February 16, 2018 Market Outlook

Wall Street Shrugs Off Inflation Concerns

The bulls are back in harness as Wall Street showed little signs of running out of steam just yet. In the aftermath of last week’s massive sell-off, the main U.S. benchmarks gains ground for the fifth straight session.

Despite the 10-year US Treasury yield hovering around and touching a four-year high of 2.94%, the S&P 500 continued its rally from last Friday’s four-month intraday low to almost 8%. The tech rally also contributed to the surge as tech stocks were among the day’s biggest gainers.

The Nasdaq Composite index rose 1.6% while the Dow Jones Industrial Average went up by 1.2% per cent. The Cboe volatility index (VIX) also hung around below its long-term average of 20.

SEC Blocks Takeover of CHX by Chinese Group

U.S. regulators on Thursday blocked the sale of the Chicago Stock Exchange (CHX) to a group led by China-based investors. They said the lack of information on the prospective buyers threatened the ability to properly monitor the exchange after the deal.

The Securities and Exchange Commission (SEC) ended a two-year battle to gain approval for the politically sensitive sale. It also underscores the more hostile environment facing Chinese buyers under the administration of U.S. President Donald Trump. Trump was openly against the CHX deal up during the election campaign.

The SEC staff initially approved the CHX in August, but the Trump-appointed SEC commissioners, led by Chairman Jay Clayton, immediately placed the decision on hold for further review.

GE’s Sale of Overseas Lighting Business Firmed Up

The parts of the overseas lighting business of General Electric (GE) will finally be sold for an undisclosed amount. The buyer is a company controlled by a former executive, Joerg Bauer. The U.S. industrial conglomerate has sealed the deal and will mark the first step in the divestment from its lighting business. The company also announced that the remaining parts of GE Lighting, including the Current are on the selling block.  

The overseas lighting business consists of GE Lighting in Europe, the Middle East, Africa and Turkey, along with its Global Automotive Lighting businesses. GE has long wanted to sell the lighting business as part of a broad restructuring plan aimed at unloading $20 billion worth of assets. GE will now focus on three core divisions: power, aviation and health care. The iconic American company was co-founded by Thomas Edison more than a century ago,

Roche Assumes Full Ownership of Flatiron Health

Swiss drug maker Roche Holding AG announced on Thursday that they would buy the rest of U.S. cancer data company Flatiron Health for $1.9 billion. Roche currently owns 12.6% of Flatiron. The Swiss firm wants to speed development of cancer medicines and support its efforts to price them based on how well they work.

Privately-held Flatiron, which is backed by Alphabet, Inc. (GOOGL), taps into data on individual cancer cases to help doctors select promising approaches for their patients. The company also stores billing data, doctors’ notes and related information.

Roche will use Flatiron algorithms to improve not only its research and trials, but also support its arguments during head-to-head price talks with payers as new combinations of its expensive therapies hit the market.

Canopy Growth Prepares for Medical Cannabis 2.0

One of the world’s biggest medical marijuana producers, Canopy Growth Corp., is preparing to take on the world’s pharmaceutical giants. Their launching of Canopy Health Innovation in late 2016 was intended to build a portfolio of patented and federally approved cannabinoid-based medicines.

Like many others, Canopy Health is preparing to create medical cannabis 2.0 according to Chief Executive Marc Wayne. There are a small but growing number of companies aiming to compete with established drug firms in treating diseases ranging from anxiety and chronic pain to multiple sclerosis and childhood epilepsy.

The gold rush for cannabis intellectual property is on. Many are developing research-backed formulations to be sold as pills, inhalers, solutions and creams, with the goal of convincing doctors and insurers to embrace marijuana as a mainstream medicine.

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