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By Jake Sherman, Anna Palmer, Daniel Lippman and Eli Okun

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THE JOHN MCCAIN CAPITOL CEREMONY SCENE ... THE CAPITOL doesn't get like this too often. Security was extraordinarily tight. Secret Service was buzzing about the Hill campus. The Capitol Rotunda -- where Sen. John McCain (R-Ariz.) was memorialized and where he will lie in state -- was filled to the brim. Dozens of members of the House and Senate stood around the periphery of the casket, which was directly under the Capitol dome. The ambassadorial corps had its own section.

PEOPLE STARTED FILING IN in the 10 a.m. hour, and the program started around 11 a.m.

SENATE MAJORITY LEADER Mitch McConnell, Speaker Paul Ryan and Vice President Mike Pence all spoke. The ceremony was televised, and will get lots of coverage over the next few days, but here are a few lines that stuck out. McConnell called McCain a "generational leader." Ryan noted that McCain was "a man, yes, of the Senate but also a man of the House." Pence noted that he was asked to attend by the president.

THE INTERACTIONS and general mood were very interesting to watch. FORMER SENS. JOHN WARNER (R-Va.) and CARL LEVIN (D-Mich.) - two men McCain worked closely with on military issues - walked arm in arm out of the ceremony. House Minority Leader Nancy Pelosi (D-Calif.) held Rep. Sam Johnson (R-Texas) up so he could bid adieu to McCain. Johnson and McCain were cellmates at the infamous Hanoi Hilton when they were prisoners of war in Vietnam.

NOTABLE ATTENDEES: Former Rep. Chris Shays (R-Conn.), who worked with McCain on campaign finance reform; Ray LaHood, a former member of the House and transportation secretary; Florida Gov. Rick Scott and Maryland Gov. Larry Hogan; Anthony Kennedy; the administration was represented by: Attorney General Jeff Sessions, Defense Secretary Jim Mattis, John Kelly, John Bolton, Deputy AG Rod Rosenstein and Kellyanne Conway ...

... WARREN BEATTY, Annette Bening, former Sen. Kelly Ayotte (R-N.H.), former Sen. Russ Feingold (D-Wis.), former DHS Secretary Tom Ridge, David Berry and family, former Defense Secretary Bill Cohen, Vladimir Kara-Murza, Henry Kissinger, former Sen. Joe Lieberman (I-Conn.) and his wife Hadassah.

... THE ENTIRE SENATE seemed to be in attendance, but former Sens. Chris Dodd (D-Conn.), Sam Brownback (R-Kan.) and Max Baucus (D-Mont.) were also there.

-- EXPECTED TO PAY A VISIT LATER TODAY: Ohio Gov. John Kasich; Su Chia-chyuan, the president of the Taiwanese parliament; Attorney General Jeff Sessions and his family; Labor Secretary Alex Acosta; Justice Sonia Sotomayor; Lithuanian Foreign Minister Linas Antanas Linkevi\u010dius; Latvian Foreign Minister Edgars Rink\u0113vi\u010ds.

CHECK OUT these great photos from Scott Mahaskey, our photo editor: VP Mike Pence, Karen Pence, Cindy McCain and Jack McCain, Cindy McCain leaning on John McCain's casket, the Rotunda, Chuck Schumer, the military honor guard lowering the casket, Meghan McCain crying over her father's casket and former Sen. Joe Lieberman blowing a kiss to McCain's casket

THE POLITICO LEDE-ALL ... "McCain lies in state as tributes flow," by John Bresnahan and Nolan McCaskill: "John McCain's last visit to Washington began with a military honor guard carrying the body of the late Arizona Republican into the Capitol, where his former colleagues paid their final respects to the longtime senator, GOP presidential nominee and war hero.

"With dozens of current and former senators and members and McCain's family in attendance -- including McCain's 106-year-old mother, Roberta -- Vice President Mike Pence, Senate Majority Leader Mitch McConnell and Speaker Paul Ryan hailed the 81-year-old senator as a uniquely, unmistakably American figure.

"'Generations of Americans will continue to marvel at the man who lies before us,' McConnell said. 'The cocky, handsome naval aviator who barely scraped thru school, and then fought for freedom in the skies. Who witnessed to our highest values even through terrible torture, and who became a generational leader in the United States Senate, where our nation airs its great debates.' 'This is one of the bravest souls our nation has ever produced,' added Ryan.

"Friday marked the first day of two days of tributes to McCain by official Washington, a gesture on a scale normally given to a president. On Saturday, former Presidents Barack Obama and George W. Bush will be speakers at a funeral in Washington National Cathedral. McCain's body will be laid to rest on Sunday at the U.S. Naval Academy in Annapolis, Md., at a private ceremony." POLITICO

Presented by Morgan Stanley:

Getting to the core of rising inflation: A new surge in U.S. healthcare costs could position core inflation for its highest year-over-year gain since 2008. Morgan Stanley Research details what this could mean for markets. Read more.

NEWS: WHCA PRESIDENT OLIVIER KNOX WRITES: "By now, you've seen the photograph from the Trump rally yesterday that shows an aide with his hand over a photographer's lens, an attempt to prevent our colleague from getting a picture of a protester at the event. I have spoken to both the White House and the Trump campaign. The White House referred me to the campaign.

"The Trump campaign assures me that these were the actions of an inexperienced volunteer, who understands that he acted in error. The campaign has taken him off the road, and promises that this will not happen again."

Good Friday afternoon. SPOTTED: Michael Avenatti at the SW Steakhouse at the Wynn in Las Vegas Thursday night. Pic

THE STAR's DANIEL DALE: "Bombshell leak to Toronto Star upends NAFTA talks: In secret 'so insulting' remarks, Trump says he isn't compromising at all with Canada": "In remarks Trump wanted to be 'off the record,' Trump told Bloomberg News reporters on Thursday ... that he is not making any compromises at all in the talks with Canada - but that he cannot say this publicly because 'it's going to be so insulting they're not going to be able to make a deal.' In another remark he did not want published, Trump said ... that the possible deal with Canada would be 'totally on our terms.' He suggested he was scaring the Canadians into submission by repeatedly threatening to impose tariffs. ...

"[T]he remarks immediately became a factor in the negotiations: Trudeau's officials, who saw them as evidence for their previous suspicions that Trump's team had not been bargaining in good faith, raised them at the beginning of a meeting with their U.S. counterparts on Friday morning. ...

"The Star was not able to independently confirm the remarks with 100 per cent certainty, but the Canadian government is confident they are accurate." The Star

-- MORE DETAILS ... "Difficult NAFTA talks with Canada continue as deadline looms," by Megan Cassella: "The Trump administration has yet to get Ottawa on board after nailing down a preliminary two-way pact with Mexico earlier this week, but sources close to the negotiations said U.S. negotiators are working to try to send Congress formal notification of an agreement that includes both of its NAFTA partners. ... Trump has threatened to have the two-way deal with Mexico replace NAFTA and said he would leave Canada on the sidelines if officials did not agree to negotiate 'fairly.' But in the days since, both sides had seemed optimistic that issues could be wrapped up in the near future, if not
on Friday." POLITICO

-- "Trade war: China suffers three-month export downturn as Donald Trump's tariffs bite," by South China Morning Post's Frank Tang: SCMP

THE INVESTIGATIONS -- "Former Manafort associate is charged with failing to register as a foreign agent," by Kyle Cheney: "[Samuel] Patten's company allegedly received more than $1 million for its Ukraine work from 2015 to 2017, and contacted officials in Congress and the executive branch without properly registering as a foreign agent. ... [R]eports in the spring indicated that Patten has associations with some of the figures at the center of Mueller's investigation of Russian interference in the 2016 election. In addition to his former ties to Manafort, Patten formed a firm in 2015 with Manafort ally Konstantin Kilimnik, who Mueller's team has suggested had ties to Russian intelligence as
late as 2016. ...

"Prosecutors say Patten should have known to register because he had registered his personal firm - the Office of Sam Patten LLC - twice in recent years." POLITICO

-- "Two prosecutors leave Mueller's office," by CNN's Katelyn Polantz: "Prosecutors Ryan Dickey and Brian Richardson are no longer working for the office of special counsel Robert Mueller, the Justice Department confirmed. Both lawyers were relatively junior but frequently spotted members of Mueller's corps. ... Richardson had been among Mueller's attorneys at Dutch lawyer Alex Van Der Zwaan's sentencing in April. ... Dickey will continue to work on criminal matters at the Justice Department." CNN

-- "AP sources: Lawyer was told Russia had 'Trump over a barrel,'" by AP's Eric Tucker and Chad Day: AP

2018 WATCH -- "Arizona candidates seek McCain's mantle," by James Arkin: "Rep. Martha McSally, a former fighter pilot, emphasized her shared biography with McCain in her primary night victory speech on Tuesday, after she won the Republican nomination. Her Democratic opponent, Rep. Kyrsten Sinema, has spent months selling herself as the heir to McCain's distinctive legislative style - a bipartisan-focused 'independent voice' who, like McCain, would 'put country over party,' she said. ...

"It's a sharp departure from other Senate campaigns around the country that have revolved around President Donald Trump." POLITICO

-- "Coming Soon to Facebook: Lots of Extreme Political Ads," by WSJ's Georgia Wells and Deepa Seetharaman: "Campaign strategists are gearing up to flood Facebook with inflammatory and polarizing ads heading into the midterm elections, saying its advertising platform rewards extreme messaging more than other venues. ...

"Ahead of the 2016 election, former Democratic strategist Melissa Ryan tested a range of online campaign ads including 'pretty and ugly, nice and incendiary,' she said. 'Ugly and incendiary won every time,' including on Facebook, said Ms. Ryan ... Facebook and some campaign strategists dispute this finding, saying the ad-auction system doesn't reward extreme messages in isolation of other factors." WSJ

-- "Why so many people are coming to see Beto O'Rourke: A revolt against Trump and a demand for compassion," by WaPo's Jenna Johnson in Fort Davis, Texas: WaPo

DATA DU JOUR -- WAPO/ABC POLL ... "60 percent disapprove of Trump, while clear majorities back Mueller and Sessions," by WaPo's Philip Rucker and Scott Clement: "President Trump's disapproval rating has hit a high point of 60 percent ... Nearly half of Americans, 49 percent, say Congress should begin impeachment proceedings that could lead to Trump being removed from office, while 46 percent say Congress should not." WaPo

SPY GAMES -- "Exclusive: Chief U.S. spy catcher says China using LinkedIn to recruit Americans," by Reuters' Warren Strobel and Jonathan Landay: "William Evanina, the U.S. counter-intelligence chief, told Reuters in an interview that intelligence and law enforcement officials have told LinkedIn ... about China's 'super aggressive' efforts on the site. ... German and British authorities have previously warned their citizens that Beijing is using LinkedIn to try to recruit them as spies. But this is the first time a U.S. official has publicly discussed the challenge in the United States and indicated it is a bigger problem than previously known. ...

"Evanina said LinkedIn should look at copying the response of Twitter, Google and Facebook, which have all purged fake accounts allegedly linked to Iranian and Russian intelligence agencies." Reuters

WAR REPORT -- "Military Believes Trump's Afghan War Plan Is Working, but Spy Agencies Are Pessimistic," by WSJ's Neal E. Boudette: "Some officials overseeing the war are concerned that a negative intelligence assessment could prompt Mr. Trump to shift course and abandon a strategy he reluctantly embraced last year that sent thousands of additional American troops to Afghanistan. At the heart of the debate is the evolving assessment of the war in Afghanistan by America's 17 intelligence agencies ...

"While the official military view of Afghanistan is 'cautiously optimistic,' some of these people said the intelligence view is 'cautiously pessimistic.' That has led to intensive discussions about how to frame the next assessment of the war in Afghanistan that will be presented to Mr. Trump in the coming months, they said." WSJ

MICHAEL KRUSE: "The Weekend at Yale That Changed American Politics": "[It] easily could have been just another set of lectures, of interest only to a small lot of participants and attendees, the kind of higher-ed, corkboard-flyer get-togethers that happen all the time with no broader fanfare or larger lasting consequences. ... Here, in fact, is what happened: the birth of the Federalist Society. In the 36 years since, it has become one of the most influential legal organizations in history-not only shaping law students' thinking but changing American society itself by deliberately, diligently shifting the country's judiciary to the right. ...

"Today, a remarkable four of nine of the country's top justices have Federalist Society ties, and the confirmation of Brett Kavanaugh-literally picked from a list given to President Donald Trump by the organization's executive vice president-would make five." POLITICO Magazine

2020 WATCH -- "Milwaukee's pitch to Democrats: Try visiting Wisconsin this time," by Natasha Korecki: "In its bid to woo the 2020 Democratic National Convention, Milwaukee this week offered up a state-of-the-art arena, robust donor commitments and demonstrated the wherewithal to handle transportation, hotel and entertainment demands. Then city officials got to the real argument: Donald Trump. ... No state better embodies the party's devastating presidential loss than Wisconsin, which Hillary Clinton felt confident enough to bypass only to see it to fall to Trump by less than 25,000 votes." POLITICO

ON THE BORDER -- "Still separated: Nearly 500 migrant children taken from their parents remain in U.S. custody," by WaPo's Maria Sacchetti: "Nearly two-thirds of the 497 minors still in custody - including 22 'tender-age' children, who are younger than 5 - have parents who were deported, mostly in the first weeks of Trump's 'zero-tolerance' policy. ... Government officials say they are moving as fast as possible, despite legal challenges and complicated logistics - including dozens of children who officials say want to go home to be with their parents, but have not been sent because of a temporary court order that prohibits their deportation." WaPo

WASHINGTON, INC. -- "GOP Took Large Sums From Abramoff's Ex-Con Former Business Partner," by Talking Points Memo's Cameron Joseph: "The [NRCC] has accepted $50,000 in donations from Adam Kidan this summer, taking money from a former business partner of ... [Jack] Abramoff who served 31 months in jail then spent three years on probation after pleading guilty to fraud and conspiracy. That money came in the form of $30,000 in direct donations to the committee, and another $20,000 Kidan gave to House Speaker Paul Ryan's (R-WI) leadership PAC that was passed along to the NRCC." TPM

MEDIAWATCH -- Jack Shafer won the Arthur Rowse Award for Press Criticism-Print at Thursday night's annual National Press Club awards dinner. ... POLITICO honorable mentions: Tim Alberta, for the Sandy Hume Award for Excellence in Political Journalism, and Joanne Kenen, for the Joseph D. Ryle Award for Excellence in Writing on the Problems of Geriatrics ... The Capital Gazette in Annapolis received an NPC president's award, and a moment of silence was held at the dinner to honor its slain staff. More info

TV TONIGHT ... Bob Costa sits down with PBS' Yamiche Alcindor, WaPo's Erica Werner and NYT's Mark Landler and Julie Hirschfeld Davis on PBS' "Washington Week" at 8 p.m.

FOR YOUR RADAR -- Perry World House, the University of Pennsylvania's global affairs research hub, has named former Mexican President Felipe Calderón, H.R. McMaster, Susan Rice, former Rep. Charlie Dent (R-Pa.), Bob Work and Nadia Schadlow among its 2018-19 class of fellows. More info

BONUS BIRTHDAY: Alex Schriver, SVP of public affairs at Targeted Victory. How he's celebrating: "Tonight, I'll watch my favorite team, the Washington Nationals, continue to disappoint me. Tomorrow, I'll play golf at my beloved Belle Haven Country Club. I'll be with my closest friends in town, my best friends from college who have flown in, and my wonderful girlfriend Tracey. Most importantly, we'll honor and celebrate our best friend, Jon Graham, who tragically passed away last Friday." Playbook Plus Q&A

Presented by Morgan Stanley:

Tighter monetary policy has led to greater volatility this year; from the Volatility Index unwind in February, to emerging markets weakness in April, to the wobble in Italian bonds stemming from recent political uncertainty in the country. But something is different this time. For much of the last nine years, easy policy was accompanied by low inflation, which gave central banks a great deal of room to maneuver. However, the inflation picture is now changing. Thanks to rising oil prices, headline inflation is now 1.9%Y in the eurozone and 2.5%Y in the U.S. But this isn't just about the effects of oil prices, which are arguably transitory. Core inflation is rising too. And for the most
important inflation measure-U.S. Core Personal Consumption Expenditures-for the most watched central bank (the Fed), there is a major change afoot that could keep core inflation higher. Read more.

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