Week of June 7 2019 Weekly Recap & The Week Ahead
“If it is abvious, it is obviously wrong” — Joe Granville
1. FTC Takes on Amazon, DOJ to Oversee Google — Amazon (NASDAQ:AMZN) could face heightened antitrust scrutiny under a new agreement between the government’s twin antitrust agencies that puts it under closer watch by the Federal Trade Commission, The Washington Post reported. The move would divvy up competition oversight of two of the country’s top tech companies, with the U.S. Justice Department having more jurisdiction over Google (GOOG, GOOGL) and paving the way for a potential investigation of the search-and-advertising giant.
2. Big Tech Faces Congressional Probe — the House Judiciary Committee unveiled a sweeping “top-to-bottom” review of unnamed tech companies early last week as reports surfaced of a dual effort from the DOJ and the FTC to tackle the perceived dominance and potential abuses of Big Tech. “The growth of monopoly power across our economy is one of the most pressing economic and political challenges we face today,” said David Cicilline, who chairs the Antitrust Subcommittee, adding that “market power in digital markets presents a whole new set of dangers.”
3. Trump Touted Progress in Mexico Talks — “Progress is being made” in talks with Mexico, according to President Trump, but “not nearly enough!” Discussions will continue , but “unless an agreement is reached a 5% tariff on Mexican goods would begin on Monday.” The peso slid as much as 1.3% as credit ratings agency Fitch downgraded the nation’s sovereign debt near junk status – citing risks posed by heavily indebted oil company Pemex and trade tensions – while Moody’s lowered its outlook to negative. Where would the levies hit hardest? Mexico is the world’s biggest exporter of beer (BUD, STZ), selling $3.6B worth to the U.S. last year, along with $2B in avocados (CVGW, FDP) and $2B in tomatoes. Corporations are also speaking out. Chipotle (NYSE:CMG) estimated a $15M hit, but said it could cover that by raising burrito prices by around 5 cents, while auto parts maker Aptiv (NYSE:APTV) said a 5% tariff would cost the company $17M per month.
4. US/China Trade War – China has lots of policy room according to PBOC — PBOC Governor Yi Gang declared if the trade war with the U.S. deepens, “we have plenty of room in interest rates, we have plenty of room in required reserve ratio rate, and also for the fiscal, monetary policy toolkit, I think the room for adjustment is tremendous,”. The yuan has stabilized in recent weeks as authorities voiced support for the currency, following a rapid selloff that pushed it near 7 per dollar – a level not breached since the global financial crisis.
5. Theresa May to step down as Tory leader — after 1,059 days in charge, U.K. Prime Minister Theresa May has officially stepped down as leader of the ruling Conservative Party. The race has already started to replace her, with 11 contenders and Boris Johnson the current favorite. Starting next week, the party’s 300 or so MPs will whittle down the field of candidates to two through successive rounds of voting. After that, the party’s rank-and-file members, an estimated 124K people, will decide which of those two finalists gets to be leader.
The week ahead — Economic data from Econoday.com:
