Bloomberg:
- China Stock Frenzy Gets Even More Manic With First Leveraged ETF. Want to double down on China’s world-beating stock rally? Now there’s an exchange-traded fund for that. Direxion Investments is starting the first ETF that seeks to provide twice the daily return of mainland Chinese stocks using leverage, according to Andy O’Rourke, chief marketing officer for the New York-based fund provider.
- China Liquor Giant Moutai Reveals Record Deliveries Without Cash. China President Xi Jinping’s crackdown on corruption and extravagance has cut into demand for luxury goods throughout the economy. Now, the campaign is bruising the balance sheets of some of China’s biggest companies. In the latest example, Kweichow Moutai Co., the $37.9 billion maker of a fiery liquor long used at political celebrations, has seen a spike in unpaid bills as distributors delay paying bills. Prices for Moutai have tumbled, cutting distributor profits and forcing them to buy on credit. Payments due to the company, what accountants call receivables, almost quadrupled at the end of September, the most recent quarter available. As Kweichow Moutai prepares to report earnings next week, the results will illustrate the corporate fallout of Xi’s crackdown.
- China Stock Jump Blows Up Bond Yields in Threat to PBOC. China’s world-beating stock surge is sucking money away from bonds and thwarting central bank efforts to cut borrowing costs to support the economy. Yields on five-year yuan corporate notes with top ratings have jumped 30 basis points in the past month to 4.74 percent, near the highest since December.
- Islamic State Recruits Teen Soldiers With Cars, Cash and Guns. They look like regular Islamic State militants in khaki fatigues and black bandanas, exercising and practicing combat routines. Yet their size and lack of trademark black beards betray them as children. The group, also known as ISIS or Da’esh, is already turning to the next generation to ensure its legacy of extremism and brutal violence endures as a U.S.-led offensive chips away at areas it controls in Iraq and Syria. Using recruitment offices in Syria called “Cubs of the Caliphate,” the al-Qaeda breakaway group is incorporating young Muslims into its ranks, sending some into battle or having them shoot hostages.
- Draghi Seen Dispelling QE Duration Doubts as ECB Jolts Economy. No sooner has he started than Mario Draghi is facing questions on how he plans to finish Six weeks into a 1.1 trillion-euro ($1.2 trillion) asset-buying plan to propel euro-area inflation out of the doldrums, the European Central Bank president is set to be asked at his regular press conference what happens if he succeeds before the provisional end-date of September 2016. His challenge is to show that policy makers are determined to cut off extraordinary support only when they’re sure the economy can stand on its own.
- Five Questions for Mario Draghi.
- Asian Stocks Drop With Aussie as Data Shows Weaker China Growth. Asian stocks fell from an almost seven-year high and the Australian dollar slid against most peers as data showed China’s economy slowed to the weakest pace of expansion since 2009 last quarter. Crude oil rose for a fifth day. The MSCI Asia Pacific Index dropped 0.3 percent by 11:10 a.m. in Tokyo, as the Hang Seng Index fluctuated after a 1.6 percent slide Tuesday.
- U.S. Seen Becoming Net Energy Exporter on Shale Output. The U.S. government said for the first time that the nation will become a net energy exporter within 15 years as the shale boom bolsters crude oil production. U.S. energy exports will exceed imports from 2029 through 2032, and from 2037 through 2040, the Energy Information Administration said Tuesday in its Annual Energy Outlook. The agency raised its oil output forecasts for 2025 and 2040, while cutting total energy demand estimates for the same years. The forecast doesn’t anticipate any change in U.S. law that bans most exports of crude.
- Iron Ore Cut by JPMorgan on Supplies as Hockey Plans China Talks. A worsening mismatch between global iron ore supply and demand prompted JPMorgan Chase & Co. to reduce price forecasts through 2018, with the world’s biggest mining companies seen sticking with expansion plan. The raw material will average $51 a metric ton this year, 20 percent less than previously forecast, the bank said in an e-mailed report on Wednesday. The 2016 outlook was cut 22 percent to $50 a ton, while predictions for 2017 and 2018 were reduced by 18 percent and 8 percent, respectively, it said.
- Florida Doctor Linked to Sen. Robert Menendez Indicted for Health-Care Fraud. Salomon E. Melgen received $105 million over six years from Medicare, indictment alleges. A Florida doctor whose practice twice was raided by federal authorities received $105 million over six years from Medicare, an indictment alleges, highlighting vulnerabilities in the federal program for the elderly and disabled. A federal grand jury indicted Salomon E. Melgen, a North Palm Beach ophthalmologist, on 46 counts of health care fraud, alleging among other things that he filed false Medicare...
- Oil Layoffs Hit 100,000 and Counting. Roughnecks feel brunt of cuts as tumble in price of crude ripples through energy industry.
- U.S. Warns Iran to Halt Unilateral Military Moves in Iraq. Move is part of a broader U.S. effort to weaken Tehran’s growing sway in the fight against Islamist extremists in the Middle East.
- Obama’s One-Man Nuclear Deal. Congress will get a vote but the President still has a free hand. President Obama says he wants Congress to play a role in approving a nuclear deal with Iran, but his every action suggests the opposite. After months of resistance, the White House said Tuesday the President would finally sign a bill requiring a Senate vote on any deal—and why not since it still gives him nearly a free hand.
- Senate panel passes Iran bill giving Congress a say on nuclear deal. The Senate Foreign Relations Committee on Tuesday unanimously approved legislation that would allow Congress to have a say on a possible U.S. nuclear negotiation with Iran. The legislation next will go to the full Senate for a vote. There was a strong bi-partisan effort for an increased congressional role as the June 30 deadline approaches for international negotiators to turn the framework of a nuclear deal into the real thing.
- Intel’s(INTC) cap spending cuts may fuel concerns. Intel Corp.’s lackluster first quarter results were on target with its previously reduced guidance, as the chip giant was hit by sluggish demand for PCs, but a bigger surprise was a far larger-than-expected cut in its capital spending forecast.
- Wary of natural disaster, NY Fed bulks up in Chicago: Report. The New York branch of the U.S. Federal Reserve, wary that a natural disaster or other eventuality could shut down its market operations as it approaches an interest rate hike, has added staff and bulked up its satellite office in Chicago. Some market technicians have transferred from New York and others were hired at the office housed in the Chicago Fed, according to several people familiar with the build-out that began about two years ago, after Hurricane Sandy struck Manhattan.
- 330 Million Citizens & Only One Democrat Interested In Being President.
- "We're Living In A Gambling Society" BlackRock's Larry Fink Urges CEOs To Stop "Short-Termist" Thinking.
- How Intel's EPS Rose And Beat Expectations Despite Flat Revenue And Net Income. (graph)
- Crude Pops After Smaller-Than-Expected API Inventory Build, Cushing Capacity Concerns Remain. (graph)
- Dollar Dumped, Oil Pumped As Another Retail Sales Miss Sends Stocks Surging. (graph)
- Q1 GDP Expectations Are Crashing. (graph)
- China GDP Tumbles To Lowest In 6 Years Amid Quadruple Whammy Of Dismal Data. (graph)
- Russian-Iranian Cooperation In The Creation Of New Regional Security Systems.
- Central Banks Made The Whole World “Buy Time”... There Are Signs We’re Beginning To Sell It.
- China Stock Rally To Continue Unless Economic Recovery Gets In The Way, Deutsche Bank Says. (graph)
- A former top adviser destroyed Obama's Iraq policy in one sentence.
- China's wealthy are fleeing the country like crazy.
- Hillary Clinton Was Asked About Email 2 Years Ago. Hillary Rodham Clinton was directly asked by congressional investigators in a December 2012 letter whether she had used a private email account while serving as secretary of state, according to letters obtained by The New York Times. But Mrs. Clinton did not reply to the letter. And when the State Department answered in March 2013, nearly two months after she left office, it ignored the question and provided no response for it.
- No swift recovery seen for copper market amid surplus, weak demand. The copper market will not get any respite from weak prices and excess supplies any time soon, even after recent hefty cost cutting and project delays have removed more than a million tonnes of new capacity, top executives said on Tuesday. Speaking at the CRU Copper conference, the executives painted one of the bleakest outlooks in years at the CRU Copper conference. While prices have recovered to around $6,000 per tonne from January when the market crashed below $5,500 for the first time since 2009, the market was languishing in a surplus of some 160,000 tonne at the end of the first quarter, according to estimates. Demand from China, the world's top consumer, grew at a meager 0.7 percent over that period as credit tightened and buying of refrigerators and air conditioners waned. While cuts in production and delays to projects have removed eight projects equating to 1.5 million tonnes that were due to come onstream by 2019, it will take years before the global market feels any supply pinch and prices recover.
Financial Times:
Evening Recommendations - Global trade faces poor growth, says WTO. Global trade is poised for at least two more years of disappointing growth, according to a new forecast that will add what some see as increasing evidence that globalisation is stalling.
Piper Jaffray:
- Raised (GPRO) to Overweight, target $55.
- Raised (ULTA) to Overweight, target $170.
- Asian equity indices are -.75% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 106.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 59.0 +.75 basis point.
- S&P 500 futures -.02%.
- NASDAQ 100 futures -.05%.
Earnings of Note
Company/Estimate
- (ASML)/.92
- (BAC)/.29
- (SCHW)/.24
- (DAL)/.44
- (PNC)/1.71
- (PGR)/.43
- (USB)/.76
- (KMI)/.23
- (NFLX)/.64
- (SNDK)/.70
8:30 am EST
- Empire Manufacturing for April is estimated to rise to 7.17 versus 6.90 in March.
- Industrial Production for March is estimated to fall -.3% versus a +.1% gain in February.
- Capacity Utilization for March is estimated to fall to 78.6% versus 78.9% in February.
- Manufacturing Production for March is estimated to rise +.1% versus a -.2% decline in February.
- The NAHB Housing Market Index for April is estimated to rise to 55.0 versus 53.0 in March.
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +3,540,000 barrels versus a +10,949,000 barrel gain the prior week. Gasoline Supplies are estimated to fall by -660,000 barrels versus a +817,000 barrel gain the prior week. Distillate inventories are estimated to rise by +255,000 versus a -250,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise +.64% versus a +.7% gain the prior week.
- US Fed Beige Book Release.
- Net Long-Term TIC Flows.
- None of note
- The Fed's Lacker speaking, Fed's Bullard speaking, ECB rate decision, Eurozone CPI report, Australia Unemployment report, Bank of Canada rate decision, weekly MBA mortgage applications report, BofA Merrill Oil/Gas Conference, Needham Health Care Conference, (WBA) analyst day and the (WDAY) analyst day could also impact trading today.
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