Consumer Confidence

Futures Flat, Gold Rises On Weaker Dollar As Traders Focus On OPEC, Payrolls

After yesterday's US and UK market holidays which resulted in a session of unchanged global stocks, US futures are largely where they left off Friday, up fractionally, and just under 2,100. Bonds fell as the Federal Reserve moves closer to raising interest rates amid signs inflation is picking up. Oil headed for its longest run of monthly gains in five years, while stocks declined in Europe.

Why This Friday's Payrolls Report Could See A Big Miss

When the main economic event this week hits this Friday at 8:30 am EDT, when the BLS releases the May payrolls report, Wall Street consensus wil be expecting a 160,000 print, a number which will have a big impact on market expectations for a Fed rate hike at the June or July FOMC meeting. However, consensus may be disappointed for one reason: the Verizon strike could chop off as much as 35,000 workers from the headline payrolls print.

Global Stocks Unchanged; US Futures Rise Above 2,100 As Traders Celebrate Memorial Day

With the US closed for Memorial Day and UK markets also offline, overnight volumes have been weaker than normal on little newsflow. The main story remains the stronger USD which not only led to the lowest Yuan fixing since February 2011 but pushed the USDJPY as high as 111.50 overnight before paring gains. Europe’s Stoxx 600 is unchanged on poor volume, after earlier rising above the 200 DMA for the first time in 2016. US equity futures were 0.2%, or 4 points higher, currently resting just above 2,101 with the last trading day of May tomorrow expected to push the cash market over 2,100 as well.

UMich Consumer Confidence Fades From Early May Exuberance, Inflation Expectations Slump To Record Lows

Having spiked magnificently (and surprisingly) to 11-month highs (from 7-month lows) with May's preliminary print at 95.8 (driven by a massive spike in 'hope'), today's final print of 94.7 (still an 11-month high) dropped from preliminary and missed forecasts. Expectations faded notably from 87.5 prelim to 84.9 final - still an 11-month high for 'hope'. However, despite the hype in the hope, short- and long-term inflation expectations tumbled with 5-10Y outlook now at record lows.

All Eyes On Yellen: Global Markets Flat On Dreadful Volumes, Oil Slides

In a world where fundamentals don't matter, everyone's attention will be on Janet Yellen who speaks at 1:15pm today in Harvard, hoping to glean some more hints about the Fed's intentionas and next steps, including a possible rate hike in June or July. And with a long holiday in both the US and UK (US bond market closes at 2pm today), it is no surprise overnight trading volumes have been dreadful, helping keep global equities poised for the highest close in three weeks; this won't change unless Yellen says something that would disrupt the calm that’s settled over financial markets.

3 Things: Auto Angst, Valuation Vulnerabilities, & Delusional Decouplings

Yes, the “bull market” is currently alive and well. However, there are mounting signs that a “cancer” has taken hold and will eventually reveal itself in the not so distant future. Unfortunately, for most investors, the inevitable outcome of chasing yield with a complete disregard of the underlying risk will be catastrophic.

Global Stocks, Futures Rally, Ignore Sharp Yuan Devaluation On Hopes Fed Is Right This Time

The single biggest event overnight was the PBOC's devaluation of the Yuan to the lowest since March 2011, setting the fixing at 6.5693, the highest in over 5 years and in direct response to a stronger dollar, which however if one looks at the DXY remains well below the recent highs in the 100 range, suggesting for China this is only just beggining. However, the fact that there was not more volatility in onshore and offshore overnight FX also comforted the market that at the same time as its was devaluing the PBOC was also intervening in the FX market, thus providing some assurance it would not allow runaway "risk off" sentiment prevail, nor would it promote another blitz round of capital outflows, leading to another gradual levitation in overnight risk.

Key Events In The Coming Week

Following last week's lull in global macro, it’s a busy start to the week in which we get the latest deluge of global flash PMIs, while the US economic calendar is loaded with New Home Sales data, Trade Balance, Initial Claims, UMichigan sentiment and the revised US Q1 GDP print on Friday. But perhaps the most expected event will be Yellen's speech on Friday at Harvard's Radcliffe, where the Fed chairman is expected to reveal some more hints on the upcoming rate hike.

Futures Fade Early Bounce, Slide In Illiquid Tape As Yen Rises, Oil Drops

Government bonds rose and the yen strengthened as investors weighed the timing of the Federal Reserve’s next increase in interest rates and the outlook for inflation. Commodities slid, led by metals, while stocks in Europe declined. Treasury 30-year yields fell for a third day. The yen rose from near this month’s low. Futures on the S&P 500 also declined after initially jumping higher in thinly traded, illiquid tape.

The Economy In Pictures: Weakness Continues

While there is currently a plethora of commentary strongly suggesting that the U.S. economy is nowhere near recession, it should be remembered the economy has NEVER been in a recession until future negative data revisions revealed it to be the case. Unfortunately, for investors, by the time a recession is widely recognized and accepted by the mainstream media and analysts, it will be far too late to do anything about it.

Futures Flat Despite China Scare As Oil Rebounds Over $47

The main risk over the weekend was that markets, which have now dropped for three consecutive weeks the longest negative streak since January, would focus their attention on the latest batch of negative Chinese economic news released over the weekend, which missed expectations across the board, most prominently in Retail Sales and Industrial Production, and following Friday's disappointing new credit loan data, would sell off as the Chinese slowdown once again becomes a dominant concern. However, after some initial weakness, the risks were all but gone when first the USDJPY jumped on another round of deflationary Japanese economic data which led to renewed hopes of more BOJ easing and a jump in the USDJPY and thus US futures.

"Hope" Spikes Most Since 2011 As UMich Consumer Confidence Hits 11 Month Highs

Consumer Expectations, according to University of Michigan, soared by the most since Dec 2011 in May's preliminary data - spiking from 77.6 to 87.5. Despite a modest rise in current confidence, this spike in "hope" was enough to send the headline confidence print to 95.8, 11-month highs and well above expectations of just 89.5. Despite confidence rising, inflation expectations tumbled (1Y from 2.8% to 2.5%).

Goldman Closes "Short Gold" Recommendation With 4.5% Loss; Will Continue Buying Gold From Its Clients

Iit took just two and a half months for Goldman to get officially stopped out of its short gold recommendation, which as we first noted, happened on April 29, when its the price soared above $1,300 breaching Goldman's stop. Officially, Goldman's Jeff Currie decided to take his time, although he too finally threw in the towel today admitting Goldman was wrong yet again with one more trading recommendation (recall that Goldman had earlier been stopped out and lost money on 5 of its Top 6 trades for 2016 in just over a month).