Month: June 2024

With ‘hard’ data plunging in May, it is surprising that S&P Global’s flash survey of Manufacturing sentiment showed an uptick. Today we get the final print, with many asking will it catch down to ISM’s drop.. and will the ISM drop extend…

Sure enough – despite the plunge in real data – S&P Global’s Manufacturing PMI survey showed an even stronger improvement from 50.0 final in April to 50.9 flash for May to 51.3 final for May.

However, ISM’s Manufacturing PMI tumbled further – dropping from 49.2 to 48.7 versus expectations for a small rise to 49.6. This tied the lowest forecast among analysts.

Source: Bloomberg

The ISM survey showed new orders declining at their fastest rate since Dec 2023 and Prices Paid down a smidge but well above the last 18 months levels…

Andrew Harker, Economics Director at S&P Global Market Intelligence, said:

“It was pleasing to see new orders return to growth in May following a blip in April. Although modest, the expansion in new work bodes well for production in the coming months.

In fact, manufacturers cited confidence in the future as a factor contributing to increases in employment, purchasing activity and finished goods stocks.

But…

“Cost pressures continued to build, however, with inflation on that front the strongest in just over a year.

Although output prices rose at a slower pace in May, this is unlikely to be sustainable should cost burdens ramp up further in the months ahead.”

So hard data crashed, inflation expectations surged… not exactly the ‘data-dependence’ that dovsh Fed members are hoping to see.

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The chief judge of the U.S. Court of Appeals for the 11th Circuit has blocked complaints against the judge overseeing one of former President Donald Trump’s criminal cases.

Chief Judge William Pryor Jr., in a newly released order dated May 22, instructed the circuit court’s clerk to stop accepting new complaints against U.S. District Judge Aileen Cannon after the clerk was flooded with complaints.

“Since May 16, 2024, the clerk of the United States Court of Appeals for the Eleventh Circuit has received over 1,000 judicial complaints against Judge Cannon that raise allegations that are substantially similar to the allegations raised in previous complaints,” Judge Pryor, an appointee of former President George W. Bush, wrote in the order. “These complaints appear to be part of an orchestrated campaign.”

Judiciary rules enable each judicial council to act when a series of “many essentially identical complaints” from different people flood into the circuit in which the council is based. The council can instruct the circuit clerk “to accept only a certain number of such complaints for filing and to refuse to accept additional complaints.”

Judge Pryor recommended to the council that it instruct the clerk to stop taking additional complaints against Judge Cannon, and the council adopted the recommendation. Judge Pryor entered the new order on behalf of the council.

Federal law lets people file complaints against federal judges over judicial misconduct, which includes treating litigants “in a demonstrably egregious and hostile manner” and “making inappropriately partisan statements.”

Some activists and others have complained about Judge Cannon’s ruling against special counsel Jack Smith, who is prosecuting President Trump. The rulings have resulted in the trial against the former president being pushed back multiple times.

After Mr. Smith’s team on May 31 asked for an immediate gag order on President Trump, for example, Judge Cannon on June 2 directed President Trump to respond and said the government could issue a reply to that response on or before June 21.

Misconduct can not include the correctness of a judge’s ruling or allegations about delays, “unless the allegation concerns an improper motive in delaying a particular decision or habitual delay in a significant number of unrelated cases,” according to judicial rules.

The order does not apply to four of the complaints lodged against Judge Cannon, according to Judge Pryor. The judge said he reviewed those complaints and dismissed them because they “lack[ed] sufficient evidence to raise an inference that misconduct has occurred.”

Many of the complaints that flooded in are aimed at the rulings or other actions of Judge Cannon in the case against President Trump, which centers on his handling of documents containing sensitive information. President Trump was charged with Espionage Act violations and obstruction in the federal case. He has pleaded not guilty.

“Although many of the complaints allege an improper motive in delaying the case, the allegations are speculative and unsupported by any evidence,” Judge Pryor said. “The complaints also do not establish that Judge Cannon was required to recuse herself from the case because she was appointed by then-President Trump.”

Judge Cannon was appointed by President Trump in 2020. Before that, she served as a federal prosecutor.

The order also does not cover an unspecified set of complaints, which “will be acted upon in due course,” according to Judge Pryor.

Judge Cannon’s orders also remain subject to review from the appeals court, he noted.

District judge orders are commonly appealed, with appeals decided by circuit courts. Appeals of circuit court decisions are taken up by the U.S. Supreme Court.

In 2022, Judge Pryor was part of an appeals court panel that overturned Judge Cannon’s order, which had stopped federal authorities from reviewing documents seized from President Trump’s resort in Florida.

The panel said Judge Cannon issued that order despite having no jurisdiction.

Of all the things Hunter Biden has been accused of, and recorded himself doing, he’ll be in a Delaware courthouse this week on three federal felony gun charges.

Jury selection begins in the case brought against him by special counsel David Weiss, who has charged the First Son with making a false statement during the purchase of a firearm, making a false statement related to information required to be kept by a licensed firearm dealer, and one count of possession of a firearm by a person who is an unlawful user of or addicted to a controlled substance.

According to the indictment, Hunter bought a Colt Cobra revolver Oct. 12, 2018 – during which he “knowingly made a false and fictitious written statement, intended and likely to deceive that dealer with respect to a fact material to the lawfulness of the sale of the firearm … certifying he was not an unlawful user of, and addicted to, any stimulant, narcotic drug, and any other controlled substance, when in fact, as he knew, that statement was false and fictitious.”

Specifically, Hunter answered ‘no’ when asked if he was “an unlawful user of, or addicted to, marijuana or any depressant, stimulant, narcotic drug, or any other controlled substance.”

Eleven days after Hunter bought the gun, his brother’s widow, Hallie Biden, threw it in a dumpster behind a market near a school. An elderly man discovered the items and police later obtained them from him. Authorities placed the items into “an evidence vault” and no charges were brought.

Searches of Mr. Biden’s account, undertaken as federal agents investigated him for tax crimes, uncovered evidence that led to the firearm charges. That included pictures showing drugs and texts relating to how Mr. Biden was using drugs. He later wrote in his memoir that he was addicted to drugs during the period he bought and owned the revolver.

Maximum prison time on all charges could be up to 25 years (we’ll wait for you to catch your breath), and each count carries a maximum fine of $250,000 and three years of unsupervised release.

The trial begins almost a year after Judge Maryellen Noreika blew up a sweetheart plea deal, which would have conveyed broad immunity to Hunter on a wide swath of unrelated potential criminal charges. The deal sought to cap a five-year investigation into Hunter’s tax affairs and business dealings.

After the plea deal unraveled, David Weiss requested and was granted “special counsel” status by Attorney General Merrick Garland.

During the trial, prosecutors will not be allowed to let the jury know about Hunter’s 2014 discharge from the Navy after testing positive for cocaine, nor his salacious child support case for his out-of-wedlock daughter in Arkansas. Judge Noreika also said that Weiss only has to show that Hunter was addicted to drugs, not that he was on them the day he purchased the gun.

The prosecution does not plan to bring out the entire infamous laptop containing details of Hunter Biden’s life but will introduce certain portions. Noreika ruled that Hunter Biden’s team will be able to question aspects of the laptop in front of the jury. The laptop, which leaked in 2020 just before the presidential election, was decried as Russian disinformation by 51 former intelligence officials.

Noreika also ruled that the special counsel cannot mention Hunter Biden’s pending federal tax trial in California during the trial in Delaware, which is also part of Weiss’s investigation and scheduled for a September trial. –Fox News

In January, federal prosecutors said that Hunter can’t hide behind the 2nd Amendment that Democrats seek to destroy.

“Anglo-American law has long recognized that the government may disarm those who, by their conduct or characteristics, present an increased risk to public safety if they possess firearms,” prosecutors said in a Jan. 16 filing. That means a U.S. law against gun ownership by people who use or are addicted to drugs can still stand under the U.S. Supreme Court’s 2022 decision that struck down restrictions in New York, they added.

Hunter’s trial is expected to last around two weeks. He separately faces nine tax-related federal charges in a case scheduled to go to trial in September in Los Angeles.

It’s another payrolls week with consensus (+190k) expecting job gains to pick up from last month’s +175k number with unemployment widely expected to stay at 3.9%. As DB’s Jim Reid writres this morning, the bank’s economists think the risks are biased to it rounding down a tenth rather than up. Meanwhile, the JOLTS data tomorrow is many people’s preferred employment measure but it’s always a month lagged to payrolls which reduces the impact. The employment components of May’s ISM indices (today for manufacturing and Wednesday for services) will also help fine tune expectations for payrolls. At the index level, DB economists see the manufacturing gauge moving from 49.2 to 49.4 in May and the services one expanding to 50.4 from 49.4 in April. Here are all the key events in the US this week.

In Europe, all eyes will be on the ECB decision on Thursday, where most economists expect a 25bps cut with markets pricing in a 96% probability. All eyes will be on how they signal the path after this meeting. The Bank of Canada meet beforehand on Wednesday with expectations that they stay on hold for now. In terms of European data, various final PMIs are out this week alongside Germany factory orders (Thursday), industrial production (Friday), and the trade balance (Friday). Elsewhere, there will be the French trade balance data (Friday) and industrial production (Wednesday), Swiss CPI (tomorrow), as well as retail sales for the Eurozone and Italy (Thursday).

Elsewhere we have the presidential elections result in Mexico after yesterday’s election with Sheinbaum set for a landslide victory according to exit polls just released. Staying with elections we have the important European Parliamentary elections between June 6-9 and the results of India’s general elections will be counted tomorrow. Exit polls show a resounding win with a predicted seat range of 350-400 for Narendra Modi’s BJP-led NDA coalition which would likely be seen as supportive for the current policy regime after Indian assets had underperformed over the last month. They need 272 for a majority and more than 352 to better the 2019 outcome.

Courtesy of DB, here is a day-by-day calendar of events

Monday June 3

• Data : US May ISM manufacturing, total vehicle sales, April construction spending, China May Caixin manufacturing PMI, Japan Q1 capital spending, company profits, company sales, Italy May manufacturing PMI, new car registrations, budget balance, Canada May manufacturing PMI
• Central banks : ECB’s Simkus speaks

Tuesday June 4

• Data : US April JOLTS report, factory orders, Japan May monetary base, Germany May unemployment claims rate, France April budget balance YTD, Switzerland May CPI
• Earnings : Crowdstrike

Wednesday June 5

• Data : US May ADP report, ISM services, China May Caixin services PMI, UK May new car registrations, official reserves changes, Japan April labor cash earnings, France April industrial production, Italy May services PMI, Eurozone April PPI, Canada Q1 labor productivity, May services PMI, Australia Q1 GDP
• Central banks : BoC decision
• Earnings : Inditex, Dollar Tree, Lululemon

Thursday June 6

• Data : US April trade balance, initial jobless claims, UK May construction PMI, Germany May construction PMI, April factory orders, Italy and Eurozone April retail sales, Canada April international merchandise trade
• Central banks : ECB decision, BoJ’s Nakamura speaks, BoE’s DMP survey
• Earnings : Meituan, Nio

Friday June 7

• Data : US May jobs report, April wholesale trade sales, consumer credit, China May trade balance, foreign reserves, Japan April household spending, coincident index, leading index, Germany April industrial production, trade balance, France April current account balance, trade balance, Canada May jobs report, Q1 capacity utilisation rate
• Central banks : Fed’s Cook speaks, ECB’s Nagel, Holzmann and Schnabel speak

* * *

Finally, looking at just the US, Goldman writes that the key economic data releases this week are the ISM manufacturing index on Monday, the JOLTS job openings report on Tuesday, and the employment report on Friday. There are no speaking engagements from Fed officials this week other than a commencement speech from Governor Cook on Friday, reflecting the FOMC’s blackout period.

Monday, June 3

• 09:45 AM S&P Global US manufacturing PMI, May preliminary (consensus 50.9, last 50.9)
• 10:00 AM Construction spending, April (GS +0.2%, consensus +0.2%, last -0.2%)
• 10:00 AM ISM manufacturing index, May (GS 49.2, consensus 49.6, last 49.2): We estimate the ISM manufacturing index was unchanged at 49.2 in May, as unfavorable seasonality offsets the rebound in global manufacturing activity. Our manufacturing tracker edged up 0.2pt to 48.8.
• 05:00 PM Lightweight motor vehicle sales, May (GS 16.0mn, consensus 15.8mn, last 15.7mn)

Tuesday, June 4

• 10:00 AM JOLTS job openings, April (GS 8,300k, consensus 8,377k, last 8,488k): We estimate that JOLTS job openings fell by 0.2mn to 8.3mn in April, reflecting a renewed pullback in online job postings.
• 10:00 AM Factory orders, April (GS +0.6%, consensus +0.6%, last +0.8%); Durable goods orders, April final (consensus +0.7%, last +0.7%); Durable goods orders ex-transportation, April final (consensus +0.4%, last +0.4%); Core capital goods orders, April final (last +0.3%); Core capital goods shipments, April final (last +0.4%)

Wednesday, June 5

• 08:15 AM ADP employment change, May (GS +125k, consensus +175k, last +192k): We estimate a 125k rise in ADP payroll employment in May, reflecting a below-normal pace of job creation during the spring hiring season.
• 09:45 AM S&P Global US services PMI, May final (consensus 54.7, last 54.8)
• 10:00 AM ISM services index, May (GS 51.0, consensus 51.0, last 49.4): We estimate that the ISM services index rose 0.6pt to 51.0 in May. Our non-manufacturing survey tracker edged up 0.9pt to 52.2, but we view seasonality as unfavorable.

Thursday, June 6

• 08:30 AM Nonfarm productivity, Q1 final (GS +0.1%, consensus +0.1%, last +0.3%); Unit labor costs, Q1 final (GS +4.9%, consensus +4.9%, last +4.7%);
• 08:30 AM Trade balance, April (GS -$75.7bn, consensus -$76.4bn, last -$69.4bn)
• 08:30 AM Initial jobless claims, week ended June 1 (GS 225k, consensus 220k, last 219k); Continuing jobless claims, week ended May 25 (consensus 1,790k, last 1,791k): We note that this week’s initial jobless claims reading covers the period including the Memorial Day holiday. Initial claims have historically been slightly more volatile around Memorial Day: the 90th percentile of week-over-week absolute changes over the past couple decades, excluding recessions, is 19k vs. 14k on average in the surrounding couple weeks.

Friday, June 7

• 08:30 AM Nonfarm payroll employment, May (GS +160k, consensus +190k, last +175k); Private payroll employment, May (GS +140k, consensus +170k, last +167k); Average hourly earnings (mom), May (GS +0.25%, consensus +0.3%, last +0.2%); Average hourly earnings (yoy), May (GS +3.87%, consensus +3.9%, last +3.9%); Unemployment rate, May (GS 3.9%, consensus 3.9%, last 3.9%); Labor force participation rate, May (GS 62.7%, consensus 62.7%, last 62.7%): We estimate nonfarm payrolls rose by 160k in May (mom sa). Big Data measures indicate a below-normal pace of job creation during the spring hiring season, and our layoff tracker has rebounded, albeit from low levels. On the positive side, we expect a 50-80k boost from the longer-than-usual May payroll month. While the BLS seasonal factors in principle adjust for these effects, they appear to have anchored around the weak nonfarm payroll reading in May 2019, which was also 5 weeks long. We estimate that the unemployment rate was unchanged at 3.9%, reflecting modestly higher household employment and stable labor force participation at 62.7%. Foreign-born unemployment rebounded in April (+223k, SA by GS), suggesting scope for the jobless rate to fall if some of these individuals found jobs. We estimate average hourly earnings rose 0.25% (mom sa), which would lower the year-on-year rate by 5bps to 3.87%. Our forecast reflects waning wage pressures and a 1-3bp drag from calendar effects (mom sa).
• 10:00 AM Wholesale inventories, April final (consensus +0.2%, last +0.2%)
• 12:00 PM Fed Governor Cook speaks: Fed Governor Lisa Cook will give the commencement address at the Girls Global Academy in Washington, D.C. Speech text is expected. On March 25, Cook said that “The path of disinflation, as expected, has been bumpy and uneven, but a careful approach to further policy adjustments can ensure that inflation will return sustainably to 2% while striving to maintain the strong labor market.”

Source: DB, Goldman

 

Authored by Daniel Lacalle,

The latest OPEC meeting conclusions show that the global economy is not as strong as headlines suggest and that industries all over the world are struggling to recover. Indeed, many manufacturing PMIs (purchasing managers’ indexes) continue to signal contraction.

Oil prices have weakened in recent weeks despite the war in Gaza and rising geopolitical risk. At the close of this article, Brent is trading at $81.62 per barrel and WTI at $76.99. This is a mere 7% rise year-to-date. The average price of the OPEC basket in the latest figure of June 2024 was $83.08.

OPEC+ has agreed to extend its production cuts until 2025 because the outlook for demand remains uncertain. Members of the oil production group see that copper prices have soared 72% in the past five years, rising 22% in the last year alone, and may fear that the push for electric vehicles is shifting demand elsewhere. Oil prices have performed adequately in the past five years, but they are nowhere close to the levels that producers would consider adequate to balance their budget. If copper can tell us anything, it is that Chinese demand and the development of electric vehicles are much stronger forces than fossil fuel demand. However, this may be an incorrect way of looking at things.

Oil prices have stabilized above the $80 a barrel level (Brent) and the OPEC basket is above what analysts consider the price required to balance producers’ budgets. Furthermore, we cannot forget that the concept of a price needed to balance the government budget means nothing. All producing countries are generating excellent profits at these levels. If their government budgets are filled with unnecessary subsidies and items that have nothing to do with energy production, they cannot expect prices to cover social or defense expenditures.

Demand is likely to continue to be weak but growing.

Furthermore, one thing is clear: oil is likely to continue to be a significant part of primary energy needs globally.

OPEC should worry about the United States and non-OPEC supply. The doom predictions of a collapse in oil production from unconventional oil have failed. The Energy Information Administration (EIA) shows that average daily production in 2024 is 13.12 million barrels per day, a 7.1% production increase over 2023 figures and 1.4% above its previous all-time high. The United States production has become stronger and more efficient, breaking even at $40 a barrel. Additionally, government measures to place regulatory burdens on energy production have failed. The United States production level is robust, sustainable and, more importantly, adaptable to regulatory risks.

OPEC members seem overly concerned about the environmental policies of Western governments. However, they should not fear too much. OPEC member governments may disagree, but central planning never works. In the same way that central planning does not make oil prices rise to the levels that some may desire, interventionism is not working toward its objective of decarbonizing by 2030. The good news for OPEC members is that Western governments have decided to implement interventionist policies and ignore competition, technology, and creative destruction. As such, oil is likely to remain a key source of energy supply for a long time. The world’s energy transition can only come if we find an alternative to oil that is abundant, has a stable and constant supply, and is economically viable. Solar, wind, and natural gas are essential to a competitive energy transition, but there is no possibility of a real change if the world abandons natural gas and nuclear.

We need to understand that the energy transition cannot come from banning efficient energy sources. It can only come from technology and competition. From free markets. We must understand that oil will continue to be a major source of energy production and that it is perfectly compatible with respect for the environment if technology is used to improve efficiency and sustainability. Ignoring the mining requirements of green energy is as dangerous as forgetting the sustainability potential of fossil fuel production. Instead of using ideology to drive energy policy, we should use technology and open markets.

Authored by Roger Marshall via The Epoch Times,

A million Americans died from COVID-19, marking one of the darkest chapters in our nation’s history. Four years later, more than 10 million Americans are still suffering from long COVID. We continue to fight for accountability.

Dr. Anthony Fauci, in his role as chief medical adviser to the president, insisted upon mask and vaccine mandates, lockdowns, and overstated vaccine efficacy, often disregarding the public’s and private medical professional’s ability to assess the facts.

Many lessons must be learned from Dr. Fauci’s tenure, highlighting the need for supervision and ethical leadership. As a physician, I believe in informing patients of the truth and collaborating on plans.

This week, he will testify before the House of Representatives. We must demand answers for the numerous unresolved issues related to his potential role in the origins of COVID-19, and the subsequent alleged cover-up. Here are several questions I hope are asked:

Dr. Fauci has advocated for and funded risky gain of function (GOF) research for more than 30 years. He was undoubtedly aware of the history of the engineering and structural problems, along with sloppy procedural issues, at the labs in Wuhan, China.

Risky GOF Research: After learning of the possibility of a lab leak from respected scientists, did Dr. Fauci consult the appropriate government agencies at the National Biosurveillance Integration Center, National Center for Medical Intelligence, and Countering Weapons of Mass Destruction Office, all stacked with experts about the risky research at the unsafe Wuhan Institute of Virology? Evidence indicates he consulted private sector scientists with significant conflicts of interest, as they depended on his research funds. Dr. Fauci has never conceded to seeking advice from the correct government channels, why?

He knew the Chinese military was involved in all research at Wuhan laboratories, including that China’s military ran a bioweapons program at the Wuhan Institute of Virology labs. Yet, Dr. Fauci continued to use taxpayer money to fund the research projects in Wuhan, China.

We very much hope Anthony Fauci will discuss this email referencing covid as a bioweapon pic.twitter.com/4JIPK4JcCi

— zerohedge (@zerohedge) June 3, 2024

Caught in a Lie: Dr. Fauci previously testified before Congress that the National Institutes of Health (NIH) wasn’t funding GOF research. Based on current information, Dr. Fauci has been caught in a lie and should answer for it. Not only has the NIH admitted to funding GOF research, they then changed the definition of GOF research to allow continued foreign research funding. What was Dr. Fauci’s role in changing this definition to secure additional funding?

Continuing Deadly Research at U.S. Taxpayers Expense: China locked us out of Wuhan after the novel coronavirus emerged and refused to share the DNA sequence of SARS-CoV-2 and other valuable information. Dr. Fauci must explain how America benefited from these grants to EcoHealth Alliance and other U.S.-funded GOF research conducted in foreign nations.

Oversight Within NIH Grant Process: Dr. Fauci must also be held accountable for overseeing the NIH grant process. We uncovered and sounded the alarm back in October of 2021 that EcoHealth Alliance was out of compliance with NIH grant policies and had not submitted its year-five report. Why did it continue to receive funding?

When confronted about this, Dr. Fauci claimed ignorance, although it was his responsibility to ensure compliance with these grants. This lack of oversight highlights the immediate need for increased accountability at the National Institute of Allergy and Infectious Diseases (NIAID) and the necessity for its own inspector general.

When following the evidence, Dr. Fauci often sought counsel from questionable advisers and scientists with clear conflicts of interest.

The Federal Advisory Committee Act mandates that advice given to the federal government by advisory committees be objective, transparent, and publicly accessible. However, email records show that Dr. Fauci consulted his close network of private scientists, some of whom financially benefited from the NIH grants that Dr. Fauci oversees, and some in that group were waiting on a grant approval worth up to $9 million.

The Federal Advisory Committee Act: Why in February 2020 did Dr. Fauci hold closed advisory committee meetings with scientists who are dependent on his NIH funding, violating the Federal Advisers Committee Act’s requirements for transparency and balanced viewpoints?

Importantly, after that meeting, the Fauci-led group published the “Proximal Origins” theory, concluding that SARS-CoV-2 emerged as a ”natural virus.” Once published, Dr. Fauci seemingly embarked on a mass media cover-up and touted that opinion piece that he orchestrated as scientific fact, even referencing it from the White House podium.

Proximal Origins Theory: Dr. Fauci should be asked why he presumably used his power to manipulate science and publish factually incorrect articles to downplay the lab leak theory. Why was Dr. Fauci directing articles in science journals and pushing his debunked proximal origins theory narrative? Was his involvement so deep that he was manufacturing and rewriting history to evade the responsibility and the role he had in this virus outbreak?

Blocking FOIA Requests: It’s also curious that after Dr. Fauci was questioned by our Senate HELP committee in May 2021, the Department of Health and Human Services shut down all Freedom of Information Act requests. Was Dr. Fauci involved in any discussions for this decision? Why was that decision made?

Many people also don’t know that Dr. Fauci received two government salaries simultaneously, making him the highest-paid federal employee ever. He was both the director of the NIAID and the director of civilian biodefense, which was operating with a $6 billion budget.

Highest-Paid Federal Employee in History: Dr. Fauci should be asked to explain how the attribution of potential intentional pathogen deployment (which he was tasked to oversee and manage) is assessed and how the action plan is developed and implemented. If he can’t adequately answer these questions when asked, he should return the salary and related pension immediately.

*  *  *

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

After closing the month of May on the front-foot when a last minute rebalancing spike in the S&P reversed two days of losses, US stock futures are ticking higher to start the month of June following the lead of broad gains across European equity markets and a jump in Asia. As Bloomberg notes, “a degree of extra optimism about the prospect for interest-rate cuts by the Fed following last week’s PCE data, along with better manufacturing figures from China, filtered through markets.”

As of 7:50am, S&P futures traded 0.2% higher with both Tech and Small-Caps outperforming as bond yields start the day lower amid bull flattening, while Nasdaq futures gained 0.4% signaling a recovery after last week’s 1.4% selloff which was driven by investors pulling out of expensive tech leaders, as NVDA jumped 3% after CEO Jensen Huang announced at the Computex conference that the group plans to update its AI accelerators every year, underlining its bullish outlook on the demand for chips and announced a Blackwell Ultra chip for 2025, along with a next-generation platform in development called Rubin for 2026. 10Y Treasury yields dropped 4bps to 4.46% after closing at 4.50% on Friday; the Bloomberg dollar index jumped while oil was volatile after the OPEC+ group announced an extension of output cuts while setting out a plan to gradually restore some production as early as October. Commodities ex-energy are weaker with natgas the standout +5%. Today’s macro data focus is on ISM-Mfg, vehicle sales, and construction spending. This is an important macro data week with the narrative gradually moving to lower growth; NFP may help frame the Fed’s reaction function.

Pre-market, NVDA is +3% and AMD up 1.6% helping both Mag7 and Semis, after the CEOs of the chipmakers made artificial intelligence announcements in Taiwan. More notable, GME is +75% and AMC +25% after the Reddit account that drove the mania in 2021 posted what appeared to be a $116 million position in GameStop. A screenshot by Keith Gill known as Roaring Kitty, which also included 120,000 call options, couldn’t be verified. Still, that didn’t prevent GameStop shares from more than doubling in premarket trading, or as JPM put it, “It appears the optimism in the last hour of Friday’s trading has resumed.“

Here are some other notable premarket movers:

• Autodesk rose 6% after the software company said no financial statements will be restated or adjusted following the results of an investigation by the board’s audit committee.
• Boston Beer slips 11% after Suntory Holdings said it is not in talks to buy the company.
• Edwards Lifesciences climbs 1% after Becton, Dickinson & Co. agreed to buy the company’s critical care unit.
• MarineMax gains 18% after Bloomberg News reported that OneWater Marine Inc. is in talks to acquire the company, citing people with knowledge of the matter.
• Paramount Global climbs 6% after Bloomberg reported Skydance Media CEO David Ellison’s latest offer for the company includes an option for non-voting shareholders to cash out a portion of their stock for about $15 a share
• Stericycle soars 16% after agreeing to be purchased by Waste Management Inc.
• Summit Therapeutics rises 16% after the drug developer said it raised about $200 million while also expanding its license territories with Akeso for the drug ivonescimab.

Elections dominated the newsflow on Monday with results from Mexico and India swaying local markets. India’s Sensex jumped more than 3% and the rupee strengthened the most in a year on speculation a decisive victory would allow Modi to push through policies to spur growth. In Mexico, the peso tumbled after Claudia Sheinbaum became the country’s first female leader in a landslide victory.

• South Africa’s ANC lost its 30-year majority and won 159 out of 400 seats (prev. 230 seats) in South Africa’s National Assembly, according to the electoral commission. South African President Ramaphosa said the election results represent a victory for democracy in South Africa, according to Reuters. South Africa’s biggest opposition party, the Democratic Alliance, has appointed a negotiating team to speak with other political parties about forming a majority coalition, according to Reuters.
• Indian PM Modi’s BJP alliance is projected to win a majority in the general election, according to CNN-News18 exit poll; projected to win 355 to 370 seats in the general election.
• Mexico’s Claudia Sheinbaum is seen winning the presidency with a landslide 56% effective vote vs 30% for Galvez, according to Parametria exit polls. Mexico’s Morena Party Chief said Claudia Sheinbaum has won the presidency. Mexico’s Morena Party is projected to have a simple majority in Congress, according to party head Mario Delgado speaking to Milenio TV.

After the S&P 500 posted gains in six of the past seven months, there’s a split among some of the top Wall Street strategists over whether the rally can continue. Investors betting on more US gains over the coming months will be disappointed, according to strategists at JPMorgan. On the opposing end, Morgan Stanley’s Michael Wilson says his bull case is in play for now.

“We see the market upside capped during summer due to the inconsistency between the consensus call for disinflation, and at the same time, the belief in no landing and in earnings acceleration,” a JPMorgan team of strategists led by Mislav Matejka wrote in a note to clients.

Elsewhere, online fashion retailer Shein is set to file for an initial public offering in London as soon as this week that could value the company at about £50 billion ($64 billion), according to a person familiar with the matter. Shein’s offering could become one of the UK’s biggest ever IPOs, clawing back a chunk of the market value London has lost from companies shifting their primary listings to New York.

European stocks also gained, led by construction and material names, after a broadly positive Asian session. Estoxx 50 higher by 0.7% in early London session with construction and retail shares leading gains, while health care and mining stocks are the biggest laggards. Here are the biggest movers Monday:

• Genmab shares rise as much as 4.4%, the most in a month, after analysts were impressed by the Danish biotechnology company’s presentation on its acasunlimab therapy in patients with previously treated metastatic non-small cell lung cancer
• National Grid advances as much as 2.8% after Citi upgrades to buy, saying in note the energy infrastructure operator offers an attractive set-up on factors including a more constructive political and regulatory outlook
• Pets at Home gains as much as 5.9% after Liberum upgrades its recommendation on the stock to buy from hold, citing the launch of a new digital platform and the easing of cost pressures as reasons to be optimistic about the pet retailer
• Hollywood Bowl rises as much as 5.1% following first-half results, which Berenberg says were solid despite tough comps. The company also raised its interim dividend by more than 20%
• Hunting jumps as much as 9.2% after the oil field services provider won a follow-on order from the Kuwait Oil Company valued at $86m, which analysts at Cannacord said has added more firepower to its backlog
• GSK plunges as much as 10%, the most since August 2022, following a Delaware court ruling that GSK, Pfizer and other drugmakers must face trials
• Borussia Dortmund shares fall as much as 8.1%, the most in almost a year, after the German football club lost the Champions League final to Real Madrid on Saturday

Earlier in the session, technology stocks led a rally in Asia on Monday, as renewed rate-cut hopes and Nvidia’s new chip plans fueled risk-on sentiment. The MSCI Asia Pacific Index climbed 1.7%, with TSMC and Tencent among stocks giving the biggest boost to the benchmark. Onshore Chinese equities traded higher after two days of losses. Concerns over the economy’s strength linger even as a private survey showed China’s manufacturing activity expanded at the fastest pace in almost two years in May. Risk sentiment returned to Asia as moderating inflation in the US revived bets that the Federal Reserve will cut interest rates. The region also got an added boost from India, where stocks surged to an all-time-high as exit polls predicted a sweeping victory for Prime Minister Narendra Modi in the general election.

Equity markets displayed some anxiety recently around the impending political uncertainty and “with this clear verdict, markets will heave a sigh of relief,” Motilal Oswal strategists led by Gautam Duggad wrote in a note. The anticipated win by Modi’s party “provides stability and continuity in policy making with a single-party majority government,” which is expected to continue pushing its economic agenda, they said.

In FX, the Bloomberg Dollar Spot Index rises 0.2%. The pound is the weakest of the G-10 currencies, falling 0.3% against the greenback. The Mexican Peso falls 1.5% after preliminary election results spooked investors.

In rates, treasuries gained across the curve led by long-end, following similar gains in gilts and bunds over early London session. 10Y Treasury yields richer by up to 4bp across long-end of the curve with 2s10s, 5s30s spreads flatter by 2bp and 1bp on the day; 10-year yields around 4.465%, richer by 4bp on the day with bunds and gilts outperforming by 1bp each in the sector.  Bunds and gilts also gain. With no coupon supply scheduled for this week and Fed officials in self-imposed quiet period, economic data culminating with Friday’s May jobs report are focal points. Meanwhile, ECB is viewed as almost certain to lower interest rates by 25 basis points at its next meeting on Thursday.

In commodities, oil prices advance after OPEC+ set out a timetable for gradually unwinding some of its oil production cuts. WTI rises 0.2% to trade near $77.20 a barrel. Spot gold is little changed around 2,325/oz.

In crypto, bitcoin saw modest gains overnight but remains within recent ranges of around $68,000.

Looking at today’s calendar, US economic data includes May S&P Global US manufacturing PMI (9:45am), April construction spending and May ISM manufacturing (10am); this week also includes JOLTS, factory orders, ADP employment change, services PMIs and May jobs report. Fed officials are expected to refrain from commenting until after their June 12 policy announcement.

Market Snapshot

• S&P 500 futures up 0.2% to 5,306.75
• STOXX Europe 600 up 0.6% to 521.13
• MXAP up 1.7% to 179.78
• MXAPJ up 1.9% to 558.17
• Nikkei up 1.1% to 38,923.03
• Topix up 0.9% to 2,798.07
• Hang Seng Index up 1.8% to 18,403.04
• Shanghai Composite down 0.3% to 3,078.49
• Sensex up 3.2% to 76,333.05
• Australia S&P/ASX 200 up 0.8% to 7,761.03
• Kospi up 1.7% to 2,682.52
• German 10Y yield little changed at 2.63%
• Euro little changed at $1.0841
• Brent Futures up 0.1% to $81.22/bbl
• Gold spot up 0.0% to $2,328.29
• US Dollar Index little changed at 104.69

Top Overnight News

• Two of China’s biggest cities saw improvements in homebuyer sentiment last weekend after relaxing property restrictions, the first positive signs in months for the embattled real estate sector. In Shanghai, about 90% of the more than 300 units offered at a new project over the weekend were sold, beating the sales-through rate for the same development in March. In Shenzhen, some developers saw buyer interest surge so much they rescinded discount offers. Existing-home sales recovered in both cities. BBG
• Russia’s attempts to conclude a major gas pipeline deal with China have run aground over what Moscow sees as Beijing’s unreasonable demands on price and supply levels. Beijing’s tough stance on the Power of Siberia 2 pipeline underscores how Russia’s invasion of Ukraine has left President Vladimir Putin increasingly dependent on Chinese leader Xi Jinping for economic support. FT
• Exit polls in India point to a landslide election win for PM Modi (Modi’s party and its allies could secure a 2/3 majority in the lower house of parliament, clearing a threshold needed for constitutional changes). Modi is planning a wave of business-friendly reforms during his upcoming third term as he aims to turn India into a manufacturing hub rivaling China. FT / RTRS
• Claudia Sheinbaum is set to become Mexico’s first female leader after preliminary results showed her on course to win an overwhelming election victory. The leftwing former Mexico City mayor, a close ally of President Andrés Manuel López Obrador, was leading by nearly 30 percentage points, according to a partial official count early on Monday. FT
• The Gaza peace plan talked about on Fri by Biden seems unlikely to be adopted (at least in the near-term) as Israel insists it will push ahead to achieve its full war objectives (two of Netanyahu’s far-right coalition partners threatened to quit his gov’t if the plan was adopted). NYT
• The U.S. economy continues to lose momentum. Growth hasn’t yet slowed to the point that it would be a concern to policymakers, but it might soon if current trends continue. WSJ
• The US housing market — long crippled by an inventory drought — is finally starting to see listings rise. But now, in many places, the buyers just aren’t showing up. Sellers are grappling with the fact that higher-for-longer rates are choking off demand during what’s typically the key season for the market. And more of those owners are cutting asking prices than any time since November 2022 as inventory grows stale, according to Redfin Corp. BBG
• Consumers have reached their limit following years of aggressive price hikes, and companies will be forced to become more promotional as a result. NYT
• 10% of registered Republicans were less likely to vote for Trump after the felony conviction (that same poll showed Biden with a 2-point lead among registered voters, up from a tie earlier in the month). RTRS  
• MSCI said due to the significant size of Saudi Aramco’s secondary offering, MSCI intends to implement changes in MSCI indexes resulting from the offering, according to Reuters.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks opened higher and then extended on gains as the region reacted to the softer-than-expected US Core PCE data on Friday alongside the prospect of a potential Israel-Hamas deal brokered by the US. The broader chip sector in the region was supported by NVIDIA CEO Huang stating the Co. is to upgrade its AI accelerators every year, later followed by an update from AMD at the Computex event in Taipei.     ASX 200 saw its upside led by a broader strength across energy and financials, whilst Australia’s Final Manufacturing PMI saw a modest revision higher from the prelim. Nikkei 225 briefly rose back above 39,000 with the upside also led by energy and financials, whilst capex data showed  company profits surprisingly accelerated in Q1. India’s Nifty 50 opened sharply higher by almost 3.5% at a record high after exit polls pointed to a landslide win by PM Modi. Hang Seng and Shanghai Comp were mixed as the former soared at the open with heavyweight stocks Alibaba and Tencent among the top gainers, whilst the latter initially bucked the regional trend and lagged despite any major headlines aside from China stating it will not join the Swiss peace conference on Ukraine, although losses were briefly trimmed after the Chinese Final Manufacturing PMI was revised higher than expected.

Top Asian News

• Moody’s Ratings has raised China’s growth forecast to 4.5% (prev. 4.0%) for 2024, according to Reuters.
• PBoC injected CNY 2bln via 7-day reverse repos with the rate at 1.80%.
• China has allocated CNY 6.44bln for vehicle trade-in subsidies, according to CCTV.
• BoJ Executive Director Kato said BoJ has no plan to immediately unload its ETF holdings; and hopes to spend time examining how to unload BoJ’s ETF holdings in the future.
• Japanese MOF official said capex data reflects moderate economic recovery but attention is needed on corporate situation amid risks of global slowdown rising.
• Japanese Economy Minister Shindo states that real economic growth of 1.3% in FY 2025 is not so unrealistic, according to Reuters.
• Australia’s minimum wage and award wages will increase by 3.75% from July 1st, the Fair Work Commission has announced, via ABC.
• BoJ Quarterly Bond Markey Survey: index gauging bond market function at -24 (prev. -29), fifth consecutive quarter of improvement

European bourses, Stoxx 600 (+0.5%) are entirely in the green, continuing the price action seen in APAC trade overnight. Indices came under some slight selling pressure in the early portion of the morning, and has been choppy within today’s range. European sectors hold a strong positive tilt; Construction & Materials takes the top spot, joined closely by Retail, which is lifted by significant strength in JD Sports (+7.5%). Healthcare is the clear laggard, dragged down by GSK (-9.4%) on Zantac-related lawsuits. US Equity Futures (ES +0.2%, NQ +0.2%, RTY +0.9%) are modestly firmer, though with price action fairly contained thus far. In terms of pre-market movers, AMD (+1.3%) gains after unveiling a new MI325X accelerator chip, whilst Nvidia (+2.2%) benefits after its CEO said the Co. is to upgrade its AI accelerators every year. GameStop (+66.4%) surges pre-market after Roaring Kitty reveals a USD 116mln position in the Co.

Top European News

• Fed’s Kashkari (non-voter) said rates to stay on hold for an “extended” time, and added that the US economy is strong, the labour market is strong, and inflation is coming down, via an FT interview from May 27th (ahead of the blackout period) but published on Monday.
• NVIDIA (NVDA) CEO Huang stated the Co. to upgrade its AI accelerators every year. CEO said on Sunday that the Co. next-generation artificial intelligence chip platform, called Rubin, would be rolled out in 2026, according to Reuters.
• AMD (AMD) CEO unveiled new MI325X accelerator chip at Computex event in Taipei, to be available in Q4 2024, AMD CEO said the Co. is aiming for an annual cadence for AI chips.

FX

• DXY is incrementally firmer and within a tight 104.50-75 range as the index took a breather from Friday’s post-PCE volatility as it looks ahead to this week’s risk events, starting with US ISM Manufacturing later today.
• EUR is softer vs. the USD as we enter into ECB week, which is set to see the central bank deliver its first rate cut since September 2019. EUR/USD is yet to approach Friday’s 1.0811 low amid a potential lack in conviction for positioning ahead of upcoming risk events.
• GBP is a touch softer vs. both USD and EUR with not much in the way of pertinent UK newsflow as the BoE remains quiet in the run up to next month’s election. Cable is managing to hold above the 1.27 mark which coincides with Friday’s low.
• JPY is marginally outmuscling the USD with Japanese fundamentals not seeing much in the way of developments over the weekend. USD/JPY ran into support around the 157 mark.
• Antipodeans are both a touch softer vs. the USD with AUD unable to benefit from an upward revision to Chinese Caixin Manufacturing PMI. AUD/USD is currently in consolidation mode, respecting Friday’s 0.6626-0.6672 range and sitting just above its 10 and 21DMAs which both sit at 0.6635.
• EM FX: South Africa’s ANC lost its 30-year majority and as such, will now look to form a coalition (USD/ZAR -0.1%). Exit polls point to landslide victories for India’s Modi (USD/INR -0.4%) and Mexico’s Sheinbaum (USD/MXN +1.0%) with focus on whether the latter will be able to obtain a super-majority and enact policies which could be deemed as less market friendly.
• PBoC sets USD/CNY mid-point at 7.1086 vs exp. 7.2378 (prev. 7.1111)

Fixed Income

• USTs are firmer as Friday’s PCE momentum remains in the driving seat into the ISM Manufacturing PMI. Within this, the Prices Paid metric will draw scrutiny following the jump to 60.9 (prev. 55.8) which took it into strong expansion territory.
• A relatively contained start for Bunds holding onto Friday’s PCE-induced upside while APAC-session updates were unable to significantly move the dial; JGB action essentially just catch up to Friday.
• Gilts are in-fitting with peers but marginally outperforming EGBs, despite the lack of UK-specific newsflow, with the region’s final PMIs unable to spark any real reaction. Gilts as high as 96.61 with last week’s 97.13 high the next point of resistance.
• OAT price action follows the broader complex though with the magnitude of gains shy of its German-peer, likely a follow through from S&P downgrading France on Friday.

Commodities

• Crude prices headed lower in the aftermath of the of the OPEC+ meeting which outlined a future roadmap for the restoration of the supply from the voluntary cuts. In the European session, WTI/Brent have bounced off worst levels, albeit marginally so; Brent currently around USD 81.30/bbl.
• Precious metals are flat as the haven metals are torn between the stronger USD/constructive risk tone and a post-PMI downtick in yields. As it stands, XAU is unchanged at the mid-point of USD 2314-2331/oz parameters.
• Base metals are a touch firmer after the last 8/9 sessions have ended in the red. Albeit, upside is very modest thus far as the broader macro backdrop for the metal has not changed this morning despite two potentially bullish updates.
• JP Morgan is of the view that current oil prices are USD 8bbl too cheap and continues to make the bullish case for oil in Q3 amid its demand outlook. Anticipates global oil demand accelerating by 2.5mln BPD from end of April to the end of August. This would raise global refinery runs by 4mln BPD over the same period.
• Russia-China gas pipeline deal reportedly stalls over Beijing’s price demands, according to the FT. China is said to have asked to pay prices close to Russia’s subsidised domestic prices and would only commit to purchasing a smaller fraction of the Siberia 2 pipeline’s annual capacity, sources said.
• An oil refinery in northwest Russia near the city of Ukhta was operating normally after a fire broke out on Sunday, according to Reuters.
• South Korean President Yoon said a vast amount of oil and gas reserve possibly undersea off South Korea’s east coast; has approved exploration of possible oil and gas reserve; reserves could amount to up to 14bln barrels of oil and gas, according to Reuters.
• Magnitude 5.7 earthquake hit Antofagasta, Chile region, according to EMSC.
• Copper miners Freeport Indonesia has not received copper concentrate export permit extension, according to a spokesperson.

OPEC+

• OPEC+ has agreed to extend its collective production cuts, which total around 3.6mln BPD, until the end of 2025 (prev. until the end of 2024). Additionally, the eight states that implemented voluntary cuts of 2.2mln BPD will extend these cuts until the end of Q3 2024 (prev. Q2 2024, exp. at least Q3 2024), after which they will gradually increase production from October 2024 to September 2025, contingent on market conditions.
• Additionally, the UAE has been permitted to increase its production by 0.3mln BPD from 2025, according to Reuters.
• Baseline revisions have been pushed back a year to 2026. “That’s because some countries like Russia are under embargo and the independent companies are not able to have access to data to support the assessment process.”, according to Energy Intel’s Bakr.
• “Under the agreement today there are no barrels that are immediately going to be added to the market. The partial return of the voluntary cuts in q4 this year is subject to market conditions. The agreement also does not stray away from the cautious path the group has been following. Even the possible return of the voluntary cuts is being done cautiously.”, according to Energy Intel’s Bakr.
• Saudi Energy Ministry said 2.2mln bpd voluntary oil cuts are to be extended till September and to be gradually phased out on a monthly basis till Sept 2025, according to Reuters citing a statement. Saudi Energy Ministry said the gradual monthly phase-out may be reversed according to market conditions, and added OPEC meeting welcomes Iraq, Russia, and Kazakhstan’s renewed commitment to adhere to OPEC production cuts. Saudi Energy Ministry said the OPEC meeting also welcomes Iraq, Russia, and Kazakhstan’s plan to resubmit their updated compensation for overproduction since January 2024 before the end of June, the statement said.
• Saudi Energy Minister said discussions among eight countries implementing voluntary cuts started two or three weeks ago, and “we are waiting for interest rates to come down, better trajectory of global growth, that would probably cause demand to increase with a clear path”, according to Reuters. Saudi Energy Minister said some ministers gathered in Riyadh to make sure they interacted with each other and the message was comprehensively understood and agreed upon.

Bank commentary on OPEC+

• Barclays says the OPEC+ outcome was mildly negative on net relative to their baseline balances view; given recent compliance numbers Barclays’ oil balances would be 500k/BPD tighter in H2 and looser by 550k/BPD in 2025.
• UBS says OPEC+ announcement “could be seen as slightly bearish oil for very near term but decisions taken also reduce downside risk in the medium-term”. Announcement does not change near-term outlook for oil. Sees oil supply deficit of 1.2 MB/D in Q3’24, expect it to support prices over the next few weeks; lifting Bren to “mid to high USD 80s”.

Geopolitics: Middle East

• Israel PM Netanyahu’s office reportedly conveyed to Ben Gvir a message that contrary to President Biden’s words, there is no clause in the draft agreement that includes stopping the war, and that the other clauses will not constitute a “surrender deal.
• Israeli PM aide confirmed on Sunday that Israel had accepted a framework deal for winding down the Gaza war being advanced by US President Biden, according to Reuters. The aid however described the plan as flawed and in need of much more work. The aide added that Israeli conditions, including “the release of the hostages and the destruction of Hamas” have not changed.
• Hamas said they view US President Biden’s latest proposal for a ceasefire as ‘positive’ and affirmed its readiness to deal positively with any proposal that offers a permanent ceasefire, complete withdrawal of Israeli forces from Gaza, reconstruction of the strip, return of displaced and a ‘serious’ hostage exchange, according to Reuters.
• Axios’ Ravid posts “Israeli officials told me the Israeli hostage deal proposal President Biden presented in his speech exhausted Israel’s manoeuvring space. There will not be a better one. If Hamas rejects it, the conflict will likely escalate.”
• Qatar, the US, and Egypt jointly called on Hamas and Israel to finalise the agreement embodying the principles outlined by US President Biden, according to a joint statement.
• Israeli Defence Minister said in any process to bring about the end of the war, Israel will not accept the rule of Hamas in Gaza, according to Reuters.
• Israeli Finance Minister Smotrich called for the Gaza offensive to be pursued until Hamas is destroyed and all hostages are rescued, saying he would not stay in government otherwise, according to a post on X.
• Israeli National Security Minister Ben-Gvir threatened to bring down the coalition government if PM Netanyahu agreed to a deal that would include ending the war without eliminating Hamas, according to a post on X.
• US National Security spokesperson Kirby said the US has every expectation that if Hamas agrees to the proposal, then Israel will say yes, according to an ABC News interview.
• Yemen’s Houthis said they conducted six military operations including targeting a US aircraft carrier and destroyer, and added they targeted ‘Maina ship, Aloraiq ship and Abliani ship’, according to Reuters.
• US CENTCOM said On June 1, it destroyed one Iranian-backed Houthi uncrewed aerial system (UAS) in the southern Red Sea, and also observed two other UAS crash into the Red Sea. No injuries or damage were reported. Additionally, USCENTCOM forces successfully engaged two Houthi anti-ship ballistic missiles in the southern Red Sea, according to Reuters.
• Israeli PM Netanyahu has accepted an invitation to address both houses of the US Congress, according to Reuters.
• Airstrikes said to hit a copper factory in Aleppo, Syria, according to Times of Israel; cites a post showing at least three explosions in quick succession; cites another post noting “This area has a huge presence for the Iranian militias and Hezbollah”. “Al-Arabiya sources: Raids likely to be Israeli targeting northern Aleppo”, according to Al-Arabiya

RUSSIA-UKRAINE

• Ukrainian President Zelenskiy said he received a signal from China they will not take part in the peace summit, according to Reuters.
• Russian Defence Ministry said Russia struck Ukraine’s energy facilities working for the military-industrial complex, and hit depots with Western weapons, according to RIA.
• Russia has announced plans to raise taxes on businesses and the wealthy amid the need for additional revenue to fund the war in Ukraine, according to Sky News.

CHINA-TAIWAN

• Chinese Defence Minister, at the Shangri-La dialogue, said China will take resolute actions to curb Taiwan’s independence and make sure such a plot never succeeds, and anyone who dares to separate Taiwan from China will only end up in self-destruction. He added China stays committed to peaceful reunification, however, this prospect is increasingly being eroded by separatists for Taiwan’s independence and foreign forces, according to Reuters.
• Taiwan government reiterated Taiwan has never been a part of the People’s Republic of China and added that China has repeatedly openly threatened Taiwan with force at international events, whilst maintaining peace in the Taiwan Strait is the common responsibility of both sides of the strait, according to Reuters.

OTHERS

• China State Security Ministry alleges British Secret Intelligence Service MI6 turned two staff members of Chinese central state organs to spy for the British government, according to a ministry statement.
• North Korea is to temporarily suspend sending balloons carrying trash, but will resume if South Korea sends anti-North Korea leaflets, according to KCNA citing the North Korean Vice Defence Minister.

US Event Calendar

• 09:45: May S&P Global US Manufacturing PM, est. 50.9, prior 50.9
• 10:00: April Construction Spending MoM, est. 0.2%, prior -0.2%
• 10:00: May ISM Manufacturing, est. 49.6, prior 49.2
  • 10:00: May ISM Employment, prior 48.6
  • 10:00: May ISM New Orders, prior 49.1
  • 10:00: May ISM Prices Paid, est. 59.5, prior 60.9
• May Wards Total Vehicle Sales, est. 15.8m, prior 15.7m

DB’s Jim Reid concludes the overnight wrap

It’s a busy morning for the EMR with DB Research launching our latest World Outlook and with the start of the month bringing us our usual performance review which Henry has just published. With regards to the World Outlook “Optimism with uncertainties ahead”, the tone is optimistic across economies and asset markets. Like most others we thought the US would experience a recession last year and when it didn’t happen, we upgraded our US growth numbers considerably in January to the top end of street forecasts for the next couple of years. Nearly 6 months on and our US forecasts remain similar, but we’ve upgraded Euro Area GDP for 2024 by half a percent to 0.9% for 2024. The big uncertainty is the US election with plenty of risks to the growth, inflation, and Fed outlook from the results. In China, our economists upgraded 2024 growth to 5.2% in April which remains unchanged while in Japan growth should stay above trend for the next couple of years which helps us be more hawkish on the BoJ than the market. India continues to be the standout with a minimum of 6-6.5% real GDP growth and 10-11% nominal growth over the next several years. The report also includes all our strategist latest forecasts for YE 24 and into 2025. See the piece here.

Since it’s the start of the month, we’ve also just released our monthly performance review for May and YTD. Most assets rebounded after a weak April with the S&P 500 and STOXX 600 reaching new records during the month. A late surge in the last 20 minutes of month-end trading on Friday helped the S&P 500 regain some poise after a more challenging last week of the month. See the performance review here.

Moving forward, it’s another payrolls week with DB (+200k) and consensus (+190k) expecting job gains to pick up from last month’s +175k number with unemployment widely expected to stay at 3.9%. Our economists think the risks are biased to it rounding down a tenth rather than up. The JOLTS data tomorrow is many people’s preferred employment measure but it’s always a month lagged to payrolls which reduces the impact. The employment components of May’s ISM indices (today for manufacturing and Wednesday for services) will also help fine tune expectations for payrolls. At the index level, our US economists see the manufacturing gauge moving from 49.2 to 49.4 in May and the services one expanding to 50.4 from 49.4 in April. See the week ahead at the end for the rest of the US data releases.

In Europe, all eyes will be on the ECB decision on Thursday, where our European economists expect a 25bps cut with markets pricing in a 96% probability. Their preview is here with all eyes on how they signal the path after this meeting. The Bank of Canada meet beforehand on Wednesday with expectations that they stay on hold for now. In terms of European data, various final PMIs are out this week alongside Germany factory orders (Thursday), industrial production (Friday), and the trade balance (Friday). Elsewhere, there will be the French trade balance data (Friday) and industrial production (Wednesday), Swiss CPI (tomorrow), as well as retail sales for the Eurozone and Italy (Thursday).

Elsewhere we have the presidential elections result in Mexico after yesterday’s election with Sheinbaum set for a landslide victory according to exit polls (BBG) just released. Staying with elections we have the important European Parliamentary elections between June 6-9 (see our econ preview here) and the results of India’s general elections will be counted tomorrow. Exit polls show a resounding win with a predicted seat range of 350-400 for Narendra Modi’s BJP-led NDA coalition which would likely be seen as supportive for the current policy regime after Indian assets had underperformed over the last month. They need 272 for a majority and more than 352 to better the 2019 outcome. See DB’s exit poll reaction piece here. As I type Indian equities have opened around +2.75% higher.

It will be interesting to see the reaction in French bond markets this morning after S&P downgraded from AA to AA- on Friday night due to the Government’s failure to restrain the deficit post Covid. This also may impact the European Parliamentary elections as National Rally’s Le Pen has already seized on it over weekend campaigning.

Asian equity markets are mostly rallying as we start a new month helped by the upbeat manufacturing PMI data coming from the region’s top economies. The Hang Seng (+2.18%), KOSPI (+2.01%) and Nikkei (+0.94%) are all higher but with mainland Chinese stocks lagging with the CSI (-0.15%) and the Shanghai Composite (-0.51%) edging lower. S&P 500 (+0.22%) and NASDAQ 100 (+0.27%) futures are higher and yields on 10yr USTs are -1.5bps lower at 4.48% as I type.

Coming back to the region’s PMI data, China’s Caixin S&P manufacturing PMI rose from 51.4 in April to 51.7 in May (51.6 expected), recording the fastest pace since June 2022. Meanwhile, South Korea’s PMI also rose to 51.6 in May, its highest reading since May 2022 and entering expansionary territory after staying below 50 for the past two months.

Yesterday OPEC+ announced that it would be extending production cuts into 2025 and laid out plans for phasing out voluntary cuts towards the end of the year. Oil is broadly unchanged this morning.

Looking back on last week now and it was another a big week for inflation data, with the US April PCE data on Friday the star of the show. Headline PCE came in line with expectations at +0.3% month-on-month, and +2.7% year-on-year. Similarly, core PCE posted at +0.2% month-on-month, and +2.8%, as expected. On the other hand, real personal spending unexpectedly contracted, falling -0.1% (vs +0.1% expected), down from +0.5% in March, potentially indicating a flagging US consumer.

Despite the weak personal spending data, the PCE inflation numbers helped raise the amount of rate cuts expected this year, with an additional +2.9bps of cuts expected by year-end on the week (and +1.8bps Friday). The prospect of more rate cuts lent support to US fixed income, as 2yr yields fell -7.3bps last week (and -5.2bps on Friday). 10yr yields likewise slipped on Friday, down -4.8bps, but failed to fully erase earlier losses (+3.4bps last week).

Over in Europe, the inflation story was a touch more concerning. The May flash HICP came in above expectations at +2.6% year-on-year (vs +2.5% expected). The core number also surprised to the upside at +2.9% (vs +2.7% expected). In response, markets casted some doubt on how aggressively the ECB will cut over the next months. As such, the amount of rate cuts priced in by overnight index swaps by December fell -7.3bps on Friday, leaving the expected rate -3.3bps lower in weekly terms. This saw yields on 10yr bunds rise +1.2 bps on Friday, adding to the selloff earlier in the week that followed on from a hotter than expected German inflation print last Wednesday, which sent yields up +8.1bps on the week.

US Equities staged a very late month-end comeback on Friday after trading lower much of the day as the personal spending data hinted at a weakening US consumer. In the final hour of trading the S&P 500 rallied nearly a full percentage point to finish +0.80 higher on the day. This made up for some of the week’s earlier losses, leaving the index down -0.51% in weekly terms. The NASDAQ saw a similar rebound, having been down -1.75% near the European close before rallying to finish just below unchanged (-0.01%) on the day and -1.10% on the week. Indeed, tech was dragged down by weakness in the cloud software sector, with the likes of Salesforce slipping -15.78% following a weak earnings report. The Russell 2000 index of small cap stocks fared somewhat better than both the S&P 500 and the NASDAQ, outperforming on Friday (+0.66%), and gaining marginally (+0.02%) last week. In Europe, the STOXX 600 fell -0.46% but retraced some losses on Friday after rising +0.32%.

GSK shares in London tumbled the most in nearly two years after a Delaware judge allowed jury trials to proceed in cases concerning the discontinued heartburn drug Zantac, which is allegedly linked to cancer.

On Friday, Judge Vivian Medinilla of the Delaware Superior Court in Wilmington agreed that plaintiffs’ scientific evidence could be heard in jury trials.  

“It would be improper to simply dismiss these experts as ‘poseurs or witnesses for hire,'” Medinilla said, adding that each side’s arguments should be decided by juries. 

She continued, “Delaware courts are loath to step into the heart of the technical debate between opposing scientists.” 

On Saturday, Brent Wisner, one of the plaintiffs’ lead lawyers, was quoted by Reuters as saying, “This moves us one step closer to justice for our clients.” 

Sanofi has said it faces about 25,000 lawsuits in Delaware, much lower than GSK’s 70,000 lawsuits over Zantac.

In response to Medinilla’s court ruling, GSK said it will appeal the decision. 

“Following the 16 epidemiological studies looking at human data regarding the use of ranitidine, the scientific consensus is that there is no consistent or reliable evidence that ranitidine increases the risk of any cancer,” GSK said. 

GSK shares plunged 10% in London, the most since Aug. 11, 2022, when the fears of Zantac litigation spooked Wall Street.

Most of the year’s gains have been wiped out. 

Citi analyst Peter Verdult told clients that GSK’s settlement would cost around $3 billion. JPMorgan analysts see $2 billion to $3 billion. 

Authored by Steve Watson via Modernity,news,

GOP Senator Rand Paul has warned that the fallout of the weaponisation of the justice system against Donald Trump could lead to “war in the streets.”

Appearing on Fox Business, Paul was asked “What is your reaction to the conviction?”

The Senator responded that it is “a sad day in America,” adding “what I worry about is something even bigger than Donald Trump.”

“I worry about strife. I worry about war in the streets. I worry about 50 percent of the public believing that the court system will be used against them,” Paul further urged.

“I worry when half the country thinks they won’t be treated fairly, what happens and how people react,” the Senator continued.

Paul also pointed out how Hillary Clinton was treated completely differently when she was charged over her email server.

“If you look at records violations and you look at Hillary Clinton, $8 million expense, and they slapped her on the wrist cause she got an $8 thousand fine,” Paul asserted.

“I think Donald Trump is the only person ever prosecuted for this particular crime,” Paul further suggested, stating that there are probably thousands of cases of records violations in New York that never go to court.

Today, exclusively on @SundayFutures with @MariaBartiromo, Senator @RandPaul spoke about the verdict delivered in former President Trump’s trial in New York.@FoxNews pic.twitter.com/V3dj73oqhj

— SundayMorningFutures (@SundayFutures) June 2, 2024

As we highlighted yesterday, Bill Maher has predicted that if Trump is sentenced to any prison time, there will be a civil war that will quickly evolve into a race war because of MAGA supporters.

As we highlighted earlier this week, former US Attorney for the District of Utah Brett L. Tolman is adament that Judge Merchan will give Trump jail time.

“This judge has considerable power now, on July 11th he has the power to take Trump forthwith, he can take him, put him in custody right then and he can do it for whatever period of time,” said Tolman, warning that despite there being a range of sentencing, “the rules are out the window, who knows what this judge will do.”

“I predict he will give him some jail time, I think he will fine him, he’ll give him a stern lecture and then he’ll promptly plan his retirement and a book deal,” concluded Tolman.

*  *  *

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Shares of GameStop Corp. jumped as much as 100% in early premarket trading in New York after the Reddit account affiliated with ‘meme’ stock trader Keith Gill, aka Roaring Kitty, posted an image of what appears to be a massive position in the struggling video game retailer. 

The Reddit account “DeepFuckingValue,” also Gill’s, posted a screenshot of what appears to be his brokerage account late Sunday night. It shows five million GME shares with a cost basis of around $21.27 per share. On line two, he bought 120,000 call options worth $65.7 million, expiring on June 21. 

Bloomberg, MarketWatch, and other financial media outlets all emphasized Gill’s position could not be verified.  
GME shares jumped as much as 103% in premarket trading. As of 0600 ET, shares are up 70%, around the $39 handle. 

On X, Gill, using his Roaring Kitty account, posted an image of a UNO reverse. In the game, players use the card to change the card-pickup direction. As of early Monday, the post garnered nearly 6 million views. 

pic.twitter.com/zUuccrKWZr

— Roaring Kitty (@TheRoaringKitty) June 3, 2024

Last Wednesday, the company revealed it had raised $933 million by cashing in on the first rally earlier last month, also ignited by Gill. The company said it completed its previously disclosed offering for 45 million shares and will use the proceeds for possible acquisitions and investments. 

Besides GME, AMC Entertainment Holdings is up 25% in premarket trading to the mid-point of the $5 handle. During the meme stock frenzy, the struggling movie theater chain also closed an at-the-market equity offering last month. 

Goldman’s Retail Sentiment basket shows the first wave of meme stock buying early last month, with gains evaporating in just a few short trading days. 

After the Covid mania, Reddit traders should’ve just bought big tech. 

Gill’s pump of GME, combined with the subsequent equity offering by the struggling company, raises concerns.