Monday Watch

Today's Headlines

Bloomberg:

• China Ousted as Asia's No. 1 Buyer of U.S. Commercial Property. Singapore ousted China to become the biggest Asian investor in U.S. commercial property last year. It was the first time since 2012 that the city outspent China, according to data from Real Capital Analytics and Cushman & Wakefield Inc. Deals by Chinese investors plunged 66 percent to $5.9 billion as regulators cracked down on capital outflows.

• China Stock Euphoria Enters New Stage as Laggards Start to Surge.

• Massive Cryptocurrency Heist Puts Spotlight on Exchange Security. The episode, disclosed by Coincheck executives at a hastily arranged press conference on Friday night, comes at an awkward time for Japanese regulators, who began rolling out a new licensing system for cryptocurrency venues just a few months ago. It has heightened calls for stricter oversight and may influence a closely watched debate in neighboring South Korea over whether to ban digital-asset exchanges outright.

• Wynn Macau Shares in Focus After U.S. Rout Following Reports Chairman Sexually Harassed Women. (video)

• Asian Equity Rally Ekes Out More Gains; Bonds Flat. Asian equities nudged higher at the start of Monday trading, building on this year’s strong start that’s pushed the regional benchmark index to a record high as investors bet an expansion in corporate earnings won’t falter any time soon. Gains in stocks in South Korea and Australia on Monday helped extend the MSCI Asia Pacific Index’s rise this year to 7.8 percent, on course for its best month since March 2016. Japanese equities edged higher. The S&P 500 Index surged on Friday to a fresh all-time high. The yen steadied after the Bank of Japan clarified comments from Governor Haruhiko Kuroda in Davos on Friday did not mean a change to its forecast. The dollar dipped. Japan’s Topix index rose 0.1 percent as of 9:08 a.m. in Tokyo. South Korea’s Kospi index gained 0.6 percent. Australia’s S&P/ASX 200 Index climbed 0.3 percent. Futures on Hong Kong’s Hang Seng Index rose 0.3 percent. Futures on the S&P 500 Index were up 0.1 percent after the underlying gauge climbed 1.2 percent Friday.

• Five Things You Need to Know to Start Your Day. (video)

Wall Street Journal:

• The Unseen Toll of a Terror Attack. New York’s December Port Authority bombing killed no one, but witnesses’ psychological pain endures.

• Trump to Soften Tone in State of the Union, Pursuing Immigration Deal. President will give ‘forward-looking’ and bipartisan speech, White House says.

• President Trump Hints at Retaliation Against EU for Unfair Trade Policies. During an interview to be aired later Sunday, the U.S. president said ‘I’ve had a lot of problems with European Union...from a trade standpoint’.

• Do School Vouchers Work? Milwaukee’s Experiment Suggests an Answer. A Wall Street Journal analysis of the school system’s 27-year-old program suggests the concept works best when private institutions limit the number of public students.

• Intel(INTC) Warned Chinese Companies of Chip Flaws Before U.S. Government. Decision to disclose issue to select few customers, including Lenovo and Alibaba, has ripple effects through security and tech industries.

MarketWatch.com:

• Bitcoin and blockchain’s broken promises. Cryptocurrencies in general are based on a false premise. According to its promoters, bitcoin has a steady-state supply of 21 million units, so it cannot be debased like fiat currencies. But that claim is clearly fraudulent, considering that it has already forked off into three branches: bitcoin cash, litecoin, and bitcoin gold. Besides, hundreds of other cryptocurrencies are invented every day, alongside scams known as “initial coin offerings,” which are mostly designed to skirt securities laws. So “stable” cryptos are creating money supply and debasing it at a much faster pace than any major central bank ever has.

Fox News:

• Iran spends billions on weapons programs, terrorism while ignoring Iranians' basic needs, report finds. (video)

CNBC: 

• Earnings have been ‘unambiguously positive,’ and it’s going to get even better, says JPMorgan. (video)

• Trump hits back at Jay-Z by touting black unemployment numbers.

• What to watch from health care earnings.

• Trump gears up for $1 trillion infrastructure plan, but GOP lawmakers push back on the idea of a gas tax.

• 14 money lessons rich parents teach their kids.

• Populist Mexican presidential candidate Lopez Obrador spooking investors as NAFTA talks heat up.

Zero Hedge:     

• Trump Ignores DOJ Warning, Notifies Sessions He Wants FISA Memo Released.

• Gowdy Drops Big Hints About FISA Memo: Dossier Funding, FBI Misuse, And Hillary's Relationship To Chris Steele.

• Mexico Police Find Enough Fentanyl To Kill Millions En Route To US Border.

• Introducing The "Polar Silk Road" - China's Latest Arctic Power Grab.

• DOJ Withholding Over 85% Of Strzok-Page FBI Texts From Congressional Investigators.

• Meet Europe's Latest Threat: She Is A Blue-Eyed Blonde Who Wants "Finland First".

Business Insider: 

• Amazon(AMZN) has created a new computing platform that will future-proof your home.

• Companies like Amazon(AMZN) and Starbucks(SBUX) want to kill cash — and it could be a huge blow to the most vulnerable Americans.

• Trump will reportedly ask for $716 billion in defense spending in 2019 budget.

• Mexico will unleash a new wave of troops to fight crime after a year of record-level violence.

Night Trading

• Asian indices are +.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 62.75 -.75 basis point.

• Asia Pacific Sovereign CDS Index 10.75 +.25 basis  point.

• Bloomberg Emerging Markets Currency Index 76.51 +.04%.

• S&P 500 futures +.05%.

• NASDAQ 100 futures +.17%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (AMG)/4.52

• (D)/.89

• (LMT)/4.03

• (STX)/1.35

• (SOHU)/-1.72

• (CR)/1.17

• (GGG)/.36

• (IEX)/1.07

• (IDTI)/.41

• (SANM)/.48

• (WERN)/.39

Economic Releases
8:30 am EST

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

• Personal Spending for December is estimated to rise +.4% versus a +.6% gain in November.

• PCE Core MoM for December is estimated to rise +.2% versus a +.1% gain in November.
  

10:30 am EST

• Dallas Fed Manufacturing Activity for January is estimated to fall to 25.3 versus 29.7 in December.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The German Import Price report and the Japan Unemployment rate report could also impact trading today.

BOTTOM LINE: Asian indices are 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 week.