Five Things You Need to Know to Start Your Day
Trump stands his ground in State of the Union address, banks face stressful tests, and Brexit's still stuck on the same thing. Here are some of the things people in markets are talking about today.
President Donald Trump’s State of the Union address talked up bipartisanship, while sticking with White House demands to build a border wall and calling for an end to “partisan investigations.” Trump reiterated a trade deal with China would need to include structural change on the Asian nation’s part. There was no announcement that he’ll use emergency powers to get funding for the wall, which may increase the chances of another shutdown in 10 days should the president force the issue again. House Speaker Nancy Pelosi seemed less than impressed with the contribution.
Wall Street’s banks face a particularly tough stress test this year as the Federal Reserve will require them to show how they would be able to keep lending during a harsh global recession. The scenario includes unemployment jumping by more than 6 percentage points and house prices falling by more than 25 percent. There is one silver lining for Wall Street: Regulators have said that firms will get much more transparency on how the tests work.
Same old problem
British Prime Minister Theresa May is seeking an urgent solution to the Northern Irish border problem that would be acceptable to both EU leaders and her own party as time runs out to find agreement ahead of the March 29 deadline for Brexit. May is in Belfast today ahead of a trip to Brussels tomorrow, which is expected to yield very little. Businesses in the U.K., meanwhile, are stepping up preparations for a no-deal scenario, while Bloomberg’s barometer of how the country’s economy is responding to the decision to leave the EU is at its lowest level since the immediate aftermath of the vote.
Markets still quiet
Overnight, the MSCI Asia Pacific Index was unchanged with much of the region remaining shut for Lunar New Year celebrations. Japan’s Topix index closed 0.1 percent lower as the yen strengthened slightly against the dollar. In Europe, the Stoxx 600 Index was broadly unchanged at 5:50 a.m. Eastern Time as investors saw few reasons for a move in either direction. S&P 500 futures edged down a little, the 10-year Treasury yield was at 2.686 percent and gold was a slightly lower.
At 8:30 a.m, the shutdown-delayed November trade balance is published, with new data on productivity -- missing some major components -- due at the same time. This evening Fed Vice Chairman for Supervision Randal Quarles will discuss the latest stress tests at an event in New York, while Fed Chair Jerome Powell is hosting a town hall with educators in Washington. Earnings from General Motors Co. and Chipotle Mexican Grill Inc. are released today.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Wall Street veteran says U.S.-China deal will be sell trigger.
- How bad is China’s economic slowdown? It depends on what you sell.
- Brexit or not, Britain’s real economic threat is here to stay.
- IMF floats dual money to allow much deeper negative rates.
- Twitter’s Jack Dorsey says the only crypto he’s holding is Bitcoin.
- Cannabis smoking associated with higher sperm count, study finds.
- Stock market shows greater reaction to forecasts by analysts with favorable surnames.
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