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January 12, 2018

Bank earnings; Surging stocks; Iran deadline

1. Bank earnings bonanza: JPMorgan and Wells Fargo are set to report fourth quarter earnings on Friday morning.

Overall, big banks had a good 2017 with solid results. However, investors are bracing for banks to record big one-off charges in the final quarter related to the overhaul of U.S. tax rules.

Goldman Sachs was the first big bank to announce a hit to profits in 2017 from a new so-called "repatriation tax."

Congress expects the new one-off tax on overseas profits will bring in an estimated $339 billion over time.

Companies expect the tax reform as a whole to be beneficial in the long run but there could be short term pain.

BlackRock is also due to report earnings before the market opens.

2. Surging stocks: U.S. stock futures are pointing up again, indicating the major indexes will hit fresh record highs on Friday.

The Dow Jones industrial average, S&P 500 and Nasdaq have been on a big winning streak since President Trump's election in November and have been hitting new highs nearly every day of 2018.

The indexes rallied between 0.7% and 0.8% on Thursday.

The S&P 500 hasn't retreated 3%, either in a single day or over several days, since early November 2016. That is the longest period of calm in history, according to Bespoke Investment Group.

European markets are mixed in early trading. Most Asian markets ended the week with small gains.

3. Iran sanctions deadline: President Trump will decide on Friday whether to continue waiving some sanctions on Iran.

The sanctions are not set to expire for several years. But the waivers, which must be renewed every 120 days under the terms of the Iran nuclear deal, suspend them temporarily.

Trump waived the sanctions at the last deadline, but it's not clear whether he will do so again. If he decides not to, Boeing's $8 billion deal to sell 80 jets to Iran Air could be at risk, as could Total's huge energy investment in Iran.

4. December retail sales: The U.S. Census Bureau is set to report retail sales figures for December at 8:30 a.m. ET.

December is a critical month for the industry because it's when Americans do much of their holiday shopping.

Struggling retailers got a bit of a break in November, when retail sales grew by 0.8% -- better than expected.

5. Coming this week:

Friday -- Bank earnings; December retail sales report

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