Today's Headlines

Bloomberg:

• Italy's Debt Highest Since Dictator Mussolini: Chart. Italy’s public debt rose to the highest level since Benito Mussolini won elections 89 years ago, paving the way for his 20-year dictatorship. The CHART OF THE DAY shows debt jumped in 2012 to 127 percent of gross domestic product from 120.8 percent a year earlier. That’s the most since 1924, when Mussolini won 64 percent of the popular vote in elections that opposition members said were marked by irregularities.
• Grillo’s Party May Consider Senate Walk-Out on Gridlock. Beppe Grillo’s senators-elect, who hold a blocking minority in Italy’s upper house of parliament, may consider staging a confidence-vote walk-out to allow a political rival to form a government and ease gridlock. Grillo’s Five Star Movement is seeking to influence the program of Italy’s next government and would require policy concessions in exchange for a walk-out, said two senators-elect who declined to be identified because no deal has been made. Five Star won’t vote to support any government, they said.
• Trichet Says Policies Aimed at Weaker Currencies Detrimental. Former European Central Bank president Jean-Claude Trichet said policies targeted at weakening a country’s exchange rate can trigger competitive devaluations without having any benefit. “We know that these kind of policies are not positive for all participants,” Trichet said in an interview in Tokyo today. “If all currencies are going down it doesn’t change anything.”
• Euro Approaches Three-Month Low Versus Dollar on Italy Concern. The euro approached the lowest level in almost three months against the dollar as Italy moved toward a new election and before data this week economists said will show the region’s economy shrank in the fourth quarter of 2012.
• China Property Shares Drag CSI 300 Down Most in 2 Years on Curbs. China’s stocks plunged, dragging down the CSI 300 (SHSZ300) Index by the most in two years, after the government ordered more measures to cool property prices and growth in the nation’s services industries slowed. The CSI 300, representing the nation’s biggest companies in the Shanghai and Shenzhen stock exchanges, fell 4.6 percent to 2,545.72 at the close, the most since November 2010, while the Shanghai Composite Index (SHCOMP) slid 3.7 percent to 2,273.40, the most since August 2011. China Vanke Co., the nation’s largest property developer, led a gauge of real-estate companies to the steepest tumble since June 2008. Anhui Conch Cement Co. and Sany Heavy Industry Co. dropped by more than 8 percent.
• Crude Drops Below $90 on Signs of Slowing Chinese Growth. West Texas Intermediate crude fell below $90 a barrel for the first time in 2013 as service industries in China expanded at the weakest pace in five months, adding to speculation that demand growth is slowing. Prices declined for the seventh time in nine days as the expansion of the non-manufacturing industry in China, the world’s largest oil-consuming country after the U.S., was the slowest since September. Measures released March 1 pointed to manufacturing growth cooling. Money managers cut bets on rising oil prices in the week ended Feb. 26, according to data from the Commodity Futures Trading Commission.

Wall Street Journal: 

• China Housing Move Sends a Jolt. An aggressive move by China's government to strike at once-again-surging property prices shows rising concern that repeated tightening measures haven't brought prices fully under control.
• Wealthier Households Carry the Spending Load. 
• PIMCO Warns Italian Bond Market Uncertainty to Remain. The current bout of volatility in the Italian government bond market is expected to persist as the fall-out and political stalemate from the recent Italian election continues to hold sway, according to a senior manager at one of the world's most influential bond investors.

MarketWatch: 

• Fed’s Yellen: Full steam ahead on QE3. While there are some potential costs to the purchases, “at this stage, I do not see any that would cause me to advocate a curtailment of our purchase program,” she said. Yellen is seen as a possible replacement for Fed Chairman Ben Bernanke if he steps aside when his second term ends in January 2014.
• China’s top real-estate CEO sees housing bubble, hopes leaders can fix it: report.
  When asked whether homes in China were too expensive, Wang simply answered yes. He told CBS that the average resident trying to buy an apartment in Shanghai would have to pay more than 45 times his or her annual salary. And when asked if there was currently a bubble in the Chinese property market, he said: “yes of course.”

Fox News:

• Employers hoping for an end to labor pains after NLRB picks ruled 'unconstitutional’.

CNBC: 

• Investors Jump Big Into Bull Market, Buying Apple(AAPL) & Facebook(FB): Survey. Retail investors fully embraced this bull market in February, looking past any threat from the sequester crisis in Washington, D.C., and buying stocks more aggressively than they have in three years, according to a sentiment index from TD Ameritrade.

Zero Hedge: 

• Consumer Health Diagnosis "Grim" As Four Out Of Five Spending Indicators Disappoint. (graphs)
• All Roads Lead To Rome.
• Germany's Revenge: Peugeot German New Car Registrations Collapse by 41%.
• Italian Spreads To Worst In 3 Months Amid Sideways European Day. (graphs)
• The Two Eras Of Financial Globalization: A Flashing Red Warning. (graph)
• Gundlach Says Stocks "Obviously Overbought", Buys "More Long-Term Treasuries In Last Month Than In Four Years".

Business Insider: 

• A Small Band Of German Professors Is The Hottest New Threat To The Future Of The Euro.
• The Fed Is Starting To Prepare For A Future PR Nightmare. The possibility of suspending remittances and carrying unrealized losses could complicate the Fed’s relationships with the rest of Washington and the public. While remittances help the federal government pay down debt, any shortfall in operating income leading to a suspension of remittances would require the Fed to borrow from Treasury. And while unrealized losses have no effect on Fed operations because of the way government accounts for them, they would leave a private company technically insolvent. It is unclear how Washington and the public might react to these circumstances and whether the Fed’s independence might be challenged.
• Barack Obama's Approval Rating Is In An Incredible Tailspin.
• Goldman Sachs(GS) Has Already Figured A Way Around Regulation To Some Of The Riskiest Investments On Wall Street.

CNN:

• World's Biggest Mall a China 'Ghost Town'. New South China Mall in Guangdong Province opened in 2005. With 5 million square feet of shopping area, the mall can accommodate 2,350 stores, making it the largest shopping center in the world in terms of leasable space -- more than twice the size of Mall of America, the biggest shopping center in the United States. At the outdoor plaza, hundreds of palm-trees blend with a replica Arc de Triomphe, a giant Egyptian sphinx, fountains and long-stretching canals with gondolas. Only problem is, the mall is virtually deserted.

New York Times:

• China’s Push to Cool Down Housing Raises Questions. Chinese shares fell the most in two years on Monday as the Shanghai stock exchange’s property index tumbled 9.25 percent. Late on Friday, China’s State Council had announced a new set of policies designed to cool down the housing market.

Reuters:

• World stock funds start year with record high demand -TrimTabs. Funds that invest in world stocks attracted $55.1 billion in new cash from investors in the first two months of the year, a record sum according to research firm TrimTabs Investment Research. The funds, which include mutual funds and exchange-traded funds based in the United States that hold world stocks, exceeded the previous two-month record of $49.1 billion at the start of 2006, the research firm said.
• Brazil stocks fall on global growth concerns.

Financial Times:

• Warning signs for US corporate bonds. Could the bond boom be turning? Warning signs are flashing as investors demand higher yields even on US bonds issued by the world’s largest and safest corporate borrowers.

Telegraph:

• Japan pledge for bold action sparks currency war fears. The man set to head Japan’s central bank has pledged to do “everything possible” to propel the country out of its deflation trap, raising fears that a falling yen will spark a currency war.

Handelsblatt:

• Some ECB policy makers think it should exit Troika because involvement risks central bank's independence.

Le Figaro:

• French Transaction Tax Will Miss 2013 Target. The tax will bring in EU600m to EU800m in 2013, compared with the target of EU1.6b. On the NYSE-Euronext, trading in shares subject to the tax fell 21% between August and November 2012, compared with a 10% drop for shares that are exempt.

Bear Radar

Style Underperformer:

• Small-Cap Growth -.20%

Sector Underperformers:

• 1) Gold & Silver -3.40% 2) Steel -2.13% 3) Oil Service -2.03%
  

Stocks Falling on Unusual Volume:

• PANW, SCSS, NSH, NS, HURN, FWLT, SFUN, CAF, TVL, SPLK, PER, VCRA, RIO, APEI, CKEC, LUK, VCLT, QGEN CHN, TECD, TFM, MFRM, MAA, OVTI, YY, MDR, DRC, OVTI, CAF and TECD

Stocks With Unusual Put Option Activity:

• 1) CME 2) JRCC 3) TSO 4) CNX 5) HES
  

Stocks With Most Negative News Mentions:

• 1) MDR 2) MTZ 3) BRK/A 4) TRB 5) DRC
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value -.06%

Sector Outperformers:

• 1) Airlines +2.09% 2) Homebuilders +.78% 3) Retail +.65%
  

Stocks Rising on Unusual Volume:

• SBGI, YPF, FOR, SSYS, THRX, BKS, MBI, SGMO and SWHC

Stocks With Unusual Call Option Activity:

• 1) MTG 2) CWH 3) NS 4) SSYS 5) MCO
  

Stocks With Most Positive News Mentions:

• 1) STLD 2) SCHW 3) TRB 4) CME 5) T

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Monday Watch

Weekend Headlines 
Bloomberg: 

• Euro Leaders Demand Austerity as Italy Nears Vote. European leaders demanded that euro members press on with budget cuts to end the debt crisis as Italy edged closer to a new election after an anti-austerity vote last week resulted in political deadlock. Finance ministers from the 17-member single-currency bloc meet in Brussels today to discuss issues including a bailout for Cyprus. In Rome, a top aide to Democratic Party leader Pier Luigi Bersani said the country may need to hold another election this year after passing new electoral laws. “Now in Europe, after the Italian election, it seems to be a case of either austerity and savings programs or growth, but that’s a completely false premise,” German Chancellor Angela Merkel said at March 1 event. EU Economic and Monetary Affairs Commissioner Olli Rehn echoed those comments this weekend, telling Der Spiegel magazine that there’s no scope for the bloc to let up on budget discipline. 

• Bersani Insists He’ll Form New Government Without Rivals. Democratic Party leader Pier Luigi Bersani, whose coalition won the most votes in Italy’s inconclusive elections, insisted he would form a government on his own without seeking an alliance with his main rivals -- Silvio Berlusconi and comic-turned-politician Beppe Grillo. “We have 460 parliamentarians, double what the right got and triple what Grillo won,” he said in an interview last night on state-owned RAI3 television’s “Che Tempo Che Fa” program. “So we will have the first word.”

• ECB’s Coeure Says Europe Needs to Rebalance Its Social Contract. European Central Bank Executive Board member Benoit Coeure said Europe must rebalance its social contract because the economic crisis “disproportionately affected the more vulnerable social groups.” Workers who could “lose their employability” if they remain jobless for too long may threaten economic growth in the 17-nation euro region, Coeure said in a speech today at Harvard University’s Kennedy School of Government in Cambridge, Massachusetts. He did not discuss monetary policy. “There are signs of a growing mismatch between worker attributes and job requirements across a number of euro-area countries,” Coeure, 43, said today at the Kennedy School’s “Europe 2.0” conference. “Future growth depends on human capital being cultivated and expanded.” The area’s unemployment rate climbed to a record 11.9 percent in January as the bloc remained mired in recession.

• Grillo Says His Party Won't Vote Confidence in Any Government. Beppe Grillo, whose party won about 25% of Italy's popular vote, said. His party would support specific legislation on a case-by-case basis. PD lawmaker Francesco Boccia said in an e-mail that Grillo's party should go to parliament to say it doesn't support Bersani's proposal. Grillo has called for the renegotiation of Italy's debt.

• Devil Is in the Details as Swiss Vote to Curb CEO Pay. The Swiss government must figure out how to translate some of the world’s toughest rules on executive pay into national law and risk an exodus of big corporations after voters overwhelmingly backed new curbs in a referendum.

• Russell Indexes to Reclassify Greece as Emerging Market. Russell Investments, which advises funds with $2.4 trillion in assets, will reclassify Greece to an emerging from a developed market, an unprecedented step taken after a recession reduced the nation’s economy by 20 percent.

• Euro Falls in Longest Stretch Since June on Record Unemployment. Europe’s 17-nation common currency posted its longest stretch of weekly losses since June as demand slumped after Italy’s election produced a hung parliament and euro-area unemployment climbed to a record. The Dollar Index (DXY) rose to the highest level since August as investors weighed the U.S. government’s failure to avoid automatic budget cuts. The euro fell below $1.30 for the first time in two months as the region’s inflation rate was below the European Central Bank’s 2 percent ceiling before a policy meeting March 7. The Labor Department may report on March 8 that U.S. employers added 160,000 workers last month, a Bloomberg survey shows. “It’s a combination of Italy’s election and generally soft economic data out of the euro zone,” Dan Dorrow, the head of research at Faros Trading LLC in Stamford, Connecticut, said of the euro’s decline. “We saw unemployment grinding higher.” The euro fell 1.3 percent this week to $1.3022 in New York after dropping 3.8 percent in February, snapping a six-month rally. 

• China’s Stocks Slump as Developers Tumble Most Since June 2008. China’s stocks fell, led by the biggest slump among developers since 2008, after the Cabinet ordered more measures to cool property prices and after growth in the nation’s services industries slowed. The Shanghai Composite Index (SHCOMP) slid 2.9 percent, the most since Feb. 21, to 2,292.14 as of the city's 11:30 a.m. break. The CSI 300 Index (SHSZ300) lost 3.8 percent to 2,568.21. China Vanke Co. led a gauge of developers to the biggest tumble since June 2008 after the State Council urged higher down-payments and interest rates for second-home mortgages. China Minsheng Banking Corp. (600016) sank 4.8 percent, pacing declines among lenders. “When there are new rules like these, it extends far beyond property shares,” Zhang Yanbin, an analyst with Zheshang Securities Co. in Shanghai, said by phone today. “There have been talks of property measures in the past few weeks, leading to declines in the market. The news over the weekend was evidence of a detailed measure, hence the loss is much bigger.” A purchasing managers’ index released yesterday showed the nation’s services industries expanded at the slowest pace in five months.

• Bearish Swaps Signal Divides SocGen, Deutsche Bank: China Credit. China's swap market turned cautious on the economy last month for the first time since August and global banks are divided on prospects for growth.

• PBOC’s Yi Says China Prepared for Currency War, Xinhua Reports. China is “fully prepared” for a currency war should one happen, central bank Deputy Governor Yi Gang said in Beijing yesterday, the official Xinhua News Agency reported. “China is prepared,” Yi was quoted as saying by the agency, which gave no further details about where he spoke. “In terms of both monetary policies and other mechanism, China will take into full account the quantitative easing policies implemented by central banks of foreign countries.” China’s foreign-exchange regulator, which is headed by Yi, warned in a report this week that quantitative easing in developed nations will lead to capital inflows into emerging markets and that policy easing can’t solve all of a country’s economic problems. 

• Rebar Falls to Six-Week Low Amid Rising Inventories in China. Steel reinforcement-bar futures fell for a second day, to the lowest level in more than six weeks as inventories in China climbed for a ninth week, adding to concern that the market is oversupplied. Rebar for delivery in October on the Shanghai Futures Exchange dropped as much as 2.6 percent to 3,916 yuan ($629) a metric ton, the lowest level since Jan. 17 for a most-active contract, and was at 3,929 at 9:41 a.m. local time. Futures fell 1.8 percent last month, the first drop since November. Inventory jumped 79 percent this year through March 1, according to Shanghai Steelhome Information.

• Australia Building Permits, Profits Drop, Sending Currency Lower. Australian home-building approvals unexpectedly fell for a second month in January, led by a slump in apartments, while company profits dropped in the fourth quarter as earnings weakened at mining and manufacturing firms.

• Kuroda Pledges Bolder Action as Bank of Japan Governor: Economy. Haruhiko Kuroda said that the Bank of Japan (8301) will do whatever is needed to end 15 years of deflation should he be confirmed as governor and indicated that open-ended asset purchases could start sooner than next year.

• Short Sales Fall 53% With U.S. Bull Market Starting Fifth Year. Investors reduced bearish stock bets to the lowest level since at least 2007 as the bull market in American equities begins its fifth year. Short sales in the Standard & Poor’s Composite 1,500 Index fell to 5.6 percent of shares available for trading in February, down from a record 12 percent during the credit crisis and the lowest ever in data compiled by Bespoke Investment Group and Bloomberg starting six years ago. The last time the number of shares borrowed and sold short approached this level, the equity gauge lost 3.3 percent in the next three months. Bulls say the capitulation by market bears shows the rally remains intact and that more money will flow into stocks after individuals sent $37.9 billion to mutual funds in January, the most since 2004. It also means a source of demand is diminishing, a traditional signal for caution in an aging bull market. “When you look at short interest, and it’s low like right now, it means people are very, very bullish about the market,” Uri Landesman, president of New York-based hedge fund Platinum Partners, which manages $1.15 billion, said in a Feb. 28 phone interview. “When that happens, it’s a bearish sign, because if all minds change, there’s downside, not upside.”

• Commodity Fund Outflows Reach Weekly Record of $4.23 Billion. Money managers removed a record $4.23 billion from commodity funds in the week ended Feb. 27, led by declines in precious-metal holdings, as raw materials capped the biggest monthly loss since October. Investors pulled an all-time high of $4.03 billion from gold and precious-metals funds, said Cameron Brandt, the director of research for EPFR Global, which started tracking the flows in 2000. The Cambridge, Massachusetts-based researcher said last week that total commodity outflows for the period ended Feb. 20 reached $828 million. The Standard & Poor’s GSCI Spot Index of 24 raw materials fell 4 percent last month, the most since October. 

• Environmentalists Step Up Opposition to Keystone Pipeline. Opponents of TransCanada Corp. (TRP)’s Keystone XL pipeline intend to make themselves heard by President Barack Obama after a March 1 report helped clear a path for the White House to approve the project. The pipeline drew a fresh wave of objections from groups including the Sierra Club, Natural Resources Defense Council and 350.org, when the U.S. State Department’s draft assessment said it won’t have a significant impact on global warming. Members of 350.org will confront Obama and Secretary of State John Kerry at all future public events, said Daniel Kessler, a spokesman. “If they are doing something in public, we will be there,” Kessler said in an e-mail. “Thousands of people are willing to get arrested to stop this project.”

• Karachi Mourns 42 Killed in Bombing as Attacks on Shiites Spread. Karachi shut schools and businesses to mourn the 42 people killed in a car bombing that targeted the city’s Shiite minority and extended a spree of deadly attacks on the Islamic sect to Pakistan’s biggest city. Women and children were among the dead and more than 135 were wounded in the blast around 7:30 p.m. yesterday in a Shiite-dominated neighborhood of the port city, Pakistan’s financial capital.

• Las Vegas Sands(LVS) Probably Violated Foreign Corrupt Act. Las Vegas Sands Corp. (LVS), embroiled in two U.S. probes and a court battle with the former head of its Chinese (1928) casino business, said for the first time it probably violated the U.S. Foreign Corrupt Practices Act.

• Celgene(CELG) Psoriasis Drug Helped Third of Patients in Study. Celgene Corp. (CELG), the maker of the cancer drug Revlimid, said its experimental psoriasis medicine helped quell the redness and inflammation associated with the skin disorder in a study. The drug, apremilast, helped one-third of patients achieve a 75 reduction of symptoms, based on a standard Psoriasis Area and Severity Index measurement. That compared with 5.3 percent of those on placebo with the same score, called PASI-75, Celgene said in a statement as it presents the data at the American Academy of Dermatology meeting in Miami Beach, Florida, today. 

• HIV-Infected Infant Cured With Early Use of AIDS Drugs.

Wall Street Journal: 

• U. S. Boosts War Role in Africa. American Drones Help French Target Militants in Mali, as Chad Claims Killings.

• Student-Loan Securities Stay Hot. Investors' Hunger for Returns Is Driving Demand Even as More Borrowers Fall Behind on Their Payments. Student loans are souring at a growing rate—and investors can't seem to get enough. SLM Corp., the largest U.S. student lender, last week sold $1.1 billion of securities backed by private student loans. Demand for the riskiest bunch—those that will lose money first if the loans go bad—was 15 times greater than the supply, people familiar with the deal said.

• The Reverse-Joads of California. Low- and middle-income residents are fleeing the state. Sacramento's liberal policies may bear much of the blame.

Marketwatch.com:

• Obama to name Wal-Mart(WMT) charity chief as OMB head.

• How shipper China Cosco sailed into rough seas. One of the country’s most prominent liner shipping operators, China COSCO Holdings Co. Ltd., is struggling to avoid being kicked out of the Shanghai Stock Exchange five years after its debut.

Fox News:

• White House retreats from doomsday spending cuts predictions, but keeps blame on Republicans. The White House has retreated from its doomsday predictions about the impact of the $85 billion in federal spending cuts as they enter a second week -- with Republican leaders appearing at least satisfied about delivering on their promise to limit government spending and hold down taxes.

• Kerry: U.S. releasing millions in aid to Egypt. Secretary of State John Kerry said Sunday the United States will give Egypt $250 million more in aid, following President Mohammed Morsi's pledges for political and economic reforms.

• Romney relays disappointment over loss, admits mistakes, in first sitdown since 2012 election.

CNBC: 

• Paris Seeks Alternative to 75% Tax. France's Socialist government is considering replacing its stricken 75 percent top income tax rate on earnings above 1 million euros, with a 65-66 percent rate on households earning more than 2 million euros.

• China services growth at 5-month low in Feb -NBS PMI.

Zero Hedge: 

• Everyone Loves Abe? (graphs)

• The "Stuffing" Is Back As GM's(GM) February Dealer Inventory Soars To Second Highest Ever. (graph)

• The Downward Spiral. (graphs)

• Here Comes China's Drones.

• The Economist vs Italy's "Clowns".

• 16 Signs That The Middle Class Is Running Out Of Money.

• CapEx, Corporate Cash, And ZIRP's Vicious Cycle. (graph)

• Personal Incomes & The Decline Of The American Saver.

• The Equity 'Air-Pocket' And 5 Reasons To Worry. (graphs) 

• Alasdair Macleod: Europe Is In Worse Shape Than Everyone Thinks.

Business Insider: 

• There Are Dark Rumblings Of A Coup D'État In Spain. 

• And Now Beppe Grillo Wants Italians To Vote On Leaving The Euro.

• CITI(C): The Italian Elections Reflect The Collision Of Two Big Macro Trends We've Been Warning About For A Long Time. 

• This '60 Minutes' Video Of China's Ghost Cities Is More Surreal Than Anything We've Ever Seen. (video)

• Chinese Property Stocks Are Getting Massacred. The Shanghai Stock Exchange Property Index (SHPROP) has tumbled 8.7 percent.

• There's Only One Thing Stopping Enemy Nations From Smashing America's Power Grid. 

• JOHN TATE: Here's Why The Internet Tax Is A Terrible Idea. 

• BofA(BAC): 'Don't Lose Sight Of The Bigger Picture. 

• It's Official: Teens Are Bored With Facebook(FB).

IBD: 

• IGT(IGT) To Cash In On New Jersey Online Gaming Nod.

Wall Street All-Stars:

• Indicator Update: A “Stop Sign” at the Market Top?

Reuters: 

• BOJ should not monetise public debt-governor nominee Kuroda. The Bank of Japan should not directly underwrite government bonds or take measures that would be interpreted by markets as public debt monetisation, Haruhiko Kuroda, the government's nominee for next central bank governor, said on Monday. 

• U.S. state pension funding gap up 20 percent in 2012 - Wilshire.

USA Today:

• Tax bills for rich families approach 30-year high. With Washington gridlocked again over whether to raise their taxes, it turns out wealthy families already are paying some of their biggest federal tax bills in decades even as the rest of the population continues to pay at historically low rates. President Obama and Democratic leaders in Congress say the wealthy must pay their fair share if the federal government is ever going to fix its finances and reduce the budget deficit to a manageable level. A new analysis, however, shows that average tax bills for high-income families rarely have been higher since the Congressional Budget Office began tracking the data in 1979. It's middle- and low-income families who aren't paying as much as they used to.

Financial Times:

• Free lunch will come to an untidy end. Investors fear asset bubbles created by Fed policies. Seth Klarmen, founder of hedge fund Baupost, offered a searing indictment of the Federal Reserve’s monetary policies in his year-end letter to investors, currently circulating in the wider hedge fund community. In the mid-January letter, Mr Klarman describes “the real downside scenario which involves the end of the free lunch of large deficits, zero interest rates and relentless quantitative easing”. Along with the European Central Bank, Fed chairman Ben Bernanke “seems intent on buying back bonds indefinitely, whether or not their actions deliver an economic recovery and inspite of any unpleasant side-effects. It is clear that after four years and counting, their efforts have not delivered. Only a zealot would continue with a plan that is not working and massively expand it,” Mr Klarman concludes.

Telegraph:

• Anger builds in Italy as old guard plots fresh technocrat take-over. Italy’s president Giorgio Napolitano is exploring the creation of a second technocrat government to break the political log-jam and calm markets after key parties failed to reach an accord, risking a serious popular backlash.  

• Make no mistake, the EU is at war with the City. Plans for a cap on banking bonuses is just the latest salvo in a stealth war being waged by Brussels against the financial services sector.

WirtschaftsWoche:

• Regling Doubts ESM Will Directly Recapitalize Banks. A decision to recapitalize banks directly from ESM funds would need to be unanimous, citing European Stability Mechanism chief Klaus Regling. Such an instrument would also limit the money the ESM could use for countries in need of aid, Regling said. Direct recapitalization without a cap would hurt the ESM's rating, he said.

Focus:

• Beppe Grillo Calls for Renegotiation of Italy's Debt. Italy is being smothered by debt and not by the euro, Grillo said. Interest amounting to EU100m a year is killing Italy, he said. Italy should leave the common currency and take back the Lira if the terms don't change, Grillo said. Italy's political system will collapse within six months under the leadership of the old parties, Grillo said.

AutomobilWoche:

• Europe's Car Suppliers May Cut 75,000 Jobs. One in 10 of the 750,000 jobs in western Europe's car supplier industry might disappear in 3-4 years, citing Marcus Berret of Roland Berger, which carried out a study. Jobs will be lost in production, R&D and administration.

Europa:

• Five Spanish regions including Catalonia need further budget cuts after missing targets to reduce their deficits in 2012, citing an interview with Budget Minister Cristobal Montoro. Valencia, Murcia, Balears and Andalusia failed to comply as well with budget cuts so need to propose new austerity measures, Montoro says. 

ORF:

• Eurogroup's Wieser Sees No Alternative to Deficit Reduction. The timing of budget adjustments is the only thing that can be changed, not the direction of paying down debts, Thomas Wieser, head of the Eurogroup Working Group, told Austrian radio station ORF. The Italian election has added to uncertainty, Wieser said. It's not correct to say that the crisis is back after the election since it never went away, he said in an interview.

Kyodo:

• Prominent Antinuclear Experts Dropped From Japan Energy Policy Panel. The government announced a new lineup Friday for a panel tasked with devising Japan's new basic energy plan, dropping some prominent antinuclear experts who sat on the panel under the previous government led by the Democratic Party of Japan.

Shanghai Securities News:

• China Housing Minister Says Confident in Controlling Home Prices. Authorities should strictly implement the property curb measures issued by the State Council yesterday, citing Housing Minister Jiang Weixin. China told its central bank to raise down-payment requirements and interest rates for second-home mortgages in cities with "excessively fast" price gains, according to the State Council. Cities facing "relatively large" pressure from rising house prices must further tighten home-purchase limits.

Beijing Times:

• The time is ripe for China to impose an inheritance tax and the threshold should be 5m yuan, citing a research paper issued by Beijing Normal University.

Weekend Recommendations

Barron's:

• Bullish commentary on (COF) and (FOR).

Night Trading

• Asian indices are -1.75% to -.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 109.0 +.5 basis point.

• Asia Pacific Sovereign CDS Index 85.25 +1.25 basis points.

• FTSE-100 futures -.53%.

• S&P 500 futures -.58%.

• NASDAQ 100 futures -.54%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (TECD)/1.76

• (SSYS)/.38 

Economic Releases

• None of note

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Yellen speaking, Fed's Powell speaking, China HSBC PMI Services, Bank stress test results, Reserve Bank of Australia rate decision, Eurozone PPI, ISM New York, Deutsche Bank Media/Telecom Conference, Cowen Healthcare Conference, JPMorgan Aviation/Transport/Defense Conference and the (D) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by real estate and commodity shares in the region. I expect US stocks to open lower and to maintain losses into the afternoon. The Portfolio is 50% net long heading into the week.

Weekly Outlook

U.S. Week Ahead by MarketWatch (video). 
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on global growth fears, rising Mideast tensions, Eurozone debt angst, profit-taking, technical selling and more shorting. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Market Week in Review

S&P 500 1,518.20 +.17%*




The Weekly Wrap by Briefing.com.

*5-Day Change