Tag: news

Facebook stock has dropped as much as 3.5%, dragging the Nasdaq lower as it faces “more systemic problems” according to Pivotal research, following reports over the weekend associated with a data leak that exposed about 50 million user accounts, raising risks of regulatory controls for the social media platform and hampering advertising growth.

According to Pivotal analyst Brian Wieser, Facebook reports raise risk to the enhanced use of data in advertising, as well as opens up third-party measurement partners to increased restrictions, which may frustrate advertisers. Still, Pivotal remains bullish as it sees no near-term tangible impact on the business, as advertisers aren’t likely to “suddenly change” their spending growth trajectory.

It may have to reconsider however, following the latest report from research company eMarketer, which in its latest report predicts the combined U.S. digital ad market share of Google and Facebook will fall for the first time this year, shrinking to 56.8% from 58.5% last year, the WSJ reported. This however should be offset by overall digital ad spending in the US, which is likely to grow nearly 19% to $107 billion in 2018.

Google and Facebook have long dominated the U.S. digital advertising market for years, earning them the title of “the digital duopoly” and leaving competitors scrambling for crumbs. But now there are signs that platforms like Amazon and Snapchat are chipping away at their market share. And while the dupoloy is still increasing its total ad revenue significantly, and no other competitor even cracks 5% market share, the smaller rivals are growing more quickly than expected and are seeking a larger share of the pie.

Putting the numbers in context, Google’s U.S. revenue from digital advertising is expected to increase about 15% this year to $39.92 billion, while Facebook’s would jump 17% to $21 billion, according to eMarketer’s forecast. That would give Google command of 37.2% of the market, down from 38.6%. Facebook’s market share will likely be 19.6%, down from 19.9%, the first time eMarketer has projected such a decline for the social-media company. Google’s market share contracted for the first time in 2016.

Of course, in a recession, where ad spending is whacked first, all bets are off.

Finally, in the latest red flag that Facebook may have even more problems going forward, Reuters reported moments ago that according to the European Commission, if confirmed the misuse of Facebook personal data for political purposes would be unacceptable. And since quietly selling discrete and highly targetable user data to advertisers is Facebook’s biggest draw, any material changes to its advertising model could have a drastic impact on its revenue growth, and thus “prices to perfection” stock price, which as we reported yesterday is trading off 2018P non-GAAP EPS of $8.388 resulting in a generous forward P/E of 25.6x.

via RSS http://ift.tt/2FLQoXt Tyler Durden

Having populated most central banks with its alumni, Goldman is now aiming even higher: right at sovereign governments, and on Monday morning, a spokesman for Germany’s finance ministry said that the co-head of Goldman Sachs in Germany, Joerg Kukies, will become deputy finance minister in the new German government.

According to Reuters, Kukies will be responsible for financial market policy and Europe in his new role, the spokesman said. In other words, with Mario Draghi – another Goldman alum – potentially resigning from the ECB, Goldman is loathe to give up its control on key European policy developments and has made its move.

Kukies served as the Managing Director of Goldman Sachs and served as its Co-Head of Germany since October 2014. Kukies oversaw the equities and fixed income division in Germany and Austria for Goldman.

As a result of his appointment, Kukies has resigned as co-head for German and Austria, a Goldman Sachs spokeswoman says in emailed statement. “Going forward, Wolfgang Fink will lead Goldman Sachs in the region as sole chief executive officer for Germany and Austria.”

Amusingly, not long ago on Goldman’s blog Kukies shared the following advice he would give his younger self:

1. Train your replacement. It’s a counterintuitive concept, but by bringing up a colleague to take on your current responsibilities, you can move on to greater things more quickly.
2. Be a salesperson. Regardless of your division, the quality of service that you provide to your internal and external clients is the single best predictor of your success over the next 10 years.
3. Think long term. While the financial services industry can be characterized by constant change, you will find that many of the clients you serve today will still be your clients – but in more senior positions – five, 10 or 15 years from now.
4. Look for potential. Every candidate that you interview today may become your best colleague – or your best client – tomorrow.
5. Share your goals. Be thoughtful about your aspirations and ambitions. Take time to think about your career, and don’t keep your plans to yourself.

In becoming Germany’s second-most influential financial advisor, he clearly stuck to all 5.

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Police in southwest Austin responded Sunday night to the fourth explosion in less than two weeks, hours after authorities issued a direct appeal for whoever has been planting a series of bombs to stop. Two men in their 20’s were hospitalized with serious, but non-life-threatening injuries according to Austin Travis County EMS. Authorities cleared a backpack in the area right after the incident.

Investigators including the FBI and the Bureau of Alcohol, Tobacco, Firearms and Explosives (BATF) responded to the scene, as over 500 federal agents have been dispatched to assist in the investigation.

At the scene of a reported explosion in southwest Travis County. We know two men were hurt. Police are keeping us streets away from the scene, which is on Dawn Song Drive. pic.twitter.com/55jN27XKrn

— Pattrik Perez KVUE (@PattrikPerez) March 19, 2018

Austin Police Chief Brian Manley urged residents to remain in their homes “until we’ve had a chance to deem this neighborhood safe,” which will be “at minimum until daylight.”

Residents are warned not to touch or go near anything that looks like a package. 

Initial Statement from Chief Manley regarding explosion https://t.co/CCydXhmQ8e

— Austin Police Dept (@Austin_Police) March 19, 2018

Eliza May said she was watching a TV show in her home when she heard an explosion that sounded like a transformer blew up in her backyard. “It sounded like when the transformers go out, but it was five times magnified that,” said Ms. May, who lives about 200 feet from where the explosion was said to have occurred.

Another neighbor, Lori Goodgame, said the explosion caused her house to shake. Her first thought was that lightning had hit her home. “There was a huge boom,” Ms. Goodgame said. –NYT

The explosion came hours after a Sunday news conference in which police publicly implored the bomber or bombers to contact authorities so they might learn more about the “message” behind the attacks. 

“These events in Austin have garnered worldwide attention, and we assure you that we are listening,” Chief Manley said to the bomber or bombers. “We want to understand what brought you to this point, and we want to listen to you.”

So far, the bombings have killed two black men and wounded a 75-year-old Hispanic woman. While law enforcement hasn’t concluded that the crimes are racially motivated, they haven’t ruled it out. 

Nelson E. Linder, the president of the Austin branch of the N.A.A.C.P., said on Sunday evening that he did not know the race of the two men injured in the latest explosion. “It’s important for the whole city to understand this is a danger, and I think tonight kind of confirms that,” Mr. Linder said. “I think that’s what this means tonight, that this whole city is at risk.” –NYT

A $100,000 reward has been issued for information leading to the arrest and conviction of whoever is responsible for the bombings, while the governor’s office is offering $15,000 to bring the total to $115,000. 

#HappeningNow #FBI, @Austin_Police and @ATFHou announce reward increased to $100,000 for info leading to arrest & conviction of person(s) responsible for #packagebombmurders. pic.twitter.com/xJMfatFtzP

— FBI SanAntonio (@FBISanAntonio) March 18, 2018

Prior to Sunday’s incident, three previous bombs in Eastern and Northeastern Austin left two dead and a third seriously wounded; one on March 2 and two more occurring on March 12. The victims opened unsuspecting packages that were left on their doorsteps which were equipped with sophisticated homemade devices.

None of the packages were mailed, rather, they were reportedly placed right next to the victims’ doors. In two of the bombings, the package exploded right after the victims picked them up, while the third went off after it had been carried inside and opened. 

“Every bomber that makes these leaves a signature,” said ATF special agent Fred Milanowski, who is in charge of the Houston division. “Obviously, once they find something successful for them, they don’t want to deviate from that because they don’t want something to blow up on them.”

Milanowski added that a certain degree of skill was required to have assembled, moved and deposited the devices without an accidental explosion – while declining to reveal exactly what materials were used to make them. 

“It wouldn’t be a typical household that would have all these components, but I would say that all the components are commercially available,” he said.

Since the March 12 double-bombings, Austin police officers have responded to 735 calls from anxious residents reporting hundreds of suspicious packages. Officials are urging residents to call 911 if they come across a package they were not expecting, or which was not delivered by a major services such as the USPS, FedEx or UPS. 

“The scope goes beyond just Austin,” a law enforcement official who spoke on condition of anonymity told the New York Times. “We’re looking for anyone that could have been involved in making bombs in the past in Texas, and really anywhere in the United States.”

via RSS http://ift.tt/2pq7tuX Tyler Durden

Global stocks and S&P futures point to a lower open on Monday and as Mark Cudmore noted earlier this morning, there are plenty of potential catalysts: sudden concerns about global growth rolling over, the slide in Apple suppliers which hit Asian stocks following a report that Apple is developing its own microLED screen, Trump’s trade war, this weekend’s McCabe firing, the ongoing personnel turnover in the White House,  Abe’s record low popularity amid Japan’s land scandal, lack of Brexit clarity, Italy’s struggle to form a government, Facebook sliding on data breach concerns, Russia’s spat with the U.K., upcoming concerns about this Wednesday’s Fed meeting, ongoing Brexit talks and today’s G-20 gathering, and so on. In fact, the proper question is why the market didn’t notice any or all of these rising concerns before.

Well, they did notice this morning, and world stocks are a sea of red this morning, stuck on their worst run since November on Monday, as caution gripped traders in a week in which the Federal Reserve is likely to raise U.S. interest rates and perhaps signal as many as three more hikes lie in store this year…

… while U.S. equity futures sell led by Nasdaq as e-mini S&P futures break below 50-DMA, with FANG stocks under pressure the pre-market trading led by Facebook (-2.5%) after weekend reports of data breach scandal, helping push the VIX above 17.

A 1% drop for Europe’s main bourses amid a flurry of gloomy company news and weaker Wall Street futures meant MSCI’s world stocks index was down for a fifth day running.

The biggest risk event this week for global markets is the first U.S. interest rate decision under new Fed Chair Jerome Powell. It comes just weeks after he hinted to investors that he’s open to lifting the policy rate four times this year, rather than the three currently reflected in dot-plot forecasts. Some Wall Street banks such as Goldman Sachs Group Inc. expect the median projection to rise to four on Wednesday, while others say there will be no change following a round of mediocre data and policy makers’ stated intentions to move gradually.

“Expected is a confident Fed Chair, both with respect to the economy’s strength and the Fed’s approach to policy,” said analysts at Westpac in a note. “While growth forecasts and the distribution of rate projections are likely to drift up, the median Fed funds forecast should remain unchanged at three in 2018 and three more in 2019,” they added. “Gradual and timely are the operative words for policy.”

Analysts at JPMorgan, however, see a risk the Fed might not only add one more rate rise for this year but for 2019 as well. “The worst case is the ‘18 and ‘19 dots both move up – the Fed is currently guiding to five hikes in ‘18 and ‘19 combined but under this scenario that would shift to seven hikes,” they warned in a note to clients. “Stocks would probably tolerate one net dot increase over ‘18 and ‘19 but a bump in both years could create problems.”

Furthermore, trade war concerns also remain front and center, especially after Sunday’s bizarre snafu in which Treasury official David Malpass said he misspoke hours after claiming the U.S. was pulling out of decade-old formal economic talks with Beijing. This happened on the same day the PBOC announced its new head.

Trade will be top of the agenda at a two-day G20 meeting starting later on Monday in Buenos Aires and any signs of escalating stress between the U.S. and China could make investors in Asia nervous.

The Stoxx Europe 600 Index headed for its first drop in three days as technology companies slumped with miners. Earlier, the MSCI Asia Pacific Index of stocks also fell, with tech shares under pressure with Bloomberg reporting that Apple was poised to disrupt its supply chain. The yen strengthened amid a huge drop in support for Japanese Prime Minister Shinzo Abe’s cabinet following the Moritomo land scandal, ironically prompting a flight to safety which is, well, the Yen. 

Japan’s Nikkei ended down 1 percent amid a firmer JPY and as support for PM Abe’s administration slumped to 33% (Prev. 45%) in the wake of the land-sale scandal. KOSPI (-0.8%) suffered losses in its top-weighted stocks in which Samsung Electronics fell on news Apple is to develop displays to replace Samsung screens, while Hyundai Motor was hit by a stateside investigation into fatal incidents involving airbag failure which could affect a total of 425K Hyundai and Kia cars. Hang Seng (flat) and Shanghai Comp. (+0.3%) were indecisive and traded choppy amid mixed property data from China, a neutral PBoC open market operation and after China signaled stable monetary policy continuity as it chose PBoC Deputy Governor Yi Gang to be the next central bank hea

In FX, the dollar initially made ground on the euro, though, as bond traders saw the gap between 10-year German and U.S. government yields, referred to as the ‘transatlantic spread’, ratchet out to its widest since December 2016. Cable was a big outperformer rising back over 1.40 as expectations for yet another Brexit transition deal are priced in; meanwhile EMFX continue their recent slide against USD. Key FX moves from BBG:

• The pound jumped on speculation of some sort of a deal being done between the U.K. and the EU. GBP/USD jumps as high as 1.4046, the highest since Feb. 26; joint U.K.-EU press conference due later Monday
• The Bloomberg Dollar Spot Index was little changed; it closed higher for a fourth week on Friday, its longest streak of gains in five months; should it advance this week, it would be the best run for the greenback since July 2015; 10-year Treasury yield rises 2 bps to 2.86%
• USD/JPY rose 0.1% to 106.08, after falling to 105.68; the pair was also affected during Asia trading by macro account sales of the euro against the yen, according to an Asia-based FX trader

In key overnight developments, the ECB’s Weidmann said he thinks that good economy developments and inflation would permit a rapid end to bond purchases, while the ECB’s Villeroy commented that the progress to inflation target was slower than anticipated.

In Brexit-related news, the UK Brexit Select Committee is set to recommend that the UK should request an extension to the EU’s Article 50 process beyond March 2019. Separately, according to an HIS Markit survey, household incomes are rising at near their fastest pace since the financial crisis in 2009 with some speculating this could force the BoE to lift rates again soon.  The UK’s BCC has raised its GDP forecast for 2018 from 1.1% to 1.4% and in 2019 from 1.3% to 1.5%. Its first forecast for 2020 is for 1.6% growth.

S&P affirmed Austria at AA+; Outlook Stable and affirmed Denmark at AAA; Outlook Stable. Fitch affirmed Italy at BBB; Outlook Stable.

As widely expected, Vladimir Putin has won the Russian Presidential election with a landslide victory.

Japan PM Abe reportedly asked South Korea President Moon to help set up a meeting with North Korea Leader Kim. White House said that US President Trump told South Korean President Moon that still on track to meet with North Korean Supreme Leader Kim by May.

UK, France and Germany have proposed new EU sanctions on Iran to aim to keep US President Trump committed to the Iranian nuclear deal, while reports added that sanctions would target individuals involved in ballistic weapons activity and war in Syria.

Looking at the commodities complex, WTI (-0.6%) and Brent (-0.7%) are pressured by concerns of oversupply arising as US drilling activity increases. The weekly Baker Hughes rig count added four oil rigs on Friday bringing the total oil rig number to 800 compared to 631 a year ago.  Moving on to metals, Gold (-0.1%) continued to edge lower on a firmer dollar but has seen a slight bounce in recent trade. Dalian iron ore fell by 4% to its lowest level since November weighed by high inventories and weaker steel demand.

On today’s relatively quiet calendar, Oracle is set to report quarterly numbers, while no major economic data is expected.

Bulletin Headline summary from RanSquawk

• European bourses started the week on a poor footing (Eurostoxx 50 -1.0%) as investors anticipate a hawkish Fed meeting later this week.
• GBP seen higher amid reports that the EU have agreed on the broad terms of UK transition deal
• Looking ahead, today’s session sees a lack of tier 1 highlights

 Market Snapshot

• S&P 500 futures down 0.7% to 2,737.00
• STOXX Europe 600 down 0.8% to 374.71
• MSCI Asia Pacific down 0.6% to 177.14
• MSCI Asia Pacific ex Japan down 0.4% to 584.33
• Nikkei down 0.9% to 21,480.90
• Topix down 1% to 1,719.97
• Hang Seng Index up 0.04% to 31,513.76
• Shanghai Composite up 0.3% to 3,279.25
• Sensex down 0.8% to 32,925.00
• Australia S&P/ASX 200 up 0.2% to 5,959.43
• Kospi down 0.8% to 2,475.03
• German 10Y yield rose 0.6 bps to 0.577%
• Euro down 0.2% to $1.2272
• Italian 10Y yield fell 0.5 bps to 1.725%
• Spanish 10Y yield fell 0.7 bps to 1.368%
• Brent Futures down 0.5% to $65.86/bbl
• Gold spot down 0.3% to $1,309.82
• U.S. Dollar Index up 0.07% to 90.30

Top Overnight News

• U.S. Treasury Undersecretary Malpass says he was incorrect in saying that the U.S. had ended formal economic dialogue with Beijing; Mnuchin continues to hold private discussions with Chinese officials
• EU Trade Commissioner Malmstrom will visit Commerce Secretary Ross on Tuesday and Wednesday to discuss U.S. tariffs on steel and aluminum, AFP reports, citing people familiar
• ECB: bond market liquidity has not deteriorated, despite the buildup of PSPP holdings over time; only some increased volatility when the net monthly volume was reduced
• White House lawyer Cobb says Trump is not considering firing Mueller
• Japanese Prime Minister Shinzo Abe saw his support tumble in weekend opinion polls as public anger continues to rise over a cronyism scandal.
• A top Treasury Department official said he was incorrect in saying that the U.S. had ended formal economic dialogue with Beijing, adding that Secretary Steven Mnuchin continues to hold private discussions with China.
• China named Yi Gang to run its central bank, elevating a long-serving deputy governor with deep international links to the forefront of efforts to clean up the nation’s financial sector and modernize monetary policy.
• The U.S. Chamber of Commerce and 44 other associations are urging President Donald Trump not to impose sweeping tariffs in response to China’s trade practices.
• Brexit negotiators want to secure a written promise of a transition deal from the European Union at a key summit this week, to help reassure businesses that they will get the grace period they desperately want.
• The U.K.government will consider further action against Russia this week after it accused Moscow of stockpiling the Novichok nerve agent. Vladimir Putin cruised to a landslide victory in Russia’s presidential vote, extending his 18-year rule amid escalating confrontation with the West.

Asian equity markets traded mixed with the region indecisive ahead of a widely anticipated Fed rate hike this week. ASX 200 (+0.2%) finished positive as strength in energy kept the index afloat, while Nikkei 225 (-1.0%) underperformed amid a firmer JPY and as support for PM Abe’s administration slumped to 33% (Prev. 45%) in the wake of the land-sale scandal. KOSPI (-0.8%) suffered losses in its top-weighted stocks in which Samsung Electronics fell on news Apple is to develop displays to replace Samsung screens, while Hyundai Motor was hit by a stateside investigation into fatal incidents involving airbag failure which could affect a total of 425K Hyundai and Kia cars. Hang Seng (+0.1%) and Shanghai Comp. (+0.1%) were indecisive and traded choppy amid mixed property data from China, a neutral PBoC open market operation and after China signalled stable monetary policy continuity as it chose PBoC Deputy Governor Yi Gang to be the next central bank head. Finally, 10yr JGBs were flat amid an indecisive risk-tone in the region, while an unsurprising Summary of Opinions release and unchanged Rinban announcement also kept prices range-bound. As such, Japanese yields were mixed while their US counterparts were higher ahead of the FOMC in which the US 2-year yield rose to its highest since 2008.

Top Asian News

• Putin Claims Mandate on Record Vote Amid Conflict With West
• China Names Yi Gang as First New PBOC Governor in 15 Years
• Noble Group Braces for First Bond Default as Pressure Mounts
• Modi’s Anti-Graft Image Under Fire on $2 Billion India Fraud
• Singapore MAS Imposes Penalties on Stanchart Bank, Trust

European bourses started the week on a poor footing (Eurostoxx 50 -1.0%) after a mixed Asian session, as investors anticipate a hawkish Fed meeting later this week. Energy and materials are amongst the worst performing sectors as concerns of US drilling activity points to higher output. Mining names are feeling the pressure from a firmer dollar with Antofagasta (-2.9%), Anglo American (2.8%), BHP (-2.7%), Rio (-2.2%) all seen at the foot of the FTSE 100. On the flip side, the financial sector is outperforming with Barclays (+3.6%) higher after reports that activist investor, Sherborne Investors have acquired a 5.2% stake in the bank. Additionally, SocGen (+0.65%) is providing some support to the sector after the Co. said they expect resolution over the LIBOR probe in the coming weeks. Separately, sources stated the company is applying for a banking license in Australia. In terms of individual movers, Hammerson shares leapt 26% after the Co. rejected a GBP 5bln offer from French retail property developer Klepierre (-4.0%). Micro Focus (-50.6%) plummeted to the bottom of the Stoxx 600 following a double whammy from worse than expected revenue outlook and the departure of their short-lived CEO.

Top European News

• Italy’s Di Maio Appeals to His Voters as He Seeks to End Impasse
• Micro Focus Shares Collapse After Sales Warning and CEO Exit
• GKN’s Rival Suitors Offer Incentives to Win Investor Support
• Barclays in Activist Crosshairs as Bramson Takes 5.2% Stake

In FX, the greenback started off firmer with the DXY above the 90.00 level after last Friday’s stronger than expected Industrial Production and ahead of a widely expected rate hike from the Fed. This pressured its counterparts across the board with commodity-linked currencies also kept subdued by weakness in the metals complex, while USD/HKD rose to print a fresh 33yr high. Conversely, JPY was the exception and outpaced the USD amid the indecisive risk-tone and after USD/JPY failed to hold onto the 106.00 handle. However, in the last hour of trading, the USD has given up virtually all gains and the BBG Dollar index was back to session lows.

In Commodity prices were lacklustre overnight in which WTI crude futures pulled back from Friday’s gains and briefly slipped to below USD 62/bbl. Elsewhere, gold languished as the greenback remained firm ahead of the looming FOMC, while copper extended on last week’s lows alongside the indecisive risk tone and early weakness in Chinese metals prices in which Dalian iron ore futures slipped over 3% shortly after the open.

In commodities, WTI (-0.6%) and Brent (-0.7%) are pressured by concerns of oversupply arising as US drilling activity increases. The weekly Baker Hughes rig count added four oil rigs on Friday bringing the total oil rig number to 800 compared to 631 a year ago. Russian Energy Minister Novak affirmed pledge to see OPEC production deal through to the end and reiterated that Russia is willing to extend cuts if necessary, while he added that Russia is open to discussing phase-out from the deal when appropriate. Moving on to metals, Gold (-0.1%) continued to edge lower on a firmer dollar but has seen a slight bounce in recent trade. Dalian iron ore fell by 4% to its lowest level since November weighed by high inventories and weaker steel demand .

On today’s global calendar, the commencement of the two-day G20 finance ministers meeting should be the highlight on Monday, while the expected announcement by China’s NPC for the PBOC governor role will also be closely watched. Meanwhile the UK’s David Davis and EU’s Michal Barnier are due to meet in Brussels with the meeting bringing possible clues about an agreement on the terms of Brexit transition. It should be a fairly quiet start to the week for data with UK and China house prices data due overnight, followed by the January trade balance for the Euro area. There is no data due in the US however the Fed’s Bostic is slated to speak in the afternoon.

US Event Calendar

• Nothing major scheduled
• 9:40am: Fed’s Bostic Speaks on  Community Reinvestment Act

DB’s Jim Reid concludes the overnight wrap

If markets were feeling a little indecisive last week given the unpredictable spate of headlines which seemed to come from the White House on an almost daily basis then there’s good news as we have the welcome distraction of a Fed meeting this week. Indeed, Wednesday’s meeting is the focal point for markets over the next five days – not least because it is Fed Chair Powell’s debut – although there are a few other potentially interesting events for us to look forward to including today’s two-day G20 meeting of finance ministers and central bankers, the conclusion of China’s NPC tomorrow, the global flash PMIs and UK/ EU summit on Thursday and yet another US government funding deadline due up on Friday. So plenty to keep markets interested.

In terms of the Fed, the consensus view amongst economists is for a 25bp rate hike and that’s reflected in the market with fed funds contracts fully pricing that in. With that likely as good as done our US economists believe that there are three key questions going into the meeting that we should be asking. The first is: does the committee still see risks as “roughly balanced”. The second is: will the median dots move up, and in particular, will they signal four rate hikes this year. The third is: how will the new chairman perform in the press conference, and what changes in style/messaging might he signal?

In summary, the team expect the answer to the first question to be that the Committee sounds a bit more upbeat (though not yet worried) about inflation developments, and a message on economic activity that is little changed. They also expect the Committee to raise growth forecasts and lower unemployment forecasts. In terms of the second question, their view is that we see the median dot move to 4 hikes from 3. However, this is likely to be a close call. Perhaps of more interest will be the terminal rate though. The team expect the terminal rate forecast to rise to 3.3% in 2020 from 3.1% in the December forecast. As for the third question and Fed Chair Powell’s press conference, on substance, they expect Powell’s message to centre on the signs of an overheating economy, and that the Fed’s current tightening action is clearly in order. This would signal that another rate hike is on the way in June.

Away from the Fed, the market will most likely be interested in the rhetoric and debate around protectionism and free trade at today’s G20 meeting with the world seemingly on the brink of a trade war. Ahead of it, Bloomberg reported over the weekend that the US was withdrawing from economic dialogue with Beijing with Treasury’s undersecretary for international affairs David Malpass saying that “because there wasn’t a path back toward a market orientation, I discontinued the China economic dialogue”. Malpass did try to walk back on his words later on and noted that Treasury Secretary Mnuchin continues to hold ‘private’ discussions with China.

On the subject of trade, last Friday our global economists published a special report titled “The rising risk of a trade war”. While the team’s baseline assumption is that trade policy actions will be limited to restrictions which are small enough not to have a significant macro impact, they also look at a couple of tail risk scenarios to this view. One is a significant but contained increase in tariffs on US imports from China on a scale very recently floated by the Administration which would likely be met by a similar imposition of tariffs on China’s imports from the US. In the second they assume that US-China trade tensions spiral into a large conflict with high tariffs imposed across the board on both sides. The team also consider the risks around a full withdrawal by the US from NAFTA. See the following link for the full report.

While we mention China, over the weekend Yi Gang has been named as the new PBOC Governor, replacing Zhou Xiaochaun. Mr Yi has been the deputy PBOC Governor for nearly 10 years and so the appointment suggests that China is signalling that it’s seeking policy continuity with further focus in modernising the country’s financial sector and monetary policy. The other update to note from the weekend is confirmation that Vladimir Putin has secured victory in Russia’s presidential election with nearly 77% of the votes and will therefore stay at the helm for another 6 years.

This morning markets in Asia have opened mixed with the Hang Seng (+0.06%), CSI 300 (+0.23%) and ASX 200 (+0.17%) modestly higher while the Kospi (-0.77%) and Nikkei (-1.11%) are down as we type, in part due to a Bloomberg report suggesting that Apple is designing and producing its own device displays for the first time. Markets in Japan also appear to be reacting to a nationwide survey which has showed a notable decline in support for PM Abe’s cabinet. The survey by Jiji Press shows that support is down over 9 percentage points versus last month to 39% and that disapproval has exceeded approval for the first time in five months.

The moves this morning also follow a week in which US equities in particular struggled with the S&P 500 falling in four  out of the five days (with Friday’s small +0.17% rebound saving the index from a full house) to clock a -1.24%  decline. In fairness, the index is slightly above the mid-point of the YTD high in late January and YTD low in early February and really it’s just struggled for direction for the last five weeks or so. Bond markets were a little less  exciting last week with Treasuries about 5bps lower over the week but the curve back to flattening fairly aggressively with 2s10s 8.3bps flatter and 5s30s 7.2bps flatter. In commodities, WTI Oil jumped +1.88% to be up for the third straight day on Friday. DB’s Michael Hsueh believes the fundamental upside risks to oil still exist and is likely to result in some further upward revisions to his 2018 demand growth assumptions.

In terms of data on Friday, in the US, the February IP was well above market at +1.1% mom (vs. +0.4% expected) which lifted annual growth to the highest since 2011 at +4.4% yoy, while capacity utilisation also grew to the highest since 2015 at 78.1% (vs. 77.7% expected). The March University of Michigan consumer sentiment survey rose to the highest since 2004 at 102 (vs. 99.2 expected). In the details, the current conditions index jumped 7.9pts to 122.8 – the highest since 1946 while the consumers’ one year ahead inflation expectation edged up 0.2pts to +2.9% (highest since Mar. 2015). Elsewhere, February housing starts and building permits both fell more than expected, at -7.0% mom to 1,236k (vs. 1,290k expected) and -5.7% mom to 1,298k (vs. 1,320k expected) respectively.  Factoring in the above, the Atlanta Fed now estimate Q1 GDP growth at 1.8% saar (-0.1ppt from previous). Back in Europe, the Euro area’s final reading of February core CPI was confirmed at 1.0% yoy.

Now turning to the ECB speak over the weekend. The ECB’s Villeroy reiterated that the Euro area economy is experiencing a “robust expansion” and that a decision to lose the easing bias on QE should be seen as a sign of confidence. He also added that “there is some kind of welcome alignment of stars between the economic background, market expectations and the convergence of those market expectations towards our own views within the Governing council”. Elsewhere, the ECB’s Knot noted that the Euro area economic “outlook is almost as good as it gets” while indicating the region is “projected to continue this firm path of growth”. On inflation, he noted he has “a high degree of confidence that actually inflation will pick up and will at some point support the definition of price stability”.

Finally back on Friday, the latest BOE Financial Policy Committee statement noted that apart from Brexit, UK’s financial stability outlook remains “standard” while potential material risks are from global vulnerabilities. The bank noted “some signs of rising domestic risk appetite in recent quarters” and that issuance of leveraged loans by UK companies have increased in 2017. The bank added that “valuations in some segments of the UK commercial real estate sector appear stretched”, while the proportion of new owner-occupier mortgages at higher LVR has also increased. Elsewhere, the BOE believes that UK banks could withstand a disorderly Brexit with their existing capital buffers but there is still a high potential risks of disruption to existing derivative contracts.

On today’s calendar, the commencement of the two-day G20 finance ministers meeting should be the highlight on Monday, while the expected announcement by China’s NPC for the PBOC governor role will also be closely watched. Meanwhile the UK’s David Davis and EU’s Michal Barnier are due to meet in Brussels with the meeting bringing possible clues about an agreement on the terms of Brexit transition. It should be a fairly quiet start to the week for data with UK and China house prices data due overnight, followed by the January trade balance for the Euro area. There is no data due in the US however the Fed’s Bostic is slated to speak in the afternoon.

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By Mark Cudmore, former Lehman trader and current Bloomberg macro commentator.

Macro View: Equity Markets Are Likely to Have Another Swoon

Almost all the most important inputs point to lower prices for global equities before the bulls can regain control.

Volatility across assets remains elevated. Importantly, the VIX can’t fall back below the crucial 15 level. Feb. 2 saw the fear gauge close above that mark for the first time in more than five months; it’s has managed to close below only once since. Long-term moving averages of swings continue to rise and that constricts risk-taking limits at financial institutions and erodes investor conviction.

Liquidity is still being squeezed. The rise in Libor may not be related to any bank stress but it still amounts to dearer funding costs. Two-year U.S. yields are at the highest since before Lehman Brothers collapsed. The 3% yield level may have held for 10-year Treasuries but they are hardly rallying rapidly.

Credit, both investment grade and high yield, continues to trade poorly, a reflection of diminished liquidity across markets and a fundamental outlook that’s less than appealing.

Global trade tensions will remain elevated for at least another few weeks, while we await the U.S. decision on China intellectual property theft and then the Treasury’s April report on FX manipulation.

Global political risks continue to mount: the personnel turnover in the U.S. administration, Japan’s land scandal, lack of Brexit clarity, Italy’s struggle to form a government, Russia’s spat with the U.K. are just some hot-button issues.

The recent broad losses in commodities constitute a warning signal on China – it doesn’t matter whether it’s a reflection of financial deleveraging or a negative outlook on the real economy – particularly as industrial metals are leading the declines.

Global growth may be solid but it’s hard to see where the upside for earnings growth is going to come from in the context of the large upward revisions early this year and also the looming threat of increased protectionism.

I turned bearish on global stocks in this column on Jan. 31, and have since repeatedly said that equities won’t find a solid base to bounce from until yields cool, investors deleverage and bears prowl openly. There are signs of the last requirement but the deleveraging seen has been insufficient relative to the level of U.S. yields.

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By Shant Movsesian and Rajan Dhall MSTA FXDailyterminal.com

While this week’s focus will be on the FOMC and the Brexit talks, we see both the USD and GBP off their respective extremes, and as such will take a quick look at the CAD, which was the clear underperformer last week.  Largely based on fears of a breakdown of the NAFTA accord, we have see USD/CAD pushing through the 1.3000 level this week, but suffering heavy losses against the likes of the EUR, JPY and GBP – the latter now pushing to highs seen in the aftermath of the Brexit vote – still.  

The domestic data has also been fading in recent months, with H2 2017 clearly showing a deceleration of economic expansion which led to the BoC hiking rates twice last year to reverse the accommodative moves on 2015 and once more at the start of the year to push the cash rate to 1.25%.   The CAD rate vs the USD fell to lows in the mid 1.2000’s, with a heavy dose of broad based weakness in the greenback, but since recovering, we have seen very little positive differentiation based on rate spreads, which in fairness, look to have broken down across the board.  The spot rate is now pretty much where we started before the BoC embarked on its tightening bias last year, and with technical metrics all pointing to oversold levels, the fundamental backdrop is now getting stretched from what we assume to be significant enough liquidation which is pushing the CAD to the bottom of the (G10) currency pile.  

While again, we look to avoid any political leaning or inclination, our views on the NAFTA accord remain unchanged.  That is, any agreement or collapse will be equally beneficial or negative for the respective parties, based on the economic benefits enjoyed for all 3 nations, albeit to varying degrees – and this is the basis on which the US is keen to redefine terms.  At present however, we continue to see the market pounding on the CAD vs the USD, but also CAD/MXN, which has dropped from 15.70+ highs down to 14.27 in the past week.    While Canada’s exports to the US (as of 2016) stand at a little over 55%, Mexico’s share to the US is just over 80%, so based on NAFTA risk alone, if is fair to say that on this parameter CAD sales are overdone.  

Even so, the convoluted nature of supply and production chains, rules of origin and cross border to-and-fro suggest the talks will go on through 2018 at the very least, so what we may have to concede is that some of out longer term forecasts for a move back to and through 1.2000 may have to be moderated on risk sentiment alone.   As it is, equity markets have been unnerved by the shakeout seen in stocks in February, so we are anticipating some form of negative skew to the commodity linked currencies over coming months.  

Back ‘home’ so to speak, the BoC continues to highlight the cautious approach going forward, but one which you would expect after the series of tightening seen so far.  As constantly reminded, there is a period of assessment on how the economy fares with higher rates, but despite regional falls in house prices, and little consumer fall-out to note as yet despite worrisome levels of household debt which have clearly flagged. Capacity utilisation is also rising, and now stands at 86.0%, so with the positive outlook on business investment and bilateral trade with Europe now secured, is the blanket CAD selling justified?.  As noted above, we are close to pricing out rate moves seen so far, though benchmark (10yr) spreads with Treasuries widening out again.  If analysts cite this for currency weakness, then the natural urge will be to start looking a further gains in the USD, but we expect this to unfold – as it is threatening to do – across the board against the likes of the EUR and JPY, and at some point vs GBP.

Extended GBP/CAD levels look an attractive route to reflect a CAD comeback once the Brexit excitement is out of the way this week, given hopes of a transition deal are the significant driving force here and are thoughts on this were covered last week.  Technically, we are close to reaching a cluster of resistance levels from 1.8300-1.8500, and is an area we expect to see value seekers jumping in.  

EUR/CAD is also at extended levels on the short term time frames, as it is against the JPY, but having noted the underperformance against MXN based on skewed NAFTA based sentiment, we have already seen some moderation against AUD and NZD.   Plenty of risks to note over the longer term as there are for most of the major economies in the world; we can’t see why the CAD has suddenly turned into the runt of the litter given the level of comparative risks seen elsewhere.  

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Authored by Finian Cuningham via The Strategic Culture Foundation,

British Conservative Prime Minister Theresa May’s dramatic escalation of hostility towards Russia this week has had one benefit closer to home. Labour’s erstwhile popular leader Jeremy Corbyn has fallen casualty to renewed Cold War politics.

May, who up to now was beleaguered from the Brexit debacle with the European Union, has suddenly rallied support for her Cold War agenda towards Russian within her own Conservative party – and from opposition lawmakers on the Labour side of the parliament.

While May was roundly cheered for her rhetorical attacks on Russia, Labour leader Jeremy Corbyn was subjected to vicious heckling from all sides in the House of Commons, including from many MPs within his own party.

May’s announcement that her government was going to expel 23 Russian diplomats for the “attempted murder” of a former Kremlin spy living in exile in Britain was widely exalted in the House of Commons.

The expulsions mark the biggest diplomatic sanction by Britain against Moscow in 30 years. Moscow has vowed to carry out reciprocal measures in the coming weeks, as bilateral relations tumble in a downward spiral.

The British move was denounced by Russia as “unprecedented hostility” and a violation of normal inter-state relations.

Arguably, the Russian response is reasonable, given that the alleged attack on 66-year-old Sergei Skripal and his daughter in Salisbury on March 4 is far from evidenced. The entire official British position of directly blaming Moscow for attempted murder rests on unverified claims about a Soviet-era nerve toxin, as well as on wild supposition.

But such is the hysterical Cold War climate being generated by British politicians and dutiful news media impugning Russia that anyone who merely questions the lack of due process is immediately pilloried as a “Russian stooge”.

That’s what happened when Jeremy Corbyn stood up in the House of Commons this week and dared to ask the prime minister for “evidence” that the alleged Soviet-era toxin was indeed linked to Russian state actions.

Corbyn also enquired if the British authorities would be providing the alleged toxin samples to Russian investigators so that they could carry out their own independent assessment – a procedure that is mandated by the 1997 international treaty known as the Chemical Weapons Convention.

In short, what the Labour leader is simply requesting was for due process to prevail. That is, a rational, evidence-based approach to the furore. Which, one would think, is a reasonable, cautionary minimum especially owing to the present danger of a catastrophic military conflict breaking out at a time from already sharp geopolitical tensions between US-led NATO states and Russia.

“Our response must be decisive and proportionate and based on clear evidence,” said Corbyn, who also refused to condemn Russia as guilty, given the lack of incriminating proof at this stage – less than two weeks after the apparent poisoning attack on the Skripals.

The Labour leader could hardly make himself heard amid boorish taunts of “shame, shame” from the Conservative (Tory) benches.

“You’re a disgrace to your party,” shouted out one Tory minister, Claire Perry, inciting the mob around her.

British news media followed suit, going on full-out Cold War offensive against Corbyn. The rabidly rightwing Sun, which last week was calling for military action against Russia, blasted its front page with the headline: “Putin’s Puppet”.

The Rupert Murdoch-owned tabloid “explained” to its readers with outraged tone that “Corbyn refused to condemn Russia” and that he had “questioned proof” of a Russian link to the attack on Sergei Skripal.

Another rightwing tabloid, the Daily Mail, also ran a front page vilification with the headline: “Corbyn, The Kremlin Stooge”.

The newspaper elaborated with the subheading that “Mutinous Labour MPs accuse [Corbyn] of appeasement for not condemning Putin”.

Meanwhile, the BBC was reporting that senior lawmakers within Corbyn’s cabinet team are mounting a rebellion against their leader precisely because of his “refusal to blame Russia” over the poisoning incident in Salisbury.

The return to Cold War politics in Britain is not just marked by knee-jerk hostility towards Russia – based on Russophobia and irrational innuendo – it is also characterized by the British establishment shutting down any dissent by smearing critics as “enemies within”.

British politics are this week hurtling back in time to the old days of Cold War witch-hunting against “Commies” and “Reds”. In the same way that the United States is still poisoned with the J Edgar Hoover and McCarthyite era of the 1950s and 60s.

Due process and rational, critical thinking are being banished again.

The poisoning incident of Sergei Skripal and his 33-year-old daughter Yulia should be a matter of criminal investigation to establish facts, motive and perpetrator.

Instead, the incident was immediately turned into a propaganda opportunity to assail Russia. The alleged logic that the Kremlin carried out a “revenge” attack on a traitor-spy who had been living for eight years in England, openly and undisturbed as part of an exchange deal with Britain’s MI6, does not make any sense. Indeed, it’s absurd, given the timing of Russian presidential elections this month and the forthcoming football World Cup to be held in Russia.

Resurgence of Cold War mania, however, suits the British establishment very nicely. Suddenly, the much derided Conservative Prime Minister Theresa May and her party are being portrayed as the noble defenders of national security against a “malicious” Russian enemy.

Even better is that the opposition Labour party which had been rejuvenated by Jeremy Corbyn with a bold, progressive and socialist policy is now being cast as a useless Russian “stooge”. Corbyn’s political enemies within his own party – rightwingers who detested his successful rise as leader – are now empowered by the Cold War climate to tear him down.

Ironically, the toxic nerve agent that was used to paralyze former Russian spy Sergei Skripal and his daughter is having several invigorating political effects for certain British state interests. The Cold War Russophobia appears to be re-energizing the formerly feeble Tory leader and her party, while numbing the once promising rise of Labour leader Jeremy Corbyn and his socialist program.

Still, it remains to be seen whether the wider British public buy into the latest Cold War debacle. If it turns out to be a cynical stunt by the British state – as seems to be the case – then the popular backlash against the Tories and the establishment will be horrendous.

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Thanks to drastic increases in crop yields and the falling need for manual farm labor, a mass migration towards cities started in the years following the Industrial Revolution.

This phenomenon first originated in developed economies as people moved to work in factories that produced consumer goods at a scale never before seen. Then in the 1950s, developing economies started to follow suit.

As VisualCapitalist’s Jeff Desjardins notes, the results have been staggering, and today a country like China has at least 35 massive cities that each have an economic output comparable to entire countries.

After many decades of urbanization, the portion of people living in urban areas has surpassed the total rural population. This happened in 2007, and we are now in the first window in human history in which more people are city dwellers.

So what cities are the meccas for urban migration today? And which are falling out of favor?

THE FASTEST GROWING CITIES (2000-2016)

The following interactive and zoomable map was put together by Datawrapper, using data from the United Nations.

It lists 500 cities with over 1 million people, and is shaded based on annualized population growth rate between 2000 and 2016. Percent growth corresponds with darker shades of teal, while orange symbolizes negative growth over the timeframe.

It’s strongly recommended to explore the map by zooming in on particular regions. Highlighting cities themselves will give you population details for 2000 and 2016, as well as an annualized percentage growth rate.

Here are some areas we thought were worth looking at in more detail:

North America

North America is mostly what one may expect. The biggest cities (NYC, LA, Chicago, Toronto) aren’t changing too fast, while some cities in the Rust Belt (Detroit, Cleveland, Pittsburgh) have slightly negative growth rates. Austin, TX and Charlotte, NC seem to be the fastest growing cities in the U.S., overall.

South America

Colombia’s Bogotá stands out as the city in South America growing at the most blistering pace. It gained 3.6 million people in the 2000-2016 year period, good for a 2.8% annual growth rate.

China and India

These two populous countries are home to many of the dark-shaded circles on the map. It’s worth looking at an additional screenshot here (just in case if you haven’t zoomed in above).

Look at the coast of China – it’s dotted with rapidly expanding cities. Incredibly, in the 16-year span of data, some of these cities have doubled in terms of population. Others like Xiamen have tripled in size. Shanghai alone has gained 10.5 million people in this span of time.

In India, the fastest growing cities are in the south, where there are at least 10 large cities that have roughly doubled in size. Delhi, which is in the north, has added nearly 11 million inhabitants over the same stretch.

Africa

In Africa, we see the names of many of the cities that are projected to be the world’s largest megacities by 2100.

Lagos in Nigeria has doubled to nearly 14 million people between 2000-2016, and it is expected to explode to 88.3 million people by 2100 to be the world’s most populous city overall. Dar es Salaam (Tanzania) and Kinshasa (DRC) are two other places that are set to grow rapidly by 2100, rounding out the list of the world’s three most populous megacities.

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