Stocks fell worldwide on the last day of the quarter, with US equity futures pointing to a lower open even as the S&P is set for its best quarter since 2015 amid persistent economic and political uncertainty.

WTI held gain above $50 a barrel, capping the biggest weekly gain of 2017 while the rand fell after South Africa’s finance minister was fired. European government bonds and Treasuries were steady with gold. Another three Fed presidents are set to speak on Friday; today's economic data in the US includes University of Michigan consumer sentiment, as well as personal income and spending.

Global stocks dipped on Friday with the MSCI All-Country World Index declining 0.4% as investors locked in some of the more than 6% gain that has given them their best start to year since 2012, while the dollar inched toward what could be its strongest week of 2017 so far. As we look back on a particularly strong Q1, we find a remarkably quiet, and "unvolatile" quarter in which most asset classes outperformed around the world, global stocks were poised to end a blockbuster quarter with a whimper, with investors seeing little reason to take shares higher amid political and economic uncertainty in the coming quarter. As discussed last night, the saga involving Zuma and South Africa’s finance minister came to a close after he was fired, sending the plunging as much as 2.9% before recovering losses.

Asian and European shares both saw profit-taking as traders squared up for the quarter perhaps driven by an unwind of positions into Japan's year end, though there was plenty still going, not least in South Africa where the sacking of its respected finance minister sent a spasm through the local currency.

European stocks fell for the first time in four days, with the Stoxx down -0.4%. as the Europe's Basic Resources index where big miners are listed, fell 1.7 percent to leave London's FTSE and the pan-European STOXX 600 index down 0.5-0.6%. Still, the later was on track for a 5% rise and third straight quarterly gain in a row, although emerging markets have been the big winners. MSCI's EM stocks index is up 12.5 percent on a dollar-adjusted basis.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan retreated 0.55 percent after its 12.5 percent charge over the quarter. Hong Kong shares fell 0.6 percent, but were still headed for a 9.8 percent quarterly jump and China's CSI 300 index added 0.4 percent, putting it on track for a 4.3 percent quarterly rise. Japan’s Topix became one of the few gauges in Asia posting a loss this quarter, wiping out a morning rally despite positive economic data. The Shanghai Composite Index added 0.4 percent. China’s official factory gauge climbed to the highest in almost five years, the latest evidence of gathering momentum in the world’s second-largest economy.

"Asia saw some pretty healthy profit-taking after a few sessions of solid gains, and as investors await euro zone and U.S. inflation data tonight," said James Woods, global investment analyst at Rivkin Securities in Sydney.

Next week promises to an interesting start to the second quarter. Trump and Chinese President Xi Jinping will meet in Florida and the U.S. president has set the tone by tweeting that Washington could no longer tolerate massive trade deficits and job losses. He will also sign executive orders on Friday aimed at identifying abuses that are causing the deficits and clamping down on non-payment of anti-dumping and anti-subsidy duties on imports, his top trade officials said. Chinese Vice Foreign Minister Zheng Zeguang said on Friday that it does not have a policy to devalue its currency to promote exports, and neither does it seek a trade surplus with the United States.

"The dialogue emanating from that is going to help set the tone of the relationship between the U.S. and China and these days it goes beyond trade. There is a lot to discuss geopolitically, not least North Korea," said PIMCO portfolio manager Yacov Arnopolin.

Against a basket of the world's other major currencies the dollar was up 0.1 percent and close to a 1 percent weekly gain that would be its best in an otherwise lackluster year. Over the quarter the greenback has fallen 1.7%, its worst showing in a year, on doubts that U.S. President Donald Trump was not prioritizing to push through Congress the economic reforms that had driven the dollar to 14-year highs at the start of the year.

"We are relatively optimistic on global growth but we think the cyclical trade has rotated away from the Trump trade and near-term U.S. fiscal stimulus," said Schroders' multi-asset Portfolio Manager Angus Sippe. "We are now more optimistic on the euro zone," he said, adding he was also "marginally short the dollar."

The euro held its own at just under $1.07 as data showed euro zone inflation had slowed in March by far more than the economists had expected, driven down mostly by a deceleration of energy price rises. Eurozone inflation in March printed weaker than expected, as recent German CPI prints suggested, with headline CPI coming in at 1.5% vs 1.8% exp, while core inflation printed at 0.7% (also below the 0.8% exp.), and the lowest since April 2015.

There were tentative signs too that the euro zone's weakest members would be hit the hardest by an imminent scaling back of the European Central Bank's asset purchase program. The yield, an indication of borrowing costs, on bonds of southern euro zone states including Portugal and Italy headed higher in the final day of trading before the ECB drops its monthly purchases of debt from 80 billion to 60 billion euros. Top ECB policymaker Benoit Coeure emphasized the bank would tread carefully with any further changes.

In commodities, Brent oil and U.S. crude dipped to $52.91 a barrel and $50.35 a barrel, having zipped higher on Thursday after Kuwait backed an extension of OPEC production cuts. Oil was heading for a 6.8 percent loss for the quarter, though. In contrast gold which was at $1,241.81 has gained nearly 8 since the start of the year. Brent set for biggest weekly gain of 2017 on ongoing OPEC jawboning.  Benchmarks remain on course for biggest weekly gain of the year as expectations grow for an extension of OPEC output cuts. Brent declines slightly, near $52.75/bbl. WTI near $50.25 with rig count due later.

Yields on 10-year Treasuries rose one basis point to 2.43 percent, after climbing four basis points on Thursday. German 10-year yields were steady at 0.34%.

According to Bloomberg, investor focus in the second quarter looks set to be on whether political developments in the U.S. and Europe will cloud the a brightening global economic outlook. President Donald Trump’s setback on a flagship health-care bill has cast a shadow on his fiscal agenda, while French elections could be a litmus test for the rise of European populism.

“There’s a strong sense of political uncertainty going forward in both the U.S. and Europe,” said Masaru Hamasaki, head of the investment information department at Amundi Japan Ltd. “In the U.S., the repeal of the Obamacare replacement bill has continued to create confusion. In Europe, we’ve only just had the U.K. trigger Article 50. We’ve already essentially entered the new fiscal year, and its difficult to keep buying when you look to the future.”

Bulletin Headline Summary From RanSquawk

• European equities have seen a particularly tentative session thus far amid light newsflow on the last trading day of the quarter
• FX markets have been relatively quiet so far today, given it is month end — and year end in Japan
• Looking ahead, highlights include US PCE, University of Michigan sentiment, ECB's Coure and Fed's Bullard & Kashkari

Market Snapshot

• S&P 500 futures down 0.3% to 2,358.25
• STOXX Europe 600 down 0.3% to 379.44
• MXAP down 0.9% to 146.81
• MXAPJ down 0.6% to 479.90
• Nikkei down 0.8% to 18,909.26
• Topix down 1% to 1,512.60
• Hang Seng Index down 0.8% to 24,111.59
• Shanghai Composite up 0.4% to 3,222.51
• Sensex down 0.02% to 29,640.20
• Australia S&P/ASX 200 down 0.5% to 5,864.91
• Kospi down 0.2% to 2,160.23
• German 10Y yield rose 0.5 bps to 0.338%
• Euro up 0.2% to 1.0693 per US$
• Italian 10Y yield rose 1.1 bps to 2.148%
• Brent Futures down 0.6% to $52.66/bbl
• Gold spot unchanged at $1,242.64
• U.S. Dollar Index up 0.06% to 100.47

Top Overnight News

• Flynn Said to Seek Immunity to Testify in Russia Probes
• KKR Said to Woo State Funds on Deal for $12 Billion Tower Firm
• Quorum Health Holder KKR May Engage in Talks With Management
• South African Assets Tumble as Gloom Pervades Fiscal Outlook
• EU Says U.K. Only Gets Trade Talks After Progress on Brexit Bill
• AstraZeneca’s Tagrisso Wins Full FDA Approval for Lung Cancer
• Johnson & Johnson Declares Actelion Tender Offer Successful
• German Unemployment Falls to New Record Low as Economy Booms
• Berkshire Hathaway Energy Boosts 3-Year Capex Plan by $4.6b
• Denmark Teams Up With Industry Lobby to Boost F-35 Order Log
• Borgwarner Sees Hybrid Cars With Turbochargers Fuelling Growth
• Boeing Awarded $2.2 Billion Contract for 17 P-8A Poseidon Jets
• Gas Exports to Send U.S. Stockpiles to 3-Year Low Before Winter

Asian equity markets traded somewhat mixed with some slight indecision heading into month, quarter and fiscal year-end, while the region also digested firm Chinese PMI data and the positive lead from Wall St. where the NASDAQ printed fresh record highs. Nikkei 225 (-0.8%) traded lower despite JPY weakness and better than expected Industrial Production, while ASX 200 (-0.3%) was dampened by property names following tighter mortgage lending regulations. Shanghai Comp. (+0.4%) and Hang Seng (-0.7%) were mixed as strong Official Manufacturing and Non-Manufacturing PMI data was counter-balanced by the PBoC's hiatus from open market operations which resulted to a net weekly drain of CNY 290b1n. Furthermore, stocks in Hong Kong were also pressured after PetroChina missed on earnings and the world's largest lender ICBC posted its weakest profit growth in over a decade. Finally, 10yr JGBs were lower amid heightened risk sentiment in Japan, while the curve flattened with underperformance seen in the short end. PBoC refrained from open market operations, for a net weekly drain of CNY 290b1n vs. last week's net injection of CNY 80bIn.

Top Asian News

• Rupee Set for Best 1Q Since 1975 as Foreigners Pour $12 Billion
• China Manufacturing Gauge Climbs to Highest in Almost Five Years
• China’s Factory Gauge Climbs to Highest in Almost Five Years
• BOJ Cuts Purchase Size Range of 1-3, 3-5 Year JGBs in April
• Battle With Apple Takes a Toll on Chinese Phone Giant Huawei
• Indian Stocks Slip Ahead of Closing Best Quarter Since June 2014
• BOJ to Purchase Fewer 1-to-5-Year Bonds in April, Rest Unchanged
• IDR, INR, TWD Post Quarterly Gains Amid Fund Inflows: Asian NDFs
• Japan Post Bank Applies to Expand Business Into Overdrafts, CDS
• China Issues Free-Trade Zone Plans for Some Regions: Xinhua
• China Benchmark Money Rate Climbs to Highest Since April 2015

European bourses remain quiet on typical Friday trade, but South African exposed companies are taking a major hit this morning. Investec (-7.5%) and Old Mutual (-7.5%) are down off the back of President Zuma sacking finance minister Gordhan. Elsewhere, markets remain quiet with Material names underperforming, albeit modestly so. Fixed income markets are also rangebound amid no real fundamental catalysts for any significant moves with markets somewhat unreactive to the latest raft of Eurozone inflation data which saw the headline Y/Y fall short of expectations (1.5% vs. Exp. 1.8%), with markets prepped for a soft figure given yesterday's German numbers.

Top European News

• French Upset Signaled by Internet Chatter Flagging Macron Flaws
• U.K. House Prices Fall for First Time in Almost Two Years
• RBS CEO Says Bank Would Move to England on Scotland Independence
• Tusk Says ‘No Such Thing’ as a ‘Brexit Bill’ for U.K.
• Marine Harvest Warns Food Safety Authority of Suspected PD Case
• Too Early to Decide Location for Brexit Job Moves: UBS’s Orcel
• U.K. Raises $14.7 Billion in Blackstone-Prudential Mortgage Deal

In currencies, the rand plunged as much as 2.6 percent before paring losses to trade 0.7 percent lower. South African President Jacob Zuma replaced Finance Minister Pravin Gordhan and overhauled his cabinet in a late-night move that threatens to trigger a revolt against the administration. The Bloomberg Dollar Spot Index rose 0.1 percent. The euro was little changed at $1.0679 after tumbling 0.9 percent Thursday. FX markets have been relatively quiet so far today, given it is month end — and year end in Japan. Alongside some notable data releases, we sense real money flow today is keeping specs largely on the sidelines, but the USD remains near better levels as US Treasury yields build (very) modestly on yesterday's gains. USD/JPY buying has taken the pair up to highs just shy of 112.20, but traders wary of sporadic JPY repatriation flow which could hit at any time into the London fix. EUFt/USD hit lows around 1.0670-75 before trying to reclaim 1.0700, but decent intra day selling seen here, and only tempered by the usual flow anticipated in EUFt/GBP. EU wide inflation has come in weaker than expected, but the miss is slightly less in the core rate, with ECB officials already tempering some of the reactions in the rate markets this week to limit today's reaction. 1.0700 capping for now, but strong demand seen from the mid 1.0600's lower down. For EURGBP, the triggering of Article 50 and the subsequent response from the EU is what will be driving trade from here, but we saw strong demand just below 0.8550 this morning, generating an initial test back to 0.8600 recently.

In commodities, West Texas Intermediate crude fell 0.1 percent to $50.31, paring some big gains on Thursday that were spurred by a report Kuwait and other countries support prolonging production cuts. Oil prices remain buoyed this morning, with WTI notably holding above USD50.00, but looks fragile at present as the USD seems to have found fresh life. Lower than expected rises in inventory levels as reported from the API and DoE this week have been key to this, as have comments that discussions are in process on a potential extension to the production cut agreement. Iron ore prices under pressure due the stockpiles reported, but copper prices notably resilient. Gold edged lower on the back of the latest move higher in US Treasuries, but the yellow metal has held off USD1240 so far today. Silver remains above USD18.00.

Looking at the day ahead, it's a busy day in the US this afternoon and headlined by the personal income, spending and PCE deflator data for February. Expectations is for a +0.2% mom rise in personal spending and +0.4% mom rise in income, while the deflator is expected to increase +0.1% mom. Away from that we will also get the March Chicago PMI before we finish the day with the final revisions to the University of Michigan consumer sentiment data for March. Away from the data there is more Fedspeak scheduled with Dudley, Kashkari and Bullard due to speak.

US Event Calendar

• 8:30am: Personal Income, est. 0.4%, prior 0.4%
  • Personal Spending, est. 0.2%, prior 0.2%
  • Real Personal Spending, est. 0.1%, prior -0.3%
  • PCE Deflator MoM, est. 0.1%, prior 0.4%, PCE Deflator YoY, est. 2.1%, prior 1.9%
  • PCE Core MoM, est. 0.2%, prior 0.3%, PCE Core YoY, est. 1.7%, prior 1.7%
• 9:45am: Chicago Purchasing Manager, est. 56.9, prior 57.4
• 10am: U. of Mich. Sentiment, est. 97.6, prior 97.6, Current Conditions, prior 114.5, Expectations, prior 86.7,
  • 1 Yr Inflation, prior 2.4%
  • 5-10 Yr Inflation, prior 2.2%

Central Banks

9am: Fed’s Dudley Speaks to Mike McKee in Bloomberg TV Interview
10am: Fed’s Kashkari Answers Questions at Banking Conference
10:30am: Fed’s Bullard Speaking in New York

DB's Jim Reid concludes the overnight wrap

A big factor for the strong performance in Q1 has been the incredibly calm start to the year as evidenced by what various measures of volatility have done this quarter. Indeed at the close of last night the VIX is now at 11.54 and just a shade above the January low of 10.58. It’s also down from 14.04 at the end of Q4. FX vol as measured by the CVIX (DB’s currency vol index of 9 major currency pairs) is now at 9.02 and also near the bottom of the range having started the year at 11.03.

We thought it would be interesting to put into context how low volatility has been in Q1 this year compared to Q1’s over the last 10 years. The VIX has traded in just a 5.14pt range this year using the intraday high to lows over the full quarter. The second lowest range in the VIX over the last 10 years came in 2014 when the range was 9.67pts while the highest came in 2009 when the range was 20.48pts. The average Q1 range from 2008 to 2016 was in fact 14.04pts. The highest level the VIX has hit in 2017 so far is 15.11 while the high points from the prior 9 year range from 21.48 to 57.36. In fact the high print for Q1 this year would rank as the sixth lowest level in the prior 9 Q1’s. So anyway you cut it this has been an incredibly low Q1 for volatility over the last decade.

As we highlighted in the EMR yesterday global economic data surprises are hovering around 6 and a half-year highs and it is interesting that this has coincided with US political uncertainty – as measured by the Baker, Bloom & Davis index – hitting the lowest level in the Trump-presidency era yesterday and in fact the lowest level since October 10th.

That backdrop is proving supportive for risk. Last night the S&P 500 closed up +0.29% and finished higher for the third day in a row. The index is also all of a sudden back to within just 33 points of the all-time high made at the start of this month. Unlike Wednesday banks were the big driver of the broader move higher yesterday with US banks finishing up +1.48%. That move came after Treasury yields reversed course for the fourth day in a row reflecting some fairly hawkish Fedspeak over the last 36 hours or so and a bigger than expected revision to Q4 GDP in the US. 10y Treasury yields closed 4.3bps higher at 2.421% and in fact are pretty much back to where they closed last Friday despite moves of at least 3.4bps up or down each day this week. Energy stocks also contributed positively yesterday after WTI Oil (+1.70%) rose for the third day in a row and finished above $50/bbl for the first time in 3 weeks with more suggestions that the OPEC production cut will be extended beyond the initial timeframe agreed.

Over in Europe equity markets also edged higher with the Stoxx 600 closing up +0.51%. Bonds were more mixed though and 10y Bund yields in fact edged down 1.1bps to 0.328%. A disappointing CPI print in Germany for March didn’t help (+0.2% mom vs. +0.4% expected) ahead of the wider Euro area reading today while the ECB’s Nowotny – who as a reminder a couple of weeks ago said that the ECB could raise the deposit rate before the prime rate – suggested that the ECB doesn’t want to prematurely raise interest rates and that there is no reason right now to deviate from the already defined monetary policy strategy for 2017.

Jumping quickly to the overnight session now where there has been a steady stream of both significant data and political related headlines. In China the official March PMI’s have been released. The manufacturing PMI has risen two-tenths to 51.8 this month (vs. 51.7 expected) and the highest since April 2012. The nonmanufacturing PMI has also risen to 55.1 from 54.2 and the highest since May 2014. That’s helped bourses in China to rise with the Shanghai Comp and CSI 300 +0.40% and +0.45% respectively. Elsewhere, in South Korea a court has ordered the arrest of former President Park Guen-hye following the issue of a warrant in connection with bribery and abuse of powers. The Kospi is little changed following the news. Over in EM the big story is out of South Africa where President  Zuma has dismissed finance minister Pravin Gordhan and 8 other cabinet members, which in turn is heightening political uncertainty in the country again. The news has caused the Rand to sell off sharply and is currently down about -3.60% from when the headlines broke. Finally in Japan core CPI was reported as rising +0.2% yoy in February and up for the second month in succession, while industrial production and jobless rate data also showed signs of improvement. Household spending data was a little softer than expected however. The Nikkei is +0.66% following that and the Yen a touch firmer.

Back to that data yesterday, where in the US Q4 GDP was revised up in the third and final revision to +2.1% qoq annualized from +1.9%. Growth in PCE was revised up five-tenths to +3.5% qoq annualized while corporate profits were recorded as growing modestly in the quarter by +0.5% qoq. That means corporate profits have now risen for two consecutive quarters for the first time since Q3 and Q4 of 2014. Elsewhere, initial jobless claims nudged down 3k last week to 258k. In Europe the only other data was the European Commission’s economic sentiment index which edged down 0.1pts to 107.9.

In terms of the Fed speakers, late last night NY Fed President Dudley said that he favours tapering reinvestments of the balance sheet “gradually and predictably” instead of outright ending them. Dudley also confirmed that the 2% inflation target for the Fed is not a ceiling and that risks for both economic growth and inflation over the medium to longer term are gradually shifting to the upside. Our favourite line from Dudley yesterday though was his reference to William McChesney Martin – the ninth and longest serving Fed Chair who famously said that the job of the Fed is to “take away the punch bowl just as the party gets going”. Dudley last night said that “I don’t think we are removing the punch bowl yet” but that “we’re just adding a bit more fruit juice”. Meanwhile the Dallas Fed’s Kaplan confirmed that two more hikes this year is a “good base case” although didn’t rule out more depending on how the economy evolves.

Looking at the day ahead, this morning in Europe we’ll be kicking off in Germany where the February retail sales data is due out before we then get the latest Nationwide house prices data in the UK for the month of March. Following that we’ll get CPI and PPI data out of France before Germany then releases unemployment data for March. It’s back to the UK after that where the final revisions to Q4 GDP will be released before we then get March CPI for the Euro area where consensus is for a slight dip in both the headline and core readings to +1.8% yoy and +0.8% yoy respectively. It’s just as busy in the US this afternoon and headlined by the personal income, spending and PCE deflator data for February. Expectations is for a +0.2% mom rise in personal spending and +0.4% mom rise in income, while the deflator is expected to increase +0.1% mom. Away from that we will also get the March Chicago PMI before we finish the day with the final revisions to the University of Michigan consumer sentiment data for March. Away from the data there is more Fedspeak scheduled with Dudley (2pm BST), Kashkari (3pm BST) and Bullard (3.30pm BST) due to speak. The BoE’s Haldane is due to speak this evening while the ECB’s Coeure speaks this morning.

As equity multiples continue to levitate to unprecedented highs, recently rising above 20x on a trailing basis, now in the 99th historical percentile according to Goldman Sachs, the lack of bargains is reflected in the acquisition prices paid by PE firms. According to a new report by PitchBook, after reaching new highs in 2016, acquisition multiples inched even higher in the first quarter of this year, and as a result the median EV/EBITDA multiple hit 10.8x in 1Q 2017, up from 10.7x last year. That was the highest median multiple paid since the financial crisis.

As the report notes, "PE firms are victims of their own success when it comes to pricing. The industry’s strong returns have led to significant stores of dry powder available to tap which, in turn, has created more competition for suitable buyout targets. Meanwhile, strategic acquirers provide plenty of additional competition and have no shortage of available capital. If anything, corporate ability to pay top dollar has only intensified in the last few months. Additionally, rising public market valuations will drive mark-to-market PE prices higher."

Is there any hope that multiples will pull back from what are the current bubble levels? Not much: PitchBook cautions that "barring economic disaster, multiples shouldn’t recede for at least the next few quarters."

The lack of any notable bargains has also resulted in a general slowdown in average LBO activity: "after three consecutive years of strong PE activity, US deal flow started off slow in 2017. 745 transactions were closed totaling $118.7 billion in value, compared to $138.7 billion across 867 deals in the final quarter of last year."

That, however, has not dented the capital allocation mood and fundraising has continued at a rampant pace and dry powder sits at a record $552.6 billion as of 3Q 2016 according to PitchBook. "Due to higher multiples and strong competition, capital deployment will be a challenge" the report notes.

Though we’ve been expecting a slowdown in PE fundraising this year, the first quarter could not have told a more different story. Capital commitments totaled $55.8 billion across 57 vehicles in 1Q 2017. Extrapolated across the entire year, that puts PE funds on track for a 15.8% year-over-year increase in commitments across 14.6% fewer funds. In a world where yield is hard to find and there are more available dollars than feasible investment opportunities, LPs are increasingly leaning on PE to meet their growing obligations.

 

Fund sizes grow KKR led the way this quarter with its $13.9 billion upper-middle-market buyout fund, exemplifying the shift toward larger and larger funds. LPs, often anxious to not get cut out of top-tier funds, have been increasing the size of their commitments and reducing the number of managers they employ. This also gives them more leverage when it comes to negotiating fee structures and co-investment.

Yet while overall deal activity has slowed down despite strong flow of capital in PE firms, one sector stands out: one-fifth (20.4%) of all PE deals completed in the first quarter involved companies in the IT sector, above the 10%-15% range seen for most of the last decade. The most popular targets have been software companies, which have made up 54.2% of all PE investments in the space since 2006 and 63.1% of IT transactions in 2016.

Some prominent Q1 examples of this included KKR's $2 billion acquisition of Optiv Security, and Thoma Bravo's $800 million purchase of PlanView.

In an amusing tangent, the report notes that "in the tech industry, there are returns to be made by avoiding quarterly earnings expectations and focusing instead on longer-term growth initiatives." The reason is clear: if one were to focus on the deteriorating cash flows among some of the most overvalued tech giants, the PE community would have nightmares every day. Best to just leave it to "growth" and avoid some of the scarier cash burn stories out there.

The report also highlights the disappearance of mega-deals. It highlights one of the major themes in PE last year, namely the rate at which firms were investing in “mega-deals.” Though generally not of the magnitudes seen prior to 2008, 20 transactions were completed at enterprise values $2.5 billion or greater last year. 2017, however, is off to a slow start. Just two deals of this size were completed in the first quarter: Blackstone’s $6.1 billion take-private of healthcare administrator Team Health Holdings, and Koch Equity Development’s $2.5 billion growth investment in enterprise software developer Infor. The latter represents a new type of “corporate private equity,” similar to what we see in the venture capital realm, and could mirror the permanent capital strategy used by firms such as Berkshire Hathaway. Having made similar investments since 2013, Koch also participated in the aforementioned buyout of insurance software provider Solera.

Perhaps the most interest point of the report is how PE firms are exiting existing investments: not through such conventional methods as corporate acuqisitions or IPO, but increasingly more frequently by flipping to other PE firms, or secondary buyouts: "it’s no longer in vogue for tech founders to exit via IPO. Just 5.0% of US venture-backed exits in 2016 happened via IPO, down from a post-financial-crisis high of 11.6% in 2014. Conversely, 13.3% of venture-backed exits last year were via PE firms, the highest of any year since at least 2006."

Some more observations on exits:

PE-backed exits of all types fell to their lowest level in almost four years last quarter. Just 207 PE backed exits were completed, totaling $31.2 billion in deal value, representing quarter-over-quarter decreases of 28.9% and 58.0%. Firms have already divested of most of their portfolio companies bought before the financial crisis, and median hold periods for PE portfolio companies have hovered between five and six years for the last half decade. That leaves the vintages of 2011 and 2012 now ready for harvest. It will still be some time until the bulk of PE investments made in the boom years of 2014-2016 are realized.

Finally, for those curious, here is the latest PE leage table according to PitchBook:

• As Trump warned N. Korea, 'armada' headed to Australia (Reuters)
• Threat of Carrier Heading to Koreas Wasn’t All It Seemed (WSJ)
• Markets Start to Ponder the $13 Trillion Asset Gorilla in the Room (BBG)
• Investors’ Nightmare Scenario Takes Shape in French Election (WSJ)
• Venezuelan opposition to hold 'mother of all marches' against Maduro (Reuters)
• U.S. says Iran complies with nuke deal but orders review on lifting sanctions (Reuters)
• Ryan’s Best Hope to Avoid a Shutdown: Making Friends With Pelosi (BBG)
• Pence says working with allies to put pressure on North Korea (Reuters)
• Fox News Is Preparing to Cut Ties With Bill O’Reilly (WSJ)
• China gathers state-led consortium for Aramco IPO (Reuters)
• Le Pen Tries to Steer Far-Right Party Into Mainstream (WSJ)
• Ferrari Roars Back in China as Rich Snub Xi's Austerity Push (BBG)
• U.S. states considering alternative execution methods face legal hurdles (Reuters)
• Homebuilders Could Be Losers in Early Test of Trump Trade Policy (BBG)
• Missing Billionaire Has Ties to China’s Military (WSJ)
• China sees higher risk of mass unemployment, pledges more support (Reuters)
• The Life of an Apple Supplier Is Getting Even Tougher (BBG)
• Barkindo says OPEC, non-OPEC committed to restore market stability (Reuters)
• Insurance Customers Will Have to Get Used to Talking to Machines (BBG)

Overnight Media Digest

WSJ

- The Trump administration notified Congress on Tuesday that Iran is compliant with the landmark nuclear agreement reached in 2015, but also cast doubt on the United State's continued support for the deal. http://on.wsj.com/2oM7o3T

- Fox News is preparing to cut ties with star anchor Bill O'Reilly, according to people close to the situation, after revelations that he and Fox parent 21st Century Fox settled multiple sexual harassment complaints led to an exodus of advertisers from his show and mounting pressure on the network. http://on.wsj.com/2oMgLRr

- Baidu Inc will share software technology it is developing for self-driving cars in a bid to catch up with competitors including General Motors Co and Waymo, the self-driving unit of Google parent Alphabet Inc. http://on.wsj.com/2oMesh7

- Private-equity firms KKR & Co LP and Stone Point Capital, in a bet that more investors will want advice from independent financial advisers and less from Wall Street's traditional brokers, will acquire a majority stake in Focus Financial Partners Llc in a $2 billion deal. http://on.wsj.com/2oM7Ij7

- The unusual attention paid to a special election in Georgia on Tuesday, as well as recent protests around the country over President Donald Trump's tax returns, show the presidential contest didn't end in November, at least for voters who didn't support the president. http://on.wsj.com/2oLYYK7

- Voters cast ballots on Wednesday to choose Jakarta's governor in a runoff that has put Indonesian politics on edge, with pre-election polls showing the minority Christian incumbent neck and neck with a challenger riding a wave of hard-line Islam in the world's largest Muslim-majority nation. http://on.wsj.com/2oM8zAw

FT

* British Prime Minister Theresa May called on Tuesday for an early election on June 8, saying she needed to strengthen her hand in divorce talks with the European Union by bolstering support for her Brexit plan.

* The International Monetary Fund revised Britain's growth forecast to 2 percent for 2017, up a half percentage point from January. The Fund said negative effects from the UK vote to leave the European Union are taking longer to materialize.

* Post Holdings is buying leading British breakfast cereal brand Weetabix from China's Bright Food Group Co Ltd for 1.4 billion pounds ($1.80 billion), giving the U.S. focused company a European base on which to build.

NYT

- TV anchor Bill O'Reilly's position at Fox News grew increasingly tenuous on Tuesday as support from the Murdoch family showed signs of eroding, according to three people briefed on discussions about his future. O'Reilly's fate at the network is expected to be discussed on Thursday at a board meeting for Fox News's parent company, Twenty-First Century Century Fox Inc. http://nyti.ms/2pQiIeO

- U.S. President Donald Trump, hammering his "America First" campaign theme, signed an order on Tuesday that he said would favor American companies for federal contracts and reform the visa program for foreign technical workers. http://nyti.ms/2pQtUIp

- Eric Schneiderman, the New York attorney general, said on Tuesday that his office had reached a $40 million settlement with Harbert Management Corporation and several of its top executives over allegations that they had not paid state taxes for some of the most profitable years. http://nyti.ms/2pQoA81

- The International Monetary Fund has raised its outlook for global growth, citing a post-election surge in confidence in the United States, better prospects in large emerging markets and an uptick in global trade. The fund forecast a growth rate in 2017 of 3.5 percent, compared with 3.1 percent in 2016. http://nyti.ms/2pQdDDe

- Snap Inc is introducing on Tuesday a new feature for its Snapchat ephemeral messaging service that will allow users to place 3-D cartoon objects into their videos and pictures. http://nyti.ms/2pQgz2G

Canada

THE GLOBE AND MAIL

** Parkland Fuel Corp is buying Chevron Corp's Canadian oil refining and marketing business for nearly C$1.5-billion. https://tgam.ca/2oro9Qf

** A NAFTA review panel has unanimously ordered the U.S. Department of Commerce to reconsider its costly duties against Canadian mills that produce glossy paper. https://tgam.ca/2orlKFm

NATIONAL POST

** The Bank of Canada says Canadians should not be afraid that robots are about to steal their jobs. http://bit.ly/2oryPya

** An Air Canada Airbus A330 traveling from Montreal to London lost a wheel during take-off on Sunday night and still managed to arrive safely in what one airport worker called a "miracle" landing. http://bit.ly/2ormTg8

** Greater Toronto Airways plans to launch a new route that will connect the Kitchener-Waterloo-Toronto tech corridor. http://bit.ly/2orEaFN

Britain

The Times

Flybe Group Plc's finance chief Philip de Klerk resigned from the struggling British airline dealing it a fresh blow as it prepares to nosedive into the red. De Klerk will become the next chief financial officer at the performance materials manufacturer Low & Bonar Plc. http://bit.ly/2oJFWFF

Goldminer Asa Resource Group Plc has said that millions of dollars seem to have been transferred from its bank accounts without explanation, prompting the removal of its chief executive and finance director and halving the value of the shares. http://bit.ly/2peUqz4

The Guardian

Next Plc boss Lord Wolfson has missed out on his annual bonus for the first time in 18 years amid tough times on the British high street. Wolfson's total pay package dived by 58 percent to 1.8 million pounds ($2.31 million) in the year to 28 January, according to the fashion and homewares retailer’s annual report published on Tuesday. http://bit.ly/2oTaXaK

Philip Hammond has signalled that the government is facing a multibillion pound loss from selling off its 73 percent stake in Royal Bank of Scotland. The chancellor told MPs that "we have to live in the real world", as he indicated that the remaining shares could be sold below the 502 pence average price that was paid for them during 2008 and 2009 when 45 billion pounds of taxpayers' money was pumped into the Edinburgh-based bank. http://bit.ly/2oJKwSF

The Telegraph

The boss of German energy giant RWE has fuelled expectations that the company will target the UK energy market for future acquisitions. Rolf Martin Schmitz disclosed that the group is interested in owning power plants in countries where capacity margins are thin and the Government is willing to award contracts to secure power supplies. http://bit.ly/2pxQJ72

Volkswagen has significantly beaten expectations by reporting a first-quarter operating profit of 4.4 billion euros, as cost controls and the success of new models kicked in. http://bit.ly/2oJF4AM

Sky News

The world's most famous department store is to throw the towel in on efforts to build a sizeable presence in the UK banking market by hoisting a 'for sale' sign over the loss-making division. Harrods Group has been interviewing prospective advisers about handling a disposal of its banking unit. http://bit.ly/2olgEek

Anthony Browne is to quit as Britain's top bank lobbyist later this year as a new industry body begins to chart a course through the outcome of a snap General Election and the UK's exit from the European Union. http://bit.ly/2oJwNNw

Independent

The former owner of Jaeger, Harold Tillman, has accused bankers and private equity bosses of running the 133-year-old fashion chain into the ground. http://ind.pn/2pPYstE

• White House to risk shutdown as Trump searches for “win” (Politico)
• Saudi Minister Wants OPEC Oil-Production Deal Extended, Perhaps for Less Than 6 Months (WSJ)
• Russia denies Reuters report think tank drew up plan to sway U.S. election (Reuters)
• Fed's Kaplan: Three rate rises this year 'still a good baseline' (Reuters)
• Ex-Arconic CEO Sent Vague Threat to Hedge-Fund Boss (WSJ)
• Can, kicked: IMF may fund Greek bailout with small amount, for one year (Reuters)
• Hard Dose of Reality Hits Anti-Brexit Campaigners (BBG)
• Egypt says air strikes kill Islamic State leaders in Sinai (Reuters)
• Bose headphones spy on listeners: lawsuit (Reuters)
• French Industrial Decline Fuels Le Pen’s Rise (WSJ)
• China's Stocks Refuse to Drop More Than 1% (BBG)
• China Shakes Up Regulators in Scramble for Stability (WSJ)
• China sees higher risk of mass unemployment, pledges more support (Reuters)
• A Quarter of Millennials Who Live at Home Don’t Work — or Study (BBG)
• Man Group's Assets Rise to Record on Largest Inflows Since 2011 (BBG)
• Putin Quietly Detaches Ukraine's Rebel Zones as U.S. Waffles (BBG)
• House Speaker Ryan sees long battle over tax reform (Reuters)
• Western Digital, Japan Investors in Toshiba Unit Sale Talks (BBG)
• The Most Closed-Off Nordic Nation Is Yearning for Immigrants (BBG)
• Housing Crunch Threatens Reno’s Tech Boom (WSJ)
• White House sidewalk to be closed to public permanently (Reuters)
• Macquarie to Boost U.K. Green Bank After $3 Billion Purchase (BBG)
• The Biggest Time Suck at the Office Might Be Your Computer  (BBG)

Overnight Media Digest

WSJ

- The Trump administration worked Wednesday to quell an international furor and calm questions over its credibility after misstating by thousands of miles the location of a U.S. aircraft carrier officials had warned could be used to strike North Korea. http://on.wsj.com/2oRuVAx

- Officials at the University of California at Berkeley canceled a scheduled appearance by Ann Coulter, the conservative commentator and Donald Trump supporter, citing safety concerns. http://on.wsj.com/2oRvaeV

- U.S. Bancorp plans on May 1 to launch a premium card geared toward high spenders and millennials. This adds to the threats facing American Express Co in a card category where it was until recently unrivaled. http://on.wsj.com/2oRCuqU

- The letter that cost Klaus Kleinfeld his job as chief executive of aerospace-parts maker Arconic Inc on Monday contained a vague threat toward the billionaire whose hedge fund had been campaigning for Mr. Kleinfeld's ouster. http://on.wsj.com/2oREorI

- New Jersey Democratic U.S. Senator Cory Booker and Republican Governor Chris Christie again joined political forces on Wednesday to call for federal investment in the region's troubled transit system. http://on.wsj.com/2oRz87k

FT

- British groups are starting to be systematically shut out by Brussels from multibillion-euro contracts. European Commission's top officials have told staff to avoid "unnecessary additional complications" with Britain before 2019, according to an internal memo.

- The owner of channels including Dave and Gold, UKTV said that Theresa May's decision for a snap general election could led to the television advertising market further deteriorating.

- Theresa May's call for a snap general election on June 8 won overwhelming backing from MPs. Labour leader Jeremy Corbyn would try to overturn daunting electoral odds by picking some of the themes adopted by Donald Trump in the US presidential election last year.

- The biggest star at Rupert Murdoch's Fox News Channel Bill O'Reilly is leaving the network after an investigation into claims that he sexually harassed many women. His departure was triggered by a New York Times investigation revealing that he and Fox News paid a combined $13 million to silence women who had complained of sexual harassment.

NYT

- Chinese authorities plan to question Apple Inc about video streaming services available over its app store within the country, in their latest move to intensify pressure on the American technology giant over the content it provides in the vast and crucial market. http://nyti.ms/2oRK8Sq

- Exxon Mobil is pursuing a waiver from Treasury Department sanctions on Russia to drill in the Black Sea in a venture with Rosneft, the Russian state oil company, a former State Department official said on Wednesday. http://nyti.ms/2oRILmq

- The Office of the Comptroller of the Currency on Wednesday admitted that its oversight of Wells Fargo & Co was "untimely and ineffective." The report said the agency failed to spot clues that would have allowed it to connect the dots in one of the most brazen banking scandals of the recent past. http://nyti.ms/2oRCLKp

- Bill O'Reilly's reign as the top-rated host in cable news came to an abrupt and embarrassing end on Wednesday as Fox News forced him out after the disclosure of a series of sexual harassment allegations against him and an internal investigation that turned up even more. http://nyti.ms/2oRHmwj

Canada

THE GLOBE AND MAIL

** China's envoy to Canada is calling for a rapid conclusion of exploratory free-trade talks so negotiators can quickly get down to work on a far-ranging trade agreement with "win-win results" for both countries. https://tgam.ca/2oNJ9E4

** Home Capital Group Inc and three of its current or former executives are being accused of making false and misleading statements to the public about the reasons the alternative mortgage lender had begun to extend fewer loans. https://tgam.ca/2oNOlbr

NATIONAL POST

** Ontario is poised to announce sweeping measures to deal with its overheated Toronto housing market, with sources close to the situation saying a 15 per cent tax on non-residents buying in the region is at the top of the list. http://bit.ly/2oNU3d9

** The Ontario Superior Court of Justice has ruled in favour of Bombardier Inc in its dispute with Metrolinx. http://bit.ly/2oNLT4y

** Joe Natale wants to create a culture that prioritizes customer service in his new role as chief executive officer of Rogers Communications Inc. http://bit.ly/2oNIAKP

Britain

The Times

The head of High Speed Two told MPs that he and his executives had done no checks and had not monitored a former HS2 chief of staff at the centre of a conflict of interest fiasco with its key contractor on the 55 billion pound ($70.26 billion)London-Birmingham rail line. http://bit.ly/2ooHzGc

The Guardian

The government will not delay tackling rising electricity and gas bills that are hurting consumers because of Theresa May's decision to call a surprise general election for June 8, business secretary Greg Clark said. http://bit.ly/2otvAGu

The government has agreed a 2.3 billion pound sale of the Green Investment Bank to the Australian bank Macquarie, according to sources close to the process. The privatisation of the bank was expected in January but signoff was delayed in the face of stiff political opposition and wrangling over the final price. http://bit.ly/2ooH535

The Telegraph

Communities secretary Sajid Javid has downplayed concerns that foreign investors are buying up swathes of London property as he promised government reforms to the housing market would continue despite the upcoming general election. http://bit.ly/2pE4bGA

Warehouse property developer Segro Plc has so far this year signed new leasing deals worth twice as much as the same time last year, showing the demand for industrial property continues to hold up. http://bit.ly/2oQHtID

Sky News

A former owner of Boots the Chemist is weighing a $6 billion takeover bid for the U.S.-based parent company of Holland & Barrett, the high street health foods chain. KKR & Co is among a small number of potential bidders for NBTY - a vitamins and nutritional supplements manufacturer previously known as Nature's Bounty. http://bit.ly/2oWWeeO

Workers at three BMW plants in the United Kingdom have started a 24-hour strike over proposed changes to pensions. http://bit.ly/2pT7WVf

The Independent

Tesco Plc has announced that it is selling its optician business to Vision Express, as it continues to slim down and focus on core operations in its home market. http://ind.pn/2omeR95

After laying ruin to the defined-benefit pension plans of public and private employees over the past several decades, Wall Street has its sites set on its next victim: mom-and-pop 401(k)s.  Sure, because as our recent headlines confirm, wall street money managers have worked wonders for public/private pension funds:

• Are Collapsing Pensions "About To Bring Hell To America"?
• How Chicago's Largest Pension May Run Out Of Cash In As Little As 4 Years
• NY Teamsters Pension Becomes First To Run Out Of Money As Expert Warns "Pension Tsunami" Is Coming
• Dallas Police Pension On Verge Of Collapse As Record Number Of Cops Seek Full Withdrawals

Alas, with companies increasingly opting for defined-contribution retirement plans (401k's) in-lieu of defined benefit plans, combined with the trillions of dollars of losses that wall street has racked up for the nation's largest pensions, it's no wonder that 'millionaire, billionaire, private jet owners', like Stephen Schwarzman of Blackstone, are looking to get their 'fair share' of fees from America's $4.8 trillion in 401(k) assets.

As Schwarzman told Bloomberg, "you have to have a dream," and his dream is to apparently lay waste to a whole new pocket of American retirement wealth.

Today most mom-and-pop investors still don’t have that option. But a shift in how people are saving in their 401(k)s may give private equity a new way in -- keeping firms like Carlyle, Blackstone Group LP and KKR & Co. eyeing the $4.8 trillion that U.S. workers have saved in their 401(k)s.

 

“In life you have to have a dream,” Steve Schwarzman, Blackstone’s chief executive officer, said on a call with analysts in January. “And one of the dreams is our desire -- and the market’s need -- to have more access” between alternative-investment funds and ordinary savers. It was a bold and telling statement coming from the helm of the world’s largest private equity firm.

 

Offering private equity to individuals has been a challenge because the investments are often hard to convert to cash quickly and they charge fees higher than those of traditional mutual funds that populate 401(k)s. Such retirement plans value assets on a daily basis, presenting a challenge for private equity firms that hold dozens of years-long investments. While private equity’s pitch is that it offers greater returns than traditional mutual funds, it may be hard to ensure each plan participant gets the best of what the asset class has to offer.

Inflows into private-sector 401(k)s have outpaced those into corporate pensions every year since 1987, according to 2014 figures, the latest available from Department of Labor data tabulated by the Investment Company Institute. Americans and their employers put $349 billion into 401(k)s in 2014, more than 3.5 times the volume that flowed into pensions, the data show.

And while private equity has largely been shunned by smaller investors due to illiquidity and high fees, a lesson that many so-called 'sophisticated' institutional investors could afford to learn, we have no doubt that they will ultimately find a way to plunder such a highly-coveted asset.

Some firms including New York-based KKR are hoping to score retirement money through an effort started by Pantheon Ventures, a London-based private equity firm that’s trying to get companies with 401(k)s more comfortable with the asset class. Companies are afraid of adding private equity because they can be sued by employees for offering complex products that charge higher fees.

 

To address the fear, Pantheon offers performance-based pricing on its fund-of-funds strategy: The firm earns a fee when performance exceeds the S&P 500 and returns money if it lags. Pantheon will mix private equity investments managed by KKR and other firms with cash and shares of an S&P 500 exchange-traded fund to offset liquidity concerns. It’s also developed a model to help value assets on a daily basis.

 

“Fundraising is all about knocking down barriers,” said Kevin Albert, Pantheon’s global head of business development. “They say they don’t want to invest with you because of one reason, so you fix it and keep reiterating.”

"Dream big," Steve Schwarzman...how else are you going to be able to afford that new Lambo for the Hamptons house?

By Chris at www.CapitalistExploits.at

Market dislocations occur when financial markets, operating under stressful conditions, experience large widespread asset mispricing.

Welcome to this week’s edition of “World Out Of Whack” where every Wednesday we take time out of our day to laugh, poke fun at and present to you absurdity in global financial markets in all its glorious insanity.

While we enjoy a good laugh, the truth is that the first step to protecting ourselves from losses is to protect ourselves from ignorance. Think of the “World Out Of Whack” as your double thick armour plated side impact protection system in a financial world littered with drunk drivers.

Selfishly we also know that the biggest (and often the fastest) returns come from asymmetric market moves. But, in order to identify these moves we must first identify where they live.

Occasionally we find opportunities where we can buy (or sell) assets for mere cents on the dollar – because, after all, we are capitalists.

In this week’s edition of the WOW: An Absurd Unintended Consequence Of Abnormally Low Interest Rates

Even the dullest amongst us have heard about compound interest.

The story goes like this: you can become wealthy - not rich, but wealthy - by foregoing those lattes, $100 haircuts, and saving a decent portion of your income. You earn interest on those savings and let it compound.

By the time your hips are giving in and your bladder has begun to leak it's all turned into a decent little stash while the Jones' next door who've spent their lives upgrading the Lexus every year and holidaying in Hawaii will be asking you for a loan to pay for the leaking roof.

This all works when you can actually earn interest on your money.

And so ever since our central bank overlords with their well intentioned but entirely destructive policies have driven rates through the floor the ability to achieve yield has been destroyed.

The distortions globally are truly breathtaking.

Take a look at this:

In the world of illiquid private assets such as venture capital and private equity asset prices are determined largely by:

1. The valuation based on the last successful financing round
2. Any liquidity event (trade sales, IPOs)
3. Or... "belly-upedness"

Last month the WSJ ran an article about Investindustrial, a European private equity fund run by one Andrea Bonomi who, while running an existing fund, just raised gobs of new money ($800m to be exact) and launched a new fund to buy the assets of the old fund.

Wait! What??

The story, according to the WSJ, goes like this:

"Buyout firms face increasing competition from patient investors like sovereign-wealth funds. One has found a way to play them at their own game: Investindustrial, a European buyout firm, is creating a new fund to buy €750 million ($800 million) of assets it already owns.

Investindustrial, founded by Italian dealmaker Andrea Bonomi, has decided on this novel course of action as it responds to greater competition for assets from institutions such as sovereign-wealth funds, which don’t have restrictions on how long they can own companies. The competition is pressuring buyout firms to devise new ways to own companies."

Maybe...

Let's put ourselves in the shoes of Bonomi and ask a few of questions.

How would you solve a"valuation issue" as well as a "liquidity issue" when, after looking for buyers for your funds' assets, the intersection of willing buyer and that of your private equity fund's NAV doesn't intersect where it "should"?

If you could turn fictional paper profits into real ones with a liquidity event, would you?

If you could earn fees on both the buy and sell side of a transaction, any transaction, would you?

If you couldn't find a buyer at the valuations you've been reporting to your LPs, pray tell, how would you solve both the "valuation" and "liquidity" problem?

Looks to me like Andrea is taking the mickey, but hey, if he can find fools investors willing to go along with it then who am I to be a buzz kill?

Tip of an iceberg...

Now consider pension funds who, in order to maintain their funding, need to deliver a particular return. Returns, I might add, which the liquid market are quite simply not providing them.

Remember, pension funds invest the vast majority in "safe" investments and are therefore predominately invested in fixed income markets, which brings me all the way back to the chart I started this discussion with. Yikes!

As you can see by going to zero or negative interest rates, the true market price of risk isn't just distorted, it's largely completely unknown at this point.

Since the market can't function through proper price discovery mechanics quite literally every asset price globally - whether it be equities, bonds, real estate, and even cash - is distorted.

Ask any money manager what method they're using to price risk premiums at and they're all lost. Nobody really knows and yet we have to price assets somehow.

Private equity assets, for their part, provide these guys with an ability to extend maturities and on the face of it reduce volatility. After all, how volatile is an asset which only changes hands once every 5 to 10 years and one which has done nothing but go up as investors have been pushed further and further down the risk curve?

As Bloomberg recently pointed out:

"According to The Pew Charitable Trusts, allocations to alts by pension funds have gone from just 11 percent in 2006 to almost 30 percent today."

And as Credit Suisse in a research note mention:

"In 1980, there were only 24 private equity firms and deal volume only modestly exceeded $1 billion. Today, there are more than 3,000 U.S. private equity firms and assets under management for buyout funds are roughly $825 billion, up from $80 billion in 1996 and less than $1 billion in 1976.12 Two of the largest private equity firms, The Carlyle Group and KKR & Co, each have more than 720,000 employees in their portfolio companies, which means they both employ more people than any U.S. listed company except for Wal-Mart Stores, Inc."

Private equity ticks many of the required boxes for pension funds.

• Reduced volatility (until you have to sell),
• Higher returns.

And that, my friends, opens a whole new can of worms because, as the demographic pig moves through the python, redemptions will increase, meaning asset sales will need to be taking place. And this right at a time when global liquidity is contracting. But that is a fun topic for another edition of World Out Of Whack.

Question for the day

Cast your vote here and also see what others would do

- Chris

"Low and expanding risk premiums are at the root of nearly every abrupt market loss."— Raghuram Rajan, the governor of the Reserve Bank of India, who is one of the few economists who foresaw the financial crisis

--------------------------------------

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After two days of back to back triple digit gains in the Dow for the first time since the election, overnight the torrid rally has faded, with European shares and U.S. stock futures little changed ahead of Trump's big unveil of his much anticipated tax cut plan as investors seek new impetus for a flagging relief rally. And, if as some traders expect, the rally is likely to be reignited no matter what Trump announces today (although a less hyperbolic plan may in fact be more favorable for risk, as it makes Trump's plan more likely instead of being shot down by Congress).

Despite the tapering of euphoria, world stocks hit another all time high on the back of strong earnings and the realization that whatever Trump says, the S&P - less than 1% from all time highs - will likely hit a new record.  the MSCI world equity index, which tracks shares in 46 countries, was up 0.1% to a fresh record high. It is up nearly 2% this week and 8.35% since the start of the year. As Bloomberg's David Ingles charts, the market cap of all stocks in the index, and thus the world, has just surpassed $50 trillion for the first time ever.

"On top of (the French election result) we have had a very decent set of corporate earnings in the U.S. and that helped push the market further along the same direction," said Investec economist Philip Shaw. "I am unsure how further along we really are on the tax cutting agenda, but it is certainly not doing market sentiment any harm," he added.

Further details on President Trump's tax cutting plans are expected to be announced later on Wednesday, potentially reviving reflation bets. The threat of a U.S. government shutdown this weekend also receded after Trump backed away from demanding Congress include funding for his planned border wall with Mexico in a spending bill.

The dollar rebounded modestly for a second day after plunging in the past week to lows not seen since November, gaining against most group-of-10 currencies even as the WTI slide continues, with crude languishing below $50 a barrel after a report on U.S. supplies. European stocks halted a five-day advance that had taken them to the highest since 2015 as earnings painted a mixed picture on growth.

According to Bloomberg, investors are waiting to see if Trump’s conciliatory tone on the border wall could help avert a government shutdown even as most members of the Congress are in the dark about the $1.1 trillion spending bill. Policy reviews by the Japanese and European Central Bank may also set the tone for rest of the week.

European shares pulled back slightly from 20-month highs as some disappointing corporate results weighed on the market but Asian stocks powered ahead. The Stoxx Europe 600 Index was little changed, after a five-day rally to the highest since August 2015.

Japan’s Topix index rose 1.2 percent, climbing for a fifth straight day for the longest winning streak this year.  Futures on the S&P 500 Index were flat after the underlying gauge climbed 0.6 percent on Tuesday, to within 10 points of its closing record.

The early FX price action this morning has been in the EUR, as the market has faded the story out late yesterday that the ECB are considering signalling a tweak in their monetary policy stance in the wake of the Macron first round victory at the weekend. This sounds premature to say the least, and alongside this, we have seen Draghi and Co curbing some of the hawkish sentiment in response to their last meeting. The recovery EU wide is a little better than fragile, but as the Fed have been struggling to do in their communication to the market, the ECB now face a similar task.

The slew of positive news pushed the Nasdaq composite to a record high on Tuesday while the Dow and S&P 500 brushed against recent peaks.

Against a strengthening dollar, the euro held on to the bulk of the gains made earlier this week; it fell 0.13 percent to $1.0911, but is still up 1.72 percent from Friday's close.

U.S. Treasury yields, meanwhile, rose above 2.30 percent for the first time in two weeks. "U.S. bond yields have broken higher without the support of commodity prices which is one of the clearest signs that the Trump trade is back," Morgan Stanley analysts said in a note. Euro zone government bond yields nudged up ahead of Trump's keenly anticipated tax announcement.

Oil prices resumed their downward trend on Wednesday as data showed a rise in U.S. crude inventories and record supplies in the rest of the world cast doubt on OPEC's ability to cut supplies and tighten the market.

Economic data include revision of retail sales. Procter & Gamble, PepsiCo are among companies scheduled to publish results. Alphabet, Microsoft, Amazon.com, Twitter, Intel, Barclays, Bayer AG and Total SA are among major companies releasing results later this week. The Bank of Japan is widely expected to keep the settings on its monetary easing program unchanged at the end of a two-day policy meeting on Thursday. Though inflation remains well below the central bank’s 2 percent target, it’s ticking up. The ECB sets monetary policy later that same day. With officials indicating little chance of a policy change, the focus will be on any signals from President Mario Draghi that the central bank is debating an exit from its extraordinary stimulus.

* * *

Market Snapshot

• S&P 500 futures down less than 0.1% to 2,384.00
• STOXX Europe 600 unchanged at 386.90
• MXAP up 0.5% to 149.55
• MXAPJ up 0.3% to 487.86
• Nikkei up 1.1% to 19,289.43
• Topix up 1.2% to 1,537.41
• Hang Seng Index up 0.5% to 24,578.43
• Shanghai Composite up 0.2% to 3,140.85
• Sensex up 0.7% to 30,149.50
• Australia S&P/ASX 200 up 0.7% to 5,912.04
• Kospi up 0.5% to 2,207.84
• German 10Y yield fell 1.0 bps to 0.368%
• Euro down 0.2% to 1.0910 per US$
• Brent Futures down 0.04% to $52.08/bbl
• Italian 10Y yield rose 8.4 bps to 1.972%
• Spanish 10Y yield rose 1.1 bps to 1.686%
• Gold spot up 0.1% to $1,265.84
• U.S. Dollar Index up 0.2% to 98.98

Top Headline News from Bloomberg

• President Donald Trump’s expected call to slash the corporate tax rate to 15 percent -- a number that many economists say would boost the deficit so much that the cut would be short-lived -- may be less about policy and more about deal-making
• The roll-out of legislation this week that would rip up much of the Dodd-Frank Act marks a pivotal moment for Republicans’ efforts to overhaul post-crisis financial rules
• Credit Suisse Chief Executive Officer Tidjane Thiam is bowing to investor pressure to keep the bank’s biggest profit generator and instead will bolster capital by selling stock in a rights offer
• KKR & Co. offered to buy a controlling stake in Hitachi Kokusai Electric Inc., the chip system-making unit of Hitachi Ltd., in a bid that values the target at $2.3 billion
• BHP Billiton Ltd. said it may resurrect the sale of its under-performing Fayetteville shale gas assets in Arkansas a little more than two weeks after billionaire Paul Singer proposed spinning off the mining company’s U.S. petroleum division
• China Southern Airlines Co. said it plans to buy 20 widebody aircraft from Airbus SE in a deal worth about $6 billion, according to a filing to the Hong Kong stock exchange Wednesday
  KKR to Acquire Hitachi Kokusai in Deal Valued at $2.3b
• IQiyi, Netflix Reach Content Cooperation Agreement
• Uber to Question Alphabet’s Larry Page in Robocar Case
• Bayer-Monsanto Deal Needs EU Scrutiny, NRW Minister Tells RP
• Shanghai to Develop ‘Water Town’ Next to Disneyland, Zone Says

Asia equity markets maintained the positive momentum from their counterparts in US, where the DJIA outperformed on strong earnings and the NASDAQ Comp. closed over 6,000 for the first time ever. ASX 200 (+0.8%) gained on return from holiday, while Nikkei 225 (+1.1%) benefitted after the JPY weakened against its major counterparts. The Hang Seng (+0.3%) and Shanghai Comp. (+0.2%) also conformed to the upside after the PBoC continued its liquidity injections. Finally, 10yr JGBs were lower with demand dampened amid the broad-based heightened risk appetite and as the BoJ kick-started its 2-day policy meeting in which the bank is widely expected to remain on hold, while there was also notable underperformance observed in the super long end.
PBoC injected CNY 40bIn in 7-day reverse repos, CNY 20bIn in 14-day reverse repos and CNY 20bIn in 28-day reverse repos.

Top Asian News

• China’s Homemade Aircraft Carrier Is Second in Xi’s Fleet
• China Merchants Seeks to Overtake UBS in Asia With Offshore Push
• China Market Strains Worsen as AAA Rated Vanke Scraps Bond Sale
• ICRA Sees FY18 Foreign Flows Into Indian Debt Capped at $5- $10b
• China Eastern Said in Cargo Stake Sale Talks With Private Firms
• Huarong Investment Risks in Spotlight After Glaucus Report
• Hyundai Motor Counts on SUV, Genesis Brand to Revive Profits
• Korean Peninsula on Brink of War Provoked From Outside: Russia

European bourses fail to find any firm direction with equities trading somewhat mixed yet again. Earning updates are yet again at the forefront of investors' minds, with Credit Suisse outperforming in the SMI this morning after announcing profit rose above analyst estimates, additionally the Swiss bank noted that they will raise USD 4bIn in a rights issues. Elsewhere, luxury names have been lifted after Kering stated that their organic growth were significantly ahead of expectations. Credit markets have found some support following yesterday's risk sentiment as the bund has seen a slow grind higher since the cash open, benefiting from month-end extension buying needs.

Top European News

• Santander’s Brazil Patience Pays off as Rebound Lifts Profit
• Kering Shares Surge After Gucci’s Strongest Growth in 20 Years
• Standard Chartered Profit Soars as Bank Overhaul Gains Traction
• Daimler Raises Earnings Forecast as Spending Pressure Mounts
• HSBC, RBS Saudi Ventures in Talks to Form $78 Billion Lender
• BHP Considers U.S. Shale Asset Sale After Activist Call
• Handelsbanken’s Capital Supremacy Fails to Charm Shareholders
• Telia Sees Lower Uzbek Fine of $1 Billion as Sales Top Views
• SEB Sees Riksbank Move After ’Shock’ Sweden Manufacturing Data
• De Benedetti Bets on Media as Italy Business Clans Look to Sell

In currencies, the Bloomberg Dollar Spot Index increased 0.2%, climbing for a second day after a 0.5 percent drop on Monday. The yen slipped 0.1 percent to 111.24 per dollar, after dropping 1.2 percent on Tuesday. The euro lost 0.2 percent to $1.0903, after four straight days of gains. The early price action this morning has been in the EUR, as the market has faded the story out late yesterday that the ECB are considering signalling a tweak in their monetary policy stance in the wake of the Macron first round victory at the weekend. This sounds premature to say the least, and alongside this, we have seen Draghi and Co curbing some of the hawkish sentiment in response to their last meeting. The recovery EU wide is a little better than fragile, but as the Fed have been struggling to do in their communication to the market, the ECB now face a similar task. So the 1.0950 test was inevitable given the headline driven market, but EUR/USD has since tempered this with a move back to 1.0900, while EUR/GBP — traditionally bid into month end — is also restrained through 0.8500 — but largely down to Cable resilience ahead of 1.2750, but now seemingly 1.2800 (1.2805 the low this morning). For EUR/USD, 1.0850-30 looks strong in the meantime. USD/JPY has also slipped back a little, and as we noted yesterday, sellers aplenty in the 111.00-112.00 area. We suspect a large chunk of the upside is down to the hopes and expectations of credible tax plans to be 'outlined' in an announcement later today, so the risk here is that the market is (again?) disappointed. EUR/JPY has also relented given the above move, and after failing to touch on 122.00, we are back in the lower 121.00's.

In commodities, gold struggled with reclaiming USD1270 yesterday, and we have since slipped back into the mid USD1260's as the recovery in the USD index allied with a modest recovery in risk assets put further pressure on precious metals. Silver has also given up ground, and has dipped into the USD17.50's. Oil prices back in focus after we slipped back under USD50.00 in WTI, resuming its decline and losing 0.2% to $49.45 per barrel, after halting a six-day selloff on Tuesday. . OPEC talks now key as Oil bulls need further encouragement on an extension to the output cuts. The major producers all seem broadly open to the idea, most of all Saudi Arabia as ongoing comments suggest. Key EIA report today with speculation inventory will contract. Base metals all following the risk mood, with ranges tight ahead of Trump announcement later today. Copper buoyed but struggles at USD2.60.

It’s a very quiet day ahead in terms of data. Over in Europe French  consumer confidence for April is the only number of note and is expected to be unchanged at 100, and there’s nothing of note to watch in the US. However earnings season continues with Proctor & Gamble and Boeing due to report today among other names. Away from data, we will see UK PM Theresa May host EC President Juncker and EU’s Brexit negotiator Michal Barnier today

US Event Calendar

• 7am: MBA Mortgage Applications, prior -1.8%
• 10am: Revisions: Retail Sales

* * *

DB's Jim Reid concludes the overnight wrap

So on day 97 of his Presidency, today is all about Mr Trump's tax plans of which the eventual success (or lack of it) will likely define the economic landscape of his administration. The WSJ last night reaffirmed that Mr Trump wants to slash corporate tax including on pass through businesses. He is also planning a tax break for child care expenses. There was also talk of a territorial tax for companies where they would pay little or no tax on future foreign earnings. Bloomberg also report that a repatriation tax of 10% is planned on the estimated $2.6tn of stockpiled offshore earnings. Anyway whatever we hear today it will still have to go through legislative approval and there will a lot of talk about how tough that will be if it's not revenue neutral.

Staying with US politics there were signs yesterday that a US government shutdown may end up being averted as President Trump showed signs of easing up on his demands for the immediate funding of the border wall. So far the spending plan needed to keep agencies running till September has been kept quiet ahead of this Friday’s deadline, but Trump’s willingness to push back funding the wall to later this year could be a sign that he would be ready to sign the spending bill.

Ahead of the big day in Washington, sentiment across global markets remained positive yesterday following the relief rally on Monday. European equities ticked up on the day (STOXX +0.2%) while the Eurozone Banks index gained by +0.6%. The DAX and CAC posted small gains of +0.1% and +0.2%. US equity markets maintained momentum with the S&P gaining +0.6%, led by Materials (+1.4%) and Financials (+1.2%). Strong bluechip earnings helping. The NASDAQ also hit a new all time high, breaking the 6,000 mark for the first time after gaining +0.7% on the day. Interestingly this was 17 years after first hitting 5,000 although without checking one wonders how many constituents were in the index back then that are still there today. We note that having taken 17 years to fill in this last 1,000 point gap, it only took 49 days to move from 4,000 to 5,000 back in 2000. Another stat is that the index is now up around 4.7 times from its lows in March 2009. Impressive and all these stats are a reminder that timing is everything in investing!

Elsewhere risk-on continued in credit. In Europe we saw Main and Crossover spread tighten by -2bps and -8bps respectively, while Senior and Sub financials spreads tightened by -5bps and -11bps on the day. Over in the US we saw similar moves tighter as CDX IG and HY tightened by -2bps and -7bps respectively. We saw a broad based sell off in government bond markets with yields rising across all maturities for US treasuries (2Y: +4bps; 10Y: +6bps) and Bunds (2Y: +2bps; 10Y: +5bps) . Yields for 10Y OATs and BTPs yields also rose on the day by +7bps and +9bps respectively, with the 10Y OAT-Bund spread widening by +2bps.

In currency markets we saw the dollar (-0.3%) weaken for the second day in a row while the Euro gained +1.0%. Sterling also gained +0.5% to reach its highest level this year. Moves over in commodity markets were fairly muted at both ends of the risk spectrum, with WTI and Gold mostly flat. The Asian session is also relatively quiet with the positive mood of the last few days continuing. The Nikkei is 0.7% higher as the BoJ start their 2-day meeting, the Hang Seng +0.6% and the Shanghai Comp +0.35%. Gold, the Dollar, Oil and Treasuries haven't moved much in the overnight session.

Looking now at some of the data out yesterday. In Europe, the ECB Q1 Bank Lending Survey was broadly positive as credit standards loosened across all three major categories. Loans to enterprises dipped back into easing territory (-2%) after having ticked up by +5% in Q4 2016. The net easing was roughly in line with the expected change in standards as reported in the previous survey, and banks now expect a net tightening of lending standards for enterprises in Q2 (2%). Standards for consumer credit and lending to households also loosened in Q1 (-7% and -5% respectively). Despite loose lending conditions credit demand growth from enterprises is slowing down: net 6% of banks reported an increase in loan demand from enterprises in Q1 but this was well below the 11% that expected an increase (as reported in the previous survey) and also less than the 18% reporting an increase in loan demand in Q4 2016. Banks however expect net loan demand from enterprises to accelerate in Q2 2017 (12%).

Elsewhere in Europe we also got French manufacturing confidence numbers for April that rose more than expected (108 vs. 105 expected; 104 previous) while business confidence was flat on the month (104) as expected. In the UK the PSNB numbers (including banks) for March were reported well above expectations at GBP 4.4bn (vs. 1.5bn expected).

Over in the US we saw a large number of housing market indicators which were mostly positive. The FHFA house price index rose by +0.8% mom in February (vs. 0.4% expected) while new home sales  unexpectedly rose to 621k (vs. 584k expected; 592k previous). In terms of softer data, the consumer board consumer confidence indicator for April fell more than expected to 120.3 (vs. 122.5 expected; 125.6 previous). The Richmond Fed manufacturing survey also fell on the month but less so than expected (20 vs. 16 expected; 22 previous). It’s a very quiet day ahead in terms of data. Over in Europe French  consumer confidence for April is the only number of note and is expected to be unchanged at 100, and there’s nothing of note to watch in the US. However earnings season continues with Proctor & Gamble and Boeing due to report today among other names. Away from data, we will see UK PM Theresa May host EC President Juncker and EU’s Brexit negotiator Michal Barnier today.

• Fed Rate Rise Unlikely, but Possible June Move in Focus (WSJ)
• GOP Health-Bill Woes Signal Centrists’ Rise (WSJ)
• As U.S. and China find common ground on North Korea, is Russia the wild card? (Reuters)
• North Korea says American was detained for 'attempted subversion' (Reuters)
• SEC Probes Solar Companies Over Customer Cancellations (WSJ)
• Slumping Car Sales Are Latest Data to Rattle Bets on Growth (WSJ)
• Putin Meets Erdogan as Russia Pursues Syria Diplomacy Blitz (BBG)
• Macron and Le Pen to square off in French pre-election TV showdown (Reuters)
• Trump aide lays out 'disruptive' approach on eve of Mideast talks (Reuters)
• JPMorgan to Move Hundreds of Staff to Three EU Offices on Brexit (BBG)
• On Serbian airwaves, a battle for heart of Balkans (Reuters)
• China to Start Security Checks on Technology Companies in June (WSJ)
• One Sign That the Retail Industry Isn’t Dead Yet (Bloomberg)
• China's Silk Road push in Thailand may founder on Mekong River row (Reuters)
• U.S. senators seek Venezuela sanctions (Reuters)
• China to step up crackdown on illegal forex deals in 2017 (Reuters)
• Buffett to face big crowd as Berkshire grows bigger (Reuters)
• NSA collected Americans' phone records despite law change: report (Reuters)
• Strong demand at Taco Bell drives Yum Brands' profit beat (Reuters)
• Uber in U.S. court reckoning on possible shutdown of self-driving program (Reuters)

Overnight Media Digest

WSJ

- Lawmakers on Tuesday warned U.S. airlines they faced more regulation if they didn't follow through with pledges to improve customer service following the widespread outcry over the treatment of a United Continental Holdings Inc passenger last month. on.wsj.com/2oW5gtG

- Apple Inc extended its rebound in the latest quarter with rising profit and revenue, but reported tepid iPhone demand that adds pressure on the technology giant to deliver a hit with its new 10th-anniversary handset later this year. on.wsj.com/2oWbZE4

- North America was the only region where Mondelez International Inc comparable sales fell in the first quarter, as food makers struggle with a turn by U.S. consumers toward fresher foods. on.wsj.com/2oW4Kfu

- Aetna Inc will again scale back its presence in the Affordable Care Act exchanges in 2018, saying it expects losses on the business this year despite sharply reduced enrollment in its individual plans. on.wsj.com/2oWlHXc

- Etsy Inc is replacing its chief executive and cutting about 8 percent of its workforce after the online marketplace reported a first-quarter loss and what it described as "a challenging February." on.wsj.com/2oWcoGA

FT

- Gold miner Avocet Mining's shares have been suspended after it failed to meet a deadline to publish its annual accounts. It's biggest shareholder is Elliott Associates.

- Vladimir Putin and Donald Trump talked paths towards Syria's peace, in a second interaction between both the presidents since Trump took office in January.

- EU has raised the opening demand for Britain's Brexit bill to be a payment of up to 100 billion euros ($109.32 billion). EU negotiators revised initial calculations to maximise the liabilities Britain is asked to cover.

- KKR blocked Barclays from winning new mandates at the U.S. private equity group in protest on how the bank's CEO Jes Staley took his brother-in-law's dispute over a failed Brazilian deal.

NYT

- Apple Inc said Tuesday that the number of iPhones sold globally fell 1 percent in the first calendar quarter, compared with the same period a year ago, although revenue rose to $52.9 billion as more customers bought the supersized, more expensive iPhone 7 Plus. nyti.ms/2p7gU0W

- Dr. Mario Molina, chief executive of the California health insurance company founded by his father, was abruptly removed from his position at Molina Healthcare Inc, according to an announcement by the company on Tuesday. His brother, John, the company's chief financial officer, was also immediately replaced. nyti.ms/2p7aoY9

- Facing new corporate demands and political pressure from a Trump administration that wants to curb immigrant work visas, Infosys Ltd, one of India's leading tech outsourcing companies, said Tuesday that it will hire up to 10,000 Americans to serve its clients in the United States. nyti.ms/2p6OyUR

- The head of President Trump's re-election campaign accused CNN of "censorship" on Tuesday afternoon after the broadcast network refused to run the group's latest advertisement. nyti.ms/2p7gfg0

- With two days left before an 11-day recess and no vote scheduled, House Republican leaders worked on Tuesday to win votes one at a time for their latest bill to repeal the Affordable Care Act after an influential Republican voice on health care came out against the measure. nyti.ms/2p7bHGB

Canada

THE GLOBE AND MAIL

** Mortgage lender Home Capital Group Inc delayed the release of financial results on Tuesday as the company recruits new board members in a bid to restore its credibility, stem the bleeding of deposits and find a potential buyer or investor. tgam.ca/2pEQUer

** British Columbia Liberal Leader Christy Clark wants to slap a hefty carbon levy on exports of thermal coal from British Columbian ports, a move that would devastate producers in both the United States and Alberta while sparking a rift over interprovincial trade. tgam.ca/2pEABhI

** Defence Minister Harjit Sajjan, under pressure to deliver a new purchasing plan for big-ticket military goods, is preparing to lower expectations for the amount of cash available by blaming the former Conservative government for leaving the Canadian Armed Forces with a budget shortfall. tgam.ca/2pEwvpP

NATIONAL POST

** Negotiators and senior trade officials from 11 Pacific Rim nations gathered in Toronto Tuesday to discuss whether it's possible to salvage the Trans-Pacific Partnership. bit.ly/2pEAVwW

** WestJet Airlines is expanding its international reach with the purchase of at least 10 Dreamliner aircraft from Boeing Co part of a larger strategy that will see the Calgary-based airline look for growth in both ultra-low-cost and longer-haul segments. bit.ly/2pExiam

Britain

The Times

* ITV bought a majority holding in World Productions, the company behind the popular BBC series "Line of Duty," for an undisclosed sum. bit.ly/2oVqI2f

* Kohlberg Kravis Roberts, the private equity giant, has expressed anger at Barclays' CEO Jes Staley's alleged behaviour relating to a battle it is waging against Jorge Nitzan, the brother of Staley's wife. bit.ly/2oVAFwC

The Guardian

* It will take an extra 15 billion pounds ($19.41 billion) of spending cuts or tax rises to eliminate the budget deficit by the time of the 2022 election, the Institute for Fiscal Studies said as it laid bare the damaging legacy of the financial crisis on UK living standards and public finances. bit.ly/2oVfNp0

* Alitalia has filed for administration for the second time in a decade, a move that could see the troubled Italian national carrier restructured, sold or finally wound up. bit.ly/2oVdyCt

The Telegraph

* The London Stock Exchange has fired back at Brussels' proposal to restrict London's ability to host euro-clearing, warning that any restriction on the clearing of Euro swaps would "damage European issuers, savers, investors, pension funds and intermediaries." bit.ly/2oVzaP5

* Morgan Stanley has sold Affinity Water for 1.6 billion pounds to a consortium of investors including FTSE 250 investor HICL Infrastructure and German insurance giant Allianz. bit.ly/2oVujNJ

Sky News

* Some 300 jobs are to be created and many more safeguarded in a 100 million pounds deal to sell part of Tata Steel's operations in the UK. bit.ly/2oVkIWY

* Staff at Ineos' petrochemical plant in Grangemouth have been evacuated due to a gas leak that police have described as a "major incident." Ineos confirmed the leak at the petrochemical plant on Twitter, adding: "Our on-site responders are continuing to manage the incident with support from the emergency services." bit.ly/2oVhvqq

The Independent

* Banks stung their customers with a combined 300 million pounds in unarranged overdraft fees last year, often for going only a few pounds over their agreed limit, according to research by price comparison service uSwitch. ind.pn/2oVlxPO

* More than half of university students are now forced to pay more than 100 pounds per week for accommodation as rents have soared in recent years, accommodation search engine University Cribs found. ind.pn/2oVfFGp

It was supposed to be Risk Macr-ON after Emmanuel Macron's avalanche victory in Sunday's French presidential elections; instead as some banks cautioned and as we showed early in the overnight session, the market reaction has been the opposite with the victory fully priced in (and more) and especially in the European currencies and stocks, as well as S&P futures, we have seen a modest episode of Risk Macr-Off. Treasury yields are falling 1-1.5bps in flattening fashion with the 10y at 2.33%. WTI crude oil has largely traded sideways and was modestly lower in early morning trade despite another monster jawboning session from the Saudi energy minister as well as Russia, both signaling they could extend production cuts into 2018, indicating that what little credibility OPEC may have had is virtually gone.

After climbing for five of the past six days in the buildup to the election of Emmanuel Macron, overnight the euro succumbed to "selling the news" and after climbing above the "psychological" 1.10 level after Macron’s victory investors booked profits. While the common currency rose to $1.1023 during early Asia trading, further filling the gap following the U.S. elections in November, with that move taking it more than 2.7% higher since the first round of the French elections, subsequent fast-money names unwound part of their longs. That saw the currency fall as much as 0.6 percent to $1.0936 in the European morning.

Discussing the Euro move, SocGen's Kit Juckes said that "the Euro went up a bit, down a bit and ended pretty much where it was last week. It faces two short-term challenges. The first is that the FX market has moved a good way further in recent days than the bond market, with the Treasury/Yield spread not very different from where it was when EUR/USSD was under 1.08. Bunds need to catch up with the currency. The second hurdle is positioning. CFTC data show the smallest speculative Euro short in 3 years. That’s still a short position, of course, so much more of a short-term hurdle than a reason for a deep correction to lighten positions. A period of choppy trading is likely for now."

While the Euro's reaction was perhaps predictable, Macron’s decisive triumph over Marine Le Pen will strengthen the EU, according to Bloomberg,
and deal a blow to the populist wave that has roiled western
democracies for the past year. But the scope for a relief rally was
limited after market gains in the buildup to Sunday’s vote. Global
stocks are trading at the highest ever, and U.S. equities also closed at
a record last week after better-than-forecast data on American jobs.

The unwind in the Euro prompted concerns about broader risk assets, and as a result the initial kneejerk reaction in European stocks and US equity futures, has faded entirely and while Asian stocks rose, European equities and S&P futures fell with investors having more than fully priced the result in.

With the political risks that have dominated European markets in a year packed with elections seen receding, the European Central Bank is expected to have more room to tighten policy as the euro zone economic recovery gathers pace. Poor Chinese trade data released overnight hurt risk sentiment.

Following a strong start in Asia, European equities began on the front-foot, before slipping into negative territory in a 'buy the rumour, sell the fact' fashion with the CAC 40 trading lower by 0.5%. In terms of broader performance across the continent, material names underpefrom in the wake of disappointing Chinese trade data which saw imports and exports fall short of expectations (Copper imports -    22.9% Y/Y).

• Exports (CNY)(Apr) 14.3% vs. Exp. 16.8% (Prey. 22.3%)
• Imports (CNY)(Apr) 18.60% vs. Exp. 29.30% (Prey. 26.30%)
• Exports (USD)(Apr) Y/Y 8.00% vs. Exp. 10.40% (Prey. 16.40%)
• Imports (Apr) Y/Y 11.9% vs. Exp. 18.0% (Prey. 20.3%)

"Investors will now go back to the basics of watching the underlying euro zone economic and inflation data and what implications it may have for monetary policy," said Iain Stealey, a fixed income portfolio manager for JPMorgan Asset Management.

Eslewhere, the dollar strengthened, Treasuries held steady and futures for U.S. stocks pointed lower. Oil swung as the Saudi oil minister said OPEC’s supply cuts will be extended into the second half of the year and possibly beyond. Energy names have been lifted by further OPEC and non-OPEC jaw-boning as Russian and Saudi rhetoric has revealed a desire to extend output cuts beyond 2017 if needed, even as China's oil imports dropped from a record as independent refiners slow buying and both WTI and Brent trading modestly lower at publication time.

Looking at global equity markets, Japan’s Topix soared 2.3% to the highest since December 2015 as investors played catch-up after a three-day holiday. South Korea’s Kospi jumped 2.3% to a fresh record ahead of Tuesday’s election. Meanwhile, the selloff in China continued, with the Shanghai Composite Index dropping 0.8% to the lowest level since October, despite data showing overseas shipments held up in April.  The Stoxx Europe 600 slipped 0.2 percent in London, dragged down by miners. Futures on the S&P 500 were down 0.2% .

The yield on 10-year Treasury notes was flat at 2.35 percent. French benchmark yields fell two basis points to 0.82 percent.

Oil prices, which hit almost six-month lows last week on worries about a global glut of crude, edged up on prospects of output cuts agreed by the OPEC producers group and others could be extended. Brent futures rose 38 cents to $49.48 a barrel.

Gold rose 0.3 percent to $1,231 an ounce. Copper prices fell 1.4 percent to four-month lows around $5,015 a tonne as Chinese trade data showed April imports of the metal dived 30 percent from a month earlier.

Bulletin headline Summary From RanSquawk

• French Presidential Candidate Macron became the President Elect after he won the 2nd round run-off
• Oil up as Russian and Saudi rhetoric has revealed a desire to extend output cuts beyond 2017 if needed.
• Looking ahead, highlights include comments from Fed's Bullard and Mester.

Global Market Snapshot

• S&P 500 futures down 0.1% to 2,395.25
• STOXX Europe 600 down 0.2% to 393.60
• MXAP up 1.4% to 150.67
• MXAPJ up 0.8% to 488.52
• Nikkei up 2.3% to 19,895.70
• Topix up 2.3% to 1,585.86
• Hang Seng Index up 0.4% to 24,577.91
• Shanghai Composite down 0.8% to 3,078.61
• Sensex up 0.4% to 29,966.27
• Australia S&P/ASX 200 up 0.6% to 5,870.89
• Kospi up 2.3% to 2,292.76
• Brent Futures up 0.7% to $49.46/bbl
• Gold spot up 0.2% to $1,230.83
• U.S. Dollar Index up 0.1% to 98.78
• German 10Y yield fell 1.1 bps to 0.407%
• Euro down 0.3% to 1.0961 per US$
• Brent Futures down 0.1% to $49.06/bbl
• Italian 10Y yield fell 8.6 bps to 1.872%
• Spanish 10Y yield rose 2.9 bps to 1.587%

Top Global News From Bloomberg

• Emmanuel Macron pledged to heal France’s rifts after his victory over Marine Le Pen in the presidential election, saying that he’ll work to address the concerns that were exposed during one of the most divisive campaigns of recent history
• Saudi Arabia and Russia signaled they could extend production cuts into 2018, doubling down on an effort to eliminate a supply surplus just as its impact on prices wanes
• Sinclair Broadcast Group Inc. is close to buying Tribune Media Co., a deal made possible after the Federal Communications Commission voted last month to ease a limit on TV-station ownership in the U.S.
• KKR & Co. is in talks with Toshiba Corp. about a preemptive bid for the Japanese company’s memory chips business that would accelerate completion of a sale and end negotiations with other potential acquirers
• Akzo Nobel NV rejected PPG Industries Inc.’s third takeover bid, saying its own breakup strategy is superior and raising the prospect that the U.S. rival will take the $29.5 billion offer directly to the Dutch coating and chemical company’s shareholders
• JD.com Posts Surprise Profit as Chinese Consumption Strengthens
• Buffett Confronts Search for Next Big Thing After Missed Chances
• Malone’s Liberty Global Pares Growth Target on U.K. Slowness
• Western Digital CEO Said to Plan Japan Trip for Toshiba Chip Bid
• S. Africa Approval of Bayer-Monsanto Deal Rests on Liberty Sale
• Einhorn, Gundlach to Speak at Sohn Investment Conference Monday
• Sinclair Said Close to Buying Tribune for About $45 a Share
• TPG Group Bids $2.1 Billion for Sydney Morning Herald Owner
• Southwest Braces for Upgrade of 30-Year-Old Reservations System
• Delta Is Said to Consider Delaying $3 Billion Airbus Order

Asia equity markets traded mostly higher following digested mixed US jobs data and the French Presidential election results where Macron triumphed as expected. ASX 200 (+0.5%) was led by commodity-related sectors after oil rebounded from last Friday's lows to approach USD 47/bbl to the upside, while Nikkei 225 (+2.4%) surged as it made up for lost ground following its 5-day weekend. Elsewhere, Shanghai Comp (-0.8%) and Hang Seng (+0.3%) were mixed as the mainland underperformed after the PBoC refrained from open market operations and following the latest Chinese trade data in which Exports and Imports fell short of expectations. Finally, 10yr JGBs were lower amid a mostly positive risk sentiment in the region, while the BoJ's Rinban announcement was also for a relatively paltry total amount of JPY 370bn.

Top Asian News

• Tycoons From China Plant Money Management Flags on Wall Street
• KKR Said in Talks With Toshiba for Preemptive Bid for Chips Unit
• China End-April Forex Reserves at $3.0295t; Est. $3.0200t
• China Said to Consider Merging 8 Companies Into 3 Power Giants
• India Said Poised to Unveil New 10-Year Bond This Week

Focus in European trade has largely centred around the materialisation of the expected victory for Emmanuel Macron in the second round of the French Presidential election. European equities began on the front-foot, albeit modestly so, before slipping into negative territory in a 'buy the rumour, sell the fact' fashion with the CAC 40 trading lower by 0.5%. In terms of broader performance across the continent, material names underpefrom in the wake of disappointing Chinese trade data which saw imports and exports fall short of expectations (Copper imports -    22.9% Y/Y). Elsewhere, energy names have been lifted by further OPEC and non-OPEC jaw-boning as Russian and Saudi rhetoric has revealed a desire to extend output cuts beyond 2017 if needed. In fixed income markets, Bunds have been supported throughout the session alongside the downtick in equities while French paper benefitting from yesterday's election result. Recent talk has suggested that OATs are likely to see a return of cash back into OATs from Asian investors. Additionally, the FR/GE spread has been relatively stable at this stage of the session with not much left on the data docket for investors to digest.

Top European News

• Buy Bayer Before Rights Issue, Co. May Raise Forecast: Jefferies
• European Miners Lead Stoxx 600 Lower; Macquarie Sees Opportunity
• U.K. House Prices Post First Quarterly Decline Since 2012

In currencies, it has been a rather uninspiring morning in FX, but one which highlighted the fact that much of the EUR buying towards the end of last week was on the anticipated French election result. We may have seen 1.1000 breached, but life above this level will be hard-fought until we get some fresh drivers to inspire fresh longs against short term differentials From the USD perspective, some will argue that moderation may take us lower than 1.0900-1.0850, some of the EU data run of late suggests ECB policy change is perhaps a little sooner than communicated by Draghi and his colleagues — Germany would agree. GBP has had a positive morning, maintaining pressure on 1.3000 against the USD, but watching EUR/GBP strong interest to sell above 0.8500 now sees a fresh push for the low 0.8400's. House price data this morning was of little consequence, but Super Thursday is the focus from here.

Commodity prices are lower across the board, but this does not paint the whole picture. From a risk perspective, one does not have to go too deep into the impact of the Macron victory in the French elections this weekend, further dampening precious metals. Losses in Gold on the modest side, but we are closer to USD1200 than the highs seen in mid Apr. The next support we see is just under USD1210.00. Silver has already tested its respective support point at USD16.20 and holds so far. Base metals still trading off China data and supply concerns, with Copper now delving into the support zone at USD2.45-50. Oil prices recovered sharply off their lows seen last week, but have eased off better levels despite more encouraging talk of an output cut extension. The pick-up in activity in the US and rising rig count temper this.

Looking at the US this afternoon is the April labour markets conditions index.  Bullard and Mester will be today's Fed speakers.

US Event Calendar

• 10am: Labor Market Conditions Index Change, est. 1, prior 0.4
• 8:45am: Fed’s Mester Speaks at Chicago Council on Global Affairs

DB's Jim Red concludes the overnight wrap

Europe's ability to maintain a healthy relationship was enhanced last night by Macron's large 66.1%-33.9% victory over Le Pen. Turnout was around 75% which is lower than previous  elections but the result was decisive. Le Pen conceded defeat shortly after the exit polls were released while world leaders including UK PM May, German Chancellor Merkel and US President Trump have been quick to congratulate Macron on his victory. The new President-elect – who will be the youngest ever elected French president - has also addressed his supporters outside his campaign headquarters in which he pledged to unite the rifts in France and do “everything in the next five years so that they have no more reason to vote for extremes”.

In terms of the next steps, Macron will now have to name a Prime Minister with parliamentary experience, who will lead the lower-house election campaign and then manage the daily business of parliamentary politics. Macron mentioned that his PM and government will be revealed after the inauguration that needs to happen by May 14th. Our economists in France highlighted in their Focus Europe piece on Friday that recent electoral results and polls suggest that Macron’s party could be the main party in the French lower house post the June elections (held from the 11th to 18th). An outright majority for his new party “En Marche!” appears numerically possible. If not, they also suggest that a majority could be reached with the participation of moderate centre-left and/or centre-right MPs who have already expressed their preparedness to govern with Macron in such a situation.

The reaction in FX markets this morning has been muted for the most part which isn’t hugely surprising following the first round result and the extent to which last night’s outcome was already priced in. The Euro was at best up +0.23%, touching an intraday high of 1.102, but it’s since fallen back to 1.098 as we go to print and about -0.20% versus Friday’s close. In Asia equity markets with the exception of China are firmer. The Nikkei is +2.25% (although that reflects some catch up from last week after markets were shut in Japan on Friday), with the Hang Seng +0.37%, Kospi +0.674% and ASX +0.41%. The Shanghai Comp is -0.92% after export growth was reported as slowing more than expected in April. Gold is little changed while WTI Oil is +1.38% and extending Friday’s rally with the boost this morning coming after Saudi’s oil minister said OPEC production cuts will likely be extended into the second half of the year. Futures are little changed. It’s worth noting also that today is a national holiday in France.

Coming back to the election theme, as it stands right now, the margin of victory for Macron is even greater than that suggested by the recent polls. In fact this has been a bit of a recurring theme for European elections of late. Indeed if you include the two French presidential elections (rounds 1 and 2), then the last six elections in Europe have all seen the nationalist candidate underperform relative to what the polls suggested. We’ve obviously seen this with Le Pen in the two French elections, while the Dutch General election back in March saw Geert Wilders’ Party for Freedom movement perform worse than expected (taking home 13.1% of the votes compared to the polling average of 14.1%). The same can also be said for the Freedom Party in Austria back in the December Presidential election, as well the recent Finland Municipal Election (in which the Finns Party underperformed relative to polls) and Bulgaria’s Parliamentary Election (in which the United Patriots Party underperformed). An interesting trend.

Meanwhile, much of the other weekend news concerns other European politics. Over in Germany Chancellor Merkel’s CDU party was given a big boost following victory over Schulz’s SPD party in the Schleswig-Holstein state election (had been an SPD-led coalition since 2012). The result was a surprise victory for the CDU with preliminary counts estimating the party to have taken 33% of votes (from 30.8% in 2012) versus 26% for the SPD (from 30.4%). Significantly, this makes for positive momentum for the CDU going into next weekend’s big North-Rhine Westphalia state election (the most populous state and SPD- coalition run). Recent polls for this state election have proven to be too close to call. Elsewhere, in Italy two of the last three opinion polls have shown the 5SM party to again have fallen behind the PD (Democratic Party). The polls, covering May 2nd-4th from Ipsos, Ixe and SWG show the average lead for PD of 0.9%. Clearly it’s extremely tight however and well within the margin of error but go back to mid-March to early April and the 5SM was holding a lead or anywhere from 2%
to 7% over the PD so there has been a bit of a shift.

Moving on. Before we look at the week ahead, a quick wrap-up now of Friday’s session. For those that missed it, the main focus of attention was the NFP print in the US which came in at a better than expected 211k (vs. 190k expected). Revisions to prior months were fairly insignificant at just a cumulative -6k over the last two months. Private payrolls also rose 194k in April, partly due to a rebound in employment growth in the previously weather-impacted leisure and hospitality sector. Away from that the labour force participation rate nudged down one-tenth to 62.9% while the U-3 unemployment rate was the biggest surprise after falling to 4.4% (from 4.6%) compared to expectations for a rise to 4.6%. That is now the lowest rate since May 2007 and a tenth below the Fed’s most recent year-end target. The broader U-6 measure also declined, by three-tenths to 8.6%. In terms of wages, average hourly earnings were up +0.3% mom in April as expected however the combination of base effects and downward revisions to earlier data saw the annual rate fall one-tenth to +2.5% yoy.

Markets weren’t hugely moved by the data. Treasury yields spiked and then dropped in the moments following the report but by the end of the day were pretty much flat at 2.350%. The Greenback was a shade weaker with the US Dollar index finishing -0.15%. Meanwhile in equity markets the S&P 500 closed +0.41% but this was more to do with the rebound that we saw across the commodity complex than anything else. After we had reported WTI Oil plummeting below $44/bbl in the Asia session on Friday, energy prices staged an impressive rebound into the close with WTI actually ending the day up +1.54% at $46.22/bbl – an intraday high-to-low swing of well over 6%. That rebound appeared to be technically driven rather than from any fundamental data or news. Industrial metals were also better off for the most part on Friday with Copper (+0.76%), Zinc (+0.51%) and Nickel (+1.39%) all firmer, although Iron Ore was again the exception after suffering its second consecutive 5% daily decline. Prior to this in Europe we’d seen equity markets finish firmer heading into Sunday’s election with the Stoxx 600 +0.65% and CAC +1.12%. Peripheral bond yields were also 4-9bps lower which compared at a 2.4bps rise for 10y Bund yields to the highest (at 0.418%) since March 21st.

Finally there has also been a decent amount of Fedspeak to sift through. On Saturday San Francisco Fed President Williams reiterated his view that 3 to 4 rates hikes this year remains appropriate while at the same time noting that the April employment report was further confirmation that Q1 GDP was an “aberration”. St Louis Fed President Bullard said that he wouldn’t oppose one more rate hike this year and that the Fed should start trimming its balance sheet “maybe sometime in the second half of the year”. The Boston Fed’s Rosengren emphasised  also his desire to start shrinking the Fed’s balance sheet “relatively soon”. There was nothing particularly relevant from Fed Chair Yellen’s speech.

Looking at the week ahead now, this morning in Europe the early release comes from Germany where we’ll get March factory orders data, followed then by house prices data in the UK and the Sentix investor confidence reading for the Euro area in May. The only data in the US this afternoon is the April labour markets conditions index. Kicking off Tuesday will again be Germany where March trade and industrial production data is due. In France we’ll also get the Bank of France business sentiment reading while in the US in the afternoon it is quiet again with the April NFIB small business sentiment reading, March JOLTS job openings and March wholesale inventories the only data due. Kicking off Wednesday is China where we’ll get April CPI and PPI prints. In France trade data and industrial and manufacturing production reports are due. Over in the US on Wednesday we will get the April import price index reading and April monthly budget statement. In Asia on Thursday the lone release is from Japan where we get the March trade balance. In the UK we then get industrial and manufacturing production for March along with the latest trade balance. The Economic Commission is also due to release its latest economic forecasts while around lunchtime we’ll get the BoE policy meeting outcome and latest inflation report. In the US on Thursday we are due to get PPI and initial jobless claims data. It’s a busy end to the week on Friday. In Germany we get Q1 GDP and April CPI while Euro area industrial production for March is also scheduled. We finish the week in the US with the April CPI report, April retail sales figures and first look at the May University of
Michigan consumer sentiment reading.

Away from the data this week’s Fedspeak consists of Bullard and Mester today, Kashkari, Rosengren and Kaplan on Tuesday, Rosengren on Wednesday Dudley on Thursday and Evans and Harker on Friday. ECB President Draghi is also due to speak on Wednesday while the BoJ minutes from the April meeting are also due Wednesday. BoE Governor Carney speaks after the BoE meeting. Away from this US Secretary of State Rex Tillerson is due to meet Russia Foreign Minister Sergei Lavrov on Wednesday. G7 finance ministers also meet on Thursday for a threeday meeting. Earnings wise we’ve got 39 S&P 500 companies due to report and 100 Stoxx 600 companies scheduled.

Asian stocks declined, while European stocks rose to the highest since 2015, led by a rebound in commodities and basic resource stocks. U.S. stock-index futures were little changed at 2,395 - just shy of all time highs - as investors focused on corporate earnings after the French election, while the VIX hovered near its lowest level since 1993.

In another mostly quiet overnight session, the Bloomberg Dollar Spot Index rose a second day as the greenback hit multi-week highs versus the Australian dollar, with the USDJPY reaching 103.83, the strongest since March 15, and the EURUSD sliding below 1.09, the lowest since March 30, as the aftermath of the French vote saw no further catalyst and the common currency consolidates near the 1.09 handle. A drop in Treasuries supported the dollar amid speculation that a hawkish speech by the Federal Reserve Bank of Cleveland President Loretta Mester on Monday may have been the opener of a series of hawkish commentary by Fed officials this week. The Fed official said that the Fed needed to be vigilant against “falling behind the curve”, while Mester also said with regards to the balance sheet that “we could probably end re-investments and not see a big impact, as long we articulate it well”.

The odds of a move in June have already risen to 80 percent from 68 percent last week, based on overnight indexed swaps and the Fed funds effective rate, and speeches by Fed’s Neel Kashkari and James Bullard among others could cement expectations of a 25-basis-point increase by policy makers in nearly a month’s time. However according to Bloomberg's FX team, further dollar gains aren’t that straightforward as strong resistance lies ahead, while a robust labor market isn’t coupled with relatively strong wage growth. The market is looking for two more increases by the Fed this year and the repricing of such expectations could be pivotal for the greenback to revert its downward trajectory since January.

Crude reversed an earlier decline ahead of government data which is expected to show inventories fell for a fifth week, while natural gas futures rebounded from the biggest loss in eight weeks. Copper for delivery in three months also bounced after the lowest close since December. That helped ensure basic resources shares were the biggest winners as the Stoxx Europe 600 Index advanced.

The big story, however, remains the near record low volatility, with the VIX dropping to a level not seen since 1993 and shares are trading at record levels.

Looking around global market, European stocks and bond yields rose on Tuesday, boosted by higher commodity prices and basid industries stocks, as well as record low volatility, continuing relief from this weekend's French presidential election and solid corporate earnings. The Stoxx Europe 600 rose 0.4 percent, Germany's DAX Germany's DAX rose 0.3 percent, France's CAC 40 and Britain's FTSE 100 added 0.4 percent.

Asian stocks did not perform as well, with MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.1 percent and Japan's Nikkei fell 0.26 percent. China's Shanghai Composite narrowly avoiding a seventh consecutive loss, the longest losing streak for four years,  weighing on the region more broadly.

U.S. futures pointed to a slightly higher opening on Wall Street, which would see the S&P 500 moving even higher than Monday's record 2,401 points.

"It's calm sailing today for stock markets after the VIX had its lowest close since 1993," ETX Capital senior markets analyst, Neil Wilson, said. Victory for business-friendly centrist Emmanuel Macron in France and earnings were also supportive for equities, he said. "So far, there is precious little to halt the rotation from bonds to stocks," he said.

The FTSEuroFirst hit its highest for nearly two years, and the index of top 50 euro zone stocks its highest for 18 months. Germany's DAX hugged close to Monday's record high. Shares in Germany's Commerzbank rose more than 2% after the bank posted forecast-beating profits in the first quarter, and mining companies were among the leading gainers. 

The MSCI World index, which touched a record high overnight, dropped about 0.1 percent.

In bond markets the 10-year U.S. Treasury yield rose to 2.394 percent, its highest in a month. The two-year yield held steady at 1.33 percent, meaning the yield curve rose to its steepest for more than two weeks. The yield curve had flattened last week to its lowest since the U.S. presidential election in November as investors fretted over the impact higher interest rates will have on the economy.

In commodities, oil market sentiment swung between optimism over statements from major oil-producing countries that supply cuts could be extended into 2018 and lingering concerns over slowing demand and a rise in U.S. crude output. U.S. crude rose 0.5 percent to $46.66 a barrel, and global benchmark Brent also rose 0.5 percent to $49.57. Copper bounced from the four-month low touched on Monday after data showed a sharp drop on imports into China, the world's biggest consumer. London copper rose 0.5 percent to $5,515 a ton on Tuesday, after falling to as low as $5,462.50 on Monday. Gold recovered from a seven-week trough touched on Monday. Spot gold rose about 0.1 percent to $1,226.60 an ounce.

Earnings continue to be released with Walt Disney Co., Mitsubishi Corp., Toyota Motor Corp. and Deutsche Telekom AG among those notable.

Market Snapshot

• S&P 500 futures up 0.1% to 2,396
• STOXX Europe 600 up 0.3% to 395.37Brent Futures up 0.2% to $49.45/bbl
• MXAP down 0.5% to 149.85
• MXAPJ down 0.09% to 488.04
• Nikkei down 0.3% to 19,843.00
• Topix down 0.3% to 1,581.77
• Hang Seng Index up 1.3% to 24,889.03
• Shanghai Composite up 0.06% to 3,080.53
• Sensex up 0.09% to 29,953.37
• Australia S&P/ASX 200 down 0.5% to 5,839.90
• Kospi up 2.3% to 2,292.76
• Gold spot down 0.05% to $1,225.61
• U.S. Dollar Index up 0.2% to 99.25
• German 10Y yield rose 2.2 bps to 0.44%
• Euro down 0.09% to 1.0914 per US$
• Brent Futures up 0.2% to $49.45/bbl
• Italian 10Y yield rose 7.7 bps to 1.949%
• Spanish 10Y yield rose 2.0 bps to 1.608%

Top Overnight News

• Elliott Takes Akzo to Court to Oust Chairman in PPG Battle; Toshiba Warns Western Digital to Stop Impeding Chip Sale
• Western Digital Aims to Acquire Majority of Toshiba Chips: NHK
• Trump Names Picks for U.S. Energy Agency Crippled Without Quorum
• NRG Board Members Said to Consider Sale of Entire Renewable Unit
• Pandora Creates Independent Committee, Gets $150m KKR Investment
• Facebook Says Fixed Issue That Triggered Outages for Some Users
• SEC Probes Rental Home Values Backing Private-Equity Bond Deals
• CIT Says New York Attorney General Is Probing Reverse Mortgages
• Boeing Planning to Trim Another 580 Jobs From Seattle- Area Hub

Bulletin Headine Summary from RanSquawk

• A modest rise in European equities this morning, as gains are supported by the upside in the commodities sector.
• Another quiet London session, where limited data/event drivers have seen traders focusing on yield and to that end, the US dominate
• Looking ahead, highlights include US JOLTS, APIs, Fed's Kaplan, Kashkari and Rosengren

Major Asian stock indices traded mostly lower following a muted lead from the US where S&P 500 and DJIA closed unchanged, although the Nasdaq 100 posted a fresh record high as Apple surmounted the USD 800bIn market cap level. ASX 200 (-0.6%) underperformed following earnings from CBA. Furthermore, all Big 4 banks traded with firm losses ahead of the upcoming budget announcement which Treasurer Morrison signalled would fund the Productivity Commission enquiry into banks' financial product sales and possible conflicts of interests. Nikkei 225 (-0.3%) was negative on pull-back from yesterday's surge, while Shanghai Comp (+0.1%) and Hang Seng (+0.8%) were tentative after the PBoC refrained from liquidity injections for the 3rd consecutive day. South Korean markets were shut due to Presidential Elections and 10yr JGBs traded flat following weakness in T-notes, while today's 10yr JGB auction also failed to support demand with the b/c slightly lower than prior. Australian Retail Sales (Mar) M/M -0.1% vs. Exp. 0.3% (Prey. -0.1%).

Top Asian News

• China’s Deleveraging Pain Puts Investors on Alert for Contagion
• China Stock Shakeout Creates Most Divided Market in 15 Years
• China’s $9 Trillion Bond Market Lures Neuberger, Fidelity
• India Auto Lobby Group Sees Post-GST Levy to Remain Unchanged
• Jakarta Governor Verdict Dents Confidence on Stocks: Street Wrap
• Real-Estate Agency Reported to Shutter 87 Outlets in Beijing
• South Koreans Vote for a New Leader After Months of Turmoil
• Temasek’s Fullerton Warns of Singapore Oil Bond Defaults
• Japan Stocks Retreat From 17-Month High Amid Earnings Reports
• Rupee Drops Most in a Month; State-Run Banks Buying Dollars: RBL

A modest rise in European equities this morning, as gains are supported by the upside in the commodities sector. The relief rally in oil prices continues with Brent crude futures looking to reclaim USD 50/bbl as investors grow optimistic that an extension to the current oil production cut is on the horizon. In stock specific news, Commerzbank is higher after the German bank beat analyst expectations with a 28% rise in Q1 net profit, as such, financial names are among the best performers. The laggard for the session has been the utilities sector following reports in UK press that if PM May is to be re-elected she will place a cap on unfair energy price rises, subsequently Centrica shares has slipped some 5%, while a soft earnings update from E.ON has also weighed on sentiment. In credit markets, the mild risk on sentiment has sapped demand safe haven flow with EGB yields ticking higher. The German curve has seen some mild bear steepening with the Schatz eying -0.64% (level not seen since mid-Jan) in which a break above this could see the next level of -0.58% tested in the near term. Across the UK curve, slight underperformance in the 10-yr benchmark with yields ticking higher by 0.34bps with the 10-yr looking to test 1.2%.

Top European News

• UBS Chief Weber Sees ECB Announcing a Taper Around September
• EON Profit Misses Estimate in Green Utility Earnings Debut
• Munich Re Misses Estimates as Higher Claims Weigh on Profit
• Renault Chief Ghosn Sees ‘Good News’ in Macron’s France Win
• Micro Focus Falls Most in 5 Years as HPE Software Revenue Drops
• Commerzbank Beats Estimates as Earnings From Trading Surge
• Pandora A/S Shares Reverse Early Gains as Charm Growth Slows
• Centrica Slumps After Conservatives Pledge Energy Price Cap
• Austria Considers F-16, Rafale and Saab to Replace Eurofighters

In currencies, the Bloomberg Dollar Spot Index rose 0.2 percent after jumping 0.5 percent on Monday. The euro traded at $1.0917, down 0.1 percent. The currency fell 0.7 percent Monday following Macron’s victory as France’s next president, after trading at the highest level since November. It has been another quiet London session, where limited data/event drivers have seen traders focusing on yield and to that end, the US dominate. The belly of the curve has seen notable gains to push the 5yr above 190bps, with the 10yr approaching 240bps again. This has prompted a sustained move through the mid 113.00's, and we are looking at test on 114.00 at some stage in the day. Strong resistance seen here. The fade in EUFt/USD also continues as a result, and we are now testing below 1.0900, but we ran into strong demand here last week, and this will prove a tougher test given the improving conditions in the Euro zone which have supported more longer term thinking. This is largely a USD move however, so all eyes on differentials.

In commodities, gold was little changed at $1,225.94 an ounce. The China Gold Association said demand in the biggest consumer could jump to a four-year high. West Texas Intermediate oil added 0.3 percent to $46.57 a barrel, reversing an earlier decline. Copper for delivery in three months rose 0.6 percent on the London Metal Exchange after Monday closing at the lowest level since Dec. 23. Looking across the commodity spectrum, we see the familiar drivers dampening prices across the board. As such, we can pretty much look to yesterday's assessment over the market, but downside momentum has slowed. Oil prices are notably heavy despite the consistent run of comments from OPEC that output cut extensions are being mulled over — with a 9 month deal being discussed if the latest rhetoric is to be believed. The market is sceptical, so WTI struggles ahead of USD47.00 and Brent pre USD50.00. Copper continues to grapple with support in the USD2.45-50 zone, but oversupply will dictate as Chinese demand is in question after the recent run of PM! numbers. Gold has lost modest ground despite the fresh selling in Treasuries, but Silver is now closer to USD16.00 after failing to hold onto the (USD16.) 50 level.

Looking at the day ahead, this morning in Europe we’re kicking off in Germany where the March industrial production print came in at -0.4% (Exp. -0.6%), while the March trade report showed a €19.6BN trade surplus, less than expected and down from €21.2BN the month prior. There are a few data releases in the US also. The early release is the NFIB small business optimism reading for April which declined to 104.5 from 104.7, however beating expectations of 104. Following that we then get the March JOLTS survey and then the March wholesale inventories report. Away from the data it is another busy day of Fedspeak with Kashkari, George, Rosengren and Kaplan all scheduled. Earnings today are headlined by Walt-Disney.

US Event Calendar

• 6am: NFIB Small Business Optimism, est. 104, prior 104.7
• 10am: JOLTS Job Openings, est. 5,725, prior 5,743
• 10am: Wholesale Inventories MoM, est. -0.1%, prior -0.1%; Wholesale Trade Sales MoM, prior 0.6%

Central Bank Speakers

• May 8-May 9: Fed’s Bullard Speaks on Panel on Interest Rate Policy
• 9am: Fed’s Kashkari to Speak to Minnesota High Tech Conference
• 11:40am: Fed’s George Speaks in Santa Barbara
• 1pm: Fed’s Rosengren Speaks at NYU Conference on Risk Management
• 4:15pm: Fed’s Kaplan Speaks at Summit in Dallas

DB's Jim Reid concludes the overnight wrap

At the moment we have more ducklings than digits on the VIX with the most noteworthy feature of the last 24 hours being its further collapse, closing down -7.57% last night to 9.77, the lowest close since December 1993. It last closed below 10 in November 2006 and of the 6889 trading days since data was first recorded in 1990, last night's close was the 4th lowest one. The years that there has been a below 10 close are 2007 (1 day), 2006 (3 days), 1994 (1 day) and 1993 (4 days). On a similar note the S&P 500’s 30-day implied volatility tumbled below 7.5% to close at 7.22% last night, the lowest ever.

It was a similar story for volatility in Europe too yesterday. With the event risk of Sunday’s French election passing with no surprises, the VSTOXX tumbled 15% yesterday to close at 14.39. That’s near the bottom of the YTD range with the low mark set back on March 17th at 11.16 (the average in 2017 so far has been 19.98). FX Vol meanwhile, as measured by the CVIX Index, hit the lowest since October 2014.

No prizes for guessing that it wasn’t a hugely exciting day in equity markets yesterday then. In France the CAC spent all of about 4 minutes in positive territory before a wave of profit taking saw the index stoop to a -0.91% loss by the end of play. In fairness that was a reasonable underperformance relative to other European markets with the Stoxx 600 down a much more modest -0.13%. It was much the same in the US session where the S&P 500 spent most of the day in the red before paring losses to close unchanged by the closing bell. That means that the S&P 500 has closed with a daily move of less than 0.20% (up or down) in 8 of the last 9 trading days, with last Friday being the only exception.

Price action was only a little bit more exciting in sovereign bond markets yesterday. Bunds and OATs traded in tight ranges for much of the session before ending little changed in yield terms. Peripherals were weaker however with Spain and Portugal yields up nearly 3bps and Italy up just shy of 7bps. That underperformance appeared to be largely a result of supply pressure with the expectation of new BTP deals coming, although perhaps also a reflection that with France now out of the way the risk story could now turn over to Italy’s election, albeit one that is still some way off for now. Elsewhere, the Euro pared a very early gain in the Asia session to close down -0.67% versus the Greenback for its weakest day since March 30th. In Treasuries 10y yields edged up 3.8bps to close at 2.387% and the highest also since the end of March. Comments from the Cleveland Fed’s Mester may have contributed to that. The Fed official said that the Fed needed to be vigilant against “falling behind the curve”, while Mester also said with regards to the balance sheet that “we could probably end re-investments and not see a big impact, as long we articulate it well”.

Staying with the Fed, yesterday we got the release of the Fed’s Senior Loan Officer Survey. It showed that banks left their standards on commercial and industrial loans (C&I) essentially unchanged, whilst demand for C&I was also little changed. Interestingly though loan officers reported tightening their lending standards for commercial real estate loans (CRE), as well as reduced demand. Banks reported concerns about vacancy rates, property prices and capitalization rates.

Changing tune and refreshing our screens this morning, it’s been a similarly subdued session in Asia this morning. The Nikkei (-0.08%), Shanghai Comp (-0.03%) and ASX (-0.39%) are all modestly in the red, while the Hang Seng (+0.33%) is a touch firmer. Markets in South Korea are closed with residents going to the polls to elect the country’s next president. Commodity markets have remained relatively stable overnight with Oil holding in around the $46.50/bbl level.

Moving on. Yesterday we saw the latest ECB CSPP/PSPP numbers and it's increasingly looking like they are tapering corporate purchases in line with Government bonds. It terms of CSPP, the average daily  purchases last week was €288mn well below the €364mn average since the program started. The CSPP/ PSPP ratio was 10.7% last week which is actually lower than the 11.64% average since July last year - the first full month of CSPP. It's been at 12.23% over the 5 weeks of tapering so far. By my crude calculations if they'd decided not to taper CSPP at all the ratio between the two programs would be around 17%. So the proof of a relatively equal taper gets stronger each week. See Michal Jezek's piece last week's on the relative dynamics between the two programs albeit before yesterday's numbers. https://goo.gl/4FQdLj

In terms of the other data in Europe yesterday, the most notable was the decent rise in the Sentix investor confidence reading for the Euro area by 3.5pts to 27.4, which is the highest reading since July 2007. Away from that factory orders in Germany rose a bit more than expected in March (+1.0% mom vs. +0.7% expected), driven largely by big ticket items. In the US the sole release was the Fed’s labour market conditions index which was reported as rising 3.5pts in April following an upwardly revised 3.6pt gain in March.

Looking at the day ahead, this morning in Europe we’re kicking off in Germany where the March industrial production print is due out along with the March trade report. Also out in Europe this morning is the Bank of France business sentiment reading for April. There are a few data releases in the US this afternoon also. The early release is the NFIB small business optimism reading for April which is expected to show a small decline to 104.0. Following that we then get the March JOLTS survey and then the March wholesale inventories report. Away from the data it is another busy day of Fedspeak with Kashkari (2pm BST), George (4.40pm BST), Rosengren (6pm BST) and Kaplan (9.15pm BST) all scheduled. Earnings today are headlined by Walt-Disney.

Two days after the biggest rout in US stocks in 8 months, and one day after Brazil's stock market was halted due to a circuit breaker, wiping out out 8.8% of its market cap, traders are eager to put it all in the rearview mirror and in a quiet session on the last day of the week - there have been no "anonymously sourced Russian blockbusters" overnight by either the NYT or WaPo - S&P futures are set for a green open, up 0.2%, in line with Asian and European markets, all looking to close the week on a positive note.

And what a week it has been: the most eventful week of 2017 for markets started with stocks at record high but then saw one of the sharpest cross-asset routs in years. Yet despite early bullish sentiment, jitters have persisted, leaving safe-haven gold headed higher again for its best week since April and the dollar back on the slide after falling to its lowest level since Trump's U.S election victory in November.

"The frustrating element is that we are now at the mercy of equity markets," said Nick Parsons, global head of FX strategy at National Australia Bank's. "We can be pretty confident that 10 points on or off of the S&P 500 is a big figure on or off of dollar/yen," he added, saying the only thing likely to break the link would be a confident-sounding Federal Reserve at its next meeting.

One catalyst for today's return of optimism is crude oil, with Brent rising above $53, and WTI back over $50 for the first time since late April, headed for a second weekly gain on growing optimism grows that OPEC and other nations will extend output cuts at exporter group’s meeting in Vienna next week, news which has been priced in several dozen times in the price anyway, but that never stopped it from being price in again.  “Russia and OPEC are talking about extending cuts to the end of March and it’s widely expected there’ll be an extension,” ING commodity strategist Warren Patterson says: “If there are longer or deeper cuts then there could be further upside”

The gradual return of risk appetite on Friday also saw investors switch from highly rated U.S. Treasuries and European government bonds into higher-yielding Italian and Portuguese debt. Like the dollar, the U.S. yield curve has slumped back to levels not seen since Trump's election, and the probability given by markets of the Fed raising rates next month has tumbled to below 60 percent from over 90 percent last week.

"Everything has turned upside down - European political risks have faded, the economy is looking strong, while in the U.S. everybody is worried," said DZ Bank strategist Daniel Lenz, quoted by Reuters.

Asian stocks rose, with the MSCI Asia Pacific Index up less than 0.1%, with more stocks advancing than declining. Japan’s Topix index climbed 0.3 percent, after sliding 1.3 percent on Thursday. The gauge lost 1.3 percent for the week. The Hang Seng Index rose 0.2% and the Shanghai Composite was little changed.

European stocks pared their worst week since November, rising in quiet trading. The Stoxx Europe 600 Index rose 0.6 percent as of 10:56 a.m. in London, paring its weekly loss to 1.1 percent.

S&P 500 futures were up 0.3 percent. The benchmark index rose 0.4 percent on Thursday after plunging 1.8 percent in the previous session, its worst day since Sept. 9.  Brazil’s Ibovespa Index tumbled 8.8 percent on Thursday, the most since October 2008, as political crisis returned to the country after last year’s impeachment process. A Japan-traded ETF tracking Brazil’s Ibovespa Index dropped 6.5 percent after an even larger decline on Thursday, closing at the lowest level of the year.

As has been the case for much of the week, the lack of any dramatic Trump-linked news resulted in the global mini relief rally. As Bloomberg confirms, market volatility eased after Trump’s administration sought to move past controversies surrounding Russia that have threatened to ensnare its plans for tax cuts and infrastructure spending.  “Following the initial excitement about the chaotic situation in the White House market participants seem to have calmed down again,” analysts at Commerzbank AG including Thu Lan Nguyen said in a note to clients.

But while Trump may have briefly faded from the spotlight, especially with his first international trip on Friday afternoon, the sudden and unexpected Brazilian political crisis has added a fresh layer of worries for investors, for whom it served as a vivid example of how quickly the best performing emerging market can become the worst.

President Michel Temer has defied calls for him to step down, saying a Supreme Court probe will debunk allegations he participated in a cover-up. Meanwhile, geopolitics remained in the spotlight, amid reports that the U.S. Navy is moving a second aircraft carrier to the Korean peninsula and that Chinese jets intercepted a U.S. Air Force plane.

Elsewhere, Jakarta stocks soared as much as 3 percent to a record after S&P upgraded Indonesia to investment grade, revising its credit rating from BB+ to BBB-, stable outlook, due to better fiscal metrics.

In rates, the yield on 10-year Treasuries climbed two basis points to 2.25 percent. It is down eight basis points this week. Benchmark yields in Germany rose two basis points, while those in the U.K. added four basis points.

West Texas crude rose 1.1 percent to $49.87, poised for a weekly increase of 4.2 percent, on optimism OPEC will reaffirm efforts to drain a global glut at their meeting in Vienna on May 25. Copper rose 0.7 percent to $5,616 a ton, leading most industrial metals higher as sentiment steadied after strong U.S. jobs data. Soybeans were stable after the biggest one-day drop since August as farmers in Brazil rushed to sell at a “once in a decade” pace as a deepening political crisis sent the nation’s currency tumbling. The commodity was 0.5 percent higher at $9.495 a bushel.

Gold was set for the biggest weekly gain in more than a month as
investors weigh political risks in U.S. Bullion for immediate delivery
climbed 0.4 percent to $1,252.37 an ounce, on track for a 2 percent
advance this week.

It’s worth noting that President Trump will travel to Saudi Arabia, arriving tomorrow and following that will visit Israel and the Vatican on Monday and Wednesday, before moving on to the NATO Summit and G7 Summit later in the week. This is the start of an eight-day foreign trip which is also his first outside the US as the President so it’s likely that his every word and move is closely watched.

* * *

Bulletin Headline Summary from RanSquawk

• A modest risk appetite in Europe thus far in what has been a quiet session as markets digest the fallout from yesterday's Comey news
• After a steady start, FX markets have livened up a little, with an improved risk mood seeing the JPY on the back foot across the board
• Looking ahead, highlights include Canadian retail sales, ECB's Praet, Coeure, Constancio and Fed's Bullard

Global Market Snapshot

• S&P 500 futures up 0.2% to 2,369
• STOXX Europe 600 up 0.4% to 390.88
• MXAP up 0.09% to 150.73
• MXAPJ up 0.2% to 491.45
• Nikkei up 0.2% to 19,590.76
• Topix up 0.3% to 1,559.73
• Hang Seng Index up 0.2% to 25,174.87
• Shanghai Composite up 0.02% to 3,090.63
• Sensex up 0.08% to 30,458.19
• Australia S&P/ASX 200 down 0.2% to 5,727.41
• Kospi up 0.07% to 2,288.48
• German 10Y yield rose 1.5 bps to 0.358%
• Euro up 0.4% to 1.1147 per US$
• Brent Futures up 1.2% to $53.15/bbl
• Italian 10Y yield fell 0.6 bps to 1.855%
• Spanish 10Y yield fell 0.7 bps to 1.56%
• Brent Futures up 1.2% to $53.15/bbl
• Gold spot up 0.2% to $1,249.22
• U.S. Dollar Index down 0.3% to 97.55

Top Overnight News from Bloomberg

• Trump On Tour: Trump Travels Abroad With Unwanted Baggage of Troubles at Home
• Cooperman Agrees to Lighter SEC Deal; Investors Digest Brazilian Audio Tapes
• Broadcom Ltd. and a group led by KKR & Co. are emerging as the two leading bidders for Toshiba Corp.’s semiconductor unit as of Friday’s deadline for second-round offers
• Brazilian markets sink as President Michael Temer vows to stand his ground amid calls for his ouster
• Billionaire hedge fund manager Leon Cooperman paid $4.9m to put an end to the SEC’s insider-trading allegations
• Treasury Secretary Steven Mnuchin said breaking up the biggest banks would be a “huge mistake,” easing concerns that the Trump administration plans a major revamp of Wall Street
• S&P Global Ratings raised Indonesia’s credit rating to investment grade, bringing it in line with the other two main rating companies and paving the way for more fund inflows into Southeast Asia’s largest economy
• Uber Threatens to Fire Engineer at Center of Waymo Lawsuit
• Americans Die When They Have to Work at Being Healthy
• Ireland Says Intensively Working to Recover Apple Money
• Saudis Said to Forge $6b Lockheed Deal for Littoral Shipss
• Gap’s Old Navy Chain Helping Fuel Rebound After Long Slump
• Salesforce Sees Increasing Demand on Expanded Cloud Lineup
• Iron Risks Plunge to $40s as Marex Sounds Second-Half Alarm
• Total U.S. Video Game Sales Rose 10% Y/y in April to $636m: NPD
• Freeport Union Plans to Extend Grasberg Strike Beyond May 30
• Shanghai Disneyland Meets 10m Visitors Expectation Since Opening
• NRG Panel Said to Recommend Southeast Asset Sale: SparkSpread
• Blackstone Said Likely to Buy Assets of India’s UIOF: TOI
• MGM Resorts Decides Against Investing in Philippines: BWorld
• Johnson & Johnson Unit Plans $500m Drug R&D in China: Daily
• Vistra Said to Have Made Takeover Approach to Dynegy: WSJ

Asia equity markets were mixed after the region somewhat shrugged off the positive lead from Wall St where stocks rebounded from their biggest loss in 8 months, as a lack of drivers kept price action relatively muted ahead of the weekend. ASX 200 (-0.2%) failed to maintain opening gains with underperformance in financials and miners weighing on the index, while Nikkei 225 (+0.3%) was choppy alongside JPY price action. Indian markets were the biggest gainers after officials kept the majority of items under the Goods and Services Tax scheme below the 18% tax rate, while Shanghai Comp. (flat) and Hang Seng (+0.3%) were indecisive after the PBoC refrained from operations today, although its efforts for the week still amounted to a net liquidity injection of CNY 160Bn vs. Prey. CNY 120Bn drain. 10yr JGBs were choppy as an indecisive risk tone was counterbalanced by a reserved Rinban announcement by the BoJ, while the curve slightly flattened amid outperformance in the super-long end.

Top Asian News

• From Hair Oil to Cement, India Revamps Taxes: Winners and Losers
• After Shutting Asia Hedge Fund, Ex-Goldman Trader Seeks Answers
• S&P Raises Indonesia One Notch to Investment Grade
• Rupiah Advances as S&P Raises Indonesia to Investment Grade
• HKMA Chief Executive Norman Chan to Meet Press at 5:15pm HKT
• Buyer’s Regret Spurs Japan Utility to Mull Swapping U.S. LNG
• Largest Indian Bank’s Profit Surges as Loan Provisions Fall

European bourses gaining this morning, however the move to the upside is somewhat contained with the Eurostoxx 50 up a marginal 0.2% as material names lead the way in Europe. In stock specific news, Hikma Pharmaceuticals underperform in the FTSE 100, after they announced that they have cut their FY revenue guidance. Elsewhere, crude futures took another leg higher following source reports that the OPEC panel are considering a scenario in which deepening the current output cut may take place, as opposed to just an extension to the current agreement. In credit markets, yields have been ticking up this morning following the modest risk on sentiment, in turn the German curve has shown a flattening bias. While peripheral debt is slightly tighter to the German benchmark with markets seemingly choosing to look through this weekend's primary vote for the Spanish socialist party.

Top European News

• STOXX Europe 600 up 0.4% to 390.88
• German 10Y yield rose 1.5 bps to 0.358%
• Euro up 0.4% to 1.1147 per US$
• Brent Futures up 1.2% to $53.15/bbl
• Italian 10Y yield fell 0.6 bps to 1.855%
• Spanish 10Y yield fell 0.7 bps to 1.56%

In currencies, the Bloomberg Dollar Spot Index fell 0.3 percent, erasing Thursday’s increase. The gauge is 1.3 percent lower for the week. The euro strengthened 0.6 percent to $1.1164, bringing its gain this week to 2.1 percent, the most since the five days ending June 3. The British pound stood 0.6 percent higher at $1.3011. The yen was little changed at 111.45 per dollar after falling 0.6 percent on Thursday. The currency is up 1.8 percent for the week, its strongest performance in a month. Emerging-market currencies rebounded. The South African rand climbed 1 percent after tumbling 2.6 percent over the previous two sessions. Russia’s ruble strengthened 1 percent as oil prices rose. After a steady start, FX markets have livened up a little, with an improved risk mood seeing the JPY on the back foot across the board. Late yesterday social media reported evidence of Comey stating that there was no interference in the investigations in question. This saw the USD snap higher across the board, but has been reversed in all the major pairings other than USD/JPY. Sideways trade here continues to find resistance ahead of 112.00. EURUSD is back on the trail for higher levels, as a longer term perspective here sees the market keen to get in on dips. Gains have been outpaced to a very modest degree by Cable, which has now shrugged off the sharp hit suffered in NY, and is now trading above levels when targeted at the time, moving cautiously through the low 1.3000's. EUR/GBP is marginally off better levels, but continues to struggle ahead of 0.8600.

In commodities, West Texas crude rose 1.1 percent to $49.87, poised for a weekly increase of 4.2 percent, on optimism OPEC will reaffirm efforts to drain a global glut at their meeting in Vienna on May 25. Gold was set for the biggest weekly gain in more than a month as investors weigh political risks in U.S. Bullion for immediate delivery climbed 0.4 percent to $1,252.37 an ounce, on track for a 2 percent advance this week. Copper rose 0.7 percent to $5,616 a ton, leading most industrial metals higher as sentiment steadied after strong U.S. jobs data. Commodity markets have recovered with an easing in the risk mood all round, partly down to some Trump friendly news — not often we hear that lately! Oil prices higher as we look to the OPEC meeting next week, but with the OPEC panel meeting with non-members today, the prospect of further 'extension deal' news has seen WTI putting in initial tests on USD50.00, but somewhat unconvincingly as yet. Brent is through USD53.00. Elsewhere, metals are higher across the board, with Copper gains back to USD2.55, outpaced by those seen in Zinc and Lead. As a result, Gold has trickled lower, in line with Silver, but we are still very much inside well worn territory, with little likelihood of retesting the stronger support levels seen towards USD1220.00 or so.

Looking at today’s calendar, with a distinct lack of macro data due out it’s likely that politics continue to remain the number one focus for markets again. The only releases due out are in Europe with PPI in  Germany, which came in stronger than expected at 3.4% Y/Y, vs Exp. 3.2%, and up from 3.1%. There is some ECB-speak with both Praet and Constancio scheduled at a conference in Brussels today. Over at the Fed we’re due to hear from Bullard and Williams. As a reminder President Trump will visit Saudi Arabia over the weekend, so  it’ll be worth keeping an eye on anything interesting to come from that.

US Event Calendar

• Nothing major scheduled
• 9:15am: Fed’s Bullard to Speak about U.S. Economy and Monetary Policy
• 1:40pm: Fed’s Williams Speaks to High School in San Francisco

DB's Jim Reid concludes the overnight wrap

This week political risk has caught up on the market but it's still unclear whether it has any legs. Since the back end of last year we've felt that 2017 would be a reasonable year for risk given the baseline view on growth but we did expect volatility spikes and occasional sell-offs. However despite a large spike in VStoxx before the French Election we've been surprised how little it's filtered through into risk assets on even a temporary measure. A big part of this view was that political risk remained very elevated around the world. While we continue to think Trump will still be able to push through a decent sized fiscal package we always felt there would be enough doubt about his administrations' ability to pass through reforms to do so to encourage volatility.

Whether this latest Trump bout of volatility lasts depends on what Mr Comey really has on the President but there wasn't much new news to report on the story yesterday which helped US equities to recover. The S&P 500 closed +0.37% with the vast majority of sectors climbing while the Dow (+0.27%), Nasdaq (+0.73%) and Russell 2000 (+0.38%) bourses were also firmer. It’s worth noting that for all the shockwaves going through markets this week the S&P 500 is only 1.67% off the all time intraday highs made on Tuesday and only down -1.05% this week. The VIX also edged down 6% yesterday to close at 14.66. Putting it in perspective that level is less than 3pts above the YTD average which as we know is one of the lowest of all time. Credit also pared back about 30% of Wednesday’s move wider yesterday with CDX IG finishing just over 1bp tighter. There was a similar reversal for safe havens with Gold (-1.13%) and the Yen (-0.60%) weaker, and 10y Treasury yields closing about 5bps off the day’s low yield at 2.229%.

Yesterday there was a general feeling that the appointment of Mueller as the special counsel into the Russia-US Election investigation was a low vol-friendly outcome in the short term as it’s expected that it will take some time for the investigation to get underway with some suggestions that it won’t start until July. Mr Trump welcomed the appointment but also called the investigation a “witch hunt” and when Trump was also pressed at a news conference as to whether or not he had put pressure on Comey he replied – unsurprisingly – “no, no next question”. In terms of the next steps, as we know the Senate and House Oversight Committee has requested for Comey to testify in both open and closed-door hearings but as of yet we are still to hear of this being confirmed. In fact the NY Times quoted the House Oversight Committee chairman Jason Chaffetz as saying that “since he’s (Comey) left government, the old telephone number that I had for him, I haven’t been able to get through”. The same article said that Chaffetz hoped Comey would appear before the House Oversight Committee next Wednesday.

In the mean time, it’s worth noting that President Trump will travel to Saudi Arabia, arriving tomorrow and following that will visit Israel and the Vatican on Monday and Wednesday, before moving on to the NATO Summit and G7 Summit later in the week. This is the start of an eight-day foreign trip which is also his first outside the US as the President so it’s likely that his every word and move is closely watched.

Staying in the US, yesterday we also heard from US Treasury Secretary Steven Mnuchin when he spoke to the Senate Banking Committee. He said that no decision has been made on any potential ultra-long bond issuance and also downplayed the idea of a national sales tax. Mnuchin also said that breaking up the biggest US banks would be a “huge mistake” and that doing so “would have a very significant” impact on markets.

There was another big story in markets yesterday and it was also of a political nature, this time in Brazil. It centred around what we reported in yesterday’s EMR concerning the alleged approval of hush money payments by President Temer to silence a former coalition ally. Temer has said, adamantly, that he will not resign in the wake of this allegation and is demanding a full investigation. The subsequent moves in Brazilian assets were eye catching though. The Ibovespa closed -8.80% (although was down as much as -10% at one stage triggering a circuit breaker) which was the biggest fall since 2008. The Brazilian Real is also about -7.75% weaker since the news broke (and saw its biggest slide since 1999) versus the Greenback. Bonds were hammered too with 10y hard currency bond yields 55bps higher. Vol surged with the CBOE Brazil ETF Volatility Index up 38% and by the most since the series started in 2011. Refreshing our screens this morning it’s been a fairly mixed start in Asia but moves have been notably modest for the most part with no real new developments to highlight. The Nikkei (-0.16%) and ASX (-0.29%) are both down, while the Hang Seng (+0.24%), Kospi (+0.085) and Shanghai Comp (+0.04%) are a touch higher.  US equity futures are flat along with Treasuries and Gold.

Moving on. Away from the obvious political developments yesterday, the other point of interest for markets was some of the musings out of the ECB. In yesterday’s minutes from the April meeting policy makers said that new staff projections and data will mean the ECB is “in a better position to take stock and reassess the sustainability of the recovery and outlook for inflation” at the next policy meeting. The minutes also revealed that “some members” considered risks to growth could be now characterized as “broadly balanced” while “other members maintained that downside risks to growth still prevailed”. Officials also felt that communication “should be adjusted in a very gradual and cautious manner as, at the current juncture, monetary and financial conditions were particularly sensitive to changes”.

This guidance on communication is consistent with comments that we have heard from Praet and Constancio recently but it was interesting to see Benoit Coeure say yesterday in an interview with Reuters that the ECB runs the risk of changing policy signals too slowly, specifically saying that the risk is that “communication deviates from economic reality, which could cause a more forceful adjustment down the road”.

In terms of data yesterday, in the UK we learned that retail sales excluding fuel jumped a better than expected +2.0% mom in April (vs. +1.0% expected) to push the annual rate up to +4.5% yoy. Sterling traded as high as $1.305 following that data (+0.60%) before an unexplained crash saw it plummet a full cent to $1.290 at one stage in a matter of minutes. The suggestion was that it was algo driven. In France we saw the unemployment rate dip to 9.6% in Q1 (from 10.0%). In the afternoon in the US the main release of note was the Philly Fed manufacturing survey which surged 16.8pts at the headline to 38.8 in May (slightly below the February high). The details did however reveal some weakening in both the new orders and employment components though. Meanwhile the conference board’s leading index rose +0.3% mom in April and initial jobless claim edged down another 4k to 232k. Away from that the Fed’s Mester also spoke but didn’t really move the dial, playing down the impact of recent volatility on her economic outlook and the read through for the Fed.

Glancing at today’s calendar, with a distinct lack of macro data due out it’s likely that politics continue to remain the number one focus for markets again. The only releases due out are in Europe with PPI in  Germany, the UK’s industrial trends survey for May and the flash consumer confidence reading for the Euro area, also for May. There is some ECB-speak with both Praet and Constancio scheduled at a conference in Brussels today. Over at the Fed we’re due to hear from Bullard (at 2.15pm BST) and Williams (at 6.40pm BST). Before we wrap up, a reminder that President Trump will visit Saudi Arabia over the weekend, so  it’ll be worth keeping an eye on anything interesting to come from that. Also noteworthy is an internal leadership election for Spain’s socialist party where the chatter is that a win for former leader Pedro  Sanchez could lead the socialists into greater open conflict with PM Rajoy’s government.

Every year, the world's richest and most powerful business executives, bankers, media heads and politicians sit down in some luxurious and heavily guarded venue, and discuss how to shape the world in a way that maximizes profits for all involved, while perpetuating a status quo that has been highly beneficial for a select few, even if it means the ongoing destruction of the middle class. We are talking, of course, about the annual, and always secretive, Bilderberg meeting.

And just like last year's meeting in Dresden, the primary topic on the agenda of this year's 65th Bilderberg Meeting which starts today and ends on Sunday, is one: Donald Trump.

Ironically, this year "the storm around Donald Trump" as the SCMP puts it, is not half way around the world, but just a few miles west of the White House, in a conference centre in Chantilly, Virginia, where the embattled president will be getting his end-of-term grades from the people whose opinion actually matters: some 130 participating "Bilderbergs".

The secretive three-day summit of the political and economic elite kicks off Thursday in heavily guarded seclusion at the Westfields Marriot, a luxury hotel a short distance from the Oval Office.

As of Wednesday, the hotel was already on lockdown and an army of landscapers have been busy planting fir trees around the perimeter, to try protect "coy billionaires and bashful bank bosses" from prying lenses and/or projectiles.  Perched ominously at the top of the conference agenda this year are these words: “The Trump Administration: A progress report”.

So is the president going to be put in detention for tweeting in class? Held back a year? Or told to empty his locker and leave? If ever there’s a place where a president could hear the words “you’re fired!”, it’s Bilderberg.

Sarcasm aside, the White House was taking no chances, sending along some big hitters from Team Trump to defend their boss: national security adviser, HR McMaster; the commerce secretary, Wilbur Ross; and Trump’s new strategist, Chris Liddell (curiously, neither Gary Cohn nor Steven Mnuchin will be there although the controversial new Chairman of Goldman Sachs International, Jose Barroso will be present). Could Trump himself show up to receive his report card in person: we are confident he will tweet all about it... which is probably why he will never be invited.

Stil, none other than Henry Kissinger, the gravel-throated kingpin of Bilderberg, visited the White House a few weeks ago to discuss “Russia and other things”, and certainly, the Bilderberg conference would be the perfect opportunity for the most powerful man in the world to discuss important global issues with Trump.

Sarcasm aside, what are among the "Trump agenda" items to be discussed?  The publicly list is as follows:

• The Trump Administration: A progress report
• Trans-Atlantic relations: options and scenarios
• The Trans-Atlantic defence alliance: bullets, bytes and bucks
• The direction of the EU
• Can globalisation be slowed down?
• Jobs, income and unrealised expectations
• The war on information
• Why is populism growing?
• Russia in the international order
• The Near East
• Nuclear proliferation
• China
• Current events

The US president’s extraordinary chiding of NATO leaders in Brussels is sure to be first and foremost on the Bilderberg discussing panel. The Bilderbergers have summoned the head of Nato, Jens Stoltenberg, to give feedback. Stoltenberg will be leading the snappily titled session on “The Transatlantic defence alliance: bullets, bytes and bucks”. He’ll be joined by the Dutch minister of defence and a clutch of senior European politicians and party leaders, all hoping to reset the traumatised transatlantic relationship after Trump’s galumphing visit.

As the Guardian puts it, the guest list for this year’s conference is a veritable “covfefe” of big-hitters from geopolitics, from the head of the IMF, Christine Lagarde, to the king of Holland, but perhaps the most significant name on the list is Cui Tiankai, China’s ambassador to the US.

According to the meeting’s agenda, “China” will also be discussed at a summit attended by Cui, the US commerce secretary, the US national security adviser, two US senators, the governor of Virginia, two former CIA chiefs and any number of giant US investors in China, including the heads of the financial services firms the Carlyle Group and KKR. And for good reason: as last night's PMI numbers showed, the Chinese economy - the global growth dynamo - is finally contracting. If China goes, the rest of the world will follow. 

Additionally, the boss of Google Eric Schmidt, who warned in January that Trump’s administration will do “evil things”, is expected to attend, too. The executive chairman of Alphabet, Google’s holding company, has just come back from a trip to Beijing, where he was overseeing Google AI’s latest game of Go against humans. He declared it “a pleasure to be back in China, a country that I admire a great deal”. It’s possible three days spent chatting to the Chinese ambassador could even be good for business.

Several journalists are participating in this year’s forum, including London Evening Standard editor George Osborne and Cansu Camlibel, the Washington bureau chief for Turkey’s Hurriyet newspaper. But per convention, news outlets are not invited to cover the event.

“There is no desired outcome, no minutes are taken and no report is written,” the group stated. “Furthermore, no resolutions are proposed, no votes are taken, and no policy statements are issued.”

Ex-deputy secretary of state William Burns and former deputy assistant secretary of defence Elaine Bunn, both Obama-era officials, will also attend. Burns, the current president of the Carnegie Endowment for International Peace, has warned that Trump “risks hollowing out the ideas, initiative and institutions on which US leadership and international order rest.”

With one of the agenda items titled simply enough "can globalisation be slowed down?" it is no surprise that anti-globalisation protesters have already descended on the location of the meeting.

* * *

Below is a full list of this year's participants:

CHAIRMAN

• Castries, Henri de (FRA), Former Chairman and CEO, AXA; President of Institut Montaigne

 
PARTICIPANTS

• Achleitner, Paul M. (DEU), Chairman of the Supervisory Board, Deutsche Bank AG
• Adonis, Andrew (GBR), Chair, National Infrastructure Commission
• Agius, Marcus (GBR), Chairman, PA Consulting Group
• Akyol, Mustafa (TUR), Senior Visiting Fellow, Freedom Project at Wellesley College
• Alstadheim, Kjetil B. (NOR), Political Editor, Dagens Næringsliv
• Altman, Roger C. (USA), Founder and Senior Chairman, Evercore
• Arnaut, José Luis (PRT), Managing Partner, CMS Rui Pena & Arnaut
• Barroso, José M. Durão (PRT), Chairman, Goldman Sachs International
• Bäte, Oliver (DEU), CEO, Allianz SE
• Baumann, Werner (DEU), Chairman, Bayer AG
• Baverez, Nicolas (FRA), Partner, Gibson, Dunn & Crutcher
• Benko, René (AUT), Founder and Chairman of the Advisory Board, SIGNA Holding GmbH
• Berner, Anne-Catherine (FIN), Minister of Transport and Communications
• Botín, Ana P. (ESP), Executive Chairman, Banco Santander
• Brandtzæg, Svein Richard (NOR), President and CEO, Norsk Hydro ASA
• Brennan, John O. (USA), Senior Advisor, Kissinger Associates Inc.
• Bsirske, Frank (DEU), Chairman, United Services Union
• Buberl, Thomas (FRA), CEO, AXA
• Bunn, M. Elaine (USA), Former Deputy Assistant Secretary of Defense
• Burns, William J. (USA), President, Carnegie Endowment for International Peace
• Çakiroglu, Levent (TUR), CEO, Koç Holding A.S.
• Çamlibel, Cansu (TUR), Washington DC Bureau Chief, Hürriyet Newspaper
• Cebrián, Juan Luis (ESP), Executive Chairman, PRISA and El País
• Clemet, Kristin (NOR), CEO, Civita
• Cohen, David S. (USA), Former Deputy Director, CIA
• Collison, Patrick (USA), CEO, Stripe
• Cotton, Tom (USA), Senator
• Cui, Tiankai (CHN), Ambassador to the United States
• Döpfner, Mathias (DEU), CEO, Axel Springer SE
• Elkann, John (ITA), Chairman, Fiat Chrysler Automobiles
• Enders, Thomas (DEU), CEO, Airbus SE
• Federspiel, Ulrik (DNK), Group Executive, Haldor Topsøe Holding A/S
• Ferguson, Jr., Roger W. (USA), President and CEO, TIAA
• Ferguson, Niall (USA), Senior Fellow, Hoover Institution, Stanford University
• Gianotti, Fabiola (ITA), Director General, CERN
• Gozi, Sandro (ITA), State Secretary for European Affairs
• Graham, Lindsey (USA), Senator
• Greenberg, Evan G. (USA), Chairman and CEO, Chubb Group
• Griffin, Kenneth (USA), Founder and CEO, Citadel Investment Group, LLC
• Gruber, Lilli (ITA), Editor-in-Chief and Anchor "Otto e mezzo", La7 TV
• Guindos, Luis de (ESP), Minister of Economy, Industry and Competiveness
• Haines, Avril D. (USA), Former Deputy National Security Advisor
• Halberstadt, Victor (NLD), Professor of Economics, Leiden University
• Hamers, Ralph (NLD), Chairman, ING Group
• Hedegaard, Connie (DNK), Chair, KR Foundation
• Hennis-Plasschaert, Jeanine (NLD), Minister of Defence, The Netherlands
• Hobson, Mellody (USA), President, Ariel Investments LLC
• Hoffman, Reid (USA), Co-Founder, LinkedIn and Partner, Greylock
• Houghton, Nicholas (GBR), Former Chief of Defence
• Ischinger, Wolfgang (INT), Chairman, Munich Security Conference
• Jacobs, Kenneth M. (USA), Chairman and CEO, Lazard
• Johnson, James A. (USA), Chairman, Johnson Capital Partners
• Jordan, Jr., Vernon E. (USA), Senior Managing Director, Lazard Frères & Co. LLC
• Karp, Alex (USA), CEO, Palantir Technologies
• Kengeter, Carsten (DEU), CEO, Deutsche Börse AG
• Kissinger, Henry A. (USA), Chairman, Kissinger Associates Inc.
• Klatten, Susanne (DEU), Managing Director, SKion GmbH
• Kleinfeld, Klaus (USA), Former Chairman and CEO, Arconic
• Knot, Klaas H.W. (NLD), President, De Nederlandsche Bank
• Koç, Ömer M. (TUR), Chairman, Koç Holding A.S.
• Kotkin, Stephen (USA), Professor in History and International Affairs, Princeton University
• Kravis, Henry R. (USA), Co-Chairman and Co-CEO, KKR
• Kravis, Marie-Josée (USA), Senior Fellow, Hudson Institute
• Kudelski, André (CHE), Chairman and CEO, Kudelski Group
• Lagarde, Christine (INT), Managing Director, International Monetary Fund
• Lenglet, François (FRA), Chief Economics Commentator, France 2
• Leysen, Thomas (BEL), Chairman, KBC Group
• Liddell, Christopher (USA), Assistant to the President and Director of Strategic Initiatives
• Lööf, Annie (SWE), Party Leader, Centre Party
• Mathews, Jessica T. (USA), Distinguished Fellow, Carnegie Endowment for International Peace
• McAuliffe, Terence (USA), Governor of Virginia
• McKay, David I. (CAN), President and CEO, Royal Bank of Canada
• McMaster, H.R. (USA), National Security Advisor
• Micklethwait, John (INT), Editor-in-Chief, Bloomberg LP
• Minton Beddoes, Zanny (INT), Editor-in-Chief, The Economist
• Molinari, Maurizio (ITA), Editor-in-Chief, La Stampa
• Monaco, Lisa (USA), Former Homeland Security Officer
• Morneau, Bill (CAN), Minister of Finance
• Mundie, Craig J. (USA), President, Mundie & Associates
• Murtagh, Gene M. (IRL), CEO, Kingspan Group plc
• Netherlands, H.M. the King of the (NLD)
• Noonan, Peggy (USA), Author and Columnist, The Wall Street Journal
• O'Leary, Michael (IRL), CEO, Ryanair D.A.C.
• Osborne, George (GBR), Editor, London Evening Standard
• Papahelas, Alexis (GRC), Executive Editor, Kathimerini Newspaper
• Papalexopoulos, Dimitri (GRC), CEO, Titan Cement Co.
• Petraeus, David H. (USA), Chairman, KKR Global Institute
• Pind, Søren (DNK), Minister for Higher Education and Science
• Puga, Benoît (FRA), Grand Chancellor of the Legion of Honor and Chancellor of the National Order of Merit
• Rachman, Gideon (GBR), Chief Foreign Affairs Commentator, The Financial Times
• Reisman, Heather M. (CAN), Chair and CEO, Indigo Books & Music Inc.
• Rivera Díaz, Albert (ESP), President, Ciudadanos Party
• Rosén, Johanna (SWE), Professor in Materials Physics, Linköping University
• Ross, Wilbur L. (USA), Secretary of Commerce
• Rubenstein, David M. (USA), Co-Founder and Co-CEO, The Carlyle Group
• Rubin, Robert E. (USA), Co-Chair, Council on Foreign Relations and Former Treasury Secretary
• Ruoff, Susanne (CHE), CEO, Swiss Post
• Rutten, Gwendolyn (BEL), Chair, Open VLD
• Sabia, Michael (CAN), CEO, Caisse de dépôt et placement du Québec
• Sawers, John (GBR), Chairman and Partner, Macro Advisory Partners
• Schadlow, Nadia (USA), Deputy Assistant to the President, National Security Council
• Schmidt, Eric E. (USA), Executive Chairman, Alphabet Inc.
• Schneider-Ammann, Johann N. (CHE), Federal Councillor, Swiss Confederation
• Scholten, Rudolf (AUT), President, Bruno Kreisky Forum for International Dialogue
• Severgnini, Beppe (ITA), Editor-in-Chief, 7-Corriere della Sera
• Sikorski, Radoslaw (POL), Senior Fellow, Harvard University
• Slat, Boyan (NLD), CEO and Founder, The Ocean Cleanup
• Spahn, Jens (DEU), Parliamentary State Secretary and Federal Ministry of Finance
• Stephenson, Randall L. (USA), Chairman and CEO, AT&T
• Stern, Andrew (USA), President Emeritus, SEIU and Senior Fellow, Economic Security Project
• Stoltenberg, Jens (INT), Secretary General, NATO
• Summers, Lawrence H. (USA), Charles W. Eliot University Professor, Harvard University
• Tertrais, Bruno (FRA), Deputy Director, Fondation pour la recherche stratégique
• Thiel, Peter (USA), President, Thiel Capital
• Topsøe, Jakob Haldor (DNK), Chairman, Haldor Topsøe Holding A/S
• Ülgen, Sinan (TUR), Founding and Partner, Istanbul Economics
• Vance, J.D. (USA), Author and Partner, Mithril
• Wahlroos, Björn (FIN), Chairman, Sampo Group, Nordea Bank, UPM-Kymmene Corporation
• Wallenberg, Marcus (SWE), Chairman, Skandinaviska Enskilda Banken AB
• Walter, Amy (USA), Editor, The Cook Political Report
• Weston, Galen G. (CAN), CEO and Executive Chairman, Loblaw Companies Ltd and George Weston Companies
• White, Sharon (GBR), Chief Executive, Ofcom
• Wieseltier, Leon (USA), Isaiah Berlin Senior Fellow in Culture and Policy, The Brookings Institution
• Wolf, Martin H. (INT), Chief Economics Commentator, Financial Times
• Wolfensohn, James D. (USA), Chairman and CEO, Wolfensohn & Company
• Wunsch, Pierre (BEL), Vice-Governor, National Bank of Belgium
• Zeiler, Gerhard (AUT), President, Turner International
• Zients, Jeffrey D. (USA), Former Director, National Economic Council
• Zoellick, Robert B. (USA), Non-Executive Chairman, AllianceBernstein L.P.

Natrually, the secretive nature of the group has given birth to conspiracy theories. Some have claimed that the Bilderberg is a group of rich and powerful kingmakers seeking to impose a one world government. Whether that is true remains in the eye of the beholder, however one thing is clear: as the graph below shows, the members are connected to virtually every important and relevant organization, media outlet, company and political entity in the world.

• Strong U.S. job growth expected in May; wage rise seen moderate (Reuters)
• Trump’s Paris Exit Leaves Him Isolated From C-Suites to Capitals (BBG)
• Critics lament Trump climate move, supporters seek new deal (Reuters)
• Musk, Iger to quit Trump advisory councils after Paris accord decision (Reuters)
• Yuan Forecasters Getting It Wrong as China Jolts Markets (BBG)
• Commodity Rebound Evaporates as Slowing Demand Spells More Gluts (BBG)
• Mnuchin and Mulvaney at Odds as Trump Confronts Debt Default (BBG)
• Three lawmakers question Kushner Cos on concerns over White House tie (Reuters)
• EU, China united on climate, still divided over trade (Reuters)
• Putin Says Snowden No Traitor, But Leaking Information Was Wrong (BBG)
• General leading Philippine battle with Islamists relieved of command (Reuters)
• Denmark Is Killing Tesla (and Other Electric Cars) (BBG)
• World's Biggest Wind-Turbine Maker Falls as Trump Drops Paris (BBG)
• Puerto Rican Exodus Is Speeding the Island’s Economic Collapse (BBG)
• Munich prosecutors expand Audi investigation (Reuters)
• Why Whistleblowers Get Paid in the U.S. but Not in Britain (BBG)
• Mattis says U.S. committed to Asia-Pacific as allies seek clear policy (Reuters)

Overnight Media Digest

WSJ

- President Donald Trump said on Thursday he will withdraw U.S. from the Paris climate accord in an effort to boost the nation's industry and independence, making a dramatic shift in policy despite intense lobbying from business leaders and close allies. on.wsj.com/2qLfBon

- U.S. meal kit service Blue Apron Holdings has filed preliminary documents for an initial public offering. on.wsj.com/2rqWQc7

- Wal-Mart Stores Inc is testing a program in which store workers deliver some orders placed on Walmart.com or Jet.com, a sign of how the retailer hopes to use its 4,700 U.S. stores to its advantage in its battle against Amazon.com Inc . on.wsj.com/2sv6MR7

- Google has told publishers it will give them at least six months to prepare for a new ad-blocking tool the company is planning to introduce in its Chrome web browser next year, according to people familiar with the company's plans. on.wsj.com/2stfH5y

- KKR & Co closed a $9.3 billion fund dedicated to private-equity investments across Asia Pacific, the largest such fund in the region, the U.S. private-equity company said on Friday. on.wsj.com/2qMEHn7

FT

President Donald Trump said on Thursday he will withdraw the United States from the landmark 2015 global agreement to fight climate change, a move that prompted widespread criticism from allies and business leaders as America became one of only three nations to oppose the Paris climate accord.

In the event of a "cliff-edge" Brexit, UK pharmaceuticals companies could have to set up some operations related to drug safety and approval within the EU to ensure their products comply with European requirements, the European Commission has warned.

British Police released more photographs of Manchester bomber Salman Abedi on Thursday as they try to discover his movements in the days the attack that killed 22 and injured more than 100.

Black workers with temporary jobs in UK increased between 2011 and 2016, while the proportion of white workers on these contracts held steady over the same period, according to analysis of official data by the Trades Union Congress.

NYT

- President Trump announced on Thursday that the United States would withdraw from the Paris climate accord. Trump said the landmark 2015 pact imposed wildly unfair environmental standards on American businesses and workers. He vowed to stand with the people of the United States against what he called a "draconian" international deal. nyti.ms/2qMSIRF

- Uber said last week that it had recently discovered an accounting error that had deprived New York drivers of tens of millions of dollars, and vowed to pay back drivers every cent, with interest. Now evidence has emerged suggesting that Uber and New York State regulators were aware of the improper deductions from drivers' earnings as early as 2015. nyti.ms/2qMKRnh

- In a rare slowdown in one of the hottest areas of the entertainment business, attendance declined at 13 of 14 Disney theme parks around the world in 2016 compared with 2015, according to a report by Themed Entertainment Association and Aecom. nyti.ms/2qN1q2d

- Food kits delivery service Blue Apron filed on to go public, moving to become one of the most prominent consumer start-ups in recent years to pursue a stock listing. The size of Blue Apron's offering has yet to be determined. The prospectus listed a $100 million fund-raising target. nyti.ms/2qMTk9V

Britain

The Times

PPG Industries Inc has walked away from pursuing a hostile 26.9 billion euros ($30.17 billion) offer for Akzo Nobel NV, the Dutch owner of Dulux paints, after weeks of fractious wrangling between the two companies. bit.ly/2qLWFGf

Britain may be back in the European Union in little more than five years if the common market radically reinvents itself, George Soros, the billionaire financier who once beat the Bank of England, has speculated. bit.ly/2qLKyJc

The Guardian

Willie Walsh, the chief executive of British Airways (BA)parent company International Consolidated Airlines Group SA , has praised BA bosses for "doing everything possible" after the IT meltdown that left 75,000 passengers stranded over the bank holiday weekend. bit.ly/2qLwUWC

Alphabet Inc's Google has officially submitted plans for its new 1 million square feet "landscraper" London headquarters, with the intention of beginning construction on the building in 2018. bit.ly/2qM1VcP

The Telegraph

Lloyds Banking Group Plc has completed a 1.9 billion pounds ($2.45 billion) takeover of credit card issuer MBNA Ltd, significantly boosting its slice of the market just weeks after the Government sold its final shares in the lender. bit.ly/2qLx2FA

The UK pharmaceuticals sector has been told to prepare for a "crisis" Brexit scenario of drastically reduced access to European markets and hundreds of millions of pounds of restructuring costs unless a swift regulatory deal can be struck with Brussels. bit.ly/2qLSBFK

Sky News

Film Finances Inc, a movie financing company with credits including the Hollywood hits La La Land and Nocturnal Animals is plotting a blockbuster premiere on the London stock market that will value it at several hundred million pounds. bit.ly/2qLRaHy

Some of the world's biggest buyout firms have walked away from potential bids for Shop Direct, the online retailer, amid concerns about its reliance on revenues from a vast consumer credit arm. bit.ly/2qLQYbb

The Independent

Workers' union Unite has branded the Bank of England "arrogant and out of touch" after some staff at the bank on Thursday started voting in an industrial action ballot over pay. ind.pn/2qLRFkZ

• UK voters deal May a crushing blow (Reuters)
• May Fights to Remain U.K. Premier After Election Debacle (BBG)
• Warning of U.S. desertion, EU chief calls for European defense (Reuters)
• EU Turns Schadenfreude Up to Maximum After May Election Disaster (BBG)
• Dollar cleans up as UK election shock stuns sterling (Reuters)
• Trump tweets on Comey, declares ‘total vindication’ (AP)
• Baghdad rejects Kurds' move to press for independence unilaterally (Reuters)
• Oil's price fall stalls despite supply glut (Reuters)
• Once Stalwart Oil Stock Bulls Starting to Say Enough Is Enough (BBG)
• Feud over Qatar deepens conflicts across Arab world (Reuters)
• Venezuela Bond Repudiation Jitters Grow After Goldman Sachs Deal (BBG)
• Saudis Have a Lot to Lose in Qatar Fight, Even If They Win (Bloomberg)
• Arab powers adds Qatar-linked people, groups to blacklists (Reuters)
• Trump calls ex-FBI director Comey a 'leaker' after testimony (Reuters)
• Central Banks Are Poised to Start Rowing in One Direction Again (BBG)
• China says it is vigilant as two U.S. bombers fly over South China Sea (Reuters)
• Russia may seize U.S. property if its own compounds not returned (Reuters)
• Verizon to Cut 2,100 Jobs at Yahoo, AOL After Merger (WSJ)
• Saks Owner Hudson’s Bay to Cut About 2,000 Jobs (WSJ)
• Torn by War on ISIS, Mosul Risks Lasting Divisions (WSJ)
• Here’s How to Kill Electric Cars (BBG)
• South Korea finds apparent North Korean drone near border (Reuters)
• SoftBank to buy robotics businesses from Alphabet Inc (Reuters)
• Bain replacing KKR in Japan government-backed bid for Toshiba chip unit: sources (Reuters)
• South Korea’s Stance on U.S. Missile-Defense System Hasn’t Shifted (WSJ)

Overnight Media Digest

WSJ

- Members of the family that founded Nordstrom Inc are exploring the possibility of taking the retailer private, signaling they are ready to double down on the business at a time when many investors see a bleak future for the American department store. on.wsj.com/2rc9EkD

- Hudson's Bay Co, owner of Saks Fifth Avenue and Lord & Taylor, said that it would eliminate about 2,000 positions as part of restructuring efforts, the latest sign of deepening distress in the retail sector. on.wsj.com/2rbVAYB

- The U.S. Food and Drug Administration is requesting Endo Pharmaceuticals Inc remove its Opana ER from the market over concerns about the painkiller's links to injection drug abuse, in what the agency called its first effort to remove an opioid pain drug over abuse concerns. on.wsj.com/2rc0owM

- About 2,100 people will lose their jobs at Yahoo Inc and AOL after Verizon Communications Inc completes its acquisition of Yahoo and combines the two onetime internet rivals, a person familiar with the matter said. on.wsj.com/2rbW8xv

- While Uber Technologies Inc wrestles with a string of controversies, the ride-hailing company is in advanced talks to acquire much of the engineering team from a struggling car-parking service, according to people familiar with the matter. on.wsj.com/2rc9PfN

- A unit of Berkshire Hathaway Inc will be able to sell a revised version of its controversial workers' compensation insurance policies in California following a settlement with the state's top insurance regulator. on.wsj.com/2rcqzDO

FT

- Saudi Aramco IPO-ARMO.SE will not join the FTSE 100 stock index if it lists its shares in the UK. FTSE Russell, the exchange that runs the FTSE 100, says that members of the index must have high-grade “premium” listings and float at least 25 percent of their shares, but Aramco plans to only sell less than 5 percent of its equity. Aramco has not pushed for a change of FTSE Russell's listing rules.

- JPMorgan Chase Chief Operating Officer Matt Zames announced his resignation. His COO responsibilities will be spread among four senior colleagues.

- UK Prime Minister Theresa May’s gamble on a snap election appeared to have not worked well, after exit polls showed that the Tories would fall 12 short of an overall majority, leaving her future as prime minister in doubt.

- Owner of the Saks Fifth Avenue Hudson’s Bay said on Thursday that it planned to cut some 2,000 jobs across its North American operations as part of a major restructuring.

NYT

- Alibaba Group Holding Ltd signaled on Thursday that for all the global worries about China's rising debt and bloated state industries, its economy still enjoys a strong pillar of support from online shoppers. nyti.ms/2rHs4gP

- Japan's SoftBank Group Corp agreed to acquire Boston Dynamics, a manufacturer of animal-like robots, from Google's parent company, Alphabet Inc for an undisclosed sum. nyti.ms/2rHnajG

- JPMorgan Chase & Co's chief operating officer Matt Zames resigned from the bank, according to an internal memo on Thursday. nyti.ms/2rHt2cM

- Verizon Communications Inc plans to lay off 2,100 people once it completes its acquisition of Yahoo Inc's internet business on Tuesday. nyti.ms/2rHK6zv

- Members of the family that founded Department store operator Nordstrom Inc in Seattle a century ago said they were exploring ways to shift the company into private ownership. nyti.ms/2rHsAeK

Canada

THE GLOBE AND MAIL

** Hudson's Bay Co is cutting 2,000 jobs in its core North American retail business, or 4 percent of its work force in that market, as its losses mount amid falling sales in a fast-changing retail climate. (tgam.ca/2rcFYUw)

** Britain's Centrica Plc has struck a deal to sell its entire Canadian oil and gas exploration and production business to Hong Kong-listed MIE Holdings Corp, in the latest example of Asian capital snapping up domestic energy assets. (tgam.ca/2t1p64s)

** Enbridge Inc says it will put new focus on capitalizing on the demand for billions of dollars in energy infrastructure needed to help move growing North American oil and natural gas supplies to overseas markets in the decades ahead. (tgam.ca/2r8YH8r)

NATIONAL POST

** Canada has moved a little closer to meeting its target to protect five percent of the country's oceans by the end of 2017, but some are concerned about the methods the government is using to reach that goal. To coincide with World Oceans Day, Fisheries Minister Dominic LeBlanc announced on Thursday that St. Anns Bank, covering 4,364 square km east of Cape Breton, is officially Canada's latest marine protected area. (bit.ly/2sITZvg)

** High levels of household debt and red-hot housing markets in Toronto and Vancouver pose the biggest threats to the stability of the country's financial system, the Bank of Canada said Thursday. (bit.ly/2siOHta)

** A Senate committee says the government must "urgently" amend laws to prevent foreign interference in Canadian elections, including the possible theft of confidential emails. (bit.ly/2r7gYTo)

Britain

The European Central Bank has ruled out further interest rate cuts in a first small step towards normalising monetary policy as the euro zone rapidly gathers momentum. bit.ly/2sIyFG7

BT Group Plc has fired PricewaterhouseCoopers (PWC) as its auditor after the firm failed to spot a fraud at its Italian business, which is thought to have continued for up to 10 years. bit.ly/2s9cTOH

The Guardian

Mahmud Kamani the co-founder of Boohoo.com Plc, has cashed in on the fast-growing popularity of the online fashion group by selling more than 80 million pounds ($101.70 million) in shares. bit.ly/2s9AqiH

The celebrity chef Gordon Ramsay has drafted in a specialist team of Brexit negotiators to tackle rising food costs at his restaurant empire as the cost of imported ingredients spiral because of weak sterling. bit.ly/2s9AC1p

The Telegraph

The European Union wants to give police new powers to obtain information from internet companies including Facebook Inc and Alphabet Inc's Google as part of new measures to fight terrorism. bit.ly/2s9bgkb

Marks and Spencer Group Plc boss Steve Rowe received a smaller pay packet for his first year at the helm of the high street retailer than his predecessor Marc Bolland, the firm's annual report has revealed. bit.ly/2s9hZux

Sky News

Qatar's Al Faisal Holding and Interritus Limited of Switzerland are in talks about a takeover of the struggling Co-op Bank. bit.ly/2s9v4UI

The exit poll team says there is a "serious risk" that Theresa May will lose her overall majority - although this is "far from certain." bit.ly/2s9dBLS

The Independent

The Liberal Democrats will make "no pact, no deal, no coalition" with either Labour or the Conservatives in the event of a hung parliament, the former leader of the Liberal Democrats has said. ind.pn/2sIU16j

KKR has just published their 2017 mid-year economic outlook and it includes some rather dire predictions for the U.S. economy.  Among other things, KKR predicts a U.S. recession by 2019 and a massive cycle of millennial deleveraging after a huge expansion of consumer credit in the form of student and auto loans.

Before getting into the details, here's a chart depicting how KKR sums up the macro picture.  In short, pretty much every major economic growth and asset valuation metric in the U.S. is flashing red warning signs relative to historical norms.

Today, almost all our work streams suggest that asset prices across most parts of the global capital markets are somewhere between fair value and expensive. From a cycle perspective, we believe that we are mid-to-later cycle in some of the more developed markets, including the United States.

So, exactly where are we in the economic cycle?  Oh, just about 96 months into the typical 37 month expansion phase...which, for those who like to keep score, is the 3rd longest expansionary period in U.S. history.  Meanwhile, in terms equity returns, the S&P's cumulative returns over the past 8 years have only been exceeded by returns that previously preceded the great depression, the 1987 crash and the tech crash...but it's probably nothing.

Since we arrived at KKR in 2011, we have been arguing for a longer cycle. Several factors have influenced our thinking over the years. First, given how bad the environment was for jobs and growth in 2008/2009, it would only make sense that it would take longer than normal to create a sustainable economic recovery. Second, as the world transitions away from manufacturing towards more of a services-based economy, our research leads us to believe that the cycles have – on average – gotten more extended. Third, the level of monetary stimulus this cycle has been unprecedented, and as such, it will likely take much more time for central banks to unwind what is now a $14.5 trillion global QE experiment.

 

Though it may not feel this way to some, we are actually now 96 months into an economic expansion in the United States (Exhibit 40). Our base view is that the expansion continues through 2018, and then we run into a soft patch of economic growth thereafter. While economic expansions do not die of old age, they are affected by issues like peaking margins, heightened leverage, and deteriorating credit. For our nickel, we see all three as potential concerns being issues by 2019.

All of which, we would guess, has something to do with the following chart depicting the massive $1.8 trillion rotation out of actively managed accounts into passively managed ETFs and other index-tracking vehicles.  It's not that difficult to see why individual company valuation metrics have become so meaningless in the age of ETF investing as investors have been lured into the false hope that the natural "diversification" of these products provides some level of downside support.  Meanwhile, the only 'valuation' metric that is tracked by these 'investors' is returns, so as long as money keeps flowing in, then valuations keep going up...and just like that you have a perfect feedback loop to fuel an epic bubble.

That said, we suspect it's only a matter of time before these same investors realize that buying a basket of stocks doesn't really provide any of the benefits of 'diversification' if all the names in the basket are perfectly correlated. 

At some point, as we like to say, math and facts win over simplistic BTFD narratives.

Of course, while equity markets are screaming 'everything is awesome', KKR notes that some troubling signs are starting to emerge in the actual underlying economic data.  Take for example auto sales and multifamily housing starts...

And then, of course, there is one of our favorite topics: consumer credit.

As KKR notes, as have we on numerous occasions, this latest expansionary period has been fueled in large part by a massive, bubbly expansion in consumer credit, particularly for autos and student loans.  Moreover, the biggest beneficiary of that massive expansion has been the generation that is perhaps one of the least financially secure in history....which probably helps explain why auto delinquencies are suddenly rising despite improving employment levels.

While aggregate statistics by the government for the U.S. consumer are reporting record low unemployment amidst surging household net worth, we have come to an increasingly more conservative outlook for the U.S. consumer, particularly at the low end of the market. Key to our thinking is that, as we show in Exhibit 76, basic household expenses continue to increase faster than overall wages, which is a growing issue for the large segment of the U.S. market that has not built net worth in recent years. Moreover, debt loads in areas such as student lending and autos has crept up to what we view as concerning levels. Sub-prime credit cards too should be an area of investor focus, in our view. How else can one explain rising auto defaults that now approximate 2007 levels with unemployment below the natural rate of employment?

All of which culminates with KRR's prediction that a recession in the U.S. is imminent.

But, at least the recession isn't coming for another 1.5 years...takeaway: Buy Moar Stocks Now.

The full report can be reviewed here:

Iconic Private Equity firm Kohlberg Kravis Roberts i.e., KKR, has appointed two executives to succeed co-founders Henry Kravis and George Roberts, in what the FT dubs is a "rare move for an industry where succession plans have not been set out publicly."

KKR announced on Monday that it had named Joseph Y. Bae and Scott C. Nuttall, long rumoured to be favourites to fill the founders’ shoes, as its co-presidents and co-chief operating officers. The appointments will task Nuttall, 44, and Bae, 45, with essentially running the $137 billion firm on a day-to-day basis.  Kravis and Roberts, both of whom are in their early 70s, will continue to lead the group as co-chairmen and co-chief executive officers. This is the first time KKR has openly indicated clear successors to the founders.

“Today’s announcement is about the future and ensuring we have the right team and leadership structure to serve our clients and partners for decades to come,” Mr. Kravis and Mr. Roberts said in a statement.
Continue reading the main story. In naming their successors, Kravis and Roberts are joining other buyout titans in preparing for the not too distant day when they step away from the business.

Kravis and Roberts said: “Having joined the firm together over 20 years ago, Joe and Scott have a strong foundation of trust, professional respect and personal friendship that is critical for success.

Henry R. Kravis, right, and George R. Roberts in 2001

“They think and act globally, they embody KKR’s core values, and they are two of our most accomplished business leaders, with proven track records of managing large teams, building new businesses and driving value for our fund investors and our public unit holders.”

As the NYT reports, other PE firms have already laid out their succession plans: Blackstone has long had an heir apparent in its real estate chief, Jonathan D. Gray, a lifer at the investment giant. Warburg Pincus long ago named Joseph P. Landy and Charles R. Kaye as its chief executives., taking over from the co-founders Lionel I. Pincus and John Vogelstein.

Preparing for succession is not always an easy task. Carlyle hired Adena T. Friedman from Nasdaq in 2011 as its chief financial officer, setting off speculation that she would one day lead the private equity titan. But she left three years later to return to Nasdaq, where she finally took over as chief executive in November. And it had hired Michael Cavanagh, a much-lauded executive at JPMorgan Chase, only for him to leave the firm for Comcast a year later.

The FT adds that "the move will add pressure to other buyout groups, whose founders are reluctant to relinquish power, to outline their own succession plans."

Private equity investors have grown increasingly concerned about succession with just 12 per cent of funds set to close in less than a decade.

The worry has intensified as limited partners — pension plans and other institutions that lock up their capital in private equity vehicles for years — cut back on under-performing managers.

But for Kravis and Roberts, the anointment of potential successors is perhaps more notable than for most. The men, cousins who co-founded Kohlberg Kravis 41 years ago, helped put private equity on the map.

The pair led the firm’s pursuit of RJR Nabisco and earned the immortal sobriquet “barbarians at the gate.” Since then, the private equity industry has largely shed its reputation as uncouth raiders and become an enormous industry, with some $820 billion in uninvested capital as of Dec. 31, according to Prequin. In recent years, the two men have praised the firm’s growing bench, with Mr. Kravis once saying that any of 15 executives could lead the firm should he and his cousin retire.

As for the new KKR executives, they will have different areas of primary responsibility, KKR said: Nuttall will concentrate on corporate and real estate credit, capital markets, hedge fund and capital raising businesses together with the corporate development, balance sheet and strategic growth initiatives. Bae will focus on global private equity businesses and real asset platforms across energy, infrastructure and real estate private equity.

Of the four major private equity titans that are publicly listed: K.K.R., Blackstone, Carlyle and Apollo Global Management, the share price of K.K.R. has performed second-best, rising almost 50% over the past 12 months.

• U.S. Republicans left scrambling after health bill sinks again (Reuters); Republicans Give Up on Health-Care Reform, Now Seek Straight Repeal (BBG)
• Trump Blames Democrats and a ‘Few Republicans’ for Health-Bill Wreck (BBG)
• House Republicans Set Out Plan to Rewrite Tax Code (WSJ)
• House GOP Budget Ignores Trump’s Cuts to Domestic Agencies (BBG)
• House Republicans unveil 2018 budget with tax reform instructions (Reuters)
• UK inflation unexpectedly falls and eases rate-hike fears (AP)
• Australian dollar at two-year high after RBA minutes (Australian)
• What If Big Oil’s Bet on Gas Is Wrong? (BBG)
• Wanda Deals in Jeopardy as China Scrutiny Mounts (BBG)
• Property Developers Push for Open Drinking on City Streets (WSJ)
• Goldman’s Traders Turn In Worst First Half of Blankfein’s Reign (BBG); Goldman's bond trading revenue slumps 40 percent (Reuters)
• BofA’s Interest Income Drops Even After Fed Delivers Rate Hikes (BBG)
• Russia, after U.S. meeting on diplomatic row, says ready to retaliate (Reuters)
• Car engine bans in Germany would put 600,000 jobs at risk: Ifo (Reuters)
• Porsche ponders diesel exit, pushes electric cars: CEO (Reuters)
• Monetary Policy in Japan Has a New Problem: Amazon (WSJ)
• EU's Moscovici upbeat about Portugal, sees 2017 growth above 2.5 percent (Reuters)

Overnight Media Digest

WSJ

- Senate GOP leaders abandoned their effort to dismantle and simultaneously replace much of the Affordable Care Act, after the defections of two more Republican senators left the party short of the votes needed to pass President Donald Trump's top legislative priority in his first year in office. on.wsj.com/2u3zGcT

- The Trump administration released its road map for remaking the North American Free Trade Agreement that aims to preserve "Buy America" provisions and reduce the U.S. trade deficit, but steps back from some of President Donald Trump' most fiery campaign rhetoric on trade. on.wsj.com/2u3gjR9

- KKR put two executives in line to take over one day for Henry Kravis and George Roberts, the private-equity pioneers atop one of the biggest brands in finance. The New York asset manager elevated Joe Bae and Scott Nuttall to the roles of co-president and co-chief operating officer and added them to its board. on.wsj.com/2u3goEr

- Tesla, which has faced criticism from its investors about a lack of independent directors, named Twenty- First Century Fox CEO James Murdoch and Ebony Media CEO Linda Johnson Rice to its board. on.wsj.com/2u3cc7R

- Signet Jewelers Ltd said Monday that Chief Executive Mark Light has decided to retire for health reasons and will be succeeded by Virginia Drosos, who has served as an independent board member since 2012. on.wsj.com/2u3bIi0

- Uber Technologies Inc said it is suspending its operations in the Chinese gambling hub of Macau, the latest retreat for the ride-sharing giant as it continues to face regulatory pressure from many overseas markets. on.wsj.com/2u3mdlx

FT

The fallout from investigations into foreign exchange price fixing deepened on Monday when US authorities hit BNP Paribas SA with a new fine and former traders at three other banks appeared in court over an alleged conspiracy.

ITV PLC's appointment of Carolyn McCall as its chief executive could cost the UK broadcaster up to 2.5 million pounds after it agreed to fully compensate the easyJet Plc boss for the loss of long-term share options and bonus payments.

The European Commission has accused Teva Pharmaceutical Industries Ltd of anti-competitive behaviour over an agreement it made with US-based rival Cephalon.

Carillion Plc has hired professional services firm EY to assist with a review of its finances, as the UK construction and support services group turns to more outside advisers in a bid to repair its balance sheet.

NYT

- Conservative commentator Ann Coulter unleashed a barrage of criticism about Delta Air Lines on Twitter after she was moved to a different seat on a flight on Saturday, prompting the company to publicly return fire and call her comments "unnecessary and unacceptable." nyti.ms/2tAi2vH

- World's largest asset management firm Blackrock said second-quarter earnings had risen 9 percent as investors continued to pour money into the company's expanding fleet of exchange traded funds. nyti.ms/2tA49h5

- KKR named Joseph Bae and Scott Nuttall as its co-presidents and co-chief operating officers, unveiling one of the clearest lines of succession in the private equity industry. nyti.ms/2tAoPoX

- Nearly the entire board of Hampton Creek, a high-profile food start-up responsible for the Just Mayo condiment, resigned last month, leaving only the company's founder and chief executive, Josh Tetrick, as its only member. nyti.ms/2tAclh6

Britain

The Times

Carillion Plc gave its nervous shareholders some reassurance on Monday as it won two big contracts on the HS2 high-speed rail line and boosted the number of City advisers helping it to cut costs and improve cashflow. bit.ly/2uwRQWF

The owner of British Gas, Centrica Plc, is spinning off its oil and gas production business into a new joint venture with Bayerngas Norge, of Germany, with a view to a potential initial public offering within two to five years. bit.ly/2uwIpXx

The Guardian

Karren Brady, the West Ham United chief executive and regular on The Apprentice, is to take over as chair of Taveta, Sir Philip Green's retail empire, as Anthony Grabiner steps down. bit.ly/2uwNzTt

Lloyd's of London has warned that a serious cyber-attack could cost the global economy more than $120 billion (92 pounds) – as much as catastrophic natural disasters such as Hurricanes Katrina and Sandy. bit.ly/2uwKm6i

The Telegraph

The former boss of Barclays and three other ex-directors of the bank have been told that they will stand trial in January 2019 over the bank's emergency fundraising with Qatar almost a decade ago. bit.ly/2uwSjIp

A British tech start-up, Virtualstock, which helps leading UK retailers to better manage their digital marketplaces, said it expects to enter the US market in the coming months and double in size by the middle of next year, as the shift to online shopping continues to ramp up. bit.ly/2uwZmRl

Sky News

Citigroup Inc will become the latest Wall Street giant to unveil plans to cope with the UK's departure from the European Union this week when it names Frankfurt as the location for a major new trading operation. bit.ly/2uwKxhY

Primark is recalling thousands of men's flip flops after discovering they contain dangerous levels of a cancer-causing chemical. bit.ly/2uwLcjg

The Independent

ITV Plc has appointed Carolyn McCall, the boss of easyJet Plc, as its new chief executive, taking over from Adam Crozier, who announced in May that he was stepping down. ind.pn/2uwS0NS

• Kushner, Russian Ambassador Had Undisclosed Contact (WSJ)
• Democrats take aim at big companies in economic blueprint (Reuters)
• Trump open to signing Russia sanctions legislation (Reuters)
• Schumer Predicts Trump Firing Mueller Would Be GOP Tipping Point (BBG)
• Senate GOP Unsure of What Health-Care Measure They Will Vote On (WSJ)
• Japan PM Abe denies favors for friend amid falling support (Reuters)
• Britain’s Economy Is Almost Flatlining (BBG)
• Wall Street Outlasts Congress on Banker Pay, But Still Loses (WSJ)
• An Obscure Nafta Chapter Could Be Canada’s Deal-Breaker Again (BBG)
• Investors Lose $22 Billion as Sweden's Benchmark Stocks Founder (BBG)
• German private sector growth slows more than expected in July-PMI (Reuters)
• Oil rises after Saudi vows to cap crude exports next month (Reuters)
• Saudi calls OPEC members to stick to limits, sees oil demand up (Reuters)
• Saudi Arabia Cuts Oil Exports (WSJ)
• IMF Sees U.S. Fading as Global Growth Engine (BBG)
• Singapore Startup Takes Bitcoin Into Real World With Visa (BBG)
• ‘They All Deserve to Die’: Caracas Militants Vow to Take Up Arms (BBG)
• South China Sea: Vietnam halts drilling after 'China threats' (BBC)
• Traders Fear Hard Landing in Emerging Markets (BBG)
• This Hedge Fund Is Betting $280 Million on a 34-Year-Old Guy (BBG)
• UK government to discuss Brexit implementation period later this year (Reuters)
• Welcome to Xi's Net: Where Politics, Porn and Pooh Are Forbidden (BBG)
• WebMD Agrees to Be Bought by Buyout Firm KKR for $2.8 Billion (BBG)
• EPA chief spent almost half of spring in home state of Oklahoma (Reuters)

Overnight Media Digest

WSJ

- U.S. Senate Republicans are expected to vote as early as Tuesday to begin debate on their sweeping health-care legislation—but they don't know yet what measure they will be voting on. on.wsj.com/2uO1tku

- Private equity firm KKR & Co is nearing a deal to buy WebMD Health Corp, according to people familiar with the matter. on.wsj.com/2gVzY2G

- Singapore-based ride-hailing firm GrabTaxi Holdings Pte expects to raise $2.5 billion a round of startup fundraising as it seeks to battle Uber Technologies Inc across the populous region, the company said. Japan's SoftBank Group Corp and Chinese ride-hailing company Didi Chuxing Technology Co will lead the current round of investment, pouring up to $2 billion into Grab. on.wsj.com/2gVTiwT

- The White House indicated U.S. President Donald Trump was likely to support legislation that would punish Russia for interfering in the 2016 election, after months of questioning assertions about Moscow's involvement. on.wsj.com/2gVSgRr

- German luxury car maker BMW AG denied it had cooperated with rivals to manipulate diesel engines for reducing nitrogen-oxide emissions, after the European Commission confirmed that Volkswagen AG asked the region's antitrust watchdogs to scrutinize decades of possible coordination efforts by the country's main auto manufacturers. on.wsj.com/2gVoTyK

- Private attorney Mike Moore is encouraging U.S. states to sue pharmaceutical companies, alleging they helped spark an addiction crisis by misrepresenting the benefits and addiction risks of opioid painkillers. Moore pressed Mississippi and Ohio to sue drugmakers and is helping them with the suits they have since filed. on.wsj.com/2gVDiLm

FT

Flavio Cattaneo, chief executive of Telecom Italia SpA , is thought to be seeking an exit payout of about 30 million euros amid reports of a clash with majority shareholder Vivendi SA, as he becomes the second head to leave the company in less than two years.

British advisory boutique DuCanon has arranged its first deal by helping to seal the 600 million pound buyout of an exhibitions organiser Clarion Events by Blackstone Group Lp .

Acacia Mining Plc, which is in the midst of a multibillion-dollar dispute with the Tanzanian government over tax and royalties, is facing renewed pressure to address long-running alleged human rights violations at one of its mines in the east African country.

A new EU competition investigation into Germany's top carmakers threatens the credibility of the entire industry, a German minister has warned, after Brussels confirmed it was probing suspected collusion on technology.

NYT

- Chinese regulators have become increasingly concerned that some of the biggest Chinese conglomerates have borrowed so much that they could pose risks to the financial system. Banking officials are ramping up scrutiny of companies' balance sheets. nyti.ms/2tSzoDX

- BMW AG, responding to claims that it formed a cartel with Daimler AG and Volkswagen AG to hold down the prices of crucial technology, denied that the German carmakers had agreed among themselves to install emissions equipment that was inadequate to do the job. nyti.ms/2vPFvue

- Time Warner Inc CEO Jeffrey Bewkes is expected to resign if regulators approve AT&T Inc's $85.4 billion bid and the Time Warner name is likely to be eliminated, as AT&T subsume the company's assets, including HBO, Turner cable network brands and Warner Bros film and television studios. nyti.ms/2tsVQUN

- The White House indicated that President Donald Trump would accept new legislation curtailing his authority to lift sanctions on Russia on his own, after a broad revolt by lawmakers of both parties about his approach to Moscow. nyti.ms/2gVSxUg

Canada

The Globe and Mail

** Ontario will dispatch up to 20 additional mental-health workers to a remote First Nations community where at least four youths took their own lives this month as government and Indigenous leaders meet Monday to discuss a health-care overhaul on Northern Ontario reserves. tgam.ca/2usbTng

** New privacy regulations such as General Data Protection Regulation coming into force in Europe next year are calling into question whether Canada's approach to privacy is keeping up with its global peers. Chantal Bernier, former interim privacy commissioner of Canada said, "we cannot take for granted that Canada would be recognized as adequate under the GDPR, because it is very different from our current legislation, and very different from the previous European legislation under which we were deemed adequate." tgam.ca/2urAzfF

** Ontario is preparing to hand over control of its gambling operations in the Greater Toronto Area (GTA) to a private operator as the government seeks to drive a gambling boom in the province. Within a few weeks, the Ontario Lottery and Gaming Corp will select a business to run its casino and thousands of slot machines in the GTA for the next two decades. tgam.ca/2urDfKc

National Post

** Visitors to Canada are still getting scammed by fake websites as they apply for mandatory electronic travel authorization, with officials receiving hundreds of complaints in the past year. The number is now up to almost 950, and immigration officials tell this week there has been "no change" in the status of the problem. bit.ly/2urQOJJ

Britain

The Times

Bakkavor, one of the biggest suppliers of ready meals to Marks & Spencer and Waitrose, is exploring plans for a stock market float that could value it at up to 1.5 billion pounds. bit.ly/2gVBiTo

The top management at Paysafe Group Plc are in line for a 70 million pound shares-based windfall if the payment processor becomes the latest technology company to be sold to foreign bidders. bit.ly/2gUFpyX

The Guardian

Asda, the British supermarket arm of Wal-Mart Stores Inc , is considering a move for the discount chain B&M European Value Retail SA, in what would be the latest attempt by a major supermarket to diversify in the face of growing competition from cheaper rivals. bit.ly/2gVzpFZ

Liam Fox has conceded Britain is likely to seek a transitional deal until 2022 after leaving the European Union, but said the arrangements should not "drag on" until after the next general election. bit.ly/2gVpRLm

The Telegraph

Under-pressure mining group Acacia Mining Plc is facing a lawsuit in the UK from relatives of people who died at one of its mine sites. bit.ly/2gUFTFh

The BBC is planning to take men off radio and television programmes and replace them with women in an attempt to close the gender pay gap. bit.ly/2gVvwAQ

Sky News

The boss of the UK pensions lifeboat, Alan Rubenstein, is to step down early next year after a near-nine-year tenure. bit.ly/2gVa7rG

Blackstone Group LP has acquired Clarion Events from rival Providence Equity Partners for a deal valued at just under 600 million pounds. bit.ly/2gVpxMw

The Independent

At least 15 Conservative MPs have reportedly agreed to sign a letter of no confidence in Theresa May. ind.pn/2gV31mW

• Dollar slumps to 13-month lows before Fed; euro up (Reuters)
• Overwhelming approval likely for Russia bill (Reuters)
• Trump to study tougher Russia sanctions bill: White House (Reuters)
• Unrest bubbles among Trump's key foreign policy aides (Reuters)
• Abe Overtaken by Rival as Top Choice for Japan Premier in Poll (BBG)
• More U.S. Cars Are Made in Mexico (WSJ)
• The Chipotle Corporate Sabotage Theory Returns (BBG)
• McCain to return for pivotal Senate vote on healthcare (Reuters)
• Kushner Faces Hostile Questioning by Dems on House Panel (BBG)
• Chinese says interception of U.S. plane 'necessary' (Reuters)
• Record-Low ECB Rates Are a €1 Trillion Government Windfall (BBG)
• Dead Bodies Start Piling Up as Fuel Theft Booms in Mexico (BBG)
• Uber ties up with AXA for drivers' accident cover in France (Reuters)
• Can John Cryan Save Deutsche Bank From Itself? (BBG)
• Oil extends gains as Saudi pledges export curbs (Reuters)
• Australia to accept first Central American refugees under U.S. deal (Reuters)
• U.S. judge halts deportation of more than 1,400 Iraqi nationals (Reuters)
• Angry Lawmaker Singles Out ‘Female Senators’ Over Health Vote (BBG)
• Israel removes Jerusalem metal detectors, Palestinians reject new measures (Reuters)
• Saudi Dairy Farm May Use Cow Dung to Meet Power Needs (BBG)

Overnight Media Digest

WSJ

- President Donald Trump made a last-minute pitch to GOP senators urging them to vote Tuesday to begin debate on the health-care law, an exhortation that added to the pressures facing congressional Republicans. on.wsj.com/2uRDgK6

- Alphabet Inc said clicks on its ads surged 52 percent in the second quarter from a year earlier and Google Inc's revenue per click fell 23 percent in the quarter. The growth in the number of clicks helped boost second-quarter revenue 21 percent to $26.01 billion over a year prior. on.wsj.com/2uRS37G

- South Korea's Samsung conglomerate, best known for its smartphones and televisions, will make available in the U.S. its lower-price copy of Johnson & Johnson's blockbuster arthritis drug Remicade. on.wsj.com/2uS9QeT

- Saudi Arabia's Energy minister Khalid al-Falih said Saudi Arabia, the world's top oil exporter, announced it would go further than cutting its production and would also limit its exports at 6.6 million barrels a day in August. on.wsj.com/2uRSBdK

- China has been bolstering defenses along its 880-mile frontier with North Korea and realigning forces in surrounding regions to prepare for a potential crisis across their border, including the possibility of a U.S. military strike. on.wsj.com/2uSw14J

- Mercedes-Benz parent Daimler AG is investing in a Chinese self-driving startup, in another instance of a Western auto maker seeking out a Chinese partner to get a foothold in a challenging market. on.wsj.com/2uRE3e2

- Barnes & Noble Inc is being pushed to sell itself by Sandell Asset Management, which says the beleaguered bookseller could benefit from fresh investment. on.wsj.com/2uRpgQI

- One of China's most acquisitive conglomerates, privately owned HNA Group, has unveiled a new ownership structure in a bid to eliminate doubt over who ultimately controls the group. on.wsj.com/2uSaUPV

FT

Alphabet Inc profits fell by more than a quarter after it was hit by a $2.7 billion fine by the European Commission, triggering the biggest decline in the internet group's net income since 2008.

Flavio Cattaneo, who stepped down as chief executive of Telecom Italia SpA over the weekend amid reports of a clash with majority shareholder Vivendi SA, will receive a 25 million euro payout, the company said on Monday.

The UK's Serious Fraud Office has launched an investigation into a 2011 payment made by Rio Tinto Plc to a consultant working on a controversial iron ore deposit in Guinea.

A restructuring by acquisitive Chinese conglomerate HNA has moved the ownership of a 29.5 per cent stake from a mysterious Chinese investor to a New York-registered non-profit, adding to the questions surrounding the governance of the company.

NYT

- Martin Shkreli said in court Monday that he would not testify in his own defense in his fraud trial, a turnaround from last week, when his lawyers told a judge that he had "insisted" on testifying. nyti.ms/2gYSmrw

- Fact-checking website Snope is locked in a legal battle saying it has drained the money it needs to survive. The site, which gets all of its revenue from advertising, created a crowdfunding page seeking $500,000 from readers to remain operational indefinitely. nyti.ms/2vUBHrv

- HNA Group said its largest shareholder Guan Jun, a private businessman in China, recently donated his 30 percent stake in the company to HNA's Hainan Cihang Charity Foundation. Combined with the 22.8 percent stake held by HNA's sister charity in China, HNA says it is now 52 percent owned by the Cihang foundations. nyti.ms/2tVlwZN

- Internet Brands, a KKR portfolio company, agreed to buy WebMD Health Corp for about $2.8 billion. Separately, KKR also said it would acquire a majority stake in Nature's Bounty from private equity rival Carlyle Group for an undisclosed amount. nyti.ms/2gYCwgm

Canada

The Globe and Mail

** Canada government is prepared to walk away from NAFTA negotiations if the Trump administration insists that dispute-settlement panels be removed from the accord, according to a senior official. Canada, the United States and Mexico will sit down on Aug. 16 for the first round of talks aimed at rewriting the North American free-trade agreement. tgam.ca/2uw7SON

** British Columbia Premier John Horgan will meet with the U.S. Secretary of Commerce Wilbur Ross when he heads to Washington this week to make a case for a deal to resolve the softwood-lumber dispute, which threatens the province's single-largest export to the United States. tgam.ca/2usP44k

** Underwriters had little trouble selling Hydro One Ltd's C$1.4 billion ($1.12 billion) bought deal, which was announced last week with the utility's C$4.4 billion ($3.52 billion) acquisition of U.S.-based Avista Corp. The entire allocation of convertible debentures was sold within a day, say sources familiar with the financing. tgam.ca/2tG5yaJ

National Post

** Creative groups representing media producers, writers, directors and actors published a letter on Monday imploring Canadian Heritage Minister Melanie Jolyare to overrule a decision by Canada's broadcast regulator that they argue will cut investments in made-in-Canada television programming by hundreds of millions of dollars. bit.ly/2uSYlnn

** The International Monetary Fund now expects Canada's gross domestic product to grow 2.5 percent this year, leading G7 growth, according to its latest World Economic Outlook. This is up from the prior forecast of 1.9 percent released in April. bit.ly/2vCuZXP

Britian

The Times

Banks are guilty of a "spiral of complacency" as lenders from credit card providers to car financiers have eased their lending standards and allowed borrowers to "rack up more and more debt", one of the Bank of England's leading officials has warned. bit.ly/2eJ4Zq3

Fraud investigators have opened an inquiry into possible corruption by Rio Tinto Plc in Guinea, nearly nine months after the miner reported itself to authorities in three countries over suspect payments. bit.ly/2eJdcdF

The Guardian

EasyJet Plc has announced the largest cabin crew intake in its 21-year history, with plans to hire more than 1,000 staff. bit.ly/2eJdpgX

The Telegraph

Convenience chain McColl's Retail Group Plc has confirmed it is retendering its 2 billion pounds ($2.60 billion) supply deal with retailer Nisa, in a potential blow to J Sainsbury Plc's planned 130 million pounds takeover of Nisa. bit.ly/2eJouih

A raft of top European companies will be forced to pull out of the Nord Stream 2 gas pipeline project with Russia or face crippling sanctions under legislation racing through the U.S. Congress. bit.ly/2eJckWv

Sky News

More than 2,500 products have shrunk in size over the past five years, but are being sold for the same price, official figures show. It is not just chocolate bars that are affected by the so-called "shrinkflation" phenomenon, according to the Office for National Statistics. bit.ly/2eINiXA

The first phase of a four-year 246 million pounds government investment into battery technology has been launched in a move that could help bring down household electricity bills. bit.ly/2eJs6jZ

The Independent

Tesco Plc is rolling out its same-day grocery delivery service across the country as it aims to counter the threat posed by Amazon.com Inc. ind.pn/2eJdwJj

• Tax Overhaul Effort Shaped by Debate Over Corporations (WSJ)
• Funds target 'unknown' stocks as Wall Street cuts analyst jobs (Reuters)
• GOP Plans Tax Compromise to Sidestep Democrats (BBG)
• Few expect Trump's 15-percent corporate tax rate: Deloitte survey (Reuters)
• Raid on Venezuelan Base Got Help From Active Officers (WSJ)
• Hackers demand million in ransom for stolen HBO data (AP)
• OPEC holds second day of compliance talks, to issue statement (Reuters)
• Time Inc misses revenue estimates as advertising sales slip (Reuters)
• Uber Chairman Says Travis Kalanick Won’t Return as CEO (WSJ)
• China says willing to pay the price for new North Korea sanctions (Reuters)
• Jacob Zuma’s Fate Hangs in Secret Parliament Vote (BBG)
• Vanguard breaks ranks to pay for analyst research (FT)
• ‘Gig Economy’ Companies Working Harder to Attract Employees (WSJ)
• Amid Trump’s Immigration Crackdown, More Mexicans Get Visas to Work in U.S. (WSJ)
• Tillerson in Thailand presses for more action on North Korea (Reuters)
• Brexit Is Quietly Strangling Science (BBG)
• China ride-hailing firm DiDi backs Uber rival Careem (Reuters)
• China's Trade Surplus Widens for Fifth Month as Imports Moderate (BBG)
• Mazda announces breakthrough in long-coveted engine technology (Reuters)
• Envision to sell ambulance business to KKR in $2.4 billion deal (Reuters)
• Nissan to sell its electric battery business to GSR Capital (Reuters)

Overnight Media Digest

WSJ

- Tesla Inc said it plans to raise $1.5 billion in its first-ever sale of traditional bonds. The company said the funds would help push broader sales of its lower-price Model 3 sedan. on.wsj.com/2vgv3gd

- Alphabet Inc's Google fired the employee who wrote an internal memo suggesting men are better suited for tech jobs than women, following an email from Google's chief executive, Sundar Pichai to the company's employees, saying that the memo writer violated company policy. on.wsj.com/2vgWpmu

- Uber Technologies Inc won't be bringing co-founder Travis Kalanick back as chief executive, the company's chairman Garrett Camp told employees, in an attempt to quell reports the co-founder was attempting a comeback. on.wsj.com/2vgCKmI

- United Technologies Corp made an initial offer of less than $140 a share to acquire Rockwell Collins Inc, but the two aerospace suppliers are still wrangling over the price of a takeover that would exceed $20 billion. on.wsj.com/2vgkytp

- Pershing Square Capital Management LP (IPO-PERS.L) said it was nominating its founder William Ackman and two others to the board of Automatic Data Processing Inc, backing off from its previous demand of five seats on the 10-person board. on.wsj.com/2vgr7vR

FT

Rising food costs helped British retail sales in July, with consumers cutting back on non-food spending as confidence in the economic outlook waned, according to the British Retail Consortium.

The UK government is considering proposals that would fine operators of essential UK services that succumb to cyber attacks 17 million pounds ($22.16 million) if they have poor security.

Members of the European Parliament are preparing to bolster EU plans to police London's euro clearing business after Brexit, raising the risk that Britain might lose the lucrative activity.

Hedge fund Pershing Square proposed three nominees, including its Chief Executive William Ackman, to serve on the board of Automatic Data Processing Inc.

NYT

- The Federal Reserve Bank of San Francisco is investigating Wells Fargo & Co for not refunding car buyers who bought special insurance and repaid their loans early. nyti.ms/2vgw7AT

- Alphabet Inc's Google on Monday fired a software engineer who wrote an internal memo that questioned the company's diversity efforts. The employee, who confirmed his firing, argued in the memo that the gender gap among high-tech employees was due in part to biological differences. nyti.ms/2vgJMIh

- Programmers are still embarking on new initial coin offerings at a torrid pace even after the Securities and Exchange Commission issued its first warning late last month for entrepreneurs who have been raising money by creating and selling their own virtual currencies. nyti.ms/2vgJPnr

- Cable network FX has struck a deal with Comcast Corp to offer a commercial-free experience for its currently airing shows, and some older ones, through a service, called FX+, that will start in September. nyti.ms/2vgY6jY

Canada

THE GLOBE AND MAIL

** Trading in the shares of Great Canadian Gaming Corp was halted by regulators last week because of "pending news," ahead of a provincial announcement about who will run gambling in the Greater Toronto Area. The Ontario Lottery and Gaming Corp is expected to select a business within days to take over operations at its casino and thousands of slot machines in the GTA for the next two decades. tgam.ca/2vhwkDU

** A number of executives at Eight Capital Corp have left the independent brokerage firm, weeks after it was involved in a controversial, and unsuccessful, financing deal for a new marijuana company. The departures, which took place over the past month, included former chief executive officer Mark Attanasio and Donato Sferra, who was managing director of investment banking, according to people familiar with the situation. tgam.ca/2vhTlq8

** Saudi Arabia's use of combat machines against its Shia population goes to the heart of the controversy over whether the Trudeau government is violating Canada's weapons export-control rules. The Trudeau government has reached out to Saudi Arabia and Western allies to register unease over Riyadh's apparent use of Canadian armored vehicles against its own citizens, Foreign Affairs Minister Chrystia Freeland says.tgam.ca/2vhUWMD

NATIONAL POST

** Final hearings on the controversial Keystone XL oil pipeline began on Monday with testy exchanges between a lawyer for Nebraska landowners who oppose the project and a company executive and a local economist whose studies tout the benefits of the venture. bit.ly/2vhAsUw

** Saskatchewan premier Brad Wall said in an interview that he is worried the environmental rules Ottawa is set to introduce later this year will strain national unity in the resource-dependent West. bit.ly/2vhGcNH

Britain

The Times

The booming jobs market shows no signs of abating, according to figures from recruitment agencies that show the fastest rise in jobs placements for more than two years. bit.ly/2vgeWPN

Investors in Paddy Power Betfair Plc were nursing heavy losses yesterday after the FTSE 100 gambling operator surprised the market by announcing the resignation of its chief executive. bit.ly/2vJgfKf

The Guardian

Companies will no longer be able to pay employees their salaries in gold bullion in the first use of a new law designed to combat "morally repugnant" tax avoidance schemes. bit.ly/2fmsyVX

Hopes of a breakthrough for householders trapped in the leasehold scandal are rising after a major developer agreed to buy back some freeholds and axe ground rent clauses. bit.ly/2uiIRpq

The Telegraph

Global Blue, the tax refund payment firm, is paving the way for a 4-billion-euro ($4.72 billion) flotation at the turn of the year, possibly in London. bit.ly/2uALNN9

The government has given the green light to a major offshore wind farm which could prove to be the cheapest yet in UK waters. bit.ly/2hE16U7

Sky News

An investment vehicle set up by two scions of the billionaire Wal-Mart Stores Inc dynasty will this week emerge as the victor of a 200-million-pound ($260.70 million)race to buy Rapha, the British maker of upmarket cycling gear. bit.ly/2vdRogh

Video-streaming business Netflix Inc has announced its first acquisition -- Millarworld, a Scottish comic book company. bit.ly/2fn35M4