Morning Call For Monday, Dec. 24

Overnight Markets And News

March S&P 500 E-minis are up +0.5% this morning after Sunday's news that Treasury Secretary Mnuchin called CEOs of the six largest U.S. banks and received reassurances that there is plenty of liquidity to deal with the recent market volatility. Mr. Mnuchin also tried to reassure the markets that President Trump would not try to fire Fed Chief Powell after Bloomberg late Friday reported that Mr. Trump has repeatedly expressed a desire to aides to fire Mr. Powell. Mr. Mnuchin today is scheduled to convene a call with the President's Working Group on financial markets with representatives from the Fed, SEC and CFTC.

The markets have so far taken in stride the partial U.S. government shutdown that began last Friday at midnight. The earliest that a shutdown could be end is when the Senate is due to reconvene on Thursday. However, White House Budget Director Mulvaney on Sunday said that, "It's very possible that the shutdown will go beyond the 28th and into the new Congress," which begins on Jan 3.

The Euro Stoxx 50 index is down -0.66% this morning, playing catch-up with last Friday's -2.06% sell-off in the S&P 500 index. Asian stocks today closed mostly lower with the Japan Nikkei index closing down -1.11% and Hong Kong Hang Seng closing down -0.40%. However, China's Shanghai Composite closed up +0.43% after Chinese government economic planning officials at their meeting last week said the government plans to cut taxes and fees in 2019 as a support measure.

China announced a new batch of import tariff cuts on 700 import items and export tariff cuts on 94 export items effective Jan 1. The move is the third round of tariff cuts this year and are designed to meet Chinese President Xi's goal of opening China's economy. The tariff move did not involve the retaliatory tariffs that China slapped on imports from the U.S.

U.S. Stock Preview

Key U.S. news today includes: (1) Nov Chicago Fed national activity index (expected -0.04 to 0.20, Oct +0.10 to 0.24), (2) Treasury auctions $40 billion of 2-year T-notes.

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