Today's Headlines

Bloomberg:

• Euro-Region Economy Contracts as Investment, Exports Decline. Europe's economy contracted in the fourth quarter as investment declined by the most since 2009 and exports and consumer spending dropped. Gross domestic product shrank 0.3 percent from the third quarter, the European Union's statistics office said today, confirming an estimate published on Feb. 15. Exports fell 0.4 percent after a 1.4 percent gain in the previous three months, while household spending declined 0.4 percent and investment dropped 0.7 percent. "The region is still facing major headwinds, notably including increased fiscal tightening in many countries and markedly rising unemployment," said Howard Archer, chief European economist at IHS Global Insight in London. "Despite some recent overall improvement in euro zone surveys and evidence that Germany is returning to growth, we doubt that the euro zone will be able to avoid further contraction in the first quarter of 2012 and very possibly the second.'"
• SocGen Joins Generali in Greece's Swap Offer. Societe Generale SA (GLE), France’s second-biggest bank, Assicurazioni Generali SpA and UniCredit SpA (UCG) joined firms saying they would participate in Greece’s debt swap as the country threatened to compel holdouts to take part. They join more than a dozen banks, insurers and hedge funds that said they plan to accept the deal, accounting for at least 45 billion euros ($59 billion) of bonds, based on data compiled by Bloomberg from the companies and their reports. About 206 billion euros of Greek bonds are eligible for the swap.
• European Stocks Decline Most Since November; Banks Retreat With Carmakers. European (SXXP) stocks declined, with the Stoxx Europe 600 Index dropping the most since November, as a report confirmed a contraction in the euro-area economy and investors weighed Greece’s chances of getting bondholders to accept a debt swap. Commerzbank AG and Societe Generale SA led a slump in bank shares. Cable & Wireless Worldwide (CW/) Plc retreated 6.7 percent after a newspaper report speculating that a potential bidder won’t make an offer for the company. Nyrstar NV, the largest producer of refined zinc, paced commodity shares lower. The Stoxx 600 (SXXP) declined 2.7 percent to 258.46 at the close in London, for the biggest drop since Nov. 21, as bondholders owning a fifth of Greece’s debt agreed for the exchange, even as the government has set 75 percent participation as the threshold for proceeding with the plan.
• Portugal in Sights as Yields Fuel Bailout Talk. Portuguese bond yields are rising as investors are busy putting cheap money from the European Central Bank to work elsewhere. The increase in 10-year borrowing costs by almost two percentage points in the past two weeks is stoking concern among investors that the nation will struggle to resume bond sales in 2013. Portugal has been unable to sell debt due in more than a year since it was given a 78 billion-euro ($102.8 billion) bailout in May 2011, following Greece and Ireland. “The ECB’s cash provides liquidity, but not solvency,” said Stuart Thomson, who helps oversee the equivalent of $110 billion as a portfolio manager at Ignis Asset Management in Glasgow. “If the perception is that a country is already bankrupt, these liquidity measures won’t work. There is growing concern that Portugal may need a second bailout.” Portugal’s 10-year yield was at 13.83 percent at 12:07 p.m. in London, up from 7.48 percent a year ago. The extra yield investors demand to own the nation’s bonds rather than Germany’s widened 1.1 percentage points to 12.04 percentage points since the ECB announced its program of three-year loans to banks on Dec. 8.
• Sovereign, Corporate Bond Risk Rises, Credit-Default Swaps Show. The cost of insuring against default on European sovereign and corporate debt rose for a third day, according to BNP Paribas SA. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments soared 9.5 basis points to 356.5 at 4:20 p.m. in London, the highest since Jan. 16. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings increased 24.5 basis points to a two-week high of 615.5. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 6.5 basis points to 141.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers jumped 11 basis points to 225.5 and the subordinated index soared 17 to 371.
• EU Considers Tougher Collateral Rules on Repo Agreements to Rein In Risks. European Union regulators may impose tougher collateral requirements on repurchase agreements on concerns that such trades might lead to unsustainable debt levels that threaten market stability. The European Commission is weighing the measure as part of proposals to rein in risky financial activities that take place outside the regular banking system, according to a document obtained by Bloomberg News. Michel Barnier, the EU’s financial services commissioner, is scheduled to publish the plans next week.
• Automakers Prepare for Deepening Decline in Europe Market. Ford Motor Co. (F), Bayerische Motoren Werke AG (BMW), Toyota Motor Corp. (7203) and their competitors are preparing for a deeper slump in European sales after deliveries at the beginning of the year were at the low end of their expectations. “The market is very difficult,” Didier Leroy, Toyota’s chief for the region, told reporters at the Geneva International Motor Show. “The start of the year is even worse in terms of the market than was planned a few months ago.”
• Brazil's GDP Growth of 2.7% Last Year Underperformed BRIC Peers: Economy. Brazil’s economy last year registered its second-worst performance since 2003 as higher borrowing costs and a currency that rallied to a 12-year high led it to underperform emerging-market peers China and India. Gross domestic product expanded 2.7 percent even after growth accelerated in the fourth quarter, the national statistics agency said today in Rio de Janeiro. The median estimate of 32 economists surveyed by Bloomberg was for the economy to grow 2.8 percent. “Brazil is losing international competitiveness,” John Welch, chief strategist for CIBC World Markets, the investment- banking arm of Canada’s fifth-largest bank, said by phone from New York. “They’re blaming all the problems on the exchange rate, but have ignored structural reforms.” The economy expanded 0.3 percent in the fourth quarter from previous three months, when it shrank 0.1 percent, the statistics agency said. From the year-earlier, GDP expanded 1.4 percent, with manufacturing dropping 3.1 percent and household consumption up 2.1 percent.
• Tanker Glut Stays at Highest Level This Year, Survey Shows. A surplus of the largest oil tankers competing to load crude at Persian Gulf ports remained at this year's highest level for a second consecutive week, a Bloomberg News survey showed. There are 10% more VLCCs available for hire over the next 30 days than there are likely cargoes, a Bloomberg survey of seven shipbrokers and owners today showed.
• Oil Falls to Two-Week Low as EU Offers to Restart Negotiations With Iran. Futures fell as much as 2.1 percent after Catherine Ashton, the EU’s foreign-policy chief, in a statement on behalf of China, France, Germany, Russia, the U.K. and the U.S., urged Iran’s nuclear envoy to meet to seek an accord on the nation’s nuclear program. Commodities also declined as the euro-area economy contracted and on concern a Greek swap deal will fail. Crude for April delivery fell $1.98, or 1.9 percent, to $104.74 a barrel at 12:13 p.m. on the New York Mercantile Exchange. Prices dropped to $104.52, the lowest intraday level since Feb. 21. Futures are up 6 percent this year. Brent oil for April settlement declined $1.86, or 1.5 percent, to $121.94 a barrel on the London-based ICE Futures Europe exchange.
• Asia Hedge Fund Startups Falter as Backers Pull Cash. Asia-focused hedge funds that were started with the help of a major backer after the 2008 credit crisis are shutting down as a shrinking pool of key investors makes it harder for them to raise capital. Isometric Investment Advisors Ltd. decided in December to close after its largest startup investor said it would withdraw its cash. Black’s Link Capital Ltd. closed after its biggest investor, a U.S.-based fund of hedge funds, pulled its capital last year, said two people with knowledge of the matter.
• Qualcomm(QCOM) to Buy Back as Much as $4 Billion of Its Shares, Boosts Dividend. Qualcomm Inc. (QCOM), the world’s biggest maker of mobile-phone chips, said it plans to buy back as much as $4 billion of shares and raise its dividend by 16 percent to return cash to shareholders as earnings increase. The quarterly cash dividend will expand to 25 cents from 21.5 cents, San Diego-based Qualcomm said today in a statement. The buyback authorization replaces a $3 billion program, which had $948 million of repurchase authority remaining.
• S&P Blocked in CMBS After Derailed Goldman Sachs(GS) Deal: Mortgages. Standard & Poor’s is frozen out of the commercial-mortgage bond market by the biggest underwriters after derailing a $1.5 billion sale by Goldman Sachs Group Inc. (GS) and Citigroup Inc. last July. Since then, those banks along with JPMorgan Chase & Co. (JPM), Deutsche Bank AG and Morgan Stanley have bypassed S&P’s credit ratings as they issued $11.3 billion of debt linked to skyscrapers, shopping malls and hotels, according to data compiled by Bloomberg. They’re turning to Kroll Bond Ratings Inc. and Morningstar Inc. (MORN) after S&P, the world’s largest credit- rating company, forced bankers to pull an offering they’d already committed to sell, roiling the $600 billion market.
• Euro Trend Break May Spur Decline, Citi Says: Technical Analysis. The euro is trading weaker than a support level against the dollar and a close below it may signal a retreat to a six-week low, according to Citigroup. The 17-nation currency is trading below support at $1.3171, which comes in on a trend line drawn from the currency pair's Jan. 13 and Feb. 16 lows. If it stays below this level today, the euro may be poised for a move down to $1.2974 and even $1.2624, the lows reached last month and in January, according to Tom Fitzpatrick, chief technical analyst at Citigroup.
• Hackers Charged in Crackdown on LuzSec, Anonymous Groups. The U.S. charged six alleged members of Anonymous, LulzSec and other hacking groups with trying to break into computers used by News Corp.'s Fox Broadcasting and security firm HBGary Inc. and by governments including Yemen. Ryan Ackroyd, Jake Davis, Darren Martyn and Donncha O'Cearrbhail were charged in an indictment unsealed today in Manhattan federal court, the Office of U.S. Attorney Preet Bharara said in a statement. Jeremy Hammond was arrested in Chicago and accused of crimes related to the hack of Strategic Forecasting Inc., or Stratfor.
• Stanford Convicted of Defrauding Investors in Ponzi Scheme. R. Allen Stanford was convicted of fraud in what prosecutors said was a $7 billion scheme involving bogus certificates of deposit at his Antigua-based bank. A federal jury in Houston today found the financier guilty of all but one of the 14 counts against him, including wire and mail fraud and obstructing a federal regulatory investigation. Stanford, 61, faces as long as 20 years in prison for each fraud count.
• China May Expand Property-Tax Trials Beyond Cities of Shanghai, Chongqing. Chinese Finance Minister Xie Xuren said the nation may expand property-tax trials, as the government prolongs efforts to cool the real-estate market, make housing affordable and limit asset bubbles. Taxes can guide housing demand, Xie said at a press briefing in Beijing today during the annual meeting of the National People’s Congress, without saying where more tests could take place. So far, the government has pilot projects in Shanghai and Chongqing. “There is agreement among the authorities that a property tax is one mechanism that can prevent asset bubbles in the long run,” said Yao Wei, a Hong Kong-based economist for Societe Generale SA. Xie’s comments are “confirmation that they are going to do it on a wider scale,” she said. Premier Wen Jiabao’s efforts to rein in property prices have added to the risk of a deeper slowdown in the world’s second-biggest economy. In his report to the National People’s Congress yesterday, he said that regulation of the real estate market is at a “crucial stage.” China ought to introduce a property tax to provide a stable source of revenue for local governments, Li Daokui, an academic adviser to the People’s Bank of China, told reporters in Beijing today. Sales at Vanke, the nation’s biggest listed property developer, dropped 27 percent in the first two months of 2012 from a year earlier to 19 billion yuan ($3 billion). Sales last month slumped 40 percent from January, the company said. Separately, Xie said the government will appropriately handle debt repayments by local governments and continue to take steps to control their borrowing.

Wall Street Journal:

• Romney Looks to Build Lead on Super Tuesday. Mitt Romney looked to take a commanding lead in the Republican presidential race as 10 states hosted Super Tuesday contests, the biggest day yet in the fight for the right to challenge President Barack Obama this fall. Ohio, a critical state in the general election, was the spotlight race, with Mr. Romney running close to former Sen. Rick Santorum, who has seen his Ohio lead erode. The former Pennsylvania senator was hoping a win there would infuse his campaign with new momentum.

MarketWatch:

• China Economist Tips Uncertain Inflation Outlook. China is still facing uncertain inflationary factors, though inflation has been easing recently, prominent Chinese economist Li Yining said Tuesday. Li, a member of the Chinese People's Political Consultative Conference, an advisory body that meets alongside China's legislature, said China would focus on the quality rather than the pace of economic growth this year. Chinese Premier Wen Jiabao said Monday in his government work report to the National People's Congress, the country's legislature, that the government aims to contain consumer price inflation around 4% this year. China missed the 4% target for last year, with the consumer price index rising 5.4% over the year.

Business Insider:

• Obama Unveils New JPMorgan(JPM), Wells Fargo(WFC) Bailout Plan, Disguised As Mortgage Relief.

Zero Hedge:

• ECB Surpasses €3 Trillion, Still Most Undercapitalized Hedge Fund In The World. (graph)
• On China and The End of the Commodity Super-Cycle.
• Worst Day In Europe Since Rally Began.
  

Gallup:

• Gallup Daily, Obama Job Approval: Approve 43%, Disapprove 48%. (graph)
  

Breitbart.com:

• The Vetting, Part I: Barrack's Love Song to Alinsky.

Reuters:

• Fresenius Asked to Take Greek Debt Writedowns. German healthcare firm Fresenius has been asked to write down the value of the government bonds it got in exchange for unpaid hospital bills, evidence that the country's debt restructuring deal will have an impact beyond the mainstream financial sector. Several drugmakers and other manufacturing companies are in a similar situation. Unpaid debts owed to the European pharmaceuticals sector is estimated by the industrys' trade body at up to $20 billion.
• Goldman(GS), JPMorgan(JPM), Barclays(BCS) Tighten Grip as Top OTC Commodities Traders.
• Copper Falls to 2-Week Low on Dollar, China Demand Worries.
• U.S. Foreclosure Starts Jump 28% in January. - LPS. Starts on U.S. home foreclosures shot up 28 percent in January, data provider Lender Processing Services said on Tuesday in a report that suggested paper backlogs that had clogged the system were rapidly clearing.

Financial Times:

• Greece Threatens Default on PSI Holdouts. Greece threatened to default on any of its bondholders who do not take part in this week’s €206bn debt swap, raising the pressure on potential holdouts. The Greek public debt management agency said in a statement that Athens “does not contemplate the availability of funds to make payments to private sector creditors that decline to participate in PSI”.

Telegraph:

• Debt Crisis: Live. Stock markets slide on worries over slowing growth in China and Europe, amid increasing tensions in the eurozone in Spain and the Netherlands and a warning that a disorderly Greek default will cost the eurozone €1trillion.

Irish Independent:

• Disorderly Greek Default Could Cost at Least €1 trillion. A DISORDERLY Greek default could cost €1 trillion and force Italy and Spain into bailout territory while Ireland and Portugal would need more funding, according to the Institute of International Finance. An IIF document, seen by the Reuters news agency, said a failure of ongoing negotiations between Greece and bank creditors would leave the potential for such a default putting unprecedented pressure on Europe.

Sueddeutsche Zeitung:

• Germany's ruling parties plan limitations on trading agricultural and other commodities, requiring traders and banks to notify authorities about open derivatives positions, including reasons for individual holdings, citing a draft resolution by the ruling Christian Democrats and their coalition partner, the Free Democratic Party.
• Germany's Free Democratic Party wants to push through limitations on high-frequency trading to regulate hedge funds and private-equity companies more strictly, citing a plan by Economy Minister Philipp Roesler. Roesler wants price volatility caused by computer trading to trigger trading interruptions at all European exchanges; he also wants a financial markets tax on the lines of U.K. stamp duty.
  

DigiTimes:

• China Will Stop Blind Expansion of Solar and Windpower, Says Premier Wen. China's Premier Wen Jiabao opened the National People's Congress on February 5, 2012. During the opening speech, Premier Wen stated China intends to stop blindly expanding industries such as solar and windpower.

Bear Radar

Style Underperformer:

• Small-Cap Growth -2.10%

Sector Underperformers:

• 1) Steel -5.10% 2) Construction -4.01% 3) Disk Drives -3.40%

Stocks Falling on Unusual Volume:

• BCS, DB, LFC, LPI, PBR, SWC, SU, FTE, SFLY, NTRI, WPPGY, SKUL, USHS, JAZZ, PLCM, MYRG, ABCO, VRA, AKRX, QLTY, ASML, FIRE, CEVA, SWKS, ACTG, TSRA, ASGN, PIQ, EZU, PAA, JKH, IWZ, DRO, JKE, KXI, NX, SMP, ENL, EVN, EQY, STJ, AAXJ, NSC, CCL, FLS, VVUS, SLV, EPP, EZA, MKTG, SSI, SWY, EWG, JOY, EZU, GDOT, KRA and AKRX
  

Stocks With Unusual Put Option Activity:

• 1) WSM 2) EWH 3) CCL 4) HYG 5) XME
  

Stocks With Most Negative News Mentions:

• 1) LULU 2) ANR 3) AA 4) MRK 5) SKUL
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume
  

Bull Radar

Style Outperformer:

• Large-Cap Value -1.31%

Sector Outperformers:

• 1) Utilities -.80% 2) REITs -.83% 3) Foods -.84%

Stocks Rising on Unusual Volume:

• PAY, SHFL, MDSO, OVTI, BVSN and JAH
  

Stocks With Unusual Call Option Activity:

• 1) MCO 2) CX 3) ONTY 4) P 5) MTG
  

Stocks With Most Positive News Mentions:

• 1) BLK 2) COP 3) BA 4) AAPL 5) OVTI
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume
  

Tuesday Watch

Evening Headlines
Bloomberg:

• Greek Debt Private Investors Join Swap. The private investors that so far declared their participation in Greece’s debt restructuring hold about 20 percent of the bonds involved in a swap required for an international bailout. The 12 members of the creditors’ steering committee that said yesterday they would join in the exchange have debt with a face value of at least 40 billion euros ($53 billion), compared with the 206 billion euros of Greek bonds in private hands, according to data compiled by Bloomberg from company reports.
• Portugal in Crosshairs as Yields Fuel Bailout Talk: Euro Credit. Portuguese bond yields are rising as investors are busy putting cheap money from the ECB to work elsewhere. The increase in 10-year borrowing costs by almost two percentage points in the past two weeks is stocking concern among investors that the nation will struggle to resume bond sales in 2013. Portugal has been unable to see debt due in more than a year since it was given a $103 billion bailout in May 2011, following Greece and Ireland. "The ECB's cash provides liquidity, but not solvency," said Stuart Thomson, who helps oversee the equivalent of $110 billion as a portfolio manager at Ignis Asset Management in Glasgow. "If the perception is that a country is already bankrupt, these liquidity measures won't work. There is growing concern that Portugal may need a second bailout."
  
• Goldman(GS) Secret Greece Loan Shows Two Sinners as Client Unravels. Greece’s secret loan from Goldman Sachs Group Inc. (GS) was a costly mistake from the start. On the day the 2001 deal was struck, the government owed the bank about 600 million euros ($793 million) more than the 2.8 billion euros it borrowed, said Spyros Papanicolaou, who took over the country’s debt-management agency in 2005. By then, the price of the transaction, a derivative that disguised the loan and that Goldman Sachs persuaded Greece not to test with competitors, had almost doubled to 5.1 billion euros, he said. Papanicolaou and his predecessor, Christoforos Sardelis, revealing details for the first time of a contract that helped Greece mask its growing sovereign debt to meet European Union requirements, said the country didn’t understand what it was buying and was ill-equipped to judge the risks or costs. “The Goldman Sachs deal is a very sexy story between two sinners,” Sardelis, who oversaw the swap as head of Greece’s Public Debt Management Agency from 1999 through 2004, said in an interview. Goldman Sachs’s instant gain on the transaction illustrates the dangers to clients who engage in complex, tailored trades that lack comparable market prices and whose fees aren’t disclosed. Harvard University, Alabama’s Jefferson County and the German city of Pforzheim all have found themselves on the losing end of the one-of-a-kind private deals typically pitched to them by securities firms as means to improve their finances.
• Netanyahu Vows to Prevent Iran From Gaining Atomic Bomb After Obama Talks. Israeli Prime Minister Benjamin Netanyahu, capping a day he started in White House talks with President Barack Obama, told Jewish leaders he won’t allow his nation to be threatened by an Iranian nuclear bomb. Iran would be more reckless and dangerous with a nuclear weapon, Netanyahu said tonight in a speech in Washington to the American Israel Public Affairs Committee. He said he wouldn’t let Israel live in the “shadow of annihilation.” While Netanyahu praised Obama for leading a campaign to toughen economic sanctions on Iran, he said such actions haven’t led Iran to curtail its nuclear program and Israel must be able to defend itself against a threat to its existence. “None of us can afford to wait much longer,” Netanyahu said.
• China's Stocks Decline Most in a Month on Slowing Economic Growth Concern. China’s stocks fell, sending the benchmark index down the most in a month, on concern slowing growth will curb demand for building materials and dent profits. Anhui Conch Cement Co., the nation’s biggest maker of the building material, slid 3 percent as property developer China Vanke Co.’s sales slumped. Vanke dropped 0.5 percent. Poly Real Estate Group Co. sank 1.2 percent after the 21st Century Business Herald cited a legislator as saying home prices need to fall as much as 30 percent. Industrial Bank Co. (601166) retreated the most in almost four months amid plans to sell new shares. The Shanghai Composite Index (SHCOMP) fell 27.71 points, or 1.1 percent, to 2,417.29 at the 11:30 a.m. local-time break, set for the biggest loss since Feb. 7. Anhui Conch fell 3 percent to 17.45 yuan. Gansu Qilianshan Cement Group Co. tumbled 5.2 percent to 11.40 yuan. Huaxin Cement Co., the Chinese affiliate of Holcim Ltd., dropped 3 percent to 15.94 yuan. Sales at China Vanke, the nation’s biggest listed property developer, dropped 27 percent in the first two months of 2012 from a year earlier to 19.05 billion yuan ($3.02 billion). Sales last month slumped 40 percent from January, the company said.
• Goldman Sachs's Soured Stock Bets Led to Asia Unit's 2011 Loss. Goldman Sachs Group Inc. lost money in Asia last year for the first time since 2008 as the Wall Street firm's stock investments in the region, led by a holding in China's biggest bank, backfired. A 46 percent decline in Asia revenue compared with 2010 was driven by markdowns on the company's stakes in public equities, the firm disclosed in its annual 10-K filing with the U.S. Securities and Exchange Commission. The bank lost $103 million in the region, compared with a $2.08 billion profit a year earlier, according to the New York-based company. The figures illustrate how losses in Goldman Sachs's Investing & Lending unit, which makes so-called principal investments with the company's own money, can surpass the bank's revenue from working with clients.
• The Children of Fukushima Wait for UN Radiation Study. As five-year-olds charge through the corridors of a kindergarten in northeast Japan at lunchtime, teacher Junko Kamada says she is still unsure if their food is safe a year after the Fukushima nuclear accident.
• Paulson's Advantage Plus Fell 1.5% Last Month, Bringing 2012 Gain to 3.5%. John Paulson lost 1.5 percent in February in one of his largest hedge funds, according to an investor update, even as the Standard & Poor’s 500 Index gained 4.1 percent during the month. Paulson’s Advantage Plus Fund, which seeks to profit from corporate events such as takeovers and bankruptcies and uses leverage to amplify returns, has gained 3.5 percent this year, according to the update, a copy of which was obtained by Bloomberg News. The S&P 500 Index rose 8.6 percent during the same period.
• Oil Trades Near Two-Day High as Tension With Iran Counters Economy Outlook. Oil traded near the highest price in two days as concern that tension with Iran will disrupt crude supplies countered concern the global economy will slow. Futures were little changed after rising as much as 0.6 percent. Israel reserves the right to defend itself and keep Iran from acquiring a nuclear weapon, Prime Minister Benjamin Netanyahu said in Washington. The world economy will grow at a below-trend pace this year, according to the Reserve Bank of Australia. South Korea’s finance ministry said uncertainty over the nation’s economic outlook has increased because of higher oil prices. Oil for April delivery was at $106.68 a barrel, down 4 cents, in electronic trading on the New York Mercantile Exchange at 11:38 a.m. Singapore time. The contract yesterday advanced 2 cents to $106.72, the highest settlement since March 1. Brent oil for April settlement rose 7 cents to $123.87 a barrel on the London-based ICE Futures Europe exchange.

Wall Street Journal:

• New Sites Unleash Pets.com 2.0. The economics of Internet commerce have changed so much that Alex Zhardanovsky is now taking on the once-seemingly impossible challenge of selling pet food online. Mr. Zhardanovsky in 2010 co-founded PetFlow.com Inc., a Manhattan start-up that has raised $10 million in venture capital and that now ships one million pounds of pet food a month. "We want to prove that the pet category can be successful online," said the 34-year-old entrepreneur, who said he expected his company to break even by the second quarter and have sales of $30 million this year, up from $13 million in 2011.
• Tech Titans Aid Undocumented Students. A group of Silicon Valley technology leaders, impatient with attempts to rewrite immigration laws, is funding efforts to help undocumented youths attend college, find jobs and stay in the country despite their illegal status.
• Money-Fund Plan Hits Resistance. A Securities and Exchange Commission plan to shore up the $2.7 trillion U.S. money-market mutual-fund industry is struggling to overcome opposition within the agency. SEC Chairman Mary Schapiro is leading the push for stricter money-fund regulation, which would follow a round of rule tightening in 2010. The effort is aimed at avoiding a repeat of 2008, when the collapse of Lehman Brothers Holdings Inc. sparked a financial panic and threatened the savings of millions of investors.
• Companies' Pension Plea. Business groups are urging Congress to let employers put less money into their pension funds, saying that exceptionally low interest rates are forcing them to set aside too much cash. A provision attached to the Senate highway bill would change the formula many large companies, including General Electric Co., Boeing Co. and Lockheed Martin Corp., must use to calculate how much to add to their pension funds, potentially shrinking their combined contributions by billions of dollars a year.
• China Foothold in U.S. Energy. Fu Chengyu's first attempt to buy a piece of the U.S. oil industry kicked up a storm of protest and ended in failure. Seven years later, the Chinese executive is pouring billions of dollars into the oil patch without even a whisper of trouble. His new recipe for success: Seek minority stakes, play a passive role and, in a nod to U.S. regulators, keep Chinese personnel at arm's length from advanced U.S. technology.
• Clock Ticks on Buyout Debt. A wave of leveraged-buyout debt is beginning to crash down on Europe's shores. Over the next five years, some $550 billion of loans made to European companies taken over in leveraged buyouts will mature, according to data crunched by Dealogic for U.K. law firm Linklaters LLP, in a study to be published Tuesday. The scale of the maturing debt is daunting in itself, but a number of additional factors—including weak economies in Europe and tightening capital requirements for banks—could make it particularly acute for lenders and borrowers, according to the report, titled "Negotiating Europe's LBO debt mountain." In a worst-case scenario, default rates, already rising sharply, could surge further, resulting in additional pain for both banks and private-equity firms, whose returns have been hampered by economic head winds and the absence of robust markets for deals and initial public offerings that they rely on for selling their investments.
• Limbaugh and Our Phony Contraception Debate by Cathy Cleaver Ruse. Ms. Fluke's crusade for reproductive justice is simply a demand that a Catholic institution pay for drugs that make it possible for her to have sex without getting pregnant. It's nothing grander or nobler than that. Georgetown's refusal to do so does not mean she has to have less sex, only that she has to take financial responsibility for it herself. Should Ms. Fluke give up a cup or two of coffee at Starbucks each month to pay for her birth control, or should Georgetown give up its religion? Even a first-year law student should know where the Constitution comes down on that.

MarketWatch:

• Why Insiders Are Skeptical Of Rally. (video)

Business Insider:

• Here's What Happened To The $3 Billion Americans Donated To Haiti After The Devastating Earthquake.
• Leaked Memo Reveals: What a Greek Default Will Cost Europe and the World.
• FROM MOSKIT TO MiG: Check Out Iran's Fearsome Military Arsenal.

Zero Hedge:

• IIF Steering Committee Holds Only 20% Of Greek Bonds Subject To PSI.
• Biggest 3-Day Slump in 3 Months for High-Yield Bond ETF. (graph)
• Couple Lives In $1.3 Million, 4,900 Square Foot Home For Five Years Without Making A Single Mortgage Payment.

CNBC:

• India Bans Cotton Exports, Global Prices Jump. India banned cotton exports with immediate effect on Monday to ensure supplies for domestic mills, boosting global prices some 4.5 percent as the absence of shipments from the world's second-largest producer might tighten a market facing weak demand.

NY Times:

• Dykstra Given Three Years in State Prison. The former Mets outfielder Lenny Dykstra was sentenced to three years in a California state prison on Monday after pleading no contest to grand theft auto and providing a false financial statement.
• As New iPad Debut Nears, Some See Decline of PCs. The chief executive of Apple, Timothy D. Cook, has a prediction: the day will come when tablet devices like the Apple iPad outsell traditional personal computers.
• Signs of Slowing in China. The nights are a little darker now here in the main metropolis of southeastern China, at the center of one of the country’s largest export hubs. It is but one sign of the slightly dimmer economic outlook for China that Premier Wen Jiabao forecast on Monday, when he reduced the government’s minimum growth target for 2012 to what would be, if growth fell that far, the lowest rate in more than two decades. Construction sites across Guangzhou used to be floodlit, so that work could continue through the night on the forests of new residential and office towers reaching toward the stars. But now, during a nationwide real estate downturn, builders are not starting projects or scrambling to finish ones already under way, so there is little need for night-work illumination.
• Texas Teacher Pension Buys Stake in Hedge Fund Giant Bridgewater. The Teacher Retirement System of Texas just went from hedge fund investor to hedge fund owner. Last month, the Texas pension took a $250 million stake in Bridgewater Associates, the giant money manager. Now, rather than plowing money into specific portfolios, it can claim a piece of the whole operation.

Forbes:

• Attorney General Explains Why It's Okay to Kill U.S. Citizens Without a Trial. Sounds like a highly rational three-part test, but it’s actually loaded with assumptions and turns mostly on subjective determinations to be made by the Executive Branch alone, based on facts that will of course remain secret from you, the American public.

Chicago Tribune:

• G-8 Summit to be Held at Camp David, Not Chicago. President Obama is moving one of two major world summits from Chicago to the presidential retreat near Washington, with an aide saying the president has decided he wants a more "intimate" setting than his hometown for the May gathering. Chicago police estimated that 2,000 to 10,000 demonstrators were expected to show up for the overlapping G-8 and NATO summits. At least two major demonstrations were already planned for downtown during the summit, and organizers said they wanted to send crowds of marchers down Michigan Avenue in the middle of the day. Police sources said the department has already sent about 8,400 of its roughly 12,000 sworn officers through some form of crowd-control training.

Real Clear Politics:

• Americans Resisting ObamaCare.

AP:

• Riot Police Break Up Anti-Putin Protest in Moscow. (videos) An attempt by Vladimir Putin's foes to protest his presidential election victory by occupying a Moscow square ended Monday with riot police quickly dispersing and detaining hundreds of demonstrators — a stark reminder of the challenges faced by Russia's opposition. The harsh crackdown could fuel opposition anger and bring even bigger protests of Putin's 12 years in power and election to another six, but it also underlined the authorities' readiness to use force to crush such demonstrations.
  

Reuters:

• Romney, Santorum Hunt For Super Tuesday Votes in Ohio. Rivals Mitt Romney and Rick Santorum made their final pitch for support in the vital battleground state of Ohio on Monday, the day before 10 states hold Super Tuesday nominating contests that could be pivotal in an unpredictable Republican presidential race. Romney has been gaining on Santorum in polls in Ohio all week, erasing a double-digit lead for the former senator from Pennsylvania. Three new surveys on Monday showed a tight race: one gave Romney a slight edge, one had Santorum with a small lead and the third showed a dead heat.
• Venezuela to Ship More Fuel to Syria as Crackdown Spreads. Venezuela is readying a third shipment of diesel to the government of Syria even as President Bashar al-Assad intensifies a crackdown against protesters, said a Venezuelan lawmaker on Monday. Last month, Venezuela's government confirmed it had sent at least two shipments of fuel to Syria, potentially undermining Western sanctions as a rare supplier to the increasingly isolated Assad regime.
• US Forecaster Sees Average 2012 Atlantic Hurricane Season. The 2012 Atlantic hurricane season will likely see average storm activity with sea surface temperatures forecast to be cooler than last year, the director of the U.S. National Hurricane Center said on Monday.

The Economist Intelligence Unit:

• Greece passed a law making it a crime for doctors to prescribe brand-name drugs rather than the generic version.

Telegraph:

• Dutch Freedom Party Pushes Euro Exit as €2.4 Trillion Rescue Bill Looms. The Dutch Freedom Party has called for a return to the Guilder, becoming the first political movement in the eurozone with a large popular base to opt for withdrawal from the single currency. "The euro is not in the interests of the Dutch people," said Geert Wilders, the leader of the right-wing populist party with a sixth of the seats in the Dutch parliament. "We want to be the master of our own house and our own country, so we say yes to the guilder. Bring it on."

South China Morning Post:

• Goldman(GS) Prepares for ICBC Share Sale. Goldman Sachs considers selling some of its stake in the mainland bank, but its informal soundings to potential buyers do not result in positive feedback.

People's Daily:

• The Chinese economy faces quality and efficiency problems and no longer speed of development, citing Yao Jingyuan, a researcher at the State Council counselors' office.

China Securities Journal:

• Chinese bank lending to local government financing vehicles won't be extended and loan policies haven't changed, citing China Banking Regulatory Commission Assistant Chairman Yan Qingmin. The pace of China's interest-rate liberalization will quicken, lowering banks' interest margins and earnings, citing Yan.

Evening Recommendations
Morgan Stanley:

• Rated (A) Overweight, target $54.
• Rated (AFFX) Underweight, target $4.
  
• Rated (WAT) Overweight, target $105.

Night Trading

• Asian equity indices are -1.5% to -.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 162.0 +1.5 basis points.
  
• Asia Pacific Sovereign CDS Index 132.50 +2.0 basis points.
• FTSE-100 futures -.30%.
  
• S&P 500 futures -.34%.
  
• NASDAQ 100 futures -.34%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (MTN)/1.38
• (UNFI)/.44
• (DKS)/.88
• (SSI)/1.07
• (P)/-.02
• (AVAV)/.43

Economic Releases

• None of note

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The weekly retail sales reports, ISI Industrial Conference, Susquehanna Semi Summit, Stifel Nicolaus Consumer Conference, BofA Merrill Consumer/Retail Conference, (CHS) Analyst Day and the (PCL) Analyst Day could also impact trading today.
  

BOTTOM LINE: Asian indices are lower, weighed down by industrial and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Falling into Final Hour on Rising Eurozone Debt Angst, Less Tech Sector Optimism, Rising Energy Prices, Global Growth Fears

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Most Declining
  
• Volume: Below Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 18.18 +5.15%
  
• ISE Sentiment Index 88.0 -7.37%
  
• Total Put/Call .93 +2.20%
  
• NYSE Arms 1.31 +32.25%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 95.50 +1.38%
  
• European Financial Sector CDS Index 166.09 +2.72%
  
• Western Europe Sovereign Debt CDS Index 347.85 +.43%
  
• Emerging Market CDS Index 241.98 +1.75%
  
• 2-Year Swap Spread 26.50 +1.5 bps
  
• TED Spread 41.50 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -70.75 +1.75 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .06% unch.
  
• Yield Curve 170.0 -1 bp
  
• China Import Iron Ore Spot $143.20/Metric Tonne unch.
  
• Citi US Economic Surprise Index 48.20 +3.1 points
  
• 10-Year TIPS Spread 2.21 -3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -3 open in Japan
• DAX Futures: Indicating +11 open in Germany

Portfolio:

• Slightly Lower: On losses in my Tech and Biotech sector longs
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  
• Market Exposure: Moved to 50% Net Long

BOTTOM LINE: Today's overall market action is mildly bearish, as the S&P 500 trades lower on rising Eurozone debt angst, rising energy prices, global growth fears, less tech sector optimism, technical selling and profit-taking. On the positive side, Computer Service, Drug, REIT, Tobacco and Restaurant shares are especially strong, rising more than +.5%. Small-Caps have outperformed throughout the day. The Brazil sovereign cds is falling -1.5% to 131.40 bps. On the negative side, Coal, Alt Energy, Oil Tanker, Oil Service, Ag, Computer, Disk Drive, Airline, Steel and Semi shares are under meaningful pressure, falling more than -1.5%. Cyclicals are substantially underperforming. Tech shares have been heavy throughout the day. Copper is falling -.96%, Oil is rising +.37% and Lumber is down -1.2%. The 10Y T-Note Yield at 1.99%, remains a concern considering the recent stock rally, falling Eurozone debt angst and improvement in US economic data. Despite the recent positive US economic data, the Philly Fed/ADS Real-Time Business Conditions Index has declined -5.08% over the last week and continues to trend lower from its peak in mid-December. Lumber is -5.0% since its Dec. 29th high despite the better US economic data, more dovish Fed commentary, improving sentiment towards homebuilders, equity rally and decline in eurozone debt angst. Moreover, the weekly MBA Purchase Applications Index has been around the same level since May 2010. The Baltic Dry Index has plunged over -60.0% from its Oct. 14th high and is now down over -50.0% ytd. The Western Europe Sovereign CDS Index is still fairly close to its Jan. 9th all-time high. Overall, credit gauge improvement has stalled over the last few weeks and these gauges are still at stressed levels. China Iron Ore Spot has plunged -21.0% since Sept. 7th of last year. Shanghai Copper Inventories are up +707.0% ytd and are still very near their recent all-time high. I still think this is more of a red flag for falling demand rather than the intentional hoarding, which many suggest. Major Asian indices fell around -1.25% overnight on growth worries, led by a -1.55% decline in Indian shares. Major European indices fell around -.75% today, led lower by a -1.28% decline in Spanish shares. Spain remains one of the worst-performers this year, falling -1.0% ytd. The Bloomberg European Financial Services/Bank Index fell -1.55%. The Bloomberg Coal Index has plunged -20.1% since Feb. 6 and is very close to its early Oct. low. As well, Alt Energy shares continue to trade very poorly given $100+ oil and the recent broad market rally, falling another -2.0% today. The Chinese government’s recent forecast for 7.5% growth is getting very close to the rate that many said a couple of years ago would be considered a “China hard-landing”. While I don’t expect a serious market correction yet, market risk looks moderately skewed towards the downside near-term. A sell-the-news reaction in shares of market leader Apple(AAPL), a sell-the-news reaction on an expected “blow-out” jobs report, rising oil, technical concerns(resistance/divergences), emerging markets growth worries, a surge in Eurozone debt angst and less dovish fed commentary are all potential downside catalysts near-term. I would become more aggressive on the long-side after further sideways action and then a convincing break above DJIA 13K and Naz 3K. For an intermediate-term equity advance from current levels, I would still expect to see further European credit gauge improvement, a further subsiding of hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices and higher-quality stock market leadership. I expect US stocks to trade mixed-to-lower into the close from current levels on rising Eurozone debt angst, less tech sector optimism, rising energy prices, global growth fears, technical selling and profit-taking.

Today's Headlines

Bloomberg:

• Venizelos: Greek Debt Swap Best, Only Offer. Greece expects bondholders to accept a one-time offer to write off about 100 billion euros ($140 billion) of Greek debt and is ready to force them to participate if necessary, Finance Minister Evangelos Venizelos said. “This is the best offer,” Venizelos said in a Bloomberg Television interview with Nicole Itano in Athens today. “This is the best offer because this is the only one, the only existing offer.” European leaders are facing the first test of their attempt to turn the page on the two-year debt crisis as Greece’s private creditors decide whether to sign off on the biggest sovereign- debt restructuring in history. The success of the 106 billion- euro swap, confirmed on the eve of last week’s European summit, depends on how many investors agree to the writedown by the March 8 deadline. “This is the critical week,” Venizelos said.
• European Services Output Declines More Than Initially Estimated: Economy. Euro-area services output shrank more than estimated in February, led by Italy and Spain, as the region’s economy struggled to rebound from a contraction in the fourth quarter. An index based on a survey of purchasing managers in the services industry dropped to 48.8 from 50.4 in January, London- based Markit Economics said on its website today. That’s below an initial figure of 49.4 published on Feb. 22. A reading below 50 indicates contraction. Howard Archer, chief European economist at IHS Global Insight in London, said today’s report suggests that the euro- area economy will shrink in the first quarter, sending the region into recession after a 0.3 percent contraction in the fourth quarter.
• Coelho Won't Follow Spain in Seeking More Room for Portuguese Deficit Goal. Prime Minister Pedro Passos Coelho said he won’t follow Spain’s example and seek to ease Portugal’s deficit targets to withstand a deepening recession. Portugal will “absolutely not” alter the deficit goals it pledged in return for a European Union-led aid package last year, Passos Coelho said in an interview in Lisbon today. “Spain is in a different situation. They have more space to maneuver to get to the target in 2013. We are in an adjustment program, so we cannot fail the targets.”
• Copper Futures Fall Most in Two Weeks on Signs That China Demand May Ease. Copper fell the most in two weeks in New York on concern that demand will slow after China, the world’s biggest consumer of the metal, cut its economic-growth target. Copper futures for May delivery slid 1.4 percent to $3.848 a pound by 10:55 a.m. on the Comex in New York. A close at that price would be mark the biggest loss since Feb. 17. Stockpiles monitored by the Shanghai Futures Exchange have climbed to the highest since at least January 2003, weekly data showed. Deliveries of passenger autos in China, including sport- utility vehicles and light-goods vans, fell 3 percent in the first two months of 2012 from a year earlier, based on the median estimate of five analysts surveyed by Bloomberg. That would be the biggest drop since 2005, according to the China Association of Automobile Manufacturers. A luxury automobile may use as much as 28 kilograms (62 pounds) of the metal, according to the Copper Development Association.
• Electric-Car Loans Dry Up Ahead of Election on Solyndra. While Energy Secretary Steven Chu says the vehicle program is evaluating applications, it hasn’t awarded new money since the bankruptcy of solar-panel maker Solyndra LLC, which won a $535 million loan guarantee through another department program. “In an election year, there will be more caution and delay as a result,” said Julian Zelizer, a political historian at Princeton University. Solyndra’s bankruptcy filing put a damper on all Energy Department loans, Zelizer said in an e-mail. “Inevitably it will slow down the program the closer we get to the election,” he said. The $25 billion vehicle-loan program, created in 2008, last made an award in March 2011. Republicans subpoenaed documents about the Solyndra loan from President Barack Obama’s administration, questioning whether campaign fundraiser George Kaiser, whose family foundation was the company’s biggest investor, pressed for the loan guarantee.
• Iraq Crude Output at Highest Since 1979, Oil Minister Says. Iraq is pumping more than 3 million barrels a day of crude, its highest average output since Saddam Hussein seized power in the country 33 years ago, the oil minister said. BP Plc and Schlumberger Ltd. (SLB) have made separate bids to develop the Kirkuk oil field in northern Iraq, Abdul Kareem al- Luaibi said today at a news conference in Baghdad. The oil ministry is studying offers to boost dwindling production at the field, one of the country’s oldest, he said. Iraq is the third-largest producer in OPEC, behind Saudi Arabia and Iran, and its output is rising after years of conflict, sanctions and sabotage. The nation holds the world’s fifth-largest crude deposits that also include Canadian oil sands, according to data from BP Plc (BP/), and the government seeks investment to help boost exports and rebuild the economy. “Crude oil production exceeds 3 million barrels a day and is at the highest since 1979,” Luaibi said, reiterating Iraq’s target of producing 3.4 million barrels by the end of the year.
• Orders to U.S. Factories Fall for First Time in Three Months. Orders to U.S. factories decreased in January for the first time in three months, a sign manufacturing is cooling at the beginning of the year. Bookings (TMNOCHNG) fell 1 percent after a revised 1.4 percent gain in December that was larger than previously estimated, figures from the Commerce Department showed today in Washington. The median of 61 economists’ projections in a Bloomberg News survey called for a 1.5 percent decline.
• U.S. Service Industries Unexpectedly Expand to a One-Year High: Economy. The Institute for Supply Management’s non-manufacturing index climbed to 57.3 from 56.8 in January, the Tempe, Arizona- based group’s data showed today. Readings above 50 signal expansion, and the median forecast of economists surveyed by Bloomberg News was 56.
• Chinese Stocks Traded in U.S. Drop Most in Two Weeks as Growth Target Cut. Chinese equities traded in the U.S. fell the most in two weeks after the government pared the nation’s economic growth target for the first time since 2005. China Life Insurance Co. (LFC), the nation’s largest life insurer, fell the most in almost three months, leading a 2 percent slide in the Bloomberg China-US 55 index of the most- traded Chinese stocks in the U.S. Commodity producers Yanzhou Coal Mining Co. (YZC) and Aluminum Corp. of China Ltd. also tumbled as metal prices sank and coal stagnated.

Wall Street Journal:

• Brazil Has Little Room For Maneuver On Rates - Economist. Brazil's central bank has little room for maneuver when it comes to reductions in the nation's sky high interest rates, with deep cuts likely to be put off for at least another year, according to the president of the Sao Paulo Economists Association.
  

CNBC.com:

• Is China's Role as Global Growth Engine Finally Over? Investors are worried that China’s decade-long run as the world's growth engine may be over— along with unprecedented demand for commodities and ultra-cheap labor and parts for manufacturers.
• For Bailout Nations, New EU Treaty Is High Price To Pay. If you were a voter in a financially troubled democracy, imagine putting up with this:
• Oil Is The New Greece: HSBC Chief Economist. Rising oil prices have displaced Greece as a source of investor anxiety, a new HSBC report says, warning that if the trend of rising oil prices persists, a fragile economic recovery in the developed world could quickly be derailed, and inflation could return to emerging markets.

Business Insider:

• Jim O'Neill: This Is My Biggest Concern Going Into March.
• Spain Is Turning Into An Economic Tragedy.
• How to Set Up an iPhone Passcode and Protect Your Data.
• China Bulls Should Remember This Old Bit Of Hindi Wisdom.
  

Zero Hedge:

• European Credit Signals LTRO Ineffectiveness. (graph)
• De-Investifying China. (graph)
• Dallas Fed's Fisher "Perplexed" By Wall Street "Fetish" With QE3 and Disgusted With The Addiction to "Monetary Morphine".
  

Forbes:

• Global January Chip Sales -8.8% Vs. Year Ago; -2.7% From December.

MercuryNews.com:

• Yahoo(YHOO) Layoffs Could Reach Thousands, Happen This Month, Report Says. Yahoo (YHOO) CEO Scott Thompson is planning a massive restructuring that will result in layoffs possibly totaling in the thousands as early as the end this month, according to a Monday report.

FINalternatives:

• BofAML: Hedge Funds Trail S&P 500 In February. Hedge fund performance still trailed that of the S&P 500 in February, according to the latest Hedge Fund Monitor from Bank of America Merrill Lynch. BofAML’s investable hedge fund composite index was up about 1.19% in February, while the S&P 500 was up 2.87%. According to analyst Mary Ann Bartels, event driven and convertible arbitrage strategies were the best performers for the month, up 2.36% and 1.48%, respectively. The worst performing strategy for the month was equity market neutral, which lost 0.83%.
• Hedge Fund Redemptions, Assets Up In February. Investors pulled $15.2 billion from hedge funds in January 2012, as overall industry assets climbed to $1.70 trillion from $1.68 trillion at end-2011. “January marked the biggest monthly outflow since July 2009, when hedge funds redeemed $17.7 billion,” said Leon Mirochnik, an analyst at TrimTabs. “The hedge fund industry has experienced net outflows in four out of the last five months.”

Business Recorder:

• Italian, Spanish Bond Yields, CDS Rise After PMI Data. Italian and Spanish government bond yields rose on Monday after PMI surveys of the service sector activity in the two countries came in below expectations. "The Spanish (PMI) was shocking, it came in way below, the Italian one was quite weak and the French one was quite weak as well. That's not helping and given the performance of the periphery last week it's probably not that surprising it gives back a little bit," one trader said. Italian two-year yields were up 8 basis points at 1.9 percent, while Spanish 2-year yields were up 7 bps at 2.39 percent. The Italian/German 10-year yield spread widened by 8 bps to 319 bps, while the equivalent Spanish spread expanded by 6 bps to 317 bps. The cost of insuring debt issued by Italy and Spain against default also rose, according to data provider Markit. Spanish 5-year credit default swaps rose 13 basis points to 388 bps, while Italian CDS were up 12 bps at 370 bps.

Telegraph:

• Spain's Sovereign Thunderclap and the End of Merkel's Europe. The Spanish rebellion has begun, sooner and more dramatically than I expected.
  
• Lending Rates Hit All Time Highs. Banks are squeezing households by record amounts with high interest rates on overdrafts, mortgages and credit cards, despite the Bank of England base rate being at an all-time low.