Prime Minister Shinzo Abe is postponing an increase to Japan's sales tax (from 8% to 10%) by two-and-a-half years until 2019, and will announce a new stimulus package this fall, complicating the government's efforts to tame the world's largest debt burden. The decision marks an about-face for Abe, who already pushed off the hike once, and repeatedly said that only an economic shock on the scale of the Lehman Brothers collapse or a major earthquake would prompt another delay.

Economy

Australia's GDP figure blew past expectations in Q1, with annual growth rising 3.1%, marking the country's fastest expansion in more than three years. The result could keep the RBA on hold at its policy meeting next week, as the economy stays on track to meet the central bank's 2.5-3.5% growth forecast by June. Australia's April trade numbers and retail sales are scheduled to be released tomorrow.

Three fresh surveys of Chinese economic activity are reviving doubts about a sustainable recovery in the world's second-largest economy. The nation's May manufacturing PMI came in at 50.1, unchanged from April and barely above the neutral 50-mark. A similar survey showed activity in China's services sector expand at a slower pace, with the official reading dipping to 53.1 from 53.5 the month before. Meanwhile, the Caixin manufacturing PMI index slipped to 49.2, marking the 15th consecutive month of contraction and the lowest reported figure since February.

French commuters are facing more travel disruptions as rail workers go on strike and President Hollande seeks to contain the labor unrest that caused many gas stations to run dry over the past week. About half of the nation's train services have been canceled across the country, and there are concerns that the Euro 2016 soccer tournament, which France hosts from next week, may be disrupted.

Washington and Brussels are scrambling to rebuild momentum for the TTIP, amid signs that it's faltering under an increasingly bitter onslaught from politicians on both sides of the Atlantic. European Commission President Jean-Claude Juncker has called on EU members to recommit to the trade deal at a summit in June, while U.S. Trade Representative Michael Froman warned that there was no "Plan B" if talks were not concluded this year.

The OECD, which has a history of cutting its growth outlooks, has done it again, warning global policymakers of a self-fulfilling "low-growth trap" where ultra-loose monetary policy risks doing more harm than good. The organization lowered its world growth forecast by some 0.3%, predicting the global economy to expand by 3% in 2016 and "by only" 3.3% in 2017.

It may turn out to be an even worse upcoming tourist season for Europe. The U.S. State Department is warning Americans of possible terrorist attack threats across the continent this summer, stating targets could include "tourist sites, restaurants, commercial centers and transportation." It also pointed to two events in particular - the Catholic Church's World Youth Day in Poland and the European Soccer Championship.

As OPEC ministers gather in Vienna, Nigeria's oil minister has emerged as the frontrunner to become the next secretary-general of the producer group. Members see Mohammed Barkindo as a rare compromise candidate to lead the organization amid rising tensions between Saudi Arabia and Iran. While crude finished May up nearly 7%, prices are starting to head south. WTI -1.6% to $48.32/bbl.

Stocks

Investors are putting record amounts of money into exchange-traded funds as bonds become increasingly difficult to buy and sell. Global fixed-income ETFs, which track bond indexes and trade like stocks, attracted $60B of inflows this year through May 25, according to data compiled by BlackRock (NYSE:BLK). That's the most for the period since the funds were created 14 years ago and on pace to top last year's record total of $93.5B.

China's Anbang Insurance Group has withdrawn its application for its planned $1.6B acquisition of Fidelity & Guaranty Life (NYSE:FGL) after failing to provide material requested for processing the deal. New York financial regulators say Anbang will be able to resubmit its application once it provides the necessary information.

Staples announced that Ron Sargent will step down from the CEO position after the company's annual meeting on June 14. Shira Goodman, President of North America operations, will take over the top spot on an interim basis, while a special board committee considers candidates to replace Sargent. The decision comes three weeks after Staples (NASDAQ:SPLS) called off a deal to buy rival Office Depot (NASDAQ:ODP) due to antitrust concerns.

The battle over Sumner Redstone's $40B media empire continues to heat up, after his daughter Shari, vice chair of Viacom (VIA, VIAB), made one of her boldest statements yet about the need for new leadership. According to spokeswoman Nancy Sterling, she has no desire to manage Viacom nor to lead its board, but wants "the best management in place" and "strong, independent directors."

Taiwanese regulators have cleared Foxconn's (OTC:FXCOF) $3.5B purchase of a 63.6% stake in Sharp (OTCPK:SHCAY), paving the way for a transformation at the Japanese display maker. Earlier this month, Foxconn founder Terry Gou said there would have to be layoffs to turn around the ailing company, but pledged that wages would rise and profit-sharing would again be the norm.

Alibaba fell almost 3% in extended trading after Japan's SoftBank (OTCPK:SFTBY) said it would sell at least $7.9B of the Chinese e-commerce giant's stock. SoftBank, Alibaba's (NYSE:BABA) largest shareholder, previously owned about 32% of outstanding shares, and the transactions will bring its stake down to about 28%. According to the company, the deal will help raise capital, boost liquidity and improve its leverage ratio.

Xiaomi has agreed to purchase around 1,500 patents from Microsoft (NASDAQ:MSFT), a rare departure for the U.S. company and part of what the two firms say is the start of a long-term partnership. The agreement also includes a patent cross-licensing arrangement and a commitment by Xiaomi (Private:XI) to install copies of Microsoft software, including Office and Skype, on its phones and tablets.

Bringing an end to a near six-year legal battle, Las Vegas Sands (NYSE:LVS) has agreed to pay more than $75M to end a lawsuit by its former top Macau executive, whose allegations prompted federal bribery investigations into the company. The settlement resolves all legal claims brought by Steve Jacobs, who said he was fired for objecting to illegal demands from the casino's controlling shareholder, Republican megadonor Sheldon Adelson.

It looks like Toyota might be further diversifying into the tech space with a possible acquisition of Alphabet's (GOOG, GOOGL) two robotics divisions. Nikkei reports that Toyota (NYSE:TM) is eyeing Boston Dynamics - known for the Cheetah, which is claimed to be the world's fastest-legged robot - and Schaft, a venture that was led by two former Tokyo University professors.

Boeing has secured a more than $3B U.S. Air Force contract for Joint Direct Attack Munitions tail kits that use GPS to make conventional bombs into precision-guided weapons. Boeing's (NYSE:BA) contract was raised from an initial $1.75B awarded in October 2014, due to warfighter demand and the need to replenish depleted inventories.

Citing The Sports Authority's bankruptcy filing and planned asset liquidation, Under Armour (NYSE:UA) now expects 2016 net revenues of $4.925B (+24% Y/Y), below prior guidance of $5B and a $5.03B consensus. The company also cut its 2016 operating income guidance to $440M-$445M from $503M-$507M. Under Armour shares dropped 3% in after-hours trading as a result.

Former chief executive of Valeant Pharmaceuticals, J. Michael Pearson, is set to receive a $9M severance payment and continue working as a consultant through 2017. He is also eligible for bonuses tied to the company's performance in 2016 before May 2, when he left the company during a series of investigations into the drugmaker's business practices. Valeant (NYSE:VRX) has set a June 7 conference call to discuss its delayed Q1 results.

Doctors at Hackensack University Medical Center in New Jersey have confirmed the birth of a child suffering from Zika-linked microcephaly, a condition wherein the child's brain and head are partially developed. Reports indicate she is the first baby born with complications from the virus in the tri-state area. The mother is said to have contracted Zika while in Honduras and was admitted to Hackensack while vacationing in the U.S. Related tickers: SNY, INO, AEMD, XON, CEMI, BCRX, TMO, OTCQB:GOVX

Following the lead of Britain and Australia, Canada is making plain packaging of cigarettes compulsory in a bid to cut the rate of smoking. Although the country already obliges firms to slap large graphic warning labels on cigarette boxes, the new measures would require a uniform, standardized color and font on packs and restrict the use of logos and trademarks.

Tuesday's Key Earnings

Bank of Nova Scotia (NYSE:BNS) -1.9% lifting bad loan provisions.
Medtronic (NYSE:MDT) -1.5% giving a cautious outlook.
TiVo (NASDAQ:TIVO) swung AH following mixed results.
Workday (NYSE:WDAY) -2.2% AH on climbing expenses.

Today's Markets

In Asia, Japan -1.6% to 16956. Hong Kong -0.3% to 20761. China -0.1% to 2914. India +0.2% to 26714.
In Europe, at midday, London -0.7%. Paris -0.7%. Frankfurt -0.6%.
Futures at 6:20, Dow -0.3%. S&P -0.3%. Nasdaq -0.3%. Crude -1.6% to $48.32. Gold +0.1% to $1218.60.
Ten-year Treasury Yield flat at 1.83%

Today's Economic Calendar

Auto Sales
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
8:30 Gallup U.S. Job Creation Index
8:55 Redbook Chain Store Sales
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
2:00 PM Fed's Beige Book