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Japan Quarterly Business Sentiment Index survey (Q2): large Japanese companies worst in 11 years

  
  Analysis
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Business Sentiment Index (BSI) survey conducted by the Ministry of Finance and the Economic and Social Research Institute (a part of Japan’s Cabinet office) is conducted quarterly.

Business sentiment among large Japanese companies minus 47.6 (from -10.1 in Q1)
  • worst result in 11 years
  • 3rd quarter in a row in negative territory
For medium-sized companies, negative 54.1
  • and for mid- to small-companies minus 61.1
  • each also at their worst ever
Data out a little earlier.
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Quarterly Business Sentiment Index (BSI) survey, conducted May 15

  • This survey analyses business leaders’ assessments of and forecasts for the economy
  • Its purpose is to get information for tracking economic trends
  • It covers about 15,000 companies that have established their headquarters or principal offices in Japan and have capital stock of 10 million yen or more

If Australia joins the US in a new cold war against China it will “pay an unbearable price “

  
Analysis, Politics
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China’s Global Times says Australia’s economy “cannot withstand” a cold war with China

Its an opinion piece in the outspoken GT and comes in response to US Republican Senator Rick Scott urging Australia to join the US in a new “Cold War” against China.
Here is the link, there is plenty more of this sort of thing here:
  • Canberra should be mindful of avoiding inappropriate statements from its officials or politicians that may echo what Scott urged. 
  • Due to escalating tensions between the two countries on multiple fronts – such as the Hong Kong affair, a US-led inquiry into the origin of the coronavirus origins, and a travel and study warning – China-Australia relations have been rapidly sliding to near freezing point. 
  • A new Cold War may only further jeopardize the already fragile relations between the two sides.
I wouldn’t think this sort of sentiment is a positive for AUD, yeah? Here is the link to the GT article
China's Global Times says Australia's economy "cannot withstand" a cold war with China 

North Korea says it is able to immediately launch a nuclear attack

  
Analysis, Politics
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A piece in Korean media, Dong A Libo, reporting that North Korea had described plans to “put strategic armed forces on a high alert operation”

“It means that North Korea is able to immediately launch a nuclear attack anywhere in Northeast Asia, stressing that it owns leadership for nuclear deterrent,” said Ryu Sung-yeob, a senior researcher at the Korea Research Institute for Military Affairs.
That does not sound too encouraging.
A piece in Korean media, Dong A Libo, reporting that North Korea had described plans to "put strategic armed forces on a high alert operation"

On the politics front today – China expected to pass Hong Kong law

  
  Analysis
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Its expected that the national security law will pass China’s National People’s Congress (NPC) parliament Thursday 28 May 2020.

This (in very brief) law imposes a new national security law in Hong Kong, bypassing the city’s legislature, with stricter measures on sedition, secession and subversion against Beijing. The new law allows mainland Chinese national security agencies to operate in HK.
I’ve been saying on this law that the NPC passing it is basically a done deal, the annual parliament sits to rubber stamp drafts. To that extent its passing is an event factored into the market already.

South Korea sees fresh spike in coronavirus cases amid outbreak in e-commerce warehouse

  
  Analysis
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South Korea reported 40 new cases in the past day, the highest total in 49 days

Korea

This comes after e-commerce firm, Coupang, reported an outbreak at its logistics center located in Buncheon with at least 36 cases linked to the fresh cluster at the moment.

The firm did already say that it has moved to test 3,600 people at its facility after the reported incident. Once again, tracking and tracing is going to be the utmost importance here.
The fear is that it could lead to a widespread community transmission that may result in secondary wave of infections in the country.
If you need reminding, South Korea also had an incident at the start of the month where one infected person who visited nightclubs led to a resurgence in the number of virus cases. As of yesterday, the nightclub-linked cases has increased to 257 persons.

The PBOC is expected to cut interest rates, RRR in H2 to support the economy

  
  Analysis
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What’s ahead from the People’s Bank of China, China’s Global Times with the heads up:

  • highly likely to announce interest rate cuts or reserve requirement ratio (RRR) cuts in the second half of the year
  • to help accelerate an economic recovery from the negatives induced by the COVID-19 outbreak and external uncertainties
  • cuts are most likely to be made on interest rates for the standing lending facility (SLF) and RRR
  • PBOC will use a variety of tools including reserve requirement ratio cuts, interest rate reductions and re-lending
  • the Bank wants M2 money supply and aggregate financing to grow at notably higher rates than last year
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GT citing Chinese experts examining the monetary policy related information in this year’s Government Work Report.
This policy is aimed at more support for liquidity, firms and the consumer. If it lifts China’s economy it should be supportive of China and China-proxy trades.
What's ahead from the People's Bank of China, China's Global Times with the heads up: 

Venezuela legal action against the Bank of England to hand over $1.13bn of gold

  
  Analysis
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The Central Bank of Venezuela has stepped up its claim against the BoE for Venezuela’s gold reserves.

  • Venezuela requested the Bank of England to sell part of its gold reserves there and send the proceeds to the United Nations to help with the country’s response to the cov1 COVID-19 outbreak
That was in April. This goes back further, though, the Bank of England has delayed the transfer of 31 tonnes of Venezuelan gold stored there to Maduro’s government since 2018. The UK does not acknowledge Maduro as Venezuela’s legitimate leader.
The BoE stores gold for many developing countries.
Via Guardian (not fresh news but ICYMI … keep an eye out if the gold does hit the market I guess)
Central Bank of Venezuela BoE gold reserves.

Saudi sovereign wealth fund has bought a big stake Boeing

  
  Analysis
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Saudi Arabia’s $300 billion sovereign-wealth fund has invested further into US corporations.

Q1 figures from the Public Investment Fund show fresh stakes taken in:
  • Facebook, Disney , Marriott, Cisco Systems, Citigroup, Bank of America, & Boeing
(and others). The stake in Boeing was circa $714 million.
With oil prices weaker Saudi is accelerating diversification, buying in during Q1:
  • “We actively seek strategic opportunities both in Saudi Arabia and globally that have strong potential to generate significant long-term returns while further benefiting the people of Saudi Arabia and driving the country’s economic growth” 
From filings with the US SEC, via a WSJ report, link is here for more (the Journal may be gated)
Saudi Arabia's $300 billion sovereign-wealth fund buys Boeing

Trump/Saudi Arabia’s king agreed on importance of stability in global energy

  
  Analysis
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Trump, Saudi Arabia King speak: White House

A White House spokesman is out saying that
  • Pres. Trump and Saudi Arabia’s king in a conversation agreed on importance of stability in global energy markets
  • The leaders reaffirmed strong US – Saudi defense partnership
The tumble in crude oil prices has had to strong catalysts. One was Saudi Arabia flooding the market with supply after failing to reach an agreement with Russia on production cuts. The next was the impact from the global coronavirus. 1 influenced supply in a bearish way. The other influenced demand in a bearish way.
The price of WTI crude oil futures for the July contract is trading up $1.16 or 4.67% at just below’s $26 a barrel. Brent crude oil prices moved above the 30 level today after rising $1.38 to $30.84.

Venezuela asks Bank of England to sell its gold

  
  Analysis
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Venezuela is asking the Bank of England to sell part of the South American nation’s gold reserves, send the proceeds to the United Nations to help with the country’s coronavirus-fighting efforts

Reuters with the report, citing “two sources with knowledge of the situation”.
  • It was not immediately evident how much gold Venezuela was asking the Bank of England to sell.
  • Venezuela’s information ministry and central bank did not respond to requests for comment.
  • The Bank of England said it does not comment on individual customer relationships.
Venezuela asks Bank of England to sell its gold
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