Good morning.
New data out this morning show China’s economy grew faster than expected in the first quarter—6.9% from a year earlier—continuing to defy predictions that its massive debt burden would bring down growth. Factory output was at the highest level since the end of 2014, with steel output the highest on record. Consumption also was strong, with retail sales up 10.9% after slowing in the first two months of the year. Meanwhile, banks continue to provide more debt—bank lending was at the third highest level on record—although March lending was less than expected.
In an Easter morning tweeting spree, President Trump confirmed that he had toned down U.S. criticism of China’s economic policies because of its assistance in dealing with the North Korean threat. “Why would I call China a currency manipulator when they are working with us on the North Korea problem? We will see what happens!” Trump wrote.
Vice President Pence, who made an unannounced visit to the Korean demilitarized zone—one day after North Korea’s failed missile launch—said Trump was hopeful that China would use its “extraordinary levers” to pressure North Korea to abandon nuclear weapons.
More news below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
• Chinese stocks suffer despite economic growth
The better-than-expected news for the world's second-largest economy was expected to provide a boon to global markets, even with continued concerns over China's huge debt load. However, results were mixed early Monday, with Chinese stocks actually tumbling in the face of heightened regulatory pressure as well as geopolitical uncertainty related to President Donald Trump's recent policy reversal tying his stance on Chinese currency to the situation in North Korea. Bloomberg
• Commerce Secretary Wilbur Ross challenges IMF claims of U.S. protectionism
Commerce Secretary Wilbur Ross called talk accusing the U.S. of protectionism by International Monetary Fund head Christine Lagarde and others "rubbish" on Sunday. Ross's comments came as the world's top finance officials begin to gather in Washington, D.C. for the spring meetings of the IMF and the World Bank. Ross chided Lagarde and others for their comments on U.S. protectionism, which he said were clearly aimed at the new Trump administration. "We are the least protectionist of the major areas," Ross told the Financial Times before specifically citing the U.S.'s trade deficits in China, Europe, and Japan to back his claim that those areas practice protectionism. Ross's remarks also come amid President Trump's adoption of a newly moderate stance on trade with China. Financial Times (subscription required)
• Neiman Marcus seeks relief amid luxury goods crunch
Luxury department store chain Neiman Marcus is one of many retailers facing an industry-wide drop in sales, but high-end retailers in particular are learning that even luxury shoppers are on the lookout for better deals. Sales of personal luxury goods dipped 1% last year, marking the first decline in seven years. Luxury retailers like Neiman Marcus are no longer able to bolster profits by raising prices, especially with increased competition from online startups offering more discounts. With that disruption to its business model, Neiman Marcus has now reportedly put itself up for sale as the chain contends with a string of quarterly sales declines and roughly $5 billion in debt. Wall Street Journal (subscription required)
• More bad press for United Airlines
Another tale of woe in the friendly skies created more negative headlines for United Airlines over the weekend. An engaged couple flying on the airline from Houston to their wedding in Costa Rica were reportedly removed from their flight by a federal law enforcement officer under disputed circumstances. United claimed the couple repeatedly tried to sit in upgraded seats for which they had not paid, while the couple said the seats they had paid for were occupied by a sleeping passenger. Regardless, the resulting incident only puts the airline in the spotlight for unfavorable reasons yet again. United shares have dipped more than 2% since video surfaced last week of a 69-year-old Vietnamese-American doctor being forcibly dragged off of a United flight. The incident sparked international outrage and Dr. David Dao is reportedly bringing a lawsuit against United, which has changed its policy regarding allocating seats for crew members in the wake of the scandal. Reuters
Around the Water Cooler
• Cadillac takes a shot at Tesla's Autopilot
General Motors has a new hands-free driving system, called Super Cruise, that the auto giant plans to debut in the fall in its new Cadillac CT6 sedan. Cadillac has described the system, which seems to be a clear attempt to rival Elon Musk's Autopilot feature at Tesla, as "the industry’s first true hands-free driving technology for the highway." Fortune's David Z. Morris notes that this represents a bit of a shot at Tesla, which released Autopilot a couple of years ago. Cadillac is saying that Super Cruise adds a "driver attention" system that aims to ensure that drivers are still paying attention to the road even when employing the hands-free system. Meanwhile, Cadillac is also betting on its mapping ability, as the company focused only on mapping highways using extremely precise 3D laser imaging. Fortune
• DHS Secretary Kelly: Marijuana "not a factor" in drug war
The new Trump administration has sent some mixed signals with regards to where it stands on the issue of marijuana legalization, even as the legal marijuana industry blossoms into a multi-billion dollar business in the U.S. But, one top official has spoken out definitively on the issue of marijuana. Department of Homeland Security Secretary John Kelly, speaking with NBC News' Chuck Todd about America's opioid epidemic on Meet the Press on Sunday, said: "Marijuana is not a factor in the drug war." Kelly argued that the U.S. has bigger problems with other drugs, especially methamphetamine, heroin, and cocaine. Fortune
• Charging Bull vs. Fearless Girl
The latest standoff brewing on Wall Street involves the artist behind the iconic "Charging Bull" sculpture. The artist, Arturo Di Modica, isn't happy about the placement of a new statue of a small girl that is staring down his bull. Di Modica recently said he may bring a lawsuit to remove the challenging statue, known as "Fearless Girl," which has become a symbol of feminism. However, Fortune's Jeff John Roberts writes that the "Charging Bull" sculptor lacks a fearsome legal case, especially under U.S. copyright law. Roberts notes that Di Modica would have his work cut out for him in invoking the Visual Artist Protection Act, which really only allows artists to put a halt to the "distortion" or "mutilation" of their work, or to stop any actions that might damage the artist's reputation. Fortune
Summaries by Tom Huddleston, Jr.: tom.huddleston@fortune.com — @tjhuddle
