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Frontrunning: June 1

  • Japan PM delays sales tax hike, puts fiscal reform on back burner (Reuters)
  • Japanese Shoppers Keep Wallets Shut Despite Sales-Tax Delay (BBG)
  • Global stocks limp into June on oil and data slips (Reuters)
  • Euro zone factory growth remained tepid in May - PMI (Reuters)
  • China's factories steadying but weak, hopes for quick recovery fade (Reuters)

Copper Slides To Three Month Low Despite Flat Futures, Oil; Dollar Rise Continues

After two violently volatile days in which the market soared (Monday) then promptly retraced all gains (Tuesday), the overnight session has been relatively calm with futures and oil both unchanged even as the BBG dollar index rose to the highest level since April 4. This took place despite a substantial amount of macro data from both Japan, where the GDP came well above the expected 0.3%, instead printing 1.7% annualized, which pushed stocks lower as it meant the probability of more BOJ interventions or a delay of the sales tax hike both dropped. Meanwhile, in China we got proof of the ongoing housing bubble when new property prices were reproted to have soared 12.4% Y/Y in April, which in turn pushed the local stock market to two month lows amid concerns the rampant housing bubble sector could divert funds from stocks. Yes, China is trading on the "risk" one bubble will burst another bubble.

Futures Fizzle After Oil Fades Bounce Above $48

It has been more of the same overnight, as global stocks piggybacked on the strong US close and rose despite the lack of good (or bad) macro news, propelled higher by the two usual suspects: a higher USDJPY and a even higher oil, if mostly early on in the trading session.

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.

Futures Halt Selloff, Levitate Higher On Another USDJPY Spike; Oil Rises

If yesterday's selloff had a specific catalyst, namely some of the worst consumer retail earnings seen in years, it merely undid the Tuesday rally which levitated global risk with no fundamental driver, aside for a 200 pip spike in the USDJPY.  Some central bankers may even say it was a "magical" levitation. Fast forward to the overnight session when following a muted Asian session, it was once again up to the "magical" USDJPY to send stocks well into the green without any actual catalyst whatsoever, but what merely appears to have been another "magical" intervention session by the BOJ.

If Everything Is So Great, Where Are The Unicorn IPOs?

Over the course of the last week it seemed no matter where we turned in the business media one meme was being pushed above all others: It’s still a great time to be a private tech unicorn. Implying, that funding rounds were still “robust.” What wasn’t said, so we will, is this: It’s a great time to be a private “unicorn” rather, than take the chance and become the poster-child for the IPO apocalypse. For it’s better to be assumed a $BILLION dollar success story rather, than IPO and officially open the books to the market and remove all doubt – that you’re not.

Supermodels And Other Productivity Measures

If we are getting so much productivity out of the current range of offerings from Silicon Valley, I have a question: why aren’t these products really expensive, as the technology of the 1920s clearly was?  In fairness, a cell phone is costly – good monthly deals from major carriers usually make you pay about $600 for the phone. Which, funny enough, is what the typewriter cost (inflation adjusted) exactly 100 years ago.  But what about all the free apps and services?  Even Uber has to pay bonuses to recruit drivers. Why is that, if the model is so good? Yes, getting to scale is important for the service, but shouldn’t drivers come running if their productivity is so much better in the new model? Something is off.

"There Is A Lot Of Fear In The Market" - Stocks, Futures Slide After Yen Soars

Two days after stocks slid in a coordinated risk-off session, and one day after a DOE estimate of US oil inventories sent US stocks surging while the failed Allergan-Pfizer deal unleashed torrential hopes of a biotech M&A spree leading to the single best day for the sector in 5 years, sentiment has again shifted, this time due to a violent surge in the Yen as the market keeps testing the resolve of the Japanese central bank to keep its currency weak, and so far finding it to be nonexistent.

Frontrunning: March 29

  • Headline of the day: Oil prices fall as investors' faith in rally wanes (Reuters)
  • Europe shares, dollar gain as investors look to Yellen (Reuters)
  • Chinese Bidder for Starwood Has Mysterious Ownership Structure (WSJ)
  • Germany wants refugees to integrate or lose residency rights (Reuters)
  • BlackRock Joins Pimco Warning Investors to Seek Inflation Hedge (BBG)
  • Goldman Sachs and Bear Stearns: A Financial-Crisis Mystery Is Solved (WSJ)

Futures Rise In Thin Trading On Back Of Yen Weakness; Europe Closed

With European markets closed across the continent on Monday as the Easter holiday continues, overnight Asia was busy with China Shanghai Composite letting off some steam, and closing down 0.7% at session lows on concerns the Shanghai and Shenzhen home bubble have been popped by the politburo, Japan was a different story with the Yen sliding following a report by the Sankei newspaper that Abe will announce in May his intention to delay the planned levy hike, coupled with additional reports that Japan will unveil a major fiscal stimulus (and just on Friday Abe said he is "not thinking at all about supplemental budget" at this time).

"Confidence Is Lost": Fred Hickey Says "Bear Market Will Last Until QE4"

"The Fed is completely dangerous - it's the most dangerous entity out there. The policy makers are the ones who are causing much of the problems we have today... The bad news has only just begun... This bear market will continue which means we’re headed lower with rallies in between until the Federal Reserve is forced to come in and start QE4."