MARKET WRAPS
Watch For:
Canadian Manufacturing Survey for April.
Opening Call:
Stock futures edged up Monday, pointing to a fresh record for
the S&P 500 after it ended last week at an all-time high.
Futures tied to the S&P 500 ticked up less than 0.1%. The
broad market gauge has climbed for three consecutive weeks.
Nasdaq-100 futures added 0.2%, pointing to a moderate rise in
technology stocks at the opening bell.
Stocks have ground higher amid an improving growth outlook in
many developed countries and continued central bank support. All
eyes will be on Federal Reserve policy makers' comments this week
following a two-day meeting. Investors remain concerned that the
Fed's evolving views on inflation and the labor market could prompt
the central bank to scale back easy-money policies sooner than
previously expected.
"Stock markets are by and large around all-time highs. We think
there is still more upside there," Salman Baig, multiasset
investment manager at Unigestion. "We're seeing clear signs that
the recovery is sustainable."
Forex:
All eyes this week are on Wednesday's U.S. Federal Reserve
decision but ahead of that various U.S. economic data will be
released, including retail sales and industrial production, which
could weigh on the dollar if weaker than expected, said
Commerzbank.
"Following the strong previous rise these [data] are likely to
have lost significant momentum," said currency strategist Thu Lan
Nguyen. "Fiscal policy stimulus is fading and bottlenecks are
making business more difficult," she said.
If this is the case, "US dollar euphoria might quickly ease
again just ahead of the FOMC meeting."
RBC Capital Markets advises buying the dollar against the Swiss
franc as its trade of the week before the Federal Reserve and Swiss
National Bank policy meetings on Wednesday and Thursday
respectively.
It targets 0.9170 in USD/CHF with a stop loss of 0.8900,
compared to 0.8989 currently. With short-seller bets against the
dollar having rebuilt in recent weeks and markets fully priced for
the first U.S. interest rate rise by mid-2023, the "balance of risk
favors being long dollar" into the Fed's meeting, RBC's Adam Cole
said.
The Fed's new economic projections could bring forward rate rise
expectations, he said. Meanwhile, the SNB will likely reiterate
that the franc is highly valued and it's prepared to intervene, he
said.
Bitcoin jumped 6.6% from its level at 5 p.m. ET Friday to trade
around $39,300, according to CoinDesk. Elon Musk tweeted Sunday
that Tesla will resume accepting the cryptocurrency as a form of
payment when miners use more clean energy.
Sterling weakened following reports the U.K. government is set
to announce that its plan to fully ease England's lockdown on June
21 will be delayed by four weeks.
Prime Minister Boris Johnson is expected to confirm the delay at
a news conference around 1700 GMT.
"It is unlikely that the formal announcement of the delay will
trigger any sharp currency movements, as it won't come as a shock,"
ActivTrades analyst Ricardo Evangelista said. "However, should
Johnson surprise the markets by confirming the end of restriction
on June 21, the pound would be likely to reverse this morning's
losses."
Bonds:
In bond markets, the yield on the benchmark 10-year Treasury
note edged up to 1.464% from 1.462% on Friday. The yield, which
moves inversely to price, has dropped for four consecutive weeks,
in part because foreign investors and pension funds are boosting
their holdings of U.S. government bonds.
"Fundamentally, bond yields should be much higher," Mr. Baig
said. "You're seeing higher inflation being priced into cyclical
commodities, growth being priced higher in equities, but bond
yields are still pricing fairly muted growth and inflation."
Another reason for the low yields is that money managers believe
Fed officials will hold off on tapering until the economy is much
stronger, said Lale Akoner, market strategist BNY Mellon Investment
Management.
"What the Fed is saying around transitory price pressures are
resonating in the bond market," said Ms. Akoner.
Commodities:
Oil prices were higher, with DNB Markets' Helge Andre Martinsen
citing positive equity markets and a relative lack of oil-specific
news. Both benchmarks are on course to break multiyear highs, with
Brent settling Friday at its highest since April 2019 and WTI
closing at its highest since October 2018 as demand continues to
improve despite high coronavirus rates in the developing world.
Slow vaccination rates in emerging economies means oil demand in
3Q and 4Q will be lower than expected, the IEA said on Friday.
Demand will hit its pre-pandemic high in 4Q next year, the watchdog
added.
TODAY'S TOP HEADLINES
Bitcoin on the Balance Sheet Is an Accounting Headache for
Tesla, Others
Elon Musk's curious Twitter war with bitcoin is expected to hit
Tesla Inc.'s bottom line this quarter.
Mr. Musk is widely blamed by investors for starting the digital
currency's most punishing slide of the year after announcing on
Twitter that Tesla would stop accepting bitcoin as payment for its
electric vehicles. He added fuel to the fire earlier this month,
tweeting breakup memes with "#bitcoin" and a broken-heart emoji.
Bitcoin has slumped 30% since the original May 12 tweet.
Read More ->
European Privacy Ruling Could Mean More Scrutiny of
Companies
The European Union's top court is set to weigh in Tuesday on
whether a privacy regulator in one country can sanction a company
if its headquarters is in another country. A go-ahead would
potentially open firms up to more penalties.
Read More ->
High-Speed Trader Virtu Fires Back at Critics Amid Meme-Stock
Frenzy
High-speed trader Virtu Financial Inc. is pushing back against
critics in Washington who say the stock market is rigged against
small investors.
Virtu's business of executing individual investors' orders is
facing scrutiny from lawmakers and regulators following the surge
in shares of meme stocks like AMC Entertainment Holdings Inc. and
GameStop Corp.
Read More ->
Cruise Lines Wrestle With Florida Ban on Vaccine Passports
A standoff between Florida Gov. Ron DeSantis and the cruise
industry over whether to require passengers to show proof of
Covid-19 vaccines is coming to a head as some cruise lines prepare
to relaunch ships from their top ports in the state this
summer.
The Centers for Disease Control and Prevention detailed
requirements in April that allowed ships to begin regular sailings
without first conducting test cruises if they attest that 98% of
crew members and 95% of passengers are fully vaccinated against
Covid-19. But Florida, as well as Texas and Alabama, which also
have cruise ports, passed laws barring businesses from requiring
"vaccine passports," or proof of vaccination.
Read More ->
Facebook and Its Advertisers Feel Pinch of Apple's Privacy
Drive
Advertising relationships are often about the people who foster
them. But when you are as big as Facebook, relationships are about
money.
On Wednesday, Facebook's head of global advertising sales
Carolyn Eversonsaid she was leaving the company after more than a
decade. Just a few months ago, Facebook's revenue chief David
Fischer said in a Facebook post that he would be leaving the
company later this year.
Read More ->
Boeing Offloads Unclaimed MAX Jets as Air Travel Recovers
A faster-than-expected recovery in domestic air travel is
helping Boeing Co. find new homes for unclaimed 737 MAX jets whose
buyers walked away or collapsed during the pandemic.
Some airlines are buying the orphaned jets amid a vaccine-fueled
travel rebound in the U.S. and other parts of the world. The
purchases have left the Chicago-based plane maker with around 10
stored MAX aircraft needing buyers, people familiar with the matter
said. Last July, it counted around 100.
Read More ->
Fed Officials Could Pencil In Earlier Rate Increase at
Meeting
WASHINGTON-Federal Reserve officials could signal this week that
they anticipate raising interest rates sooner than previously
expected following a spate of high inflation readings.
In March, the last time they released quarterly economic
forecasts, most officials expected to keep the Fed's benchmark
interest rate near zero through 2023 to encourage the economy's
recovery from the pandemic. Officials are set to release updated
projections Wednesday after a two-day policy meeting.
Read More ->
G-7 Leaders Rally to Biden's Call to Challenge China
CARBIS BAY, England-Leaders of the Group of Seven wealthy
democracies called on China to respect human rights but stopped
short of an outright condemnation of Beijing, as President Biden
sought to build momentum for an international coalition to counter
Chinese influence in the world.
A 25-page joint statement released by leaders of the G-7 nations
on Sunday-covering issues ranging from pandemic recovery to the
global economy, tax, trade and girls' education-asked China "to
respect human rights and fundamental freedoms, especially in
relation to Xinjiang and those rights, freedoms and high degree of
autonomy for Hong Kong." The same section of the statement said the
G-7 would continue to consult on how to challenge China's behavior
in the global economy.
Read More ->
Economy Week Ahead: The Fed, Factories and Consumers
The Federal Reserve's policy meeting highlights this week's
slate of economic news.
Read More ->
Eurozone Industrial Production Growth Beat Expectations Despite
Supply Chain Woes
Eurozone industrial production growth in April was higher than
expected despite supply bottlenecks hindering activity in many
sectors, Eurostat data showed.
Output from factories, mines and utilities across the
single-currency area rose by 0.8% over the previous month in April,
the EU statistics agency said Monday. This was above forecasts from
economists polled by The Wall Street Journal, who had expected a
0.3% increase.
Read More ->
Markets Are Leaving Little Room for the Fed to Be Wrong on
Inflation
Investors have faith in the Fed. Over the past three months
consumer prices, excluding volatile food and energy, have risen 2%,
equivalent to a shockingly high annual rate of 8.2%. Rather than
panic and dump bonds, investors have piled into Treasurys and
pushed 10-year yields back down to where they stood in late
February. Confidence in the central bank is absolute.
To be fair, the Fed is probably right: This burst of inflation
is probably transitory. The reopening of the economy released a
surge of pent-up demand, while supply bottlenecks are restricting
production and distribution. As things get back to normal inflation
should calm down.
Read More ->
Debt Burden Swells as Europe Extends Life Support for
Companies
Rousselle Industrie SA, a maker of machinery for paint
manufacturers in northern France, almost collapsed in 2020 after
the pandemic disrupted supply and its clients' businesses.
The 10-person company was saved by the equivalent of $360,000 in
loans under a government program that guaranteed debt and deferred
interest payments for 12 months.
Read More ->
Regulators Tell Banks It Is Time to Stop Using Libor
Regulators are ramping up efforts to end Libor trades by
year-end.
The Commodity Futures Trading Commission last week told brokers
that facilitate derivatives trading among large banks that they
should stop using Libor, or the London interbank offered rate, as a
reference rate by July 26. The Tuesday announcement could
accelerate the push to phase out the troubled interest-rate
benchmark, which underpins trillions of dollars worth of financial
contracts. Authorities decided several years ago, after a
widespread Libor-rigging scandal, that it should disappear by the
end of 2021.
Read More ->
U.S. Fight Against Chinese 5G Efforts Shifts From Threats to
Incentives
The U.S. government is ratcheting up pressure on Beijing's 5G
ambitions overseas, offering financial incentives and other
enticements to countries willing to shun Chinese-made telecom
gear.
U.S. foreign-affairs agencies are developing workshops and a
handbook that would help policy makers in places like Central and
Eastern Europe, and in developing countries elsewhere, to build
next-generation 5G cellular networks that don't use equipment from
Huawei Technologies Co. and China's ZTE Corp.
Read More ->
Carlos Ghosn Fallout: American Father, Son Plead Guilty to Role
in Escape
TOKYO-Americans Michael Taylor and Peter Taylor pleaded guilty
in Tokyo on Monday to the charge of helping former Nissan Motor Co.
chief Carlos Ghosn escape Japan in a box aboard a private jet in
late 2019.
Michael Taylor, a 60-year-old former Green Beret, and his son
Peter Taylor, 28, were brought into a Tokyo courtroom in handcuffs
surrounded by guards for the first day of their trial. After
prosecutors read out a summary of the charge, the Taylors told the
judge the prosecutors' statements were correct. The defendants
didn't speak further on Monday, but a second trial session was
scheduled for late June.
Read More ->
Ousted From Power, Israel's Netanyahu Plots Comeback
TEL AVIV-Outmaneuvered by rival politicians after 12 years in
power, Israeli Prime Minister Benjamin Netanyahu is already
plotting a comeback, intending to challenge the new government on
matters that could deeply divide the cross-party coalition.
Mr. Netanyahu, who now is expected to lead the opposition, plans
to press the new governing coalition, which includes eight parties
ranging from an Arab group to conservative forces, on sensitive
policy issues such as settlement construction and empowering the
country's Arabs.
Read More ->
Biden and Macron Share Affection and Worldview at G-7 Summit
President Biden and French President Emmanuel Macron threw their
arms around each other as they walked on the beach. Later the two
men shared a tête-à-tête as aides looked on. At one point Mr. Biden
asked Mr. Macron to answer a reporter's question for him.
At the summit of the Group of Seven leaders in Cornwall this
weekend, the two presidents embraced each other, sometimes
literally, as allies on a host of issues-from multilateralism to
fighting climate change-after years of volatility between Mr.
Macron and former President Donald Trump.
Read More ->
Write to sarka.halas@wsj.com
TODAY IN CANADA
Earnings:
HEXO 3Q
Major Drilling Grp 4Q
Economic Indicators (ET):
0830 Apr New motor vehicle sales
0830 Apr Monthly Survey of Manufacturing
Other News:
Canada to Discard 300,000 Doses of J&J Covid-19 Vaccine
Canada said late Friday it would discard 300,000 doses of
Johnson & Johnson's Covid-19 vaccine it received in April,
saying health authorities were unable to determine whether the
shipment met safety standards.
Canada halted distribution of the doses after learning the doses
included a substance produced at a Emergent BioSolutions plant in
Baltimore -- a factory beset by contamination problems. In April,
Canada's health department said the J&J doses would undergo a
safety assessment before they were released for use.
In a Friday evening statement, Canada said the health regulator
was unable to issue a decision on the doses, without elaborating.
Further, it said it would no longer accept Covid-19 vaccine doses
made at Emergent's Baltimore factory, nor would it accept vaccine
doses with ingredients produced at the plant.
"To ensure the safety of any future vaccine supply from this
facility, Health Canada is planning an onsite inspection, expected
to take place this summer," the statement said. A government
representative did not immediately respond to further
questions.
A spokesperson at Emergent wasn't immediately available for
comment about Canada's statement.
Expected Major Events for Monday
04:30/JPN: Apr Revised Industrial Production
12:30/CAN: Apr New motor vehicle sales
12:30/CAN: Apr Monthly Survey of Manufacturing
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Monday
BMTC Group Inc (GBT.T) is expected to report for 1Q.
Charles Schwab (SCHW) is expected to report.
Coda Octopus Group Inc (CODA) is expected to report for 2Q.
Coffee Holding Co (JVA) is expected to report $0.06 for 2Q.
HEXO Corp (HEXO,HEXO.T) is expected to report for 3Q.
Major Drilling Group International Inc (MDI.T,MJDLF) is expected
to report $0.09 for 4Q.
Motorcar Parts Of America Inc (MPAA) is expected to report $0.49
for 4Q.
Optical Cable (OCC) is expected to report for 2Q.
RF Industries (RFIL) is expected to report $-0.01 for 2Q.
Urstadt Biddle Properties Inc - Class A (UBA,UBP) is expected to
report for 2Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
Air Products & Chemicals Raised to Positive From Neutral by
Susquehanna
Biogen Raised to Outperform From Market Perform by Bernstein
Brookdale Senior Living Raised to Overweight From Equal-Weight
by Barclays
Celsius Holdings Raised to Outperform From Neutral by Credit
Suisse
Cricut Cut to Equal-Weight From Overweight by Morgan Stanley
International Paper Raised to Buy From Hold by Argus
Research
OGE Energy Raised to Buy From Neutral by B of A Securities
Qumu Cut to Hold From Buy by Craig-Hallum
Smartsheet Cut to Sector Perform From Outperform by RBC
Capital
United Natural Foods Raised to Buy From Neutral by Northcoast
Research
Ventas Raised to Overweight From Equal-Weight by Barclays
This article is a text version of a Wall Street Journal
newsletter published earlier today
(END) Dow Jones Newswires
June 14, 2021 06:08 ET (10:08 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.