Cabinet approves participation of Private Sector into Space exploration

The government’s recent reforms for the space sector will not only enable private companies to build rockets and satellites but also let them use the Indian Space Research Organisation’s (Isro’s) facilities,  It was perhaps the first admission that existing regulations impeded the private sector from fully participating in space exploration. And just a few days back, the Union cabinet finally approved the formation of a new organization- the Indian National Space Promotion and Authorisation Centre (IN-SPACe) under the Department of Space (DoS). IN-SPACe will now be in charge of regulating, guiding and promoting the activities of the private sector in the space industry. More importantly, through INSPACe, private companies will be allowed to build their own facilities on DoS premises after they vet their application.

And this is a big positive. Here's ISRO chairman, Dr. Sivan explaining this bit.

“Under the present situation, ISRO has reached its limit on providing our services due to manpower limitations and we can’t scale up more than 3 per cent market share. That’s why we need private players to get involved and that will also boost market share when they diversify into many  

services" 

Moody downgrade China's rating

China's great wall of debt! Moody's has lowered the nation's credit rating to A1 from Aa3, citing Beijing's waning financial strength and rising liabilities. It marks the first time a major ratings agency has downgraded the country in more than 25 years. The move also received a backlash from China's finance ministry, which said the decision was "absolutely groundless" and was based on an "inappropriate calculation method."

President Trump's first budget proposal

President Trump's first full budget proposal lands on lawmakers' desks, with a proposed $3.6T in spending cuts over the next decade. Congress will still be allowed to spend $4.1T in 2018, including a big boost to defense, border security and infrastructure, while cutting Medicaid, food stamps and other social programs. The plan also calls for selling half of the nation's Strategic Petroleum Reserve and permitting drilling in the Alaska refuge.

China's 2017 outlook brightened as export rose 16.4% Y/Y

China's 2017 export outlook brightened after the government reported better than expected trade growth for March and as U.S. President Trump suddenly declared China is not a currency manipulator. China's exports rose at the fastest pace in more than two years in March, up 16.4% Y/Y, while import growth remained strong at 20.2%; the country's crude oil imports hit a record high of nearly 9.2M bbl/day. Analysts said the stronger trade data reinforces the growing view that economic activity in China has remained resilient and that global manufacturing is improving.

The yuan climbed to its biggest one-day advance vs. the dollar in nearly three months after President Trump abandoned his earlier pledge to name China a currency manipulator and said the dollar was too strong. China equities are higher, also enjoying a boost from news of stronger than expected growth in exports. But Japan’s Nikkei average lost as much as 1.3% to its lowest level since December, as the yen hit five-month highs against the dollar. European bourses also are lower in the early going as the euro strengthens vs. the dollar.

Trump Requests Cuts To Medical Research

New media reports indicate the Trump administration is seeking to cut funding for the National Institutes of Health (NIH) this fiscal year. Proposed fund would go into the construction of border wall and military spending.

Earlier in the month, President Donald Trump had released his budget for next year, in it, NIH saw cuts of close to 20 percent in funding for medical research.

Now it appears the president is asking congress to cut $1.2 billion from research grants within the agency for this fiscal year, which ends in October. Bloomberg and Politico reported on the $18 billion in cuts to “discretionary spending bills.”

High Stakes for HealthCare Votes

The odds of getting an Obamacare replacement bill passed by the House improved late Wednesday as the White House reportedly offered to get rid of the set of minimum benefits health insurers are now required to provide customers. That could win over some members of the Freedom Caucus ahead of today's crucial health care vote, which investors see as a litmus test for President Trump's broader plans and trade on Wall Street.

Real Interest rates on the rise

The record high stock market, trend of rising inflation and encouraging jobs numbers add up to future interest rate increases by the Federal Reserve.

The real yield on a 10-year TIPS has risen 29 basis points in recent weeks.At the same time, the inflation breakeven rate has declined - slightly.The driving force? A rise in nominal rates, which will nearly always pull the TIPS yield higher.

The rate hikes in 2017 would bring the Fed's Federal Funds Rate - a key short-term rate across financial markets - at least to 1.50% from the current 0.75%. A comparable increase in the 10-year nominal Treasury would bring its yield up to 3.35%. At that point a 10-year TIPS would be yielding somewhere around 1.10% to 1.20%.

Of course, it's possible that a higher short-term rate won't result in higher yields for TIPS. But in an environment of rising short-term rates, rising inflation, rising employment and higher asset prices, TIPS yields should also rise. I'd consider a yield above 1.00% on a 10-year TIPS a pretty good investment in 2017.

Health Care sector of the S&P closed lower yesterday

On Tuesday morning President Donald Trump continued his campaign to bring down drug prices in the United States by tweeting he was now working on a new system for the market. “There will be competition in the Drug Industry,” 

As reported by Reuters shares of Pfizer (NYSE:PFE) and Merck (NYSE:MRK) shed 1.1 percent, and Amgen (NASDAQ: AMGN) dropped 1.4 percent. While the Nasdaq Biotechnology index (INDEX NASDAQ:NBI) was 1.4 percent lower, while the NYSE Arca Pharmaceutical index (INDEX NYSE GIS:DRG) fell 1.2 percent.

The tweet comes on the heels of the announcement of the Republican bill set to dismantle and replace the Affordable Care Act, commonly referred as Obamacare,the proposal would create a new tax credit tied to a person's age and income for those who cannot get insurance through their employer, and would restructure the country's Medicaid program. The healthcare sector of the S&P 500 closed 0.4% lower yesterday, but over the last three months it's up more than 10%.

Snap will price its IPO

Snap will price its IPO after today's market close in the most eagerly awaited tech offering since Alibaba (NYSE:BABA) went public in 2014. Reports suggest pricing could be $1-$2 above its $14-$16 marketing range, which would result in a valuation of $19.5B-$22.3B from listing on the NYSE. In September, the company changed its name to Snap (Pending:SNAP) from Snapchat to reflect its intent to branch out into myriad products, like Spectacles and a recently reported drone.

Apple (NASDAQ:AAPL) will soon start assembling the 4-inch iPhone SE at its new Bengaluru plant, a facility that's being set up by contract manufacturer Wistron (OTC:WICOF). The company is targeting an initial production of 300K-400K units, according to the Economic Times, and will go ahead with the plan without waiting for the government’s nod on a list of tax concessions.

Eurozone Finance Ministers and the IMF seem likely to miss next week's deadline to agree on a €7B bailout for Greece. The two sides remain at loggerheads over an IMF demanded that Athens be granted debt relief and easier surplus targets, meaning a pact may now be months away. While Greece won't face bankruptcy trouble until July, eurozone officials were racing to strike a deal so the drama wouldn't be forced into the upcoming Dutch and French elections.

More trouble,meanwhile,as Spain's public debt rose by €6.3B in December. According to Reuters' calculations using National Statistic Institute data for gross domestic product, that increase meant debt as a percentage of economic output stood at 100% at the end of 2016. The government said in a statement it estimated the year-end rate at 98.98%, using its latest GDP forecasts.

The Fed kept Interest rate on hold.

The Fed kept interest rates on hold at its January policy meeting, its first since Donald Trump assumed the presidency, but said "measures of consumer and business sentiment have improved of late." The FOMC's next policy meeting will take place on March 14,Meanwhile, the market is now trapped in another rate decision session, this time at the Bank of England, which will release its policy statement, minutes and inflation. 

India is a " bright spot'' in the world economy

The Finance Minister Arun Jaitley said as he unveiled his annual budget, adding that the impact on growth from the government's cash crackdown would wear off soon. Still, the finance ministry forecasts that growth could dip to as low as 6.5% in the current fiscal year to March, before picking up slightly in the coming fiscal year to between 6.75%-7.5%.

The IMF believes that Greece debt is "explosive" and "highly unsustainable," reaching 275% of GDP by 2060 unless the country's loans are significantly restructured. The assessment, prepared ahead of an IMF board meeting on Feb 6, is significantly more pessimistic than that of Greece's eurozone creditors and underscores the difficulty of the fund moving ahead with a bailout.

More Quantitative Easing on table, as Japan's economy is struggling to maintain its inflation target.

The Bank of Japan is still ways away from its 2% inflation target. December's core consumer price index - which excludes fresh food - fell 0.2% on year, marking the 10th consecutive month of decline. The yen also came under downside pressure overnight, as the BOJ increased its buying in 5- to 10-year bonds, sending a message that a tapering of its asset purchase program isn't on the table.

With the first trading session of the year on deck, investors are sketching their market predictions for 2017. Which sectors will be hot? Will the oil rally continue? Is the IPO market poised for a comeback? More record M&A? Elections results in France and Germany? How will Brexit turn out? Other trade agreements? Tensions with China, North Korea, Russia, Mexico? Upcoming U.S. monetary policy? How will a Trump presidency shape the markets? Any other stock-related issues ?

2016 Highlights

Politics, economics and markets were all turned on their head in 2016, and investors are looking ahead to 2017 following a turbulent year. Highlights: The Panama Papers, Diesel Gate settlement , Greek debt relief, Megabrew, the EU's tax crackdown, sale of Yahoo , nuclear test and impeachment in Korea, Pokemon Go, Twitter  takeover rumors, Brexit and sterling's plunge, the Italian referendum, panic at Deutsche Bank  and Monte dei Paschi , OPEC's output deal, and following Donald Trump's election - a Fed rate hike, the dollar's surge and soaring treasury yields. The Dow, S&P and Nasdaq also partied like it was 1999 - the three markets all closed at historic highs for the first time in 17 years.

China ceeded as number one Creditor following decline in holdings of US treasury.

Japan has overtaken China as the biggest holder of U.S. government bonds, as figures for foreign ownership of U.S. Treasurys in October show that China's holdings declined to the lowest in more than six years as its central bank used its foreign exchange reserves to support the yuan. Japan's Treasury holdings also decreased but at a slower pace; Japan trimmed $4.5B of U.S. paper to end the month with $1.131T, while China's holdings plunged by $41.3B to $1.115T, the lowest level since July 2010 and capping a decline of five straight months. China has been dipping into its reserves, selling Treasurys to support the yuan, which yesterday fell to its weakest level vs. the U.S. dollar in more than eight years.

Global Currency Market recover against dollar

Global Market stable overnight, and the euro, yen and pound all recover a bit of ground against the dollar, as the greenback surged to 14-year highs vs. the euro and a broader basket of currencies yesterday as markets repositioned for a faster pace of Fed rate hikes over the next year. The yen has plunged 11% vs. the dollar since Pres.-elect Trump's election victory last month, surpassing the Mexican peso's 10% slide to become the worst performing major currency during the period. The weaker yen will make Japan’s exports more competitive and could boost growth, and the Nikkei index has gained for eight straight days, but bond prices have been under pressure amid a global debt selloff. In China, fears that a rising dollar will destabilize trading in the yuan has sent the currency to its lowest against the dollar in more than eight years and raised concerns that outflows could increase

Fed Outlook on rate hike?

The yield on 10 year Treasury Note is above 2.5% for the first time since October 2014, as investors eye a key Federal Reserve meeting which begins tommorow. The next notable yield is 3%, last hit in 2013. In equities: U.S. stocks are at all-time highs, with the Dow in striking distance of 20,000, but futures are sliding lower to start the week. Will expectations of a Fed rate hike put a dent in the Trump rally?