Bank of America

One look at BofA's earnings report shows why contrary to popular opinion, the bank that bailed out insolvent Merrill Lynch is far better off to be pnealized with tens of billions in legal fees than running its business unbothered by the racketeering government. The reason: a year after BofA reported $6 billion in litigation charges, moments ago Bank of America announced only $0.4 billion in legal fees, which meant it barely had any credible addbacks. So when looking at its numbers on a realistic, GAAP basis, BofA once again missed EPS, with the bottom line printing at $0.27, or below the $0.29 estimate.

McAfee: 

“Encryption Doesn’t Matter In a World Where Anyone Can Plant Software On Your Phone and See What You’re Seeing”

While today's macro calendar is empty with no central bank speakers or economic news (just the monthly budget (deficit) statement this afternoon), it’s a fairly busy calendar for us to look forward to this week as earnings season kicks up a gear in the US as mentioned while Greece headlines and the G20 finance ministers meeting on Thursday mark the non-data related highlights.

If there was any doubt that global trade is stalling, it was promptly wiped out following the latest abysmal Chinese trade data which saw exports tumble by 15% - the most in over a year - on expectations of a 8% rebound, with the trade surplus coming in at CNY18.2 billion, far below the lowest estimate. While unnecessary, with the Chinese GDP growth rate this Wednesday already expect to print at a record low, this was further evidence of weak demand both at home and abroad. Weakness was seen in most key markets, and the strength of China's currency was partly to blame, which again brings up China's CNY devaluation and ultimately QE, which as we wrote some time ago, is the ultimate endgame in the global reflation trade which, at least for now until the CBs begin active money paradropping to everyone not just the 0.01%, is only leading to inflation in stocks and deflation in everything else.v

GE’s announcement that its getting out of the finance business should be a reminder of how crony capitalism is corrupting and debilitating the American economy. The ostensible reason the company is unceremoniously dumping its 25-year long build-up of the GE Capital mega-bank is that it doesn’t want to be regulated by Washington as a systematically important financial institution under Dodd-Frank. Oh, and that its core industrial businesses have better prospects. We will see soon enough about its oilfield equipment and wind turbine business, or indeed all of its capital goods oriented businesses in a radically deflationary world drowning in excess capacity. But at least you can say good riddance to GE Capital because it was based on a phony business model that was actually a menace to free market capitalism. Its deplorable raid on the public purse during the Lehman crisis had already demonstrated that in spades.

“In my 30-year career, it’s one of the most unattractive risk-return propositions that I’ve seen,” DoubleLine's Bonnie Baha says. Between abysmally low yields, heightened rate sensitivity heading into a rate hike cycle, and balance sheet re-leveraging on the part of US corporations, it’s a bad time to be betting on corporate credit.

In a note today, Bank of America economists (after looking at weather data) admit their finding "puts us in an awkward spot today." What did it find? Namely that all those who reran that 2014 playbook, Ethan Harris and other Bank of America economists included, and decided to blame the weather for Q1 GDP crashing from over 3% to under 1%, are wrong or simply lying.

Moments ago, General Electric showed why April is much more likley to be a rerun of February than January or March when it announceed that it would go ahead and repurchase half of the total record stock buybacks announced in February, or some $50 billion in what may be the largest stock buyback announcement in history! How will GE fund this massive distribution to its shareholders, of which the most concentrated one will once again be the biggest winners? Simple: by dumping the division that nearly caused its insolvency during the financial crisis, the hedge fund known as GE Capital. As part of the just announced mega transaction, GE announced an agreement to sell the bulk of the assets of GE Capital Real Estate to funds managed by Blackstone. Wells Fargo will acquire a portion of the performing loans at closing.

"The fair value of hedges held by 57 U.S. companies in the Bloomberg Intelligence North America Independent Explorers and Producers index rose to $26 billion as of Dec. 31, a fivefold increase from the end of September," Bloomberg writes, noting that the very same Wall Street banks on the hook for the hedges also financed the shale boom.

"While Dudley clearly does not want stocks to decline a lot, he also wants to avoid meaningful increases... Also very apparent is that Dudley wants bond prices to go down – not a lot but clearly down." - Bank of America

Curious how the third largest energy deal, and 14th largest corporate take over in history, happened? The answer, courtesy of Reuters, is simple: all it took was a phone call.

• Israel, U.S. Lawmakers Press Case Against Iran Nuclear Deal  (WSJ)
• Rand Paul tries to broaden libertarian appeal (Reuters)
• Fewer Oil Trains Ply America’s Rails (WSJ)
• Chicago voters go to polls in first ever mayoral runoff (Reuters)
• FedEx to buy TNT to expand Europe deliveries (Reuters)
• Mohamed El-Erian Has Most of His Money in Cash (BBG)
• In Surprise Move, Australia Holds Rates (WSJ)
• Oil falls as Iran, China discuss more supply (Reuters)

When an economic crisis is coming, there are usually certain indicators that appear in advance...

Barron’s should have published its gushing cover story on Jamie Dimon’s stewardship of JPMorgan today – as an April Fool’s joke.

Having already proven that their institutions are above the law in the aftermath of the financial crisis, executives at the “Too Big to Fail and Jail” banks have decided it’s time to teach Senate Democrats a lesson. Not being content with trillions in taxpayer backed bailouts to protect and further consolidate virtually all wealth within their oligarch fiefdoms, these bankers are irate at the notion that a commoner would dare criticize their unassailable crony privilege. What Wall Street wants is one hundred Chucky Schumers in the Senate.