Today's Headlines

Bloomberg:

• China Stock Bargains Even More Elusive After Selloff Goes Global. For once, it wasn’t China’s fault. With the country’s markets closed for lunar new year holidays last week, global equity investors found plenty of other reasons to sell -- everything from sliding oil prices to shrinking bank profits and crumbling faith in global monetary policy. The MSCI All-Country World Index plunged 2.6 percent, entering bear-market territory for the first time in more than four years. While the rout may help Communist Party officials counter perceptions that China is the biggest risk for global markets, investors in yuan-denominated A shares will find little to cheer about as trading resumes Monday. Valuations in the $5.3 trillion market, already inflated by a record-breaking bubble last year, now look even more expensive versus their beaten-down global peers. The Shanghai Composite Index trades at a 34 percent premium to MSCI Inc.’s emerging-markets index -- up from an average gap of 10 percent over the past five years -- and equities in the tech-heavy Shenzhen market are almost four times more expensive than their developing-nation counterparts. Shares with dual listings, meanwhile, are valued at a 46 percent premium on the mainland relative to Hong Kong, near the widest gap since 2009.

• China January Exports Fall 6.6% on Year in Yuan Terms. China’s exports dropped in January, while imports also fell, adding to economic challenges confronting the world’s biggest trading nation. Overseas shipments declined 6.6 percent in January in yuan terms from a year earlier, the customs administration said on Monday, compared with a 2.3 percent increase in December. Imports extended a stretch of declines to 15 months, falling 14.4 percent, leaving a trade surplus of 406.2 billion yuan ($62.3 billion). The decrease suggests the yuan’s depreciation since August has yet to result in a sustained boost to the competitiveness of China’s factories. "Business sentiment in both U.S. and Europe lost some steam recently," UBS Group AG economists led by Zhang Ning wrote in a note before the data release.

• Yuan Rises Most Since 2005 as PBOC Voices Support, Raises Fixing. China’s yuan surged by the most in more than a decade, catching up with dollar declines during a week-long holiday, after the central bank chief voiced support for the currency and set its fixing at a one-month high. The currency advanced 0.89 percent, the most since the nation scrapped a peg to the dollar in July 2005, to 6.5174 a dollar as of 9:46 a.m. in Shanghai, according to data compiled by Bloomberg. The offshore yuan traded in Hong Kong fell 0.18 percent to 6.5201.The People’s Bank of China earlier raised the daily fixing against the dollar, which restricts onshore moves to a maximum 2 percent on either side, by 0.3 percent to 6.5118, the strongest since Jan. 4.

• China’s Stocks Tumble as Markets Reopen After Week-Long Holiday. China’s stocks slumped as trading resumed after a week-long holiday which saw global equities enter a bear market on concern over the strength of the world economy. The Shanghai Composite Index dropped 2.4 percent to 2,698.16 as of 9:47 a.m. local time, led by financial and industrial companies. The MSCI All-Country World Index retreated 2.6 percent since the city’s markets closed on Feb. 5, while the Hang Seng China Enterprises Index tumbled 6.8 percent. The yuan gained 0.9 percent in Shanghai, the biggest advance since at least 2007, after the central bank strengthened the currency’s reference rate by the most in three months. China’s benchmark stock index has plunged 22 percent this year on concern that the economic slowdown and weakening yuan will exacerbate capital outflows. The nation’s foreign-exchange reserves shrank in January to the smallest since 2012, data released on Feb. 7 showed. Margin traders have also been unwinding bullish bets on stocks amid speculation valuations are still too high.

• Japan's Economy Contracted Again in Final Quarter of 2015. Japan’s economy contracted in the final three months of 2015 as the nation struggles to break free of a cycle of expansion and contraction despite more than three years of the Abenomics program. Gross domestic product shrank an annualized 1.4 percent in the three months ended Dec. 31, following a revised 1.3 percent gain in the third quarter, the Cabinet Office said on Monday. The median estimate of 33 economists surveyed by Bloomberg News was for a 0.8 percent decline. Weakness in private consumption was the biggest contributor to the contraction, undermining Prime Minister Shinzo Abe’s policies to spur inflation and growth in the world’s third-largest economy. 

• Airlines in Southeast Asia May Defer Plane Deliveries, IATA Says. Airlines in Southeast Asia may need to push back delivery of aircraft after a decade of economic growth and optimism about a surge in air travel prompted them to order hundreds of jets from Airbus Group SE and Boeing Co. Carriers in the region that includes Indonesia and Malaysia are now confronted with challenges such as overcapacity and intense competition, Tony Tyler, chief executive officer of the International Air Transport Association, said in Singapore Sunday ahead of Asia’s biggest airshow. IATA is a global industry body representing about 250 airlines.

• ‘Brexit’ Puts Focus on European Security as U.S. Urges Unity. European Union leaders head into a week of crucial diplomacy on Britain’s future in the bloc with a U.S. warning to avoid “Brexit” and concern that disunity could undermine regional security. Days before EU national leaders try to thrash out a deal aimed at keeping Britain in, German Chancellor Angela Merkel’s senior foreign-policy lawmaker, Norbert Roettgen, said Europe needs more unity, not less. That followed a warning by U.S. Secretary of State John Kerry that a British exit would weaken Europe just as it needs strength to deal with the twin challenges of terrorism and refugees. “We cannot any longer delegate this matter of European security to the U.S.,” Roettgen, who heads the German parliament’s foreign affairs committee, said at the Munich Security Conference on Sunday. “We have to pour in a much, much higher amount of financial, political, military resources. We have as Europeans to care for our security -- this is fundamentally new.”

• Saudi Arabia Said to Ease Bank Loan Rules to Boost Liquidity. Saudi Arabia is easing rules on bank lending to stimulate growth in the largest Arab economy, two people with knowledge of the matter said. Banks were told they can lend the equivalent of 90 percent of their deposits, up from an earlier limit of 85 percent, by the Saudi Arabian Monetary Agency on Sunday, the people said, asking not to be identified as the information is private. The move followed a request from the country’s committee of treasurers to help ease liquidity constraints, according to one of the people. Saudi Arabia is seeking to revive its economy and stimulate credit after the slump in oil and government spending strained the banking system. The three-month Saudi Arabia Interbank rate rose to 1.73 percent on Feb. 3, its highest in about seven years, according to data compiled by Bloomberg. Bets for a devaluation of the riyal reached their highest in about two decades in January, even after the country pledged to keep its currency peg.

• Asian Stocks Follow U.S. Rally as Index Climbs From 3-Year Low. Asian stocks rallied from the lowest level since 2012 after U.S. and European shares staged a rebound, with Japan stocks surging before the reopening of China’s market. The MSCI Asia Pacific Index gained 2 percent to 115.27 as of 9:10 a.m. in Tokyo, following a 6.2 percent slide last week.

• Oil Resumes Drop as Iran Loads Post-Sanctions Cargo to Europe. Oil resumed its decline below $30 a barrel as Iran loaded its first cargo to Europe since international sanctions ended. Futures fell as much as 1.7 percent in New York after surging 12 percent on Friday, while Brent in London slid 2.1 percent. A tanker for France’s Total SA was being loaded Sunday at Kharg Island while vessels chartered for Chinese and Spanish companies were due to arrive later the same day, an Iranian oil ministry official said. U.S. drillers idled rigs for an eighth week amid brimming U.S. crude stockpiles, according to data from Baker Hughes Inc.

• Oil Speculators Shrug Off Huge Stockpiles to Bet on Price Climb. Oil stockpiles at an 86-year high and warnings of a persistent glut weren’t enough to keep money managers from betting that prices are ready for a rebound. Speculators’ long positions in West Texas Intermediate crude climbed to the highest since June as oil sank toward a 12-year low, according to U.S. Commodity Futures Trading Commission data. Despite a 12 percent rally Friday, prices finished last week down 4.7 percent at $29.44 a barrel. Speculators’ long position in WTI rose by 1,152 contracts to 302,384 futures and options in the week ended Feb. 9, CFTC data show. Shorts, or bets that prices will decline, slipped 2.1 percent. Net-longs increased 5 percent to a three-month high.

Wall Street Journal:

• Antonin Scalia Was Democracy’s Legal Champion. He changed the way judges looked at text and law, and he was the best writer the Supreme Court has ever known.

• Conservatives Rally Around Call to Wait on Filling Scalia Supreme Court Seat. Senate Majority Leader Mitch McConnell calls for waiting until after presidential elections. Conservative lawmakers and activists Sunday rallied around Senate Majority Leader Mitch McConnell’s call for waiting until next year to decide who will fill the Supreme Court opening created by the death of Antonin Scalia. Within hours of the news of Mr. Scalia’s death Saturday, the Kentucky Republican said the vacancy shouldn’t be filled until there is a new president to succeed President Barack Obama, whose term ends next January. By Sunday, conservative momentum had built

• Donald Trump’s MoveOn.org Moment. His claim that Bush ‘lied’ about WMD in Iraq is a lie spread by the left. By now it’s a cliché that Donald Trump can say anything he wants, and his supporters don’t care. They love him for his attitude and bluster, which has become a proxy for their rage against the political machine. Maybe that will be true again after Saturday night’s debate in South Carolina, but someone has to point out how the GOP presidential frontrunner has adopted the political left’s worldview on fundamental questions—including blatant distortions of fact.

Fox News:

• Political battle brews over replacing Scalia, as high court decides on immigration, other key issues. (video) The unexpected death of Supreme Court Associate Justice Antonin Scalia is sparking a political battle in Washington and on presidential campaign trails across the country -- as Democrats and Republicans argue about replacing Scalia while the high court decides on such politically-charged issues as ObamaCare, immigration and abortion. At issue is whether President Obama, in his final months of office, will attempt to appoint a replacement for Scalia, with the court now split between four Democratic and four Republican appointees.

CNBC:

• Recession might be in the cards, if history's a guide: Analyst. (video) Stocks ended the week on a high note despite hitting a two-year low on Thursday. Despite the gains, the major indexes still saw a second straight week of losses, but one noted technician says he's spotted a key indicator in the market that signals more turmoil ahead. "When you see the relative performance of utilities, bonds and the S&P 500 index acting opposite to each other, you're about to get another contraction," Cornerstone Macro technical analyst Carter Worth told CNBC's "Fast Money" traders last week.

Zero Hedge:

• Citi: "There Was Something About The Entire Recovery Narrative That Is Downright Wrong".

• A Contagious Crisis Of Confidence In Corporate Credit.

• When Trust Is Bust - All The Charts You Can Eat.

• The World Is Turning Japanese. (graph)

• Don't Panic! "Experts" Agree - This Is Not 2008.

• How The Clintons Enabled The 2008 Economic Crisis And Financial Coup d'Etat.

• A Bubble Induced Economy & The Wage Gap. (graph)

• Why Yellen's Testimony Screamed Danger.

• Don't Blame China For Market Insanity... Says China.

• "Killer Wave" Confirms Big Bear Market Looms. (graph)

• In Unexpected Twist, Oil Exporters Are Buying Treasurys While They Liquidate Stocks.

• Saudi Stocks Slammed As War Worries Trump Dead-Crude-Bounce. (graph)

• New Ghost City Under Construction In China.

• Why Commercial Real Estate Is Next: 'Challenging Technicals' Are About To Become 'Weak Fundamentals'.

• The Global Fixed-Income "Blood Map" Of 2016.

Business Insider:

• Japan's 'Abenomics' is on the ropes.

• The GOP is gearing up for a big fight over Scalia's successor.

• Report: Scalia died of a heart attack.

• CIA director: The Middle East is the worst it's been in 50 years with 'unprecedented' bloodshed.

Reuters:

• Indian-American judge who could replace Scalia worked on controversial cases for business.

Financial Times:

• Market turmoil causes sharp losses at US hedge funds. Some of the largest and well known US hedge funds have suffered further sharp losses from this year’s rout in equities and commodities, raising the prospect that investors pull more money from the industry. Popular bets in equities, currencies and commodities have backfired on a number of hedge funds this year, confounding some of the industry’s highest profile investors such as Bill Ackman’s Pershing Square, Glenview Capital run by Larry Robbins, while Carl Icahn has been hit hard by the slumping energy sector. 

• Russia accused of ‘weaponising’ Syria refugees. Russia is deliberately attacking civilians in northern Syria in an attempt to intensify the refugee crisis, western diplomats and politicians have warned, in a sign that a fragile ceasefire agreement for the war-ravaged country is crumbling before it begins.