The hot seat could be a bit more fiery than usual when Janet Yellen begins her semi-annual Congressional testimony at 10:00 a.m. ET. The Fed Chair is expected to defend the post-crisis banking rules President Trump has pledged to undo and investors will be interested to see if her economic outlook aligns with his. When it comes to interest rates, Yellen isn't expected to do much more than repeat the "gradual" pace guidance that was used in the Fed's last statement.
The trade situation with Canada is already "less severe," than that with Mexico, President Trump said yesterday, holding a joint press conference with Canadian Prime Minister Justin Trudeau. "We will be tweaking it, doing certain things with both of our countries." Canada sends 75% of its exports to the United States, equivalent to 20% of the country's gross domestic product.
Chief executives of some of America's largest retailers, including Target (NYSE:TGT), Best Buy (NYSE:BBY), Gap (NYSE:GPS) and AutoZone (NYSE:AZO), will head to Washington tomorrow to make their case that an import tax would raise consumer prices and hurt their businesses. Best Buy has even circulated a flyer to lawmakers, which cites an analyst forecast that a 20% tax would wipe out the company's projected annual net income of $1B and turn it into a $2B loss.
Meanwhile, the EU and other U.S. trading partners have begun laying the groundwork for a legal challenge to an American border tax proposal in a move that could trigger the biggest case in World Trade Organization history. Should the U.S. ignore a WTO ruling, as Trump has threatened in the past, it could lead to the unraveling of the international system designed to prevent global trade wars.
Following days of speculation, National Security Adviser Michael Flynn has resigned, apologizing to VP Mike Pence for misleading him about his conversations with Russia. Retired Army Lt. Gen. Keith Kellogg has been named as acting national security adviser in his stead. In Cabinet news, the U.S. Senate confirmed Steven Mnuchin as Treasury Secretary last night, with yet another vote mostly along party lines.
Evacuation orders for 188,000 Northern California residents remain in effect today as engineers work around the clock at America's tallest dam. "It would be a massive blow to the state's water system if they lose Oroville," said Peter Gleick, a water researcher at the Pacific Institute. The big worry doesn't center on the dam itself, but that a collapse of the spillway could cut into the hillside and lead to a "cascading failure."
Due to rising food and travel prices during the Lunar New Year, China's consumer inflation hit the highest level in almost three years, rising 2.5% in January, while producer inflation accelerated 6.9%, reaching an almost six-year high. Inflation expectations have been rising in most major developed economies, except Japan, since mid-2016 in line with a global recovery in manufacturing.
European data dump: The eurozone economy grew 0.4% in the fourth quarter, slightly less than initially reported as German and Italian expansion disappointed. In the U.K., inflation rose to 1.8% in January, a smaller increase than expected, pushing the pound down 0.5% to $1.2459. Lastly, ZEW's Indicator of Economic Sentiment for Germany fell to 10.4 vs. 16.6 last month due to weak data and political uncertainty.
Credit Suisse +1.6% premarket after pre-tax profits beat expectations, boosted by a strong quarter in investment banking and capital markets. The bank still reported a heavy Q4 net loss of 2.3B Swiss francs ($2.3B) as it felt the impact of a $5.3B fine from the DOJ. More restructuring measures? Credit Suisse (NYSE:CS) intends to cut between 5,500 and 6,500 jobs in 2017.
After a day of delays and confusion, Toshiba (OTCPK:TOSYY) Chairman Shigenori Shiga has resigned as the struggling conglomerate said it expected to book a $6.3B writedown on its U.S. nuclear business. The massive hit raises concerns about whether it can survive its latest financial woes and "would even impact Japan's sovereign credit rating if there’s a knock-on effect," said Tom O'Sullivan, a Tokyo-based energy analyst.
South Korea's special prosecutor's office will decide no later than Wednesday whether to request an arrest warrant for Samsung Group (OTC:SSNLF) chief Jay Y. Lee, a suspect in a graft probe that may topple President Park Geun-hye. The office will decide at the same time on whether to seek arrest warrants for four other Samsung Group executives identified as suspects in its investigation.
Amazon Web Services is taking on Skype (NASDAQ:MSFT), WebEx (NASDAQ:CSCO) and GoToMeeting (NASDAQ:CTXS) in videoconferencing, pushing deeper into the productivity-application market to broaden its appeal to business customers. AWS's (NASDAQ:AMZN) new service, called Chime, lets users host video meetings and share content on computer and mobile-phone screens. It's available on Windows, Mac, iOS, and Android.
Disney has dropped PewDiePie, the world's highest-earning YouTube (GOOG, GOOGL) star, after a series of videos that featured anti-Semitic messages, WSJ reports. "Although Felix has created a following by being provocative and irreverent, he clearly went too far in this case," said a spokeswoman for Maker Studios (NYSE:DIS). The Swedish vlogger has over 53M subscribers and reportedly makes $15M a year from YouTube.
For the first time, Wal-Mart (NYSE:WMT) will combine its own buying for products sold at its stores with purchases it makes for its website, a significant move to stamp out duplicate efforts as it consolidates buying operations to better fight Amazon (AMZN). Vendors contacted by Wal-Mart about the change told Reuters the store and online buying teams of the world's largest retailer currently operate independently.
According to Business Insider, Burlington Stores (NYSE:BURL) has become the latest retailer to decide not to sell products of Ivanka Trump's brand online. Nordstrom (NYSE:JWN), Neiman Marcus (Pending:NMG), Gilt, Sears (NASDAQ:SHLD) and Belk (OTCPK:BLKIA) dropped the line in the past two weeks. Reports also suggest that other discount sellers including TJ Maxx (NYSE:TJX) and Marshalls have instructed employees to mix the clothing into racks and ditch brand signage.
Defending her decision to advise President Trump, IBM CEO Ginni Rometty sent a memo to employees stressing the company "does not espouse a political point of view" and has "engaged directly with every U.S. president since Woodrow Wilson." At her last meeting, Rometty, Trump and Homeland Security Secretary John Kelly talked about "ways that advanced technology could address national security imperatives while also permitting lawful immigration and travel."
The owner of Burger King and Tim Horton's has approached Popeyes Louisiana Kitchen (NASDAQ:PLKI) to express interest in an acquisition, sources told Reuters. A deal would be a bet by Restaurant Brands (NYSE:QSR) that it can use its international reach to introduce Atlanta, Georgia-based Popeyes' famous Louisiana-style fried chicken and buttermilk biscuits to more diners globally.
Running out of options... U.S. District Court Judge James Boasberg has denied a request from the Standing Rock Sioux and Cheyenne River Sioux tribes, seeking to halt construction of the final link in the Dakota Access Pipeline. The tribes argued the project would prevent them from practicing religious ceremonies at a lake they contend is surrounded by sacred ground. Related tickers: ETP, ETE, SXL, PSX, MPC, ENB, EEP
Apple has reclaimed its throne as the only $700B publicly-traded U.S. company, riding a post-earnings rally and a more favorable outlook on Wall Street. Goldman Sachs raised its price target on the stock on Monday, citing Apple's (NASDAQ:AAPL) 3-D sensing technology, while UBS released a note stating the market is undervaluing the firm's services business. The last time Apple broke above the $700B level was in February 2015.
In Asia, Japan -1.1%. Hong Kong flat. China +0.1%. India flat.
In Europe, at midday, London +0.2%. Paris +0.2%. Frankfurt +0.1%.
Futures at 6:20, Dow -0.1%. S&P -0.1%. Nasdaq flat. Crude +0.8% to $53.33. Gold +0.4% to $1230.70.
Ten-year Treasury Yield +1 bps to 2.45%
6:00 NFIB Small Business Optimism Index
8:30 Producer Price Index
8:50 Fed's Lacker speech
8:55 Redbook Chain Store Sales
10:00 Yellen delivers semi-annual testimony
1:00 PM Fed's Kaplan: Monetary Policy