Tuesday Jany

• ·         Stocks drop as the VIX rises
• ·         Energy shares decline
• ·         Central Banks meet
• ·         You’re fired
• ·         1-2 = -1?

 Happy last day of January. US stocks fell by .6% yesterday, as the market digested the weekend political events, oil rolled over, and the VIX rose from a very low 10 to 12.  Small caps were hit harder, with the R2000 down 1.3%.  Oil dropped almost 1% for the second day on oversupply fears.   Technology and bank sectors were both down about 1%. It looks like another down day if you believe the US futures markets, which are slightly down.

	LAST	CHANGE	% CHANGE
DJIA	19,971.13	-122.65	-0.61%
Nasdaq	5,613.71	-47.07	-0.83%
S&P 500	2,280.90	-13.79	-0.60%
Russell 2000	1,352.33	-18.37	-1.34%
Global Dow	2,602.93	0.83	0.03%
Stoxx Europe 600	362.72	0.17	0.05%
Nikkei 225	19,041.34	-327.51	-1.69%
UK: FTSE 100	7,157.18	38.70	0.54%
CBOE Volatility	12.12	1.54	14.56%
Australia: S&P/ASX 200	5,620.90	-40.60	-0.72%
China: Shanghai Composite	3,159.17	Closed
Hong Kong: Hang Seng	23,360.78	Closed
Europe Dow	1,611.68	-9.51	-0.70%
India: S&P BSE Sensex	27,655.96	-193.60	-0.59%
France: CAC 40	4,799.94	15.30	0.32%
Germany: DAX	11,696.17	14.28	0.12%
Italy: FTSE MIB	18,760.57	1.17	0.01%
Spain: IBEX 35	9,392.00	30.70	0.33%
U.S. 3 Month	0.515	0/32
U.S. 2 Year	1.208	0/32
U.S. 5 Year	1.921	4/32
U.S. 10 Year	2.465	6/32
U.S. 30 Year	3.064	10/32
Germany 2 Year	-0.685	0/32
Germany 10 Year	0.453	0/32
Crude Oil	52.48	-0.15	-0.29%
Brent Crude	55.31	0.08	0.14%
Natural Gas	3.16	-0.072	-2.23%
S&P GSCI	393.98	0.47	0.12%
E-mini S&P 500	2273.25	-2.75	-0.12%

The BOJ met today and made no changes to monetary policy, the Fed meets tomorrow and we expect the same, and it’s the BOE’s turn on Thursday.   President Trump signed a executive order instructing government agencies to eliminate 2 rules for every new one they implement.  He was surrounded by small business owners at the signing ceremony, but it didn’t help the Russell 2000.  He also swiftly fired acting AG Sally Yates after she balked on implementing the executive order on immigration.

Deutsche Bank continues to settle litigation, this time agreeing to a $629 million fine for helping wealthy Russians skirt capital controls and move money outof the country.   Under Armour got smacked down 23% on a big earnings and revenue miss.  Yesterday I mentioned that inflation rates are coming in at just under 2% in the US and Germany, and today, January inflation data for the full Eurozone is consistent, up 1.8%.   Warren Buffet said he’s bought $12 billion in US stocks since the election.  No wonder stocks are up.

Here’s the news:

Bank of Japan meeting

In the first of a troika of major central bank meetings this week, the BOJ kept its stimulus unchanged and maintained its 2017 inflation forecast as it waited to judge the impact of recent currency moves. The yen was trading at 113.9 to the dollar at 5:06 a.m. ET. Tomorrow, the Federal Reserve will announce its latest monetary policy decision and while no change is expected, investors will watch for signals of a March rate hike. On Thursday, the Bank of England is also predicted to stand pat, but may revise up its growth forecasts.

Euro-area inflation, growth

Inflation in the euro bloc showed a 1.8 percent annual increase in January, the fastest pace since early 2013. While that was driven by an 8.1 percent increase in energy prices, the headline number is now effectively at the European Central Bank's target of close to but below 2 percent. That's likely to intensify debate about the institution's policy stance. The economy in the common-currency zone expanded 1.8 percent in the fourth quarter from a year earlier, and unemployment fell to 9.6 percent in December, although the performance was mixed on the national level. In Germany unemployment fell to another record low, while in Italy it unexpectedly rose.

Mirror trades

Deutsche Bank AG was fined on both sides of the Atlantic over compliance failures that saw the bank help wealthy Russians move $10 billion out of the country. The $629 million fines were handed down weeks after the bank agreed to pay $7.2 billion to U.S. authorities to settle an investigation into mortgage-debt sales. Shares in the bank, which is due to report earnings on Thursday, were trading higher at 18.975 euro by 5:34 a.m. ET

Markets mixed

Overnight, the MSCI Asia Pacific Index dropped 0.9 percent while Japan's Topix index fell 1.4 percent as concerns grew over President Donald Trump's isolationist policies. In Europe, the Stoxx 600 Index was broadly unchanged at 5:40 a.m. ET with retailers selling off and banks rising. U.S. stock futures fell after the acting attorney general's dismissal stoked jitters about the unpredictability of the new administration.

Coming up...

In today's economic data, Chicago PMI is due at 9:45 a.m. ET, with U.S. consumer confidence for January due 15 minutes later. Apple Inc. is due to report earnings after the bell, with investors looking to see if the company managed to turn around recent quarters of stalled growth at the end of 2016.  The Bank of Japan raises its growth forecast. Japan's central bank kept policy on hold with a 7-to-2 vote but raised its 2017 real gross-domestic-product growth forecast to 1.5%, up from its previous forecast of 1.3% offered last November. The Japanese yen is little changed at 113.83 per dollar. German unemployment is at its lowest level since the reunification. Germany's unemployment rate slipped to 5.9% in January, its lowest level since 1990, Bloomberg says. The euro is higher by 0.1% at 1.0708 against the dollar. Gold is flirting with $1,200. The precious metal trades up by 0.2% at $1,198 an ounce. Warren Buffett has been loading up on stocks since the election. Bloomberg reports that, in an interview with Charlie Rose, legendary investor Warren Buffett announced, "We've, net, bought $12 billion of common stocks since the election." Buffett did not give any specifics as to which stocks he was buying and selling. Deutsche Bank doesn't know whether it will need to raise more capital. "There is still some uncertainty. Only when this is gone will we know exactly what our capital resources look like for the long term," Deutsche Bank management board member Christian Sewing was quoted as saying in the German daily newspaper Handelsblatt. Insulin makers are being accused of price fixing. Lilly, Novo Nordisk, and Sanofi are accused of taking part in an "organized scheme to drive up prices at the expense of patients who need insulin drugs to live," according to a complaint filed in the US District Court of Massachusetts. "Pokémon Go" boosts Nintendo. The video game maker reported a quarterly net profit of 34.2 billion yen ($301 million), up 17.5% from a year ago, as the smartphone game "Pokémon Go" provided a boost. Sales, however, tumbled 21.3% versus last year. Stock markets around the world trade mixed. Japan's Nikkei (-1.7%) paced the decline in Asia, and France's CAC (+0.4%) leads the advance in Europe. The S&P 500 is set to open higher by 0.2% near 2,279. Earnings reporting is heavy. Aetna, Coach, Exxon Mobil, Harley-Davidson, Under Armour, and United Parcel Service are among the names reporting ahead of the opening bell. Apple will release its quarterly results after markets close. US economic data is moderate. Case-Shiller home prices will be released at 9 a.m. ET before Chicago PMI and consumer confidence cross the wires at 9:45 a.m. ET and 10 a.m. ET. The US 10-year yield is unchanged at 2.49%. Yates (Jim Watson/AFP/Getty Images) You’re Fired The White House on Monday fired acting Attorney General Sally Yates for telling government lawyers not to defend an executive order signed by President Donald Trump suspending immigration from seven countries out of concerns that terrorists from those countries might enter the U.S. Dana Boente, the U.S. attorney for the Eastern District of Virginia, will be acting attorney general until Mr. Trump’s nominee, Jeff Sessions, is confirmed by the U.S. Senate, which could happen next week. The Justice Department standoff was the latest in a series of extraordinary events since Mr. Trump signed his order on Friday night, sparking confusion and protests at airports around the U.S., as well as condemnation from executives at blue-chip companies such as Goldman Sachs, Coca-Cola, Amazon and Ford. Meanwhile, Mr. Trump will amend a recent executive action so he can add CIA director Mike Pompeo into a role on the National Security Council. Mr. Trump is also scheduled to name his Supreme Court nominee today in a prime-time address. Friend Request Facebook is trying everything to re-enter China—and it’s not working. Blocked on China’s internet since 2009, the social-media giant has courted Chinese officials, made Chief Executive Mark Zuckerberg more visible in China, hired a well-connected China-policy chief and begun developing technology that could cull content the Communist Party deems unacceptable. It has made no visible headway. And as time passes, Facebook is watching from the outside as Chinese companies mop up the market that might have been its own. Facebook faces a wary central government, which blamed social media for stirring ethnic unrest in 2009 and remains uneasy with the company’s ability to be a dissidents’ megaphone. Meanwhile, Facebook is aiming to be more essential to its 1.79 billion existing users, unveiling new technology to let them reset passwords for other websites using its platform. Bitter Pill Walgreens Boots Alliance and Rite Aid have agreed to reduce the amount Walgreens would pay for its rival by at least $2 billion, after the two companies struggled to get antitrust enforcers to bless the big drugstore deal. The companies said Monday they would look to sell more stores as they seek to satisfy regulators at the Federal Trade Commission, which has been reviewing the combination. The process may take up to six months, they said. Walgreens in October 2015 agreed to buy Rite Aid for $9 a share, or about $9.4 billion, to form a drugstore chain with more than 10,000 U.S. stores. FTC officials had raised concern that such a big company could hold too much sway in negotiations with pharmacy-benefits managers such as CVS Health’s Caremark or Express Scripts Holding, which handle corporate and government drug plans. Face the Facts How can we cut through our resistance to unwanted information? We avoid looking at our bank accounts after paying the bills, resist stepping on a scale after the holidays, refuse to schedule preventive health tests. Researchers call this behavior information avoidance or strategic ignorance. We do it to avoid facts that make us feel bad, obligate us to do something we don’t want to do, or challenge how we see ourselves, others or the world. Some avoid unwanted information because they might not have the financial or psychological resources to deal with that information. But we report that research shows that when people feel they have some control over the outcome of information, they’re more likely to agree to hear it. We also offer strategies for facing the truth. Snap reportedly picks NYSE for IPO Snap, the company that owns social media platform Snapchat, will launch its initial public offering on the New York Stock Exchange, people familiar with the matter said. Wall Street sources say the IPO could value the company as high as $25 billion.  TechCrunch (30 Jan.)  Study: HFT aids liquidity in stable markets High-frequency trading helps support liquidity when markets are relatively stable, according to a study by French regulator Autorite des Marches Financiers. The study results prompted one HFT provider to call for a balance between prudent regulation and heightened connectivity to emerging liquidity hubs. The Trade (UK) (30 Jan.)

Upstarts: how Uber, Airbnb et al are changing the world.

Buffett bought $12 billion of stock since the election.

Putin might not rush to end sanctions just yet.

'50 cent' volatility buyer has options insiders asking 21 questions.

The $2 trillion woman who's turning Pimco around.

Stock markets and the rule of law. McCain, Again the Maverick, Challenges President Trump Homeland Security Chief and White House Clash Deutsche Bank to Pay Nearly $630 Million to Settle Probes Into Russian Trades The Markets Don’t Believe in Trump for the Long Term

I'm a big fan of Barron's. But to be honest, I mostly read it for the ads. It's always interesting to see what Wall Street is trying to sell at any given time. Last summer, virtually every ad was for some kind of dividend-paying exchange-traded fund: Small-cap dividends, momentum-stock dividends, international dividends. Today most of those dividend ads are gone as the bond sell-off has cooled that craze. On the back page this past weekend there was a big ad for a duo of ETFs - IGHG and HYHG - with the tagline 'Keep the bonds, lose the duration.' The two ETFS offer access to corporate bonds, with the duration risk hedged so that investors are just getting exposure to underlying credits. It's kind of perfect for this moment. People still want access to multiple asset classes in the name of diversification, but they're scared of rising interest rates. The backpage of Barron's wasn't the only thing that was perfect this weekend. The cover went with a classic "Dow 30,000" headline, which of course will become infamous if there's a sell-off anytime soon. As for what could derail the rally, according to Barron's? That would be President Trump failing to keep his "worst impulses" in check.

Source: Bloomberg, BI, WSJ, CFAI Fin. Newsbrief, TechCrunch, The Trade