Comment by phil

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phil
June 27th, 2017 at 6:09 am

Good morning!

Waiting on the BOE rate decision, any minute.  Would be a surprise if they tighten.   Draghi already had his say:

Mario Draghi called for continued euro-area stimulus even as the economy enters a new phase in its upturn, saying support is still needed to entrench the trend.

“All the signs now point to a strengthening and broadening recovery in the euro area — deflationary forces have been replaced by reflationary ones,” the European Central Bank president said on Tuesday in Sintra, Portugal. “However, a considerable degree of monetary accommodation is still needed for inflation dynamics to become durable and self-sustaining. So for us to be assured about the return of inflation to our objective, we need persistence in our monetary policy.”

The euro jumped as Draghi said that most factors damping inflation are temporary, and was up 0.6 percent at $1.1250 at 9:50 a.m. in Lisbon.











Europe is flat, Asia was flat and we're flat – very exciting stuff!  Oil $43.84, might be finally going for $44, /RB $1.45 but Dollar back down at 96.61 so not at all impressive.  Silver was the right horse to back, just hit $1,000 per contract at $16.65 so done there and we'll look for fresh horses.  Nas was certainly the right short, still down at 5,760 and that was good for over $2,000/contract – it doesn't always have to be oil, you know!

/TF short below 1,415 is the percentage play to make ahead of the BOE, assuming the Dollar bounces- tight stops above, I have to keep saying.

Oh, I guess /DX long at 96.70 is good too!

EU just fined GOOGL $2.7Bn for anti-trust violations.  It's not because they monopolize search but because they use that monopoly to send people to their own services over others (ie, they cheat/lie to you).  This will be interesting.  



And here's a great article for history buffs:  "For the love of Zeus, stop misusing Thucydides"  – Great example of how you have to be critical of information – even the citations that are used to verify the information you're verifying.  

Tuesday's economic calendar

• 4:05 Fed's Williams Sppech
• 8:55 Redbook Chain Store Sales
• 9:00 S&P Corelogic Case-Shiller Home Price Index
• 10:00 Consumer Confidence
• 10:00 Richmond Fed Mfg.
• 10:00 State Street Investor Confidence Index
• 11:15 Fed's Harker: Economic Outlook
• 1:00 PM Janet Yellen speech
• 1:00 PM Results of $34B, 5-Year Note Auction

U.S. warns Syria over chemical attack

• The White House says it has evidence that Syria is preparing to launch another chemical attack and warned that it will "pay a heavy price" for doing so.
• In April, U.S. forces fired 59 Tomahawk missiles (NYSE:RTN) at a Syrian air base that was linked to a chemical-weapons attack in Idlib province that killed more than 80 people.

Crisis in Brazil deepens

• The country's attorney general has formally accused President Michel Temer of corruption, making him the first sitting president to face criminal charges.
• While the alleged bribery scandal at meatpacker JBS (OTCQX:JBSAY) has spurred impeachment talk, it will definitely reduce the chances Temer can push through reforms needed for Brazil to rebound from its worst recession on record.

Big week for the IPO market

• The IPO market is expected to see more deals price this week than at any time over the past two years, as a strong stock market and the performance of new listings boosts confidence.
• Investors that bought U.S.-listed IPOs priced in 2017 are so far reaping an average return of 12%, according to Renaissance Capital, whose exchange-traded fund IPO has returned over 22% YTD.

CBO evaluates Senate health bill

• The Senate Republican healthcare bill would result in 22M more people uninsured by the end of the coming decade, while reducing federal spending by $321B during that time, according to the Congressional Budget Office.
• The figures, which were released just hours after GOP leaders revised the bill, complicates the path forward for the already-fraught legislation.
• Is a vote before the July 4 recess still realistic?

 

Report: U.S. tariffs on solar panels could crush industry

• A trade complaint asking the Trump administration to impose tariffs on solar panels could devastate the U.S. solar industry, wiping out two-thirds of systems forecast to be installed over the next five years, according to a report by GTM Research.
• The case, filed by bankrupt panel manufacturer Suniva, would cause equipment prices to spike in the U.S. and prompt installations to fall to as low as 25 GW during 2018-22, down from GTM’s current forecast of 72.5 GW, the report says.
• The biggest impact of tariffs likely would be felt by large-scale unity solar farms, which compete as an alternative to natural gas, while residential rooftop installations would take a lesser hit, GTM says.

Big oils can survive at $40 but need $60 to thrive, BMO says

• Global oil majors including Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), Total (NYSE:TOT) and Royal Dutch Shell (RDS.A, RDS.B) can survive in a $40-$50/bbl oil price range but they really need oil above $60 to thrive, according to analysts at BMO Capital.
• The analysts say that at $40 oil, the group's operating cash flows fail to cover current capex and dividend expectations, even with the aid of scrip, whereas at greater than $50/bbl, the majors should on aggregate be able to match full cash outflows
• BMO sees only XOM able to cover its full cash dividend at ~$50/bbl in 2017, although the others should be able to organically cover their dividends at $50-$55 with the aid of financial levers such as scrip dividends, project deferrals (for re-engineering), further cost reductions and efficiency gains.

GE is new Top Pick at Barclays, which sees bright side of recent changes

• General Electric (GE +0.2%) has been a longtime underperformer vs. the S&P 500 and has taken a 13% drubbing YTD, but Barclays analyst Scott Davis makes the stock his new Top Pick, replacing Honeywell (HON +0.4%), as he sees Ge earnings forecasts as too low.
• Barclays believes the naming of John Flannery as the new CEO, "combined with a bottom-quartile valuation, significant cost-out program, better cash generation, accretion from BHI, and a top-decile dividend yield continue to make GE one of the most compelling stories in our universe."
• GE's detractors point to an unrealistic earnings ramp through 2018 and weak free cash flow generation, but the firm thinks GE's cash deficit is "largely explainable given structural changes in the business and cyclical headwinds from new product introductions."

California to list Monsanto's glyphosate as causing cancer

• California's environmental regulator says it will add glyphosate, the active ingredient in Monsanto's (NYSE:MON) popular Roundup weed killer, to the state's list of chemicals known to cause cancer, effective July 7.
• The agency says the designation under California's Proposition 65 state law will proceed following an unsuccessful attempt by the company to block the listing in trial court.
• MON calls the state's action "unwarranted on the basis of science and the law," and has appealed the trial court's decision as it plans to continue its legal challenge.

Best Buy looks to ride smart home products wave

• Piper Jaffray analyst Peter Keith thinks Best Buy (BBY +2.1%) is in a good position to benefit from the smart products home trend. Key snippets from the firm's note are posted below.
• "While Home Depot and Lowe's will participate in Smart Home product adoption, BBY's smaller revenue base provides greater leverage to the cycle."
• "Additionally, BBY can sell products to strengthen wifi signals throughout homes as consumers add more and more connected devices. Further, BBY recently introduced Best Buy Smart Home by Vivint to provide increased home security and monitoring capabilities. BBY is also remodeling the Smart Home area at the front of the store to expand the product assortment. Finally, the "Connected Home" category has been called out as a key comp driver for each of the last 3 quarters."
• The suite of "smart" home products offered by the company includes locks, cameras, lights, thermostats and nursery items (BBY Q1 earnings call transcript).

Blockchain moves into mainstream finance

• Meet the "Digital Trade Chain Consortium."
• IBM is building a blockchain-based platform for seven big European banks that will simplify finance transactions for small- and medium-sized businesses.
• The project, which aims to be up-and-running by the end of the year, will mark one of the first real-world use cases of blockchain technology for financial institutions.

'Transformers' opens softly for franchise but tops box office

• Transformers: The Last Knight took over for Cars 3 atop the box office charts over the weekend, but with a Transformers franchise-low opening.
• The latest Transformers picture from Paramount (VIA +2.7%, VIAB +2.9%) drew $44.7M to lead comers, including Wonder Woman (TWX +0.1%), which held its No. 2 spot with $24.9M. Cars 3 (DIS +1.2%) lagged that only slightly, with $24.1M.
• Wonder Woman is lifting the DC Comics Universe as it plugs away: Now at $318.1M in domestic grosses, it's hit $653.9M on a worldwide basis in four weeks of release.
• Cars 3 drew just under $100M cumulative domestic in its second week, and added another $11.9M from 26 international markets to bring its global cumulative total to $141.3M.