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Trump faces more pushback on protest response, ECB expected to announce additional stimulus, and jobless claims may drop below 2 million.   

Defense attacks

Both President Donald Trump's current and former defense secretaries have publicly questioned his threat to use military force to quell nationwide protests. Defense Secretary Mark Esper said he did not support invoking the 1807 Insurrection Act, comments which angered White House officials who see it as breaking rank. Jim Mattis was much stronger in his attack on his former boss, accusing Trump of trying to divide the American people. The president does not seem ready to change course, saying yesterday that if New York City leaders fail to crack down on protests in the city, then he would

Buying, spending

The European Central Bank is expected to announce an extension of its pandemic asset purchase program today, with most economists surveyed predicting an extra 500 billion euros ($560 billion) of bond buying. With inflation close to zero and growth in the region expected to plunge by double digits this year, there is little likelihood of much internal opposition to more stimulus. The bank's decision is announced at 7:45 a.m. Eastern Time followed by a press conference with President Christine Lagarde at 8:30 a.m. Also in Europe, details of a bigger-than-expected 130 billion euro fiscal package in Germany show a focus on digital infrastructure and green energy, without providing direct support to the country's car industry. 

Jobs

The number of weekly initial jobless claims is expected to drop below 2 million for the first time since mid-March when the data is published at 8:30 a.m. this morning. The employment picture remains both depressing and unclear ahead of tomorrow's payrolls number which is forecast to show 8 million positions lost in May. Yesterday's ADP data showed private companies cut positions at one third of the expected pace, with a 2.76 million drop

Markets slip

Global stock markets were taking a break from their daily ritual of rallying despite everything going on the world. There was still some bullishness holding out in Asia where the MSCI Asia Pacific Index climbed 0.3% and Japan's Topix index closed 0.3% higher. The mood in Europe was souring ahead of the ECB decision, with the Stoxx 600 Index 0.7% lower by 5:50 a.m. It was a similar story for U.S. futures which pointed to a drop at the open. The 10-year Treasury yield was at 0.744% and oil was lower

Coming up...

April U.S. trade data accompanies the claims data and the start of the ECB press conference at 8:30 a.m. Canada reports international trade for April, also at 8:30 a.m. Slack Technologies Inc., Broadcom Inc. and Michaels Cos Inc. are among the companies reporting. Casinos in Las Vegas are set to reopen today.

What we've been reading

This is what's caught our eye over the last 24 hours

And finally, here's what Joe's interested in this morning

The stock market has basically gone straight up since the beginning of April, but over the last several days something has started to change. In the beginning the market was lead by a handful of tech megacaps and "stay at home" stocks that were perceived to be safe ports in a storm. Lately people have been buying everything, especially stuff that had really gotten beat down hard in the crash. Just take a look at things like airlines or Brazilian shares. It's all getting bought. And not only that, yesterday we saw a substantial selloff in Treasuries, which was a further sign of exuberance, as people start to relinquish their grip on haven assets.

So once again, confused observers may be asking why markets would go up so aggressively amid *gestures wildly at everything* all this. Perhaps a hint is in the forecast from economist Mark Zandi, who sees the unemployment rate falling back to 10%, where it would stay in the absence of further aggressive fiscal stimulus. 10% unemployment is awful. That's the worst level of the financial crisis. Nonetheless investors may just be assuming that the post-2009 playbook will work again. If you bought stocks when the unemployment rate was 10% last time around, you did phenomenally well in the subsequent years, as mediocre wage growth and massive slack basically guaranteed that the Fed wouldn't hike rates for years, creating the Goldilocks conditions that investors love.

There's all kinds of ways the plan could go bad. If the existing economic shock gives way to further weakness in demand, then that could wreck the market. Or if somehow the Fed is forced to start hiking sooner than the market currently estimates, then that would throw a spanner in the works. But right now it looks like investors are fast forwarding to the end of the tape and saying we know how this ends, so let's just go there now.

Joe Weisenthal is an editor at Bloomberg. 

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