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Three years after Mark Zuckerberg made Brian Action a billionaire, by paying $22 billion for WhatsApp, the messaging app’s co-founder has a clear message for the billions of social media drones worldwide – #deletefacebook.

MarketWatch notes that Acton and fellow co-founder Jan Koum sold the messaging service WhatsApp to Facebook in 2014 for $22 billion. Acton received about $3 billion in the deal, and has a net worth of about $5.5 billion, according to Forbes.

After staying on for three years, Acton quit Facebook in September, and is now a major backer of rival messaging service Signal, which boasts encryption to make its messages resistent to government surveillance.

And now, after the revelations of the last week, building on an ever-growing mountain of issues for Facebook, Acton said, in a tweet overnight:

“It is time. #deletefacebook,”

It is time. #deletefacebook

— Brian Acton (@brianacton) March 20, 2018

Action was referencing the online movement that is gaining steam in the wake of revelations that the personal data of 50 million Facebook users was used without their permission by political data company Cambridge Analytica during the 2016 presidential campaign.

Could it really happen again?

 

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While it will hardly come as a surprise considering that trade wars always evolve in an escalating tit-for-tat manner, the WSJ reports that just hours ahead of Trump’s announcement of as much as $60 billion in tariffs targeting Beijing, China is preparing to hit back with its own countertariff aimed at President Donald Trump’s support base, including levies targeting U.S. agricultural exports from farmbelt states in retaliation to the mounting trade offensive from Washington.

At the same time, and in hopes of avoiding further escalation, Beijing is also reportedly weighing concessions, including easing restrictions on foreign investments in securities firms and insurance companies.

In taking a stick-and-carrot approach, President Xi Jinping is seeking to avoid escalating trade tensions with the Trump administration.

“Any Chinese response to new U.S. tariffs would be measured and proportional,” said a Chinese official involved in policy-making.

Should the carrot not work, China’s “stick” is said to target U.S. exports of soybeans, sorghum and live hogs.

And while we said that the news should not come as a surprise, it appears that to FX trading algos, that’s precisely what the WSJ report was, as it sent both the USDJPY and AUDUSD sliding.

 

Earlier today, the WSJ confirmed previous reports that the White House is preparing to crack down on what it says are improper Chinese trade practices by making it significantly more difficult for Chinese firms to acquire advanced U.S. technology or invest in American companies, individuals involved in the planning said.

The administration plans to release on Thursday a package of proposed punitive measures aimed at China that include tariffs on imports worth at least $30 billion.

But the tariffs won’t be imposed immediately. Rather, U.S. industry will be given an opportunity to comment on which products should be subject to the duties. As part of the package, the White House will announce possible investment restrictions by Chinese firms in the U.S. and will direct the Treasury Department to outline rules governing investment from China.

Final details of the plan, including the amount of imports to be hit by tariffs, remain in flux, those involved with the discussions said. While the rough amount and rationale for the tariffs are expected to be disclosed on Thursday, the final decisions will come once U.S. industry has had its say, they said.

As a reminder, last week we laid out the most likely Chinese imports that will likely be targeted by Trump. To do this, Goldman looked at imports from China in 57 categories. The answer is shown in the table below.

These are the items that are most likely to see their prices spike as a result of the tariffs: Power tools and electrical appliances top the list, based on a substantial bilateral trade deficit, higher tariffs applied in China versus the US, and high share of imports going to final (in this case, consumer) use.

Sporting goods, toys, jewelry, and consumer electronics like TVs rank highly, for the same general reasons. However, in most of these categories, imports from China constitute a large share of total domestic sales of these products.

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On Tuesday evening anti-government fighters in the embattled East Ghouta suburb of Damascus launched a major attack, firing several missiles and artillery shells into a crowded shopping district of government-held Jaramana area, resulting in a civilian massacre.

The Guardian has described the attack as “one of the deadliest rebel attacks on the Syrian capital” which according to early reports took the lives of 38 civilians, including women and children. Local reporters say that number may climb higher. 

And according to Middle East based Al-Masdar News, which has a correspondent on the ground close to the scene, a near simultaneous attack on the Mezzeh District of Damascus resulted in the deaths of a woman and five children. 

Explosions light up the Damascus sky with Mt. Qasioun in the background during previous fighting in the summer of 2017. Photo provided by a local Damascus photographer, via Leith Fadel.

The Guardian reports that the particular shopping area in Jaramana hit by a volley of rockets was particularly busy as Mother’s Day – celebrated in Syria on March 21 – brought throngs of families into crowded markets:

State media said the opposition fire had hit the area of Jaramana, which residents said was full of shoppers – many buying presents before Mother’s Day. A taxi driver, who asked not to give his name, said he had been nearby when the rocket hit a street known for its cheap clothes and food shops.

“The place was full of people buying presents for Mother’s Day,” the 41-year-old said. A nurse in her 30s, who asked not to be named, said the projectile had hit a shopping area “next to a security checkpoint”. “The intensity of the blast was terrifying,” she said.

Though given scant attention in international media since the start of the now 7-year long war, Damascenes have had to endure living under the constant threat of mortar attack from al-Qaeda linked groups operating in the suburbs and Damascus countryside as “the new normal”.

Chilling image from the deadly rocket attack on market in #Jaramana today, over 35 killed, death toll increasing pic.twitter.com/qOF5k6AhLB

— Danny Makki (@Dannymakkisyria) March 20, 2018

Some victims of today Massacre in Damascus when a shell launched by Eastern Ghouta militants hit a crowded market pic.twitter.com/HpAbVQDcF6

— H.K 🇸🇾 (@Ibra_Joudeh) March 20, 2018

While the Syrian government has retaken most of Syria’s populous urban centers, and much of the country has returned to some degree of stability, some observers have described the next phase of the war as an “endless insurgency” – expected to continue for years as the al-Qaeda insurgency goes underground. 

The intensity of indiscriminate mortar fire from Ghouta on civilian areas of the Damascus city center has markedly increased of late as the Syrian Army continues its ground incursion into the sprawling suburb which has been held for years by jihadist factions seeking the ouster of Syrian President Bashar al-Assad and the defeat of the army. And according to The Guardian, the army is making progress in Ghouta: 

Regime and allied forces have retaken more than 80% of the area and splintered the rump of the enclave into three pockets, each controlled by different rebel groups.

The ground fighting as well as consistent government aerial bombardment has resulted in significant civilian casualties, with each side trading blame for disregarding civilian lives. The government for its part has accused the armed groups who have long operated in the Ghouta area of using civilians as human shields, instead of allowing them a safe exit through ‘safe corridors’ established by the Syrian Army. 

Meanwhile, President Assad early this week took the unusual step of driving through the Syrian capital’s congested city center on his way to visit recaptured parts of Ghouta in a Honda.

Video footage of Assad driving the car through what appeared to be routine Damascus traffic and without any visible security escort was published to official “Syrian Presidency” social media accounts. 

الطريق إلى الغوطة (1/8) pic.twitter.com/QH21aeGURX

— Syrian Presidency (@Presidency_Sy) March 18, 2018

“We’re going to Ghouta, to see the situation,” Assad told the camera at the start of a series of eight brief published videos. “Every meter of the areas that we’re driving through may have a drop of the blood of a Syrian fighter, of a hero among heroes, so that we can all pass through it and for life to return,” commented Assad as he drove himself to greet Syrian troops at newly recaptured parts of the Damascus suburb. “Let’s not forget there are civilians and we must preserve their lives,” he added. 

The surreal footage spread quickly through social media, and elicited the following commentary from The New York Times:

In bypassing the news media, Mr. Assad delivered an alternative view of the war, one in which he is assured and in charge, casually cruising past bombed-out buildings, often driving with just two fingers, an elbow propped casually out the window.

It is entirely possible that Tuesday evening’s mass rocket and mortar attack on the busy government-held civilian shopping area in Jaramana was intended as highly visible revenge attack for Assad’s prior ‘public relations’ casual drive to recaptured parts of the Ghouta suburb.

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By Mark Cudmore, macro strategist and former Lehman trader who writes for Bloomberg

Investors are hyped up about Wednesday’s Federal Reserve meeting, but a bigger dynamic that doesn’t hew nicely to a schedule as does U.S. monetary policy isn’t getting the attention it deserves: shifts in commodities.

There’s an inordinate amount of focus on this Fed meeting. Sure, there are plenty of facets to analyze and it will dominate the attention of traders for the next day or two. But there are quite a few dynamics in the commodity space that will influence markets long after every sentence of Jerome Powell has been fully parsed.

Agricultural commodities are collapsing again. It was only in January they reached a multi-decade low. A subsequent bounce of 10% in less than seven weeks for the Bloomberg Agriculture Subindex fed the narrative that global inflation was finally set to accelerate, fueled by rising food prices putting upward pressure on CPI baskets throughout Asia in particular.

But that’s already proved to be a pipe dream, and a major support for higher yields has been removed.

More worrying, perhaps, is the recent slump in industrial metals. This is a negative signal on global growth, and on China’s economy in particular. It’s irrelevant whether the move has been driven more by the financial deleveraging push or by a deteriorating outlook for the real economy — both are negative for risk assets.

These broad commodity declines are coming even as oil prices are rising. Since energy is one of the largest costs in the extraction, production and distribution of most other commodities, this divergence is remarkable and unlikely to be sustainable.

It’s also causing some notable shifts in terms-of- trade that have not yet fully fed through to relative asset pricing. Australia, Indonesia and South Africa are suffering from severe slumps in terms of trade, even as those for fellow commodity exporters — Russia, Norway, Colombia — remain near multi-year highs.

These dynamics are providing a variety of trading opportunities — many that are being overlooked amid the excitement over one Fed meeting. And they’ll still drive asset moves and provide profit potential when you wake up on Thursday.

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The Canadian Loonie and Mexican Peso jumped late on Tuesday after a report by the Globe and Mail that the U.S. government has dropped a demand that all vehicles made in Canada and Mexico for export to the United States contain at least 50% U.S. content.

President Donald Trump’s administration dropped the demand during the North American Free Trade Agreement negotiations in Washington last week, which included talks between Canada’s Foreign Minister Chrystia Freeland and U.S. Trade Representative Robert Lighthizer, the Canadian newspaper reported.

Autos have been one of the biggest sticking points in the talks, and Washington had originally demanded both the 50% U.S. content requirement and jacking up an existing requirement for North American content from 62.5% to 85% . Canada and Mexico flatly rejected the U.S. content demand, since it would give the United States a guaranteed economic advantage over its North American trading partners.

Canada’s ambassador to Washington, David MacNaughton, said on Tuesday that meetings over the past two weeks “have been more positive than I’ve seen them before.

“I can say in all honesty that there has been substantive progress made, certainly on the auto side,” he told a conference of the American Association of Port Authorities at a Washington hotel. “I am confident that we are going to move forward. I hope we can do so as quickly as possible.”

Freeland’s chief spokesman declined to comment on the report and said Canada and United States continued to work well together, while Canada’s Prime Minister Justin Trudeau said earlier this week that Trump appeared to be “enthusiastic” about coming to an agreement on NAFTA.

The biggest beneficiary from the news were the two NAFTA currencies with both the Loonie and Peso surging in response; UBS said that while MXN is undervalued and also pinned by very high real policy rates, UBS isn’t currently long the currency, noting that “Political risks are a factor here,” he says. “We find much better value in rates than in the currency.”

Some have speculated that Trump is easing off on his NAFTA demands to double down on the far more important trade war with China to be unveiled this Friday, and where Trump hopes to build a united trade front of nations who have been similarly impacted by China’s trade surplus.

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Global shares traded in the red, and the dollar slumped before a hike in US interest rates, while awaiting key guidance on how many more to expect for this year. S&P futures were little changed, while markets in Europe and Asia dropped; Japan’s Nikkei was closed for holiday.

MSCI’s all-country equity index flatlined and is now 6 percent off record highs hit at the end of January, pressured by fears of a global trade war ignited by President Trump and the possibility that the Fed could end up raising interest rates more than three times this year. Markets are also on edge because of the selloff in U.S. tech shares, which has wiped almost $50 billion off the value of Facebook this week amid uproar over the alleged misuse of users’ data. The Facebook losses have filtered through other tech shares in the United States and overseas, with shares in Twitter falling more than 10%.

The losses are likely to have hit investors hard, with Bank of America Merrill Lynch’s monthly survey showing global funds heavily positioned in tech shares just before the rout began.

“There are tensions between potential bad news and good news in the market. The bad news is the problem facing the tech sector, which has been the leading light of U.S. and Asian equity markets for over a year,” said Andrew Milligan, head of global strategy at Aberdeen Standard Investments. “The good news is we must recall why the Fed is tightening policy. It’s because of the underlying strength of the U.S. and global economy.”

Europe slumped in early trading after Asian shares dropped into the close and copper sagged again. Adding to Europe’s uncertainty was the report in La Repubblica that Italian ex-premier Silvio Berlusconi is open to possible center-right coalition pact with anti-establishment Five Star Movement which is spooking markets. The Stoxx 600 fell 0.2%, led lower by travel and leisure sector with airlines hurt by a surge in oil prices: the SXTP was down 0.7%, with Air France-KLM down 2%, easyJet down 1.7%, Lufthansa down 1.2%.

Earlier, Asia stocks followed the US example where the major indices rebounded from the recent tech sell-off. ASX 200 (+0.2%) and KOSPI (+0.1%) were marginally positive as Australia’s energy sector tracked the outperformance seen in its US counterparts, although gains were contained approaching today’s FOMC and with Japan closed for Vernal Equinox national holiday. Elsewhere, Hang Seng (+1.1%) and Shanghai Comp. (+0.4%) led the region as focus turned to earnings with the top performers in Hong Kong spurred by recent financial results. However, as China closed local market slumped, with the China’s ChiNext Index of small caps and tech stocks sliding 1.9% Wednesday afternoon, wiping out earlier 0.7% gain. PC makers, pharmaceutcial stocks led the losses. Insurers surged in morning session but tumbled before close following a bearish S&P report on a crackdown.

As previewed overnight, today’s highlight will be the FOMC decision, where there market implied odds of a rate hike are above 90%. Analysts are split over whether the Fed will raise policy tightening expectations until more price pressures are clearly evident, especially given outside risks to the economy such as a possible global trade war.

“A prudent institution would probably give more weight to the facts, at least for the moment,” Roberto Perli, a former Fed economist who is now a partner at Cornerstone Macro, wrote in a note predicting the Fed would stick with three projected rate increases for this year.

With futures markets anticipating another increase in June, Powell’s Fed could leave its rate outlook unchanged until then to see how the economy absorbs the $1.8 trillion in stimulus expected from the Trump administration tax cuts and planned spending.

“We might have significant changes in communication compared with what we’ve seen under (previous chair Janet) Yellen,” said Chris Scicluna, head of economic research at Daiwa Capital Markets. “The economic situation post tax cuts also justifies a significant shift upwards in the dot plot,” he added, referring to fears the Fed’s de facto policy forecast chart could signal four rate rises rather than three, due to the economic boost delivered by Trump’s tax reforms.

The dollar extends its slide and now stands lower on a weekly basis as traders seem less confident that the Fed will signal four rate hikes this year and may not sound as hawkish as previously thought. As Bloomberg notes, leveraged names were seen trimming their long-dollar as Powell could adopt a more balanced stance. The greenback fell against all of its peers apart from the kiwi after Tuesday’s rally when U.S. benchmark yields gained for a fourth session.

The Bloomberg Dollar Spot Index slipped 0.3%, the most in two weeks; the Fed is expected to raise rates by 25bps on Wednesday, according to median estimate in a Bloomberg survey.

Traders will also focus on whether policy makers change their wording about the near-term economic risks are “roughly” balanced, as well as on any commentary about protectionism and the long-term federal funds rate. Strategists see it as a close call whether U.S. policy makers will add a fourth dot to the rate-hike path at the Federal Open Market Committee review.

Volumes in the currency market were low in anticipation of Powell’s first post-decision press conference and as Japan was closed for a holiday.  The pound was boosted by wage data, while the euro approached the $1.23 handle once more.

A summary of notable overnight FX moves from BBG:

• EUR/USD rises toward the 55-DMA at 1.2293 amid broad dollar weakness, with volumes staying low after London open while Tokyo holiday kept Asia volumes contained
• GBP/USD climbs as much as 0.6% to 1.4075 as data showed U.K. wages rising at their fastest pace since the end of 2016; EUR/GBP reverses its advance and drops 0.2% to 0.8725, the lowest since Feb. 1
• USD/JPY edges lower after testing the 21-DMA at 106.50 and with Japanese markets closed; large option strikes due to expire in New York and before the Fed decision include $3.22b at 106 and $1.25b at 107
• The Mexican peso and the Canadian dollar advance against the greenback following the Globe and Mail report that Trump administration dropped a demand that all vehicles made in Canada and Mexico for export to the U.S. contain at least 50% U.S. content

In other global news, Treasury Secretary Mnuchin said he has had very direct talks with China and that dialogue will continue, while he added that the general G20 view is to see China open its markets. China Vice Commerce Minister said the nation will actively take steps to safeguard interests of its domestic industries following US trade investigations.

South Korean President Moon suggested that a 3-way summit between US, South Korea and North Korea is possible, while there were separate reports that South Korea offered to hold a high-level meeting with North Korea on March 29th.

In the UK, Trade Secretary Fox said that a FTA is not the UK’s only approach to relationships and that the government will also look at incremental steps to improve trade. Separately, three of the nine members of the The Times’s BoE shadow monetary policy committee called for an immediate quarter-point increase. Two said they would raise rates in May and two others added that the Bank should lay the groundwork for rises this year.

Market Snapshot

• S&P 500 futures down 0.05% to 2,722.25
• STOXX Europe 600 down 0.2% to 375.47
• MSCI Asia Pacific down 0.07% to 176.60
• MSCI Asia Pacific Ex Japan down 0.2% to 583.63
• Nikkei down 0.5% to 21,380.97
• Topix down 0.2% to 1,716.29
• Hang Seng Index down 0.4% to 31,414.52
• Shanghai Composite down 0.3% to 3,280.95
• Sensex up 0.5% to 33,162.61
• Australia S&P/ASX 200 up 0.2% to 5,950.27
• Kospi down 0.02% to 2,484.97
• German 10Y yield rose 0.7 bps to 0.592%
• Euro up 0.4% to $1.2286
• Brent Futures up 0.2% to $67.58/bbl
• Italian 10Y yield fell 6.7 bps to 1.641%
• Spanish 10Y yield rose 1.0 bps to 1.318%
• Gold spot up 0.5% to $1,317.29
• U.S. Dollar Index down 0.3% to 90.14

Top Overnight News from BBG

• Trump administration has dropped demands that all vehicles made in Canada and Mexico for export to the U.S. contain at least 50% U.S. content, Globe & Mail reports, citing people familiar
• Federal offices in Washington area closed all day due to weather
• U.K. Jan. Avg. Weekly Earnings 2.8% vs 2.6% est (prev. revised to 2.7% from 2.5%); Unemployment Rate 4.3% vs 4.4% est.
• Italian ex- premier Silvio Berlusconi open to possible center-right coalition pact with anti-establishment Five Star Movement, according to newspaper La Repubblica, raising the chance of populist parties taking power
• API inventories according to people familiar w/data: Crude -2.7m, Cushing +1.6m, Gasoline -1.1m, Distillates -1.9m
• A newspaper affiliated with China’s ruling Communist Party urged “strong restrictive measures” against alleged U.S. soybean dumping, underscoring concern that trade disputes pressed by President Donald Trump could extend into other sectors
• EU President Donald Tusk sought to play down the impact of potential U.S. tariffs on steel and aluminum imports as Europe braces for more conflict with President Donald Trump

Asian stocks took impetus from Wall St. where the major indices rebounded from the recent tech sell-off. ASX 200 (+0.2%) and KOSPI (+0.1%) were marginally positive as Australia’s energy sector tracked the outperformance seen in its US counterparts, although gains were contained approaching today’s FOMC and with Japan closed for Vernal Equinox national holiday. Elsewhere, Hang Seng (+1.1%) and Shanghai Comp. (+0.4%) led the region as focus turned to earnings with the top performers in Hong Kong spurred by recent financial results.

Top Asian News

• Chinese Insurance Stocks Slide After S&P Report on Crackdown
• Hong Kong Exchange’s Big Bet on China Is Suddenly Under Threat
• Tencent Profit Beats Estimates as WeChat Games Drive Growth
• Volvo Owner’s Chinese Unit Sees Overseas Deals Fueling Growth

European equities opened with a lack of firm direction, before edging lower (Eurostoxx 50 -0.3%) ahead of the FOMC meeting. The utilities sector is boosted following upgrades of Italy’s A2A (+2.3%) and Germany’s E.ON (+1.9%) by Kepler Chevreux. The FTSE 100 is weighed on by a firmer sterling. Simultaneously, UK retailers are taking a hit amid signs of consumer spending downturn; Moss Bros (-19.8%) crashing after the issue of a profit warning. Carpetright (-0.3%) has taken a loan from a significant shareholder to cover short-term capital requirements, Kingfisher (-6.8%) amongst the laggards following the Co. reporting a fall in earnings and expressing concerns on the outlook for the retail sector, warning that the UK market is tough. On the flip side, LSE (+0.9%) is at the top of the FTSE 100 amid talks that the 21-month Brexit transition deal agreed this week could prompt Intercontinental Exchange (ICE) of the US to make another bid approach.

Top European News

• BofA’s Pullback on Margin Loans Followed Sweeping Internal Probe
• Deutsche Telekom to Buy Hellenic Telecom Stake for EU284m
• BMW’s Muted Forecast in Step With Daimler Amid E-Car Stretch
• Telenor to Sell Central, East Europe Units for $3.4 Billion

In FX markets, CAD and MXN were the biggest overnight movers with the currencies lifted on news that the US dropped the contentious auto-content proposal in NAFTA discussions last week. Elsewhere, the rest of currency markets were uneventful ahead of the upcoming Fed decision and dot-plot projections, in which EUR/USD faintly nursed losses and hovered near 1.2250 where there are large option expiries for today’s New York cut. Furthermore, GBP/USD just about held on the 1.4000 handle after the prior day’s losses which were triggered by the CPI miss, while USD/JPY was relatively unchanged amid the absence of market participants in Japan.

In commodities, crude prices held on to the gains from yesterday’s rally in which prices rose above USD 63/bbl and also briefly tested USD 64/bbl to the upside. The advances were attributed to ongoing Saudi-Iran tensions and further Venezuelan output declines, while the latest API inventory report was also supportive with headline crude stockpiles at a surprise drawdown. Elsewhere, gold found mild support as the USD pared back some of the strength heading into the FOMC decision later, while copper traded sideways and failed to benefit from the improvement in risk appetite. OPEC are said to be discussing a change of measures for success for the OPEC cut deal and that the Vienna meeting looked at a change to its inventory target.

Looking at the day ahead, the big highlight is of course the FOMC meeting outcome at 6pm GMT. Shortly after that Fed Chair Powell will also deliver his first post-meeting press conference as Chair. Away from that it’s another fairly quiet day for data with January/February employment data and February public sector net borrowing data due in the UK, while in the US the Q4 current account balance and February existing home sales data will be released.

US Event Calendar

• 7am: MBA Mortgage Applications, prior 0.9%
• 8:30am: Current Account Balance, est. $125.0b deficit, prior $100.6b deficit
• 10am: Existing Home Sales, est. 5.4m, prior 5.38m;  MoM, est. 0.37%, prior -3.2%
• 2pm: FOMC Rate Decision

DB’s Craig Nicol concludes the overnight wrap

With markets really struggling to build up any sort of momentum at the moment, today’s Fed meeting should be seen as a welcome distraction. The meeting takes on a little bit more focus as it’s of course Fed Chair Powell’s debut in the hot seat. So there will be plenty of eyes on what he has to say and what changes in style or messaging he might signal. Indeed, with a 25bp hike as good as certain today our US economists believe that Powell’s performance, along with the answers to whether or not the Committee still sees risks as “roughly balanced” and if the median dots move up, are the three key questions that investors should be looking out for.

As a reminder, our colleagues expect the Committee to sound a bit more upbeat (though not yet worried) about inflation developments, and while consumer spending indicators have softened a bit recently, their message about economic activity can remain little changed. They also expect FOMC participants to likely raise their growth forecasts and reduce unemployment forecasts. With regards to the hotly anticipated dots, the team believe that it makes sense to raise the path of rates sooner rather than later. On this basis, they expect the median forecast to move up to four rate hikes this year, from three, although caveat that it could be a close call. Perhaps of more significance for the market though, they expect the entire path of rate hikes to shift up modestly including the terminal rate forecast to  3.3% in 2020 from 3.1% in December. With regards to Powell, the team expect his message to centre on the signs of an overheating economy, and that the Fed’s current tightening action is clearly in order, which would signal that  another rate hike is on the way in June.

Markets are going into today’s Fed meeting coming off the back of a difficult week and a half. Yesterday the S&P 500 (+0.15%), Nasdaq (+0.27%) and Dow (+0.47%) held their heads above water although were routinely tested with the tech sector again seemingly at the centre of things. Monday’s main culprit – Facebook – fell another -2.56% yesterday (although bounced well off the intraday lows) and is down -9.15% in the last two days. That story seemed to kick up another gear yesterday with the news that the social network company is being probed by the US Federal Trade Commission over the possible violation of a 2011 consent decree, while company officials have also supposedly agreed to brief members of the House Judiciary Committee, possibly as soon as today. The VIX actually edged down less than 1pt yesterday to 18.20. European bourses were broadly higher with the Stoxx 600 (+0.51%), DAX (+0.74%) and FTSE (+0.26%) all up, partly aided by the lower Euro (-0.75%) and energy stocks as WTI Oil rose to the highest in nearly 3 weeks (+2.27%).

Bond markets have been a bit more contained by comparison in recent days which is probably as much to do with anticipation over today’s Fed meeting. 10y Treasuries finished 4.1bps higher yesterday at 2.897% and continue to be stuck in this 2.80-2.90% range where they’ve been for most of the last month. 10y Bunds were also +1.5bps yesterday although there was a notable outperformance in the periphery despite no obvious drivers with Italy (-6.7bp), Spain (-3.1bp) and Portugal (-1.6bp) all down.

Overnight, the WSJ has reported that the Trump administration will release a punitive package on Thursday aimed at China that includes tariffs on imports worth at least $30bn as well as proposing investment restrictions on Chinese firms in the US. Notably the measures will have a grace period and the final details are still evolving. Elsewhere, Reuters has reported that the European Commission  ill propose new tax rules today that will make large digital  companies with material revenue in Europe pay a 3% tax on their turnover, largely consistent with reports over the weekend. This morning in Asia, markets are broadly firmer thanks to the rise for the Oil complex with the Hang Seng (+1.14%), ASX 200 (+0.26%) and Kospi (+0.16%) all up. It’s worth noting markets in Japan are closed for a public holiday.

Meanwhile, with China’s NPC now wrapped up our China Chief Economist Zhiwei Zhang concluded with his thoughts in a note yesterday. Zhiwei highlights that the market will be surprised by policy changes from China in 2018, in part as the government will focus more on sustainability than stability. Overall, he believes that growth will likely slow, infrastructure and property cycles may cool off and adversely affect commodity demand, while the government favours the new economy such as the services sector and consumption. Elsewhere, macro policies may lead to short term pain but conducive to growth in the long term.

With regards to other big meeting in recent days, over at the G20, talks appear to have ended with no clear developments with the joint statement indicating that “we recognize the need for further dialogue and actions”. More significantly, the statement did little to dispel concerns around a potential trade war and rising protectionism.

Closer to home, Brexit headlines continue to trickle through despite Monday’s positive announcement. The newsflow was a little odd with Irish PM Leo Varadkar saying that he welcomed the headway made in Brexit negotiations, but Deputy PM Simon Coveney suggesting that there is an option to extend the Brexit transition period, although that wasn’t disclosed in Monday’s withdrawal text. It’s worth adding that yesterday DB’s Oliver Harvey shifted his view to tactically bullish Sterling in light of a Brexit muddle through being confirmed, Bank of England risks being tilted towards more hawkish repricing, seasonality and long positions being pared back.

Staying with the UK, yesterday’s CPI data for February was for the most part slightly softer than expected. Headline CPI rose +0.4% mom compared to expectations for +0.5%, with base effects meaning that the annual rate fell a tenth more than expected to +2.7% yoy from +3.0%. The more significant core print also retreated three-tenths to +2.4% yoy, putting it back to the lowest level since last July. RPI also eased from its previous print of +4.0% yoy to +3.6%. Whether or not that staves off some of the hawks from a rate hike remains to be seen but today’s wages data will perhaps be of more interest with expectations being for a slight increase in average weekly earnings to +2.6%.

In other news, we wanted to point readers’ attention to a report by our European economists yesterday looking ahead to the EU Summit this Thursday and Friday. They believe that there are three main market sensitive topics on the agenda: Brexit, EMU institutional reforms and trade. With Brexit now largely ticked off, focus will be on the latter two issues. Our economists note that Macron’s election and the emergence of a Grand Coalition in Germany with an SPD finance minister has raised expectations for what might be achieved in terms of EMU reform. The team expect a statement acknowledging progress but caveat that a lot of work is still likely needed to be done prior to hitting the June deadline. The team also note that trade is the unexpected element on the agenda this week with the EU now facing the dilemma of knowing how to respond to the US threat of tariffs. They expect a middle path to be taken. You can find more in the report by clicking here.

Quickly wrapping up the remaining economic data yesterday. Germany’s February PPI was lower than expected at -0.1% mom (vs. +0.1% expected) and +1.8% yoy (vs. +2.0% expected). The Euro area’s March consumer confidence index (+0.1 vs. 0.0 expected) and Germany’s March ZEW survey on current situations (90.7 vs. 90 expected) were both above market. However, the ZEW survey expectations index (5.1 vs. 13.0 expected) was well below expectations and fell to the lowest reading since the latter part of 2016, which could make for an interesting read-through in tomorrow’s PMIs.

Looking at the day ahead, the big highlight is of course the FOMC meeting outcome at 6pm GMT. Shortly after that Fed Chair Powell will also deliver his first post-meeting press conference as Chair. Away from that it’s another fairly quiet day for data with January/February employment data and February public sector net borrowing data due in the UK, while in the US the Q4 current account balance and February existing home sales data will be released.

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The Austin serial bomber suspected of delivering six homemade bombs to locations around Austin this month, killing two people, has died after blowing himself up. Less than an hour after CBS Austin  released photographs of the suspect at a Fed-X facility, media reported of an officer-involved shooting on I-35 in Round Rock.

Police have identified the dead suspected bomber as a 24-year-old white male, according to the Associated Press.

BREAKING: APD sources tell us that the #AustinBombings suspect is dead after this officer-involved shooting in Round Rock https://t.co/fmePDy2tkY https://t.co/FS1WMsLmHy

— CBS Austin (@cbsaustin) March 21, 2018

As CBS Austin reported, police were closing in on the suspect when he killed himself by detonating some sort of explosive device, according to CBS Austin’s source.

According to KVUE, the FBI and police tracked the bomber to the Round Rock area using cell phone technology, security video, store receipts before ‘engaging him’ around 3am on Wednesday. Then, as officers pursued the suspect a device was detonated, before a volley of gunfire.

The shooting came just hours after CBS published CCTV showing images from a surveillance video from the FedEx Office store on Brodie Lane in South Austin which helped investigators zero in on the suspect.

According to the Daily Mail, the images show a man – possibly wearing a wig and gloves – delivering two packages around 7.30pm on Sunday. One of the packages subsequently exploded on a conveyor belt at a FedEx sorting facility outside of San Antonio in Schertz.

The other was intercepted at a facility near Austin airport and was later confirmed to contain a bomb.

 

BREAKING: ATF is with @Austin_Police and @FBISanAntonio on I-35 at the scene of the individual suspected in the #packagebombmurders pic.twitter.com/JAZssOclMI

— ATF HQ (@ATFHQ) March 21, 2018

 

Authorities believe the same person is connected to the two packages that surfaced Tuesday is also responsible for the four other explosions that began on March 2nd, killing two people and injuring six.

Austin Police Department tweeted that they were working on an officer-involved shooting near the highway, but gave no further details.

HAPPENING NOW: this is I35 S in Round Rock near Old Settlers Blvd shut down after officer involved shooting FBI on scene @cbsaustin pic.twitter.com/pi0tEBhmY4

— Melanie Barden (@MelanieCBS) March 21, 2018

I-35 is closed while a massive presence of law enforcement — including Austin Police, FBI and ATF investigators — processes the scene, which involved officers firing at the suspect. Several helicopters were seen hovering overhead.

Police warn that, though the bomber is dead, there might be more bombs out there.

Live feed:

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In yet another sign of what Russia expert Stephen Cohen has described as the escalating New Cold War, non-NATO aligned Sweden is initiating detailed plans to ready itself for total societal mobilization in response to military attack from a major external power. As Aaron Mehta points out in his exclusive for Defense News entitled Fortress Sweden: Inside the plan to mobilize Swedish society against Russia, that major external power is none other than Russia, whose heavily militarized port of Kaliningrad lies a little over 220 miles across the ocean from Sweden.

During past Cold War decades, Sweden (along with other non-NATO Nordic country Finland) was known for keeping painstakingly detailed survival readiness plans in case of a great power invasion, down to “how parking garages were designed so you could use them as shelters” according to Magnus Nordenman of the Atlantic Council. But the program was left derelict after the collapse of the Soviet Union and a new era of peace meant the end of such “total defense” plans.

Image source: Quora

But in 2017 a government sponsored commission was formed to investigate and lay the groundwork for plans to resurrect and update plans for total Swedish societal mobilization. Though the commissions findings were not set to be delivered until May 2019, it produced a 6-page preliminary findings report late last year (out of a total working report of 243 pages), likely in response to increased tensions between NATO and Russia in the Baltic region.

According to Defense News:

The report estimates that between 2021 and 2025, Sweden will need to invest 4.2 billion krona (U.S. $510.5 million) per year on its total defense proposals. While not a major spend by American defense levels, that is a serious investment for Sweden, especially considering it is additional money on top of what the country intends to invest in its armed forces.

And thus far, during program’s trial period:

Sweden has allocated about 400 million krona per year in 2018, 2019 and 2020 to invest in total defense developments. That culminates with a major exercise, tentatively planned for the year 2020, involving all aspects of the total defense concept — in essence, a trial run incorporating the entire nation.

The funds will be allotted as follows according to the preliminary report provided by the planning commission:

A lot will go toward infrastructure, such as building new shelters and depots. Other funds will go toward requirements to defend the homeland. Broadly, those funds will go to “rescue service and home protection, health-care system and pharmaceuticals, private enterprises, emergency power solutions, food and water supply, basic economic transactions, cyber security and psychological defense,” per the commission.

One of the more interesting aspects to the allocations of funds involves “training to resist propaganda efforts and fake news spread via social media” in order to – in the words of Swedish Defence Commission head Bjorn von Sydow – “defend the democratic principles that are vital to the nation.”

The other interesting, and most controversial aspect, is that the study acknowledges a significant gap in time between the start of a major power invasion and mobilization of Sweden’s military, as well as the possibility of the arrival of allied ground forces necessary to repel a major invasion by a country like Russia. 

The commission put Swedish military mobilization at a week, and allied force arrival at a whopping three months (based on talks commission representatives held with undisclosed NATO officials) – in the meantime “civilians would have to fend for themselves as best they can” – preparedness for which forms the basis of the commission’s study.

According to Defense News:

Early in the process, the commission seized on two key principals: that it would take Sweden’s military a week to be fully mobilized, and that it would take three months before allied ground forces would be able to arrive in force to assist Sweden in reclaiming its territory.

On the first point, von Sydow said it is a simple reality that to mobilize the entire nation would take time. For that week, civilians would have to fend for themselves as best they can — something he described as having been calmly received by the Swedish public.

The second point is perhaps more controversial, in that it’s based not on policy but on a mix of historic studies and conversations with allies. Because Sweden is not part of NATO, any military action would have to come from a coalition of willing allies.

And it’s an open question whether, in the face of what would realistically be a multi-pronged Russian invasion of Europe, any allied ground forces would actually come to Sweden’s aid.

Though there’s been a series of recent bilateral agreements with some European nations, and crucially including the U.S., a long tradition of Swedish neutrality has left the Scandinavian country without any definitive treaties wherein allies would be obliged to act. 

Meanwhile, Sweden last year reintroduced military conscription for all Swedes born in or after 1999 (the prior conscription policy was abolished in 2010) in response to perceived as heightened Russian aggression in the region, and a build-up of forces in and along the Baltic Sea.

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