iftttwall

Last week, ahead of the OPEC meeting, BofA commodity analyst Francisco Blanch said the oil cartel faced three specific choices ahead of its May 25 meeting in Vienna, when it is widely expected to extend the production cut:

1. First, OPEC could cut production beyond the 1.2mn b/d agreed in December and encourage non-OPEC members to deepen the cuts.
2. Second, OPEC could increase output aggressively and restart the oil price war.
3. And third, OPEC could keep the cuts at the current levels for the next 6 to 9 months and hope for oil market demand conditions to improve.

For clarity, BofA also presented the following table adding the proposed likelihoods of any given choice of action, of which a simple deal extension had the highest probability of occuring.

It appears that BofA was right, because on Tuesday morning, Bloomberg reported, citing delegates, that the OPEC committee is currently studying three deal extension options: a 6-, 9- and 12-month extension.  Bloomberg also notes that OPEC’s Joint Ministerial Monitoring Committee will be studying these three options and will meet one day before the general meeting – ie on Wednesday. Committee members include Algeria, Kuwait and Venezuela, and non-members Russian and Oman.

Separately, confirming that further cuts will most likely not be announced, the Kuwait oil minister said today that OPEC is not considering deeper cuts, as they’re not “necessary right now.”

As a remember, yesterday OPEC’s secretary general said that consensus is building around a 9 month extension, which is also the base case of most sellside firms. Saudi has also voiced support for such a move: on Monday there were headlines that Saudi’s energy minister was en route to Iraq to try to sway Iraq from a 6m to 9m view, with Iraq allegedly agreeing to the proposal. As a result, an announcement of anything different would likely provoke a market reaction.

Finally, for a detailed take on what OPEC’s motive is – or should be – yesterday Goldman published an extensive note explaining why OPEC’s target with the upcoming deal revision is not to push the price of oil higher, which would prove self-defeating as even more production comes online, but to push the oil strip deeper into backwardation, removing funding for US shale companies.

There has not been a notable move in the price of WTI on the news.

via http://ift.tt/2rwtSKb Tyler Durden

The Rand spiked towards 13/USD – its highest in a month – after reports that South Africa's ruling African National Congress’s National Executive Committee will discuss option of the party removing President Jacob Zuma at May 26-28 meeting, according to two members of the decision-making panel who declined to be identified because they aren’t authorized to speak publicly on the matter.

As Bloomberg reports, the option to remove Zuma to be raised as part of discussion on no-confidence motion called by opposition parties in president in parliament, one of the people says.

While the official denial has been issued

While the NEC’s agenda will only be agreed at its meeting, the matter of Zuma’s removal won’t be discussed, ANC spokesman Zizi Kodwa says by phone.

USDZAR has not stalled its move yet.

via http://ift.tt/2rwspnj Tyler Durden

While unclear if this is an official release – recall, earlier in the day UK PM Theresa May said authorities knew the name of the Manchester attack suspect but were not disclosing it until they were certain – moments ago CBS reported that the suspect behind the Manchester attack is 23-year-old Salman Abedi. As CBS also adds, he was known to authorities.

CORRECTION: CBS News can confirm suspected Manchester attacker is 23-year-old Salman Abedi https://t.co/OtAmmxHRzF http://pic.twitter.com/vWYlZrenyB

— CBS News (@CBSNews) May 23, 2017

JUST IN: @CBSNews can now confirm Salman Abedi as the name of the suspected Manchester bomber http://pic.twitter.com/nJxcPxlmRZ

— CBS This Morning (@CBSThisMorning) May 23, 2017

CBS News confirms #ManchesterBombing suspect as Salman Abedi, 23, who was known to authorities.

— justin michael (@JstnMchl) May 23, 2017

As a reminder, earlier on Tuesday morning, ISIS claimed responsibilty for the Manchester bombing.

ISIS Statement claiming responsibility for the attack in #Manchester http://pic.twitter.com/t3H9u2bkvL

— Shkar Sharif (@ShkarSharif) May 23, 2017

via http://ift.tt/2qfCnVv Tyler Durden

Addressing the UK on Tuesday morning, British PM Theresa May said Tuesday that UK security services probing Monday’s attack at a Manchester pop concert believe they know the identity of the suspect, but will not release the name until further confirmation.

May, who briefed the media outside 10 Downing Street, said the terror attack that killed at least 22 and injured 59, including many children and young people, “stood out for its “appalling, sickening cowardice.”

“While we experienced the worst of humanity in Manchester last night, we also saw the best,” she said. May also said he had chosen the time and the place to attack and cause “maximum carnage and to kill and injure indiscriminately.”  May said security services  “believe the attack was carried out by one man” but need to find out whether “he was acting alone or part of a wider group.”

Separately, Queen Elizabeth II also released a statement on Tuesday, offered her condolences to the victims of Monday’s attack.

“The whole nation has been shocked by the death and injury in Manchester last night of so many people, adults and children, who had just been enjoying a concert.

 

“I know I speak for everyone in expressing my deepest sympathy to all who have been affected by this dreadful event and especially to the families and friends of those who have died or were injured.

 

“I want to thank all the members of the emergency services, who have responded with such professionalism and care.

 

“And I would like to express my admiration for the way the people of Manchester have responded, with humanity and compassion, to this act of barbarity.”

Authorities in Manchester said Tuesday that it appears that an attacker detonated an improvised explosive device at the concert. It is not immediately clear if the attacker acted alone, but the person apparently died in the explosion. Moments ago, ISIS claimed responsibility for the attack.

ISIS Statement claiming responsibility for the attack in #Manchester http://pic.twitter.com/t3H9u2bkvL

— Shkar Sharif (@ShkarSharif) May 23, 2017

Police then said a 23-year-old man had been arrested in connection with the terrorist attack: “With regards to the ongoing investigation into last night’s horrific attack at the Manchester arena, we can confirm we have arrested a 23-year-old man in South Manchester,” Greater Manchester Police said in a statement.

With regards to last night’s incident at the Manchester arena, we can confirm we have arrested a 23-year-old man in South Manchester.

— G M Police (@gmpolice) May 23, 2017

Another man was arrested in the Arndale Shopping Centre on Tuesday, but this is not currently believed to be connected to Monday night’s attacks.

Finally, speaking in Israel, President Donald Trump branded those responsible for the deadly suicide bombing at an Ariana Grande concert and other terrorist attacks “evil losers” on Tuesday.

“So many young, beautiful, innocent people living and enjoying their lives, murdered by evil losers,” he said in Bethlehem while standing next to Palestinian leader Mahmoud Abbas. “I won’t call them monsters because they would like that term, they would think that is a great name.” He added: “I will call them, from now on, losers because that’s what they are: losers.”

Later, in a speech at the Israel Museum in Jerusalem, Trump said the thoughts and prayers of the American people were with the victims and their loved ones in Manchester. “You’ve seen just a horrible thing going on,” the president said at the top of his speech, where he was joined by Israeli Prime Minister Benjamin Netanyahu and other Israeli officials. “Horrific, horrific injuries. Terrible. Doozens of innocent people. Beautiful young children, savagely murdered in a heinous attack upon humanity.”

Then moments ago, Trump also tweeted his solidarity with the UK, “We stand in absolute solidarity with the people of the United Kingdom.”

We stand in absolute solidarity with the people of the United Kingdom. http://pic.twitter.com/X6fUUxxYXE

— Donald J. Trump (@realDonaldTrump) May 23, 2017

via http://ift.tt/2q6R4yA Tyler Durden

Following the horrific events last night in Manchester in which a bombing at an Ariana Grande concert, primarily attended by teenagers, claimed the lives of at least 22 people, we’re just now learning that the Islamic State is claiming responsibility for the attack.

BREAKING: Islamic State group says one of its members carried out the Manchester attack that killed 22 people.

— The Associated Press (@AP) May 23, 2017

#ManchesterAttack: Islamic State says one of its members carried out deadly attack, with a device planted at the Ariana Grande concert http://pic.twitter.com/8oAlUeGvKI

— Sky News (@SkyNews) May 23, 2017

 

Here is the statement from the Islamic State:

“With Allah’s grace and support, a soldier of the Khilafah managed to place explosive devices in the midst of the gatherings of the Crusaders in the British city of Manchester, in revenge for Allah’s religion, in an endeavor to terrorize the mushrikin, and in response to their transgressions against the land of the Muslims.  The explosive devices were detonated in the shameless concert arena, resulting in 30 Crusaders being killed and 70 others being wounded.  And what comes next will be more severe on the worshipers of the Cross and their allies, by Allah’s permission.  And all praises due to Allah, Lord of the creation.”

ISIS Statement claiming responsibility for the attack in #Manchester http://pic.twitter.com/t3H9u2bkvL

— Shkar Sharif (@ShkarSharif) May 23, 2017

 

Of course, this is not a terribly surprising outcome given some of the disturbing messages posted to Twitter last night in which Islamic State supporters celebrated the attack.  Per Yahoo News:

“It seems that bombs of the British airforce over children of Mosul and Raqqa has just came back to #Manchester,” one user named Abdul Haqq said on Twitter, in reference to the Iraqi and Syrian cities held by the militants where a U.S.-led coalition, of which Britain is a member, is conducting air strikes.

 

Supporters posted messages encouraging each other to carry out “lone wolf” attacks in the West and shared Islamic State videos threatening the United States and Europe.

 

One user said he hoped Islamic State was responsible for the attack, although no claim has appeared on any of the militant’s group’s official social media channels.

 

“We hope that the perpetrator is one of the soldiers of the caliphate,” he wrote on a channel affiliated to the group hosted by messaging network Telegram.

 

Others posted banners saying “the beginning is in Brussels and Paris, and in London we form a state,” in reference to previous similar “lone wolf” attacks in Belgium and France for which the group has claimed responsibility.

* * *

A full overview of the attack can be found here.  Below is a summary:

• The Manchester Arena was hit by at least one explosion during a concert by Ariana Grande
• Police confirm 22 Dead, around 59 injured
• UK officials suspect it was caused by suicide bomber.
• Senior counter-terrorism officials meeting in London
• Police warn people to stay away from area
• Emergency services rush to scene
• Ariana Grande ‘Okay’ following the incident

Here is the summary: A man armed with an “improvised” bomb has killed at least 22 people and injured 59 outside a concert arena filled with teenagers in central Manchester on Monday night, in the worst terrorism incident in the UK since 2005. Police said the bomber, who died in the explosion, detonated the device shortly after the end of a concert by US pop star Ariana Grande at about 10.30pm. The incident adds the northern English city to the growing list of recent western targets that includes London, Paris, Stockholm and Berlin.

Quoted by the FT, Ian Hopkins, chief constable of Greater Manchester police, said they were still attempting to determine whether the attacker “was acting alone or was part of a network”.

“This has been the most horrific incident we have had to face in Greater Manchester and one that we all hoped we would never see,” Mr Hopkins said at a news conference on Tuesday morning. “Families and many young people were out to enjoy a concert at the Manchester Arena and have lost their lives… We believe, at this stage, the attack last night was conducted by one man,” Hopkins told reporters. “The priority is to establish whether he was acting alone or as part of a network.

British political leaders, who were in the middle of a general election race, halted all campaigning. Prime Minister Theresa May was scheduled to chair a meeting of the cabinet’s emergency Cobra committee on Tuesday morning.

“We are working to establish the full details of what is being treated by the police as an appalling terrorist attack,” Mrs May said. “All our thoughts are with the victims and the families of those who have been affected.”

Prime Minister Theresa May called an emergency meeting with intelligence chiefs on the deadliest militant assault in Britain since four British Muslims killed 52 people in suicide bombings on London’s transport system in July 2005. Witnesses related the horror of the blast which prompted a stampede just as the concert ended at Europe’s largest indoor arena.

“We ran and people were screaming around us and pushing on the stairs to go outside and people were falling down, girls were crying, and we saw these women being treated by paramedics having open wounds on their legs … it was just chaos,” said Sebastian Diaz, 19.

“It was literally just a minute after it ended, the lights came on and the bomb went off,” Diaz said.

U.S. President Donald Trump described the attack as the work of “evil losers”. German Chancellor Angela Merkel said it “will only strengthen our resolve to…work together with our British friends against those who plan and carry out such inhumane deeds.”

According to AP, there was no immediate claim of responsibility. Online, supporters of the extremist Islamic State group, which holds territory in Iraq’s Mosul and around its de facto capital in the Syrian city of Raqqa, celebrated the blast. One wrote: “May they taste what the weak people in Mosul and (Raqqa) experience from their being bombed and burned,” according to the U.S.-based SITE Intelligence Group.

“A huge bomb-like bang went off that hugely panicked everyone and we were all trying to flee the arena,” said concertgoer Majid Khan, 22. “It was one bang and essentially everyone from the other side of the arena where the bang was heard from suddenly came running towards us as they were trying to exit.” Added Oliver Jones, 17: “The bang echoed around the foyer of the arena and people started to run.” Video from inside the arena showed concertgoers screaming as they made their way out amid a sea of pink balloons.

British Prime Minister Theresa May said the government was working to establish “the full details of what is being treated by the police as an appalling terrorist attack.” May is due to chair a meeting of the government’s COBRA emergency committee later Tuesday. She and other candidates suspended campaigning for Britain’s June 8 election after the blast.

Police advised the public to avoid the area around the Manchester Arena, and the train station near the arena, Victoria Station, was evacuated and all trains canceled.

The Dangerous Woman tour is the third concert tour by 23-year-old Grande and supports her third studio album, “Dangerous Woman.” Grande’s role as Cat Valentine on Nickelodeon’s high school sitcom “Victorious” propelled her to teen idol status, starting in 2010.

via http://ift.tt/2qcrbJK Tyler Durden

There has been distinct cognitive dissonance between Bloomberg’s two more prominent market commentators in recent weeks: on one hand, Bloomberg’s Richard Breslow has been growing increasingly frustrated with the “noise” in capital markets and the inability of traders to form a clear thesis, instead flip-flopping from day to day based on whatever the prevailing narrative of the past 24 hours (or minutes) is; on the other Mark Cudmore, who after starting the year off with a clear bearish bent, has become increasingly more bullish, at times dogmatically so, and his latest note released overnight does little to change the divergence.

Writing in “Stocks Have Upside as Value Is a Subjective Measure” Cudmore claims that “too many investors seem obsessed with the fact that U.S. stocks are “expensive” and “overvalued” when compared to historical metrics”, something we showed over the weekend based on a BofA table which demonstrated that stocks are overvalued on 18 of 20 metrics…

… and instead claims that “value is a subjective assessment seems to have been forgotten. As a result, U.S. equities are more likely to melt-up rather than melt-down in the short-term.” As a result, his contention is that even with the S&P trading at 2,400, and potentially set to make new record highs today, “U.S. equities are more likely to melt-up rather than melt-down in the short-term” conf

We leave it up to readers to agree or disagree with the former portfolio manager.

His latest Macro View titled is presented below.

Stocks Have Upside as Value Is a Subjective Measure

 

The truism that value is a subjective assessment seems to have been forgotten. As a result, U.S. equities are more likely to melt-up rather than melt-down in the short-term.

 

Too many investors seem obsessed with the fact that U.S. stocks are “expensive” and “overvalued” when compared to historical metrics.

 

I’m not disputing those statements. But when there’s an unprecedented amount of liquidity in global markets, then valuations at unprecedented levels don’t seem completely illogical.

 

Value can’t be adequately compared in nominal terms. Real terms are what matter. If two people are stranded on a desert island and one has some food while the other has gold but nothing else, then she will exchange all that gold for some food. At that point in time, that value is correct, no matter what historical data suggests.

 

It’s hard to consider valuations stretched when there’s still excess cash on the sideline. I’ve noticed that perma-bears tend to bemoan that central banks are distorting markets while simultaneously failing to incorporate that “distortion” into their valuation metrics. They can’t profitably have it both ways. Either central banks have not changed the game and the bearish historical models will work, or central banks have altered market dynamics, in which there’s no point referencing rules to the old game as an excuse to sell.

 

I know which camp I’m in. Global liquidity is abundant and constantly increasing. Central bank balance sheets have been accelerating in size since the start of 2016, not decelerating.

 

Taking the combined balance sheets of just the four largest central banks in the world (PBOC, ECB, Fed and BOJ) and charting that versus the market capitalization of global equity markets shows no dislocation in broad equity prices.

 

If anything, this suggests that global equities are “undervalued” as normally they trade at a premium to those balance sheets. And I stress that I’m only charting central bank balance sheets against the entire world’s equity markets.

 

When you add in the fact that global growth is picking up, global earnings are incredibly strong and long-term yields remain contained, then it’s hard not see this Goldilocks world for equities persisting.

 

I will acknowledge that this argument focuses on global equities rather than U.S. stocks. I’m firmly in the camp that U.S. equities may underperform other markets, particularly EM ones, for many years ahead.

 

So how can I say that U.S. equities are at risk of melting up? Because too many investors are fighting reality and using U.S. equities to express a misguided bearish global view. U.S. political noise provides an extra excuse.

 

This is the macro backdrop. Corrections are obviously possible. But, until the framework shifts again, I’m failing to see why dip-buyers aren’t correct.

via http://ift.tt/2rLKECi Tyler Durden

Manchester Attack Sees Asian Stocks Fall, Gold Firm

The appalling attack in Manchester overnight in which over 22 people have been killed has led to a slight uptick in risk aversion in markets.

Investors are cautious after police said they were treating a bombing at a concert in the Manchester Arena as a “terrorist incident”.

Gold in GBP (24 hours)

Asian stocks  gave up gains after the attacks and European indices had a subdued start.

Gold rose in the aftermath of the attacks to three week highs prior to giving up some of the gains by mid morning trading.

Sterling fell marginally and gold in sterling terms rose as high as £973.55 prior to consolidating near £970. Sterling was down 0.2 percent against the dollar to $1.2978 after falling 0.3 percent on Monday.

If the blast is confirmed as a terrorist incident, it would be the deadliest attack in Britain by militants since four British Muslims killed 52 people in suicide bombings on London’s transport system in July 2005.

The attack has come just two-and-a-half weeks before an election that British Prime Minister Theresa May is expected to win easily.

Polls showing that the contest was tightening had added to sterling’s woes recently. A terrorist attack will likely benefit the Tory Party and Theresa May as they are perceived to be tougher on terrorism than the Labour Party.

Terrorist events have not impacted markets globally in recent months and years. However, the concern is that with consumers indebted and consumer sentiment vulnerable, a spate of terrorist attacks or worse a terrorist ‘spectacular’ akin to ‘September 11’ could badly impact already fragile economies and increasingly frothy financial markets.

The UK’s counter-terrorism chief has said that terrorists want to inflict an “enormous and spectacular” terrorist atrocity on the UK.

The uncertain political climate in the UK and the United States is  weighing on the dollar and sterling. Concerns over U.S. political turmoil and the complete mess that is the current U.S. political situation will lead to continuing demand for safe haven gold.

This has led to gold’s recent gains and should contribute to gold eking out further gains in the coming weeks.

 

News and Commentary

Gold edges higher in Asia after deadly Manchester concert venue blast (Investing.com)

Gold prices tally highest settlement in 3 weeks (MarketWatch.com)

Gold prices steady despite Manchester blast, US political woes support (Reuters.com)

Trump Concern, Manchester Blast Spur Risk-Off Tone (Bloomberg.co)

Trump trouble and euro surge extend gold’s gains (Reuters.com)

 

Market crash that makes 2008 look like a picnic – Paul Interviews Taleb (YouTube.com)

Greek Authorities To Launch Mass Confiscation Of Safe Deposit Boxes In Tax-Evasion Crackdown (zeroHedge.com)

Dungeons of gold: Sex, booze and braais in underground mine cities (TimesLive.co.za)

Gold and silver futures shorts seem washed out (TFMetalsReport.com)

Gold’s golden cross: Metal just formed a chart pattern that can signal a breakout (CNBC.com)

 

Avoid Digital & ETF Gold – Key Gold Storage Must Haves

Gold Prices (LBMA AM)

23 May: USD 1,259.90, GBP 969.62 & EUR 1,119.17 per ounce
22 May: USD 1,255.25, GBP 967.17 & EUR 1,123.07 per ounce
19 May: USD 1,251.85, GBP 962.17 & EUR 1,122.03 per ounce
18 May: USD 1,261.35, GBP 968.21 & EUR 1,133.95 per ounce
17 May: USD 1,244.60, GBP 961.70 & EUR 1,122.13 per ounce
16 May: USD 1,234.05, GBP 958.98 & EUR 1,117.93 per ounce
15 May: USD 1,231.50, GBP 952.32 & EUR 1,124.61 per ounce

Silver Prices (LBMA)

23 May: USD 17.14, GBP 13.22 & EUR 15.25 per ounce
22 May: USD 16.95, GBP 13.04 & EUR 15.10 per ounce
19 May: USD 16.77, GBP 12.90 & EUR 15.02 per ounce
18 May: USD 16.81, GBP 12.90 & EUR 15.10 per ounce
17 May: USD 16.90, GBP 13.03 & EUR 15.22 per ounce
16 May: USD 16.72, GBP 12.97 & EUR 15.13 per ounce
15 May: USD 16.59, GBP 12.83 & EUR 15.12 per ounce

Recent Market Updates

– James Rickards: Gold’s “Decisive Turn Around” – “Next Stop Is $1,300 Or Higher”
– Gold and Silver Bullion Coins See Sales “Explosion” In UK On “Wave Of Political Turmoil”
– Gold Investment Is the Ultimate Guide for Tech Investors In 500 Words
– Gold Spikes On Heavy Volume On Trump, U.S. Political “Mess”
– Cyber Wars Could Crash Markets and Threat To Humanity – Rickards and Buffett
– Cyber Attacks Show Vulnerability of Digital Systems and Digital Currencies
– History of Gold – Interesting Facts and Changes Over 50 Years
– U.S. Gold Exports To China and India Surge In 2017
– The Dream of the Central Banker
– Silver Investment Case Remains Extremely Compelling
– Gold Coins, Bars In Demand – +9% In Q1, 2017
– Irish Property Bubble – 38pc Believe Housing Market Will Crash
– Silver Bullion On Sale After 10.6% Fall In Two Weeks

Access Award Winning Daily and Weekly Updates Here

via http://ift.tt/2q6OQ2q GoldCore

S&P futures rose alongside European stocks as Asian shares posted modest declines. The euro set a new six-month high and European bourses rose as PMI data from Germany and France signaled that the ECB will have to tighten soon as Europe’s recovery remains on track, with the German Ifo business confidence printing at the highest level on record, and hinting at a GDP print in the 5% range. Oil declined after the Trump budget proposal suggested selling half the crude held in the US strategic petroleum reserve.

Strong economic survey data across the Eurozone supported EU bourses, despite a cautious start to trade after last night’s deadly terror attack in the UK. Alongside strong headline numbers, one of the most eye-catching details in the data was the biggest manufacturing sector job growth reading in the survey’s 20-year-history and overall employment gains were the second best in a decade.

“It’s a very good result and it’s broad based. We’ve got a good pace of growth here. The fact we have maintained this high level in May is great news for second quarter GDP,” said Chris Williamson, chief business economist at IHS Markit.”

Just like in the US, tech companies helped propell the Stoxx Europe 600 Index higher after Nokia Oyj settled a litigation with Apple. The U.K.’s FTSE 100 Index rose a third day, the pound pared declines and gilts were steady after the Manchester bombing. The dollar declined after the Washington Post reported Donald Trump asked intelligence chiefs to publicly deny collusion between his campaign and Russia, a potentially impeachable offense. The U.S. president in March asked Director of National Intelligence Daniel Coats and NSA Director Michael Rogers to publicly deny existence of any collusion between his campaign and the Russian government, the Washington Post reported, citing unidentified current and former officials.

Oil dropped, halting a four-day rising streak that took the price of crude above $51 a barrel.

It wasn’t just the German IFO surge: a euro-area Purchasing Managers’ Index showed manufacturing in the bloc expanded at the fastest pace in more than six years, bolstering the case for an ECB rate hike and further capital flows out of the US and into Europe as political wrangling in Washington rumbles on, diverting attention from President Trump’s spending and tax plans.

“Europe’s growth numbers aren’t knocking the skin off the ball, but they are less volatile and it’s doing relatively well compared to the U.S., U.K. and Japan,” said Bill Blain, head of capital markets at London-based Mint Partners. “More than a few global investors have lost faith in the U.S. recovery and Trump jump.”

There was some bad news: signs that euro zone authorities and the International Monetary Fund remain some way apart on Greece’s debt problems combined with the strong data to nag at bond markets. Greece’s short-dated government bond yields rose sharply as the IMF’s chief negotiator stuck to its stance that there needs to be more realism on what Athens can deliver. The prospect of the ECB scaling down its multi trillion euro stimulus program meanwhile nudged up yields on German Bunds DE10YT=TWEB and other higher-rated government debt.

“The risk-off environment is already erased and we are back to the levels we saw yesterday on the back of the very bright economic outlook,” said DZ Bank analyst Rene Abrecht.

The Stoxx Europe 600 Index gained 0.2 percent in early trading. The U.K.’s FTSE 100 Index added 0.1 percent. Futures on the S&P 500 climbed 0.1 percent after the underlying gauge rose 0.5 percent on Monday. The selloff in Brazilian assets resumed on Monday. The NEXT Funds Ibovespa Linked Exchange Traded Fund, an equity ETF that tracks Brazil’s benchmark index, slumped 3.9 percent in Tokyo trading Tuesday.

Asian trading had seen a modest pull back in risk appetite with MSCI’s broadest index of Asia-Pacific shares not including Japan dropping back from near two-year highs. Tokyo’s Nikkei closed down 0.3 percent as Japanese manufacturing activity expanded at the slowest pace in six months in May, while trading in China was choppy on concerns over a regulatory crackdown on risky lending practices. Japan’s Topix dropped 0.2 percent after swinging between gains and losses. South Korea’s Kospi rose 0.3 percent. Hong Kong’s Hang Seng fell 0.1 percent. The Shanghai Composite Index lost 0.5 percent.

The dollar remained in the doldrums too. It dipped to a 6-1/2-month low against a basket of other major currencies as low 10-year U.S. Treasury yields continued to underscore fading expectations for fiscal stimulus from the Trump administration.

Of note, today the White House will present Trump’s first full budget plan to lawmakers on Tuesday. Its proposals include a $3.6 trillion cut in government spending over 10 years, balancing the budget by the end of the decade. Congress holds the federal purse strings and often ignores presidential budgets, which are proposals and may not take effect in its current form. But the plan, which advocated selling half of strategic U.S. oil reserves, weighed on crude futures according to Reuters, offsetting optimism over expectations that other major oil producers would agree to extend supply curbs this week.

Brent retreated 0.8 percent to$53.44 a barrel. U.S. crude futures gave up all their earlier gains to edge lower to $50.71, after hitting their highest level in more than a month earlier in the session. The weaker dollar, meanwhile, lifted gold slightly. Spot gold climbed 0.1 percent to $1,261.56 an ounce in its third straight session of gains.

This afternoon sees US new home sales and the much-ignored Markit manufacturing PMI. Neither is expected to be much-changed from last month. The big event for the US market is the FOMC Minutes tomorrow. “The big question for markets is how fast investors get back to the business of hunting carry” according to SocGen’s Kit Juckes. “I am watching USD/BRL which has stabilised after last week’s spike, and if this starts to edge down again while US equities move towards new highs, that would increase the likelihood of a June Fed rate hike rate, while also supporting all the higher-yielding currencies. That does, in G10FX, lead to NZD/JPY.”

Bulletin Headline Summary from RanSquawk

• Strong PMI and IFO surveys across the Eurozone have supported EU bourses despite a cautious start to trade following last night terror attack in the UK
• WTI and Brent crude futures enter the North American crossover in negative territory as concerns continue to mount regarding the factions within the cartel and whether all players are on board with output curbs
• Looking ahead, highlights include Fed’s Kashkari, Harker and ECB’s Coeure

Global Market Snapshot

• S&P 500 futures up 0.2% to 2,396.75
• STOXX Europe 600 up 0.3% to 392.14
• MXAP down 0.2% to 151.94
• MXAPJ down 0.1% to 496.39
• Nikkei down 0.3% to 19,613.28
• Topix down 0.2% to 1,565.22
• Hang Seng Index up 0.05% to 25,403.15
• Shanghai Composite down 0.5% to 3,061.95
• Sensex down 0.3% to 30,494.69
• Australia S&P/ASX 200 down 0.2% to 5,760.19
• Kospi up 0.3% to 2,311.74
• German 10Y yield rose 1.6 bps to 0.413%
• Euro up 0.2% to 1.1259 per US$
• Brent Futures down 0.7% to $53.47/bbl
• Italian 10Y yield unchanged at 1.845%
• Spanish 10Y yield rose 0.7 bps to 1.63%
• Brent Futures down 0.7% to $53.47/bbl
• Gold spot down little changed at $1,260.08
• U.S. Dollar Index down 0.1% to 96.84

Top Headline News

• Britain is reeling from last night’s terror attack that killed 22 people at a concert by U.S. pop star Ariana Grande in the northern city of Manchester
• OPEC and its allies were poised to continue their production cuts for another nine months after Iraq backed an extension, removing one of the last remaining obstacles to an agreement
• President Donald Trump would dramatically reduce the U.S. government’s role in society with $3.6 trillion in spending cuts over the next 10 years in a budget plan that shrinks the safety net for the poor, recent college graduates and farmers
• Noble Group Ltd.’s crisis deepened after S&P Global Ratings flagged a risk of default for the commodity trader within a year, triggering a rout in the company’s shares before they were suspended in Singapore ahead of a company statement
• Nokia Oyj, the latest technology company to do battle with Apple Inc. over patents, secured a licensing agreement that is likely to boost its revenue in an underdog victory that sent the Finnish company’s shares soaring
• Details of the closed-door discussion that Federal Reserve officials held during their most recent policy gathering are expected to keep the odds of a June interest-rate increase high

Asia equity markets traded with a cautious tone amid terror fears following the explosion in Manchester, UK where 19 people were confirmed dead and over 50 others injured, which police are treating as a terrorist attack. This dampened the risk tone in ASX 200 (-0.3%) and Nikkei 225 (-0.3%), although markets in Australia attempted to recover as gains in commodities-related sectors provided support. Hang Seng (+0.1%) and Shanghai Comp. (-0.5%) were mixed with downside stemmed after the PBoC conducted a firm liquidity injection of CNY 140bIn. Finally, 10yr JGBs were relatively flat with only mild upside observed despite the cautious risk tone observed in equities, while the enhanced liquidity auction also saw a muted reaction and failed to drive any significant demand.

Top Asian News

• China Boosts Zinc Imports to 13-Month High on Local Shortage
• Noble Group ‘Fighting for Its Life’ as S&P Sees Default Risk
• Sun Pharma Weighs on Indian Drugmakers as U.S. Competition Bites
• Fortescue CEO Says Iron-Ore Price May Need to Fall More: FT
• Tongda Didn’t Get Oppo’s R11 Model Order, Tongda CFO Says
• China Spins a Worldwide Web of Food From Mozambique to Missouri

In European markets, Strong PMI and IFO surveys across the Eurozone have supported EU bourses this morning to trade risk-on, following stellar readings from France and Germany in particular, where the Mfg. figure rose to 59.4, ahead of the exp. 58. Subsequently, offsetting the slip in crude oil futures which stemmed from comments by the Kuwait Oil Minister who stated that not everyone is on board with 9-month extension. This is somewhat of a contrast to rhetoric from the Saudi Energy Minister, who kept alive hopes by stating that there is no objection to a 9-month deal. Of note, equities have pulled off highs amid reports that South Korea have fired warning shots following an unidentified object flying south from North Korea. In credit markets, government bonds have reversed their in FTQ amid the risk on sentiment. Notable underperformance observed in the Greek short end after reports that Greece’s creditors failed to reach an agreement on Greek debt measures and held off releasing new funds to Greece. Additionally, Belgium have now opened books for their EUR 20yr with reports noting that demand has exceeded EUR 8.85b1n. Elsewhere, supply from the UK and Germany has been well digested.

Top European News

• German Upswing Takes Business Sentiment to Highest Since 1991
• Greek Deal on Debt Relief Founders as Talks Stretch to June
• U.K. Began New Fiscal Year With Higher-Than-Forecast Borrowing

In currencies, the Bloomberg Dollar Spot Index dropped for a third day, falling 0.1 percent to head for the lowest level since Nov. 4. The yen rose 0.2 percent to 111.13 per dollar. The pound was little changed at $1.2996 after weakening as much as 0.4 percent. The euro rose 0.2 percent to $1.1258. Across FX markets, the news of the terror attack in Manchester has dominated the headlines, which prompted some mild GBP selling to trip below 1.30, although, bids layered in 1.2950 curbed further downside. EUR still feeling the upward momentum, now helped by the strong Eurozone PMI readings. NZD remains on the front foot off the back of optimistic expectations from the budget later this week. The local press have been shedding a positive light on some of the economy friendly measure. We have the Fonterra dairy auction later today, so this may test the NZD resolve which sees the spot rate above 0.7000 and AUD/NZD back in the mid 1.0600’s. As can be said of a number of pairings in the majors, there look to be over-extensions of note, and some will be justified in attributing this to USD/JPY given the marginal price action see in Treasury yields. Sub 111.00 looks to be running into demand as we cannot ignore the prospect of a Fed rate hike in June. As we have spoken of in recent weeks, the market is also looking at the longer term perspective of the US rate path, but in light of this, the data has faded at best, so we expect some consolidation in the USD at these levels as we await more data.

In commodities, WTI and Brent crude futures enter the North American crossover in negative territory as concerns continue to mount regarding the factions within the cartel and whether all players are on board with output curbs. More specifically, the Kuwait Oil Minister says that not everyone has agreed to a 9-month output extension but is agreed on a 6-month extension, while adding that deeper cuts are not being discussed. Crude oil prices also took a hit after the Chinese customs highlighted that China’s crude imports from Russia and Saudi Arabia fell 1.9% and 3.9% respectively in April. In metals markets, gold prices are mildly higher due to a weaker USD and safe-haven flows in the wake of the Manchester Arena explosion, while copper prices failed to maintain traction as risk sentiment in the region turned cautious.

Looking at the day ahead, in the US we’ll get the flash May PMIs along with April new home sales and May Richmond Fed manufacturing index. Away from the data, the Fed’s Kashkari is scheduled to speak again at two separate events while the Fed’s Harker speaks at 5pm ET. The other big focus for today will be the Trump’s administration budget request where we are expecting to get alot more details on the back of the skinny budget released back in March and some of the leaks this morning.

US event calendar

• 9:45am: Markit US Manufacturing PMI, est. 53, prior 52.8; Services PMI, est. 53.3, prior 53.1; Composite PMI, prior 53.2
• 10am: New Home Sales, est. 610,000, prior 621,000; MoM, est. -1.77%, prior 5.8%
• 10am: Richmond Fed Manufact. Index, est. 15, prior 20
• 9am: Fed’s Kashkari Speaks with Reporters in Minneapolis
• 3pm: Fed’s Kashkari Speaks in Minneapolis
• 5pm: Fed’s Harker Speaks in New York

DB’s Jim Reid concludes the overnight wrap

Awful news this morning for those of us in the UK after a suspected terrorist attack at a concert in Manchester late last night which has taken the lives of 19 people and left another 50 injured. If confirmed as a terrorist attack it will be the largest such atrocity on these shores since the 2005 London bombings. Safe haven assets are a little stronger this morning with 10y Treasury yields -1.7bps and Gold +0.15%. Sterling (-0.10%) is slightly weaker. The Nikkei (-0.12%) is a touch softer but most other markets in Asia are flat to slightly higher. Indeed the ASX is +0.03% while the Hang Seng (+0.30%), Shanghai Comp (+0.18%) and Kospi (+0.92%) are firmer.

Also worth highlighting overnight is the news that S&P had moved to place Brazil’s sovereign BB rating on credit watch negative. Brazilian assets had resumed their selloff yesterday with the Bovespa down -1.54%, Brazilian Real weakening -0.38% and local currency bond yields 30bps higher. Also Bloomberg is reporting that President Trump is to announce $3.6tn in tax cuts over the next 10 years at today’s much anticipated budget plan. The proposal will supposedly claim to balance the budget within a decade. As we’ve noted before however it appears that the Republican-led Congress is likely to largely ignore the proposal. Today’s main market story outside of the UK attack are the global flash PMIs. The strong YTD performance in equities has matched the strong recent performance of global PMIs so on this measure the rally is not out of line with the data. Of the main regions, China has perhaps seen the weakest PMI readings and it’s notable that whilst US/European equities are up around 10-25% YTD, Chinese equities are slightly down. With this in mind today’s flash PMIs from around the globe will give us an early sign to whether momentum is continuing at an elevated pace. In Europe the expectations are for broadly unchanged numbers for services and manufacturing with a 55 or 56 handle. In the US also broadly unchanged with a 53 handle for both. A sizeable move in either direction around this consensus would likely drive equities over the next few weeks. We’ll actually have to wait until next week to receive China’s PMIs but this morning Japan released its manufacturing PMI which came in at 52.0 for May versus 52.7 in April.

This comes after market sentiment continues to improve after the US political shocks of last week. The S&P 500 (+0.52%) rose for the third consecutive session yesterday and is now up 1.76% from last week’s intraday lows and also back to within half of a percent of the all time high mark again. The Dow (+0.43%), Nasdaq (+0.82%) and Russell 2000 (+0.72%) indices also had a decent session despite there not really being much news. In fact the lack of any Trump-related headlines was probably a positive for sentiment although some of the deals struck with Saudi Arabia over the weekend were seen as a boost for markets. The VIX also plunged over 9% and closed back below its YTD average at 10.93. Markets in Europe were a bit more benign (Stoxx 600 -0.09%) with banks down for the fourth time in five days.

Helping sentiment at the margin were higher Oil prices with WTI Oil (+0.91%) closing above $51/bbl for the first time since April 18th. This comes ahead of Thursday’s OPEC meeting where expectations are seemingly high for an extension to the supply cut agreement. In fact the rest of the commodity complex was generally firmer with Gold (+0.37%), Iron Ore (+0.80%), Copper (+0.37%) and Zinc (+0.67%) all edging up. The one asset which is struggling to recover from the Trump-inspired selloff from last week is the US Dollar (-0.16%) which fell for the 7th time in the last 8 sessions yesterday. That wasn’t helped by the strong day for the Euro though (+0.28%) which bounced after German Chancellor Merkel called the single currency “too weak” (albeit in the context of Germany’s trade surplus).

As a longer term aside on the current and future financing of government debt, yesterday the UK Conservative Party seemed to take a care policy U-turn on their campaign trail. The reforms announced in their manifesto last week basically meant that more people would have to use their home to fund future elderly care down to their last £100,000. However the backlash led to remarks from PM Mrs May yesterday that they would consult on having a maximum amount that any person would be forced to pay. This comes only a couple of months after the same government announced a U-turn on taxing self employees people slightly more to be closer to other employees in the economy. This follows the previous chancellor George Osborne reversing a cut in tax credits (announced in 2015) for millions of low-paid families after immense and very public criticism.

With the UK not seeing a budget surplus since 2001 (only very briefly after many prior years of big deficits) and with the Conservative Party last week delaying a return to a balanced budget to 2025 in their manifesto one wonders how budgets will ever balance again when any tax increases or welfare cuts are very quickly reversed when shown as unpopular. This is not a UK only phenomenon (well done Germany though) but this recent activity in the UK surely is reflective of a wider global issue of how to collect more in tax than you spend, especially as we get older, all have a vote and the working age population shrinks or growth stalls across the developed world. It’s one of the reasons we think that helicopter money will eventually be prevalent. Governments can’t cut deficits too much without major backlash. In the end it’ll be easier to monetise them.

On that note, following another set of marathon talks yesterday negotiations between Greece’s creditors failed to yield a deal on debt relief at last night’s Eurogroup meeting. The IMF and Germany were supposedly in disagreement over the amount of debt relief required to assure economic stability in Greece. Eurogroup Chair Jeroen Dijsselbloem said that it is still a priority to bring the IMF on board and that work will continue in the coming weeks with the hope that a deal can be concluded on June 15th at the next scheduled meeting for Eurogroup ministers. As a reminder Greece faces around €7bn of debt maturities in July. Onto credit, the latest ECB CSPP numbers were out yesterday and I was surprised to see the average daily corporate purchases at €401mn last week, notably above the average daily run rate of €365mn since the program started. So back in April and early May it looked like a broadly equal CSPP/PSPP split but last week’s numbers gives us the possibility that CSPP hasn’t been tapered as much after all.

Just wrapping up the remaining newsflow yesterday, with no significant data out there was a bit of focus on the Fedspeak yesterday. The Dallas Fed’s Kaplan said that he still favoured two more rate hikes this year and a balance sheet reduction to start later this year. On inflation Kaplan said that “recent readings are likely not indicative of a weakening trend…and as slack continues to be removed from the labour market, headline inflation should reach, or exceed, the Fed’s 2% longer-run objective in the medium term”. Over at the ECB the Bundesbank’s Weidmann reiterated that inflation pressures are currently “muted” but that they should increase “with the continued economic upswing and gradual decline in unemployment in the Euro area”.

Looking at the day ahead, we’ve got a fairly busy diary to get through in Europe this morning. Shortly after this hits your email we’ll get the final revisions to Q1 GDP in Germany (no change to the +0.6% qoq flash print expected) as well as details around the growth drivers. Shortly after that we get May confidence indicators out of France before all eyes turn to those flash May PMIs. Later on this morning we’ll get the May IFO survey out of Germany and public sector net borrowing data in the UK for April. This afternoon in the US we’ll also get the flash May PMIs along with April new home sales and May Richmond Fed manufacturing index. Away from the data, the Fed’s Kashkari is scheduled to speak again at two separate events (2pm BST and 8pm BST) while the Fed’s Harker speaks at 10pm BST. The ECB’s Coeure speaks this afternoon too. The other big focus for today will be the Trump’s administration budget request where we are expecting to get alot more details on the back of the skinny budget released back in March and some of the leaks this morning.

via http://ift.tt/2rOul79 Tyler Durden