Friday Watch

Evening Headlines

Bloomberg:

• Asian Currency Gains Could Fuel the Rally in Local Bonds. The rally in Asia’s local-currency bonds still has juice and the strength in the region’s currencies will support further gains by countering the impact of tighter monetary policies. That’s the message from Ng Kheng Siang, Singapore-based Asia Pacific head of fixed income at State Street Global Advisors. The firm, which has $2.7 trillion in assets, prefers bonds of Malaysia, Thailand and Indonesia, and China, with its deleveraging efforts and the potential to be included in a major bond index, is a longer term play.

• China Crude Oil Production Shrinks. (video) 

• Hackers Have Walked Off With About 14% of Big Digital Currencies. (video) Digital currencies and the software developed to track them have become attractive targets for cybercriminals while also creating a lucrative new market for computer-security firms. In less than a decade, hackers have stolen $1.2 billion worth of Bitcoin and rival currency Ether, according to Lex Sokolin, global director of fintech strategy at Autonomous Research LLP. Given the currencies’ explosive surge at the end of 2017, the cost in today’s money is much higher. “It looks like crypto hacking is a $200 million annual revenue industry,” Sokolin said. Hackers have compromised more than 14 percent of the Bitcoin and Ether supply, he said.

• Asian Stocks Rise, Even in Face of Climb in Yields. (video) The MSCI Asia Pacific Index climbed, led by industrial stocks and consumer staples, while Japanese shares posted the largest gains. Equities in Hong Kong and Sydney were flat, while those in Shanghai advanced. Most major U.S. equity gauges dropped in a choppy session Thursday. Yields on 10-year Treasuries pierced 2.63 percent, within a basis point of the highest since 2014. Japan’s Topix index rose 0.6 percent as of 10:39 a.m. in Tokyo. Hong Kong’s Hang Seng Index were little changed. Australia’s S&P/ASX 200 Index fluctuated and South Korea’s Kospi index added 0.2 percent. Futures on the S&P 500 rose 0.1 percent after the underlying gauge slipped 0.2 percent Thursday, when the Dow Jones Industrial Average retreated 0.4 percent.

• Five Things You Need to Know to Start Your Day.

• JPMorgan(JPM). Boosts Dimon's Pay 5.4% to $29.5 Million for 2017. 

• ETF Bargain Hunters Snag $584 Million of Low-Cost Fidelity Funds. It looks like a big exchange-traded fund investor went out bargain hunting and picked up some sector funds on the cheap. Five of Fidelity Investments’s sector ETFs took in unprecedented amounts of cash Wednesday, totaling about $584 million, according to data compiled by Bloomberg. The funds, which provide exposure to stocks in health care, industrials, financials, consumer discretionary and information technology, are also known for their discounted costs, only charging 8 basis points apiece.

• U.S. Refiners Are Riding High With Strong Margins, Tax Boost.

Wall Street Journal:

• House Passes Stopgap Budget Bill; Senate Resistance Remains as Shutdown Looms. House moves closer to passing spending measure but senators come out against it.

• Six Chinese Ships Covertly Aided North Korea. The U.S. Was Watching. Intelligence gathered by American officials provides what they say is detailed evidence of sanctions violations.

• Tax Reform’s Apple(AAPL) Dividend. $38 billion in taxes finances a lot of Social Security checks.

• SEC Pours Cold Water on Prospect of Bitcoin ETFs. Regulator warns Wall Street not to look for loopholes to offer funds tracking bitcoin.

• Trump Angry at His Chief of Staff Over Comment President ‘Not Fully Informed’ on Border Wall Issue. President tweeted ‘the Wall is the Wall, it has never changed or evolved from the first day I conceived of it’.

• White House Considering San Francisco Fed President John Williams for Fed’s No. 2 Job. Trump administration also has considered Richard Clarida, Lawrence Lindsey and Mohamed El-Erian for vice chairman.

MarketWatch.com

• With the new tax law, you need to update your estate plan.

Fox News:

• The absurdity of government 'shutdowns'. (video)

CNBC:

• Trump says he called and thanked Tim Cook after Apple(AAPL) revealed its US investment plan.

• IBM(IBM) shares fall despite first growth in 23 quarters. (video)

• Apple(AAPL) and others bringing home foreign cash may be a big enough force to boost the US dollar.

• The Dow's 31% gain during Trump's first year is the best since FDR.

• Stock market's value under Trump has grown by $6.9 trillion to $30.6 trillion.

• Football protests could hurt Super Bowl LII viewership. The politicization of football this season may hurt Super Bowl LII viewership, according to two new surveys commissioned by CNBC. Just over half of U.S. adults plan to watch the big game this year, according to a survey conducted this week by Fluent, a data-driven marketing firm. Of the respondents who said they won't watch the game but did last year, a quarter said it's because football has gotten too political.

• Texas Instruments'(TXN) long-time CEO is stepping down after the stock rallied 57 percent in the past year.

Zero Hedge:

• The "World's Most Bearish Hedge Fund" Has A "Stunning" Theory What Happens Next To The Dollar. (graph)

• Chinese Government Propaganda is Being Enthusiastically Embraced at U.S. Universities.

• Why California Has The Nation's Worst Poverty Rate.

• India Test Fires Nuclear-Capable ICBM, Poses Major Threat To China.

• Ex-Twitter(TWTR) Engineer Admits Company Colludes With Oppressive Governments To Ban Users.

• ICE Plans Largest Raid On Northern California Illegals After State Passes Sanctuary Legislation.

• Amazon(AMZN) Unveils 20 City Finalists For HQ2, Expects To Create 50,000 Jobs In Winning City.

• Sweden Is Preparing For A "Civil War": PM Wants To Deploy Army In No-Go Zones.

• Comey's Former Chief Of Staff Testifies On Clinton Email Investigation, Her Exoneration, And More.

• Crypto Comeback Continues As Stocks, Bonds, Dollar Sink. (graph)

Business Insider:

• Some cryptocurrency traders in South Korea took the bitcoin 'bloodbath' to a whole new level.

• American Express(AXP) falls despite earnings beat (AXP).

Night Trading 

• Asian equity indices are unch. to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 62.0 +.5 basis point. 

• Asia Pacific Sovereign CDS Index 10.5 unch.

• Bloomberg Emerging Markets Currency Index 75.78 +.08%.

• S&P 500 futures +.08%.

• NASDAQ 100 futures +.12%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (FHN)/.29

• (KSU)/1.36

• (RF)/.26

• (SLB)/.45

• (STI)/1.05

Economic Releases

10:00 am EST

• The Preliminary Univ. of Mich. Consumer Sentiment Index for January is estimated to rise to 97.0 versus 95.9 in December.

Upcoming Splits

• None of note

Other Potential Market Movers

• The govt. funding deadline and the UK retail sales report could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by technology 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 100% net long heading into the day.