Hong Kong

"If you were to ask me, since we’re making forward-looking statements, what will the second quarter look like in Las Vegas? Weak. Do you hear me? Weak. So I’m trying to lower expectations here. This notion of a big recovery is a complete dream," Steve Wynn says, underscoring not only the weakness in gaming revenue from the Vegas strip to Macau, but also the fact that there simply is no economic recovery in the US.

And the 'incidents' just keep coming for Japan. Lax safety checks at Kwai Chung container terminal - the only sea entry point for food from overseas - have allowed banned imports from Japan to enter Hong Kong, according to Democratic Party lawmaker Helena Wong Pik-wan. As The South China Morning Post reports, radioactive contaminated food may have been entering the city unnoticed for years because of deficiencies in safety controls on fresh produce since the ban following the Fukushima nuclear power plant incident in 2011.

China is faced with a new reality wherein the very conditions that have supported the country's rapid economic growth may now be set for a wholesale reversal, as the "migrant miracle" gives way to a consumer-driven economy characterized by rising wages, decreased savings and investment, and falling export competitiveness. Meanwhile, what was once a "demographic dividend" is quickly becoming a "demographic deficit" as the number of working-age Chinese begins to decline. Beijing's response to this new reality will go a long way towards shaping the country's economic future.

• Fed's Yellen says met firm at heart of leak probes (Reuters)
• EU Raises Growth Outlook as ECB Counters Greek Threat (BBG)
• Hillary Clinton Takes Hit in WSJ Poll, but Holds Edge Over GOP Rivals (WSJ)
• China stocks slump on tighter margin rules, IPOs; Hong Kong down (Reuters)
• McDonald’s Chief Promises Turnaround in a Restructuring (NYT)
• German Bond Market Selloff Continues (WSJ)
• Vanguard overtakes Pimco’s Total Return following outflows in wake of Bill Gross’s departure (WSJ)
• EU Demands Concessions as Greece Hurtles Toward Deadlines (BBG)
• Junk Bonds Are The New Haven Assets (BBG)

Yesterday, when we heard that China brokers may impose tighter margin requirements to contain what is now a laughable stock bubble we said that tonight's Shanghai session could get exciting: "China may get exciting: Some China Brokers Raise Margin Trading Requirement: Sec. News" It did: overnight the Shanghai Composite tumbled by 4.1% to under 4300, the biggest one day drop since January 19.

"China’s capital account might be closed—but it’s not that closed. Between 2003 and 2012, $1.3 trillion slipped out of mainland China—more than any other developing country... GFI says the most common way money leaks out in the developing world is through fake trade invoices. The other big culprit is “hot money,” likely due to corruption—which GFI gleans from inconsistencies in balance of payments data. In China, both activities have picked up since 2009." Just like in the U.S., the so-called government “stimulus” in China achieved nothing more than to stimulate an oligarch crime spree. Hence the global boom in $100 million real estate, art and everything extremely high-end. As intended, the bailouts and stimulus on a global basis went directly to the 0.0001%.

Nowhere is the new normal more evident than the frenzied hording of so-called "trophy homes" by the world's 1800 billionaires. As Bloomberg reports, the ultra-luxury housing market is scaling new heights as a record number of properties around the world command prices topping $100 million. Demand is growing among affluent Americans and Europeans; billionaires from unstable economies, such as Russia and Middle Eastern countries; and buyers from mainland China, who were barred from investing overseas before 2012. Why - simple (to them?)... "They’re a scarce commodity. And they’re better than gold because you can boast about it."

Quickly looking at the potential market moving events this week, US payrolls on Friday will be the clear focus. In terms of expectations, our US colleagues are expecting a +225k print which matches the current Bloomberg consensus, while they expect the unemployment rate to drop one-tenth to 5.4%. Elsewhere, Thursday’s UK Election will be closely followed while Greece will once again be front and center.

• Win or lose, Cameron's political career hangs by a thread (Reuters)
• Greece aims for deal with lenders, IMF hard on reforms: minister (Reuters)
• Greek Jobless Legacy Adds Danger for Tsipras as Funds Dry Up (BBG)
• U.S. Will Change Stance on Secret Phone Tracking (WSJ)
• China April HSBC PMI shows biggest drop in factory activity in a year (Reuters)
• Goldman Sachs in Talks to Sell Its Coal Mines (WSJ)
• Takeover Fuel Begins to Flow as S&P 500 Bull Run Makes History (BBG)

Holidays in Europe and Asia left things quiet overnight after some traders used the last day of April to frontrun the old "sell in May and go away" market adage. Market closures also kept the Chinese day trading hordes from using a tiny beat on the official manufacturing PMI print as an excuse to pile more money into the country's equity mania, while Japanese shares ended mostly unchanged as investors fret over when the BoJ will deliver the next shot of monetary heroin. In the US we'll get a look at ISM manufacturing and the latest read on consumer confidence as we head into the weekend.

Hookers for Brazilians, and MiGs for Russians... what cost is your country obsessed with?

U.S. and U.K. GDP slowed very sharply in first quarter of 2015. Latest data confirms the rapid slowdown despite stock markets booming in the UK, U.S. and globally. This highlights the major disconnect between the real economy and a financial sector intoxified by easy money.

• Marchers protest police violence in Baltimore, New York (Reuters)
• Majority of Financial Pros Now Say Greece Is Headed for Euro Exit (BBG)
• Greece signals concessions in crunch talks with lenders (Reuters)
• Greece, Euro-Area Partners Target Deal by Sunday (BBG)
• Iglesias Says EU Risking Right-Wing Backlash With Greek Pressure (BBG)
• Student-Loan Surge Undercuts Millennials’ Place in U.S. Economy (BBG)
• Majors’ Quandary: Why Drill for Oil When They Can Buy Somebody Else’s? (WSJ)

The airline has been working with its banks and the relevant authorities and understands that the funds – less than $5 million – have now been frozen. Although the sum stolen was relatively small in corporate terms and appears to have been tracked and frozen quite quickly, the incident - yet again - highlights the threat posed by cybercrime to today’s banking and financial systems.

• Police enforce curfew in Baltimore, disperse protesters (Reuters)
• Saudi king resets succession to cope with turbulent times (Reuters)
• Euro-Area Bank Lending Increases for First Time Since 2012 (BBG)
• Riksbank Increases Bond Purchases as Key Rate Left Unchanged (BBG)
• Greek Banks Get More Funds as ECB Weighs Collateral Discount (BBG)
• Greek bank deposits drop 1.36 pct in March for sixth month in a row (Reuters)
• Sarao Remains in Jail After Failing to Pay Bail at Hearing (BBG)