Bloomberg:
- Forget Tanks. It’s Russia’s Ruble That’s Conquering East Ukraine. As a wobbly cease-fire keeps eastern Ukraine’s warring factions apart, Russia’s ruble is conquering new territory across the breakaway republics. In Donetsk, the conflict zone’s biggest city, supermarkets have opened ruble-only checkout counters to serve the fighters in camouflage lining up along pensioners. Bus and tram tickets come with a conversion from Ukraine’s hryvnia to the Russian currency. Gas-station workers are paid in rubles because that’s what their rebel customers use to fuel their armored jeeps.
- Global Bondholders Caught in China’s Cement Consolidation Push. A push by authorities in China to shrink the nation’s cement industry has caught global bond investors in the middle.
- These Chinese Stocks Are Trouncing the Market on Soccer Stimulus. Xi Jinping’s plan to make China a soccer superpower is winning over fans in an unlikely place: the nation’s $7.7 trillion stock market. Nine listed companies with ties to the country’s soccer league have surged an average 158 percent since the Chinese president first signaled plans in March 2014 to revive a sport plagued by match-fixing and an 82 ranking in FIFA’s international league.
- China’s Stocks Drop as Best-Performing Phone Shares Lead Decline. China’s stocks fell amid concern recent gains were excessive relative to the outlook for economic growth. Phone companies, the best performers over the past month, led declines. China United Network Communications Ltd. slid 4.1 percent after jumping 60 percent since last month. Everyday Network Co. and Nanfeng Ventilator Co. plunged more than 5 percent, dragging down the ChiNext index of small companies. Energy companies provided some market support, with China Oilfield Services Ltd. and Offshore Oil Engineering Co. jumping 10 percent on industry reform speculation, according to Zheshang Securities Co. The Shanghai Composite Index dropped 0.7 percent to 4,449.43 at 10:09 a.m. local time. The CSI 300 Index fell 1 percent.
- Asian Stocks Follow U.S. Shares Higher as Investors Await RBA. Asian stocks outside of Japan rose for a second day following a rally in U.S. equities and as investors await an interest-rate decision by Australia’s central bank. Australia & New Zealand Banking Group Ltd. jumped 3.8 percent in Sydney after the lender posted a record first-half cash profit. Fortescue Metals Group Ltd. rose 3.1 percent in Sydney after Vale SA signaled that it may be willing to moderate supply growth amid a glut in iron ore. Alibaba Pictures Group Ltd. declined 7.3 percent in Hong Kong after actress Zhao Wei and her husband Huang Youlong sold shares in the film-making unit of China’s biggest Internet company The MSCI Asia Pacific excluding Japan Index rose 0.2 percent to 515.88 as of 9:32 a.m. in Hong Kong. Markets in Japan, South Korea and Thailand are closed Tuesday for holidays.
- In Land of Negative Yields, Junk Bonds Are The New Haven Assets. The new fixed-income haven is, of all things, the market for junk bonds. With government bonds in Germany to Japan and Slovakia yielding less than nothing, money is pouring into exchange- traded funds that buy speculative-grade debt, traditionally the riskiest of fixed-income assets. The pace is staggering. So far this year, about $9 billion has flowed into the funds globally, a significant chunk for the $44.4 billion market in junk-debt ETFs. In the land of negative yields, even the most conservative firms such as Zurich Insurance Group AG and Assicurazioni Generali SpA, the biggest Swiss and Italian insurers, are planning to invest in sub-investment grade debt for the first time.
- Goldman: Expansion in Stock Valuations Will End When the Fed Raises Rates. They expect interest rates to go up in September. The second-longest expansion in U.S. stock-market valuations in more than three decades is coming to an end, according to Goldman Sachs Group Inc. Stock valuations have surged 62 percent since September 2011, the longest period of multiple expansion since the height of the Internet bubble in December 1999, when the S&P 500’s forward price-to-earnings ratio had climbed for 61 straight months, according to Goldman. The current run is 42 months old and Goldman predicts it will end when the Federal Reserve lifts interest rates, which the strategists believe will happen in September.
- Hillary Clinton Takes Hit in WSJ Poll, but Holds Edge Over GOP Rivals. Democratic front-runner sees those with negative view jump to 42%; Bush draws most support on GOP side.
- India’s Debt Pile Up Complicates Growth Plans. Infrastructure companies key to India’s prospects already loaded down with heavy debt loads.
- Panera(PNRA) to Drop at Least 150 Artificial Ingredients From Menu. Chain is latest to respond to consumer shift toward foods seen as more healthful.
- Sorry, Charlie Hebdo. Western writers abandon their support for free speech.
- New offensive frees captives from Boko Haram; exposes group's bloodlust. A major offensive by Nigerian forces has freed nearly 700 captives from Boko Haram in the last week, while also further exposing the Islamist terror group's bottomless propensity for evil. As many as 10 girls were stoned to death last week as rescuers closed in on the terrorist group's stronghold in the Sambisa forest in the northern Borno state. Survivors told of their harrowing escape from the terror group, which claims to be aligned with ISIS.
- Federal Reserve 1 - 0 Saudi Arabia. (graph)
- Peak Oil Optimism. (graph)
Financial Times:
Telegraph: - China’s ‘migrant miracle’ nears an end as cheap labour dwindles. China’s labour force is shrinking and the “migrant miracle” that powered its industrial rise is mostly exhausted, removing the factors that propelled the country’s meteoric development, according to leading economists.
- Liquidity drought could spark market bloodbath, warns IIF. Evaporating liquidity and higher US interest rates will cause huge market swings with potentially catastrophic consequences, Institute of International Finance warns.
- China May Raise Stamp Tax in 3Q, Brokerage Says. China may raise the stamp tax on stock trading to boost fiscal revenue as recent market volume keeps surging, citing a research not of Changjiang Securities.
- None of note
- Asian equity indices are -1.0% to +.5% on average.
- Asia Ex-Japan Investment Grade CDS Index 105.0 unch.
- Asia Pacific Sovereign CDS Index 60.0 -.5 basis point.
- S&P 500 futures -.11%.
- NASDAQ 100 futures -.15%.
Earnings of Note
Company/Estimate
- (ADM)/.71
- (DTV)/1.52
- (DISCA)/.35
- (EMR)/.76
- (EL)/.51
- (HCA)/1.35
- (HCP)/.78
- (H)/.19
- (ICE)/2.96
- (K)/.92
- (KLIC)/.12
- (LPX)/-.19
- (MDC)/.16
- (NBL)/.04
- (ODP)/.13
- (TRW)/1.87
- (VSH)/.20
- (VMC)/-.15
- (DIS)/1.11
- (ZTS)/.37
- (AGU)/.32
- (ALL)/1.42
- (EA)/.26
- (FOSL)/.69
- (HLF)/1.01
- (MYL)/.69
- (PZZA)/.54
- (PXD)/.06
- (SCTY)/-1.60
8:30 AM EST
- The Trade Deficit for March is estimated at -$41.7B versus -$35.4B in February.
- Final Markit US Services PMI for April is estimated at 57.8 versus a prior estimate of 57.8.
- The IBD/TIPP Economic Optimism Index for May is estimated to fall to 50.0 versus 51.3 in April.
- ISM Non-Manufacturing for April is estimated to fall to 56.2 versus 56.5 in March.
- None of note
- The Fed's Kocherlakota speaking, Eurozone PPI report, China HSBC Services PMI, US weekly retail sales reports, Robert Baird Growth Stock Conference, Wells Fargo Industrial/Construction Conference, (LXK) analyst meeting and the (CUDA) investor meeting could also impact trading today.
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