It's jobs day.


Economists are expecting a hiring rebound in April to 192,000 positions added after March’s disappointing number when the figures are released at 8:30 a.m. Eastern Time. For the third report in a row, expectations are for a decline in the jobless rate to 4.0 percent from the 4.1 percent level it has held since October 2017. Average hourly earnings are forecast to show an annual gain of 2.7 percent.

Let’s meet again

The U.S. delegation to China, led by Treasury Secretary Steven Mnuchin, and their hosts agreed to continue talking, while reaching no breakthrough over trade as their meetings ended in Beijing. The Trump administration asked China to decrease its trade surplus with the U.S. by at least $200 billion by the end of 2020, the kind of demand that Chinese officials had already warned against. Away from the talks, the standoff between the two countries is already hurting global commerce with traders in the Asian nation canceling shipments of U.S. soybeans. 

Berkshire results

Tomorrow’s results from Berkshire Hathaway Inc. come with a health warning. Due to a new accounting rule, the company is now required to report unrealized gains and losses from equity investments in net income. With a $170 billion stock portfolio, quarterly market swings will have an outsized effect on the company’s results. There is no sign that the new accounting rule has slowed down Chairman Warren Buffett’s appetite for equities, as CNBC reports Berkshire has purchased a further 75 million shares of Apple Inc.

Markets mixed

Overnight, the MSCI Asia Pacific ex-Japan Index dropped 0.7 percent for a fourth day of declines amid a retreat in financial stocks. Japan remained closed for a holiday. In Europe, the Stoxx 500 Index was 0.3 percent higher at 5:40 a.m. with a rise in mining stocks more than offsetting a drop in bank shares following disappointing results from some major institutions. S&P 500 futures were pointing to a small loss at the open, the 10-year Treasury yield was at 2.935 percent and gold was slightly lower. 

Iran outlook

With President Donald Trump seemingly set on pulling the plug on the Iran nuclear deal next week, U.S. officials are looking to what comes after, with some suggesting there may not be an immediate reimposition of sanctions in order to find time to forge a new agreement. However, the U.S. might find itself alone at the table, with Iran ruling out new talks. The standoff remains “the main issue preoccupying the oil market,” according to Carsten Fritsch, an analyst at Commerzbank AG. Crude is set to end the week broadly unchanged, with today’s Baker Hughes U.S. rig count at 1:00 p.m. the only data release due for that sector. 

What we've been reading

This is what's caught our eye over the last 24 hours.

And finally, here’s what Sid’s interested in this morning

Remember the bad ol' days when weaker economic data gave bulls ammo as they argued yet-more dovish monetary policy would anchor risk appetite? Well, Europe is the Ground Zero for this meme after a ton of lackluster readings this week showed growth momentum is easing. Industrial output data for April are disappointing wherever you look from Germany, Spain to Italy. And the inflation trajectory remains hilariously bad. Last month, headline euro-area consumer price growth registered an expected slowdown to 1.2 percent, while the core reading eased to just 0.7 percent, the weakest in more than a year. But I am already hearing the bulls say: bad economic news is good news for markets. Weak price pressures can ease financial conditions and spur risk-taking to boot, the thinking goes. It's a viewpoint laid out by Suki Mann, a former star credit strategist at UBS. "It's a little deflating, but corporate bond investors are probably getting what they wished for. No breakneck growth, no rate market sell-off, few signs of inflation and an ECB needing to play ball." Still, money managers can snub weaker aggregate demand for so long. If growth in the trading bloc has reached a cycle peak already, cash flows will take a hit.

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