World freaks out over Trump

WORLD FREAKS OUT OVER TRUMP — Reuters/London: “Donald Trump's first major foreign policy address alarmed American allies, who view the Republican front runner's repeated invocation of an ‘America first’ agenda as a threat to retreat from the world. While most governments were careful not to comment publicly on a speech by a U.S. presidential candidate, Germany's foreign minister veered from that protocol to express concern at Trump's wording.

“‘I can only hope that the election campaign in the USA does not lack the perception of reality,’ Frank-Walter Steinmeier said. ‘The world's security architecture has changed and it is no longer based on two pillars alone. It cannot be conducted unilaterally,' … Carl Bildt, a former Swedish prime minister … said he heard Trump's speech as ‘abandoning both democratic allies and democratic values.’” http://reut.rs/1VW20Za


MARKETS FREAK OUT OVER PROFITS — WSJ’s Theo Francis and Kate Linebaugh: “U.S. corporate profits, weighed down by the energy slump and slowing global growth, are set to decline for the third straight quarter in the longest slide in earnings since the financial crisis. … Weakness was felt across the board, with executives from Apple Inc. to railroad Norfolk Southern Corp. and snack giant Mondelez International Inc. saying the current quarter remains tough. …

“The concerns from company executives echo weak economic data released Thursday morning, which showed U.S. gross domestic product rose just 0.5 percent in the first quarter. Business investment and consumer spending on goods slowed, while consumer spending on services climbed. … Based on the 55 percent of companies in the S&P 500 index that had already reported results … Thomson Reuters expects overall earnings to decline by 6.1 percent in the first quarter” http://on.wsj.com/1T8JBRS

DOLLAR DROPS — Bloomberg: “The dollar dropped against almost all of its major peers after weaker-than-expected U.S. economic growth dimmed prospects for a Federal Reserve interest-rate increase at a time when monetary easing is being put on hold elsewhere. Asian stocks fell and crude oil traded near $46 a barrel. … The yen was headed for its biggest weekly jump since 2008 after the Bank of Japan unexpectedly refrained from adding to record stimulus. …

“The slowest pace of American economic expansion in two years reignited some concern over the global outlook, and pushed out bets on the potential timeline for tighter Fed policy. This central-bank inaction also comes amid a middling U.S. earnings season, with disappointing results from technology companies compounded by investor Carl Icahn’s decision to sell his stake in Apple Inc.” http://bloom.bg/1VW7pPV

FIRST QUARTER SUCKS … AGAIN — John Hancock Manulife chief economist Megan Greene: “While Q1 GDP in the US came in below consensus at 0.5 percent annualized (from 1.4 percent in Q4), it also gives us little insight into how the Fed might act going forward. Q1 GDP growth in the US has historically been lackluster given a number of seasonal-adjustment issues, and this year was no different. …

"Investment plummeted by 5.9 percent (previously -2.1 percent), the worst we’ve seen since 2009. This is partly owing to a relatively strong USD and a continued collapse in oil and gas drilling.”

GDP CHEAT SHEET — Via Hamilton Place Strategies: http://bit.ly/1Tz9I7M

SANDERS LISTS DEMANDS — POLITICO’s Daniel Strauss: “Bernie Sanders shared the specific list of changes he'd like the Democratic Party to make during a speech on Thursday. In an otherwise carbon copy of his stump speech in Springfield, Oregon, Sanders declared that he wants to see the Democratic Party pursue a 50-state strategy, open primaries in every state, and automatic voter registration for everyone starting at age 18. … The Vermont senator went on to also call for the Democratic Party to push for same-day registration and open primaries.” http://politi.co/1pMeofW

GOP ELITES GIVING UP ON STOPPING TRUMP — WP’s Philip Rucker: “Throughout the Republican Party, from New Hampshire to Florida to California, many leaders, operatives, donors and activists arrived this week at the conclusion they had been hoping to thwart or at least delay: Donald Trump will be their presidential nominee. An aura of inevitability is now forming around the controversial mogul.

“Trump smothered his opponents in six straight primaries in the Northeast and vacuumed up more delegates than even the most generous predictions foresaw. He is gaining high-profile endorsements by the day — a legendary Indiana basketball coach on Wednesday, two House committee chairmen on Thursday. And his rivals, Sen. Ted Cruz of Texas and Ohio Gov. John Kasich, are making the kind of rushed tactical moves that signal desperation” http://wapo.st/1rlRqxE

MM SIDEBAR — Seems like the GOP elite might want to wait until at least next Tuesday night to throw in in the towel on Trump The billionaire was always going to score big in northeastern blue states. If Ted Cruz manages to win Indiana on Tuesday hope will remain to keep Trump under 1,237 delegates. If Trump wins the Hoosier State then, yeah, it will be over.

CELEBRATING EVANGELISTI — Little birdie tells MM that Joe Evangelisti, JPMorgan Chase’s chief communications officer, celebrates his 30th anniversary at the bank today — making him the longest serving PR honcho in high finance. JPM CEO Jamie Dimon is throwing a party tonight where colleagues, journalists and PR competitors will toast Joe’s awesomeness.

GOOD FRIDAY MORNING — Amazing OT win for the Caps over the Pens last night fueled by a hat trick including the game winner from T.J. Oshie. Still, it’s gonna be a long, tough series. The Penguins are superb. And the Caps are good at winning Game 1’s vs the Pens and going on to lose the series. Email me on [email protected] and follow me on Twitter @morningmoneyben

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES – Zachary Warmbrodt with this quarter's edition of our financial services lobbying and political spending newsletter – and to get Morning Money every day before 6 a.m. – please contact Pro Services at (703) 341-4600 [email protected]

PLAYBOOK LUNCH — Watch live at noon - White House Correspondents' Association Weekend Playbook Lunch — Join POLITICO's Mike Allen as he takes Playbook live for a conversation with Funny or Die D.C.’s head writer/producer and President Obama’s former speechwriter, David Litt, Host of "Billy on the Street" and from Hulu's "Difficult People," Billy Eichner and President of Production of Funny or Die, Mike Farah. Livestream — http://POLITICO.com/live

THINGS THAT ARE WEIRD: KOCHERLAKOTA EDITION — Former Minnesota Fed president Narayana Kocherlakota wrote an op-ed for Bloomberg on Thursday suggesting that Donald Trump was starting to make economic sense: “I was glad to see Trump address Fed-related issues in an interview with Fortune magazine last week. His key comments: ‘We have to rebuild the infrastructure of our country. We have to rebuild our military, which is being decimated by bad decisions. We have to do a lot of things. We have to reduce our debt, and the best thing we have going now is that interest rates are so low that lots of good things can be done that aren’t being done, amazingly.’

“I read this as calling for two forms of fiscal stimulus. One is more spending, especially on the military and on infrastructure such as roads and bridges. The second is maintaining low taxes despite high levels of government debt (in other remarks, Trump has favored tax reduction).” http://bv.ms/1TzBAZf

Let us remember that in this same FORTUNE interview Trump said he would dump Fed Chair Janet Yellen and also criticized rates as too low and punishing savers. He also did a full reversal from an interview given just a couple of weeks prior in which he pledged to wipe out the entire $19 trillion national debt in eight years, which would … well it would be impossible. Then there is the matter of the $10 trillion cost of his tax cut plan. This is making sense?

ABA SLAMS FED ON DIVIDENDS — The American Bankers Assoc. wrote to the Federal Reserve “voicing strong opposition to December 2015 legislation that substantially cut the dividends paid on Federal Reserve Stock” From the letter: “This change to the statutory dividend rate upended Federal Reserve System policy on offsets and incentives for system membership, dating from the inception of the Federal Reserve, in place for over 100 years.

“This action was taken explicitly to target a narrow set of financial institutions to fund a significant portion of the national transportation system. Member banks having more than $10 billion in assets will be materially damaged by the resulting dilemma: either accept a severely reduced return on a highly illiquid asset, or leave the Federal Reserve System altogether.” Full letter: http://bit.ly/1SCEKZO

THE BIG IDEA: WHY IS PRODUCTIVITY STUCK? — NYT’s Neil Irwin: “More than 151 million Americans count themselves employed, a number that has risen sharply in the last few years. The question is this: What are they doing all day? Because whatever it is, it barely seems to be registering in economic output. … We could chalk that up to a statistical blip if it were a single year; productivity data are notoriously volatile. But this has been going on for some time.

The happy reason: “Think about a business that is investing for the future. It hires a bunch of people and opens new offices and builds new factories. But while it is doing all that stuff, its actual productivity is quite low. … . Maybe, just maybe, that is happening with the United States economy writ large. Businesses are adding workers in preparation for the future, but it will take time for their investments to pay off in terms of [GDP].” http://nyti.ms/1WtYtj6

AMAZON SCORES SURPRISE PROFIT — Leslie Hook in San Francisco: “Amazon reported its most profitable quarter to date on Thursday as sales beat expectations, sending its share price up 12 percent to value the group at almost $280bn. Sales grew to $29.1bn in the first quarter, up 28 percent from the same period a year ago, exceeding analysts’ expectations and the company’s own forecast … Net income rose to $513m, Amazon’s highest quarterly profit. North American retail sales and international retail sales both grew more than 30 percent during the quarter.

“The fastest growing part of the company was Amazon Web Services, the company’s cloud computing division, which reported $2.6bn in sales, up 64 percent from the same period a year ago. … During the first quarter Amazon also continued investing heavily in new areas, including logistics operations, last-mile delivery, and original video content. The profits came as a surprise because Amazon has historically eschewed profits and founder Jeff Bezos has often said that he places more value on other financial metrics as better measures of growth” http://on.ft.com/1pMKo3t

GOOD DAY FOR BEZOS! — Via Fast company: “Not a bad afternoon's work. The Amazon CEO saw his 82.9 million shares increase in value by $6 billion as the company's shares jumped over 10 percent in after-hourstrading on earnings results that beat expectations.” http://bit.ly/1VW1c6P

PAY DISPARITY WORSENS — WP’s Danielle Paquette: “Pay disparities between men and women start earlier in their careers than frequently assumed and have significantly widened for young workers in the past year, according to a report from the Economic Policy Institute. Paychecks for young female college graduates are about 79 percent as large as those of their male peers, the think tank found — a serious drop from 84 percent last year.

“The sudden change follows a more gradual shift. In 2000, women ages 21 to 24 with college degrees earned 92 percent of their male counterparts’ wages on average, which was unchanged from 1990. Regardless of their education, young women typically earn less money than young men in the United States. Female high-school graduates, ages 21 to 24, now earn an average of 92 cents for every dollar paid to their male counterparts.” http://wapo.st/1UksYYS

KATZENBERG TO STEP DOWN AT DREAMWORKS — LAT’s Ryan Faughnder: “Jeffrey Katzenberg, the Hollywood mogul whose name has been synonymous with DreamWorks Animation, will step down as chief executive after his company is sold to Comcast Corp.'s NBCUniversal. … After the deal closes, Katzenberg will become chairman of DreamWorks New Media, made up of the company’s stakes in Awesomeness TV and NOVA, NBCUniversal said Thursday. In addition, Katzenberg will serve as a consultant to NBCUniversal.

“The proposed sale of DreamWorks Animation to Comcast for $3.8 billion would not only signal further consolidation in Hollywood, it probably also would mark the end of Katzenberg's long tenure as head of the studio he built into a powerhouse with such hits as "Shrek" and "Kung Fu Panda." Selling the studio to Comcast's NBCUniversal would provide a stable and secure home for DreamWorks Animation, especially since the studio has stumbled at the box office in recent years.” http://lat.ms/1T8Yjsf

ICYMI: OBAMA TALKS ECONOMY — President Obama spoke about his economy record with Andrew Ross Sorkin in the Sunday NYT Mag” “I actually compare our economic performance to how, historically, countries that have wrenching financial crises perform. By that measure, we probably managed this better than any large economy on Earth in modern history. …

“If you have a political party — in this case, the Republicans — that denies any progress and is constantly channeling to their base, which is sizable, say, 40 percent of the population, that things are terrible all the time, then people will start absorbing that. … If you look at the platforms, the economic platforms of the current Republican candidates for president, they don’t simply defy logic and any known economic theories, they are fantasy.” http://nyti.ms/1UiDq35 … Cover: http://bit.ly/1Ty2gcO

DERIVATIVES BROKERS GET FED ACCESS — FT’s Gregory Meyer in New York and Philip Stafford in London: “Derivatives brokers choosing where to park their margin money will now have the option of the world’s most powerful central bank. The Federal Reserve Bank of Chicago has authorised three of the US’s largest clearing houses, run by CME Group and Intercontinental Exchange, and the Options Clearing Corporation, to open an account at the central bank. ICE’s permit is for its US credit derivatives clearing house. …

“The change at the CME applies only to house cash belonging to brokers … Margin posted by their customers will continue to be walled off and held by commercial banks or in US Treasury bonds … The switch has been made possible by clearing houses’ designation as systemically-important utilities, which recognised the dangers to the financial system if they failed and gave them access to the Fed’s cash in an emergency” http://on.ft.com/1VX3stQ

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