Thursday, January 19, 2017

Friday Watch

Evening Headlines
  • Mnuchin Says He’ll Tag China an FX-Manipulator If Warranted. U.S. Treasury Secretary nominee Steven Mnuchin said during his Senate confirmation hearing he’s willing to label China as a currency manipulator if warranted, after President-elect Donald Trump backed away from his pledge to do so immediately. Mnuchin said “I would” when asked by Senator Robert Casey on Thursday whether he would recommend naming the Asian country a manipulator if it deserved that label. Trump had already softened his stance on China’s currency policy, saying in an interview this month with the Wall Street Journal that he wouldn’t name the country a manipulator on his first day in office, as previously promised. “I would talk to them first,” Trump was cited as saying by the Journal. “Certainly they are manipulators. But I’m not looking to do that.”
  • China Ends Year of Stabilization on a High as Consumers Splurge. China’s economy accelerated for the first time in two years in the final quarter of 2016, cementing an economic stabilization that’s giving leaders a buffer as they transition to neutral policy and prepare for potential trade tensions with Donald Trump. Gross domestic product increased 6.8 percent in the three months through December from a year earlier, compared with a 6.7 percent median estimate in a Bloomberg survey. The full-year expansion of 6.7 percent was the slowest since 1990, but still landed right in the middle of the 6.5 percent to 7 percent official target.
  • Davos Set Learns to Love Donald Trump on Eve of Inauguration. The investors and executives who throng Davos every January are many things. But above all, they’re rich. And they’re starting to see plenty of opportunities to stay that way under Donald Trump. At coffee bars and cocktail parties in the Swiss town, which hosts the World Economic Forum’s annual meeting this week, conversation has often turned to how money can be made from the rise of a populist firebrand. Amid all the panel-talk of reducing inequality and re-invigorating the middle class, the Davos set is hard at work looking for ways to safeguard and expand its wealth even as anti-establishment movements roil global politics. That means enjoying the benefits of a Trump-driven boom in the U.S., where the business world is celebrating his pledges to slash taxes and loosen regulations. Stock markets have surged to near record highs, and banks like Goldman Sachs Group Inc. and Citigroup Inc. have reported strong earnings.
  • Yellen Says Fed Not Behind the Curve, Backs Gradual Rate Rises. (video) Federal Reserve Chair Janet Yellen backed a strategy for gradually raising interest rates, arguing that the central bank wasn’t behind the curve in containing inflation pressures but nevertheless can’t afford to allow the economy to run too hot. “I consider it prudent to adjust the stance of monetary policy gradually over time,” she said Thursday in the text of remarks to the Stanford Institute for Economic Policy Research in California, while stressing the considerable doubt surrounding that outlook.
Wall Street Journal:
Zero Hedge:
Busines Insider:
Night Trading 
  • Asian equity indices are -.50% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 116.0 -.25 basis point.
  • Asia Pacific Sovereign CDS Index 34.75 +.75 basis point.
  • Bloomberg Emerging Markets Currency Index 70.01 +.13%
  • S&P 500 futures +.09%. 
  • NASDAQ 100 futures +.14%.
Morning Preview Links

Earnings of Note

  • (CFG)/.52
  • (GE)/.46
  • (KSU)/1.16
  • (PG)/1.06
  • (RF)/.23
  • (COL)/1.14
  • (SLB)/.27
  • (STI)/.88
Economic Releases
  • None of note
Upcoming Splits
  • (OTEX) 2-for-1
Other Potential Market Movers
  • The Presidential Inauguration, Fed's Harker speaking and the UK retail sales report could also impact trading today.
BOTTOM LINE:  Asian indices are mostly lower, weighed down by commodity and industrial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 50% net long heading into the day.

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