Business

In discussing the key overnight news in an otherwise quiet session, JPM writes that "the most important headline was prob. the one concerning China loosening some currency outflow curbs" so focusing on that, Reuters, and SCMP before it, reports that after months of draconian and ever tightening capital control, China's central bank has relaxed some of the curbs on cross-border capital outflows it put in place just months ago to shore up the yuan currency.

Following yesterday's surprising Goldman miss, traders were closely watching the results of its closest comp, Morgan Stanley this morning to determine if the Goldman FICC revenue disappointment was systemic or a one-off event. They were pleasantly surprised when MS beat on both the top and bottom line, reporting revenue of $9.75 billion and EPS of $1.00, both above consensus estimates of $9.29 billion and $0.90, although the EPS did include a discrete tax benefit of $112 million.

European stocks rebounded after the biggest one-day drop since November, alongside S&P futures, while Asian equities posted modest declines after yesterday's weak US close. Gold and yen slid, while the dollar gained on the latest Mnuchin comments to the FT according to which Trump was "absolutely not" trying to talk down the dollar.

Once hedge fund darlings, almost no one is more perfectly aligned to get obliterated by falling used car prices than America's auto rental companies, Hertz and Avis.  As Bloomberg notes today, on a combined basis, Hertz and Avis dump about 400,000 vehicles per year into the used car market and operate fleets that are multiple times larger. 

And with used car prices plunging, bondholders are starting to get slightly anxious about the collateral impact of writing down billions of dollars worth of capital assets.

Goldman Sachs' Chief US Political Economist Alec Phillips writes that tax reform faces a risk of failure, but tax cuts remain likely... in 2018 and investors need to stay realistic about the impact of fiscal stimulus.