Morning Briefing

Morning Briefing

Morning Briefing Will markets shake off Friday’s disappointing GDP?
As a new week begins Wall Street will be looking for positives to offset the disappointing GDP data released Friday showing a 0.7 per cent contraction in the US economy during the first quarter of the year. So far Monday has brought a lift to the world markets with China’s latest manufacturing PMI showing slight growth and in-line with expectations, although services PMI was down slightly. The data was enough to give Shanghai a boost and the index closed up almost 5 per cent. European markets picked up some of the Asian sentiment but weak manufacturing PMI data for the Eurozone and the continued risk of a Greek loan default have dented confidence since.

US stock futures are flat. Oil is trending lower (Brent $64.72, WTI $59.57 at 6.10am ET). Gold is trending lower.
 
Today’s data
Personal income and outlay at 8.30am ET
PMI manufacturing index at 9.45am ET
ISM manufacturing index at 10am ET
Construction spending at 10am ET
Gallup US consumer spending measure at 1pm ET
Flexshopper, Globalink, and Stemgen are among the companies reporting earnings today.
 
Fed should increase interest rates to curb bubbles says Schiller
Robert Schiller says that speculative bubbles in the housing and stock markets may need to be curbed by an early rise in interest rates. The respected economist told CNBC that if the Fed is to avoid the mistakes of the past, when the housing bubble was able to grow too large, it would need to take a pre-emptive strike. However he noted that with economic demand showing weakness it may not be an option currently.
 
Oil prices weaken as OPEC maintains production levels
Following a larger than expected fall in the number of US oil rigs released in data Friday there was a boost to oil prices however that has changed so far Monday. Figures showing that OPEC continued to produce at record levels during May has led to expectation that it will continue to add to the global supply glut this month. Morgan Stanley told Reuters that prices could be lower during this second half of the year although it does not expect to see the lows of January.
 
Fund managers hit back at former BoC governor Mark Carney
The Financial Stability Board is considering designating some of the biggest US fund managers as ‘too big to fail’ which would come with a raft of new requirements for the firms.  The global regulator chaired by former Bank of Canada governor Mark Carney, now in charge at the Bank of England, is considering imposing the rules and extra scrutiny on firms such as Fidelity and BlackRock. The asset managers though say that they do not take deposits or guarantee returns and should therefore not be deemed ‘systemically important’.