Bloomberg:
- EU Opens Way for Easier Budgets After Italian Austerity Backlash. European finance ministers opened the way for looser budget policies after a backlash against austerity thrust Italy into political limbo and shattered months of relative stability in European markets. Italy’s deadlocked election, France’s refusal to make deeper budget cuts and protests against the shrinking of the welfare state across southern Europe escalated the rebellion against the German-led prescription for fighting the debt crisis. Economic strains “may also justify in a certain number of cases reviewing deadlines for the correction of excessive deficits,” European Union Economic and Monetary Commissioner Olli Rehn told reporters late yesterday after a meeting of euro- area finance ministers in Brussels.
- Euro Chiefs Won’t Rule Out Cyprus Depositor Losses. European finance ministers left open the possibility of saddling bank depositors and bondholders with some of the costs of an aid package for Cyprus, potentially unsettling markets as the bailout negotiations drag on. Dutch Finance Minister Jeroen Dijsselbloem declined to rule out a “bail in” of Cypriot depositors, even after concern over the treatment of bank account holders prompted the first signs of capital flight from the island. “All the questions on the elements” will be dealt with by late March, Dijsselbloem told reporters after chairing a meeting of euro-area finance ministers in Brussels yesterday.
- Wegelin Must Pay $58 Million in U.S. Tax Prosecution. Wegelin & Co. was ordered to pay U.S. authorities almost $58 million at the end of a criminal case after the Swiss bank pleaded guilty to helping American taxpayers hide more than $1.2 billion from the Internal Revenue Service.
- China Bull Market Ending as Financials Plunge: Chart of the Day. A slump by a Chinese equity gauge of banks, property developers and insurers in the past month is signaling the end to a bull-market rally by the nation's stocks as the government takes steps to prevent asset bubbles. Peaks in the relative performance of financial shares versus the broader market have foreshadowed bear-market declines in the CSI 300 Index, according to data compiled by Bloomberg. "The stock rally is over," Zhou Binglin, a senior economist at Guosen Securities Co. in Shenzhen, said March 1. Banks and developers are "leading indicators," with real estate accounting for about 20% of the economy, he said.
- China Boosts Defense Spending as Military Modernizes Arsenal. China will boost defense spending 10.7 percent this year as the government modernizes its military arsenal and adopts a more assertive stance in territorial disputes with its neighbors. Military spending is set to rise this year to 740.6 billion yuan ($119 billion) from 669.1 billion, the Ministry of Finance said in a report.
- RBA Holds Key Rate at 3%, Reiterates Scope to Ease Further. Australia’s central bank kept its benchmark interest rate unchanged at a half-century low and reiterated it has room to cut further if needed to boost demand. Governor Glenn Stevens and his board left the overnight cash-rate target at 3 percent, the Reserve Bank of Australia said in a statement today in Melbourne. The decision was predicted by 27 of 29 economists surveyed by Bloomberg. Two forecast a 0.25 percentage point cut.
- Netanyahu Warns Iran Stalling While Biden Presses Talks. Israeli Prime Minister Benjamin Netanyahu said that Iran is using negotiations over its nuclear program to stall for time to develop an atomic weapon, even as Vice President Joe Biden said the U.S. favors diplomacy to stop Iran from getting one. “Diplomacy has not worked,” Netanyahu, speaking via satellite, today told the largest gathering in Washington of a pro-Israel U.S. lobbying group. Iran is “running out the clock,” he said. “It has used negotiations, including the most recent ones, in order to buy time to press ahead with its nuclear program.”
- China Moves to Temper Growth. Property Bubble Is a Key Concern. China's ambitions for more moderate growth come after decades of double-digit increases and are a centerpiece of new leaders' plans to be detailed during the annual National People's Congress, which began Tuesday. "We should unswervingly take expanding domestic demand as our long-term strategy for domestic development," said Premier Wen Jiabao, delivering his final report to the congress after 10 years at the helm. The key to that change, he said, is to "enhance people's ability to consume."
- Italy, Spain Close the Risk Divide. Italy's political uncertainty, coupled with relative stability in Spain, brought the gap between the two countries' bond yields to the narrowest point in almost a year on Monday, Financial markets shuddered when last month's parliamentary election in Italy left Europe's third-largest economy without any clear leadership. Since then, yields on 10-year Italian bonds have risen by half a percentage point to 4.867% on Monday, according to Tradeweb.
- Money-Laundering Suspicion Stalls Europe's Latest Bailout. Cyprus's newly elected government is bargaining for a €17 billion bailout from its euro-zone peers. But the little island won't get a cent until it wrestles with a long-standing issue: money laundering. Cyprus's reputation as a transit point for shady cash, and its unusual connections to Russia, are making many of its would-be rescuers nervous.
- Gardner Denver(GDI) Expected to Fetch More than $75 Per Share From KKR.
- U.S., China Reach Deal on North Korea Sanctions. The U.S. and China have reached a deal on a new set of sanctions against North Korea in response to its test of a nuclear weapon last month, U.N. diplomats said. The resolution, which will enforce some existing sanctions and include new ones, will be introduced at a U.N. Security Council meeting on Tuesday, a diplomat said. China has already voted for three sets of sanctions against its reclusive ally for its past nuclear tests and ballistic missile launches, both banned by the Security Council.
- Young Adults Retreat From Piling Up Debt. Young people are racking up larger amounts of student debt than ever before, but fresh data suggest they are becoming warier of borrowing in general: Total debt among young adults dropped in the last decade to the lowest level in 15 years. A typical young U.S. household—defined as one led by someone under age 35—had $15,000 in total debt in 2010, down from $18,000 in 2001 and the lowest since 1995, according to a recent Pew Research Center report and government data. Total debt includes mortgage loans, credit cards, auto lending, student loans and other consumer borrowing. In addition, fewer young adults carried credit-card balances and 22% didn't have any debt at all in 2010—the most since government tracking began in 1983.
- Venezuela Says Chávez Has New Infection, Breathing Problems Worsen.
- Carbon Power Politics. The next EPA chief and next phase of the Obama green agenda. President Obama gave his second-term global warming agenda a lot more definition Monday with a new Environmental Protection Agency chief to replace Lisa Jackson. Picking Gina McCarthy, one of her top lieutenants and the architect of some of the agency's most destructive carbon rules, is a sign he intends to make good on his vow of "executive actions" if Congress doesn't pass cap and tax.
- Pawning your portfolio. Wealthy investors are using their stocks and bonds to get large loans. With loans still hard to come by, wealthy investors are embracing a somewhat surprising and potentially risky strategy: pawning their stocks and bonds.
- A tale of Chinese dwellers in a degraded land.
- Tumbling Oil Prices May Have Further to Fall. Oil prices, at 2013 lows, could continue to feel pressure, if the global economy turns out to be weaker than expected and production continues to grow in places like the U.S., Brazil and Iraq, according to James Burkhard, vice president and head of oil market research at IHS. "We're going from three million barrels to four million barrels of spare OPEC productive capacity this year," he said, shortly after participating in a panel discussion at the annual IHS CERAWeek conference in Houston.
- The Fannie Mac Daddy: Fannie Freddie To Merge Select Operations.
- Did The US Government Sanction The Liquidation Of Lehman Brothers?
- Understanding Europe's "Austrian" Solution - The 'Merkel-Draghi' Wager. (graphs)
- JCPenney(JCP) Has Color-Coded Employees To Prepare For Future Firings.
- America's Four Biggest Banks Still Have The Ugliest Loan Books In The Business.
- The Outlook For Young Job Seekers Is Depressing.
- Deutsche Bank(DB) selling block of Vornado shares in Penney(JCP). Deutsche Bank is offering a block of 10 million shares in retailer J.C. Penney that is being sold by Vornado Realty Trust, a source familiar with the offering said on Monday. The news, which saw shares of J.C. Penney fall in after-hours trade, came less than a week after the department store chain reported its sharpest sales drop since announcing a grand transformation plan 13 months ago. Vornado is the Penney's third-largest shareholder and its chairman, Steven Roth, sits on the retailer's board.
- Japan opposition Democrat official: cannot support BOJ nominee Iwata.
- Facebook(FB) hit with fresh IPO-related lawsuit. A Facebook Inc shareholder has sued the social networking company's Chief Executive Mark Zuckerberg and others over its troubled IPO, potentially reviving legal claims that a different court dismissed in February.
- Moody's sees bankruptcy risk in Detroit fiscal emergency. The city of Detroit would have a potential path to bankruptcy court under a state-appointed emergency financial manager, posing risks to the city's bondholders, Moody's Investors Service said on Monday.
- Europe faces an impossible challenge - why can't Olli Rehn see it? "There is no alternative". That was again the message this weekend from our old friend Olli Rehn in telling Der Spiegel that the eurozone's miscreant periphery has no option but to stick to the assigned path of budgetary consolidation. With Italy in open political revolt and much of the rest of the Club Med deep in the grips of an apparently inescapable depression, there is, he said, no room for manoeuvre. Normally when something isn't working, you try a different approach, but the luckless European economics chief finds himself so locked into the task of defending the indefensible – the single currency - that he is unable to offer alternatives.
- Ex-BOJ Deputy Says More Money Supply Won't Beat Deflation. Jiji cities an interview with former Bank of Japan Deputy Governor Yutaka Yamaguchi.
RBC Capital:
- Rated (NFLX) Outperform, target $210.
- Asian equity indices are +.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 109.50 +.5 basis point.
- Asia Pacific Sovereign CDS Index 85.0 -.25 basis point.
- FTSE-100 futures +.50%.
- S&P 500 futures -.01%.
- NASDAQ 100 futures +.11%.
Earnings of Note
Company/Estimate
- (CKP)/.17
- (LNCR)/.61
- (SWHC)/.23
- (PAY)/.49
10:00 am EST
- ISM Non-Manufacturing Composite for February is estimated to fall to 55.0 versus 55.2 in January.
- None of note
- The Fed's Lacker speaking, Eurozone Services PMI/Retail Sales, Australia gdp report/rate decision, Brazil rate decision, weekly retail sales reports, IBD/TIPP Economic Optimism Index for March, (XLNX) investor day, Deutsche Bank Gaming/Lodging Conference and the Citi Financial Services Conference could also impact trading today.
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