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01Jun2015 Pre-Market Commentary: U.S. Financial Reports Poor, U.S. Dollar Retracts, U.S. Futures Trade Near Unchanged Line

Written by Gary

Morning U.S. financials 'not so good', drives U.S. dollar down and WTI oil up. U.S. futures up fractionally, but the likelihood of a robust Monday session is not very high on our positive scale.

Markets expected to open fractionally higher.


Here is the current market situation from CNN Money

European markets are mixed today. The CAC 40 is up 0.71% while the DAX gains 0.15%. The FTSE 100 is even.

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What Is Moving the Markets

Here are the headlines moving the markets.

Intel to buy Altera for $16.7 billion

(Reuters) - Intel Corp agreed to buy Altera Corp for $16.7 billion as the world's biggest chipmaker seeks to make up for slowing demand from the PC industry by expanding its line-up of higher-margin chips used in data centers.

OPEC's Pricing Leverage Is Weakening

OPEC is expected to leave its oil output unchanged at a meeting in Vienna this week, a contrast with the cartel's past muscular role as a swing producer that could even out price bumps.

Merkel, Hollande, Tsipras call was 'constructive': Germany

BERLIN (Reuters) - A phone call on Sunday between German Chancellor Angela Merkel, French President Francois Hollande and Greek Prime Minister Alexis Tsipras took place in a "constructive" atmosphere, the German government said on Monday.

Sluggish factory growth in Europe and Asia puts central bank stimulus in spotlight

LONDON/SYDNEY (Reuters) - Manufacturing activity showed scant sign of picking up across Europe and Asia in May as demand stayed stubbornly weak, highlighting the need for central banks to continue supporting growth.

Futures higher after positive China factory data

(Reuters) - U.S. stock index futures were higher on Monday, after closing down the previous week, as investors focused on the bright spots in China's factory activity data and ahead of a string of domestic economic data.

Greek Default, Deposit Blocks, New Government "May Be Necessary" To End Impasse, Goldman Says

Over the past several days it's become increasingly clear that the endgame in Greece will involve some manner of political shakeup in Athens.

As we've said all along, the troika wants â€" no, needs â€" to force Greek PM Alexis Tsipras into conceding Syriza's election mandate or risk emboldening leftist movements across the periphery. The necessity of remaining resolute when it comes to demanding complete surrender from Athens was made all too clear when recent regional and local elections in Spain showed a groundswell of support for Podemos and many progressive, anti-austerity candidates (we'll leave aside the fact there was never any real â€'austerity' in the first place).

Greece and creditors missed a self-imposed Sunday deal deadline and, in what seemed like an admission that discussions have become intractable, Tsipras penned a lengthy statement over the weekend which blamed creditors for the stalemate and warned that democracy in Europe was threatened by those who wish to create a two-tiered EMU wherein weaker nations are essentially governed from on high by the institutions and EU paymaster Germany. Additionally, Syriza's far-left radicals look set to split with Tsipras, forcing a government reshuffle in order to get a deal passed through parliament.

Today, Goldman is out reinforcing all of the above noting that in the end, it simply is not possible for Syriza to keep its election promises and secure a deal with the troika.

Via Goldman (on the political aspect):

On the one hand, the European authorities are committed to a framework based on three key principles:

Frontrunning: June 1



Senate lets NSA spy program lapse, at least for now (Reuters)

Draghi Deflation Relief Means Little With Greek Threat Unsolved (BBG)

Tepid factory data add to Asian gloom (FT)

Citigroup Likely to Close Banamex USA (WSJ)

Frugality of High Earners in U.S. Shows Long Shadow of Recession (BBG)

Greece's Tsipras Warns Bell May Toll for Europe (BBG)

Carnegie Mellon Reels After Uber Lures Away Researchers (WSJ)

Romário leads drive for Brazilian probe into Fifa (FT)

Faster than China? India's road, rail drive could lay doubts to rest (Reuters)

Intel closes in on $16bn Altera takeover (FT)

Lynch's Secret to Finding Value Discovers Littl ...

China factories scrabble for growth in May, export demand shrinks

BEIJING (Reuters) - Growth in China's giant factory sector edged up to a six-month high in May but export demand shrank again, prompting companies to shed jobs and keeping alive worries about a protracted economic slowdown, a government survey showed on Monday.

EU's Oettinger says Greece deal still possible this week

BERLIN (Reuters) - Germany's EU Commissioner Guenter Oettinger said on Monday it might still be possible for Greece and its creditors to reach a deal this week.

Futures Flat With Greece In The Spotlight; China Boomerangs Higher

Remember China's 6% crash last week? It is now a distant memory made even more remote thanks to the latest batch of ugly data out of China, coupled with hints of even more liquidity injections, which led to the latest surge in the Shcomp, an index that has put most pennystocks to shame.

Indeed, while the Hang Seng was up a modest +0.6% overnight, the Shanghai Comp soared higher +4.7% amid further easing expectations, underlined by a disappointing HSBC Mfg PMI print (49.2 vs. Prev. 49.1), which marked the third consecutive contraction as reported earlier. Prices were also supported by reports that China are said to consider doubling its CNY 1 trillion local debt swap program, with the program allowing regional authorities to convert high yielding debts into municipal bonds and effectively lowers financing costs. JGBs softened after shrugging Friday's gains across German Bunds and USTs as investors were reluctant to chase prices higher ahead of tomorrow's JPY 2.4trl 10yr auction.

In Europe, the big story remains Greece, and as everyone expected, the doomed country and its creditors failed to make a deal on Sunday. This is after Greek Officials were said to have prepared a draft agreement, which was expected to be announced on Sunday. Not helping things, Greek PM Tsipras came out in fully defiant mode and accused bailout monitors of making "absurd" demands and seeking to impose "harsh punishment" on Athens.

Separately according to Greek Economy Minister Stathakis, Greece
envisages that they will rep ...

Oil falls as OPEC output stays high, dollar rises

LONDON (Reuters) - Crude oil prices dropped on Monday as the dollar rose and on expectations that OPEC production would remain high, stoking worries of oversupply despite declining U.S. rig operations.

Malaysia Airlines CEO says carrier 'technically bankrupt', set to cut jobs, routes

KUALA LUMPUR (Reuters) - The newly appointed chief executive of loss-making Malaysia Airlines said on Monday the carrier is "technically bankrupt", underlining the case for a restructuring to cut a third of jobs, scrap some international routes and review its long-haul fleet.

New StanChart boss faces cash call, dividend squeeze

LONDON (Reuters) - Standard Chartered's incoming Chief Executive Bill Winters is expected to raise capital and cut the bank's dividend later this year, potentially forced to act by a tough stress test of its Asian loans, investors and analysts said.

Intel Nears Deal to Buy Altera

Intel's on-again-off-again attempt to buy Altera is on the cusp of succeeding, as the chip maker prepares to announce the roughly $17 billion acquisition Monday.

China recovery helps shares; eyes on Greece

LONDON (Reuters) - European stock markets inched higher on Monday, putting aside concerns over Greece that unsettled the euro after Chinese stocks rallied almost 5 percent.

Euro zone factory growth stumbles as core struggles: PMI

LONDON, (Reuters) - Euro zone factory growth was weaker than previously thought last month as the bloc's core countries continued to struggle, a survey of businesses showed on Monday.

Johnson & Johnson And The 9 Other Stocks Baby Boomers Love Most

Boomers are turning 65 at a rate of about 10,00 per day.

Juniper, Ciena Don't Fit Ericsson's Style

Investor hopes that Ericsson may plug product gaps with Juniper or Ciena may be misplaced.

UK to launch Lloyds retail share sale in next 12 months

LONDON (Reuters) - Britain said it will launch a sale of shares in Lloyds to private retail investors in the next 12 months and has extended a facility enabling it to sell more shares in the bank to financial institutions.

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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