Stocks continue to trade back and forth as tariff negotiations develope. At the close the Dow was up 94 at 24,895. Trading voloume was higher.
Healthcare provider Cigna shocked Wall Street by announcing the purchase of pharmacy benefit manager Express Scripts for $67 billion smackers. What surprised the gurus was that Cigna is jumping into a market that is in turmoil thanks in part to a joint venture by Amazon, Warren Buffet and JP Morgan Chase wherein they will attempt to set up internal systems to provide healthcare to employees. Cigna said it is doing the deal in order to obtain the scale and skill sets (labor) needed to bring value to customers.
Speaking of labor, the Federal Reserve Beige Book of anecdotal economic evidence came out yesterday and showed that across the country demand for labor is outstripping the supply of workers. The report said “Across the country, contacts observed persistent labor market tightness and brisk demand for qualified workers,” Shortages appear acute in construction, manufacturing and information technology. Wage growth also picked up to a moderate pace.
President Trump announced a 25% tariff on steel imports and a 10% aluminum tariff which will go into effect in 15 days. Canada and Mexico were exempt from the tariffs while the NAFTA negotiations are ongoing. The rest of the 11 counties on the tariff list are free to negotiate tariffs on an individual basis. One point made regarded “reciprocal deals” that if a country levels its tariffs on imported US goods the US will lift its tariff on steel/aluminum imports from that country. The debate continues to rage as 107 House Republicans opposed the tariffs. Elon Musk however noted that when a US car goes to China it is hit with a 25% tariff but when a Chinese car comes to the US it only pays a 2.5% tariff. He said it was like competing in the Olympics wearing lead ski boots. The bottom line here is that tariff and trade negotiations will be an ongoing process where “reciprocity” is the new buzzword.