Watch For:

Weekly Jobless Claims; Existing Home Sales for April; Canada New House Prices for April; Canada Industrial Product & Raw Materials Price Indexes for April

Opening Call:

Stock futures were lower Thursday, pointing to deeper losses for U.S. markets on growing worries of an economic slowdown.

International stocks also retreated, with the Stoxx Europe 600 shedding 1.7% and with major Asian benchmarks suffering similar losses.

Earnings reports from some of America's biggest retailers in recent days added to concern that the highest rate of inflation in four decades is catching up with U.S. consumers and pitching the economy toward a recession. Investors were already grappling with the end of an era of loose monetary policy that had stoked big gains for stocks and other riskier assets.

The war in Ukraine, meanwhile, is adding to inflationary pressures prompting the Fed to embark on a series of interest-rate rises and to reduce its bondholdings. And Covid-19 shutdowns in China have led to a sharp slowdown in the world's second-biggest economy.

The combination of factors has fed into steep losses for stocks and some corporate bonds, and many investors expect the volatility to continue. "The price action suggests it's not over," said Philip Saunders, a portfolio manager at Ninety One, an asset manager based in the U.K. and South Africa.

Looking ahead, investors will parse earnings reports from Kohl's, VF and BJ's Wholesale Club for fresh evidence of how successfully companies are able to pass higher costs onto consumers.

Also coming up are data on home sales in the U.S. The figures from the National Association of Realtors are expected to show sales of existing homes fell for a third-straight month in April as rising mortgage rates and climbing prices cooled the housing market.

Economic Insight:

Recent activity data for the U.S. economy refute the message the economy is at risk of falling into a recession in the short term, said Capital Economics' chief North America economist Paul Ashworth.

Gains in retail sales point to solid consumer spending, while the increase in industrial production signals that output expands robustly once supply-chain bottlenecks ease, Ashworth said.

"With signs that core inflation is still running far too hot, the continued strength of economic activity supports the Fed's decision to press ahead with 50 basis point rate hikes at the next couple of meetings."

However, Capital Economics expects easing inflation and a slowdown in economic growth will prompt the Fed to shift back to 25bp hikes by fall.


The dollar, largely flat in European trade, won't soften from its currently high levels until the selloff in risk assets slows and drives investors away from safe haven assets, said Swissquote Bank. For that to happen economic data must show an easing of consumer prices.

"We must see softening in energy prices, and ideally an improvement in global supply chains."


The yield on 10-year Treasury notes edged down to 2.859% from 2.884% Wednesday. The move put yields, which had shot up for much of the year as the Fed began to raise interest rates, on course to fall for seven in nine trading days.

Read Pimco Is Shifting Away From U.S. Bonds as Growth Slows. Here's What It's Buying Instead.


Oil prices moved higher, with the threat of more sanctions on Russian supply still the main driver for crude's gains.

Around 2.5 million barrels of Russian oil a day will be affected by EU's proposed embargo, said ANZ. "Russia will struggle to find alternative buyers due to constraints on shipping and infrastructure. OPEC is unlikely to fill the gap, with the group struggling to raise output in line with its higher quotas."


Gold futures continued to soften in early European trading with the dollar and 10-year Treasurys remaining more attractive safe-havens.

A lack of liquidity was noted by SPI Asset Management's Stephen Innes, who said "futures volumes are tracking at around 50% of the 10-day average. The strategic gold buyer continues to offer support possibly on recession risk."


Base metals managed to recover some losses as signs of lockdowns easing in China helped relieve recent pressure on prices.

Some Shanghai residents have been able to shop according to reports, hinting that lockdown restrictions may start to ease and consumption rates could lift.

ANZ Research said "fiscal stimulus measures and ongoing supply side issues should see metals markets tighten in the second half of 2022," and help support prices in the medium term.


UBS trimmed its outlook for silver this year, as Fed rate hikes and a strong dollar keep the pressure on prices.

UBS said prices should fall to $20 a troy ounce by the end of the year, compared with its $22 forecast previously. It said in June, prices should fall to $22 from a previous expectation of $25, and in September to $21 from a previous $23 forecast.

The support to precious metals from the Ukraine war was shorter than expected, UBS said, adding that the prospect of more aggressive rate hikes and rising bond yields create further headwinds for silver. UBS noted that it doesn't advise further silver long positions.




Elon Musk's Pursuit of Twitter Leads to Complicated Next Steps and Legal Questions

In the classic hostile takeover, an aggressive acquirer pursues a reluctant quarry.

But Elon Musk's bid for Twitter Inc. appears headed to a bizarre place: Could Twitter force him to buy a company he might not actually want?


Tesla Autopilot's Role in Deadly Vehicle Crash Is Probed by Safety Regulators

U.S. auto-safety regulators have opened a special crash investigation into a fatal wreck involving a Tesla Inc. vehicle that has left three people dead.

The National Highway Traffic Safety Administration disclosed the probe Wednesday, identifying the vehicle as a 2022 Tesla Model S. It added the incident to a list of auto crashes it is investigating that are potentially linked to semiautonomous driving features.


Target, Walmart Earnings Selloff Puts Retailers' Inflation Pains on Display

Inflation is catching up with some of America's biggest retailers, as their recent quarterly results were pinched by higher costs on everything from products to fuel.

Investors dumped shares of Walmart Inc., Target Corp. and other big chains-notching some of the biggest declines since the market crash of 1987-amid fears that the companies wouldn't be able to pass along higher prices to consumers. It has also stoked concerns through financial markets about the resilience of companies that collectively employ millions of workers in the U.S. and abroad.


Under Armour CEO Patrik Frisk Is Stepping Down

Under Armour Inc. said Patrik Frisk will step down as president and chief executive two years into the job and as the sportswear maker is trying to reignite sales.

The Baltimore company named Colin Browne as interim president and CEO, starting June 1, until a permanent successor is named.


Global Stocks Fall After U.S. Selloff; Futures Edge Down

International stocks retreated, tracking a U.S. selloff, but muted moves in equity futures suggested American markets could stabilize in Thursday's trading session.

Futures tied to the technology-heavy Nasdaq-100 stood about 0.3% lower. Those for the S&P 500 and Dow Jones Industrial Average both edged down about 0.1%.


High Inflation, Slowing Growth Raise Risk of Global Downturn

The global economy is in danger of entering a period of so-called stagflation, or high inflation and weak growth, policy makers and corporate leaders say, which could erode living standards around the world.

Treasury Secretary Janet Yellen on Wednesday became the latest leader to warn of turbulence for the global economy. "Certainly the economic outlook globally is challenging and uncertain," Ms. Yellen said in Bonn, Germany, ahead of a meeting of leaders of seven wealthy nations. "Higher food and energy prices are having stagflationary effects, namely, depressing output and spending and raising inflation all around the world."


More Crypto Market Turmoil Is Predicted by SEC Chairman Gary Gensler

WASHINGTON-Securities and Exchange Commission Chairman Gary Gensler said Wednesday he worries that more investors will be harmed in cryptocurrency markets, after this month's implosion of the stablecoin known as TerraUSD.

"I think a lot of these tokens will fail," Mr. Gensler told reporters after a House Appropriations Committee panel hearing Wednesday. "I fear that in crypto...there's going to be a lot of people hurt, and that will undermine some of the confidence in markets and trust in markets writ large."


CFTC Signals Intent to Increase Enforcement of Crypto-Related Cases

NEW YORK-The number of cases of alleged digital asset fraud and manipulation continues to accelerate, the head of the Commodity Futures Trading Commission said.

"Headlines about the loss of tens of millions of dollars in digital assets due to protocol exploits, phishing attacks, preying on vulnerable people and other fraudulent and manipulative schemes have become far too common," CFTC Chairman Rostin Behnam said Wednesday in a video message delivered at a crypto industry conference in New York.


Melvin Capital to Close Funds, Return Cash to Investors

Melvin Capital plans to close its funds and return the cash to its investors, capping a stunning reversal for a firm that lost big on the surge in meme stocks last year and on wagers on growth stocks this year.

In a letter to investors that was reviewed by The Wall Street Journal, Gabe Plotkin, Melvin's founder, wrote that he reached his decision after conferring with Melvin's board of directors during a monthslong process of reassessing his business.


Biden Invokes the Defense Production Act to Increase Baby-Formula Supply

The Biden administration is invoking the Defense Production Act to increase production of baby formula and launching a program that would use commercial aircraft to pick up overseas formula that meets U.S. standards, the White House said Wednesday.

Under the Korean War-era national security mobilization law, President Biden is requiring suppliers to prioritize giving resources to U.S. formula manufactures. A new program called Operation Fly Formula would also direct the Defense Department to use its contracts with commercial air-cargo lines to pick up formula from other countries that meets U.S. health and safety standards. The White House didn't specify any countries.


Judges Deal Latest Blow to SEC's In-House Courts

WASHINGTON-Securities regulators can't bring enforcement actions seeking financial penalties through their in-house courts, a federal appeals court ruled on Wednesday.

The decision, from a split panel of the U.S. Court of Appeals for the Fifth Circuit, adds to the legal backlash over federal-agency tribunals that some critics say violate the separation-of-powers doctrine. The Securities and Exchange Commission, one of the biggest and busiest financial regulators, has been a focal point for the feud. Its enforcers sometimes litigate cases before administrative law judges who are employees of the SEC, but are supposed to exercise independent judicial powers.


Beijing Probes Central Banker for Passing Tips to Bond Traders

China's top anticorruption agency is investigating a senior Chinese central banker for suspected leaking of official economic statistics, say people with knowledge of the matter, after Beijing criticized the central bank for not adequately aligning itself with the party-state.

The Central Commission for Discipline Inspection said Wednesday that Sun Guofeng, who was until earlier this month head of the monetary-policy department of the People's Bank of China, is being investigated for "suspected serious violation of laws and discipline." It didn't disclose any specifics.


Convicted Insurance Mogul Ordered to Give Up Control of Companies

A North Carolina court has ordered convicted insurance mogul Greg Lindberg to turn over control of hundreds of his private companies to a special board in an effort to salvage four financially troubled insurers that have been under regulatory supervision since 2019.

The court order concluded that Mr. Lindberg committed fraud in failing to abide by a 2019 agreement under which North Carolina's insurance department seized control of the insurers from Mr. Lindberg.




ATS Automation Tooling 4Q


Canada Goose 4Q

Computer Modelling 4Q

Heroux-Devtek 4Q

Lightspeed Commerce 4Q

Economic Indicators (ET):

0830 Mar Employment Insurance

0830 Apr New Housing Price Index

0830 Apr Industrial/Raw Material Prices

Stocks to Watch:

Velan 4Q Loss/Shr $1.19; Sales $124.8M


Expected Major Events for Thursday

04:01/US: 3Q Manpower U.S. Employment Outlook Survey

08:30/UK: 1Q Mortgage and landlord possession statistics

08:30/UK: 1Q Mortgage Arrears and Possessions data

09:00/ITA: Mar Balance of Payments

10:00/UK: May CBI Industrial Trends Survey

12:30/US: 05/14 Unemployment Insurance Weekly Claims Report - Initial Claims

12:30/US: May Philadelphia Fed Business Outlook Survey

12:30/CAN: Mar Employment Insurance

12:30/US: U.S. Weekly Export Sales

12:30/CAN: Apr New Housing Price Index

12:30/CAN: Apr Industrial product & raw materials price indexes

13:00/RUS: Weekly International Reserves

14:00/US: 1Q Quarterly Retail E-Commerce Sales

14:00/US: Apr Leading Indicators

14:00/US: Apr Existing Home Sales

14:30/US: 05/13 EIA Weekly Natural Gas Storage Report

20:30/US: Federal Discount Window Borrowings

20:30/US: Foreign Central Bank Holdings

23:01/UK: May UK Consumer Confidence Survey

23:30/JPN: Apr CPI (Nation), CPI ex-food (Nation)

All times in GMT. Powered by Kantar Media and Dow Jones.


Expected Earnings for Thursday

ATS Automation Tooling Systems Inc (ATA.T) is expected to report $0.32 for 4Q.

Advanced Drainage Systems Inc (WMS) is expected to report $0.58 for 4Q.

Apollo Investment Corp (AINV) is expected to report $0.34 for 4Q.

Applied Materials Inc (AMAT) is expected to report $1.90 for 2Q.

Armstrong Flooring Inc (AFI) is expected to report $-0.26 for 1Q.

BJ's Wholesale Club Holding Inc (BJ) is expected to report $0.72 for 1Q.

Badger Meter Inc (BMI) is expected to report $0.51 for 1Q.

Bit Digital Inc (BTBT) is expected to report for 1Q.

CAE Inc (CAE,CAE.T) is expected to report $0.22 for 4Q.

Canada Goose Holdings Inc (GOOS,GOOS.T) is expected to report $0.00 for 4Q.

Cato Corp (CATO) is expected to report for 1Q.

ClearOne Inc (CLRO) is expected to report for 1Q.

Computer Modelling Group Ltd (CMG.T) is expected to report $0.06 for 4Q.

Deckers Brands (DECK) is expected to report $1.25 for 4Q.

Eagle Materials Inc (EXP) is expected to report $1.67 for 4Q.

Flowers Foods Inc (FLO) is expected to report $0.40 for 1Q.

Heroux-Devtek (HRX.T) is expected to report $0.23 for 4Q.

ICPEI Holdings Inc (ICPH.V) is expected to report for 1Q.

Kayne Anderson Energy Infrastructure Fund Inc (KYN) is expected to report for Full year.

Kohl's Corp (KSS) is expected to report $0.77 for 1Q.

Lightspeed Commerce Inc (LSPD.T) is expected to report for 4Q.

MEI Pharma Inc (MEIP) is expected to report $-0.18 for 3Q.

Monro Inc (MNRO) is expected to report $0.44 for 4Q.

National Energy Services Reunited Corp (NESR) is expected to report $0.11 for 1Q.

NorZinc Ltd (NZC.T) is expected to report for 1Q.

Palo Alto Networks Inc (PANW) is expected to report $-1.18 for 3Q.

Plantronics Inc (POLY) is expected to report $-0.05 for 4Q.

Polymet Mining Corp (PLM,POM.T) is expected to report for 1Q.

Replimune Group Inc (REPL) is expected to report $-0.58 for 4Q.

Republic First Bancorp (FRBK) is expected to report $0.09 for 1Q.

Ross Stores Inc (ROST) is expected to report $0.99 for 1Q.

Singularity Future Technology Ltd (SGLY) is expected to report for 3Q.

Skillsoft Corp (SKIL) is expected to report for 1Q.

TeraWulf Inc (WULF) is expected to report for 1Q.

The Children's Place Inc (PLCE) is expected to report $1.28 for 1Q.

ThermoGenesis Holdings Inc (THMO) is expected to report for 1Q.

Three Valley Copper Corp (TVC.V) is expected to report for 1Q.

VF Corp (VFC) is expected to report $0.45 for 4Q.

ePlus Inc (PLUS) is expected to report $0.69 for 4Q.

Powered by Kantar Media and Dow Jones.



AeroVironment Raised to Outperform From Sector Perform by RBC Capital

Cardinal Health Raised to Outperform From In-Line by Evercore ISI Group

Carrier Global Cut to Neutral From Buy by B of A Securities

Century Aluminum Cut to Peer Perform From Outperform by Wolfe Research

Comstock Resources Cut to Underweight From Neutral by Piper Sandler

Endeavor Group Holdings Raised to Buy From Neutral by Goldman Sachs

Ginkgo Bioworks Holdings Cut to Underperform From Neutral by B of A Securities

Great Ajax Raised to Buy From Neutral by Compass Point

Hanmi Fincl Cut to Neutral From Buy by DA Davidson

Hope Bancorp Cut to Neutral From Buy by DA Davidson

Mercury Systems Raised to Outperform From Sector Perform by RBC Capital

Penn National Gaming Raised to Buy From Hold by Jefferies

Salesforce Raised to Buy From Neutral by Roth Capital

Ventas Raised to Outperform From Neutral by Credit Suisse

VSE Cut to Sector Perform From Outperform by RBC Capital

Warby Parker Cut to Neutral From Buy by Goldman Sachs

World Fuel Services Raised to Buy From Hold by Stifel

This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

May 19, 2022 05:31 ET (09:31 GMT)

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