Thursday, January 12, 2017

Dow Futures Descend As Analysts Question The Trump Rally

‘Trump presidency is unlikely to be a one-way bet’

By Victor Reklaitis
January 12, 2017

U.S. stock futures lost altitude Thursday, putting the Dow on track to give up much of the prior day’s gain as analysts continued to digest President-elect Donald Trump’s news conference.

Dow Jones Industrial Average futures YMH7, -0.20% shed 44 points, or 0.2%, to 19,833, while S&P 500 futures ESH7, -0.28% gave up 7.10 points, or 0.3%, to 2,263.50. Nasdaq-100 futures NQH7, -0.26% fell by 13.25 points, or 0.3%, to 5,033.25.

Biotech stocks will try to recover following a slump Wednesday when Trump said companies were “getting away with murder” with respect to drug prices.

Those remarks were a warning to that sector and other sectors of the president-elect’s tendency to adopt a scattershot approach to domestic policy, said Michael Hewson, chief market analyst at CMC Markets, in a note on Thursday.

“The Trump presidency is unlikely to be a one-way bet for stock markets,” Hewson added.

Investors are waiting for a flurry of Federal Reserve speeches, as well as fresh data on import and export prices, and jobless claims.

On Wednesday, the Dow DJIA, +0.50% gained nearly 100 points, or 0.5%, closing less than 50 points from the 20,000 mark. The S&P 500 SPX, +0.28% tacked on 0.3% to end less than 0.1% from Friday’s all-time closing high. The Nasdaq Composite COMP, +0.21% added 0.2% and scored its fifth record close in a row.

Other markets: Oil futures CLG7, +1.11% and gold futures GCG7, +0.63% traded higher, helped by a drop for the dollar DXY, -0.68% . European stocks SXXP, -0.22% traded lower, and Asian markets mostly lost ground.

Economic news: Reports on import and export prices, and weekly jobless claims are slated to hit at 8:30 a.m. Eastern Time. Economists polled by MarketWatch expect 258,000 claims.

A flurry of Federal Reserve officials are expected to speak, starting with two events at 8:30 a.m. Eastern: Philadelphia Fed President Patrick Harker talking in Malvern, Penn., and Atlanta Fed President Dennis Lockhart and Chicago Fed President Charles Evans taking part in a panel discussion in Naples, Fla. Lockhart is also due to give a speech at 11:30 a.m. Eastern.

At 1:15 p.m. Eastern, St. Louis Fed President James Bullard is due to talk to the Forecasters Club of New York, and Fed chief Janet Yellen has a town hall meeting with teachers in Washington, D.C., at 7 p.m. Eastern.

Individual movers: Shares in Delta Air Lines Inc. DAL, +1.28% are likely to see active trading as the carrier is due to post quarterly earnings before the open.

Shares of Applied Optoelectronics Inc. AAOI, -0.66% may be active after they jumped 19% in after hours trading Wednesday. The optical network equipment company forecast earnings well above its original outlook.

Article Link To MarketWatch:

Trump Shakes Things Up. His Future Cabinet Calms Things Down.

By Eli Lake
The Bloomberg View
January 12, 2017

As Congress begins the confirmation hearings for President-elect Donald Trump's nominees, a paradox emerges. Trump refuses to bow to official Washington, but his future cabinet echoes official Washington's policy mantras.

Trump tweets that the intelligence community -- accused of leaking that senior U.S. officials were briefed on allegations about his sexual conduct in Russia -- is akin to the Gestapo. He tells a CNN reporter that his network is "fake news," for reporting that. He claims that no one except the press cares about his tax returns. He proposes a commission on childhood vaccinations after meeting with someone who believes the unproven theory that they cause autism. The next president rocks the boat.

So far, his nominees don't. Take retired general Michael Flynn, Trump's incoming national security adviser. He has earned a reputation as a maverick inside the intelligence community, and its mandarins whisper to the press that he has a wicked temper. At the U.S. Institute of Peace on Tuesday, Flynn defied that perception. He spoke about the importance of alliances and the incoming administration's deep faith in American exceptionalism. He asked the audience of establishment foreign policy experts to clap for his predecessor, Susan Rice, and he singled out Bill Clinton's secretary of state, Madeleine Albright, for praise.

It was hard to believe this was the same guy who joined in with the crowd at the Republican convention this summer in chants of "lock her up." On Tuesday, Flynn sounded like he was about to be inducted into the Charlie Rose hall of fame.

It wasn't just Flynn. John Kelly, the retired Marine general who is Trump's choice to be the next secretary of homeland security, sounded like someone Barack Obama would have nominated. He told senators that he agreed with the conclusions of the FBI, the CIA and the Office of the Director of National Intelligence that Russia tried to influence November's election by hacking the e-mails of leading Democrats. Trump had not conceded this until Wednesday at his press conference.

Kelly also said he disagreed with the idea of registering anyone based on their religion or ethnicity. Progressives and civil liberties groups have urged the president-elect not to make good on a campaign promise to instate a "Muslim registry" for screening visa applicants.

Even former Exxon Mobil CEO Rex Tillerson, who hit some road blocks Wednesday in his confirmation hearings because he repeatedly failed to acknowledge his company's lobbying against sanctions, expressed a preference for middle-of-the-road policies for the most part. For example, he said that if other NATO members did not pay their dues, he wouldn't recommend threatening to withdraw U.S. commitments for mutual self-defense. Over the summer, Trump suggested such an approach in an interview with the New York Times.

On Russia, Tillerson at times lost his footing. That's important because Exxon forged energy exploration deals with Russia during Tillerson's tenure. In a bruising exchange with Senator Marco Rubio, Tillerson declined to call Vladimir Putin a war criminal. It should be said that the Obama administration does not refer to Putin this way either -- though Secretary of State John Kerry called for a war crimes investigation into Russia and Syria after a humanitarian convoy to Aleppo was bombed this fall.

On Tillerson's overall approach to Russia however, he was very much in line with establishment thinking. He said he would not favor acknowledging any Russian claim to Crimea, the territory Putin's government annexed in 2014, unless it was part of a deal that was acceptable to Ukraine's government. He also said that for now he would recommend keeping existing sanctions on Russia in place until the new administration formulated its policy and met with counterparts in Moscow.

Senator Jeff Sessions, Trump's pick for attorney general, has generated so far the most controversy among the next president's nominees. On Wednesday, Democrat Cory Booker became the first sitting senator to testify against a fellow senator at a confirmation hearing, claiming Sessions was hostile to civil rights. But even Sessions is striking moderate notes. He said on Tuesday that if he were confirmed to lead the Justice Department, he would not authorize waterboarding or other kinds of torture of detainees because such techniques were illegal. Trump famously said during the campaign that he would bring back waterboarding and worse, but he softened that stance after the election following his conversations with James Mattis, the retired Marine general nominated for secretary of defense.

In some ways this is to be expected. During the campaign, Ohio Governor John Kasich said Donald Trump Jr. called one of his aides to offer the vice presidential slot on the ticket. Kasich said he was promised he would be in charge of both domestic and foreign policy. When asked what the president would do, the son answered he would be making America great again. So who will be running the country in Kasich's absence?

Trump chose as his running mate the conservative governor of Indiana, Mike Pence, a man who is less controversial than the Golf Channel. Pence is the chairman of the transition committee, which presents Trump with candidates for appointments to lead his government. So far the cabinet, unlike the next president, reflects a steady conventionality.

Article Link To The Bloomberg View:

Apple Sets Its Sights On Hollywood With Plans For Original Content

The technology giant has been in talks with veteran Hollywood producers about buying rights to scripted television programs. 

By Ben Fritz, Tripp Mickle, and Hannah Karpj
The Wall Street Journal
January 12, 2017

Apple Inc. is planning to build a significant new business in original television shows and movies, according to people familiar with the matter, a move that could make it a bigger player in Hollywood and offset slowing sales of iPhones and iPads.

These people said the programming would be available to subscribers of Apple’s $10-a-month streaming-music service, which has struggled to catch up to the larger Spotify AB. Apple Music already includes a limited number of documentary-style segments on musicians, but nothing like the premium programming it is now seeking.

The technology giant has been in talks with veteran producers in recent months about buying rights to scripted television programs. It also has approached experienced marketing executives at studios and networks to discuss hiring them to promote its content, said people with knowledge of the discussions.

In addition to TV, Apple indicated to these people that it is considering offering original movies, though those plans are more preliminary.

Executives at Apple have told people in Hollywood they hope to start offering original scripted content by the end of 2017.

The shows Apple is considering would likely be comparable to critically acclaimed programs like “Westworld” on Time Warner Inc.’s HBO or “Stranger Things” on Netflix.

Because it is looking at just a handful of carefully selected shows, and potentially films, it doesn’t appear Apple is preparing to spend the hundreds of millions or even billions of dollars it would need to spend annually to become a direct competitor to Netflix Inc., Inc.’s Prime Video or premium cable networks.

Rather, it would escalate the arms race between Apple Music and Spotify, which both offer essentially the same catalog of tens of millions of songs, by adding other content that could distinguish Apple’s service.

Nonetheless, the entry of the world’s most valuable company into original television and films could be a transformative moment for Hollywood and mark a significant turn in strategy for Apple as it starts to become more of a media company, rather than just a distributor of other companies’ media.

In addition to its music-related nonfiction shows and documentaries, Apple Music already has bought the rights to a half-hour version of “Carpool Karaoke,” which is currently a segment on CBS’s “The Late Late Show with James Corden.” It is also making a quasi-biographical series about Dr. Dre, the rap star and Apple Music executive, which is slated to premiere later this year.

But it hasn’t yet bought scripted content from outside producers, a more expensive and riskier endeavor that takes it further onto the turf of entertainment companies. The series and movies Apple is now considering buying don’t have any particular relationship to music, according to the people familiar with the matter.

One reason Apple hasn’t yet completed a deal to buy a scripted series is because it is still working out details of its business strategy built around original content. But it has told producers that a key advantage it hopes to offer is that it would share data on how many people watch its original content and some demographic data on them. Netflix doesn’t share any such information with its content creators, which has been a source of contention among some in Hollywood.

Apple has been flirting for years with whether and how it should enter the entertainment business. It held talk with television companies about offering a “skinny bundle” of networks over the internet, but was never able to reach terms. It also approached Time Warner Inc. last year about a possible merger before that company agreed to be acquired by AT&T Inc.

The move into original content comes as Apple is grappling with a slowdown in its traditional business. Last year it missed its own internal revenue targets for the first time in at least seven years as sales of the iPhone 6s fell short of expectations. Sales of the iPhone, which turned Apple into the world’s most profitable company, have slowed amid rising competition, particularly in China.

Apple Music has become a key piece of the company’s services business, which has been growing as iPhone sales slow. Revenue from Apple Music rose 22% in the quarter ended Sept. 24, but the service’s subscriber base is still dwarfed by Spotify’s.

Apple Music said in December that it had more than 20 million subscribers, most of whom pay $9.99 a month; Spotify counted more than 40 million paying subscribers in September.

Article Link To The Wall Street Journal:

Mexico Lays Out Cards For High Stakes Talks With Trump

By Dave Graham
January 12, 2017

Mexico said on Wednesday it would throw its relationship with the United States wide open in talks with the incoming Trump administration, putting security, migration and trade on the table as it seeks to avoid a major economic shock.

U.S. President-elect Donald Trump has threatened to tear up a trade agreement that underpins Mexico's export model if he cannot renegotiate its terms in his favor, battering the peso currency and fueling uncertainty over foreign investment.

President Enrique Pena Nieto said Mexico would take a broad approach to the challenge, seeking a settlement that would benefit both Mexico and the United States as he looks to carve out a platform that gives him room for maneuver in talks.

"All the issues that define our bilateral relationship are on the table, including security, migration and trade," Pena Nieto said in a speech to diplomats in Mexico City, sketching out his negotiating position for the first time.

Reuters reported last month that Mexico's government aimed to use security and migration to gain leverage over the United States in its talks with Trump, and could offer to reinforce its borders to get a better deal on trade.

Pena Nieto said Mexico would invest in a more secure border, but repeated his posture that it would not pay for the border wall Trump plans to build.

During the campaign, Trump threatened to have Mexico fund the wall by blocking remittances from Mexicans living in the United States. Pena Nieto said he would work to ensure those funds continued to flow freely across the border.

Pena Nieto said the U.S. government shared responsibility for migrants seeking to reach the United States, and should also work to stop the southward flow of weapons and illicit funds that help finance Mexican organized crime.

Mexican officials point to a jump in deportations of illegal immigrants under Pena Nieto, and to the country's importance in working with U.S. law enforcement to combat rising U.S. demand for lethal drugs such as heroin smuggled in from Mexico.

If Trump seeks to hurt Mexico on trade, there is little incentive for the Mexican government to go out of its way on behalf of the United States on other issues, they argue.

Trade Diversification

Mexico sends 80 percent of its exports to the United States and is eager to uphold the North American Free Trade Agreement (NAFTA) between the two nations and Canada that acts as a conduit for the bulk of foreign direct investment in Mexico.

Trump has called NAFTA a "disaster" and vowed to scrap or recast it in the hope of bringing jobs back to America.

Mexico, meanwhile, must work to reduce its dependency on the United States, economists and policymakers have said.

Pena Nieto said his government would seek to diversify business ties with Asia and Latin American countries where it had room for improvement, such as Brazil and Argentina.

Mexico also aims to wrap up talks with the European Union on updating a joint trade accord in the next 12 months, he added.

In a news conference on Wednesday, Trump said he would soon begin talks with Mexico on the border wall and would make Mexico reimburse the United States for construction costs.

Trump also promised a major border tax on companies that moved jobs outside the United States, giving the example of firms relocating plants to Mexico.

Article Link To Reuters:

The World Isn’t Waiting For Trump On Trade

China and other nations are already developing their own initiatives and blocs.

By Joshua Kurlantzick
January 12, 2017

During the campaign, Donald Trump slammed current and potential U.S. free-trade deals, called for possible tariffs on China, Mexico, and other countries, and promised to use the presidential bully pulpit to attack companies that outsource. In the transition, he’s appointed a U.S. trade representative known for fighting to impose punitive tariffs, lashed out at companies he believes have outsourced jobs from America, and created a special office on trade and industrial policy to be led by an extremely harsh critic of free trade. While it seems unclear how committed Trump is to many of these promises—he also chose a U.S. ambassador to China with long experience promoting bilateral trade—the president-elect has already triggered a counterreaction in global trade and business, showing that other countries aren’t going to wait for him to act. They’ll go ahead and determine their own economic futures.

The biggest beneficiary may be China, which is positioning itself as the defender of the global economic order. In a speech to the Asia-Pacific Economic Cooperation forum in late November, Chinese President Xi Jinping, obviously commenting on Trump’s election, urged Asian and Pacific nations to “deepen and expand cooperation in our region” and announced that, no matter what happens in the U.S., Beijing would take the lead on promoting global economic ties.

Despite Trump’s investments and branding deals across South and East Asia, many business leaders and economic officials in the region feared his election. One of their greatest concerns is likely to come to pass: Trump has vowed to withdraw the U.S. from the biggest potential free-trade deal, the Trans-Pacific Partnership, on his first day in office. A few Asia-Pacific leaders called on TPP signatories to finalize the deal even without the U.S. in it, but Japanese Prime Minister Shinzo Abe denounced that idea, saying the “TPP is meaningless without the United States.”

Only days after Trump’s election, leaders from Australia, Malaysia, and other nations that promoted the TPP changed course and embraced a rival China-led agreement, known as the Regional Comprehensive Economic Partnership, which Beijing has been pushing for years. The RCEP, which pointedly excludes the U.S., would allow China much more influence to set regional trade rules and norms.

Many Asian nations—longtime U.S. partners—are fearful of China’s rising influence, even though they accept that they’re becoming more dependent on Chinese trade and investment. Beijing retains many state-owned companies, and other Asian nations worry that China might use the RCEP to protect the power and influence of those enterprises. The RCEP contains weaker environmental and labor standards and fewer tools to ensure intellectual-property protection. It also would likely provide only a small initial boost to growth in poorer nations such as Vietnam, which would have benefited massively from the TPP, according to the Peterson Institute for International Economics. The RCEP will lead Asian companies to favor trade with companies in countries that are part of the China-backed trade deal; the White House’s Council of Economic Advisers estimates that the passage of the RCEP will lead U.S. industries that now export more than $5 billion in goods to Japan to lose market share to Chinese exporters.

Many Asian officials privately say they would still prefer the TPP but will support any deal that even marginally maintains the momentum for trade in Asia. They also say they could eventually support a broader, regionwide trade deal known as the Free Trade Area of the Asia-Pacific that also excludes the U.S. (and includes China). Leaders of Asean, the Southeast Asia regional organization, recently proposed another trade pact that would expand the deal covering the region to include other Asian economies.

While some Asian businesses are trying to use their ties to the president-elect to bolster their companies, there appear to be many more searching for ways to ensure their businesses grow even if the U.S. embraces protectionism. Many aren’t waiting for the RCEP or another replacement TPP deal to be completed to examine the long-term risk of investing in the U.S. for the next four years, or for the possibility that Trump will deliver on his suggestions of a 5 percent or 10 percent tariff on imports.

Japanese companies, for example, are ramping up their ties and investments in Southeast Asia and Latin America, even as Trump attacks by name prominent Japanese manufacturers such as Toyota, which he threatened to punish for putting factories in Mexico. Leading Japanese companies joined Abe on a visit to Argentina in November, where he signed 57 trade deals with Buenos Aires. Chinese companies and Beijing appear ready to increase the value of Chinese technology exports and ensure that the nation’s businesses are less dependent on sales to U.S. customers.

Trump and his border wall have so alarmed Mexico’s leaders and businesspeople that the country’s economy minister is looking to negotiate new trade deals with Asia-Pacific economies as soon as possible. Many Mexican businesses—and international companies with manufacturing operations in the country—are scrambling for backup plans to move operations dependent on the U.S. market in case the new administration follows through and substantially changes the North America Free Trade Agreement. Canada, whose economy is heavily dependent on trade with America and which stands to be hit hard by any significant changes in Nafta, signed a free-trade deal with Europe in the fall. Canada is also working to sign agreements with South American and Asian states.

Some senior Republican officials are privately worrying that other major economies are much better equipped to adapt to U.S. protectionism in the long run than the incoming administration believes. The Trump transition team has offered no clear clues about how it will address the possible impact on the U.S. if other countries respond to potential tariffs by erecting their own to American exports, or by taking the U.S. to the World Trade Organization over and over. Meanwhile, Indian politicians and companies in Hyderabad and other tech hubs are welcoming the prospect of Trump cutting highly skilled legal immigration to the U.S., saying it will lead to more jobs being created in India, including for American companies with offices there.

The potential for financial mayhem is huge. After all, China isn’t just a target of Trump’s anger over supposedly unfair trade deals but also America’s largest trading partner and the biggest holder of U.S. Treasuries. U.S. companies have spent billions of dollars building manufacturing operations in China, Mexico, Vietnam, and many other countries. Chinese and European leaders already have made veiled threats of countertariffs—including reductions in purchases of U.S. agricultural and manufactured products—if the U.S. erects trade barriers.

In the long term, a protectionist shift in U.S. policy is likely to backfire. It will probably exacerbate some of the patterns of economic and financial deglobalization—that is, globalization in reverse—that have existed since the 2008-09 worldwide downturn. According to reports by the WTO, trade flows have sharply slowed since 2007 and might decelerate further in the Trump years. European and Asian banks, which have already slashed foreign lending because they’re subject to rules promulgated after 2008 to bolster capital requirements, may keep more of their money at home as well. This would further reduce international capital flows, especially to developing nations, where companies have little ability to raise their own money through domestic banks and local stock markets. That will certainly affect their ability to buy U.S. goods. American exports contribute about 14 percent of gross domestic product, and that figure is rising each year. And so while Trump is ramping up for trade conflict, the deglobalization it’s promoting will undermine the very prosperity that he’s promised to deliver.

Article Link To Bloomberg:

U.S. Property Foreclosures At 10-Year Low In 2016

By Sharon Bernstein
January 12, 2017

Foreclosure proceedings affected nearly a million U.S. homes and other real estate last year, down 14 percent from 2015 and down 70 percent from the worst of the housing crisis in 2009, a report released Thursday shows.

Foreclosures hit a 10-year low and property owners in all but 15 states experienced fewer of the early stages of foreclosure, usually begun after owners have missed four mortgage payments, according to the report by ATTOM Data Solutions, formerly called RealtyTrac.

Final repossessions of properties also dropped overall, but did increase in 21 states and the District of Columbia, including Massachusetts, Alabama, New York, Virginia and New Jersey.

Daren Blomquist, spokesman for the Irvine, California, data company, said just over half of the foreclosures that did take place were related to the housing crisis, which began in 2008 amid turmoil in the financial markets and the bursting of a years-long bubble in U.S. real estate prices.

Altogether in the United States last year, about 379,000 owners lost their property to banks under foreclosure, down from 1.05 million in 2009 at the height of the mortgage and housing crisis.

Another 479,000 properties were under the early stages of foreclosure, which do not always lead to repossession. That is down from a peak of 2.14 million in the early stages in 2009.

In some states last year, including Hawaii, New Jersey and Nevada, nearly two-thirds of the foreclosures were related to the financial crisis, as banks slowly worked their way through a backlog of cases and consumers ran out of protections, Blomquist said.

Many of the remaining foreclosures were related to local economic issues, he said.

Overall foreclosure activity increased in about a quarter of U.S. metropolitan areas with more than 200,000 people, the report said. Among the metro areas where properties in some stage of foreclosure increased in 2016 were Provo-Orem, Utah; Honolulu, Hawaii; Lynchburg, Virginia; Springfield, Massachusetts; and Tucson, Arizona. Foreclosures increased by about 30 percent in those areas, the report said.

Foreclosures also increased in Washington, D.C.

Article Link To Reuters:

Senate Launches Obamacare Repeal Process

By Susan Cornwell
January 12, 2017

The U.S. Senate on Thursday took a first concrete step toward dismantling Obamacare, voting to instruct key committees to draft legislation repealing President Barack Obama's signature health insurance program.

The vote was 51-48. The resolution now goes to the House of Representatives, which is expected to vote on it this week. Scrapping Obamacare is a top priority for the Republican majorities in both chambers and Republican President-elect Donald Trump.

Republicans have said that the process of repealing Obamacare could take months, and developing a replacement plan could take longer. But they are under pressure from Trump to act fast; he said on Wednesday that the repeal and replacement should happen "essentially simultaneously."

Some 20 million previously uninsured Americans gained health coverage through the Affordable Care Act, as Obamacare is officially called. Coverage was extended by expanding Medicaid and through online exchanges where consumers can receive income-based subsidies.

Republicans have launched repeated legal and legislative efforts to unravel the law, criticizing it as government overreach. They say they want to replace it by giving states, not the federal government, more control.

But in recent days some Republicans have expressed concern about the party's current strategy of voting for a repeal without having a consensus replacement plan ready.

House Speaker Paul Ryan said this week he wants to pack as many replacement provisions as possible into the legislation repealing Obamacare. But Senate Finance Committee Chairman Orrin Hatch, also a Republican, said this could be difficult under Senate rules.

The resolution approved Thursday instructs committees of the House and Senate to draft repeal legislation by a target date of January 27. Both chambers will then need to approve the resulting legislation before any repeal goes into effect.

Senate Republicans are using special budget procedures that allow them to repeal Obamacare by a simple majority; this way they don't need Democratic votes. Republicans have a majority of 52 votes in the 100-seat Senate; one Republican, Senator Rand Paul, voted no on Thursday.

Democrats mocked the Republican effort, saying Republicans have never united around an alternative to Obamacare. "They want to kill ACA but they have no idea how they are going to bring forth a substitute proposal," declared Senator Bernie Sanders of Vermont.

Trump said Wednesday he would submit a replacement plan as soon as his nominee to lead the Health and Human Services department, Representative Tom Price, is approved by the Senate. But Trump gave no details.

Democrats passed the Affordable Care Act in 2010 over united Republican opposition. Democrats say the act is insuring more Americans and helping to slow the growth in healthcare spending.

But Republicans say the system is not working. The average Obamacare premium is set to rise 25 percent in 2017.

Article Link To Reuters:

Thursday, January 12, Morning Global Market Roundup: Dollar Tumbles, Bonds Win As Trump Trade Fizzles

By Marc Jones 
January 12, 2017

The U.S. dollar nursed widespread losses on Thursday after President-elect Donald Trump's long-awaited news briefing provided little clarity on future fiscal policies, disappointing bulls who had bet on major stimulus.

Trump did not mention possible tariffs against Chinese exports, however - a relief for Asian share markets that have feared the outbreak of a global trade war.

The lack of detail about a potential stimulus also put safety plays such as bonds and gold back in favor, cooling bets that have built in recent months on significantly higher global inflation and series of U.S. interest rate hikes.

It was enough to send the dollar tumbling back below 114 yen for the first time in five weeks and brought some welcome relief to Brexit-bruised sterling and Turkey's lira, which has been badly beaten up this year. [EMRG/]

"The risk was always that a president like Trump would end up upsetting that consensus (of faster U.S. growth, stronger dollar) view by introducing more political uncertainty," said asset manager GAM's head of multi-asset portfolios Larry Hatheway.

European shares also fell, bucking gains in Asia and Wall Street overnight and weighed down by a 2 percent slump in healthcare stocks after Trump said pharmaceutical firms had been "getting away with murder" with their prices. [.EU]

They weren't being helped either by a deck of stronger currencies.

The euro was back at $1.0650 for the first time in a month, shaky sterling climbed above $1.22 and Sweden's crown hit a four-month high and cracked its 200-day moving average against the euro after pacy inflation data.

It was also bliss for bond markets that have been in reverse since Trump's election fuel led bets on higher U.S. interest rates that tend to set the bar for global borrowing costs.

Euro zone bond yields fell 2 to 6 bps as German Bunds rallied and as U.S. 10-year Treasury yields fell to their lowest level in more than a month at around 2.30 percent.

"Overall, investors are wary ahead of Trump's inauguration – a case of buy the talk (Trumpflation), but sell the news," analysts at Societe Generale said in a note.

Good As Gold

Wall Street had overcome its brief wobble to end Wednesday firmer, though the Dow Jones still didn't manage to break the 20,000 points barrier and looked set to start around 0.2 percent lower later, according to futures prices.

Tuesday's first Trump news conference since the Nov. 8 election contained no details on tax cuts or infrastructure spending, anticipation of which had fueled the five-week rally in stocks and a selloff in global bond markets.

"The news conference was a far cry from the market friendly, pro-growth "presidential" comments that Trump delivered at his acceptance speech," wrote analysts at Westpac, adding it left a "veritable laundry list" of questions unanswered.

In commodity markets, oil was a shade firmer in Europe after a minor dip in Asian trading. [O/R] U.S. crude was trading at $52.33 and Brent crude was up 30 cents at $55.40 a barrel follow gains of nearly 3 percent on Wednesday.

The weaker dollar also helped metals markets. Gold rose to a seven-week high just shy of $1,200 per ounce while London copper traded up almost 2 percent after electronic trading there was delayed by a mystery five-hour outage. [MET/]

Article Link To Reuters:

Oil Rises On OPEC Output Cuts, China Demand Forecast

By Christopher Johnson
January 12, 2017

Oil prices rose on Thursday, supported by reports that key members of OPEC were starting to cut production and by forecasts of strong demand growth in China.

Brent crude LCOc1 was up 50 cents at $55.60 a barrel by 1050 GMT (5:50 a.m. ET). U.S. crude CLc1 was up 35 cents at $52.60.

The Organization of the Petroleum Exporting Countries agreed in November to cut oil production to try to reduce a global supply glut that has depressed prices for more than two years. Several OPEC members appear to be implementing the deal.

"Reports are emerging that OPEC signatories to the production cut agreement have already commenced reducing output," said Daniel Hynes, commodities analyst at ANZ Research.

Saudi Arabian Energy Minister Khalid al-Falih said on Thursday said the OPEC deal would accelerate the rebalancing of the global oil market and that prices would respond later this year.

Falih told a conference in Abu Dhabi global demand for oil would grow by well over 1 million barrels per day (bpd) in 2017 and the market would tighten in two to three years.

Kuwaiti Oil Minister Essam Al-Marzouq told the conference Kuwait had already cut its oil output by more than it promised under the OPEC deal, without giving further details.

Iraq oil minister Jabar Ali al-Luaibi told reporters Iraq was "hoping for a better price". Iraq had reduced its oil exports by 170,000 bpd and was cutting them by a further 40,000 bpd this week, he said.

BMI Research said overall "compliance to the OPEC/non-OPEC oil production cut appears to be positive ... We calculate compliance with production cuts at around 73 percent," led by high compliance from members of the Gulf Cooperation Council, namely Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain and Oman.

Prices were also lifted by news of record Chinese car sales, which grew by 13.7 percent between 2015 and 2016 to 28 million sold vehicles.

Reflecting China's growing fuel consumption, its net crude imports will rise 5.3 percent to 396 million tonnes (around 8 million bpd) in 2017, state-owned China National Petroleum Corp (CNPC) said on Thursday. Its crude demand will hit a record 594 million tonnes this year (around 12 million bpd), CNPC said.

In the United States, traders said an inventory report published by the U.S. Energy Information Administration on Wednesday implied oversupply as crude stocks unexpectedly rose by 4.1 million barrels to 483.11 million barrels. [EIA/S]

Article Link To Reuters: