Attorney General William Barr will appear before the House of Representatives appropriations subcommittee on Tuesday for the first time since special counsel Robert Mueller submitted his Russia report surrounding the 2016 US election, reports Reuters.
While the session is intended to explore the Trump administration’s $29 billion Justice Department fiscal 2020 budget request, Barr will undoubtedly face questions about the Mueller report and when Congress might expect to see a redacted version.
Barr has been working with Mueller to redact sensitive portions of the report, including grand-jury information following a ruling last week at the US Court of Appeals for the DC Circuit. He has indicated that it will be ready by mid-April, in just a few days.
Mueller turned his confidential report over to Barr on March 22 following a 22-month-long probe into whether Donald Trump may have colluded with Russia during his 2016 presidential campaign and whether Trump later obstructed inquiries into the matter.
On March 24, Barr released a four-page letter to Congress laying out what he said were Mueller’s main findings. Barr is expected to submit a redacted copy of the full report to the public and Congress by mid-April, or even sooner. –Reuters
Democrats are using the redactions to suggest that Barr and the Trump administration are holding back vital information which they hope might deliver the impeachment they’ve sought for more than two years, despite Mueller’s findings of no collusion – and AG Barr and Deputy AG Rod Rosenstein determining that Trump did not obstruct the probe.
On Monday, Rep. Doug Collins – the top Republican on the Democrat-controlled House Judiciary Committee, wrote a scathing letter to the panel’s chairman, Rep. Jerry Nadler (D-NY) accusing him of putting Attorney General William Barr in an “untenable but politically convenient situation.” Barr would be forced to “break the law” if he provides an unredacted report – and he doesn’t, Nadler will “label him as part of a cover-up.”
According to Barr’s written testimony, the Attorney General will focus Tuesday’s discussion on issues including immigration enforcement, the opioid epidemic and combating violent crime.
He is scheduled for a Wednesday appearance in front of a Senate appropriations panel.
via ZeroHedge News http://bit.ly/2UpLw1j Tyler Durden
If you have been on social media lately, you have probably seen Strange Planet, a four-panel cartoon strip by artist and author Nathan W. Pyle. The cartoons depict aliens doing mundane tasks and describing them in overly literal terms that make them sound ridiculous: A Valentine’s Day card, for instance, is a picture of “a vital organ being wounded.”
Funny stuff, right? Well, not anymore. Strange Planet is, as the kids say, #canceled.
On Monday, Nylon—an online fashion magazine that reads like it’s staffed entirely by 13-year-olds—signal-boosted a shocking discovery: Pyle is pro-life. He even had the nerve to share this opinion semi-publicly. Once, in 2017, he made a comment on his personal Instagram about how proud he was of his girlfriend and “all the courageous mothers” who attended the March for Life.
Nylon‘s intrepid reporter notes that we all should have seen this coming. “It’s clear that we shouldn’t have been surprised that he has such conservative views,” she writes. “The first line in his bio is ‘I follow Jesus,’ which should clue you in about his religious leanings.”
The subhed of the article: “We should be more careful with what we’re sharing,” as if re-posting a Pyle cartoon is akin to juggling knives.
I have complained many times previously about the pernicious tendency in certain hyper-woke circles to gang up on anybody who expresses the slightest dissent from leftist orthodoxy. Here, I’ll simply close by noting that Pyle’s alleged pro-life views are not exactly a fringe position.
Following Christine Lagarde’s warnings last week, The IMF has officially cut its outlook for global growth to the lowest since the financial crisis amid a worsening outlook in most major advanced economies and signs that higher tariffs are weighing on trade.
“Following a broad-based upswing in cyclical growth that lasted nearly two years, the global economic expansion decelerated in the second half of 2018,” the International Monetary Fund says in its latest World Economic Outlook.
“Activity softened amid an increase in trade tensions and tariff hikes between the United States and China, a decline in business confidence, a tightening of financial conditions, and higher policy uncertainty across many economies”
In its latest World Economic Outlook, the IMF forecasts that the world economy will grow 3.3% this year, down from the 3.5% the IMF had forecast for 2019 in January:
This is the third time the IMF has downgraded its outlook in six months.
IMF says risks skewed to downside, citing trade tensions, softness in Europe, no-deal Brexit
IMF lowers 2019 U.S. growth estimate to 2.3% vs 2.5% estimate in January
IMF cuts euro-area growth forecast to 1.3% this year from 1.6%
IMF raises China 2019 economic growth forecast by 0.1 percentage point to 6.3%
IMF lowers 2019 trade volume growth est. to 3.4% vs 4% in January
Every single country’s growth outlook was cut… except Nigeria!
Of course, it would not be a globalist report without some hope and the fund suggests global economic growth will recover in the second half of this year, before plateauing at 3.6% from next year
However, the IMF is warning that risks are skewed to the downside, with a range of threats menacing the global economy, including the possible collapse of negotiations between the U.S. and China to end their trade war, and the departure of Britain from the European Union without a transition agreement, known as the “no-deal” Brexit scenario.
“Amid waning global growth momentum and limited policy space to combat downturns, avoiding policy missteps that could harm economic activity needs to be the main priority,” the IMF said.
IMF Managing Director Christine Lagarde warned the world economy faces a “delicate moment” as finance ministers and central bankers prepare to gather in the U.S. capital this week for the spring meetings of the IMF and World Bank.
via ZeroHedge News http://bit.ly/2D4XSRP Tyler Durden
It begins: unprecedented tit-for-tat formal “terror” designations exchanged between Washington and Tehran on Monday could soon enter a hot war on the ground. A mere hours after President Trump formally designated Iran’s Islamic Revolutionary Guards Corps (IRGC) as a terrorist organization on Monday, Iran’s foreign ministry responded in kind by immediately putting forward a bill placing the US Central Command (CENTCOM) on a list of organizations designated as terrorists, akin to ISIS.
This means each side has given its armed forces authorization to target the other as part of “war on terror” operations. And already on Tuesday an IRGC commander has put the US Navy in the Persian Gulf on notice, warning it not to come anywhere near Revolutionary Guards speed boats. Specifically, according to Iran’s ISNA news agency, Tehran has warned that America’s aircraft carrier currently deployed to the gulf, the USS John C. Stennis, should not come anywhere near IRGC boats.
An Iranian Revolutionary Guard commander warned the U.S. Navy to keep its warships at a distance from Revolutionary Guards speed boats in Gulf waters, a day after the United States designated the Guards as a terrorist organisation.
“Mr Trump, tell your warships not to pass near the Revolutionary Guards boats,” ISNA news agency reported a tweet from Mohsen Rezaei as saying.
Over the past years there’s been a number of intercept incidents in the Persian Gulf carried out by each side — none of them escalating to the point of serious exchange of fire.
The last major international incident was the January 2016 crisis wherein two US Navy Riverine Command boats cruising from Kuwait to Bahrain strayed into Iranian territorial waters, resulting in the combined of crew of nine men and one woman being taken into Iranian detention. The crew was released 15 hours later, but to the great embarrassment of Washington, for which four of the sailors were later punished.
USS John C. Stennis, currently operating in the Persian Gulf area. Image source: US Navy
In total the IRGC is actually has millions of members, while the more elite “foreign and clandestine” arm, the Quds force, estimated to be at anywhere between 10,000 and 20,000 members. The Quds Force is known to report directly to the Supreme Leader of Iran, Ayatollah Khamenei.
Further on Tuesday, the IRGC stated that US pressures based on the latest official terror designation will only “increase the Guards’ defense and offensive power,” according to state media.
All of this turns the Persian Gulf area into a huge potential flash point for a major incident, especially considering Iranian military commanders have over the past year repeatedly threatened to close the vital Strait of Hormuz water way in the gulf, a key strategic oil transit point.
via ZeroHedge News http://bit.ly/2OYpcGm Tyler Durden
Europe’s Stoxx 600 turned negative on Tuesday after Bloomberg published a document showing the Italian government’s projected budget deficit for 2019 is even larger than the Italian Treasury had suggested last week, putting Italy’s populist leaders on the path to anotheer destabilizing showdown with Brussels.
Italy is now projecting a budget deficit equivalent to 2.5% of GDP, larger than the 2.3%-2.4% from projections released last week, and nearly 50 basis points above the agreed-upon 2.04% target from a peace accord with Brussels reached late last year. The leaked document, cited by Bloomberg, affirmed that the government anticipates GDP growth to slide to just 0.1%, down from 1% in prior forecasts.
Italian bond yields climbed on the headline…
…while Italian stocks dragged the broader European market lower.
We now await a reaction from Brussels, which we imagine will have something to say given that the Italian government has now been exposed for lying to the European Commission.
via ZeroHedge News http://bit.ly/2uUDlej Tyler Durden
Elijah Shaw came to Nashville in the 1990s to study music. At first, that meant spending a lot of time on the road. “The first decade of my career, [I was] traveling all over the place and interacting with major record labels and sort of going where ever work would take me,” he says.
Eventually, Shaw built The Toy Box, a soundproofed home studio located in his detached garage. Being able to work at home, he says, allowed him the opportunity to raise his daughter while still tapping into one of the world’s best music scenes, bringing stability to an unpredictable business.
“Nashville is one of the few places remaining in the world where some of the very best musicians get together face to face to make music,” says Shaw, who has worked with recording artists ranging from Jack White to Wilco to Adele. “That’s why I wanted to be here and why I wanted to create a home studio.”
But for the last four years, the city of Nashville has been trying to shut that studio down.
In August 2015, Shaw received a letter from the Department of Codes and Building Inspection informing him that his studio was an unpermitted home business and was therefore illegal. Shaw was given two weeks to cease and desist his recording operations or else face daily fines of $50 and potentially be taken to court.
“My heart just dropped completely,” Shaw says. “For the next week I couldn’t even sleep, like what am I going to do? This is my entire life, this is my everything.”
After the letter came a phone call from a code enforcement officer, followed by a home inspection, and then a mounting series of demands from officials. Shaw was told to remove recording equipment from his house, strip his prices and address off his business’ website, and take videos of his studio recordings off his YouTube channel. Failure to comply would mean fines and possibly even jail time.
Shaw had violated of an obscure provision in Nashville’s zoning code that bans home businesses from serving clients on site. The code effectively outlaws his studio and thousands of others like it in a city made famous for its music. As written, it may even prevent home studio owners from inviting fellow musicians into their homes.
He and another local entrepreneur are now suing the city with the help of a libertarian law firm, the Institute for Justice. Their suit claims that Nashville’s home business ban is an unconstitutional restriction on the right to earn a living. More than that, the suit is an attempt to protect Nashville’s storied music scene from outdated zoning codes that segregate cities into commercial and residential categories while criminalizing the sort of creative spontaneity from which great music is born.
Could it be that you are getting a better deal from big technology companies than you realize? George Mason University economist Tyler Cowen thinks so, and he has penned a new book to convince you that you should love big businesses as much as he does.
It’s called Big Business: A Love Letter to An American Anti-Hero, and it indeed sings the praises of today’s bêtes noires. In true Cowenesque fashion, the book starts out with a markedly contrarian premise that by the last page seems so evident that you wonder why it first felt outlandish at all. Even the most dogged big business critic may feel just a little tenderer towards today’s titans by the end (whether they want to admit it or not).
The simple fact is this: most of what we love and need—”ships, trains and cars; electricity, lighting, and heating; most of our food supply; most of our lifesaving pharmaceuticals; clothes for our children; telephones and smartphones; the books we love to read; the ability to access the world’s information”—comes from businesses, and usually big businesses at that. Andrea O’Sullivan (who works for Cowen at the Mercatus Center) explains the book’s thesis.
Quadriga’s bankruptcy was reportedly approved today by Nova Scotia Supreme Court Justice Michael Wood, and follows the court monitor Ernst & Young’s (EY) recommendation that it should be declared bankrupt earlier this month.
EY’s legal team then argued that the ongoing restructuring process for QuadrigaCX under the Companies’ Creditors Arrangement Act (CCAA) should shift to an alternative process under the Bankruptcy and Insolvency Act (BIA).
The ruling now grants EY enhanced investigative powers as a trustee under the BIA, which means the company can require production of documents and testimony from witnesses.
Today, Wood also granted a so-called asset preservation order from EY, which extends to all assets held by Jennifer Robertson – the wife of Quadriga’s late co-founder Gerald Cotten – and the Cotten estate. The order prohibits Robertson from selling, removing and transferring any assets.
As previously reported, Quadriga filed for creditor protection when – following Cotten’s death – it lost access to its cold wallets and corresponding keys, that ostensibly held the assets owed to various clients. Currently, the exchange reportedly owes more than $195 million to over 115,000 customers.
In late March, Quadriga’s legal representatives – law firms Miller Thomson and Cox & Palmer – formed an Official Committee of Affected Users of the exchange. The committee is set to help the law firms represent all affected users in the court proceedings against QuadrigaCX.
via ZeroHedge News http://bit.ly/2I9BWZW Tyler Durden
Offering yet another lesson in how raising the minimum wage can destroy jobs, particularly for the most poorly compensated workers whom activists had intended to help, the Wall Street Journal reported on Tuesday that Wal-Mart is deploying robots to carry out mundane tasks like mopping its floors and tracking inventory as it seeks to cut down on labor costs after raising wages last year, while also expanding into new services like grocery delivery.
Wal-Mart, which is the largest employer in the US, said at least 300 stores will introduce machines that scan shelves for out-of-stock products. Meanwhile, so-called “autonomous floor scrubbers” will be deployed in 1,500 stores, and conveyor belts that automatically scan and sort products as they are loaded off of trucks will more than double to 1,200. Another 900 stores will install 16-foot-high towers that will allow customers to pick up their online grocery orders without interacting with humans.
One of Wal-Mart’s automated shelf scanners
Of course, Wal-Mart tried to portray the robots not as job killing machines, but as tools to help free up employees to do other things like pack groceries for its delivery service. But since grocery delivery is still a business in search of a sustainable business model, as WSJ pointed out last month, these tasks will likely soon be automated, too.
The company said the addition of a single machine can cut a few hours a day of work previously done by a human, or allow Walmart to allocate fewer people to complete a task, a large saving when spread around 4,600 U.S. stores. Executives said they are focused on giving workers more time to do other tasks, and on hiring in growing areas like e-commerce.
Instead, Walmart is spending to battle Amazon.com Inc. and serve more shoppers buying online. Walmart has hired around 40,000 store workers to pick groceries from shelves to fulfill online orders. The company is also raising wages, adding worker training, and buying e-commerce startups.
Store workers spend two to three hours a day driving a floor scrubber through a store using the manual machines, said a company spokesman last year. The automatic conveyor belts cut the number of workers needed to unload trucks by half, from around eight to four workers, said executives at a company presentation last June.
“With automation we are able to take away some of the tasks that associates don’t enjoy doing,” said Mark Propes, senior director of central operations for Walmart US. “At the same time we continue to open up new jobs in other things in the store.”
Brain Co., which makes the software that powers Wal-Mart’s floor scrubbers, described a workplace where machines and humans would work in harmony as “operational partners.” And in a tight labor market, it’s difficult for employers to fill some of these low wage positions.
“It’s very hard for employers to get the workforce they need,” Mr. Duffy said. “None of the customers we’re working with are using our machines to reduce their labor costs; they’re using them to allow their teams, their janitorial teams, to perform higher-value tasks.”
Retailers and other companies that hire large numbers of low-skilled hourly workers are increasingly looking to automation as they face higher labor costs and aim to improve retention amid the lowest unemployment in decades. Target Corp. added machines to count cash to backrooms of stores last year, following a similar move by Walmart.
Last week Target said it has raised starting wages for store workers to $13 an hour and has previously said it will raise starting wages to $15 next year. Last month, Costco WholesaleCorp. raised starting wages for U.S. and Canadian store workers to $15. Amazon did the same for U.S. workers last year.
Walmart raised starting wages for store workers to $11 last year. Executives said at a recent investor conference that Walmart is keeping wages competitive by store and market.
Now if they could only teach the robots to hand out stickers and greet customers at the door…
via ZeroHedge News http://bit.ly/2D5wwey Tyler Durden
The global equity rally stumbled for the second day, and risked running out of steam ahead of Wednesday’s action-packed event bonanza, even as Asian and European shares gained while US equity futures pared losses as investors appeared to shrug off threats from President Trump for new tariffs on goods produced in the EU in retaliation for Airbus subsidies. Treasuries were unchanged, as the dollar drifted lower.
Amid a generally muted tone, Asia rose to an 8-month high overnight with European shares initially opening flat after the office of the U.S. Trade Representative sent its proposals to the World Trade Organisation, saying the EU had provided $11 billion worth subsidies to Airbus; however the Stoxx Europe 600 inched higher in morning trade, up 0.1%, with the banking sector rising before the ECB meeting Wednesday, overshadowing losses in the tech sector, led lower by SAP.
In notable moves, SAP fell 2.5% after being downgraded to hold from buy at HSBC, cut to neutral from buy at UBS ahead of the software company’s 1Q results later this month. Airbus shares dropped as much as 2.5 percent in early deals, with many of its key suppliers lost between 0.7 percent and 1.2 percent, though much of the early losses were then recovered.
While most Asian markets were higher, Chinese stocks dipped modestly, down 0.2%, but it was the ongoing surge in Chinese 10-year sovereign yields that continues to grab attention, with the paper rising another 4bps to 3.294%, the highest level of the year following a torrid surge last week, when yields jumped 19bps, the most since November 2013.
Aberdeen Standard Investment’s head of global multi-asset strategy, Andrew Milligan, told Reuters that “signals like this just remind people… that the strategic rivalry between the U.S. and other countries is serious and is not going to go away.”
Ahead of “Super Wednesday”, the other focus was set to be the International Monetary Fund’s half-yearly forecasts, which will reinforce the message that the global economy continues to slow down for a variety of reasons, which in turn will likely push stocks even higher. According to Reuters, the Fund is expected to make quite a sizable cut to its growth number and Germany’s benchmark 10-year bond yield stayed just below zero percent on bets interest rates are set to stay extremely low globally.
Finally, the reason why markets may be subdued today is because all hell is set to break loose tomorrow when the EU emergency Brexit summit, ECB meeting, US CPI report and FOMC minutes all take place.
In currencies, Sterling was largely unchanged, after earlier jumping on speculation Germany would accept a 5-year time limit on the Irish backstop; the jump quickly fizzled after a German government spokesman denied the report. Additionally, Prime Minister Theresa May is set to meet Germany’s Angela Merkel and France’s Emmanuel Macron to ask for another Brexit delay. Elsewhere, the The Australian and Canadian dollars and Norwegian crown and Russian rouble also rose as a surge in oil prices to five-month highs lifted most other commodity-linked currencies too, as the dollar continued its 2-day slide.
In commodities, Brent rose as high as $71.34 a barrel, the highest since November, while WTI crude also hit a November 2018 high of $64.77 and was up 22 cents at $64.62. Oil prices are up more than 40 percent this year, jumping on expectations that global supplies will tighten due to fighting in Libya, OPEC-led cuts and U.S. sanctions against Iran and Venezuela.
Levi Strauss is due to release earnings after its IPO last month. Economic data include JOLTS job openings, small business optimism.
Market Snapshot
S&P 500 futures down 0.1% to 2,894.75
STOXX Europe 600 up 0.09% to 387.85
MXAP up 0.3% to 163.34
MXAPJ up 0.4% to 543.47
Nikkei up 0.2% to 21,802.59
Topix down 0.09% to 1,618.76
Hang Seng Index up 0.3% to 30,157.49
Shanghai Composite down 0.2% to 3,239.66
Sensex up 0.3% to 38,800.85
Australia S&P/ASX 200 up 0.01% to 6,221.82
Kospi up 0.1% to 2,213.56
German 10Y yield fell 0.9 bps to -0.002%
Euro up 0.08% to $1.1272
Brent Futures up 0.2% to $71.26/bbl
Italian 10Y yield rose 0.8 bps to 2.132%
Spanish 10Y yield fell 0.6 bps to 1.081%
Brent Futures up 0.2% to $71.26/bbl
Gold spot up 0.3% to $1,301.75
U.S. Dollar Index down 0.1% to 96.95
Top Overnight News from RanSquawk
The EU is preparing retaliatory tariffs against the U.S. over subsidies to Boeing, significantly escalating transatlantic trade tensions hours after Washington vowed to hit the EU with duties over its support for Airbus SE. Trump’s administration on Monday said it would impose tariffs on $11 billion in imports from the EU because of the European aid
The EU and China managed to agree on a joint statement for Tuesday’s summit in Brussels, papering over divisions on trade in a bid to present a common front to Trump, EU officials said
The slump in the Chinese car market showed no signs of easing, with retail sales of sedans, sport utility vehicles, minivans and multipurpose vehicles dropping 12 percent to 1.78 million units in March, the China Passenger Car Association said Tuesday. That follows an 18.5 percent drop in February and 4 percent decline in January
Turkey’s ruling party will demand a rerun of last month’s local election for the mayor’s seat in Istanbul after tallies showed it lost the vote, according to Recep Ozel, a ruling party official assigned to the election board. The election looked like it had stripped the city from President Recep Tayyip Erdogan and parties affiliated to him for the first time in 25 years
Societe Generale SA said it plans to cut about 1,600 jobs after a slump in trading revenue pushed Chief Executive Officer Frederic Oudea to intensify efforts to boost profit at the investment-banking unit
Asian equity markets eventually turned mostly positive on what was a predominantly cautious session following a mixed performance on Wall St amid tentativeness ahead of upcoming earnings season and this week’s central bank activity including FOMC Minutes and ECB policy meeting. ASX 200 (U/C) and Nikkei 225 (+0.2%) were indecisive but with losses in Australia stemmed by strength in the energy sector as the escalating conflict in Libya lifted oil prices, while Tokyo sentiment mirrored a choppy currency. However, the region was not without its success stories as Crown Resorts surged over 20% after it announced it was in discussions regarding a takeover approach by Wynn Resorts and with Sony higher by more than 7% on news Third Point was building an activist stake in the Co. and called for a review on ownership of several divisions. Hang Seng (+0.3%) and Shanghai Comp. (+0.1%) were also tepid amid a lack of any firm drivers and as trade-related news quietened down, while the PBoC also continued to refrain from open market operations. Finally, 10yr JGBs were lacklustre amid an indecisive risk tone and as participants awaited a 5yr auction, as well as Saudi Aramco’s USD 10bln bond offering which was more than 7x oversubscribed. Prices later recovered off their lows as the 5yr JGB auction later proved to better than previous with an improvement seen across most metrics including a higher b/c and accepted prices.
Top Asian News
China Investor Loves This Tiny Maker of Floating Flamingos
Malaysia’s Felda Is Said to Seek $1.5 Billion Government Rescue
Japan to Cut Japan Post Stake to >1/3 in Sale This Year: Nikkei
Tumbling China Bonds May Soon Look Good to Foreign Investors
Choppy trade for European equities thus far [EuroStoxx 50 +0.2%] following a cautious Asia-Pac session where China was tepid amid the lack of any firm drivers ahead of tomorrow’s risk-packed session. Analysts at HSBC believe that the Chinese economy has bottomed, and growth will pick-up in the coming months as the private sector feels the effects from corporate tax cuts. Over in Europe, stocks nursed some of the losses seen at the open after jitters from the US’ release of prelim tariffs on USD 11bln of EU products [Full list available on the headline feed] somewhat waned after sources noted that the legal actions taken against Airbus (-1.5%) subsidies are “greatly exaggerated”, and the EU remains open to dialogue with the US. Furthermore, upside in equities was initially exacerbated amid reports that German Chancellor Merkel is reportedly willing to put a 5yr time limit on the Northern Irish backstop, although equities shed some gains after this was dismissed, but remain in positive territory. Sectors are relatively mixed with no clear outperformer or laggard. In terms of individual stocks, Swiss heavyweight Novartis’ (-9.8% unadj.) Alcon unit (+5.2%) began its first trading day on the front foot and opened above the CHF 46.50-53.50 indicative range at CHF 55.00. Elsewhere, SAP (-2.1%) fell to the foot of the DAX in light of downgrades at HSBC and UBS. Finally, Italy’s Prysmian (-3.9%) extended on losses seen at the open following further failed commission tests.
Top European News
U.K. Minister Sees ‘Common Ground’ With Labour: Brexit Update
Debenhams Lenders Poised for Control as Ashley Falls Short
Telenor Takes on Telia in Nordics With $1.7 Billion DNA Deal
Porsche Bets on 911 Demand to Rally Sales to Record After 1Q Dip
In currencies, Sterling leapt towards the top of the G10 table amidst reports that German Chancellor Merkel may be open to a fixed backstop timeframe (5 years touted), which could appease some of those unwilling to back the WA, according to a Brexiteer. Cable cleared the 55 DMA (1.3096) and 1.3100 handle on its way to 1.3121 in response, while Eur/Gbp retreated to 0.8595 from 0.8627 at one stage before a denial by the German Government. Looking ahead, UK PM May’s is in Berlin to see her German counterpart and has a subsequent meeting with French President Macron before Wednesday’s emergency EU Summit. Meanwhile, talks between Tory Cabinet members and the Labour party are ongoing to try and strike a deal, and interim updates remain mixed.
AUD/NZD – The Aussie has extended gains to 0.7150 vs its US counterpart and 1.0600 against the Kiwi as commodities continue to rally and overnight data in the form of housing finance confounded expectations to the upside. Aud/Usd is now looking at bullish chart levels including the 100 DMA and a 50% Fib at 0.7142 and 0.7149 respectively to maintain momentum on a closing basis, with decent if not insurmountable option expiries between 0.7150-55 (circa 770 mn) also on the radar. Meanwhile, Nzd/Usd is trying to tag along and trying to breach 0.6750 ahead of offers said to be sitting at 0.6760.
JPY – Usd/Jpy has drifted down within a 111.57-24 range and into a relatively heavy expiry zone, as 1.8 bn runs off from 111.20-25 vs 1.7 bn at 111.35-40, with the Yen seeing some safe-haven demand due to renewed US/EU tit-for-tat tariff posturing. Chart-wise, 111.25 also represents the 10 DMA, while resistance ahead of the 112.00 big figure comes via a daily formation around 110.78.
EUR – The single currency has consolidated yesterday’s clearance of 1.1250 vs the Dollar and is eyeing 1.1280 as the DXY slips a bit further below 97.000 to test support at 96.806 amidst broad declines in Usd/major pairings. However, a thick cluster of option expiries may drag Eur/Usd back down given 5.8 bn rolling off between 1.1245-75, not to mention a further 3.1 bn lower down.
CAD/NOK – Both benefiting from the ongoing strength in oil prices, and the latter to the extent that a knee-jerk spike in Eur/Nok in wake of weak Norwegian GDP data has already been reversed, with the cross currently straddling 9.6200 vs a high just shy of 9.6500. Meanwhile, the Loonie is pivoting 1.3300 vs its US counterpart and just eclipsed its previous April high.
EM – More thrills and spills for the Lira, as an initial rebound made on a reduced recount in Istanbul was thwarted by another rejection of the electoral board’s decision by the AKP that is insisting on a full election rerun. Usd/Try back up near 5.6700 vs 5.6425 and 5.6949 at the extremes.
In commodities, another day of gains in the energy complex with WTI and Brent futures trading in proximity to USD 64.50/bbl and USD 71.00/bbl respectively; although the complex is trading towards the bottom of the days range. Developments in Libya remain a key factor in the upside seen recently with analysts at TD noting that “military tensions in Tripoli, Iranian sanctions and difficulties in Venezuela may cause deficits as OPEC+ is reducing supply and US shale activity is flattening — USD 68/bbl WTI in the cards”. That said, analysts at Goldman Sachs, due to lower projected inventories, expect further backwardation and modest upside in oil prices whilst forecasting the WTI/Brent spread to tighten to USD 4.50/bbl from Q4 2019 onwards. GS also raised its Q2 2019 Brent forecast to USD 72.50/bbl (Prev. USD 65.00/bbl) and maintained its USD 60.00/bbl 2020 forecast. Meanwhile, Russian Energy Minister Novak stated that there is no need to extend the OPEC+ output deal if the market is forecast to be balanced by H2, which his Saudi counterpart previously said was only 70-80mln barrel away. Elsewhere, metals are benefitting from the recent pullback in the Buck, with gold also profiting from recent flows into the yellow metal ahead of tomorrow’s risk-filled day. Copper gained amid continued strength in Chinese commodity prices in which Dalian iron ore futures gained for a 7th consecutive session amid tightening supply. Finally, Platinum caught a bid as markets speculate the impact of labour strikes in South Africa, which saw the metal break through key resistance levels whilst also triggering CTA short covering, according to TD.
US Event Calendar
6am: NFIB Small Business Optimism, est. 102, prior 101.7
10am: JOLTS Job Openings, est. 7,550, prior 7,581
DB’s Jim reid concludes the overnight wrap
I know that all parents think their children are special and highly gifted but I have to tell you that I genuinely think that one of my twins – 19 month old Jamie – is showing serious skills that already could mark him down as a future professional footballer. I’ve asked a few people who have seen him perform and they agree that they’ve never seen someone so proficient at his age. Yes, Jamie is going through a phase at the moment that whenever he doesn’t get his own way he launches into the most theatrical dive and bursts into tears. He then rolls about all over the floor and demands action. At times I swear he’s waving an imaginary card at the referee (usually mum). All that’s left is to try to teach him how to kick a ball and the family can retire off his 2035 Premier League contract. On that good luck to all those fans of teams in the Champions League quarter-finals over the next couple of evenings… unless of course you are a Porto fan where I instead wish you all the bad luck in the world (but please still vote for us in II).
In footballing terms if tomorrow is the Champions League of bumper days for markets, yesterday was like watching a lethargic pub team training session as Easter holidays seemed to have started in earnest. News flow has livened up overnight though as the US Trade Representative office has released a list of EU goods which will be subjected to additional tariffs if the EU continues to provide subsidies to Airbus. In the accompanying statement, the USTR office cited the WTO’s finding that the aid to Airbus has “repeatedly” caused “adverse effects to the United States.” The threatened tariffs are on some $11bn of imports from the EU and will be implemented only after the WTO give the final go-ahead this summer. The Trump administration hasn’t always trusted the WTO on these matters so its interesting that they are here. Proposed items in the list include new passenger helicopters, various cheeses and wines, ski-suits and certain motorcycles. This news might also remind investors that the US report on the national security risk of auto imports was delivered back in February without any official response yet. Having said that the US first complained to the WTO about Airbus subsidies 15 years ago so this has been a long running dispute.
Despite the tariff threat, markets are eking out modest gains overnight with the Hang Seng (+0.31%), Shanghai Comp (+0.14%) and Kospi (+0.11%) all up after erasing early losses while the Nikkei (+0.02%) is trading flattish. Elsewhere, futures on the S&P 500 are trading flat (-0.08%).
Before this the S&P 500 spent most of yesterday in the red, but clawed back during the New York afternoon (+0.10%) to extend its winning streak to eight consecutive days. That’s the longest stretch since October 2017. The NASDAQ also squeaked out a positive day (+0.19%) while the DOW (-0.32%) limped to a small loss, suffering from another drop for Boeing (-4.44%). Prior to this, the STOXX 600 (-0.19%) closed lower with all but three sectors in the red, while the story in bond markets was a slight tick up in Treasury yields (10y +2.3bps) and the 2s10s curve back up +0.7bps to 15.9bps. It’s worth noting that ever since the curve went below 20bps in December last year it’s traded in just a 10bp range. Meanwhile in commodities, WTI oil rose +2.16% following the Libya conflict news over the weekend, putting it at the highest since October 31st. The main story in EM was further weakening for the Turkish Lira (-1.14%) after President Erdogan suggested that there were “widespread irregularities” in the local elections. Other emerging markets performed well, with the Russian ruble (+0.72%) and Mexican peso (+0.52%) gaining alongside the advance in oil prices.
As for the daily Brexit update, Mrs May is travelling to see Mrs Merkel and Mr Macron today ahead of tomorrow’s summit that will decide on the UK extension request. So expect headlines from these meetings. Yesterday saw Labour receive an updated offer from the government as part of the ongoing Brexit negotiations. Supposedly there are still ongoing discussions about whether it will include a clear offer of moving to a customs union. The BBC’s Laura Kuenssberg also suggested that there is anxiety on the Labour side as even primary legislation could still be unpicked by the next Tory leader. This means that even if both sides can reach an agreement on a customs union it’s not entirely clear that they’ll be able to deliver a deal politically. It’s worth recapping that our house view base case is for no agreement between Labour and the Tories this week, but indicative votes going forward instead of a compromise solution. Later last night, the House of Lords passed its version of the bill to prevent a no-deal Brexit, though the issue has been a bit overtaken by events since PM May has already promised not to allow a no-deal outcome and is committed to following Parliament’s decision. Sterling floated between gains and losses during the European session before rallying +0.21% during the US session and overnight it has strengthened +0.14%.
As mentioned at the top this week should really kick into gear from tomorrow with a main course of the ECB meeting, the emergency EU Council meeting to discuss the Brexit extension, the FOMC minutes and US CPI data all on the cards. However we’ve got a couple of appetisers to look forward to today with the World Bank/IMF Spring Meetings kicking off, as well as the latest Euro Area bank lending survey covering Q1. A reminder that the survey for Q4 had a much softer tone. The net percentage of banks reporting tightening standards to enterprises was closer to even with -1 in Q4 compared to -6 in Q3. Demand for loans also continued its slowing trend from recent quarters with the net balance to enterprises falling to +9 versus +12 in Q3. It was a similar story for housing loans although demand for the latter did pick up. At a country level the softness was mostly reserved for Italy and Spain. Notably the outlook for Q1 also implied further moderation. So worth keeping an eye on today’s survey to see whether or not there are pockets of improvements. Given the only recent China rebound it might be too early to expect too much.
While we’re on the ECB there was a Bloomberg story doing the rounds yesterday which suggested that Committee members “are said not to have discussed tiering options” since Draghi’s comments towards the end of last month. There was a slight knee jerk reaction for European Banks post that headline however the story didn’t really seem to gather much momentum thereafter. European Banks did however still close down -0.72% while Bunds ended broadly flat and a notch above 0% at 0.007%.
In other news, there wasn’t much to write (or WhatsApp) home about from the data yesterday. In the US February factory orders were confirmed as declining -0.5% mom, matching consensus expectations. Core capex orders were also unrevised at -0.1% mom. Prior to this, in Europe the Sentix investor confidence reading for the Euro Area improved slightly to -0.3 (from -2.2) while February export data in Germany was weaker than expected at -1.3% mom (vs. -0.5% expected).
Finally to the day ahead, which is notably sparse for data releases with nothing due in Europe and only the March NFIB small business optimism print and February JOLTS report due out in the US. Away from that the Fed’s Clarida is set to speak at a “Fed Listens” event in Minneapolis late tonight, while as mentioned above the annual Spring Meetings of the World Bank and IMF begin today, and at some stage we’re expecting to get an update of the IMF’s World Economic Outlook. So expect headlines there. As discussed earlier, we’ll also get the Euro Area bank lending survey today.
via ZeroHedge News http://bit.ly/2G3ufRw Tyler Durden
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