Wells Fargo

Judging by the recent action in equity futures, the continuously rangebound US market since the end of QE may be entering its latest downphase, catalyzed to a big extent by the recent strength in the JPY (the EURJPY traded down to 2 year lows overnight), especially following yesterday's not one but two statements by Abe advisor Harada saying a USDJPY at 125 isn't "justified" and a 105 level would be appropriate. A level, incidentally, which would push the Nikkei lower by about 20% and crush Japanese pensions which are now mostly invested in stocks. Not helping matters was the pause in the Chinese and Hang Seng stock bubbles, with the former barely rising 0.3%, while the former actually seeing its first 1.6% decline after many days of torrid, relentless rises.

One of America’s biggest banks is going to be protested by an unlikely group today: its employees. As The Guardian reports, Wells Fargo bankers are protesting the bank’s alleged predatory practices – mainly the sales quotas imposed on some of its workers (which have led to at least 30 employees opening duplicate accounts, sometimes without customers’ knowledge, in order to inflate their sales numbers). One worker warns, “it is not in Wells Fargo’s best interest for customers to purchase products and services they don’t use or need.” Now where have we seen this kind of activity before? Wells Fargo bank workers are not the only ones struggling to make ends meet without breaking ethical standards as bank tellers have collected as much as $105m in food stamps.

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

Back in April 2013, Apple shocked the world when in a dramatic U-turn to Steve Jobs beliefs, it announced what was "the largest single share repurchase authorization in history" when it boosted its share repurchase authorization to $60 billion from $10 billion. Today, GE did its best to match this number, when it reported that as part of a massive business restructuring, it announced a "new Board authorization of up to $50B buyback." This is how it will fund it.

• Nikkei tops 20,000, Europe hits 15-year high (Reuters)
• GE to sell real estate holdings, sets $50 billion share buyback (Reuters)
• Iran’s Middle Class Plans for Life After a Deal (BBG)
• Walgreens to Close 200 Stores as It Expands Cost Cuts (WSJ)
• Hillary Clinton expected to announce presidential run as soon as this weekend (Reuters)
• It will cost $1.5 billion to keep Deutsche Bank Libor Manipulators out of prison  (USA Today)
• Police Cameras Bring Problems of Their Own (WSJ)
• Obama says concerned China bullying others in South China Sea (Reuters)
• Investors Revive Appetite for Asian Junk Bonds (WSJ)

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.

In so many ways, Warren Buffett and modern America are the same thing. An idea packaged and marketed so brilliantly, most of humanity unquestionably believes the myth.  However, when you look beneath the surface, it becomes increasingly clear that neither of them actually come close to what’s printed on the package.

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

• Iran, powers push for nuclear deal as clock ticks toward deadline (Reuters)
• How DIY Bond Traders Displaced Wall Street’s Hot Shots (BBG)
• MillerCoors Caught in a Downdraft (WSJ)
• Saudi-led strikes again hit Yemen overnight (Reuters)
• Even With Free Money, Merkel Still Reluctant to Spend (BBG)
• Britain Uses Tax Breaks to Lure Digital-Game Developers (WSJ)
• China to Insure Deposits in Move Toward Scrapping Rate Curbs (BBG)
• As China Expands Its Navy, the U.S. Grows Wary (WSJ)

• Setbacks and progress as Iran, six powers meet to end nuclear impasse (Reuters)
• Russia’s Foreign Minister Sergei Lavrov to Leave Iran Nuclear Talks (WSJ)
• Obama Ramps Up Lobbying on Iran as Deadline Looms (WSJ)
• Greek yields edge up as lenders scrutinise reform pledge (Reuters)
• Oil prices drop on possible Iran deal, dollar (Reuters)
• Yemen’s Houthis Battle for Aden as Saudi Strikes Hit Rebels (BBG)
• Iran nuclear deal to see $20 oil if Tehran floods crude market (Telegraph)
• China’s Zhou Says PBOC Has Room to Act on Growth Slowdown (BBG)

• Google's new CFO to make $70 million (WSJ)
• Senate passes Republican budget with deep safety net cuts (Reuters)
• With Yemen strikes, Saudis show growing independence from U.S. (Reuters)
• Banks Slash Dividends as Loans Sour From Beijing To Pearl River (BBG)
• North American Railroads Caught by Speed of Crude-Oil Collapse (BBG)
• Japan’s Zero Inflation a Setback for Abenomics (WSJ)
• Cooperman Says U.S. Seeks Information About Omega Trades (BBG)

• Saudi Arabia, allies launch air strikes in Yemen against Houthi fighters (Reuters)
• Pilot on Crashed Jet Was Locked Out of Cockpit, NY Times Says (BBG)
• Why Bombing This Tiny Oil Producer Is Roiling the Energy Market (BBG)
• U.S.-led coalition, Iraqis pound Islamic State in Tikrit (Reuters)
• Munger Says Prepare for Harder World as Buying Power Slides (BBG),Mocks Greek ‘Idiotic Idea’ You Can Vote Yourself Rich (BBG)
• The Central Banker Who Saved the Russian Economy From the Abyss (BBG)
• Bank of Canada says foreign buyers complicate housing market (Reuters)
• Investors Scoop Up Companies’ Bonds (WSJ)
• Espirito Santo Probe Turns Mariana Mortagua Into Portuguese Star (BBG)

• ECB Tells Greek Banks Not to Boost Exposure to Athens Government’s Debt (WSJ)
• Search teams probe wreckage of jet in French Alps (Reuters)
• Flight Recorders Offer Best Hope of Explaining Jet’s Fatal Drop (BBG)
• Yemen Houthi militia sweeps toward Aden in threat to president (Reuters)
• In Nigeria, Oil Price’s Slide Deters Theft (WSJ)
• Saudi Arabia building up military near Yemen border (Reuters)
• Quant Who Shook the Financial World Tries More Humble Approach (BBG)
• Executive Pensions Are Swelling at Top Companies (WSJ)