Impeachment Vote, CPI, Couche-Tard/Carrefour - What's up in Markets

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Impeachment Vote, CPI, Couche-Tard/Carrefour - What's up in Markets

By Geoffrey Smith -- Donald Trump is set to become the first U.S. president in history to be impeached twice. The dollar’s upward correction stalls after a strong Treasury auction and a more dovish note from Federal Reserve officials. Alimentation Couche-Tard  (TSX: ATDb ) is in talks to buy France’s Carrefour (OTC: CRRFY ), and Visa (NYSE: V ) has dropped its acquisition of Plaid. CPI numbers for December and official crude oil inventory estimates are due. Here’s what you need to know in financial markets on Wednesday, January 13th.

1. Trump set to be impeached again

To be impeached once might be regarded as misfortune. To be impeached twice looks like carelessness, as Oscar Wilde might have said.

Donald Trump is set to make history on Wednesday, with the House of Representatives set to impeach him for the second time, only a week before his term expires.

The chances of a conviction in the Senate also appear to be rising, with increasing numbers of Republican Senators turning on Trump after another incendiary interview on Tuesday, in which he defended his incitement of last week’s violent attack on Capitol Hill. Both Mitch McConnell, the former Majority Leader, and the influential Liz Cheney are now open to voting to convict, according to various reports.

2. Dollar eases after strong bond auction, dovish Fed comments; CPI eyed

The dollar and 10-Year bond yields fell after strong interest at a Treasury auction on Tuesday, along with remarks from Federal Reserve officials that pushed back against talk of tapering asset purchases later in the year.

Kansas City Fed President Esther George, notably, said it was too early to talk of reducing monetary stimulus, while the Boston Fed’s Eric Rosengren refused to be drawn into any talk of tapering. 

The movement in bond yields this week will add a little extra spice to consumer inflation data that are due at 8:30 AM ET (1330 GMT). Analysts expect the headline annual rate to tick up to 1.3%, still well below the Fed’s 2% target, while the core CPI rate is seen staying at 1.6%. The month-on-month change is expected at 0.4%.

There will be more appearances from senior Federal Reserve officials in the course of the day, with Lael Brainard due at 2PM ET and influential vice-president Richard Clarida due at 4PM. Philadelphia Fed president Patrick Harker is sandwiched in between them.

3. Stocks flat; Visa abandons Plaid bid

U.S. stocks are indicated to open mixed later, after a decidedly muted rebound during Tuesday’s session that was overshadowed by the brewing political fight in Washington.

By 6:30 AM ET, Dow Jones futures , S&P 500 futures and NASDAQ Futures were all essentially flat.

Stocks likely to be in focus later include data provider IHSMarkit, which is in the process of being bought by S&P Global (NYSE: SPGI ), and Visa (NYSE: V ), which said late on Tuesday it has abandoned its planned acquisition of Plaid due to antitrust concerns.

Tesla (NASDAQ: TSLA ) stock may also be supported by the news that it has filed to establish a legal entity in India.

4. Couche-Tard in talks to buy Carrefour 

Canada’s Alimentation Couche-Tard, the owner of various store chains including Circle K, is in talks to buy French-based Carrefour in a deal worth over $30 billion, including debt.

The acquisition would substantially boost the Canadian company’s global presence, especially in emerging markets, notably Brazil and Argentina, where Carrefour has invested heavily over the last two decades.

Carrefour (PA: CARR ) stock,  which had underperformed most of Europe’s food retailers over the last year, rose over 13% on the news in Paris.

5. U.S. inventory drop keeps oil rally going; EIA eyed

The rally in crude oil slowed but remains intact after data from the American Petroleum Institute on Tuesday showed a steeper-than-expected drop in U.S. crude inventories for the second week in a row.

The government’s data are due at 10:30 AM ET, as usual, and are expected to show a decline of 2.27 million barrels. The API’s estimate fell by over 5.6 million.

By 6:35 AM ET, U.S. crude futures were up 0.2% at $53.30 a barrel, while Brent crude was essentially unchanged at $56.59. Both markers had hit fresh 11-month highs overnight, helped by comments from an International Energy Agency official saying that the pandemic hasn’t massively brought forward the expected peak in world oil demand.

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