Monday Morning Reads
- Artificial Intelligence, The Cloud and Your Money
- Fuel Costs Jump
- OPEC’s Worst Meeting Ever
- Probe of Foreign Chip Makers
- Death Spiral Accelerates
- Does Private Equity Deserve More Scrutiny
- Time to Worry About a Trade War?
- Futures start the week higher
- Data sharing deals plague Facebook
- China launches foreign chipmaker probe
- Wells Fargo eyes post-Brexit hubs
- IATA slashes airline profit forecast
- SpaceX delays moon tourism deadline
- 'Solo' drops 65% at the box office
- UniCredit, SocGen exploring merger
Tweet of the morning:
$VIX closed the 1st day of the new month 2 handles lower than it closed the last day of the previous month (the day before).
I'd have ignored that except for the difference in median $SPX returns and %-positive between the baseline (all months) and months that meet the criteria. pic.twitter.com/mzNi85uVlq
— OddStats (@OddStats) June 3, 2018
Open Interest Changes:
Unusual Option Action:
Stocks across the globe are flashing green following a robust May jobs report on Friday that reignited investor sentiment and reset bets on the Fed's rate hike path. The move higher comes despite concerns over the impact of trade disputes between the White House and major economic allies, as well as this week's G7 summit (see below). Also on the radar today is the keynote address of WWDC, Apple's (NASDAQ:AAPL) annual developer conference.
"If the U.S. introduces trade sanctions including a tariff increase, all the economic and trade achievements negotiated by the two parties will not take effect," according to an official statement from China, carried by the Xinhua News Agency. The warning, which added that the negotiating process should be "based on the premise" of not fighting a "trade war," comes as the two sides concluded their latest round of trade talks in Beijing.
Wrapping up a heated G7 meeting in Canada, top global economic leaders on Saturday asked U.S. Treasury Secretary Steven Mnuchin to convey their "unanimous concern and disappointment" about the metals tariffs imposed by Washington last week. "Ministers and Governors agreed that this discussion should continue at the Leaders' Summit in Charlevoix (set for June 7), where decisive action is needed. The aim of this should be to restore collaborative partnerships to promote free, fair, predictable and mutually beneficial trade," the group said in a summary statement written by Canada.
Britain must submit "written proposals in the next two weeks" on how it plans to keep a frictionless border on the island of Ireland after Brexit, Irish Foreign Minister Simon Coveney told the Irish Times. "If there is no progress on the backstop, we are in for an uncertain summer." The border will be Britain's only land frontier with the EU after it leaves the bloc.
Eurozone investor sentiment deteriorated sharply in June, reflecting the recent volatility and political uncertainties in the Italian economy. The measure of confidence compiled by Sentix plunged to 9.3, down from 19.2 in May, marking the lowest score since October 2016. Fears of a trade war with the U.S. also weighed heavily on the gauge.
The principle of solidarity among members of the eurozone should not turn the bloc into a debt-sharing union, Germany's Angela Merkel told Frankfurter Allgemeine Sonntagszeitung. "I will approach the new Italian government openly and work with it instead of speculating about its intentions," she added, after Italy swore in a populist coalition. The country accounts for 23.4% of the eurozone's public debt and 15.4% of the bloc's GDP.
Voters in Slovenia have given victory to a populist party led by two-time former prime minister Janez Jansa in parliamentary elections that tilted another European country to the right. While the SDS received nearly 25% of the vote, the anti-immigration party - which has pledged to "put Slovenia first" - may face an uphill battle forming a coalition. Slovenia has been an EU member since 2004 and joined the eurozone in 2007.
Cambridge Analytica memories? Facebook (NASDAQ:FB) is under fire again after the NYT revealed data sharing deals with 60 companies that gave over users' education history, relationship status, work, religion and political leaning. Facebook said it forged the partnerships back when mobile phones were less powerful and app stores did not yet exist, aiming to create device-integrated APIs, but the company only announced that it would wind them down in April.
The first-ever Star Wars film to lose money? In its second week, Soloearned just $29.3M from North American theaters - a 65% drop from its opening weekend, which was itself a disappointingly low take for a film with its high production budget. The Disney (NYSE:DIS) movie has now earned $148.9M domestically vs. the estimated $250M it cost to make.
Chinese regulators are investigating Micron Technology (NASDAQ:MU), Samsung Electronics (OTC:SSNLF) and SK Hynix (OTC:HXSCL) as the country tries to reduce dependency on foreign chips, WSJ reports. Some speculate the probe concerns the rising cost of DRAM chips - the three companies are dominant suppliers - or it might be seeking to use the current DRAM pricing environment to gain leverage for a technology transfer.
It's the latest bank to shift some operations away from London. Wells Fargo (NYSE:WFC) is eyeing a plan to use both Paris and Dublin as its post-Brexit hubs, according to the Irish Times, as the lender prepares to be stripped of the "passporting" rights that allow it to operate seamlessly across the EU. The financial institution currently has a 1,200-strong workforce in the city.
Italy's largest bank, UniCredit (OTCPK:UNCFY), is exploring a merger with France's Societe Generale (OTCPK:SCGLY) in a move that would see the two institutions leading the way for banking tie-ups on the continent, FT reports. While no formal approach has been made, senior executives stressed planning was at an early stage and Italy’s volatile political situation caused a delay in the timetable for a deal from the original plan of 18 months.
Bayer has launched a €6B rights issue, a cornerstone of the financing package for its planned $62.5B takeover of Monsanto (NYSE:MON). The cash call is smaller than initially envisaged because Monsanto reduced its debt during a lengthy antitrust review, while Bayer (OTCPK:BAYRY) raised funds from selling down its stake in plastics maker Covestro and offloading assets to BASF (OTCQX:BASFY). Media reports suggest the transaction will close on June 7.
Dented by higher fuel and labor costs, global airline profits this year are set to slide from the record reached in 2017. Net income for 2018 is likely to total $33.8B, 12% lower than a December forecast for $38.4B, according to the International Air Transport Association. The new forecast compares with an all-time high of $38B airlines made last year, which was boosted by special accounting like one-off tax credits. Airline stocks: AAL, ALK, DAL, JBLU, LUV, SAVE, UAL
With oil now above $65 a barrel, Boeing (NYSE:BA) is expecting increased demand for a new mid-sized plane. Industry sources say the proposed 220 to 270 seat aircraft has been designed with an elliptical fuselage, leaving less space for cargo in order to make it more aerodynamic and cheaper to fly. However, Chinese airlines in particular have expressed reservations about the proposal due to the growth of e-commerce in the world’s second largest economy.
SpaceX is pushing back the timeline for launching a pair of space tourists around the moon, missing another deadline for putting humans in its Dragon capsule. A new timetable for the flight - now postponed from this year until at least mid-2019 - hasn't been released by the company. The delay comes amid SpaceX's (SPACE) own projections of a nearly 40% drop in launches next year from as many as 28 anticipated for 2018.
In Asia, Japan +1.4%. Hong Kong +1.7%. China +0.5%. India -0.6%.
In Europe, at midday, London flat. Paris +0.9%. Frankfurt +0.3%.
Futures at 6:20, Dow +0.5%. S&P +0.4%. Nasdaq +0.4%. Crude -0.6% to $65.39. Gold -0.1% to $1298.10. Bitcoin -1.5% to $7593.
Ten-year Treasury Yield +2 bps to 2.91%
Today's Economic Calendar
10:00 Factory Orders