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President Trump delivers his second State of the Union address

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President Donald Trump will address the nation Tuesday night to deliver the State of the Union, his third address to a joint session of Congress while in office.

Trump is expected to tout his economic record and make a plea for bipartisanship as he addresses lawmakers and their guests as well as several justices of the U.S. Supreme Court.

Investors will be watching for any news on ongoing trade talks with China, as well as whether the president discusses drug pricing or plans for new infrastructure spending.

The address comes shortly after the conclusion of the longest partial government shutdown on record, which ended with a stopgap spending measure and no resolution of the president’s demands for billions of dollars in funding for his proposed border wall.

The Democratic response to the president’s address will be delivered by Stacey Abrams. Abrams lost her bid to become the first black female governor of Georgia last year and is being floated as a possible contender for the state’s U.S. Senate seat held by David Perdue, a Republican.

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Lufthansa earnings hit by high fuel cost, overcapacity

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Germany’s biggest airline Lufthansa posted a loss for first three months of the year, hurt by rising fuel cost and overcapacity in Europe.

The company said in a statement on Monday evening that adjusted earnings before interest and tax (EBIT) fell to -336 million euros (-$380 million), compared to 52 million euros a year earlier.

Earnings were hit by a 202-million euro rise in fuel costs, as well as a strong comparison to the previous year when the airline benefited from the loss of capacity due to Air Berlin’s insolvency, Lufthansa said.

The airline said it expected unit revenues at constant currency to increase year-on-year in the second quarter, helped by favorable booking levels and a clear slowing of the market-wide capacity growth.

For 2019, Lufthansa said it still expected to report an adjusted operating profit margin of 6.5-8.0 percent.

Shares of the airline were indicated to open 5.5 percent lower in premarket trade on Tuesday morning at 0535 GMT.

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France to ask EU partners to adopt its cryptocurrency regulation

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The certification will be granted by the French market regulator for those who want it, and issuers, traders, custodians and investors will have to pay taxes on profits they make on those securities.

The goal is to establish a market in Paris for companies raising capital in this way, allowing France to grab a slice of the expanding business while giving it some oversight of a niche which some fear could be a target for speculators.

The European Commission has recently launched a feasibility study on how to regulate the cryptocurrency markets, though no legislation is expected at least until late 2019 as the mandate of the current administration is ending.

On unregulated markets, where no rules apply, investors are left totally unprotected if things go sour.

Under France’s regulatory proposals, authorities would verify who is behind a new coin’s issuance or a trading platform, and check the companies’ business plans and anti-money laundering rules.

The specific requirements companies need to abide by to get the regulatory stamp of approval are still to be defined by government decrees.

The certification will give investors basic guarantees against outright fraud, but will not protect them against losses.

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Investors worry about economy, bet against Europe, like Amazon, Baidu

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Traders work at the offices of CMC Markets in the City of London on December 10, 2018 as Britain's Prime Minister Theresa May makes a statement in the House of Commons announcing the government's intention to delay the 'meaningful' vote on the Brexit withdrawl agreement.

Daniel Sorabji | AFP | Getty Images

Traders work at the offices of CMC Markets in the City of London on December 10, 2018 as Britain’s Prime Minister Theresa May makes a statement in the House of Commons announcing the government’s intention to delay the ‘meaningful’ vote on the Brexit withdrawl agreement.

Global fund managers have positioned their portfolios for slower growth and lower interest rates, but they do not foresee a recession until the second half of next year at the earliest.

More than half, or 53% of the fund managers in the monthly Bank of America Merrill Lynch survey believe the Fed is done raising interest rates, and just 13% expect higher global short-term rates, the lowest level since August 2012.

But 66% also see below trend economic growth and low inflation, the highest percent since October 2016. Seventy percent expect a global recession to start in the second half of 2020 or later, while 86% do not believe the inversion of the U.S. Treasury yield curve signals an impending recession.

Betting against European stocks was the most crowded trade in April, for a second month. While investors are negative on Europe, the second-most crowded trade favors buying big-cap growth names in the U.S. and China, through FAANG and BAT.

FAANG includes Facebook, Amazon, Apple, Netflix and Alphabet, while BAT represents Baidu, Alibaba and Tencent. The third- and fourth- most crowded trades are long U.S. dollar and then long Treasurys.

There were 187 participants in the survey, which was conducted between April 5-11.

The fund managers continue to see the biggest risks as the trade war and China’s growth slowdown. Trade wars have edged out China’s growth slowdown as the bigger worry in 10 of the last 11 months. The dominant concerns since 2011 have been euro zone debt, possible breakdown of the euro zone, Chinese growth, populism, quantitative tightening and trade wars.

Fund managers did increase their exposure to cyclical risk in the month by adding stocks and reducing cash. But the investing pros are most heavily positioned in utilities, and their allocation to global bank stocks is the lowest since September 2016. They also favor cash and emerging markets, vs. stocks and the euro zone.

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