Tuesday Morning Reads
- Top 5 Stocks 2018
- 2018 Outlook
- Ethereum Just Posted a Fresh All-Time High
- Squeeze on Resources
- China Bulls Out in Force as Stocks
- Bad News For Cashiers
- Toasts to the Deals of 2017
- What Should Worry Investors in 2018?
- Looking Ahead to 2018
- Futures start year on the right foot
- Eurozone factory growth at record high
- Search underway for next NY Fed chief
- A 'cryptoruble' is in the making
- Happy new year at Deutsche Bank
- Iran unrest lifts crude; prices above $60
- BP sees $1.5B charge on U.S. tax reform
- U.S. testing flying aircraft carriers
With the first trading session of the year on deck, investors are sketching their market predictions for 2018. Will U.S. stocks keep rising? Which sectors will be hot? Tax bill benefits or debt ceiling worries? U.S. mid-term elections? Will the oil rally continue? Cryptocurrency surprises? Next steps for monetary policy? Dollar downturn? Brexit and NAFTA? Other trade agreements? How will the second year of Trump's presidency shape the markets? Any other stock-related tea leaves?
Asian indexes were mostly firmer in the first trading session of the year as data showed factories across the continent ending 2017 on a strong note. The China Caixin/Markit Manufacturing PMI for December came in at 51.5, up from 50.8 in November, due to strong performances in both output and new orders. Factory activity in India also scored multi-year highs, while Taiwan posted its highest level since at least 2015.
Eurozone manufacturers ended 2017 by ramping up activity at the fastest pace in more than two decades. IHS Markit's December final manufacturing PMI for the bloc was 60.6, matching an earlier preliminary reading and above November's 60.1. "Forward-looking indicators bode well for the new year: new orders rose at a near-record pace, while purchasing growth hit a new peak," said Chris Williamson, chief economist at IHS Markit.
The search to replace New York Fed President William Dudley has begun, with his retirement slated for mid-2018. The hunt is being closely watched as the appointment comes with a permanent vote on monetary policy. According to Bloomberg, the long list includes outgoing dean of NYU's Stern School of Business Peter Blair Henry, New York Fed insider Simon Potter and other previous senior Fed employees like Brian Sack and Nellie Liang.
More than a dozen people have died in the demonstrations against Iran's government and a clerical elite, which began Thursday and have drawn in tens of thousands of people. Those protesting the government are frustrated with the economy, which has suffered rising prices and high unemployment, as well as expensive proxy wars in Syria, Iraq and Yemen. Warning of a crackdown, authorities have blocked access to the Telegram messaging app and Instagram.
Crude oil benchmarks, Brent and WTI, have both started the year above $60 per barrel for the first time since January 2014. "Growing unrest in Iran set the table for a bullish start to 2018," the U.S.-based Schork Report said in a note to clients. Iran is the third-largest producer in OPEC, which agreed last year to extend its oil output cuts through Dec. 31, 2018.
Meanwhile, the North Sea's Forties Pipeline System - one of the world’s most important crude oil conduits - is fully back in business after being shut last month due to the discovery of a hairline crack. "All restrictions have been lifted and virtually all platforms are now on line," operator Ineos said in a statement. The company bought the pipeline system from BP in late October.
In his annual New Year's Day address, Kim Jong-un warned the U.S. that he has a "nuclear button" on his desk, but offered an olive branch to South Korea, saying he was "open to dialogue." Seoul responded to the remarks, suggesting high-ranking government talks next week that will likely focus on bringing a North Korean delegation to the Pyeongchang Winter Olympics.
More illicit oil transfers? South Korean authorities have seized a Panama-flagged vessel suspected of transferring oil products to North Korea in violation of international sanctions. It follows reports that Russian tankers supplied fuel to North Korea on at least three occasions in recent months by transferring cargoes at sea, as well as the seizure of the Hong Kong-flagged Lighthouse Winmore.
Russia is exploring ways to create a "cryptoruble" that could help it circumvent Western sanctions. "This instrument suits us very well... We can settle accounts with our counterparties all over the world," said Sergei Glazev, an economic adviser to Vladimir Putin. It would be "the same ruble, but its circulation would be restricted in a certain way," allowing the Kremlin to track its every move.
Star Wars: The Last Jedi became the highest-grossing movie of 2017 on New Year's weekend, giving Disney (NYSE:DIS) another banner year at the box office. The studio has three titles in last year's top-five grossing films including Beauty and the Beast and Guardians of the Galaxy Vol. 2. Grossing over $1B worldwide, The Last Jedi has yet to open in China, the world’s No. 2 box-office market.
Happy New Year... Bonuses and pay raises are back at Deutsche Bank (NYSE:DB) as Germany's biggest lender emerges from its most turbulent period. It's in stark contrast with 2017, which began with CEO John Cryan abolishing 2016 performance-related bonuses for many senior staff, as well as cutting the investment bank's bonus pool.
Siemens will test the appetite of sovereign wealth funds ahead of next year's planned listing of its healthcare unit, which is expected to be valued at around €40B. Siemens (OTCPK:SIEGY) is expected to sell 15%-25% of Healthineers, implying stock worth €6B-€10B could be sold - Germany's biggest share offering since Deutsche Telekom (OTCQX:DTEGY) in 1996.
While the holiday season is typically a time for retailers to blanket the airwaves with commercials, Sears Holdings (NASDAQ:SHLD) hasn't run paid national television commercials since late November, according to ad research firm iSpot. That compares with about $8.4M the Sears brand spent on national TV ads in December last year and the roughly $6.5M Kmart shelled out during the same period.
Pokemon Go is finally set to make its debut in China after developer Niantic struck a partnership with local games company NetEase (NASDAQ:NTES). Alongside a new "augmented reality" Harry Potter game, Niantic is hoping the Nintendo-backed (OTCPK:NTDOY) app's launch in the world's largest mobile market will help it return to growth after revenues dropped in 2017.
Macau casino stocks tumbled overnight after the territory's gaming revenue rose almost 15% in December to 22.7B patacas ($2.8B), missing analyst estimates of a 20% increase. However, appetite for gambling as a whole seemed to recover in 2017. Figures from Macau's Gaming Inspection and Coordination bureau showed revenues last year climbing 19% to 265.7B patacas ($33B).
Following a major tax overhaul, BP expects a positive impact on future post-tax earnings from the U.S., but estimated a one-off non-cash charge of about $1.5B on 2017 fourth-quarter results. Last week, Shell (RDS.A, RDS.B) said it expected the U.S. tax reforms to have a "favorable" impact on its operations, but added that the change would hit Q4 earnings.
The Gremlins are coming! After eliminating Lockheed Martin (NYSE:LMT) and Kratos (NASDAQ:KTOS) from its program to develop a "flying aircraft carrier," DARPA is narrowing in on the prototypes of privately held Dynetics and General Atomics. Phase 3 will decide on a contractor to build swarms of killer drones - launched from a transport aircraft - in 2019. The drones would have a lifetime of around 20 uses and reach targets of as much as 300 miles away.
In Asia, Japan -0.1%. Hong Kong +2%. China +1.2%. India flat.
In Europe, at midday, London -0.4%. Paris -0.9%. Frankfurt -0.7%.
Futures at 6:20, Dow +0.1%. S&P +0.2%. Nasdaq +0.1%. Crude +0.4% to $60.63. Gold +0.3% to $1313.10. Bitcoin +1% to $13546.
Ten-year Treasury Yield +2 bps to 2.43%