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Market Morning: Trump Tariff Tantrum, Buybacks Booming, Moon to Pyongyang, Cannabis Coke

ME Staff

Trump Adds $267B Tariff Insult to $200B Tariff Injury

Not only will the Trump Administration slap tariffs on $200 billion in Chinese goods by next week, or so is being announced on every scrap of financial media this morning, but the tariff rate will be doubled in 2019. This puts the total amount of goods with either announced or in-effect tariffs at $250 billion, but it gets even more extreme. If China retaliates against the United States by raising more tariffs in response to this newest round of $200 billion, Trump will immediately retaliate with another $267 billion in tariffs on top of the $250 billion already announced or in effect. On the other hand, if China does not retaliate in fear of this further retaliation by Trump, it will look weak and scared, which doesn’t seem to be the position that Xi Xinping wants to be in. It’s an alphadog contest and the trade of goods and services between people is the pawn. Retailers are going to get especially hurt.

Stocks to Watch: (NYSE:WMT) (NYSE:TGT)

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Why Stocks Keep Climbing: Corporate Buybacks

According to data compiled by Goldman Sachs (NYSE:GS), corporate stock buybacks are now the largest share of cash spending by firms in the S&P 500 (NYSEARCA:SPY). This hasn’t been the case for 19 of the past 20 years, when most cash was spent on capital expenditures. Goldman predicts that share buybacks will climb over $1 trillion for the whole year, for the first time ever. Apple (NASDAQ:AAPL) for its part spent $45 billion on buybacks during just the first six months of the year. This is triple what it did last year. Money is flowing, clearly. Which raises an important question. What happens when it stops?

 

As Mr. Deeds Went to Washington, So Goes Moon to Pyongyang

Moon Jae-In and Kim Jong-Un, the two Korean leaders of vastly different Koreas, walked hand in hand in the North Korean capital of Pyongyang yesterday among shouts of “Unification!” by the people, who apparently would like to end the war between the two countries officially. Families are still split following the war since hostilities ended in 1953, though a peace treaty was never officially signed. President Trump has asked Moon to be his middleman between himself and Kim, and it appears he is doing a fine job so far. Washington says it would like to see concrete steps towards denuclearization before it signs any peace treaty ending the Korean War on an official basis.

Related Tickers: (NYSEARCA:EWY)

Amazon, Netflix Dominate Emmys

The cord cutters are killing it. Amazon (NASDAQ:AMZN) cleaned up in the comedy category, while Netflix (NASDAQ:NFLX) and HBO, owned by AT&T (NYSE:T), tied for 23 wins apiece. HBO’s Game of Thrones, of course, won best drama and Barry, a dark comedy about a hit man who wants to just be a normal guy but keeps having to kill people to keep them from talking about the people he had to kill, won for best lead and supporting actors.

Have a Coke and Smile and a Non-psychoactive Joint

Coca-Cola (NYSE:KO) is in talks with Canadian cannabis firm Aurora Cannabis (OTCMKTS:ACBFF) for creating cannabis-infused soft drinks for people with inflammation and pain. The drinks will be infused with cannabidiol, the cannabinoid that doesn’t get you stoned, which means the new line of drinks will be health-focused rather than recreational-focused. Shares of Aurora were up over 17% on the news, as it would mark the first time that a major non-alcoholic drinks manufacturer has entered the cannabis market.

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