Morning 1-29

  Borrowing Needs

(Bloomberg) — The U.S. Treasury Department indicated that the government’s borrowing needs are rising faster than previous
estimates as the Trump administration finances a widening budget deficit. The department expects to issue $365 billion in net
marketable debt from January through March, up $8 billion from its estimate in October, according to a statement released
Monday in Washington. The Treasury sees an end-of-March cash balance of $320 billion, unchanged from its forecast three
months ago. In its first estimate of the April-June period this year, the department estimated borrowing of $83 billion, $11 billion
more than in the same period last year and the most for that quarter since 2012.

European Equity Comments via Reuters

Deutsche Bank believes “the growth scare is now priced out” and recommends reducing the cyclical exposure following an 8 percent outperformance vs defensives since the start of the year.

“We reduce our overweight in European cyclicals versus defensives,” DB strategists say, as they downgrade insurance and construction materials to underweight from overweight and airlines to benchmark from overweight, while upgrading personal & household goods to overweight from underweight and food & beverages to benchmark from underweight.

“While our projections for a recovery in Euro area PMI momentum and rising US bond yields over the coming months imply only slight further upside for cyclicals versus defensives (2% until end-Q1), we prefer to maintain an overweight in cyclicals overall as a hedge against the possibility of a boost from a US-China trade agreement by March 1,” they add.

(More) China Stimulus

(Xinhua) — China unveiled a raft of measures on Tuesday to secure stable domestic consumption growth in 2019.
The policy plan, jointly released by 10 ministry-level authorities including the National Development and Reform Commission, will inject new impetus into automobile sales, urban and rural consumption upgrades, spending on new  products and services, and improvement in the consumption environment. Chinese markets closed next week for New Year’s celebration

 A theme for Overnight trade, Waiting

 Disappointing Earnings from Germanys SAP, Biggest Dax component initially weighed on Stocks overnight but indices have clawed back into the green. SAP still trading lower by 3.5%. A handful of U.S. Earnings this morning highlighted by 3M have provided a bit of optimism as traders come on line this morning. All base metals trading higher this morning Copper +.4%, Nickel+1.2%. The U.S. has imposed sanctions on Venezuelan oil industry, markets shrug. Crude and Brent both +1%.Thinking is once Maduro Steps down Sanctions will be lifted so a Not a long term concern for markets for now. Treasuries and Bunds Sideways as is dollar index. Waiting for a catalyst

China trade negotiations start tomorrow and have not gotten off on the wrong foot as the U.S. charged Huawei with bank and Wire Fraud, breaking Iran sanctions and IP theft. China Vice premier will meet with Trump at the conclusion of talk on Thursday.

Event Risks:

  • Fed meeting tomorrow focus will be on balance sheet and Global growth worries
  • A round of Brexit amendments to be voted on in parliament today Overnight GBP vol highest in months so some worries about outcome of votes.PM May could lose control  of Brexit process.
  • John Bolton said the U.S. is considering sending 5k troops to Columbia to monitor Situation In Venezuela
  • Apple earnings after close ,3:30  attention must be paid

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