Morning Call For Friday, Jan. 26

OVERNIGHT MARKETS AND NEWS

Mar E-mini S&Ps (ESH18 +0.29%) this morning are up +0.35% and European stocks are up +0.42% on optimism in the global economy. GBP/USD moved higher, and European stocks garnered support on strength in the British economy after Q4 UK GDP expanded faster than expected. The markets will scour a keynote address by President Trump at the World Economic Forum in Davos later this morning for clues to U.S. trade policy after the Trump administration ramped up protectionist rhetoric earlier this week. Asian stocks settled mixed: Japan -0.16%, Hong Kong +1.53%, China +0.28%, Taiwan -0.17%, Australia and India closed for holiday, Singapore -0.15%, South Korea +0.39%. China’s Shanghai Composite rose to a new 2-year high as a rally in bank stocks led the overall market higher on earnings optimism. Japan’s Nikkei Stock Index fell to a 2-week low, led by weakness in exporters, after USD/JPY tumbled to a 4-1/2 month low Thursday, which reduces the earnings prospects for exporters.

The dollar index (DXY00 -0.48%) is down -0.50%. EUR/USD (^EURUSD) is up +0.32% on hawkish comment from ECB Executive Board member Coeure who said, “we’ll have to focus more on upside risks” going forward. USD/JPY (^USDJPY) is down -0.07%.

Mar 10-year T-note prices (ZNH18 -0.18%) are down -7.5 ticks.

ECB Executive Board member Coeure said “now there are risks of sluggish growth, risks of prices remaining low, etc. And we’re also slowly moving out of that and looking forward, we’ll have to focus more on upside risks.”

Eurozone Dec M3 money supply rose +4.6% y/y, weaker than expectations of +4.9% y/y and the smallest pace of increase in 5-months.

UK Q4 GDP rose +0.5% q/q and +1.5% y/y, stronger than expectations of +0.4% q/q and +1.4% y/y.

Japan Dec national CPI rose +1.0% y/y, weaker than expectations of +1.1% y/y, but still the largest increase in 2-3/4 years. Dec national CPI ex fresh food rose +0.9% y/y, right on expectations. Dec national CPI ex fresh food & energy rose +0.3% y/y, weaker than expectations of +0.4% y/y.

China Dec industrial profits rose +10.8% y/y, the smallest pace of increase in a year.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) Q4 GDP (expected +3.0% q/q annualized, Q3 +3.2%) and Q4 personal consumption (expected +3.7%, Q3 +2.2%), (2) Dec durable goods orders (expected +0.8% and +0.6% ex transportation, Nov +1.3% and -0.1% ex transportation), (3) Dec wholesale inventories (expected +0.4%, Nov +0.8%), (4) USDA weekly Export Sales, (5) USDA Dec Cattle on Feed.