Market Outlook – May 22, 2018

Dow Jones Tops 25,000 Again

 

The Dow Jones Industrial Average posted its highest close since March 12 on Monday. The blue-chip index advanced 298.20 points (+1.2%) to start the week after the U.S. and China declared a trade war truce on Sunday. The index closed at 25,013.29.

For the S&P 500 Index, it was nearly a nine-week high as the index rose 20.04 points (+0.7%). All 11 sectors finished in green territory with the industrial stocks gaining 1.5%. The index posted its best finish since mid-March. The tech-heavy Nasdaq Composite Index rose by +0.7% like the S&P 500.

Potential Increase in Agricultural Exports to China

 

The latest trade agreements between the U.S. and China would favor American exporters of beef, corn and soybeans. There’s a potential increase of $60-90 billion agricultural imports by the Asian economic giant under the agreements.

While analysts said the agreements would not have instant economic impact, there are some key areas in which American farmers would likely benefit. According to the U.S. Department of Agriculture the beef imports of China globally has increased nine-fold starting in 2012 to 2016.

After 14 years, China reopened its market to U.S. beef in June 2017. Among the specific products Beijing threatened to impose stiff tariffs during the heated trade dispute were beef, corn, soybeans, and wheat.

GE and Wabtec Shares Jump on News of Merger

 

On Monday, shares of General Electric Co. (GE) and Wabtec Corp. (WAB) rose 2.8% and 4.3% respectively. The jump was triggered by the announcement that GE will merge its transportation business with the U.S. rail equipment manufacturer. GE and its shareholders will own just over half of the combined business.

The deal is worth $11.1 billion and would be the biggest transaction by far to be consummated by GE Chief Executive John Flannery. He announced a major overhaul of the U.S. industrial conglomerate late last year.

GE will be receiving $2.9 billion up-front payment in cash and a 9.9% stake in the combined company. GE shareholders will own 40.2% while the existing Wabtec shareholders will own 49.9%.

Obamas Sign Multi-Year Production Deal with Netflix

 

Netflix Inc. (NFLX) announced on Monday they struck a unique multi-year production deal with the Obamas. The Obamas intend to use the video-streaming giant to promote common values through the power of storytelling.

The Obamas will produce a diverse mix of content, including the potential for scripted series, unscripted series, docu-series, documentaries and features. The first content is tentatively set to air in 2019 at the earliest.

The former president and first lady will sometimes appear on camera as hosts or moderators. They will also be behind the scenes as producers in some shows. Netflix made no mention of the financial terms. Netflix believes its125 million members would welcome to see the Obamas in their post-White House years.

EU Lawmakers to Grill Zuckerberg on Facebook Scandal

 

EU lawmakers are expected to grill Mark Zuckerberg in Brussels on Tuesday. The lawmakers would be seeking answers from Facebook Inc.’s (FB) CEO to questions regarding the recent data breach scandal and the non-transparent use of political advertisements.

Zuckerberg will also be meeting with French President Emmanuel Macron on Wednesday. Meanwhile, British lawmakers also want to question the FB chief directly either in person or via video link.

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