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R.T.M. ~ Frontrunning ~ 18th Ed., Vol.2 ~ May 2nd - 6th

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Frontrunning: May 2


Submitted by Tyler Durden on 05/02/2016 07:44 -0400

  • Puerto Rico Development Bank Won’t Make Most of a Debt Payment Monday (WSJ)
  • Why the jump in futures? Tokyo slide keeps mood downbeat (Reuters)
  • Indiana to test Donald Trump’s staying power with evangelicals (Reuters)
  • Gold Rallies Above $1,300 for First Time Since January 2015 (BBG)
  • This Tech Bubble Is Bursting (WSJ)
  • Valeant’s CEO Was Key Force on Pricing (WSJ)
  • US banks sound caution on commercial property loans (FT)
  • As oil plows through $45 a barrel, U.S. producers rush to lock in prices (Reuters)
  • Why So Many Chinese Students Come to the U.S. (WSJ)
  • Big bargains entice Warren Buffett fans on Berkshire weekend (Reuters)
  • Halliburton, Baker Hughes Calls Off $28 Billion Deal (BBG)
  • Goldman targets 'mass affluent' borrowers with unusual lending plan (Reuters)
  • In Ukraine’s ‘Klondike,’ a Rush for Stolen Gems (BBG)
  • China April official factory activity expands but at slower pace (Reuters)
  • Buffett Hits Hedge Funds While They're Down, Faulting Fees (BBG)
  • Japan final April manufacturing PMI hits lowest since Jan 2013 after Kumamoto earthquake (Reuters)
  • Mobius Adds Cash to Brazil Saying Rousseff Removal Not Priced In (BBG)
  • Spanish Politics Enters Uncharted Waters as Election Looms (BBG)


Overnight Media Digest

WSJ

- Halliburton and Baker Hughes called off their merger, once valued at nearly $35 billion, which encountered opposition on several continents from regulators who claimed that it would hurt competition in the oilfield services business. (http://on.wsj.com/1Z1Avep)

- Hulu is developing a subscription service that would stream feeds of popular broadcast and cable TV channels, a move that would make the company a competitor to traditional pay-TV providers and other new digital entrants. (http://on.wsj.com/1Z1Aw1W)

- A group including private equity firm Apollo Global Management LLC boosted its bid for Apollo Education Group Inc in an effort to salvage the takeover of the University of Phoenix owner amid shareholder resistance. (http://on.wsj.com/1Z1AA1A)

- Republican front runner Donald Trump holds a 15-point lead over his rivals in Indiana's Republican presidential primary, while Democratic frontrunner Hillary Clinton has a four-point edge ahead of Bernie Sanders, a new Wall Street Journal/NBC News/Marist Poll finds. (http://on.wsj.com/1VGzZV8)



FT

* Halliburton Co and Baker Hughes Inc are expected to announce the termination of their merger agreement on Monday following opposition from U.S. and European antitrust regulators.

* Air France-KLM's board appointed Jean-Marc Janaillac as the Franco-Dutch airline's new chief executive on Sunday, following the resignation earlier of Alexandre de Juniac.

* British lawmakers have asked Philip Green and his wife Tina to "respond promptly" to its request for help with inquiries into the failure of department store chain BHS and its pension liabilities.

* Deutsche Bank has "serious" and "systemic" failings in its controls against money laundering, terrorist financing and sanctions, according to a confidential letter by the UK's financial regulatory agency.



NYT

- A lawsuit seeking to be certified as a class action has been filed on behalf of consumers in New York and California against the owner of Quaker Oats after testing found traces of the pesticide glyphosate in some oatmeal. (http://nyti.ms/26Jb7jg)

- Puerto Rico's $422-million missed payment is the biggest yet in a continuing series of defaults by the struggling United States territory, and a warning that it will probably default on even larger and more consequential payments due on July 1, unless Congress enacts rescue legislation before then. (http://nyti.ms/1X3ljPe)

- China is pouring hundreds of billions of dollars into its economy in a new effort to support growth, and some of it is going into real estate sector, stocks and even egg futures. (http://nyti.ms/1TeKecS)



Britain

The Times

* Only way is up for oil price

(http://bit.ly/1raDJB3)

The oil price may have reached its floor after touching decade-low levels this year because of fears about a supply glut and a stand-off between the big producing nations, according to the world's leading energy official.

* Blackstone races to top of private equity mountain

(http://bit.ly/26IFQwK)(http://bit.ly/26IFQwK)

Blackstone Group has raised a bumper $60 billion from private equity investors over the past five years, claiming the title of the world's biggest private equity group and leaving its rivals far behind.

The Guardian

* Leaked TTIP documents cast doubt on EU-US trade deal

(http://bit.ly/23gYuYe)

Talks for a free trade deal between Europe and the U.S. face a serious impasse with "irreconcilable" differences in some areas, according to leaked negotiating texts.

* Europe's liberal illusions shatter as Greek tragedy plays on (http://bit.ly/26IGpXy)

Greece is running out of money. The government in Athens is raiding the budgets of the health service and public utilities to pay salaries and pensions. Without fresh financial support it will struggle to make a debt payment due in July.

The Telegraph

* Lord Grabiner to be quizzed by MPs over BHS collapse

(http://bit.ly/1SWIP0y)

Lord Grabiner, the chairman of Arcadia, is due to be called to help MPs to understand why BHS was sold for 1 pound ($1.46) to Retail Acquisitions 13 months before its dramatic collapse.

* BT to let rival use its ducts and poles in bid to boost competition (http://bit.ly/23hrfnD)

BT Group is in talks to open up its infrastructure to a rival in a landmark test of Ofcom's plan to introduce more competition for its much criticised Openreach network monopoly.

Sky News

* Butterkist owner to pass on the popcorn

(http://bit.ly/23esjsm)

The private equity group which owns stakes in corporate giants such as Hilton Worldwide and Versace is to take advantage of soaring UK consumer demand for popcorn by putting the Butterkist brand up for sale.

http://www.zerohedge.com/news/2016-05-02/frontrunning-may-2
 

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Slew Of Negative News, Defaults And Failed Mergers Push Futures In The Green


Submitted by Tyler Durden on 05/02/2016 06:47 -0400

It has been a busy weekend for mostly negative newsflow.

It all started with China which on Saturday reported yet another disappointing PMI print of 50.1, which both missed expectations and declined from the previous month; then we got the latest Iraq oil output and exports number which rose yet again, pushing it further into near record territory despite a weekend of political chaos in Baghdad which saw protesters loyal to al Sadr penetrate the fortified Green Zone; at the same time Russian total output dipped just 0.5% from its post-USSR record, suggesting the global oil glut is only set to deteriorate.

In M&A news the long awaited termination of the Halliburton-Baker Hughes merger finally took place when the companies announced last night they would not extend the termination deadline; more important was Puerto Rico’s announcement that it would default on a $422 million bond payment for its Government Development Bank while Atlantic City is also expected to announce a default later today; the US shale sector just had its two latest casualties after Ultra Petroleum filed for bankruptcy citing $3.9 Billion Debt; at the same time Midstates Petroleum also filed Chapter 11.

In sum, a bevy of negative news in the past 48 hours which perhaps explains why futures are fractionally in the green as of this moment.

Central planning humor aside, US - and certainly Japanese - equities continue to be driven mostly by the Yen, which has failed to decline substantially after last week's surge, and as a result the USDJPY remains within several dozen pips of its post October 2014 lows of 106.2.





The yen soared almost 5 percent on the final two trading days of last week as the Bank of Japan unexpectedly refrained from boosting stimulus amid fading prospects for a U.S. interest-rate increase this summer. As a result, Japan led a selloff in Asian equities, with the Topix index sliding for a fifth day as trading resumed after a break on Friday. The yen held its steepest back-to-back gains since the global financial crisis and the Stoxx Europe 600 Index reached a two-week low.

"To sum it up in a single phrase, there was a gap in the communication between the BOJ and the market,” Yoshinori Ogawa, a market strategist at Okasan Securities in Tokyo told Bloomberg. "There are concerns the yen may strengthen beyond 105 per dollar. As we are in the middle of long holidays, liquidity is thin, which makes it easier for speculators to whip markets around with their selling."

This ongoing pressure on the dollar explains why gold has finally breached the $1,300 resistance level.

What is perhaps strange is that despite a weaker dollar, oil continues to fall for a second day due to the noted previously Iraqi exports which approached record high in April, adding barrels to worldwide supply glut. Operations weren’t affected Sunday after protesters stormed parliament in Baghdad, threatening to paralyze govt of OPEC’s 2nd-largest producer; disruption broke up Sunday as protesters agreed to leave govt area. "The rally is running out of steam," says Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. "Negative sentiment and negative fundamentals are becoming more obvious. Most of the problem surrounds oversupply in the market, and that’s not going away."

A notable move in Italy has seen local banks all slammed lower following the previously reported news that Italy's bank bailout fund would use up a third of its firepower already just to buy most of the shares in Banca Popolare di Vicenza’s EU1.5b capital increase through an initial public offering after institutional investors showed little interest, in effect bailing out the first bank under its remit just weeks after being activated.

S&P 500 futures rose 0.1 percent after U.S. equities ended last week with their worst two-day drop since February, amid lackluster earnings and few signs of a pickup in economic growth.

Liquidity in the market will be particularly low today as markets are shut for holidays in China, Hong Kong and the U.K.

Latest Market Snapshot

  • S&P 500 futures up 0.1% to 2061
  • Stoxx 600 up less than 0.1% to 342
  • DAX up 0.9% to 10131
  • German 10Yr yield down 2bps to 0.25%
  • Italian 10Yr yield down 2bps to 1.47%
  • Spanish 10Yr yield down 2bps to 1.58%
  • S&P GSCI Index down 0.5% to 358.4
  • MSCI Asia Pacific down 1.2% to 130
  • Nikkei 225 down 3.1% to 16147
  • S&P/ASX 200 down 0.2% to 5243
  • US 10-yr yield down 2bps to 1.82%
  • Dollar Index down 0.23% to 92.87
  • WTI Crude futures down 0.9% to $45.49
  • Brent Futures down 1.3% to $46.77
  • Gold spot up 0.5% to $1,299
  • Silver spot down 0.2% to $17.81
Global Top News

  • Halliburton, Baker Hughes Abandon $28 Billion Merger Agreement: Halliburton to pay Baker Hughes $3.5b termination fee
  • Buffett Hits Hedge Funds While They’re Down, Faulting High Fees: At the annual meeting of his Berkshire Hathaway, he warned about the enduring risk of derivatives, defended stocks in his portfolio and signaled that some of the co.’s biggest subsidiaries are hitting speed bumps; Buffett Says Valeant Business Model Was ‘Enormously Flawed’
  • Apollo-Led Consortium Increases Offer for Apollo Education: Consortium led by Apollo Global Management has increased its offer to buy Apollo Education to $10/share, or $1.14b
  • Puerto Rico Will Default on Government Development Bank Debt: Will default on a $422m bond payment for its Government Development Bank; GDB and creditors reach tentative framework on 53% haircut
  • Ultra Petroleum Files for Bankruptcy, Citing $3.9 Billion Debt: Principal assets are gas-producing properties in Wyoming
  • Midstates Petroleum Co. files for bankruptcy protection
  • Euro-Area Manufacturing Growing at ‘Anemic’ Pace, Markit Says: Growth was little changed last month as stronger readings in Germany, Italy and Spain were offset by contraction in France
  • Energy Future Offers New Reorganization Plan Amid Deal Dispute: Proposal to sell Oncor unit to Hunt Consolidated in jeopardy
  • JPMorgan Says Justice Department, SEC Probing Hires in Asia
  • ‘Jungle Book’ Holds Off ‘Keanu’ to Stay No. 1 at Box Office: Collected $42.4m in its 3rd weekend in North American theaters
  • Oil Bulls Bet the Waning U.S. Shale Boom Will Curb Global Glut: Hedge funds boost bullish wagers to highest in 11 months: CFTC
  • AIG Raises $1.25 Billion Selling PICC Stock Near Bottom of Range: Sold 740 million PICC shares at HK$13.08 apiece
  • Short Sellers Target Perrigo After CEO Exit as Goldman Says Sell: Short interest at highest since 2013 after forecast cut
Looking at regional markets, Asia stocks opened the week in negative territory with Nikkei 225 resuming its BoJ-triggered declines as JPY strength slams exporters. Nikkei 225 (-3.1%) was dragged lower by a firmer JPY as well as poor earnings & forecasts from several Japanese firms. In addition, auto names were also pressured with Takata shares plunging 10% following reports that US authorities are to call for an expansion of car recalls affected by faulty airbags. Elsewhere, ASX 200 (-0.2%) conformed to the downbeat tone after discouraging Chinese PMI data whilst uncertainty over the upcoming RBA policy meeting adds to the caution. Finally, 10yr JGBs saw a mild uptick in trade amid a risk-averse sentiment in the region, while the 20yr yields declined to a fresh record low of 0.24%.

Top Asian News

  • China Factory Stabilization Shows Little Need for Added Stimulus: Official factory gauge, the manufacturing purchasing managers index, stood at 50.1 in April
  • Macau Gaming Revenue Stabilizes, Falls Less Than Estimated: April gaming rev. decreased 9.5% versus 13.5% estimated decline
  • JPMorgan Hires Ex-BOJ Officials for Research Business in Tokyo: Former BOJ deputy director Hiroshi Ugai recruited as senior economist, Rie Nishihara as senior analyst for banking
  • Election Jitters Send Philippine Stock Investors to Sidelines: Rodrigo Duterte, who maintains lead a week before presidential vote, has given few details on economic policies
  • Mitsubishi Motors’ Fraud Hits Nissan as Minicar Sales Plunge 51%: Nissan Japan sales of mini, standard vehicle fall 22% in April, Mitsubishi minicar deliveries drop 45%
  • Beaches of Dead Fish Test New Vietnam Government’s Response: Thousands rally on Sunday calling for closing of Formosa plant in a nation where public protests, criticism are unusual
  • Westpac Warns of Rise in Consumer Defaults on Mining Slowdown: Defaults inching up in mining states of Queensland, WA
  • Ricoh Drops Most on Record After Forecasting Decline in Profits: Closes down 16%, most since Nov. 2008, after a record 17% drop during the day
  • Takata Falls on Report Recalls May Rise to 100 Million Autos: Co. says no decision on additional recall in U.S. in response to Nikkei newspaper report
The European morning has seen equities kick-off the week in a tight range amid the holiday thinned trade, with UK markets closed and many across Asia also away. European equities trade marginally higher, led higher by exporters amid the EUR strength and with gains capped by the losses in financials, stemming from Italian banks as the NPL saga continues. Additionally, the tone has been somewhat dampened following soft Chinese Official PMI figures over the weekend, subsequently hinting at modest weakening in regards to the momentum of China's economy.

From a fixed income perspective, Bunds are trading higher with the yield curve seeing some bull flattening, while notable outperformance has been observed in the long end with 30yr yields lower by 4.4bps. As such, some have noted that the price of German paper has been underpinned by residual month-end demand.

Top European News

  • Air France-KLM Board Picks Janaillac as New CEO, Chairman: Selected veteran transportation manager Jean-Marc Janaillac as CEO and chairman, to start July 31
  • Italian Bank Shares Tumble After Investors Snub Pop. Vicenza IPO: Bank stocks dropped after private investors snubbed an IPO by Banca Popolare di Vicenza and Atlante, Italy’s bank- rescue fund, had to buy almost all the shares; Italy Exchange to Rule on Pop. Vicenza Listing After Stock Sale
  • Philips Said Disappointed With Lighting Bids, Leaning To IPO: Could seek valuation of about EU5.5b in potential listing
  • Ferrari CEO Switch Said Imminent With Board Choosing Marchionne: Ferrari set to appoint Chairman Sergio Marchionne to replace Amedeo Felisa as CEO as early as Monday, according to people familiar with the matter
  • Italy’s Intesa Sanpaolo Sells Payment Units in $1.2b Deal: To sell Setefi and Intesa Sanpaolo Card payment units to a group that includes Bain, Advent in deal valued at EU1.04b
  • Deutsche Bank Said to Be Faulted by FCA Over Lax Client Vetting: Firm says it’s fixing lapses regulator cited in March letter
  • Merkel’s $1.4b German E-Car Push Boosts Infineon, STMicro: Value of chips in e-cars, hybdrids double that in regular cars
  • Spanish Politics Enters Uncharted Waters as Fresh Election Looms: Deadline for patching together a majority from the most fragmented parliament in Spanish history falls at midnight on May 2, triggering a repeat election for late June
In FX, there is not too much to report from early Europe, with the overnight session seeing a USD/JPY test lower but holding off 106.00 for now. A bid tone seen in the EUR with the lead spot rate taking out 1.1470-75 resistance — 1.1500 now targeted but digital out-strikes here said to be providing some supply ahead of the figure. EU manufacturing PMI's saw the final read up slightly to 51.7, but notable weakness seen in the French component. Nevertheless, last week's healthy EU wide GDP number adds to encouragement to a move beyond 1.1500. Elsewhere, Cable is shaking off some favour to the Brexit camp, but the EUR/GBP is pushing to new recent highs on the above EUR sentiment. An offered USD tone clearly continues, pushing AUD higher despite RBA risk ahead — outside calls for a rate cut. USD/CAD still eyeing 1.2500 lower down, but trade tight ahead of the North American open.

In commodities, in thin European trade WTI has managed to hang on to gains seen last week and continues to reside above the USD 45.00/bbl handle while Brent remains in close proximity to USD 47.00/bbl. Elsewhere, gold has continued its rally and has risen above the psychological USD 1300/oz as risk-averse sentiment and USD weakness underpinned the safe-haven, Silver printed just below USD 18/oz at USD 17.93/oz, while copper saw flat trade amid a lack of market participants as various nations including the world's largest consumer China were away.

On today's calendar we’ll get the final revision for the US this afternoon while the main focus will be the April data for ISM manufacturing and prices paid prints. March construction spending data will also be released.

Bulletin Headline Summary from Bloomberg and RanSquawk

  • European bourses trade modestly higher, led by exporters as EUR/USD approaches 1.1500 to the upside
  • Fixed income remains supported amid light volumes this morning, with the UK away for May Day Bank Holiday
  • Highlights today include US Manufacturing PMI and scheduled comments from Fed's Lockhart, ECB's Draghi and Lautenschlaeger
  • Treasuries rally in overnight trading as equity markets mixed in Europe, lower in Asia with many bourses closed due to holiday; economic data this week will be dominated by Friday’s nonfarm payrolls report.
  • U.S. Treasury says China, Japan, Germany, S. Korea, Taiwan meet two of three criteria for pursuing FX policies that could provide unfair competitive advantage, under Trade Facilitation and Trade Enforcement Act of 2015
  • In a world awash with debt, it’s hard to imagine that there may not be enough to go around. Yet, JPMorgan predicts record-low global yields ahead
  • Italian bank stocks dropped in Milan trading after private investors snubbed an initial public offering by Banca Popolare di Vicenza SpA and Atlante, the country’s bank- rescue fund, had to buy almost all the shares
    Markit Economics in London said its monthly Purchasing Managers Index points to “anemic” factory growth in the Euro-area as stronger
  • in Germany, Italy and Spain were offset by contraction in France
  • Gold advanced above $1,300 an ounce as investors flood back to precious metals as risks to the global economy prompted the Federal Reserve to signal it will take a slower approach to further interest-rate increases
  • Puerto Rico will default on a $422 million bond payment for its Government Development Bank, escalating what is turning into the biggest crisis ever in the $3.7 trillion market that U.S. state and local entities use to access financing
  • Brazil’s President Rousseff promised increased spending on her party’s most popular social program and took other measures aimed at her electoral base, less than two weeks before the Senate is expected to vote in favor of the impeachment process she calls a coup d’etat
  • After ratcheting up lending at the behest of President Dilma Rousseff, Brazil’s state-controlled banks may be in store for more pain as Brazil’s longest recession in a century sparks a surge in delinquencies
  • Halliburton Co. and Baker Hughes Inc. called off their $28 billion merger that faced stiff resistance from regulators in the U.S. and Europe over antitrust concerns
  • The hundreds of protesters who pulled down blast walls and forced their way into Baghdad’s Green Zone on Saturday laid bare growing political chaos that increasingly poses a threat to the country’s security and the economy
  • Sovereign 10Y bond yields mixed; European equity markets mixed, Asian markets lower; U.S. equity-index futures rise. WTI crude oil drops, metals higher
US Event Calendar

  • 8:50am: Fed’s Lockhart speaks at Amelia Island, Fla.
  • 9:45am: Markit US Manufacturing PMI, April F, est. 50.8 (prior 50.8)
  • 10am: ISM Manufacturing, April, est. 51.4 (prior 51.8)
  • 10am: Construction Spending, March, est. 0.5% (prior -0.5%)
  • 5:30pm: Fed’s Williams speaks in Los Angeles
DB's Jim Reid concludes the overnight wrap

Earnings will again be a big focus for markets this week with 124 S&P 500 companies set to report, headlined by the likes of Merck, Pfizer and Kraft Heinz. We’ll also get the latest reports from 17% of the Stoxx 600 including some of the big banks. With the market firmly back to scrutinizing the data too, the big focus there this week comes on Friday when we’ll get the April employment report in the US. We’ll have a full preview of that closer to the date but as well as the labour market numbers it’s worth also keeping an eye on today’s ISM manufacturing print which, following on from softer regional readings, is expected to show a modest 0.4pt decline to 51.4. Our US economists are actually forecasting for a drop below 50 (to 49.0) and the data will give an early insight into what extent, if at all, growth is rebounding in Q2. We’ll also get the April PMI’s this week, so there’s plenty to keep us busy.

Over the weekend the main focus has been on the China data released on Sunday. The data showed a slight drop in the official manufacturing PMI for April, declining a modest 0.1pts to 50.1 (vs. 50.3 expected) while the non-manufacturing PMI was also lower, falling 0.3pts to 53.5. New orders subcomponents for both were softer, although especially in the latter where the component dropped back below 50. We’ll have to wait for the reaction from markets in China as bourses are closed for a public holiday (along with Hong Kong) today. The focus is more on Japan however where markets have reopened following a public holiday of their own on Friday. With the Yen unchanged this morning but hovering around 18 month highs, the Nikkei has plunged -3.62%, while the Topix is -3.55%. Elsewhere the ASX (-0.63%) and Kospi (-0.73%) are weaker too while moves for Oil aren’t helping with WTI down close to -1%.

Meanwhile the other headline grabber from the weekend is the news out of Puerto Rico with the confirmation that Governor Padilla has declared a debt moratorium on a $422m repayment due today by the island’s Government Development Bank, and so triggering a default. The bigger news now might mean what this means for the nation’s other general obligation bonds, of which according to Bloomberg $800m are due to be repaid by July. A story worth following.

Moving on. Earnings season is ticking along and in the US we’ve now had the latest quarterly earnings from 310 S&P 500 companies. There’s a familiar trend to what we’ve seen in the past with 77% beating at the EPS line and 57% at the revenue line – which largely matches previous quarters although the beat in sales is a bit better than what we’ve seen historically. As we’ve highlighted previously however, this masks what has been a significantly weaker period for earnings relative to last year. Our equity colleagues in the US highlight the important point that analysts have chopped their EPS forecast by over 9% for this quarter since the turn of the year, making it less of a surprise to see so many companies coming ahead of estimates. In fact our colleagues note that Q1 EPS should wrap up at about 5% lower YoY unless we see big beats from the remaining reporters. We’re currently down close to 6% on a YoY basis although ex-energy that’s only -0.5% yoy.

In a quick recap of markets on Friday, it was a pretty soft close to the week for markets on both sides of the pond, with volatility across currencies and some fairly mixed data plaguing sentiment. A late bounce into the close helped limit the loss for the S&P 500 to just -0.51%, however European bourses moved the other way in the late stages of trading there, culminating with the Stoxx 600 closing with a -2.13% decline which was the biggest daily fall since February. There was a similar underperformance in credit markets with the iTraxx Main and Crossover indices ending 2.5bps and 11bps wider respectively, while in the US CDX IG ended the day just 1bp wider. Currency markets were dominated by weakness for the US Dollar. In fact the Dollar index closed the day down -0.72% meaning it weakened over 2% during the week with the index now back to trading at the lowest level this year. It’s the mirror image for the Euro with the single currency up +0.87% on Friday and a shade over 2% on the week.

In terms of the US data, the core PCE was confirmed as rising +0.1% mom in March as expected which has resulted in the YoY rate dipping a tenth to +1.6%. The employment cost index print was reported as increasing +0.6% qoq in Q1. Meanwhile, there was some mixed signals coming from the personal income and spending reports last month. Income rose +0.4% mom and a little more than expected (vs. +0.3% expected), while spending (+0.1% mom vs. +0.2% expected) was below consensus. The Chicago PMI for April declined a steeper than expected 3.2pts to 50.4 (vs. 52.6 expected) while there was similar weakness in the ISM Milwaukee (-6.7pts to 51.1). Finally later in the session we got confirmation of a downward revision to the final April University of Michigan consumer sentiment print, by 0.7pts to 89.0. More concerning perhaps was the 3pt downward revision to the expectations reading to 77.6 which is the lowest since September 2014.

There was plenty of data released in Europe on Friday too. The highlight was a better than expected Q1 GDP print (+0.6% qoq vs. +0.5% expected) for the Euro area. This had the effect of keeping the YoY rate unchanged at +1.6% and while the headline reads positive, our Macro colleagues in Europe noted that some caution is warranted, however. They highlight in particular that there are transitory factors at play and numerous forces – including global uncertainty, rising oil and political risk – to prevent underlying growth from accelerating. Meanwhile, there was some disappointment in the CPI headline estimate for the Euro area after printing at -0.2% yoy (vs. -0.1% expected), a decline of two-tenths. The core print was recorded as declining three-tenths to +0.7% yoy (vs. +0.9% expected). Elsewhere, German retail sales were reported as declining unexpectedly in March (-1.1% mom vs. +0.4% expected) and so shrinking annual growth to +0.7% yoy.

Staying in Europe, there was some focus also on Portugal on Friday after the nation retained its IG credit rating status from DBRS. The news is significant as the agency is the only one to rate Portugal investment grade and so according to the FT, this allows the country to continue to benefit from QE bond buying by the ECB.

We’ll also get the final revision for the US this afternoon while the main focus will be the April data for ISM manufacturing and prices paid prints. March construction spending data will also be released. Away from the data we’ll start to hear from a number of Fedspeakers again. Lockhart (today and Wednesday), Mester (Tuesday), Kashkari (Wednesday) and Bullard (Thurday) are all scheduled while Bullard, Kaplan, Lockhart and Williams are all due to take part in a panel interview on Friday. Meanwhile the ECB’s Draghi is scheduled to speak this afternoon, while Weidmann is also due to speak later in the week.

It’s another big week for earnings with 124 S&P 500 companies set to report, accounting for 16% of the index market cap. The highlights look set to be AIG (today), Pfizer (Tueday), Kraft Heinz (Wednesday) and Merck (Thursday). In Europe we’ll get reports from 17% of the Stoxx 600 including Shell, HSBC, BNP, UBS and BMW.

http://www.zerohedge.com/news/2016-...efaults-and-failed-mergers-push-futures-green
 

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Asian Precious Metals Update: May-2-2016
By: Chintan Karnani, Insignia Consultants
Last week was the herd. All metals and energies rose at the same time. The US dollar depreciated along with below expectation US economic data releases. This resulted everything rising and breaking past key technical resistances. You went long with a high margin money in all metals and energies. You won. You went short and you got busted.
 

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Nothing to see in this one. If you'd like to listen you can do so in one tab, play around on GIM or surf the web in another.

28 Pages A Conversation with Sen. Bob Graham | FTMDaily
FinanceAndLiberty.com


Published on May 2, 2016
This video was posted with permission from http://FTMDaily.com

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#10
Asian Metals Market Update: May-3-2016
By: Chintan Karnani, Insignia Consultants
The current rise in gold and silver is backed by a weaker US dollar and expectation of a delayed interest rate hike by the Federal Reserve. Physical gold buyers are on the sidelines. Those who have purchased physical gold are not making new purchases. New physical gold investors are waiting for Friday’s US April nonfarm payrolls. It will be a technical trade after NFP with the US dollar as the key.
 

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#11
Frontrunning: May 3


Submitted by Tyler Durden on 05/03/2016 07:36 -0400

  • Global stocks slide as yen, euro gains question policy potency (Reuters)
  • U.S. Index Futures Signal Stock Losses as AIG Drops on Earnings (BBG)
  • EU Sees Weaker Growth in Eurozone and Wider EU as China Slowdown Weighs (WSJ)
  • Euro Set for Longest Run of Gains Since 2013 as Fed Focus Fades (BBG)
  • German Bonds Advance as EU Cuts Euro-Area Inflation Outlook (BBG)
  • Trump hopes to land decisive blow in Indiana showdown with Cruz (Reuters)
  • Hedge Funds Under Attack as Cohen Says Skilled People Are Scarce (BBG)
  • China's banking regulator moves to contain off-balance sheet risk (Reuters)
  • Two Sigma Co-Founder `Very Worried' Machines Will Take Jobs (BBG)
  • Aeropostale Preparing to File for Bankruptcy This Week (WSJ)
  • Fairway Group Holdings files for Chapter 11 bankruptcy (Reuters)
  • Pfizer Beats Estimates as Vaccine, Cancer Drug Sales Surge (BBG)
  • UBS Drops as Profit Misses Estimates on Wealth, Trading Income (BBG)
  • Commerzbank Plunges as Low Interest Rates Hit Sales, Trading (BBG)
  • Halliburton adjusted profit beats estimate, helped by cost cuts (Reuters)
  • The Super Rich Were the First to Bail During the Financial Crisis (BBG)
  • Islamic State breaches peshmerga defenses north of Mosul (Reuters)
  • Iraq Cleric’s Moves Test Political Order (WSJ)
  • Australia Budget Highlights Low-Growth Challenge: Moody's (BBG)
  • Drought-hit Zimbabwe sells off wild animals (Reuters)


Overnight Media Digest

WSJ

- Aeropostale Inc is preparing to file for bankruptcy protection this week and close more than 100 stores, according to people familiar with the matter, as the teen-apparel retailer contends with mounting losses and falling sales. (http://tinyurl.com/jkabzlq)

- The Colorado Supreme Court ruled Monday that municipalities can't bar hydraulic fracturing, a long awaited decision in a legal battle that has rippled across this energy rich state. (http://tinyurl.com/h9jzg4a)

- Donald Trump, with a big lead in the polls in Indiana and the Republican presidential nomination within his reach, kept attacking his GOP rivals on the eve of the state's primary, while democratic front-runner Hillary Clinton ignored her opponent and looked ahead to the general election. (http://tinyurl.com/zu8amcp)

- Microsoft Corp updated its Bing search app for iOS on Monday with a new feature that lets you search for images by taking a photo with your iPhone or uploading an image from your camera roll. (http://tinyurl.com/zspmtx3)



FT

* France's competition authority ordered Engie to raise its natural gas prices for companies, saying that in some cases the energy company utility was engaging in "predatory pricing" and harming competitors.

* Philippe Hebert, chief risk officer of Barclays France, has alleged money laundering and mis-selling failures at the bank in a letter written to Tony Blanco, chief executive of Barclays France, which was seen by the Financial Times.

* Eurozone economies would benefit at the cost of Britain if it decided to leave the European Union, a prominent French economist has predicted, with a relocation of financial activity out of London causing sterling to plummet.

* The stock market in Milan said it could not allow regional lender Popolare di Vicenza to list after it failed to find sufficient buyers for its 1.7 billion euros ($1.96 billion)capital raising.



NYT

- WhatsApp, a messaging service owned by Facebook, was shut down in Brazil on Monday after a court order from a judge who is seeking user data from the service for a criminal investigation. (http://tinyurl.com/gse8b79)

- Puerto Rico's default on most of a $422-million debt payment on Monday puts the spotlight back on Washington to enact a rescue package for the island, and congressional aides said a revised bill would be introduced next week. (http://tinyurl.com/jb2qr44)

- The Dutch chapter of the environmental activist group Greenpeace on Monday disclosed a trove of documents from the talks over a proposed trade deal between the European Union and the United States. (http://tinyurl.com/jzgo5qh)

- Hulu, until now primarily a rerun service for episodes of broadcast television shows, is working to create a more robust offering that would stream entire broadcast and cable channels to consumers for a monthly fee. (http://tinyurl.com/zy9uopz)



Britain

The Times

- Range, a discount furniture retailer, and NewDay, one of the country's largest providers of store cards, have begun talks with investors about flotations that could value the companies at more than 1 billion pounds ($1.47 billion) each. (http://bit.ly/1Z4UU23)

- David Cameron is to put curbing Islamist extremism at the heart of the Queen's Speech this month as he seeks to fend off claims that he is becoming a lame-duck prime minister. (http://bit.ly/1Z4W4L9)

The Guardian

- Britain's most senior civil servant, Jeremy Heywood, is reviewing HS2 as fears grow that the high-speed railway cannot be built within its 55 billion pound budget in its current form. (http://bit.ly/1Z4XPrw)

- Worries about the EU referendum in June, rising labour costs and China's slowdown have knocked UK business confidence to a four-year low, according to a report by ICAEW. (http://bit.ly/1Z4XVzt)

The Telegraph

- A Brexit will cost up to 100,000 jobs while the NHS and other public services will face significant cuts, Cabinet Minister Greg Hands has warned. (http://bit.ly/1Z4Ybyw)

Sky News

- Restaurants and bars could also be stopped from adding service charges to bills to remind customers they do not have to tip if they don't want to. Tips left by customers should go to workers in full and not their employers, the government has said in a report. (http://bit.ly/1Z4YJnR)

The Independent

- The chairman of Business Select Committee examining the collapse of BHS has said the retailer's former owner, Philip Green, has "enormous questions" to answer surrounding the sale of the 88-year-old high street chain, accusing him of "crashing" it into a cliff. (http://ind.pn/1Z4ZBZF)


http://www.zerohedge.com/news/2016-05-03/frontrunning-may-3
 

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#12
"Unexpected" Australian Rate Cut To Record Low Unleashes FX Havoc, Global "Risk Off"


Submitted by Tyler Durden on 05/03/2016 06:39 -0400


Three months ago, when Australia unexpectedly revealed that its recent "stellar" job numbers had in fact been cooked we asked, rhetorically, why the sudden admission it was all a lie? Simple: weakness in commodity prices "is far greater than people had been expecting,” the nation's top economist said. Australia is now "swimming against the tide" because of uncertainties in the global economy, he added. Which we translated as follows: "we need more easing, and to do that, the economy has to go from strong to crap." And with the Australian economy suddenly desperate for lower rates from the RBA, one can ignore the propaganda lies, and focus once again on the far uglier truth.

Overnight this was finally confirmed when in a surprise move, Australia’s central bank cut its benchmark interest rate for the first time in a year to a record low and left the door open for further easing to counter a wave of disinflation that’s swept over the developed world. The move sent the local currency tumbling and local stocks climbing.

Reserve Bank of Australia Governor Glenn Stevens and his board lowered the cash rate by 25 basis points to 1.75 percent Tuesday, a move predicted by just 12 of 27 economists surveyed by Bloomberg. The rest had seen no change. Data last week showed quarterly deflation in the consumer price index and the weakest annual pace on record for core inflation, which the RBA aims to keep between 2 percent and 3 percent on average.

“Inflation has been quite low for some time and recent data were unexpectedly low,” Stevens said in a statement. “These results, together with ongoing very subdued growth in labor costs and very low cost pressures elsewhere in the world, point to a lower outlook for inflation than previously forecast.”

As Bloomberg reminds us, Australia’s central bank acted after two regional neighbors stood pat last week - New Zealand and Japan. Illustrating the impact of central bank decisions on exchange rates, the Aussie has the weakest performance among the G-10 since last Wednesday, a day before the Bank of Japan and Reserve Bank of New Zealand meetings. The announcement sent the AUDUSD plunging.





"They’re saying that there’s no point in messing around, let’s get in and do this, cut the cash rate and get some of the speculative money out of the Australian dollar,” said Chris Weston, chief market strategist at IG Ltd. in Melbourne.

In some way's Australia rate cut had been telegraphed earlier in the aftermath of last night's latest disappointing Chinese Manufacturing PMI number, which as we reported contractde for the 14th straight month, and not only missed but dropped to 49.4 after a brief March bounceback from February lows.





Perhaps more importantly, the plunge in the AUD caused havoc across other key carry trades, and following a nearly 200 pip plunge in the AUDJPY, the Yen soared once more, this time surging to the highest against the dollar since August 2014, pushing the pair as lows at 105.600, and dragging risk assets lower with it.

As a result, the dollar fell to its weakest level in almost a year and stocks declined while Treasuries rose as evidence of limp economic growth around the world permeated through global financial markets. It also meant that gold once again jumped above $1300, while oil has traded on the backfoot near $45 a barrel despite the accelerating dollar weakness, ahead of weekly U.S. government data forecast to show rising stockpiles.

"We’ve started to take a little bit of money off the table,” said Sean Darby, chief global equity strategist in Hong Kong at Jefferies. “There’s quite a bit for investors to digest now after quite a big run-up in markets, particularly after the disappointment from the Bank of Japan last week.”

It wasn't just central banks: commercial banks were also responsible for today's weakness. UBS Group AG fell 5.8% after reporting worse-than-forecast first-quarter net income. Commerzbank AG lost 6% after its profit more than halved. HSBC Holdings Plc erased gains to fall 0.7 percent after posting a drop in profit.

"Weak earnings and a strong euro are the main triggers for the market being down today,” said Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank in Bonn, Germany. “What markets need most right now is to see better numbers from the economic indicators in Europe and a better view from companies on their future earnings.”

So far it has not seen that, and making matters worse, the European Commission said hours ago that growth in the Eurozone and the wider European Union will be slightly weaker this year than previously forecast, as it warned that the economic slowdown in China and other emerging markets, geopolitical tensions and uncertainty ahead of the U.K. referendum on EU membership could weigh on the economy.

The EU’s economists also cautioned that the strength of factors that have been supporting growth in the region, such as low oil prices and a weaker euro, could start to fade, while fundamental problems in many of the bloc’s economies, including high levels of private debt and unemployment, continue to hold back the economic recovery. The commission now expects the rate of inflation in the eurozone to be just 0.2% this year, down from the 0.5% previously forecast. In 2017, inflation in the currency union is now seen at 1.4%, down from the 1.5% predicted earlier and still below the close-to-2% targeted by the ECB.

“We’re into the May doldrums where people are starting to reconsider portfolios and will probably not do too much,” said Sean Darby, chief global equity strategist in Hong Kong at Jefferies Group LLC. “They’ve either missed the rally from the first quarter or they’re getting a little bit too concerned about some of the weakness in the global data.”

Market snapshot

  • S&P 500 futures down 0.7% to 2059
  • Stoxx 600 down 1.3% to 337
  • FTSE 100 down 0.7% to 6196
  • DAX down 1.6% to 9957
  • German 10Yr yield down 2bps to 0.24%
  • Italian 10Yr yield down less than 1bp to 1.47%
  • Spanish 10Yr yieldunchanged at 1.58%
  • S&P GSCI Index down 0.7% to 352.7
  • MSCI Asia Pacific up less than 0.1% to 130
  • Nikkei 225 closed
  • Hang Seng down 1.9% to 20677
  • Shanghai Composite up 1.8% to 2993
  • S&P/ASX 200 up 2.1% to 5354
  • US 10-yr yield down 5bps to 1.82%
  • Dollar Index down 0.54% to 92.12
  • WTI Crude futures down 1% to $44.33
  • Brent Futures down 1% to $45.37
  • Gold spot up 0.5% to $1,298
  • Silver spot up 0.4% to $17.61
Top Global News

  • Australia Cuts Key Rate to Record Low, Pulling Down Currency: Australian dollar slumps as much as 1.5% following decision
  • UBS Profit Misses Estimates on Lower Wealth, Trading Income: Investment-banking unit sees profit slump 67% in first quarter
  • HSBC’s Quarterly Profit Beats Estimates as Costs Contained: Operating expenses fell 6.6% in quarter from year earlier
  • Fairway Group Files for Bankruptcy as Competition Revs Up: Gourmet grocer lists $387m in debt, $230m assets
  • J&J Faces 1,000 More Talc-Cancer Suits After Verdict Loss: Jury awards $55m to woman who blamed talc for cancer
  • Einhorn’s Greenlight Buys Yelp, Takes Macro Bet on Natural Gas: Hedge fund says mobile app company can double revenue by 2019
  • Mylan Sees Profit Rising About 16%, Generic Prices to Drop: CEO committed to closing Meda acquisition
  • Apple CEO Says He ‘Could Not Be More Optimistic About China’: Tim Cook spoke in interview on CNBC
  • Aeropostale Prepares to File for Bankruptcy This Week: WSJ
  • EU Commission Doubts Trade Deal With U.S. Possible: Sueddeutsche
  • U.S. Grain Cos. Plan to Reject New Monsanto GM Soybeans: WSJ
  • ADM, Bunge Not Accepting Soybeans W/ Unapproved Monsanto Trait
Looking at regional markets, Asian equity markets traded mostly positive with ASX 200 (+0.8%) among the leaders, following an RBA rate cut, while poor China PMI figures increase stimulus hopes. ASX 200 was led by financials after Big-4 bank ANZ recovered from opening losses on optimism regarding the bank's direction, while a 25bps rate cut by the RBA further boosted sentiment. Elsewhere, Chinese markets were mixed with the Shanghai Comp (-1.68%) was weighed by further poor data in which Caixin Manufacturing PMI failed to meet estimates and posted a 14th consecutive month in contraction territory, as the recent data misses increased hopes for additional easing. As a reminder Japanese markets were shut due to Constitution Day and will next re-open on Friday.

Top Asian News

  • China’s Caixin PMI Slips in April as Pockets of Weakness Remain: PMI from Caixin Media and Markit Economics fell to 49.4 vs est. 49.8
  • Short Sellers Under Fire in Australia as RBA Spurs Stock Rally: Banks lead gains after interest-rate cut, ANZ results
  • Yuan Gains After PBOC Sets Strongest Fixing Rate Since December: PBOC raised daily fixing by 0.04% to 6.4565/dollar
  • China Swap Rate Drops Most in Year as Bond Income Escapes Tax: Policy bank bond yields, benchmark repo rates decline
  • PLDT Profit Falls 34% as Losses From Rocket Internet Persist: 1Q net drops to 6.2b pesos
  • ANZ Rallies as Low-Yield Business Cuts Offset Profit Drop: 1H cash profit A$2.782b vs est. A$3.577b
  • DBS First-Quarter Profit Rises 6 Percent, Beats Estimates: 1Q net income S$1.2b vs est. S$1.04b
European equities have also seen significant downside so far this morning (Euro Stoxx: -1.6%), with the DAX slipping back below the 10000 level. While yesterday's decline in energy prices have helped lead energy names lower today, focus has been some of the high profile earnings from across Europe, with the likes of BMW, UBS, Commerzbank and Lufthansa all seeing downside in the wake of their updates. Bunds have seen upside today, with prices back above 162.00, while peripheral debt markets have seen Portuguese paper lifted by the latest sovereign update from DBRS, which has abated some of fears from last week as this would mean that Portuguese bonds are still eligible for ECB QE. Meanwhile, analysts at Informa note that BTP/Bonos are lower by around 1.5bps in the wake of soft demand for the BP Vicenza IPO, whereas for Spain the EU extension for the nation and their deficit goals has offset some of the concerns following the countries inability to form a government.

Top European News

  • European Commission Sees U.K. Referendum Risks as Forecasts Cut: Predicts 2016 growth will slow to 1.8%, 2017 will be 1.9%
  • U.K. Manufacturing Unexpectedly Shrinks as Firms Hemorrhage Jobs: Markit PMI drops to 49.2 from 50.7 in March
  • BMW First-Quarter Profit Falls 2.5% on Self-Driving Shift: BMW sticks to forecast for slight earnings growth in 2016
  • Commerzbank Profit Halves as Market Turmoil Hurts Revenue: Earnings beat analysts’ estimates even as revenue declined
  • BNP Paribas Profit Unexpectedly Rises on Lower Provisions: Pretax profit at corporate and institutional bank falls 55%
  • Lufthansa Fares Under Pressure as It Grapples With Restructuring: Carrier says revamp is beginning to deliver cost turnaround
  • Philips to List Lighting Unit After Failing to Find Buyer: Dutch manufacturer to list at least 25% stake, will seek to sell remaining shares in coming years
in FX, it has been a lively start to the European session, with the RBA rate turning AUD lower after attaining .7700+ levels vs the USD. Elsewhere though, fresh USD selling has been the early theme against the rest of the majors, led by EUR/USD through the 1.1500's, tipping 1.1600 by some 15 ticks so far. USD/JPY took out support ahead of 106.00 to extend losses through to 105.55, but some nervousness at these levels sees us some 20 ticks or so higher since. Cable made strong gains through to 1.4770, but a weak UK manufacturing PMI number, below the 50.0 pivot (49.2) has sent GBP reeling, with the EUR/GBP rate through .7870 extending Cable losses to just below 1.4700, though tentatively so as yet. USD/CAD finally took out 1.2500 to trip stops down to 1.2460/61, but we are back above 1.2500 again as Oil takes a hit. Oil prices have already been on the wane, but clearly preceded by stock market weakness, which looks set to impact on FX today. Swedish industrial production much better than expected, knocking USD/SEK down to just under 7.9000.

In commodities, WTI and Brent have shaken off some of their recent gains after the continuation of the fallout from the Genscape report which noted a build in cushing stockpiles, Gold has still be rising after a week USD is helping boost safe haven demand. Silver has been trading sideways after reaching the USD 18.00/oz level yesterday and is currently just shy of that level. Elsewhere, copper and Dalian iron ore futures were weaker following the recent discouraging Chinese PMI releases, with the latter declining by nearly 6% intraday as increasing stockpiles also weigh.

On today's US calendar, highlights include Redbook weekly sales, the ISM New York, US IBD/TIPP Economic Optimism, API Crude Oil Inventories and earnings from Pfizer and CVS Health.

Bulletin Headline Summary from Bloomberg and RanSquawk

  • European bourses slump with sentiment dampened from soft Chinese Caixin Manufacturing PMI figures alongside a slew of weak earnings updates.
  • USD-index briefly slips below 92.00, subsequently lifting EUR/USD above 1.1600, while gains in GBP are capped as Manufacturing PMI figures fall into contractionary territory.
  • Highlights include US IBD/TIPP Economic Optimism, API Crude Oil Inventories and earnings from Pfizer and CVS Health.
  • Treasuries rally in overnight trading amid drop in global equities and oil as evidence of limp economic growth around the world permeated through global financial markets.
  • The European Commission told the euro area’s largest economies to reduce debt and modernize labor markets as it again slashed its inflation forecast and warned of slower- than-predicted growth across the 19-nation bloc; ECB publishes indicative calendar for TLTRO-II operations
  • U.K. manufacturing unexpectedly shrank for the first time in three years in April, dealing a shock blow to the economy after growth slowed in 1Q. Markit Economics said its factory Purchasing Managers Index dropped to 49.2 from 50.7 in March
  • Australia’s central bank cut its benchmark interest rate to a record low and left the door open for further easing to counter a wave of disinflation that’s swept over the developed world
  • Australia injected a double-dose of stimulus as the government handed down an expansionary budget hours after the central bank eased policy for the first time in a year
  • A private gauge of Chinese manufacturing slipped in April, underscoring pockets of weakness in an economy weighed by overcapacity and weak external demand
  • The Federal Reserve is set to propose so-called stays on derivative contracts that would prevent counterparties from immediately pulling collateral from a failed bank. The plan is meant to give authorities ample time to unwind a firm
  • UBS Group AG said 1Q profit dropped 64%, missing analyst estimates, as market turbulence eroded earnings at the wealth-management and securities units. The shares plunged
  • Commerzbank AG fell as much as 9.4 percent in Frankfurt, the most in almost three months, after market turmoil and a squeeze to margins hurt sales and halved first-quarter profit
  • BNP Paribas SA, France’s largest bank, posted a surprise increase in first-quarter profit as a decline in provisions for bad loans helped outweigh a slump in trading revenue. The shares rose
  • Sovereign 10Y bond yields mostly lower; European equity markets drop, Asian markets lower (Japan closed); U.S. equity-index futures fall. WTI crude oil drops, metals higher
US Event Calendar

  • 8:55am: Redbook weekly sales
  • 9:45am: ISM New York, April, no est. (prior 50.4)
  • 10am: IBD/TIPP Economic Optimism May, est. 46.5 (prior 46.3)
  • Wards Domestic Vehicle Sales, April, est. 13.4m (prior 12.97m)
  • 10:30am: Fed’s Mester speaks at Amelia Island, Fla.
  • 2pm: Fed’s Williams on Bloomberg Radio
  • 4:30pm: API weekly oil inventories
  • 7pm: Fed’s Lockhart speaks in Jacksonville, Fla.
DB's Jim Reid concludes the overnight wrap

With newsflow relatively light over the past 24 hours, we’ll start this morning with firstly acknowledging one of the most memorable sporting upsets of all time. With odds of 5000/1 at the start of the season, Leicester City were last night crowned deserved Premier League champions after Chelsea battled back to rescue a draw against Spurs. As regular readers will know your EMR authors have to endure the emotional rollercoaster that is supporting Liverpool (me), Arsenal (Craig) and Nick on my team (Spurs) and despite all too brief moments of excitement in doing so, have also become sadly accustomed to the title falling to one of Man United, Man City or Chelsea for longer than we’d care to remember. So it’s hard for us not to enjoy this fairytale moment for Leicester fans. Our research COO is a big Leicester fan and as he pays the bills a big congratulations to him this morning. To put into context just how much of an outside bet Leicester were for readers less familiar to what has played out, there were actually shorter odds for The Queen having the Christmas Number One (1000/1) and Kim Kardashian being US President (2000/1). I suspect Elvis working down the local chip shop might have also been more likely at the bookmakers.

Over in the markets and much like how the last week of April played out, the first day of May was a poor one for the US Dollar which saw the Dollar index fall another half a percent to mark a fresh year-to-date low. In fact the index has now fallen for six consecutive sessions and is now over 7% off its January highs. The weakness in the Greenback did however help to kick start US equities on a strong footing in May with the S&P 500 returning +0.78% and so wiping out over half of last week’s loss. The Bank Holiday in the UK meant trading volumes were thin in Europe and price action relatively benign. The Stoxx 600 (-0.07%) finished with a very modest loss with peripheral markets generally being the underperformer there.

The main focus yesterday and a contributor to that weakness for the Dollar was the ISM manufacturing data. The reading printed at 50.8 in April which is down a full point from March and more than what the market had expected (consensus expectation was for 51.4). The print also matched the manufacturing PMI after there was no change in the final revision. In terms of the details, the new orders component declined 2.5pts to 55.8 although that is still well above where it printed in December at 48.8. Employment rebounded 0.9pts to 49.2 but still remains in contractionary territory, while inventories declined 1.5pts to 45.5. A positive aspect of the data was the second consecutive print above 50 for new export orders (+0.5pts to 52.5) and in turn marking the best level since November 2014, indicating some stabilisation and positive feed through from the weakness in the currency. We’ll get the ISM non-manufacturing data tomorrow but it’s worth mentioning that the spread between the two series got back to 2.7pts last month which was the least since December 2014. The current market consensus for this month’s non-manufacturing print is 54.8 which implies a spread of 4pts however. If correct, that will be the most since January.

Onto the latest in Asia this morning where bourses in Hong Kong aside it’s actually been a relatively positive start for markets in the region. Gains are being led out of China where the Shanghai Comp and CSI 300 are +1.44% and +1.62% respectively. The Kospi (+0.43%) and ASX (+1.58%) are also in positive territory, but the Hang Seng (-1.19%) has reopened on the back foot after markets were closed for a public holiday yesterday. Markets in Japan are shut for a public holiday of their own today (and will remain shut until Friday) although that hasn’t stopped the Yen from rallying further this morning. It’s close to +0.30% firmer and closing in on breaking though the 106 level.

There’s been some data released overnight too and it’s come in China where the non-official Caixin manufacturing PMI revealed a 0.3pt decline to 49.4 (vs. 49.8 expected). Meanwhile as we go to print the other main news overnight is out of the RBA have who have announced a 25bps cut in the benchmark rate to a new all time low of 1.75%. The move was only expected by 12 of 27 economists according to Bloomberg and has resulted in the Aussie Dollar falling nearly 2% from its pre-decision highs.

Yesterday also saw the release of the Fed’s Senior Loan Officer Opinion Survey. The April survey results showed that on balance, banks tightened lending standards on commercial and industrial loans during Q1, but that lending standards on loans to households were said to have eased. A modest net fraction of banks were also reported as easing standards on credit cards and consumer loans, while there was little change in standards for auto loans. With regards to the energy sector specifically, banks were reported as saying that they expect delinquency and charge-off rates on loans to firms to deteriorate over the reminder of the year and that the majority of banks have taken a variety of actions to mitigate loan losses over the past year, including tightening lending policies on new lines of credit, restructuring outstanding loans or requiring additional collateral.

There was also some Fedspeak for us to digest last night. San Francisco Fed President Williams reiterated that he expects the Fed to move interest rates ‘gradually back to a more normal level over the next couple of years’ but highlighted that the new long-term normal rate could be significantly lower than what the Fed’s dot plots imply.

Switching to the micro and in terms of the corporate earnings results yesterday, of the 12 S&P 500 companies to report 8 exceeded EPS expectations. That’s below the run rate for the year which is unchanged at 77%, while sales beats continue to hover around 57%. Weakness in Oil prices did little to dent moves for the energy sector. WTI (-2.48%) defied the move lower for the US Dollar and declined back below $45/bbl following some bearish OPEC output numbers and also rising oil stockpiles in the latest Genscape data. Elsewhere moves for rates markets were headlined by further weakness for US Treasuries, with 10y yields up another 4bps yesterday and hovering around 1.873%.

The only other remaining data in the US yesterday was the March construction spending numbers (+0.3% mom vs. +0.5% expected). In Europe the main data flow centered on the April manufacturing PMI’s. The Euro area reading was revised up a modest 0.2pts to 51.7 while on a regional basis there were actually downward revisions to both Germany (-0.1pts to 51.8) and France (-0.3pts to 48.0) while the peripherals generally exceeded expectations. Italy printed at 53.9 (vs. 53.0 expected), a rise of 0.4pts, while Spain printed at 53.5 (vs. 53.0 expected), a rise of 0.1pts.

Looking at the day ahead, the calendar is relatively sparse today. This morning in Europe we’ll get the manufacturing PMI for UK, followed closed by the March Euro area PPI data. Alongside this will be the release of the latest European Commission economic forecasts. Over in the US this afternoon there’s more regional manufacturing data with the ISM NY, while the May release for the IBD/TIPP economic optimism data is also due. Later on this evening the main focus will be on the April vehicle sales data which is expected to show a rebound. Away from the data we’ll hear from the ECB’s Couere early this morning, while this afternoon the Fed’s Mester is set to take part (at 3.30pm BST) in a panel discussion on ‘unusual monetary policy’ and the affect on market liquidity. The Fed’s Williams is also due to speak again at 7pm BST. Earnings wise we’ve got 37 S&P 500 companies set to report including Pfizer. In Europe we’ll get 21 Stoxx 600 reports including UBS, BNP Paribas and HSBC.


http://www.zerohedge.com/news/2016-...cut-record-low-unleashes-fx-havoc-global-risk
 

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#14
April Layoffs
http://www.dailyjobcuts.com/layoffs-april.htm

A New Digital Cash System Was Just Unveiled At A Secret Meeting For Bankers In New York
http://theeconomiccollapseblog.com/...d-at-a-secret-meeting-for-bankers-in-new-York

Obamacare To Unveil "Price Shock" One Week Before The Elections
http://www.zerohedge.com/news/2016-05-02/obamacare-unveil-price-shock-one-week-elections

Is Craig Wright The Creator Of Bitcoin? Frisby and Matonis On ‘Satoshi Nakamoto’
http://news.goldseek.com/GoldSeek/1462277916.php
 

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#19

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#21

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#22
We Are Witnessing the Epic Battle Between Globalists and Sovereign Nations | Rob Kirby
Reluctant Preppers


Published on May 3, 2016
1) Treasury Security Buybacks - Is there any real demand for dollars - or Anti-Dollar movement across the globe? a) Chinese alternative trading platforms b) CIPS China Interbank Payment System with SWIFT Memorandum of Understanding c) Exchange Stabilization Fund (EDF) Off-book buying of securities, creating real shortage of bonds in the market to settle.
2) Federal Reserve raising rates or faking to save face and cover the truth? a) Token rate rise was cover to do reverse repos to free up some bonds.
3) Global Trade pacts are about much more than shipping jobs and manufacturing overseas. a) Anti-Worker’s rights b) Anti-Ecology c) Anti-Human d) Anti-Sovereignty of all who sign them e) Surveillance of Ordinary people f) Suppression of Real News
4) New World Order NWO Globalism vs. Sovereign nations a) Greek people reeling against Euro controls b) Tsunami of Islamic immigrants into Europe clearly supported by globalists c) Trump populism i) Like him or not, he’s bucking the power system ii) US Parties and Media worse than the Soviet Politbureau iii) There will be trials, and the New World Order with get their Nuremberg
5) Eurozone breakup in the cards? a) Britain voting whether to exit the Eurozone b) Goldman Sachs guided Longterm Capital - Italy lost their gold, would not have qualified for the Eurozone by Master Treaty Guidelines that locked Britain out, George Soros “broke the bank of England”
6) Gold and Silver breaking out at last, or plenty of room for further suppression to come? a) Not just precious metals- b) Tangibles: storable food, means of protection, tools, machines, real estate, farmland
 

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#23
Michael Pento-Market Losing Faith in Value of the Dollar
Greg Hunter


Published on May 3, 2016
Money manager Michael says inflation has nowhere to go but up. Pento explains, “We have printed enough for this to go hyperbolic. We have plenty of excess reserves. We have already hit our core (Fed) inflation target. We are already up 2.2% year over year. If you want to be honest, we already have the condition much like the 1970’s of stagflation. . . . The Federal Reserve promised us we were on the road to recovery. They said we would be growing at 3% and we are growing at 0%. They said they could raise interest rates and normalize the Fed Funds Rate, and they can’t do it. The dollar index went up to 100 on the belief that this was going to be the case, and it is absolutely not true. That’s how the market is losing faith in the value of the dollar. We are in a condition of stagflation, make no mistake about it.”

Are we also in a recession too? Pento says, “They can do this indefinitely until inflation becomes intractable. In the United States, we are running up on 90 months of 0% interest rates, and what do we have for that? Fourth quarter GDP was 1.4%, and that was bad enough, but first quarter has a zero handle. It was 0.5%. That’s what we get for blowing up the Fed’s balance sheet to $4.5 trillion? That’s what we get for manipulating bond yields down to 0% for 90 months? We are virtually in a recession. If we are not in a recession, we are in a flat line or dead line economy, and it’s zero.

Join Greg Hunter as he goes One-on-One with Michael Pento of Pento Portfolio Strategies and author of “The Coming Bond Market Collapse.”

All links can be found on USAWatchdog.com: http://usawatchdog.com/most-dangerous...

http://usawatchdog.com/donations/
 

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#24
Frontrunning: May 4


Submitted by Tyler Durden on 05/04/2016 07:40 -0400

  • Donald Trump’s Win Just Latest Tremor Shaking GOP (WSJ)
  • Trump Becomes Presumptive Republican Nominee as Cruz Exits Race (BBG)
  • How 'Stop Trump' failed to halt the Republican front-runner (Reuters)
  • Islamic State seeks news blackout in Mosul as Iraqi army nears (Reuters)
  • U.S. gathers allies on next steps in Islamic State fight (Reuters)
  • BHP, Vale Face $44 Billion Lawsuit Over Brazil Dam Disaster (WSJ)
  • Euro-Area Economy Starts Quarter in a ‘Low Gear,’ Markit Says (BBG)
  • Oil steadies near $45 after slide, Canada wildfire supports (Reuters)
  • Despite Shale Glut, U.S. Imports More Foreign Oil (WSJ)
  • ECB Urges Rigorous Debt-Reduction Rules as Low Rates Ease Burden (BBG)
  • Oil Price Upheaval Finally Hits Refiners (WSJ)
  • Tanker leaves east Libyan port without loading, amid stand-off with Tripoli (Reuters)
  • Apple to Revamp Streaming Music Service After Mixed Reviews, Departures (BBG)
  • Target gets tough with vendors to speed up supply chain (Reuters)
  • Brazil's Crusading Corruption Investigation Is Winding Down (BBG)
  • Malaysia dissolves 1MDB advisory board headed by PM Najib (Reuters)
  • Portugal Says No to Pessimism When It Comes to Economic Forecasts (BBG)
  • Hollande Plots Return From the Dead as French Economy Heals (BBG)
  • Billions Are Being Invested in a Robot That Americans Don't Want (BBG)


Overnight Media Digest

WSJ

- Republican front-runner Donald Trump almost certainly snared the Republican Party's presidential nomination by winning a sweeping victory in Indiana's primary Tuesday and forcing his chief rival, Texas Senator Ted Cruz, from the race. (http://on.wsj.com/1NjCqu4)

- Takata Corp is preparing to recall at least another 35 million rupture-prone airbag inflators that U.S. regulators have deemed a safety risk, said people familiar with the matter, further escalating a crisis at the Japanese supplier linked to numerous deaths and injuries. (http://on.wsj.com/1rjUBpl)

- MetLife Inc, one of the best-known brands in life insurance, misled tens of thousands of customers about a product that retirees seek out for safety, according to regulators, who levied a near-record $25 million fine against the company. (http://on.wsj.com/1X7JMTL)

- CBS Corp said its first-quarter earnings rose 20 percent as the broadcast of Super Bowl 50 boosted the media giant's advertising sales. (http://on.wsj.com/21vlJhP)



FT

* Commerzbank earnings more than halved in the first quarter on Tuesday, hit by volatile capital markets and the drag on earnings from low interest rates.

* Commodities group Liberty House, confirmed on Tuesday that it had sent a letter of intent covering Tata Steel UK assets. The group will compete with Excalibur, a management-led buyout team that wants to bring employees on board as investors and which also sent a letter of intent.

* UBS reported weaker earnings and capital on Tuesday, following which its shares closed down 7.5 percent. The Swiss bank also warned that global financial market turmoil had paralysed client activity across its wealth management-dominated businesses.

* Barclays has launched a 100 percent mortgage which will allow some buyers to take out a entire mortgage value without needing to pay a deposit, a first by a high street bank since the financial crisis.



NYT

- Regulators are expected to announce as early as Wednesday that at least 35 million additional airbags made by Takata will need to be fixed, according to a person briefed on the matter. (http://nyti.ms/1rT2l2d)

- Google on Tuesday said it would expand its testing of autonomous vehicles by installing its technology in a fleet of minivans made by Fiat Chrysler. (http://nyti.ms/1Njt2qx)

- The head of development for Porsche, Wolfgang Hatz, has left the automaker seven months after he was suspended for possible involvement in Volkswagen's emissions cheating scandal, Porsche said Tuesday. (http://nyti.ms/1QRROIG)

- Judge Ricardo Múcio Santana de Abreu Lima overturned a lower court order and lifted the nationwide suspension of WhatsApp in Brazil on Tuesday, allowing the popular messaging service owned by Facebook to get up and running again. (http://nyti.ms/26RHMmQ)



Canada

THE GLOBE AND MAIL

** Canada's Veterans Affairs Minister Kent Hehr says members of the military with mental-health issues should not fear they will be automatically discharged when they step forward for treatment. (http://bit.ly/21w1oc4)

** Agriculture Minister Lawrence MacAulay promised on Tuesday to consult with farmers and processors in the coming weeks to deal with the problem of so-called diafiltered milk, triggering a potential trade showdown with the United States. (http://bit.ly/21w1uR1)

** The entire 80,000-strong population of Fort McMurray was ordered to leave everything behind and evacuate quickly as an out-of-control wildfire veered into the city on Tuesday with little warning, creating the largest fire evacuation in Alberta's history. (http://bit.ly/21w1RLk)

NATIONAL POST

** Gregory Wiebe, a senior partner in the global accounting giant KPMG, who has been accused of being behind a tax avoidance scheme in the Isle of Man, says a lot of international tax rules "are broken" - and they need to be fixed. (http://bit.ly/21w2g0p)

** Bombardier Inc's decision to curtail production of its largest business jets one year ago appears to be paying off, with the aircraft holding significantly more of their value than the competition. (http://bit.ly/21w2wfM)

** A dramatic increase in expected energy-related loan losses at Canadian Western Bank has reignited concerns that the effects of the energy downturn are just beginning to be felt by the country's biggest lenders. In a pre-announcement before second quarter financial results are released later this month, the Edmonton-based bank said it will record C$33 million ($26 million) of provisions for credit losses on its oil and gas production portfolio. (http://bit.ly/21w2TqH)



Britain

The Times

- Manufacturing is in a period of "deep unease" and suffered its worst month in more than three years in April, as uncertainty grows over the European Union referendum result and demand at home and abroad continues to slow. (http://bit.ly/1TksFbj)

- HSBC Holdings Plc has blamed turmoil in global markets for a drop of nearly a fifth in its profits for the first three months of the year. Despite the fall in profits, HSBC said that there would be no cut to its payouts to shareholders. (http://bit.ly/1TksLQ1)

The Guardian

- The British government has ordered the insolvency watchdog to launch an immediate investigation into the circumstances surrounding BHS's slump into administration. (http://bit.ly/1TktnW3)

- Asda has been ordered by the advertising watchdog to ensure future sales promotions do not mislead consumers about how much they could save, just days after the supermarket chain agreed to change potentially confusing pricing after public criticism by the government's competition regulator. (http://bit.ly/1VJdsXT)

The Telegraph

- UK factory output contracted for the first time in three years in April as concerns about the global economy and troubles on the high street exerted a drag on activity. (http://bit.ly/1VJdzT8)

Sky News

- Britain's biggest payday lender Wonga saw losses double last year as a price cap imposed by regulators, triggered a sharp fall in revenues. Wonga Group recorded a pre-tax loss of approximately 70 million pounds in 2015, compared to 37 million pounds a year earlier. (http://bit.ly/1VJdK0N)

The Independent

- A federal judge in New Orleans Monday allowed BP to drop its bid to avoid paying the second half of $2.3 billion in compensation promised to seafood interests harmed by the blown-out well. (http://ind.pn/1VJdX4b)


http://www.zerohedge.com/news/2016-05-04/frontrunning-may-4
 

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#25
Global Stocks Slide As Dollar Continues Rising: Has The "Pricing In" Of Trump Begun


Submitted by Tyler Durden on 05/04/2016 06:44 -0400

While there was no unexpected overnight central bank announcement unlike yesterday's surprise by the RBA which unleashed volatility havoc in the FX market, which promptly spilled over into all asset classes, overnight stocks around the world saw another leg lower without a tangible catalyst, while EM currencies fell to a one-month low after two Fed presidents raised concern investors had become too complacent in their belief that U.S. interest rate raises will stay on hold. Or perhaps all that is happening is that after ignoring Trump, the market is starting to finally price in the possible reality of the Donald in the White House (although as Jeff Gundlach pointed out, Trump would be a far better president for the economy and the market than Hillary or Bernie).

"Equity market sentiment seems to be rolling over globally as the wind begins to come out of the oil price rally,” said Angus Nicholson, market analyst at IG in Melbourne. “Given the move in commodity prices, the materials and energy sectors are set for a difficult session."

The dollar has climbed against all its 16 major peers since Monday’s close as Atlanta Fed President Dennis Lockhart called a June rate increase "a real option,” while San Francisco’s John Williams said he would support such a move at the next meeting provided the U.S. economy stayed on track. While both are non-voting members of the Federal Open Market Committee, the outlook for Fed policy is under scrutiny with data on nonfarm payrolls due at the end of the week.

"While the probability of a hike next month is very low, I do think the market is underpricing the chances of a hike after that,” Michael Wang, a strategist at hedge fund Amiya Capital told Bloomberg. “And to that extent emerging markets may be vulnerable.”

As the chart below shows, the market is clearly unprepared for a rate hike and is pricing in a 90% chance of no Fed move next month.



As a result, stocks in Europe and developing nations fell for a fourth straight day while Asian shares have now fallen for the 6th session, their longest losing streak since the February lows. The dollar extended Tuesday’s recovery from the weakest level in almost a year, while Russia’s ruble tumbled the most in more than a week and Malaysia’s ringgit dropped to the lowest since March. After briefly bouncing on yesterday's API inventory data, oil resumdes its decline before official DOE stockpile data scheduled for release Wednesday that’s forecast to show a fuel glut is expanding.

Europe's Stoxx 600 Index was down 0.6% with all industry groups in the red. Anheuser-Busch InBev NV slid 3.1% after reporting sales and profit growth that missed estimates. BHP Billiton Ltd. tumbled after it was named in a $44 billion law suit over a dam rupture in Brazil that caused deaths and severe environmental damage. In the green were Siemens, Europe’s largest engineering company, up 0.6% and Societe Generale which rose 3.8% after both reported better earnings than analysts forecast.

The MSCI Emerging Markets Index of stocks fell 1 percent to the lowest in almost a month. Russia’s Micex Index dropped 1.1 percent as trading resumed following a two-day holiday. The Hang Seng China Enterprises Index fell 0.6%, dropping for a third day, and the Shanghai Composite Index slipped less than 0.1 percent. US equity futures were down 0.7%, after dropping 0.9% in the last session.

Market Wrap

  • S&P 500 futures down 0.7% to 2042
  • Stoxx 600 down 0.5% to 334
  • FTSE 100 down 0.6% to 6147
  • DAX down 0.4% to 9883
  • German 10Yr yield up less than 1bp to 0.21%
  • Italian 10Yr yield up 5bps to 1.5%
  • Spanish 10Yr yield up 5bps to 1.61%
  • S&P GSCI Index down less than 0.1% to 348.2
  • MSCI Asia Pacific down 0.9% to 128
  • Nikkei 225 closed
  • Hang Seng down 0.7% to 20526
  • Shanghai Composite down less than 0.1% to 2991
  • S&P/ASX 200 down 1.5% to 5271
  • US 10-yr yield down less than 1bp to 1.79%
  • Dollar Index up 0.12% to 93.06
  • WTI Crude futures down 0.1% to $43.60
  • Brent Futures down less than 0.1% to $44.95
  • Gold spot down 0.6% to $1,279
  • Silver spot down 0.5% to $17.33
Global Top News

  • JetBlue and Bombardier Said to Resume Talks on C Series Order: Agreement would follow recent purchase of 75 jets by Delta
  • Aeropostale Files for Bankruptcy in Latest Retailer Meltdown: Changing tastes, fast-fashion rivals prove too much for chain
  • Takata Survival Seen Getting Harder With Wider Air-Bag Recalls: Co.’s talks with U.S. regulators could lead to recall of millions of additional vehicles
  • Altice Gets Approval From FCC to Acquire Cablevision Systems: Co. is pleased with decision, sticks with plans to complete deal in 2Q
  • Trump Nomination All But Certain After Indiana Win, Cruz Quits: Sanders surprises Clinton with defeat in Democratic race
  • Pfizer Said to Approach Medivation on Potential Buy: Reuters
  • Hellman & Friedman Said Near $7.5b Purchase of MultiPlan: WSJ
  • Target to Overhaul Rules, Fines to Quicken Supply Chain: Reuters
  • TSMC to Make Processors for New Apple Products: Comm. Times
Looking at regional markets, Asia stocks traded lower following Wall St.'s losses as growth concerns and commodity weakness dampens sentiment. ASX 200 (-1.5%) saw losses in energy and basic materials after WTI crude futures fell below USD 44/bbl and iron ore decline over 4%, while index heavyweight BHP Billiton also underperformed after Brazil filed a USD 43b1n civil lawsuit against Co.'s Samarco JV. Chinese markets were also weighed by the commodity declines, although the Shanghai Comp (-0.1 %) has fared better than its peers after the PBoC continued to provide liquidity into the interbank market with another CNY 100bIn injection. As a reminder, Japanese markets remain closed for Greenery Day

Asian Top News

  • PBOC Opens Taps to China Policy Banks in Bid to Sharpen Stimulus: Lending for policy banks now approved at start of each month
  • Indonesia Growth Fails to Pick Up in Setback to Jokowi Reforms: 1Q GDP increases 4.92% y/y vs est. 5.07%
  • Hong Kong Bank Funds Said Frozen for Some Tangled in 1MDB Probe: Individuals affected probed by authorities outside Malaysia
  • Xi’s Silk Road Dream for China Hits a Speed-Bump in Thailand: S.E. nation rejects offer of financing for rail project
  • Mobius Says Buy Commodity Stocks as Rebound’s Just Beginning: Templeton Emerging Markets adding holdings of China producers
  • Ayala Land Says 1Q Profit Rose 14% Y/y, Spent 23.4b Pesos: 1Q sales +8% to 26.97b pesos
In Europe, equities trade modestly in the red after a slew of earnings updates from notable large caps dictated the state of play. The underperformer of the morning has been the FTSE 100 with shares of mining heavyweight BHP Billiton tumbling after reports that Brazil have filed a USD 43b1n lawsuit against the Co., while the DAX moved south of 9950 having tripped below yesterday's low.

From a fixed income perspective, Bunds initially edged lower with yields rising and as such the curve notably bear steepened. Additionally, German paper underperformed relative to USTs given the large amount of supply expected hitting the market with government bond auctions from France, Germany and the UK totalling around EUR 14bIn. However, with the auctions now out the way, Bunds have pared much of their opening losses to head into the North American open around the 163.00 level.

European Top News

  • Shell Quarterly Profit Beats Estimates on Refining Earnings: Company cuts billions more dollars from capital spending plan
  • AB InBev First-Quarter Sales Miss Estimates on Brazil: U.S. sales to retailers fell 0.3% on adjusted calendar basis
  • Credit Suisse Sells Debt Assets to TPG Arm for $1.27 Billion: Sale results in charge of about $100m for Credit Suisse
  • Societe Generale Beats Profit Estimates, Plans Deeper Cuts: Bank announces additional cost cuts of EU220m
  • Siemens Quarterly Profit Beats Estimates on Power Orders: Cost-savings goal lifted to as much as EU950m this year
  • Adidas Decides to Sell Golf Division to Focus on Clothing: Talks planned for disposal of TaylorMade, Adams and Ashworth
  • Euro-Area Economy Starts Quarter in a ‘Low Gear,’ Markit Says: Composite PMI at 53 in April, services gauge at 53.1
In FX, the dollar appreciated 0.1 percent to $1.1486 per euro and advanced 0.2 percent to 106.79 yen. Japanese Finance Minister Taro Aso said Tuesday, when the currency reached an 18-month high, that the government is monitoring speculative foreign-exchange trades and will respond if needed. The yen has strengthened more than twice as much as any other major currency in the past week as the Bank of Japan unexpectedly refrained from adding to stimulus at a policy review.

The MSCI Emerging Markets Currency Index fell for a third day, sliding 0.7 percent. Malaysia’s ringgit dropped 1.4 percent, the most since September, and South Korea’s won weakened 1.2 percent. “The market is grasping the view that the dollar probably fell a little too much, and a rebound could be ahead, and this seems to have deteriorated sentiment towards emerging-market assets including the won,” said Jeon Seung Ji, a currency analyst in Seoul at Samsung Futures Inc.

Risk sentiment is steady as a result, and enough to keep the JPY pairs in tight ranges for now. USD/JPY tested 107.50 higher up, but clearly rejected this, but on the downside, the recent USD revival means there is no rush to test the mid 105.00's again just yet. EUR/USD buyers from 1.1470 — previous resistance, but no convincing come-back as yet. Data-wise, EU services were a touch off expectations, more so retail sales. UK construction PMIs were also below forecasts, but to limited effect.

In commodities, WTI and Brent have both traded flat for the session after falling in recent days. The level to look for in WTI on the downside would be USD 43.28/bbl as this could provide some support, and if this level breaks, the next notable level is USD 41.80/bbl. Also in the commodities sector Gold prices retreated further away from the USD 1300/oz level and on a technical note the key support level to look out for is the USD 1272.00 level, Silver has also come off highs and now resides at the 23.6 fib level at USD 17.27/oz also the RSI is showing a slight bullish divergence which could mean a brief relief move to the upside. Elsewhere copper and iron ore also saw lacklustre trade amid global growth concerns and also weighed as USD recovered from near 16-month lows.

On the US calendar, it is a busy session kicked off by the April ADP employment change print (195k expected) which will be closely watched ahead of payrolls on Friday. The March trade balance is then due to be released, followed by Q1 nonfarm productivity and unit labour costs data. Later on today we’ll then get those services and composite PMI’s, followed imminently by the ISM non-manufacturing reading for April. Expectations are for a modest pick-up to 54.8 which if true will confirm the biggest spread between the ISM series since January. March factory orders data is also due along with any final revisions to the durable and capital goods orders data.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities have spent much of the session in the red, while Bunds have pared much of their opening losses in the wake of a slew of European auctions
  • USD-Index continues to grind higher ahead of the North American crossover, paring some of the recent heavy losses
  • Today's highlights include US ADP Employment, Services PMI, US Factory Orders and ISM Non-Manufacturing and DoE crude oil inventory report
  • Treasuries steady in overnight trading as global markets and precious metals sell off; U.S. Treasury will release quarterly refunding announcement at 8:30am ET.
  • Low interest rates are helping to reduce euro-area public debt, but rigorous enforcement of European Union fiscal rules is also needed to bring the burden down by a “sizable” amount, the European Central Bank said
  • Chinese debt investors are turning bearish at just the wrong time for the nation’s corporate borrowers, which face a record 3.7 trillion yuan ($571 billion) of local bond maturities through year-end
  • China’s central bank is turning on the credit taps to its policy banks as it seeks to support the economy by channeling credit to designated areas of the government’s choosing
  • Record-low interest rates and wild market swings are eroding profit at Europe’s banks, with no end in sight. From UBS’s wealth-management unit to Commerzbank’s consumer-lending business, income is shrinking as margins get squeezed and clients avoid trading
  • Societe Generale SA reported an unexpected increase in first-quarter profit, boosted by consumer banking, and announced plans to deepen cost cuts at its investment bank. The shares jumped
  • Donald Trump became the presumptive Republican presidential nominee on Tuesday after driving his top challenger, Texas Senator Ted Cruz, from the race with a crushing Indiana primary win
  • Sovereign 10Y yields mixed; European and Asian equity markets drop (Japan closed); U.S. equity-index futures fall. WTI crude oil drops, metals lower
US Event Calendar

  • 7am: MBA Mortgage Applications, April 29, no est. (prior -4.1%)
  • 8:15am: ADP Employment Change, April, est. 195k (prior 200k)
  • 8:30am: Trade Balance, March, est. -$41.2b (prior -$47.1b)
  • 8:30am: Nonfarm Productivity, 1Q P, est. -1.3% (prior -2.2%)
    • Unit Labor Costs, 1Q P, est. 3.3% (prior 3.3%)
  • 9:45am: Markit US Services PMI, April F, est. 52.1 (prior 52.1)
  • 10am: ISM Non-Mfg Composite, April, est. 54.8 (prior 54.5)
  • 10am: Factory Orders, March, est. 0.6% (prior -1.7%)
    • Factory Orders Ex Trans, March, no est. (prior -0.8%)
    • Durable Goods Orders, March F, est. 0.8% (prior 0.8%)
    • Durables Ex Transportation, March F, est. -0.1% (prior -0.2%)
    • Cap Goods Orders Non-defense Ex Air, March F, no est. (prior 0%)
    • Cap Goods Ship Non-defense Ex Air, March F, no est. (prior 0.3%)
  • 10:30am: DOE Energy Inventories
  • 6:30pm: Fed’s Kashkari speaks in Rochester, Minn.
DB's Jim Reid concludes the overnight wrap

Small ash clouds gathered over markets yesterday as it was back to risk-off mode as investors contemplated a number of variables all of which contributed to a distinctly weaker tone through the session. FX volatility has been a big theme of late and yesterday was case in point with some sharp and wild moves across key currencies. Indeed the intraday ranges for the Euro, Yen and Sterling were 1.04%, 1.07% and 1.63% respectively. The Euro in fact touched 1.162 yesterday matching the highs of August last year, while the Yen was as strong as 105.55 at one stage and the strongest in 18-months. As a result the Dollar index broke below 92 in early trading (and so nearing 2014 levels) before swinging back to a late session gain (of +0.34%) before the close of play. Still, the range topped 1.20% and if we look further afield at EM currencies there were losses of at least 1.50% for currencies in Turkey, Brazil, Mexico, South Africa and Colombia. The RBA rate cut also contributed to a near 2.5% decline for the Aussie Dollar.

Also not helping was a weaker session for commodities. WTI continued its slide after falling -2.52% and is now back below $44/bbl having traded as high as $46.78 intraday at the back end of last week. That earlier softer than expected manufacturing data in China also contributed to a poor day for base metals with the likes of Copper (-2.57%), Aluminium (-2.74%) and Iron Ore (-4.27%) all falling heavily. Even Gold (-0.39%) went against its usual safe haven status. So that saw mining and energy names get heavily hit, while banks stocks also had a day to forget after disappointing earnings reports out of UBS and Commerzbank saw their share prices tumble 8% and 10% respectively and so lead the sector broadly lower.

By the close of play the Stoxx 600 was down -1.66%, while the S&P 500 closed out the day with a -0.87% loss and so more than wiped out Monday’s gains. The index has now retreated on three out of the last four sessions and it appears that the rally which has essentially been going since mid-February is losing momentum. Credit markets mirrored the weaker performance for risk. In Europe the iTraxx Main and Crossover indices ended 3bps and 10bps wider (with financials indices hit harder) while in the US the CDX IG index closed over 3bps wider. Rates markets were the biggest beneficiaries yesterday. 10y Treasury yields were nearly 8bps lower and closed back below 1.80% for the first time in two weeks, while similar maturity Bund yields rallied to the tune of nearly 7bps.

This morning in Asia we’ve seen bourses largely follow that weak lead from the US last night and trade in the red for the most part. The Hang Seng (-1.19%), Kospi (-0.62%) and ASX (-1.05%) in particular are down the most, while losses for bourses in China have generally been more modest. The Shanghai Comp is down -0.22% currently. Markets in Japan are still closed for a public holiday, although the Yen is actually half a percent weaker this morning and bucking the recent trend.

With no data released overnight, the other big focus this morning is the US Presidential Election race. After Trump secured the Indiana primary, the big news since is the announcement that Ted Cruz has decided to withdraw from the Republican race and so all but confirms Trump as the Republican nominee. Sanders defeated Clinton in the Indiana primary for the Democratic race, but it looks unlikely to stop Clinton now likely facing off against Trump.

Moving on. Despite the still lowly probability (12%) being priced into a rate hike by the Fed in June, some attributed yesterday’s reversal in the US Dollar off the lows to the comments from Fed officials yesterday. Both San Francisco Fed President Williams and Atlanta Fed President Lockhart stuck to the Fed script by not ruling out the possibility of a move next month. Lockhart said specifically that ‘I would put more probability on it being a real option’ and the ‘communication of committee participants and members between now and mid-June obviously should try to prepare the markets for at least a realistic range of possibilities’. Meanwhile, Williams went as far as to say that should inflation continue to rise towards the Fed’s target and growth rebounds towards his 2% target for the year, then ‘it would be appropriate’ to ‘go that next step’ in hiking in June.

In fact we’ve heard from Lockhart again overnight and while the bulk of his comments reinforced those made during the day, he also added that the uncertainty stemming from the Brexit referendum ‘has some potential to loom large as we approach the June meeting’. June is all of a sudden looking like a big month for markets and it’s worth highlighting that in the time between June 15th and June 26th, we’ll have the FOMC meeting (on the 15th), BoJ meeting (on the 16th), BoE meeting (on the 16th), UK EU referendum (on the 23rd) and a possible Spain election on the 26th. In the background we'll also have the ECB starting their corporate bond purchases, with their success likely to be a big factor in credit markets in June and beyond.

Elsewhere, despite the weaker day for markets yesterday the economic data out of the US was actually fairly reasonable. The IBD/TIPP economic optimism reading in May firmed 2.4pts to 48.7 (vs. 46.5 expected) and so reaching the highest level in a year. Meanwhile vehicle sales rose last month. Total vehicle sales increased to an annualised rate of 17.3m (vs. 17.4m expected) having plummeted to 16.5m in March. Domestic vehicle sales printed at 13.5m (vs. 13.4m expected), a rise of 500k. Finally the ISM NY was up a fairly robust 6.6pts to 57.0.
In Europe the main data of note was out of the UK where the April manufacturing PMI came in at a disappointing 49.2 - the first sub 50 reading for 3 years. That represented a decline of 1.5pts from March after expectations had been for a rise to 51.2. Elsewhere the Euro area PPI reading printed higher than expected last month at +0.3% mom (vs. 0.0% expected).

Looking at today’s calendar, this morning in Europe the calendar is dominated by the release of the April services and composite PMI’s. We’ll get the final revisions for the Euro area, Germany and France as well as the data for the peripheral countries. Euro area retail sales are also worth keeping an eye on today. Meanwhile it’s a packed calendar across the pond this afternoon. Kicking things off will be the April ADP employment change print (195k expected) which will be closely watched ahead of payrolls on Friday. The March trade balance is then due to be released, followed by Q1 nonfarm productivity and unit labour costs data. Later on today we’ll then get those services and composite PMI’s, followed imminently by the ISM non-manufacturing reading for April. Expectations are for a modest pick-up to 54.8 which if true will confirm the biggest spread between the ISM series since January. March factory orders data is also due along with any final revisions to the durable and capital goods orders data. Away from the data we’re due to hear from the Fed’s Kashkari, while the ECB’s Weidmann is also scheduled to speak today. Earnings wise we’ve got 38 S&P 500 companies scheduled to report with the highlights being Kraft Heinz and Metlife. In Europe we’ll get earnings reports from 29 Stoxx 600 companies including Royal Dutch Shell. So plenty to keep us busy.

http://www.zerohedge.com/news/2016-...llar-continues-rising-has-pricing-trump-begun
 

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#29
Donald Trump VS China 2016 Presidential Election.
Fabian4Liberty


Published on May 4, 2016
 

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#30
Gold Seeker Closing Report: Gold and Silver Fall With Stocks
By: Chris Mullen, Gold-Seeker.com
Gold dropped almost 1% in London before it bounced back to $1289.33 at about 8:30AM EST and then fell to a new session low of $1272.11 by early afternoon in New York, but then rallied back higher in late trade and ended with a loss of just 0.61%. Silver slipped to as low as $17.174 and ended with a loss of 0.52%.


SoT – Alasdair Macleod: If You’ve Got Gold, You’ve Got Money – If You Haven’t Got Gold You’ve Got a Problem
By: The Daily Coin
One would have to be blinded from either denial or ignorance not see the escalating political and military tension between the U.S. and Russia/China. While the U.S. media spins the story into a tall-tale in which BRIC nation leaders are the provocateurs, the truth is that the U.S. has transformed its illegitimate “war on terror” into war on the world in a last-gasp attempt hold onto the economic and geopolitical hegemony it has enjoyed for several decades.
 

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#34
Futures Rebound As Crude Regains $45 On Canada Fears; Turkey Hammered


Submitted by Tyler Durden on 05/05/2016 06:47 -0400

While markets remain relatively subdued ahead of tomorrow's nonfarm payrolls report, after several days of losses in US stocks, which have taken "sell in May" to heart and pushed the S&P500 to three week lows, overnight markets ignored the latest weak data out of China where the Caixin Services PMI was the latest indicator to disappoint (dropping from 52.2 to 51.8), and instead focused on crude, which rebounded from yesterday's post inventory-build lows and briefly printed above $45/bbl over uncertainty related to the impact of Canada wildfires on production and how long will last. The bounce in WTI has meant Brent briefly traded at parity with West Texas for the first time in 6 weeks.

It "would appear to be related to outages in production related to the wildfires in Canada - uncertainty of the extent of the outages and how long they will persist," says BNP Paribas energy strategist Gareth Lewis-Davies.



"Move today has to be seen in the context of the last 5 days and we have only recovered half the losses we have seen in that period."

Emboldened by the rise in oil, European stocks rose for the first time in a week as commodity, energy producers lead the rebound from the biggest four-day drop since February, while S&P500 futures rose 0.3%, and was back over 2,050.

As we noted yesterday, Turkish equities and bonds continued to fall amid a political showdown between the president and prime minister. Turkey’s 10-year bond yields climbed to a one-month high, while the Borsa Istanbul 100 Index dropped 1.6 percent, declining for a fifth day. The clash between Davutoglu and Erdogan threatens to usher in an era of political uncertainty, raising questions ranging from the president’s bid to coalesce power through a constitutional amendment or early elections to the future path of economic policy. The lira gained 1.4 percent after the steepest selloff in eight years yesterday.

Despite the attempt at a rally, sentiment was mixed: "There’s still a very cautious feeling to markets," said William Hobbs, who helps oversee about $150 billion as head of investment strategy at the wealth-management unit of Barclays Plc in London. “The world is growing and is likely to grow a bit quicker as we go through the year and inflation returning and that’s simply not priced in at these levels.”

"The market has been in a consolidation phase as its previous rally, which was based on a rebound in commodity prices and signs of economic stabilization, is starting to taper off,” Audrey Goh, a strategist at Standard Chartered, told Bloomberg. "We are also going into the summer months, when the market tends to be weaker."

Among companies moving in early U.S. trading, Tesla Motors Inc. climbed 3.6 percent after the electric-car maker reaffirmed its deliveries forecast and pulled ahead its plans to produce 500,000 autos annually. Fitbit Inc. tumbled 13 percent after the maker of wearable fitness trackers gave a profit forecast that fell short of the lowest analysts’ estimates.

Market Wrap

  • S&P 500 futures up 0.3% to 2052
  • Stoxx 600 up 0.3% to 333
  • FTSE 100 up 0.2% to 6127
  • DAX up 0.3% to 9862
  • German 10Yr yield up 1bp to 0.22%
  • Italian 10Yr yield up 1bp to 1.52%
  • Spanish 10Yr yield up less than 1bp to 1.61%
  • S&P GSCI Index up 1.3% to 352.2
    MSCI Asia Pacific down 0.2% to 128
  • Nikkei 225 closed
  • Hang Seng down 0.2% to 20485
  • Shanghai Composite up 0.2% to 2998
  • S&P/ASX 200 up 0.2% to 5279
  • US 10-yr yield up 2bps to 1.8%
  • Dollar Index up 0.17% to 93.34
  • WTI Crude futures up 2.9% to $45.07
  • Brent Futures up 2.4% to $45.70
  • Gold spot down less than 0.1% to $1,279
  • Silver spot up 0.3% to $17.42
Top Global News

  • Tribune Board Rejects Gannett’s $815 Million Takeover Bid: Company unveils standalone plan to bolster LA Times globally
  • Goldman, HSBC Said Among Banks on Saudi Exchange IPO Shortlist: JPMorgan, Morgan Stanley also said to be considered for IPO that could raise more than $500m for 30% stake
  • Tesla’s Musk Sleeping Near Factory Floor to Spur Manufacturing Progress: Co. now sees reaching 500,000- vehicle production in 2018, two years earlier than before
  • Turkey PM Said to Give Up as Erdogan Pressure Insurmountable: Prime Minister Ahmet Davutoglu is expected to step down this month after losing power struggle with President Erdogan
  • Synacor More Than Doubles After Winning AT&T Web-Hosting: Contract with carrier will be worth $100m annually
  • Camping World Said to Aim to Raise $350m in IPO: New York Times
Looking at regional markets, Asia stocks traded mostly lower amid holiday-thinned trade and following the losses seen on Wall St. where US stocks declined to 3-week lows, while the region also digests further softer data from China. However, outperformance in energy and financials have capped losses in ASX 200 (-0.2%) after WTI crude futures reclaimed USD 44/bbl while banks were underpinned following NAB's earnings. China saw mild pressure with the Shanghai Comp (-0.2%) negative after Chinese Caixin Services & Composite PMI figures were weaker than prior, although further liquidity injections by the PBoC helped stem losses. As a reminder, Japanese and South Korean markets are closed for public holiday.

Asia Top News

  • China Fertilizer Maker to Default on Bonds Amid Debt Woes: Inner Mongolia Nailun investors opted for early note repayment
  • Yuan’s Losing Streak Signals PBOC Break With Stronger Dollar: Chinese currency may have to drop more quickly vs USD: analyst
  • Fears of China Unrest See Investment Firms Evicted to Preempt It: >1,000 such cos. have failed, with more to come
  • Philip Lowe to Replace Stevens as RBA Governor From Sept. 18: Lowe inherits post with diminished interest rate ammunition
  • National Australia Earnings Rise as Bad-Debt Charges Decline: 1H cash profit A$3.31b vs est. A$3.356b
  • Packer Cuts Macau Stake, Stoking Crown Buyout Speculation: Australia’s Crown to reduce Melco stake to 27% from 34%
Today has seen a quiet start to the morning amid numerous market closures in Europe due to Ascension Day allied with participants remaining cautious prior to the US jobs report tomorrow. As such, volumes have been somewhat on light side, with equities trading modestly higher while notable outperformance has been observed in the FTSE MIB in the wake of source reports that the Italian Treasury is considering investing in the Italians bank rescue fund. Alongside this, similarly to trade overnight, Europe has been bolstered by gains in energy names with WTI crude breaking above USD 45.00/bbl.

European Top News

  • Brexit Uncertainty Drags U.K. Economy to Near Stagnation: Services PMI drops to 52.3 from 53.7, below estimates and weakest since February 2013
  • Centrica Falls Most in More Than a Year on Equity Sale Plan: Company plans to sell 350 million shares to fund acquisitions
  • Repsol Beats Estimates on Surprise Profit From E&P Business: Results reflect lower exploration costs, efficiency savings
  • BT Profit Beats Expectations, Helped by EE Wireless Purchase: Company targets investing GBP6b in network upgrades
  • Barclays Sells 12.2% Stake in African Unit for $879 Million: Stake bought by money managers; Barclays now owns 50.1%
In FX, Australia’s dollar strengthened 0.5 percent versus the USD. The nation’s retail sales increased 0.4 percent in March from the previous month, while the trade deficit was smaller than economists forecast. Reserve Bank of Australia Deputy Governor Philip Lowe will replace Glenn Stevens as head of the monetary authority in September.

The greenback strengthened 0.2 percent to 107.21 yen, building on a 0.6 percent advance over the last two days. The Bloomberg Dollar Spot Index held near a one-week high after the probability that the Fed will raise interest rates this year climbed back above 50 percent. U.S. employers added at least 200,000 workers for a third month in April, according to a Bloomberg survey of economists before data on Friday. Russia’s ruble climbed 1 percent and the Mexican peso gained 0.7 percent as oil advanced. South Africa’s rand rose 0.6 percent, rebounding from a four-week low.

In commodities, Heading towards the North American crossover, WTI and Brent crude futures continue to extend on its overnight gains with WTI making a break above USD 45.00/bbl. One factor for consideration in regards to the recent upside in oil prices over the past couple of days, is reports of a Canadian wildfire in the Fort McMurray region in which some of Canada's large oil producers are situated, including Canada Oil Sands. As such, around lmin bpd of Canadian Oil Sands production capacity could be affected.

Additionally, Libyan supply disruptions have also added to the strength in oil prices as officials warned that output may decline to around 120k bpd. To put this in some context, Libya currently produces 310k bpd and have a total capacity of 780k bpd. Elsewhere, gold prices have been pressured by the continued recovery in the greenback allied with the modest upside in European equities, subsequently sapping demand from the safe-haven. Elsewhere, copper and iron ore prices were subdued amid holiday thinned trade overnight.

Following yesterday's data deluge, the sole two events on the US calendar are Jobless Claims and Challenger job cuts, while the Fed's Bullard & Kaplan speak. Earnings wise we’ve got 30 S&P 500 companies set to report including Merck, while in Europe we’ve got 15 Stoxx 600 companies due to release their latest quarterlies

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg

  • Today has seen a quiet start for European equities which have spent much of the session in modest positive territory.
  • Crude prices remain elevated amid reports of supply disruptions in Libya, alongside wildfires in Canada potentially harming oil production within the region.
  • Today's highlights include US Jobless Claims, Challenger Job Cuts, EIA Natural Gas, ECB's Visco, Fed's Bullard & Kaplan.
  • Treasuries lower in overnight trading as global equity markets mixed, oil rallies and precious metals drop; economic data today includes jobless claims which are close to four decade lows.
  • The European Central Bank will discontinue production of the 500-euro ($575) banknote in a move that risks tensions with euro-area citizens worried the institution is encroaching on their freedoms
  • U.K.’s Purchasing Managers Index dropped to 52.3 from 53.7 in April, its lowest level in more than three years; Britain goes to the polls in a series of local and legislative elections that will deliver a new mayor for London, continued nationalist government in Scotland and the voters’ first verdict on Jeremy Corbyn’s leadership of the Labour Party
  • China’s authorities, seeking to forestall potential social unrest due to growing failures of investment firms and online lenders, are ordering many to break leases and close their storefronts on busy streets
  • Speculators who traded 1.7 trillion yuan ($261 billion) futures in a single day last month have retreated as fast as they advanced. Trading volumes across the nation’s three biggest exchanges are more than half of what they were at their peak on April 22 and back to levels similar to a year ago
  • Turkish Prime Minister Ahmet Davutoglu is expected to step down after losing a market-roiling power struggle with President Recep Tayyip Erdogan, clouding the country’s economic prospects and imperiling its relations with the European Union
  • Philip Lowe is set to replace Glenn Stevens as governor of Australia’s central bank, inheriting an economy grappling with the onset of disinflation that forced policy makers to cut interest rates to a record low this week
  • Sovereign 10Y yields mixed, Greece rallies 19bp; European and Asian equity markets mixed (Japan closed); U.S. equity- index futures rise. WTI crude oil rallies, precious metals lower
US Event Calendar

  • 7:30am: Challenger Job Cuts y/y, April, no est. (prior 31.7%)
  • 8:30am: Initial Jobless Claims, April 30, est. 260k (prior 257k)
  • 9:45am: Bloomberg Consumer Comfort, May 1 (prior 43.4)
  • 10am: Freddie Mac mortgage rates
  • 10:30am: EIA natural-gas storage change
  • 11:30am: Fed’s Bullard speaks at Santa Barbara Conf.
  • 7:15pm: Fed’s Bullard, Kaplan, Lockhart, Williams speak at Stanford
DB's Jim Reid concludes the overnight wrap

Before we look closer at the rest of the data and price action yesterday, there’s been some data out of China this morning first for us to digest. The private Caixin services PMI for April has softened a touch to 51.8, after printing at 52.2 in March. That largely matches up with the 0.3pt decline in the official reading over the weekend and means that the composite was down half a point this month to 50.8.

Bourses in China have been volatile this morning and have largely swung between gains and losses, but as we type the Shanghai Comp is little changed. Elsewhere the Hang Seng (-0.40%) is in the red for the fourth consecutive session, while the Kospi (-0.49%) is also weaker along with the ASX (-0.25%). Markets in Japan remain shut until tomorrow, while the Yen is unchanged. Just staying with China, overnight our China Chief Economist Zhiwei Zhang published a note highlighting the hidden risks in the financial sector. Zhiwei highlights that China’s recent credit boom has made the financial sector more fragile and monetary policy less effective. He takes a look at what is a widening gap between rapid bank credit growth and moderate M2 growth and that of the credit expansion going to non-bank financial institutions, much of this is in the form of investment rather than loans which are less transparent and potentially more risky. Zhiwei has revised up his probability of the scenario of growth dropping below 6% for 4 consecutive quarters over the period of 2017-19 from 20% to 25%. A link to the note is attached here.

Back to yesterday. It all felt a bit déjà vu in markets with the price action virtually matching that of Tuesday. In Europe we saw the Stoxx 600 close - 1.12% to finish at the lowest level in nearly a month, while markets in the US also edged lower but slightly less so. The S&P 500 ended -0.59% meaning it’s been down in four of the last five sessions. It felt like it was the same culprits yesterday weighing on sentiment too with energy and financials stocks largely leading the bulk of bourses lower. Indeed the Stoxx 600 Banks index was down -1.48% yesterday and has tumbled 9% now in the space of just four sessions. The S&P 500 Energy index was down -1.30% yesterday and is down 4% over the same period.

Credit markets are also having a tougher month in May so far. In the US CDX IG was another 2bps wider yesterday and has now weakened for five consecutive sessions. The iTraxx Main index is also 5bps wider from where we closed April. Meanwhile there was the usual volatility in currency markets in and around the batch of data releases. Ultimately it concluded with a second consecutive stronger day for the US Dollar though with the Dollar index up +0.25% (it’s now up +1.5% from Tuesday’s 18-month low). The Yen traded in another big range but ended up a touch weaker. Finally the closing level for WTI (+0.30% at $43.78/bbl) masked what was actually an intraday range of nearly 4% (it has rebounded 2% this morning though), while it was another rough day for the majority of base metals too (Copper -1.08%, Zinc -0.53%, Iron Ore -5.24%).

Touching on that US data in a bit more detail, in terms of the components of the ISM services reading, employment, new orders and prices paid all rose last month, although there was a slight decline for business activity and new export orders (albeit from recent highs). The spread between the two ISM series is now back to 4.9pts (after being 2.7pts and 3.9pts in March and February respectively) and the most since January. Meanwhile, the March trade deficit narrowed a touch at $40.4bn (vs. $41.2bn expected) and narrowing nearly $7bn from February. The final services PMI was revised up 0.7pts to 52.8 and so resulting in a composite print of 52.4 which is a gain of 0.7pts from March and the second consecutive monthly increase. Elsewhere, factory orders rose a bit more than expected in March (+1.1% mom vs. +0.6% expected), Q1 nonfarm productivity weakened slightly less than expected (-1.0% qoq vs. -1.3% expected) and unit labour costs rose +4.1% qoq. That fall in productivity is the second consecutive negative quarterly reading and leaves YoY growth in productivity at a fairly subdued +0.6%.

The end result of all that data was for the Atlanta Fed to revise down their Q2 GDP forecast by a tenth to 1.7%. That’s still above the forecast of our US economists however who expect only a mild rebound from the weak first quarter and currently have growth pegged at 1.0%.

Elsewhere, during the European session yesterday the main focus was on the release of the remaining PMI’s. For the Euro area we saw the final April services reading revised down a very modest 0.1pts to 53.1, with the composite print of 53.0 effectively unchanged versus the prior two months. Across countries we saw marginal downward revisions to Germany and France while Italy was the positive surprise as its services reading printed ahead of expectations (52.1 vs. 51.9 expected; 51.2 March) much like its manufacturing data earlier in the week. Wrapping up the data, Euro area retail sales declined sharply in March and by more than expected (-0.5% mom vs. -0.1% expected).

Before we look at today’s calendar and just staying in Europe briefly, political fragility has been a big theme of late and we can add Turkey to that list with the news that the power struggle between Turkey’s PM Davutoglu and President Erdogan looks set to end with Davutoglu giving up his premiership. The FT highlighted that despite Erdogan occupying a largely ceremonial post, he has continued to demonstrate enough power to largely influence most aspects of government. According to Bloomberg, Davutoglu’s AK Party is to hold a leadership contest within two weeks with the current Premier not expected to be a candidate. The Turkish Lira weakened nearly 4% yesterday while equity markets in Turkey were generally off at least 2%.

Looking at the day ahead, after the packed calendar that we had yesterday, today looks fairly sparse by comparison. This morning in Europe the only release of note is the April services and composite PMI’s for the UK which is worth keeping an eye on in light of the soft manufacturing print earlier in the week, while in the US the sole release is the latest weekly initial jobless claims data. Away from the data we’re due to hear from the Fed’s Bullard this afternoon (scheduled for 4.50pm BST), while it might also be worth keeping an eye on Japan PM Abe’s press conference today too (due at 2.00pm BST). Earnings wise we’ve got 30 S&P 500 companies set to report including Merck, while in Europe we’ve got 15 Stoxx 600 companies due to release their latest quarterlies.


http://www.zerohedge.com/news/2016-...crude-regains-45-canada-fears-turkey-hammered
 

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#35
Frontrunning: May 5


Submitted by Tyler Durden on 05/05/2016 07:30 -0400

  • Europe shares, oil snap four-day losing streaks (Reuters)
  • Oil rallies as Canada fire and Libya violence threaten supply (Reuters)
  • How Trump Won—and How the GOP Let Him (WSJ)
  • Hedge Fudge Managers Lose Their Swagger (BBG)
  • Turkey Premier Said to Give Up as Erdogan Tightens Grip (BBG)
  • Health Insurers Struggle to Offset New Costs (WSJ)
  • Judge says Clinton may have to testify in email lawsuit (Reuters)
  • Trump's deportation plan could slice 2 percent off U.S. GDP (Reuters)
  • A Cartel and a Briefcase: How Drug Cash Moves on a River of Gold (BBG)
  • Big-Spending Fracking Family Behind Cruz Won't Back Trump (BBG)
  • China's Great Commodity Bubble Loses Air Before It Can Burst (BBG)
  • Abortion provider Planned Parenthood sues Kansas over plan to cut funding (Reuters)
  • Look Out, Loonie, Canada May Have Just Peaked (BBG)
  • Bass Says Investors Would Avoid China If They Knew Bank Risk (BBG)
  • Tribune Publishing Rejects Gannett Bid (WSJ)
  • Truce takes hold in Aleppo but fighting goes on elsewhere in Syria (Reuters)
  • The Unloved Business That's Saved Big Oil From Low Energy Prices (BBG)


Overnight Media Digest

WSJ

- The U.S. Justice Department warned North Carolina officials that it considers the state's new bathroom law a violation of the Civil Rights Act. (http://on.wsj.com/1To3Taf)

- Tesla Motors plans to ramp up annual production to a half-million vehicles, two years earlier than planned, but will do so without its two top manufacturing executives. (http://on.wsj.com/1To3wfG)

- Tribune Publishing Co's board of directors rejected an unsolicited acquisition offer from Gannett Co , calling the bid "opportunistic". (http://on.wsj.com/1To3vIO)

- Former Republican senator, 82-year-old Bob Bennett of Utah, one of the first incumbents ousted in a national wave of anti-incumbent sentiment in 2010, has died, his assistant said. (http://on.wsj.com/1To3p3V)



FT

* Trinity Mirror is set to shut down its new national newspaper called The New Day, just two months after launching it as it seeks to cut its losses.

* Liberty Global, which also owns Virgin Media, is evaluating a potential contribution of up to 500,000 pounds ($724,550) to a campaign to keep Britain in Europe.

* Airbus is developing humanoid robots in partnership with French and Japanese researchers with a purpose of being able to use them alongside humans on its assembly lines and inside aircraft.



NYT

- Tesla Motors said it was confident it could accelerate production to meet high demand for its forthcoming Model 3 electric vehicle, despite the departure of two top manufacturing executives. (http://nyti.ms/1T2C7Gs)

- U.S. Federal safety regulators said long-term exposure to environmental moisture and wide temperature fluctuations caused airbags made by Takata to rupture violently. (http://nyti.ms/24z88I7)

- Tribune Publishing sent a letter to Gannett saying its board had unanimously rejected the $815 million takeover offer, which included debt and other liabilities and represented a significant premium above Tribune's share price. (http://nyti.ms/1rWgFam)

- Chinese company Xintong Tiandi has won the right to sell its leather goods under the iPhone trademark after years of legal back-and-forth with Apple, according to an article in Chinese state news media. (http://nyti.ms/1VKKPtk)

- The European Central Bank on Wednesday announced an end to the 500-euro bank note, worth roughly $575, in a move aimed at hampering cash transactions by drug dealers and money launderers. (http://nyti.ms/1W9dSXo)



Britain

The Times

- Executives at Royal Bank of Scotland Group Plc faced accusations of taking home "obscene" pay packets and being "glorified civil servants" at a stormy annual meeting. (http://bit.ly/1W8QBVt)

- EDF's former finance chief tried to persuade the French energy giant to postpone plans to build an 18-billion-pound nuclear power station at Hinkley Point, Somerset, for at least three years, he told French MPs yesterday. (http://bit.ly/1W8QJ7q)

The Guardian

- The mining group BHP Billiton Plc and its partner Vale SA are facing a 30-billion-pound claim from Brazilian prosecutors over an iron ore mine dam collapse last year that released a torrent of toxic mud, killing 19 people and leaving 700 homeless. (http://bit.ly/1W8QQjl)

The Telegraph

- BT group Plc is to unveil a multibillion-pound network upgrade programme, including laying ultrafast fibre-optic broadband lines to around two million homes and businesses. (http://bit.ly/1W8Qvgt)

- Intercontinental Exchange Inc has walked away from its attempt to break up the London Stock Exchange's 21-billion-pound merger with Deutsche Boerse AG, removing one of the major hurdles to the deal. (http://bit.ly/1W8QAB1)

Sky News

- The New Day newspaper is to close after just nine weeks of circulation. The daily newspaper, published by Trinity Mirror Plc, is to be publishing its final edition on Friday. (http://bit.ly/1W8OUHt)

- Royal Dutch Shell Plc has reduced its key investment forecast by a further 10 percent or $3 billion after announcing a sharp drop in first quarter profits amid the depressed oil price environment. (http://bit.ly/1W8QpFK)

The Independent

- Housing analysts have slammed a 100-percent mortgage launched by Barclays Plc as "crackers", saying the first mortgage since the crisis not to require a deposit will help people buy property they can't afford. (http://ind.pn/1W8QLw6)


http://www.zerohedge.com/news/2016-05-05/frontrunning-may-5
 

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#36

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#37
Asian Metals Market Update: May-5-2016
By: Chintan Karnani, Insignia Consultants
All metals and energies will zoom and the dollar collapse story will restart if US April nonfarm payrolls comes in below 160,000. A NFP number below 160,000 will imply that there will not be any interest rate hike this year by the Federal Reserve. The Federal Reserve is the only key central bank to tighten, the rest of central bank bias is towards increasing the reign of free money. Any expectations of an increase in global liquidity will result in commodity prices sky rocketing and short term quick gains in emerging market currencies.

Is a Cash Ban and Carry Tax Coming to the US?
By: Graham Summers
The fact of the matter is that Europe is now the center for misguided Central Planning for monetary policy. ECB President Mario Draghi has cut interest rates not once, not twice, not even thrice, but FOUR times into NIRP.

Shariah Gold Standard – $2 Trillion In Assets “Could Send Price Soaring”
By: Mark O'Byrne, GoldCore
The coming ‘shariah gold standard’ or shariah compliant gold could lead to a very significant source of new demand for physical gold coins and bars in the Islamic world. It is believed that this will contribute to much higher prices and gold “soaring” as some of the $2 trillion of assets held in Islamic financial institutions are allocated to the very small physical global gold market.
 
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34,590
#39
RANsquawk preview: Non farm payrolls April 2016
RAN squawk


Published on May 5, 2016