Tuesday, January 17, 2017 On Tap

SNAPSHOT

8:30 a.m. Jan Empire State Manufacturing Survey Mfg Idx (previous 9.0), Employment Idx (previous -12.2), New Orders Idx (previous 11.4), Prices Received (previous 3.5)

Stock futures weaker; dollar falls; 10-year Treasury yield 2.331%; Nymex $52.90; gold $1201.92

10:00 a.m. Federal Reserve Governor Lael Brainard in conversation on fiscal policy and monetary policy 11:00 a.m. World Economic Situation and Prospects report 12:00 p.m. SEC Chair Mary Jo White speaks at an Economic Club of New York luncheon

Recent Analyst Ratings Actions FireEye Initiated at Buy by Standpoint Research; Price Target at $18.00/Share

Watch for: Empire State Manufacturing Survey; NAHB Housing Market Index; Fed’s Lael Brainard gives talk; U.K. PM Theresa May gives Brexit speech; earnings from Morgan Stanley, Tiffany & Co, United Continental

OPENING CALL U.S. futures extended losses while the British pound recovered from a 31-year low ahead of a speech later Tuesday by U.K. Prime Minister Theresa May, in which she is expected to declare that the country wants a clean break from the European Union. Futures pointed to a 0.4% opening loss for the S&P 500 and Dow Jones Industrial Average as U.S. markets reopen from the Martin Luther King Day holiday. In European stock markets, the Stoxx Europe 600 dipped 0.4% in the early minutes of trading after posting its biggest drop since early November on Monday. The basic resources sector led declines as copper prices fell nearly 1% to $5,790 a metric ton.

EQUITIES General Motors this week will announce plans to invest at least $1 billion across several U.S. factories, two people familiar with the plan said, a move aimed at underlining its commitment to U.S. manufacturing jobs in the wake of President-elect Donald Trump’s criticism of the auto maker’s imports from Mexico. GM’s announcement could come as early as Tuesday, the people briefed on the plan said. The company will cite a number of new jobs in excess of 1,000 stemming from the investment but doesn’t plan to specify which of its factories are in line for more work, one person said. In an interview Monday, GM general counsel Craig Glidden declined to confirm specifics of the announcement but said any investment the company might disclose has been long planned and isn’t a response to pressure from Mr. Trump. “This is something we’ve been undertaking for some period of time,” he said. “It’s really getting our story told in a way that is I think complete and fulsome.” A GM spokesman declined to comment. The Trump transition team didn’t immediately return a request for comment. British American Tobacco on Tuesday said it had agreed to pay $49.4 billion for the 57.8% of Reynolds American that it doesn’t already own. BAT is paying $29.44 in cash and 0.5260 of an ordinary share for each Reynolds’ share, valuing its U.S. peer at more than $85 billion, and creating the world’s largest listed tobacco company by revenue and market value.

Tuesday, January 17, 2017 The deal comes after BAT said in October that it had made an offer for Reynolds valued at $56.50 a share, or about $47 billion for the stake it didn’t own. Tuesday’s agreed price represents a premium of 26% over the closing price of Reynolds the day before BAT made its initial announcement last year. Ericsson and Cisco Systems said Monday that they would overhaul the telecommunications network of Vodafone Hutchison Australia, which they described as their largest deal since the two networking companies announced a partnership. The five-year deal, whose valuation wasn’t disclosed, is a sign that Ericsson’s and Cisco’s alliance is starting to bear fruit more than a year after its creation, analysts say. Ericsson and Cisco will upgrade the Australian service provider’s infrastructure by harmonizing hardware and software components and integrating mobile and fixed networking equipment to prepare it for next-generation applications such as virtual reality, autonomous driving and ultra-high-definition video.

FOREX The British pound rose 0.9% against the dollar to $1.2161 Tuesday, bolstered by inflation data, after settling at its lowest since 1985 Monday following weekend media reports the U.K. could lose access to the bloc’s single market. Jordan Rochester, currency strategist at Nomura, said in a note that the pound could fall toward $1.18 against the dollar if Mrs. May confirms the reports that rule out single-market access. Still, “we think indicating an approach to the negotiations that leads to a ‘clean break/hard Brexit’ from the EU will provide just as many more new questions as those it answers about the future EU/U.K. relationship,” he said, pointing to continued uncertainty around the speed and style of the bargaining process and the ultimate agreement that will be reached. In other currencies, the WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, fell 0.7% on Tuesday, with the euro up 0.5% against the dollar at $1.0671 and the dollar down 0.8% against the yen at Y113.0850.

BONDS In government bonds, the yield on the 10-year U.S. Treasury note fell to 2.331% from 2.380% on Friday, while German bund yields fell to 0.218% from 0.256% Monday.

COMMODITIES Gold and oil moved higher in Europe, with gold up 1.5% at $1,213 an ounce and Nymex crude up 1.5% at $53.14 a barrel.

Tuesday, January 17, 2017 Other Top Stories Of The Day IMF Upgrades U.S. Growth Forecast on Trump Stimulus Plans President-elect Donald Trump hasn’t taken office yet, but he is already reshaping the global growth outlook. The International Monetary Fund on Monday bumped up its economic growth forecasts for the U.S., saying output could grow nearly a halfpercentage point faster than previously thought over this year and next, thanks to Mr. Trump’s plans to cut taxes and boost infrastructure spending. That would put U.S. economic expansion at 2.3% this year and 2.5% next year.

Trump Warns on House Republican Tax Plan President-elect Donald Trump criticized a cornerstone of House Republicans’ corporate-tax plan, which they had pitched as an alternative to his proposed import tariffs, creating another point of contention between the incoming president and congressional allies.

CIA Director John Brennan Rejects Donald Trump s Criticism Outgoing Central Intelligence Agency Director John Brennan on Monday rejected Donald Trump’s suggestions that he may have leaked an unsubstantiated dossier on the president-elect while defending the U.S. intelligence community more broadly from Mr. Trump’s recent attacks on its credibility and integrity.

Russia’s Lavrov Wants Trump Administration at Syria Peace Talks Russian Foreign Minister Sergei Lavrov said the administration of President-elect Donald Trump should be invited to take part in Syria peace talks on Jan. 23.

Hewlett Packard CEO Sees Need for Action as Technology Destroys Jobs Hewlett Packard CEO Meg Whitman said the pace of change from technological advances will only accelerate, and the corporate and academic worlds need to better collaborate to address the problem of eliminated jobs.

Tuesday, January 17, 2017 Dow-DuPont Merger Probe Hinges on Innovation Concerns Agricultural technologies to boost yields are at the center of European authorities’ investigation into Dow Chemical’s merger with DuPont.

New U.S.-China Rivalry Risks Lethal Confrontation Provocations by President-elect Trump over trade and territory could escalate into armed conflict between Washington and Beijing.

ECB Survey Suggests Easing Credit Conditions in Eurozone Eurozone banks expect credit standards to ease in the current quarter, while demand for funding is also expected to pick up, according to a quarterly survey.

U.K. Inflation Hits Two-Year High in December Consumer prices in the U.K. rose in December at their fastest annual rate for more than two years, fueled by a slide in the pound in the months since Britons voted to leave the European Union.

Today In Canada Earnings scheduled Silver Bull Resources (SVB.T)* 4Q 2016 Results *Estimated release date based on last year’s report

Economic Indicators (all times ET) Investment in non-residential building construction 4Q 2016

Tuesday, January 17, 2017 Stocks to watch Financials after they fell Monday. Manulife closed down 1%. Barrick Gold rose 1.5% on stronger gold prices

Calendar items (all times ET) New motor vehicle sales