Morning Market Report

Futures Rise As POTUS Comments Spark New Hope For Trade Deal

honestly it would not take much for them to do this…algo trading searching for headlines at work here-after yesterday I'm surprised it's not up moar.

The rebound started just after 8pm EDT on Monday night, with the S&P trading just above 2,800 when President Trump said he believed discussions with China “will be very successful,” with the outcome expected in three or four weeks.

Responding to Trump, who said he was optimistic about resolving the trade dispute, the Chinese government’s top diplomat said China and the United States both have the “ability and wisdom” to reach a trade deal that is good for both.

Of course, it is quite possible that the market's overly optimistic interpretation of Trump's take may have been premature, considering that on Tuesday morning Trump has had a barrage of no less than 7 tweets on the topic of trade war, with the highlight so far his claim that "when the time is right we will make a deal with China. My respect and friendship with President Xi is unlimited but, as I have told him many times before, this must be a great deal for the United States or it just doesn’t make any sense." In second tweet, Trump says deal must make up some of “tremendous ground we have lost to China on Trade since the ridiculous one sided formation of the WTO. It will all happen, and much faster than people think!"

A day after equities suffered their worst selloff of 2019, the S&P rebounded even as world stocks hovered near two-month lows on Tuesday, following more optimistic comments from U.S. and Chinese officials on trade which brought some comfort.

Earlier, Asian shares took another beating on Tuesday catching up to the Monday US rout, but closed off their lows, following the more upbeat tone from U.S. and Chinese officials.

The rebound in optimism was perplexing as just one day earlier China said it would impose higher tariffs on $60 billion of U.S. goods in retaliation against the U.S. tariff hike, and at least some analysts remained quite skeptical. ING economist Prakash Sakpal said the current volatility showed how a “180-degree” turn in U.S. rhetoric on trade negotiations had spooked markets. “We don’t see any quick end to this state of the markets until we see some resolution, constructive dialogue and something very solid in terms of deals. But the hopes for that are a bit misplaced currently,” he said.

Judging by the markets' reaction so far today, Prakash's take is in the minority, and signs of stability in global stock markets took the shine off safe-haven assets for now.

Oil up, no surprise there-see highlight for what should be overhead resistance..about $62.50.

Cap#4 is 30 year US Treasury Bond and moar reflective of what china holds in our debt-keep an eye on this.

Market Snapshot

S&P 500 futures up 0.4% to 2,817.50

STOXX Europe 600 up 0.4% to 373.88

MXAP down 0.9% to 154.35

MXAPJ down 0.9% to 507.15

Nikkei down 0.6% to 21,067.23

Topix down 0.4% to 1,534.98

Hang Seng Index down 1.5% to 28,122.02

Shanghai Composite down 0.7% to 2,883.61

Sensex up 0.7% to 37,354.89

Australia S&P/ASX 200 down 0.9% to 6,239.91

Kospi up 0.1% to 2,081.84

German 10Y yield rose 1.0 bps to -0.06%

Euro up 0.2% to $1.1239

Italian 10Y yield rose 1.6 bps to 2.326%

Spanish 10Y yield rose 0.7 bps to 0.998%

Brent futures down 0.2% to $70.12/bbl

Gold spot down 0.2% to $1,297.73

U.S. Dollar Index little changed at 97.33

US Event Calendar

8:30am: Import Price Index MoM, est. 0.7%, prior 0.6%; YoY,

est. 0.3%, prior 0.0%

8:30am: Export Price Index MoM, est. 0.6%, prior 0.7%; YoY,

prior 0.6%

To the day ahead now, which this morning kicks off in Germany with the final April CPI revisions (no change from the +1.0% mom flash reading expected). Shortly after that we’re due to get March and April employment data in the UK where the consensus is for no change in the unemployment rate of 3.9% and a small decline in weekly earnings to +3.3%. Also due out this morning is the March industrial production print for the Euro Area and the May ZEW survey in Germany. In the US today we’re due to get the April NFIB small business optimism reading and April import price index print. Away from the data the Fed’s Williams is due to speak at 8.15am BST this morning followed by George (5.45pm BST) and Daly (11pm BST) this evening. The ECB’s Villeroy is also scheduled to speak this morning.

really hitting the speaking gig hard now-they do this all the time but they usually never get highlighted.

https://www.zerohedge.com/news/2019-05-14/futures-jump-trump-comments-spark-new-hope-trade-deal

https://www.dailyfx.com/crude-oil

https://www.bloomberg.com/markets/stocks/futures

https://www.marketwatch.com/investing/stock/tmubmusd30y?countrycode=bx

US Treasury Gov't Debt Auction Schedule

Calling these auctions are a bit disingenuous at this point. The participants,namely the primary dealer's, are all required to buy these in order to maintain status as a primary dealer at the NY FRB.

See this:

DEFINITION of Primary Dealer

A primary dealer is a pre-approved bank, broker-dealer, or other financial institution that is able to make business deals with the U.S. Federal Reserve, such as underwriting new government debt. These dealers must meet certain liquidity and quality requirements as well as provide a valuable flow of information to the Fed about the state of the worldwide markets.

BREAKING DOWN Primary Dealer

Primary dealers are a system of banks and broker-dealers authorized by the Federal Reserve System to deal directly in government bonds. This system was established in 1960 by the Federal Reserve Bank of New York (FRBNY) to implement monetary policy on behalf of the Fed. By purchasing securities in the secondary market through the FRBNY Open Market Desk, the government increases reserves in the banking system and, thus, increases the money supply in the economy. Conversely, selling securities results in a decrease in reserves, limiting the amount of funds that are available for lending. In effect, primary dealers are the Fed’s counterparties in open market operations (OMO).

Primary dealers, which all bid for government contacts competitively, purchase the majority of Treasury securities – Treasury bills, notes, and bonds – at auction and then redistribute or sell them to their clients, creating the initial market in the process. They are required to submit meaningful bids when new Treasury securities are auctioned. In a way, primary dealers can be said to be market makers for Treasuries. Accordingly, primary dealers trade Treasuries and typically also trade spread product.

In 2008, in response to the subprime mortgage crisis and to the collapse of Bear Stearns, the Federal Reserve set up the Primary Dealers Credit Facility (PDCF), through which primary dealers could borrow overnight at the Fed's discount window using several forms of collateral including mortgage-backed loans. Federal Reserve Banks are authorized to accept loans and other bank obligations as collateral for advances at the discount window. The discount window is used by the Fed to rediscount private securities as a means to directly provide funding to banks at a particular interest rate and, thus, influence banks' marginal cost of funds. The PDCF was closed on February 1, 2010.

https://www.investopedia.com/terms/p/primarydealer.asp

https://www.treasury.gov/resource-center/data-chart-center/quarterly-refunding/documents/auctions.pdf

>>6494887

>>6494550

they had it hovering on -666 for quite some time. Usually it does not stay on any one set of number's for any length of time, Grabbed a screen shot at the time and posted it when it habbened.

>The volume begins to subtlety pick-up to the buy-side, pulling the market out of that targeted 666 trading range.

This has been a common theme towards the close, everyday-usually highlighted in the reports-see cap#2. Painting the tape is what it is called-whether it's good or bad this is what is going on.

>>6494924

anybody but her. Know's just enough to appear educated to one's who are not.

Not going to be a freeze like in 2008, would have habbened already

Bayer stock continues rout after $2 billion award in Roundup trial

Frankfurt (Reuters) - Shares in Bayer fell as much as 5% on Tuesday after a jury awarded more than $2 billion to a California couple in the largest U.S. jury verdict against the company over allegations its Roundup weed killer causes cancer.

That put the stock on course to close at its lowest level in almost seven years, even though the punitive damages award is likely to be reduced due to U.S. Supreme Court rulings that limit the ratio of punitive to compensatory damages to 9:1.

The jury set the total punitive damages at $2 billion and added $55 million in compensatory pay, concluding that Roundup - based on herbicide glyphosate - had been defectively designed, and that the company failed to warn of the herbicide’s alleged cancer risk.

The shares were down 2.5% at 55.05 euros at 0905 GMT.

Bayer said in a statement on Monday that it was disappointed with the verdict and would appeal. A spokesman called the jury’s decision “excessive and unjustifiable”.

It was the third consecutive U.S. jury verdict against the company in litigation over the chemical, which Bayer acquired as part of its $63 billion purchase of Monsanto last year.

“Clearly we anticipate that much of the punitive damages of $2 billion would likely be significantly reduced on appeal,” JP Morgan analysts said in a note.

“However, the level of compensatory damages is still likely to be somewhat of a concern to the market given the level is above the Hardeman case,” they added, referring to $5 million in compensatory damages awarded to a plaintiff in a previous case.

The brokerage said the litigation slashes its valuation of the company by 5 billion euros ($5.6 billion) but it will take until mid-2020 for more cases and a couple of appeal decisions to provide greater clarity.

https://in.reuters.com/article/bayer-glyphosate-lawsuit-stocks/bayer-stock-continues-rout-after-2-billion-award-in-roundup-trial-idINKCN1SK0MW