The Health Care bill is dwindling by the day, while a blueprint for NAFTA’s renegotiation was released this week and Citigroup officially declared Frankfurt its new base for the European Union – how will these events affect the market? Get all the answers in this edition of Steady Investor’s Week…
The Health Care Bill Appears Dead, But CEOs Don’t Seem to Mind – The prospects for passing a health care bill appear to be dwindling by the day, and Republicans have effectively given up on trying to replace the Affordable Care Act – at least for now. New efforts appear to center around a delayed repeal, but a couple of key GOP senators have already pulled support for that idea as well. This matters in the investment world because a portion of the post-election rally arguably relied on the expectation that a pro-growth economic agenda was top of mind for this administration. If health care couldn’t move, it begs the question of how at-risk other policies involving tax cuts, infrastructure spending, and deregulation may be. Time will tell. In the meantime, the business world appears unfazed by the legislative gridlock – confidence among CEOs of major corporations and small businesses has surged in recent months.
Chinese Data Points to Strength – a big story in recent weeks has been “global synchronized earnings growth,” whereby for the first time since 2010 earnings growth is set to rise simultaneously across Europe, the U.S., the UK, Japan, and Emerging Markets. But, what about China? Data shows solid strength there, too. Estimates have GDP for Q2 pegged at 6.9%, which matches the growth rate seen in Q1. Other metrics like consumer spending, factory output and investment were also strong, and retail sales recorded its fastest expansion since December 2015.
NAFTA, Renegotiated? – the administration continues to press forward with plans to renegotiate NAFTA, as of this week a blueprint for doing so was released by the Office of the United States Trade Representative. The blueprint calls for an agreement that “reduces the trade deficit” with Canada and Mexico, while aiming to preserve “Buy America” provisions. Accomplishing those dual mandates would likely involve tariffs or quotas controlling the flow of goods, neither of which would maintain the spirit of a free trade agreement.
Goodbye London, Hello Frankfurt – in the latest Brexit-related blow to the UK, the banking behemoth Citigroup has announced its choice of Frankfurt, Germany as its European Union base instead of London. This announcement follows others that have similarly been blows to the UK’s decision to leave. Goldman Sachs, Morgan Stanley, and Japanese bank Nomura have also stated intentions to set up or expand operations in Frankfurt.
Netflix Earnings – the online streaming company, which could arguably be categorized as a consumer discretionary company versus a tech company, saw a big pop this week following the company’s report that it far-surpassed new subscriber targets and plans to spend $6 billion per year on content. The company added 5.2 million new customers in Q2, with many of those subscribers coming from outside the U.S.
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