It’s all about earnings and the inauguration as traders get cracking after the holiday weekend.
A landmark Brexit speech and the Davos hootenanny are also helping to wake up anyone who remembered the “I have a dream” man by sleeping in, as eToro analysts put it.
The combo of the big change at the White House on Friday and the fresh info on Brexit today is making investors anxious, says Gary Huxtable from Atlantic Pacific Securities. Markets could have handled one event, but the double dose is trouble, he suggests.
Could flawless earnings calm everyone and extend the Trump rally? Ignore the latest quarterly results, as there are five key things to watch instead, says our call of the day.
Investors should “focus less on actual 4Q results and more on management insights on how firms are positioned on five policy issues that will drive 2017 earnings revisions and share prices,” say Goldman Sachs strategists, led by David Kostin.
Here is Kostin & Co.’s fab five, as laid out in a “Weekly Kickstart” note:
• Regulation: The Trump administration could change all sorts of rules, and that should help midstream energy companies (Goldman likes Williams Cos. WMB, -0.49% , MPLX MPLX, +0.03% and Enterprise Products EPD, +0.29% ). It also ought to boost banks ( Citi C, +0.68% , PNC PNC, +0.73% and Morgan Stanley MS, +0.41% are Goldie faves).
• Fiscal spending: The strategists suggest big outlays on infrastructure could give only a modest boost to U.S. economic growth, but a yuuge lift to materials providers Vulcan VMC, +1.52% , Summit SUM, +1.80% and Martin Marietta MLM, +0.34% .
• Destination-based border-adjusted tax: This would involve U.S. companies no longer being able to deduct import costs when calculating their tax bases, the Goldman team says. It could mean trouble for Nike NKE, +0.99% , Dollar Tree DLTR, -0.52% , VF Corp. VFC, -0.96% and RH RH, +1.66% .
• Interest deductibility and depreciation policy: Companies with high leverage could be hurt by this, the strategists warn.
• Corporate tax rate: The Goldman team expects the corporate statutory tax rate will drop to 25%. It notes the post-election outperformance by the stocks in its “high tax rate basket,” which is shown below.
Key market gauges
Futures for the Dow YMH7, -0.24% , S&P 500 ESH7, -0.37% and Nasdaq-100 NQH7, -0.36% are heading south. The move comes after the Dow DJIA, -0.03% and S&P SPX, +0.18% lost ground last week, while the Nasdaq Composite COMP, +0.48% gained.
51% — That is the percentage of people in the U.S. who say they disapprove of how Donald Trump is handling the presidential transition, while 44% approve, according to a Gallup poll.
“We seek a new and equal partnership — between an independent, self-governing, global Britain and our friends and allies in the EU. Not partial membership of the European Union, associate membership of the European Union, or anything that leaves us half-in, half-out.” — Prime Minister Theresa May is declaring that the U.K. wants a “clean Brexit.”
As the World Economic Forum in Davos kicks off, Chinese President Xi Jinping warns: “No one will emerge as winner in a trade war.”
There is also buzz about the anti-drone guns in Davos that are protecting the elites:
GM GM, -0.45% plans to invest at least $ 1 billion in U.S. factories, adding 1,000 jobs, while Noble Energy NBL, +0.56% has agreed to pay $ 2.7 billion to buy Clayton Williams Energy CWEI, -2.27% and British American Tobacco BATS, -1.35% is shelling out $ 49 billion for full control of Reynolds American RAI, +0.41% .
Iron ore has been jumping to levels last seen in 2014, as revealed in the above chart showing iron ore futures on a continuous basis on Nymex.
A fresh reading for the Empire State index is due at 8:30 a.m. Eastern Time, followed by a speech by New York Fed President William Dudley.
Fed Gov. Lael Brainard is slated to talk after the market’s open, and San Francisco Fed President John Williams, after the close.
Check out: MarketWatch’s Economic Calendar
The three-year search for MH370 has ended. It’s all still a mystery.
“I’m allergic to my husband” — a Minnesota woman’s story.
A puppy swallowed an eight-inch knife and survived.
“I’m not on SnapFace” — Belichick after a Steelers receiver’s blunder.
At a Russian border: “It would not stop tanks, but it will be difficult to climb over.”
RIP to the last man on the moon:
Gene Cernan, last American on the moon, dies at 82
Former astronaut Gene Cernan, one of only a dozen men to walk on the moon and who returned to Earth with a message of ‘peace and hope for all mankind,’ has died.
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