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23Jan2018 Pre-Market Commentary: Wall Street To Open Lower After Major Indexes Hit Another All-time High, WTI Crude Trending Up Into The 64 Handle, Goldman: Risk Level At All-Time Level

Written by Gary

US stock market index futures are looking to take a brief breather today by opening fractionally lower (SPY -0.1%). The next catalyst for equities could come from the slew of big earnings set to be unveiled this week.


Here is the current market situation from CNN Money

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. funding deal keep stocks bulls on the charge

LONDON (Reuters) - World stocks hit another all-time high on Tuesday, as relief at a temporary U.S. government funding deal boosted already sky-high confidence about global growth and corporate earnings.

Trump slaps steep U.S. tariffs on imported washers, solar panels

WASHINGTON/LOS ANGELES (Reuters) - U.S. President Donald Trump slapped steep tariffs on imported washing machines and solar panels on Monday, giving a boost to Whirlpool Corp and dealing a setback to the renewable energy industry in the first of several potential trade restrictions.

J&J results top estimates, takes $13.6 billion tax charge

(Reuters) - Johnson & Johnson reported adjusted quarterly profit and revenue slightly above analysts' expectations on Tuesday, as the healthcare company gained from strong demand for new drugs including cancer and psoriasis treatments.

JPMorgan rolls out $20 billion investment plan

(Reuters) - JPMorgan Chase & Co unveiled a $20 billion investment plan on Tuesday to increase wages, hire more, open new branches and expand its business as it takes advantage of sweeping changes to the U.S. tax law and improved regulatory environment.

P&G profit falls on beauty brands sale, tax charge

(Reuters) - Procter & Gamble Co reported a 68 percent drop in quarterly profit on Tuesday, due to the sale of a chunk of its beauty brands to Coty Inc last year and a charge related to the recent U.S. tax overhaul.

Futures higher on strong earnings, global growth hopes

(Reuters) - U.S. stock futures were slightly higher on Tuesday as a bunch of upbeat corporate results and robust global growth expectations lifted sentiment.

Verizon quarterly profit jumps, helped by tax reform

NEW YORK (Reuters) - Verizon Communications Inc on Tuesday reported a jump in quarterly profit, helped by tax reform and the addition of phone subscribers.

UK regulator puts brake on Murdoch's $15.7 billion Sky deal

LONDON (Reuters) - Rupert Murdoch's $15.7 billion takeover of Sky is not in the public interest and should be blocked unless a way is found to prevent the media tycoon from influencing the network's news output, Britain's regulator said.

SocGen CEO expects better market conditions in 2018 and beyond

DAVOS (Reuters) - Societe Generale chief executive Frederic Oudea is "very positive" about the French bank's set-up in capital markets and expects to see better market conditions in 2018 and beyond, he told Reuters on Tuesday.

What Wall Street Thinks About The Impact Of Trump's Tariffs

On Monday afternoon, the U.S. Trade Representative's office announced the U.S. will impose new duties of as much as 30% on foreign-made solar equipment and as high as 50% on imported washing machines. Still, the MSCI Asia Pacific Index of stocks rose for a third day, while most emerging currencies in the region advanced.

While President Donald Trump's decision to slap tariffs on imported solar panels and washing machines has a limited immediate market impact in Asia, it will probably have bigger implications on the region's trade and economic outlooks, according to various analysts.

Below are comments from analysts, compiled courtesy of Bloomberg:

Linus Yip (chief strategist at First Shanghai Securities in Hong Kong)



Investors are not too worried about the news because these sectors have already discounted possible tariff moves by Trump; implementation isn't a shock or a surprise to them.

Impact should be very limited given the news has been in the market for a long time.

Robin Xiao (analyst at CMB International Securities in Hong Kong)



Major solar cells and module exporters will be affected by the tariff, especially the leading names such as Jinko, Trina, Canadian Solar, JA etc., but the impact will probably be limited in the short term since the tariff is well expected from the Trump administration's trade attitude.

Co. expects solar downstream demand will maintain its growth momentum though U.S. demand may decline on the tariff impact, as cost reduction measures are still on track towards grid-parity.

Toru Nishihama (EM economist at Dai-ichi Life Research Institute in Tokyo)



"If U.S.-China relationship sours from this tariff deal, affecting China's trade, it will also have quite a significant implication on Southeast Asia, whose shipments to China is very large."

...

Goldman: "Risk Appetite Is Now At Its Highest Level On Record"

Two weeks ago, we showed that as a result of growing market euphoria and pervasive asset growth, Goldman was getting worried. Speaking at a conference in London, Goldman MD Christian Mueller-Glissmann warned investors, "valuations are at very high levels. And that concerns us when it comes to making progress in stocks, unless you maintain a very high level of optimism." And as we showed then, the firm's aggregate risk appetite index reached record highs in December - the same peak reached in 1999/2000 and 2007, just before the market crashed.

Fast forward to today, when Goldman's Ian Wright provides an update on risk sentiment in the context of the global market rally that has accelerated since Goldman's initial concerns on January. It will hardly come as a surprise that risk sentiment as calculated by Goldman has also increased.

In fact, it has never been higher.

First, a quick recap of what has happened so far in 2018 from Wright:

Global equities are having their best start to a year on record. MSCI AC World ($) is up 5.1% so far this year, which ranks as its best performance at this point in a year dating back to 1987.

asd

Even more impressive is that risk-adjusted returns for MSCI AC World ($) are also the highest since we have data, and more than twice the next closest year since 1 ...

Frontrunning: January 23



Globalisation is losing its luster, India's Modi tells Davos summit (Reuters)

Centrists Outflanked Party Leadership to End Government Shutdown (WSJ)

UK regulator rules against Murdoch takeover of Sky (FT); UK Deals a Blow to Fox's $16 Billion Takeover of Sky (WSJ)

Manufacturers Fight Over New Tariffs' Effect on U.S. Jobs (WSJ)

Samsung says U.S. tariffs on washers a great loss for American consumers (Reuters)

Here's What Trump's Tariffs Are Doing to Markets (BBG)

U.S. solar panel import tariff to hit European, Asian manufacturers (Reuters)

As Trump Heads to Davos, the Question Is Which Trump Will It Be? (WSJ)

Bitcoin May Split 50 Times in 2018 (

S&P Futures Suddenly Slide Amid Growing Trade War Fears

After earlier tracking the latest daily rally in global equities amid surging investor optimism, rising earnings and a spending bill to end the U.S. government shutdown which saw Asian stock hit new all time highs, US futures encountered an unexpected air pocket, with the E-mini sliding as much as 10 points from session highs.

asd

There was no immediate catalyst for the move although the previously noted sharp move lower in the USDJPY, which dropped below 110.40 after trading above 111 following Tuesday's BOJ announcement, may have been a factor behind the move.

asd

Furthermore, as some trading desks point out, this latest risk off move is not unique to USDJPY, with US yields dipping lower, gold popping while S&P futs, which seemed to lead the move, slipped ...

Outsourcers Still Susceptible to Changes in the Political Weather

Shares in big Indian outsourcing firms like Infosys have been on a roll. The ongoing immigration debate in the U.S. is a looming cloud.

Cartier-Owner Richemont Bets Big on Online Bling

Would you buy a $100,000 watch online? Richemont wants to buy out its fellow shareholders in Yoox Net-a-Porter, because for more people, the answer is yes.

Netflix Says Catch Me if You Can

Netflix has set a new subscriber record, with growing viewers in global markets.

Bond Report: Treasury yields pull back slightly as investors focus on economy

U.S. Treasurys see some cautious buying on Tuesday, pushing yields lower, a day after President Donald Trump signed legislation to temporarily end a multiday, partial shutdown of the government.

The Tell: Stock market headed for 'nasty surprise' if this signal proves correct

Anticipating a cut in U.S. corporate tax rates, Wall Street analysts late last year ratcheted up their earnings estimates for 2018, forecasting an 18% increase in profits, but declining cash-flow growth remains problematic for markets, according to Société Générale's Andrew Lapthorne.

CryptoWatch: Goldman issues a warning on bitcoin—and an even bigger warning on Ethereum

The chorus of bitcoin bears is growing louder by the day.

Earnings Summary for Today

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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