Financial and Economic Brief - May 22, 2018by © Liberty Publishing, Inc.
Progress on Trade Negotiations
Treasury Secretary Steven Mnuchin recently commented to CNBC on the state of the U.S.-China trade negotiations, saying “I think we’ve made very meaningful progress. Now it’s up to both of us to make sure that we can implement it.” U.S. officials have been meeting and negotiating with their Chinese counterparts over a number of issues, including technology, agricultural and energy products. The two sides have retreated from threatening tariffs over dozens of products, though Mnuchin said that if China doesn’t follow through on its pledges, the taxes will be imposed.
GE Train Division Merger
General Electric will merge its train engine division with railroad manufacturing firm Wabtec in an $11 billion deal. This is a deal to streamline GE, the Boston-based conglomerate. Wabtec Corp. will pay GE a $2.9 billion upfront payment and Wabtec shareholders will own about 49.9% of the combined company, when the deal closes in early 2019. GE shareholders will own about 40.2% and GE will own 9.9% of the merged company. Executives did not address what effect the merger might have on jobs, but did say the merged company is expected to generate about $250 million in annual synergies by 2022.
BOJ Drops Inflation Target Timeframe
The Bank of Japan (BOJ) won approval for its decision to desert the timeframe it had set for meeting its inflation target of 2%. In its quarterly report, the BOJ says this will “dispel the notion that the central bank is obliged to ease policy if it pushes back this forecast”. The government and the BOJ have reaffirmed their agreement to take necessary policy steps to beat deflation. The BOJ agreed to do its “utmost to achieve its inflation target at the earliest date possible”, while the government pledged to restore long-term fiscal health.