General Electric

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.

• 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 Cop Is On the Take

“If you’re unhappy with what you’ve had over the last 50 years, you have an unfortunate misappraisal of life...  should all be prepared for adjusting to a world that is harder..."

• 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)

A shift in the mutual fund industry's stance towards grossly overvalued private tech startups may be embedding risk into the retirement accounts of unsuspecting Americans, suggesting that the rather creative valuations VCs and founders place on the latest app may be imperiling your 401k. It's called "chasing unicorns."

• As reported here first: The U.S. Has Too Much Oil and Nowhere to Put It (BBG)
• Dollar Drops From 12-Year High as S&P Futures, Bonds Gain (BBG); Dollar Bulls Retreat From 12-Year High to Euro With Fed in View (BBG)
• Clinton Private Email Plan Drew Concerns Early On (WSJ)
• ECB Bond Buying Not Needed With Economy Improving, Weidmann Says (BBG)
• China Feb new yuan loans well above forecast (Reuters)
• U.S. probing report Secret Service agents drove car into White House barrier (Reuters)
• Kerry tells Republicans: you cannot modify Iran-U.S. nuclear deal (Reuters)
• PBOC Pledges to Press on With Rate Liberalization Amid Slowdown (BBG)
• China Prepares Mergers for Big State-Owned Enterprises (WSJ)

Arbitrary Price Weighting

• RBS to cut up to 14,000 jobs in investment banking unit (FT)
• Doctors, patients scramble ahead of high court Obamacare decision (Reuters)
• Rajan Cuts India Rates After Modi Agrees to Inflation Target (BBG)
• Russia’s Putin Makes First Public Comments on Killing of Boris Nemtsov (WSJ)
• House breaks impasse, passes security funding without provisions (Reuters)
• How a 25-Year-Old Investor Spurred Lumber Liquidators’ Plunge (BBG)
• Jeff Immelt’s Overhaul of GE Impeded by Falling Oil Prices (WSJ)
• Sahara India Defaults on Luxury Hotel Loans From Bank of China (BBG)

• Yellen faces Senate grilling on Fed rate policy, transparency (Reuters)
• Big Banks Face Scrutiny Over Pricing of Metals (WSJ)
• Greece makes more concessions to euro zone, Germany sets vote (Reuters)
• Time for another executive order: Longer Lives Hit Companies With Pension Plans Hard (WSJ)
• The Syria invasion "false flag" approaches: Islamic State in Syria abducts at least 90 from Christian villages (Reuters)
• Why Lenders Love the $2.5 Million Home Loan (BBG)
• Reuters journalist Maria Golovnina dies in Pakistan aged 34 (Reuters)
• Qatar’s Ties to Militants Strain Alliance (WSJ)

"...those companies were among the many that gave to the Clinton family’s global foundation set up by her husband, former President Bill Clinton. At least 60 companies that lobbied the State Department during her tenure donated a total of more than $26 million to the Clinton Foundation, ...Mrs. Clinton’s connections to the companies don’t end there. As secretary of state, she created 15 public-private partnerships coordinated by the State Department, and at least 25 companies contributed to those partnerships."

The fact that there is a debate about a quarter-point rate hike tells us that extraordinarily low interest rates have mostly failed to deliver a robust recovery. That people opposed to even the tiniest increase in rates are resorting to hyperbole tells us that they too know this. The thinking seems to be that six years into near-zero policy, the only reason it hasn’t worked is because it hasn’t been tried long enough. Meanwhile, the dangerous side effects of year after year of artificially low rates continue to grow.

• Greece will do 'whatever it can' to reach deal with EU (Reuters)
• ECB Urges Greek Political Deal as Emergency Cash Is Tight (BBG)
• Fighting rages in run-up to Ukraine ceasefire (Reuters)
• Eurozone GDP Picks Up, Thanks to Germany (WSJ)
• Two J. P. Morgan Executives Connected to Asia Hiring Probe Pushed Out (WSJ)
• Putin's High Tolerance for Pain and Europe's Reluctance to Inflict It (BBG)
• Indigestion Hits Top U.S. Food Firms (WSJ)
• Alibaba's Jack Ma seeks to reassure employees over U.S. lawsuits (Reuters)