Bloomberg:
- Bersani Preaches Spread-the-Wealth Before Italian Vote. Pier Luigi Bersani is traveling from Palermo to Naples with a spread-the-wealth message to fend off populist rival Beppe Grillo in two poor regions pollsters say are vital to gaining control of Italy’s Senate. With outright victory at stake in the Feb. 24-25 parliamentary election, Bersani, 61, is set to appear in Naples, capital of the southern region of Campania, after speaking to thousands in Sicily’s biggest city yesterday. He has covered the length of the Italian peninsula this week to rally voters in the three must-win regions of Lombardy, Sicily and Campania. Victory in Campania and Sicily, two of Italy’s poorest regions, is in doubt as former comic Grillo’s anti-austerity message resonates with recession-scarred voters. Bersani drew cheers from flag-waving supporters in Palermo’s Piazza Verdi when he said he’d push to get more out of the wealthy. Still, his base of union supporters may not be enough to stop Grillo from carrying Sicily. Victory by Grillo in Sicily is “a concrete possibility,” said Roberto D’Alimonte, a professor at Rome’s Luiss University who does political analysis for Sole 24 Ore, Italy’s leading business newspaper.
- China Stocks Fall Most in 8 Months on Property, Commodity Risk. China’s stocks fell, sending the benchmark index to its biggest loss in eight months, after the government told local authorities to curb real estate speculation and commodity shares tumbled. Anhui Conch Cement Co. (600585), the nation’s biggest producer of the building material, slumped 5.5 percent on concern over real estate restrictions that include home-price control targets and the expansion of a property tax. China Construction Bank Corp. (601939), the largest mortgage lender, slid the most since June. Jiangxi Copper Co. and PetroChina Co. led declines for metal and energy stocks after minutes from the Federal Reserve’s last meeting showed debate over further stimulus action. The Shanghai Composite Index (SHCOMP) retreated 2.7 percent to 2,331.61 at the 11:30 a.m. break, heading for the biggest drop since June 4. The CSI 300 Index (SHSZ300) dropped 3.3 percent to 2,614.86, the most since November 2011.
- PBOC Switch to Drain Cash Turns Citigroup Bearish. The People’s Bank of China’s first draining of cash since June, seeking to damp a property-market revival, is prompting Citigroup Inc. (C) to predict one-year yields will rise faster than longer-term rates. “The PBOC regards the current liquidity conditions as overly loose,” said Weisheng He, a strategist in Shanghai at Citigroup. “Going into April, I expect the bond curve to bear- flatten,” he said, predicting the one-year yield will rise to 3 percent this year from 2.70 percent yesterday. The outlook for a flattening yield curve reflects the risks that excessive lending may fuel inflation in the world’s second- largest economy and lead to a property-market bubble.
- China Aluminum Stockpiles Seen at Record, Swelling Global Glut. Aluminum inventories in China’s main trading regions are estimated to have climbed to a record as supply growth outpaces demand in the largest user and producer, adding to a global glut of the lightweight metal. Reserves expanded to 1.119 million metric tons from 750,000 tons a year ago, according to a survey of warehouses in four cities by data provider SMM Information & Technology Co. Stockpiles in six hubs including Shanghai increased to 1.156 million tons, according to Li Xun, an analyst at Myyouse.com, researcher Mysteel.com’s sister website, citing their survey. The estimates add to signs that surging supplies from new capacity in China’s northwest are not being absorbed, and may weigh on aluminum, which has declined 6.7 percent in London in the past year. Global production will outpace demand by 1.82 million tons this year from 1.49 million tons in 2012, Barclays Plc said on Feb. 15, advising investors to bet on lower prices of the metal used to make autos, appliances and packaging. “I have no doubt that the inventories will expand further,” Wang Chunhui, a Shanghai-based analyst at SMM, said in a telephone interview on Feb. 19. “Maybe it can exceed 1.2 million tons this year.”
- Rebar Futures Fall for Second Day on China Property Curbs. Steel reinforcement-bar futures in Shanghai fell for a second day as the Chinese government moved to curb property speculation, reducing demand for the building material. Rebar for delivery in October fell by as much as 2.1 percent to 4,082 yuan ($653) a metric ton on the Shanghai Futures Exchange, before trading at 4,093 yuan at 10:02 a.m. local time. The contract has dropped 4.3 percent this week as investors returned to the market after the Lunar New Year holiday.
- Copper Slides to Seven-Week Low as Metals Fall on China Concern. Copper slumped to a seven-week low and nickel tumbled to the lowest level in 12 weeks after China moved to curb property speculation and Federal Reserve minutes showed a debate over the stimulus. Aluminum, lead, zinc, and tin also declined. Copper for delivery in three months lost as much as 0.8 percent to $7,900 a metric ton on the London Metal Exchange, the lowest since Dec. 31, before trading at $7,935 at 10:11 a.m. Shanghai time. Nickel dropped as much as 1.9 percent to $16,840 a ton, the lowest since Nov. 28. Chinese Premier Wen Jiabao called on local authorities to “decisively” curb real estate speculation and take steps to rein in the property market after data showed prices surged the most in two years last month.
- Commodities Tumble on Speculation Hedge Fund Selling Positions. “You have a sort of mini perfect storm hitting commodities today,” Dave Lutz, the head of exchange-traded fund trading and strategy at Stifel Nicolaus & Co. in Baltimore, said in a telephone interview. “There’s market chatter that a fund is blowing up, gold has fallen below $1,600, and oil storage tanks in Cushing are near all-time records.”
- Aussie Set for 2-Day Drop as Asian Stocks Decline. The Australian dollar declined, following yesterday’s biggest one-day drop in almost a month, as Asian stocks extended equity losses worldwide, curbing demand for higher-yielding assets.
- Asset Freezes Among Steps Obama Urged to Take on Cyber Thieves. President Barack Obama must take tougher actions than those specified so far to deter cyber attacks on vital computer networks, including freezing offenders’ assets or denying them entry into the U.S., cybersecurity experts said. Obama’s administration yesterday pledged to share more intelligence with companies about nations involved in economic espionage and methods used to steal corporate information, and to study the need for stronger U.S. laws against trade-secret theft.
- VeriFone(PAY) Plunges After Profit Forecast Trails Estimates. VeriFone Systems Inc. tumbled as much as 35 percent after the maker of credit-card terminals forecast second-quarter profit that missed analysts’ estimates, amid weak economic conditions in Europe. The shares plunged as low as $20.81 in extended trading, after earlier falling 3.5 percent to $31.89 at the close in New York. Earnings excluding some items will be 45 cents to 50 cents a share in the quarter ending in April, San Jose, California- based VeriFone said in a statement. Analysts on average had predicted profit of 80 cents a share, according to data compiled by Bloomberg. VeriFone also announced preliminary first-quarter adjusted profit of 47 cents to 50 cents a share, less than the company’s prior projection of as much as 73 cents. Beyond Europe, VeriFone said it experienced lower than anticipated sales from customers in Brazil, and also had an increase in deferred revenue from clients in Africa and the Middle East.
- Fed Split Over How Long To Keep Cash Spigot Open. Federal Reserve officials, uneasy with potential risks springing from the central bank's low-interest-rate policies, are split over an early retreat from the experimental programs created to revive the U.S. economy. Minutes released Wednesday from the Fed's January policy meeting show officials concerned that the current easy-money policies could lead to excessive risk-taking and instability in financial markets. The Fed is buying $85 billion in mortgage and U.S. Treasury securities a month to drive down long-term rates and has promised to keep short-term rates near zero until unemployment improves. Some said the Fed might have to taper its controversial bond buying before the job market fully recovers, according to the January minutes. The Fed has previously allowed bond buying programs to end in this recovery and then restarted them. It will review the programs at its next meeting, March 19-20, setting the stage for another high-stakes debate.
- European Banks Move to Boost Health Gauge. Big European banks are boosting a key gauge of their financial health through largely cosmetic maneuvering, even as regulators in some countries try to crack down on the practice. Banks are recalculating the risks in their loan portfolios and trading books in flattering ways, a move that has the effect of raising their ratio of capital to "risk-weighted" assets—a metric that investors and regulators use to assess banks' abilities to absorb unexpected losses. While such maneuvering has been going on for years, analysts say it appears to be accelerating at some major European banks, which are under pressure to raise their capital ratios as new regulations known as Basel III start phasing in this year.
- Google(GOOG) Developing Touchscreen Devices Using Chrome Operating System. Google Inc. has developed the first touchscreen laptops powered by its Chrome operating system to be sold later this year, according to people familiar with the matter, as the Internet giant tries to go toe-to-toe with Microsoft Corp.'s Windows operating system. Interestingly, the new Chrome devices also would compete with devices powered by Google's other operating system, called Android, which took the smartphone and tablet market by storm in recent years, propelling Google as a force in mobile-device software.
- GE(GE) Sues Whirlpool(WHR) on Cartel. General Electric Co. has sued rival Whirlpool Corp. and two European suppliers, saying the companies ran a price-fixing cartel that caused GE to overpay for parts for its refrigerators. GE alleges that it was hurt by an international conspiracy to set prices at "supra-competitive levels," to decrease manufacturing capacity and to limit product availability by a group of global manufacturers of refrigerator compressors. Compressors create cold air that keeps food fresh or frozen in refrigerators.
- U.S. Ups Ante for Spying on Firms. China, Others Are Threatened With New Penalties. The White House threatened China and other countries with trade and diplomatic action over corporate espionage as it cataloged more than a dozen cases of cyberattacks and commercial thefts at some of the U.S.'s biggest companies.
- Companies Seek to Avoid China New Year Hangover. For the world's manufacturers, post-holiday no-shows are an increasingly frustrating part of China's tightening labor market. The trend reflects rising expectations among China's workers, who are seeking out higher pay even as they show less inclination to work in factories. Many workers use the break to look for new jobs or start families.
- ObamaCare's 'Baby Elephant'. John Kasich says Valerie Jarrett promised, and other Medicaid tales. On Wednesday Florida Republican Rick Scott became the latest GOP Governor to volunteer to shoulder some responsibility for ObamaCare, which has liberal sages gloating about a resistance-is-futile shift in the GOP. The media don't want to discuss the substance, only the politics, so allow us to report how the flippers are justifying their flips.
- Tesla(TSLA) Loss Is Wider Than Expected; Revenue Beats. Tesla reported a wider-than-anticipated net loss for the fourth-quarter as higher production costs offset better-than-anticipated revenues.
- Technical Red Flags Could Signal More Stock Market Selling. Markets threw up enough technical red flags amid a wave of volatility Wednesday to have traders wondering if the first real sell off of 2013 has finally arrived.
Business Insider:
Washington Post:
- Japan’s Prime Minister Shinzo Abe: Chinese need for conflict is ‘deeply ingrained’. China has a “deeply ingrained” need to spar with Japan and other Asian neighbors over territory, because the ruling Communist Party uses the disputes to maintain strong domestic support, Japanese Prime Minister Shinzo Abe said in an interview. Clashes with neighbors, notably Japan, play to popular opinion, Abe said, given a Chinese education system that emphasizes patriotism and “anti-Japanese sentiment.” Abe’s theory on the entrenched motivation behind China’s recent naval aggression helps explain why he has spent more effort trying to counter the Chinese than make peace with them: He thinks the fierce dispute with China over an island chain in the East China Sea isn’t going away anytime soon.
NY Times:
4-traders:- White House Tactic for C.I.A. Bid Holds Back Drone Memos. The White House is refusing to share fully with Congress the legal opinions that justify targeted killings, while maneuvering to make sure its stance does not do anything to endanger the confirmation of John O. Brennan as C.I.A. director.
- Ineffective Communication Hurts Brazil's Credibility -Moody's. Brazil's government is reaching for more flexibility in its fiscal and monetary policies, but it hasn't been able to communicate effectively with the market, causing confusion and hurting credibility, according to Moody's Investors Service Vice President Mauro Leos.
- Cheesecake(CAKE) Factory's profit misses Street, shares down. Restaurant chain The Cheesecake Factory Inc forecast a current-quarter profit largely below analysts' estimates after reporting weaker-than-expected results for the last quarter, sending its shares down more than 3 percent after the bell.
- Fluor(FLR) revenue short of estimates, has loss on ruling. Engineering company Fluor Corp on Wednesday reported slower-than-expected revenue growth and a quarterly loss due to a $265 million charge for the Greater Gabbard wind project off the coast of Britain. Shares of Fluor, the largest publicly traded U.S. engineering company, dropped 2 percent in after-hours trading following a 3 percent slide in the regular session on the New York Stock Exchange.
- Fed doubtful on open-ended QE3 policy. The US Federal Reserve is cooling on open-ended asset purchases as officials grow nervous about the dangers of a bigger balance sheet. According to the minutes of its January meeting, released on Wednesday, “many” officials are concerned about the costs and risks of further asset purchases, as the Fed buys securities at a pace of $85bn a month. The minutes suggest that QE3 – as the Fed’s third round of quantitative easing is known – could end earlier than previously thought and is no longer a truly open-ended programme. The Fed’s balance sheet has reached $3.078tn and could exceed $4tn if QE3 continues for the rest of the year.
- Commentary: US Hacking allegations against China both baseless and revealing. It is highly unlikely that both the origins of the hackers and the attacks they have launched can be located. That is why China's foreign ministry and defense ministry both described the firm's report as "amateurish" when they dismissed Mandiant's false accusations.
- None of note
- Asian equity indices are -2.25% to -1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 108.25 -.25 basis point.
- Asia Pacific Sovereign CDS Index 82.5 -.5 basis point.
- FTSE-100 futures -.63%.
- S&P 500 futures -.09%.
- NASDAQ 100 futures -.09%.
Earnings of Note
Company/Estimate
- (PCG)/.59
- (CHK)/.15
- (ZEUS)/.08
- (HRL)/.48
- (PDCO)/.52
- (ZLC)/1.01
- (HST)/.37
- (WMT)/1.57
- (PEG)/,39
- (DNR)/.28
- (TTC)/.42
- (RS)/.97
- (SWY)/.76
- (WBMD)/.04
- (INTU)/.32
- (COG)/.22
- (FLS)/2.84
- (AIG)/-.08
- (MHK)/.94
- (NEM)/.97
- (JWN)/1.35
- (PSA)/1.78
- (HPQ/.71
- (PZZA)/.76
8:30 am EST
- The Consumer Price Index for January is estimated to rise +.1% versus unch. in December.
- The CPI Ex Food & Energy for January is estimated to rise +.2% versus a +.1% gain in December.
- Initial Jobless Claims are estimated to rise to 355K versus 341K the prior week.
- Continuing Claims are estimated to rise to 3150K versus 3114K prior.
- The Preliminary Markit US PMI for February is estimated to fall to 55.5 versus 55.8 in January.
- Philly Fed for February is estimated to rise to 1.1 versus -5.8 in January.
- Existing Home Sales for January are estimated to fall to 4.9M versus 4.94M in December.
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,000,000 barrels versus a +560,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -900,000 barrels versus a -803,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,800,000 barrels versus a -3,677,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.4% versus a -.4% decline the prior week.
- None of note
- The Fed's Fisher speaking, Fed's Bullard speaking, Fed's Williams speaking, Eurozone manufacturing & services PMI data, Spain 10Y bond auction, China home price data, Bloomberg Economic Expectations Index for February, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, 4Q Mortgage Delinquencies report and the 4Q Mortgage Foreclosures report could also impact trading today.
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