The unofficial start of earnings season kicks off today as big banks JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC) and PNC Financial (NYSE:PNC) report their quarterly numbers. Earnings for S&P 500 companies are expected to have increased by 11.8% in Q4, according to Thomson Reuters. But many companies are forecast to take one-time charges due to deferred taxes and may be reluctant to give the broad positive guidance expected by the trading community.

Economy

Following months of political uncertainty, the euro jumped to a three-year peak against the dollar overnight after German party leaders reached a breakthrough in talks to form a "grand coalition." The ECB added to the bullishness on Thursday by signaling in minutes from its mid-December meeting that it's planning to slow its stimulus program more quickly than investors had expected. Euro +0.8% to $1.2123.

As Beijing implemented new UN sanctions against Pyongyang, China reported a sharp drop in business with North Korea in 2017. Overall trade between the two nations fell 10.5% to about $5B, and the month of December showed trade diving 50.6% compared to 2016. While the U.S. may see that as a positive development, China posted a trade surplus with the country last year that climbed 10% to a record $275.8B.

Negotiators have officially set a March deadline to rewrite NAFTA, but President Trump told the WSJ that he was "a little flexible," taking into account Mexico's July 1 presidential and legislative elections. "They can pay for it indirectly through NAFTA... We make a good deal on NAFTA, and, say, I'm going to take a small percentage of that money and it's going toward the wall. Guess what? Mexico's paying."

Citing the government's failure to pass key fiscal reforms, Standard & Poor's has downgraded Brazil's credit rating deeper into junk territory, to BB-, or three notches below investment grade. It's a slap in the face for the administration of President Michel Temer, which has been touting Brazil's progress in recovering from its worst recession on record.

Extending the market's strong start to the year, Brent crude oil broke above $70/bbl yesterday for the first time since 2014, underpinned by the effectiveness of OPEC output cuts and geopolitical risk in producing countries like Iran. In the U.S., WTI crude climbed as high as $64.77 as domestic stockpiles posted their eighth straight week of declines.

Stocks

General Motors has filed for government approval to deploy the "first production-ready vehicle designed from the start without a steering wheel and pedals." The Cruise AV (Autonomous Vehicle) - a rebranded version of the Chevrolet Bolt EV - will be ready to hit the road by 2019, assuming GM receives clearance from the NHTSA and the individual states in which it wants to run the robo-taxis.

Tax and other incentives have come to play a major role in luring automakers to invest in various regions of the U.S. Toyota (NYSE:TM) and Mazda (OTCPK:MZDAY) were reportedly offered at least $700M to steer their $1.6B new factory investment to northern Alabama. The project is expected to create 4,000 jobs and make up to 300,000 vehicles a year by 2021.

Ford has confirmed a second death in a 2006 Ranger (NYSE:F) caused by a defective airbag inflator made by Takata (OTCPK:TKTDQ) and urged 2,900 owners in North America to stop driving the model immediately. Owners should contact their dealers to have the trucks repaired at their homes or towed into a dealership. At least 21 deaths worldwide are linked to the Takata inflators.

Major changes are coming to Facebook (NASDAQ:FB) as Mark Zuckerberg prioritizes "meaningful social interactions" on the platform's News Feed versus "relevant content." Users will start seeing less public content from businesses or publishers and more posts from their friends. Zuck also expects the time people spend on the social network will go down as a result, but it will be "more valuable." FB -2.6% premarket.

Dropbox has filed confidentially to go public, in what stands to be one of the largest tech IPOs in the past few years, sources told Bloomberg. The offering, expected in the coming months, would mark a rare move among richly valued tech startups that have capital still flowing in from giant investment firms. Dropbox (Private:DROPB) had a $10B valuation at the time of its last funding round in 2014.

Intel is quietly advising some customers to hold off installing patches that address new security flaws affecting virtually all of its processors, WSJ reports. It turns out the patches had bugs of their own. The glitch underscores the difficulty of Intel's (NASDAQ:INTC) challenge as it scrambles to fix the unprecedented vulnerabilities, called Meltdown and Spectre.

Attention, index-tracking and ETF investors: S&P Dow Jones Indices (SPGI, CME, NWS) and MSCI are renaming their Telecommunication Services Sector as Communication Services. Comcast (NASDAQ:CMCSA), DISH Network (NASDAQ:DISH), Netflix (NASDAQ:NFLX), Disney (NYSE:DIS), Facebook (FB), Twitter (NYSE:TWTR), Snap (NYSE:SNAP) and Alphabet (GOOG, GOOGL) will be added to the newly broadened category. The changes will be implemented after the close of business on Sept. 28, 2018.

A small town three hours east of Seattle - Wenatchee, Washington - is turning into the epicenter of bitcoin mining in the U.S. The reason? A series of dams on the Columbia River provide abundant hydroelectric power, which costs about $0.02 to $0.03 per kilowatt hour. Miners are seeing strong returns, with some producing 5 to 7 bitcoins per day, but their monthly electricity costs could run into the hundreds of thousands of dollars.

More than 200 workers were laid off yesterday from the Carrier (NYSE:UTX) heating and air conditioning plant in Indiana that played a role in President Trump's campaign, sparking criticism from workers and labor activists that he broke his promise. Carrier said that 1,100 workers - mostly in manufacturing and engineering - will remain at the factory, upholding its deal with Trump.

Treasury Secretary Steven Mnuchin has applauded Walmart (NYSE:WMT) for raising its starting hourly wage to $11 and giving bonuses to some employees after the passage of new tax legislation. Following a portfolio review, Walmart is also shuttering 63 of its Sam's Club locations across the U.S., but 10 to 12 of the closed stores could be converted to e-commerce facilities.

Checking in with Super Bowl advertising: NBC (CMCSA) is almost sold out of its inventory for this year. It has a handful of spots left for the Feb. 4 championship, and is charging more than $5M for the average 30-second spot. NBC expects ad sales revenue to exceed $900M for the Winter Olympics (also on the way next month) and should hit $1.4B combined from the games and the Super Bowl.

Today's Markets

In Asia, Japan -0.2%. Hong Kong +0.9%. China +0.1%. India +0.3%.
In Europe, at midday, London +0.2%. Paris +0.3%. Frankfurt +0.2%.
Futures at 6:20, Dow +0.4%. S&P +0.2%. Nasdaq +0.1%. Crude -0.6% to $63.43. Gold +0.7% to $1331.90. Bitcoin +5.5% to $14020.
Ten-year Treasury Yield +2 bps to 2.55%

Today's Economic Calendar

8:30 Consumer Price Index
8:30 Retail Sales
10:00 Business Inventories
12:30 PM Fed's Harker Speech
1:00 PM Baker-Hughes Rig Count
4:30 PM Fed's Rosengren: “Money, Models, and Digital Innovation”