Please do not adjust your screens: that off-green color you are seeing, that is not a malfunction. Yes, for the first time in six days, global stocks are lower with the MSCI all-country world index dipping from a 6 month high dragged down by lower European and Japanese equity markets, as the USDJPY dropped to a fresh five-week low while Treasury yields continued to hit new record lows because, as Bloombergexplains, “traders assessed the outlook for the global economy.” It is unclear if that means that the outlook is suddenly much brighter. After all, it was last Friday’s recessionary payrolls that sent the S&P soaring to just shy of all time highs, so in this bizarro, centrally-planned “market”, we need more clarification.

The global stocks gauge fell 0.4%, led by telecom and materials shares. The Stoxx Europe 600 Index dropped 1 percent, heading for its biggest slide since May 23. S&P 500 futures expiring this month retreated 0.4%. Markets in China and Hong Kong were closed today,

It also appears the algos have gotten tired of first creating then chasing oil momentum because after hitting almost record overbought levels, oil finally fell and the Bloomberg Commodity Index erased earlier gains, putting it on track for the first decline in seven days after earlier advancing as much as 0.4%. WTI dipped back under $51 following yesterday’s late day algo-driven buying scramble, down 0.9% to $50.78, while Brent dropped 0.3% to $52.34 a barrel.

However, while “risk” assets such as stocks and commodities dipped, bonds rose, with U.K. gilt and German Bunds yields declining to a record low and a Japan 5 year auction pricing at a fresh average record low yield overnight. New Zealand’s currency jumped after the central bank refrained from cutting borrowing costs.

Some more humor: this is what Bloomberg has to say: “Global economic optimism has cooled because of weak U.S. jobs data, a lower growth forecast from the World Bank and the U.K.’s looming referendum on quitting the European Union. Central banks are still pursuing accommodative policies, with the European Central Bank buying corporate bonds for a second day and the Bank of Korea unexpectedly cutting rates.” Oh so it took traders 5 days to spot the “weak US jobs data” and 2 days to finally read the article on the growth forecast cut? Golf clap.

And now some even more fantastic quotes: “Growth still doesn’t look brilliant,” said Peter Dixon, global equities economist at Commerzbank AG in London. “The kind of rally we’ve had in the past few days across most assets doesn’t tend to last very long.” Oh but it can Peter – after all, all it takes is a bunch of lunatic central bankers who are left with nothing to lose and intent on blowing the biggest bubble in history, to keep doing what they do so well (for the full slamdown, read DB’s response). Here, James gets it: “Monetary policy remains accommodative globally and expectations for a rate hike in the U.S. have been pushed back,” James Woods, an analyst at Rivkin Securities in Sydney, said by phone. “That should be supportive of equities.” That’s right James: bad news for millions of US workers – for the 8th year in a row – is great news!

The dollar hit a five-week low against the yen, hurt by falling Treasury yields amid waning expectations that the Federal Reserve will lift interest rates anytime soon. Those expectations saw German 10-year Bund yields hit a low of 0.034 percent, not far from negative territory in which $10 trillions worth of bonds globally already trade at.

Market Snapshot

• S&P 500 futures down 0.4% to 2101
• Stoxx 600 down 0.8% to 342
• FTSE 100 down 0.8% to 6251
• DAX down 1.2% to 10099
• S&P GSCI Index down 0.2% to 388.9
• MSCI Asia Pacific down 0.6% to 132
• Nikkei 225 down 1% to 16668
• S&P/ASX 200 down 0.1% to 5362
• US 10-yr yield down 3bps to 1.68%
• German 10Yr yield down less than 1bp to 0.05%
• Italian 10Yr yield down 1bp to 1.38%
• Spanish 10Yr yield down 2bps to 1.41%
• Dollar Index up 0.21% to 93.79
• WTI Crude futures down 0.4% to $51.01
• Brent Futures down 0.7% to $52.14
• Gold spot down 0.3% to $1,259
• Silver spot up less than 0.1% to $17.06

Top Global News

• Soros Said to Return to Hands-On Trading, Sees Market Shifts: Has been spending more time in the office directing trades and recently oversaw a series of big, bearish investments
• China’s Factory-Gate Deflation Eases in Capacity-Cut Drive: May producer price index fell 2.8%, least since late 2014
• UBS to Cut Managers at U.S. Wealth Unit, Recruit Fewer Advisers: Headcount reduction will mostly hit middle and senior managers, including some at main offices in New Jersey, New York
• Twitter Confident Systems Not Breached By Hackers: Techcrunch: Co. confident that “our systems have not been breached,” TechCrunch says citing a spokesperson responding to reports that >32m Twitter login credentials have been leaked; Ross Hoffman to Run Twitter Media Team: Recode
• Blackstone Said to Have $200 Million Profit in Hawaii Deal: Hyatt Waikiki Beach resort to sell to Mirae for $780m
• DOJ Asks Supreme Court to Overturn Apple Patent Ruling: Reuters: DOJ asked the Supreme Court to send Apple, Samsung’s smartphone patent case to trial court for more litigation
• Ralph Lauren Said to Hire Coach’s Jane Nielsen as CFO: WSJ; Coach CFO Nielsen to Leave Co. to Pursue Another Opportunity
• Avaya Said to Meet Creditors as It Wrangles $6 Billion Debt Load: Discussions will put co. face-to-face with a group of lenders including Blackstone Group and Apollo Global Management
• Samsung May Supply Batteries to Tesla Energy, CEO Musk Says: Unit provides electricity storage for homes, businesses
• Solar Makes Up Most of New U.S. Power Capacity for First Time: Solar accounted for 64% of new capacity, wind added 33%
• Puerto Rico Bill Faces House Vote Despite Uncertain GOP Support: Republicans will likely need robust support from Democrats to pass the measure
• Caesars Judge Says He May Not Be Able to Halt Creditor Suits: Casino giant asking for freeze on cases in Delaware, New York

Asia equity markets shrugged off the positive US close and traded cautious with a lack of demand amid several market closures in the region. Nikkei 225 (-1.0%) underperformed on a firmer JPY and weaker than expected Machine Orders in which the M/M figure contracted the most since May 2014. ASX 200 (-0.2%) also suffered from broad-based weakness, although commodity strength stemmed losses after oil prices extended its gains following the DoE inventory drawdown. Elsewhere, the KOSPI (-0.1%) was initially supported following an unexpected 25bps rate cut by the BoK but then conformed to the downbeat sentiment, while mainland Chinese and Hong Kong markets were closed for holiday. 10yr JGBs traded marginally higher amid the risk-averse tone, while the 5yr auction saw the highest b/c since 2014, a narrower tail in price and the lowest accepted price surpassing estimates.

Top Asian News

• Korea Unexpectedly Cuts Rate to Support Debt Restructuring: Only one of 18 economists in survey correctly picked move
• Korea Bond Yields Drop to Records as BOK Signals Worst Not Over: BOK Governor Lee Ju Yeol says S. Korea seems to be getting closer to lower rate limit
• RBNZ Keeps Key Rate at 2.25% as Inflation, Housing Pick Up: Governor Wheeler says further easing may still be needed
• Tencent Said to Weigh Supercell Deal at $9 Billion Valuation: SoftBank is selling assets to strengthen balance sheet

European shares fell for a second straight day, with a drop in Vodafone weighing on the telecom sector and Essentra hit by a profit warning.  Risk-off tone dictates the state of play in Europe with the Euro Stoxx (-1.1%) seeing heavy losses this morning amid the softness across the commodity complex with WTI crude edging towards USD 51.00bbl . Additionally, the DAX has been one of the underperformers led by utility giant EON (-6.8%) as they go Ex Div. As such, this has underpinned the gains in Bunds, while the 30yr outperforms on the back of duration buying with the yield curve continuing to bull flatten amid the front end lagging with oil prices hovering near 8-monh highs.

Top European News

• ECB Said to Buy Volkswagen Securities in Second Day of Purchases: Purchases included securities issued by Volkswagen, Continental and Orange, according to a person familiar
• Draghi Says Economic Cost of Delaying Reforms Too High to Ignore: Called on politicians to help the ECB’s bid to restore economic health to the region by accelerating reforms, comments in speech at Brussels economic forum
• U.K. House Prices Predicted to Drop for First Time Since 2012: RICS survey shows London home prices already falling in May
• Dong Valued at $15 Billion Joins List of European IPO Giants: Share sale raises gross proceeds of DKK17.1b
• Aspen to Buy Anaesthetics From AstraZeneca for $520 Million: Will also pay AstraZeneca royalties and as much as $250m in additional sales-based installments over the next two years
• Glencore Sells Agri Stake to Canadian Fund for $625 Million: British Columbia Investment Management Corp buys 9.99% stake
• Telefonica Said to Seek Sale of Argentine TV Broadcaster Telefe: Disposing of non-core assets under new chairman

In FX, the Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, gained 0.3 percent, snapping a two-day drop. The U.S currency strengthened 0.4 percent to $1.1347 per euro and was 0.5 percent weaker against the yen. The kiwi soared as much as 2 percent to 71.48 U.S. cents, its strongest level in about a year, after the Reserve Bank of New Zealand refrained from cutting rates and said it expects inflation to accelerate.  Risk sentiment has been driving FX this morning, with USD/JPY driven lower again to take out the Monday lows at 106.35, but limited follow through below here as we hold comfortably off 106.00 for now Nevertheless, AUD, CAD and GBP have suffered a little in line with this, while NZD has had some of the shine taken off the post RBNZ rally. The EUR/USD slipped back into the mid 1.1300’s. In the GBP, more data proving the UK economy is holding up despite the uncertainty over the Brexit vote in 2 weeks, as the trade deficit narrowed on the month, whilst also exceeding expectations. GBP lower nevertheless, with Cable now in the mid 1.4400’s. Losses proving hard fought though, but this is largely down to lower participation. Another day of slim pickings for US data, with only weekly claims and wholesale inventories to look to, but Wall Street now key for the JPY pairs after the price action see this morning.

In Commodities, WTI and Brent have traded in negative territory in the EU session and this comes in tandem with broad based weakness across the commodities sector with Gold USD 1252.10/oz down 0.37% in EU trade. U.S. crude oil fell 0.9 percent to $50.78 a barrel after hitting a 11-month high of $51.67 a barrel. Brent crude rose as high as $52.86 a barrel, highest since October 2015, but was last trading lower at $52.23 a barrel. Spot gold dropped after hitting a three-week high of $1,266.01 an ounce, while aluminium fell 1 percent after climbing to a one-month high of $1,614.50 a tonne. Copper also fell. “I think gold is going to stay range bound until we see more confirmation. We need more confirmation from labour market data in the U.S. that we get in a month from now. The market wants to see at least two data points,” said Dominic Schnider of UBS Wealth Management in Hong Kong. Silver is also down 0.75%. This morning base metals have been quiet as Chinese markets are closed but copper has edged higher rising 0.7% and an average gain across the board of 1.2%, today’s volumes have been light with 2,597 lots traded.

Looking at today’s calendar, it’ll be interesting to see how last week’s initial jobless claims data comes in (270k expected) in light of the weak payrolls report. Later on this afternoon we’ve also got the April wholesale trade sales and inventories report. Away from the data we’ve got the ECB’s Draghi due to speak at 8am BST this morning where he opens the Brussels Economic Forum so it’ll be worth seeing if anything of interest comes out of that.

Bulletin Headline Summary from RanSquawk and Bloomberg

• European equities enter the North American crossover lower across the board with risk-averse sentiment gripping the region
• USD/JPY has been driven lower again to take out the Monday lows at 106.35, but limited follow through below here as we hold comfortably off 106.00 for now
• Looking ahead, highlights include US Initial Jobless Claims and Wholesale Inventories

• Treasuries edge higher in overnight trading, global equities and commodities sell off; auctions conclude with $12b 30Y bonds, WI 2.49%, last sold at 2.615% in May, extended a pattern of tails by 30Y refundings.
• South Korea’s central bank unexpectedly cut the benchmark interest rate to a new record low Thursday, citing growing risks to the economy including slowing global trade and the government’s push to restructure indebted companies
• The European Central Bank bought corporate bonds in euros for a second day as it expanded its stimulus program for the region’s flagging economy; The bank’s entry into the corporate bond market included buying bonds with junk ratings and saw purchases of notes from troubled German carmaker Volkswagen AG
• Billionaire investor George Soros has become more involved in trading at his family office, concerned about the outlook for the global economy and the risk that large market shifts may be at hand, according to a person familiar with the matter
• “Everything is being driven by high liquidity that ultimately is being provided by central banks,” Simon Quijano-Evans, chief emerging-market strategist at Commerzbank AG, Germany’s second-largest lender, said in London
• UBS Group AG, which said last month it’s looking for ways to cut costs, is eliminating some management positions in its U.S. wealth unit and reducing the number of financial advisers recruited from competitors
• U.K. exports surged 9.1% in April to their highest level in almost three years as Britain shipped more to countries both inside and outside the European Union

DB’s Jim Reid concludes the overnight wrap

The post-payrolls and post-Yellen slow grind higher continues for US equity markets with the S&P 500 continuing to edge to within touching distance of that record high. Yesterday it closed up +0.33% and it means we’ve not had a swing of greater than 0.50% either way for the index since May 25th. A fourth consecutive weaker day for the US Dollar seemed to be the trigger with little other newsflow for markets to really feed off. European equity markets had actually edged lower (Stoxx 600 -0.49%) earlier on following a big two-day rally as peripheral banks came under pressure again while those moves in the Bund market were also closely watched. 10y Bund yields actually touched an intraday low of 0.032% only to give up those gains into the close to finish more or less unchanged around 0.053%.

Meanwhile, much of the chatter yesterday was on how much of an impact the start of the ECB corporate sector purchasing program, which kicked off yesterday, would have on markets. Certainly the price action in the European CDS indices was more one of consolidation that anything else with the iTraxx Main and Crossover indices little changed on the day. All of the suggestion was that they were very much active through the secondary market as we’d expected.

Flipping over to Asia now where the latest inflation numbers have been released in China. Headline CPI has printed at -0.5% mom in May, the third straight monthly decline which has had the effect of lowering the YoY rate by three-tenths to +2.0% (vs. +2.2% expected). Another slowdown in food prices appears to have been the main driver there. On the other hand, there was a notable increase in the latest PPI print. Prices rose +0.5% mom last month which has resulted in the YoY rate increasing to -2.8% (vs. -3.2% expected) from -3.4%. Producer prices have actually edged higher for three consecutive months now.

With markets in China and Hong Kong closed today, we’ll have to wait to see what the impact there is although it’s largely a sea of red for markets elsewhere in Asia. The Nikkei (-0.91%), Kospi (-0.22%) and ASX (-0.59%) are all lower while there’s also been some action in the FX market. The Kiwi Dollar has rallied nearly 2% after the RBNZ held rates on hold again with some concern about financial stability risks stemming from the housing market being attributed. Meanwhile the Bank of Korea surprisingly cut its benchmark rate this morning by 25bps to 1.25% after expectations had been that they would stay put. The Won immediately weakened 0.7% post the move but is back to unchanged now.

Elsewhere while both US equities and credit were a smidgen stronger yesterday, Gold actually rallied a robust +1.53% while Treasuries were also well bid with the benchmark 10y yield trading down a couple of basis points to 1.703%. Oil continued its surge too with WTI (+1.73%) rallying hard for the third consecutive day to settle up above $51/bbl now. The latest EIA data showing a decline in US crude stockpiles helped, as did the concerning reports of more wildfires in Canada. Indeed two Canadian oil producers have been forced to halt production only just as output had recommenced and workers have again been evacuated in the Alberta region.

With regards to that JOLTS job openings report yesterday in the US, openings were reported as increasing to 5.79m in April (vs. 5.68m expected) from a downwardly revised 5.67m in March. That put the job opening rate at 3.9% from 3.8%, however the data also showed that the hiring rate dipped two tenths to 3.5% which is the lowest level since August 2014. Given this is one of Yellen’s most favoured series the recent spike lower is significant. Our US economists highlighted yesterday that in their view corporate profit margins may be one source of the weakness in hiring. Indeed they note that corporate profits have been down year-over-year for the last three quarters and they suggest that corporate profit margins have likely peaked in the current business cycle.

Away from this, the only other data of note was out of the UK with a surprisingly bumper industrial production report for April (+2.0% mom vs. 0.0% expected). That was the actually the largest monthly increase since 2012 and has had the effect of lifting the YoY rate to +1.6% from -0.2% in the month prior. Manufacturing production was also up a robust +2.3% mom during the month (vs. -0.1% expected).

Submitted by Michael Snyder via The Economic Collapse blog,

Widespread reports continue to pour in from all over the nation of “glitches” with the food stamp system.  It is eight days into the month and large numbers of people still have not received their benefits, and in other instances it is being reported that EBT cards are simply not working correctly.  So what in the world is going on here?  On downdetector.com there are scores of reports of problems with the EBT system from people all over the nation.  Could this simply be another example of government incompetence, or is something else at work here?

I had heard some rumblings about this over the past few days, but I had not really taken them seriously until I read an article from highly respected author Ray Gano…

It interesting over the weekend I got several emails telling me about cell phones being down, internet being down, and get this, EBT cards not working and having no money associated to them.

 

This is a concern because when the US Government has payment failures, then there is possibly something happening that the press is not telling you about.

 

Now, we know that computers have problems and that states, counties and cities run on computers. But what is interesting is that since the beginning of 2016, The US government has had over 2,700 reports on downdetector.com showing that they have been late loading the money onto these EBT cards.

 

Folks, we are now going on 8 days where the Government has not paid the EBT payments so that people have food.

So I went over to downdetector.com myself, and I was stunned to see that reports of EBT outages continue to pour in every hour.  Here are just a few of the recent comments that have been left by people that are still waiting for their food stamp benefits for June…

Heidi Lynn: I was supposed to get mine on the 5th and still nothing. Even ebt NJ site says $0 as well as my EBT card says $0. I’m on disability. I forgot to add I tried calling NJ Board of Services and was on hold for over an hour. I had to hang up to take dog out, etc. Does anyone know what’s going on yet?

 

Ann Wilson: Now that it’s been a whole week since I was supposed to get my June benefits, and haven’t, I’m planning on going to my Illinois FCRC office. I hope they will be able to fix this difficulty.

 

Jenn Johnson: I always get mine on time. I was due to get mine today June 7th and nothing. I am from kentucky. Why is there nothing on the news about this?

 

Jarrett Manhart: Havnt received mine either. They are never late. And my fone is off so i cant call em. Im on Wi-Fi down the street from me.

 

Sunny Nicole Jones: I haven’t gotten mine either! I’m glad it’s not just me though because then I would really be worried!

But when I went to confirm these widespread outages with articles from the mainstream media, I came up empty.

Either the mainstream media does not know what is going on yet, or it is being ignored.

If you have not gotten your EBT benefits for this month yet or you know someone that is in that position, please feel free to let me know.  I want to get to the bottom of this.  There are people all over the nation that are reporting problems with the food stamp system, but nobody seems to know exactly how widespread this issue is just yet.

Today there are well over 40 million Americans on food stamps, and a lot of them would start rioting tomorrow if you told them that their food stamp cards were being turned off permanently.

EBT cards are the modern equivalent of the bread lines of the 1930s.  Instead of having to wait in long lines for food, the government just zaps money on to EBT cards each month, and those that are hurting are able to get something to eat.

But down in Venezuela, extremely long food lines are a daily reality for much of the population right now.  The following comes from the Daily Mail…

Venezuela was once South America’s richest nation, but a fall in oil prices combined with other economic problems has led to desperate citizens taking drastic measures.

 

Nearly half of Venezuelans say they can no longer afford to eat three meals a day, according to a recent poll by the local firm Venebarometro. The poll surveyed 1,200 adults at their homes during the first week of April and had a margin of error of plus or minus of about two percentage points

 

Those who can, cross the border into Colombia to buy, bring back and then use or sell food and other basic commodities.

Could you imagine not being able to provide three meals a day for your family any longer?

Close to half the population of Venezuela is already in that position, and the economic collapse down there grows worse with each passing day.

Most Americans just assume that nothing like that could ever happen here.

Most Americans just assume that the government will always have plenty of money to give out.

As I mentioned above, there are well over 40 million Americans that receive EBT benefits.

However, when you factor in all government programs, more than 100 million Americans get some form of money or benefits from the federal government each month.

So what would happen someday if suddenly the spigot was turned off?

What would those 100 million people do?

How would they survive?

Hopefully this current EBT outage is just a temporary technical glitch, and hopefully the government will get it fixed in short order.

But someday there will be a major crisis that will cause food stamp benefits to be cut off either permanently or for an extended period of time.

When that day arrives, what will that do to our communities?

This is coming soon…

As SHTFPlan.com’s Mac Slavo notes, this isn’t the first such incident and it certainly won’t be the last as an evermore impoverished populace becomes increasingly dependent on government handouts.

In 2013 we reported that the EBT card acceptance system in 16 states crashed, leaving thousands with no way to put food on their dinner tables. As further evidence of what may happen following a widespread outage wherein those on government assistance have no way of buying food and other necessities, considerwhat this woman had to say:

I go to the register and they ask me “how you going to pay.”

 

I said with food stamps.

 

“Oh, we’re shut down, you can’t pay with food stamps.”

 

I got kids to feed. You know?

 

And because the government’s down I can’t feed my family?

 

…

 

What’s going on with America? Now they trying to starve us to death?

 

…This is crazy

 

…I got six kids I have to feed.

 

…

 

I’m just trying to figure out how to get something to eat.