News Summary from Bloomberg:
1) Iran Resists Saudi Gesture for Unity as OPEC Fractures Reappear
Iran resisted overtures from OPEC’s largest producer Saudi Arabia to restore a production target scrapped at the group’s last meeting in December. “I don’t agree with an overall output ceiling for OPEC,” Iranian Oil Minister Bijan Namdar Zanganeh said Thursday, before a meeting of the group in Vienna. Zanganeh wants the organization to return to a country-quota system, which he said might be difficult to achieve.
2) TOPLive Starts: OPEC Meets as Saudi Minister Makes Vienna Debut
06/02 02:59 ET With no change in strategy expected, attention will turn to the long-awaited change in leadership at OPEC. The organization has tried for more than three years to find a replacement for current Secretary-General Abdalla El-Badri, who was due to stand down in 2012 after serving two terms. At OPEC’s last meeting in December, El-Badri’s term was extended until July.
3) Brent Hovers Around $50 as OPEC Meets; European Stocks Advance
Brent crude climbed toward $50 a barrel as OPEC met in Vienna, supporting energy producers and the ruble. Stocks in Europe advanced, while bonds in the region declined before the European Central Bank’s interest rate announcement. Crude hovered near a seven-month high as the Organization of Petroleum Exporting Countries discusses production policy, with Saudi Arabia’s energy minister saying he sees supply and demand coming into balance.
4) Draghi Wants ECB Easing Solo Joined by Europe Reform Chorus
If Mario Draghi criticizes euro-area governments on Thursday, he knows the world’s economic policy advisers support him even though the intended audience might not be listening. The European Central Bank president will probably have little fresh monetary stimulus to offer when he briefs reporters in Vienna after the Governing Council sets policy, giving him room to address rising concern that politicians aren’t pulling their weight.
5) Goldman Says Hedge Funds Wedded to Top Picks Like Never Before
Hedge funds, who’ve seen their reputations take a beating in recent months, have not suffered a corresponding hit to their confidence, at least as far as stock- picking goes. So says research from Goldman Sachs Group Inc., which found that a stock-selection metric known as concentration climbed at the end of the first quarter to the highest level on record. The term refers to the percentage of hedge fund holdings accounted for by their 10 biggest positions.
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6) Clinton to Say Trump Unfit to Be Commander-In-Chief
Hillary Clinton will argue that Donald Trump is “fundamentally unfit” to be president in a speech Thursday detailing what she sees as the dangers of the presumptive Republican nominee’s approach to national security. The Democratic presidential candidate and former secretary of state plans to lay out specific policy concerns while also casting the stakes of the general election in broader terms, senior policy adviser Jake Sullivan said .
7) California’s Weird Senate Contest Has Republicans Rooting For a Democrat
A dozen Republicans are competing to succeed U.S. Senator Barbara Boxer, whose retirement is opening one of California’s two seats for the first time since 1992. But prominent GOP consultants are talking up a Democrat: Representative Loretta Sanchez, a 10-term congresswoman from Orange County, a longtime Republican stronghold. In 2012, California began holding open primaries. The top two finishers proceed to a November runoff, regardless of their party
9) The Deepening Deficit That Makes Zinc One of 2016’s Top Bets
The Chinese smelters that churn out more than 40 percent of the world’s zinc may cut production for the first time in four years because they can’t get enough raw material, further lifting prices of one of this year’s strongest-performing commodities. Zinc, used for rustproofing steel in everything from auto bodies to suspension bridges, has surged as much as 25 percent in 2016 to the highest since July as miners supply less of the ore concentrate .
10) Saudi Minister Says OPEC Strategy Succeeding, Prices on Way Up
Saudi Arabian Energy Minister Khalid Al- Falih spoke to reporters at start of OPEC’s ministerial conference in Vienna. * On OPEC strategy, mkt balancing: * Sees supply and demand coming into balance * Mkt is not oversupplied; just inventory that needs to be absorbed * We will be gentle with our approach * Demand is robust; non-OPEC supply declining * Everybody is satisfied w/ mkt * OPEC strategy is succeeding
11) BlackRock Sees U.S. Yield Curve Flattening Further on Fed Wagers
Even as the yield difference, or spread, between Treasury two- and 30-year securities fell to the lowest since 2008, there may be space for further so-called curve flattening as the market underestimates the chances of two interest-rate increases this year, according to BlackRock Inc. The yield gap has narrowed as traders boosted bets that the Federal Reserve will raise rates this year. A flattening of the curve may suggest investors see rates going up. …
12) Spain Leads European Bonds Lower as Investors Await ECB Decision
Spanish bonds fell, pushing 10-year yields to the highest in a week, as demand declined at a series of auctions for the nation’s debt and as investors awaited the European Central Bank’s latest policy decision. Government securities across the euro zone dropped amid speculation officials meeting in Vienna will refrain from announcing additional monetary stimulus and will leave interest rates unchanged.
13) Japanese Sell Overseas Debt as Fed Moves Toward Rate Increase
Japanese investors sold overseas debt for the first time in seven weeks as the Federal Reserve moved closer to raising interest rates. Fund managers cut holdings of bonds outside the nation by a net 549.4 billion yen ($5 billion) in the week ended May 27, the Ministry of Finance said Thursday in its weekly report on investment trends. Those are the first sales since the period ended April 8. “Treasury yields should increase,” said Yoshiyuki Suzuki
14) Emerging-Market Stocks Rise Before OPEC, ECB; Ruble Strengthens
Emerging-market stocks rose for the first time in four days before key meetings for OPEC and the European Central Bank and a monthly U.S. payrolls report. A gauge of developing-nation equities headed for its highest close in a month, with benchmark indexes in Thailand, Pakistan and China all gaining at least 0.4 percent. The Russian ruble and South Korean won both strengthened. Emerging-market assets have traded in a narrow range in the past
15) Duterte Plans Wider Philippine Deficit in Fiscal Reversal
The incoming administration of Philippine President-elect Rodrigo Duterte signaled its willingness for looser fiscal policy and higher borrowing as it seeks to ramp up spending on infrastructure and cut taxes. Ben Diokno, who will be Duterte’s budget secretary when the new government takes office on June 30, said a fiscal shortfall of 3 percent of gross domestic product is a “comfortable deficit target.”
16) Mega Bond Deals Flood Emerging Markets Before Next Fed Move
Suddenly, it’s a year of mega bond deals in emerging markets. Argentina drew $65 billion in bids for its $16.5 billion offering in April, and now borrowers in the Middle East are stepping up. Abu Dhabi returned to the international capital markets with a $5 billion placement, followed by a record $9 billion sale by Qatar. Saudi Arabia is looking to sell as much as $15 billion of bonds in a debut offering, people with knowledge of the matter said. …
17) ECB Rates Not Only Thing on Hold in Vienna on Thursday
The European Central Bank is set to leave monetary policy on hold when it meets in Vienna onThursday. That’s not the only thing that will remain steady: most economists expect the ECB to keep its 2016-2018 inflation forecasts unchanged from March. While that may suggest that ECB President Mario Draghi still has some work to do, it would mark the first time in a year that officials haven’t had to downgrade their outlook for consumer prices.
18) Japan’s Debt Burden Is Quietly Falling the Most in the World
Japan for years has been renowned for having the world’s largest government debt load. No longer. That’s if you consider how the effective public borrowing burden is plunging — by one estimate as much as the equivalent of 15 percentage points of gross domestic product a year, putting it on track toward a more manageable level.
19) Gigonomics: The Dismal Science Behind Today’s On-Demand Jobs
Forget about a secure future: Today’s jobs don’t even offer a secure present. The era of one-company careers is largely gone, and now the latest shift in labor markets is piling on the anxiety for many who do manage to get hired. They’re likely to land in an arrangement that falls short of what jobs used to be like. Driving cars for Uber is the poster-child for this alternative work, but it extends across the spectrum…
20) Brazil Soybean Producer Files for Bankruptcy as Debt Talks Fail
Grupo Bom Jesus, one of Brazil’s biggest soybean and corn producers, filed for bankruptcy after unsuccessful negotiations with lenders to restructure about 2 billion reais ($550 million) of bank debt. The Rondonopolis, Mato Grosso-based company sought court protection after some creditors tried to seize its assets, Chief Executive Officer Nelson Vigolo said Wednesday in a telephone interview. “We were hoping for an agreement until yesterday, but …
21) Temer Blunders Are Rousseff’s Hope Back to Brazil Presidency
When Dilma Rousseff stood down as Brazil’s president last month to face an impeachment trial, it looked all but certain she wouldn’t come back. Yet a series of setbacks for her interim replacement, Michel Temer, may win her the few votes she needs to return to office. In less than a month, Temer lost two ministers over recordings suggesting they sought to interfere in a corruption probe, was criticized for appointing a cabinet without women and had to backtrack on scaling down the Ministry of Culture. All that plays into Rousseff’s thesis that Temer wants to downsize government and oust her to protect his allies from the graft probe.
22) BRAZIL DAYBOOK: Industrial Output; Petrobras CEO Takes Office
Brazil’s industrial production probably declined 8.7% from a year earlier in April, according to economists surveyed by Bloomberg. National statistics agency IBGE releases its monthly report at 9am. All events listed in Brasilia time.
23) Trading volumes at SIX and Deutsche Boerse declined in May
SIX Swiss exchange and Deutsche Boerse both revealed declines in trading activity for May this year compared to the same month last year. SIX witnessed a particularly difficult month, with overall turnover down 28% compared to the month prior, totalling CHF 90.95 billion. Deutsche Boerse’s order book turnover across asset classes decreased 17% in May this year compared to last year, totalling €103.8 billion.
24) Telecom: Kudelski to establish second headquarters in Arizona
Kudelski to establish second headquarters in Arizona Thursday 2 June 2016 | 11:54 CET | News Kudelski, a provider of media content protection and value-added service technology, announced its decision to establish a second headquarters in Phoenix, the US. By taking this step, the Group wants to become closer to the North American market and be able to better leverage growth opportunities that are developing there.
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25) Europe Stocks Are Little Changed as Investors Await ECB Meeting
European stocks were little changed, after a two-day decline, as investors awaited the European Central Bank’s rate decision and President Mario Draghi’s remarks. Energy producers led gains among industry groups, with oil near $49 a barrel, as the Organization of Petroleum Exporting Countries meets to discuss production policy amid rising U.S. inventories. The Stoxx Europe 600 Index added 0.2 percent at 9:51 a.m. in London. …
26) S&P 500 Futures Are Little Changed as Traders Await Jobs Data
U.S. index futures were little changed, with equities at a six-week high, before a monthly jobs report and key meetings for OPEC and the European Central Bank. Contracts on the S&P 500 expiring in June fell 0.1 percent to 2,095.5 at 6:03 a.m. in New York, after the index ended little changed in the past two days. Dow Jones Industrial Average futures fell 15 points, or 0.1 percent, to 17,764. Investors are showing caution
27) Greece Running Out of Time for Quick ECB Waiver Reinstatement
Greece may be running out of time if it wants to restore regular European Central Bank refinancing lines for its banks as soon as this week. The ECB’s Governing Council, meeting in Vienna on Thursday, will reinstate a waiver on the country’s junk-rated debt only if auditors representing creditor institutions notify it of an agreement with the government on all pending prior actions, according to a Greek official.
28) Pimco Has Some Exposure to Short-Dated Greek Bonds, Balls Says
“We have a very small position on Greece’s short-dated securities,” Andrew Balls, chief investment officer for global fixed income at Pimco says at briefing in London. * “The risk-reward is reasonable and it’s much smaller than what it was a few years ago. We tend to avoid longer exposure” * Pimco also has an overweight position in Italian bonds, though it is smaller than a few years ago, Balls says * NOTE: Pimco Avoids Owning …
29) Goldman’s ‘Bullish Exception’ Powers Ahead as Zinc Tops $2,000
Zinc extended its rally to a 10-month high amid expectations for a global shortage of one of this year’s best-performing commodities. Shares of companies producing the metal rose. Zinc, used for rustproofing steel in everything from auto bodies to suspension bridges, has surged 23 percent in 2016, outperforming other base metals. Banks from Goldman Sachs Group Inc. to Macquarie Group Ltd. see further gains for prices that have risen for …
30) Family Business: Saving the Remains of Britain’s Steel Industry
From its sparse, four-sentence website to a discreet London office with no sign or name on the doorbell, Greybull Capital LLP has embodied the “private” in private equity. That changed at a stroke with the purchase of the Scunthorpe steelworks in England as part of a 400 million-pound ($578 million) rescue plan that casts the low-key family firm as a potential savior of Britain’s steel industry.
31) Yen Set for Longest Gain in Month Amid Concern Over Brexit, Fed
The yenheaded for its first three-day rally in a month as concern the global economy isn’t strong enough to shake off shocks such as the potential U.K. exit from the European Union and U.S. policy tightening spurred demand for the currency as a haven. Japan’s currency advanced against all 10 of its developed- market peers, while the pound held a two-day loss of more than 1.5 percent, after a poll signaled an increase in support for so-called Brexit .
32) Pound Trader Keeps His Head When All About Him Are Losing Theirs
Adrian Lee is a man in demand. His phone is abuzz with questions on Britain’s European Union vote. Can he brief the board on the referendum, asks a U.S. client. How about later today? The founder of Adrian Lee & Partners, which oversees $9 billion of foreign-exchange investments for money managers, is quick to oblige. And after hearing him out, the company takes his advice — and decides it doesn’t need any more protection on its sterling positions. …