Market Morning: Fox Goes to Disney Land, OPEC Meeting Tomorrow
21st Century Fox is Going to Disney Land!
21st Century Fox (NASDAQ:FOXA) has accepted an offer from Disney (NYSE:DIS) to acquire its entertainment assets in an all stock deal valued at $71.3 billion at $48 a share over its previous offer of $38. Unless Comcast (NASDAQ:CMCSA) can come up with a higher offer, it looks like Fox TV and sports, minus Fox News, Fox Sports One, and Fox Broadcasting, and Fox Business Network, and other assorted Foxes, is going to Disney. So basically, what it boils down to is that Disney owns the Simpsons now. This is Round 2 in what is expected to be a wave of mergers in media, which began with the merger between AT&T (NYSE:T) and Time Warner (NYSE:TWX) last week.
SEE: Blockchain Startup Tron Acquires BitTorrent For $140 Million
Dollar Up, Asia Down, Futures Flat, Emerging Market Currencies Crushed
The craze for dollars continues today as the Dollar Index (NYSEARCA:UUP) keeps climbing higher on fears of a trade war. Which, when you think about it, makes little sense, since less trade with the US means less dollars needed means lower demand for dollars, so why the climb? The persistence of the perception that the dollar is the world’s safe haven continues to permeate global markets and emerging market currencies keep suffering on that assumption. The Turkish Lira (TRY=X) is down another half percent today against the dollar, the Argentine Peso (ARS=X) is still at all time lows, and the Russian Ruble (RUB=X) is down 0.4% against the dollar. Gold (NYSEARCA:GLD) is taking a beating on continued dollar strength. Asian stocks are down on the assumption that a trade war will hurt them more than it will hurt the US
What to do: Be wary of these moves. They don’t make long term sense, and will only sustain themselves for as long as the dollar is perceived to be a safe haven. This will probably last only until inflation becomes obviously strong.
OPEC Meeting on Friday Amid Tense Atmosphere Between Iran, Saudi Arabia
Iran doesn’t want to increase production and thinks the Sauids should shun President Donald Trump’s demand that OPEC pump more oil (NYSEARCA:USO). This might have something to do with sanctions, as Iran is not a big fan of American sanctions against itself. Meanwhile, Saudi Arabia is, because it means higher oil prices. Meanwhile, Russia is pushing for a 1.5M bbl/d increase, which seems impossible because Russia is already right near maximum oil pumping capacity. It could be that the upcoming OPEC meeting will generating nothing but headlines seeking to affect the oil price temporarily without changing production by much.
What to do: Oil production looks unlikely to go up significantly regardless of what statements come out of tomorrow’s meeting. If oil falls tomorrow, buy the dip.
Daimler Predicts Profit Fall On Tariffs
Damiler AG (OTCMKTS:DDAIF), maker of Mercedes-Benz, predicting a fall in profits on increasing trade tensions between the US and China. Daimler produces many of its cars in Alabama which are then shipped to China, and now caught up in retaliatory tariffs for Trump’s tariffs of $50 billion in Chinese goods because he thinks that too much stuff is a breach of national security and consumers need to be protected against cheap goods. Nobody knows where these tariffs will end, meaning it could get much worse before it gets better.
What to do: Make sure you get your Mercedes used until these tariffs are rescinded. Unless you don’t mind contributing to national security against the invasion of luxury cars.
Stockman: Navarro is a Fruitcake and Trump is an Ignoramus
The mild-mannered David Stockman, former budget director for the Reagan administration and general prophet of doom, meanwhile says that these tariffs against cars are nothing, child’s play, “irrelevant”. What’s relevant is the disruption of trade between the US and China, the two biggest economies in the world, the wooly mammoths in the room, about to be frozen under a sheet of permafrost. He referred to Peter Navarro, President Trump’s Trade Czar of sorts, as an “absolute fruitcake,” though he declined to describe what flavor, or if one could be a relative fruitcake, and if so, relative to what? But whatever flavor, the fruit wasn’t grown in China, that’s for sure. Stockman believes it is the inflation of the US dollar supply that has led to trade deficits, and that the US should stop doing that, which incidentally would put the US into a deep recession. But that, in any case, is what’s needed, according to Stockman.
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