December 4, 2017, by Lorcan Roche Kelly
The House and Senate start work on joining their tax plans, another risk to Brexit talks and giant health-care merger faces antitrust worry. Here are some of the things people in markets are talking about today.
After the Senate tax bill was passed in a 51-49 vote early Saturday morning, following a marathon session, attention now turns to work on compromise legislation that will bring the House and Senate bills together which could be ready for President Donald Trump’s signature “within 10 days.” Trump signaled that there may be room to move on the corporate tax rate, saying it could be as high as 22 percent when the final bill emerges. At a fundraiser over the weekend, the president told Republican donors that the tax overhaul means he will be “unbeatable” in his bid for re-election, while brushing aside a federal probe that is closing in on members of his inner circle.
The U.K. has been playing down expectations for a breakthrough on divorce talks from the European Union at a scheduled lunch between Prime Minister Theresa May and European Commission President Jean-Claude Juncker today. With the issue of the Irish border still unsolved, another roadblock has emerged in the role of the European Court of Justice’s post-Brexit powers. May’s Conservative party see any oversight from the ECJ as a sovereignty lost to the EU. Yet upholding the ECJ’s role in protecting citizen rights is likely to be a sticking point for the EU parliament, which holds veto power over a final deal. Elsewhere in Europe, the election of a new head of the Eurogroup is scheduled for today, with four finance ministers from euro-area countries vying for the role.
The huge deal which sees CVS Health Corp. buying Aetna Inc. for about $67.5 billion, and in the process remaking the U.S. health-care sector, is likely to come under close scrutiny from antitrust regulators. While, in the past, deals such as this which combined companies at different points in the supply chain were viewed as less anticompetitive than direct rivals combining, the administration’s recent move on the merger between AT&T Inc. and Time Warner Inc. shows such deals are coming under closer scrutiny.
Overnight, the MSCI Asia Pacific Index was little changed while Japan’s Topix index closed 0.5 percent lower as big tech names in the region retreated. In Europe, the Stoxx 600 Index was 0.8 percent higher at 5:45 a.m. Eastern Time, with banks and insurers leading the gains following the Senate tax deal agreement, while sovereign bonds in the region dropped. S&P 500 futures added 0.5 percent, the 10-year Treasury yield was at 2.395 percent and gold was lower.
Future of investing
While the usual raft of year-end predictions for what the next twelve months will hold fills inboxes, there is one interesting trend that may be worth more focus. BlackRock Inc. and Vanguard Group are getting closer to a position where they will have a relative duopoly in the U.S. asset management industry. With the wealth under management of the two companies on track to exceed U.S. GDP, none other than Vanguard founder Jack Bogle is raising the prospect that too much money is in too few hands. With the number of ETFs now higher than the number of U.S. stocks, the power these companies have may start to hurt basic market efficiency.