Tag: news

Submitted by John Rubino via DollarCollapse.com,

First it was the banks reporting horrendous numbers — largely, we were told, because of their exposure to recently-cratered energy companies. Now it’s Big Tech, which is a much harder thing to explain. The FAANGs (Facebook, Apple, Amazon, Netflix and Google) own their niches and not so long ago were expected to generate strong growth pretty much forever. That’s why every large-cap mutual fund and most hedge funds (not to mention a few central banks) owned so much of them.

This year’s first quarter was emphatically not what their fans had in mind. Apple, for instance, reported not just a slowdown but a double-digit year-over-year sales decline:

Rotten Apple: Stock plunges 8% on earnings, revenue miss

 

(CNBC) – Apple reported quarterly earnings and revenue that missed analysts’ estimates on Tuesday, and its guidance for the current quarter also fell shy of expectations.

 

The tech giant said it saw fiscal second-quarter earnings of $1.90 per diluted share on $50.56 billion in revenue. Wall Street expected Apple to report earnings of about $2 a share on $51.97 billion in revenue, according to a consensus estimate from Thomson Reuters.

 

That revenue figure was a roughly 13 percent decline against $58.01 billion in the comparable year-ago period — representing the first year-over-year quarterly sales drop since 2003.

 

Shares in the company fell more than 8 percent in after-hours trading, erasing more than $46 billion in market cap. That after-hours loss is greater than the market cap of 391 of the S&P 500 companies.

 

Looking ahead to the fiscal third quarter, Apple said it expects revenue between $41 billion and $43 billion — Wall Street had expected $47.42 billion on average, according to StreetAccount.

 

One area of weakness for Apple in its second-quarter was the Greater China segment — comprising mainland China, Taiwan and Hong Kong. Revenue for that region fell 26 percent year-over-year to $12.49 billion. Previously, that area had posted consistent growth for China.

Twitter managed to grow in the first quarter, but its next-quarter revenue projection came in 10% below Wall Street’s consensus:

Twitter sinks 12% on revenue miss, guidance

 

(CNBC) – Twitter on Tuesday posted mixed quarterly results and gave sales guidance that disappointed Wall Street, even as its user base grew more than expected.

 

The social media company reported adjusted first-quarter earnings of 15 cents per share on $594.5 million in revenue. Earnings rose from 7 cents per share in the previous year, while sales climbed 36 percent from $435.9 million in the prior-year period.

 

Analysts expected Twitter to report earnings of 10 cents per share on $608 million in revenue, according to a consensus estimate from Thomson Reuters.

 

Shares dropped about 12 percent in after-hours trading Tuesday.

 

Twitter said it expects second-quarter revenue of $590 million to $610 million, well below analysts’ estimates of $678 million, according to Thomson Reuters. In the company’s conference call, executives downplayed the low estimate, saying it did not reflect sagging interest from advertisers.

The repercussions from tech’s tank are myriad, in part because so many sophisticated investors own so much of this paper. As Zero Hedge just noted:

Wall Street In Pain: 163 Hedge Funds Are Long AAPL Stock

 

First it was the blow up of hedge fund darling Valeant that crushed countless funds who were long the name.

 

Then, one month ago after the collapse of the Allergan-Pfizer deal, we showed (one of the reasons) why the hedge fund world continued to underperform the broader market: Allergan was one of the most widely held hedge fund stocks.

 

And now, following the biggest Apple debacle in years, here is the reason why the hedge fund community is about to see even more redemption requests and underperform the market even more: according to the latest GS hedge fund tracker, at least 163 hedge fund are long the name which has just lost over $40 billion in market cap in the after hours. The good news: it used to be over 200 as recently as a year ago.

 

Tears won’t be confined to Wall Street however: let’s not forget that none other than the Swiss National Bank is also long some 10.4 million shares of AAPL.

It also won’t be a surprise to find out that the Japanese central bank — a massive buyer of equities which recently began diversifying into other countries’ shares — and the US Plunge Protection Team are on the hook for a few tens of billions here. But stock market squiggles and hedge fund redemptions are a side-show. The big questions are:

1) Can an economy grow when its banks, energy companies and tech giants are all losing ground?

 

2) Can a hyper-leveraged global financial system survive if its main economies can’t grow?

The answer to both questions is almost certainly “no.” So either something extraordinary (and extraordinarily unlikely) happens to ignite sustainable growth, or the dissolution of the fiat currency/fractional reserve banking/central planning model will begin. Expect developed world governments to do almost literally anything to stop that from happening.

via http://ift.tt/1TdGhVW Tyler Durden

Two days ago we reported an initial, unconfirmed report that in a deja vu occurrence of what happened in Iran several years ago when its nuclear enrichment plant was found infected with the infamous Stuxnet virus, a computer malware virus was discovered at the Gundremmingen nuclear power plant in Bavaria.

Today we finally have confirmation after Reuters reports that the nuclear power plant was indeed infected with not one but several computer viruses. But don’t worry, Reuters is quick to calm a concerned public, “they appear not to have posed a threat to the facility’s operations because it is isolated from the Internet, the station’s operator said on Tuesday.” The Gundremmingen plant in question is located about 120 km (75 miles) northwest of Munich, is run by the German utility RWE.

The nuclear power plant of Gundremmingen. Photo: Reuters

Ironically, this takes place just a week after the German government made an unprecedented request of Belgium to temporarily shut two nuclear reactors, citing technical issues involving possible safety defects. Last week Germany asked Belgium to take Engie SA’s Tihange-2 and Doel-3 atomic plants offline until the safety concerns can be addressed, Environment Minister Barbara Hendricks said last Wednesday.

It appears that the safety concern may have been Germany’s after all.

The viruses, which include “W32.Ramnit” and “Conficker”, were discovered at Gundremmingen’s B unit in a computer system retrofitted in 2008 with data visualization software associated with equipment for moving nuclear fuel rods, RWE said.

Just like in the case of Iran where USB sticks were used to infect the local nuclear facility, Reuters reports that malware was also found on 18 removable data drives, mainly USB sticks, in office computers maintained separately from the plant’s operating systems. RWE said it had increased cyber-security measures as a result.

W32.Ramnit is designed to steal files from infected computers and targets Microsoft Windows software, according to the security firm Symantec. First discovered in 2010, it is distributed through data sticks, among other methods, and is intended to give an attacker remote control over a system when it is connected to the Internet.

Conficker has infected millions of Windows computers worldwide since it first came to light in 2008. It is able to spread through networks and by copying itself onto removable data drives, Symantec said. 

For now it remains unclear who is behind this latest viral attack.

In 2013, a computer virus attacked a turbine control system at a U.S. power company after a technician inserted an infected USB computer drive into the network, keeping a plant off line for three weeks.

RWE has informed Germany’s Federal Office for Information Security (BSI), which is working with IT specialists at the group to look into the incident. The BSI was not immediately available for comment.

And now damage control. Mikko Hypponen, chief research officer for Finland-based F-Secure, said that infections of critical infrastructure were surprisingly common, but that they were generally not dangerous unless the plant had been targeted specifically. The most common viruses spread without much awareness of where they are, he said.

As an example, Hypponen said he had recently spoken to a European aircraft maker that said it cleans the cockpits of its planes every week of malware designed for Android phones. The malware spread to the planes only because factory employees were charging their phones with the USB port in the cockpit. Because the plane runs a different operating system, nothing would befall it. But it would pass the virus on to other devices that plugged into the charger.

In retrospect, if trying to calm the public, it is perhaps not a great idea to say that the nuclear power plant is safe as a result of the infection just because various airplanes are also infected with comparable viruses.

via http://ift.tt/1NzDjP0 Tyler Durden

Futures are looking weak again.

Traders gunned for 2,100 on the S&P 500 last week. They briefly touched that level, but there was no follow through for the obvious reason: no one with a brain believes this rally.

We’ve broken above the downward trendline established by a series of lower highs in 2015. However, there’s a decent space between here and the all-time highs that has yet to be filled. And with momentum waning, it’s quite possible this move was a false breakout.

In truth it’s difficult to find just who is buying stocks right now.

1. Corporate buybacks are in a blackout period, so it’s not that.
2. Corporate insiders are selling the farm.
3. Individual investors are pulling money out of stock funds.
4. And institutional investors have been net sellers of stocks for weeks now.

This leaves Central Banks.

What used to be conspiracy theory is now a fact: the futures exchanges permit Central Banks to buy stock futures to provide “liquidity.” It is not coincidence that this policy occurred around the time the markets began to feel increasingly manipulated with stocks ramping higher for absolutely no reason at various points during the day.

If this whole mess sounds like a recipe for a Crash to you, you’re correct. Markets require actual buyers to perform. Sure, Central Banks can manipulate stocks here and there, but you need real buy orders for a market to not completely implode.

Remember the Flash Crash? Remember 2008? Central Banks couldn’t stop those either.

Take a look at the S&P 500’s long-term chart. Where does it look like it’s heading to you?

If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.

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Phoenix Capital Research

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In late January, when oil was trading in the low $30 range, Dennis Gartman made a bold forecast: “we won’t see crude above $44 again in my lifetime”

 

Three months later, oil just hit $45 – its highest price since November – and yet Gartman is still alive…

A paradox? Gartman has an explanation, and it has to do with Keynes, “erring” and “wrongness.” From this latest note:

Finally… and perhaps most importantly… we invoke Lord John Maynard Keynes this morning who said long ago when he had changed his mind on an investment he had previous touted that “When the facts change, I change; What then do you do, Sir?” The facts are changing in the world of crude oil; demand is still rather strong and supplies seem to be rising but only modestly. Further, the term structures are shifting. We had been, on balance and really quite openly, bearish of crude for the past several years, erring always to sell crude’s rallies rather than to buy crude’s weakness. That has been wrong for the past two months and it is time to acknowledge that “wrongness.” If the facts are indeed changing… and certainly they seem to be… then we too must change. Lord Keynes did; we must also.

Well, “change” is certainly prefereably to “die.”

Oil can now crash.

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Just three weeks ago, the Venezuela socialist paradise gifted local workers with one extra day of rest each week when, as a result of the crippling economic crisis and collapsing power grid, president Maduro designated every Friday in the months of April and May as a non-working holiday in his desperate bid to save electricity as a prolonged drought pushes water levels to a critical threshold at hydro-generation plants. Never without a scapegoat, Maduro immediately blamed El-Nino for implementing the three-day weekend.

“This plan for 60 days, for two months, will allow the country to get through the most difficult period with the most risk,” Maduro said on state television in early April. “I call on families, on the youth, to join this plan with discipline, with conscience and extreme collaboration to confront this extreme situation” of the drought blamed on the El Nino weather system.

As a reminder, the reason for the electrical rationing was the water content of Venezuela’s Guri Dam, which supplies more than two-thirds of the country’s electricity. As The Latin American Herald Tribune wrote a month ago, the dam “is less than four meters from reaching the level where power generation will be impossible. Water levels at the hydroelectric dam are 3.56 meters from the start of a ‘collapse’ of the national electric system. Guri water levels are at their lowest levels since 2003, when the a nationwide strike against Hugo Chavez reduced the need for power, masking the problem.”

Yesterday the water levels at Guri dam reached a record low of 241.67 meters, according to state power utility Corpoelec. If levels drop below 240 meters, the dam’s operator may be forced to shut down units at the plant that produces about 75 percent of the electricity that Caracas, the country’s capital and largest city, consumes.

(arrow shows where the water shoud be if the dam were operating at capacity)

 

Alas, since this plan was doomed to fail as the Venezuela economy would produce even less output as a result of the extended weekend, things went from comical to farcical overnight when the Venezuelan gift kept on giving, and the nation expanded the three-day weekend to five days, declaring a two-day work week for government workers, adding it was seeking international help to save its power grid amid a drought that threatens the capital’s main source of electricity.

The two-day work week, after the government added Wednesdays and Thursdays as non-working days to save more power, will last at least two weeks, President Nicolas Maduro said on his weekly program broadcast on state television. Schools will be closed on Fridays starting this week, he said.

“The public sector will work Monday and Tuesday, while we go through these critical and extreme weeks where we are doing everything to save the Guri,” Maduro said, referring to the giant hydroelectric dam that has become like a “desert.” The collection of electricity-saving measures have reduced Guri’s daily drop from 22 centimeters a day to 10 centimeters, he added.

As Bloomberg adds, Venezuela is requesting emergency international help from the United Nations for public works construction to help the country recover from an “extreme situation,” Maduro said. He called for “social peace” during the power crisis.

Meanwhile, Venezuelans, except those in the capital and some states, began to experience programmed four-hour rolling blackouts on Monday as a drought cripples generation at the Guri dam. According to the IMF, Venezuela’s economy will contract 8% this year, after shrinking 5.7% in 2015. Considering hyperinflation in Venezuela is already running at over 700%,and now that the economy is effectively shut down, we will take the under.

 

Today’s announcement follows another curious idea by Maduro when earlier this month he ordered the country’s time zone changed to save energy, reversing the decision by his predecessor, Hugo Chavez, to set back clocks 30 minutes in 2007 to ease daily predawn commutes for school children and the poor. Clocks will be moved forward a half hour May 1.

Looking forward, we doubt that the decision to expand the weekend from 3 to 5 days will be reversed any time soon (after all the initial 3-day weekend expansion was supposed to be temporary as well), and the most likely outcome is that in his next decree, Maduro will announce that public workers can just take a 7 day weekend, and no longer show to work. They will also receive a commesurate wage.

At that point, we assume, is when the Venezuela experiment in creating a socialist paradise finally concludes.

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• Trump, Clinton press closer to general election showdown (AP)
• Acela primaries: Winners, losers (Hill)
• Trump Says He’s `Presumptive Nominee’ as Clinton Wins Four (BBG)
• In the battle for Hollywood endorsements – and cash – Clinton rules (Reuters)
• U.S. Oil Rises Above $45 a Barrel for First Time Since November (BBG)
• Spin: Near-Zero Growth Happens Often in Slow-Motion U.S. Economy (BBG)
• Comcast in Discussions to Buy DreamWorks Animation (WSJ)
• Iran’s Supreme Leader says U.S. lifted sanctions only on paper (Reuters)
• Oil’s Magic Number Becomes $50 a Barrel for Promise of Recovery (BBG)
• Donald Trump Set to Give Foreign-Policy Speech (WSJ)
• Suspect in Paris attacks extradited to France from Belgium (Reuters)
• Oil Companies’ Bet on Kurdistan Turns Sour (WSJ)
• Greek stocks slump as Tusk rejects emergency summit  (FT)
• China Debt Headache Swells as Bank Breaches Bad-Loan Buffer  (BBG)
• Germany Plans $1.4 Billion in Incentives for Electric Cars (BBG)
• Barclays Posts Drop in Profit on Falling Returns at Investment Bank (WSJ)
• Xi says China must create jobs to replace ones lost due to reforms (Reuters)
• 1MDB Bondholders Face Threat of More Tussles Ahead of May Coupon (BBG)
• Victoria Nuland says optimistic about Ukraine reforms (Reuters)
• Chipotle Sales Tumble 23% as Food-Safety Fallout Persists (BBG)
• Delaware’s $1 Billion Opacity Industry Gives U.S. Onshore Haven (BBG)
• US Steel files trade complaint against big Chinese producers (AP)
• Spain’s new elections: three possible outcomes (FT)

 

 

Overnight Media Digest

WSJ

– Tuesday brought Donald Trump and Hillary Clinton closer to winning their parties’ nominations, but like a hotly contested sporting event, the presidential contest is getting nasty as the end draws nearer. (http://on.wsj.com/1UgfIo8)

– Comcast Corp is in talks to buy DreamWorks Animation SKG Inc for more than $3 billion, according to people familiar with the matter, in a deal that could make the cable giant a rival to Walt Disney Co in the lucrative family-entertainment business. (http://on.wsj.com/1UfWU8u)

– Oil companies that piled into Iraqi Kurdistan after Saddam Hussein’s ouster are running into trouble, unravelling the region’s promise as source of easy-to-drill oil and threatening Iraq’s production surge. (http://on.wsj.com/1VV4VRs)

– Book retailer Leonard Riggio said in an interview Tuesday that he will step down as executive chairman of Barnes & Noble Inc, following the company’s annual meeting scheduled for September. (http://on.wsj.com/241Gbfa)

 

FT

Former Barclays executive Eric Bommensath told a London court on Tuesday that he was not aware of alleged attempts by traders at the British bank to manipulate the Libor global financial benchmark rate.

The New York Times Co said on Tuesday it would close its editing and pre-press print production operations in Paris, resulting in the elimination or relocation of up to 70 jobs as it moves to cut costs at its international newspaper.

French retailer Fnac said on Tuesday it had the backing of a majority of Darty shareholders in a battle with South Africa Steinhoff for control of the London-listed electronic goods retailer.

 

NYT

– Apple, the Silicon Valley giant that has spent much of the last five years as the world’s most valuable company, said on Tuesday that revenue for its second fiscal quarter, which ended in March, declined 13 percent to $50.6 billion as sales of its flagship product, the iPhone, fell, with little else to take its place. (http://nyti.ms/1SJ63nu)

– Standard & Poor’s stripped Exxon Mobil of its top credit rating on Tuesday for the first time since the Great Depression, signaling that even the mightiest oil company cannot escape the worst oil and gas slump since the 1980’s. (http://nyti.ms/234W9PU)

– A justice on Brazil’s high court has freed Andre Esteves, the former chief executive of the Brazilian investment bank BTG Pactual, his lawyer said in an interview on Tuesday. (http://nyti.ms/1qS4vhD)

– Longtime columnist for The Las Vegas Review-Journal, John L Smith, has resigned, becoming the latest journalist to leave the newspaper since it was bought by Sheldon Adelson, the billionaire casino magnate and Republican donor, late last year. (http://nyti.ms/1SOagcU)

 

Canada

THE GLOBE AND MAIL

** Canada’s biggest oil sands producers – Suncor Energy Inc , Cenovus Energy Inc, Canadian Natural Resources Ltd and Royal Dutch Shell Plc – are in discussions with some leading environmental groups in an effort to parlay the companies’ support for Alberta’s climate policy into reduced opposition to the industry and its proposed pipelines. (http://bit.ly/1pEvBI2)

** Alberta’s Finance Minister Joe Ceci vowed to win back the province’s top investment-grade rating after suffering two credit downgrades this month. (http://bit.ly/1pEwXCI)

NATIONAL POST

** Justin Trudeau maintains the Great Bear Rainforest is no place for an oil pipeline – as Enbridge Inc examines possible alternatives to Kitimat in British Columbia, as endpoints for Northern Gateway – but sources say the prime minister isn’t necessarily rejecting Prince Rupert as a possible marine oil port. (http://bit.ly/1pExZyH)

** Husky Energy Inc will wait for a return to stability in the oil business before restoring investment and dividends, CEO Asim Ghosh said Tuesday. (http://bit.ly/1pEz49s)

 

Britain

The Times

Eddie Parladorio, a lawyer on the board of Retail Acquisitions, which bought BHS for 1 pound in March 2015, objected to the UK retailers’s decision to loan 1.5 million pounds ($2.19 million) to a company linked to the father of Retail Acquisition’s current owner, Dominic Chappell. (http://bit.ly/1WRVX6X)

BP Plc plans to cut costs by $7 billion next year after reaffirming its commitment to maintain shareholder payouts, despite a plunge in oil prices to their lowest level in 12 years. (http://bit.ly/1WRWe9T)

The Guardian

Tata Steel Ltd has not ruled out keeping its UK business, including the Port Talbot steelworks, despite having begun the process of selling it and announcing it wants to pull out of the country, according to a source close to the Indian company. (http://bit.ly/1WRWkOS)

Volvo AB is set to run self-driving versions of its family 4x4s on roads around London next year as the motor industry’s trial of autonomous vehicles accelerates. (http://bit.ly/1WRWo18)

The Telegraph

Tado, a German start-up that supplies smart-heating technology to millions of SSE Plc’s UK customers, has raised $23 million to help fund its expansion into new markets and roll out a remote monitoring system for household boilers in Britain. (http://bit.ly/1WRWztn)

The UK’s Financial Conduct Authority has begun sifting through the British links to the law firm at the heart of the Panama Papers leak, although its acting chief executive said it is “far too early” to predict how many UK firms might have broken the law. (http://bit.ly/1WRWGVM)

Sky News

Asda will be publicly criticised by competition watchdogs on Wednesday when they publish the latest phase of their response to a ‘super-complaint’ about predatory pricing tactics by major grocers. (http://bit.ly/1WRVrpC)

Chancellor of the Exchequer George Osborne is set to repeat his argument that the EU referendum is already weighing down the UK economy. The key measure of economic growth – the GDP figure for the first three months of this year – will be released on Wednesday. (http://bit.ly/1WRVtO5)

The Independent

Scottish Power has agreed to pay 18 million pounds for failing to treat its customers fairly. The fine follows an investigation by industry regulator Ofgem into the firm’s customer service. (http://ind.pn/1WRWFkH)

 

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The tide has finally turned on what until recently was every sellside analyst’s favorite stock.

With AAPL back in bear market territory and the stock back at levels last seen when the S&P was at 1820, it only makes sense for Goldman to take profit on its AAPL short position, which in this case manifested itself with a “Conviction Buy” call on the stock (for Goldman to short the stock, clients have to buy), and moments ago it closed out its “conviction buy” saying “we are disappointed by Apple’s quarter and guidance, as it reflects a much weaker iPhone 6s product cycle than we had anticipated, with most of the negative surprise vs. our expectations coming from China”, and cutting its 12 month price target on the stock from $155 to $136.

This is what else Goldman said.

Tough quarter; removing from Conviction List, maintain Buy rating

 

Current view

 

We are disappointed by Apple’s quarter and guidance, as it reflects a much weaker iPhone 6s product cycle than we had anticipated, with most of the negative surprise vs. our expectations coming from China. As such, we expect the shares to be weak in the near term, until the market gets comfortable around improving trends with the iPhone 7 product cycle. That said, we do not view the quarter as thesis-changing longer term, and maintain our Buy rating. In particular, we are encouraged by (1) Apple’s new disclosure that its iPhone installed base is up 80% vs. 2 years ago, coupled with evidence in our US survey of significant pent-up demand for the iPhone 7, and (2) the acceleration in reported services growth to 20% yoy, with gross services up 27% – evidence of increasing monetization of Apple’s platform. We now estimate 41mn iPhone units in F3Q, compared to prior GS/consensus at 47mn/44mn, with about a 2mn impact from the channel inventory reduction. We lower our FY16-18 sales estimates by 8%-9% on lower units/ASPs, and our EPS estimates by 11%- 14% to $8.40/$10.53/$11.42 on the additional impact of lower margins. We lower our 12-month price target to $136 from $155, based on 12.5X CY17 EPS (previously 15X on CY16E EPS), reflecting lower growth. Risks include product cycle execution, end demand, competition, and a slower pace of innovation.

 

iPhone: Disappointing iPhone 6s demand weighs on results

 

Apple’s iPhone segment fell short of expectations in the quarter, as revenue of $32.9bn (-18% yoy, -36% qoq) compared to GS at $35.3bn and consensus at $33.2bn. Similarly, 51.2mn units were below our forecasted 53.6mn although modestly above Street at 50.3mn. ASPs of $642 compared to GS and Street at $659 driven by FX headwinds as well as a mix towards both mid-tier and entry-level iPhones (i.e., the 6 and 5s, respectively) in the quarter. Looking ahead to June, while management does not provide explicit segment-level guidance, it expects “seasonal” sequential declines in iPhone sales. Looking at the trailing three-year average as a proxy for underlying seasonality, that -19% qoq decline would imply 41.2mn iPhone units. Management also expects iPhone ASPs to decline from March driven by the maturing 6s cycle coupled with the introduction of the lower-priced iPhone SE. The ASP mix in F3Q will also be negatively impacted by the $2bn planned channel inventory reduction, as that primarily impacts the higher-priced iPhone 6s models. We now expect iPhone unit volume of 213.9mn/246.3mn in CY16/CY17, representing yoy growth of -7.6%/+15.1%, respectively.

 

$2bn channel inventory reduction creates up to 2mn unit drag yoy

 

Exiting the March quarter, iPhone inventory was within the company’s targeted five-to-seven week range; however, citing the “macroeconomic environment” management intends to reduce company-wide channel inventories by $2bn in the June quarter compared to a ~$800mn reduction in C2Q15. The company expects the vast majority of that reduction to occur within the iPhone segment, which we believe is driven by disappointing sales of the iPhone 6s and some cannibalization by the unexpectedly popular iPhone SE, which is in short supply. Taking our C2Q16 iPhone ASP assumption of $620 and assuming that 95% of the $2bn reduction is iPhone, we calculate a 3mn hit to iPhone shipments in the June quarter vs. an estimated 1mn drag in the year ago period. Net-net, we expect a 2mn unit headwind which equates to a 4pt revenue growth headwind on a yoy basis from the planned channel inventory reduction in F3Q.

 

Installed base up 80% over the past 2 years, supports “7” refresh cycle in 2H

 

On this quarter’s earnings call, Apple disclosed additional information about the growth of its iPhone installed base as well as the upgrade rate relative to prior cycles. CEO Tim Cook said that the active iPhone installed base is up 80% vs. two years ago; note that Apple includes secondary market devices within its definition. In addition, the upgrade rate for the iPhone 6s is slightly higher than the iPhone 5s but lower than the particularly robust iPhone 6 cycle; this suggests that the yoy decline in the replacement rate we are seeing currently may be more due to difficult comps and a pull forward by the iPhone 6. We view these as positive indicators heading into the iPhone 7 cycle this fall, as we continue to expect a return to yoy unit growth driven largely by upgrades of the rapidly growing installed base. Recall that our survey of over 1,000 US consumers indicated that 44% of respondents intend to buy the iPhone 7 this fall which we view as a strong indicator of pent-up demand within the installed base. Please refer to our report, Reiterate CL-Buy as Apple enters upward estimate revision cycle dated April 12, 2016 for detailed discussion about our survey.

Translation:

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For those who thought that the world’s biggest company losing over $40 billion in market cap in an instant on disappointing Apple earnings, would have been sufficient to put a dent in US equity futures, we have some disappointing news: with just over 7 hours until the FOMC reveals its April statement, futures are practically unchanged, even though the Nasdaq appears set for an early bruising in the aftermath of what is becoming a disturbing quarter for tech companies. “It’s pretty disappointing,” Angus Nicholson, an analyst at IG Ltd., told Bloomberg. “These aren’t good numbers out of the China segment which people are most concerned about, and if that continues to play out it will be a concern going forward.”

Instead of tech leading, however, the upside has once again come from the energy complex where moments ago WTI rose above $45 a barrel for the first time since November after yesterday’s unexpected 1.07 million barrel API inventory drawdown.

Adding to the oil move, the World Bank boosted its forecast for oil prices this year, projecting that refinery demand will pick up and U.S. output cuts will steepen in the second half of 2016.  “The recent leg higher in oil prices is due to the tightening of the supply side of the market,” Jens Naervig Pedersen, an analyst at Danske Bank A/S in Oslo, said by e-mail. “U.S. production is edging lower, the rig count suggests there’s more to come, and the API figures from yesterday pointing to stock draws further confirm this development.”

So with oil back over the critical $45 level at which point US shale producers resume fracking, it is increasingly looking like the Morgan Stanley deja vu forecast, which sees 2016 being a repeat of 2015 is coming true.

Elsewhere, treasuries rose perhaps following Gundlach’s recommendation from yesterday afternoon to start buying, sending 10-year yields lower for the first time in eight days, and the dollar weakened, as markets signaled caution before the Federal Reserve’s latest interest rate decision. As Bloomberg reports, benchmark 10-year note yields retreated from the highest level in a month before the Fed’s policy announcement.

Looking ahead to today’s Fed meeting, virtually nobody expects Yellen to surprise and Fed Funds futures reflect zero chance of an interest-rate hike on Wednesday, though the central bank’s comments will be scrutinized for any hints of a move in coming meetings. “Whether they will still remain a little bit dovish, that is the key thing for us,” said Jens Peter Soerensen, chief analyst at Danske Bank A/S in Copenhagen. “Given that data has been not too strong but not too bad either, the risk is still very balanced. People are a bit reluctant to go in and buy the dollar until they see what the Fed does tonight.”

Here is what DB’s Jim Reid thinks will happen:

Markets have been feeling the chill so far this week but the conclusion of the FOMC meeting this evening should heat things up. With no press conference, all the focus will be on the tone of the associated statement. The Fed will want to leave the door open for a June hike but it’s hard to imagine that they’ll dramatically change market pricing for it. The futures contracts have nudged up to pricing a 22% probability of a June hike from as low as 14% mid-way through this month. How much this changes will likely hinge on what extent the Fed continues to acknowledge concerns about global growth and risks abroad. US data has been mixed of late. After getting back close to neutral at the start of April, economic surprise indices have trended steadily lower into negative territory as the month has passed. On the positive side the weaker US Dollar should give the Fed some confidence. Since the March Fed meeting, the Dollar index has weakened just over 2%. That’s partly helped to support a near $8/bbl gain for WTI and 4% rally for the S&P 500 to YTD highs. We think much of the rebound in markets since early February has been due to the Fed’s about turn and re-found dovishness. This leaves them trapped in our opinion.

Meanwhile, confusion reigns: “People are questioning valuations because earnings growth just isn’t there,” said Francois Savary, chief investment officer at Prime Partners in Geneva. “It will be very difficult for stocks to gain more ground, especially with the higher euro. There’s also the issue of Fed credibility, and the fact that Yellen is looking at international events as a reason to not raise rates.”

More important than the FOMC will be tonight’s BOJ announcement, where there is a substantial probability of surprise by Kuroda. The Bank of Japan will review monetary policy on Thursday and Prime Minister Shinzo Abe’s economic adviser said Tuesday it’s possible that purchases of government bonds and exchange-traded funds will be stepped up.

In Asia, shares fell with U.S. equity index futures as Apple’s earnings added to the gloom around the current reporting season for technology companies. Barclays Plc and Total SA advanced on better-than-expected reports. Australia’s dollar weakened versus all 31 major peers. Crude oil in New York rose to the highest since November.

Greek government bonds slid, pushing the yield on shorter-dated notes up by the most in more than three weeks, as Prime Minister Alexis Tsipras sought a meeting of euro-area leaders to resolve disagreements between the government and creditors, a move echoing last year’s drama when a quarrel over bailout terms almost pushed the country out of the currency bloc.

The Stoxx Europe 600 Index declined 0.1 percent amid mixed earnings results. Barclays climbed 2.7 percent as revenue at the investment bank fell less than expected. Adidas AG jumped 7.2 percent to a record after raising its annual profit forecast as consumers spend more before this year’s 2016 UEFA European Championship.  Total SA added 1.4 percent after posting a smaller-than-projected drop in quarterly earnings, and Statoil ASA, Norway’s largest oil company, climbed 2.8 percent after reporting a surprise profit. Rio Tinto Group and BHP Billiton Ltd. dragged a gauge of miners lower as iron ore retreated. Societe BIC SA sank 5.5 percent after reporting a decline in margins.

Standard & Poor’s 500 Index futures slipped 0.2%, while contracts on the Nasdaq 100 slumped 1.1 percent. Apple fell 7.1 percent in premarket trading as waning demand for the iPhone weighed on its results. Twitter Inc. tumbled 13 percent after forecasting current-quarter revenue that will fall short of analysts’ estimates. Facebook Inc. and PayPal Holdings Inc. are among companies reporting earnings after the close of markets Wednesday.

Market Snapshot

• S&P 500 futures down 0.2% to 2084
• Stoxx 600 up 0.1% to 348
• FTSE 100 down less than 0.1% to 6280
• DAX up 0.3% to 10290
• German 10Yr yield down less than 1bp to 0.29%
• Italian 10Yr yield down 4bps to 1.49%
• Spanish 10Yr yield down 7bps to 1.57%
• S&P GSCI Index up 1.2% to 356.1
• MSCI Asia Pacific down 0.8% to 131
• Nikkei 225 down 0.4% to 17290
• Hang Seng down 0.2% to 21362
• Shanghai Composite down 0.4% to 2954
• S&P/ASX 200 down 0.6% to 5188
• US 10-yr yield down 2bps to 1.91%
• Dollar Index down 0.12% to 94.46
• WTI Crude futures up 2.2% to $45.01
• Brent Futures up 2.6% to $46.92
• Gold spot up 0.2% to $1,246
• Silver spot up 0.9% to $17.32

Top Global News

• Apple’s Waning Smartphone Sales End 51-Quarter Growth Streak: Fewer iPhone upgrades lead to 16% decline in shipments; sees FY3Q rev. $41b-$43b vs est. $47.35b, 2Q EPS $1.90 vs est. $2.00; Apple Suppliers Fall After Forecast for Slowing IPhone Sales; Earnings No Help for Apple Stock Set to Become Dow’s Biggest Dog; Samsung Planning $9 Billion Down Payment on IPhone Displays
• Twitter Gains in Users Aren’t Enough to Spur Advertising Growth: sees 2Q rev. $590m-$610m vs est. $677.1m, sees 2Q adj. Ebitda $145m-$155m vs est. $172.9m; 1Q rev. $595m vs est. $607.5m; says rev. came in at low end of forecast range because brand marketers didn’t raise spending as fast as expected in 1Q
• EBay Forecast Beats Estimates as Traffic Efforts Pay Off: Sees 2Q rev. $2.14b-$2.19b, est. $2.14b, sees 2Q adj. EPS cont. ops 40c-42c, est. 44c; 1Q adj. EPS 47c, est. 45c
• Comcast in Discussions to Buy DreamWorks Animation, WSJ Says:
• U.S. Oil Rises Above $45 a Barrel for First Time Since November: Nationwide stockpiles drop 1.07m barrels last week: API
• AT&T Profit Tops Estimates; Company Sees Net TV Customer Loss: 1Q adj. EPS 72c, est. 69c; added 129k monthly subscribers, below projections
• Trump Declares He’s ‘Presumptive Nominee’ as Clinton Wins Four: Trump won all five states holding votes Tuesday — Pennsylvania, Connecticut, Maryland, Delaware and Rhode Island; Clinton beat Bernie Sanders in Connecticut, Pennsylvania, Delaware and Maryland, Sanders won in Rhode Island
• NYSE Joins Nasdaq Assailing Plan to Overhaul Trading Fees: Proposed test will hurt investors, NYSE president says
• Bond Inflation Outlook Sets Nine-Month High Ahead of Fed Meeting: Inflation seen at 1.57% pace next 5 yrs, yields show
• Near-Zero Growth Happens Often in Slow-Motion U.S. Economy: Sluggish first quarter would be third in as many years, economists forecast GDP to rise 0.6%
• Exxon Mobil Loses Top Credit Rating It Held Since Depression: Standard & Poor’s on Tuesday stripped Exxon of its highest AAA measure of credit-worthiness, cutting it to AA+
• Adidas Lifts Profit Forecast Ahead of Euro Soccer Tournament: Now sees 2016 net income from cont. ops up 15%-18%, had seen up 10%-12%; raised outlook for 2nd time in less than 3 months
• Chipotle Sales Tumble 23% as Food-Safety Fallout Persists: Restaurant chain reports first loss since going public
• FBI Officials Said to Urge Against Review of IPhone Hacking Tool: Have recommended against conducting a review to determine whether the vulnerability that was used to hack into a dead terrorist’s iPhone should be disclosed to Apple

Looking at regional markets, Asian stocks traded mixed following the tentative lead from Wall St. as participants remained weary ahead of the upcoming FOMC & BoJ meetings, while disappointing earnings from Apple also weighed on Asian suppliers. ASX 200 (-0.3%) initially outperformed after WTI climbed to YTD highs following an unexpected API drawdown, while weak domestic CPI data also boosted RBA rate cut hopes. However, the index was then dragged into negative territory alongside the risk-averse tone in the region. Nikkei 225 (-0.3%) fell as participants remain cautious as the BoJ kicked off its 2-day policy meeting, while Apple suppliers in the region also suffering following poor Q2 results from the tech giant which missed on earnings, revenue and forecasts, while iPhone sales declined for the 1st time Y/Y. Shanghai Comp (-0.4%) had been initially supported by strong Industrial Profits which rose 11.1 % Y/Y, although declines in Chinese commodity prices and default concerns saw the index reserve its earlier gains. 10yr JGBs weakened with participants side-lined ahead of the upcoming policy decision, while the absence of the BoJ in the market also contributed to the lack of demand.

Top Asian News

• Nomura Posts Surprise Quarterly Loss on Trading, Brokerage Slump: 4Q net loss 19.2b yen vs est. 23.4b yen profit
• Galaxy Ent.’s Profit Trails Estimates on Dearth of High- Rollers: 1Q adj. Ebitda HK$2.4b vs est. HK$2.47b
• Nintendo Forecasts Miss Analyst Estimates; NX Release March 2017: Sees op. profit +37% to 45b yen vs est. 65.6b yen
• Mitsubishi Motors Withholds Earnings Forecast on Test Fraud: Co.may have to compensate customers, Nissan, govt
• Australia Core Inflation Slows to Record, Puts Rate Cut in Play: CPI falls 0.2% q/q, first decline since 2008 crisis
• China Debt Headache Swells as Bank Breaches Bad-Loan Buffer: Bank of China’s coverage ratio falls below 150% for first time
• Asia Hedge Fund Outflows Highest in Seven Years, eVestment Says: March redemptions from Asia-based funds neared $2b
• Rupee Bulls See Volatility Damped as Oil Enters Goldilocks Phase: Currency’s implied volatility fell to 4-mo. low last week
• Samsung Planning $9 Billion Down Payment on IPhone Displays: Co. said to be in talks to supply for next iPhone model

In Europe, stocks have traded in modest negative territory through much of the morning before seeing a pickup in recent trade to pare earlier losses. Sentiment in equity markets has been somewhat uncertain after the downbeat CPI data overnight from Australia and ahead of the key risk events of the week in the form of the Fed and BoJ rate decisions. Equities however reversed course amid the positive impact from the upside seen in the energy complex. This comes as WTI and Brent both continue to trade at YTD highs in the wake of the surprise API drawdown last night (-1100k vs. Exp. 2400k) and the continued upside seen in oil seen over the past few weeks. In terms of equity specific news, earnings season is in full flow with the likes of Adidas (+6.6%) and Barclays (+2.6%) among the best performers after premarket releases.

Fixed income markets remain modestly higher on the day, in fitting with the general risk off sentiment. As such, Bunds remain at elevated levels, subsequently tracking USTs higher with the curve notably flatter amid outperformance in the long end.

Top European News

• Barclays Shares Rise as Investment Bank Weathers Market Turmoil: Pretax profit fell 25% to GBP793m, rev. dropped 13% to GBP4.6b, topping GBP4.48b avg. estimate; investment bank posted smaller revenue declines than U.S. rivals
• U.K. Economy Loses Pace as Services Slow, Manufacturing Shrinks: Growth slowed to 0.4% from 0.6% in the final three months of 2015, as forecast in a Bloomberg survey of economists
• Total Quarterly Profit Beats Estimates, Helped by Refining: 1Q adj. net $1.64b beats average est. $1.25b; co. plans to limit capex to
• Hutchison-VimpelCom Italian Deal Said to Face EU Objections: EU antitrust complaint listing concerns could come in June
• Steinhoff Folds in Darty Auction, Handing Victory to Fnac: aid Steinhoff says it won’t raise its offer for Darty, Fnac’s 170p/shr bid supported by shareholders owning majority stake
• Munich Re Shares Decline After First-Quarter Profit Warning: says 1Q result “well below” expectations, also well below year-earlier figure
• Santander Jumps as Bank Beats Profit Estimates, Builds Buffer: 1Q Net EU1.63b, est. EU1.5b; provisions for bad loans fall, as capital ratio rises
• Nordea Girds for Sanctions It Says May Follow Panama Probe: Posted 28% decline in profit last quarter
• Iberdrola Profit Drops as Currencies, Electricity Prices Slide: 1Q Ebitda EU2b; est. EU2.06b
• Deutsche Bank Struggles to Shake Winter Blues in Credit Markets: Cost of insuring against losses on Deutsche Bank’s debt is 67% higher than average for 12 of its biggest peers
• ECB May Reshape Euro Corporate Debt by Driving Long-Term Issues: Central bank to purchase bonds with maturities up to 30 years

In FX, it has been a busy morning ahead of the key FOMC meeting tonight, with yet more USD sales to note against selected majors, but enough to pull the USD index lower again. Stand out has been GBP earlier in the week, but EUR/USD gains have seen us back into the low-mid 1.1300’s again, while a WTI surge to $45.0 has sent USD/CAD through 1.2600 and below the lows from Friday. The move has also stemmed the sell-off in AUD/USD, which slumped from the mid .7700’s in the wake of the surprise Australian CPI read which was much lower than expected — Q1 yoy 1.3% vs 1.8% previously. We tested .7600, but unsuccessfully as yet. Big data release in the UK in Q1 GDP, but coming in largely as expected, pre data positioning saw early selling above 1.4600 reversed, but 1.4545-50 levels have held up so far. Tuesday’s 1.4638 high is intact as yet. USD/JPY has every reason to stand pat with the BoJ decision hot on the heels from that of the Fed. Support holding up, but stock market weakness creeping in (Apple miss) to cap the topside for now.

In commotieis, heading into the North American crossover, WTI and Brent crude futures have extended on gains following yesterday’s surprising drawdown in the latest API crude oil inventory report. Subsequently, crude prices now trade at YTD highs with WTI breaking above USD 45.00/bbl which is the first time since Nov’15. Gold (+0.1 %) prices remained near yesterday’s highs as a cautious tone and USD weakness underpinned. Elsewhere, copper and Dalian iron ore futures extended on losses in Asian trade with the latter declining 6% to hit limit down on Chinese concerns and a continuation of the selling since China increased transaction costs.

Datawise in the US this afternoon it’s worth keeping a close eye on the advance goods trade balance reading for March with respect to its influence on GDP, before March pending home sales data is released. This all of course comes before the main event this afternoon with the conclusion of the two-day FOMC meeting. Meanwhile it’s another bumper day for earnings today with 41 S&P 500 companies set to report, the highlights of which include Boeing, Facebook and General Dynamics.

Bulletin Headline Summary from Bloomberg and RanSquawk

• Uncertainty looms across equities as participants weigh risk events in the form of the Fed and BoJ rate decisions with the surge higher in crude prices.
• GBP finds support to remain near 1.4600 following UK GDP figures, while commodity linked currencies strengthens against the USD amid the surge in crude prices.
• Looking ahead, highlights include Fed, RBNZ and Brazilian rate decisions and US Pending Home Sales.

US Event Calendar

• 7am: MBA Mortgage Applications, April 22 (prior 1.30%)
• 8:30am: Advance Goods Trade Balance, March, est. -$62.8b (prior -$62.864b)
• 10am: Pending Home Sales m/m, March, est. 0.5% (prior 3.5%)
• 10:30am: DOE Energy Inventories
• 2pm: FOMC Rate Decision

DB’s Jim Reid concludes the overnight wrap

Well the weather in Europe yesterday certainly saw four seasons in one day. Actually thinking about it there was nothing resembling summer as London had snow, I got caught in a freezing hail downpour in Holland and then arrived late last night in Munich to sleet with no signs of any imminent rise in temperature. Goodness knows how cold it would have been without man made global warming. Pity our poor Dutch friends who are off for King’s Day today with the forecast being that it will be colder than Xmas 4 months ago.

Markets have been feeling the chill so far this week but the conclusion of the FOMC meeting this evening should heat things up. With no press conference, all the focus will be on the tone of the associated statement. The Fed will want to leave the door open for a June hike but it’s hard to imagine that they’ll dramatically change market pricing for it. The futures contracts have nudged up to pricing a 22% probability of a June hike from as low as 14% mid-way through this month. How much this changes will likely hinge on what extent the Fed continues to acknowledge concerns about global growth and risks abroad. US data has been mixed of late. After getting back close to neutral at the start of April, economic surprise indices have trended steadily lower into negative territory as the month has passed. On the positive side the weaker US Dollar should give the Fed some confidence. Since the March Fed meeting, the Dollar index has weakened just over 2%. That’s partly helped to support a near $8/bbl gain for WTI and 4% rally for the S&P 500 to YTD highs. We think much of the rebound in markets since early February has been due to the Fed’s about turn and re-found dovishness. This leaves them trapped in our opinion.

All that at 7pm BST tonight then. Meanwhile, while yesterday was another fairly directionless and unconvincing day of price action for markets ahead of the bigger events this week, the first of these big events came after the closing bell in the US last night with the release of the Apple Q2 results. The headline news saw the first quarterly drop in revenues in over a decade. This was expected but the magnitude of the decline wasn’t, with revenues declining nearly $1.5bn more than the consensus estimate. Earnings also missed with the tech giant posting EPS of $1.90 (vs. $2.00 expected). Also disappointing was the guidance for Q3 with revenues expected to fall materially more than the market had previously been expecting. Unit sales of iPhones and iPads actually exceeded expectations during the quarter, although sales in other products disappointed while the steep decline in revenues in Greater China for Apple was also highlighted as a concern.

All this culminated in a nearly 8% fall for Apple shares in extended trading, while some soft results from Twitter which saw shares plummet 9% in after hours compounded the pain for the sector. This morning we’ve seen Nasdaq futures weaken over 1% in early trading, with other US equity index futures also in the red. Bourses in Asia are a little more mixed. The Nikkei is -0.58% while Mainland and Greater China bourses are flattish. The Kospi is -0.22% although the ASX has jumped +0.66% after Australia posted a markedly softer than expected CPI print which has seen the Aussie Dollar plummet 1.4% in the aftermath. There has been better news out of China with the latest industrial profits data reporting a +11.1% yoy gain in March, a remarkable rebound from the -4.7% reported at the end of 2015.
The other news this morning is coming out of the US Presidential campaign where the WSJ is reporting that Trump has won all five Republican primaries overnight. The exact number of delegates is yet to be released but the victories will further extend Trump’s lead. Meanwhile the same wire is reporting that Clinton was the big winner in the Democratic Party race, winning four of the five primaries over closest rival Sanders.

Moving on. The big mover again yesterday was Oil with WTI closing up over 3% and a shade above $44/bbl to mark a fresh YTD high. Much of this reflected a weaker day for the US Dollar with the Dollar index (-0.28%) closing lower for the second consecutive day post some disappointing durable and capital goods orders data (more shortly). Interestingly, the benign return across both equity markets (S&P 500 +0.19%, Stoxx 600 +0.18%) and credit markets (CDX IG -0.1bps, Main unchanged) suggested that we may be seeing some decoupling between commodity markets and wider risk assets. In fact iron ore sold off nearly 5%, while Copper was down close to 1%. Sovereign bond yields continue to edge higher meanwhile with 10y Bunds now close to testing 0.30% (up 4bps yesterday) and 10y Treasury yields also extending their move up above 1.9% to close yesterday at 1.928% (up 1.4bps), the seventh consecutive session yields have edged higher.

With regards to that data, it was the softer than expected reads for durable and capital goods orders in March which got the main attention. Headline durable goods orders were reported as increasing +0.8% mom (vs. +1.9% expected) with the ex-transportation reading (-0.2% mom vs. +0.5% expected) also missing. Core capex orders were unchanged in March meanwhile (vs. +0.6% expected), while shipments rose a less than expected +0.3% mom (vs. +0.9% expected). Our US economists noted yesterday that the -9.6% annualized decline in Q1 2016 core shipments marks the weakest quarter since Q2 2009 (-21.2%), when the economy was just about to emerge from recession. They note also that spending outside the energy sector also plunged last quarter. In fact if you remove the impact of the machinery component from the shipments data, which is where energy related spending is captured, then shipments were down -13.8% last quarter.

Meanwhile there was also some disappointment to be had in the April consumer confidence index reading which fell 1.9pts to 94.2 (vs. 95.8 expected) although there was a silver lining in a reported increase in the present conditions index. Further evidence of disappointment in the manufacturing sector was revealed this month with a decline in the Richmond Fed manufacturing survey by 8pts to 14 (vs. 12 expected). On the positive side the flash April services PMI rose 0.8pts to 52.1 (vs. 52.0 expected). Finally the S&P/Case-Shiller home price index rose +0.7% mom in February in the 20 main cities so as to be up +5.4% yoy.

Switching to the micro where there were a couple of interesting snippets of news to make mention of, all of which came in the energy/commodity sector. First there was some positive news to take away from the Q1 BP earnings which revealed an unexpected profit during the quarter supported by gains in trading and refining, after analysts had been forecasting a loss for the period. Meanwhile, Glencore returned to the new issue market yesterday for the first time in about a year which in that time has seen the company weather a huge commodity rout and subsequent asset sale process. The company issued 250m of Swiss Franc denominated bonds yesterday which according to the FT was an upsized deal from the early indication. Lastly and on a slightly damper note for the sector, Exxon Mobil was stripped of its AAA credit rating from S&P yesterday after being downgraded by one notch to AA+. According to Bloomberg Exxon had held that rating since 1930 and it means the S&P AAA corporate club in the US public space now has just two members in Microsoft and Johnson & Johnson.

Before we look at today’s calendar, a quick mention of the latest in Spain where new elections this summer is looking likely after talks between potential coalition party leaders ended without agreement yesterday. Much of the commentary is suggesting that a new ballot would be likely to take place on June 26th, interestingly just 3 days after the Brexit referendum vote.

Looking ahead to today, this morning in Europe we’re kicking off in Germany where we’ll get the import price index for March, along with the latest consumer confidence data. Shortly following that we’ll get money supply data for the Euro area as well as the advanced reading for Q1 GDP in the UK (expected to print at +0.4% qoq). Datawise in the US this afternoon it’s worth keeping a close eye on the advance goods trade balance reading for March with respect to its influence on GDP, before March pending home sales data is released. This all of course comes before the main event this afternoon with the conclusion of the two-day FOMC meeting. Meanwhile it’s another bumper day for earnings today with 41 S&P 500 companies set to report, the highlights of which include Boeing, Facebook and General Dynamics. Total and Statoil will report during European hours in the energy sector.

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