President Trump's first full budget proposal lands on lawmakers' desks this morning, with a proposed $3.6T in spending cuts over the next decade. Congress will still be allowed to spend $4.1T in 2018, including a big boost to defense, border security and infrastructure, while cutting Medicaid, food stamps and other social programs. The plan also calls for selling half of the nation's Strategic Petroleum Reserve and permitting drilling in the Alaska refuge.

Economy

At least 22 people were killed and 59 wounded in an explosion at the end of an Ariana Grande concert in Manchester, England. "We are working to establish the full details of what is being treated by the police as an appalling terrorist attack," Theresa May said in a statement. Sterling extended losses following the news, while the FTSE 100 had a more muted response.

The 27 EU nations handling Britain's exit from the bloc has set a tough negotiating mandate for the talks, stating it "must honor its share of all the obligations undertaken while being a member." The directive included explicit language that described "a schedule of payments" from London and costs "related to the withdrawal and relocation of EU agencies."

Businesses across the eurozone maintained April's blistering growth rate in May as firms struggled to meet growing demand. IHS Markit's Flash Composite PMI matched the previous month's 56.8. "The fact we have maintained this high level in May is great news for second quarter GDP," said Chris Williamson, chief business economist at IHS Markit.

Greek bailout talks have once again ended without an agreement, leaving the eurozone locked in a race against time to finish negotiations before Athens faces crippling repayment deadlines in July. Germany, Greece and the IMF sparred over the next stages of the €86B bailout and how to ease the country's debts once its rescue program expires in 2018.

Brazil has confirmed its commitment to business-friendly reforms after S&P threatened to downgrade the country further into junk territory by revising the country's outlook to "CreditWatch negative." According to the agency, growing doubts about President Temer's capacity to stay in office and his push forward with reforms "have heightened downside risk to the rating."

China's imports of North Korean goods fell below $100M to fresh multi-year lows in April, accelerating a decline after Beijing halted coal shipments from its isolated neighbor. "We urge North Korea to not do anything to again violate U.N. Security Council resolutions," Chinese Foreign Minister Wang Yi declared. "At the same time, we hope all parties can maintain restraint."

Mark your calendars... MSCI will announce on June 20 whether it will finally include China's domestic A-shares in its $1.5T Emerging Markets Index (ETF: EEM) as Beijing tries to open up its markets and attract foreign capital. The index provider last June delayed the decision for a third straight year, citing regulation worries and accessibility for global investors.

"I've heard it's one of the toughest deals of all, but I have a feeling that we're going to get there eventually," President Trump said after meeting with Israeli Prime Minister Bibi Netanyahu. Along with a pledge to confront Iran, Trump also met with Palestinian Authority President Mahmoud Abbas in Bethlehem before traveling to the Vatican today to meet with Pope Francis.

OPEC and its allies are poised to continue their production cuts for another nine months after Iraq backed an extension, removing one of the last remaining obstacles to an agreement. Kuwait's oil minister said some nations still aren't on board, but the most influential members are publicly backing supply curbs lasting until March 2018.

Stocks

Bitcoin leaped more than 11% to hit an all-time high of $2,289 on Monday, about $150 short of doubling in value for May. The surge comes amid a major New York conference on digital currencies. In addition to Consensus, at least two other cryptocurrency forums are being held in New York this month: the Ethereal and the Token Summit. Related tickers: COIN, OTCPK:BTCS

A day after Ford (NYSE:F) officially ousted its CEO in a bid to remake itself as a future-focused vehicle manufacturer, Toyota (NYSE:TM) announced its own steps to embrace technology's next wave. Together with MIT's Media Lab, Toyota has enlisted a series of partners that specialize in different aspects of blockchain technology for the development of driverless cars.

General Motors will lay off close to 600 of its 1,500 South African workers by July after a decision last week to sell its local operations. Top manufacturing union NUMSA confirmed the notice of retrenchment. The exit will mark the end of GM's 13-year tenure in South Africa, which saw the introduction of the Chevrolet, Hummer and Cadillac brands.

Add to the catalog of complaints that has rattled Fox News (FOX, FOXA). Three cases have arrived in a Manhattan court from women who charge the company with sexual harassment, firing an employee after she informed supervisors she was pregnant, and racial discrimination. "We believe these latest claims are without legal basis and look forward to proving that Fox News at all times has acted appropriately," the network said in a statement.

Disney is betting that the most successful movie of all time will help its theme parks continue a hot streak eight years after the film came out. The media giant this week opens "Pandora-World of Avatar," a $500M attraction at its Animal Kingdom near Orlando. The theme parks business of late has been a bright spot for Disney (NYSE:DIS) vs. continuing slowdowns at ESPN.

Twitter has "kicked around" the idea of creating a subscription service and it's not taking the business model off the table. That's according to Jack Dorsey, who spoke at the company’s annual shareholder meeting in San Francisco. Rumors have circulated for months that Twitter (NYSE:TWTR) was preparing to launch a premium version of Tweetdeck, but so far nothing has come to fruition.

Shares in Nokia have hit the highest level since February 2016, up almost 6% premarket, after the Finnish firm settled an ongoing patent dispute and signed a new licensing agreement with Apple (NASDAQ:AAPL). "It moves our relationship with Apple from being adversaries in court to business partners," said Maria Varsellona, Chief Legal Officer at Nokia (NYSE:NOK).

The U.S. Supreme Court has decided to limit the controversial practice of "venue shopping" - where so-called patent "trolls" pick court locations they believe will be favorable to the cases they're arguing. Firms will now be required to bring lawsuits to where the defendant is incorporated. The ruling came about in a case between TC Heartland and Kraft Heinz (NASDAQ:KHC).

Before its shares were suspended in Singapore, Noble Group (OTCPK:NOBGY) plunged by a third overnight, hit by a credit rating downgrade and reports that a potential strategic investor may have walked away. The stock has been beset by the long downtrend in the commodity markets and by Iceberg Research, which has published numerous negative blog posts about the company.

U.S. firms are working with Japanese partners on new projects to develop technologies that will enhance Japan's shield against a North Korean missile strike. Raytheon (NYSE:RTN) is allied with Mitsubishi Electric (OTCPK:MIELY) on the project, while Lockheed Martin (NYSE:LMT) is working with Fujitsu (OTCPK:FJTSY). The intent is to extend the range of Japan's detection and targeting radar.

Apple wants to expand its contract manufacturer's facility in the southern Indian tech hub of Bengaluru, as the company seeks a bigger share in one of the world's biggest smartphone markets. Apple (AAPL) officially began initial production of a small number of iPhone SEs last week at its Wistron (OTC:WICOF) plant and plans to ship devices to local customers as soon as this month.

Today's Markets

In Asia, Japan -0.3%. Hong Kong +0.1%. China -0.5%. India -0.7%.
In Europe, at midday, London flat. Paris +0.8%. Frankfurt +0.5%.
Futures at 6:20, Dow +0.2%. S&P +0.1%. Nasdaq +0.2%. Crude -0.7% to $50.75. Gold -0.1% to $1259.70.
Ten-year Treasury Yield flat at 2.25%

Today's Economic Calendar

8:55 Redbook Chain Store Sales
9:45 PMI Composite Flash
10:00 New Home Sales
10:00 Richmond Fed Mfg.
1:00 PM Results of $26B, 2-Year Note Auction