Thursday March 30 Daily Market Primer

•         Stocks, oil up; yields, $ down
•         Rosengren says 3 hikes, more Fed speak today
•         Seattle dominates billionaires list

US stocks rose slightly yesterday, as oil rallied on positive supply news, and treasury yields and the dollar fell.  Boston Fed President Eric Rosengren said the Fed should hike three more times this year, and the markets took that and the start of the Brexit clock in stride.  Asian and European markets mostly fell and S&P futures are indicating a down day in the US.

	LAST	CHANGE	% CHANGE
DJIA	20,659.32	-42.18	-0.20%
Nasdaq	5,897.55	22.41	0.38%
S&P 500	2,361.13	2.56	0.11%
Russell 2000	1,371.64	4.38	0.32%
Global Dow	2,693.72	-2.13	-0.08%
Stoxx Europe 600	375.70	-1.50	-0.40%
Nikkei 225	19,063.22	-154.26	-0.80%
UK: FTSE 100	7,351.67	-22.05	-0.30%
CBOE Volatility	11.54	0.01	0.09%
Australia: S&P/ASX 200	5,896.20	22.70	0.39%
China: Shanghai Composite	3,210.24	-31.08	-0.96%
Hong Kong: Hang Seng	24,301.09	-90.96	-0.37%
Europe Dow	1,661.03	-16.94	0.39%
India: S&P BSE Sensex	29,647.42	115.99	-1.01%
France: CAC 40	5,066.56	-2.48	-0.05%
Germany: DAX	12,213.64	10.64	0.09%
Italy: FTSE MIB	20,225.54	-51.26	-0.25%
Spain: IBEX 35	10,359.40	-8.20	-0.08%
U.S. 3 Month	0.78	0/32
U.S. 2 Year	1.278	-0/32
U.S. 5 Year	1.924	0/32
U.S. 10 Year	2.38	0/32
U.S. 30 Year	2.982	3/32
Germany 2 Year	-0.743	0/32
Germany 10 Year	0.33	5/32
Crude Oil	49.39	-0.12	-0.24%
Brent Crude	52.13	-0.29	-0.55%
Natural Gas	3.191	-0.04	-1.24%
S&P GSCI	383.54	-1.27	-0.33%
E-mini S&P 500	2353.5	-3.5	-0.15%

Initial jobless claims, which as you come out every Thursday, were 258K, 3K lower than the prior week, but a little higher than expected.  There are three more speeches today from what seem to be increasingly vocal Fed presidents.

Seattle billionaires Bill Gates and Jeff Bezos have the top two slots on the Bloomberg Billionaire’s’ Index, after Amazon’s stock price rise move yesterday put Bezos over Buffet and Spanish retail magnet Amancio Ortega (Inditex S.A.).  Unlike the Forbes list, which is published annually, the Bloomberg index attempts to track billionaire net worth in real time.

Here’s the news:

Fed path

Federal Reserve Bank of Boston President Eric Rosengren said yesterday that the Federal Reserve should hike rates three more times this year, a call that is more hawkish than the 'two-hike' line that has been held by most other regional presidents this week. Market-implied odds currently show a 20 percent chance that rates will end the year above 1.5 percent. Bank of Cleveland President Loretta Mester, Bank of Dallas President Robert Kaplan and New York Fed President William Dudley are all due to speak later today.

Brexit work

After the nine-month hiatus between the vote and the start of negotiations ended yesterday, the work of disentangling the U.K. from the EU begins. Prime Minister Theresa May has already hit something of a roadblock after the attempt, in her letter, to tie security to trade ran into immediate opposition from European leaders. Analysts are not bearish on this leg of Brexit yet, with BlackRock Inc. saying they are long the pound, while Citigroup Inc. sees the FTSE 100 rallying to 8,000 by the middle of next year.

Euro inflation

Consumer-price growth in Spain weakened for the first time in almost a year, coming in at 2.1 percent for March. German regional inflation numbers are being released throughout the morning, with Saxony data showing a drop to 1.8 percent from 2.4 percent. Economists expect the euro-zone flash inflation number due tomorrow to show a drop to 1.8 percent. The European Commission said its index of executive and consumer sentiment for the currency area dipped to 107.9 from 108 in February.

Markets slip

Overnight, the MSCI Asia Pacific Index fell 0.5 percent, while Japan's Topix Index dropped 0.9 percent. In Europe, the Stoxx 600 Index was broadly unchanged at 5:41 a.m. with oil stocks among the best performers following gains in the commodity. U.S. stock market futures slipped 01. percent.

Coming up...

At 8:30 a.m. weekly U.S. jobless claims numbers are out, with expectations for a drop to 247,000 from last week's 261,000. Also at that time, the third reading for fourth-quarter U.S. GDP is released, but expectations are for a slight revision higher, to 2.0 percent. In its decision at 3 p.m. Mexico's central bank is expected to raise rates by 25 basis points.  Jeff Bezos is the second-richest man in the world. Shares of Amazon rallied 2.1% on Wednesday, propelling Bezos' net worth to $75.6 billion, according to the Bloomberg Billionaires Index. Lululemon collapses after earnings. Shares of Lululemon fell by as much as 16% in after-hours trade on Wednesday after the company said it expected sales at stores open for at least one year to decline in the first quarter in the "low-single digits" on a constant dollar basis. JPMorgan is reportedly looking into office space in Ireland. The investment bank is looking into office space in Dublin that can hold up to 1,000 employees as it looks to shift jobs out of London in response to Brexit, Bloomberg says. Legg Mason is cutting jobs. The investment firm is laying off about 30 employees, or 3% of its administrative staff, as it looks to shift toward low-fee investing, Bloomberg reports. None of layoffs will affect investment personnel. Oil is struggling to get back above $50. West Texas Intermediate crude oil is down 0.3% at $49.38 a barrel as it fights for its first close above $50 since March 8. South Africa's finance minister could be on the way out. President Jacob Zuma has vowed to fire his finance minister, Pravin Gordhan, AFP says. The South African rand is stronger by 0.7% at 12.9535 per dollar. Fed speak is heavy. Cleveland's Mester (9:45 a.m. ET), Dallas' Kaplan (11 a.m. ET), San Francisco's Williams (11:15 a.m. ET), and New York's Dudley (4:30 p.m. ET) all take the mic Thursday. Stock markets around the world are lower. China's Shanghai Composite (-1%) lagged in Asia, and Britain's FTSE (-0.2%) trails in Europe. The S&P 500 is set to open down 0.4% near 2,351. Earnings reporting is light. Dell Technologies reports ahead of the opening bell. US economic data flows. GDP-Third Estimate, personal consumption, core PCE, and initial j0bless claims will all be released at 8:30 a.m. ET. The US 10-year yield is little changed at 2.38%. Nafta After All The Trump administration is signaling to Congress that in coming negotiations with Mexico and Canada it will seek mostly modest changes to the North American Free Trade Agreement, a deal President Donald Trump called a “disaster” during the campaign. An administration draft proposal being circulated in Congress by the U.S. trade representative’s office would keep some of the most controversial provisions, including one establishing an arbitration panel that investors in the three nations can use to resolve civil claims, bypassing local courts. The document appears to represent a compromise between trade hawks and moderates. We also report that expectations are fading of a rapid rapprochement with Russia, as the White House pushes off Kremlin proposals for a meeting with President Putin and takes an increasingly skeptical view of reaching a grand bargain with Moscow. Adieu EU British Prime Minister Theresa May on Wednesday began the U.K.’s march out of the EU, starting the clock on negotiations that will have reverberations across Europe. Tim Barrow, Britain’s ambassador to the EU, handed European Council President Donald Tusk a letter formally notifying the bloc that the U.K. will be the first member state ever to leave. In the letter Mrs. May offered what some read as a warning—couched in a diplomatic tone—that the U.K. sees its military and security contributions as a vital card it can play in the coming talks to win better EU market access. But Britain’s hand has weakened since the Brexit vote, writes our Europe File columnist Simon Nixon. We also look at companies and countries scrambling to adjust to the retreat of globalization. Nuclear Option Westinghouse filed for chapter 11 bankruptcy protection Wednesday, setting off a showdown between its Japanese parent, Toshiba, and a major U.S. utility, and threatening to complicate relations between the two countries’ governments. The runaway costs from four half-finished nuclear reactors Westinghouse is building in the southeastern U.S. have threatened the viability of Toshiba, whose precarious finances have attracted the attention of Japan’s government. Now Toshiba faces an angry customer in Tom Fanning, the CEO of Southern Co., primary owner of two of the reactors. He characterized completion of the pair, which the U.S. government has backed with an $8 billion loan guarantee, as an international political issue. Within hours of the bankruptcy filing, Westinghouse was rushing to assure its biggest customer in China that four reactors it is building south of Shanghai won’t be affected. Tusk: EU's focus in Brexit talks is damage control Tusk (Leon Neal/Getty Images) "Damage control" is the primary objective for the EU in upcoming negotiations over the withdrawal of the UK, said European Council President Donald Tusk. The EU will focus on reducing the cost that Brexit is likely to impose on member states, citizens and businesses, he said.  Reuters (29 Mar.),  New Europe (29 Mar.),  Politico Pro (subscription required) (29 Mar.)  Investing via smartphone in China prompts concerns Personal investors in China are leading the world in a massive move toward making investments via smartphone apps, a trend that accounted for $200 billion in transactions in 2015, according to some estimates. The development has sparked concerns over this booming but loosely regulated market, with many investments proving to be fraudulent and the companies offering them illegal. The Wall Street Journal (tiered subscription model) Senate panel to vote next week on SEC nominee Clayton The Senate banking committee has said it will vote next week on whether to approve the appointment of Jay Clayton as head of the Securities and Exchange Commission. Clayton, whom President Donald Trump nominated for the post, will still need to obtain full Senate approval if the April 4 vote goes in his favor. Reuters (29 Mar.),  The Wall Street Journal (tiered subscription model) (29 Mar.)  Survey: Retail investors interested in ESG Half of retail investors want advisers to give more information about environmental, social and governance investing, a survey by State Street's Center for Applied Research found. Among investors knowledgeable about ESG investing, 83% obtained information from research or from friends and family, rather than from advisers. ThinkAdvisor (free registration) (28 Mar.)  Big banks' risk-management IT unsatisfactory, Basel says Almost all of the world's biggest banks have failed to implement technology that lets them properly manage risk, the Basel Committee on Banking Supervision said in a report. Dozens rely on manual risk reports and on IT systems fragmented along business lines and legal entities that are incompatible with one another, the report said. Bank for International Settlements (March 2017),  MLex (subscription required) (28 Mar.)  §  View CFA Institute review of Euromoney’s new blockchain forum    Market Integrity Insights (10 Aug.)  Mexico gets $17 billion windfall on Trump-driven peso drop. Never Mind the Brexit, Here's the Profit Forecast That Sees FTSE 100 at 8000. Top carry trade isn't dead yet as traders stock up in rand bonds. Exchanges in everything in China. Bill Ackman says sorry. This Chinese stock soared 4,500 percent and no one know why. Overtaxed Turks brew up a homemade inflation remedy: Moonshine. Scores of Builders Raise Their Hands to Design Trump Border Wall Republicans Fuel Uncertainty Over Health Law’s Fate South Africa Party Clash Plays Out at Revered Activist’s Funeral EU Calls Trump’s Coal Move a ‘Global Disaster’ as Nations Renew Climate Vows Samsung Has a Lot Riding on the Galaxy S8 Launch Arab Nations Push to Develop Their Own Defense Industries  Former Citizens Bankers Say They Faked Data for Customer-Meeting Program In our current age, where we're staring at screens all the time and everything seems to be moving to the blockchain, it's refreshing to see a good old fashioned ceremony. Yesterday the U.K. officially triggered Article 50 to start their talks on leaving the European Union, and regardless of whether you think it was a good idea or not, at least it was done ceremoniously. A British envoy to the EU entered the European Council Headquarters with a briefcase containing a letter that Theresa May had written the night before. He handed it in public to European Council President Donald Tusk, and they had a stage set up with the flags of the EU and the U.K. Outside of government, capitalism has its own ceremonies. The recent Snap Inc. initial public offering was an example of how great that whole spectacle is. Everyone gathered on the New York Stock Exchange floor, the ringing of the bell, the nervous anticipation of the pop, and then the volatile first trades. In that moment, which is kind of like a corporate Bar Mitzvah, the management of the company transmutates into trusted stewards of strangers' money (at least in theory). No wonder auction IPOs that don't leave as much money on the table so often flop. The physical, public display of going through the ritual or ceremony remains important across various aspects of life.

Source: Bloomberg, BI, WSJ, CFAI Fin. Newsbrief