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 Good morning! Here's what you need to know. Chinese manufacturing is contracting. HSBC's China manufacturing PMI climbed to 48.3 in April from 48.0 in March. However, any reading below 50 signals contraction in the industry. "These indicate that the manufacturing sector, and the broader economy as a whole, continues to lose momentum," said HSBC's Hongbin Qu. "Over the past few days, Beijing has introduced more reform measures which could support growth by inducing more private sector investment. We think bolder actions will be required to ensure the economy regains its momentum." Warren Buffett isn't interested in war. Berkshire Hathaway held its annual shareholder meeting this weekend. Buffett reminded shareholders that there was "no guarantee" Berkshire would outperform the S&P 500 in every cycle. Regarding his role in Coca-Cola's controversial equity plan, he said it wouldn't have been productive to "go to war" with the board. "I think the best result for the Coca-Cola Company was achieved by our abstention, and we will see what happens in terms of compensation between now and the next meeting of Coke," he said. Apple wins $120 million from Samsung. Apple won a patent lawsuit against Samsung. However, Samsung will only be paying Apple $120 million, which is far less than the $2.2 billion the company was hoping for. "Today’s ruling reinforces what courts around the world have already found: that Samsung willfully stole our ideas and copied our products," said Apple in a statement. Euro zone inflation is staying low. The European Commission reduced its 2015 GDP growth forecast for the euro zone to 1.7% from February's prediction of 1.8%. It also forecasted that the inflation rate would be 0.8% this year and just 1.2% next year. JP Morgan's 'challenging environment.' On Friday afternoon, JP Morgan Chase filed its latest 10-Q, and in it the bank warned its Q2 markets revenue wasn't looking great. "Based on Markets revenue results to date, which reflect a continued challenging environment and lower client activity levels, expect 2Q14 Markets revenue to be down approximately 20%+/- versus 2Q13," said the company. "The Markets revenue actual results will depend heavily on performance throughout the remainder of the quarter, which can be volatile." Another GM recall. GM is recalling 51,640 SUVs. The recall include 2014 models of the Buick Enclave, the Chevy traverse, and the GMC Acadia. "An inaccurate fuel gauge may result in the vehicle unexpectedly running out of fuel and stalling, increasing the risk of a crash," said the National Highway Traffic Safety Administration. Economist Gary Becker has died. Becker won the Nobel prize in economics in 1992. "The 82-year old Becker was a pioneer in using the tools of economics to analyze things that are frequently thought to be outside the realm of economics," noted BI's Joe Weisenthal. "This idea of using economics to analyze non-market things seems normal these days (the book "Freakonomics" was all about this, and was a huge blockbuster). But when Gary Becker started doing this it was novel. And he truly taught people to see the world in new ways." India makes the cover of Barron's. As 800 million Indians head to the polls in history's largest-ever election, Barron's Jonathan Laing offers a bullish picture assuming Gujarat's Narendra Modi wins. "Modi's governance style flies in the face of Indian tradition, which has featured backroom business deals in exchange for kickbacks to circumvent the prospect of endless bureaucratic delays," wrote Laing. "Bidding on government contracts in Gujarat is done on the Internet, not over tea. Modi also has embraced privatization of key sectors like ports, water, and power, which is unusual in most of India's 28 state governments and in Delhi, where a dreamy Congress Party's predilection for socialism still holds sway despite the ideology's many failures in India since independence in 1947." Pfizer earnings beat. Pfizer said its Q1 revenue fell 9% year-over-year to $11.35 billion. Adjusted earnings came in at $0.57, which was a bit higher than the $0.55 expected by analysts. An update on American services. Later this morning, we'll get two U.S. services industry reports. First, we get Markit's services PMI report at 9:45 a.m ET; economists estimate the headline fell to 54.5 in April from 55.3 in March. At 10:00 a.m. ET comes the ISM non-manufacturing index; economists estimate ISM's index increased to 54.0 in April from 53.1 in March. "Early readings on the service sector for April, including the Richmond Fed survey and the flash reading of the Markit services PMI, pulled back slightly for April, but remained in positive territory," noted Wells Fargo's John Silvia. Markets around the world are in the red. Asian market closed lower. European markets are in the red. And U.S. futures are predicting a down day. *** Below is a Q&A Business Insider's Rob Wile had with Branko Milanovic, a former World Bank economist and now a visiting professor at CUNY. *** BUSINESS INSIDER: You appear to have been the first to review Piketty in English. How did that come about? Was there much competition to capture that byline? BRANKO MILANOVIC: I knew that his book was about to be published and when I was in Brussels last September, I remembered that, went to a bookstore and bought Piketty’s book just a couple of days after it came out in Paris. It was very prominently displayed in the bookstore. Piketty was already then very well known economist, many of the ideas discussed in the book were in some ways presented by him earlier, and there was quite a lot of anticipation “in the air.” I read the book very quickly, probably in less than 3 weeks. It was an extremely impressive piece of work; it went beyond the already high expectation that I had. There was no doubt in my mind that it is one key books of the last several decades. So I wrote the review very quickly. The first draft was ready I think by mid-October. There was not much competition because I read the book so early, in French, and the timeliness of my review “competed” with French reviews of his book, not with American. However, having said all of that I must confess that I did not expect that the reception of the book and his ideas would be so overwhelming. I do not think Piketty himself expected it. I don’t think that anyone could have imagined that within a month of its publication in the United States the book would be No. 1 of all books on Amazon. BI: We've since been inundated with Piketty reviews. Whose have you been most impressed by? BM: There were many excellent reviews. The ones I remember in particular were reviews by Robert Solow in The New Republic http://www.newrepublic.com/article/117429/capital-twenty-first-century-thomas-piketty-reviewed, Paul Krugman on his blog and The New York Review of Books http://www.nybooks.com/articles/archives/2014/may/08/thomas-piketty-new-gilded-age/, Robert Skidelsky in the Prospect Magazine http://www.prospectmagazine.co.uk/magazine/book-review-capital-in-21-century-thomas-piketty/#.U2bsBCiHhac. I also liked Doug Henwood’s review published on Book Forum http://www.bookforum.com/inprint/021_01/12987. A very nice review and discussion of some of Piketty’s points is by Brad DeLong. http://equitablegrowth.org/2014/04/12/notes-finger-exercises-thomas-pikettys-capital-twenty-first-century-honest-broker-week-april-12-2014/ BI: What seem to you to be the most important critiques of Piketty’s thesis? BM: Leaving aside the critiques of Piketty’s proposal for global taxation of capital (which are easy to make), the most serious critiques, in my opinion, are two: whether the rate of return on capital will remain higher than the growth rate of the economy despite a very large increase in the capital/income and capital/labor ratios, and Piketty’s lack of attention to the rise of China, India and other emerging market economies that can, in my opinion, keep the global rate of growth at a rather high level for a century or so. BI: Are there any misconceptions bout his findings that have started floating up that need to be nipped? BM: I believe that some of the left-wing critiques that question the definition of capital used by Piketty are misplaced. To me his definition that includes housing together with the “productive capital” makes lots of sense. Piketty clearly says that he treats all forms of assets that yield an explicit or implicit income (owner-occupied housing yields an implicit income) as capital. That’s both sensible and simple. So I do not see the point in the critiques. Similarly, the right-wing critique that Piketty’s ideas are driven by some kind of distaste for capitalism, or envy towards the rich, are, to be a bit harsh, pure nonsense. It is also meaningless to defend high incomes by invoking supposed high productivity of extremely well-paid executives or financiers, or to argue that their spending is needed to maintain aggregate demand. Surely, if maintaining high aggregate demand were a key objective, redistribution in favor of those who are poorer would be good for it because the poor spend a higher percentage of their income than the rich. BI:For the true Piketty devotee, what's the next work of his — translated or not — that they should seek out? BM: I don’t know what would be his next book. But it seems to me that his work will first, extend in a policy area toward implementation of some form of international cooperation regarding taxation of capital, second, expand the already formidable database on top incomes that Piketty and his coauthors have created, and thirdly, do research on new topics like fiscal evasion. True worldwide inequality may be much greater than what we currently believe if we were able to account for hidden wealth. | 
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