Trade talk is set to dominate the first meeting between Donald Trump and Justin Trudeau as the Canadian Prime Minister arrives in Washington today for his first face-to-face encounter with the U.S. President. Aside from NAFTA negotiations, the two leaders may discuss Trump's decision to conditionally approve TransCanada's (NYSE:TRP) Keystone XL pipeline from Alberta's oil sands, a project blocked by the Obama administration.

Economy

Japan's economy grew at an annualized pace of 1% in the final quarter of 2016, roughly in line with analysts' expectations, as yen weakness spurred a pick-up in exports and business investment. For calendar 2016, the economy also grew by 1%, following an expansion of 1.2% in 2015. That's well above Japan’s long-run growth potential of about 0.5%, suggesting "Abenomics" is working to boost demand.

In the wake of Pyongyang's latest missile launch, South Korea's finance ministry has pledged to act "swiftly and firmly" to combat financial market volatility, although the reaction from stocks has been muted so far. "The United States of America stands behind Japan, its great ally, 100%," President Trump said yesterday in a joint press conference with Shinzo Abe, who called the launch "absolutely intolerable." He made no further comments.

Swiss voters have rejected plans to overhaul the nation's corporate tax system, sending the government back to the drawing board as it tries to abolish ultra-low tax rates for multinational companies without triggering a mass exodus. Most Swiss recognize the country needs reform to avoid being blacklisted as a low-tax pariah, but new measures proposed to help firms offset the loss of their special status breaks had created deep divisions.

Greek Prime Minister Alexis Tsipras believes the country's drawn-out bailout review will "conclude positively," but repeated that Athens will not accept "illogical" demands and already "made so many sacrifices in the name of Europe." European Commission President Jean-Claude Juncker may feel a bit different. He said the deal was "on shaky ground" because the IMF had not yet decided what role it would play and expressed his doubt that the "EU will remain united during Brexit talks."

Italy is leading eurozone bond yields higher after former Prime Minister Matteo Renzi looked set to trigger a leadership contest of his ruling Democratic Party, highlighting risks in the bloc's third largest economy. The move could delay the early election he has been pushing for since he was toppled as premier last year and increase the political uncertainty taking hold in the broader eurozone.

"There is quite significant uncertainty about what's actually going to happen," Fed Vice Chairman Stanley Fischer said at the Warwick Economics Summit on Saturday in response to a question about the Trump administration's fiscal and trade plans. He also voiced hopes that capital requirements for lenders will not be overly reduced, and believes Dodd-Frank won't be repealed, though there might be some adjustments.

Meanwhile, the U.S. Senate has some more busy sessions on tap as it considers economic policy makers chosen by President Trump. A confirmation vote for Treasury Secretary Steven Mnuchin is scheduled for today, while a committee hearing for Labor Secretary nominee Andrew Puzder and a confirmation vote for Wilbur Ross to head the Commerce Department could come later this week.

Traders are awaiting the release of OPEC's monthly oil market report, and if production cuts come through as suggested, oil prices could push higher. Crude futures are currently down 0.6% to $53.53/bbl. On Friday, the IEA said compliance was about 90% in January, the first month of cuts in oil production that the group agreed to late last year.

Stocks

Amazon may face penalties after disclosing that it may have violated American law by selling goods covered by U.S. sanctions. "We determined that, between January 2012 and December 2016, we processed and delivered orders of consumer products for certain individuals and entities located outside Iran covered by the Iran Threat Reduction and Syria Human Rights Act," Amazon (NASDAQ:AMZN) said in a securities filing.

Trump-branded consumer products have suffered new blows, with Sears (NASDAQ:SHLD) and Kmart discontinuing online sales of 31 Trump Home items. The retailers said their decision was part of a push to focus their online business on the most profitable items. New details have also emerged showing Ivanka Trump's fashion line tumbling 32% at Nordstrom (NYSE:JWN) last fiscal year, with the declines deepening more than 70% around the U.S. presidential election.

Several years after it backed away from bottomless data packages, Verizon (NYSE:VZ) is bringing them back for $80 a month; or $180 for four separate smartphone lines. Sprint (NYSE:S) and T-Mobile (NASDAQ:TMUS) have been chipping away at Verizon's customer growth, thanks in part to those carriers' aggressive pricing for unlimited data. Last year, AT&T (NYSE:T) also started offering unlimited data plans to customers who sign up for DirecTV.

One of Japan's largest beer makers, Kirin Holdings (OTCPK:KNBWY), has thrown in the towel on its troubled Brazilian unit, selling it to Heineken (OTCQX:HEINY) for €664M, or €1.025B including debt. The deal will make Heineken the No. 2 brewer in the world's third-largest beer market, with a share of some 19%, but still far behind market leader AB InBev (NYSE:BUD).

Royal Bank of Scotland is expected to launch a new cost-cutting program when it publishes its full-year results next week, likely posting its ninth consecutive annual loss. According to the Sunday Times, RBS may close branches and cut up to 15,000 jobs as it targets savings of around £800M. The taxpayer-owned bank has lost more than £50B since the financial crisis.

Looking to stay competitive in the future vehicle market, Hyundai (OTC:HYMTF) has established a new self-driving vehicle technology center and recruited a renowned researcher who had developed related technologies at General Motors (NYSE:GM). Hyundai Motor and Kia (OTC:KIMTF), together the world's fifth-largest automaker, aim to develop highly automated vehicles by 2020 and fully autonomous vehicles by 2030.

Ex-Volkswagen Chairman Ferdinand Piech, who resigned after a showdown with former chief executive Martin Winterkorn, has refused to testify to German lawmakers investigating a possible governmental role in Dieselgate. A Bild am Sonntag report last week said Piech had informed top directors at VW (OTCPK:VLKAY) about potential cheating with diesel emissions tests in the U.S. six months before the scandal became public in September 2015.

According to the Nikkei, Toshiba (OTCPK:TOSYY) probably suffered a group net loss of about ¥400B ($3.52B) in the nine months through December, largely due to a goodwill impairment of around ¥600B on its U.S. nuclear unit. The conglomerate will announce its latest earnings tomorrow, along with a full-year outlook, and will likely explain the cause of the losses, measures to prevent similar events and plans to rebuild its nuclear business.

South Korea's special prosecutor again summoned Samsung Group leader (OTC:SSNLF) Jay Y. Lee today to question him over bribery allegations, as it investigates a graft scandal that has engulfed the country's president. The move could potentially deal another blow to South Korea's biggest business empire after a court rejected a request to issue an arrest warrant for him last month.

"The Happiest Place on Earth" is getting a bit more expensive. One-day prices at Disney's (NYSE:DIS) U.S. theme parks have increased by up to 4.9%, while some annual passes also got a price hike. Theme parks are Disney's second-largest division, bringing in nearly $17B in revenue and $3.3B in operating income for the fiscal year that ended in September.

Today's Markets

In Asia, Japan +0.4%. Hong Kong +0.6%. China +0.6%. India +0.1%.
In Europe, at midday, London +0.1%. Paris +0.9%. Frankfurt +0.7%.
Futures at 6:20, Dow +0.2%. S&P +0.1%. Nasdaq +0.1%. Crude -0.6% to $53.53. Gold -0.4% to $1231.50.
Ten-year Treasury Yield +2 bps to 2.43%