Another Day of Choppy, Low-Volume Trading

Economic Data

- (RU) Russia Apr Industrial Production Y/Y: -4.5% v -1.0%e
- (ES) Spain Mar Trade Balance: -€0.9B v -€2.0B prior
- (IL) Israel Mar Manufacturing Production: 4.8% v 2.9% prior
- (US) MBA Mortgage Applications w/e May 15th: -1.5% v -3.5% prior
- (ZA) South Africa Mar Retail Sales M/M: -0.5% v +0.5%e; Y/Y: 2.0% v 4.1%e
- (TR) Turkey Central Bank (CBRT) left its Benchmark Repurchase Rate unchanged at 7.50% (as expected)
- (PL) Poland Apr Sold Industrial Output M/M: -8.1% v -4.9%e; Y/Y: 2.3% v 5.5%e; Construction Output Y/Y: 8.5% v 5.8%e
- (PL) Poland Apr PPI M/M: -0.3% v 0.0%e; Y/Y: -2.6% v -2.2%e
- (PL) Poland Apr Retail Sales M/M: -2.1% v 0.3%e; Y/Y: -1.5% v 1.0%e; Real Retail Sales Y/Y: 1.5% v 4.0%e
- (CA) Canada Mar Wholesale Trade Sales M/M: 0.8% v 0.9%e
- (US) DOE Crude: -2.67M v -1.0Me; Gasoline: -2.77M v +0.25Me; Distillate: -0.55M v +0.1Me

Trading is choppy and volumes are lower again today in US markets. The 10-year UST yield is coming in a few basis points as European bonds sell off on a fresh round of Greece jitters. Traders are awaiting the FOMC minutes, out later this afternoon. As of writing, the DJIA is up 0.6%, while both the S&P500 and Nasdaq are unchanged.

Greece has proposed imposing a levy on certain bank transactions to raise revenues to meet fiscal targets. Kathimerini reported Athens had proposed a levy of 0.1-0.2% on bank transactions with the aim of raising €300-600 million annually. The reports raised the specter of full-fledged capital controls. Meanwhile, Greek politicians warned Athens would be unable to make its next debt repayment to the IMF on June 5th without a deal with creditors. After failing to retake 1.5000 last week, EUR/USD has retreated four big figures, to test 1.1070 in trading earlier today.

Six global banks - Bank of America, Citicorp, JPMorgan, Barclays, UBS and Royal Bank of Scotland - agreed to pay $5.8 billion and five of them agreed to plead guilty to charges tied to a FX market rigging investigation. UBS was granted immunity for its cooperation in the investigation. Separately, the Federal Reserve imposed fines of more than $1.6 billion on the five banks for "unsafe and unsound practices."

Southwest warned that it is seeing revenue miles flow down 3% y/y in the second quarter, while the airline also raised its forecast for FY15 capacity growth. When pressed, Southwest said this year would be the peak in its capacity growth, which was related to its big expansion of operations in Texas. Analysts panned the comments, and Buckingham cut LUV to neutral. Shares of LUV tanked 3% yesterday and another 7% this morning, while all other major US airlines are down 4-7%. Shares of the majors are testing their 200-day MAs.

Yahoo is up more than 3% this morning, recovering some of the 8% slide seen just before the close yesterday afternoon. An IRS official speaking at a conference said the agency was considering changes to tax rules concerning spinoffs, leading traders to assume Yahoo might face new issues in its (tax-free) spinoff of its stake in Alibaba to shareholders. Yahoo later confirmed that the IRS has not made any decision on spinoff rules, although it may be looking at changes.

Time Warner Cable is back in the headlines. Overnight, French cable giant Altice was reported to be holding talks to acquire Time Warner, sending shares of TWC up 3.5%. Altice's CEO later said at a conference that there were interesting opportunities for consolidation in the US, expect to be "right in the middle" of US cable consolidation.

Looking Ahead

- 14:00 (US) FOMC Minutes from April 28-29 Meeting
- 21:00 (AU) Australia May Consumer Inflation Expectation: No est v 3.4% prior
- 21:35 (JP) Japan May Preliminary Manufacturing PMI: 50.3e v 49.9 prior
- 21:45 (CN) China HSBC May Preliminary Manufacturing PMI: 49.3e v 49.9 prior