Morning Reads







Russia has defaulted on its foreign debt for the first time since the Bolshevik Revolution after a 30-day grace period for the country to disburse two Eurobond interest payments expired on Sunday night. It's a largely symbolic move given that the Kremlin has enough money to pay off the debt, but is barred from doing so because of the heavy Western sanctions leveled on the government. Last month, the U.S. Treasury Department effectively blocked Moscow from making the payments after letting a sanctions loophole expire that had previously allowed it to transfer cash to debtholders via American banks.

Quote: "Anyone who understands this situation knows that this in no way a default," Russian Finance Minister Anton Siluanov declared. "There is money and there is also the readiness to pay. This situation, artificially created by an unfriendly country, will not have any effect on Russians' quality of life."

While a formal default (by a ratings agency or court) would be another sign of isolation, in this case it doesn't mean much, as Russia currently cannot borrow internationally. In fact, it doesn't need to, thanks to surging energy export revenues that have grown even more plentiful since the invasion of Ukraine. The grim status could influence its standing as an economic and financial pariah, however, as more multinationals flee the country or discourage foreign direct investment for the future.

Next steps: Bondholders are likely to take a wait-and-see approach. Claims only become void three years from now and much could change before then in terms of the scope of the war or sanctions. Debtholders may also have a difficult time repatriating the cash since the Kremlin hasn't waived its sovereign immunity and no foreign court would have jurisdiction there. Note that Russia under Boris Yeltsin also defaulted on its domestic debts in 1998, which led to a wave of inflation and a devalued ruble, but the economy was able to recover quickly due to rising oil prices and international aid. (23 comments)


The U.S. Supreme Court on Friday ruled 6-3 that the constitution does not confer a woman's right to abortion, overturning the landmark 1973 decision in Roe v. Wade. "It is time to heed the Constitution and return the issue of abortion to the people's elected representatives," read the majority opinion written by Justice Samuel Alito. The Guttmacher Institute estimates that 26 states are certain or likely to ban abortion as a result of the ruling, with about a dozen of them already implementing so-called trigger laws, which range from banning abortion completely to outlawing termination after six or 15 weeks.

Backdrop: Roe v. Wade effectively legalized abortion across the United States in 1973 by striking down a Texas law that only permitted abortion for the purpose of saving a woman's life. The majority opinion at the time declared that a woman's right to privacy under the 14th Amendment superseded a state's right to ban abortion and the court set different rules for each trimester. In the years since, Roe has been modified but not overturned, like in the 1992 case of Planned Parenthood v. Casey. In that decision, the court said that restrictions are "unconstitutional" if they place an "undue burden" on a woman, and quickly became the new standard by which new abortion cases were judged.

There is still a lot to figure out under the new ruling, which has riled the political divide across the country. Will states restrict abortion pills, which accounted for 54% of U.S. abortions in 2020? If they do, could FDA approval of mifepristone, one of the most common pills used for medication abortions, pre-empt state restrictions? How will that impact U.S.-based telemedicine providers, or major insurers like UnitedHealth (UNH), Cigna (CI), Anthem (ANTM) and Aetna (CVS)?

Treading a fine line: Looking to avoid a public backlash, many corporations and business leaders (that are still on the job) have been sitting this one out. Similarly, many pro-choice oriented companies have instead chosen to offer their U.S.-based employees travel reimbursements for out-of-state abortions, in a show of support without touching the hot topic. Disney (DIS), JPMorgan (JPM) and Goldman Sachs (GS) have joined the list of those providing the expenses, as well as Netflix (NFLX), Meta Platforms (META) and Paramount Global (PARA). (565 comments)

Trading blame

2022 is shaping up to be the "Summer of Flight Disruption." Chances are you have experienced delays if you've been to an airport recently, and that's if you even get on a plane (cancellations have been through the roof). Recent developments have even prompted "camping out at the airport" to trend across the country, while hours-long waits for customer service have left many passengers with a sour taste of the whole traveling experience.

Go for the staycation? Things don't look like they'll be getting better anytime soon as airlines and the FAA point fingers at each other ahead of the busy July Fourth weekend. "The industry is actively and nimbly doing everything possible to create a positive customer experience since it is in an airline’s inherent interest to keep customers happy, so they return for future business," Airlines for America President Nicholas Calio, which represents the largest U.S. carriers, said in a letter to Transportation Secretary Pete Buttigieg. "However, we have also observed that FAA (air traffic control) staffing challenges have led to traffic restrictions under blue sky conditions."

"People expect when they buy an airline ticket that they’ll get where they need to go safely, efficiently, reliably and affordably," the agency said in response. "After receiving $54B in pandemic relief to help save the airlines from mass layoffs and bankruptcy, the American people deserve to have their expectations met." Carriers have already slashed their June-August schedules by 15% compared with their original plans, with United (NASDAQ:UALscrapping 50 daily flights from its hub at Newark Liberty International Airport and American Airlines (NASDAQ:AALcutting service to four U.S. cities.

Outlook: In truth, a combination of factors has led to severe staff shortages that have never returned from their pre-COVID levels. Demand has bounced back faster than the industry anticipated, many have found permanent jobs elsewhere and the pandemic slowed training of air traffic controllers and pilots. Routine issues like thunderstorms during the spring and summer have also continued to plague key travel routes and new hotspots like Florida along the East Coast, while COVID infections continue to sideline airline and airport employees, further frustrating travelers. (2 comments)

G7 summit

There was a lot of talk about the war in Ukraine at the latest G7 meeting in the Bavarian Alps, with Western leaders committing to provide Kyiv with "financial, humanitarian, military and diplomatic support for as long as it takes," according to a draft statement. Members also sought a deal to impose a "price cap" on Russian oil, and some even agreed to ban Russian imports of newly mined and refined gold, which is one of the country's top exports. The annual gathering was called the G8 prior to 2014, when Russia was expelled from the group following the annexation of Crimea.

On to infrastructure: Previously called "Build Back Better World," or BW3, President Biden followed up on the proposal from last year's G7 summit by launching a global infrastructure plan to counter China's influence in the developing world. The "Partnership for Global Infrastructure and Investment" would specifically create an alternative to China's "Belt and Road," which has been criticized for its leverage in creating political goodwill, massive debt and a way to spread Beijing's influence. The U.S. committed $200B in grants, federal funds and private investment to the project over the next five years, and intends to mobilize $600B from the entire G7 by 2027.

"I want to be clear. This isn't aid or charity. It's an investment that will deliver returns for everyone, including the American people and the people of all our nations," Biden declared at the summit. "It will boost all of our economies and let communities from around the world see the concrete benefits of partnering with democracies." Among the areas that will be targeted include "health, digital connectivity, gender equality, and climate and energy security."

Response from China: "China continues to welcome all initiatives to promote global infrastructure development," Foreign Ministry spokesman Zhao Lijian replied when asked for comment. "We believe that there is no question that various related initiatives will replace each other, [but] we are opposed to pushing forward geopolitical calculations under the pretext of infrastructure construction or smearing the Belt and Road Initiative." (20 comments)

Today's Markets

In Asia, Japan +1.4%. Hong Kong +2.4%. China +0.9%. India +0.8%.
In Europe, at midday, London +0.6%. Paris +0.1%. Frankfurt +0.8%.
Futures at 6:20, Dow +0.3%. S&P +0.4%. Nasdaq +0.6%. Crude +0.1% to $107.77. Gold +0.6% to $1840.80. Bitcoin +0.1% to $21,454.
Ten-year Treasury Yield +5 bps to 3.17%

Today's Economic Calendar

8:30 Durable Goods
10:00 Pending Home Sales
10:30 Dallas Fed Manufacturing Survey
11:30 Results of $46B, 2-Year FRN Auction
1:00 PM Results of $47B, 5-Year Note Auction

Companies reporting earnings today »

What else is happening...

At the weekend: 'Elvis' (WBD) and 'Top Gun' (PARA) tie for box-office crown.

Federal appeals court puts hold on FDA's Juul (MO) ban - Reuters.

Monkeypox is not an international health emergency yet – WHO.

Frontier (ULCC) sweetens offer for Spirit (SAVE) ahead of shareholder vote.

Airbus (OTCPK:EADSY) on verge of $5.5B order from India's Jet Airways.

Chevron (CVX) to downsize in California, move some workers to Texas.

Goldman (GS) aims to raise $2B to buy Celsius's distressed crypto assets.

Federal gas tax holiday slammed by criticism on all sides.

U.S. keeps top credit rating at Moody's; outlook stays at stable.

Could the shift to remote work ease pressure on inflation?

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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