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US stocks move toward record high.

Room to rally | The S&P 500 traded less than 1% away from its all-time high, climbing to its highest level since early April. Equites are extending a rebound fueled by speculation that the Federal Reserve will be able to cut rates this year as higher-than-estimated jobless claims reinforced bets on policy easing. The advance in stocks has also been attributed to commodity trading advisers — who surf momentum — being modeled to buy shares this week. To Doug Ramsey at Leuthold, another 10% gain in the S&P 500 isn’t out of the question statistically. He analyzed 80 years of data on bull-market rallies, focusing on those that happened when unemployment was this low and the economic cycle this mature. If the current rally meets the prior records for length and level, the S&P 500 would end the year at 5,705. Elsewhere, a $25 billion sale of 30-year bonds saw good demand. Treasury 10-year yields declined four basis points to 4.46%.

Apple’s AI push | Apple will deliver some of its upcoming artificial intelligence features this year via data centers equipped with its own in-house processors, part of a sweeping effort to infuse its devices with AI capabilities. The company is placing high-end chips — similar to those designed for the Mac — in cloud-computing servers designed to process the most advanced AI tasks coming to Apple devices, according to people familiar with the matter. Simpler AI-related features will be processed directly on iPhones, iPads and Macs. The move is part of Apple’s much-anticipated push into generative artificial intelligence. Apple’s plan to use its own chips and process AI tasks in the cloud was hatched about three years ago. Still, the company accelerated the timeline after the AI craze — fueled by OpenAI’s ChatGPT and Google’s Gemini — forced it to move more quickly.

Coming up... | The calendar is light for Asia Friday. Honda and Tokyo Electron earnings are coming, as well as a TSMC board meeting. Elsewhere, University of Michigan consumer sentiment is set to be published. In the UK, there’s industrial production and GDP, and in the euro area the ECB’s account of the April policy meeting.

Source: Bloomberg

Companies can't issue debt fast enough with 88 deals in 72 hours

In credit markets worldwide, almost anything goes. From the US to Europe to Asia, companies — some of which found themselves shut out of the new issuance market not so long ago — are seizing on strong investor demand and a lack of clarity around where funding costs are headed to issue the most debt in years. The deluge comes as risk premiums on debt worldwide remain tight amid mixed signs of where interest rates are headed next. (Bloomberg Markets | May 9)

Buybacks are back: Corporate America is on a spending spree

US companies are feeling good about their prospects and spending like they mean it. The first-quarter earnings season is better than many Wall Street forecasters expected. At the same time, companies are stepping up repurchases of their own shares, which is giving a resurgent stock market an extra boost. Big tech companies are leading the charge. (The Wall Street Journal | May 9)

Private credit margins squeezed as competition, risky loans rise

Private credit lenders face margin pressure at a time when the rivalry from US banks intensifies, and Moody’s Ratings warns against rising problem loans in the flourishing $1.7 trillion industry. (Bloomberg Professional - free link | May 7)

High-tech trading firms are muscling into the bond industry

Riding a wave of digitization and a boom in ETFs, electronic market makers — who keep securities moving by continuously buying and selling in lightning-fast transactions — are expanding their reach in government bond trading and finally gaining ground in the once-untouchable world of corporate debt. In the process they’re storming territory ruled by Wall Street’s biggest banks, throwing everything from client relationships to transaction costs into flux and scooping up staff alongside market share — even as the march of so-called electronification stirs concerns about financial stability. (Bloomberg Markets - The Big Take | May 7)

'With the help of our friends at the Fed, they did put the income back in fixed income"

For the first time in nearly a generation, fixed income is living up to its name. This, at a certain level, is simply the consequence of benchmark rates in the US jumping from 0% to over 5% in two years. But at a time when all of Wall Street seems fixated on whether the Federal Reserve will cut interest rates this year — and heated arguments break out over whether the 10-year US bond should yield, say, 4.5% or 4.65% — it’s easy to lose sight of one important fact: That after being held hostage by zero-rate policies for almost two decades, US Treasuries are finally reverting back to their traditional role in the economy. (Bloomberg Markets - Fixed Income | May 6)

Listless inflows dim hopes of revival for long-suffering active funds

US active asset managers are getting left behind as investors tiptoe back into the markets via index-tracking funds. Active mutual funds experienced outflows of more than $50bn in the first three months of the year, according to Morningstar Direct, hurting large asset managers such as Capital Group, T Rowe Price, and Franklin Templeton. Instead, investors are focusing on strategies that track an index over those that select stocks, particularly exchange-traded funds. (Financial Times | May 5)

Scattered Spider is a prolific eCrime adversary who has conducted a range of financially motivated activities since early 2022. The adversary's early campaigns predominantly targeted firms specializing in customer relationship management (CRM) and business process outsourcing (BPO), as well as telecommunications and technology companies. Illustration: CrowdStrike

Hackers behind MGM attack targeting financial sector

The hacking group accused of disrupting casinos and hotels at MGM Resorts International last year is engaged in a new campaign targeting banks and insurance companies, according to cybersecurity researchers. The group, known as Scattered Spider, has targeted 29 companies since April 20 and successfully compromised the systems of at least two insurance companies, according to Resilience Cyber Insurance Solutions, a cybersecurity risk company whose researchers have been tracking the group’s activities online.

— Bloomberg Industries | Finance

FBI warns hackers' use of AI is growing. So is the bureau's.

Hackers of all stripes are widely using artificial intelligence to attack US companies, local governments, and federal agencies, senior officials at the Federal Bureau of Investigation say. Criminals are using technology such as generative AI to launch attacks that have historically been the preserve of well-funded, sophisticated threat groups backed by nation-states. These include targeted spear-phishing and social-engineering attacks. Hackers are employing deepfakes to persuade employees that their bosses are calling them and tailoring specific attacks to individuals using information scraped from social media or the wider internet. 

— The Wall Street Journal

Washington takes its cyber strategy global

The US has spent two years supporting Ukraine in one ground war and seven months backing Israel in another, and it continues to prepare for the possibility of a third in Taiwan. But arguably its most persistent focus has been on a far longer-running, more perennial, borderless battle over cyberspace and the future of technology. The State Department unveiled its own piece of that ever-expanding policy priority this week with the release of its International Cyberspace and Digital Strategy. This strategy lays out a doctrine of “digital solidarity” that emphasizes the role of technology in diplomacy and the need to build international coalitions to uphold an “open, inclusive, secure, and resilient” internet through “responsible state behavior” in cyberspace.

— Foreign Policy

In 1942, Bugs Bunny & Porky Pig danced and sang on movie screens to encourage Americans to buy US Treasury war bonds. Video: Looney Tunes ('Any Bonds Today?')

Uncle Sam wants you . . . to buy green bonds?

About $2.6 trillion of green bonds have been issued by countries and companies worldwide. But the world’s biggest bond issuer — the US government — has been noticeably absent from the green bond party. Is that about to change?

— Financial Times

The CEO who hired his wife, gave his dog a title, and brought down a bank

Vernon Hill’s Commerce Bancorp was about to open its first New York City branch in 2001 when his wife, Shirley, called wanting to know whether dogs could be allowed inside. Shirley Hill, also the branch designer, had been stopped from bringing the couple’s Yorkshire terrier, Sir Duffield, into other banks. Vernon Hill, the bank’s founder and chief executive, declared it “just another stupid bank rule” and launched a campaign to encourage dogs to visit Commerce. Hill, now 78 years old, thought a lot of bank rules were stupid. The builder of Commerce Bank and Metro Bank was also behind the toppling of Republic First.

— The Wall Street Journal

Americans are racking up 'phantom debt' that Wall Street can't track

It's hard enough for central bankers and Wall Street traders to make sense of the post-pandemic economy with the data available to them. At Wells Fargo & Co., senior economist Tim Quinlan is particularly spooked by the “phantom debt” he can't see. That specter lurks behind buzzy “Buy Now, Pay Later” platforms, which allow consumers to split purchases into smaller installments. The major companies that provide these so-called "pay in four" products such as Affirm Holdings Inc., Klarna Bank AB, and Block Inc.’s Afterpay, don’t report those loans to credit agencies.

— Bloomberg Wealth | The Big Take