- China's PMI Reports Show Slowdown Deepening as Services Slip. (video) China’s factory gauge extended its stretch of deteriorating conditions to a record seven months while a measure of services fell to the weakest in seven years, underscoring the challenge for policy makers as they seek to cut overcapacity in manufacturing without derailing growth. The manufacturing purchasing managers index dropped to 49 in February, missing the median estimate of 49.4 in a Bloomberg News survey of economists. It hasn’t been weaker since January 2009. Numbers below 50 indicate conditions worsened. In a sign China’s slowdown is spreading, the non-manufacturing PMI -- which has been outperforming the factory measure -- fell to the lowest level since December 2008. A separate manufacturing reading from Caixin Media and Markit Economics fell to 48 in February, from 48.4 in January.
- Smells Like Subprime. Chinese bankers often pride themselves on having studied in the U.S. or the U.K and true to form, they're bringing home a lot of the intricate financing that helped people overseas get loans for homes, cars and education. But these financiers are taking creative structures one step further. On Monday, Bloomberg News reported that China will allow domestic banks to issue as much as 50 billion yuan ($7.6 billion) of asset-backed securities that would be paid back using the proceeds from nonperforming loans. (Yes, you read that correctly.) The structure they're employing is similar to the method that was used to repackage subprime mortgages in the U.S. ahead of the global financial crisis.
- Sydney Median Home Price Falls to 10-Month Low as Market Slows. (graph) The Sydney median home price dropped to a 10-month low in February after record values and a regulatory clampdown that tightened lending standards crimped demand. The median dwelling value in Australia’s largest city fell to A$730,000 ($522,000) from A$765,000 a month earlier, falling for a third consecutive month, data from researcher CoreLogic Inc. showed Tuesday. The measure touched a record A$800,000 in October, according to the data.
- Most China Stocks Rise After Reserve Ratio Cut, Factory Data. Most Chinese stocks advanced after the central bank’s move to cut the amount of cash lenders must hold in reserve and a strengthening yuan countered disappointing manufacturing data. The Shanghai Composite Index edged higher in mid-morning trading, with about four stocks gaining for every that fell. The required reserve ratio will drop by 0.5 percentage point effective March 1, the People’s Bank of China said after the nation’s markets closed Monday.
- Asian Stocks Swing as Yen Advance Offset China Economic Stimulus. Asian stocks fluctuated between gains and losses as continuing strength in the yen pressured Japanese shares while investors weighed disappointing China manufacturing data against the nation’s stimulus efforts. The MSCI Asia Pacific Index climbed 0.1 percent to 119.32 as of 11:39 a.m. in Tokyo, after dropping 0.1 percent earlier.
- S&P 500 Falls for a Third Month as Late-February Rebound Fades. (video) The Standard & Poor’s 500 Index erased a February gain Monday, despite a rally in crude oil, as a two-week rebound faltered in the month’s lightly traded final session. Banks and health-care shares were the biggest drags today, with lenders capping a third monthly decline, losing 6.9 percent in February. JPMorgan Chase & Co. and Wells Fargo & Co. fell at least 2.1 percent to pace Monday’s retreat. Amgen Inc. sank 3.6 percent and Endo International Plc plunged 21 percent as health-care companies had their worst decline in more than two weeks. Energy shares fell 1.2 percent to post the fourth consecutive monthly drop and ninth in the last 10. The S&P 500 fell 0.8 percent to 1,932.23 at 4 p.m. in New York, extending its monthly losing streak to three, the longest in more than four years. It closed 0.4 percent lower for February.
Wall Street Journal:
- 1MDB Scandal: Deposits in Malaysian Leader Najib’s Accounts Said to Top $1 Billion. Global investigators believe much of it originated with state development fund and moved to Prime Minister Najib Razak’s accounts via offshore entities.
- The Donald and The Terminator. The perils of a conservatism where the messenger trumps the message. Before there was Donald, there was Arnold. And therein lies a cautionary tale with particular resonance this Super Tuesday. The caution has to do with the limits of a personality-driven populism for effecting conservative change. The moment has to do with the 11 primaries and caucuses on Tuesday: The results may well make it all but impossible for any rival to wrest the 2016 GOP presidential nomination from Donald Trump.
- Making Depressions Great Again. The U.S. may renounce its trade leadership at a dangerous economic moment. Political leaders have made many mistakes since the 2008 financial panic, but by some miracle a trade war isn’t one of them. There are signs that this luck is running out, at a moment the world economy can least afford it.
- Lynch: No ‘artificial deadline’ on DOJ’s Clinton email probe. (video) Attorney General Loretta Lynch said Monday in an interview with Fox News that the Justice Department has no deadline for concluding the Hillary Clinton email investigation and that it’s being handled “like any other review,” even with the presidential election just months away. Lynch said on "Special Report with Bret Baier" that the investigation is being handled by the agency’s “career independent lawyers” and that they will “review the facts and the evidence and make a determination in due course.”
- Hobby Lobby Founder Endorses Rubio, Calls Trump a 'Bully'. Hobby Lobby founder David Green, who just endorsed Marco Rubio for president, explained to the FOX Business Network’s Neil Cavuto why he is not going to vote for Donald Trump. “I don’t want a loose cannon to take care of the problems we have,” Green said. “We’re all angry at where we’ve been. But, to do something because we think someone’s made a billion dollars—we’ve made billions of dollars, but that doesn’t make us have the ability to run this country… the last thing we need in this country [right] now is an individual that leads us by a scorched earth attitude and no matter what it takes to get ahead.”
- China's Crowd-Sourced Housing Bubble Goes "Crazy" - $585,000 For A 65 Square Foot 'Apartment'. (graph)
- Systemic "Fragility" Surges. (graph)
- "The GOP Is On The Verge Of A Meltdown": Senior Republicans Threaten To Vote For Hillary. (graph) They fear that a victory for Mr Trump could fatally fracture the party and prevent them from winning the White House in November.
- Peak Complacency (Again). (graph)
- Japan Braces For A "Turbulent, Volatile" 10-Year Auction With First Ever Negative Yield On Deck. (graph)
- Exporting Death & Destruction. (graph)
- Ackman Losses $200 Million In An Instant After Valeant(VRX) Reveals SEC Investigation; Stock Crashes.
- China State Media Warns of Home Price Surge in Top Cities. Some developers and real estate agents created illusion of massive demand for homes that led to purchases by panic buyers, according to a commentary written by reporter Zheng Juntian.
- Asian equity indices are +.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 159.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 74.50 -1.25 basis points.
- Bloomberg Emerging Markets Currency Index 68.45 +.05%.
- S&P 500 futures -.16%.
- NASDAQ 100 futures -.20%.
Earnings of Note
9:45 am EST
- The Final Markit US Manufacturing PMI for February is estimated to rise to 51.2 versus 51.0 in January.
- The IBD/TIPP Economic Optimism Index for March is estimated to rise to 47.9 versus 47.8 in February.
- ISM Manufacturing for February is estimated to rise to 48.5 versus 48.2 in January.
- ISM Prices Paid for February is estimated to rise to 35.0 versus 33.5 in January.
- Construction Spending for January is estimated to rise +.3% versus a +.1% gain in December.
- Wards Total Vehicle Sales for February are estimated to rise to 17.7M versus 17.47M in January.
- None of note
- The Eurozone Manufacturing PMI, Super Tuesday Primaries, US weekly retail sales reports, CSFB Healthcare Conference, Pac Crest Emerging Tech Summit, (APC) conference call, (F) February sales conference call and the (OI) investor day could also impact trading today.