Today's Headlines

Bloomberg: 

• Italy Confronts Vacuum as Leaders Seek to Avoid Election. Italian political leaders sparred over forming a government after inconclusive elections fueled concern about the outlook for the euro region and the country’s deepening recession. Beppe Grillo, whose anti-establishment movement was the top vote-getter in Italy’s election this week, rejected a call made yesterday by Democratic Party leader Pier Luigi Bersani to back a coalition. Grillo’s movement “must say what they want to do for this country and for their children,” Bersani said.
• Hollande Jobs Pledge Turning Into Achilles Heel as Claims Rise. French President Francois Hollande’s promise to create jobs by the end of the year is turning into his Achilles heel. Jobless claims rose last month to a 15-year high at 3.17 million, the labor ministry said yesterday. The increase brings such claims close to the country’s historic peak in January 1997 -- when they stood at 3.21 million -- with no signs they’ll fall any time soon. 
• Spain’s Bankia-Led Bailout Won’t Spell End of Bank Troubles. Spain’s 41 billion-euro ($54 billion) rescue of lenders, prompted by record losses at Bankia (BKIA), won’t spell the end of troubles for the nation’s financial industry as the economy remains mired in recession.
• China Needs Tighter Monetary Policy, State Research Agency Says. China needs to lean toward a tighter monetary-policy stance as the economy faces risks from excessive liquidity and credit, according to a research unit of the nation’s top economic-planning agency. Authorities should drain more cash from the financial system to manage liquidity and regulators need to enhance oversight of banks’ off-balance-sheet business, the State Information Center, a research arm of the National Development and Reform Commission, said in a report published today in the official China Securities Journal. The report adds to signs that the central bank and other agencies will step up efforts to counter risks from rising property prices and debt as the economy recovers from the weakest growth in 13 years.
• China Provinces Cut Growth Targets in Sign Debt Concerns Heeded. Almost half of China’s provinces are setting their growth sights lower in the wake of the central government’s emphasis on the quality of expansion over speed, a sign of an increased focus on tackling rising debt.
• Canada Losing Debt Halo as Bull Market Housing Peaks With Carney. 
• Gross Says Corporate Bonds Irrationally Priced. Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, said asset-price irrationality is rising after years of record low benchmark interest rates by the Federal Reserve. The level of asset prices signal investors should be cautious and the degree of irrationality is about six on a scale of one to 10 and rising, Gross wrote in his monthly investment outlook posted on Newport Beach, California-based Pimco’s website today. He noted that Fed Governor Jeremy Stein earlier this month said some credit markets, such as corporate debt, are showing signs of excessive risk-taking, while not posing a threat to financial stability.

Wall Street Journal:

• Budget Battle: Live Stream.
• Bernanke: Fed Must Review Exit Strategy Sometime Soon. Federal Reserve Chairman Ben Bernanke on Wednesday said the Fed sometime soon will need to review its strategy for exiting its easy money policies, though it must be careful not to choke off economic growth by raising interest rates too soon. Mr. Bernanke, in his second day of testimony before Congress, also defended the central bank's policies against criticism that it is hurting retirees and other savers. He said raising interest rates too soon would hurt them and the rest of the economy.
• Italy's Grillo Rules Out Forming Coalition. Beppe Grillo, the former comedian whose upstart Five-Star Movement increasingly appears to be the only real winner of Italy's general election, on Wednesday described center-left leader Pier Luigi Bersani as a "dead man walking" and said his own party wouldn't be joining any coalition to form a government. 
• Phil Gramm: Obama and the Sequester Scare. Governing isn't about blaming someone else. It is about choosing.

MarketWatch: 

• Italy yields up less than feared amid gridlock. Center-left’s Bersani attempts to piece together new government.

CNBC: 

• Live Blog: Apple(AAPL) Shareholder Meeting. 
• Pending Home Sales Rise Despite Rough Winter. Contracts to buy existing homes in January rose a strong 4.5 percent from the previous month, according to the National Association of Realtors, which also revised December's numbers down. That beats expectations of a 1.8 percent gain.
• Housing Market May Not Be as Healthy as It Appear. (video)
• Apple(AAPL) 'Seriously Considering' Returning Cash to Shareholders.

Zero Hedge: 

• Capital Goods "Split Decision" Points To Uncertain Economy. (graphs) 
• Bank Deposits Decline Across Europe In January. (graphs) 
• A Century Of French And Italian Economic Decline.
• Europe Limps Higher After Italy Auctions Debt At Four-Month High Yields. (graphs)

Business Insider: 

• THE NEXT STOCK MARKET CRASH: Why Many Pros Think It Has Already Begun. (graphs)
• BOB WOODWARD: Obama Is Showing 'A Kind Of Madness I Haven't Seen In A Long Time'.
• Four Reasons The Next Budget Crisis Will Be Even Worse Than The Sequestration Deadlock. 
• DRAGHI: WE'RE 'FAR' FROM EXITING STIMULUS MEASURES. 
• A Major Conservative Group Is Targeting 'Big Government' Republicans.

Mortgage Bankers Assoc.:

• Mortgage Applications Decrease in Latest MBA Weekly Survey. Mortgage applications decreased 3.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 22, 2013 This week’s results did not include an adjustment for the Presidents’ Day holiday. The Market Composite Index, a measure of mortgage loan application volume, decreased 3.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3 percent compared with the previous week. The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier and is at its lowest level since the week ending December 28, 2012.

Reuters:

• Italian president snubs German candidate over "clown" comment. Italian President Giorgio Napolitano canceled a dinner with the German opposition's chancellor candidate on Wednesday after he described Italian former premier Silvio Berlusconi and comic-turned-politician Beppe Grillo as "clowns". Peer Steinbrueck, a Social Democrat who will take on Chancellor Angela Merkel in Germany's next national election in September, has a reputation for gaffes and his remark created the first diplomatic incident of his accident-prone campaign.
• Joy Global(JOY) says starting to see big mining projects come back. Mining equipment maker Joy Global Inc said it was starting to see big projects come back to the market as global miners, looking for more returns than volumes, begin to open up their purses to low-risk projects.

Financial Times:

• China to tighten shadow banking rules. China will rein in its shadow banking system by requiring banks to provide greater disclosure about their off-balance sheet activities, according to people briefed on the new rules. The Chinese shadow banking system – credit flows beyond traditional bank loans – has quadrupled in size since 2008 to about Rmb20tn ($3.2tn), or 40 per cent of economic output. These flows were crucial in reviving the country’s growth last year. But banking analysts and rating agencies have warned that they pose an increasingly serious risk to Chinese economic stability.

Telegraph:

• ECB bond plan in jeopardy as Italy's voters reject conditions. Italy's electoral earthquake is “a catastrophe for the euro and the European Union”, according to Luxembourg’s foreign minister, Jean Asselborn. 
• Eurozone faces serious problem if Italian instability spreads. Paul Kavanagh, chairman of Killik Capital, says if the political instability caused by the Italian election spreads to other European countries it will present serious problems for the EU.