Today's Headlines
Bloomberg:
- China's Slowdown Hits Nearby Economies Hardest. Hong Kong and Mongolia alike are feeling the pinch. Those nearest to China are among the hardest hit as growth in the world's second-largest economy grinds to the slowest pace in a quarter century. Hong Kong, Macau, and Taiwan all saw their economies shrink in the first quarter, while Mongolia's commodities-fueled boom has faltered. And the bad news doesn't stop there. "The ripples are likely to spread further out," said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong. "As China's economy continues to cool, it will provide an ongoing drag on global output, curtailing inflation pressures in the process and anchoring interest rates in the process. The economic malaise currently experienced by China's immediate neighbors, therefore, is only a portend of a milder version to afflict economies elsewhere as China comes off the boil." That's already the reality facing Hong Kong.
- The Big Short Is Back in Chinese Stocks. Chinese equities are once again in the cross hairs of short sellers. Short interest in one of the largest Hong Kong exchange-traded funds tracking domestic Chinese stocks has surged fivefold this month to its highest level in a year, according to data compiled by Markit and Bloomberg. The last time bearish bets were so elevated, such pessimism proved well-founded as China’s bull market turned into a $5 trillion rout.
- Factory Output in South Korea Drops Further Amid Weak Exports. South Korea’s industrial production fell more than economists expected as weak exports and corporate restructuring of shipbuilders continue to hurt demand and business sentiment. Factory output dropped 2.8 percent from a year earlier in April, Statistics Korea said Tuesday, compared with a 1.3 percent decline estimated by economists in a Bloomberg survey. Production fell 1.3 percent from a month earlier. "The negative factory output data trend shows that the foundations of growth are weak," said Suh Dae Il, an economist at Mirae Asset Daewoo Co. "The government’s push to restructure shipbuilders and shipping companies will further hurt domestic demand."
- European Stocks Little Changed as Investors Mull U.S. Rate Hike. European stocks were little changed in thin trading as investors considered the implications of a possible increase in U.S. interest rates after Federal Reserve Chair Janet Yellen said a hike is likely in the coming months. The Stoxx Europe 600 Index added 0.1 percent to 350.14 at the close of trading, after briefly rising as much as 0.2 percent, with automakers rising the most.
- Asian Stocks Little Changed as Investors Weigh Data, Rate Hike. Asian stocks were little changed, poised for the biggest monthly drop since January, as investors assessed economic data and the prospects for higher U.S. interest rates. The MSCI Asia Pacific Index rose less than 0.1 percent to 128.28 as of 9:16 a.m. in Tokyo. The gauge is down 2.2 percent this month, the worst showing since an 8 percent plunge in January, amid investors’ anxiety over the U.S. central bank’s plan to raise interest rates.
- Fed Outlook Hits Bonds to Emerging-Market Currencies; Oil Climbs. Anxiety over the prospect of a U.S. interest-rate hike as soon as
June dominated global trading, battering government debt and most
developing-nation currencies. Emerging-market currencies extended
losses from Friday, on track for their worst month since August against
the dollar after Federal Reserve Chair Janet Yellen signaled Friday that
a rate increase is likely some time in the coming months. Gold fell for
a ninth day in its longest slump in a year, while Mexican bonds sank
with German bunds amid a tumble in 10-year treasury futures. A gauge of
global stocks held near a four-week high with trading volumes in the
Americas and Europe more than 50 percent below their daily average amid
market closures in the U.S. and the U.K. The yen slumped a second day.
Wall Street Journal:
- Iraqi Forces Begin Ground Assault on Fallujah. The city is one of Islamic State’s most significant remaining strongholds in Iraq. Iraqi special forces advanced to the edge of Fallujah on Monday but struggled to enter the city, where Iraqi and U.S. officials said Islamic State extremists were amassing civilians to serve as human shields.
- Business Makes Senate Push. U.S. Chamber of Commerce hopes to keep the GOP from losing control of the Senate in November. The country’s biggest business lobby will launch an initiative Tuesday to deploy influential Republicans to raise funds for tight Senate races, hoping to keep the GOP from losing control of the chamber in November.
Fox News:
- Former State Dept. watchdog debunks central Clinton email claim. (video) The State Department’s former top watchdog, in an interview with Fox News, rejected Hillary Clinton’s repeated claims that her personal email use was in line with her predecessors’ – while saying he would have immediately opened an investigation if he caught wind of a secretary of state using such an account.
Zero Hedge:
- Beyond The Minsky Moment: China's Ponzi Schemes Are Now Investing In Other Ponzi Schemes.
- Trickle-Down Crash? Trophy Assets Suddenly Tanking.
- Here We Go Again: Wells Fargo Is Trying To Give Mortgages To Low-Income, Debt-Heavy Millennials Living At Home. (graph)
- Brits "Appalled, Disgusted" At Brexit Postal Ballot 'Fraud'.
- "An Unusual Number Of Known Unknowns" - These Are The Key Event Risks In June.
- Trump And Hillary Don't Know How To Fix The Economy.
- The Limits Of Oil's Rebound.
- Why Management Is Incentivized To Fabricate Earnings: It's All About non-GAAP Bonuses.
- Grant Williams Warns Of Looming 'Wealth Tax', Says "Own Physical Gold, Not ETFs".
- What The Charts Say: Fatally Attracted To New Highs. (graph)
- Never Forget.
- ECB Policy-Failure On Display: European Businesses Aren't Planning To Invest.
- China Sends Yellen Another Warning, Fixes Yuan At Lowest In Over Five years. (graph)
- Global Stocks Unchanged; US Futures Rise Above 2,100 As Traders Celebrate Memorial Day. (graph)
Business Insider:
- Consumers' mindsets are shifting dramatically — and it's killing brands like Tiffany.
- Putin has turned Russia into a ticking time-bomb only he can defuse.
- The antidote to China's debt addiction could make things worse.
- Former CEO of HSBC: Brexit would make London a 'prosperous global financial centre'.
Financial Times:
- Iata warns of slowdown in air travel. Global demand for air travel may be “shifting down a gear”, according to Iata, the aviation industry’s main trade body, sounding a warning that will send jitters through the sector.
Night Trading
- Asian indices are -.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 140.5 -.5 basis point.
- Asia Pacific Sovereign CDS Index 52.75 -.25 basis point.
- Bloomberg Emerging Markets Currency Index 70.73 -.1%.
- S&P 500 futures +.26%.
- NASDAQ 100 futures +.37%.
Earnings of Note
Company/Estimate
- (MDT)/1.26
- (SCOR)/.26
- (ITRI)/.34
- (NX)/.09
- (WDAY)/.02
- (ZOES)/.04
Economic Releases
8:30 am EST
- Personal Income for April is estimated to rise +.4% versus a +.4% gain in March.
- Personal Spending for April is estimated to rise +.7% versus a +.1% gain in March.
- PCE Core MoM for April is estimated to rise +.2% versus a +.1% gain in March.
- The S&P/CS 20 City MoM SA for March is estimated to rise +.7% versus a +.66% gain in February.
- Chicago Purchasing Manager for May is estimated to rise to 51.0 versus 50.4 in April.
- Consumer Confidence for May is estimated to rise to 96.0 versus 94.2 in April.
- Dallas Fed Manufacturing Activity for May is estimated to rise to -8.0 versus -13.9 in April.
- None of note
- The China PMI report, German retail sales report, Australia GDP report, weekly US retail sales reports and the Deutsche Bank Financial Services could also impact trading today.
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