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North American Morning Briefing: Traders Eye Key Inflation Print; Politics Also in Focus


Stock futures pointed slightly higher early Monday, while benchmark bond yields were little changed.

There is limited data or earnings due during the day, but investors will have more to chew on as the week progresses.

Big-name companies including FedEx, Nike and Micron Technology will report earnings from Tuesday onward. On Wednesday, the Federal Reserve will release the results of its annual stress test for the biggest U.S. banks. Then on Friday, the Fed's preferred inflation gauge, the personal-consumption expenditures price index, is due.

Overseas stocks were mostly higher. Japan's Nikkei 225 closed up, while the yen weakened. The Stoxx Europe 600 rose.

Stocks to Watch

Apple shares were largely flat after the European Union said the iPhone maker's App Store rules might be in breach of the bloc's Digital Markets Act. The European Commission, the EU's executive arm, said it had also opened an additional non-compliance investigation against the company over concerns that Apple's requirements for third-party app developers and app stores don't comply with the Digital Markets Act.

Nvidia shares were heavily traded ahead of Monday's open, after falling more than 3% on both Thursday and Friday.

Under Armour said late Friday that it had agreed to pay $434 million to settle a yearslong lawsuit into claims that co-founder Kevin Plank misled investors.

UPS said Sunday that it is selling its freight-brokerage business to RXO for about $1 billion, less than what it paid for it in 2015. Shares of RXO rose 9%, while UPS stock was little changed.

Watch For:

No major economic data scheduled; speech by Fed's Mary Daly

Today's Headlines/Must Reads:

- Apple, Meta Have Discussed an AI Partnership

- Holiday Travel Is Booming. Why Are Airlines Doing So Badly?

- Hedge Funds Made a Killing on FTX-Then It Got Complicated

- The U.S. and Europe Can't Agree on What Counts as Sustainable Aviation Fuel. That's Leaving Investors in a Bind



Ways that the French election could accelerate recent falls in the euro against the dollar would include not only a large vote for the far right National Rally but also a large vote share for the left, turning the second round into a contest between two extremes, Barclays Research said.

"At any rate, French politics are turning away from Macron's pro-EU, liberal angle towards an ask for wider budget deficits and policies that would undermine the power of European institutions."

Meanwhile, demand for the dollar remains strong, Barclays added.

ING said the dollar has emerged the favored hedge for political uncertainty ahead of the elections in France.

This will likely offset the impact of potentially weak U.S. PCE inflation data on Friday which could increase prospects of a Federal Reserve interest-rate cut in September, ING added.

"The short-term downside for the dollar against European currencies may be less pronounced as markets could still favour defensive positions ahead of the French vote on Sunday."

ING said the DXY dollar index could trade above 106.00, possibly approaching 106.50 by the end of the week.

The yen's recent bout of weakness leaves a strong risk of fresh intervention by the Bank of Japan to prop up the currency, UniCredit Research said.

It said the weakness comes despite the minutes of the BOJ's June meeting flagging a possible further interest-rate hike in July.


The political uncertainty in France has led the 10-year OAT-Bund yield spread into a new trading regime, with an estimated range of 63-80 basis points, Morgan Stanley Research said.

A new value on the spread is expected to hover around 72-75bps, depending on the value of the political premium attached to it, it said.

"We think that investors, over the coming weeks, will opt for a 'wait and see' approach and thus it is likely that the spread will continue to hover in the aforementioned range, barring any unexpected surprises or adverse headlines on politics," Morgan Stanley Research said.

Morgan Stanley Research also said the recent risk-off episode related to the elections induced a notable bid in duration, predominantly seen on the cash curve, adding that having a long duration exposure was still favored from a seasonal standpoint.

"All in all, given the uncertainties and considering that a clearer picture on the French outlook will only be known after the second week of July, we would prefer trading duration with a long stance for the time being."


Oil prices were broadly stable early in the European session, as traders awaited key U.S. inflation data later in the week for more cues on the path of interest-rate cuts.

"The oil rally appears to be running out of momentum," ING said.

"Despite this, we remain supportive towards the oil market with a deficit over the third quarter set to tighten the oil balance."




Brookfield's Plan to Turn Malls Into Minicities Falls Short

Brookfield Property Partners spent billions in 2018 to assume full ownership of mall-owner GGP when malls were out of favor on Wall Street. Executives at the firm defended this contrarian bet in part by saying that they would turn most of the company's 125 malls into minicities with residences, offices or hotels as well as stores.

Six years later, only two malls, in Atlanta and near Seattle, have been redeveloped in this way, with another two-in North Carolina and Denver-in the pipeline.


Pro Take: The Covid Retirement Wave Could Be With Us for Good

Federal Reserve Chairman Jerome Powell has repeatedly pointed to the strong recovery in labor-force participation as a big reason why wage growth is slowing, easing pressure on inflation.

But the labor force today looks different in one crucial point than it did before the pandemic: Workers have no interest in working into their 60s or 70s.


Stocks are having their best election year since 1976. What the rally needs to continue.

U.S. stocks have posted an impressive election-year rally so far in 2024. But as investors question whether that rally will continue, they're watching inflation and economic-growth data to gauge the Federal Reserve's potential interest-rate path, as well as corporate earnings in the second half of this year.

The S&P 500 SPX is on pace for its best first-half performance during an election year since 1976, as well as the second-best performance in an election year in its history, according to Dow Jones Market Data.


German Business Sentiment Declines on Gloomier Outlook

Sentiment at German companies has become more pessimistic on weakening expectations for business conditions ahead, according to a monthly survey.

The Ifo Institute's business-climate index fell to 88.6 in June, from 89.3 in May, data showed Monday. This was against expectations that the index would rise to 89.6, according to economists polled by The Wall Street Journal.


The Rise of Chinese EVs Is Dividing the West

America and Europe are heading down different roads in response to China's emergence as an electric-vehicle juggernaut.

The U.S. is closing its borders to Chinese EVs before they even launch. The Biden administration last month raised the total tariff rate to 102.5% on Chinese EVs, despite extremely low imports. Canada, whose car industry is tightly integrated with the U.S., is considering new tariffs too, Bloomberg reported on Friday.


Matt Gaetz Hits the Road to Reshape the Republican Party

FORT WALTON BEACH, Fla.-Eight months after plunging the Republican Party into a deep crisis, Rep. Matt Gaetz says he doesn't want to divide the GOP. He wants to make it to be just like him.

"I'm trying to reshape the House in my image," he said in an interview in his hometown after announcing his re-election campaign. Asked to describe what that looks like, Gaetz said it is a Republican who can "end the wars, shut the border, reduce the spending" and is a "fighter."


Taiwan Wants a Drone Army-but China Makes the Drones It Wants

TAIPEI-As drones transform warfare in Ukraine and Gaza, Taiwan is accelerating efforts to build a fleet of them for its defenses.

But the island democracy has a problem: The overwhelming majority of the types of small, inexpensive drones that are having the greatest impact on battlefields are made in China, the very country that poses a threat to it.




None Scheduled

Economic Calendar (ET):

1345 Bank of Canada Governor speech


Expected Major Events for Monday

05:30/JPN: May Tokyo area department store sales

05:30/JPN: May Nationwide department store sales

08:00/GER: Jun Ifo Business Climate Index

10:00/UK: Jun CBI Industrial Trends Survey

14:30/US: Jun Texas Manufacturing Outlook Survey

23:50/JPN: May Services Producer Price Index

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


Expected Earnings for Monday

3D Systems Corp (DDD) is expected to report $-0.11 for 1Q.

AEterna Zentaris Inc (AEZS,AEZS.T) is expected to report for 1Q.

Air T Inc (AIRT) is expected to report for 4Q.

Ayala Pharmaceuticals Inc (ADXS) is expected to report $-1.95 for 1Q.

Beyond Air Inc (XAIR) is expected to report $-0.45 for 4Q.

California First Leasing Corp (CFNB) is expected to report for 3Q.

Cyanotech Corp (CYAN) is expected to report for 4Q.

Enerpac Tool Group Corp (EPAC) is expected to report $0.39 for 3Q.

Nicholas Financial (NICK) is expected to report for 4Q.

Pioneer Power Solutions (PPSI) is expected to report $0.02 for 1Q.

Prairie Operating Co (PROP) is expected to report for 1Q.

Powered by Kantar Media and Dow Jones.



Alcoa Raised to Overweight From Equal-Weight by Morgan Stanley

CME Group Cut to Underweight From Neutral by JP Morgan

Freeport-McMoRan Raised to Overweight From Equal-Weight by Morgan Stanley

Nike Raised to Outperform From Perform by Oppenheimer

(MORE TO FOLLOW) Dow Jones Newswires

June 24, 2024 06:16 ET (10:16 GMT)

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