Two big sales totalling $2.1B could spark significant trading interest in Canada's Valeant Pharmaceuticals (TO:VRX) today. The beleaguered company has agreed to sell three skin care brands to France's L'Oreal for $1.3B, and it's Dendreon Pharmaceuticals business to China's Sanpower Group for $820 million. Proceeds are expected to be used to pay down some of the $30B in debt the company has racked up over the years. Today's market reaction may indicate if the street sees this as the start of righting the ship or a sign of desperation. Selling Dendreon at a profit appears to be a step in the right direction but time will tell.
With the Dow slipping away from 20,000 and little in the way of economic or earnings reports, the focus for trading this week so far has turned to politics, particularly in the UK and the US.
Global markets have been consolidating yesterday's moves overnight. Gold and JPY have been holding on to their gains.
GBP is lower again although the pace of the sterling selloff has slowed. Brexit has been back in focus even though nothing has changed mainly because traders have nothing else to focus on at the moment. Traders should note the weaker pound continues to improve the competitiveness of the UK relative to the Eorozone and that it's only a matter of time before something else pops up and attention turns elsewhere.
US index futures and the Dax are flat so far today while the FTSE is up 0.4%. The Hang Seng rallied 0.8% while copper is up 1.0% as traders viewed rising Chinese producer prices as a sign of higher demand for commodities.
Crude oil is bouncing back a bit from Monday's big selloff with WTI gaining 0.6%. Ongoing reports that OPEC and Non-OPEC producers are starting to cut production as promised has been offset by ongoing concerns that higher prices could bring shut-in US shale production back on-line. This week's API (tonight) and DOE reports could give a better idea of where the US market is at after last week's big swings that were distorted by year-end adjustments.
The big moves in indices and currencies that dominated late 2016 were driven by repositioning for Trump Administration. The street now appears to have fully priced in the upside of Trump putting the balance of risks to the downside for USD and US stocks.
Tomorrow's press conference and the inauguration on January 20th could start the shift from speculating on what he could do, to reacting to what he actually does. Today brings outgoing President Obama’s farewell speech where the street will looking to see if he decides to go out graciously or continues his recent program of Scorched Earth/try to make things difficult for Trump.
This could determine if Donald Trump will be able to spend his first days in office moving forward his own agenda or having to put out the fires President Obama leaves behind. (Likely a combination of both)