Opening Bell: 1.12.17

Steven Mnuchin profited Paulson's housing investments; Bill Gross is right about Dow 20,000; Peter Thiel is concerned about Silicon Valley's sex life.
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(Getty Images)

(Getty Images)

Mnuchin Has Stake in Fund That Would Gain From Fannie Mae Revival (WSJ)

Financial disclosures made public Wednesday show Mr. Mnuchin owns investments in a hedge fund that has made a significant investment in Fannie and Freddie run by a Trump donor, John Paulson. The fund enjoyed a big gain after Mr. Mnuchin said just hours after his nomination was announced in November that the new administration would move quickly to restore the mortgage firms to private ownership.

Hints of Fear in Bank Stock Options Ahead of Earnings (WSJ)

As earnings season kicks off this week, the options market is signaling that a pause may be looming for the euphoric rally in bank stocks. Since mid-December, investors have boosted the number of bearish options on financial shares at a faster pace than for bullish contracts—a reversal from the weeks immediately after the U.S. election.

Trump's tax cuts may pressure U.S.'s top credit rating: Fitch (Reuters)

"We do see increasing medium-term pressures (on the U.S. rating)," Ed Parker said at the agency's annual credit outlook conference in London. "Even before elections the U.S had the highest level of government debt of any triple-A country. If we add on top of that Trump's plans to cut taxes by $6.2 trillion over the next 10 years that could add around 33 percent to U.S. government debt," he added.

U.K. Bankers Drop Push to Keep EU ‘Passporting’ After Brexit (BBG)

Prime Minister Theresa May’s government has signaled it won’t give the finance sector any special status in the divorce talks and EU leaders have suggested they will object to an extension of passporting. That’s led bankers to increasingly focus on lobbying to win access via so-called equivalence. That would mean the EU allows other countries access so long as it has similar regulatory standards.

Why Bill Gross Is Right About Dow 20,000 (BBG)

Time for an experiment. Let’s take Cisco Systems Inc., which as of Wednesday had a market capitalization of about $150 billion and the lowest stock price in the Dow, and see what happens when it’s replaced. Here’s what the Dow would look like when a selection of worthy constituents -- Campbell Soup Co. (founded in 1869, worth about $18 billion as of Wednesday), Emerson Electric Co. (1890, $37 billion) or even Harley-Davidson Inc. (1903, $10 billion) -- are added. 20,000! Just don’t replace it with $76 billion Priceline Group Inc., it will take all the fun out of Dow 30,000.

Erdogan calls on central bank to ‘thwart’ FX traders, stoking lira rally (FT)

Mr Erdogan, who has form when it comes to bombast over the exchange rate, said there was “no difference between people with weapons and those with foreign currency”, adding that speculators used the exchange rate “like a weapon” against the country. He also called on Turkey’s central bank to “thwart” traders, raising hopes of another interest rate rise in a country where the conservative AKP government has long been averse to tighter monetary policy.

Why Morgan Stanley is talking down autonomous car expectations (FT)

“The development and testing of autonomous cars could involve potentially significant numbers of civilian casualties. We believe many players in this field and the investment community may be underestimating the legal, regulatory, moral and ethical factors at work.”

Trump confidant and tech billionaire Peter Thiel thinks Silicon Valley has a sex problem (BI)

“On the one hand, the tape was clearly offensive and inappropriate. At the same time, I worry there’s a part of Silicon Valley that is hyper-politically correct about sex. One of my friends has a theory that the rest of the country tolerates Silicon Valley because people there just don’t have that much sex. They’re not having that much fun.”

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