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Daily Agenda: ECB Asset Purchases Begin

Greece returns to the negotiating table; Chinese exports rise sharply; Blackstone to purchase Willis (Sears) Tower.

The rollout of the European Central Bank’s $1.2 trillion asset purchase facility and Greek Finance minister Yanis Varoufakis’ return to negotiations with creditors put Europe at the top of the macro risk factors this week. Over the weekend, Eurogroup chairman and Dutch Finance minister Jeroen Dijsselbloem and other finance ministers announced that the written proposal sent by the Greek government on Friday in advance of today’s meeting fell short of the requirements to extend the loans needed to support public spending there, raising the possibility of default once again. As was the case during the last round of discussions, Athens and Brussels have exchanged sharp words in the media, complemented by the statement over the weekend from European Central Bank board member Benoit Coeure that the central bank cannot finance Greece by purchasing more of the nation’s debt. As discussions get underway, the battle between easing and the threat of a Greek exit from the euro will play tug-of-war on investor sentiment.

Chinese exports rise sharply. February shipments abroad from China grew at a pace of 48.9 percent year-over-year, or a 15 percent increase for the first two months of 2015 versus the same period in 2014. Although February’s export data was heavily distorted by Lunar New Year’s celebrations, the data demonstrates increasing demand — notably from the U.S. and South Asia — and helped drive the monthly trade surplus to $61 billion. Import levels were more than 20 percent lower than during the same month last year, as weak prices offset volume increases in key commodities including iron ore and crude oil.

Blackstone to buy Chicago landmark. Over the weekend reports surfaced that private equity firm Blackstone Group is in the late stages of negotiations to purchase Chicago’s Willis Tower, formerly known as the Sears Tower. The proposed $1.5 billion acquisition of the second-tallest building in the U.S. would represent the largest single-building purchase price ever in the Windy City.

Petrobras investigation widens. On Friday the Supreme Court of Brazil cleared the way for charges to be brought against nearly 50 politicians implicated in a series of corruption probes into Petróleo Brasileiro, commonly referred to as Petrobras. Among those to be charged are Senate President Renan Calheiros and Eduardo Cunha, head of the lower Chamber of Deputies. The charges represent a major headwind for President Dilma Rousseff’s Brazilian Democratic Movement Party (PMDB), of which both Calheiros and Cunha are members. Other officials named include Rousseff’s former energy minister and previous chief of staff. The court noted that it lacks the authority to bring charges against the president herself while she is in office.

Japanese GDP disappoints. Revised Japanese fourth-quarter 2014 GDP came in at 1.5 percent, significantly lower than initial estimates of 2.2 percent. Critically, capital expenditure levels weakened from first estimates rather than the expansion predicted by consensus forecasts, a signal that business leaders remain unenthusiastic about the efforts of Prime Minister Shinzo Abe’s administration and Bank of Japan’s efforts to stimulate demand.

Canadian rail accident prompts concern over safety. A fire broke out on Saturday after a train transporting crude derailed near Gogama, Ontario. Canadian National Railway Co. officials announced that a temporary bypass track would be created to allow traffic to resume on the line. Rail shipments of oil in North America have increased dramatically in recent years, as construction of new pipelines has not kept up with massive increases in production capacity.

Credit reporting giants reach deal. Equifax Information Services, Experian Information Solutions and TransUnion, the three largest U.S. personal credit data ratings companies, will today announce a deal with the New York State Attorney General that alter practices relating to errors and unpaid medical debt. The changes address some of the criticisms of the companies raised by industry watchdog groups and the Consumer Financial Protection Bureau, and follows an overhaul to the FICO score calculation overseen by Fair Isaac Corp. last year.

GM to buy back shares. General Motors Co. is expected to announce a $5 billion stock buyback program in response to pressure from a consortium of hedge fund firms led by activist Harry Wilson, who had been pursuing a board seat at the car company. Wilson has been publicly critical of GM management in recent months and had made calls for up to $8 billion to be returned to shareholders.

Portfolio Perspective: The Fullness of TimeRobert Savage, CCTrack Solutions

Time heals all wounds — even economic ones like debt deflation. That seems to be the main story for March as the ECB moves forward with quantitative easing and the US considers reversing six years of zero-rate policy. China’s trade data this weekend highlights the pain of demand destruction from reform and the usual calendar of confusion from the Lunar New Year holidays. Can a new watch change the way the world thinks about time? Time has helped cure some of the ills in the U.S. economy but not in Europe or Japan. The role of foreign-exchange markets in fixing the imbalances of how time works in the U.S. compared to other nations might be the real lesson. The gains in the U.S. dollar over the past week have been the highest in six weeks. The movement of the euro from 1.13 to 1.08 last week stands in contrast to the relative stability of the Japanese yen at 120. The lack of China demand may do the same for foreign exchange.

Robert Savage is the CEO of CCTrack Solutions, a New York–based hedge fund firm. CCTrack is backed by Citic Capital Holdings, which in turn is backed by the sovereign wealth funds of China and Qatar.

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