Week In Review: How Trump's Policies Moved Stocks - Dec 9, 2018

Catch up on the top industries and stocks that were impacted, or were predicted to be impacted, by the comments, actions and policies of President Trump and his administration with this weekly recap compiled by The Fly:

1. HUAWEI CFO ARRESTED: Canada arrested Huawei Technologies CFO Meng Wanzhou on December 1 at the request of U.S. authorities on suspicion she violated U.S. trade sanctions against Iran, CNBC reported on Thursday. China has since demanded Canada release Wanzhou, one of the vice chairs on the company's board and the daughter of company founder Ren Zhengfei, the Associated Press reported. Following the arrest, Deutsche Bank analyst Zhiwei Zhang lowered his probability of the U.S. and China reaching a trade deal by March 1 to 30% from 40%. The arrest is a "clear signal that the trade war is escalating to a new level," the analyst argued. According to reports, Huawei accounted for nearly 17% of Lumentum's (LITE) sales in FY17, about 15% of FY17 sales for Oclaro (OCLR) and 11% of FY17 sales for Finisar (FNSR). The company competes in China with ZTE (ZTCOY), Infinera (INFN) and Ciena (CIEN).

2. POSTAL REFORMS: Earlier this week, the Trump administration released a report recommending the U.S. Postal Service enact reforms that could raise shipping rates for certain packages, which might inflame tensions with Amazon (AMZN) and other online retailers. “Although the USPS does have pricing flexibility within its package delivery segment, packages have not been priced with profitability in mind […] The USPS should have the authority to charge market-based prices for both mail and package items that are not deemed ‘essential services,’” reads an executive summary of the report. The administration’s task force recommends that the USPS divide its shipments into essential and commercial service categories, with many e-commerce shipments falling into the latter category, which would not be protected by existing price caps and thus be subject to rate increases. Commenting on the report, Craig-Hallum analyst George Sutton told investors that the conclusions are consistent with his expectations and substantially de-risk Stamps.com's (STMP) story. Meanwhile, his peer at Citi said he views the report as a "material positive" for parcel pricing. Analyst Christian Wetherbee told investors that the Task Force affirmed his view that the USPS's new business model needs to be structured around parcel and that pricing should be aimed at maximizing profit versus volume. Further, the analyst argued that the initiatives laid out in the report are likely to lead to higher parcel rates, which is a "long-term positive" for FedEx (FDX) and UPS (UPS).

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