02Jun2017 Pre-Market Commentary: Wall Street Likely To Set New Historic Highs Again At The Opening, WTI Crude Slips Into The Low 47 Handle, US Dollar Waterfalls Down To The High 96 Level

Here is the current market situation from CNN Money

European markets are broadly higher today with shares in Germany leading the region. The DAX is up 1.58% while France’s CAC 40 is up 0.88% and London’s FTSE 100 is up 0.33%.

Strong U.S. job growth expected in May; wage rise seen moderate

WASHINGTON (Reuters) – U.S. job growth likely remained strong in May, a further sign of an acceleration in economic activity that would effectively seal the case for an interest rate increase this month despite sluggish wage gains.

Oil slides as U.S. climate withdrawal compounds glut concerns

LONDON (Reuters) – Brent crude tumbled below $50 on Friday, heading for a second straight week of losses, on worries that U.S. President Donald Trump’s decision to abandon a climate pact could spark more crude drilling in the United States, worsening a global glut.

Goldman Sachs applies for Saudi equities trading license: sources

DUBAI (Reuters) – Goldman Sachs has applied to Saudi Arabia’s capital markets regulator for a license to trade equities in the kingdom, two sources familiar with the move said, in the latest step by Western banks to expand operations in the country.

Linde shares seen up after boards agree Praxair merger

WUERZBURG, Germany (Reuters) – Shares in Germany’s Linde looked set to top the blue-chip DAX index on Friday after the company’s boards agreed a $73 billion merger with U.S. peer Praxair to create the world’s biggest industrial gases group.

World stocks set to end the week at all-time highs

LONDON (Reuters) – World stocks hit record highs, having gained 11 percent so far this year, and the dollar recovered more ground on Friday as upbeat U.S. economic data allayed concerns over growth ahead of payrolls figures due out later in the day.

Spotify stock listing could be within a year-source

STOCKHOLM (Reuters) – Streaming music service Spotify could be floated within a year, a source familiar with the matter told Reuters on Friday, after co-founder Martin Lorentzon told Swedish radio a listing was not in the pipeline.

Munich prosecutors expand Audi investigation

MUNICH/BERLIN (Reuters) – Munich prosecutors said they have widened an investigation at Audi to examine the carmaker’s sales in Germany and elsewhere in Europe after the federal government accused the Volkswagen division of cheating on emissions tests in its home market.

Pennsylvania pipeline fight could upend international oil flows

NEW YORK (Reuters) – Refiners from the Midwest United States are fighting for access to a vital Pennsylvania pipeline – a move that could cripple their East Coast competitors and redraw the map for international flows of crude and fuel into coveted coastal markets.

EU regulators say Qualcomm has not offered concessions in NXP bid

BRUSSELS (Reuters) – U.S. smartphone chipmaker Qualcomm has not offered any concessions so far in its $38-billion bid for NXP Semiconductors , EU antitrust regulators said on Friday, increasing the risk of a lengthy investigation into the deal.

Frontrunning: June 2

Strong U.S. job growth expected in May; wage rise seen moderate (Reuters)

Trump’s Paris Exit Leaves Him Isolated From C-Suites to Capitals (BBG)

Critics lament Trump climate move, supporters seek new deal (Reuters)

Musk, Iger to quit Trump advisory councils after Paris accord decision (Reuters)

Yuan Forecasters Getting It Wrong as China Jolts Markets (BBG)

Commodity Rebound Evaporates as Slowing Demand Spells More Gluts (BBG)

Mnuchin and Mulvaney at Odds as Trump Confronts Debt Default (BBG)

Three lawmakers question Kushner Cos on concerns over White House tie (Reuters)

EU, China united on climate, still divided over trade (Reuters)

Putin Says Snowden No Traitor, But Leaking Information Was Wrong (BBG)

General leading Philippine battle with Islamists relieved of command (

Why trusting in the bigger picture gives you trust in gold

• Trump pulls out of Paris Climate Accord

  Why trusting in the bigger picture gives you trust in gold

  • Gold pauses ahead of non-farm payrolls data

    In Gold We Trust 2017 released

    Reports on the ‘Everything Bubble’

    On average gold is up 5.88% ytd, since start of 2017.

    Trump ‘was the trigger of the sudden reverse thrust of the gold price’

    Reorganization of the global monetary order considered a ‘grey swan’

    Trump’s announcement late yesterday that the US would be pulling out of the landmark 2015 Paris climate accord saw gold prices retreat. Markets are now awaiting the release of the non-farm payroll data. General consensus is that 210,000 new positions were added in May. However, this could be an underestimation given the stronger ADP number yesterday.

    The Paris climate deal, jobs numbers, elections and terrorist attacks are all important ingredients in the tale of an economy. But they should not be considered individually when considering the gold price or

BofA: The “QE Monster” Only Ends When “The Wall Street Bubble” Finally Shocks The Fed

Below we excerpt some of the latest observations from BofA’s Michael Hartnett, who nearly a year ago first penned the “Icarus trade” concept – i.e., the final push in the US stock market to its all time highs – and who has been expecting a “blow off top” to stocks, before it all comes crashing down. How far are we away from this “blow off top” target of 2,620 (at which point the US stock market cap as a % of GDP hits an all time high)? As of this moment, it is less than 200 points.

What is the catalyst for the last dash surge to end? “Icarus continues until Wall St. bubble (not Main St. recovery) forces Fed to tighten aggressively.”

As for the catalysts, BofA sees three: “Chinese credit crunch (note China corporate bond market down in 2017 – Chart 2); Italian political risk and spread widening (see Rome muni bonds vs. New York – Chart 3); stronger US wages (consensus tomorrow’s May AHE = 2.6%) needed to rein-in the QE monster and ease Fed’s growing panic at breakdown of Phillips Curve.”

More below:

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Ain’t No Stopping Me Now: another “risk-on” week of flows…$13.7bn inflows to equities, $6.0bn inflows to bonds, $0.1bn inflows to gold.

Growth, Europe, EM winning: largest inflows to US growth funds in 24 weeks ($1.1bn); 10th consecutive week of inflows to Europe equities; 18th straight week of inflows to EM debt.

The Late Rotation & the Great Woe-tation: YTD inflows to stocks ($141bn) pacing bonds ($168bn); but no end to woe for active equity investors, i.e., big rotation from active ($58bn outflows YTD) to passive equity funds ($199bn inflows YTD) continues.

The Passive Bias & Beta of Private Clients: ETFs rising quickly as share of GWIM debt (9.6%) and equity holdings (11.4% – Chart 9); beta of BofAML GWIM top 10 stock holdings not yet …

“Emotionally Disturbed Individual” Blamed For Manila Resort “Robbery” That Killed 36

As an ISIS-inspired insurgency rages in the country’s south, Philippines’ authorities are assuring the public that an attack on a luxury resort in Manila that left more than three dozen dead wasn’t an act of terrorism, but was, in fact, a robbery.

A gunman armed with a “baby armalite” rifle burst into the Resorts World Manila casino on Friday and started firing off shots and setting gaming tables alight on Friday, authorities said, before making his way to the back of the casino where he stole several million dollars’ worth of gambling chips. Most of the dead suffocated on the thick smoke, according to Reuters. However, despite authorities assurances, the high death toll and brazen nature of the attack suggest that terrorism may have been the underlying motivation. US terrorism monitor the Site Intelligence Group said an Islamic State-linked Filipino operative claimed “lone wolf soldiers” of ISIS were responsible for the attack, according to the Guardian.

“All indications point to a criminal act by an apparently emotionally disturbed individual,” Ernesto Abella, a spokesman for Duterte, told a news conference. “Although the perpetrator gave warning shots, there apparently was no indication that he wanted to do harm or shoot anyone.”

The gunman killed himself in his hotel room after being shot and wounded by resort security, police and Resorts World management said. A second “person of interest” who was in the casino at the time was cooperating with the investigation, Reuters reported.

China Is a Highly Suspect Leader on Climate Change

The world’s largest carbon emitter is now titular leader of the Paris accord’s climate efforts—but until China fixes distortions in its power sector, foreigners will find profit opportunities limited.

What’s Missing Is What’s Good About European Growth

Europe’s recovery hasn’t seen much bank lending. That may yet be a good thing.

There’s a Paint Company to Own, But Akzo Nobel Isn’t It

Akzo Nobel group’s refusal to enter talks with U.S. peer PPG Industries has laid bare not just the board’s lack of commitment to owners’ interests but also the protection from shareholder pressure afforded by the company’s capital structure and Dutch law.

Bond Report: Treasury yields steady ahead of key jobs number

Treasury yields steadied on Friday as traders await a key nonfarm-payrolls report that could help to confirm strength in the U.S. labor market and influence the Federal Reserve’s monetary-policy plan.

Currencies: Dollar edges up ahead of jobs report

The U.S. dollar was slightly higher against its major rivals on Friday, though trading was quiet as investors looked ahead to the highly anticipated May jobs report.

Need to Know: Trump’s Paris pullout won’t be a game changer, say markets-minded pundits

President Trump’s big no to the Paris climate deal is dominating the news, but stocks aren’t fazed by the global furor over his move. What if his decision isn’t as big of a deal as everyone seems to think? That’s what our chart of the day suggests.