- Bersani Rejects Deal With Berlusconi in Repubblica Interview. Italian Democratic Party leader Pier Luigi Bersani ruled out an alliance with rival Silvio Berlusconi and said he plans a program of reforms to attract votes from all political parties, in an interview with la Repubblica. A broad coalition government including Berlusconi’s People of Liberty party “would be the death” of the Democratic Party, Bersani said in the Repubblica interview, adding that he will ask other parties to support his program in parliament. “The hypothesis of a broad coalition doesn’t exist and will never exist,” he said.
- European Stocks Retreat on U.K., Chinese Manufacturing. Rio Tinto Group contributed the most to a slide by a gauge of European commodity producers. Belgacom SA (BELG) sank to the lowest price since its initial public offering in 2004 after its forecast for 2013 missed projections. Royal Vopak NV (VPK) dropped the most in more than four years after operating profit fell in 2012.
- Euro Falls Below $1.30 as Economic Weakness May Spur ECB Moves. The euro fell below $1.30 for the first time in two months after reports showed the region’s manufacturing contracted in February and unemployment climbed to a record. The 17-nation currency extended a fourth weekly loss against the greenback, the longest streak since June, as signs the region remains stuck in a recession backed the case for the European Central Bank to cut interest rates.
- French February Car, Light-Vehicle Registrations Fall 12% to 173,246. PSA Peugeot Citroen car registrations fell 14% to 51,464 in Feb., French carmakers assoc. said in a statement. Renault group had 12% drop to 45,038.
- Italy February Manufacturing PMI 45.8, MNI Says. France Feb. Manufacturing PMI 43.9, MNI said.
- Dollar Index to Rally After Bullish Close: Technical Analysis. The Dollar Index may rise to match the highest level since July 2010 after completing a “bullish outside month,” Citigroup Inc. said, citing trading patterns. The gauge yesterday closed at 81.95 in New York, rising 3.5 percent in February, the biggest monthly advance since May. A close above 80.87 would signal further gains targeting 82.75 and then 84.10 for the Intercontinental Exchange Inc. index, analysts led by Tom Fitzpatrick, chief technical analyst at Citigroup in New York, wrote in a note to clients yesterday.
- China Tightens Mortgage Rules as Home Prices Keep Rising. China told its central bank to raise down-payment requirements and interest rates for second-home mortgages in cities with “excessively fast” price gains, stepping up efforts to cool the property market. The People’s Bank of China’s regional branches may implement the measures in accordance with the price-control targets of local governments, the central government said in a statement on its website yesterday. Cities facing “relatively large” pressure from rising house prices must further tighten home-purchase limits, according to the statement.
- Emerging Stocks Erase Weekly Gain on China, Commodities. Emerging-market stocks erased this week’s gains, led by commodity producers, after Chinese manufacturing data trailed estimates and as $85 billion of spending cuts were set to be triggered in the U.S. Vale SA, the world’s biggest iron-ore producer, was the biggest drag in a measure of developing-nation shares. OAO Gazprom, Russia’s largest natural-gas company, fell the most in two weeks. Bank of China Ltd. sank 2.5 percent in Hong Kong. Energy Development Corp. tumbled 11 percent as five people were killed and six are missing after a landslide in the Philippines. The MSCI Emerging Markets Index slid 0.3 percent to 1,051.29 at 11:52 a.m. in New York, leaving it 0.2 percent lower this week.
- Ruble Drops to Lowest This Year as Crude Oil Slides on China. The ruble sank to its weakest level this year as oil and global stock markets fell on slowing manufacturing in China and the euro area. The ruble slid 0.7 percent against the dollar to 30.7600 by 7 p.m. in Moscow, the lowest since December and a 1.1 percent drop in the week.
- Commodity Outflows Total Record $4.23B in Week Ended Feb 27, Says EPFR Global.
- Copper and Aluminum Fall to 3-Month Lows After China’s PMI Data. Copper and aluminum fell to three- month lows after manufacturing growth slowed in China, the world’s biggest industrial metals user. China’s Purchasing Managers’ Index was 50.1 in February, compared with 50.4 in January and the 50.5 median forecast of analysts surveyed by Bloomberg, government figures showed today. “The China numbers came in below expectations, and that implies that manufacturing and copper demand in that country aren’t going to be particularly robust for the next little while,” Bart Melek, the Toronto-based head of commodity strategy at TD Securities, said in a telephone interview. “Inventories in Europe and Asia are rising.” Copper futures for delivery in May dropped 1.4 percent to $3.497 a pound at 10:04 a.m. on the Comex in New York, after touching $3.4725, the lowest for a most-active contract since Nov. 19. The metal yesterday closed below the 200-day moving average. Trading was 66 percent higher than the average in the past 100 days for this time of day, data compiled by Bloomberg show.
- Sequester Impact Small, Says Stanford Professor: Chart. Automatic spending cuts that are scheduled to begin today will have a “very small” impact on the U.S. economy, according to John Taylor, an economics professor at Stanford University in California.
- Druckenmiller Sees Storm Worse Than ’08 as Retirees Steal. Stan Druckenmiller, one of the best-performing hedge fund managers of the past three decades, has a warning for the youth of America: Don’t let your grandparents steal your money. Druckenmiller, 59, said the mushrooming costs of Social Security, Medicare and Medicaid, with unfunded liabilities as high as $211 trillion, will bankrupt the nation’s youth and pose a much greater danger than the country’s $16 trillion of debt currently being debated in Congress. “While everybody is focusing on the here and now, there’s a much, much bigger storm that’s about to hit,” Druckenmiller said in an hour-long interview with Stephanie Ruhle on Bloomberg Television’s Market Makers. “I am not against seniors. What I am against is current seniors stealing from future seniors.” Druckenmiller said unsustainable spending will eventually result in a crisis worse than the financial meltdown of 2008, when $29 trillion was erased from global equity markets. What’s particularly troubling, he said, is that government expenditures related to programs for the elderly rocketed in the past two decades, even before the first baby boomers, those born in 1946, started turning 65.
- Snyder Says Detroit Needs State Manager to End Fiscal Crisis. Michigan Governor Rick Snyder plans to name an emergency manager to handle Detroit’s fiscal crisis, stripping power from officials in a withered city that in 1940 was the fourth biggest in the U.S. and a capital of industry.
- Leveraged Loans Set Record as Fed Sees Excesses: Credit Markets. The riskiest U.S. companies are tapping institutional investors for loans at the fastest pace ever, as some Federal Reserve governors warn of excesses developing in the market. Borrowers obtained more than $88 billion in loans last month from non-bank lenders, exceeding the pre-crisis peak of $55 billion in April 2007 and more than tripling the $26.7 billion received in January, according to JPMorgan Chase.
- Citigroup(C) Says Dodd-Frank Drives Off Overseas Clients. Citigroup Inc. (C) said it could lose overseas customers and Goldman Sachs Group Inc. (GS) may have to limit transfers of capital among its units because of new regulations designed to make the financial system safer. New derivatives rules set by the Dodd-Frank Act may force foreign clients at overseas branches to comply with U.S. standards, a prospect some don’t find appealing, New York-based Citigroup said today in its annual securities filing. Customers “have expressed an unwillingness to continue to deal with overseas branches of U.S. banks if the rules would subject them to these requirements,” Citigroup said. “Citi could lose clients to non-U.S. financial institutions that are not subject to the same compliance regime.”
- Deutsche Bank(DB) Slides as Goldman Cuts on U.S. Capital Concern. Deutsche Bank AG fell the most in more than five months after Goldman Sachs Group Inc. cut the company to sell from hold, saying it may have to transfer $13 billion to its U.S. unit because of new capital rules. Deutsche Bank slid as much as 6.2 percent, the biggest intraday drop since Sept. 26, and declined 4.3 percent to 33.57 euros at the 5:45 p.m. close in Frankfurt. The stricter requirements may hurt profit at Europe’s biggest bank by assets and require it to ask shareholders for more money, Goldman Sachs analysts including Jernej Omahen said in an e-mailed report from London today.
MarketWatch:
- The return of interest-only mortgages. These loans promise low monthly payments, but plenty of risks. Affluent borrowers are signing up for the same type of mortgage that pushed many homeowners into foreclosure just a few years ago.
- Easy money will end in tears, Allan Meltzer says. Commentary: Foremost expert gives a history lesson on economics.
- Too-big-to-fail is too big to end. Commentary: Even Bernanke doubts we can avoid next bailout.
- Obama is the closest thing to Nixon we've seen in 40 years by Pat Caddell.
Zero Hedge:
- Consumer Taps Out As Income Plunges By Most In 20 Years: Savings Rate Crashes To 2007 Levels. (graph)
- Global PMI Summary. (table)
Washington Post:
- Hail Armageddon by Charles Krauthammer. “The worst-case scenario for us,” a leading anti-budget-cuts lobbyist told The Post, “is the sequester hits and nothing bad really happens.” Think about that. Worst case? That a government drowning in debt should cut back by 2.2 percent — and the country survives. That a government now borrowing 35 cents of every dollar it spends reduces that borrowing by two cents “and nothing bad really happens.” Oh, the humanity!
- U.S. crisis caused by faulty spending policies: Canada minister. An influential Canadian cabinet minister took an unexpected swipe at the United States on Friday, saying it was up to its ears in debt because it had followed big-spending policies similar to those advocated by a left-leaning Canadian party. The comments by House Leader Peter Van Loan were a surprise, given that the United States is Canada's closest ally and Ottawa is currently pressing Washington to approve a major pipeline from the oil sands of Alberta to Texas.
- Fund investors sour on emerging market, US stocks -EPFR. Fund investors worldwide soured on emerging market stocks for the first time in over five months and opted for U.S. bonds in the latest week as global concerns shook markets, data from EPFR Global showed on Friday. Investors pulled $1.07 billion from emerging market stock funds in the week ended February 27, the fund-tracking firm said. Those were the first outflows from the funds since early September, the firm added. Funds that hold U.S. stocks also saw a drop in demand as investors redeemed $411 million from the funds. That marked a reversal from the prior week's inflows of $2.24 billion.
- Italy car sales drop 17.4 percent in February - Ministry. New car sales in Italy, Europe's fourth-largest car market, fell 17.4 percent in February from the same month a year ago to 108,419 vehicles, Italy's Transport Ministry said on Friday. In January, car sales in recession-hit Italy plunged 17.58 percent, adding to a decline for all of 2012 of 19.8 percent. Automakers are facing a sustained slump in the European car market against the backdrop of the euro zone debt crisis and government austerity measures. Fiat's market share was 28.5 percent in February, against 30.1 percent in January, according to a statement by the automaker. Fiat is Europe's tenth-biggest selling brand by volume.
- Global manufacturing growth eased in Feb -PMI. Growth in global manufacturing eased to a modest pace last month, hampered by weaker showings in China, the euro zone and Britain, but supported by stronger growth in the United States, a business survey showed on Friday. JPMorgan's Global Manufacturing PMI, produced with research and supply management organisations, fell to 50.8 in February from 51.4 in January.
- UK manufacturing shrinks unexpectedly in February, triggers slide in the pound. A shock contraction in British manufacturing last month dragged the pound below the psychologically important $1.50 mark for the first time since June 2010, as tough conditions both at home and abroad indicated that the sector will drag down growth in the first quarter.
- Eurozone unemployment touches fresh high. Eurozone unemployment touched a fresh high in January, as data painted a far from encouraging picture for the 17-nation bloc. Unemployment in the eurozone rose to a record 11.9pc in January from 11.8pc in December, with nearly 19m people out of work. The highest jobless rates were in bailed-out Greece, at 27pc - although this figure is for November - and in struggling Spain, on 26.2pc.
- Italy Should Consider Return to Lira, Willsch Says. CDU lawmaker Klaus-Peter Willsch says if majority of Italians cannot be convinced to stand by EMU rules, country must be allowed to return to its own currency.
- Europe Relying Too Much On ECB, Fuest Says. ZEW's new president Clemens Fuest says ECB measures have reduced the pressure on politicians to push through necessary measures to stabilize euro zone and combat crisis. The current strategy by governments is to buy time through cheap credits, which will fail. Creditors must participate more in restructuring of banks. Reforms in ailing countries must be sped up. The Italian election result is "a warning", he also said.
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