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Daily Agenda: Markets Digest Trump Nomination

Factoring in the risks of political uncertainty; Phillips Lighting debuts; Valeant enterained buyout offer; China train builder sells equity.

In a speech in Bismarck, North Dakota yesterday, real-estate mogul Donald Trump celebrated his victory in winning the necessary number of delegates to receive the Republican Party’s presidential nomination before his probable opponent, Hillary Clinton, could secure the Democratic nomination. Despite the animosity of many senior GOP leaders to Trump, he is now poised to begin campaigning for the White House in earnest. To date, economic policies espoused by Trump have been an elusive mixture of protectionism against trading partners, including China, and the rolling back of environmental regulations, particularly those affecting energy industries like oil and coal. For investors, this ever-changing political theater raises the question of what it’s impact might be on the U.S. private sector if Trump wins the general election. With stocks reaching multiweek highs despite a dollar rally, the answer seems to be that a glass-half-full argument is prevailing so far. But there are six long months before the general election.

Philips public offering a success. Today Philips Lighting debuted as a public company in Amsterdam, with shares rising by a high single-digit measure in initial trading. The initial public offering brought more than $800 million in capital to parent company Royal Philips. The move to take the lighting unit — the historical core franchise of the firm — public comes after failed attempts to find a private buyer.

Pharmaceutical drama continues. Today The Wall Street Journal reported that beleaguered drugmaker Valeant Pharmaceuticals International had spurned a buyout offer fronted by private equity firm TPG and Japan’s Takeda Pharmaceutical earlier this year. According to unnamed sources, the offer came while former Valeant CEO Michael Pearson was on leave for health reasons. Separately, yesterday Gilead Sciences, Biogen and Jazz Pharmaceuticals revealed that they had received subpoenas as part of a widening investigation into drug companies’ relationships with charities that help patients afford their drugs.

Chinese train builder to sell equity. Today China’s CRRC Corp., a train manufacturer, announced it will execute a privately placed secondary offering at a nearly 5 percent discount to current trading levels for the company’s Shanghai listed shares as it seeks to reduce its debt. The total size of the offering may exceed $1.8 billion. CRRC is the only domestic manufacturer of high-speed locomotives in China and, as a state-controlled entity, was created in recent years through a series of mergers.

Abe looks to dodge tax hike. Multiple media outlets today reported rumors that Japanese Prime Minister Shinzo Abe is exploring ways to delay a sales-tax increase slated for spring of 2017. The move comes after extraordinary quantitative easing and negative interest-rate experiments by the Bank of Japan have, so far, failed to produce results. Separately, consumer-price-inflation data released today by Japan’s Statistics Bureau indicated that deflationary pressures persisted in April, with the headline index contracting by 0.3 percent year-over-year.

Pending home sales spike to multiyear high. Data released on Thursday by the National Association of Realtors indicated that the number of pre-owned houses in the U.S. that are under contract for sale is at the highest level since 2006, up some 5.1 percent month-over-month. Low unemployment and low, historically anomalous mortgage interest rates continue to buoy the real-estate market.

Thermo Fisher to acquire rival. Today Thermo Fisher Scientific Inc. announced that it will acquire FEI Co. in a deal that is valued at more than $4 billion. The acquisition of FEI, which produces equipment for scientific analysis, will provide more hardware market share to Thermo’s biotech and laboratory technology franchise.

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