Can you believe it’s Monday again? Feels like it was just Monday, well, a week ago. Phil Rosen here — reports say Russia has defaulted on its foreign debt for the first time since 1918, but the Kremlin says otherwise. Let’s see what’s cookin’.
1. Russia defaulted on its foreign debt for the first time in a century, according to reports. For months following the country’s invasion of Ukraine, Western sanctions have stymied its attempts to fulfill its obligations. On Sunday — when the grace period on around $100 million of interest payments due on May 27 expired — bondholders told The Wall Street Journal and Reuters they had not received their payments.
But Russia’s finance ministry said it made the payments on the bonds denominated in euros by sending the money to Euroclear, a bank that would then distribute the finances to investors. Labelling the situation “a farce”, the Kremlin said any default is artificial, as it has the money to pay its debts, but sanctions are hampering institutions’ ability to accept it.
As the final grace period has passed, a deadline considered an event of default if missed, the focus is now on bondholders of 25% of the outstanding bonds, and whether they agree to declare that a default has occurred.
In other news:
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2. US stock futures rise early Monday, after Fed chair Jerome Powell said last week that monetary tightening may be less sharp than expected to avoid a recession. Here are the latest market moves.
3. On the docket: Nike, Jefferies Financial Group, and Trip.com, all reporting. Plus, look out for the advance report on durable goods from the US Census Bureau, expected at 7:30 am ET.
4. An energy portfolio manager at a $9 billion firm said this batch of stocks can help bolster your holdings in a bear market. After a decade of underperformance, energy firms have prioritized shareholder returns in a big way. These 10 companies have lofty cash flow yields and make for great buys right now.
5. Investors should monitor the Nasdaq 100 and Chinese stock markets to know if the Fed will pull off a soft landing for the economy. Fundstrat’s Tom Lee said watching these two markets can be uniquely instructive: “After all, a recession would be a massive headwind for QQQ and China equities.”
6. A recession stemming from the Fed’s slow reaction is “uncomfortably possible,” Mohamed El-Erian said. The top economist warned that the Fed didn’t recognize it had an inflation problem early on, and now there are consequences that could unfold. But he did express some optimism around the strength of the labor market.
7. Warren Buffett will likely acquire Occidental Petroleum once its credit situation improves, according to Truist. The billionaire from Omaha has already plowed in almost $20 billion in the company. It’s been three years since he first purchased his $10 billion of preferred stock.
8. A 45-year-old shared the money tricks that allowed him to retire at 36. He said the small amounts of cash allocated to the right funds every month can compound gradually, and it becomes easier over time. These are the five habits he swears by.
9. Value investors have missed out on massive gains by dismissing the likes of Amazon and Alphabet as overpriced. Fund manager Adam Seessel explained how to fairly value tech champions — and avoid losing out on big upsides.
10. Copper, a key economic bellwether, has fallen into a bear market. On Friday, the metal dropped 24% from its May 2021 peak. This has happened ahead of every single recession in the last 30 years.