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Colin Cieszynski

The Before the Bell report is compiled by editors of The Globe and Mail and is updated throughout the morning to reflect latest developments. Colin Cieszynski, Chartered Financial Analyst and Chartered Market Technician, is chief market strategist with CMC Markets.

The big day everyone has been eagerly awaiting (or dreading) for over two months since the U.S. election is finally here. Today Donald Trump is to be sworn in as U.S. President and to give a speech outlining his vision for the country. There will also be other festivities and protests running into the weekend.

The official start to the Trump Administration brings some trepidation to the markets. The big post-election rally priced in huge expectations that his policies would benefit the U.S. economy with little blowback or opposition. Today and Monday, his first full weekday in the Oval Office, the rubber hits the road.

Today's inaugural address may give traders a better idea of what measures he is planning to take to fix the economy (changes to trade, infrastructure, regulations, taxation and heath care were widely discussed in the campaign), and where the economy sits on his list of priorities. It's important for traders to note that along with new initiatives, he's going to need to spend time cleaning up the messes that outgoing President Barack Obama has left behind.

So far this morning, U.S. index futures are all up slightly 0.4 per cent to 0.2 per cent. The FTSE and the Dax are off slightly. Overnight IBM beat the street on earnings and guidance but there was little impact indicating strong results have already been priced in, shifting the balance of surprises to the downside.

Gold is flat while the U.S. dollar is up slightly against other major currencies. U.S. Federal Reserve Chair Janet Yellen indicated more rate hikes are likely, but she also noted the U.S. isn't overheating so she probably won't be as aggressively hawkish as the Street is thinking. Earlier in the week she hinted toward two rate hikes, the Fed party line is three and the Street has priced four to five hikes into the U.S. dollar.

The British pound has dropped back moderately on lower than expected but still pretty good U.K. retail sales report. (There are a lot of countries that would love to post a 4 per cent gain in retail sales.)

Despite a ‎1.25-per-cent gain in the WTI oil price overnight, the Canadian dollar remains under pressure and could be active through the day. Canadian inflation and retail sales reports are due but are likely to be overshadowed by events south of the border. With the U.S. looking to reopen NAFTA and bring in other trade measures, even though Canada is unlikely to be targeted directly, we could get caught in the crossfire of trade wars. Because of this risk, the Bank of Canada moved dovish this week indicating it stands ready to cut interest rates if needed to mitigate any impact of changing trade. Any comments or actions from Mr. Trump on trade today could have a big impact on both the loonie and the Mexican peso.

The banking situation in China may also impact trading in the coming days. Overnight, China GDP came in at 6.8 per cent, just above expectations. Meanwhile,the Peopels' Bank of China has been rushing to shore up the country's banking system ahead of next weekend's Lunar New Year holiday. In addition to pumping in record amounts of liquidity, the PBOC cut the reserve requirements for major banks, freeing up capital form them to put into the system as well. The Hang Seng fell while mainland markets rose, but China could become a bigger issue next week particularly if the U.S. starts taking action against it over trade or currency issues.

Now, here is a closer look at what's going on this morning and what is still to come.

MARKET DATA:

Futures (as of about 8:30 a.m. ET)

Dow +0.08 per cent; S&P 500 +0.21 per cent; Nasdaq: +0.25 per cent; TSX 60 +1.40 per cent

Equities
Japan's Nikkei +0.34 per cent
Shanghai composite index +0.69 per cent
Hong Kong's Hang Seng -0.71 per cent 
Germany's DAX -0.01 per cent
London's FTSE -0.07 per cent
France's CAC 40 +0.12 per cent

Commodities
WTI crude oil (Nymex Feb.) +1.25  per cent at $52.79 (U.S.) a barrel
Gold (Comex Feb.) +0.06 per cent at $1,202.20  (U.S.) an ounce
Copper (Comex March) -1.46 per cent at $2.5 (U.S.) a pound

Currencies
Canadian dollar -0.19 at 74.82 cents (U.S.)
U.S. dollar index +0.01 at 101.19

Bonds
Canada 10-year bond yield +0.06 at 1.76 per cent

KEY ECONOMIC RELEASES

China real GDP, industrial production, fixed asset investment and retail sales
Japan department store sales
Germany producer price index
U.K. retail sales

(8:30 a.m. ET) Canada consumer price index for December. Estimate is unchanged from November and up 1.7 per cent year over year.
(8:30 a.m. ET) Canada retail sales for November. Estimate is an increase of 1.2 per cent from October. Excluding automobiles, the projection is an increase of 0.4 per cent.

(1 p.m. ET) Baker-Hughes rig count

Also: U.S. inauguration day

KEY STOCKS TO WATCH

Also see: Friday's small-cap stocks to watch

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Canada's Amaya Inc. raised its adjusted profit forecast for 2016, citing better-than-expected results in the fourth quarter ended Dec 31., helped by its casino games and a successful relaunch in Portugal.

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IBM slipped 1.5 percent to $164.23 premarket after the company reported its 19th quarter of sales decline.

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American Express lost about 2 percent after the company reported a quarterly profit that missed expectations.

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General Electric Co. reported a 35.7 per cent jump in quarterly profit on Friday, helped by strength in its power and renewable energy businesses, and affirmed its growth and profit forecasts for 2017. Total revenue fell 2.4 per cent to $33.1-billion but earnings from continuing operations attributable to shareholders rose to $3.48-billion. Earnings per share from continuing operations rose to 39 cents from 26 cents, the company said. Adjusted earnings, however, fell 2 per cent to 46 cents a share, matching the average of analyst estimates, according to Thomson Reuters I/B/E/S. Its shares fell 1.7 per cent in premarket trading.

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Fairfax Financial Holdings is in early talks to sell 25 per cent of India's largest private general insurer ICICI Lombard in a deal that could fetch up to $1-billion, as the Canadian firm looks to cash out and start a new insurance joint venture, sources familiar with the matter said.

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AT&T Inc. said it will record a pre-tax loss of about $1 billion in the fourth quarter ended Dec. 31. The loss is related to the annual remeasurement of pension and post-employment for benefit plans, AT&T said in a regulatory filing on Friday. Its shares were up 0.02 per cent in premarket trading.

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Procter & Gamble Co.  reported better-than-expected quarterly sales and profit, helped by demand for its healthcare products. Shares of the company, which raised its fiscal 2017 forecast for organic sales growth, were up 2.8  per cent in premarket trading. P&G said its core earnings per share, which excludes restructuring charges and other items, was $1.08, in the second quarter ended Dec. 31. Analysts expected a profit of $1.06 per share, according to Thomson Reuters I/B/E/S.

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Dietary supplements maker Herbalife Ltd. said on Friday its fourth-quarter sales would be below its expectations, hurt by a strong dollar, and that volumes would be near the low-end of its previous forecast. The company said it expected net sales to fall 4-6 percent in the quarter ended Dec. 31, compared with its previously estimated range of a fall of 2.5 percent to a rise of 1.5 percent. Its shares fell 5.6 per cent in premarket trading.

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Oilfield services giant Schlumberger matched Street forecasts with adjusted quarterly profit of 27 cents per share, while revenue beat estimates. Its shares were off 0.34 per cent in premarket trading.

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Domino's Pizza was upgraded to "overweight" from "sector weight" at KeyBanc, on optimism about sustainable growth for the pizza chain. KeyBanc is particularly optimistic about the company's strong move into digital ordering.

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Pacific Crest rated both Alphabet and Facebook "overweight" in resumed coverage, based in large part on increased ad pricing.

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Earnings include: Citizens Financial Group Inc.; General Electric Co.; Kansas City Southern; Regions Financial Corp.; Rockwell Collins Inc.; Schlumberger NV; SunTrust Banks Inc.; Synchrony Financial.

With files from wire services

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