“Watch the December closing low for the D-J Industrials. If that low is violated in the first quarter of the New Year, watch out.” — Lucien Hooper

1. U.S., Russia Suspend Nuclear Treaty — the U.S. and Russia suspended a 1987 nuclear weapons treaty on Saturday, which banned land-based missiles with a range between 300 and 3,400 miles, and kept nuclear-tipped cruise missiles off the European continent for three decades. Arms race? Putin said Moscow would follow Washington in pursuing research and development of intermediate-range missiles, but said he wouldn’t deploy them in Europe or elsewhere unless the U.S. did so.
2. Puerto Rico $18B Bond Restructuring Deal Gets Court Approval — Puerto Rico’s restructuring deal that wipes out a third of its $18B in sales-tax bond debt received court approval, making headway in fixing its broken finances, the Wall Street Journal reports. The write-downs on the revenue bonds known as Cofinas will save the island’s government $17B in interest and principal payments in the coming decades. Creditors holding over $14.5B in Cofina debt supported the deal. The settlement is tied to a split of the sales taxes pledged to Cofina that releases 46% of the money back to the island’s government, giving it an average of $456M a year that otherwise would have been set aside for bondholders.
3. Trump Delivered State of the Union — President Trump delivered the State of the Union address to Congress. Trump said the administration is seeking fair trade, cheaper prescription drug prices, and an improvement in the nation’s infrastructure. Trump also disclosed that he plans to meet with North Korean leader Kim Jong Un on February 27-28 in Vietnam. Illegal immigration was a major topic as expected, with Trump announcing that he’s ordered an additional 3,750 troops to the southern border. “Congress has 10 days left to pass a bill that will fund our government, protect our homeland, and secure our Southern Border,” he stated without directly threatening another shutdown. No great surprise, but Trump also maintained that the unfair trade practices of China must end. While maintaining his prior positions, there didn’t appear to be any ratcheting up of the trade rhetoric.
4. U.S. Trade Reps to Meet in China Next Week — the Trump administration is reportedly sending U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to Beijing early next week to continue trade talks. A meeting between the two officials with their Chinese counterparts is seen as a step toward bringing President Trump and Chinese President Xi Jinping together to close a deal. The trade war truce between the U.S. and China expires on March 1.
5. Britian PM Theresa May heads to EU for Backstop Talks — U.K. Prime Minister Theresa May heads to Brussels to meet with EU officials with 50 days left until Brexit. May will discuss potential changes to the Irish “backstop” that would allow Northern Ireland to remain tied to EU trading rules. The U.K. can’t leave the agreement without EU permission, which has made the backstop unpopular in the U.K. parliament. If the talks aren’t successful, the U.K. could be one step closer to a hard Brexit.
6. Trump Set to Sign Exec Order Banning Chinese Telecom Equipment — Pres. Trump is set to sign an executive order banning Chinese telecom equipment from U.S. wireless networks, in a move aimed at protecting the U.S. from cyber threats, Politico reports. The administration reportedly plans to release the directive before the Feb. 25-28 MWC Barcelona conference to send a signal that future contracts for cutting-edge technology must prioritize cybersecurity. Many countries seek to deploy next-generation 5G wireless networks to power the rapidly proliferating IoT, and Chinese firms such as Huawei and ZTE (OTCPK:ZTCOY) are aggressively pushing to build these networks at a lower cost than their competitors.

The week ahead — Economic data from Econoday.com: