Evening Headlines
Bloomberg:
- Merkel’s G-7 Faces Confluence of Deadlines on Greece to Russia. In June 2007, the last time Chancellor Angela Merkel hosted a Group
of Eight summit, she was unaware that the world’s leaders stood on the
edge of a global financial precipice. Now down one member after Russia’s exclusion last year after it
annexed Ukraine’s Crimea peninsula, Merkel’s G-7 faces a series of
existential crises that are in large part hers to solve. Greece’s five-year battle to stay solvent runs the almost daily risk
of failure, the European Union is struggling to maintain unanimity on
sanctions against Russia, and nuclear talks with Iran are touch-and-go.
Those are challenges that President Barack Obama will press European
leaders to heed to ensure unity among the world’s leading advanced
economies.
- China’s Online Lending Boom Spurs Startups, Investment and Risk. Though peer-to-peer lending was pioneered in the U.S. by companies
such as LendingClub Corp., China is where it’s really taking off. Internet-based peer lenders there gave out at least $32.5 billion in
loans last year, almost quadruple the rest of the world combined,
according to U.K. investment bank Liberum Capital Ltd. It predicts
lending in China will almost double this year to $60 billion versus
$11.7 billion in the U.S., the second-largest market. In peer-to-peer
lending, companies use the Internet to quickly match borrowers and
lenders at better rates than banks.
- Asian Stocks Retreat for Fifth Day as Greece Delays Debt Payment. Asian stocks fell for a fifth day, with the regional benchmark index
heading for its second week of losses, following a decline in U.S.
equities as Greece asked for a deferral on its debt payments.
The MSCI Asia Pacific Index dropped 0.3 percent to 148.85 as of 9:01
a.m. in Tokyo, heading for a 1.7 percent decline this week amid a
selloff in bonds and commodities.
- Oil Set for Weekly Drop as Glut Seen Persisting After OPEC Meet. Oil headed for the biggest weekly drop since March amid speculation
OPEC will maintain its output target at a meeting on Friday, leaving the
market oversupplied. Futures were little changed in London, poised for a 5.3 percent
decline through June 5. The Organization of Petroleum Exporting
Countries will continue its battle to retain market share, according to
Maria van der Hoeven, the executive director of the International Energy
Agency. The 12-member group is forecast to keep its daily production
target of 30 million barrels unchanged at the meeting in Vienna.
- Whatever OPEC Decides, Oil Supplies Are Rising From All Sides. No
matter what OPEC says Friday about its production target, the outcome
is sure to be more oil. Iran, Iraq and Libya said this week they plan to
add millions of
barrels to the market this year. Saudi Arabia, the biggest member in the
group, is already pumping the most in three decades. And executives
from the world’s biggest oil companies pledged to keep expanding by
cutting costs and focusing on the most promising drilling sites. The contest for market share is proving more important than price as
the Saudis seek to undercut higher-cost producers while costs keep
dropping. The competition is intensifying because producers are eager to
sell ever more oil even as world demand slows.
- Goldman(GS) Said to Near U.S. Settlement Exceeding $2 Billion. Goldman Sachs Group Inc. is in talks to pay $2 billion to $3 billion
to settle a probe into its sales of mortgage bonds leading up to the
financial crisis, according to a person with direct knowledge of the
situation. The investment bank could reach a deal with the U.S. Justice
Department within weeks, the person said, asking not to be identified
because the negotiations aren’t public.
Wall Street Journal:
- The Clinton ‘Charity’ Begins at Home. Employment rolls for the Clinton Foundation show scads of political operatives—but this doesn’t seem to bother the IRS. The scandal of the century at the IRS was that agency’s secret targeting
of conservative nonprofits. Perhaps a close second is the scandal of
what the IRS hasn’t been investigating: the Clinton Foundation.
- Islamic State’s Global Expansion. After years of denial, the U.S. response must now go beyond countering ISIS in Iraq and Syria. As Islamic State advances in the northern Syrian province of Aleppo,
there is a deadly twist in the war. The radical Islamist group, also
known as ISIS or ISIL, is now expanding in roughly a dozen countries
across Africa, the Middle East and Asia by exploiting local grievances,
doling out money and leveraging its battlefield successes.
Fox News:
- ISIS shows off US gear seized from Iraqis in fighting near Fallujah. A new video from ISIS reportedly depicts the terrorist army showing
off U.S. military equipment seized from Iraq troops in fierce fighting
near Fallujah. The 10-minute video shows live action from skirmishes in the town of
Karmah, just east of Fallujah. The black-clad jihadists are shown using
small arms and several rocket-propelled grenades. One scene features an
ISIS sniper shooting at Iraqi military positions near the town, and
another shows a suicide bomber identified as “Turkistani” being
deployed.
MarketWatch.com:
CNBC:
Zero Hedge:
Business Insider:
Reuters:
Telegraph:
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 108.5 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 61.75 +2.0 basis points.
- NASDAQ 100 futures -.12%.
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Change in Non-Farm Payrolls for May is estimated at 225K versus 223K in April.
- The Unemployment Rate is estimated at 5.4% versus 5.4% in April.
- Average Hourly Earnings for May is estimated to rise +.2% versus a +.1% gain in April.
3:00 pm EST
- Consumer Credit for April is estimated at $16.0B versus $20.523B in March.
Upcoming Splits
Other Potential Market Movers
- The Fed's Dudley speaking, Eurozone GDP report and the OPEC meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.
