>>> Berkshire : Warren Buffett: insurance underwriting was the swing factor in Q

Warren Buffett: insurance underwriting was the swing factor in Q1 earnings; has been a wonderful period for Geico as competitors cut back on new business - investor day comments 
- Berkshire is an investor in four airlines and is betting on the industry; price competition is a risk
- Thought IBM would have done better over the last 6 years
- Google business of selling clicks to advertisers with little cost is a good business
- Hard to know how much price competition will come into a business like cloud services; Bezos has delivered a remarkable business achievement with Amazon

Reuters - French candidate Macron claims massive hack as emails leaked

Leading French presidential candidate Emmanuel Macron's campaign said on Friday it had been the target of a "massive" computer hack that dumped its campaign emails online 1-1/2 days before voters choose between the centrist and his far-right rival, Marine Le Pen.

Macron, who is seen as the frontrunner in an election billed as the most important in France in decades, extended his lead over Le Pen in polls on Friday.

As much as 9 gigabytes of data were posted on a profile called EMLEAKS to Pastebin, a site that allows anonymous document sharing. It was not immediately clear who was responsible for posting the data or if any of it was genuine.

In a statement, Macron's political movement En Marche! (Onwards!) confirmed that it had been hacked.

"The En Marche! Movement has been the victim of a massive and co-ordinated hack this evening which has given rise to the diffusion on social media of various internal information," the statement said.

An interior ministry official declined to comment, citing French rules that forbid any commentary liable to influence an election, which took effect at midnight on Friday (2200 GMT).

The presidential election commission said in statement that it would hold a meeting later on Saturday after Macron's campaign informed it about the hack and publishing of the data.

It urged the media to be cautious about publishing details of the emails given that campaigning had ended, and publication could lead to criminal charges.

Comments about the email dump began to appear on Friday evening just hours before the official ban on campaigning began. The ban is due to stay in place until the last polling stations close Sunday at 8 p.m. (1800 GMT).

Opinion polls show independent centrist Macron is set to beat National Front candidate Le Pen in Sunday's second round of voting, in what is seen to be France's most important election in decades. The latest surveys show him winning with about 62 percent of the vote.

RUSSIAN HAND SEEN

Former economy minister Macron's campaign has previously complained about attempts to hack its emails, blaming Russian interests in part for the cyber attacks.

On April 26, the team said it had been the target of a attempts to steal email credentials dating back to January, but that the perpetrators had failed to compromise any campaign data.

The Kremlin has denied it was behind any such attacks, even though Macron's camp renewed complaints against Russian media and a hackers' group operating in Ukraine.

Vitali Kremez, director of research with New York-based cyber intelligence firm Flashpoint, told Reuters his review indicates that APT 28, a group tied to the GRU, the Russian military intelligence directorate, was behind the leak. He cited similarities with U.S. election hacks that have been previously attributed to that group.

APT28 last month registered decoy internet addresses to mimic the name of En Marche, which it likely used send tainted emails to hack into the campaign’s computers, Kremez said. Those domains include onedrive-en-marche.fr and mail-en-marche.fr.

"If indeed driven by Moscow, this leak appears to be a significant escalation over the previous Russian operations aimed at the U.S. presidential election, expanding the approach and scope of effort from simple espionage efforts towards more direct attempts to sway the outcome," Kremez said.

France is the latest nation to see a major election overshadowed by accusations of manipulation through cyber hacking.

U.S. intelligence agencies said in January that Russian President Vladimir Putin had ordered hacking of parties tied to Democratic presidential candidate Hillary Clinton to influence the election on behalf of Republican rival Donald Trump.

Oil is forming a “hammer” setup on daily candlesticks, if confirmed is evidence of a bullish reversal and suggests the current downtrend has run out of steam, may indicate there is more upside to come.
Oil printed at a trend low of $43.76 earlier, lowest intraday level since Nov. 15, before bouncing back, and is now up on day
See chart here
Oil had fallen as much as 11.3% this week following EIA data that showed a continued expansion of U.S. crude production
U.S. output rose for an 11th week through April 28 for longest run of gains since 2012, EIA data showed Wednesday
While OPEC is likely to prolong curbs for further 6 months, U.S. shale supply remains a concern, Nigeria’s oil minister said
Stoxx 600 oil and gas index is down 4.5% ytd
The biggest SXEP decliners ytd are: Saipem -26.5%, Tullow Oil -25.7%, Wood Group -15.4%

9to5.com : Could Apple buy Netflix or Tesla? Citigroup thinks so

Could Apple buy Netflix or Tesla? Citigroup thinks so
Analysts often dream about spending Apple’s growing cash pile by listing which company’s Apple could acquire, and this week Apple’s cash reserves climbed past a quarter trillion dollars at $256.8 billion. In response, Citigroup analyst Jim Suva has listed both Netflix and Tesla as takeover targets for Apple…

Reuters reports that Suva included seven companies as potential M&A targets for Apple: Netflix, Disney, Tesla, Activision Blizzard, Electronic Arts, Take Two Interactive Software, and Hulu.
The idea in part, as Citi has highlighted before, is that Apple may be more likely to do something with its cash pile which is mostly overseas if the Trump administration offers corporations a tax holiday as expected.
Apple CEO Tim Cook has talked about the need for corporate tax reform (and a lower tax rate) as recently as this week, although he has been cool on large company acquisitions:
In terms of large acquisitions… we have looked at large companies. In each case, it didn’t pass our test for various reasons. We will look again, I’m sure we will. I think we have the management talent and depth to do it. We don’t feel pressure to acquire revenue…we want to make great products. Cash is not burning a hole in our pocket.
One exception is Beats Electronics which Apple acquired for $3 billion as the foundation for Apple Music and the expansion of its audio business.
However unlikely a major acquisition by Apple of any of the companies listed by Citi may be, the firm certainly isn’t alone in predicting Apple could use its cash for a big company takeover. Last month RBC similarly floated the idea of Apple buying Disney to create ‘unique opportunities’ although the firm only described the likelihood as ‘greater than 0%.’
Reuters doesn’t give Citi’s analyst much credit either:
The analyst is rated three out of five stars for his recommendations on Apple, according to Thomson Reuters StarMine.

>>> Weekly Update

Weekly Market Update: Despite commodity softness stocks hold at lofty levels heading into the French election

The week opened on a sleepy note, with many markets outside the US closed for the Mayday holiday. Washington DC stayed on the front lines, as White House administration officials continued to push the President's agenda. Congress came together and reached a tentative deal on a $1.1T omnibus spending bill to fund the govt through Sept 30th. By Thursday, House Republicans finally pushed through its bill repealing and replacing the Affordable Care Act as had been promised repeatedly during the election. European politics also may have aided sentiment after the final French presidential debate ahead of Sunday's runoff appeared to solidify the prospects for an Emmanual Macron victory.

The US economic data generally came in a bit softer than expected and lagged that of what we saw of out of Europe and Asia. The Euro moved up to a 5-month high, while the Dollar gained ground against the Yen, reaching a 1-month high. Wednesday's FOMC statement and Friday's jobs report largely affirmed the notion the Fed can and will stay on a path of gradually raising interest rates. Futures markets have continued to price in two more hikes this year, most likely starting in June. A chorus of Fed officials vocalized that same belief in speeches on Friday, as well. Assuming the French election goes as planned, ECB officials also hinted that they could steer the market towards their plans to withdraw stimulus in the near future. Treasury yields drifted higher following Wednesday's FOMC statement.

Commodities saw a wave of selling throughout much of the week that temporarily spooked equity markets. WTI crude prices dropped below the Nov low of $45.90 Wednesday to trade at levels not seen since last summer. The selling was exacerbated by technical levels but largely attributed to lingering concerns about steadily increasing NA supply and lackluster demand growth. Cooper, iron ore, and aluminum also declined, hurt by reports that the Chinese continue to crack down on a host of financing vehicles. Prices appeared to have stabilized late in the week, potentially helped by readthroughs from Q1 earnings season. A third of the S&P reported this week and executives from across an array of sectors talked confidently about growth they were seeing across both business lines and geographies. Many even talked about their belief that they can raise prices to offset input costs and painted an even more encouraging picture than the economic data has shown. For the week the Dow added 0.3%, S&P gained 0.6% and the NASDAQ rose 0.9%.

In corporate news this week, Apple shares were hit after disclosing some iPhone sales softness in its quarterly results, but the tech giant pared its losses as the market digested CEO Cook’s defense that it is likely just a pause in purchases while customers gear up to buy the new phone launching this fall. Tesla reported its revenue doubled y/y on record deliveries, but posted a larger loss than anticipated, and the automaker expressed some worry that the cheaper Model 3 model may be eating into sales of the pricier Model S. Facebook beat on the top and bottom line as its ad revenue jumped 51% y/y, and the social media behemoth told investors it will use GAAP figures instead of non-GAAP from now on so that it can include stock-based compensation in its calculations.

SUNDAY 4/30
04/30 (US) Congress negotiators from both parties said to have reached a tentative deal on $1.1T omnibus spending bill to fund the govt through Sept 30th - financial press

MONDAY 5/1
(HK) Macau Apr Gaming Rev MOP20.2B v MOP21.23B prior; +16.3% y/y v 14.0%e
05/01 *(US) MAR PCE DEFLATOR M/M: -0.2% V -0.2%E; Y/Y: 1.8% V 1.9%E
(US) MAR PERSONAL INCOME: 0.2% V 0.3%E; PERSONAL SPENDING: 0.0% V 0.2%E
*(US) MAR PCE CORE M/M: -0.1% V -0.1%E; Y/Y: 1.6% V 1.6%E
(US) APR FINAL MARKIT MANUFACTURING PMI: 52.8 V 52.8E (lowest since Sept)
*(US) APR ISM MANUFACTURING: 54.8 V 56.5E; PRICES PAID: 68.5 V 67.5E
(US) Atlanta Fed forecasts initial Q2 GDP growth at 4.3%
*(CN) CHINA APR CAIXIN PMI MANUFACTURING: 50.3 V 51.3E; 7-month low; 10th straight month of expansion

TUESDAY 5/2
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50% (AS EXPECTED)
BP.UK Reports Q1 adj Net $1.45B v $1.21Be, Underlying replacement cost profit $1.51B v $0.5B y/y, Total Rev $56.4B v $53.5Be
*(DE) GERMANY APR FINAL MANUFACTURING PMI: 58.2 V 58.2E (confirms its 29th month of expansion)
*(UK) APR PMI MANUFACTURING: 57.3 V 54.0E (9th month of expansion and highest since Apr 2014)
(EU) EURO ZONE MAR UNEMPLOYMENT RATE: 9.5% V 9.4%E (matches lowest level since 2009)
MRK Reports Q1 $0.88 v $0.83e, R$9.43B v $9.29Be
(CZ) Czech PM Sobotka: To submit government resignation to President and possible prepare for early election
(US) Pres Trump tweets: "Our country needs a good 'shutdown' in September to fix mess!"
AAPL Reports Q2 $2.10 v $2.02e, R$52.9B v $52.6Be; raises dividend 10.5% to $0.63 from $0.57 (indicated yield 1.71%); increases buyback program by $35B (4.4% of market cap) to $210B

WEDNESDAY 5/3
BNP.FR Reports Q1 Net €1.89B v €1.81B y/y, Rev €11.3B v €10.8B y/y
(UK) EU said to have raised Brexit bill to an upfront payment between €91-113B over 10 years would net to ~€55bn-€75B as Britain received share of EU spending and repaid loans - financial press
(DE) GERMANY APR UNEMPLOYMENT CHANGE: -15K V -11KE; UNEMPLOYMENT RATE: 5.8% V 5.8%E
(EU) EURO ZONE Q1 ADVANCE GDP Q/Q: 0.5% V 0.5%E; Y/Y: 1.7% V 1.7%E
(US) APR ADP EMPLOYMENT CHANGE: +177K V +175KE (lowest since Oct)
NYT Reports Q1 $0.11 v $0.06e, R$398.8M v $385Me; Digital subscribers surge
(US) APR FINAL MARKIT SERVICES PMI: 53.1 V 52.5E
(US) Puerto Rico Gov announces restructuring of $70B debt; to advance plan for bankruptcy-like case - press
(IR) Iran reportedly attempts missile launch from a mini submarine, 14 days prior to Sanctions trigger
(US) FOMC HOLDS TARGET RATE RANGE AT 0.75-1.00%, AS EXPECTED; GROWTH SLOWDOWN IN Q1 IS LIKELY TO BE TRANSITORY; EXPECTS ECONOMY TO WARRANT GRADUAL RATE HIKES
(US) Association of American Railroads weekly rail traffic report for week ending April 29th: 527.8K carloads and intermodal units, +5.1% y/y (16th straight week of gains)
TSLA Reports Q1 -$1.33 v -$0.55e, R$2.70B v $2.56Be
FB Reports Q1 $1.04 v $1.10e, R$8.03B v $7.85Be
(AU) AUSTRALIA MAR TRADE BALANCE (A$): +3.1B V +3.3BE (5th consecutive surplus)
(CN) CHINA APR CAIXIN PMI SERVICES: 51.5 V 52.2 PRIOR; 4th month of sequential decline and weakest level since May 2016

THURSDAY 5/4
HSBA.UK Reports Q1 Pretax profit (adj) $5.94B v $5.3Be, Underlying Rev $12.8B v $12.5B y/y
CARLB.DK Reports Q1 (DKK) Rev 13.7B v 13.4Be
SIE.DE Reports Q1 Net profit €1.45B v €1.44Be, Industrial Business profit €2.49B v €2.12Be, Rev €20.2B v €19.7Be
GLE.FR Reports Q1 Net €747M* v €863.2Me, Op €1.20B v €1.37B y/y, Rev €6.47B v €6.18Be
ABI.BE Reports Q1 $0.74 v $1.00e, EBITDA $4.49B v $4.90Be, R$12.9B v $12.9Be
BMW.DE Reports Q1 Net €2.15B v €1.64B y/y, EBIT €2.65B v €2.65B prelim, Rev €23.45B v €23.4B prelim; affirms forecast
RDSA.NL Reports Q1 adj Profit $3.75B v $3.01Be, Basic CCS EPS $0.41 v $0.13 y/y, R$71.8B v $64.8B y/y
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED
USCR Reports Q1 $0.42 v $0.17e, R$299.1M v $282Me
FAST Reports Apr Net Sales $343.8M, +3.7% y/y
(CZ) CZECH CENTRAL BANK (CNB) LEAVES REPURCHASE RATE UNCHANGED AT 0.05%; AS EXPECTED
*(US) Q1 PRELIMINARY NONFARM PRODUCTIVITY: -0.6% V -0.1%E; LABOR COSTS: +3.0% V 2.7%E
(BR) Brazil Apr PMI Services: 50.3 v 47.7 prior (1st expansion in 26 months)
*(US) MAR FINAL DURABLE GOODS ORDERS: 0.9% V 0.7%E; DURABLES EX TRANSPORTATION: 0.0% V -0.2% PRELIM
WTI Crude breaks Nov low below $46.00 (lowest level since April 2016)
(US) Atlanta Fed cuts Q2 GDP to 4.2% from 4.3% on 5/1
(US) House of Representatives passes ACHA Obamacare healthcare replacement bill
IBM Buffett said to have sold 33% of IBM stake in Q1 and Q2, but has stopped selling shares - CNBC
(HK) HONG KONG APR COMPOSITE PMI: 51.1 V 49.9 PRIOR; 1st expansion in 4 months, 3-year high
(NZ) NEW ZEALAND Q2 INFLATION EXPECTATION SURVEY: 2-YEAR INFLATION EXPECTATION 2.17% (highest since Q3 of 2014) V 1.92% PRIOR

FRIDAY 5/5
(CZ) Czech PM Sobotka changes mind and will NOT submit his resignation (withdraws offer); proposes to dismiss his finance minister
(US) APR UNEMPLOYMENT RATE: 4.4% V 4.6%E (lowest since May 2007)
(CA) CANADA APR NET CHANGE IN EMPLOYMENT: 3.2K V +10.0KE; UNEMPLOYMENT RATE: 6.5% V 6.7%E
(US) APR CHANGE IN NONFARM PAYROLLS: +211K V+190KE
(US) APR AVERAGE HOURLY EARNINGS M/M: 0.3% V 0.3%E; Y/Y: 2.5% V 2.7%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
(US) New York Fed Nowcast: cuts Q2 GDP forecast to 1.8% from 2.3% from 4/28

>>> US Close Dow +0.26% S&P +0.41% Nasdaq +0.42% Russell +0.59%

Closing Market Summary: Stock Market Ends Week at Record High

The major averages wrapped up the range-bound week with modest Friday gains. The S&P 500 (+0.4%) and the Nasdaq (+0.4%) finished at new record highs while the Dow (+0.3%) settled just a step behind its peers. For the week, the S&P 500 added 0.6%.

Buyers had a slight edge from the jump after the Employment Situation Report for April showed better than expected nonfarm payrolls (211,000 actual vs 180,000 consensus) and lower than expected unemployment (4.4% actual vs 4.6% consensus). However, the Jobs report did have a few blemishes. Namely, the labor force participation rate dipped to 62.9% from 63.0% and average hourly earnings decelerated on a year-over-year basis (to 2.5% from 2.6%). 

The Federal Reserve Bank of New York revised its second quarter GDP forecast to +1.8% from last week's +2.3% following today's data. However, investors in the bond market lacked conviction to push Treasuries one way or the other. The benchmark 10-yr yield (2.35%) settled at its unchanged mark.

Crude oil registered a much needed bounce-back performance on Friday, jumping 1.5% to $46.23/bbl. However, the positive showing only put a dent into the 8.0% week-to-date loss that the commodity brought into Friday's session. WTI crude faced multiple challenges this week, including persistently high U.S. inventories, weak economic data from China, and deteriorating technical support. Nonetheless, the energy sector appreciated the late-week rally, adding 1.6%.

The lightly-weighted telecom services (+1.5%) and materials (+1.4%) sectors closed in line with the energy space at the top of the day's leaderboard. Like energy, the materials group received some support from the commodity market with copper ($2.53/lb, +0.8%) finishing solidly higher after dropping 5.7% over the three previous sessions. Gold (1,226.90/ozt, -0.1%) and silver ($16.28/ozt, -0.1%) closed just below their flat lines, however, in light of their respective weekly losses of 3.3% and 5.7%, the slight downtick was a positive.

Retailers helped push the consumer discretionary sector (+0.6%) ahead of the benchmark index, evidenced by the 1.5% increase in the SPDR S&P 500 Retail ETF (XRT 43.39, +0.62). The industrial group (+0.6%) also settled ahead of the broader market with aerospace and defense names providing a pocket of strength. The real estate (+0.8%), utilities (+0.6%), consumer staples (+0.3%), and technology (+0.3%) spaces also finished in the green.

On the flip side, the influential financials (-0.1%) and health care (-0.1%) sectors ended Friday's session a tick below their flat lines. Biotech names weighed on the health care sector with the iShares Nasdaq Biotechnology ETF (IBB 295.87, -2.58) losing 0.9%. The financial space experienced broad weakness with most of its largest components settling in the red.

In Europe, the major bourses finished higher across the board with France's CAC (+1.1%) leading the advance. The positive performance precedes the French presidential run-off, which will take place on Sunday. The latest polls give Emmanuel Macron a healthy 62-38 advantage over Marine Le Pen. This has been construed as a positive for equity markets in light of Ms. Le Pen's anti-EU rhetoric. Germany's DAX and the UK's FTSE settled higher by 0.6% and 0.7%, respectively.

The U.S. Dollar Index (98.44, -0.17) slipped 0.2% as the greenback lost 0.1% and 0.4%, respectively, against the euro (1.0994) and the pound (1.2978).

In addition to the Employment Situation Report, investors received the March Consumer Credit report on Friday:

  • The April Jobs Report showed that nonfarm payrolls hit 211,000 (consensus 180,000), nonfarm private payrolls added 194,000 (Briefing.com consensus 175,000), the unemployment rate fell to 4.4% (consensus 4.6%), average hourly earnings increased 0.3% (consensus 0.3%), and the average work week was 34.4 (consensus 34.4).
    • The key takeaway from the report for us is that there were some elements that left it a little out of sync with the view that the economy is poised to hit, and sustain, escape velocity. The asynchrony we are referring to is the drop in the labor force participation rate and the deceleration in average hourly earnings growth on a year-over-year basis. The former dipped to 62.9% from 63.0% while the latter slipped to 2.5% from 2.6%. Friday's last economic report--March Consumer Credit (consensus $16.0 billion)--will cross the wires at 15:00 ET.
  • The Consumer Credit report for March showed an increase of $16.4 billion while the consensus expected growth of $16.0 billion. The prior month's credit growth was revised to $13.8 billion from $15.2 billion.
    • Consumer credit increased at a seasonally adjusted annual rate of 4.25% during the first quarter (and 5.25% in March), with revolving credit little changed and nonrevolving credit increasing at an annual rate of 5.75%.

Investors will not receive any economic data on Monday.

  • Nasdaq Composite +13.3% YTD
  • S&P 500 +7.2% YTD
  • Dow Jones Industrial Average +6.3% YTD
  • Russell 2000 +2.9% YTD