02Jun2016 Pre-Market Commentary: Markets Awaiting Jobs Data

Here is the current market situation from CNN Money

European markets are higher today with shares in London leading the region. The FTSE 100 is up 0.36% while Germany’s DAX is up 0.06% and France’s CAC 40 is up 0.05%.

Futures flat ahead of U.S. labor data, ECB meeting

(Reuters) – U.S. stock index futures were little changed on Thursday as investors await the European Central Bank’s decision on interest rates and the release of domestic labor data.

Temasek, GIC buy $1 billion in Alibaba stock in SoftBank sale

(Reuters) – Singapore state funds bought $1 billion of shares in Chinese e-commerce company Alibaba Group Holding Ltd as part of an $8.9 billion sale by Japan’s SoftBank Group Corp, Alibaba’s biggest shareholder, the company said on Wednesday.

Saudis pledge not to shock oil markets as OPEC clash looms

VIENNA (Reuters) – Saudi Arabia promised on Thursday not to shock the oil markets as OPEC headed into a heated debate about production policy, with Iran insisting on the right to raise output steeply.

J&J to buy hair care products maker Vogue for $3.3 billion

(Reuters) – Johnson & Johnson said it would acquire Vogue International for $3.3 billion, adding brands such as OGX shampoos and FX hair styling products to its consumer portfolio that includes Neutrogena and Clean & Clear.

Uber, Lyft set to defend driver settlements in court

SAN FRANCISCO (Reuters) – Uber and Lyft on Thursday will attempt to persuade separate U.S. judges to approve class action settlements which keep drivers classified as independent contractors instead of employees.

Six automakers to recall nearly 2.5 million U.S. vehicles over Takata airbags

WASHINGTON (Reuters) – Six automakers said Thursday they are recalling nearly 2.5 million U.S. vehicles with defective Takata air bag inflators, documents posted with government regulators show.

Independence of compliance reviews is questioned in drug firm settlements

WASHINGTON (Reuters) – Some major U.S. drug companies have hired their own auditors to perform compliance reviews mandated in government settlements over alleged civil violations, such as paying kickbacks or off-label drug promotion, according to federal records reviewed by Reuters.

EU cautions governments against banning Uber, Airbnb

BRUSSELS (Reuters) – Services such as ride-hailing app Uber [UBER.UL] and home-rental site Airbnb should only be banned as a last resort, the European Union executive said on Thursday, as it seeks to foster development of the “sharing economy”.

Honda shows off self-driving cars at new Calif testing facility

CONCORD, Calif (Reuters) – Honda Motor Co gave a sneak preview of its self-driving prototypes on Wednesday, saying it was already on its way to offering semi-autonomous safety functions to the mass market.

Frontrunning: June 2

Global stocks struggle as ECB and OPEC meetings loom (Reuters)

Iran Resists Saudi Gesture for Unity as OPEC Fractures Reappear (BBG)

Clinton to blast Trump on North Korea, NATO in foreign policy speech (Reuters)

Hillary Clinton Shifts to California as Race Tightens There (WSJ)

Puerto Rico’s U.S. Rescue Won’t Come Soon Enough to Halt Default (BBG)

U.S. to Curb Payday Lenders (WSJ)

BOJ’s Sato Is Pessimistic on Economy, Central Bank’s Strategy (BBG)

PIMCO sees ‘significant’ chance of Brexit vote in UK (Reuters)

Internet Boom Times Are Over, Says Mary Meeker’s Influential Report (BBG)

Gigonomics: The Dismal Science Behind Today’s On-Demand Jobs (BBG)

Labor Fears Partisan Defections Toward Donald Trump (WSJ)

Alibaba Details …

Preview Of Today’s ECB Announcement

With the ECB announcement due in a few minutes, followed by Draghi’s press conference, today’s ECB meeting should be a relatively dull affair as they are currently in ‘wait and see’ mode with regards to previous policy actions. As RanSquawk notes, general consensus among analysts is that the ECB are to keep rates on hold this month and avoid added stimulus.

ECB’s rates are currently: Refinancing 0.00%, Deposit -0.40% and Marginal Lending 0.25%

General consensus among analysts is that the ECB are to keep rates on hold this month and avoid added stimulus, given the significant nature recent action

The recent uptick in energy prices is expected to be reflected in the ECB staff projections but Draghi will need to be careful not to dampen market expectations for further easing with overtly bullish inflation expectations

With The OPEC Meeting Now In Session, Here Are The Latest Updates

With the OPEC meeting having started a little under two hours ago, it appears that the premature optimism raised yesterday about yet another imminent production freeze deal may have been mostly hot air. Indeed, yesterday’s bounceback in oil was driven by the various reports of a potential reintroduction of a ceiling on production after the previous ceiling was scrapped in December. The WSJ ran a story suggesting that the willingness is shared by Saudi Arabia as well as smaller producers in Nigeria, Qatar, Algeria and Venezuela. However, like in Doha, Iran appears to be against a wholesale supply cap after its oil minister said late on Wednesday he’d prefer individual national output quotas rather than an overall production ceiling, and added that he doubted a deal is possible. Meanwhile, Saudi Arabia is willing to live with either outcome.

This is a recap of what oil ministers said just before they entered a close door session which is expected to conclude at 10 am Eastern:

Saudi Arabia’s minister said OPEC’s current strategy was working and that group should reestablish a production ceiling “when necessary”; click here for summary

Iran says an OPEC output ceiling without country quotas means nothing; Iran aims to pump 4.8m b/d in 5 yrs

Kuwait doesn’t think a ceiling is necessary

Iraq says OPEC will consider 32.4m b/d ceiling, which is same as April’s output level, according to secondary sources

Like in Doha, while Iran will be the scapegoat for any lack of deal, the question is what Saudi Arabi’s strategy is. For the answer, we go to Saudi Arabia’s new Energy Minister Khalid Al-Falih who spoke to reporters at start of OPEC’s ministerial conference in Vienna. This is what he said via BBG:

On OPEC strategy, market balancing:

Sees supply and demand coming into balance

Mkt is not oversupplied; just inventory that needs to be absorbed
…

Offshore Bullion Storage or 3 eggs?

What does one hundred trillion dollars buy you?

How about a mansion in every country, an airplane at every airport and a private island in every ocean?

How about 3 eggs?

When Zimbabwe issued its infamous 100 000 000 000 000 dollar bill, it could buy 3 eggs on the day it was issued. A few days later, it could only buy one egg.

Hyperinflating Currencies

Unbacked fiat/paper/credit, and nowadays electronic currency, has a poor track record. After studying this list of 609 defunct currencies, out of which 153 died due to hyperinflation, it’s obvious that every time fiat currencies are tried, they …

Delivery Won’t Be the Driver at Amazon

Comments by CEO Jeff Bezos suggest Amazon isn’t planning to supplant FedEx or UPS anytime soon. Investors should be glad.

China’s Currency Black Box Cracked, But Pressures Remain

What will test Beijing’s resolve to keep the currency on its currently predictable path is the next move by Janet Yellen, who arguably has more influence over Chinese policy right now than her colleagues in Beijing.

How China’s Deal Makers Unclogged Pipeline Home

A month ago, plans to take overseas-listed Chinese companies private and relist them back home seem doomed. Some have found a way.

May 2016 Job Cuts Fall to Five-Month Low to 30,157

from Challenger Gray and Christmas

The number of job cuts announced by U.S.-based employers fell sharply in May, with a total of 30,157 planned workforce reductions recorded during the month.

Protective Details: More Than Goons With Guns

from STRATFOR

— this post authored by Scott Stewart

I raised some hackles last week when I noted that “effective security for public figures must go beyond goons and guns.” Some Stratfor readers and even a few friends questioned whether I was insulting executive protection officers as a whole by referring to them as goons. But that certainly wasn’t my intention; instead, I was attempting to delineate the very real distinction that exists between true protection professionals and a segment of protection providers who are, in fact, little more than brutes with weapons.

Why the ECB will have room to “celebrate” at today’s meeting

The recent rally in oil prices is giving the European Central Bank a rare opportunity to strike an upbeat tone on growth and inflation at its monetary policy meeting on Thursday.

Deep Dive: These dividend “kings” have had average annual returns of up to 21% for 25 years

Eighteen U.S. companies have increased their dividends for at least half a century, writes Phil van Doorn.

Need to Know: This is when stock-market bulls should head for the exit

Watch for the market to take a dramatic turn today, as everyone’s favorite oil cartel and bazooka-wielding Mario Draghi look set to spark swings. Today’s call from investing legend Felix Zulauf sees trouble in mid-2017.