With trade war drums beating loudly, a strong employment report from the Labor Department this morning will probably do little to dial back market expectations that the Fed will cut interest rates this year. Nonfarm payrolls probably increased by 185,000 jobs last month after surging 263,000 in April, a figure that's well above the roughly 100,000 needed per month to keep up with growth in the working age population. Average hourly earnings are forecast to have increased 0.3% after rising 0.2% in April, while the unemployment rate is expected to have remained near a 50-year low of 3.6%.

More gains

Wall Street futures are ahead by 0.3%, pointing to a fourth consecutive session gain, as investors anticipate a near-term immigration agreement between the U.S. and Mexico, and extend bets on further central bank easing around the world. While the White House still intends to impose tariffs on Mexican imports this Monday, reports suggest "significant progress is being made" in negotiations. Investors are also continuing to digest yesterday's ECB decision day, including revelations that policymakers have been discussing potential rate cuts and an extra bout of quantitative easing.

Trouble in the eurozone

Further signals of an economic slowdown are continuing to build, with Germany reporting a staggering 3.7% plunge in April exports - the most in nearly four years - alongside a 1.9% contraction in industrial output. The figures were severe enough for the country's central bank, the Bundesbank, to slash its 2019 GDP forecast in half to just 0.6%. "For economic growth and, to a lesser extent, for the rate of inflation, it is the downside risks that predominate as things stand today," the central bank said in a biannual update of its projections.

China's policy arsenal

If the trade war with the U.S. deepens, "we have plenty of room in interest rates, we have plenty of room in required reserve ratio rate, and also for the fiscal, monetary policy toolkit, I think the room for adjustment is tremendous," PBOC Governor Yi Gang declared. The yuan has stabilized in recent weeks as authorities voiced support for the currency, following a rapid selloff that pushed it near 7 per dollar - a level not breached since the global financial crisis. It still lost about 2.5% in May, among the worst in Asia.

Mayday

After 1,059 days in charge, U.K. Prime Minister Theresa May has officially stepped down as leader of the ruling Conservative Party. The race has already started to replace her, with 11 contenders and Boris Johnson the current favorite. Starting next week, the party's 300 or so MPs will whittle down the field of candidates to two through successive rounds of voting. After that, the party’s rank-and-file members, an estimated 124K people, will decide which of those two finalists gets to be leader.

Grocery battle hits next level

As the delivery wars continue to heat up, Walmart (NYSE:WMT) is restarting a service that brings grocery orders inside shoppers' homes and into their kitchen refrigerators. This time, Walmart will use its own employees - who have been with the retailer for at least a year - and use its own vehicles. Workers will also be required to wear wearable cameras and enter the home by putting in a one-time code on a smart lock. The service will begin this fall across three cities - Kansas City, Missouri; Pittsburgh, Pennsylvania; and Vero Beach, Florida.

Barnes & Noble on the block

Seeking a new owner after years of decline, Barnes & Noble (NYSE:BKS) is nearing a deal to be bought by Elliott Management, WSJ reports. The news sent shares of the nation’s largest bookstore chain up 30% to $5.96 on Thursday (the hedge fund is expected to pay $6.50 per share). The acquisition, which could be imminent, wouldn't be the first foray into bookstores for Elliott after the firm scooped up U.K. book chain Waterstones in 2018.

Huawei crackdown

Facebook (NASDAQ:FB) is no longer allowing pre-installation of its apps on Huawei phones, the latest blow for the Chinese tech giant as it struggles to keep its business afloat in the face of a U.S. ban on its purchase of American parts and software. Meanwhile, Google has (GOOG, GOOGL) warned if the U.S. administration moves ahead with sweeping ban on Huawei, it risks compromising national security, FT reports. While the sanctions are expected to hurt Huawei in the short term, industry experts say it could force the company to develop more home-grown technologies, hurting the dominance of American companies.

Emissions compromise

With an "extended period of litigation and instability" on the line, a group of 17 major automakers, including General Motors (NYSE:GM), Toyota (NYSE:TM), Honda (NYSE:HMC) and Volkswagen (OTCPK:VWAGY), have come out in support of an emissions deal aimed at heading off a confrontation between California and the Trump administration. In a letter to Governor Gavin Newsom, the companies urged a compromise "midway" between Obama-era standards that require annual decreases of ~5% in emissions and Trump's proposal that would freeze vehicle emissions requirements at 2020 levels through 2026.

Thursday's Key Earnings

DocuSign (NASDAQ:DOCU) -21% AH with signs of subscription deceleration.
J. M. Smucker (NYSE:SJM) -2.3% seeing a sales growth slowdown.
Beyond Meat (NASDAQ:BYND) +18.1% AH giving rosy revenue guidance.
Zoom Video (NASDAQ:ZM) +11.8% AH on upside full-year outlook.

Today's Markets

In Asia, Japan +0.5%. Hong Kong closed. China closed. India +0.2%.
In Europe, at midday, London +0.9%. Paris +1.5%. Frankfurt +0.8%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.4%. Crude +0.8% to $53. Gold -0.4% to $1338. Bitcoin +2.2% to $7969.
Ten-year Treasury Yield flat at 2.13%

Today's Economic Calendar

12:00 Fed's Daly Speech on Sunday
8:30 Non-farm payrolls
10:00 Wholesale Trade
1:00 PM Baker-Hughes Rig Count
3:00 PM Consumer Credit