Stock markets around the world but particularly in the US have staged major rallies in recent wee‎ks. Gains were driven by speculation that President Trump would bring in sweeping pro-business change. Traders are starting to find out, however that the speed of government is a lot slower than the speed of business let alone the speed of markets.

Although some indices have managed to reach new all-time highs this week, the pace of gains has slowed suggesting markets may be getting priced for perfection, and it wouldn't take much to spark a correction.

Overnight action suggests that profit-taking may be getting underway. The Nasdaq turned down Thursday and this morning, US index futures are trading down 0.3% to 0.5% while the FTSE is down 0.6% and the Dax is down 1.0%.

On Thursday, US Treasury Secretary Mnuchin indicated he hopes to pass tax reform by the end of August but tjat this could slip to late in the year. Meanwhile, ‎other reports suggested Congress may not get to infrastructure funding until 2018. Action in indices and in sectors that have benefitted from "Trump trade" anticipation like industrials and construction could indicate if traders are getting tired of waiting. Next Tuesday, President Trump is scheduled to address a joint session of Congress. The street may be looking for something big and could be disappointed if he doesn't deliver.

Currency trading finds Gold and JPY rallying overnight and building on Thursday's gains as ‎political risk concerns return for the US and Europe. GBP continues to attract support with Cable holding above $1.2500. Last night the Brexit cause got a big boost from a by-election that saw a big swing to the Conservatives enabling them to take a seat that Labour had held for about 80 years. Meanwhile, on the continent, France and Italy apparently have come out in support of taking a tough stance but as this early stage that is to be expected and both countries could have new leadership within six months anyway.

‎Canadian markets could attract attention today especially with US news flow light. Consumer price inflation is due, one of the last major reports before next week's Bank of Canada meeting. 

It's also another big day for Canada earnings. Royal Bank has picked up where CIBC left off beating the street by a wide margin and raising its dividend. ‎Husky Energy had a positive report while Magna International disappointed badly.

Corporate News

Royal Bank of Canada        $1.83 vs street $1.77, 5% dividend increase

Husky Energy             $0.67 vs street $0.65

Magna International        $1.24 vs street $1.36

Economic News

Singapore industrial production        2.2% vs street 9.5%

Upcoming significant economic announcements include:

8:30 am EST        US jobless claims            street 240K

8:30 am EST        Canada consumer prices        street 1.6%
8:30 am EST        Canada core CPI median        previous 2.0%

10:00 am EST        US new home sales            street 570K
10:00 am EST        US consumer sentiment         street 96.0

1:00 pm EST        US Baker Hughes drill rig count        previous 751

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