Alphabet stock dips in early hours on DOJ threat of Google breakup

Alphabet stock dips in premarket on news of DOJ mulling Google breakup

Will Alphabet be broken up? The U.S. Department of Justice (DOJ) said Tuesday it will look at how to break up Google’s search engine dominance. Good luck. Scale has worked and made it much easier and simpler for consumers – remember the likes of Lycos or Ask Jeeves? Google works through its scale, and everyone still selects Chrome when they get the chance to choose – such as new phones in Europe.

It’s rather like breaking up Sky’s effective monopoly of football rights – the consumer experience suffered because you need multiple subscriptions to watch what you want. It’s hard to see the courts finding a suitable remedy. And it will take a long time — to put it mildly. Shares shouldn’t be overly affected by the threat. I don’t feel investors need fret about an Alphabet soup of Chrome, YouTube, Android etc. GOOGL trades about -1% in pre-market trading this morning, having rallied about 10% in the last month. Google shares are up 19% year-to-date.

US election could impact America’s anti-trust policies

The interesting thing about the whole trust-busting thing is what could happen after the U.S. presidential election in November. We looked at political assassinations and their impact on markets recently on the Overleveraged podcast. The impact varies a lot.

The most obvious impact we saw was when McKinley was killed and replaced by Teddy Roosevelt, due almost entirely to their respective attitudes to big business and monopolies. McKinley wasn’t bothered about using the Sherman act to carry out anti-trust actions. Roosevelt was very different, and the market dropped a lot on McKinley’s death due to fear he would break up the large corporations. There followed the anti-trust action against Northern Rail and the great trust-busting operations of his second term.

FTSE 100 rallies in London, European markets mixed, China stocks see second hard day of selling

Stocks rallied early in London on Wednesday, led by utilities, but it was a more mixed picture for mainland Europe after another hard day of selling in Asia, led by China. Wall Street rallied with the S&P 500 climbing 1% on big tech gains.

Chinese stocks tumbled again – down 7% today – a policy briefing is due on Saturday. Will Beijing go for pure quantitative easing to stimulate consumer demand? FOMC minutes are due later, but the picture appears to be changing so quickly and the Federal Reserve is so data-dependent that it doesn’t really matter what they have said before today.

The FTSE 100 is in an increasingly narrow range and threatened breakouts have failed to really materialise.

Oil prices pare recent Middle East-fueled gains in big reversal on Tuesday

Oil prices pared recent gains in a big reversal yesterday, though look to have found some support for the time being. Brent had cleared $80 but moved to test $76 yesterday evening before pushing up a little overnight. Some of the immediate geopolitical risk premium has been taken out of the price following the Iranian strikes on Israel.

The fundamental bias leans to the downside, so it’s just this premium that is keeping the market up. What we cannot be sure about is the future course of events in the Middle East and for instance, closure of the Strait of Hormuz or destruction of Iran’s oil facilities.

The Reserve Bank of New Zealand cut rates by 50 basis points, taking the country’s key interest rate, the OCR, down to 4.75%. The central bank gave a clear(ish) signal on more rate cuts to come but stopped short of formal guidance. NZDUSD fell sharply to breach the 200-day line.

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