Existing Home Sales for May
Stock futures rose sharply Tuesday as investors returned from a
three-day weekend feeling a bit more optimistic after last week's
Lifting sentiment were comments from Joe Biden, who said a U.S.
recession wasn't "inevitable." The president's comments were made
Monday following a talk he had with former Treasury Secretary Larry
Summers, who feels there is a recession ahead.
"No, I don't think it is," Biden said about asked whether the
U.S. was headed for a recession. "I was talking to Larry Summers
this morning and there's nothing inevitable about a recession."
Appearances before Congress from Jerome Powell will be closely
watched by Wall Street this week. The Fed has been hiking rates in
an effort to cool inflation that is running at 40-year highs. Some
investors fear the Fed's aggressive policy tightening will lead to
St. Louis Fed President James Bullard played down fears of a
severe recession, saying Monday the U.S. economy should continue to
grow in the coming several months. But he warned that high
inflation posed a serious risk to the U.S. economy.
In premarket trading in New York, gains were spread across many
sectors, with technology shares, travel companies and banks trading
higher. Cruise lines Royal Caribbean , Carnival and Norwegian
Cruise Line each climbed more than 3%, while American Airlines
climbed 3.1%, boosted by expectations for what is expected to be a
busy travel season.
Megacap technology companies climbed before the opening bell,
too, with Amazon.com adding 2.2% and Netflix adding 2.3%. Tesla
Overseas, the pan-continental Stoxx Europe 600 rose 1%, while
trading was mixed in Asia.
The probability of a recession in the U.S. over the next year
has risen to 30% from a previous estimate of 15%, as the Federal
Reserve will likely be forced to respond more aggressively to high
inflation, economists at Goldman Sachs said.
Tighter financial conditions are set to weigh on economic
growth, and the Fed seems to be compelled to act if energy prices
rise further and despite slowing economic activity. A recession
caused by monetary policy tightening is likely to be shallow, but
it could lead to a 2.5 percentage-point increase in the
unemployment rate, the economists said.
"One additional concern this time is that the fiscal and
monetary policy response might be more limited than usual."
Read: Berenberg Expects Economy to Enter Recession in 2023
The prospect of a temporary pause in the federal gasoline tax
could support the dollar, ING said.
Looser fiscal policy combined with monetary policy tightening,
which the Fed is carrying out, is "generally good news" for a
currency, ING said.
"Let's see how this gasoline tax holiday story develops and what
size of fiscal stimulus it represents. This should be another
factor keeping the dollar strong this summer."
The euro could fall below parity against the dollar in coming
years if weak growth and elevated inflation, or stagflation,
becomes the new normal, said Danske Bank.
The global investment environment has been characterised by
secular stagnation--mediocre growth but low inflation--since the
2007-08 financial crisis but it could transition toward years of
stagflation, said Danske analyst Lars Sparreso Lykke Merklin. That
means the dominance of the dollar, especially in EUR/USD, could
last for some time.
"We may see a continued drift lower in EUR/USD over the coming
2-5 years, taking spot towards the 0.80-1.00 area."
Cryptocurrencies continue to recover after the weekend's heavy
losses but they aren't out of the woods, said Swissquote Bank
analyst Ipek Ozkardeskaya.
"The risk of a further selloff cannot be ruled out as the
tighter Fed expectations, the global selloff in risk assets and the
fact that the massive outflows in cryptocurrencies started showing
some cracks in the freshly born crypto industry make the
cryptocurrencies increasingly less appetizing."
Ozkardeskaya added that cryptocurrencies could see a limited
recovery in the near-future.
Oil prices made solid gains in Europe, clawing back some of last
week's losses as investors focus on limited supplies and building
Recent Chinese data showing record oil imports for May suggests
that demand is still strong, said OANDA's Jeffrey Halley. "That
remains so around the world, and the squeeze on refined products
like diesel and gasoline remain as tight as ever."
DNB's Helge Andre Martinsen said last week's slump in prices was
technical in nature and "hence, we consider the recent weakness a
Exxon CEO Darren Woods said a lack of investment in new supply
means that the oil market could remain tight for another three to
five years, according to Bloomberg.
Gold futures eased lower, pressured by weak demand.
"Physical demand is subdued, but we believe the gloomy economic
backdrop should strengthen gold's appeal," said ANZ.
Metal prices edged higher in London but remained at multi-month
lows on inflationary worries and weak demand, with Peak Trading
Research saying that copper's weakness is "a good proxy for weak
global growth expectations."
"We still need sustained consumption over a longer period to
inspire macro confidence" with yo-yoing Covid-19 policies in China
not helping to improve sentiment, said Marex's Asian Metals
TODAY'S TOP HEADLINES
JetBlue Lifts Offer for Spirit Airlines, Commits to Selling
JetBlue Airways Corp. is continuing its quest to buy Spirit
Airlines Inc., increasing its offer and strengthening its
commitment to divest itself of assets to get regulatory approval
for the deal.
JetBlue on Monday increased its offer to $33.50 in cash per
Spirit share. Previously, it had offered $31.50 per share.
Mondelez to Acquire Clif Bar for $2.9 Billion
Mondelez International Inc. said it would acquire Clif Bar &
Co. for at least $2.9 billion, in a deal that adds the brands Clif
Bar, Luna and Clif Kid to Mondelez's food business.
The global food giant said Monday that it would continue to
operate Clif Bar's business out of the company's headquarters in
Emeryville, Calif., and would continue to manufacture products out
of facilities in Indiana and Idaho.
Activists Target Nelson Peltz's Trian Over U.K. Fund
A group of investors is agitating for change at a London-listed
investment vehicle managed by shareholder activist Trian Fund
Management LP, arguing that the company has deviated from its
original purpose when it went public nearly four years ago.
The group, made up of Invesco Ltd., Janus Henderson Investors UK
Ltd., Pelham Capital Ltd. and Global Value Fund, said Monday it is
calling on the company's board to convene an extraordinary general
meeting of its shareholders and swap out current directors.
Canadian National Railway Says Shipments Uninterrupted After
Canadian National Railway Co. said its shipments throughout
Canada and the U.S. haven't been interrupted after its Canadian
signal and communication workers walked off the job Saturday
following months of contract negotiations.
The union is seeking improved benefits and wages. Robert Reilly,
CN's chief operating officer told employees in a letter Monday that
the railway had offered the union, the International Brotherhood of
Electrical Workers, a 10% wage increase and other benefits in a
proposed three-year contract.
Fed's Bullard Says He Expects Economic Expansion to Continue
Federal Reserve Bank of St. Louis President James Bullard said
the economy appears on track for more expansion this year, and that
the central bank must meet market expectations for rate rises as
part of its effort to rein in inflation.
"U.S. labor markets remain robust, and output is expected to
continue to expand through 2022," Mr. Bullard said in materials for
a presentation in Spain. But he added, "Risks remain substantial
and stem from uncertainty around the Russia-Ukraine war and the
possibility of a sharp slowdown in China."
Inflation Outpaces Forecasts in Australia and South Korea
Policy makers in Australia and South Korea warned that inflation
was rising faster than expected, and the head of Australia's
central bank said it would take years for it to return to normal
Reserve Bank of Australia Gov. Philip Lowe on Tuesday said
inflation in Australia is on track to rise to 7% by the end of the
year, higher than the bank's last forecast in May when it expected
inflation to peak at around 6%. Mr. Lowe added that it would take
years before inflation returns to the central bank's target range
RBA Seeks Credible Path Back to Inflation Target
SYDNEY-Australians should prepare for further interest rate
increases as the Reserve Bank of Australia moves to implement what
it describes as a "credible" path for returning inflation to the
central bank's 2.0%-3.0% target range.
RBA Gov. Philip Lowe said in a speech Tuesday that the pace of
coming interest rate increases will be determined by events in the
global economy, the rate at which labor costs rise domestically,
and the strength of consumer spending over coming months.
U.S. Natural-Gas Exporter Completes First Deal With German
Venture Global LNG Inc. has struck the first binding deals by a
U.S. natural-gas exporter to supply natural gas to a German
company, as the European nation turns to America to help replace
supplies from Russia.
On Tuesday, Venture Global said it agreed to sell 1.5 million
metric tons of liquefied natural gas a year in two separate 20-year
deals with German energy company EnBW Energie Baden-Württemberg AG,
starting in 2026. Half of the amount will come from Venture's
Plaquemines LNG facility under construction in Louisiana, while the
other half will come from another proposed facility in that state,
Singapore Unveils S$1.5B Support Package to Help Combat
Singapore unveiled a 1.5 billion Singapore dollars (US$1.08
billion) support package to offer targeted and immediate relief for
lower-income citizens and more vulnerable groups to help combat
inflation. The package will also provide more help for local
The continuing war in Ukraine and the continuing Covid-19
restrictions in parts of the world have disrupted supply chains,
and led to higher energy and food prices, the Ministry of Finance
said in a press release on Tuesday.
Canada Plans Billions in Military Spending to Counter Russia
Threat in Arctic
OTTAWA-Canada on Monday pledged to spend over $30 billion over
the next two decades to help detect and track military threats from
Russia and China in the Arctic.
This would mark one of the biggest outlays by Canada in decades
on bolstering its military capabilities, and would deliver on a
promise to the U.S. to modernize its capabilities to help defend
North America as part of the North American Aerospace Defense
Command, or Norad.
Write to email@example.com TODAY IN CANADA
Economic Indicators (ET):
0830 May New Housing Price Index
0830 Apr Retail Sales
Expected Major Events for Tuesday
09:00/ITA: Apr Balance of Payments
10:00/UK: Jun CBI Industrial Trends Survey
12:30/CAN: May New Housing Price Index
12:30/US: May CFNAI Chicago Fed National Activity Index
12:30/CAN: Apr Retail trade
14:00/US: May Existing Home Sales
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Tuesday
Blade Air Mobility Inc (BLDE) is expected to report for 2Q.
California First Leasing Corp (CFNB) is expected to report for
Clairvest Group Inc (CVG.T) is expected to report for 4Q.
Cognyte Software Ltd (CGNT) is expected to report for 1Q.
Cyanotech Corp (CYAN) is expected to report for 4Q.
FTI Consulting (FCN) is expected to report $1.74 for 4Q.
La-Z-Boy Inc (LZB) is expected to report $0.92 for 4Q.
Progressive Corp (PGR) is expected to report.
Reservoir Media Inc (RSVR) is expected to report for 4Q.
Simply Inc (SIMP) is expected to report for 1Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
American Eagle Outfitters Cut to Neutral From Buy by B. Riley
American Express Raised to Outperform From Neutral by Baird
Azek Raised to Buy From Neutral by B of A Securities
Banner Corp Raised to Overweight From Equal-Weight by Stephens
Banner Corp Raised to Overweight From Equal-Weight by Stephens
Capital One Raised to Outperform From Neutral by Baird
CF Industries Cut to Neutral From Buy by Citigroup
Dow Cut to Neutral From Buy by Citigroup
Dream Finders Homes Cut to Underperform From Neutral by B of A
Fifth Third Bancorp Raised to Outperform From Neutral by
M&T Bank Raised to Outperform From Neutral by Baird
MDC Holdings Cut to Underweight From Equal-Weight by Wells
Meritage Cut to Underweight From Equal-Weight by Wells Fargo
NextEra Energy Partners Raised to Outperform From Sector Perform
by RBC Capital
Olin Corp Cut to Neutral From Buy by Citigroup
Owens Corning Cut to Underperform From Buy by B of A
Prog Holdings Cut to Market Perform From Outperform by Raymond
Roblox Cut to Hold From Buy by Truist Securities
Toll Brothers Cut to Equal-Weight From Overweight by Wells
Urban Outfitters Cut to Neutral From Buy by B. Riley
Utz Brands Raised to Buy From Neutral by Goldman Sachs
Westlake Cut to Neutral From Buy by Citigroup
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
June 21, 2022 05:39 ET (09:39 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.
From Jul 2022 to Aug 2022
From Aug 2021 to Aug 2022