10 Things You Need To Know - January 3, 2018

Key data releases this week include: ISM manufacturing index (Wed), FOMC meeting minutes (Wed), nonfarm payrolls (Fri), ISM non-manufacturing index (Fri), and durable goods orders (Fri).
Reuters
January 1, 2018
Politico Pro
Monday, January 1, 2018
Public arguments between German Chancellor Angela Merkel's Christian Democratic Union and the Social Democratic Party regarding taxation and immigration have raised questions about whether Merkel can bring the parties together to back a coalition government. Preliminary talks on government formation are scheduled Wednesday.
Capital Economics
January 2, 2018
China’s official and unofficial manufacturing PMIs diverged again in December, but both point to a solid performance at end-2017. However, we remain cautious on the outlook for 2018 and expect tighter monetary conditions to weigh on economic activity.
Nikkei Asian Review
January 2, 2018
Japan appears to be putting deflation behind it, as a tight labor market increases wages and as profit growth encourages companies to increase capital investment. To support the trend, the government plans to cut taxes of companies that raise pay and that spend more on equipment and facilities.
Barron’s
January 1, 2018
With the central bank expected to raise interest rates 75 basis points by the end of 2018 and the two-year Treasury yield about 1.89%, if the 10-year yield doesn’t move much the yield curve could invert this year. However, while recessions are always proceeded by an inverted yield curve, not all inverted yield curves are followed by recessions.
Barron’s
January 1, 2018
Including reinvested dividends, the S&P 500 has returned 20% or more 26 times since 1943. The average return following a 20% gain has been 12%.
Barron’s
January 1, 2018
The trajectory of 2018 earnings growth expectations is increasing for the S&P 500. Earnings are expected to climb 12.3% this year, according to S&P Capital IQ consensus estimates, versus the 11.2% gain that was expected on December 20th.
Fox Business
December 31, 2017
On New Year's Day, the minimum wage increased in 18 states and 20 cities in the US. Increases are set for three more states this year, according to the National Employment Law Project.
IBD
January 1, 2018
The value of U.S. housing climbed 6.5% in 2017 to $31.8 trillion, according to Zillow. That’s the fastest gain in home values since 2013.
Capital Economics
January 2, 2018
Markit’s global manufacturing PMI rose to a near seven-year high in December, adding to evidence that the world economy ended 2017 in very good shape. We expect 2018 to be another year of strong growth.