Financial Review

Tax Plan Puffery

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DOW + 72 = 23,430
SPX + 3 = 2582
NAS + 7 = 6790
RUT + 10 = 1503
10 Y + .02 = 2.37%
OIL – .32 = 56.23
GOLD – 17.40 = 1277.00

Cryptocurrency

• Number of Currencies: 912
• Total Market Cap: $242,651,274,595
• 24H Volume: $8,257,485,175

Top Cryptocurrencies

	Name	Symbol	Price USD	Market Cap	Vol.	Total Vol. %	Price BTC	Chg. % 1D	Chg. % 7D
	Bitcoin	BTC	8,083.4	$135.23B	$3.68B	44.57%	1	-1.96%	+22.72%
	Ethereum	ETH	372.17	$35.70B	$841.59M	10.19%	0.0457184	+1.22%	+16.29%
	Bitcoin Cash	BCH	1,219.00	$20.46B	$816.53M	9.89%	0.149375	-2.23%	-5.14%
	Ripple	XRP	0.24100	$9.29B	$208.90M	2.53%	0.00002952	+0.25%	+16.61%
	Litecoin	LTC	71.540	$3.89B	$182.29M	2.21%	0.00884957	-1.35%	+17.62%
	Dash	DASH	475.10	$3.67B	$173.21M	2.10%	0.0584733	-0.51%	+12.63%
	IOTA	MIOTA	0.94100	$2.67B	$96.62M	1.17%	0.00011773	-1.83%	+66.39%
	NEO	NEO	35.353	$2.30B	$249.48M	3.02%	0.0043399	-1.75%	+24.43%
	Monero	XMR	137.36	$2.13B	$63.47M	0.77%	0.016987	+0.44%	+13.23%
	NEM	XEM	0.20779	$1.88B	$14.50M	0.18%	0.00002568	-2.78%	+8.70%

It was a light volume session on Wall Street today. Stocks moved higher but closed well off session highs. This will be a holiday shortened week with the markets closed on Thursday and just a half session for stocks on Friday. We should all be thankful to take a few days away from the debate over the tax plan.

Sen. Susan Collins of Maine objects to the last-minute decision by Republican tax writers to include a repeal of Obamacare’s individual mandate — a critical source of revenue for the bill. Alaska Sen. Lisa Murkowski, another swing Republican, also has voiced objections to scotching the individual mandate. And Sen. Ron Johnson of Wisconsin wants more generous treatment for pass-through businesses.

Meanwhile, Sens. Bob Corker of Tennessee and Jeff Flake of Arizona, among others, have said the bill’s deficit impact could cost their support. If 3 Republican senators vote against a tax plan, it will not pass; that number might dip down to just 2 defectors depending on how the special election in Alabama swings. We don’t know if some of these senators have solid objections or if they are just negotiating.

This weekend, the White House indicated it might be willing to give in on repealing the individual mandate. But yanking the provision would exacerbate a problem troubling other potentially critical Republican votes in the Senate. It generates more than $300 billion in sorely needed revenue. Deficit hawks are working to wrench the bill in the other direction.

Corker, for one, has been categorical in declaring he’ll oppose a tax bill that adds “one penny” to the deficit. Late last week, he said he is working with like-minded colleagues to rein in the Senate version’s cost, now estimated at $1.4 trillion. In fact, the bill costs much more than that, thanks to expiring provisions for wage earners.

The White House budget director claims the bill will more than pay for itself through the economic growth it unleashes. But that’s just puffery. The administration so far has failed to produce an analysis justifying the claim. No independent study backs it up, either, and some paint a dire picture of the tax package’s impact on the nation’s fiscal health.

For example, even factoring in new economic growth from lower rates, the Penn-Wharton Budget Model found the measure would add up to $6.9 trillion to the debt by 2040.

Federal Reserve Chair Janet Yellen said she will step down from its Board of Governors once her successor, Jerome Powell, is sworn into the office. The announcement was expected, although Yellen could have stayed on as a governor even after stepping down as the chair, because her term as governor does not end until January 31, 2024.

Her decision to leave will give Trump an additional fourth spot to fill on the Fed’s seven-person Board of Governors in Washington, including for a vice chairman. This Wednesday, we’ll get the minutes of the last Fed FOMC meeting.

The Department of Justice will file a lawsuit today to block AT&T’s $85 billion acquisition of Time Warner. The No. 2 U.S. wireless carrier struck a deal in October 2016 to buy Time Warner, which also owns the premium channel HBO and movie studio Warner Bros, to compete with emerging technology companies by bundling video entertainment on its mobile service. The deal is opposed by an array of consumer groups and smaller television networks because it would give AT&T too much power over the content it would distribute to its wireless customers.

The legal challenge comes after AT&T rejected a demand by the Justice Department earlier this month to divest its DirecTV unit or Time Warner’s Turner Broadcasting – which contains news network CNN – to win antitrust approval. AT&T’s chief executive said then that he would defend the deal in court to win approval if necessary. Time Warner ended down 1.1 percent today.

Nebraska regulators today approved a Keystone XL oil pipeline route through the state, breathing new life into the long-delayed $8 billion project, although the chosen pathway is not the one preferred by the company that hopes to build it and could mean more time is needed to study the changes.

The Nebraska Public Service Commission’s vote also is likely to face court challenges and may even require another federal analysis of the route, if the project’s opponents get their way. Environmental activists, American Indian tribes and some landowners have fiercely opposed the project since it was proposed by TransCanada Corp in 2008. It would carry oil from Canada through Montana, South Dakota and Nebraska to meet the existing Keystone pipeline, where it could proceed as far as the U.S. Gulf Coast.

TransCanada has said that it would announce in late November or early December whether it planned to proceed with building the pipeline — which would carry an estimated 830,000 barrels of oil a day. Approval of the route gives TransCanada the ability to gain access to the land of holdout landowners through eminent domain proceedings.

North Korea is back on the list of state sponsors of terrorism, a designation that allows the United States to impose more sanctions. The designation came a week after Trump returned from a 12-day, five-nation trip to Asia in which he made containing North Korea’s nuclear ambitions a centerpiece of his discussions.

The Treasury Department will announce additional sanctions against North Korea on Tuesday. The designation will be largely symbolic, as North Korea is already heavily sanctioned by the United States. The United States has designated only three other countries – Iran, Sudan and Syria – as state sponsors of terrorism.

There is a possibility the move could backfire. North Korea could respond in several ways, including renewing missile or nuclear tests. The move also could undercut Trump’s efforts to solicit greater Chinese cooperation in pressuring North Korea to halt its nuclear and ballistic missile tests. In any case, it will do little to open the way for US dialogue with North Korea.

Chancellor Angela Merkel of Germany faced the greatest crisis of her career after negotiations to form a new government collapsed. The breakdown abruptly raised the prospect of new elections in Germany. Merkel said she was hopeful about forming a majority government. But if forced to choose, she would prefer to go through new elections rather than try to lead a minority government.

At a time when the European Union is facing a host of pressing problems, from Brexit negotiations with Britain, to the rise of right-wing populism, to separatism in Spain’s Catalonia region, the possibility of political instability in a normally reliable Germany prove disconcerting.

The potential for instability in Germany would be a major blow to the European Union. The political instability stems from the elections in Germany on Sept. 24, when Merkel’s Christian Democrats finished first. But their share of the overall vote dropped significantly, while the far-right Alternative for Germany scored a record vote, entering Parliament for the first time as the third-biggest grouping. Merkel was unable to form a coalition among the remaining parties.

Today’s emerging-market disaster comes courtesy of Chile. The nation had the world’s worst-performing stock market and major currency today due to some political turmoil. The prospect of a clear victory for billionaire Sebastian Pinera in next month’s run-off election evaporated following a poor performance in the first round on Sunday.

Many investors had taken for granted that Pinera would win the second round on Dec. 17, with the benchmark IPSA index rallying 39 percent this year through Friday in dollar terms on hopes the tax cuts he pledged would revive investment, growth and corporate profits. But that’s now in doubt, and the IPSA index retreated as much as 4.8 percent to 5,134.58 in Santiago on Monday, its biggest intraday loss since January 2012.

Chipmaker Marvell Technology Group said it would buy smaller rival Cavium for about $6 billion, as it seeks to expand its wireless connectivity business. In the last two years, the chip industry has witnessed a series of deals as companies try to gain market share in emerging areas such as automotive technologies and connectivity. The most recent is a bid by Wi-Fi chipmaker Broadcom for rival Qualcomm for $103 billion, in what could be one of the biggest technology deals ever.

The opioid crisis has ravaged some communities across the country. Of the estimated 50,000 Americans who died of drug overdoses in 2015, some 63% involved opioids. That same year, more than 33,000 Americans died of drug overdoses involving opioids. It’s estimated more than 54,000 people died from opioids in 2016.

According to a new report from The Council of Economic Advisers, an agency that is part of the Executive Office of the President, the economic cost of the opioid crisis in 2015 was $504 billion, much higher than previous estimates. One study from the Beth Israel Deaconess Medical Center in Boston found that the average cost of treating an opioid overdose victim in intensive care units jumped 58% between 2009 and 2015.

As the addiction persists, patients arrive in a worse condition and require longer stays. In 2015, average cost among 162 academic hospitals was $92,400 per patient in intensive care. The U.S. spent nearly $8 billion on criminal justice-related costs due to selling and consuming opioids, which was almost entirely a cost to state and local governments.

The cost in lost productivity is about $20 billion. Some seven in 10 employers have felt some effect of prescription drug usage among their employees. And fatal overdoses cost nearly $22 billion in health care and lost productivity costs.

Financial Review

Scotch and Cigarettes

Sinclair Noe — March 24, 2017

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DOW – 59 = 20,596
SPX – 1 = 2343
NAS + 11 = 5828
RUT + 1 = 1354
10 Y – .02 = 2.40%
OIL + .31 = 48.01
GOLD – 1.70 = 1243.90

House Speaker Paul Ryan pulled his Obamacare repeal bill from the floor this afternoon, a day after President Donald Trump had threatened to walk away from health care reform if he didn’t get a vote. Ryan reportedly met with Trump, presented the expected vote totals and recommended the President pull the bill.

The decision was ultimately Trump’s. Trump had gambled big by presenting holdout House conservatives with a take-it-or-leave it ultimatum on Thursday night and put his own credibility on the line. It also puts Ryan in a much-weakened political position, after being defied by his own conference.

And somewhere John Boehner is puffing on a cigarette and enjoying a Friday afternoon Scotch.

So, what now? The GOP effort to repeal Obamacare is dead. The House meltdown on Obamacare repeal has serious implications for the American health care system, with Republicans apparently unable to repeal the law but also unwilling to fix the deficiencies that the White House says will collapse the law.

Ryan told fellow Republicans they are “moving on” from health care; which means the next issue will likely be tax reform, another complex and divisive issue, made even more complicated because health care represents nearly 20% of the economy.

Still, shifting focus to tax reform from the quagmire that is health care reform might be a positive in the eyes of Wall Street.

Stocks rose from session lows to end little changed. Investors now have a weekend to consider implications. Treasuries rose. The dollar slipped for a second week. The S&P 500 Index capped its worst week since the election as political wrangling in Washington dominated sentiment. Banks sank 3.8 percent in the week. Shares of hospital operators finished sharply higher.

New orders for key US-made capital goods fell in February, but shipments surged. The Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dipped 0.1 percent last month after rising 0.1 percent in January. A recovery in oil prices from multi-year lows is driving demand for equipment in the energy sector, helping to lift the manufacturing sector after a prolonged slump.

Separately, orders for durable goods advanced 1.7% while the increase in January was raised several notches to 2.3%, reflecting a pickup in manufacturing that kicked in toward the end of last year. The increase in bookings last month was spearheaded by commercial aircraft, whose orders jumped almost 48%. That offset a nearly 1% drop in orders for new cars and trucks.

US auto sales in March will increase almost 1.9 percent from a year earlier, even as consumer discounts continue to remain at record levels. Per industry consultants J.D. Power and LMC Automotive, March U.S. new vehicle sales are expected to be about 1.62 million units.

Oil posted its third weekly drop ahead of this weekend’s meeting in Kuwait, at which OPEC and its production-cutting allies will assess the effectiveness of their actions to date. Talks will also be overshadowed by the question of whether the persisting glut requires curbs to be extended beyond the summer.

US shale producers are drilling at the highest rate in 18 months but have left a record number of wells unfinished in the Permian Basin in Texas, the largest oilfield in the country – a sign that output may not rise as swiftly as drilling activity would indicate. A record 1,764 wells were left unfinished in the Permian in February. In February alone, 395 wells were drilled and only 300 completed. That was the highest drilling rate in the Permian in two years.

President Trump announced this morning the granting of a permit for construction of the controversial Keystone XL pipeline, calling it “the first of many infrastructure projects” that he would approve in order to put more Americans to work.  The $8 billion project would span 1,200 miles, connecting Alberta’s massive tar sands crude with pipelines and refineries on the Texas gulf coast that are particularly well-suited to handling the thick oil.

TransCanada, the Calgary-based firm that has been trying to win approval for the pipeline for nearly 10 years, announced that the State Department has signed and issued a construction permit for the project. Because of the approval, TransCanada will drop an arbitration claim it filed for $15 billion in damages under the North American Free Trade Agreement. And Trump made no mention of using US steel, as he earlier said would be required of any new pipeline.

That doesn’t necessarily mean the pipeline will be built – at least not any time soon – but it will result in many new jobs…, for attorneys. Since Obama had nixed the pipeline based on an environmental assessment commissioned by the State Department in early 2014, opponents will likely argue in court that Trump can’t reverse the decision without conducting a new assessment.

The Presidential Permit is only one part of a web of federal, state, and local permits that must be obtained prior to starting construction. TransCanada may still need to reach deals with hundreds of potentially affected landowners, plus state and local regulators on the pipeline’s route.

Dallas Fed President Robert Kaplan sees three interest rate rises in 2017 as “a reasonable baseline.”  Kaplan said he is not looking for a pause in rate hikes if US employment and inflation figures continue to improve, adding that it would be right for the Fed to begin trimming its balance sheet in the future. Kaplan is a voting member on the FOMC.

New York Fed President William Dudley said today that the economy will cope “just fine” with gradual policy tightening. Meanwhile, St. Louis Fed President James Bullard does not share that confidence, and believes 2 more hikes might potentially be overkill. Bullard told reporters, “It’s not necessary to raise rates that quickly if the goal is to keep inflation near target and keep unemployment between 4.5 and 5 percent.”

US financial regulators are telling four foreign banks to improve their living wills. Barclays, Credit Suisse, Deutsche Bank and UBS were each given until July 2018 to improve their resolution plans, which are intended to map out a strategy so their US operations could be closed under bankruptcy law without taxpayer assistance in the event of an unexpected crisis.

At the same time, the Federal Reserve and the Federal Deposit Insurance Corporation said livings wills presented by 16 large US banks would be functional. Only Northern Trust’s living will have shortcomings that must be addressed.

Germany’s state-owned development bank KfW mistakenly transferred more than $5.4 billion to four banks because of a technical glitch that repeated single payments multiple times. We don’t know how that could happen but the money has been recovered. Maybe the “send” key got stuck or something.

Apparently, this kind of glitch is not uncommon. In June 2015, Deutsche Bank’s foreign exchange unit mistakenly sent $6 billion to a hedge fund client and recovered the sum a day later. And of course, there have been multiple hacks on multiple banks, including the Federal Reserve Bank of New York.

Still, the KfW blunder is distinctive because KfW’s own website touts it’s been awarded the title of the world’s safest bank by Global Finance magazine. You’ve probably never heard of KfW, but if it does register it might be because of an ill-timed payment of more than 300 million euros KfW made to Lehman Brothers in September 2008, just as the U.S. investment bank filed for bankruptcy.

At the time, the German lender failed to refresh its counter-party check that would have prevented it from processing the regular transaction. The transfer turned into a political scandal in Germany, with newspaper Bild calling KfW “Germany’s dumbest bank.”

Passengers on some flights to the US and UK must check in most types of electronic devices starting at 3 a.m. ET on Saturday. The ban includes laptops, cameras, gaming devices and tablets such as iPads. Some airlines flying to the U.S. have already started enforcing the new rules. Officials said the move is a response to fears that terrorist groups may target commercial aircraft by smuggling explosive devices in electronic devices.

On a party-line vote of 50-48, the Senate has approved overturning regulations from last October that put strict requirements on consumer privacy protection. The FCC, then led by Tom Wheeler, voted to require ISPs to get consumer consent before using data like health and financial information, as well as precise geolocation in ads and internal marketing. Major providers opposed the restrictions at the time.

The YouTube advertising exodus continues as Johnson & Johnson, JPMorgan and LYFT join other major advertisers in the US and the UK to pull ads from the platform, due to concerns they may have appeared on channels that broadcast offensive videos. Whether the recent events are a harbinger of bigger problems may depend on whether Google can give businesses more control over ad placement.

Japan’s Toshiba Corp has informed its main lenders it is planning for US nuclear unit Westinghouse Electric to file for bankruptcy on March 31. Reuters reports Toshiba expects a Chapter 11 filing for Westinghouse would expand charges related to the US unit in the current financial year to around $9 billion, about 30% higher than earlier estimates.

The decision comes only three months after Toshiba first warned of multi-billion dollar charges for Westinghouse. The ensuing financial meltdown has already caused Toshiba to put up its prized memory chip unit for sale, consider a sale of a majority stake in Westinghouse and miss deadlines to file earnings that have put it at risk of a delisting.

Dow Makes Another Run Toward 20,000

Charles Schwab: On the Market

Posted: 1/24/2017 4:15 PM ET

Dow Makes Another Run Toward 20,000

U.S. stocks finished solidly higher, with the Dow again nearing the elusive 20,000 mark, amid a plethora of mixed earnings and economic reports, as well as a number of actions by President Donald Trump, including reviving the Dakota Access and Keystone XL oil pipelines. Treasuries were lower and crude oil prices recovered from yesterday's decline, while the U.S. dollar was slightly higher and gold lost ground.

The Dow Jones Industrial Average (DJIA) rose 113 points (0.6%) to 19,913, the S&P 500 Index was 15 points (0.7%) higher at 2,280 and the Nasdaq Composite jumped 48 points (0.9%) to 5,601. In moderate volume, 865 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.43 to $53.18 per barrel and wholesale gasoline added a penny to $1.60 per gallon. Elsewhere, the Bloomberg gold spot price fell $8.60 to $1,209.63 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—ticked 0.1% higher to 100.29.

Dow member 3M Co. (MMM $176) reported 4Q earnings-per-share (EPS) of $1.88, one penny above the FactSet estimate, as revenues ticked 0.4% higher year-over-year (y/y) to $7.3 billion, roughly in line with projections. MMM reaffirmed its 2017 EPS guidance. Shares lost ground.

Dow component Verizon Communications Inc. (VZ $50) posted adjusted 4Q profits of $0.86 per share, three cents south of forecasts, as revenues declined 5.6% y/y to $32.3 billion, compared to the expected $32.1 billion. VZ said its earnings and revenue for 2017 are expected to be fairly consistent with 2016. The company said in regard to its acquisition of Yahoo Inc. (YHOO $44), it continues to work with the search engine to assess the impact of data breaches. VZ traded solidly lower. Late yesterday, YHOO reported 4Q EPS and revenues that topped forecasts and shares were nicely higher.

Dow member Johnson & Johnson (JNJ $112) announced 4Q EPS ex-items of $1.58, above the estimated $1.56, with revenues rising 1.7% y/y to $18.1 billion, below the projected $18.3 billion. JNJ issued 2017 EPS and revenue guidance that came in just shy of expectations. Separately, JNJ announced that it is evaluating potential strategic options for its diabetes care companies, LifeScan Inc., Animas Corp., and Calibra Medical Inc. JNJ traded lower.

Dow component DuPont (DD $76) achieved 4Q earnings ex-items of $0.51 per share, above the estimated $0.41, with revenues decreasing 2.0% y/y to $5.2 billion, below the projected $5.3 billion. DD issued 1Q EPS guidance that came in south of expectations. DD said it expects to close its merger with Dow Chemical Co. (DOW $60) in the first half of 2017, pending regulatory approval. DD gained solid ground.

Dow member Travelers Companies Inc. (TRV $117) reported 4Q EPS of $3.20, compared to the estimated $2.80, as net written premiums rose 3.0% y/y to $6.1 billion, roughly in line with forecasts. Shares traded lower.

Steel companies based in the U.S., including United States Steel Corp. (X $33) and Nucor Corp. (NUE $61), saw nice gains after President Donald Trump signed executive orders today to restore the controversial Dakota Access and Keystone XL oil pipelines that were shuttered during the Obama administration. During the signing, Mr. Trump said that he is "very insistent that if we're going to build pipelines in the United States, the pipe should be made in the United States."

Housing sales slip, while manufacturing activity accelerates more than expected

Existing-home sales in December fell 2.8% month-over-month (m/m) to a 5.49 million annual rate, compared to the Bloomberg forecast of a 5.52 million pace. November's figure was upwardly revised to a 5.65 million annual rate. Compared to last year, sales were only 0.7% higher, but existing homes sold in 2016 (5.25 million) were the highest since 2006. The median existing-home price was up 4.0% y/y at $232,200. Housing supply came in at a 3.6-month pace at the current sales rate, versus 3.9 months in December 2015, and the inventory of homes for sale fell to the lowest since 1999. Sales in the Northeast, Midwest and West all declined m/m, but were higher y/y, while the South was flat m/m and down y/y.

National Association of Realtors (NAR) Chief Economist Lawrence Yun said solid job creation and exceptionally low mortgage rates translated into a good year for the housing market, but higher mortgage rates and home prices combined with record low inventory levels stunted sales in December. For analysis of the real estate sector, see Schwab's Director of Market and Sector Analysis, Brad Sorensen's, CFA, latest Schwab Sector Views: Sectors and Politics at www.schwab.com/marketinsight, and follow Schwab on Twitter: @schwabresearch.

The preliminary Markit U.S. Manufacturing PMI Index for January improved to the best level since March 2015 after rising to 55.1 from December's 54.3 level, and versus forecasts of 54.5. A reading above 50 denotes expansion in activity and Markit said the solid improvement was led by a sharp increase in new work.

The Richmond Fed Manufacturing Activity Index unexpectedly jumped further into expansion territory (a reading above zero), rising to 12 for January from the 8 posted in December, and versus expectations of a 7 reading.

Schwab’s Chief Investment Strategist Liz Ann Sonders notes in her latest article, Not Fade Away: Will High Consumer/Business Confidence Fade or Persist?, measures of both consumer and business confidence have recently surged, with the former resting on fairly strong pillars, but the latter may be on weaker pillars and subject to post-inauguration volatility. Read more at www.schwab.com/marketinsight and be sure to check out our article, The Trump Effect: Can the Post-Election Rally Continue at www.schwab.com/insights for analysis of the late-2016 rally to record highs. Follow Liz Ann on Twitter: @lizannsonders.

Treasuries finished lower, as the yield on the 2-year note rose 4 basis points (bps) to 1.19%, while the yields on the 10-year note and the 30-year bond advanced 6 bps to 2.46% and 3.05%, respectively.

The U.S. dollar and Treasury yields have been volatile but remain elevated amid political uncertainty in the wake of last week's inauguration of President Donald Trump, while economic data continues to be relatively positive. Schwab's Vice President of Legislative and Regulatory Affairs, Michael T. Townsend and Vice President of Trading and Derivatives, Randy Frederick offer their latest video, How Could the Items on the Republican Agenda Impact Investors?, at www.schwab.com/insights. Follow Schwab on Twitter: @schwabresearch.

Schwab's Chief Fixed Income Strategist, Kathy Jones discusses the bond markets and the recent rally in the greenback in her articles, Anatomy of a Bond Bear Market: What to Look For When Yields Rise and Will the U.S. Dollar Bull Market Continue in 2017?, at www.schwab.com/marketinsight. Follow Kathy on Twitter: @kathyjones.

The only report slated for release on tomorrow's economic calendar is MBA Mortgage Applications.

Europe rebounds slightly, Asia mixed

European equities rebounded modestly, despite some mixed data in the region and as the global markets remained skittish after U.S. President Trump took actions yesterday to withdraw from the Trans-Pacific Partnership (TPP) and renegotiate the North American Free Trade Agreement (NAFTA). The British pound pared solid early losses and finished modestly lower versus the U.S. dollar amid festering "hard" Brexit uncertainty even as the U.K. Supreme Court ruled that the government will need parliamentary approval to start Brexit negotiations. With the global markets remaining jittery to begin 2017, Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA, offers Five Reasons to Stay Invested Despite Heightened Uncertainty, at www.schwab.com/oninternational. The euro also dipped versus the greenback and bond yields in the region gained ground.

In economic news, Markit's preliminary Eurozone Composite PMI Index—a gauge of business activity in both the manufacturing and services sectors—dipped to 54.3 in January, from 54.4 in December, and compared to the 54.5 reading that was expected. However, a reading above 50 denotes expansion. Schwab's Jeffrey Kleintop, CFA, offers his article, The CURE for a calm Market: Four risks for 2017, at www.schwab.com/oninternational, where you can also find his commentary, 5 Reasons International Stocks May Underperform In 2017. Follow Jeff on Twitter: @jeffreykleintop.

Stocks in Asia finished mixed, with global sentiment remaining jittery amid U.S. President Donald Trump's actions in the first few days following his inauguration that have caused protectionism concerns to flare up, notably yesterday's executive order to withdraw from the Trans-Pacific Partnership (TPP). Japanese equities declined, with the U.S. trade concerns being met with the yen holding onto most of yesterday's rally, overshadowing a report that showed growth in the nation's manufacturing output accelerated slightly in January. For more on Trump's trade policies, see Schwab's Chief Global Investment Strategist Jeffrey Kleintop's, CFA, article, President Trump and Global Trade: How Will Campaign Promises Play Out? at www.schwab.com/oninternational, where you can also find Schwab's Director of International Research, Michelle Gibley's, CFA, latest article, Currency Hedging: 5 Things You Need to Know.

Mainland Chinese stocks and those traded in Hong Kong both rose, with the markets continuing to coast into the long Lunar New Year holiday break beginning at the end of the week. Markets in Australia advanced, buoyed by a rally in basic materials, while Indian securities gained solid ground following some upbeat earnings reports in the region and yesterday's drop for the U.S. dollar. Finally, South Korean stocks finished flat. Schwab's Michelle Gibley, CFA, offers timely analysis of emerging markets in her latest article, Emerging Markets: Why They Deserve a Place in Your Portfolio at www.schwab.com/oninternational, and be sure to check out our release, Why Your Portfolio Needs International Stocks—Despite 2017 Risks at www.schwab.com/insights.

Tomorrow's international economic calendar will hold GDP from South Korea, trade data from Japan, CPI from Australia, confidence figures from France, PPI from Spain, the Ifo Business Climate Survey from Germany, and industrial orders and sales from Italy.