(JPM on market focus) The market is watching three unfolding processes – 1) Trump/Ryan’s progress on the “Big 3” of tax reform, deregulation, and infrastructure spending (nothing incremental occurred on this front in the last 12-18 hours), 2) whether nominal economic growth can continue improving (the flash PMIs from Europe and Japan were mostly healthy this morning), and 3) the CQ4 earnings season (so far no major controversies in either direction).
(Reuters) Britian’s Supreme Court has ruled that triggering Article 50 will require a parliamentary vote. However importantly, no additional requirements on the content of the bill were stipulated, which indicates that the trigger of Article 50 will likely proceed as planned by end of Q1. Bottom line–May’s Brexit plans unlikely to be slowed by Article 50 defeat.
(Reuters) “Some prominent US fund managers” don’t think the ACA will be changed all that much despite pledges to do so by Trump and Congressional Republicans. “As a result, these fund managers say they are buying shares of hospitals, health insurance companies and biotech firms they see as unfairly hit by political uncertainty.
(Reuters) Fed’s Lacker says he worries about falling behind the curve and wants to tighten at a faster pace to avoid an inflation.
(Bloomberg) — It’s time to talk about the balance sheet. Eight years after the Federal Reserve launched the first of three controversial bond-buying campaigns to help save the U.S. economy, its holdings are stuck at $4.5 trillion, and the question of when to let them shrink is beginning to simmer. Several policy makers have pushed publicly to get the debate started. How the discussion plays out could have big implications for the pace of future interest-rate hikes and for the dollar. “They should start framing this for the market,” said Michael Gapen, chief U.S. economist at Barclays Plc. Investors need to hear what the “balance of policy” will be between the balance sheet and the central bank’s main tool, the federal funds rate, he said.
(Bloomberg) — Commodities will be supported in the months ahead by a global rebound spanning the U.S., Europe and China that’s buttressing worldwide demand for raw materials, according to Goldman Sachs Group Inc. “We’re seeing a cyclical uptick in global economic activity and that’s driving demand, not only for oil but all commodities,” Jeffrey Currie, head of commodities research, said in Hong Kong on Tuesday. “That’s the core reason why we upgraded our outlook on commodities to overweight.” :The impact of China’s stimulus will probably last well into the first half of 2017 while policies from new U.S. President Donald Trump may reinforce inflationary pressures, aiding raw materials.” “U.S. and China are focal points where we’re seeing the uptick, but even the outlook for Europe is much more positive than what people would have thought six months to a year ago,” he said. “It’s not what’s happening on the supply side but rather what’s happening on the demand side.”.