- Greece Seeks Plan C After Eurogroup Rules Out Bridge Loan. (video) Euro-area governments won’t grant Greece’s request for a short-term financing agreement to keep the country afloat while it renegotiates the terms of its financial support, said Jeroen Dijsselbloem, chairman of the bloc’s finance ministers’ group. “We don’t do” bridge loans, Dijsselbloem told reporters in The Hague on Friday, when asked about Greece’s request. “A simple extension is possible as long as they fully take over the program.” The European Union’s latest rebuff raises the stakes for Greece’s new government, which has already failed in its demands for a debt writedown. The next showdown is scheduled for Feb. 11 in Brussels, when Greek Finance Minister Yanis Varoufakis faces his 18 euro-area counterparts in an emergency meeting after Prime Minister Alexis Tsipras delivers a major policy speech on Sunday.
- Merkel Holding Emergency Talks With Putin Over Deepening Crisis. (video) German Chancellor Angela Merkel and French President Francois Hollande are holding emergency talks in Moscow with Vladimir Putin in a last-ditch effort to stave off a deeper confrontation with the Russian leader over Ukraine. Merkel and Hollande, whose arrival in the snowy Russian capital as darkness fell was shown live on TV, were whisked off to meet Putin behind closed doors at his official residence within the Kremlin. The two leaders will push him to implement the Minsk cease-fire agreement from last September, two people familiar with the matter said. Merkel is pessimistic about Putin’s willingness to defuse the crisis and plans to deliver the message that Russia faces tougher actions unless he agrees to help end the escalating violence in Ukraine, said one of the people, who asked not to be identified discussing government strategy.
- Putin’s New Challenge: Propping Up Russia’s Ailing Banks. The news broke in a terse announcement on the web: another Russian bank was in trouble. The Jan. 26 statement from SB Bank, a midsize Russian lender, underscored the pressures building inside the nation’s financial system. SB said it was freezing cash withdrawals, initially for just three days. On Friday, the ban was extended for a second time, through Feb. 9. Staggered by the collapse in oil and plunge in the ruble, Russia is now confronting a potential banking crisis.
- Spanish Bonds Underperform Italy’s as Podemos Gains Popularity. Spain’s bonds are set to underperform their Italian peers for the fifth time in six weeks amid concern the rise of a Spanish anti-austerity party might lead to the sort of turmoil that followed Syriza’s victory in Greece. Podemos, which has pledged to restructure $1.1 trillion of Spanish public debt, widened its lead over Prime Minister Mariano Rajoy’s People’s Party, according to a survey this week by the state polling company. By contrast in Italy, itself no stranger to political upheaval, Sergio Mattarella was elected president on Saturday as a candidate backed by Prime Minister Matteo Renzi. That marked a victory for the Italian premier, who overcame tensions within the governing coalition. “The reason for Spain underpeforming Italy is totally related to investors’ concerns about the political landscape, in relation to what is going on in Greece,” said Luca Cazzulani, a senior fixed-income strategist at UniCredit SpA in Milan. “It’s something that will probably carry on in the near term. The link investors will make is that the next country with a strong anti-austerity movement will be Spain.”
- Currency Devaluations Are an Undeclared War. The global currency war is threatening to prove a silent killer. So says David Woo, head of global rates and currencies research at Bank of America Merrill Lynch in New York. While some question the existence of any conflict -- arguing that falling exchange rates merely reflect efforts by central banks to spur lackluster domestic economies -- Woo expresses concern. “There is a growing consensus in the market that an unspoken currency war has broken out,” he said in a report to clients this week. “The reason why this is a war is that it is ultimately a zero-sum game -- someone gains only because someone else will lose.” The standard view on war-mongering is that by easing monetary policy, central banks from Asia to Europe are hoping to weaken their currencies to boost exports and import prices. Trade rivals then retaliate, creating a spiral of devaluations as witnessed in the 1930s.
- European Stocks Rise Fifth Day as U.S. Payrolls Exceed Forecasts. European stocks advanced for a fifth day, extending a seven-year high, as data showed employers in the U.S. added more jobs in January than forecast. The Stoxx Europe 600 Index climbed 0.2 percent to 373.31 at the close of trading, after earlier dropping as much as 0.4 percent.
- Shipping Costs Test New Low as China Coal Imports Slide: Freight. Tumbling demand for coal in China and weakening growth in the nation’s iron ore purchases have sent shipping costs to almost the lowest on record. The Baltic Dry Index, a measure of global freight rates for commodities, fell on Friday to within 0.9 percent of the all-time low in July and August of 1986. China’s seaborne coal imports slid 10 percent in 2014, reversing growth of 16 percent the year before, according to Clarkson Plc, the world’s largest shipbroker. The Chinese economy, which buys almost half the world’s coal and ore cargoes, will grow at the slowest pace in 25 years, economists’ forecasts compiled by Bloomberg show.
- Jobs Report Boosts Odds of Fed Interest-Rate Increase in June. (video) The odds of a Federal Reserve interest-rate increase as early as June rose after a government report showed payroll gains in January capped the biggest three month increase in 17 years. The probability of a Fed liftoff by June, based on trading in futures and options, rose to 27.6 percent on Friday, from 17.6 percent the day before, data compiled by Bloomberg show. The odds of an increase by September were 59.1 percent, up from 44.5 percent.
- ‘Sell Treasuries!’ Cry Heard Across Wall Street Stunned by Jobs. Yields on 2-year Treasuries increased the most today in about two months, jumping 0.1 percentage point to 0.63 percent at 11:19 a.m. in New York, according to Bloomberg Bond Trader data. Bond bears have been disappointed lately, waiting for the economy to pick up enough to justify higher interest rates from the Federal Reserve. The jobs report -- which showed payrolls advanced by 257,000 last month and delivered the biggest wage increase since 2008 -- should give them new confidence. “The market is starting to realize that we may get earlier hikes than expected,” Mohamed El-Erian, chief economic adviser at Allianz SE, said in a Bloomberg Television interview today.
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- Greek stand-off pushes Europe to the brink. The last thing Germany is going to do is cut a deal with Greece.
- Greece downgraded as S&P warns cash crisis could force it out of euro. Standard & Poor's cuts Greece to the brink of default and warns that the country could be forced to leave the single currency if it loses access to European funding.
- Merkel 'Degraded' by New Greek Government, Kauder Says. Germany and Chancellor Angela Merkel have been "degraded several times" by members of the new Greek government, Volker Kauder, caucus leader for Merkel's Christian Union bloc in parliament, says. "These words resonate, to say it quite bluntly." "Germany was among those who saved the Greeks from ruin. It is about time that the entire new government recognizes this instead of attempting to drive a wedge between the euro countries," he said. Prime Minister Alexis Tsipras should focus on taxing rich Greeks, Kauder said. "I would have liked to see the shirt-sleeved new prime minister tackle this first. Taxing the rich should be a field of activity for left-wing populists," he said.
- Russia Considers Rules to Revoke Foreign Media Permits. Russia's Communications Ministry is weighing law to allow withdrawal of permits to work in Russia for foreign media that have breached local legislation on extremism or published incorrect data, citing people familiar with the matter.
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