Janet Yellen will speak this afternoon at 1 PM, sharing her economic outlook at the Executives Club of Chicago. Traders will parse her words carefully, looking for any clues to the timing of the next hike. They're now placing a 75.3% chance of a rate hike in March, up from 66.4% late Wednesday. After Vice Chair William Dudley said earlier this week, "the case for tightening monetary policy has become a lot more compelling." Chair Yellen is expected to reinforce the idea that higher interest rates are on the way.

Mexico's trade war strategy: Alejandro Silva & Alejandro Urbina, emerging market investors at Silva Capital Management, argue in Bloomberg View that Mexico has plenty of leverage in a trade war with the U.S. "Mexico should target products coming from states that were critical to Trump's victory in the Electoral College," they write, naming states like Michigan, Pennsylvania, and North Carolina as places where hundreds of thousands of jobs rely on exports to Mexico. In Ohio, for instance, they write that 178,000 in the jobs in transportation equipment manufacturing are supported with exports to Mexico.

Caterpillar's facilities raided by feds: Three manufacturing facilities in Illinois were raided by federal law enforcement officials, the company said Thursday afternoon, sending the stock down 4.28%. The company added that it thinks the investigation is related to an IRS probe of a Swiss subsidiary.