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Following March’s big disappointment in BLS (and surge in ADP), perhaps today’s better than expected print for April of +204k (+198k exp) is less relevant than ever. Service-providing jobs rose 160k, goods-producing rose 44k, and March’s hot number was revised lower (from 241k to 228k).

Jobs rose in every cohort except “Information”…

“The labor market continues to maintain a steady pace of strong job growth with little sign of a slowdown,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

“However, as the labor pool tightens it will become increasingly difficult for employers to find skilled talent. Job gains in the high-skilled professional and business services industry accounted for more than half of all jobs added this month. The construction industry, which also relies on skilled labor, continued its six month trend of steady job gains as well.”

Mark Zandi, chief economist of Moody’s Analytics, said,

“Despite rising trade tensions, more volatile financial markets, and poor weather, businesses are adding a robust more than 200,000 jobs per month. At this pace, unemployment will soon be in the threes, which is rarified and risky territory, as the economy threatens to overheat.”

While all eyes are focused on ADP employment data today for a hint ahead of Friday’s payrolls print, we remind readers that March saw the biggest ‘miss’ in 7 years as ADP printed 138k higher than BLS’ version of reality…

In fact, as we have pointed out previously, something odd has happened since President Trump was elected – ADP is constantly over-optimistic relative to BLS data, the exact opposite of its regime during Obama’s tenure.

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Critics of President Trump’s tax reform plan said corporations would just use the massive piles of cash repatriated under the new tax law to buy back more stock. And, as it turns out, Apple has proven them right.  

During the first quarter, the iPhone maker bought back $23.5 billion of its shares, a record amount for any US company. And, the reason why the stock is higher this morning, is that the company isn’t nowhere close to being finished, as in its quarterly report Apple announced that it would earmark $100 billion for a new share-repurchase program.

Apple also doled out another $3.2 billion in dividends.

Apple’s buybacks were a direct result of the Tax Cuts and Jobs Act passed by Republican lawmakers in December. The law allowed Apple to repatriate more than $250 billion held overseas.

But in what’s perhaps the most shocking statistic, the amount of stock bought back by Apple is larger than the market capitalization of more than half of the companies in the S&P 500 index, including household names like Kroger, Best Buy and Hershey, according to Reuters calculations.

And what’s more, Apple’s buybacks were equivalent to roughly half of the buybacks announced in April, up from $38.1 billion worth of planned buybacks announced in April 2017, according to Reuters.

In fact, of all quarterly buybacks in history, Apple holds to the Top 4 spots:

• AAPL: Q1 2018 with $22.8 Billion
• AAPL: Q1 2014 with $18 Billion
• AAPL: Q3 2014 with $17 Billion
• AAPL: Q2 2013 with $16 Billion
• IBM: Q2 2007 with $15.7  Billion

Of course, Apple wasn’t alone: The first quarter of 2018 was the biggest quarter on record for buyback announcements as US firms announced $242.1 billion worth of buybacks.

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Former Deutsche Bank trader Greg Lippmann is best known for having worn t-shirts with the logo “I am short your house” just before the financial crisis hit, and the US housing market imploded (making Lippmann very rich in the process). Logically, he is also very well-known for designing the trade against subprime mortgages that became known as the Big Short.

Well, Greg “The Big Short” Lippmann is back with a new warning, telling Bloomberg that the next crisis will emerge from corporate debt (hardly a surprise to regular readers).

Speaking at the Milken Conference, the former MBS trader who now runs his own, $3 billion hedge fund LibreMax Capital, told Bloomberg’s Erik Shatzker that corporate debt and equities will face the biggest pain when the next downturn comes; meanwhile unlike the last crisis, investments linked to consumer debt should be relatively safe as companies have been the ones gorging the most on the ultra cheap interest rates during the past decade (alas, this is yet another analysis that avoids the impact of student and auto loans, which have taken consumer debt to new all time highs).

“If the first quarter’s volatility is a harbinger of something bigger, I think that you’re going to see a lot more trouble in the corporate market and the equity market than the structured products market,” Lippmann said during a Bloomberg interview in Beverly Hills. “The consumer is in much better shape than corporates. Consumers are less levered than they were pre-crisis. Corporates are more levered than they were pre-crisis, and I think structured products are not going to be the epicenter.“

Lippmann also predicted that while the next recession may not be imminent, “it is on the horizon” and will be less severe but longer than the global financial crisis of 2008 and 2009. It’s likely to be more akin to 2000 through 2002, he said.

Of course, Lippmann has a reason to be bullish on structured products and bearish on corporates: he said that his fund has been heavily investing in other structured products such as commercial mortgage securities, collateralized loan obligations and student-loan investments. The fund has also shifted into the debt of some companies with exposure to real estate, such as homebuilders. One may almost call Lippmann “the big long.”

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After President Donald Trump sought to crowdsource the location of the historic US-North Korea summit by asking his twitter followers if they’d appreciate the symbolic significance of a meeting along the Demilitarized Zone, a South Korean newspaper reports that Panmunjeom – the border village where the Korean War armistice was signed – and Pyongyang, the North Korean capital, are the final two candidates, according to two anonymous US officials. 

“The US is currently pushing for Panmunjeom and North Korea for Pyongyang as the site of the summit,” a source in Washington who is familiar with developments concerning the summit said on April 30.

“A few days ago, President Trump said that the candidates for the North Korea-US summit had been narrowed down to two, but North Korea and the US were already talking about Panmunjeom and Pyongyang two weeks before he made those remarks,” the source said.

The report in South Korea’s Hankyoreh newspaper suggests that “third country” locations like Switzerland and Sweden, which were initially touted as possible locations for the summit, have been definitively ruled out.

During a joint press conference with Nigerian President Muhammadu Buhari at the White House on Friday, Trump responded to a question about the possibility of holding the summit in the DMZ, saying “some people don’t like the look of that” but that there’d be a “great celebration” to be had on the site if the talks go well.

“Some people don’t like the look of that, some people like that very much. […] There’s something I like about it because […] you’re actually there where if things work out there’s a great celebration to be had on the site not in a third party country.”

Other sources explained that Trump’s push to hold the summit at the DMZ is a negotiating tactic aimed at extracting more nuclear concessions, since the North Koreans are pushing to host the summit in Pyongyang.

Of course, choosing a location should be an afterthought assuming the North Koreans are serious about denuclearization.

“If, in fact, Kim has made a strategic decision to give up his entire nuclear weapons program, then I think deciding on the place and the date should be fairly easy,” said John Bolton.

Bolton’s remarks, according to Hankyoreh, appear to suggest that the US would be willing to hold the talks in Pyongyang if North Korea is willing to make certain concessions on the scope and time frame of denuclearization.

According to diplomats, the optics of President Trump visiting Pyongyang, the capital of a country with which he was only recently exchanging nuclear threats, would create a powerful image. However, a meeting at Panmunjeom would also carry symbolic weight, given its role in the original Korean War peace talks. Panmunjeom was one of a handful of potential summit locations that were discussed during the phone call between President Moon and Trump on April 28. Most recently, it was the site of the historic inter-Korea summit held on April 27. 

“Panmunjeom has considerable significance as the place where division was dissolved and a milestone to peace was erected,” a senior official at the Blue House said on May 1.

“If Panmunjeom turns out to be the site of the North Korea-US summit, the summit could end up being even more symbolic than the Malta Summit,” Blue House Chief of Staff Im Jong-seok said last month. The Malta Summit was when the leaders of the US and the Soviet Union met in 1989 to officially declare the end of the Cold War.

Hankyoreh added that Panmunjeom would also be useful because of the minimum of ceremony that such a meeting would require, as opposed to a summit in Pyongyang, which would be considerably more high maintenance. Furthermore, South Korea’s Blue House believes that if an agreement is reached during the meeting, it would be best for South Korean President Moon Jae in to immediately join the two leaders for a trilateral summit aimed at officially bringing an end to the Korean War.

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As Asian and European traders return from holiday, sentiment is generally risk on, with Asia mixed and European markets and US equity futures in the green, rallying from the open as the DAX outperforms, the mining sector is well supported thanks to a metals rally in Asia while tech stocks rise following Apple’s earnings last night.

After slumping late on Tuesday evening following a WaPo report that Mueller may subpoena Trump to compel him to answer questions, U.S. stock index-futures have risen in what has been largely a straight line all session, with Nasdaq futs rising the most after Apple impressed investors with the size of its buybacks, which offset the miss in iPhone sales.

In addition to AAPL, SNAPwill be in the spotlight after Snapchat parent’s first-quarter sales fall far short of target. Shares tumbled in extended hours. Overall so far, about two third of S&P 500 companies have reported results, of which 80% have managed to beat estimates, according to Bloomberg data. That’s much higher than the 73% beats seen during the same quarter last year. And yet, the S&P is in the red since the start of earnings season.

European miners, automakers, and technology shares led the Stoxx Europe 600 Index toward its best gain this week, ignoring declines in most Asian markets. Dialog Semi up 4.9%, Infineon up 1% and STMicro up 2% on the back of Apple earnings while the basic resources sector also gained ground, helped by a rally in base metal prices.

Also of note: today we got the European Q1 GDP print which came in as expected at 0.4%, if still disappointing, as it slowed down materially from 0.7% in the prior quarter this was the weakest number since early 2016.

The GDP slowdown was offset by a slightly better final Eurozone Markit Manufacturing PMI for April which came in at 56.2, slightly above the 56.0 expected, and above the last print of 56.0.

Overnight in Asia, Bloomberg’s Tom Orlik writes that the main takeaway from China’s April Caixin purchasing managers’ index is not the fractionally higher headline reading but the slowdown in new business: the reading came in at 51.1, up from 51 in March and above expectations of 50.9. As Orlik notes, “it’s particularly striking that export orders are contracting, possibly an indication that tariff talk has turned buyers cautious. Taken together with other early indicators, the Caixin data flags the possibility of softening momentum heading into 2Q. That’s consistent with our expectation of a moderate slowdown stretching over the year.”

And while Chinese policy makers appear to be taking no chances, with the latest signals showing a slight tilt toward supporting growth including a cut in the reserve requirement ratio and allowing the yuan to creep lower, Chinese markets turned cautious, and the SHCOMP closed just barely in the red, with Asian stocks failing to cross into the green.

Moving on to today’s highlight now and that’s likely to be the conclusion of the FOMC.  The Federal Open Market Committee is expected to leave interest rates unchanged, and the focus will be on how it opts to describe price pressures. A policy statement is scheduled for 2 p.m. on Wednesday. As Deutsche Bank writes, “it’s probably a little hard to get too excited though given that it’s a non-press conference meeting and no change in policy is expected with the market pricing a lowly 4% probability to a hike. Indeed our US economists believe that the focus will instead be on modifications to the statement language. Specifically they will be looking for indications that the Committee is preparing for more substantial changes to come in June. The team expect the statement to find a way of acknowledging but downplaying the softening of growth in Q1, perhaps by noting that it followed a strong Q4 bounce back from hurricane disrupted activity earlier.

More importantly, our colleagues expect the Committee to upgrade the inflation language to note that inflation has risen and is near their 2% objective. They could also note that market-based measures of inflation compensation have risen further in recent months. On the outlook they could make a subtle change to describing it as “remains solid” rather than “has strengthened” recently. The other two issues that will likely be discussed are when to modify either (1) the balance of risks or (2) the statement that the federal funds rate is likely “to remain, for some time, below levels that are expected to prevail in the longer run.”

Also today, the government – seeking to finance a ballooning budget shortfall – will announce its quarterly refunding plans at 8:30 a.m. Wednesday in Washington.

Moving on to today’s highlight now and that’s likely to be the conclusion of the FOMC. It’s probably a little hard to get too excited though given that it’s a non-press conference meeting and no change in policy is expected with the market pricing a lowly 4% probability to a hike. Indeed our US economists believe that the focus will instead be on modifications to the statement language. Specifically they will be looking for indications that the Committee is preparing for more substantial changes to come in June. The team expect the statement to find a way of acknowledging but downplaying the softening of growth in Q1, perhaps by noting that it followed a strong Q4 bounce back from hurricane disrupted activity earlier. More importantly, our colleagues expect the Committee to upgrade the inflation language to note that inflation has risen and is near their 2% objective. They could also note that market-based measures of inflation compensation have risen further in recent months. On the outlook they could make a subtle change to describing it as “remains solid” rather than “has strengthened” recently. The other two issues that will likely be discussed are when to modify either (1) the balance of risks or (2) the statement that the federal funds rate is likely “to remain, for some time, below levels that are expected to prevail in the longer run”.

Looking at FX, the time to trim dollar longs has come as market awaits the Fed policy statement: the U.S. currency pared Tuesday’s advance while Treasuries slipped, even so the dollar is trading near its strongest level against the euro since mid-January.  Some key overnight FX moves:

• BBDXY halts advance as it meets resistance by 233-DMA and as leveraged accounts trim their longs. Any change in the Fed’s inflation rhetoric could see investors chase the market higher, a London-based trader told Bloomberg. Technically, momentum studies suggest dollar rally is to pause, at least on a daily basis.
• EURUSD closes Tuesday below its 200- DMA for the first time since April 2017, signaling bearish momentum may hold. It gained Wednesday as much as 0.2% to touch 1.2030 high; European Q1 GDP came in as expected at 0.3%, which in turn put further pressure on the EURUSD, more downside would result in a test of the pair’s 233-DMA at 1.1925.
• GBPUSD swings between gains and losses as overstretched shorts meet another round of Brexit talks, turbulence in the U.K. government and Thursday’s local elections in England. Cable hit a fresh near four-month low earlier at 1.3581 before climbing back above 1.3600
• USDCNH surged as much as 200 pips after China weakened its daily currency fixing by more expected before U.S. officials arrive in the country to discuss trade issues.

As Bloomberg’s Mark Cranfield writes, the USDCNH breaking out higher ahead of the Steven Mnuchin-led delegation to China to discuss trade issues is unlikely to be a coincidence: “China has the cover story of the yuan being at a two-year high on its basket, which naturally allows for a higher USD spot rate. Even so, the PBOC set the daily USD/CNY fixing on Wednesday higher than many traders expected. One-year CNH forwards have been edging higher and there is increased demand for out-of-the-money USD call options. Neither are yet at levels to cause alarm, but yuan markets have a habit of quickly gaining bearish momentum. USD/CNH above 6.40 will be a signal that China is playing hardball with the yuan.”

Core fixed-income trades under pressure, with the UST curve steeper with focus on refunding announcement. Italian BTPs rally sharply in reaction to Italian President ruling out June elections, as news hit when market was closed yesterday.

In commodities complex, crude fails to remain supported by ongoing speculation that the US could withdraw from the Iranian nuclear deal. Tuesday’s API report revealed an increase 3.4mln in crude inventories, 0.7mln build in Cushing, Gasoline build by 1.6mln and showing a draw in distillates of 4.0mln . In the metals sector, Gold is also sitting in positive territory in the context of a falling Dollar. Copper has also bounced from a monthly low following Chinese manufacturing sector data that suggested improving domestic demand in China.

In the neverending Brexit saga, UK PM May is expected to back EU ‘customs partnership’, according to press reports. However, there were separate reports that UK PM May was warned by 60 Conservative MPs a post-Brexit customs partnership with the EU will result to a collapse of the government.

Over in Italy, a majority of Italian Democratic Party leaders oppose a Salvini or Di Maio-led government. Italian President Mattarella wants a new government in order to pass 2019 budget and rules out June elections. 5 Star Movement leader Di Maio said a government is not possible with the centre right, in short: a paralyzing political impasse with no wait out, for now.

Today’s data include MBA mortgage applications and ADP employment change. AIG, CVS, Kraft Heinz, Manulife Financial, Mastercard, MetLife, Spotify, Sprint, and Tesla are among companies reporting earnings.

Bulletin Headline summary from RanSquawk

• European bourses higher, tech sector leads following Apple’s earnings yesterday
• The Greenback has eased off best levels across the board awaiting more fundamental direction from the FOMC later today
• Looking ahead, highlights include US ADP, FOMC, DoEs, US refunding and a slew of speakers

Market Snapshot

• S&P 500 futures up 0.2% to 2,657.25
• STOXX Europe 600 up 0.6% to 387.40
• MSCI Asia down 0.3% to 173.34
• MSCI Asia ex Japan down 0.3% to 567.21
• Nikkei down 0.2% to 22,472.78
• Topix down 0.2% to 1,771.52
• Hang Seng Index down 0.3% to 30,723.88
• Shanghai Composite down 0.03% to 3,081.18
• Sensex up 0.4% to 35,283.40
• Australia S&P/ASX 200 up 0.6% to 6,050.19
• Kospi down 0.4% to 2,505.61
• German 10Y yield rose 1.8 bps to 0.577%
• Euro up 0.1% to $1.2006
• Italian 10Y yield rose 4.3 bps to 1.53%
• Spanish 10Y yield fell 0.3 bps to 1.277%
• Brent futures down 0.1% to $73.08/bbl
• Gold spot up 0.5% to $1,310.93
• U.S. Dollar Index down 0.1% to 92.34

Top Headline News from Bloomberg

• Prosecutors working for Robert Mueller have made clear to Donald Trump’s legal team that the special counsel would consider a subpoena compelling the president to testify before a grand jury if he refuses to participate in a voluntary interview, according to two current U.S. officials
• Federal Reserve officials have a tricky problem to navigate at this week’s meeting: how to describe inflation that has just bounced back to their elusive 2 percent target
• The prospect of a no-deal Brexit is real again. European Union chief negotiator Michel Barnier is ramping up his rhetoric and officials in private worry that the risk of a messy divorce, which had receded at the end of last year, is now back
• Apple Inc.’s results confirmed that, while the days of double-digit smartphone industry growth are over, Chief Executive Officer Tim Cook has a plan to withstand the slowdown
• AllianceBernstein Holding LP is said to be planning to move its headquarters to Nashville, with more than 1,000 staff potentially moving, according to the Nashville Post
• A surge in prices of crude oil, India’s biggest import item, and a sharp weakness in the rupee are pushing some economists to change their minds on when the central bank will raise interest rates, with Deutsche Bank seeing a hike in June
• European Manufacturing PMIs: Eurozone 56.2 vs 56.0 est; Germany 58.1 vs 58.1 est; France 53.8 vs 53.4 est; Italy 53.5 vs 54.5 est; Spain 54.4 vs 54.1 est.
• Eurozone 1Q A GDP q/q: 0.4% vs 0.4% est.
• Brexit: Tory faction of 60 MPs considering withdrawing support for govt bills in Parliament in opposition to the customs partnership plan with the EU, according to people familiar: Telegraph
• API inventories according to people familiar w/data: Crude +3.4m, Cushing +0.7m, Gasoline +1.6m, Distillates -4.1m

Asian markets eventually saw a broad risk-averse tone despite initially trading mixed throughout most the session following a similar close on Wall St. where stocks rebounded from the initial data-triggered selling pressure and the Nasdaq  outperformed in anticipation of Apple earnings. The tech giant eventually reported a beat on EPS, announced a USD 100bln share repurchase authorization and raised dividends by 16%, although it slightly missed on revenue and iPhone sales; shares were higher by around 5% after-market which fuelled further upside in Nasdaq 100 futures to above 6700. US equity futures have since pulled-back from highs amid a bout of selling following reports that Special Counsel Mueller suggested the possibility of a subpoena if President Trump refuses to speak to investigators, although the pressure was suppressed shortly after it was determined this was from a meeting with Trump lawyers back in March. ASX 200 (+0.6%) and Nikkei 225 (-0.2%) traded mixed as earnings  dictated price action. Shanghai Comp. (flat) and Hang Seng (-0.3%) traded subdued despite initial gains in mainland on return from the extended weekend as it took its first opportunity to react to better than expected Chinese Official Manufacturing and NonManufacturing PMI data. However, the picture then gradually deteriorated following the Caixin Manufacturing PMI which also topped estimates but showed Export Orders shrank for the first time since November 2016. Finally, 10yr JGBs were uneventful amid similar price action in T-notes and as stocks took much of the focus, while the results of an enhanced-liquidity for 2yr-20yr also failed to spur demand

Top Asian News

• Xerox CEO Resigns in Icahn Win That Threatens Fujifilm Deal
• Mubadala Said to Hire BofA, Morgan Stanley, Citi for Cepsa IPO
• Banks Scrambling for Hong Kong Deposits Push Rates as High as 3%
• Chinese Battery Giant Wins First Order From Nissan for Sylphy

European markets have returned on an upbeat tone (Eurostoxx +0.4%) with all major bourses in the green following mass closures in the region yesterday. Germany’s DAX 30 is outperforming its peers after breaching its 200DMA to the upside. All sectors are firmly in the green with outperformance in materials as miners are lifted amid higher copper prices. The tech sector is feeling a boost following Apple’s earnings post-market yesterday with the likes of Infineon (+3.4%) and STMicroelectronics (+4.9%) at the top of their respective indices. On the downside, earnings dampened the likes of Paddy Power Betfair (-5.9%), Swisscom (-3.1%) and Direct Line Insurance (-3.2%).

Top European News

• Euro-Area Factory Growth Eases for Fourth Straight Month
• U.K. Construction Rebounded in April as Snow Disruption Fades
• Lundin Jumps to a Record as Earnings Soar on Output, Cost Cuts
• Germany Poised for Solar Record as Hot April Weather Lingers

In FX, the Greenback has eased off best levels across the board awaiting more fundamental direction from the FOMC later today, but figuratively speaking the next major move may well depend on several big figures that have been tried and tested, but not yet breached. In terms of the Dollar index, a base does appear to be forming at 92.000 after several approaches towards the 92.640 ytd peak and a rebound in US Treasury yields is supportive, albeit partly supply-related ahead of the Quarterly Refunding.  Technically, 92.515 is a key Fib for the DXY that has yet to be cleared convincingly. AUD/NZD: The biggest beneficiaries of a pause in the Greenback’s advance, but in truth largely due to the fact that both antipodeans have borne the brunt of losses when trading below 0.7500 and 0.7000 respectively. No real positive momentum for the Kiwi from rather indifferent NZ jobs data overnight, but Nzd/Usd has rebounded relatively firmly above the big figure again, as Aud/Usd retains its round number status and the cross straddles 1.0700. GBP: Some respite for the floundering Pound as the UK construction PMI returns to growth and beats consensus to break the recent run of disappointing macro leads. Cable has bounced firmly above 1.3600, to just over 1.3650 and Eur/Gbp is back below 0.8800, but Sterling is far from out of the firing line amidst yet more Brexit-related political divisions and uncertainty over the EU withdrawal bill on customs union and Irish border dispute among other contentious issues. EUR: Pivoting around the 1.2000 marker vs the Usd having traded below the 200 DMA for the first time in around 12 months yesterday, and the headline pair now looking prone to more downside if that key technical level fails to hold (1.2016).  CAD: The Loonie has resumed its overall recovery from recent 1.2900 and above lows vs the Usd in wake of Tuesday’s better than forecast Canadian GDP report, with more impetus emanating from a more confident if not hawkish BoC Governor Poloz. Usd/Cad is now looking at more bids said to be sitting between 1.2820-00.

In commodities, crude fails to remain supported by ongoing speculation that the US could withdraw from the Iranian nuclear deal. Tuesday’s API report revealed an increase 3.4mln in crude inventories, 0.7mln build in Cushing, Gasoline build by 1.6mln and showing a draw in distillates of 4.0mln . In the metals sector, Gold is also sitting in positive territory in the context of a falling Dollar. Copper has also bounced from a monthly low following Chinese manufacturing sector data that suggested improving domestic demand in China. US API weekly Crude Stocks (27 Apr) +3.427M vs. Exp. +0.700M (Prev. 1.099M).  IMF official says Saudi Arabia needs oil at USD 85-87/bbl to balance budget.Russian oil production in April in line with May at 10.97mln BPD.

Looking at the day ahead, it’s a busy day headlined by the FOMC meeting outcome in the evening. Prior to that we’ll get the April ADP employment change print in the US, while in Europe a first look at Q1 GDP for the Euro area and  Italy is due. The remaining April manufacturing PMIs will also be out in Europe. The other  big event on Wednesday is the US Treasury announcement of its debt issuance plans. EU and UK Brexit negotiators will also begin the next round of Brexit talks, continuing through to Friday, while the ECB’s Weidmann will also speak. Kraft Heinz and Tesla results are also due.

US Event Calendar

• 7am: MBA Mortgage Applications, prior -0.2%
• 8:15am: ADP Employment Change, est. 197,500, prior 241,000
• 2pm: FOMC Rate Decision (Upper Bound), est. 1.75%, prior 1.75%
• 2pm: FOMC Rate Decision (Lower Bound), est. 1.5%, prior 1.5%

DB’s Jim Reid concludes the overnight wrap

My favourite news story yesterday was that the viewing of children’s program Peppa Pig is increasingly being controlled in China as its overwhelming popularity is spreading to adults and is apparently encouraging subversive behaviour. As someone who has to sit through it every night when I get home and also at weekends then I can testify that I’m increasingly having subversive thoughts and tendencies after watching so many episodes.

For most of yesterday it felt like US industrials would subvert financial markets but a late rally in tech (IT sector +1.46%) helped turn the S&P 500 from -0.85% to a closing +0.25%. Apple (+2.3%) led the charge before the close and rose a further +3.7% in extended trading after a beat on consensus revenue estimates and announcing a new US$100bn share buyback as well as guiding to higher revenue for the June quarter ($51.5bn-$53.5bn vs. consensus of $51.6bn). The Dow dipped -0.27%, weighted down by Pfizer (-3.3%) and a softer than expected ISM manufacturing print.

Elsewhere, market volumes were fairly thin as several European and Asian countries were celebrating May Day/Labour Day. Weaker WTI Oil (-1.93%) and a stronger US dollar index (+0.66%) were some of the main highlights, with the USDEUR at the highest since mid-January as it fell below 1.20 yesterday (this morning 1.1990). As we’ll see later, the other big story was that the prices paid component within the ISM was at 7 year highs continuing a theme from virtually all the recent survey data. Elsewhere, Sterling dropped -1.08% post the weak UK data (see below) while government bonds were mixed but little changed (UST 10y +1.1bp; Gilts -1.4bp).

This morning in Asia, markets are modestly lower as trading resumed post holidays, with the Nikkei (-0.32%), Kospi (-0.36%), Hang Seng (-0.60%) and Shanghai Comp. (-0.38%) all down. Futures on the S&P are down c0.2%, in part as the Washington Post reported that Special investigator Mueller has told President Trump’s legal team that he would consider a subpoena to compel the President to face a grand jury if he refuses to do a voluntary interview.

Elsewhere, China’s RMBUSD fell c0.4% this morning as the PBOC cut the reference level of the Yuan to 6.3670 per USD. Datawise, China’s April Caixin manufacturing PMI was slightly above market (51.1 vs. 50.9 expected) while Japan’s April Nikkei composite and services PMI both rose from the prior month at 53.1 (vs. 51.3 previous) and 52.5 (vs. 50.9 previous) respectively.

Moving on to today’s highlight now and that’s likely to be the conclusion of the FOMC. It’s probably a little hard to get too excited though given that it’s a non-press conference meeting and no change in policy is expected with the market pricing a lowly 4% probability to a hike. Indeed our US economists believe that the focus will instead be on modifications to the statement language. Specifically they will be looking for indications that the Committee is preparing for more substantial changes to come in June. The team expect the statement to find a way of acknowledging but downplaying the softening of growth in Q1, perhaps by noting that it followed a strong Q4 bounce back from hurricane disrupted activity earlier. More importantly, our colleagues expect the Committee to upgrade the inflation language to note that inflation has risen and is near their 2% objective. They could also note that market-based measures of inflation compensation have risen further in recent months. On the outlook they could make a subtle change to describing it as “remains solid” rather than “has strengthened” recently. The other two issues that will likely be discussed are when to modify either (1) the balance of risks or (2) the statement that the federal funds rate is likely “to remain, for some time, below levels that are expected to prevail in the longer run”.

Anyway we’ll have the answers to those questions at 7pm BST tonight. Ahead of it, it was interesting to see more evidence of pricing pressure coming through in the prices paid component of the ISM survey yesterday. The April reading of 79.3 represented a jump of 1.2pts and bettered expectations for 78.5, and also rose to the highest since April 2011. That index is also up an impressive 26.3pts from the mid-2017 lows. The accompanying text to the survey noted that “the increases in prices was across all industry sectors” so it appeared to be broad based. The actual headline ISM manufacturing reading was below expectations at 57.3 (vs. 58.5 expected) and down 2pts from March but continues to remain at historically elevated levels. New orders also moderated to 61.2 (from 61.9) but again remains well in expansion territory, while the employment component pulled back to 54.2 (from 57.3) to match the January level.

Here in the UK there was also plenty of focus on the domestic data and particularly the soft March consumer credit data. Unsecured lending came in at just £254m compared to expectations for £1.4bn, putting it at the lowest since 2012. Credit card lending was roughly a fifth of the amount in February with the data largely foreshadowed by the BoE’s credit conditions survey out last month. Mortgage approvals also weakened to 62.9k from 63.8k, albeit in line with expectations. The bad news didn’t end there with the April manufacturing PMI coming in at a weaker than expected 53.9 (vs. 54.8 expected) and down 1pt mom to the lowest in 17 months. Sterling sold off -1.08% last night versus the USD, the most since 5th February and is at the lowest since mid-January. We should add that our UK economists reiterated their 1.8% GDP forecast for 2018 yesterday but made the point that consumption will weaken further this year as credit tightening and soft house prices counteract a slight improvement in real incomes. In light of soft data of late next week’s BoE meeting looks to be one to watch.

Ahead of the US / China trade talks from tomorrow, the US Commerce Secretary Ross somewhat softened the expectations of a break through as he noted the US delegation plans to head home by the weekend or sooner “if (talks are) not satisfactory”, although he added that “I wouldn’t be going all the way (to China) if I didn’t think there was some hope”. Elsewhere, US Trade representative Lighthizer noted “it’s not my objective to change the Chinese system…..but I’ve to be in a position where the US can deal with it, where the US isn’t a victim of it, and that’s where our role is”. Moving onto NAFTA talks, Mr Lighthizer said “I’d like to get (an agreement) done a week or two after (next week’s meeting)….If not, then you start having a problem”, in part as changes to NAFTA requires Congress approval and delaying it until the November Congressional elections “changes the whole way you…construct the deal”.

Now moving onto some Brexit headlines. The UK’s Brexit Secretary Davis has confirmed that the EU side has pushed back on Britain’s two proposals for the Irish border issue while he also told the Parliament that it could take “years”  to get the practical measures to resolve the border issues, although he does want “a very substantive” agreement on future relations with the EU by October. Elsewhere, Irish’s deputy PM Coveney told the Senate that the government also wants “substantial progress” on Irish issues, but before the June European Council meeting. So lots bubbling along as Brexit talks resume today.

Looking at the day ahead, it’s a busy day headlined by the FOMC meeting outcome in the evening. Prior to that we’ll get the April ADP employment change print in the US, while in Europe a first look at Q1 GDP for the Euro area and  Italy is due. The remaining April manufacturing PMIs will also be out in Europe. The other  big event on Wednesday is the US Treasury announcement of its debt issuance plans. EU and UK Brexit negotiators will also begin the next round of Brexit talks, continuing through to Friday, while the ECB’s Weidmann will also speak. Kraft Heinz and Tesla results are also due.

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Submitted by Bill Blain of Mint Partners

“There’s no time to cry, happy, happy. Put it in your heart where tomorrow shines..“

Can’t not talk about Apple this morning. Y’day’s numbers cap a superb run of earnings from the Tech/Data giants –  just as we were beginning to hate them!

Why did we ever doubt? We are not worthy of their infinite love… (Well, we got Tesla coming up..)

Does Apple’s record $100 billion bribe stock-buyback mean we’re all good with the Bright Shiny Things that Make it All Better? Mac want us to focus on non-smartphone earnings from I-tunes subscriptions, apps, cloud and other tech. I do love my Home-pod, but my Apple Watch was a terrible disappointment even before the face fell off and they refused to fix it. As for cordless headphones – er, you buy better ones for a quarter the price, although I accept they ain’t Apple White.

My key issue remains: show me what’s in the magic cupboard, show me the next thing I never imagined could exist. Er? It’s empty? I can’t help but think smartphones are just commodities and Apple just aint as exciting in terms of the long term opportunities as other disruptives. I’m wondering what’s happened to the creative energy that spawned the tech revolution, the big data society and the internet insurrection of the high street? Did it get buried in “same as”, “same as”, and expectations West Coast PVE will buy anything?

Facebook launching a dating app? Please, no one under 30 knows what FB is. I was reading a great article in the FT yesterday about the BIG DATA competition between the US and China. There is a picture that sums up it all: a Chinese Policewoman on the beat wearing a pair of smartglasses with built in facial recognition. We all know China’s concern with civil liberties is more casual than the West’s, but that’s one future, and it’s not dependent on launching BNST Smartphone XI next year… just saying, y’know..

Meanwhile the old world continues to wither and die. One of the iconic guitar makers, Gibson (how I wish I had the dosh to have bought one when I was young: it would have opened my future as a rockstar rather than a middling investment banker… ) went into chapter 11 y’day, a victim of over expansion and unwise over-hopeful App driven spending. (Dang.. there is probably a Gibson sale coming up and just spent my rainy day money on new sails for the yacht..)

This morning the news is about Trump trade negotiations, Trump upsetting stock markets over his inherent naughtiness, pontifications on whether he will succeed or not in getting deals closed and signed. I’m betting he will, but.. does it matter? Or how about the continuing ructions in stocks and bonds: up a bit, down a bit, a bit of worry about liquidity and worries about spreads.

One theme that’s becoming increasingly clear is growing concern on heavily indebted EM and HY companies; they are tumbling like skittles on a championship night. It’s clear from the price action the street is increasingly discounted anything with a whiff of leverage and potential cashflow issues.

Yet as all this is occurring.. it’s important to remember the tau of the long-term investment gods – in the long-term geopolitics and market ructions don’t matter. Growth will beget returns. As the population rises, job rise, incomes rise, then financial assets will inevitably follow.

They do say the single cowrie shell found in an ancient child’s piggy-bank in the ruins of ancient Ur, (perhaps the oldest city in the world), would now be worth more than Apple, Amazon and Tencent combined. If that child had just put into a JP Morgan account – he or she would be on a great pension.

And as the world is set to continue expanding with more and more workers expected to pull their families into the middle classes, and start consuming, travelling and spending with a vengeance, then the long-term outlook looks excellent. Its just the short-term that is more difficult… and as Keynes said.. “in the long-run, we’re all dead..”

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Authored by Maria Polizoidou via The Gatestone Institute,

• In principle, the idea is no different from George Soros’s 220-page guide seemingly to create a permanent voting majority for the Democratic Party by “enlarge[ing] the U.S. electorate by 10 million voters by 2018.”

• Greece’s ruling Syriza coalition appears to be adopting a strategy of garnering votes from immigrants by expediting their naturalization process. It will be easier to obtain Greek citizenship than a fishing license.

• A total of 800,000 immigrants — almost one-tenth of the native Greek population — will soon become citizens. Transposed to the United States, that would be the equivalent of 32,000,000 new voters.

As Greece struggles with accelerating economic decline and an increasing lack of public faith in the political leadership, the ruling Syriza coalition appears to be adopting a strategy of garnering votes from immigrants by expediting their naturalization process.

According to a recent report in the Greek daily Parapolitika, Interior Minister Panos Skourletis is laying the groundwork to enable hundreds of thousands of immigrants to become citizens and vote in the next elections. Although the mandate of Prime Minister Alexis Tsipras ends in September 2019, some analysts have been predicting a call for elections by the end of 2018.

Until now, candidates for Greek citizenship had to be vetted by a committee. Under the new system, applicants will be granted citizenship automatically if they correctly answer 20 out of 30 questions online. In addition, the government is planning to allow immigrants over the age of 65 to obtain Greek IDs, without testing their knowledge of the Greek language. In other words, it will be easier to obtain Greek citizenship than a Greek fishing license. As a result, a total of 800,000 immigrants — almost one-tenth of the native Greek population — will soon become citizens. Transposed to the United States, that would be the equivalent of 32,000,000 new voters.

In principle, the idea is no different from George Soros’s 220-page guide, released by DC Leaks, seemingly to create a permanent voting majority for the Democratic Party by “enlarge[ing] the U.S. electorate by 10 million voters by 2018.”

Easing citizenship requirements may be a calculated electoral ploy, but it is also in keeping with an overall European multiculturalism. The current leadership is not interested in the origins of the country’s illegal immigrants, many of whom hail from Afghanistan, Pakistan and sub-Saharan Africa and do not respect the Judeo-Christian roots and culture of modern Greek civilization. Nor does the government appear to concern itself with the danger involved in allowing huge numbers of migrants from terrorist-ridden Muslim-majority countries to become citizens, without vetting them.

Meanwhile, as its immigrant population increases, Greece is simultaneously undergoing a brain-drain. Over the past 8 years, for example, 500,000 skilled and educated young people left the country and have chosen to remain abroad rather than return home and contribute to the economy, the culture and society in general.

According to recent opinion polls, if elections were held in Greece today, the opposition party, New Democracy, would win.

Pictured: Recently-arrived migrants in Lesbos, Greece wait to board a ferry to Athens, on November 10, 2015. (Photo by Carl Court/Getty Images)

It is likely for this reason that the incumbent Syriza coalition has been stepping up its efforts to stay in power.

Let us hope that its maneuver to do so by hastily granting voting rights to immigrants will fail. If not, the future of Greece and other countries where there are visible efforts to undermine democratic processes — as in America’s politicized, seemingly criminalized Department of Justice and Federal Bureau of Investigation and the efforts of U.S. Democrats to try to prevent the president from forming a government — could be dangerously bleak.

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Fed up with Mark Zuckerberg repeatedly dodging their requests to appear in person UK Parliament has issued an ultimatum to the Facebook CEO: come face us by May 24, or you’ll receive a formal summons to appear the next time you set foot on UK soil.

“Following reports that he will be giving evidence to the European Parliament  in May, we would like Mr Zuckerberg to come to London during his European trip,” reads the committee letter signed by Conservative MP Damian Collins. “We would like the session here to place by 24 May.”

“It is worth noting that, while Mr Zuckerberg does not normally come under the jurisdiction of the UK Parliament, he will do so the next time he enters the country,” Collins adds. “We hope that he will respond positively to our request, but if not the Committee will resolve to issue a formal summons for him to appear when he is next in the UK.”

BREAKING: This is pretty extraordinary. Parliament issues ultimatum to Facebook. Either Mark Zuckerberg comes voluntarily. Or, he’ll face a summons next time he enters British territory. Facebook really couldn’t have handled this much worse… pic.twitter.com/VFyJrHXWel

— Carole Cadwalladr (@carolecadwalla) May 1, 2018

The House of Commons’ Digital, Culutre, Media, and Sport Committee has invited Zuckerberg to appear three times to answer questions about data privacy and the recently coined “fake news” shared over Facebook.

The committee has been investigating efforts made by Russian actors and Cambridge Analytica affiliate AggregateIQ to influence the Brexit vote. Facebook recently admitted that Cambridge Analytica improperly accessed the information of about 1 million users in the U.K., and that AggregateIQ spent $2 million on Brexit ads. It’s still unclear whether AggregateIQ used Cambridge Analytica’s data for the ad campaign, and the two companies have disputed claims that they are linked. –slate

In late March, Bloomberg reported that Zuckerberg declined to appear before the UK Parliament to answer questions about allegations of the company’s misuse of customer’s data. Instead, Zuck sent Chief Technology Officer Mike Schroepfer – a decision one member of Parliament called “cowardly,” and another who said it was “absolutely astonishing.” 

“Mr Zuckerberg has personally asked one of his deputies to make themselves available to give evidence in person to the Committee,” wrote Rebecca Stimson, Facebook’s head of UK public policy in a March statement. 

Mark Zuckerberg declines request to appear before U.K. parliamentary committee and @DamianCollins. Recommends his Chief Technology Officer and Chief Product Officer instead. Full letter here: pic.twitter.com/Q6EueSHu8a

— Joe Mayes (@Joe_Mayes) March 27, 2018

Damian Collins, the head of the committee that is also investigating the impact of social media on recent elections, had invited Zuckerberg to answer for a “catastrophic failure of process.“

U.K. Parliament to Facebook’s Mark Zuckerberg: Appear before lawmakers or risk a formal summons https://t.co/1ZJWkGW4ir #tictocnews pic.twitter.com/m0zwrAb3I1

— TicToc by Bloomberg (@tictoc) May 1, 2018

That said, Zuckerberg can probably rest easy – as Slate points out that the House of Commons “has the power to find people guilty of contempt if they reject a summons, though the legislative body has not fined or imprisoned anyone for contempt since 1666.” 

Facebook has until May 11 to reply to the committee. 

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