Market Outlook – September 13, 2014

Dow Jones Closes with Slight Gain


The Dow Jones Industrial Average and the S&P 500 Index bounced back from lows on Wednesday to edge up by 27.86 points (+0.11%) and 1.03 points (+0.04%) respectively. The Nasdaq Composite Index was unable to sustain its recent gains as it shed 18.24 points (-0.23%).

The shares of chip makers sunk while the unveiling of Apple Inc.’s (AAPL) new product lineup didn’t create much excitement. Only three of the 11 primary sectors of the S&P 500 ended lower. The financial stocks (-0.8%) led the decliners followed by technology stocks (-0.5%) and utilities stocks (-0.1%).

The S&P 500 and the Nasdaq have risen for two straight sessions through Tuesday following a four-day skid. Trading in recent sessions has been muted. For this month, the S&P 500 hasn’t closed with a move of 0.5% in either direction in any session.

Washington Offers Beijing New Chance to Talk Trade


The Trump administration has offered China a new chance to talk trade. The Chinese Commerce Ministry welcomed the invitation even as U.S. officials are preparing to impose steep tariffs on $200 billion worth of their goods.

United States President Donald Trump warned last week that the new tariffs could go into effect very soon and America is ready to go on short notice. Renewed high-level talks might produce better results than the low-level trade negotiations that took place last month.

On Thursday, China’s spokesman Gao Feng confirmed that the two governments were discussing details for a new round of negotiations. He said, “The escalation of trade conflicts doesn’t benefit either side’s interests.”

U.S. is Now the World’s Largest Oil Producer


For the first time since 1973, the United States has reclaimed the throne to become the world’s largest producer of crude oil. The Energy Department published on Wednesday the preliminary estimates that show Russia and Saudi Arabia have been unseated.

The U.S. shale oil boom is reshaping the global energy landscape. It is validated by the fact that American oil output has more than doubled over the past decade. Bob McNally, president of consulting firm Rapidan Energy Group., boasted, “It’s a historic milestone and a reminder: Never bet against the U.S. oil industry.”

Texas remains as the epicenter of the shale boom. According to the U.S. Energy Information Administration (EIA), production growth in the Permian Basin of West Texas in February was the reason why the U. S. has overtaken Saudi Arabia. It’s the first time it happened in more than two decades.

The EIA sees the U.S. to remain atop the oil world through 2019. Their oil production will be ahead of both Russia and Saudi Arabia during that stretch.

Adobe Systems Aiming to Boost its Cloud-Based Products


Adobe Systems Inc. (ADBE) is currently negotiating to purchase Marketo Inc., a privately held cloud-based marketing software company. According to sources, the maker of image-editing software Photoshop wants to boost its cloud-based software offerings.

Private equity firm Vista Equity Partners Management LLC took Marketo private two years ago for $1.8 billion. In case Adobe succeeds in striking deal, the company is expected to pay more than that amount.

Acquiring Marketo would give Adobe the muscle to take on larger rivals such as Microsoft Corp. (MSFT) and Oracle Corp. (ORCL). The business-to-business marketing applications of Marketo would complement Adobe’s marketing business. However, there is no confirmation yet whether the talks between Adobe and Vista Equity would lead to a deal.

Cannabis Firms Step Up Pitch with European Investors


Cannabis firms in Canada are stepping up their efforts to build their institutional investor base. The weed companies are courting European funds as countries across the region approved marijuana for medical use.

Weed companies such as Canopy Growth Corp. (CGC), Tilray Inc. (TLRY), and Aurora Cannabis Inc. (OTCQX INTL: ACBFF) have been signing export deals with European governments and buying local companies. They are also opening production facilities in the region.

In 2018, they have been intensifying their business pitches to European funds through conferences and road shows. They are hoping that more stable institutional investors will replace vacillating retail investors.

What’s hindering their success are high valuations and lingering concerns about the future and legitimacy of the cannabis industry, particularly in the United States. Canada was among the first countries to approve medical marijuana in 2001. On October 17 this year, sales of legal and recreational marijuana will commence in Canada.

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