North American Morning Briefing: Stock Futures Tick Higher Ahead of Retail Sales Data

MARKET WRAPS

Watch For:

Oracle 4Q Results; CVS Health investor day; U.S. PPI for May; U.S. Retail Sales for May; U.S. Industrial Production for May; Canada Housing Starts for May.

Opening Call:

Stock futures edged higher Tuesday ahead of fresh data that will indicate how much Americans spent in stores, at restaurants and online last month.

Futures tied to the S&P 500 ticked up 0.1%, indicating that the broad benchmark index is on track to notch its thirtieth record close of the year. Nasdaq-100 futures gained 0.2%, pointing to gains in technology stocks after the opening bell.

Investors expect that stocks will climb through the rest of the year due to easy monetary policies. Many people are also betting that higher inflation, due to the easing of economic restrictions and supply-chain bottlenecks, will be temporary. Signs that inflation will be elevated for a prolonged period or that the Federal Reserve may retrace its support could shake that confidence, money managers said.

"Investors seem a bit more convinced the Fed will do what it says it is going to do and stay put," said Edward Smith, head of asset allocation research at U.K. investment firm Rathbone Investment Management. "That should mean we have relatively easy financial conditions and that should be good for equity markets."

Data on Americans' retail spending last month are due at 8:30 a.m. ET. Economists surveyed by The Wall Street Journal expect retail sales to have fallen as auto sales declined, fiscal support for consumers faded and Americans shifted their spending toward services and away from goods.

The market could see slightly weaker spending data as yet another sign that Americans aren't worried about rising consumer prices, said Sebastien Galy, a macro strategist at Nordea Asset Management. "Households don't need to purchase as quickly because they don't fear inflation," he added.

Forex:

Strong U.S. retail sales, industrial production and producer prices data later Tuesday could lift the dollar ahead of Wednesday's Federal Reserve decision, Commerzbank said.

Signs of rising inflation have been offset by recent weak jobs data, but signs of strong demand in Tuesday's figures could increase speculation that the Fed may scale back monetary easing early, said Esther Reichelt, currency strategist at the bank.

This could mean the Fed might focus more on inflation risks on Wednesday "and might signal an imminent reduction in asset purchases," she said.

However, the Fed's decision remains uncertain and dollar traders won't want to take "too clear a position" before then, she added. The DXY dollar index was down 0.1% at 90.4120.

The EU and U.S. have reportedly agreed to resolve a long-running dispute over aircraft subsidies to Airbus and Boeing but that won't provide a significant boost to the euro, ING said.

"Signs of further unwinding of the Trump-era protectionist agenda by President Biden should be welcomed by European sentiment, although there is likely very little priced in when it comes to EU-U.S. trade-related downside risk to the EUR, so the currency impact should not be material today," ING analysts said.

A formal announcement on the agreement for aircraft subsidies, which would lift the threat of punitive tariffs on the EU and U.S., is expected later Tuesday, according to media reports. EUR/USD was steady at 1.2123.

Bonds:

In bond markets, the yield on the benchmark 10-year Treasury note edged down to 1.487%, from 1.499% on Monday.

Commodities:

Oil prices rose after Brent notched new multiyear highs on Monday. Recent gains have come despite the decreasing likelihood that the U.S. will rejoin the Iranian nuclear deal before the Iranian presidential elections later this week. If talks do drag on into the second half of the year, expected Iranian supply is at risk, ING's Warren Patterson said.

While one might assume this would be bullish for prices, "it would [also] mean that other OPEC+ members would have more room to increase output later this year," he added.

Traders are also observing low investment in production. Angola's output is below its OPEC+ quota and has been declining for years, he said.

Copper prices fell to their lowest level since April amid growing jitters about possible Chinese measures to tamp down rising commodity prices.

Three-month copper on the LME fell 3.3% to $9,624.50 a metric ton, its biggest one-day decline since early March.

Chinese markets reopen Tuesday following a holiday, giving traders there the first opportunity of the week to respond to continuing rumors that China was planning to release state reserves of copper, aluminum and zinc as part of a broader push to crackdown on speculation in the metals market and protect domestic consumers of metals from high prices amid inflation concerns.

TODAY'S TOP HEADLINES

U.S. and EU Near Deal on Boeing-Airbus Trade Fight

The U.S. and the European Union are near to a deal that would suspend their trade dispute over government subsidies to Boeing Co. and Airbus SE, in a sign of easing trade tensions, a top EU official said.

European Commission President Ursula von der Leyen said Tuesday she is "very positive and convinced" a deal would be announced later in the day. "It is in our common interest to solve it," she said of the dispute.

Read More ->

AstraZeneca: AZD7442 Trial for Prevention of Symptomatic Covid-19 Didn't Meet Primary Goal

AstraZeneca PLC said Tuesday that a Phase 3 trial to assess the safety and efficacy of a long-acting antibody combination called AZD7442 for the prevention of symptomatic Covid-19 after exposure didn't meet the primary goal.

The Cambridge, U.K.-based pharmaceutical company said AZD7442 reduced the risk of developing symptomatic Covid-19 in unvaccinated adults with confirmed exposure to a person with a case of the SARS-CoV-2 virus within the past eight days by 33% compared with placebo, which wasn't statistically significant.

Read More ->

Lordstown Motors Brings in Interim CFO Known for Skill in Turning Around Companies

Lordstown Motors Corp. hired an outside advisory firm to handle its finances, raising questions about what is ahead for the electric truck startup that last week warned investors it lacks sufficient cash.

The Lordstown, Ohio-based company on Monday disclosed it engaged AP Services LLC, a subsidiary of AlixPartners LLP, as part of an executive reshuffling after a board report found inaccuracies in some of the firm's disclosures about truck preorders.

Read More ->

Bitcoin on the Balance Sheet Is an Accounting Headache for Tesla, Others

Elon Musk reignited his curious Twitter relationship with bitcoin on Sunday, giving the cryptocurrency a small boost.

More pertinent to Tesla Inc. shareholders, however, is the hit to the company's bottom line this quarter from Mr. Musk's sometimes hot, sometimes cool attitude toward bitcoin.

Read More ->

Vaccines Offer Significant Protection Against Covid-19 Delta Variant, U.K. Analysis Shows

Public health officials in the U.K. say they are increasingly confident that vaccines offer significant protection against the Delta variant of coronavirus, a hopeful sign as the highly transmissible strain spreads across the world.

Separate studies from researchers in England and Scotland published Monday found that while protection against infection was somewhat diminished against Delta compared with more established variants, two doses of vaccine offered considerable protection against severe illness and hospitalization.

Read More ->

Supply Chain Disruptions, Strong Demand Likely Pushed Up Producer Prices in May

The prices that businesses are charging their customers likely rose again last month, adding to inflation pressures bubbling through the economy.

Economists surveyed by The Wall Street Journal expect the Labor Department to report Tuesday that its so-called producer-price index rose 0.5% in May from the prior month, down slightly from the 0.6% increase in April from March. The average rise between 2017 and 2019 was 0.2%.

Read More ->

Auto-Supply Pinch Likely Held Back Retail Spending in May

Shoppers likely pulled back on auto purchases last month while boosting spending on other items and at restaurants, as more people got vaccinated against Covid-19 and business restrictions were further eased.

Economists estimate that Tuesday's Commerce Department report will show that overall retail sales declined 0.6% in May. They expect that sales excluding autos rose a solid 0.5% from a month earlier.

Read More ->

Lumber Prices Are Falling Fast, Turning Hoarders Into Sellers

Lumber prices are falling back to earth.

Futures for July delivery ended Monday at $996.20 per thousand board feet, down 42% from the record of $1,711.20 reached in early May. Futures have declined 14 of the past 15 trading days, the last two by the most allowed by exchange rules.

Read More ->

RBA Lays Out Key Considerations for Potential Policy Shakeup at July Meeting

Members of the Reserve Bank of Australia's rate-setting board discussed key considerations that could drive significant changes to the central bank's platform of stimulus measures at its next meeting on July 6.

In minutes of the RBA's June 1 policy meeting, the central bank said a return to full employment was a priority for monetary policy as this would assist in achieving its target of bringing inflation to within a 2%-3% range.

Read More ->

Bitcoin Rises Above $40,000 on Elon Musk Tweet, MicroStrategy Plans

Bitcoin reached its highest level in more than two weeks Monday, buoyed by MicroStrategy Inc. completing its $500 million offering of junk bonds to buy bitcoin and by fresh comments from Tesla Inc. Chief Executive Elon Musk.

The world's largest cryptocurrency by market value traded as high as $41,046.77-a nearly 11% rise from its Friday level at 5 p.m. ET.

Read More ->

Back-to-Back Rebukes of China Mark a Turning Point

Major democracies rallied together this week to issue extraordinary back-to-back rebukes of Beijing, marking a shift toward collective action and pushing back against President Xi Jinping's strategies to position China as a global leader.

Over two consecutive days, Group of Seven leaders and North Atlantic Treaty Organization nations jointly criticized core Chinese policy under Mr. Xi as damaging to military stability, human rights, international trade and global health. NATO members vowed Monday to counter "systemic challenges to the rules-based international order" posed by China.

Read More ->

SEC Considers Changes to Trump-Era Rules

The U.S. Securities and Exchange Commission said it would consider changes to regulations passed under the Trump administration, a move that drew criticism from its Republican commissioners.

Among the regulations that the SEC plans to revisit are amendments to its whistleblower award program and a rule requiring oil, gas and mining companies to disclose payments made to foreign governments. Both rules were passed late last year over opposition by the agency's Democrats.

Read More ->

Americans Are Keeping Their Cars Longer, as Vehicle Age Hits 12 Years

The average age of vehicles on U.S. roadways rose to a record 12.1 years last year, as lofty prices and improved quality prompt owners to hold on to their cars longer.

It was the first time the average vehicle age rose above 12 years, according to data released Monday by research firm IHS Markit. While the average vehicle age has risen steadily over the last 15 years, the trend accelerated during the coronavirus pandemic partly because of a drop in new-car sales, IHS said.

Read More ->

NY Fed May Consumer Survey Finds Public Bracing for Large Inflation Gains

Americans are bracing for a wave of higher inflation over the next year, amid projections of big increases in home prices, rent, food, gasoline and medical costs, the May New York Fed Survey of Consumer Expectations reported Monday.

One year from now, the public expects inflation to hit 4%, a series high for the New York Fed report, from the projected 3.4% increase reported in April. Three years from now, survey respondents said they expected to see inflation at 3.6%, the second highest reading for the survey, up from April's 3.1%.

Read More ->

Israel's Ultra-Orthodox Parties, Shorn of Influence, Vow to Unseat Prime Minister Naftali Bennett

TEL AVIV-For the past four decades, Israel's ultra-Orthodox parties have spent more time in government than out. Now they join their ally Benjamin Netanyahu in opposition, and have already begun taking aim at new Prime Minister Naftali Bennett's coalition as they try to preserve some of the hard-won privileges they enjoy in Israeli society.

Many rabbis and religious lawmakers regard Mr. Bennett's coalition as a threat to their way of life. His government, sworn in Sunday, is a broad alliance of right-wing, leftist and centrist parties, even an independent Arab Islamist party, a first in Israeli politics. Ultra-Orthodox politicians fear it will diminish the community's status and have vowed to disrupt and ultimately bring down the new administration, setting up what could be a prolonged skirmish over what kind of country Israel should be.

Read More ->

Biden, Erdogan Meet in Attempt to Reset U.S.-Turkey Ties

ISTANBUL-President Biden met with Turkey's President Recep Tayyip Erdogan for the first time since taking office, as the two NATO allies attempt to repair a frayed relationship by seeking common cause over their security interests across the world, from Libya to Syria and Afghanistan.

"There is no problem with the U.S. that we cannot solve," Mr. Erdogan said following the meeting in Brussels on Monday.

Read More ->

After Apple Subpoenas, Justice Department Rethinks Policies on Getting Lawmakers' Records

WASHINGTON-The Justice Department will bolster its procedures for obtaining records from members of Congress, Attorney General Merrick Garland said Monday, after it emerged that the agency during the Trump administration secretly seized data on the communications of Democrats on the House Intelligence Committee.

Mr. Garland said he directed his deputy, Lisa Monaco, "to evaluate and strengthen the department's existing policies and procedures for obtaining records of the legislative branch."

Read More ->

Senate Confirms Ketanji Brown Jackson for Powerful Appeals Court

WASHINGTON-The Senate on Monday confirmed one of President Biden's most prominent judicial nominees, Ketanji Brown Jackson, for the appeals-court seat that Merrick Garland long held before becoming attorney general.

Judge Jackson, 50, who has served as a federal trial judge in the nation's capital since 2013, is considered a potential Supreme Court candidate if a vacancy opens up for Mr. Biden, who has pledged to place a Black woman on the high court.

Read More ->

Write to sarka.halas@wsj.com

TODAY IN CANADA

Earnings:

Nothing major scheduled

Economic Indicators (ET):

0815 May Housing Starts

Stocks to Watch:

No items published

Other News:

*Canada's Trudeau: EU and Canada Are Launching Partnership on Raw Minerals to Boost Green Economy

*EU's Von Der Leyen: We Count on Canada as Strong Ally in Climate Change Fight

Canadian Regulators Seek Policy Amendments for Facial Recognition

Canada's privacy commissioner wants the country's lawmakers to revamp privacy laws to address issues related to facial recognition, following an investigation into the use of such technology by Canada's federal police agency.

The Office of the Privacy Commissioner of Canada, the country's privacy watchdog, on Thursday said the Royal Canadian Mounted Police violated federal privacy law when it used software from facial-recognition-technology company Clearview AI Inc. between 2019 and 2020.

Canadian Privacy Commissioner Daniel Therrien submitted a report to Parliament Thursday with the findings of that investigation, and asked policy makers to address regulatory ambiguities that have implications for facial-recognition systems. Specifically, he called on Parliament to clarify how online images of people's faces should be treated and to stipulate that police agencies are responsible for ensuring that collection practices of data providers don't run afoul of privacy laws.

"We encourage Parliament to amend the Privacy Act to clarify that the RCMP has an obligation to ensure that third party agents it collects personal information from have acted lawfully," Mr. Therrien said in the report.

Canada is one of a number of countries where officials are grappling with how to regulate facial-recognition technology. The European Commission in April proposed legislation for regulating artificial intelligence, including banning police from using real-time facial-recognition systems in public spaces, with some exceptions.

Market Talk:

Enbridge Minn. Line Likely to Be Completed by Fall After Ruling

Enbridge will likely be able to complete the Line 3 Replacement project by this fall following a positive ruling by a Minnesota court, Scotiabank's Robert Hope says. The Canadian energy infrastructure company received a positive ruling regarding Enbridge's L3R project Certificate of Need, Route Permit and Environmental Impact Statement from the Minnesota Court of Appeals. "With these legal challenges behind us, we expect Enbridge's valuation to expand as investors regain confidence in the story," Hope says. Scotiabank has a sector outperform rating on the stock with a target price of C$54. Shares are up 1.5% at C$48.98.

Expected Major Events for Tuesday

04:30/JPN: Apr Tertiary Industry Index

04:30/JPN: Apr Revised Retail Sales

06:00/GER: May CPI

06:00/UK: May UK monthly unemployment figures

06:45/FRA: May CPI

08:00/ITA: May CPI

11:45/US: Weekly Chain Store Sales Index

12:15/CAN: May Housing Starts

12:30/US: May PPI

12:30/US: Jun Empire State Manufacturing Survey

12:30/US: May Advance Monthly Sales for Retail & Food Services

12:55/US: 06/12 Johnson Redbook Retail Sales Index

13:15/US: May Industrial Production & Capacity Utilization

14:00/US: Apr Manufacturing & Trade: Inventories & Sales

14:00/US: Jun NAHB Housing Market Index

20:00/US: Apr Treasury International Capital Data

20:30/US: 06/11 API Weekly Statistical Bulletin

23:01/UK: May Scottish Retail Sales Monitor

23:50/JPN: Apr Orders Received for Machinery

23:50/JPN: May Provisional Trade Statistics for the Month

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Tuesday

Anterix Inc (ATEX) is expected to report for 4Q.

Argan Inc (AGX) is expected to report $0.46 for 1Q.

Block (H&R) (HRB) is expected to report $5.04 for 4Q.

ClearSign Technologies Corp (CLIR) is expected to report for 1Q.

FTI Consulting (FCN) is expected to report $1.60 for 4Q.

GWG Holdings Inc (GWGH) is expected to report for 4Q.

GWG Holdings Inc (GWGH) is expected to report for 1Q.

Key Tronic (KTCC) is expected to report for 3Q.

La-Z-Boy Inc (LZB) is expected to report $0.73 for 4Q.

MICT Inc (MICT) is expected to report $-0.05 for 1Q.

Oracle Corp (ORCL) is expected to report $1.05 for 4Q.

Rafael Holdings Inc (RFL) is expected to report for 3Q.

TX Holdings Inc (TXHG) is expected to report for 2Q.

Volt Information Sciences Inc (VOLT) is expected to report $-0.01 for 2Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

Boston Properties Raised to Overweight From Neutral by Piper Sandler

Camden Property Trust Cut to In-Line From Outperform by Evercore ISI Group

Chipotle Mexican Raised to Strong Buy From Outperform by Raymond James

DCP Midstream Raised to Strong Buy From Outperform by Raymond James

Equity Residential Cut to In-Line From Outperform by Evercore ISI Group

First Bancshares Cut to Neutral From Buy by DA Davidson

Kinder Morgan Cut to Sell From Neutral by Goldman Sachs

Lordstown Motors Cut to Sell From Hold by RF Lafferty

Paramount Group Cut to Underperform From In-Line by Evercore ISI Group

Pebblebrook Hotel Trust Raised to In-Line From Underperform by Evercore ISI Group

Physicians Realty Trust Cut to Neutral From Outperform by Baird

Range Resources Cut to Hold From Buy by Tudor Pickering

UWM Holdings Cut to Neutral From Outperform by Wedbush

Welltower Raised to Outperform From In-Line by Evercore ISI Group

Wendy's Raised to Buy From Neutral by Northland Capital Markets

This article is a text version of a Wall Street Journal newsletter published earlier today


  (END) Dow Jones Newswires
  06-15-21 0609ET
  Copyright (c) 2021 Dow Jones & Company, Inc.

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