Stocks across the globe are heading higher, helped by some solid corporate earnings, oil's determination to top $44/bbl, and a new pledge by Japan stating it was prepared to weaken its currency (see below). Despite the screen of green, the S&P 500 is still where it started at the beginning of the month, continuing the trend which has categorized equities for most of 2016. Is "Sell in May" still relevant, or are the flat markets here to stay?

Economy

Japanese shares soared overnight after Finance Minister Taro Aso reiterated his resolve to intervene in the currency market if the yen's "one-sided" gains persist and last long enough to hurt the country's fragile economic recovery. "He said it again, so there is a growing view that he will actually do it," said Chihiro Ohta, general manager of SMBC Nikko Securities. Nikkei +2.2%.

Chinese consumer inflation flatlined on-year in April despite a big rise in food prices, falling just short of expectations. The consumer price index rose 2.3%, compared with a 2.4% forecast, while consumer inflation was 0.2% lower. Wholesale prices, meanwhile, declined on-year for the 50th consecutive month, down 3.4%, but at a slower rate of decline than in March.

It is too early to assess precisely the economic impact of the Alberta wildfire, according to the Bank of Canada, adding that it will have more to say in its interest rate decision later this month. Markets have ratcheted up the odds of a Canadian rate cut by year-end as the blaze disturbs oil production, but economists say the temporary interruption alone is unlikely to force the central bank's hand on May 25.

As Washington remains deadlocked over a solution to Puerto Rico's rapidly worsening debt situation, Treasury Secretary Jacob Lew traveled to the U.S. territory on Monday to put a face on the crisis. "It's very hard to do things like this until you are at a moment of necessity," he said outside one of the island's hospitals. "This is that moment." Policymakers in the House of Representatives will unveil a new version of emergency legislation tomorrow, which will clarify how to prioritize the different creditors in Puerto Rico's labyrinthine web of bond issuers.

Greece's 10-year bond yields have fallen below 8% for the first time in over six months after eurozone finance ministers offered debt relief to the cash-strapped country from 2018. The deal appears to be a compromise between Germany, which does not believe Athens needs additional debt relief, and the IMF, which insists it is necessary, and will be fleshed out by deputy finance ministers by May 24.

German industrial production declined more than expected in March, a second consecutive drop that could signal slackening demand in Europe's largest economy. Production, adjusted for seasonal swings, fell 1.3% from the prior month, when it dipped a revised 0.7%, according to data from the Economy Ministry in Berlin. Slowing global growth has led the German economy to rely increasingly on domestic demand, bolstered by record-low unemployment.

Maverick candidate Rodrigo Duterte has won the Philippine presidential elections, following the withdrawal of all his opponents. His record as the crime-crushing mayor of the southern town of Davao, once notorious for its lawlessness, earned him the moniker "The Punisher" and appears to have resonated with voters. Election officials also noted there was record turnout at polling stations, with more than 81% of the 54M registered voters casting a ballot.

Barely a month following the Panama Papers leak, the group of international journalists who linked some of the world's most powerful people to sheltering wealth abroad have released a searchable database of more than 200K offshore entities. It's not illegal to create a shell company (which can be used for legitimate purposes, such as protecting trade secrets), but because they can also obscure the identities of their owners, they're sometimes used for illegal activities.

Brazil's Senate is forging ahead with impeachment proceedings against Dilma Rousseff, rejecting a surprise decision by the acting speaker of the lower house, who tried to annul a key vote just days before the president could be suspended from office. The clash between Brazil's two most senior lawmakers threw markets into disarray and threatened to drag out a painful political crisis and constitutional standoff that could end up at the Supreme Court.

Stocks

Earnings roundup: Credit Suisse (NYSE:CS) swung to a 302M Swiss franc net loss, as it plowed ahead with restructuring its investment bank, and cautioned that subdued market conditions could continue into Q2. Hit by a lower demand for mobile networks, Nokia (NYSE:NOK) reported a net loss of €513M, warning of further cuts and layoffs following the €15.6B acquisition of Alcatel-Lucent. SoftBank's (OTCPK:SFTBY) quarterly profit plummeted more than 36%, as turnaround efforts continued at Sprint (NYSE:S), the struggling wireless carrier it bought in 2013. ING posted a 29% fall in Q1 profit, blaming the drop on higher regulatory costs in Europe and weakness in its financial markets division.

The high-profile mental competency case against Sumner Redstone was dismissed yesterday, but the two days of trial that occurred have prompted Viacom (VIA, VIAB) to consider another pay cut for Redstone, now its chairman emeritus. Board members from the company and CBS are now planning to visit the 92-year-old to investigate his competency for themselves, sources told WSJ. Redstone's total compensation at Viacom fell 92% to $2M last year, after the media giant slashed his bonus.

Microsoft is shutting down its Chinese Web portal next month as the firm shifts its focus from providing online content to offering software and services for Windows 10 devices. Microsoft (NASDAQ:MSFT), which is under investigation by Chinese antitrust authorities, said it plans to continue to invest in other businesses in the country as well as maintaining its research and development operations there.

Baidu's chief executive has called on employees to put values before profit in response to a scandal surrounding the death of a student who underwent an experimental cancer treatment he found on the company's search website. "If we lose the support of users, we lose hold of our values, and will truly go bankrupt in just 30 days," Robin Li wrote in a letter. The controversy has prompted regulators to impose curbs on the advertising business Baidu (NASDAQ:BIDU) relies on for the lion's share of its income.

Saudi Aramco is seeking to grow globally via joint ventures overseas as it prepares for a partial privatization due to the "challenging" backdrop for the energy industry. "The expansion is part of Aramco's plan to be the world's leading energy-chemicals company by 2020," CEO Amin Nasser said. Changes to the state-owned oil giant lie at the heart of plans for a radical overhaul of the kingdom's economy in the face of lower oil prices that have already caused massive fiscal deficits in Riyadh.

After admitting to false fuel efficiency data, Mitsubishi Motors (OTC:MMTOY) is firming up plans to compensate customers for related expenses, including gas costs and higher taxes on vehicles that no longer qualify for breaks. The amount paid will depend on the results of fuel testing by Japan's transport ministry, which began May 2 but will likely not finish until June. Mitsubishi Motors' shares have lost about 50% of their value since the scandal surfaced.

The Japanese government is urging automakers to call back an additional 7M or so vehicles sold in the country with Takata (OTCPK:TKTDY) air bags, the Nikkei reports. If all comply, the tally for recalls related to the faulty devices will hit roughly 120M cars worldwide. "Takata's recall crisis is like the Titanic hitting the iceberg," said Takeshi Miyao, an analyst at Carnorama. "You don’t realize the enormity until you see the impact from it."

Monday's Key Earnings

Gap (NYSE:GPS) -13.5% AH weighed down by Old Navy, Banana Republic.
Hertz (NYSE:HTZ) -4% AH after heavily missing estimates.
Teva (NYSE:TEVA) +5.1% as specialty drugs bolstered sales.
SolarCity (NASDAQ:SCTY) -20% AH on slipping margins, soft guidance.

Today's Markets

In Asia, Japan +2.2% to 15565. Hong Kong +0.4% to 20242. China flat at 2832. India +0.3% to 25772.
In Europe, at midday, London +0.8%. Paris +1.1%. Frankfurt +1.2%.
Futures at 6:20, Dow +0.6%. S&P +0.6%. Nasdaq +0.6%. Crude +1% to $43.89. Gold flat at $1266.40.
Ten-year Treasury Yield flat at 1.76%

Today's Economic Calendar
6:00 NFIB Small Business Optimism Index
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
10:00 Wholesale Trade
1:00 PM Results of $24B, 3-Year Note Auction