Financial and Economic Brief - December 5, 2017by © Liberty Publishing, Inc.
Mixed Numbers for Automakers
Major automakers posted mixed U.S. November new vehicle sales on Friday and predicted a competitive December as they rushed to sell vehicles and lift their 2017 numbers. The November sales results come as the National Automobile Dealers Association said it expects new vehicle sales to fall to 16.7 million units in 2018, after dropping to 17.1 million for the full year in 2017. Brandon Mason, a director at PwC's automotive practice, said a worrying trend for the industry was a rising number of deep subprime loans.
CVS to Buy Aetna
CVS Health is buying Aetna for $69 billion in cash and stock in a deal that “reflects a rapidly shifting health care landscape”. Aetna stockholders are to receive around $207 a share and will own about 22% of the combined company. The deal could result in lower costs to both CVS and Aetna. Joseph Agnese, a senior analyst with investment research firm CFRA, has said that Aetna participants are likely to benefit the most because CVS may be able to offer them lower co-pays if they shop with them. “This combination brings together the expertise of two great companies to remake the consumer health care experience,” said CVS CEO Larry Merlo.
Upcoming Fed Rate Hikes
According to a Reuters poll of economists, the U.S. Federal Reserve is “almost certain” to raise interest rates later in December, a majority of whom also now expect three more rate rises in 2018. These new expectations come despite a split among policymakers on the outlook for inflation, which has remained persistently low. While the U.S. economy expanded in the third quarter at a 3.3% annualized rate, the poll suggested that may be the best growth rate until the second half of 2019. “This is about just getting back to a neutral level where monetary policy is neither encouraging growth or pushing against growth,” said Brett Ryan, senior U.S. economist at Deutsche Bank.