Sunday, June 11, 2017

Monday Watch

Today's Headlines
  • Weakened May Forced to Give Jobs to Rivals in Bid to Cling On. Theresa May dramatically promoted one prominent pro-Brexit minister and reappointed a second to her cabinet as she prepared to face furious Tory lawmakers in a showdown that could end her premiership. May surprisingly named Michael Gove, who unsuccessfully ran against her for the party leadership last year and whom she then fired from the Ministry of Justice, as her new environment secretary. She also promoted another unsuccessful pro-Brexit leadership challenger, Andrea Leadsom, from the environment job to leader of the House of Commons, responsible for steering legislation through Parliament.
  • Macron Set for Majority in Assembly After First-Round Vote. President Emmanuel Macron headed for a clear majority in the National Assembly after French voters rallied behind their new head of state in the first round of legislative elections Sunday. Macron’s year-old party, Republic on the Move, won about 33 percent of the vote, some 13 percentage points ahead of the Republicans, according to pollsters’ projections based on an early vote count. The result could give Macron’s party as many as 445 seats out of 577 in the lower house of parliament, according to projections by Elabe. The lowest estimate for his seat count was from Ipsos, which saw 390 to 430 seats.
  • Gulf Mediator Says Qatar ‘Ready to Understand’ Region's Concerns. Gulf crisis mediator Kuwait said on Sunday that isolated Qatar was “ready to understand” the concerns of its neighbors and bolster stability in the region, in a sign that the week-old spat may be easing. Kuwaiti Foreign Minister Sheikh Sabah Al-Hamad Al-Sabah said his country would not abandon mediation efforts until the impasse was resolved, the state-run KUNA news agency reported. Qatari leaders are “willing to hold dialogue” to end the crisis, he said.
  • China Holds Firm to Its $5 Trillion Anchor as Fed, ECB Seek Exit. Investors who fret about when and how global central banks will run down their crisis-era balance sheets can be relaxed about the biggest of them all -- China’s. Whereas the Federal Reserve’s $4.5 trillion asset pile is set to be shrunk and the European Central Bank’s should stop growing by the end of this year as the outlook brightens, China’s $5 trillion hoard is here to stay for the time being -- and could even still expand, according to the majority of respondents in a Bloomberg survey of People’s Bank of China watchers.
  • Economists See a Strong Chance of Second Term for BOJ's Kuroda. Haruhiko Kuroda is considered a contender to get a second term as Bank of Japan governor by a majority of economists who offered an opinion on the matter ahead of a policy meeting this week. A third of them listed him as the only possible contender to lead the central bank after his current term ends in April 2018, according to a survey by Bloomberg.
  • Russia, Saudis See Oil Inventories Falling After Price Drop. A deal among oil-producing countries to curb production and balance an oversupplied market will achieve its objective in the first quarter of next year, Russian Energy Minister Alexander Novak said, after prices tumbled on news of a build-up in U.S. inventories. His Saudi counterpart, Khalid Al-Falih, said at a joint news briefing in Astana, Kazakhstan, that inventories were declining worldwide and reductions would accelerate in the next three to four months. Inventories will settle to their five-year historical average -- OPEC’s target -- before the end of the year, though Saudi Arabia, the group’s biggest producer, may modify its policy if output cuts don’t have the desired effect, he said.
Wall Street Journal:
Zero Hedge: 
Night Trading
  • Asian indices are -.5% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 85.75 -.5 basis point.
  • Asia Pacific Sovereign CDS Index 17.75 -.5 basis point.
  • Bloomberg Emerging Markets Currency Index 73.39 +.%.
  • S&P 500 futures -.08%.
  • NASDAQ 100 futures -.13%.

Earnings of Note
  • None of note
Economic Releases
2:00 pm EST
  • The Monthly Budget Deficit for May is estimated at -$87.0B versus -$52.5B in April.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Japan Machine Orders, $24B 3Y T-Note auction, $20B 10Y T-Note auction and the William Blair Growth Stock Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down 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 50% net long heading into the week.

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