FT Thoughts Inflation, Labour markets and cyber attacks

This and previous notes can be found at asianmarketsense.com
Check out ERI-C.com  for your research needs

ASIAN markets at 2:15pm HK time
Australia 
ASX 200 opened higher and tested 7,280 in the morning trading before easing back to trade in the 7,240/270 range for the rest of the session. Currently +42pts (+0.6%) @ 7,260
Pre market data missed F/cast but the trade data and retail sales were +VE. Oil names +VE as crude continues to rise. Utilities and Financials were also strong. Sentiment helped by the Government announcing a $500 per week disaster payment system for those affected by covid lockdowns.
Japan 
Services PMI data was 46.5 down MoM but better than forecast
Tokyo reported 487 new covid cases (+16 DoD) and nationwide was 3,036
Nikkei opened lower at 28,890 but rallied to 29,135 in the opening trades and then traded sideways for most of the morning before easing back to 29,046 at lunch. PM the market traded sideways
Currently +105pts (+0.4%) @ 29,051
Topix traded in a similar pattern high was 1,967 before easing back to 1,958 at lunch. Currently +14pts (+0.7%) @ 1,956
S Korea 
Kospi opened higher and worked to the day high 3,258 around 1:15pm before easing back currently +27pts (+0.8%) @ 3,251
Kosdaq worked better for most of the day to a high of 992 and then traded slightly lower currently +10pts (+1%) @ 991
Taiwan 
Taiex opened higher and rallied to 17,283 in early trades and then traded sideways in the range 17,200/290 to close +81pts (+0.5%) @ 17,246 T/O was US$17.38b.
China 
CSI 300 opened lower ahead of the Caixin PMI data (which was 55.1 weaker MoM and missed f/casts but still well above 50) saw a brief rally to 5,305 but then sold down to 5,278 mid morning and then rallied to the day high 5,314 before easing slightly into lunch. PM has trended lower currently -24pts (-0.5%) @ 5,265
News that Biden intends to revised the ban on Chinese companies with military companies hurting sentiment.
HK 
Pre market opened 29,365 +68pts vs +102pts ADR’s but trended lower throughout the day. Despite HK PMI climbing to 52.7 the highest in 7 years. Chinese Financials and E-commerce stocks weak. Petrochems and tech +VE and Xtep strong after yesterday’s selling. Razor weak after placement.
FTSE Russell unveiled the second-quarter review results, where XIAOMI-W (01810.HK) will once again be included in FTSE China 50 Index.
Adds CITIC (00267.HK) and COSCO SHIP HOLD (01919.HK)
Removes GEELY AUTO (00175.HK) , EVERGRANDE (03333.HK) and NEW ORIENTAL-S (09901.HK)
All changes will be made effective from 21 June.
Europe
Futures indicate and higher open FTSE +12 points at 7,109, DAX +21 points at 15,607, CAC 40 +4 points at 6,520 and Italy’s FTSE MIB +11 points at 25,350, according to IG. Key will be the PMI data 
Data
EUROZONE Services and Composite PMI, 
GERMANY Services and Composite PMI, 
FRANCE 
Services and Composite PMI, 
UK Services and Composite PMI, 
US Futures 
Opened flat Dow +8pts S&P and Nasdaq slightly +VE and have stayed around there. With caution ahead of initial claims
US Challenger Job Cuts, ADP Employment Change, Initial Claims, 4 week Average Claims, Continuing Claims, Services and Composite PMI, ISM Non Manufacturing Data (PMI, Employment, New Orders, Prices), EIA Oil Report, EIA Natural Gas Report.
Fed Speakers Bostic, Kaplan, Harker and Quarles.
Earnings: Broadcom, Lululemon Athletica, Five Below, Hovnanian, Express, J.M. Smucker, DocuSign, Cooper Cos, CrowdStrike 

FT on-line
Beijing quashes annual Hong Kong rally to mark Tiananmen massacre

Crowds expected to avoid gathering this year for first time in three decades for fear of arrest due to the new National Security law.

Persistence of Donald Trump’s China tariffs frustrates US business
Policy under Biden is closer to his predecessor’s approach than experts had expected

FT Front Page
Breaking point
Oil spill fears for Sri Lanka
See also inside Sri Lanka fears environmental disaster if chemical ship sinks

Trafigura warned Credit Suisse over suspicious Greensill Gupta invoice
• Commodities trader raised alarm • Bank’s $10bn funds collapsed • Due diligence under fire.
More on the saga

Etsy buys British vintage fashion app Depop for $1.6bn in drive to fit Gen Z

INSIDE
Central bankers split on best way to tackle post-pandemic inflation
Leading monetary authorities, including the Fed, ECB and BoJ, are pursuing different strategies.
Sets out the current policies but makes the point that ‘For some economists, these disagreements are beside the point: monetary policy has become so extended that central bankers lack effective tools to do more.’ Which is probably correct but what is more worrying is that they are not more worried about inflation being an issue at present. The Feds data dependant approach leaves it open to being behind that curve when it sees signs of inflation and then has to take more radical action to curb the situation.

ILO warns of longer-term damage to global labour market
Another warning about the uneven nature of the recovery. It warns also about the longer term impact on younger people entering the labour market.

China boom causes industrial power outages.
‘Factories across cities such as Guangzhou, Foshan and Dongguan, known for producing global consumer and high-tech products, have been ordered to use less power and even close for between one to three days a week to mitigate the shortfall.’
A heat wave coupled with low rainfall in Yunnan which supplies hydro electric power to Guangdong, coupled with local government reluctance to use coal-fired power stations has resulted in power rationing.
A further problem for China’s already uneven recovery. But it also highlights the reliance that China has on coal-fired power stations.

Cyber premiums jump in face of acute threats
Surge in attacks prompts vigilant insurers to question clients closely about culture, attitude to security and training.
An interesting read on what is a very topical and it highlights both the increased risks and the fact that many companies do not even good basic defences.

Beijing-based development bank leaves door open on lending to Myanmar
AIIB says it takes no view on ‘form of government’ but applies broader checklist.
An interesting read even though the bank does not currently have any projects under consideration for Myanmar.
It also warns that as western companies withdraw there is potential for Chinese companies to stepin.
It will be interesting to see though whether if those companies are listed western investor remain supportive.
It was interesting to see yesterday a number of Chinese sportswear companies being sold down as the US lawmakers urged the NBA to end endorsement of Chinese apparel firms that use cotton grown in China's Xinjiang region.

Fixed income. Sub-zero pain
Negative rates put $4tn savings industry under heavy strain
Pressure on money market funds raises the stakes for Fed intervention to increase yields
Another look at the problems facing money market funds. A key point is that ‘If government money market funds have to keep investing at zero per cent, the economics of the industry “breaks down”,’
That is potentially the big issue that companies start looking for alternatives.

Bitcoin ETF applications gather dust as SEC chair Gensler points to ‘gaps’
Highlights the lack of comprehensive legislation and the problems associated with trying to regulate crypto with existing legislation most of which was originally written before there was crypto.
Interesting to find out that ‘Crypto enthusiasts originally were encouraged by Gensler’s appointment, given he had taught classes on block-chain technology at Massachusetts Institute of Technology but he recently called for “greater investor protection” in bitcoin specifically.’
I think there also needs to be a international body to ensure global standards and international co-operation.

Markets Insight
Apparent losers can become the biggest winners By Baruch Lev a professor of accounting and finance at New York University Stern School of Business.
An interesting read; ‘In fact, investing in losing companies, as long as you know which ones to choose, is very lucrative.’
That is surely the key to all investing. But he looks at how accountants treat intangibles like R&D, IT and brand enhancement.
He concludes
‘The icing on the cake is that investment in the stocks of accounting losers is very lucrative. The reason: investors, by and large, treat accounting losers as real losers, only to be surprised by later performance. Outdated accounting rules obviously fail investors.’
That I think reinforces that fact that accounts are not the ‘be all’ and that accounts are not drawn up to provide investment advice.
Investing is about knowing the company. The accounts are just one area to be considered.

FT BIG READ. SPORTS BUSINESS
Football’s flawed pursuit of the ‘Asian fan’
The business plan for the European Super League was partly built on ambitious, but unproven, income streams from Asia. The collapse of the project is forcing clubs to rethink their approach to the region.
An interesting read and it concludes ‘It has never been more urgent for clubs to make the compromises with their traditional fan bases that they have been avoiding, says the Asian head of one global broadcaster.
“They are facing this kind of crisis just as the gravy train is coming to an end,” he adds. “The younger generation everywhere is not as interested in football — or at least, not as interested in consuming it the way their parents did.”’
There are a lot more games and interests now competing for people’s attention and money.