Today's Headlines

Bloomberg:    

• Euro-Region Industrial Output Drops as Slump Persists: Economy. Euro-area industrial output fell more than economists forecast in January, adding to signs that the region’s recession extended into the first quarter. Factory production in the 17-nation euro zone dropped 0.4 percent from December, when it rose a revised 0.9 percent, the European Union’s statistics office in Luxembourg said today. The median forecast in a Bloomberg News survey of 32 economists was for a 0.1 percent decline. Production fell 1.3 percent in January from a year earlier.
• Italian Bonds Decline as Borrowing Costs Climb at Debt Auction. Italian bonds fell, with two-year yields rising the most in two weeks, as borrowing costs increased at an auction amid concern a political deadlock will derail plans to fix the nation’s finances. Shorter-maturity notes led declines as the country sold 3.32 billion euros ($4.3 billion) of securities due in December 2015 at an average yield of 2.48 percent versus 2.30 percent at the previous offering last month. “The market is a bit complacent about the risks that can happen in Italy,” said Mohit Kumar, head of Europe and U.K. rates strategy at Deutsche Bank AG in London. “If you have a government that is unable to pursue structural reforms, it will have an impact on economic growth in Italy.” 
• Europe to Contract as Much as 1.5%, El-Erian Says: Tom Keene.
• PBOC Chief Says China Should Be on ‘High Alert’ on Inflation. China should be on “high alert” over inflation after February’s figures exceeded forecasts, central bank Governor Zhou Xiaochuan said, signaling a heightened focus on controlling prices. Monetary policy is “no longer relaxed” and is “relatively neutral” as demonstrated by a 13 percent target for money-supply growth that’s tighter than expansion in the last two years, Zhou, head of the People’s Bank of China, said at a press conference today during the annual gathering of China’s National People’s Congress. Zhou’s comments add to signs that officials are tightening policies even as the recovery in the world’s second-biggest economy shows signs of weakness.
• China’s Stocks Slump to Two-Month Low on Property Curbs. Chinese stocks fell, dragging the benchmark index to a two-month low, as real estate and construction companies tumbled on concern policy makers will step up property curbs. Sina.com reported the southern city of Shenzhen banned developers from raising home prices, citing discussions with property companies. Poly Real Estate Group Co. and Gemdale Corp. declined more than 3 percent. Sany Heavy Industry Co. (600031), the nation’s biggest maker of construction machinery, lost 2.1 percent. CSR Corp. (601766) and China CNR Corp., the nation’s top train makers, slumped at least 3.7 percent on concern the dismantling of the rail ministry will curb state spending. “Property curbs and the central bank’s possible attitude towards tightening liquidity make investors nervous,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “There’s concern the economic recovery will falter.” The Shanghai Composite Index (SHCOMP) dropped 1 percent to 2,263.97 at the close, capping a five-day, 3.6 percent losing streak that’s the longest in four months. The gauge also erased its gain for the year.
• Copper Falls on Concern China Housing Curbs Will Sap Demand. Copper fell the most in a week amid concern that policy makers will expand efforts to cool the housing market in China, the world’s biggest consumer. Chinese stocks fell, dragging the benchmark index to a two- month low, as real estate and construction companies tumbled. Sina.com reported the southern city of Shenzhen banned developers from raising home prices. Accelerating inflation means the country should be on “high alert,” Zhou Xiaochuan, head of the People’s Bank of China, said today, signaling a heightened focus on controlling prices. On the Comex in New York, copper futures for delivery in May slid 0.7 percent to $3.5285 a pound at 12:01 p.m., heading for the biggest decline since March 1. 
• Iron Ore Falls Most Since January Amid China Property Concerns. Iron ore fell the most since January amid concern curbs on construction in China will reduce demand for the commodity used to make steel. Imported ore with 62 percent iron content at the Chinese port of Tianjin dropped 3.1 percent to $139 a dry metric ton today, the most since Jan. 16, according to The Steel Index Ltd. The global benchmark fell 13 percent from a 16-month high reached Feb. 20. Sentiment is deteriorating because of concerns about demand from real estate in China, Oscar Tarneberg, an analyst at The Steel Index, said by e-mail today. “China’s panicked basic-material destock continues, with construction and real-estate firms caught up in a severe economic slump, caused by tightening liquidity and the ongoing threat of negative property policies,” Melinda Moore, an analyst at Standard Bank Plc, said in an e-mailed report today.
• Import Prices in U.S. Climbed in February as Energy Costs Jumped. The cost of goods imported into the U.S. climbed in February by the most in six months, reflecting a jump in energy expenses that is now receding. The 1.1 percent increase in the import-price index followed a 0.6 percent gain in the prior month, Labor Department figures showed today in Washington. The median forecast of 43 economists in a Bloomberg survey called for a 0.6 percent advance. Prices dropped 0.3 percent over the past 12 months.
• Business Inventories in U.S. Increase by Most Since May 2011. Inventories in the U.S. rose in January by the most since May 2011 as companies replenished warehouses and shelves amid signs demand will pick up. The 1 percent increase in goods on hand exceeded the highest forecast in a Bloomberg survey and followed a 0.3 percent gain in December that was more than previously estimated, Commerce Department figures showed today in Washington. The median estimate was for a 0.5 percent advance. At the January sales pace, businesses had enough goods on hand to last 1.29 months, up from 1.28 months in the prior month and the highest since August. Business sales dropped 0.3 percent in January, reflecting declines at factories and wholesalers.

Wall Street Journal:

• New Pope: Live Updates.
• The Resilient Consumer? Not Quite. Resilient? That’s not exactly the word we’d use to describe it. The bulk of the gain came courtesy of auto sales and rising gas prices. Excluding those two items, and building materials, sales were up a far less impressive 0.36%. Sales were down at department stores, restaurants and furniture stores. “That indicates consumers may have cut their spending on non-essentials,” Dow Jones’ Sarah Portlock and Jeffrey Sparshott wrote this morning.

CNBC: 

• Crumbling BRICs: Why You're Better Off Elsewhere. The BRIC nations increasingly look like they will no longer be the building blocks of international investing. As a group, Brazil, Russia, India and China have been seen as the collective pillar of emerging market growth, leading to an exodus of money from U.S. stocks and into global equities. But signs indicate that trade has begun to run its course, and investors are looking for opportunity elsewhere.

Zero Hedge: 

• Chart Of The Day: Chinese Stocks Turn Red For The Year. 
• NFIB: "No Sign Of A Surge In Confidence". 
• Dash For Absolute Trash Outperforms Everything In 2013. (graphs) 
• Has the European Spring Started?
• Farage Slams Eurozone As "Complete Economic Disaster". (video)

Business Insider:

• The Chinese Central Bank Is Finding Itself In An Increasingly Difficult Position. 
• Europe Hasn't Even Done The Most Painful Part Of The Recovery. (graphs)

NYPost:

• Goldman’s(GS) Blankfein on trader talent hunt at Morgan Stanley(MS). Lloyd Blankfein smells blood in the water. The Goldman Sachs CEO is taking dead aim at Morgan Stanley’s most prized assets — its best and brightest employees — after his rival decided to defer pay for senior bankers. Blankfein, as a big game hunter, recently landed 13-year Morgan Stanley veteran Kate Richdale, head of its Asia Pacific investment banking business. The CEO’s talent hunt is continuing, sources said. Goldman currently is in selective talks with other Morgan Stanley bankers and has also lured a handful of traders from the bank. The classic Wall Street maneuvering comes months after Morgan Stanley told some execs it would defer pay, including their cash bonuses, over three years — a move that caused some bankers to grouse.

c/net:

• Paris court to Apple Stores: No more breaking 9 p.m. curfew. The court prohibits late-night work at the retail outlets and orders Apple to pay damages to the unions that filed suit against the company.

Reuters: 

• Exclusive: Obama administration to let spy agencies scour Americans' finances. The Obama administration is drawing up plans to give all U.S. spy agencies full access to a massive database that contains financial data on American citizens and others who bank in the country, according to a Treasury Department document seen by Reuters. The proposed plan represents a major step by U.S. intelligence agencies to spot and track down terrorist networks and crime syndicates by bringing together financial databanks, criminal records and military intelligence. The plan, which legal experts say is permissible under U.S. law, is nonetheless likely to trigger intense criticism from privacy advocates.
• Italy's Berlusconi promises parliamentary battle against magistrates. Italy's former prime minister, Silvio Berlusconi, facing trial on tax fraud and sex charges and under investigation for suspected political bribery, promised to take on prosecutors after parliament opens this week. 
• Russia risks billions of dollars if Cyprus defaults - Moody's.

Telegraph:

• MEPs reject EU spending cuts and demand extra £1.7bn from British taxpayers. MEPs have rejected cuts to European Union budgets agreed at an all-night summit last month and have demanded that national governments pay an extra £14 billion in spending for this year.
• BoE's Bailey warns bailed-out banks need more capital. Andrew Bailey, incoming deputy governor of the Bank of England, has said some of Britain's bailed-out banks need more capital to achieve financial stability.