It's a long weekend coming up in the US and much of Canada. ‎I've been thinking that the enthusiasm of traders to hold positions over the weekend would be a true test of whether the current rally has any legs left or is totally exhausted and vulnerable to a correction.

Stocks have rallied on a combination speculation on President Trump's tax reform package, generally positive earnings and guidance, strong US economic data, institutional short covering and easing political uncertainty following a series of no drama summits with the leaders of the UK, Japan, Canada and Israel. 

One of the signs of a rally is that markets respond positively to positive news which is what we saw Wednesday with strong US day driving the Dow to a new all-time high.  On Thursday, however‎ stocks failed  to respond to positive jobless claims and Philadelphia Fed reports a sign that markets may be getting fully priced and vulnerable to a correction.

Overnight and into this morning, stock indices have been sliding with US index futures down 0.3% and Dow futures approaching a retest of 20,500. ‎Overseas, the FTSE is flat while the Dax is down 0.4% and the Nikkei is down 0.6%.

Currency trading has been active today. JPY is rallying while gold is holding on to recent gains as capital leaving rick markets flows back into defensive havens. GBP is getting hammered (you thought I was going to say pounded didn' t you?) back towars $1.2400 after UK retail sales disappointed, ending a postIbrexit hot streak for now. EUR and CAD are down moderately against the US dollar. 

‎This action suggests that traders are starting to take profits ahead of the long weekend. News flow is drying up and political uncertainty is starting to loom again. It looks like negotiations over Greece are going to blow through next week's deadline and into the upcoming European election season with the EU and IMF (read US) still divided over austerity levels and debt relief for the long suffering cradle of civilization. 

Meanwhile, debate on the Brexit bill in the House of Lords starts Monday. The government remains on track so far toward triggering Article 50 in March but it remains to be seen if this will happen around the EU Summit being held on March 9-10 ‎or later in the month. 

And of course, in the US political uncertainty may be only a tweet away. ‎Following on from his successful meeting with President Trump Monday and speech to the EU Parliament about CETA yesterday, Canadian PM Trudeau meets with German Chancellor Merkel today. Talks on trade and defense are likely to top the agenda. 

Some have suggested that Canada could offer advice on how to work withthe new US administration. I think it's going to be difficult for Germany to get out of the doghouse, however, because the issues related to trade, currency and Greece are structural not political and can't be easily resolved without sweeping changes to the Eurozone. 


Corporate News

There have been no major corporate announcements so far today. 


Economic News

UK retail sales            1.5% vs street 3.4%
UK retail ex auto        2.6% vs street 3.9%

NZ Business PMI        51.6 vs previous 54.5
NZ retail sales            0.8% vs street 1.0%

Singapore GDP            2.9% vs street 2.5%
Singapore electronic exports    6.1% vs previous 5.7%
Singapore non-oil exports    8.6% vs street 9.6%


Upcoming significant economic announcements include:

10:00 am EST        US leading index        street 0.5%

1:00 pm EST        US Baker Hughes drill rig count    previous 741


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