The U.S. and Mexico reached an agreement on trade and immigration this weekend. So, it’s time to celebrate.
Crisis averted!
Or is it?
The promised 5% tariff on Mexican goods hasn’t been completely eradicated. It’s just been “indefinitely suspended.” In other words, President Trump could bring it back at any moment if he decides that Mexico is no longer playing ball on immigration.
In a series of tweets this morning, Trump warned that “if for some unknown reason” Mexico fails to hold up its end of the deal, “we can always go back to our previous, very profitable, position of tariffs.”
Wall Street certainly seems pleased, as markets rallied sharply this morning. But then, they’re happy with any shiny object lately.
But that shiny new Mexico agreement could have dire implications down the road. According to TD Securities: “President Trump has effectively ‘weaponized’ tariffs for a non-economic reason, and that should become a lingering source of concern for businesses.”
The Takeaway:
The Mexico tariffs are now a sword hanging over the country’s head. Cooperate or suffer the consequences. And it’s not just Mexico’s economy that would suffer.
For now, it’s still “risk-positive” to stay engaged in the market. There’s still upside to participate in and profit from. Just be aware that the tariff-tweet sword could fall at any minute … so be prepared [Note: link to 10X promo].
Monday Merger Mania
Ray-United, and It Feels So Good
At $121 billion, it’s the defense sector’s biggest merger ever. It’s like something out of a comic book; the new Stark Industries, if you will.We’re talking about the planned combination of Raytheon Co. (NYSE: RTN) and United Technologies Corp. (NYSE: UTX).
Are there Iron Man suits on the horizon? We don’t know.
But the merger drastically changes the defense sector’s landscape for aviation, electronics, comunication and bombs … lots of bombs. Raytheon makes the Tomahawk and the Patriot missile systems, while United Tech’s Pratt & Whitney unit makes engines for several key fighter jets, including the F-35 joint strike fighter.
However, President Trump expressed concerns over the deal. Furthermore, both Boeing Co. (NYSE: BA) and Airbus SE (OTCMKTS: EADSY) buy aircraft engines from Pratt & Whitney and may not like the tightening competition in the aerospace market. As such, investors may want to hold off on buying into the UTX/RTN merger mania until the merger’s approval is clearer.
May the Salesforce Be With You
Big data is about to get a lot bigger. Salesforce.com Inc. (NYSE: CRM) just announced it’s buying Tableau Software Inc. (NYSE: DATA) in a $15.7 billion deal.The deal is a match made in heaven, with Salesforce’s cloud services expected to benefit greatly from Tableau’s data analytics software.
More number-crunching, better data visualization … we’re not quite sure what that means, but it certainly sounds exciting.
CRM is down roughly 5% on the news. You’d think that Salesforce’s investors would be used to big acquisitions by now. Meanwhile, DATA is up more than 35% on the news.
By the way, if you’re a Profits Unlimited subscriber, congratulations on your big 227% gain on your DATA position! If you’re not … well, what are you waiting for [Note: link to PRL Tech Boom promo]?
Parking With Tilray and Peter Thiel
Right now, about 77% — roughly 75 million shares — of Tilray Inc.’s (Nasdaq: TLRY) stock is “parked” with Privateer Holdings. Privateer is a private equity fund backed by venture capitalist Peter Thiel.The lockup period for those shares was about to end, potentially flooding the market. A veritable river of TLRY shares flowing into the market would not be good for TLRY stockholders.
But Tilray struck a deal to avert this crisis. According to the agreement, Privateer will divest those shares gradually over the next two years. Additionally, Tilray will acquire Privateer in a downstream merger.
Tilray short sellers could be in a world of hurt now. These bears were betting that the end of Privateer’s lockup period would drive TLRY’s price down sharply. Roughly 24.2% of TLRY’s float, or shares available for public trading, are currently sold short.
Can you say short squeeze? Sure you can. TLRY is up more than 11% on the news, and once these short sellers get spooked, it could go even higher.
If you were wondering why Salesforce.com would pay $15.7 billion for a data analytics firm, the chart above says it all. The amount of data generated worldwide right now is about 33 zettabytes. You’d need 660 billion Blu-ray disks to contain all that data.
And that’s nothing compared to the amount of generated data that analysts are forecasting for 2035. You just won’t believe how vastly, hugely, mind-bogglingly big it is.
Now think about compiling and analyzing that data. Are you going to do it? I don’t think so.
Tableau’s $15.7 billion price tag is a steal looking at those figures.
Top Trade War Strategies From the Experts
You’re probably feeling pretty good today, with the market rising and the tariff standoff at the border now resolved (supposedly).
That is until you realize that Chinese tariffs are still a thing.
We’re bombarded daily with financial news headlines to “invest in these stocks if you want to live!” Or we’re told that “these five companies will save your portfolio in the trade war.”
What’s an investor to do in the current U.S.-China trade war debacle?
Who do you believe?
Today, we have some really great stuff from the experts at Banyan Hill.
Jeff Yastine, editor of Total Wealth Insider, Ted Bauman, editor of The Bauman Letter and Ian King, editor of Automatic Fortunes, debate the key points of the U.S.-China trade war, as well as other key market trends and financial news, including:
Is the U.S.-China trade war being overestimated?
Will the Federal Reserve cut interest rates?
What are the implications of a potential antitrust legislation for big tech?
Don’t miss this crucial video. To watch now, click here or on the image below:
Until next time, good trading!
Regards,
Joseph Hargett Great Stuff Managing Editor, Banyan Hill Publishing
