CapMarketComment: Monday April 10 Daily Market Primer

Stocks resilient
French election odds changing…again
US-Russian relations harden

US stocks held up well on Friday following the Syrian missile strike and the disappointing March jobs number, though stocks did bounce around during the day. The dollar, the 10 year yield, and the VIX all rose. The S&P finished last week down just .25%. Global stock markets are starting the week lower, but S&P futures are pointing up this morning.

	LAST	CHANGE	% CHANGE
DJIA	20,656.10	-6.85	-0.03%
Nasdaq	5,877.81	-1.14	-0.02%
S&P 500	2,355.54	-1.95	-0.08%
Russell 2000	1,364.56	0.14	0.01%
Global Dow	2,675.37	-5.12	-0.19%
Stoxx Europe 600	380.88	-0.38	-0.10%
Nikkei 225	18,797.88	133.25	0.71%
UK: FTSE 100	7,340.50	-8.87	-0.12%
CBOE Volatility	13.47	1.08	8.72%
Australia: S&P/ASX 200	5,912.90	50.40	0.86%
China: Shanghai Composite	3,269.39	-17.22	-0.52%
Hong Kong: Hang Seng	24,262.18	-5.12	-0.02%
Europe Dow	1,641.16	-16.26	-0.44%
India: S&P BSE Sensex	29,575.74	-130.87	-0.98%
France: CAC 40	5,107.56	-27.71	-0.54%
Germany: DAX	12,201.51	-23.55	-0.19%
Italy: FTSE MIB	20,186.45	-113.61	-0.56%
Spain: IBEX 35	10,462.90	-66.10	-0.63%
U.S. 3 Month	0.818	0/32
U.S. 2 Year	1.29	-0/32
U.S. 5 Year	1.921	0/32
U.S. 10 Year	2.387	-1/32
U.S. 30 Year	3.007	0/32
Germany 2 Year	-0.823	1/32
Germany 10 Year	0.224	1/32
Crude Oil	52.66	0.42	0.80%
Brent Crude	55.74	0.5	0.91%
Natural Gas	3.27	0.009	0.28%
S&P GSCI	396.07	1.45	0.37%
S&P GSCI	396.07	1.45	0.37%

US-Russian relations hardened over the weekend on Syria, with Secretary of State Rex Tillerson blaming Russia for Syria still having chemical weapons. He will be in Moscow tomorrow. The French election prospects are changing with communist backed Jean-Luc Melenchon and anti-globalist Marine Le Pen gaining popularity. Another Barclay’s CEO is in trouble, this time over the handling of a whistleblower incident last year. It’s a short market week, with markets closed for Good Friday.

Here’s the news:

#FordSchoolYellen

At 4:00 p.m Eastern Time Federal Reserve Chair Janet Yellen will speak at the University of Michigan, with the event including a session where she will take questions from the audience and via Twitter. Speaking in Australia early this morning Fed Vice-Chairman William Dudley downplayed the length of any pause in short-term rate normalization after the Fed starts shrinking its balance sheet. With Friday's jobs data showing unemployment at the lowest level in almost 10 years, the Fed may tighten faster -- or just lower their estimate for the level at which low unemployment becomes inflationary.

Barclays CEO probed

Barclays Plc Chief Executive Officer Jes Staley is being investigated by the U.K. Financial Conduct Authority over his attempts to unmask a whistle-blower last year. The board of the bank said he will be reprimanded and have his pay cut as part of a case which is also under scrutiny by the Department of Financial Services in New York. Shares in the lender had recovered earlier losses to trade broadly unchanged by 5:33 a.m. Also in London, the BBC is reporting that the Bank of England pressed banks to lower their settings for the London interbank offered rate during the 2008 financial crisis.

Reassessing French election

The French presidential election is becoming a four-way race as support for Communist-backed candidate Jean-Luc Melenchon surges. Investors who were banking on centrist candidate Emmanuel Macron winning the vote are now reassessing the situation where a second-round run off between far-right Marine Le Pen and far-left Melenchon is a possibility. The spread between French and German debt widened to the highest since February while a gauge of euro volatility surged.

Markets drop

Overnight, the MSCI Asia Pacific Index fell less than 0.1 percent, while Japan's Topix index closed 0.7 percent higher as the yen weakened. In Europe, the Stoxx 600 Index was 0.2 percent lower at 5:50 a.m. with miners posting the best performance. U.S. futures pointed to a drop at the open.

Iron ore slump

Iron ore dropped into bear-market territory, with Barclays analysts pinning the blame on lower demand from China. For miner BHP Billiton Ltd., such price problems are being overshadowed by investor Elliott Management Corp., which is urging the company to spin off its U.S. oil assets and improve capital returns. Also watching iron developments will be Wilbur Ross’s former investment company WL Ross & Co., which said it will help lead a joint venture to acquire steel assets in China.

A fourth candidate is being overlooked in the French election. The latest Kantar Sofres poll, published late Sunday, shows the far-left candidate Jean-Luc Melenchon at 18% support for the first round, just 1 point behind Republican Francois Fillon, Bloomberg says. The independent Emmanuel Macron and the far-right candidate Marine Le Pen are tied at 24%.
The Bank of England has been caught in the middle of the Libor-fixing scandal. A secret recording from 2008 shows one banker claiming the BOE was pressuring commercial banks to keep Libor rates low, the BBC says.
Oil is at a 1-month high. West Texas Intermediate crude oil trades up 0.6% at $52.56 a barrel, its highest since April 7.
Barclays' CEO is investigated over whistle-blower incident. Barclays' CEO, Jes Staley, is being investigated by the Financial Conduct Authority and the Prudential Regulation Authority for trying to identify a whistle-blower, Reuters reports, citing a Barclays statement.
Some Twitter execs received big paydays as the stock tanked. Twitter's stock tanked 30% in 2016, but that didn't stop the company's chief operating officer Anthony Noto and former COO Adam Bain from raking in $23.77 million and $29.3 billion, respectively.
Mondelez might be looking for a new CEO. The maker of Oreo cookies and Trident gum has hired the recruiter Heidrick & Struggles International to find a potential replacement for CEO Irene Rosenfeld amid pressure from activist investors, Reuters reports, citing The Wall Street Journal.
'The Boss Baby' wins the box office. DreamWorks Animation's latest hit brought in $26.3 million over the weekend, according to BoxOfficePro.com.
Stock markets around the world are mostly lower. France's CAC (-0.7%) trails in Europe after China's Shanghai Composite (-0.5%) lagged in Asia. The S&P 500 is set to open little changed near 2,356.
Fed speak is moderate. St. Louis' James Bullard and Fed Chair Janet Yellen take the mic Monday.

It's a holiday-shortened week. US markets will be closed Friday in observance of Good Friday.

Russian Roulette
Trump administration officials dialed up their criticism of Moscow and blasted Syrian leader Bashar al-Assad on Sunday, heightening tensions in advance of Secretary of State Rex Tillerson’s visit to Russia this week. Mr. Tillerson said he would urge Russian Foreign Minister Sergei Lavrov and other officials to rethink their support for Mr. Assad and to uphold Russia’s commitments to ensure the elimination of Syria’s chemical-weapons stockpile following last week’s attacks on civilians. The U.S.-Russian dispute over Syria is one of several difficult issues Mr. Tillerson is expected to raise on a trip that was seen as a potential first step toward a long-planned rapprochement between the two nations. He also is expected to confront the Russians about alleged election meddling in the U.S. Over the weekend, the Syrian regime stepped up the pace of airstrikes against the opposition over the weekend.

Bond Binge
Investors are buying record volumes of new bonds, signaling that many remain skeptical about the prospects for faster economic growth and are reluctant to move on from a strategy that has worked for years. Companies and governments in emerging markets sold $178.5 billion of dollar-denominated debt in the first three months of the year, the best first quarter on record, while highly rated U.S. companies issued $414.5 billion of debt, a record for any quarter. The booming debt sales reflect a strong investor appetite for higher-yielding bonds as the U.S. economy lumbers toward its ninth year of expansion but remains in slow-growth mode. Investors fled bonds after last year’s presidential election, worried that a rally spanning more than three decades was ending. But that proved to be a blip before they returned forcefully this year. In our quarterly Investing in Funds & ETFs report, we also look at whether the Social Security trust fund should be allowed to invest in stocks.

Fed's $4.3T wind-down might cause volatility

The Federal Reserve's wind-down of $4.3 trillion in mortgage-backed securities and Treasurys likely will reintroduce market volatility, experts say. Several scenarios could unfold, including wider mortgage spreads and reduced use of the Fed's facility for overnight reverse repurchase agreements. Bloomberg (09 Apr.)

Slowdown hits US job creation

Employers hired 98,000 workers in March, less than half the monthly totals for January and February, the Labor Department said. The unemployment rate edged down to 4.5% from 4.7% in February, while overall wages continued to improve. The New York Times (free-article access for SmartBrief readers) (07 Apr.)

· The foreign threat to U.S. Treasuries that dwarfs the Fed's debt hoard.

· How to beat the currency market? Just get on Twitter, academics say.

· Why South Korea's markets are still being rattled by Syria.

· Bigger is better when it comes to European stocks, KKR says.

· What do you do with half a million rigged VWs?

· A masterclass in spotting nonsense on the internet.

Families, Lawmakers Want to Know More About What Becomes of College Students

Democrats’ Conditions for Tax Overhaul Make Bipartisan Deal Unlikely

Hard-line Cleric Ebrahim Raisi Launches Bid for Iranian Presidency

Stockholm Attack Puts Focus on Terrorists From Central Asia

Mondelez Lays Groundwork to Replace Its Chief Executive, Irene Rosenfeld

Now Anyone Can Invest in Startups—if They Have the Stomach for It

How Goldman Sachs Made More Than $1 Billion With Your Credit Score

Chinese Banks Ramp Up Overseas Loans