All eyes on Madrid as Catalonia blinks, Trump's tax plan faces challenges, and more Uber headaches.
Pulling back
The Spanish government has maintained its hard line
on Catalan secession after the president of the region yesterday backed
away from unilaterally declaring independence. Prime Minister Mariano
Rajoy convened an extraordinary meeting of his cabinet this morning, and
started the process that may spur the suspension of the regional
government. He is seeking further clarification from Catalan about its
independence intentions. The decision by Catalan separatists to defer
its declaration has spurred a rally in the country’s stocks and bonds, while the euro rose to its highest level in more than a week.
Fiscal plans
President Donald Trump said that he will adjust his tax plan in the coming weeks without specifying what the adjustments would be. The tight legislative arithmetic means
that the administration will have to tread carefully to avoid
alienating any more than two GOP senators. The recent feud between the
president and Senator Bob Corker won’t help the passage of the fiscal plan.
Uber woes
Uber Technologies Inc. is facing at least five criminal probes from the Justice Department – two more than previously reported. The ride-hailing app was already under pressure following the suspension of its license to operate in London,
with similar moves possible in other major markets such as Brazil. Its
mounting legal problems are not the only headwind of late: a speed-bump has also emerged in Softbank’s plan to invest billions in Uber.
Markets rise
The MSCI
Asia Pacific Index gained 0.2 percent overnight, while Japan’s Nikkei
225 Stock Average added 0.3 percent to close at the highest since 1996. In Europe, the Stoxx 600 Index was unchanged at 5:40 a.m. Eastern Time as a 1.25 percent rally in Spain’s IBEX 35 Index was not enough to lift the regional gauge. S&P 500 futures slipped 0.1 percent, the 10-year Treasury yield was at 2.343 percent while gold was unchanged.
Earnings season
Wall Street third-quarter earnings season kicks off with JPMorgan Chase & Co. and Citigroup Inc. reporting tomorrow, with expectations for a less-than-stellar set of results across the banking industry. Low volatility in markets probably hit trading revenue, loan growth is expected to decelerate for the fourth-straight quarter, and earnings outlooks are somewhat dependent on the success of Trump’s tax overhaul.