Italy's anti-establishment parties have abandoned plans to form a coalition government after the country's president refused to accept a controversial choice for economy minister, raising the possibility of snap polls. Investors fear the election will resemble a referendum on the EU and the euro, posing an existential threat for the bloc. That sparked the currency to slip below the $1.16 level, while the gap between Italian and German 10-year bond yields widened to its highest in over four years, putting pressure on banks and stocks across the region.

Economy

More tensions? The EU plans to shift more than €30B in funding away from central and eastern Europe, slashing Poland and Hungary’s share of "cohesion spending" while boosting support for Greece, Italy and Spain. The proposed reforms, set to be unveiled today in the bloc's budget for 2021-2027, are said to reflect the "evolution of disparities" in Europe since the financial crisis.

Aiming to reduce marine litter, the European Commission has proposed banning single-use plastic products such as cotton buds and plastic straws, as well as putting the burden of cleaning up waste on manufacturers. The proposal also requires EU countries to collect 90% of single-use plastic drink bottles by 2025, and producers to help cover costs of waste management and clean-up.

Recovering some of last week's big losses, the Turkish lira climbed 3.3% against the dollar yesterday as the monetary authority said it would start using the one-week repo as its policy rate starting in June. "The simplification move shows the lira crisis has one advantage: Turkey policy makers are finally returning to economic orthodoxy," said Ziad Daoud, chief Middle East economist for Bloomberg Economics.

"Our U.S. team has arrived in North Korea to make arrangements for the Summit between Kim Jong Un and myself. I truly believe North Korea will be a great economic and financial Nation one day," President Trump wrote on Twitter. Kim also reaffirmed his commitment to "completely denuclearize the Korean Peninsula," while former North Korean spy chief Kim Yong Chol headed to the U.S. for talks.

Colombia is headed for its most divisive presidential race in decades that could upset a historic peace deal or see a reversal of business-friendly policies. That's unnerved some investors in Latin America's fourth largest economy as right-winger Ivan Duque won Sunday's first-round vote, triggering a June 17 runoff with leftist Gustavo Petro.

With subtropical storm Alberto picking up strength as it heads north through the Gulf of Mexico, Exxon Mobil (NYSE:XOM) has evacuated non-essential workers from its Lena production platform. Royal Dutch Shell (RDS.A, RDS.B) and Chevron (NYSE:CVX) further shut production on local platforms due to Alberto and evacuated workers from those sites. The Gulf is home to 17% of daily U.S. crude output and 5% of natural gas production.

The Fed will have difficulty raising interest rates significantly beyond the settings of its Japanese and European counterparts, which are still pursuing accommodative policy, according to St. Louis Fed President James Bullard. Not wanting to prejudge the central bank's next meeting in June, Bullard also reiterated his view that the Fed does not need to raise interest rates further because of low inflation expectations.

Stocks

Cyber attackers may have stolen the data of nearly 90K customers at the Bank of Montreal (NYSE:BMO) and Canadian Imperial Bank of Commerce (NYSE:CM) in what appeared to be the first significant assault on financial institutions in Canada. The "fraudsters" threatened to make the data public, according to a spokesman, who stated the claims were not yet verified. TD Bank (NYSE:TD), Royal Bank of Canada (NYSE:RY) and Bank of Nova Scotia (NYSE:BNS) appear to be unscathed by the reported attacks.

Britain is poised to sell a multi-billion pound stake in Royal Bank of Scotland (NYSE:RBS), resuming a huge privatization program that has been stalled for three years. The government still holds a 71% stake in the lender after stepping in with a taxpayer bailout during the financial crisis, but efforts since then to recoup the money have been stymied by the plunge in the bank's share price, regulatory probes and Brexit.

Ant Financial has closed its latest funding round having raised $10B from a clutch of global and local investors, sources told Reuters. It values the Alibaba (NYSE:BABA) affiliate at $150B, compared with about $60B after its previous fundraising in April 2016. Ant is expected to list on both domestic and overseas exchanges, according to people familiar with the company's plans.

In a final push to secure clearance for its proposed $44B acquisition of NXP Semiconductors (NASDAQ:NXPI), Qualcomm (NASDAQ:QCOM) is expected to meet this week with China's antitrust regulators. The deal, which has already got a nod from eight of the nine required global regulators, comes after the Trump administration said it had reached a deal that would put Chinese telecom equipment maker ZTE (OTC:ZTCOY) back in business.

Apple may be planning to use OLED screens for all its upcoming iPhone (NASDAQ:AAPL) models, according to South Korea's Electronic Times. At the moment, only the iPhone X uses OLED, while the iPhone 8 and iPhone 8 Plus both have LCD screens. iPhone display makers tumbled on the report, with Japan Display (OTCPK:JPDYY) sinking as much as 21% and Sharp (OTCPK:SHCAY) declining as much as 4.3%.

Cheers! Coca-Cola (NYSE:KO) has launched its first ever alcoholic drink, called "Lemon-Do," which will be sold across Japan with 3%, 5% and 7% alcohol versions. The move capitalizes on the growing popularity of "chuhai" alcopops, which contain shochu alcohol mixed with flavored carbonated water. Although it owned a winery from 1977 to 1983, Coca-Cola has never directly sold an alcoholic drink in a history that dates to 1886.

Starbucks will close its more than 8,000 company-operated stores in the U.S. this afternoon to conduct anti-bias training. The session will include videos featuring company executives and rapper Common, as well as encouraging employees to share stories of bias in their own lives. It adds to the coffee giant's new visitor policy following an uproar over the way two black men were treated at a Starbucks (NASDAQ:SBUX) in Philadelphia last month.

Airbnb only recently began to regard Booking Holdings (NASDAQ:BKNG) as a threat, but internal projections from the two companies suggest the two may be neck and neck, The Information has learned. Airbnb (AIRB) internally projects it will sell 255M-265M "room nights" this year, although it hopes to lift that number to nearer 280M, while Booking Holdings expects to sell 270M room nights of "alternative accommodations."

The Force under siege? Disney's (NYSE:DIS) Solo: A Star Wars Story struggled in its debut at the Memorial Day box office, taking in an estimated $83.3M for its first three days, well short of Rogue One's $155.1M for the same period. Adding in Monday, Solo reached an estimated $103M, well down from a projected $130M-$150M.

Petrobras is now urging its workers not to follow through on a strike planned for later in the week after Brazil's government offered new fuel subsidies and changed the oil producer's pricing policy. The decision was in response to a major truckers' strike that had paralyzed factories, caused food and fuel shortages, and wreaked havoc on the economy. PBR -14% premarket.

Effectively nationalizing the project until an operator can be found, Canada is likely to buy Kinder Morgan Canada's (OTCPK:KMLGF) Trans Mountain oil pipeline and its controversial expansion project, Bloomberg reports. The Canadian government intends to offload the project as soon as it's guaranteed that it will be built, but it's unclear if other Kinder Morgan (NYSE:KMI) assets will be included in any sale.

Union members representing Canadian Pacific Railway's (NYSE:CP) conductors and locomotive engineers have served a notice to go on strike as early tomorrow amid strong demand for shipments of grain, potash and other commodities. "After workers at CP voted to reject the last contract offers, the company is still refusing to negotiate seriously," according to a union statement. CP is Canada's second-largest railroad.

Australia is calling back an additional 1.1M cars fitted with Takata (OTCPK:TKTDQ) air bags, increasing the size of the country's biggest ever compulsory recall to just under 4M automobiles. The devices have been linked to at least 18 deaths and 180 injuries worldwide because the inflators can rupture and shoot metal fragments into vehicles, leading to mass recalls around the globe.

Airbus has named company veteran Eduardo Dominguez Puerta to head its Urban Air Mobility unit, a newly formed division that will oversee futuristic transport options. Projects include an autonomous flying cab prototype called CityAirbus, as well as electric flying taxis named Vahana and Voom, which are being billed by Airbus (OTCPK:EADSY) as a premier on-demand helicopter booking platform.

Jeff Bezos has pledged to use his rocket startup to develop robotic rovers and perhaps human habitats on the moon's surface, even if such projects fail to win financial support from NASA. "This is not something that we may choose to do; this is something we must do... We must go back to the moon, and this time to stay." Bezos has sold roughly $1B of Amazon (NASDAQ:AMZN) stock annually to invest in Blue Origin (BORGN), which hopes to start offering suborbital space tourism flights by 2019.

Today's Markets

In Asia, Japan -0.6%. Hong Kong -1%. China -0.5%. India -0.6%.
In Europe, at midday, London -1.2%. Paris -1.2%. Frankfurt -1.3%.
Futures at 6:20, Dow -0.7%. S&P -0.7%. Nasdaq -0.6%. Crude -1.4% to $66.94. Gold flat at $1303.50. Bitcoin +0.6% to $7149.
Ten-year Treasury Yield -7 bps to 2.86%

Today's Economic Calendar

00:40 Fed's Bullard: U.S. Monetary and Economic Policy
9:00 S&P Corelogic Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
10:30 Dallas Fed Manufacturing Survey