Monday Watch

Today's Headlines

Bloomberg:

• Saudi King, Trump Agree to Tackle Iran's Influence, Boost Ties. Donald Trump and Saudi Arabia’s King Salman agreed to bolster economic ties, anti-terrorism efforts and tackle Iran’s “destabilizing regional activities” in a call held amid growing criticism over the U.S. president’s move to block immigration from seven predominantly Muslim countries. The two leaders “agreed on the importance of strengthening joint efforts to fight the spread of radical Islamic terrorism and also on the importance of working jointly to address challenges to regional peace and security, including the conflicts in Syria and Yemen,” the White House said. The king agreed to support “safe zones in Syria and Yemen, as well as supporting other ideas to help the many refugees who are displaced by the ongoing conflicts,” according to the statement.

• German Pride Shifting to Frustration in Role as Motor of Europe. Germany is cursed by its own economic strength. For eight years, the nation of 83 million people has been the euro area’s growth driver. Now it’s at the forefront of the currency bloc’s reflation, with price increases potentially exceeding 2 percent, and dissatisfaction with the European Central Bank has morphed into outrage. Critics and media are slamming the institution’s monetary stance -- set to support not just Germany but the entire 19-nation region -- as mainstream parties struggle to contain a surge in populism ahead of national elections. Finance Minister Wolfgang Schaeuble has warned that higher inflation could cause “political problems,” and German monetary officials are urging their peers to start devising an exit strategy from unconventional stimulus.

• Dollar Slips After Trump Move, Asia Stocks to Fall. The dollar headed lower and Asian stocks signaled a weaker start to the week as traders digested the tensions sparked by Donald’s Trump order halting some immigration, a move that’s ignited opposition from world leaders. The greenback weakened against all its major peers in early Asian trading. Equity-index futures in Japan and Australia dropped, while markets in Hong Kong, China, Malaysia, Korea, Singapore, Taiwan and Vietnam are among those closed for holidays. Australian 10-year bonds climbed.

• Kuwait Extends World-Topping Rally as Traders Dismiss U.S. Ban. Kuwait stocks, the world’s best performers this year, extended a rally to an 18th day, the longest winning streak in over a decade, as the country moved a step closer to a debut sale of dollar bonds. Gulf markets didn’t react to a U.S. travel ban on seven mainly Muslim countries. The Kuwait Stock Exchange Index advanced 1.3 percent to 6,943.24 on Sunday, the highest level since November 2014. The Bahrain Bourse All Share Index finished at the highest level since 2015 and Oman’s MSM30 Index added 0.2 percent. Kuwait picked six banks to advise on its first international debt sale as the OPEC member shores up public finances after the slump in oil prices.

Wall Street Journal:

• Donald Trump’s Immigration Order Sparks Confusion, Despair at Airports. Scientists, business travelers, grandmothers among those banned from entering; 375 blocked Saturday include green-card holders. Scientists, business travelers and grandmothers were among those trapped at U.S. airports or diverted in transit to the U.S. Saturday as the impact of an executive order reverberated around the globe. Citing security concerns, President Donald Trump late Friday suspended the entire U.S. refugee program for four months and banned for 90 days entry into the U.S. of nationals from Iran, Iraq, Libya, Somali, Sudan, Syria and Yemen...

• Fed Grapples With Massive Portfolio. Years after the financial crisis, central bank considers what to do with holdings of long-term bonds and other assets.

• Small Businesses Uneasy Over Border-Adjustment Tax Plan. Owners say they may have to raise prices, lay off workers; exporters expect to benefit.

MarketWatch.com:

• Earnings releases are still a confusing mess, and it’s investors who pay the price.

Barron's:

• Had bullish commentary on (LM), (BMY), (ABCO), (ANTM), (MGA), (SYNT), (BLUE), (LLY) and (CVS). 

• Had bearish commentary on .

Fox News:

• Senate Democrats bash Trump's immigration ban; emotional Schumer vows fierce Hill opposition. (video)

• White House backs Trump's decision to include strategist Bannon at national security meetings. (video)

CNBC: 

• Trump: America 'proud nation of immigrants', says executive order 'is not about religion'.

• Wall Street veteran Art Cashin finds the rally ‘discomforting,’ here’s why. (video)

Zero Hedge:

• Here Are The Latest Updates On Trump's Refugee Ban.

• "This Is Not A Muslim Ban" - President Trump Confirms Policy Is Similar To Obama's 2011 Iraqi Refugee Ban.

• "I'm A Woman Who Went To The Women's March And The March For Life. The Differences Were Stunning".

• Federal Judge Grants Partial Block Of Trump Immigration Order.

• War With US Becoming A "Practical Reality" Chinese Military Warns.

• The Trap Is Set: "Both Sides Are Utterly Unprepared For What's Coming".

• Why Unwinding The Fed's Balance Sheet Could Get Messy. (graph)

Business Insider: 

• There are a lot of problems with Trump's 20% border tax idea.

• Apple’s(AAPL) hidden multi-billion dollar business could be the star of Tuesday's earnings.

Night Trading

• Asian indices are -1.0% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 111.25 -.5 basis point.

• Asia Pacific Sovereign CDS Index 32.25 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 70.46 +.04%.

• S&P 500 futures -.31%.

• NASDAQ 100 futures -.33%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (AMG)/3.70

• (CR)/.98

• (GGG)/.86

• (IEX)/.93

• (SANM)/.67

• (WERN)/.26

Economic Releases
8:30 am EST

• Personal Income for December is estimated to rise +.4% versus unch. in November.

• Personal Spending for December is estimated to rise +.4% versus a +.2% gain in November.

• Real Personal Spending for December is estimated to rise +.3% versus a +.1% gain in November.

• The PCE Core MoM for December is estimated to rise +.1% versus unch. in November.

10:00 am EST

• Pending Home Sales MoM for December are estimated to rise +1.5% versus a -2.5% decline in November.
  

10:30 am EST

• Dallas Fed Manufacturing Activity for January is estimated at 15.5 versus 15.5 in December.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone CPI report and the Japan Industrial Production report could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighted down by commodity and industrial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the week.