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News From Wall Street

 

Yellen is due to speak in Philadelphia this afternoon, following a rather shockingly NFP data and the course the dollar took. Investors are all ears on the talk and the tips Fed Chairwoman will be releasing on the prospects of the interest rate direction.The event will also offer the last insight into Fed thinking before a media blackout takes effect ahead of the June 14-15 monetary policy meeting.

Today’s Markets

In Asia, Japan -0.4% to 16580. Hong Kong +0.4% to 21030. China -0.2% to 2934. India -0.2% to 26777.
In Europe, at midday, London +0.9%. Paris flat. Frankfurt +0.1%.
Futures at 6:20, Dow +0.1%. S&P flat. Nasdaq +0.1%. Crude +1% to $49.11. Gold +0.1% to $1243.50.
Ten-year Treasury Yield +1 bps to 1.72%

Today’s Economic Calendar

2:15 Fed’s Rosengren speech
8:30 Gallup US Consumer Spending Measure
10:00 Labor market condition index
12:30 PM TD Ameritrade IMX
12:30 PM Janet Yellen speech
2:00 PM Janet Yellen in a discussion with Fed’s Harker

Main News Feed

Economy

The soft and weak job number has not changed the overall economic picture, Cleveland Fed President Loretta Mester declared, calling “a gradual upward pace of the funds rate appropriate.” “When the rate hikes will occur and the slope of that gradual path is data dependent,” she added. The U.S. economy added just 38K jobs in May, well below the consensus estimate of 164K and the smallest gain since September 2010.

Boston Fed President Eric Rosengren also expects sufficient economic growth to justify higher interest rates in the coming months despite the recent “choppy” economic conditions in the U.S. and May’s “disappointing” employment report. Over the past six months, Rosengren has been a forceful advocate for raising rates in the U.S., citing a concern that low rates may be fostering asset bubbles, especially in the commercial real estate market.

Hillary Clinton won the Puerto Rico primary on Sunday, pushing her even closer to the delegate majority needed to become the presumptive nominee of the Democratic Party. She is widely expected to secure that title tomorrow, when voters in six states head to the polls for the last multi-state primary day of the nomination race.

Treasury Secretary Jacob Lew and Secretary of State John Kerry are in Beijing for the eighth round of the U.S.-China Strategic and Economic Dialogue as tensions simmer over Beijing’s land-reclamation in the South China Sea. Chinese authorities are likely to complain about recent anti-dumping steel tariffs and ask that the U.S. recognize its country as a market economy, while American officials want China to adopt further financial liberalization, address industrial overcapacity and refrain from more yuan devaluations.

In an interview on Saturday, former Mayor of London and one of the leaders of the ‘Leave’ campaign – Boris Johnson – rejected claims made by JPMorgan’s (JPM) Jamie Dimon that Britain’s potential exit from the EU could mean fewer jobs in the U.K. “Dimon and JPMorgan are… the very people who urged this country to embed itself in the euro, which has turned out to be an absolute catastrophe,” he said. “In real terms many people have seen their wages fall as a result of many of these signature policies.”

Swiss voters have rejected by a wide margin a proposal to introduce a guaranteed basic income for everyone living in the country. The initiative received just 23.1% of the vote in Sunday’s referendum, compared with 76.9% against. Supporters felt introducing a monthly income of 2,500 Swiss francs per citizen would promote human dignity and public service, while opponents said it would cost too much and weaken the economy.

German industrial orders dropped more than expected in April due to weak demand – especially from outside the eurozone. According to the Economy Ministry in Berlin, contracts for ‘Made in Germany’ goods were down 2% from the prior month, when they rose a revised 2.6%. The figures follow the Bundesbank’s cut last week to its German growth forecast for 2016 and 2017.

The floods that hit central France and Paris last week have caused hundreds of millions of euros of damage, French minister Juliette Meadel said Sunday, cautioning that the cost may eventually top €1B. Another hit to the economy – the French railway system is facing a sixth day of strikes, although Prime Minister Hollande said the disruption will be over by the time the Euro 2016 international soccer tournament begins on June 10.

Romans have delivered a major blow to Italian Prime Minister Matteo Renzi in local elections. The anti-establishment Five Star Movement candidate, Virginia Raggi, has won 36.7% of the mayoral ballot in the Italian capital, leaving the Democratic Party’s Roberto Giachetti tied in second place. If results confirm the findings, the two would fight a run-off contest on June 19, with populist Raggi favored to win.

A crucial element of Saudi Arabia’s “Vision 2030” reforms announced by deputy crown prince Mohammed bin Salman in April will be put before the cabinet for approval today. The plan is expected to flesh out sector-by-sector details, including the creation of the world’s largest sovereign investment fund and selling shares in state energy giant Aramco, to restructure the kingdom’s oil-dependent economy.

More than 25 European and Asian-owned supertankers are now shipping Iranian crude, allowing the Islamic Republic to ramp up exports much faster than expected following the lifting of sanctions in January. Tehran was struggling as recently as April to find partners to ship its oil, but after an agreement on a temporary insurance fix, more than a third of Iran’s crude shipments are now being handled by foreign vessels.

Stocks

Global alcohol makers are bracing for a potentially precedent-setting court decision in Scotland over whether the country will become the first to implement a floor on alcohol prices (the industry feels the move could unleash an international wave of regulation). After years of the case bouncing around the legal system, the Court of Session will hold a hearing on minimum unit pricing tomorrow and is expected to make a decision by August. Related tickers: BUD, DEO, ABEV, SAM, BORN, CCU, STZ, TAP, VCO, BF.A, BF.B

Impossible Foods aims to disrupt the food industry by developing meat products from plant-based ingredients. Launched by a top biochemist from Stanford, the startup says it’s on the verge of offering an alternative that looks, smells, and even sizzles like regular ground beef – based a molecule called heme that catalyzes the flavors in meat. The development might be something to watch for companies such as Cargill, Tyson Foods (NYSE:TSN), JBS (OTC:JBSAF), and National Beef Packaging Company (NYSE:LUK).

Goldman Sachs received more than a quarter of a million applications from students and graduates for jobs this summer, a rising number that is way more than GS could ever employ. The trend is mirrored at several other large banks such as JPMorgan (NYSE:JPM), Morgan Stanley (NYSE:MS), BofA (NYSE:BAC) and Citigroup (NYSE:C). According to figures provided to theFinancial Times, the number of these applications has risen more than 40% globally since 2012.

Recording the biggest-ever single tower real estate transaction in the Asia-Pacific, BlackRock (NYSE:BLK) has agreed to sell a 43-story office building in Singapore to the Qatar Investment Authority for $2.5B. The tower has been on the market since last year after bids by a consortium of Norway’s sovereign wealth fund and CapitaLand, and rival bids by ARA Asset Management failed to clinch the deal.

In a somewhat unprecedented way of moving metal, Cadillac President Johan de Nysschen will this month begin looking for commitments from store owners willing to set up showrooms where buyers can learn about products via VR headsets without getting behind the wheel. Virtual stores are a part of “Project Pinnacle,” an extensive retail-strategy overhaul by General Motors’ (NYSE:GM) luxury division that was first introduced a few months ago in closed-door meetings.

The chairman of the controlling shareholder of Avianca Holdings (NYSE:AVH) has confirmed he is open to a strategic partnership that would infuse the Latin American carrier with new cash. “Why not if it makes sense,” Jose Efromovich declared in Switzerland. “This is a very capital-intensive business. We are going to be open for opportunities.” Last week, United Continental (NYSE:UAL) and Delta Air Lines (NYSE:DAL) were named as possible suitors for the company.

Following years of acquisitions that saddled SoftBank (OTCPK:SFTBY) with record debt and weighed down its stock, founder Masayoshi Son is getting serious about improving the company’s balance sheet. SoftBank now plans to raise $10B from selling down its stake in Alibaba (NYSE:BABA) and another $685M from offloading shares in GungHo Online Entertainment (OTC:GUNGF). It’s also in discussions to exit Finnish game developer Supercell Oy, a deal that could increase the amount raised via asset sales to $14B.

British lawmakers are holding a two-day debate over new surveillance legislation that could give the country’s intelligence organizations increased access to digital communications. The measure, called a “snooper’s charter” by critics, may force large tech companies to give these agencies access to encrypted messages in the name of national security. A similar debate rocked the U.S. last year, when Apple (NASDAQ:AAPL) refused to unlock the iPhone from one of the San Bernardino shooters.

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