Tag: finance

Much was made of Berkshire’s unexpected infatuation with AAPL yesterday (which was not actually driven by Buffett but by one of his new ex-hedge fund heirs, Todd Combs and Ted Weschler, who have “shown a willingness to wade into other corners”), which catalyzed the recently beaten down stock’s biggest surge in months.  Not as much was made of the selling in AAPL in the first quarter, but perhaps it should have been because while the Top 20 buyers of AAPL stock added a grand total of 101.5 million shares, the Top 20 sellers liquidated 50% more, or 157.5 million.

Additionally, if one adds up all the changes in AAPL stock as of March 31 as reported per the latest batch of 13F, there was a grand total of 58.7 million net AAPL shares sold, which explains the company’s declining stock price4 in the quarter.

Finally, for those curious who the top 20 buyers and sellers of AAPL stock were in the first quarter, here is the full breakdown.

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A significant downward revision for March (from -0.6 to -0.9% MoM) enabled April to beat handsomely (+0.7% vs +0.3% exp.) pleasing headline-tracking algos. While this is the biggest monthly jump in Industrial Production since Nov 2014 – all thanks to the biggest spike in Utilities since 2007; the year-over-year tumble continues with IP -1.07% YoY for the 8th month in a row. Industrial production has never fallen for this long – in 96 years – without the US economy being in recession.

The monthly pickup was thanks to Utilities:  The increase of 5.8 percent in the output of utilities was its largest since February 2007, when it leapt 6.2 percent. In April, electric utilities and natural gas utilities expanded 5.4 percent and 9.3 percent, respectively.

But year-over-year, this is the 8th monthly plunge in a row…

 

The longest streak of losses without a recession since records began in 1920…

 

Of course none of that matters… until it does…

 

Charts: Bloomberg

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Submitted by Carey Wedler via TheAntiMedia.org,

The classified 28-pages of the 9/11 report have made global headlines lately as a handful of lawmakers battle to release them to the public. Those pages are believed by activists and members of Congress — who have seen them — to expose the role of Saudi Arabia, including government officials, in the terrorist attacks.

But according to a new report based on years of investigative journalism, it turns out there are far more than 28 classified pages on Saudi Arabia and 9/11 — there are 80,000 kept secret by the FBI. And though not all 80,000 are expected to concern the Saudi family — and the FBI insists their investigation of the documents came up empty-handed — journalists, at least one lawmaker, and heavily-redacted documents suggest otherwise.

As the Daily Beast reported, the discovery of the 80,000 pages came when Irish investigative journalists Anthony Summers and Robbyn Swan were contacted by an unnamed counterterrorism official in 2011. The reporters were preparing to publish a book on the 10th anniversary of the terror attacks and were told  by the source that a Saudi family who had been living in Sarasota, Florida, prior to the attacks had connections to the attackers. Specifically, they were linked to Mohamed Atta, the Egyptian terrorist widely recognized as the ringleader of the attacks.

The unnamed official’s tip conflicted squarely with the FBI’s prior conclusions on that family. Abdulazzi al-Hiijjii, his wife Anoud, and their three small children lived in an upscale Sarasota community, along with Anoud’s father, Esam Ghazzawi, a financier and interior designer, who owned the home, and Ghazzawai’s American-born wife. The FBI had received multiple calls from the family’s neighbors expressing concerns over erratic behavior. Two weeks before 9/11, they left the house in a huge hurry, leaving dirty diapers and toys strewn about, a fully stocked refrigerator, and three cars in the driveway.

Though the FBI opened an investigation in April 2002, it still insists it never found any significant connection between the family and Atta. The agency acknowledged they had suspected a connection, but “not until after the Tampa field office opened an investigation that claimed to find ‘numerous connections’ between the family and the 9/11 hijackers,” the Daily Beast explained. The 80,000 classified pages in question stemmed from that investigation.

The FBI says “the bureau’s own agents did initially suspect the family was linked to some of the hijackers.” But “on further scrutiny, those connections proved unfounded, officials now say.”

But Summers and Swan contacted Dan Christensen, a veteran Florida reporter, and together they published an exposé on these connections in Sarasota in September 2011. As they reported, following the 9/11 attacks:

“[L]aw enforcement agents not only discovered the home was visited by vehicles used by the hijackers, but phone calls were linked between the home and those who carried out the death flights — including leader Mohamed Atta — in discoveries never before revealed to the public.”

They were also never revealed to lawmakers. The 2011 story caught the attention of Bob Graham, a Florida Democrat who has since led the campaign to release the 28 pages on the Saudi connection, which are said to contain information showing Saudi government officials were involved in orchestrating the attack.

At the time, he said the journalists had “open[ed] the door to a new chapter of investigation as to the depth of the Saudi role in 9/11.” Graham attempted to view some of the documents, and told the Daily Beast (for a forthcoming article) they did show a connection between the family and three hijackers. He was soon after confronted by then-deputy director of the FBI, Sean Joyce. According to Graham, he said, “Basically everything about 9/11 was known and I was wasting my time and I should get a life.”

Christensen filed a Freedom of Information Act request in the hopes of either confirming or refuting their original reporting. Thomas Julin, his lawyer, said the FBI initially denied having any records. When Graham said he was willing to testify he had seen some, the Department of Justice conveniently admitted to having 35 relevant pages. They released them, but they were heavily redacted. In spite of the overt censorship guarding that information, they reportedly still made clear the FBI had suspicions about the family — and that they had found several connections between them and the hijackers. The pages also include the FBI’s dismissals of those suspicions.

U.S. District Court Judge William Zloch, who presided over the Freedom of Information case, was unconvinced and demanded the FBI conduct another search of its records. This time,“the FBI found some additional responsive documents which it produced,” Juline told the Daily Beast. “But it also found 80,266 pages of material in the Tampa Field Office of the FBI which had been marked with the file number for the FBI’s PENTTBOM investigation.”

PENTTBOM was the FBI term for its investigation into the 9/11 attacks. Though the New York Post had previously reported on these 80,000 pages, the DoJ’s small release of documents clarified suspicions. Zloch ordered the FBI to hand over all the documents in May 2014 — and he is still going through them to determine which pages can be released. He has given no indication of when he will be finished.

The Daily Beast explained “Zloch’s task is made all the more painstaking by the strict security rules governing review of classified documents, even for a sitting judge. The files are kept in a secure facility, and he can only remove a portion at a time.”

It remains unclear how many of the 80,000 pages pertain directly to the Tampa FBI field office’s investigation of the family in Sarasota — and their ties to the attackers. Though Christensen says he’s ready to be proven wrong, he believes “those files will reveal the underlying reasons for the FBI’s early suspicions.”

As the Daily Beast laid out:

“The FBI, for instance, says that phone records searches showed no links to the house and the hijackers. Christensen’s confidential source says the opposite is true. If the FBI is right, Christensen asks, then why not just release the information and put the dispute to rest?”

The FBI has attempted to discredit the pages, claiming the agent who filed the first reports on the family and their potential connection to the hijackers was “not a good writer and should not be taken as the last word,” according to Graham. However, that agent was promoted shortly after 9/11, casting doubt on assertions they were incompetent.

In a similar evasion of accountability, President Obama vowed to block a legislative effort to release the 28 pages amid pressure from the Saudi Arabian government, which threatened to remove $750 billion in American assets should the legislation pass. The president cited concerns that allowing families of 9/11 victims to sue a foreign government could, in turn, open the United States government up to prosecution, itself. The White House has since indicated it intends to release part of the 28 pages.

Though Julin says the 28 pages likely aren’t linked to the Sarasota Saudi family, he hopes their eventual release “might help Judge Zloch see the wider significance of the events in Sarasota and persuade him that some or all of the records have not been properly classified.”

Last week, a former member of the 9/11 commission said he believes six Saudi officials supported the 9/11 hijackers. John F. Lehman said Wednesday, “There was an awful lot of participation by Saudi individuals in supporting the hijackers, and some of those people worked in the Saudi government,” he said. “Our report should never have been read as an exoneration of Saudi Arabia.”

The FBI’s trove of documents also requires further examination. Julin dismissed suspicions Judge Zloch is intentionally lagging in his investigation of the 80,000 pages. “I believe this is not a stalling tactic at all,” he said. “The judge is doing what he has to comply” with the stringent rules surrounding the release of the classified documents. “But I would urge him to speed it up,” he said.

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Unlike recent months when the Census Bureau reported some fireworks in the New Housing Starts and Permits data, the April update was relatively tame, and saw Starts rise from an upward revised 1,099K to 1,172K, beating expectations of a 1,125K print, mostly as a result of a 36K increase in multi-family units which however remain depressed below recent peaks from early 2015, which will likely stoke even higher asking rents, already at record highs across the nation.

 

But if starts were better than expected, then the future pipeline in the form of Housing Permits disappointed, with 1,116K units permitted for the month of April, below the 1,135K expected, if a rebound from last month’s downward revised 1,077K.

 

The issue, as with the starts data, is the multi-family, aka rental units, barely rebounded and remained at severely depressed levels last seen in 2013: at 348K rental units permitted in April, this is a far cry from the recent highs of 598K in June.

One wonders if this is intentional, because based on soaring asking rents, as shown in the chart below, with Americans increasingly unable or unwilling to buy single-family units, rental prices have exploded to 8% Y/Y based on Census data.

Should multi-family permits and starts remain as depressed as it has been in recent months, we expect that this chart of soaring median asking rents will only accelerate in the near future, and will require a whole host of seasonal adjustments from making its way into the already bubbly CPI data.

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Headline CPI rose 0.4% MoM (above +0.3% exp) for the biggest jump since Feb 2013 but sadly at the same time, price-adjusted hourly wages slid 0.1% in April.

 

Following a small drop in March, from 8 year highs, Core (ex food and energy) Consumer Prices rose 2.1% YoY (as expected) abesent the effect of Gasoline's huge 8.1% MoM surge.

 

Of course this is probably transitory but we note that rent inflation remains at 3.7% YoY – its highest since 2008 and definitively not transitory.

 

And as the breakdown shows, energy and gasoline price soared in April – so are higher oil prices good or bad again?

 

The index for all items less food and energy increased 0.2 percent in April after increasing 0.1 percent in March. The shelter index rose 0.3 percent in April following a 0.2 percent rise the prior month. The indexes for rent and for owners' equivalent rent both increased 0.3 percent, while the index for lodging away from home declined for the second straight month, falling 0.4 percent. The medical care index rose 0.3 percent in April, with the index for prescription drugs rising 0.7 percent and the hospital services index advancing 0.3 percent, but the physicians' services index declining 0.1 percent. The motor vehicle insurance index rose 1.2 percent in April, and the index for airline fares advanced 1.1 percent after declining in March. The recreation index rose 0.3 percent in April, as did the index for education, and the indexes for alcoholic beverages, tobacco, and personal care all posted slight increases.

Gas prices according to CPI data, are up over 20% in the last 2 months – the biggest spike since June 2009…

 

In contrast, the index for household furnishings and operations declined 0.4 percent in April, its largest decline since April 2010. The indexes for apparel, for new vehicles, and for used cars and trucks also fell in April, each declining 0.3 percent. The index for communication declined as well, falling 0.2 percent.

 

Charts: Bloomberg

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Submitted by Clint Siegner via Money Metals Exchange,

A respectable number of Americans hold investments in gold and silver in one form or another. Some hold physical bullion, while others opt for indirect ownership via ETFs or other instruments. A very small minority speculate via the futures markets. But we frequently report on the futures markets – why exactly is that?

Because that is where prices are set. The mint certificates, the ETFs, and the coins in an investor’s safe – all of them – are valued, at least in large part, based on the most recent trade in the nearest delivery month on a futures exchange such as the COMEX. These “spot” prices are the ones scrolling across the bottom of your CNBC screen.

That makes the futures markets a tiny tail wagging a much larger dog.

Too bad. A more corruptible and lopsided mechanism for price discovery has never been devised. The price reported on TV has less to do with physical supply and demand fundamentals and more to do with lining the pockets of the bullion banks, including JPMorgan Chase.

Craig Hemke of TFMetalsReport.com explained in a recent post how the bullion banks fleece futures traders. He contrasted buying a futures contract with something more investors will be more familiar with – buying a stock. The number of shares is limited. When an investor buys shares in Coca-Cola company, they must be paired with another investor who owns actual shares and wants to sell at the prevailing price. That’s straight forward price discovery.

Not so in a futures market such as the COMEX. If an investor buys contracts for gold, they won’t be paired with anyone delivering the actual gold. They are paired with someone who wants to sell contracts, regardless of whether he has any physical gold. These paper contracts are tethered to physical gold in a bullion bank’s vault by the thinnest of threads. Recently the coverage ratio – the number of ounces represented on paper contracts relative to the actual stock of registered gold bars – rose above 500 to 1.

The party selling that paper might be another trader with an existing contract. Or, as has been happening more of late, it might be the bullion bank itself. They might just print up a brand new contract for you. Yes, they can actually do that! And as many as they like. All without putting a single additional ounce of actual metal aside to deliver.

Gold and silver are considered precious metals because they are scarce and beautiful. But those features are barely a factor in setting the COMEX “spot” price. In that market, and other futures exchanges, derivatives are traded instead. They neither glisten nor shine and their supply is virtually unlimited. Quite simply, that’s a problem.

But it gets worse. As said above, if you bet on the price of gold by either buying or selling a futures contract, the bookie might just be a bullion banker. He’s now betting against you with an institutional advantage; he completely controls the supply of your contract.

It’s remarkable so many traders are still willing to gamble despite all of the recent evidence that the fix is in. Open interest in silver futures just hit a new all-time record, and gold is not far behind. This despite a barrage of news about bankers rigging markets and cheating clients.

Someday we’ll have more honest price discovery in metals. It will happen when people figure out the game and either abandon the rigged casino altogether or insist on limited and reasonable coverage ratios. The new Shanghai Gold Exchange which deals in the physical metal itself may be a step in that direction. In the meantime, stick with physical bullion and understand “spot” prices for what they are.

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While far less attention is being paid to hedge fund 13F filings, which show a stale representation of equity long stakes among the hedge fund community as of 45 days prior, than in years gone by as a result of increasingly poor performance by the 2 and 20 crowd, they still remain closely watched source of investment ideas but mostly to find out what the new cluster ideas and hedge fund hotel stocks are at any given moment so they can be faded.

Courtesy of a Bloombert compilation, here are some highlights from the latest round of 13F filings.

Valeant.

 What used to be one of the industry’s most popular holdings has fallen out of favor with just about every major hedge fund holder save Pershing Square Capital Management’s William Ackman. Brahman Capital, which had invested in Valeant for at least 2010, exited the 8.12 million shares it held at the end of 2015 during the first quarter. The New York firm was joined by a who’s who of hedge fund giants: Andreas Halvorsen’s Viking Global Investors, Stephen Mandel’s Lone Pine Capital, Philippe Laffont’s Coatue Management and Barry Rosenstein’s Jana Partners all sold off the former high-flier, which has plunged about 90 percent from its peak last August.

Allergan

The merger-arb blow up of the year has claimed its set of scalps, however the company’s failed acquisition by Pfizer took place after the end of Q1, which is why all those who loaded up in the first quarter are now nursing big losses on their failed M&A bets. Among them are Lone Pine and Seth Klarman’s Baupost Group who bought into Allergan Plc during the first quarter, establishing stakes shortly before Pfizer Inc. decided in April to terminate a $160 billion deal to combine with the Dublin-domiciled company as the U.S. cracks down on corporate inversions. Pentwater Capital Management, Arrowgrass Capital Partners and Eton Park Capital Management also took new stakes or increased their Allergan holdings. The stock has fallen 28 percent this year.

Cutting back equity exposure

As noted earlier, the value of Soros Fund Management’s publicly disclosed holdings dropped by 25% to $4.5 billion as of the end of the first quarter. He was not alone in rapidly derisking his portfolio. At Glenview Capital Management, the hedge fund run by Larry Robbins, investments in U.S.-listed stocks declined by 22 percent. At Louis Bacon’s Moore Capital Management, the value of the holdings fell by about 29 percent.

Gold

Gold is gaining popularity among prominent investors. Soros established a $264 million position in Barrick Gold Corp., acquiring a 1.7 percent stake in the world’s biggest bullion producer that was the fund’s biggest equity position. Soros also disclosed owning bullish options on 1.05 million shares in the SPDR Gold Trust, an exchange-traded fund tracking the price of bullion. Other major investors also sought safety in the yellow metal. Eton Park purchased 3.6 million shares in the same gold ETF, a $422 million position. Bessemer Group bought 546,000 shares valued at $64.3 million.

As has become the norm, John Paulson once again went the other way and cut his holdings in the gold ETF. Paulson & Co. owned 4.8 million shares of ETF at the end of the first quarter, compared with 5.8 million as of Dec. 31. Instead he bought over $50 million worth of Office Depot stock which suffered a spectacular collapse after its merger with Staples was also terminated shortly after.

* * *

Here are the rest of the notable highlights among the marquee hedge fund names.

ADAGE CAPITAL

• New stakes in GCP, CHTR, FOXA, ROK, X
• Boosts RTN, DD, GE, DAL, VZ, AGN
• Cuts SYF, PFE, CFG, BA, TYC, BAC
• No longer shows MHK, VC, SUNEQ, SFG, SO, EBAY

APPALOOSA MANAGEMENT

• New stakes in FB, SYF, MHK, BAC, FOXA, VRX, GLBL
• Boosts ETP, WPZ, CYH, AMLP, NXPI, DAL, GOOG, AGN, PFE, TERP
• Cuts GM, KMI, HCA, GT, URI
• No longer shows PCLN, AAPL, HPE, CBI, EMN

BAUPOST GROUP

• Reports new stakes in AGN, VMW, SRAQU, LQ, GNW
• Boosts EMC, AR, FOXA, OLN, LNG, FOX
• Cuts PYPL, PBF, BXE, NG
• No longer shows FTR, OCN, KOS, MU, SN

BERKSHIRE HATHAWAY

• New stake in AAPL
• Boosts PSX, IBM, CHTR, LBTYA, DE, V, BK
• Cuts PG, MA, WBC, WMT
• No longer shows T

BLUE HARBOUR

• New stakes in FFIV, LM
• Boosts AVT, AGCO, VRNT, XLNX, RAX
• Cuts INXN, CHS, BIN, BW
• No longer shows AKAM, GWR

BLUEMOUNTAIN

• New stakes in MBLY, AIG, IBKR, XLY, TV, ENDP
• Boosts IMS, POST, AVGO, JCI, BBY, TSO, HLF
• Cuts PFE, NUVA, IAC, EURN, GNRT, TARO, VRNT
• No longer shows TEVA, BRCM, SLH, BAC, VRX, WTW, MET

BRIDGEWATER ASSOCIATES

• New stakes in EWZ, DIS, MCD, POT, DISH, MDLZ, GOOG
• Boosts VWO, EEM, INTC, ESRX, RL
• Cuts AAPL, PEP, SPY, EXC, ORCL, M
• No longer shows BCE, VIAB, FOSL, TU, KO, JNJ

COATUE MANAGEMENT

• New stakes in PYPL, SPLK, FFIV, CMG, HTZ, SQ
• Boosts EA, AVGO, AKAM, LCI, LBTYA, GOOGL
• Cuts GOOG, NFLX, MSFT, HAIN, EXPE, CHTR, AMZN, GPRO, FB
• No longer shows AAPL, AGN, TWX, CBS, VRX, LNKD, IBM

CORVEX MANAGEMENT

• New stakes in NOMD, TMH, VRX, GLPI
• Boosts PFE, PAH, SIG, COMM, P, BLL, FNF
• Cuts GOOGL, VER, AGN
• No longer shows BAC, AN, CMA, CFG, KMI, TWX

DUQUESNE FAMILY OFFICE

• New stakes in KO, PM, SO, DUK, PPL, PEP, CAT, VZ
• Boosts GOOGL, PSTG
• Cuts AMZN, MSFT, FB, HDB
• No longer shows RTN, CTRP, NOC, SYF, CMG

ELLIOTT MANAGEMENT

• New stakes in QLIK, PFE, PAH, EGN, NE, HLF
• Boosts HES, CNP, SYMC, CAB, AA, BXLT, AGN
• Cuts IPG, ODP, PRGO, RYAAY, FCB, TWC
• No longer shows XLE, VMW, HPE, XOP, STE, NBL, SHPG

EMINENCE CAPITAL

• New stakes in LEN, HUM, ZBRA, RL, ANTM
• Boosts CAA, AN, CCE, SPGI, LNKD
• Cuts TRIP, SJM, ZNGA, ADSK, FOSL
• No longer shows YUM, GOOG, HOT, ATVI, YELP, GNC

ETON PARK CAPITAL

• New stakes in BXLT, GLD, ITC, MHK, CDK, HOT
• Boosts TWC, AGN, EMC, CRTO, CI
• Cuts MSFT, ADBE, SHW, SBAC, ODP, JAH
• No longer shows ADSK, PRGO, AER, HUM, RAD

FAIRHOLME CAPITAL

• Boosts BAC, SRSC
• Cuts SHLD, LUK, SHLDW, JOE, LE
• No longer shows MRC, CNQ, BRK/A, BRK/B, AIG, IBM

GATES FOUNDATION

• Boosts TV, ECL, AN
• Cuts BRK/B

GLENVIEW CAPITAL MANAGEMENT

• New stakes in FIS, AAP, GPN
• Boosts HCA, TWC, GOOGL, HLS, LBTYK, ABBV
• Cuts MON, TMO, HUM, MCK, CI, DOW
• No longer shows PCLN, CYH, PVH, AMAT, UHS, AIG

GREENLIGHT CAPITAL

• New stakes in HTS, PVH, CYH, GSAT, LAMR
• Boosts AAPL, YHOO, M, AGNC, YELP, AER, FOXA
• Cuts IAC, AGR, TTWO, IM, TWX, KORS
• No longer shows CBI, OI, GRMN, ON, SGMS, MTCH

HIGHFIELDS CAPITAL MANAGEMENT

• New stakes in MAR, PEP, PFE, DIS, BXLT, CL, TWX, GS
• Boosts WBA, GOOG, WMB, GOOGL, ABBV, IAC, AER
• Cuts MCD, DD, ICE, APC, HOT, CBS, EBAY, YUM
• No longer shows MSFT, SPGI, PRGO, YHOO, SRE, PYPL, AGN

ICAHN ASSOCIATES

• New stakes in MFS
• Boosts XRX, AIG
• Cuts NUAN, PYPL
• No longer shows AAPL, HOLX, TGNA, MENT, PBY, GCI

ICONIQ CAPITAL

• New stakes in UNH, APO, BX, OAK, KKR, CG, SUNEQ
• Boosts GLD, IAU, VTI, IWB, SPY, FB
• Cuts PARR, BABA, VEA, VWO, ACWI, CVX
• No longer shows AMLP, PXD, TSLA, RIG, TOT

JANA PARTNERS

• New stakes in GOOG, SRCL, HDS, TDG, BAC
• Boosts PFE, SPY
• Cuts CAG, LGF, AGN, LVNTA, WBA, MSFT, TWC
• No longer shows QCOM, AIG, LBTYK, BAX, STRZA, TWX, VRX, WMB

KERRISDALE ADVISERS

• New stakes in BRO, EBAY, MENT, PYPL, SNPS
• Boosts CTSH, LXFT, YELP, ETSY, PRXL
• Cuts TARO, MCK, PCLN, MRKT, BGCP, TFM
• No longer shows KFY, BID, EPAM, WSM, RHI

LAKEWOOD CAPITAL

• New stakes in GS, COF
• Boosts CDK, HCA, BIDU, CMCSA, ORCL, MA
• Cuts WRK, ACAS, IM, GTS, TSE, FDX, TWC
• No longer shows TSO, UNP, NPO, SPR, JBLU, GME, NFLX

LANSDOWNE PARTNERS

• New stakes in FB, JCI, UNH, RAI, AGR, GLPI, KO
• Boosts WFC, GOOGL, AMZN, JPM, UTX, UPS, NKE, LNKD
• Cuts ACN, AAPL, LB, DIS, V, DAL, CMCSA, FIT, MTCH
• No longer shows GS, TMUS, C, SYF, ETFC, BAC, MS, SCTY

LONE PINE CAPITAL

• New stakes in AGN, BXLT, PYPL, MNST, YUM
• Boosts FB, GOOG, NOC, GOOGL, EQIX, ADBE, BUD, NKE
• Cuts ILMN, V, EA, AMZN, JD, MA, MSFT
• No longer shows WMB, VRX, WBA, ATVI, ADSK

LONG POND CAPITAL

• New stakes in HLT, CBG, CAA, LQ, CFG
• Boosts KEY, CLNY, TCO, H, SRC
• Cuts FCE/A, SRG, BPOP, FPO, SFR
• No longer shows HOT, LHO, ARPI, SBAC, AL, BYD

MARCATO CAPITAL

• New stakes in RLGY, SFR, LIND
• Boosts M, LBRDK, LBRDA, BLDR, VRTS
• Cuts GT, BID
• No longer shows LPLA, CAR, MDCA, TOWR, BLD

MAVERICK CAPITAL

• New stakes in LRCX, NOC, CMCSA, PCRX, USB, NVDA, VIAB
• Boosts PCLN, FB, AGN, ADBE, AVGO, BUD
• Cuts LBTYK, PF, CIT, PFE, ST, GOOG, ARMK
• No longer shows ARRS, SC, FLT, CHTR, ORI, AER, SNY

MELVIN CAPITAL

• New stakes in NFLX, HD, COST, KHC, MNST, WYNN
• Boosts EXPE, AMZN, LOW, V, MHK, FB, NKE
• Cuts LVS, JD, GIL, BABA, ORLY, HBI
• No longer shows MCD, RCL, ADS, GOOGL, BC, PCLN, LULU, SBUX

MILLENNIUM MANAGEMENT

• New stakes in COP, MRO, CMS, ZBH, PG, RCL, DPZ
• Boosts APC, PEP, T, FIS, PCG, ADBE, YHOO
• Cuts OXY, PPL, NEE, LOW, HFC, TEVA, NBL, FB
• No longer shows WMT, AMZN, OII, GG, PSX

MOORE CAPITAL

• New stakes in EEM, FIS, XHB, FXI, BG, ATVI, HD
• Boosts GOOGL, AAPL, AME, MGM, DLTR, AIG
• Cuts FB, AMZN, CTRP, EQIX, RH, BABA
• No longer shows BAC, C, XOP, JPM, MCD, MSFT, MS, GS

OMEGA ADVISORS

• New stakes in UNH, PYPL, GILD, ETP, BLL, AAPL, EA
• Boosts MSFT, TRGP, SYF, TRCO, WBA
• Cuts GOOGL, AGN, AIG, DISH, AER, FB
• No longer shows C, JPM, EEM, PFE, GLBL, AMZN, HLT

PASSPORT CAPITAL

• New stakes in TSM, TAP, MRK, QVCA, PCLN, CHTR
• Boosts CMCSA, JNJ, YHOO, PFE, LMT, HDP, BABA
• Cuts NKE, GOOG, SBUX, MSFT, HD, KO, MCD
• No longer shows SYT, DAL, UNP, NFLX, LBTYK, LLY

PAULSON & CO

• New stakes in BEAV, ATVI, ACAS, ODP, ALXN, EXPE, BXLT, FB
• Boosts AKRX, ENDP, RDN, PFE, BIIB, ETSY, CVC
• Cuts TWC, HOT, AGN, TMUS, AIG, PRGO
• No longer shows OUT, PMC, ABBV, GMED, LH, PCLN

PERRY CORP.

• Boosts AER
• Cuts TWX, AIG, HCA, SE
• No longer shows WMB, CPGX, CYH, ETE, ETP

PERSHING SQUARE

• New stakes in NOMD
• Boosts QSR
• Cuts APD, MDLZ

POINT72 ASSET MANAGEMENT

• New stakes in NFLX, COP, MNST, YHOO, KORS
• Boosts LOW, FB, APC, NWL, VRX, TWX, AMZN
• Cuts NKE, AAP, SIG, GOOGL, COH, MCD, RL, MDVN, EA
• No longer shows AMAT, TYC, CELG, LULU, TJX, WTW

POINTSTATE CAPITAL

• New stakes in CELG, MDVN, EEM, HAL, COG
• Boosts CHTR, LYB, ABBV, AGN, MSFT
• Cuts TEVA, TWC, NOC
• No longer shows LUV, BAC, CFG, GD, JAZZ

SANDELL ASSET

• New stakes in HOT, BXLT, CAG, AFFX, FCS, CPGX
• Boosts YHOO, CAM, MEG, YOKU, CVC, CIT
• Cuts VIAV, TVPT, ARG, XLF, ALLY, BOBE
• No longer shows ETH, PMCS, FCE/A, ABG, SFG, VSLR

SOROS FUND MANAGEMENT

• New stakes in ABX, BXLT, CCI, AVGO, SLB, AET
• Boosts EQIX, GLPI, EMC, HOT, SPY
• Cuts SYF, CY, AGRO, AGN, LYB, PYPL, DISH, AMZN
• No longer shows LVLT, DOW, ENDP, DAL, MCD, BUD

STARBOARD VALUE

• New stakes in MRVL, DEPO, NXST
• Boosts YHOO, M, BAX, CW, WRK
• Cuts DRI, FCPT, QTM
• No longer shows MDAS, MEG, WPP, RLD, ODP, CI

TEMASEK

• New stakes in FIS, BGNE
• Boosts ILMN, REGN, JD, GILD
• Cuts MON

TIGER GLOBAL

• New stake in Z
• Boosts CHTR, EHIC, ETSY, XO
• Cuts AMZN, JD, AAPL, PCLN, DATA, QSR, FLT, MA, SQ
• No longer shows VIPS, TDG, RH, BUD, ATHM, TWC

THIRD POINT

• New stakes in GOOGL, BXLT, LOW, EMC, VMW, FOXA, WMB
• Boosts YUM, DHR, CB, BUD, STZ, KHC
• Cuts AMGN, AGN, SJM, ROP, DOW, MHK, TWC
• No longer shows LBTYK, EBAY, MS, AXTA, CWEI

TRIAN FUND

• Boosts SYY, PNR, DD, BK, MDLZ
• Cuts GE
• No longer shows PEP

TUDOR INVESTMENT

• New stakes in PEP, ITC, CL, MEG, CSCO
• Boosts FIS, MRK, SPY, WMT, ZBH
• Cuts FB, CSRA, EFX, CSC, TEVA, LLY, K, SJM
• No longer shows ULTI, IYR, EWJ, ADP, BABA, V

VALUEACT

• New stake in ADS
• Boosts WLTW, CBG
• Cuts ADBE, AGU, MSI, MSCI
• No longer shows HAL

VIKING GLOBAL

• New stakes in FB, LLY, JD, NWL, DVA, MET, TMUS
• Boosts COG, ECA, AVGO, GPOR, AMZN, AET, MA
• Cuts PXD, LYB, AGN, WBA, HUM, LNG, ANTM, CCI, PFE
• No longer shows VRX, MCK, PCLN, QUNR, BK, CMG, NKE, HAL

Source: BBG

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• As Brexit vote looms, U.S. banks review their European commitments (Reuters)
• Oil’s Strength Continues to Boost Global Stocks (WSJ)
• Trump closing gap with Clinton, poll shows (Hill)
• In Adjacent Pennsylvania Counties, Republicans Are Split on Donald Trump (WSJ)
• Make America Gold Again: Calls for Everyone’s Favorite Standard Are Back (BBG)
• SEC, Treasury Push for Centralized Reporting of Treasurys Trades (WSJ)
• Venezuela protesters fear Maduro will cling on at all costs (FT)
• Alphabet Unveils Program for Carpooling Via App Waze, Fraying Ties With Uber (WSJ)
• EU’s Tusk calls Brexit advocate Boris Johnson’s Hitler comments ‘absurd’ (Reuters)
• Placid VIX Tells Little of Volatility Story as Futures Take Off (BBG)
• Greece wants Eurogroup to focus on short-term, medium term debt relief on May 24 (Reuters)
• New From Credit Suisse: Bonds for Self-Inflicted Catastrophes (WSJ)
• Middle East Luxury Sales Fading as Oil Falls and Tourism Slows (BBG)
• Hedge Funds Abandon Ex-Darling Valeant and Other 13F Highlights (BBG)
• New police force finds old habits die hard in Ukraine (Reuters)
• Apple CEO Tim Cook Visiting India, an Important Growth Market (BBG)
• Russian Finance Minister sees 2016 budget deficit at 3 percent with oil at $40 per barrel (Reuters)
• New York’s LaGuardia, Long in Tatters, Borrows Big for Facelift (BBG)
• Shadow Banks Make Diciest Loans While Wall Street Retains Risk (BBG)

 

Overnight Media Digest

WSJ

– Warren Buffett’s Berkshire Hathaway Inc disclosed Monday that it had made a $1 billion bet on Apple Inc stock earlier this year, boosting the iPhone maker’s market value by more than $18 billion.(http://on.wsj.com/1TWLAMh)

– The Supreme Court, unable to resolve the dispute between religious employers and the Obama administration over contraception coverage in the government’s health-care law, sent the matter back to lower courts to seek a compromise between the parties.(http://on.wsj.com/1TWLyUK)

– Facebook Inc is now selling video ads on behalf of other companies, a move that could prove lucrative for the technology giant and intensify its competition with Alphabet Inc. subsidiary Google and other online ad specialists. (http://on.wsj.com/1TWLEff)

– Phone book publisher Dex Media Inc filed for chapter 11 bankruptcy protection Monday evening after reaching a restructuring deal with creditors. (http://on.wsj.com/1TWLJPW)

 

FT

* World powers including the United States are ready to consider demands from Libya’s new unity government for exemptions from a U.N. arms embargo to help take control of the lawless country, U.S. Secretary of State John Kerry said on Monday.

* Deutsche Bank AG has hired Thomas Piquemal, former senior executive vice president for finance at French utility company EDF Group , to head its global mergers and acquisitions practice.

* Warren Buffett’s Berkshire Hathaway Inc revealed a more than $1 billion stake in Apple Inc in a rare foray into the technology sector.

 

NYT

– Chinese authorities are quietly scrutinizing technology products sold in China by Apple Inc and other big foreign companies, focusing on whether they pose potential security threats to the country and its consumers and opening up a new front in an already tense relationship with Washington over digital security. (http://nyti.ms/1TFHHsF)

– Lending Club, which serves as an online matchmaker between small-business borrowers and individual and institutional lenders, said it had received a subpoena from the Justice Department. (http://nyti.ms/1TFHEgn)

– Twitter Inc announced that Debra Lee, chairman and chief executive of BET Networks, was joining its board. As part of the announcement, Twitter also said a board member, Marjorie Scardino, would become the company’s lead independent director. (http://nyti.ms/1TFIBp1)

 

Canada

THE GLOBE AND MAIL

** Alberta has put major oil sands facilities and camps under a mandatory evacuation order as the wildfire that consumed part of Fort McMurray remains out of control. All work camps and facilities north of Fort McMurray and south of Fort McKay are affected by the order issued late Monday.(http://bit.ly/1qqaVE0)

** Ontario’s energy and auto industries have expressed surprise over the province’s ambitious plan to slash greenhouse gases. They warned that the plan, if imposed, would drive up home heating costs for homeowners, and that automakers would not make enough electric cars to meet its targets.(http://bit.ly/1TdHjHq)

** Toronto housing developer Urbancorp is pushing ahead with a restructuring under creditor protection, saying it owes millions to major banks, home buyers and investors in Israel even as its projects require “tens of millions” more to complete. (http://bit.ly/1TX1Xsk)

NATIONAL POST

** Telecommunications behemoth AT&T Inc announced that it plans to buy Toronto-based video streaming platform Quickplay Media Inc, a company that enables consumers to watch TV and video on any mobile device.(http://bit.ly/1TdHXoz)

** The Ontario government is once again drafting major policies in “back rooms”, the opposition is charging after the reported leak of a C$7 billion($5.4 billion) climate-change plan to be released later this spring. (http://bit.ly/1Tkjgoq)

 

Britain

The Times

Six weeks after the collapse of a $160 billion merger with Allergan, Pfizer has made a recommended bid for Anacor Pharmaceuticals worth $99.25 a share, saying that it would be a “strong fit” with its inflammation and immunology portfolio. (http://bit.ly/22e7vCh)

The Guardian

The global community is badly prepared for a rapid increase in climate change-related natural disasters that by 2050 will put 1.3 billion people at risk, according to the World Bank. (http://bit.ly/1Thb4lB)

Stephen Bubb has announced he will be stepping down as chief executive of Acevo (Association of Chief Executives of Voluntary Organisations) after 15 years in June to head up the Charity Futures Programme. (http://bit.ly/1st6zxS)

The Telegraph

House prices could crash by 25 percent and the pound could drop by a third if the UK leaves the EU, according to Fitch, which warned that social tensions risked boiling over even if Britain stays in the bloc. (http://bit.ly/1TjeEPn)

Warren Buffett has bought more than $1 billion (700 million euros) of Apple Inc stock with shares in the company falling to their lowest level for two years. (http://bit.ly/1XvEul0)

Sky News

South Korea’s Environment Ministry has said that it will fine Nissan’s South Korean operation for allegedly manipulating emissions tests on its Qashqai cars, which were made in Sunderland. (http://bit.ly/1TktLHe)

HSBC is to move 840 UK jobs abroad as part of a major cost-cutting plan and has told staff that it is moving the IT roles to sites in India, China and Poland by the end of March next year. (http://bit.ly/1WB2t3w)

The Independent

Warren Buffett’s Berkshire Hathaway Inc disclosed a stake in Apple Inc, betting that the technology company will rebound after a slump driven by a slowdown in iPhone sales. (http://ind.pn/1VZbq5Q)

Google could be hit with a fine as high as 3 billion euros from the European Commission in the coming weeks related to an investigation of the company’s alleged abuse of its dominance in the online search market, according to reports. (http://ind.pn/1OydsYf)

 

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One of the more closely watched 13F reports yesterday in addition to that of Warren Buffett was that of Soros Fund Management, the family office of George Soros, which revealed that while the 85 year old billionaire was not quite as bearish as his former chief strategist Stanley Druckenmiller, or Carl Icahn for that matter, had turned decidedly sour on overall equity exposure.

As shown in his 13F, Soros slashed his overall long equity holdings by over 25% to just $4.5 billion as of March 31, which was the lowest such position since 2013.

 

As previously discussed, Soros has warned of risks stemming from China’s economy, arguing its debt-fueled economy resembles the U.S. in 2007-08, before credit markets seized up and spurred a global recession. In January, the former hedge fund manager said a hard landing in China was “practically unavoidable,” adding that such a slump would worsen global deflationary pressures, drag down stocks and boost U.S. government bonds.

Perhaps that is also why in addition to slashing his bullish bets, Soros also more than doubled his SPY puts to 2.1 million shares, or a value of $431MM, up from $205MM the previous quarter.

But more notably was Soros’ significant return to gold, after he acquired 1.7% of Barrick, making it the firm’s biggest U.S.-listed holding. Soros also disclosed owning call options on 1.05 million shares in the SPDR Gold Trust, an exchange-traded fund that tracks the price of gold. It was unclear if Soros has been influenced by Druckenmiller who earlier this month at the Sohn Conference, called gold his largest currency allocation as central bankers experiment with the “absurd notion of negative interest rates.”

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It has been more of the same overnight, as global stocks piggybacked on the strong US close and rose despite the lack of good (or bad) macro news, propelled higher by the two usual suspects: a higher USDJPY and a even higher oil, if mostly early on in the trading session.

Yes, the oil squeeze higher continues, and as the charts below courtesy of Andy Critchlow show, Brent is now 82% higher in the past 82 days…

 

… while crude has had its strongest rally since 2010.

 

However, after rising above $48 for the first time since October, crude finally pulled back modestly and was unchanged at last check while Brent was modestly in the red. This led to equities paring much of their overnight advance. In FX, in addition to the abovementioned spike in the USDJPY now well in the mid-109.50s, the other prominent mover was Australia’s dollar which advanced after central bank officials suggested authorities will hold off on cutting interest rates.

The Stoxx Europe 600 Index was still set for its third day of gains also following the crude jump above $48 a barrel. The British pound climbed by the most in four weeks as a poll indicated support is growing in the U.K. for the country to remain in the European Union. Investors got a reminder of the challenges facing central banks as a report showed U.K. consumer-price growth unexpectedly slowed in April. U.S. data on Tuesday are forecast to show inflation quickened last month. West Texas Intermediate crude was unchanged at $47.74. The pound was 0.6 percent stronger at $1.4486 and the Aussie gained 0.5 percent to 73.25 U.S. cents. US equity futures were unchanged after rising 0.3% around the European open.

“Markets seem to be in a relatively sweet spot with a steadily stronger U.S. dollar and resilient commodities prices,” Angus Nicholson, a Melbourne-based market analyst at IG Ltd., told Bloomberg “Many investors have been predicting a pullback in markets, but despite all the negativity, markets have continued to grind higher.”

Spot on: which is why to all those who are itching to short the market here, our advise is to wait for Gartman to go long first.

This is where markets were at this moment

• S&P 500 futures up less than 0.1% at 2063.5
• Stoxx 600 up 0.5% to 337
• FTSE 100 up 0.6% to 6191
• DAX up 0.1% to 9963
• German 10Yr yield up 1bp to 0.16%
• Italian 10Yr yield down less than 1bp to 1.48%
• Spanish 10Yr yield down less than 1bp to 1.6%
• S&P GSCI Index down 0.1% to 367.2
• MSCI Asia Pacific up 0.7% to 127
• Nikkei 225 up 1.1% to 16653
• Hang Seng up 1.2% to 20119
• Shanghai Composite down 0.3% to 2844
• S&P/ASX 200 up 0.7% to 5396
• US 10-yr yield up less than 1bp to 1.76%
• Dollar Index down 0.04% to 94.53
• WTI Crude futures up less than 0.1% to $47.74
• Brent Futures down 0.6% to $48.68
• Gold spot down 0.2% to $1,271
• Silver spot up less than 0.1% to $17.16

Top Global News

• Oil Advances to Seven-Month High as U.S. Stockpiles Seen Falling
• Saudi Arabia’s Treasuries Holdings Are Unveiled After 41 Years
• Soros Cuts U.S. Stock Investments 37%, Buys Barrick Gold Stake
• Hedge Funds Abandon Ex-Darling Valeant and Other 13F Highlights
• LendingClub Subpoenaed by Justice Department After CEO Exit

Looking at regional m,arkets, Asian stocks traded mostly higher following a firm Wall Street close where tech and energy surged after Berkshire Hathaway took a USD 1bIn stake in Apple and WTI rose to fresh 6-month highs. This saw the energy sector underpin ASX 200 (+0.7%) and Nikkei 225 (+1.1%) as WTI extended its advances during Asia hours to above USD 48/bbl, while JPY weakness further bolstered Japanese stocks. Shanghai Comp (-0.3%) underperformed despite the PBoC injecting funds through its Medium-term Lending Facility, as debt concerns continued to linger after Evergreen Holding defaulted on bond repayments to become at least the 10th defaulter in China YTD. 10yr JGBs traded flat with a lack of demand seen amid a positive risk tone in Japan, while today’s 5yr auction saw mixed results with the b/c slightly declining from prior although the lowest accepted price was higher than expected. Japanese PM Abe said the sales tax will be increased as planned unless a serious event occurs. PM Abe also commented he will make a decision at an appropriate time which will be based on expert opinions.

Top Asian News

• BlackRock’s Fink Says ‘All Have to’ Worry About China Debt
• China to Restrict Trading Halts, Report Says, Boosting MSCI Odds
• ANZ to Cut About 200 Jobs in Australia as Loan Growth Slows
• As China Revamps Regulation, PBOC Gears Up for Central Role
• Aircastle’s Japan Venture to Buy Up to 10 Boeing, Airbus Planes
• Japan to Seek Cheaper Plans From Operators, Official Says

European equities have been climbing higher this morning with Germany and Switzerland returning from their elongated break. Risk on sentiment has been supported by the continuation of the upside in oil prices in which Brent crude futures had sustained a move above USD 49/bbl for a large part of the morning. However, in recent trade prices have tailed off with WTI crude retesting USD 48/bbl to the downside.
Additionally, the upbeat tone has also been supported by the gains in Apple yesterday following Berkshire Hathaway announcing a USD 1bIn stake in the Co. As such, gains in equities has seen Bunds on the back foot. Alongside this, a slew of EUR-denominated bond sales is set to continue this week after near record amount of sales last week. Furthermore, as energy markets continue to climb this could continue to hamper fixed income products as markets inflation expectations adjust to the uptick in prices.

Top European News

• U.K. Inflation Rate Unexpectedly Declines to 0.3% on Air Fares: Economists had forecast a rate of 0.5 percent, based on the median estimate in a Bloomberg survey
• Vodafone Beats Estimate With 2.5% Quarterly Network Revenue Gain: Analysts surveyed by Bloomberg expected 1.5 percent growth, on average
• Iliad First-Quarter Sales Increase 6.6% on Wireless Promotions: Revenue rose to 1.15 billion euros ($1.3 billion)
• Barclays’ Ramos Emerges as Best-Value South African Bank CEO: Barclays Africa earned 508 rand ($33) in net income for every rand the Johannesburg-based company paid Ramos in base salary, long-term incentives and bonuses in 2015, according to data compiled by Bloomberg
• Deutsche Bank Names Ex-EDF CFO Thomas Piquemal to Lead M&A: Piquemal, 47, who quit as chief financial officer of French utility Electricite de France SA in March, will be based in Paris and report to corporate and investment banking chief Jeff Urwin

In FX, Asia and early London have been pretty active today, with the ongoing levitation in USDJPY one of the most prominent trades, where a 109 stop hunt unleashed short covering above 109 and pushed the pair as high as 109.60.  Cable has also been active with inflation data in both the UK and US today. The UK numbers saw some softness in the more focused-upon core read, with the y-o-y rate registering 1.2% vs median 1.4% expected. Ahead of this, the ORB/Telegraph poll saw the remains showing a significant lead to send the spot rate tearing through the 1.4400’s, trading through 1.4500 but holding resistance levels ahead of 1.4550 before the data response saw us lower again. EUR/GBP was testing .7800 early on, but has survived a potential breach of the figure level. Elsewhere, the post RBA (minutes) recovery in AUD looks to have been short-lived as the spot rate sinks back into the low .7300’s. US inflation now set to determine whether we test through the figure, with EUR/USD also mid-range ahead of the release. USD/JPY is higher on the positive risk tone, with the quest for 110.00 back on. USD/CAD has duly found anticipated support in the mid 1.2800’s to return through 1.2900, coinciding with a turn-back in WTI through $48.0 and Brent below $49.0.

In commodities, WTI and Brent have fallen off session highs after eyeing the USD 50.00/bbl level. Gold and silver have also been falling alongside the rest of the commodities complex as the USD has been strengthening in the EU session. Elsewhere, copper and iron prices were underpinned and were in minor positive territory amid the global risk sentiment.

On today’s US calendar, the big focus will be on the April inflation data. Market expectations are for a +0.3% mom headline print which should be boosted by higher oil prices and a +0.2% mom print at the core.  Elsewhere this afternoon we’ll also get April housing starts and building permits data – both of which are expected to rebound. Finally we’ll cap the day off with more important data in the form of industrial production (+0.3% mom expected), capacity utilization and manufacturing production. Fedspeak wise we’ll also hear from Williams and Lockhart at noon in a joint interview, as well as Kaplan (at 1.15pm EDT) later on while the ECB’s Praet and Nouy are scheduled to speak this morning.

 

Bulletin Headline Summary From RanSquawk and Bloomberg

• European equities trade higher as European equities take the lead from their US and Asian counterparts with elevated energy prices also underpinning sentiment
• GBP has been a key focus for FX markets as UK CPI fell short of expectations, while the latest polls develop a further bias for remaining in the EU
• Looking ahead, highlights include US CPI, Housing Starts, Building Permits and API Inventories, ECB’s Praet, Fed’s Williams, Lockhart and Kaplan
• Treasuries trade slightly lower overnight, led by belly, amid rise in global equities while crude oil is off session-highs; U.S. data includes CPI and housing starts.
• Even as the VIX sits 25 percent below its bull market average, investors are using futures on the index to hedge against trouble in equities six months from now
• After spending years fighting the European Union, Ryanair Holdings Plc CEO Michael O’Leary has turned into one of its biggest defenders, and he’s even decorating his airplanes to prove it
• The pound rallied the most in two weeks after the ORB/Telegraph poll showed 55 percent of respondents were in favor of remaining in the European Union, while 40 percent wanted to leave
• U.K. inflation unexpectedly slowed in April, highlighting the struggle Bank of England policy makers face to revive price growth
• Chinese stocks traded in Hong Kong rose the most in a month, with commodity producers gaining as oil prices climbed and President Xi Jinping vowed to press ahead with plans to cut capacity at state-owned enterprises
• As China’s leaders consider ways to improve market oversight and avoid the kind of boom and bust in equities that shook investors around the world last year, the PBOC is already extending its oversight to areas beyond its traditional focus
• BlackRock Inc.’s Laurence D. Fink, who oversees the world’s largest money manager with $4.7 trillion of client assets, said “we all have to be worried” about China’s mounting debt amid slowing growth, even as he remains bullish on the economy in the long run
• Ray Dalio’s $154 billion Bridgewater Associates became the first foreign hedge fund manager to win approval to set up a wholly owned investment-management business in China, according to Shanghai-based consulting firm Z-Ben Advisors
• Sovereign 10Y yields mostly lower; Asian, European equities higher; U.S. equity-index futures higher; WTI crude oil rises while precious metals fall

US Event Calendar

• 8:30am: Housing Starts, April, est. 1.125m (prior 1.089m)
  • Housing Starts m/m, April, est. 3.3% (prior -8.8%)
  • Building Permits, April, est. 1.135m (prior 1.086m, revised 1.076m)
  • Building Permits m/m, April, est. 5.5% (prior -7.7%, revised -8.6%)
• 8:30am: CPI m/m, April, est. 0.3% (prior 0.1%)
  • CPI Ex Food and Energy m/m, April, est. 0.2% (prior 0.1%)
  • CPI y/y, April, est. 1.1% (prior 0.9%)
  • CPI Ex Food and Energy y/y, April, est. 2.1% (prior 2.2%)
  • CPI Index NSA, April, est. 239.119 (prior 238.132)
  • CPI Core Index SA, April, est. 246.450 (prior 246.095)
  • Real Avg Weekly Earnings y/y, April (prior 1.1%)
• 9:15am: Industrial Production m/m, April, est. 0.3% (prior -0.6%)
  • Capacity Utilization, April, est. 75% (prior 74.8%)
  • Manufacturing (SIC) Production, April, est. 0.3% (prior -0.3%)
• 12pm: Fed’s Williams, Lockhart speak in Washington
• 1:15pm: Fed’s Kaplan speaks in Midland, Texas
• 4:30pm: API weekly oil inventories

DB’s Jim Reid concludes the overnight wrap

Yesterday was all about Apple and oil. Starting with the former, Apple’s share price gained close to 4% yesterday and the most in over two months following the news that Warren Buffet’s Berkshire Hathaway has bought a $1bn slice of the company. That comes as other high-profile money managers have recently cut or exited their positions in the tech giant (including Carl Icahn). That said, after trading just above $130 in the summer of 2015, shares have since collapsed into the low $90’s and while Buffet has for a while typically avoided investment in the tech sector, the move will been as a something of a vote of confidence that Apple can halt the recent slide in sales.

Meanwhile, the other big headline grabber yesterday was Oil. An upbeat broker report suggesting that the market has moved into a deficit quicker than expected following some of the recent supply disruptions (including Nigeria, Canada and Venezuela) helped fuel a +3.27% for WTI and so taking it to close to $48/bbl and the highest close since November 3rd. Brent was up a similar amount and is edging closer to the $50/bbl mark (hovering around $49.26/bbl this morning). With the moves this morning it means that the unrelenting rally for WTI since the February intraday lows has seen it surge an impressive 84% in that time.

Unsurprisingly then it was energy and tech names which led the S&P 500 to a +0.98% gain yesterday, while the Nasdaq finished up a slightly higher +1.22%. While Oil has been on a one-way track since February, it does appear that US equities have however hit a bit of a stumbling block this month even after considering yesterday’s strong performance. In fact in the nine sessions prior to yesterday, the S&P 500 had followed three days of consecutive losses, with three days of gains and then three more days of losses again with the index back to flat for the month of May (which compares to a 4% return for Oil). So while the old adage ‘sell in May and go away’ hasn’t quite been completely true, it’s proving to be a much more directionless month for US equities compared to the positive performance of March and April.

With the rebound in oil we thought we’d update our long-term chart of the average real price of oil back to 1861. When we last published back in January we remarked that for the first time in a decade oil was actually cheap relative to its long term value. 4 months on and with the large rally its back just above its 155 year long term real adjusted average (around $47). The chart is in the PDF today for those interested.

Switching our focus now to the latest in Asia this morning, bourses are largely following the US lead with the majority advancing. The Nikkei (+0.77%), Topix (+0.76%), Hang Seng (+0.31%), and ASX (+0.56%) are all up, while it’s China which is the standout underperformer with the Shanghai Comp currently – 0.37% although it’s not obvious what has triggered that. The poor weekend data was largely ignored yesterday but perhaps it’s causing a drag today. Credit markets are benefiting from the general better sentiment with indices in Asia and Australia a couple of basis points tighter. In FX markets the Aussie Dollar (+0.80%) is the big mover following the RBA minutes from the meeting earlier this month which indicated that the decision to cut rates was actually more balanced than maybe first thought.

Moving on. Aside from the Apple and oil focus there wasn’t a great deal else to drive markets yesterday although the US data did turn a few  heads. Specifically it was the May Empire manufacturing print which attracted attention after the data was reported as tumbling from its recent April high by nearly 19pts to -9.0 (vs. +6.5 expected). That monthly change was actually the most since October 2014 and of further concern was the weakness in the components with new orders, shipments and inventories all negative. Our US economists highlighted that this has resulted in their ISM-adjusted manufacturing survey index now falling below 50 after two successive monthly >50 readings. The ISM manufacturing print is due to be released on June 1st but for now yesterday’s reading will see much attention placed on Thursday’s Philly Fed manufacturing survey. Meanwhile the other data yesterday was the NAHB housing market index which also came in lower than expected at 58 for May, albeit unchanged relative to the prior month.

There was also some Fedspeak to mention yesterday and it came from Richmond Fed President Lacker. The Fed official said that while he would never completely make up his mind prior to a meeting, he noted that ‘at this point it looks to me as if the case for raising rates looks to be  pretty strong in June’. Lacker made mention of inflation moving ‘decidedly toward 2%’ as well as there being further evidence of tightening in  labour markets. He also said that the downside risks which dominated at the beginning of the year ‘have dissipated’. The US Dollar was little changed by the end of play yesterday although there was a reasonable move in the Treasury market with the benchmark 10y finishing up over 5bps higher in yield at 1.754% and wiping out Friday’s move lower.

Wrapping up the rest of the price action yesterday, with a number of public holidays it was an unsurprisingly quiet and low volume session in Europe reflected by just the +0.01% return for the Stoxx 600. Credit markets in the region were a touch wider (Crossover +4bps) although the stronger day for risk in the US saw CDX IG finish nearly 2bps tighter. It’s the new issue market which is still taking up much of the attention – particularly the mega deal from Dell. Bloomberg is reporting that the $16bn deal will be split across 8 tranches and is set to possibly price today but notably the same article suggests that the order book has already run past the $60bn mark, with the company suggesting that it is weighing up whether or not to upsize the deal.

Before we move on to the day ahead, the latest The House View titled “A challenging road” came out overnight. Despite rising concerns about global growth, the team expects only a modest deceleration into year-end from the US, China and the eurozone in aggregate. This, coupled with central banks taking a backseat in the coming months and geopolitical risk events approaching, leaves them holding a short-term neutral view on most markets.

Moving now to today’s calendar, this morning in Europe we’re kicking off in the UK where we’ll get the April inflation docket including CPI, PPI and RPI prints. Current expectations for CPI are for a +0.3% mom headline reading. The only other notable data this morning is the Euro area trade balance reading. Across the pond this afternoon the big focus is on the April inflation data. Market expectations are for a +0.3% mom headline print which should be boosted by higher oil prices and a +0.2% mom print at the core. Our US economists have a +0.1% mom forecast for the core as they expect further moderation in the growth rate of residential rents to keep a lid on inflation. Elsewhere this afternoon we’ll also get April housing starts and building permits data – both of which are expected to rebound. Finally we’ll cap the day off with more important data in the form of industrial production (+0.3% mom expected), capacity utilization and manufacturing production. Fedspeak wise we’ll also hear from Williams and Lockhart this evening (due at 5.00pm BST) in a joint interview, as well as Kaplan (at 6.15pm BST) later on while the ECB’s Praet and Nouy are scheduled to speak this morning.

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