Tag: news

• Futures flat as geopolitical risks weigh; earnings eyed (Reuters)
• Brent oil rises for 8th day on possible extension to supply cut (Reuters)
• U.S. accuses Russia of Syria gas attack ‘cover up’ (Reuters)
• Xi Tells Trump China Wants Peaceful North Korea Solution (WSJ)
• Tillerson, Lavrov Hold Talks in Moscow Amid Rising Tensions Over Syria (WSJ)
• Russian diplomat says U.S. stance on Syria ‘a mystery’ (Reuters)
• Trump’s message to bankers: Wall Street reform rules may be eliminated (Reuters)
• Puerto Rico seen sliding toward bankruptcy as deadline nears (Reuters)
• Trump Lays Groundwork for Widespread Government Reorganization (BBG)
• In surprise move, Iran’s Ahmadinejad to run for president (AP)
• Leftist’s Rise in French Polls Is Spooking Markets (BBG)
• UK’s Daily Mail to pay Melania Trump damages over modeling claims (Reuters)
• Newly Energized Liberals Pour Record Effort Into Local Races (WSJ)
• PR Nightmares: United Seat Fiasco Among Worst Corporate Gaffes (BBG)
• Higher Yields Damp China’s Corporate Bond Market (WSJ)
• United Airlines faces mounting pressure over hospitalized passenger (Reuters)
• Japan automakers look to robots to keep elderly on the move (Reuters)
• Airbnb signs dozens more tax agreements in the U.S., France (Reuters)

 

Overnight Media Digest

WSJ

– Senior White House officials accused Russia of trying to cover up the suspected Syrian chemical attack last week, adding that the U.S. has concluded the Syrian military used banned sarin gas in the assault. The officials also questioned whether Russia had a role in the attack and suggested it may have known that its ally Syria was planning to use sarin. http://on.wsj.com/2oUqY13

– Three explosions hit a soccer team’s bus just ahead of a major game in the German city of Dortmund on Tuesday, seriously injuring one player in what authorities described as a targeted attack on one of Europe’s most prominent sports clubs. http://on.wsj.com/2oxd4Ri

– United Airlines Chief Executive Oscar Munoz apologized Tuesday for an altercation in which police forcibly removed a passenger from a flight in Chicago, seeking belatedly to quell a worldwide furor. The incident sparked outrage on social media, angered millions in United’s fast-growing China market and drew condemnation on Capitol Hill. http://on.wsj.com/2ooY33K

– Uber Technologies Inc is losing its communications chief in the middle of a public-relations crisis for the ride-hailing company. Rachel Whetstone, who joined Uber in 2015 from Alphabet Inc’s Google where she also led communications and public policy, said in a statement Tuesday she is leaving the company, without citing a reason. http://on.wsj.com/2oVMvqb

– The English-language version of a voice-activated “virtual assistant” that is a major feature of Samsung Electronics Co Ltd’s newest flagship device won’t be ready to go when the Galaxy S8 smartphone arrives in U.S. stores next week, according to people familiar with the matter. http://on.wsj.com/2o4t6z5

– Elliott Management Corp has informed Akzo Nobel NV that it plans to call a shareholder meeting to try to oust the chairman of the company’s supervisory board, ratcheting up the pressure on the paint giant to engage in sale talks. http://on.wsj.com/2nCJpqQ

 

FT

*The Royal Marines will be cut by 200. The 200 posts, including many specialist roles, will be transferred from the marines to the Royal Navy to stave off staffing gaps.

*The British Library is considering a 500 million pounds ($624.35 million) extension that will offer it 100,000 sq ft of extra space for education, exhibitions and research next to its headquarters at St Pancras in London.

*Australia defended BHP Billiton Ltd on Tuesday, saying that any major changes to the corporate structure of the country’s biggest company would need to be consistent with the “national interest”. The defence came after activist hedge fund Elliott Advisors called on Monday for the scrapping of BHP’s dual corporate structure involving Australian and British companies.

 

NYT

– A group of Chinese political activists filed a lawsuit in federal court against Yahoo on Tuesday, saying the company failed to properly oversee a $17 million fund it created a decade ago to help Chinese writers, democracy advocates and human rights lawyers persecuted for standing up to the country’s government. http://nyti.ms/2oWw50I

– Toshiba, a pillar of the modern Japanese economy whose roots stretch back to the country’s industrial stirrings in the 19th century, warned on Tuesday that a disastrous foray into nuclear power may have crippled its business beyond repair. http://nyti.ms/2oWd7Hl

– Uber has lost a string of top managers in recent months as the ride-hailing company has dealt with scandals over its workplace culture and its executives’ behavior. That exodus is continuing with the exit of Rachel Whetstone, the company’s head of policy and communications. http://nyti.ms/2oWm0kp

– Rolling Stone and a writer have agreed to settle a libel suit brought by a University of Virginia administrator over a debunked article that described a gangrape at the university, the magazine announced on Tuesday. http://nyti.ms/2oWr08m

– LeEco has scrapped a planned $2 billion acquisition of U.S. consumer electronics company Vizio, citing unspecified “regulatory headwinds”. http://nyti.ms/2oWjmei

 

Canada

THE GLOBE AND MAIL

** A landmark deal between TransCanada Corp and Western Canadian natural gas companies for discounted, long-distance pipeline transport comes “just in time” to help stave off some competition from increasing U.S. production, says one of the key backers of the agreement. https://tgam.ca/2p4Zs0j

** British Columbia Liberal Leader Christy Clark has launched the 41st general election in British Columbia, laying out a simple campaign theme that she is counting on voters to favour on May 9 – that only her party will keep the province’s economy strong and job opportunities growing. https://tgam.ca/2p4TcWw

** Canadian oil producers are confident in Alberta’s oil sands projects as a long-term play, betting that consolidation and a homegrown focus will drive down operating costs and make the industry more competitive as foreign players retreat. https://tgam.ca/2p4HhI1

NATIONAL POST

** Cenovus Energy Inc CEO Brian Ferguson says the company is encouraged by the interest in its asset divestiture plan to fund part of the mega C$17.7 billion ($13.29 billion)deal to buy ConocoPhillips’ Canadian assets, which should help improve investor sentiment around the acquisition. http://bit.ly/2p4YRf4

** Pembina Pipeline Corp plans to build a propane export terminal in Prince Rupert, British Columbia where major liquefied natural gas export projects have stalled in recent years. http://bit.ly/2p4HIlD

** Canadian oilsands producers worried about international capital fleeing to the U.S. should take heart from the long-term attractiveness of the reserves, according to a senior think-tank advisor. http://bit.ly/2p4Ti0t

 

 

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

Trust between Russia and the US has collapsed under the Trump administration, Russian President Vladimir Putin stated on Wednesday, as Moscow delivered an unusually frigid if not hostile reception to Secretary of State Rex Tillerson in a face-off over Syria, shortly after Putin said the recent chemical attack was a staged “false flag” and predicted that more are coming, while at the same time the US accused Russia of a gas attack “cover up.”

In an interview on Wednesday, Putin said that if Donald Trump had intended to bring about a thaw in US relations with Russia, he has failed to see this intention through.

“One could say that the level of trust on a working level, especially on the military level, has not improved but has rather deteriorated,” Putin said in an interview broadcast on Russian television moments after Tillerson sat down with Russian Foreign Minister Sergei Lavrov in an ornate hall. Putin doubled down on Russia’s support for Syrian President Bashar al-Assad, repeating denials that Assad’s government was to blame for the gas attack last week and adding a new theory that the attack may have been faked by Assad’s enemies.

Moments earlier, Lavrov greeted Tillerson with unusually icy remarks, denouncing the missile strike on Syria as illegal and accusing Washington of behaving unpredictably.

Quoted by Reuters, Lavrod said that “I won’t hide the fact that we have a lot of questions, taking into account the extremely ambiguous and sometimes contradictory ideas which have been expressed in Washington across the whole spectrum of bilateral and multilateral affairs. And of course, that’s not to mention that apart from the statements, we observed very recently the extremely worrying actions, when an illegal attack against Syria was undertaken.”

Lavrov also noted that many key State Department posts remain vacant since the new administration took office – a point of sensitivity in Washington.

Just as Tillerson sat down for talks, a senior Russian official assailed the “primitiveness and loutishness” of U.S. rhetoric, part of a volley of statements that appeared timed to maximize the awkwardness during the first visit by a member of Trump’s cabinet.

“In general, primitiveness and loutishness are very characteristic of the current rhetoric coming out of Washington. We’ll hope that this doesn’t become the substance of American policy,” Deputy Foreign Minister Sergei Ryabkov told Russia’s state-owned RIA news agency.”As a whole, the administration’s stance with regards to Syria remains a mystery. Inconsistency is what comes to mind first of all.”

Tillerson kept to more calibrated remarks, saying his aim was “to further clarify areas of sharp difference so that we can better understand why these differences exist and what the prospects for narrowing those differences may be.” “I look forward to a very open, candid, frank exchange so that we can better define the U.S.-Russian relationship from this point forward,” he told Lavrov.

After journalists were ushered out of the room, Lavrov’s spokeswoman, Maria Zakharova, wrote on her Facebook page that U.S. journalists traveling with Tillerson had behaved as if they were in a “bazaar” by shouting questions to Lavrov. Kremlin spokesman Dmitry Peskov said Tillerson might meet Putin later on Wednesday if the two top diplomats decided it would be useful to brief the Russian president on their talks. But Peskov too did not hold back his criticism, saying calls from Western powers for Russia to cut support for Assad amounted to giving terrorists a free hand.

Moscow’s hostility to Trump administration figures is a sharp change from last year, when Putin hailed Trump as a strong figure and Russian state television was consistently full of effusive praise for him. Trump’s repeated claims that he could mend relations between Washington and Moscow has fueled accusations that he secretly colluded with Russia to win the US presidential election last year. His administration is currently under a congressional investigation over alleged ties with Russia.

Some have even gone so far to suggest that Trump’s entire Syria operation has been staged – in cooperation with Russia – to deflect attention from his proximity toward Russia, making it appear that he and Putin remain foes. Judging by the complete disappearance of stories involving Trump being manipulated by Russia over the past week, if indeed this was the strategy, it has succeeded.

* * *

Meanwhile, Moscow has has stood by Assad, defying western demands to cut loose with the Syrian leader, saying the poison gas belonged to rebels, an explanation Washington dismisses as beyond credible. Putin said that either gas belonging to the rebels was released when it was hit by a Syrian strike on a rebel arms dump, or the rebels faked the incident to discredit Assad.

Tillerson traveled to Moscow with a joint message from Western powers that Russia should withdraw its support for Assad after a meeting of the Group of Seven industrialized economies also attended by Middle East allies.

Overnight, in an interview with the Fox Business Network, Trump said he was not planning to order U.S. forces into Syria, but that he had to respond to the images of dead children poisoned in the gas attack.  “We’re not going into Syria,” he said in excerpts of the interview on the station’s website. “But when I see people using horrible, horrible chemical weapons … and see these beautiful kids that are dead in their father’s arms, or you see kids gasping for life … when you see that, I immediately called (Defense Secretary) General Mattis.”

Putin and Trump are yet to meet face to face to discuss the tensions between Russia and the US. A meeting of the two leaders has not been scheduled so far, even though Moscow has indicated it is willing.

via http://ift.tt/2nDO8sd Tyler Durden

With the Carl Vinson carrier group steaming toward the Korean Penninsula (it is expected to arrive some time over the weekend), in an unexpected overnight development less than a week after his first meeting with China’s president, Donald Trump called President Xi on the phone to discuss trade and the developing North Korean situation. According to China’s state television, Xi stuck with his objective of “denuclearization” of the Korean Peninsula, and called for a peaceful resolution of rising tension.

“China insists on realizing the denuclearization of the peninsula, insists on maintaining peace and stability on the peninsula, and advocates resolving the problem through peaceful means,” Xi was quoted as saying in the call according to Chinese state broadcaster CCTV said.

Chinese Foreign Ministry spokesman Lu Kang, who said Trump had initiated the call, urged everyone to lower the tension. “We hope that the relevant parties do not adopt irresponsible actions. Under the current circumstances, this is very dangerous,” Lu told reporters at a regular press briefing.  Kang also said Wednesday at a regular briefing in Beijing that it was a “good thing” that the two leaders were in touch again days after meeting in Florida.

Translation: Trump is strongly urged not to launch a unilateral strike on North Korea as he did on Syria without express Chinese prior approval.

Trump had ordered the USS Carl Vinson aircraft carrier group to head to the Korean peninsula in an attempt to deter North Korea’s nuclear and long-range missile ambitions, which it is developing in defiance of U.N. resolutions and sanctions.  Previously, Trump pressed Xi to do more to curb North Korea’s nuclear programme when they held their first face-to-face meeting in Florida last week. He said on Twitter on Tuesday that North Korea was “looking for trouble” and the United States would “solve the problem” with or without China’s help.

According to Reuters, the communication between the leaders underscores the increasing sense of urgency as tension escalates amid concern that reclusive North Korea could soon conduct a sixth nuclear test, or more missile launches, and Trump’s threat of unilateral action to solve the problem.

As we reported yesterday, Trump’s call with Xi came as an influential state-run Chinese newspaper warned that the Korean peninsula was the closest it has been to a “military clash” since North Korea’s first nuclear test in 2006.  China’s Global Times newspaper said in an editorial North Korea should halt any plan for nuclear and missile activities “for its own security”. While widely read in China and run by the ruling Communist Party’s official People’s Daily, the Global Times does not represent government policy.

The newspaper noted Trump’s recent decision to launch 59 Tomahawk missiles at a Syrian airfield in response to a deadly gas attack last week. “Not only is Washington brimming with confidence and arrogance following the missile attacks on Syria, but Trump is also willing to be regarded as a man who honours his promises,” it said.

“The U.S. is making up its mind to stop the North from conducting further nuclear tests. It doesn’t plan to co-exist with a nuclear-armed Pyongyang,” it said. “Pyongyang should avoid making mistakes at this time.”

The Global Times said if North Korea made another provocative move, “Chinese society” might be willing to back unprecedented sanctions, “such as restricting oil imports”.

* * *

As also reported yesterday, North Korean state media warned on Tuesday of a nuclear attack on the United States at any sign of American aggression. Officials from the North, including leader Kim Jong Un, have indicated an intercontinental ballistic missile test or something similar could be coming. North Korea launched a long-range rocket carrying a satellite on April 13, 2012, marking the anniversary of the birth of North Korea’s founding president Kim Il Sung. Saturday will be the 105th anniversary of his birth. Residents thronged Pyongyang’s boulevards on a sunny spring morning, some practising for a parade to be held on the weekend, with no visible sign of the tension

“So long as we are with our supreme leader Marshall Kim Jong Un we are not afraid of anything,” a woman who gave her name as Ri Hyon Sim told Reuters journalists, who were escorted by North Korean officials.

Regardless of the mood on the ground in North Korea, for now at least the entire region remains on edge:

Russia has said it is worried about the possibility of a U.S. attack on North Korea and it would raise the issue with visiting U.S. Secretary of State Rex Tillerson, Russian media quoted Deputy Foreign Minister Sergei Ryabkov as saying.

 

Earlier on Wednesday, two sources in Tokyo said Japan’s navy planned exercises with the Carl Vinson carrier group in a joint show of force. Japan’s Maritime Self Defence Force and the U.S. Navy could conduct helicopter landings on each other’s ships, as well as communication drills, they said. A senior Japanese diplomat said it appeared the U.S. position was to put maximum pressure on North Korea to reach a solution peacefully and diplomatically.

 

“At least, if you consider overall things such as the fact that the U.S. government has not put out warnings to its citizens in South Korea, I think the risk at this point is not high,” said the diplomat, who declined to be identified.

 

South Korea’s acting president, Hwang Kyo-ahn, has warned of “greater provocations” by North Korea and ordered the military to intensify monitoring.

The North fired a liquid-fuelled Scud missile this month, the latest in a series of tests that have displayed its ability to launch attacks and use hard-to-detect solid-fuel rockets. North Korea remains technically at war with the United States and its ally South Korea after the 1950-1953 Korean conflict ended in a truce, not a peace treaty. It regularly threatens to destroy both countries.

The market’s attention will now focus to development in Moscow where Rext Tillerson is meeting with Russian foreign minister Sergey Lavrov at a very tense time for both countries.

via http://ift.tt/2p7hrAA Tyler Durden

S&P futures are unchanged and Asian stocks closed mixed, however European stocks rebounded for first time this week, led by auto stocks after Daimler’s quarterly profit, as a break in alarming political news prompted traders to “swoop” – as Reuters puts it – on equities, cooling a safe-haven rally that saw the yen and gold at five-month highs and global government bond yields to drop their lowest this year.

Still, with many geopolitical unknowns in the days ahead as well as potential military escalation in North Korea, the mood remained “skittish”, and meant that what looked set to be oil’s longest winning run since August – up for 8 consecutive days, its longest streak in 2017 – has largely gone under the radar.

As DB’s Jim Reid puts it, it has felt quite quiet and orderly this week considering the risk-off tendencies and relatively big spike in volatility. However that might be because of a lack of activity given the pending Easter break. So poor liquidity is probably exacerbating the moves. Add to this the rising geopolitics tensions (North Korea, Syria), slow burning ongoing concerns about Trump trades post the healthcare debacle, and a steady increase of support for Melenchon in the recent French polls making it less certain who’ll contest the final round run-off. For now equity and credit markets remain fairly resilient which reduces the immediate worry but if vol remains elevated at these levels for a few days expect weakness.

This morning in Asia we got the latest inflation data out of China. In terms of the numbers, PPI in March has moderated somewhat after dipping two-tenths to +7.6% yoy (vs. +7.5% expected) following a bit of a levelling out in commodity prices. That said it also marks the seventh consecutive monthly positive print after 54 months of deflation in prices at the factory gate. Meanwhile CPI has edged up one-tenth to +0.9% yoy although did miss slightly relative to expectations for +1.0%, with a -4.4% yoy decline in food prices in particular having an impact.

Bourses in China are a touch weaker although that is the case for much of Asia this morning, if not the rest of the world. Global markets halted their recent declines with an early 0.3 percent rise for Europe’s STOXX 600 share index put it on course for its best day of the month. The rise in oil underpinned energy stocks while banks and carmakers also made ground. MSCI’s broadest index of Asia-Pacific shares outside Japan saw a late rally though Shanghai closed down 0.4 percent as China reported a slight slowdown in producer price inflation. South Korean stocks and the won gained for the first time in seven days. Hong Kong equities erased losses to rally in late trading. The yield on 10-year U.S. notes rose after closing Tuesday below 2.3 percent for the first time in four months. Oil extended its longest winning streak since December. Japan’s Topix fell to the lowest level of the year after the yen breached 110 yen per dollar for the first time since November on Tuesday. A quick breakdown from Bloomberg:

• The Stoxx Europe 600 rose 0.3 percent, with automakers leading gains as Daimler AG’s first-quarter profit almost doubled. Daimler shares rose 1.6 percent.
• Korea’s Kospi rose 0.2 percent, after dropping 2 percent over the previous six sessions. Japan’s Topix fell 1 percent, led by declines in banks, autos and other exporters. South Australia’s S&P/ASX 200 index gained less than 0.1 percent.
• The Hang Seng China Enterprises Index climbed 0.3 percent and the Hang Seng Index jumped 0.6 percent, wiping out earlier losses at the end of the trading day. The Shanghai Composite fell 0.5 percent. Data showed China’s producer price gains slowed last month from a peak in February, tempering the global inflation outlook.

At the same time, volatility is easing after the VIX climbed to a level unseen since November on Tuesday amid escalating global tensions.

“It is a modest rebound,” said Rabobank strategist Philip Marey. “We have discounted much of the news like the conflict between the Americans and the Russian on Syria and Trump’s tweets on North Korea, so maybe its time to move on.”

S&P500 futures are unchanged, having spent the Asian session in the red. Japan’s Nikkei had slid just over 1 percent as a rising yen weighed on exporters’ shares.

However, while stock traders are hoping to BTD, the allure of save havens persists with gold climbing as far as $1,280.30 at one stage, its highest since Nov. 10, while the 10Y TSY was at 2.30% at last check, flirting with the key support ling that has emerged since the Trump election, after dropping to 2.28% overnight.

“A degree of uncertainty has found its way into previously seemingly bulletproof financial markets,” wrote analysts at ANZ.  “There is clearly some nervousness out there, with tensions around North Korea ratcheting higher and adding to an already heightened geopolitical environment. Global cyclical assets have not yet responded, but that can’t last.”

In geopolitics, Chinese President Xi Jinping on Wednesday stressed the need for a peaceful solution for the Korean peninsula on a call with U.S President Donald Trump. North Korea has warned of a nuclear attack on the United States at any sign of aggression as a U.S. Navy strike group steamed toward the Korean peninsula – a force Trump described as an “armada”. Japan’s navy also plans joint drills with the U.S. force, sources told Reuters. Trump said in a Tweet that North Korea was “looking for trouble” and the U.S. would “solve the problem” with or without China’s help.

The bellicose language has dragged South Korean stocks and the won to four-week lows and caused jitters across Asia. At the same time, U.S. Secretary of State Rex Tillerson was in Moscow to denounce Russian support for Syria’s Bashar al-Assad, raising the stakes in the Middle East. A joint news conference by Trump and NATO Secretary General Jens Stoltenberg was also likely to generate headlines.

In currencies, the yen, a favoured harbor in times of stress due to Japan’s position as the world’s largest creditor nation, also cooled in Europe after having surged over 1.2 percent against the dollar on Tuesday. The dollar huddled at 109.70 yen, having been as low as 109.35 at one stage. Dealers warned there was little in the way of chart support until the 200-day moving average at 108.72.

The euro steadied too, having dropped to its lowest in five months at 115.91 yen. It was looking to snap 11 straight sessions of losses, a record for the single currency. It was shade higher on the dollar at $1.0618. Political uncertainty in France added to the euro’s woes as hard-left candidate Jean-Luc Melenchon surged in the polls ahead of the May presidential election. 

All this unease boosted bonds with yields on 10-year Treasuries US10YT=RR boasting their lowest close of the year on Tuesday. Yields were last at 2.30% and testing a hugely important barrier on the charts. European yields nudged only cautiously upwards despite the easier mood in other assets, as nearly 16 billion euros of upcoming debt sales weighing on risk-averse, holiday-thinned markets.

Meanwhile, US traders are looking for an upbeat earnings season set to kick off tomorrow with a handful of banks reporting Q1 results. Analysts expect earnings for all S&P 500 companies to have risen 10 percent in the first quarter from a year ago, according to Thomson Reuters data.

Oil’s winning streak got an added lift from reports Saudi Arabia was lobbying OPEC and other producers to extend a production cut beyond the first half of 2017. Global benchmark Brent edged up 30 cents to $56.53 a barrel, while U.S. crude added 25 cents to $53.66. If sustained, this would be the longest stretch of gains since August 2016.

Bulletin Headline Summary from RanSquawk

• European indices have remained afloat with oil prices rising amid a drawdown in last nights API report,  while Saudi support of extension to cuts also keeps oil elevated.
• GBP undecided after mixed jobs report where importantly wage inflation is now below CPI.
• Looking ahead, highlights include DoE and Bank of Canada rate decision.

Market Snapshot

• S&P 500 futures up 0.1% to 2,353.00
• STOXX Europe 600 up 0.5% to 382.98
• MXAP down 0.08% to 146.72
• MXAPJ up 0.5% to 479.87
• Nikkei down 1% to 18,552.61
• Topix down 1% to 1,479.54
• Hang Seng Index up 0.9% to 24,313.50
• Shanghai Composite down 0.5% to 3,273.83
• Sensex down 0.3% to 29,685.83
• Australia S&P/ASX 200 up 0.08% to 5,933.96
• Kospi up 0.2% to 2,128.91
• German 10Y yield unchanged at 0.204%
• Euro up 0.1% to 1.0616 per US$
• Italian 10Y yield rose 3.9 bps to 1.986%
• Spanish 10Y yield rose 0.3 bps to 1.647%
• Brent Futures up 0.5% to $56.49/bbl
• Gold spot down 0.1% to $1,273.27
• U.S. Dollar Index down 0.07% to 100.64

Top Overnight News From Bloomberg

• Amazon Said to Mull Whole Foods Bid Before Jana Stepped In
• Meredith Said in Late-Stage Talks for Time Inc. Takeover
• Xi Urges North Korea Talks in Trump Call as Tensions Mount
• Oil Extends Longest Gain of 2017 as Saudis Seen Extending Curbs
• Tillerson, Lavrov Meet in Moscow as U.S. Blasts Russia on Syria
• BHP CEO Rejects Oil Spinoff for Third Time After Singer Demand
• Neurocrine Wins FDA Approval on Drug for Movement Disorder
• Arista Networks Says Ruling Allows for Product Imports Into U.S.
• Daimler’s First-Quarter Earnings Surge on Mercedes Success
• NuStar to Buy Navigator in $1.5 Billion Bet on Permian Pipelines

Asian markets were weighed by geopolitical concerns with the Nikkei 225 (-1%) the underperformer amid JPY  strength. The downbeat tone was evident across the region, with the Shanghai Composite (-0.4%) finding itself in negative territory not helped by the 0.90%, vs. Exp. 1.00% CPI Y/Y miss, while ASX 200 (+0.1%) was also subdued,  although strength in the materials sector and mining names stemmed downside. Finally, JGBs followed European and US fixed income markets, finding bullish pressure throughout the session. Noticeably, the BoJ lowered its 3yr-5yr  purchases by JPY 30bIn which had no effect on the 10yr or the flight to safety, with the 10yr JGB Jun’17 contract higher by around 20 ticks. Chinese CPI (Mar) Y/Y 0.9% vs. Exp. 1.0% (Prey. 0.8%); – PPI (Mar) Y/Y 7.6% vs. Exp. 7.6% (Prey. 7.8%). PBoC refrained from open market operations again for a net daily drain of CNY 40bIn. BoJ Governor Kuroda stated BoJ easing is not targeting an FX level and that JPY weakness could help inflation  reach target quicker. Kuroda further stated that he sees no problem with asset purchases or expansion of monetary base.

Top Asian News

• China Producer Price Reflation Moderates as Commodities Cool Off
• Xi, Trump Exchange Views on Issues Including North Korea Today
• China Says Escalating Korean Situation ’Irresponsible, Dangerous’
• Cathay Promotes Operating Chief Rupert Hogg to CEO After Loss
• Qantas Stops Selling Tickets in Zimbabwe Amid Cash Shortage

In Europe the risk off sentiment doesn’t last long with the markets shrugging off yesterday’s concerns to see equities trade higher again this morning. Energy names are leading the charge, with the sector benefitting as WTI trades above USD 533.50/bbl in the wake of reports of Saudi Arabia want OPEC to extend production cuts and is pushing for a six-month extension. Elsewhere this morning, Tesco’s earnings failed to lift the company, with concerns remaining after profits were weighed on by the 2014 accounting scandal. Fixed income markets have traded in a tighter range for much of the morning amid the slew of supply. Additionally, gilt prices notched lower in the wake of a relatively soft 2065 auction in which the tail had notably widened by some 1.7bps.

Top European News

• Tesco Lays Down Price Gauntlet to Rivals as Pressure Grows
• U.K. Households Facing Biggest Earnings Squeeze Since 2014
• EU Won’t Back Trade Deal If U.K. Chooses ‘Singapore-on- Thames’
• Puma Raises 2017 Earnings Forecast as Turnaround Progresses
• Swedish Elk-Hunt Bribery Case Widens to Handelsbanken Chairman
• Banco Popular Rises Most in Three Months on Takeover Speculation
• Melenchon Crashes Front-Runners’ Party as French Risks Rise
• German Economy Saw ‘Vigorous’ Expansion in 1Q 2017: Government

In currencies, the yen fell less than 0.1 percent to 109.70 against the dollar as of 8:44 a.m. in London, erasing an earlier gain of 0.2 percent. The currency jumped 1.2 percent on Tuesday for the biggest increase since January. The Bloomberg Dollar Spot Index fell 0.1 percent. The South Korean won rose 0.4 percent, after six days of declines. The euro added 0.1 percent to $1.0620, gaining for a third day. Focus in the FX markets has been on the JPY, as it gains across the board on geopolitical fears. We have finally broken through the 110.00 on the downside, tripping stops through 109.50 but with limited momentum though here as some had feared. Tensions over North Korea and Syria are unlikely to go away any time soon, so expect JPY demand to continue in the meantime. We see the EUR benefiting from times of risk off, but there is no relief for the single unit as the French elections continue to unnerve the market — there seems to be little confidence in the polls which continue to see Le Pen lagging. EUR/USD tested through 1.0600 yesterday and today, but struggles ahead of the first point of resistance at 1.0650. We saw EUR/JPY dipping under 116.00 in late Asia, but demand noted below here.

In commodities,  oil climbed 0.4 percent to $53.61 a barrel, after advancing for six straight sessions. Saudi Arabia is likely to support extending OPEC output cuts into the second half of 2017 in an effort to boost oil prices, according to a person familiar with the kingdom’s internal discussions. Gold fell 0.1 percent to $1,273.70 an ounce, after jumping 1.6 percent on Tuesday to the highest since Nov. 9. The flight to safety has seen Gold on the ramp again in recent sessions, tipping USD1280.00 alongside the drop in the USD which has seen the JPY take out 110.00. Silver is now back above USD18.00 as a result, as precious metals have been the obvious trade in the last few days. Oil prices have pushed higher also as Saudi Arabia wants OPEC to extend the production cuts by another 6 months, with the API’s showing a drawdown to add impetus to the WTI rise through USD53.00. Brent is now pushing into the upper USD56.00’s. Base metals naturally suffer with the risk off tone as, with Copper now back under USD2.60, but techs note some near term support on the horizon. Zinc has been underperforming as supply picks up, but also stabilises to a modest degree today.

Looking at the day ahead, it’s quiet again in the US with just the March import price index reading and monthly budget statement due out. Away from the data the BoE’s Carney is due speak this morning, while the IMF’s Lagarde is also scheduled to speak at a conference in the next few hours. The Fed’s Kaplan then speaks this afternoon at 3pm BST. As highlighted earlier, expect politics to also remain a focus with Tillerson’s visit to Russia one to watch.

US Event Calendar

• 7am: MBA Mortgage Applications, prior -1.6%
• 8:30am: Import Price Index MoM, est. -0.2%, prior 0.2%; YoY, est. 3.95%, prior 4.6%;  Import Price Index ex Petroleum MoM, est. 0.0%, prior 0.3%
• 8:30am: Export Price Index MoM, est. 0.0%, prior 0.3%; 8:30am: Export Price Index YoY, prior 3.1%
• 10am: Fed’s Kaplan Speaks in Fort Worth
• 2pm: Monthly Budget Statement, est. $169.0b deficit, prior $108.0b deficit

* * *

DB’s Jim Reid concludes the overnight wrap

So far this week vol has been spiking up like Sergey after he’s planted his pole at the end of the runway. Given the moves it’s got us asking the question as to whether this is the rise in vol we’ve been waiting for? Last night the VIX closed (15.07) at the highest level since the US election with European VSTOXX (22.95) also at the highs over the same period and just over double the all-time lows seen just over 3 weeks ago. Simultaneously Gold (+1.61%) hit 5 month highs last night and 10yr Treasury yields hit a 5 month low after falling 7bps to 2.296%. 10y Bund yields also held steady at 0.201% and continue to hover a shade above the 2017 low of 0.179% made intraday back in February.

It has felt quite quiet and orderly this week considering the risk-off tendencies and relatively big spike in volatility. However that might be because of a lack of activity given the pending Easter break. So poor liquidity is probably exacerbating the moves. Add to this the rising geopolitics tensions (North Korea, Syria), slow burning ongoing concerns about Trump trades post the healthcare debacle, and a steady increase of support for Melenchon in the recent French polls making it less certain who’ll contest the final round run-off. For now equity and credit markets remain fairly resilient which reduces the immediate worry but if vol remains elevated at these levels for a few days expect weakness.

In terms of the actual geopolitical developments yesterday, it was President Trump’s latest tweeting around North Korea which initially saw vol spike higher midway through the afternoon. Trump tweeted that “North Korea is looking for trouble” and that the US “will solve the problem” with or without the help of China – reiterating comments he has made previously. Overnight in an interview with Fox News, Trump also said that “we are sending an armada” to the North Korean peninsula. In addition to this and ahead of his visit to Russia, secretary of state Rex Tillerson was fairly blunt in his comments about Russia’s involvement in Syria. Speaking at the G-7 summit, Tillerson said that Russia had aligned itself with an “unreliable partner” in Syria’s al-Assad and urged Russia to abandon its support. Tillerson has travelled to Moscow and is due to meet foreign minister Sergei Lavrov. There’s also some chatter that he could meet President Putin although that is still to be confirmed. Putin had said yesterday that the recent chemical attacks in Syria were “provocations”.

So expect there to be plenty more headlines around this today. While safe havens rallied and volatility spiked higher yesterday it was notable that risk assets actually stayed relatively resilient all things considered. The S&P 500 pared a loss of as much as -0.85% to finish the day down only a modest -0.14%. The percentage loss for the Dow (-0.03%) was even smaller while the Stoxx 600 was -0.02% by the  closing bell, despite the obvious moves in vol. In fact in the last six sessions, the Stoxx 600 hasn’t moved up or down by more than 0.20%. Meanwhile credit was a bit weaker at the margin (CDX IG +1bp, iTraxx Main +0.5bps, Crossover +3bps) but again the moves were pretty modest in reality.

This morning in Asia we’ve had the welcome distraction of the latest inflation data out of China. In terms of the numbers, PPI in March has moderated somewhat after dipping two-tenths to +7.6% yoy (vs. +7.5% expected) following a bit of a levelling out in commodity prices. That said it also marks the seventh consecutive monthly positive print after 54 months of deflation in prices at the factory gate. Meanwhile CPI has edged up one-tenth to +0.9% yoy although did miss slightly relative to expectations for +1.0%, with a -4.4% yoy decline in food prices in particular having an impact. Bourses in China are a touch weaker although that is the case for much of Asia this morning. The Shanghai Comp and CSI 300 are -0.32% and -0.04% respectively while the ASX and Hang Seng are -0.17% and -0.15%. In Japan the Nikkei (-1.24%) has notably underperformed reflecting the rally for the Yen (+1.04%) over the past 24 hours. US equity index futures are down about -0.20%.

Moving on. It was another fairly quiet day for macro data yesterday although we did get the first of a number of inflation reports during the week. In the UK headline CPI was reported as rising a higher than expected +0.4% mom in March (vs. +0.3% expected) which had the effect of holding the annual rate unchanged at +2.3%. However the core rate fell a little more than expected to +1.8% yoy from +2.0% although still remains well above the levels of 2015 and 2016. Headline RPI was a little softer than expected (+0.3% mom vs. +0.4% expected) however PPI output rose +0.4% mom and well ahead of the consensus estimate for +0.1%. Sterling (+0.61%) closed higher for the second day in succession yesterday.

Elsewhere in Europe there was some disappointment in the February industrial production print for the Euro area which came in at -0.3% mom (vs. +0.1% expected). More disappointing however was the six-tenths of a percent downward revision to the January data to +0.3%. Our European economists note that if industrial production remains unchanged in March, it will have fallen marginally in Q1 versus the strong +0.9% qoq growth in Q4. This lends some support to their view that the hard data is limiting upside in growth in Q1 despite the strong survey data. On that note, the German ZEW survey was upbeat in April with the current situations index rising 2.8pts to 80.1 and to the highest since July 2011, while the expectations index surged to 19.5 from 12.8. The data in the US yesterday was a bit of a non-event. The BLS JOLTS report revealed that job openings rose to 5.74m in February from 5.63m with both the quits rate and hiring rate edging down one-tenth. Meanwhile the NFIB small business sentiment index nudged down 0.6pts to 104.7 in March, although remains nearly 10pts above its pre-election level. Elsewhere there was a bit of Fedspeak yesterday although nothing that really moved the dial with San Francisco Fed President John Williams reiterating this view that three to four rate hikes this year seems appropriate.

Before we move on to today’s calendar, it’s worth highlighting yesterday’s report by our FX strategy team in which they look at how an exit from unconventional ECB policy would impact the euro. They find that “not all tightenings are created equal” and argue that it is the sequencing of the exit, rather than the overall monetary policy stance, that will determine whether the euro appreciates. A policy focused on an early exit from negative rates would be very bullish for the euro. The report shows that FX is far more sensitive to front-end rather than back-end yields and that this sensitivity has dramatically increased after the 2008 financial crisis. The report also shows that the effects of negative rates are highly non-linear, so that an early ECB hiking cycle will have a disproportionately positive impact on FX. In contrast, a policy focused on a tapering of the ECB’s PSPP program would not be bullish for the euro. QE operates via signaling effects on the short-term rate path as well as by depressing term premia. If the ECB is able to keep the front-end anchored, a rise in term premia alone could have bearish implications for the EUR via reduced demand for European fixed income. Similar effects were observed around the Fed taper tantrum.

Looking at the day ahead, this morning in Europe the main focus is likely to be on the UK again where we’ll get the March and February employment data. The consensus is for no change in the ILO unemployment rate at 4.7% and a slight dip in weekly earnings ex bonus to +2.1% yoy. It’s quiet again in the US this afternoon with just the March import price index reading and monthly budget statement
due out. Away from the data the BoE’s Carney is due speak this morning, while the IMF’s Lagarde is also scheduled to speak at a conference in the next few hours. The Fed’s Kaplan then speaks this afternoon at 3pm BST. As highlighted earlier, expect politics to also remain a focus with Tillerson’s visit to Russia one to watch.

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After a period of several weeks in which Bloomberg’s macro/FX commentator Richard Breslow took a tentative gamble on the skeptical, if not outright bearish, side in this morning’s note the former FX trader has shifted his outlook to a modestly more bullish one, cautioning that in light of recent events, “too many commentators have fallen into the “everything is binary” trap and decided that if you assume each event will end badly, there’s material to turn out a good rant. I even read this morning one purportedly disinterested analyst admit he has gotten tired of not seeing bond yields collapse given all the bad news.” He adds that “the reality is, actual investors have learned that all binary outcomes won’t resolve themselves in the same way and they have to find more than one way to deconstruct events. Most issues in life, and certainly in geopolitics, are better characterized by yin and yang rather than it’s all zero sum.”

Maybe, or maybe every time a negative event emerges it is swept by the $15 trillion in global central bank liquidity unleashed over the past decade. In any case, as this website and as Kyle Bass have repeatedly claimed, the one biggest positive attribute of Donald Trump is that he is an accelerator of actual events, and as such neither “commentators”, nor traders, nor Breslow will have long to wait to find out if he is correct in his shift in assessment to the positive. In fact, with the USS Vinson barreling down on North Korea, the answer may come as soon as this weekend.

His full note below:

You Might Consider Getting Them While It’s Hot

 

The incessant search for proof that the world, and hence markets, are imminently coming to an end has become an exercise in self-indulgence. Too many commentators have fallen into the “everything is binary” trap and decided that if you assume each event will end badly, there’s material to turn out a good rant. I even read this morning one purportedly disinterested analyst admit he has gotten tired of not seeing bond yields collapse given all the bad news. 

 

The reality is, actual investors have learned that all binary outcomes won’t resolve themselves in the same way and they have to find more than one way to deconstruct events. Most issues in life, and certainly in geopolitics, are better characterized by yin and yang rather than it’s all zero sum.

 

Stock valuations are really high and must correct. The buyers are greater fools. Maybe. Certainly popular. But we’re also about to enter earnings season and some pretty smart people are looking for a robust set of numbers. With earnings growth handily outstripping the previous two years. Low market volatility can just as easily be a time correction after a big run higher as a petering out of momentum before the deluge.

 

And it’s not just a U.S. thing. Ebitda forecasts are rising for Japanese companies while credit-default swaps continue to come tighter. Credit OAS spreads for Chinese off-shore bonds are looking decidedly relaxed. And guess what, investors think the real upside surprise could come from Europe.

 

It’s a reality of life that new U.S. presidents, especially one’s with no foreign affairs background, are going to be tested. And have messages they must send. It doesn’t mean war is imminent. Analysis seems to run to all out war or universal peace. It doesn’t work that way.

 

Yes the world is a dangerous place, but while safe havens were rallying last night on well-heralded Korean fears, the Chinese and American presidents were talking and the won and Kospi rallying.

 

Less and less is expected on U.S. fiscal initiatives in the short-term. That’s bullish not bearish. Rather than being built into the price there’s greater scope for it to be potential icing on the market’s cake.

 

So many are celebrating falling iron ore prices as a sign growth and inflation are grinding to a halt. They should look at the broader commodity complex and note how bid it looks. And then admit that iron ore prices and global GDP have no meaningful correlation.

 

Sometimes the all-out search for canaries in the investing coal mine becomes about as useful as an ostrich sticking its head into the ground.

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“You get a red line, you get a red line, everyone gets a red line…”

 

Source: Townhall.com

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Authored by Mike Shedlock via MishTalk.com,

The most recent French election polls remain very tight. Four candidates have a genuine shot at making it to the final round.

The first round vote is on April 23. Yet, a huge percentage of voters still have not made up their minds who to vote for.

Another 32% to 37% plan on sitting the election out or purposely spoiling their ballot.

4.5 Percentage Points Separate Macron, Fillon, Mélenchon

Round One Confidence

How confident should Le Pen and Macron be regarding round one? Take a guess before reading further.

Support for Le Pen is relatively solid. So is support for Fillon. Hamon, Mélenchon, and Macron have issues.

33% of Macron’s alleged base may not even vote for him!

If Mélenchon can manage to hold his base while capturing support for Macron, we could see something virtually no one but me has even discussed: Le Pen vs Mélenchon in round two.

Which Way Are Undecideds Likely to Break?

To ascertain who voters are likely to switch to, assuming they switch, let’s investigate round two intent.

Macron is the clear winner in second round intent, but results vary widely.

Those intending to vote for Hamon are highly likely to support Macron in round two, assuming, of course, Macron does make it to round two.  However, Hamon is only polling 8.5% now as his base has largely abandoned him already.

Despite the fact that the positions of Le Pen and Mélenchon are very similar, Le Pen presumably would pick up very little support from Mélenchon while a whopping 40% would choose to sit the election out in protest.

This looks like a lukewarm hold your nose vote for Macron.

If Fillon is knocked out of round one, his support would be much more evenly split, but Macron still rates better than Le Pen.

Does Any of This Make Much Sense?

On the surface, not much.

Le Pen and Mélenchon both eject EU institutions, free trade, and NATO. Both are in favor closer ties with Russia’s Vladimir Putin.

Fillon is pro-Europe as is Macron and Hamon. But Le Pen, who is vehemently anti-Europe, rates to pick up 31% of Fillon’s vote if he is knocked out, assuming you believe the polls.

Neither Le Pen nor Mélenchon is likely to get their anti-Euro legislation passed in French parliament and that assessment may help both of them at the expense of Macron.

Le Pen vs Macron

Here’s another chart to ponder.

Given round two intentions stated above, this should have been a massive landslide Macron. But it isn’t.

The above chart is yet another sign of doubt about Macron.

Macron better not make any serious blunders in the final 12 days of round one campaigning.

Also consider French Candidate Mélenchon Launches “Fiscal Kombat”: Free Video Game on Sharing Wealth.

Those wishing to play the game can do so at FiscalKombat.Fr.

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It was just a matter of time before we were forced to write this ridiculous post.  You knew it was coming, we knew it was coming…and now the day has finally arrived that some extreme leftist has called for the banning of automobiles as a means of preventing terrorist attacks…you know, because the person driving the vehicles couldn’t possibly be to blame.  

And while you may think such logic would be reserved for the kookiest of liberal activists living in an isolated commune some 100 miles from any established commercial interests, it actually came from a reputable columnist, Eva Franchell, writing for a large Swedish newspaper, Aftonbladet.

Per a translation from Breitbart London, Franchell’s opinion piece referred to automobiles as “effective murder machines” that must be banned at once if our world leaders are truly committed to the cause of fighting terrorism.

Instead, it is cars — which she calls “effective murder machines” — that Franchell says “must simply be removed from city centres and places where people gather, if people are to be protected in future”.

 

Vehicles are “easy to steal, and so nothing has been able to stop their advance”, writes Ms. Franchell.

 

“It just isn’t reasonable that a big truck can be driven right into one of Stockholm’s busiest streets on a Friday afternoon right before Easter.”

Yup, not reasonable at all that a motorist would be permitted to utilize a road…outrageous when you really think about it.

 

Moreover, proving that she gave this some thought, which is actually far worse than if it were some irrational, kneejerk reaction to a horrible crime, Franchell goes on to explain that “mobility” issues could be solved purely with public transportation and that deliveries could just be made when “people aren’t out on the streets.”

Noting how it is a popular destination for tourists, Franchell says the city centre must be a “safe environment” for visitors to enjoy. She described it as “remarkable” that it is possible to drive around the Swedish capital’s medieval old town.

 

Outlining her vision for a car-free Stockholm, she argues: “Most problems with regards to mobility and public transport can be solved, and deliveries to shops and restaurants could take place at times when people aren’t out on the streets.”

 

“Vehicles have been allowed to dominate our cities for decades and it’s the people who need space. It’s vital now that cars be regulated,” the piece concludes.

Meanwhile, Karolina Skog went so far as to adapt the car ban to other popular liberal narratives by suggesting that there existence is really an issue of gender discrimination…

“Cars are driven largely by men so by giving a lot of space to cars; we’re giving a lot of space to men — at the expense of women,” Karolina Skog explained.

What more is there to say really?  We could point out that the logical conclusion of Franchell’s proposal would be the ban of almost everything that could be used as a weapon, from rocks to computer monitors, but we kind of need our monitors.

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