Today's Headlines

Bloomberg:

• Euro-Area Manufacturing, Services Contraction Worsens: Economy. Euro-area services and manufacturing contracted at a faster pace than economists forecast in February as the economy struggled to recover from the deepest recession in almost four years. A composite index based on a survey of purchasing managers in both industries in the 17-nation currency bloc decreased to 47.3 from 48.6 in January, London-based Markit Economics said today. Economists had forecast a reading of 49, according to the median of 22 estimates in a Bloomberg survey. The data reinforce indications that the euro-area economy continued to contract in early 2013 after the recession worsened in the fourth quarter. The manufacturing gauge slipped to 47.8 from 47.9. In Germany, Europe’s biggest economy, the services measure fell to 54.1 in February from 55.7 last month, the sharpest decline since August. France’s services gauge fell to 42.7 this month from 43.6 in January, while its manufacturing index increased to 43.6 from 42.9, today’s data showed. 
• European Stocks Decline Most in Two Weeks on Fed, Economy. European (SXXP) stocks declined the most in more than two weeks as a measure of services and manufacturing output contracted, while concern mounted that the Federal Reserve will scale back its asset-purchase program. All 19 industry groups in the Stoxx Europe 600 Index retreated with a gauge of carmakers dropping 2.5 percent. BHP Billiton Ltd., the world’s biggest mining company, posted its largest two-day drop in more than nine months. Safran SA slid the most since August after saying it may make an offer for Avio SpA’s space-propulsion business. The Stoxx 600 sank 1.5 percent to 284.86 at the close of trading in London, its biggest tumble since Feb. 4.
• Euro Weakens Below $1.32 First Time in Six Weeks as Output Drops. The euro declined below $1.32 for the first time in six weeks as an industry report showed services and manufacturing in the region shrank at a faster pace in February than economists forecast.
• China Swaps Touch Two-Week High on Record PBOC Fund Withdrawals. China’s one-year interest-rate swaps touched a two-week high on speculation the central bank will tighten monetary policy to temper gains in home prices. 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. The People’s Bank of China drained 910 billion yuan ($146 billion) from the financial system this week, the biggest withdrawal since Bloomberg started compiling the data in 2008. “It shows determination of the central bank to tighten liquidity conditions as they need to guard against nascent inflation and asset-price gains, especially in real estate,” said Dariusz Kowalczyk, a Credit Agricole CIB strategist in Hong Kong.
• Emerging Stocks Erase Gains for 2013 Year as Earnings Disappoint. Emerging-market stocks erased gains for the year, underperforming developed-nation equities as earnings at companies from Hyundai Motor Co. (005380) to Petroleo Brasileiro SA (PETR4) trailed analysts’ forecasts. The MSCI Emerging Markets Index (MXEF) fell 1.3 percent to 1,055.02 as of 4:45 p.m. in Hong Kong, wiping out this year’s advance. The gauge has fallen 2.6 percent from a 17-month high on Jan. 3 as 62 percent of the companies included reported quarterly profit that missed estimates, compared with 34 percent in the MSCI World Index of developed nations.
• Emerging Stocks Face Significant Correction, JPMorgan Says. Emerging-market stocks may enter a “significant correction” after they trailed developed-nation shares this year, according to JPMorgan & Chase Co. “Fundamentals and technicals are weakening,” Adrian Mowat, the chief Asia and emerging-market strategist at JPMorgan, wrote in a report dated yesterday. He recommended options that protect against stock losses and advised selling equities that are most sensitive to market swings.
• Insider Sales Reach 2-Year High as S&P 500 Nears Record. Corporate executives are taking advantage of near-record U.S. stock prices by selling shares in their companies at the fastest pace in two years. There were about 12 stock-sale announcements over the past three months for every purchase by insiders at Standard & Poor’s 500 Index (SPX) companies, the highest ratio since January 2011, according to data compiled by Bloomberg and Pavilion Global Markets. Whenever the ratio exceeded 11 in the past, the benchmark index declined 5.9 percent on average in the next six months, according to Pavilion, a Montreal-based trading firm.
• Hedge Funds Boost Stock Bets to ’07 High, Goldman Says. Hedge funds are more bullish on equities than they have been in six years and American International Group Inc. (AIG) replaced Apple (AAPL) Inc. as the top-held stock, according to Goldman Sachs Group Inc. Net long exposure to stocks in hedge funds climbed to 52 percent in the fourth quarter, matching the 10-year high reached in the first quarter of 2007, a team led by Goldman Sachs’ Amanda Sneider and David Kostin said in a report yesterday.
• Iron-Ore Swaps Drop as China Property Curbs Seen Cutting Demand. Iron-ore swaps dropped the most in almost six weeks alongside declines in steel futures and equities on speculation China’s call for real-estate curbs would curb demand for the commodity used in construction materials. The March contract tumbled 2.6 percent to $148.50 a dry metric ton as of 8:26 a.m. in London, according to GFI Group Inc. It headed for the biggest decline since Jan. 11, based on data from SGX AsiaClear, the largest clearer of the derivatives used to hedge prices and bet on Chinese growth. 
• Wheat Leads Slump as Nickel to Crude Fall: Commodities at Close. Copper, tin and nickel fell to the lowest this year on signs of a deepening slump in Europe and concern that the Federal Reserve will slow the pace of economic stimulus in the U.S. Copper futures for May delivery slumped 1.7 percent to $3.5625 a pound at 10:28 a.m. on the Comex in New York after touching $3.5585, the lowest since Dec. 24.
• Index of U.S. Leading Economic Indicators Rose in January. The index of U.S. leading indicators rose for a second month in January, showing the world’s largest economy is on track to sustain the expansion in the first half of this year. The Conference Board’s gauge of the outlook for the next three to six months increased 0.2 percent from a 0.5 percent rise in December, the New York-based group said today. The gain matched the increase projected by economists, according to the median estimate in a Bloomberg survey. 
• Previously Owned U.S. Home Sales Climb to 4.92 Million. Purchases of existing houses rose 0.4 percent to a 4.92 million annual rate, figures from the National Association of Realtors showed today in Washington.
• Consumer Bureau Said to Warn Banks of Auto Lending Suits. The U.S. Consumer Financial Protection Bureau has told at least four banks that it may sue them over vehicle loans and interest-rate markups by auto dealers that appear discriminatory, according to three people briefed on the matter. The banks received letters from the CFPB last week giving them 15 days to provide an explanation of the practice, said the people, who asked not to be identified because the plans aren’t public. The letters indicate the bureau believes the banks may have violated the Equal Credit Opportunity Act, a 1974 law that bars discrimination in lending.

Wall Street Journal: 

• Multiple Bomb Attacks Rock Damascus. Dozens of Syrians were killed and wounded on Thursday in a wave of car bombs and mortar attacks targeting political, security and military symbols of President Bashar al-Assad's regime, according to witnesses, state media and opposition activists.
• Wal-Mart(WMT) Expects Flat U.S. Sales This Quarter. Wal-Mart Stores Inc.'s WMT +2.14% fiscal fourth-quarter earnings rose 8.6% helped by a lower tax rate and expense controls, while same-store sales at U.S. Wal-Mart stores were at the low end of the company's guidance. The world's largest retailer forecast flat same-store sales for its U.S. division in the current quarter, reflecting the strain its customers are under. Wal-Mart's lower income customers are grappling with higher payroll taxes, rising gasoline prices and delayed income-tax refunds.
• 'How Stupid Do You Think We Are?' An American CEO speaks the blunt truth to the French state.

MarketWatch:

• Fed's Bullard: Current policy looks very easy. Federal Reserve policy looks "very easy" and is below one of the Fed favorite guideposts for policy, said James Bullard, the president of the St. Louis Federal Reserve Bank on Thursday. In a speech at the New York University School of Business, Bullard said that one estimate of policy puts the Fed's short-term rate at negative 5%, considerably more negative than the Taylor rule that the central bank often used before the crisis to gauge policy. The Taylor rule and St. Louis Fed forecasts suggest that rates should increase above zero in August, Bullard said. But some analysts suggest that the Fed would want to keep rates at zero for an "extra time" to make up for having rates at zero since 2008. Bullard said Fed policy is consistent with the extra time approach. Bullard repeated that he backed tapering asset purchases to send signals to the market about the economy's progress.
• Iran Lifts Output, Upgrades Atomic Technology Before Meeting. Iran rolled out new atomic technology and boosted its output of enriched uranium that world powers are concerned may eventually be used for nuclear weapons, according to the International Atomic Energy Agency. Iran’s total production of medium-enriched uranium rose to 280 kilograms (617 pounds) from 232.8 kilograms reported in November, the IAEA said today in a 12-page restricted report. Iran has converted or is in the process of converting 103 kilograms, or 37 percent of the stockpile, into reactor fuel, which Iran has declared is for producing medical isotopes.

CNBC:

• Italy's Election: Tycoon, Comedian or Professor.
• Strike Three! The American Consumer Is Out. Faced with delayed tax refunds, an increased paycheck tax bite and higher gas prices, U.S. consumers are proceeding cautiously and scaling back, a trend that has already impacted one large retailer's bottom line. Nearly three-quarters of those polled by the National Retail Federation said their spending plans are taking a hit due to the expiration of a two-percent cut in payroll taxes that made consumers do a double-take on their paychecks at the start of the year. Lower-income consumers are already feeling the pinch, analysts said.

Zero Hedge:

• Frontrunning the Myopic Muppets - Bank Bailout Edition!
• Initial Jobless Claims Spike Even As BLS "Estimates" California, Virginia, Hawai And DC Data; Back To Year Ago Levels. (graph) 
• Philly Fed Plunges To 8 Months Low As Great Unrecovery Continues. (graph) 
• Congress Asks Bernanke For Full Risk Analysis On Fed's Soaring Balance Sheet.
• About Your $3.16 A Day Healthcare Insurance Plan...

Business Insider: 

• After Sequestration, A Shocking Proportion Of Government Spending Will Be On Entitlements. 
• GARTMAN: We Are Exiting All Bullish Positions And Rushing To The Sidelines. 
• Italy Had An Awful Day. (graph) 
• JPMORGAN: Here's What You Need To Know About The Radical Comedian Who's Offering Everyone In Italy A Free iPad.

New York Times: 

• Manufacturers Survey Points to New Downturn in Euro Zone.

Reuters: 

• Italy election stalemate worst option for markets. An inconclusive result in Italy's elections this weekend could prompt an even bigger sell-off in some markets than the return to power of scandal-mired Silvio Berlusconi, who led the country to the financial precipice in 2011. 
• Moody's outlook for US local governments remains negative. Moody's Investors Service is keeping its outlook negative for U.S. local governments in 2013, as cities and counties must continue to contend with tight revenues, high demand for spending, and an "uneven economic recovery," the rating agency said on Thursday.

Telegraph: 

• Angela Merkel accused of 'unholy alliance' with Britain. Angela Merkel has been accused of engaging in an “unholy alliance” with Britain after backing David Cameron’s demands for a cut to the European Union budget.

BBC:

• Libor setting 'still not clean' despite scandal. The way that the key Libor interest rate is set in the UK is still not clean and free of fraud, according to a top US regulator. "We have a lot more work to do," Gary Gensler, chairman of the Commodity Futures Trading Commission, told the BBC in London. He suggested that the rate was often "completely made up".

Naftemporiki:

• Greek Revenue Misses Target So Far This Month. State revenue in first 15 days of month seen at EU1.174b vs. EU1.365b target, citing preliminary finance ministry data.