Morgan Stanley

Last year it was Goldman Sachs telling clients to "dump your gold" (only to become the biggest buyers of the precious metal in the following quarter). Just last month, Morgan Stanley advised clients that 'gold will not see $1300 again'... and today, Bank of America joins the crowd as Macneil Curry advises "It is time to sell Gold" (to BAML we presume?)... as the range trade of the past month is completing and the downtrend is set to resume.

• Hillary and Me: The 2008 campaign was a nightmare. Will 2016 be as bad?  (Politico)
• What Timothy Geithner Really Thinks (NYT)
• Rebels declare victory in east Ukraine self-rule vote (Reuters)
• Race for AIG's Top Job Has Two Favorites (WSJ)
• America on the Move Becomes Stay-at-Home Nation for Millennials (BBG)
• Old, Fired at IBM: Trendsetter Offers Workers Arbitration (BBG)
• Bad luck Jonathan: Pressure Mounts on Nigerian President (WSJ)
• Iran leader slams West's 'stupid' missile stance before talks (Reuters)
• Conchita Wurst of Austria Wins Eurovision Song Contest (WSJ)
• Greek Finance Ministry expects Q1 GDP contraction of less than 1.5 pct (Kathimerini)

"Priced for perfection" would seem an understatement after one glance at the astounding hockey-stick in margin-expansion expectations 'priced-into' the top 1500 US equities. One can't help but wonder, with a stagnating macro-economy and tapering Fed, just how bad the labor force participation rate will become as costs are cut to the bone marrow to enable this margin miracle to come true... and imagine what happens if the summer is hot and winter cold once again?!

There's more than one oil price around the world and as the following comprehensive (but brief) overview from Morgan Stanley's Global Energy Teach In shows, crude oil pricing across the world is dynamic and multi-factorial - from fundamental factors (such as simple supply and demand and seasonality) to macro factors (such as USD strength, macro sentiment, and "burden") and risk premia (e.g. geopolitics), the following provides everything you wanted to know about global crude oil fundamentals, but were afraid to ask...

• Omnicom, Publicis call off proposed $35 billion merger (Reuters)
• Apple in talks for $3.2bn Beats deal (FT)
• Alibaba IPO Grew Out of ’80s Chaos and Guy From Goldman (BBG)
• Nigeria's president at WEF pledges to free kidnapped girls (Reuters)
• JPMorgan Joins Wells Fargo in Rolling Out Jumbo Offerings (BBG)
• It's 1999 all over again: Young Bankers Fed Up With 90-Hour Weeks Move to Startups (BBG)
• ECB stimulus talk knocks euro, peripheral yields (Reuters)
• Deutsche Bank Currency Crown Lost to Citigroup on Volatility (BBG)
• London Taxis Plan 10,000-Car Protest Against Uber App Use (BBG)
• Pfizer Holders Could Face Tax Hit in a Deal for AstraZeneca (WSJ)

It has been a very quiet session so far, and despite the slow-mo levitation in the USDJPY, its impact on US equity futures has been minimal if not negative. In fact, following yesterday's latest late day tumble, which Goldman summarized as follows, "Equities tried and failed again to break 1885, it continues to be the level that we can’t escape"... it would appear we are increasingly changing the trading regime, and as Guy Haselmann explained simply, markets are slowly but surely coming to the realization that the Fed's crutches are being taken away (that they may well return following a 20%, 30%, or more drop in the S&P is a different matter entirely) and that the economy will not grow fast enough to make up for this. Perhaps the most notable "event" is the sheer avalanche of banks pushing up their forecasts for an ECB rate cut (and or QE start) to June following Draghi's yesterday comments. And so the 1 month countdown begins until the end of forward guidance, or until the ECB "shatters" its credibility as expained yesteday.

• China’s Trade Unexpectedly Rises (BBG)
• 'We're already not in Ukraine' - rebel east readies secession vote (Reuters)
• Pro-Russian Separatists in Ukraine Reject Putin's Call to Delay Vote (WSJ)
• Vietnam’s Stocks Post Biggest Loss in Decade on China Tensions (BBG)
• Hedge Funds Extend Their Slide (WSJ)
• Carney Looks to Untested Tools as House Prices Boom (BBG)
• New Draghi Era Seen on Hold at ECB as Euro Area Recovers (BBG)
• Woman With Printer Shows the Digital Ease of Bogus Cash (BBG)
• Regulators See Growing Financial Risks Outside Traditional Banks (WSJ)

• Alibaba files for what may be biggest tech IPO (Reuters)
• Early Tap of 401(k) Replaces Homes as American Piggy Bank (BBG)
• Developers Turn Former Office Buildings Into High-End Apartments (WSJ)
• Thai court orders Yingluck Shinawatra to step down as PM (Guardian)
• German industry orders fell 2.8% in March, the biggest drop in one and a half years (RTE)
• Ukraine Bulls Scatter as Death Toll Mounts (BBG)
• China Property Slump Adds Danger to Local Finances (BBG)
• Stein Says Fed May See Bouts of Volatility as It Approaches Exit (BBG)

• Both sides bury dead as Ukraine slides towards war (Reuters)
• Dollar wilts to 6 1/2-month low; shares drift (Reuters)
• Draghi Grapples With Money Markets Signaling Recovery Too Early (BBG)
• Foreign wristslaps: Credit Suisse Nears Record Tax Plea: Credit Suisse Settlement Expected to Exceed $1 Billion (WSJ)
• OECD joins IMF in cutting global growth forecast, demanding moar QE from ECB  (WSJ)
• Three Bankers Bolster Blankfein as Goldman Trading Sinks (BBG)
• Strong performance from eurozone services sector (FT)
• OECD Cuts Forecast for 2014 Global Growth; Urges ECB Action (WSJ)
• Elite Colleges Don't Buy Happiness for Graduates (WSJ)
• How Russia Inc. Moves Billions Offshore -- and a Handful of Tax Havens May Hold Key to Sanctions (BBG)

6 Years After the Financial Crisis Hit, The Big Banks Are Still Committing Massive Crimes

• Fed’s Fisher Says Economy Strengthening as Payrolls Rise (BBG)
• Russia Knows Europe Sanctions Ineffective With Tax Havens (BBG)
• EU Cuts Euro-Area Growth Outlook as Inflation Seen Slower (BBG)
• U.S. Firms With Irish Addresses Get Tax Breaks Derided as ‘Blarney’ (BBG)
• Portugal exits bailout without safety net of credit line (Euronews)
• Puzzled Malaysian Air Searchers Ponder What to Try Now (BBG)
• Barclays, Credit Suisse Battle Banker Exodus, Legal Woes (BBG)
• Germany says euro level not an issue for politicians (Reuters)
• Alibaba-Sized Hole Blown in Nasdaq 100 Amid New Stock (BBG)
• Obamacare to save large corporations hundreds of billions (The Hill)

• Ukraine attacks rebel city, helicopter shot down (Reuters)
• Euro Unemployment Holds Near Record Amid Factory Gains (BBG)
• Yellen’s Fed Resigned to Diminished Growth Expectations (BBG)
• Junket Figure's Disappearance Shakes Macau's Gambling Industry (WSJ)
• China tried to undermine economic report showing its ascendancy (WSJ)
• Liquidity Trap Hitting AAA Bonds Has ATP CEO Sounding Alarm (BBG)
• AstraZeneca Snubs Pfizer Approach That U.K. Won’t Block (BBG)
• Missing Jet Recordings May Have Been 'Edited' (NBC)
• RBS turns corner as first-quarter profit trebles (Reuters)
• Japan household spending hits four-decade high, wages key to outlook (RTRS) while Real Incomes Drop 3.3% in March, 6th straight decline

• Two-Thirds of Insurance Exchange Enrollees Paid Premiums (WSJ)
• Panic: Criminal Charges Against Banks Risk Sparking Crisis (BBG)
• Did the junk bubble pop: Junk Loans Pulled as Investors Say No After Fed Raises Concerns (BBG)
• CME mulls price fluctuation limits for gold, silver futures (Reuters)
• AT&T Has Approached DirecTV About Possible Acquisition (WSJ)
• NBA sets wheels turning for Clippers sale; Oprah in wings (Reuters)
• One way to fix prison overcrowding: Florida Jail Hit by Deadly Blast (WSJ)
• New Boeing jets hold key to more than half of future sales (Reuters)
• Sony slashes profit estimate by 70% (Guardian)

It is May Day, which means half the world - the half where welfare contributions to one's standard of living are off the charts - celebrate labor, or rather the lack thereof, by taking a day off. Which means virtually all of Europe is closed, as are Eurex and Euronext futures, and most European markets expect the UK. In light of the non-existent volume, futures are relatively unchanged despite the latest Chinese Mfg PMI disappointment (50.4, below the 50.5, expected but just above the prior print of 50.3), and of course yesterday's US GDP debacle which helped push the DJIA to a record high. The good news is that with volume even more miserable than usual, the few momentum ignition algos that are operating will have a field day with the now standard low-volume levitation that happens like clockwork if the news is bad, and also happens just in case if the news is bad.

After widening its tolerance for real world volatility mid-March, the PBOC has faced a daily battering of USD buyers and CNY sellers which have driven the Chinese currency to its weakest level in over 18 months. However, things are starting to become problematic... while call buying and hedging is exploding - as carry traders and local specs rush to cover exposures, Bloomberg notes that Morgan Stanley fears as the yuan approaches the lower end of PBOC’s permissible daily trading range, anticipated intervention to defend band could put other currencies under selling pressure. The last time - Summer 2012 - that the PBOC defended its currency, EUR came under selling pressure but as Morgan Stanley notes, “In the very unlikely case” of PBOC not defending band, FX volatility would surge globally with implications going beyond RMB as markets would assume China’s economic problems might be significant... whocouldanode?