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Wall Street Breakfast: Earnings Season Kicks Off

Earnings season for the first quarter is about to get underway, starting with Alcoa's (NYSE:AA) results after today's market close. If Wall Street forecasts are to be believed, traders are bracing for a 7.9% plunge in Q1 profits, marking the steepest decline since the Great Recession. It's part of a broader earnings erosion gripping U.S. companies due to the dramatic drop in oil prices, currency turmoil and slow growth across the globe.

The U.S. Federal Reserve will conduct a closed meeting this morning "under expedited procedures" during which the Board of Governors will review and determine advance and discount rates charged by the Fed banks. The event is notable because the last time such a gathering took place was on November 21, less than a month before the central bank's historic rate hike. President Obama is also scheduled to meet with Fed Chair Janet Yellen later this afternoon to discuss the economy and Wall Street reform.

Negative interest rates have helped boost demand and support stable prices by supplementing conventional monetary stimulus, senior officials at the International Monetary Fund said in a paper. The report comes ahead of the IMF's annual spring meetings this week in Washington, D.C. Six of the world's central banks have so far introduced negative rates, most notably the ECB and BOJ, and around a quarter of the world economy by output is now experiencing official rates that are less than zero.

Texas Senator Ted Cruz and Vermont Senator Bernie Sanders scored more victories over the weekend, taking shots at front-runners Donald Trump and Hillary Clinton, and extending an increasingly bitter nomination fight. Although the two states only offer a handful of delegates, and won't give Sanders extra ground (due to an evenly split caucus), the contests play a pivotal role in candidates' momentum ahead of the important New York primaries later this month.

Chinese consumer inflation came in a little under forecast in March, prompting speculation that further stimulus measures may be needed in the world's second largest economy. The consumer price index last month advanced 2.3% Y/Y, compared to analyst estimates for a 2.5% rise, while consumer inflation dropped 0.4% M/M. The producer price index, meanwhile, fell on-year for the 49th consecutive month, down 4.3%, but at a slower rate of decline than in February.

The recent G20 agreement to avoid competitive currency devaluation does not mean Japan can't intervene in response to the one-sided moves of the yen, according to Chief Cabinet Secretary Yoshihide Suga. "What the G20 is talking about is arbitrary intervention, which is different from responding to a one-sided move." The dollar hit a fresh 17-month low versus the yen last week on expectations that the U.S. Federal Reserve would raise interest rates very slowly.

Seeking to repair the damage from questions about his personal finances, U.K. Prime Minister David Cameron is creating a new task force to tackle tax avoidance, and will address MPs today on how he plans to investigate claims in the Panama Papers. Cameron published his tax records on Sunday to defuse criticism and clear his name in the Panama leak, in which his late father was mentioned for setting up an offshore fund.

Geopolitical tensions across the globe: Iranian Foreign Minister Mohammad Javad Zarif declared the country's missile program is not up for negotiation with the United States. The U.N. special envoy for Yemen welcomed the start of a tentative truce in the country's year-old conflict, but warned that peace talks due to start later this month would require difficult compromises for all sides. North Korea said it successfully tested a "long-range" engine designed for an ICBM that would "guarantee" an eventual nuclear strike on the U.S. mainland.

Ukrainian Prime Minister Arseniy Yatsenyuk has resigned following weeks of pressure, paving the way for a government revamp seeking to end the...