“Distrust and caution are the parents of security” — Benjamin Franklin

1. Japan overhauls its public pension fund — Reuters, the government announced a reshuffle of the Investment Committee of the $1.26 trillion Government Pension Investment Fund (GPIF), in line with Abe’s drive to have the fund make riskier investments and rely less on low-yielding government bonds. The revamp is part of Abe’s “third arrow” of his strategy to reform the economy and lift Japan out of deflation.
2. European Central Bank (ECB) could embark on a broad-based asset buying plan — ECB President Mario Draghi said Weaker inflation could prompt broad ECB asset-buying. He also added that a further strengthening of the euro could also prompt action.
3. The FDA is set to unveil proposals to regulate electronic cigarettes — the proposal will include an eventual ban on sales to anyone under 18 and manufacturers will also have to gain FDA approval for their products, disclose the chemicals used in the devices and add health warnings about the addictiveness of nicotine. Lorillard (LO) commands almost 50% of the e-cigarette market in convenience stores, while Altria Group (MO) and Reynolds American (RAI) are starting to ramp up their offerings.
4. China’s manufacturing sector has contracted for a fourth consecutive month in April — the HSBC PMI gauge has edged up to 48.3 from 48 in March. “Domestic demand showed mild improvement and deflationary pressures eased,” says HSBC, “but downside risks to growth are still evident as both new export orders and employment contracted.”
5. Alaska Legislature approves state stake in major gas pipeline, LNG project — Alaska’s legislature has approved Governor Sean Parnell’s proposal to allow the state to negotiate the export of natural gas with BP (BP), ConocoPhillips (COP), ExxonMobil (XOM) and TransCanada (TRP). The plan is to build an 800-mile pipeline to a liquefied natural gas export plant, with the project set to cost $45B-65B. The state would retain ownership of 25% of the LNG plant.
6. S&P has reduced Russia’s rating by a notch to BBB-, one grade above junk level, S&P kept the country’s outlook at negative as the tensions with Ukraine continue to ratchet up. Russia began military exercises on its border with Ukraine in response to the latter killing five pro-Moscow rebels during attempts to reassert control over the eastern part of the country.

The week ahead — Economic data from Econoday.com:

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