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US FINANCIAL MARKET
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DAILY MARKET REPORTS

  • Investors assessed President Donald Trump’s first major policy stumble, while awaiting comments from several Federal Reserve policymakers including Fed Chair Janet Yellen.
  • Hopes for tax reform, infrastructure spending and deregulation helped drive stocks and the dollar higher after Election Day, while pushing government bond prices lower.
  • Still, many investors believe stock markets were in need of a correction given the speed of the recent rally, and they say markets are unlikely to enter a sustained free fall given the recent improvement in global economic growth.
  • The S&P 500 is still up around 9% since Election Day despite declining in recent sessions.

US FINANCIAL MARKET

China’s Tencent Buys 5% Stake in Tesla

  • The internet giant paid about $1.8 billion to take the stake in Tesla this month.
  • The move puts Tencent among the biggest owners of Tesla’s shares.
  • Tencent bought the shares through a combination of an offering of stock by Tesla on March 17 and open-market purchases.
  • Tencent’s stake is passive, meaning it likely isn’t seeking to agitate Tesla for changes or seek board seats.
  • Tencent, while little known outside China, is the world’s largest game publisher by revenue.
  • Within China, the Shenzhen-based company is known for its social-media platforms WeChat and Weixin, which together have close to 890 million monthly active users and are fixtures in Chinese daily life.

Facebook, Eye on Snapchat, Adds Camera Features

  • Facebook introduced three new camera-centric features to its main Facebook app, including one that allows users to create photo and video montages that vanish within 24 hours—just like Snapchat’s Stories.
  • Facebook is also making the camera accessible with one swipe to the right and adding a variety of filters and masks.
  • The third feature is a direct-messaging tool.

Olive Garden Owner Pays $780M for Cheddar’s Chain

  • Darden Restaurants struck a $780 million cash deal to buy the 165-restaurant Texas chain from stockholders including private-equity firms L Catterton and Oak Investment Partners.
  • In Cheddar’s, Darden gets a chain with a traditional American menu ranging from chicken tenders and cheese fries to seafood and chicken pot pie.
  • Darden, spun off from General Mills in 1995, has more than 1,500 restaurants, with Olive Garden accounting for the bulk of locations — and sales.
  • In 2014, Darden sold Red Lobster, once its No. 2 chain, to private-equity firm Golden Gate Capital to focus on Olive Garden.

Amazon to Buy Middle East E-Commerce Site Souq.com

  • Amazon said Tuesday it is acquiring Dubai-based Souq.com, placing one of its biggest global bets in recent years on the small but rapidly expanding Middle Eastern online shopping market.
  • Amazon didn’t give a value but a banker familiar with the deal said it was worth around $700 million.
  • Souq.com, founded in 2005 by Syrian-born entrepreneur Ronaldo Mouchawar, has grown into one of the region’s biggest e-commerce businesses—offering over 8.4 million products across categories such as consumer electronics, fashion and household goods—with around 6,000 employees and local operations in Saudi Arabia, the United Arab Emirates and Egypt.

The Galaxy S8 Is Samsung’s Best Shot at Redemption

  • The Galaxy S8 that will be unveiled Wednesday, has a lot more at stake than sales targets: it must restore consumer trust and stabilize a brand dogged by political scandal, product recalls and privacy concerns.

Valeant Ex-CEO Michael Pearson Sues Company over Unpaid Stock Award       

  • Michael Pearson is suing the embattled drugmaker for refusing to pay him more than 3 million company shares that he said he is owed.
  • Mr. Pearson said Valeant breached his contract by not paying him 580,676 shares and 2.5 million performance shares that were due last November under the terms of his separation agreement.
  • Based on Valeant’s stock price of $10.81 at the close of trading Monday, the unpaid shares have a market value of about $33 million.

Pimco Settles Breach-of-Contract Suit with Bill Gross for $81 Million

  • Mr. Gross abruptly left Pimco in September 2014 after disagreements with the firm’s other executives.
  • In 2015, he sued the manager for at least $200 million in damages, alleging he was forced out.

Condos Conquer Los Angeles

  • Almost 2,000 new luxury condos are under development or being sold on or ahead of schedule.
  • Many are going for over $1,000 a square foot.
  • Condo resale prices, meanwhile, are up 3.3% in the past year to $628 a square foot in downtown L.A.
  • Chinese developers are among the busiest in downtown L.A.
  • Downtown L.A. once was a financial district that largely emptied out at night. It has been enjoying a broader development surge over the past few years with a mushrooming of stores, restaurants and bars.

SpaceX Aims for Historic Rocket Launch with Reused Booster

  • Elon Musk’s SpaceX will strive to make history once again this week, highlighting benefits of reusable boosters with the scheduled launch of the first large, liquid-fueled rocket powered by engines previously fired in space.
  • Relying on the Falcon 9’s repurposed lower stage—including nine refurbished main engines intended to propel a European commercial satellite into Earth’s orbit—the blastoff slated for Thursday from Florida’s Kennedy Space Center will mark the culmination of years of intense planning, testing and public advocacy by the company.

Bond Buyers Return With a Vengeance

  • Government bonds are back in fashion, as the “Trump trade” on higher growth and inflation begins to unravel.
  • The yield on the benchmark 10-year Treasury note tumbled to 2.373% Monday from a two-year high of 2.609% on March 13 and 2.446% at the end of last year.
  • Yields fall as bond prices rise.

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US ECONOMY & POLITICS

U.S. Home Prices Rise at Fastest Rate in 31 Months, Case-Shiller Says

  • Home prices in January rose at their fastest rate since mid-2014.
  • The S&P CoreLogic Case-Shiller Indices, which cover the entire nation, rose 5.9% in the 12 months ended in January, up from a 5.7% year-over-year increase reported in December.

Trump Tweet Touts Ford’s Plan to Invest in Three Michigan Plants

  • “Major investment to be made in three Michigan plants,” Mr. Trump’s tweet said. “Car companies coming back to U.S. JOBS! JOBS! JOBS!”

Fed’s Evans: Three 2017 Rate Rises Plausible, Four Possible if Inflation Picks Up

  • Chicago President Charles Evans said the U.S. central bank could raise short-term interest rates four times this year if inflation picks up, but suggested three increases remain more plausible.
  • Mr. Evans said long-term inflation expectations in the U.S. are running below the central bank’s 2% target, even though short-term prices are nearing that objective.

Sluggish Housing Recovery Took $300 Billion Toll on U.S. Economy, Data Show

  • If the home-building industry had returned to the long-term average level of construction, it would have added more than $300 billion to the economy last year, or a 1.8% boost to gross domestic product (GDP), according to a study.
  • In 2016, total spending on housing declined to 15.6% of GDP, a broad measure of goods and services produced across the U.S., compared with a 60-year average of nearly 19%.

Despite Trump Move on Climate Change, Utilities’ Shift From Coal Is Set to Continue

  • The Trump administration’s move to roll back President Obama’s signature climate-change policy may extend the life of some aging coal-fired power plants, but companies and energy experts say it is unlikely to reverse the U.S. utility industry’s shift to natural gas, solar and wind as leading sources of electricity.
  • President Donald Trump signed an executive order that would begin to reverse the Clean Power Plan, which would have required utilities to reduce power-plant carbon-dioxide emissions to 32% below 2005 levels by 2030.

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EUROPE & WORLD

SoftBank Talks to China’s Uber Rival Didi About $6 Billion Investment

  • SoftBank has approached China’s Didi Chuxing Technology about investing roughly $6 billion to help the ride-hailing firm expand in self-driving car technologies.
  • The bulk of the investment would likely come from SoftBank’s planned $100 billion Vision Fund.
  • Vision Fund, originally slated to launch in January, has been delayed as SoftBank weighs different demands from investors such as Saudi Arabia’s Public Investment Fund, Abu Dhabi’s Mubadala Development Co., Apple Inc., Qualcomm Inc. and Oracle Corp.
  • Didi became China’s ride-hailing champion after it merged with rival Uber Technologies Inc.’s China operations last year.

Aramco tax cut lifts company’s value by $1 trillion, analyst estimates

  • Saudi Arabia’s decision to cut tax paid by national oil giant Saudi Aramco has increased its value by $1 trillion.
  • The government said on Monday it was cutting the tax rate for Aramco to 50 percent from 85 percent as part of preparations for next year’s IPO, which would sell as much as 5 percent of the company.
  • Deputy Crown Prince Mohammed bin Salman, who leads economic reforms, has said the IPO will value Aramco at a minimum of $2 trillion.

American Airlines takes $200 million stake in China Southern

  • China Southern will issue new shares worth HK$1.55 billion ($199.6 million) to American Airlines, making American the second U.S. carrier to own part of a Chinese airline after Delta Air Lines bought 3.55 percent of China Eastern Airlines for $450 million in 2015.

Payments company Square launches in the UK

  • Square, the payments company led by Twitter Inc Chief Executive Jack Dorsey, has launched in the United Kingdom in its first European foray.
  • Square estimated that, while more shoppers were choosing plastic over cash, about half of the U.K.’s 5.4 million small businesses do not yet take card payments.

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TODAY in HISTORY

  • Nathaniel Briggs patented a washing machine (1797)
  • The cities of Constantinople and Angora changed names to Istanbul and Ankara, Turkey (1930)
  • Supreme Court rules unanimously that an anonymous tip does not justify a stop-and-frisk action against a person (2000)

This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, Wall Street Journal.

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