Today's Headlines

Bloomberg:

• Italy Projections Show Hung Parliament on Berlusconi. Italy may require another vote after partial election results suggested the four-way race may end in a divided parliament, an aide to Democratic Party candidate Pier Luigi Bersani said. “Those projections show a risk of ungovernability,” Stefano Fassina, Bersani’s economic-policy spokesman, said today on Italy’s La7 television. Projections by IPR Marketing and state-broadcaster RAI showed Bersani was denied victory as Silvio Berlusconi built a blocking minority in the Senate. Italian bonds reversed gains and stocks pared a rally on speculation that voters repudiated budget rigor and turned to the premier who was forced out in November 2011 by Europe’s financial crisis. In Italy, where premiers require control of both houses of parliament, Berlusconi may have won the Senate race in the swing regions of Sicily, Campania and Lombardy, according to an IPR projection based on partial vote counts. “A hung parliament would be a guarantee of paralysis both in terms of economic program and structural reforms,” Annalisa Piazza, a fixed-income analyst at Newedge Group in London, said in an e-mail. “Such a scenario would be the worst-case outlook.” 
• Italian Bonds Decline as Polls Indicate Hung Parliament. Italy’s bonds fell, erasing an advance that saw 10-year yields decline by the most in six months, as polls indicated the euro area’s third-largest economy may be left with a hung parliament. Italian two-year yields reversed the biggest slide in six weeks as partial results of the country’s election suggested former Prime Minister Silvio Berlusconi may have built a blocking minority in the Senate to deny outright victory to Pier Luigi Bersani. Stefano Fassina, an aide to Bersani, said the nation may need a second election. German bunds rose as concern the results will derail austerity measures introduced by outgoing premier Mario Monti boosted demand for safer assets. 
• Euro Declines to Six-Week Low Amid Italian Election Concern.The euro fell to the lowest in six weeks versus the dollar after partial election results from Italy suggested the four-way race may end in a divided parliament requiring another vote. “We think the euro will remain under pressure until we get more clarity,” Sireen Harajli, a foreign-exchange strategist in New York at Credit Agricole SA (ACA), said in a telephone interview. “There’s a lot of uncertainty there, and it’s weighing on the euro and risk assets in general.” The euro declined 0.4 percent to $1.3144 as of 1:41 p.m. in New York after gaining as much as 1 percent. It touched $1.3137, the lowest since Jan. 10.
• China’s Slower Manufacturing Casts Shadow Over Recovery. China’s manufacturing is expanding at the slowest pace in four months, a private survey showed, underscoring the headwinds faced by policy makers in the world’s second-biggest economy. The preliminary reading of a Purchasing Managers’ Index was 50.4 in February, according to a statement from HSBC Holdings Plc and Markit Economics today. That compares with the 52.3 final reading for January and the 52.2 median estimate of 11 analysts surveyed by Bloomberg News.
• Asian Ship Loans Seen Prolonging Worst Industry Slump in Decades. Asian banks are prolonging the shipping industry’s worst slump in decades by lending more money to fund building of vessels ordered from local yards, according to HSH Nordbank AG, the world’s biggest marine lender. Record deliveries of new ships built in the past four years are curbing earnings and vessel owners’ cash flows, Christian Nieswandt, Hamburg-based HSH Nordbank’s global head of shipping for Germany, said in interviews in the city and London on Feb. 21-22. “Significant” numbers can’t repay loans, he said. The Baltic Dry Index of rates to ship minerals and grains by sea fell in four of the last five years as the fleet’s growth outpaced demand for commodities. A delayed recovery will hurt European banks estimated by Petrofin Research to hold about 75 percent of $500 billion in global shipping loans. Banks are deferring repayments and restructuring terms to avoid foreclosures and writing off defaulting loans as vessel prices plunge to levels below outstanding debt. 
• Nickel and Aluminum Drop as China Manufacturing Expansion Slows. Nickel extended the biggest weekly drop since 2011 in London and aluminum fell after figures showed manufacturing is expanding at the slowest pace in four months in China, the world’s largest consumer of the metals. “The majority of metal prices are continuing to show weakness,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said by e-mail today. “Besides the restraint being exercised by market players on account of the Italian elections,” the Chinese gauge was “doubtless also weighing on sentiment,” he said. Nickel for delivery in three months slid 0.8 percent to $16,832 a metric ton by 10 a.m. on the London Metal Exchange.

Wall Street Journal: 

• Italians Seem Set to Reject Austerity in Vote. The makeup of Italy's future government and Parliament was uncertain as votes were being counted in watershed national elections, but one trend seemed clear: Italians are fed up with the austerity that has characterized the past year of the caretaker government. Instant polls released just after the close of the voting stations at 3 p.m. on Monday showed the center-left Democratic Party winning a majority in the lower house of Parliament. But projections released shortly after, based on early counting of actual votes, showed the center-right coalition run by former Premier Silvio Berlusconi leading in the upper house of Parliament, the Senate. That divide, if confirmed by the final vote tally, could steer the country back to a new election as early as this summer. Both the polls and projections showed two trends: the surge of popularity of former comedian Beppe Grillo, who campaigned on an antiausterity, anti-establishment platform; and the lower-than-expected showing of departing Premier Mario Monti's centrist coalition. 
• WSJ Analysis: Fed Exit Strategy a Work in Progress. Two developments are worth watching on the Federal Reserve front these days. Both relate to Fed planning for how it will withdraw one day from the aggressive bond buying it is now pursuing to bolster the markets and the economy. Call the first the tapering debate. Right now the Fed is buying $85 billion per month of U.S. Treasury debt and mortgage-backed securities. It has said it would continue to buy this debt until it sees substantial improvement in the outlook for employment.

CNBC: 

• One Quarter of US Has More Card Debt Than Savings. For more than half the country, 55 percent, an emergency fund outweighs credit card debt. Nearly a quarter, 24 percent, admit to having more debt on plastic than money in the bank, while 16 percent say they have neither credit card debt nor savings. That puts 40 percent of the population close to the edge of ruin while everyone else seems to be sitting pretty.
• Bob Woodward: Obama Made Big Mistake on Sequester. 
• Why Consumers May Be On Crash Course. Consumers are clipping coupons at a rate not seen since before the 2007 recession, and that's a troubling sign, according to Coupons.com CEO Steven Boal. The website tracks how often people view and print coupons and their redemption rate. Right now, Coupon.com's Internet Coupon Index, as it's called, shows a spike in coupon offers and demand.

Zero Hedge: 

• Did Bunga Bunga Just Kill The US Housing Recovery As Lumber Futures Plunge. (graph)
• From Hung Parliament To BTP Sell Off: JPM Says To Expect A 40-100 Bps Rise In Italian Bond Yields. 
• Europe Ends Unch As "Italian Hope" Gains Evaporate. (graphs) 
• What If ObamaCare, Too Big To Fail Banks, And The State Are All the Wrong Sized Unit?
• Italy May Be Headed For Revote Following Miserable Bersani-Monti Senate Showing.

Business Insider: 

• LIVE: NIGHTMARE SPLIT SCENARIO LOOMS IN ITALIAN ELECTION, COUNTRY MAY BE 'UNGOVERNABLE'. 
• Here's John Kerry's First 'Gaffe' As Secretary Of State. 
• REPORT: There's A Fresh Round Of Layoffs Coming To Goldman Sachs(GS). 
• Six Years Later, The Biggest Leveraged Buyout Deal In History Faces Spectacular Failure. 
• Gas Prices Are Unusually High Right Now, And They're Heading Higher. 
• FELIX ZULAUF: 'Lira-ization Of The Euro' Is Inevitable. 
• ANALYST: Here's Why The Berlusconi Surge Is Slamming Every Market In The World. 
• Dallas Fed Manufacturing Survey Misses Expectations Falling To 2.2. 
• John Boehner Is Holding A Sequester Press Conference Today...

New York Times:

• A New Cold War, in Cyberspace, Tests U.S. Ties to China. When the Obama administration circulated to the nation’s Internet providers last week a lengthy confidential list of computer addresses linked to a hacking group that has stolen terabytes of data from American corporations, it left out one crucial fact: that nearly every one of the digital addresses could be traced to the neighborhood in Shanghai that is headquarters to the Chinese military’s cybercommand.

Reuters:

• Italy's Election Live.
• Sinopec to buy stake in Chesapeake assets for $1.02 billion. China Petroleum & Chemical Corp (Sinopec) (600028.SS) will buy half of Chesapeake Energy Corp's (CHK.N) Mississippi Lime oil and gas properties in Oklahoma for $1.02 billion to increase its presence in the booming North American shale gas industry. Output from shale fields in the United States and Canada has jumped over the last three years due to the advent of drilling methods such as hydraulic fracturing. Companies in China, which has the largest shale reserves in the world, are keen to get the know-how of drilling in such unconventional fields. China's state-owned CNOOC Ltd (0883.HK) has struck a deal to buy Canadian oil and gas company Nexen Inc (NXY.TO) for $15.1 billion, while Pioneer Natural Resources Co (PXD.N) said last month it would sell a stake in its assets in the Wolfcamp shale field of Texas to Sinochem Group SINOC.UL for $1.7 billion. Sinopec, Asia's largest oil refiner, will buy 50 percent of Chesapeake's 850,000 acres of net oil and natural gas leasehold properties in the Mississippi Lime shale field in northern Oklahoma, the companies said. 
• Lowe's(LOW) makeover bears fruit; Sandy helps sales. Lowe's Cos Inc's quarterly results beat analysts' estimates on Monday as sales benefited from rebuilding after Hurricane Sandy and the retailer's own efforts to improve product selection and customer service.

Telegraph: 

• Value of money slides 30pc in 30 years as cost of goods rockets.
• Uncertainty for Italy as election exit polls show split vote. The centre-right coalition led by Silvio Berlusconi is leading in the race for the Italian upper house, while Pier Luigi Bersani's centre-left group is ahead in the lower house.
• George Osborne: Moody's downgrading sends 'clear message' for UK austerity. Chancellor George Osborne says Britain's loss of its prized AAA credit rating shows that the UK needs to continue to deal with its debt.  

Bild:

• German SPD Chief Gabriel Still Opposes Cyprus Aid. New govt in Cyprus doesn't necessarily make it easier for Germany's opposition party SPD to agree to aid package, SPD leader Sigmar Gabriel said. Gabriel says Cyprus made money laundering part of its business model.

Les Echos:

• ECB's Coeure Says France Must Stick to Commitments. Asked if France's wish to delay its 2014 deficit reduction target would put Europe's stability pact in danger, Benoit Coeure, French board member on the ECB, said that the question is more important than France alone. Behavior of big countries is "particularly important" in determining the credibility of the stability pact, he said. France must stick to commitment to cut 2013 structural deficit and the nominal deficit increase must remain as small as possible. France needs spending cuts to ensure mid-term credibility, he said.

Xinhua:

• Survey highlights opaque Chinese govt procurement. A survey of government procurement prices showed that nearly 80 percent of surveyed products were purchased at a price much higher than market price, indicating irregularities in government procurement. The survey was conducted by the Chinese Academy of Social Sciences in Guangdong, Heilongjiang, Jiangxi and Fujian provinces. The survey results were issued Monday. Of 19,020 surveyed products, mainly office utilities, 15,190 were purchased at a price higher than market price, the survey showed. For instance, 18 million yuan ($2.88 million) was spent on 2,098 laptops, but only 13.73 million yuan would've been needed if they were purchased at market price. China's government procurement law states that government procurement prices must be lower than the average market price. Tian He, head of the survey team and a researcher with the CASS, said a lack of transparency and high procurement prices will invite public suspicion. The volume of government procurement surged from 100.9 billion yuan in 2002 to 1.13 trillion yuan in 2011, according to the survey.