Sunday, June 04, 2017

Monday Watch

Today's Headlines
  • London Cops Adjust to New Terror Reality With Guns, Helicopters. The image of a special-forces helicopter landing on London Bridge on Saturday night raised the question of whether the British capital is becoming more dangerous -- or is in fact better defended than ever. The attack, which killed seven people, was the second time in three months that London has come under attack after a similar assault on the country’s Parliament in March. Prime Minister Theresa May was accused on Sunday evening by Labour Party leader Jeremy Corbyn of failing to protect the public by starving the police of funds.
  • Some Major Attacks in Europe in Recent Years.
  • More Than 1,500 Injured in Turin After Terror Scare.  
  • World Bank Still Sees Global Growth Picking Up Amid Policy Risks. The World Bank kept its outlook for the global economy unchanged, forecasting a modest pickup in growth despite uncertainty about monetary policy and the risk of a surge in protectionism. The development lender projects the world economy will grow by 2.7 percent this year and 2.9 percent the next, the same as its January forecast. “Global activity is firming broadly as expected,” the World Bank said in a report released Sunday. “Manufacturing and trade are picking up, confidence is improving, and international financing conditions remain benign.”
  • Australian Bonds Jump as Yen and Gold Hold Gains. Yields on Australian government bonds joined Treasuries at a seven-month low, while the yen and gold held onto gains that came Friday in the wake of a weaker-than-expected U.S. employment report. The pound slipped after a terror attack in London. U.S. and Australian bonds rallied as wage growth and hiring strength in the American labor market came in below forecasts. The euro traded near its highest this year and the yen remained stronger, weighing on Japanese stocks. As investors weigh the implications of the latest terror incident at a popular London nightlife spot, the reaction in the British currency was muted. Japan’s Topix index fell 0.4 percent after closing Friday at the highest since August 2015. Australia’s S&P/ASX 200 Index lost 0.6 percent and South Korea’s Kospi index rose 0.1 percent
  • Pound Falls After London Terror Attacks Raise Political Tensions. The pound fell after a weekend terror attack in London killed seven people, raising investor jitters days before the nation goes into a snap election. The pound declined as much as 0.3 percent in early trading in Asia Monday, though losses were contained even as the latest terror incident at a popular nightlife spot, which also left 21 people injured, gripped U.K. politics amid a tightening election race. The third attack in the U.K. in less than three months comes before the June 8 election, which will be held as armed police patrol the streets in the greatest show of force for decades.
  • Odd Lots: Why Everyone's Talking About the VIX and 50 Cent.
  • OPEC Deal Extension Isn't Enough to Rope in Bullish Oil Traders. The good news from OPEC wasn’t good enough. Hedge funds trimmed bets on rising crude prices to the lowest level since November as oil futures dipped below $50 a barrel amid skepticism an OPEC-led campaign to cut output will soon curb a worldwide supply glut. Speculators fled bearish positions for a second week.
  • Five Things You Need to Know to Start Your Day.
Wall Street Journal:
Zero Hedge:
Night Trading
  • Asian indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 87.75 -.5 basis point.
  • Asia Pacific Sovereign CDS Index 19.0 -.25 basis point.
  • Bloomberg Emerging Markets Currency Index 73.39 +.03%.
  • S&P 500 futures -.14%.
  • NASDAQ 100 futures -.11%.

Earnings of Note
  • (JKS)/.41
  • (CASY)/.84
  • (THO)/1.86
Economic Releases
8:30 am EST
  • Final 1Q Non-Farm Productivity is estimated to fall -.2% versus a -.6% decline in 4Q. 
  • Final 1Q Unit Labor Costs are estimated to rise +2.5% versus a +3.0% gain in 4Q.
10:00 am EST
  • The ISM Non-Manufacturing Composite for May is estimated to fall to 57.0 versus 57.5 in April.
  • Factory Orders for April are estimated to fall -.2% versus a +.2% gain in March.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The China Services PMI report, (AAPL) WWDC, Stifel Tech/Internet/Media Conference and the (CSX) annual meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the week.

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