Wednesday Morning Reads, News, Charts

Wednesday Morning Reads, News, Charts










World stocks are set to end the month of May with a 2% gain after a calm day in Asia. The Shanghai Composite Index in China finished the day 0.2% higher, while the Nikkei in Japan was down 0.1%. European stocks are mixed, with the Stoxx 600 down 0.08%. There's more action with currencies as the sterling dropped 0.3% after a poll in the U.K. showed the ruling Conservative party could lose a significant number of Parliament seats to the opposition Labour Party. U.S. stock futures are slightly higher into the last trading of the month.


Eurozone flash inflation increased 1.4% in April to fall just short of the consensus estimate for a 1.5% rise. Inflation decelerated from the 1.9% pace seen in April. Core prices rose 0.9% during the month vs. +1.0% expected. Eurozone unemployment fell 10 basis points to 9.3% for April.

Oil traders will be watching supply data pour in later today. The EIA is scheduled to release monthly crude oil and natural gas production numbers at mid-day, to be followed shortly by petroleum supply data for May. The weekly U.S. oil inventory report from the American Petroleum Institute is also due out later in the afternoon. Analysts see oil trading in a narrow band around $50 barring any geopolitical drama. A little further out, Goldman Sachs forecasts Brent oil trading at around $55 at the end of the year and WTI close to $53. WTI crude oil futures -1.8% to $48.77/bbl at last check. Brent crude-1.9% to $50.86/bbl.

China may be pulling off a stable cooling of a hot market, as it posted manufacturing and services numbers that showed steady expansion. Investment in construction and infrastructure played a part in the solid numbers. The country's manufacturing PMI was unchanged from 51.2, marking its 10th straight month of expansion (numbers over 50). Meanwhile, nonmanufacturing PMI rose to 54.5 from the prior month's 54.0.

The Bank of Japan plans to keep its bond buying activity at unchanged levels in June. The central bank is expected to accumulate ¥7.85T of notes next month based on the purchase ranges of various maturity dates. The BOJ lowered its projection for Treasury bill purchases at the end of June to a range of ¥27T-29T.

A barnburner print of close to 4.0% is expected when Q1 Canada GDP is released later today. The economic numbers aren't expected to be strong enough to prompt the Bank of Canada to boost interest rates this year, despite the fast pace of growth in comparison to the U.S. and Europe. "These days, a quarterly pace anywhere near our 4.5 per cent projection is a rarity among developed economies, and would have the last six months advancing at a 3 1/2 per cent rate," observes CIBC Chief Economist Avery Shenfeld.

Fedspeak alert: Dallas Fed President Robert Kaplan is due to participate in some Q&A in New York City this morning, while San Francisco Fed President John Williams is scheduled to talk in Seoul at the Bank of Korea International Conference. The latest Federal Reserve Beige Book report on economic activity will also be circulated later today.


The U.S. military is taking a victory lap after a successful missile defense test involving a simulated attack by an intercontinental ballistic missile. An ICBM-type missile fired from the Kwajalein Atoll in the Marshall Islands toward Alaska was intercepted by a missile fired from Vandenberg Air Force Base in California. Boeing (NYSE:BA) is the prime contractor on the defense system. Raytheon (NYSE:RTN), Orbital ATK (NYSE:OA) and Northrop Grumman (NYSE:NOC) are sub-contractors.

With Rex Tillerson leading the State Department, it's up to new Exxon Mobil (NYSE:XOM) CEO Darren Woods to face the heat today on climate change at the company's annual shareholder meeting in Dallas. Key Exxon shareholders such as BlackRock, Vanguard Group and the California Public Employees' Retirement System are pressuring the company to "stress-test" against warming targets set in the Paris climate agreement. The issue of executive compensation could also be a talking point after proxy firm ISS recommended voting against the company's latest pay package.

Scott Pelley is out as anchor of the CBS Evening News (NYSE:CBS) and will work full-time as a correspondent on 60 Minutes. He had held the anchor chair since taking over for Katie Couric in 2011, but reportedly clashed with CBS News President David Rhodes, and his newscast has been stuck in third place in the ratings behind those at NBC (NASDAQ:CMCSA) and ABC.

A relatively disappointing holiday weekend at the box office still held some promise for Disney (NYSE:DIS) as the studio logged the top two films. Pirates of the Caribbean: Dead Men Tell No Tales debuted at the top spot with $78.5M over the four days, and Guardians of the Galaxy Vol. 2. held its No. 2 spot with $27.2M. With the rollout of its fifth Pirates movie, Disney also pushed past $1B in domestic box office for 2017.

A potential sale of Mallinckrodt's (NYSE:MNK) generic drug business could fetch as much as $2B. The company, which is sharpening its focus on branded offerings, has hired Credit Suisse to advise it in the sales process. Shares of Mallinckrodt are down 30% YTD, but are pointing 2% higher in premarket trading.

Uber has fired VP of technology Anthony Levandowski, who previously worked for Alphabet’s (GOOG, GOOGL) self-driving vehicle program and is now central to a legal battle between his employers. Alphabet has accused Uber (Private:UBER) and Levandowski of stealing trade secrets from its now spun-off Waymo project. Uber fired Levandowski for failing to cooperate with the investigation and for failing to meet an Uber-imposed deadline for turning over documents.

Kelley Blue Book forecasts new car sales in the U.S. will edge up 0.2% in May to 1.525M units. Sales for mid-size SUVs/crossovers are expected to jump 10%, while compact and mid-size car sales are seen dropping. "Retail numbers for May are expected to finish strong, however they continue to be supported by considerable incentives and lease subvention," notes the research firm. General Motors (NYSE:GM) is expected to pick up U.S. market share in May, while Hyundai (OTC:HYMLF) and Fiat Chrysler Automobiles (NYSE:FCAU) are anticipated to lose ground.

The conference season heats up today with several key gatherings. Presenters at the Sanford C. Bernstein Strategic Decisions Conference in New York City include McDonald's (NYSE:MCD), Yum Brands (NYSE:YUM), Campbell Soup (NYSE:CPB) and Kraft Heinz (NASDAQ:KHC), PayPal (NASDAQ:PYPL) and Bank of America (NYSE:BAC). The RBC Consumer & Retail Conference in Boston will see execs with SUPERVALU (NYSE:SVU), Brinker International (NYSE:EAT) and Dollar Tree (NASDAQ:DLTR) talk shop, among others. Watch for guidance updates and comments on strategic adjustments to Trump policies.

Corporate calendar: Noteworthy events today include a shareholder M&A vote for Mead Johnson Nutrition (NYSE:MJN) and annual meetings for Under Armour (NYSE:UAA), Williams-Sonoma (NYSE:WSM), MGM Resorts (NYSE:MGM) and Dollar General (NYSE:DG). The quiet period for Select Energy Services (NYSE:WTTR) also ends today following last month's IPO.

Today's Markets
In Asia, Japan -0.1%. Hong Kong -0.2%. China +0.3%. India -0.1%.
In Europe, at midday, London +0.2%. Paris flat. Frankfurt +0.1%.
Futures at 6:20, Dow flat. S&P +0.1%. Nasdaq +0.1%. Crude -1.8% to $48.77. Gold +0.1% to $1266.40.
Ten-year Treasury Yield +1 bp to 2.22%

Today's Economic Calendar
7:00 MBA Mortgage Applications
8:55 Redbook Chain Store Sales
9:45 Chicago PMI
10:00 Pending Home Sales
2:00 PM Fed's Beige Book
3:00 PM Farm Prices
7:30 PM Fed's Williams Speech

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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