- Global stocks are higher with the European Euro Stoxx 50 up +0.90% and June S&Ps up +12.30 points. The dollar slumped to a 2-1/2 week low and Treasuries are weaker, while commodities rose with crude at a 2-week high and copper and gold at 3-week highs. Jean-Claude Juncker, leader of the Euro-Zone finance ministers, said in Paris yesterday that EU leaders will decide on a new aid package for Greece by the end of June and that EU officials have ruled out a "total restructuring" of Greece's debt, which sent the yields on Greek government bonds tumbling 30 bp and boosted the euro to a 3-week high against the dollar. The WSJ also reported that Germany may stop demanding an early rescheduling of bonds for Greece so the nation can get a new package of loans. A rally in Greek bank stocks led the rally in European equity prices, with Alpha Bank SA and EFG Eurobank Ergasias SA up over 5%. May German unemployment -8,000 to 2.97 million. its 23rd straight monthly decline, while the unemployment rate fell -0.1 to 7.0%, the lowest since records for a reunified Germany began in 1991. Another boost to European stocks was the May Euro-Zone CPI estimate which slowed to a +2.7% y/y pace, weaker than the +2.8% y/y increase expected, and eases pressure on the ECB for further interest rate increases.
- The Asian stock markets today closed higher with Japan up +1.99%, Hong Kong +2.16%, China +1.59%, Taiwan +1.87%, Australia +0.87%, Singapore +0.63%, South Korea +2.33%, India +1.49%. Japanese stocks rallied as the yen weakened against the dollar, lifting exporters, and after a Trade Ministry survey of Japanese manufacturers said they plan to increase factory output 8% this month and a further 7.7% in June, which would confirm that Japanese factory production is coming back online to pre-quake levels. Japanese stocks gained even after Moody's Investors Service put Japan's debt rating on review for a downgrade, citing faltering growth prospects and "a weak policy response" that may hinder government efforts to cut the nation's debt burden. Separately, Apr Japan industrial production rose +1.0% m/m, half of market expectations for a +2.0% m/m increase, while Japan's Apr jobless rate rose +0.1 to 4.7%. China's Shanghai Stock Index closed higher after hte Apr China leading index rose to 102.11, its highest level in 6 months.
- June S&Ps this morning are trading up +12.30 points on Greek aid optimism. The US stock market last Friday moved higher after G-8 leaders said the global economy is strengthening along with an unexpected increase in US consumer confidence: Dow Jones +0.31%, S&P 500 +0.41%, Nasdaq Composite +0.50%. Bullish factors for stocks included (1) the statement from G-8 leaders meeting in France that "the global recovery is gaining strength and is becoming more self-sustained," which will pave the way for reductions in debt, (2) the unexpected increase in May US University of Michigan consumer confidence (+1.9 to 74.3 versus expectations of unchanged at 72.4), and (3) a rally in financial stocks on reduced European debt concerns after ECB Council member Wellink said he?s "fully confident" Greece will meet conditions to receive its 3.3 billion-euro ($4.7 billion) aid payment by the IMF next month.
- Bearish factors included (1) the weaker-than-expected Apr US personal spending (+0.4% versus expectations of +0.5%), and (2) the plunge in Apr US pending home sales (-11.6% m/m versus expectations of -1.0% m/m).
- Goldman Sachs (GS) climbed 1.0% in pre-market trading after JPMorgan Chase upgraded the stock to "overweight" from "neutral."
- Alcoa (AA) rose 1.3% in pre-market trading after industrial metals prices rose in overnight trade, with copper climbing to a 3-week high.
- June 10-year T-notes this morning are down -12 ticks as global equity markets strenghten. T-note prices last Friday shook off early losses and moved higher on concern the economy is slowing along with increased safe-haven demand from Europe's debt crisis: TYM11 +2.5, FVM11 +1.2, EDU11 +1.0. Jun T-notes rose to a 5-1/2 month nearest-futures high and the 10-year T-note yield slipped to a 5-1/2 month low of 3.05%. Bullish factors included (1) the weaker-than-expected Apr US personal spending (+0.4% versus expectations of +0.5%), (2) the plunge in Apr US pending home sales (-11.6% m/m versus expectations of -1.0% m/m), and (3) increased safe-haven demand for Treasuries on concern that Greece may not receive additional bailout funds and default on its debt after Greek Prime Minister Papandreou failed to secure support from the country's main opposition parties for new austerity measures. Bearish factors included (1) the unexpected increase in May US University of Michigan consumer confidence (+1.9 to 74.3 versus expectations of unchanged at 72.4), and (2) reduced safe-haven demand for Treasuries after the statement from G-8 leaders meeting in France that "the global recovery is gaining strength and is becoming more self-sustained," which will pave the way for reductions in debt.
- The dollar index this morning is lower and at a 2-1/2 week low with the dollar/yen +0.64 yen and the euro/dollar +1.19 cents. The dollar index last Friday plunged to a 2-week low as weaker-than-expected data on US consumer spending and home sales suggests the Fed will lag behind other central banks in raising interest rates: Dollar Index -0.595, USDJPY -0.490, EURUSD +0.01583. Bearish factors included (1) the weaker-than-expected economic data on Apr US personal spending and Apr pending home sales, which may prompt he Fed into maintaining its overly easy monetary policy, and (2) euro strength after ECB Council member Wellink said he?s "fully confident" Greece will meet conditions to receive its 3.3 billion-euro ($4.7 billion) aid payment by the IMF next month. Bullish factors included (1) the larger-than-expected decline in the May Euro-Zone economic confidence which fell to a 7-month low and is euro negative, and (2) the unexpected increase in the May US University of Michigan consumer confidence, which is dollar supportive.
- July crude oil prices this morning are trading up +$1.61 barrel and July gasoline is +2.17 cents per gallon, both at 2-week highs. Crude oil and gasoline prices last Friday finished higher as a weak dollar and a statement from the G-8 saying the global economy is strengthening offset weaker-than-expected US economic data: CLN11 +$0.36, RBN11 +2.39. Jul gasoline rallied to a 2-week high. Bullish factors included (1) the fall in the dollar index to a 2-week low, which boosts investment demand in commodities, (2) the statement from the G-8 leaders meeting in France that the global economy is strengthening, which may lift global energy demand, and (3) strength in gasoline after a power blackout shut 3 refineries in Texas City, Texas. Bearish factors included (1) the weaker-than-expected Apr US personal spending and Apr pending home sales, which signals economic weakness that may lead to reduced fuel demand, and (2) the prediction from JPMorgan Chase that OPEC will raise oil-output quotas next month as the group seeks to "assuage" pressure on consumer nations to release emergency stockpiles.
Earnings reports (confirmed releases, sorted by mkt cap) PVH-Phillips-Van Heusen (BEST earnings consensus $1.16), GMLP-Golar LNG Partners LP (0.40), CRIC-China Real Estate Information (0.04), EJ-E-House China Holdings (0.09), LGF-Lions Gate Entertainment (0.20).
Global Financial Calendar
|0900 ET||Mar S&P/CaseShiller composite-20 home price index expected -0.2% m/m and -3.4% y/y, Feb -0.2% m/m and 3.3% y/y. Q1 S&P CaseShiller composite-20 home price index, Q4 -4.1% y/y.|
|0945 ET||May Chicago purchasing managers index expected -5.3 to 62.3, Apr -3.0 to 67.6.|
|1000 ET||May consumer confidence expected +1.1 to 66.5, Apr +1.6 to 65.4.|
|1100 ET||USDA weekly grain export inspections.|
|1130 ET||Weekly 3-mo and 6-mo T-bill auctions.|
|0000 ET||Apr Japan vehicle production, Mar -57.3% y/y.|
|0100 ET||Apr Japan construction orders, Mar -11.0% y/y.|
|0100 ET||Apr Japan housing starts expected -3.1% y/y, Mar -2.4% y/y.|
|0200 ET||Apr German retail sales expected +1.8% m/m and +1.5% y/y, Mar -2.7% m/m and -3.5% y/y.|
|0355 ET||May German unemployment change expected -30,000, Apr -37,000. May unemployment rate expected -0.1 to 7.0%, Apr unchanged at 7.1%.|
|0245 ET||Apr French consumer spending expected unchanged m/m and +4.4% y/y, Mar -0.7% m/m and +2.6% y/y.|
|0245 ET||Apr French producer prices expected +0.8% m/m and +6.4% y/y, Mar +0.9% m/m and +6.6% y/y.|
|0500 ET||Apr Euro-Zone unemployment rate expected unchanged at 9.9%, Mar unchanged at 9.9%.|
|0500 ET||May Euro-Zone CPI estimate expected +2.8% y/y, Apr +2.8% y/y.|
|1200 ET||ECB Council member Ewald Nowotny speaks at an event in Vienna.|
|0830 ET||Apr Canada industrial product prices expected +0.7% m/m, Mar +0.9% m/m.|
|0830 ET||Apr Canada raw materials price index expected +3.5% m/m, Mar +5.7% m/m.|
|0900 ET||Bank of Canada announces interest rate decision (expected no change to the 1.00% benchmark rate).|
|2100 ET||May China PMI manufacturing expected -1.3 to 51.6, Apr -0.5 to 52.9.|
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.