Monday Watch

Today's Headlines

Bloomberg:

• North Korea Fires Multiple Missiles Which Fall Into Japan's EEZ. North Korea fired four ballistic missiles early Monday with three falling into Japan’s exclusive economic zone, the government in Tokyo said. South Korea’s Yonhap News said the regime may have launched an intercontinental ballistic missile, though there was no official confirmation of that. The move comes as South Korea and the U.S. undertake annual military drills that Pyongyang has called a prelude to an invasion.

• Draghi Seen Keeping Cool on Stimulus Drive Amid Inflation Surge. A timeline for the end of European Central Bank stimulus is taking shape among economists. Policy makers will wait until at least June before upgrading their assessment of the risks to the euro-area recovery and won’t announce another reduction in bond purchases until September, according to most respondents in a Bloomberg survey. Tapering quantitative easing and starting to raise interest rates will take until at least the end of next year and possibly into 2019.

• Coming Home to Roost: Chinese Property Investors Head for U.S. Exit. But Hong Kong might not be on their wish list. Chinese real-estate investors are losing interest in the U.S. as their concern over yuan depreciation eases and questions swirl around President Donald Trump's stance on protectionism.

• China Considers Dialing Back Electric Car Quota After Opposition. China is considering dialing back or delaying proposed measures aimed at pushing automakers to produce more electric vehicles, after industry feedback that the targets are overly ambitious.

• Wave of Islamic State Car Bombs Targets Iraqi Troops in West Mosul. Iraqi troops encountered the "heaviest" clashes yet with Islamic State group fighters Sunday in western Mosul since the start of the new push more than two weeks ago, according to a senior commander. Maj. Gen. Haider al-Maturi of the Federal Police Commandos Division told The Associated Press that IS militants dispatched at least six suicide car bombs, which were all destroyed before reaching the troops. The militants, he said, are moving from house to house and deploying snipers.

• How the Rest of the World Paved the Way for a March Fed Hike. U.S. data has been good enough to allow the Fed to hike, and global risks haven't soured the outlook.

• Li's Risks, Yellen's Optimism Make for Mixed Open. Most recent trading on futures contracts from Friday: Nikkei 225 Stock Average dropped 0.5 percent. Australia’s S&P/ASX 200 Index and Hang Seng futures both rose 0.4 percent.

Wall Street Journal:

• China’s Premier Maps Out Cautious Economic Course. Li Keqiang signals government is shifting tack after credit and infrastructure spending propped up economic growth but caused housing prices and debt to balloon.

• Conservative Groups Jeopardize GOP Plan to Repeal Affordable Care Act. Conservative groups pushing back against Speaker Paul Ryan’s plan. 

• Bullish Commodity Bets Hit Record Highs as Investors Seize on Signs of Growth. Rising interest in commodities reflects a sharp turnaround from a year ago.

• The ‘Rock Star’ Librarians Who Choose What Your Kids Read. Current and former elementary-school librarians with big social-media followings are exerting considerable sway over what kids read.

• States Ease Restrictions on Voting by Felons. Florida proposal to lift its lifetime ban would add to a nationwide trend.

• Iraqis Tell of Islamic State Brutality in Mosul. Militants deploy booby traps, use human shields as government forces advance in the city.

Fox News:

• Trump calls for congressional probe into possible wiretapping of his campaign. (video)

• ObamaCare ‘secret’ bill details will soon be made public, House Republicans say. (video)

CNBC:

• ‘March 4 Trump’ supporters gather in cities across the nation.

• Hundreds of mobile websites and apps are found to leak personal info.

• China to strengthen defenses, but budget details excluded. China pledged more support to its military on Sunday including strengthening maritime and air defenses amid efforts to safeguard sovereignty, but unusually did not give spending figures for 2017 despite promises of transparency.

• How 'Made in the USA' can see a renaissance, and what will (and won't) change. (video)

Zero Hedge:

• White House Demands Congressional Probe Whether Obama Ordered Wiretaps.

• FBI Director Asked DOJ To Publicly Reject Trump Wiretapping Claims.

• Newsmax CEO: "I Spoke To Trump About The Wiretap Story, I Haven't Seen Him This Pissed Off In A Long Time".

• North Korea Fires Four Missiles; Three Land Inside Japan's Exclusive Economic Zone.

• China Cuts Economic Growth Forecast In Annual Report: Here Are The Key Changes.

• Hedge Fund CIO: "This Is Why So Many Intelligent People Get Destroyed By Market Trends".

• The Most Un-Fun Bubble Ever. (graph)

• The Chart That Democrats Don't Want You To See. (graph)

• Deutsche Bank To Raise $8.5 Billion In New Capital, Announces Major Restructuring.

• Le Pen Odds Hit 6-Week Low As Fillon Shuns Establishment, Confirms He's Staying In French Election. (graph)

• This House Was 3D-Printed In Under 24 Hours At A Cost Of Just $10,000. (video)

• Visualizing The Worrying Decline Of Freedom Around The World. (graph)

• The Robots Sent Into Fukushima Just Keep Dying.

Business Insider:

• Dying shopping malls are wreaking havoc on suburban America.

• British chancellor on Brexit talks: 'The mood music is changing'.

• Stocks have stopped caring about rate hikes.

Reuters:

• Erdogan compares German conduct with Nazi period. President Tayyip Erdogan accused Germany of behaving as in Nazi times in cancelling political meetings of resident Turks that were due to be addressed by Turkish officials. German authorities withdrew permission last week for two rallies by Turkish residents in German cities amid growing public outrage over Ankara's arrest of a Turkish-German journalist, dragging bilateral ties to a new low.

Night Trading

• Asian indices are -.50% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 94.75 +1.0 basis point.

• Asia Pacific Sovereign CDS Index 26.5 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 71.15 -.08%.

• S&P 500 futures -.39%.

• NASDAQ 100 futures -.36%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (KFY)/.53

• (ALOG)/.99

• (CASY)/.89

• (DCO)/.45

• (THO)/1.22 

Economic Releases
10:00 am EST

• Factory Orders for January are estimated to rise +1.0% versus a +1.3% gain in December.

• Final Durable Goods Orders for January are estimated to rise +1.0% versus a prior estimate of a + 1.8% gain.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kashkari speaking, Deutsche Bank Media/Intenet/Telecom Conference, Cowen Health Care Conference, Sandler O'Neil Financial Services Conference and the (FAST) Feb. sales report could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology 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 75% net long heading into the week.