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House set to vote on funding measure, China growth beats estimates again, and OPEC cuts may be working too well.
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Shutdown showdown
The House is on track to pass a one-month government spending bill later today, with Speaker Paul Ryan said to be close to gathering the votes needed. The bill would then pass to the Senate where Democrats would be confronted with the conundrum over whether to block the measure in order to gain leverage on immigration. White House Press Secretary Sarah Sanders said that President Donald Trump supported the bill in its current form.
China growth
China’s economy expanded 6.9 percent in 2017, slightly ahead of expectations, with activity lifted by global growth. There was some cynicism about the data, with Beijing’s continuing ability to beat economist expectations by the slimmest of margins a “source of disquiet," according to Bloomberg’s chief Asia economist Tom Orlik. A report by the Centre for Economics and Business Research in London says China’s economy is set to overtake the U.S. as the world’s largest by 2032.
Too good
OPEC and its production-cut allies meet this weekend to review their strategy to clear the global oil glut as they risk becoming victims of their own success. U.S. production to exploit soaring prices could undo all of OPEC’s hard work with output that could top 11 million barrels a day next year, surpassing both Saudi Arabia and Russia, according to U.S. government forecasts. In the market this morning, a barrel of West Texas Intermediate for February delivery remained near three-year highs, trading at $63.99 by 5:45 a.m. Eastern Time.
Markets mixed
Overnight, the MSCI Asia Pacific Index slipped 0.4 percent, with Japanese stocks accounting for much of the drop as the Topix index closed 0.7 percent lower after rising above 1,900 for the first time since June 1991 earlier in the session. In Europe, the Stoxx 600 Index was little changed at 5:45 a.m. in a quiet session ahead of earnings season. S&P 500 futures were flat, the 10-year Treasury yield was at 2.605 percent and gold was lower.
Tax change
Morgan Stanley will report fourth-quarter earnings this morning, a day after it saw its market capitalization pass that of Goldman Sachs Inc. for the first time in a decade. Investors will focus on the bank’s tax overhaul costs, after it flagged a $1.25 billion charge related to the changes. The new fiscal regime has Apple Inc. bringing hundreds of billions of dollars held overseas back to the U.S. – and coughing up $38 billion in taxes.
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Here's what you should read today |
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How did Michael Wolff get White House access to write his best-selling tell-all book "Fire and Fury"? Bloomberg's Jennifer Jacobs answers that question in a great account of how the author managed to finagle his way inside the early days of the administration and get ample participation from key players, despite his history of writing highly critical pieces about his subjects. What's fascinating is the article reads like a case study in how human-made catastrophes come about. See it turns out, nobody actually ever greenlit the book. "Nearly everyone who spoke with Wolff thought someone else in the White House had approved their participation," Jacobs writes. Some White House staffers were under the impression that Hope Hicks, one of Trump's closest aides, had given them official approval to talk to Wolff. Instead, it appears, she was mostly just offering them advice that if they did talk to him, they should try to shape a positive narrative. Also, Wolff initially gave the impression he was going to write a glowing book, which caused everyone to drop their guard. The ultimate impact of the book may be minor, but how it all came about is a microcosm of true disasters like Enron or even Chernobyl. In such cases, there was nobody in a position to see the big picture, a key contributor to calamities. Ego, risk concealment, and poor communication rolled into one: It's a politics story that's a great lesson in risk management.
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