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 Good morning! Here's what you need to know. Fed Day. The FOMC will give its latest guidance on monetary policy at 2 p.m. Bill McBride at Calculated Risk says it'll be mostly staying the course. "I expect the FOMC to announce a $10 billion decrease in asset purchases, to blame the early year weakness mostly on the weather, and to express some concern about housing and also concern that inflation is too low." Twitter Shares Sink. The stock is down 12.6% before the bell after the San Francisco-based group announced disappointing user growth. "Costolo's explanations [for the miss] were admirable, but fell short," BI's Jay Yarow said. "When the call started, Twitter was down 8-9%. By the end of the call, it was down 10-11%." Mortgage Demand Plummets. Applications fell 5.9% to their lowest level since December 2000. Refi demand fell 7% to the lowest level since 2008. Japan PMI. Japan's April Markit manufacturing survey yielded some mixed results. The headline PMI fell to 49.4 in April from 53.9 in March. That's the first sub-50 reading in 14 months. Any reading below 50 signals contraction.“As was expected, the implementation of the increase in the sales tax negatively impacted on Japanese manufacturing companies," noted Markit's Amy Brownbill. "Output and new orders both fell for the first time in 14 months. In both cases, Japanese manufacturing companies linked the reductions to the increase in the sales tax." IMF: Russia Is Already In Recession. The International Monetary Fund said Wednesday that Russia is already in recession. The organization also slashed its growth forecast for 2014 to 02.% from 1.3% just a few weeks ago citing the effect of the Ukraine crisis on investment. "If we define recession as negative growth in two quarters in a row, then Russia from that point of view is experiencing recession," IMF economist Antonio Spilimbergo was quoted as saying by the Interfax news agency. Eurozone Inflation Higher. Prices climbed 0.7%, less than the 0.8% expected but better than 0.5% in March. "European Central Bank governing council member Christian Noyer said Wednesday he favors some additional measures to loosen monetary policy, but said the central bank is already doing a lot," the Wall Street Journal reported. 'I think we can do a little bit more, but essentially we have done what is necessary,' he said on French radio Europe 1." Justice Looking Into Illicit Tax Shelters. The Justice Department is looking to bring criminal charges against Credit Suisse and BNP Paribas for providing illicit tax shelters to U.S. clients and financing blacklisted governments respectively, the New York Times reports. The FT says BNP has warned its penalty could be in hte multiple billions. ADP. At 8:15 a.m. we get the ADP employment report for April. Consensus is for a reading of 210,000 versus 190,000 prior. "The ADP report received a lot of criticism from some analysts ahead of last month’s release, but the critics were at least temporarily quieted by just a 1K miss: The BLS reported private payrolls up 192K, almost identical to the 191K ADP estimate," HFE's Jim O'Sullivan said in a note this morning. "The monthly ADP estimate reflects a combination of current-month data derived from ADP clients’ employee records and an estimate of the recent trend, based in large part on the latest BLS data. As a result, last month’s payrolls data will affect this month’s ADP estimate. The point of contention is whether the ADP estimate has become overly dependent on the latest BLS data, and not enough on ADP’s independent information, such that the ADP series is a better indicator of the prior month’s payrolls than the current month’s. Indeed, data for some months recently seem to fit that pattern, although we suspect the outcome is largely by chance. According to Mark Zandi of Moody’s Analytics, which helps compile the data, 96% of the variation in ADP from month to month is due to the independent ADP data." GDP. At 8:30 a.m. we get a Q1 GDP reading. Estimates are for a print of 1.2% growth, down from 2.6% prior. This would be driven by an estimated 2.0% growth in personal consumption.
Markets. Are going nowhere. TimeWarner just announced they'd beat on earnings. Other earnings today include Yelp and MetLife. *** Below is a Q&A with Pete Saunders, a Chicago-based urban planner. He's been blogging about problems in city housing markets at The Corner Side Yard. *** PS: Can you summarize the problem you're trying to diagnose? Our nation's cities are on the cusp of rebirth to an extent not seen in my lifetime. It's fair to say that while lots of analysts and observers are debating whether or not cities are adding more population than suburbs today, the fact is that the tide has turned. More and more people are expressing a desire to live in walkable, urban environments, with amenities and access, than at any time in the last 50 years. And more importantly, they're acting on it. The trend will continue to build. I've had a long interest in urban rebirth and revitalization that goes back to my growing up in Detroit in the '70s. And while I recognize that not all cities are the same, I'm concerned with how the rebirth is happening. There are so many new city movers who are either afraid of the conditions in sketchy areas, or afraid of being labeled as part of the problem of gentrification, that they're creating citadels of affluence in cities that have little or no connection to the rest of the city. My fear is that many would prefer to strengthen the citadel at the expense of the rest of the city. Where I live, in Chicago, might be the clearest example of this because of its long held segregation patterns, but it's happening in some fashion around the country. I want to call attention to this and seek alternative paths. BI: How does this problem differ between cities and suburbs? What role do current zoning laws play? PS: At the metro level, if we're talking about reducing racial and economic segregation, the problem is one of constrained housing supply in the 'burbs, which artificially raises prices and acts as a barrier for minorities. Without a doubt a more diverse mix of housing types would open large areas of the suburbs up to minorities -- and many suburbs have resisted that. However, when talking about the city alone, conditions change. I argue that the burden of artificially high suburban home prices doesn't rest on in-demand urban neighborhoods, that burden rests on the poor, working-class and middle-class neighborhoods whose prices have been artificially depressed as a result of suburban actions. So I guess I see suburban zoning laws affecting things at the metro level, having an impact on low and moderate income city neighborhoods, but having less of an impact in the most desirable high-income neighborhoods. BI: What metros are exceptions to this problem? PS: Admittedly this is more of a Northeast/Midwest city problem, where segregation is more clear-cut. There, economic and racial segregation tend to go hand in hand. But there are many Sun Belt metros (I'm assuming, I don't get around much) that are economically segregated by less so racially. BI: In your second post you write, "If young affluents are serious about returning to cities, they should consider Austin, Bronzeville, Woodlawn and South Shore, and not just Wicker Park and Logan Square." How would this be different from some commonly accepted definitions of gentrification? PS: Like I said earlier, there are lots of people who want to avoid the gentrifier label. So young affluents are headed to the same locations, and if the trend continues they will become a strain on amenities and city services. We're setting ourselves up for a point where we'll have a critical mass and explosion into surrounding communities that will do far more harm than good. I tend to think gentrification is a return to normalcy for most neighborhoods. Austin, Bronzeville, Woodlawn and South Shore are relatively poor now, but that hasn't always been the case. I'm about trying to manage that transition, not just letting it happen. BI: What metros, if any, are "getting it right" when it comes to this problem? PS: I've only recently developed this dissenting view on housing, segregation and gentrification, so I'm not exactly sure about metros that are "getting it right" at this time. Honestly, it might be that no one is getting it right now, but that metros might be angling to be the first ones to do so. We're still in uncharted waters six years on since the housing collapse. No one really knew who the Sun Belt metro winners would be in 1947. | 
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