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EU: Eurozone recession to continue until 2014. The European Commission has cut its outlook, predicting the economy will contract by 0.3% this year after shrinking by 0.6% in 2012, and then return to growth of 1.4% in 2014. The EC had forecast the economy would expand by 0.1% in 2013, but tight lending conditions and record unemployment - which is expected to peak at 12.2% - have dashed any hopes of a recovery this year. With inflation seen falling to 1.8%, pressure could rise on the ECB to lower rates.

H-P earnings beat forecasts despite 16% drop in profit. H-P's (HPQ) shares jumped 4.9% premarket after the company's FQ1 earnings beat consensus and it provided guidance that was above expectations. However, net profit fell 16% to $1.23B as EPS came in at $0.82 and revenue slid 6% to $28.36B. Sales fell across H-P's operations, including PCs, printers, consumer and enterprise hardware, and high-end servers. On the earnings call, CEO Meg Whitman insisted that there are no plans to break the company up.

Alcatel names ex-Vodafone executive as CEO. Alcatel-Lucent (ALU) has hired former Vodafone Europe chief Michel Combes as its CEO to replace Ben Verwaayen on April 1, ending the latter's tumultuous 4 1/2-year reign. The appointment comes amid rumors of asset sales, as well as speculation that the French government is interested in acquiring a minority stake. France might also encourage a merger with Nokia Siemens Networks (NOK, SI).

Top Stock News
Boeing to present modified 787 batteries. Boeing (BA) is today expected to present a redesign of its 787 batteries to stop them overheating as it looks to persuade the FAA to allow the Dreamliners to resume passenger flights, hopefully next month. CEO Jim McNerney has told the WSJ that Boeing is confident it has identified "all probable causes" of the battery failures.

AIG makes net loss of $4B, partly due to Superstorm Sandy. AIG (AIG) swung to a net loss of $4B in Q4 from a profit of $21.5B a year earlier, when it benefited from a tax-related accounting gain of $19.2B. The result this year was due to an after-tax loss of $1.3B because of Superstorm Sandy and a $4.4B loss related to the sale of AIG's airplane leasing unit. The insurer's operating EPS dropped to $0.20 from $0.77, although that was better than expectations for a loss. Shares were +3.5% premarket.

ING CEO Jan Hommen to step down. ING (ING) CEO Jan Hommen will step down in October and be replaced by Ralph Hamers, the head of the Dutch bank's Belgian operations. Hamers, who joined ING in 1991, has "an excellent track-record...in leading strategic change processes," ING said. That should come in handy given the massive changes the bank's been going through, including selling billions of dollars of assets. Shares were +0.7% premarket.

Pentagon to start talks with suppliers about cuts. Frank Kendall, the Under Secretary of Defense for Acquisition, has authorized the Pentagon's purchasers and program managers to start talking to suppliers about plans for implementing $46B of automatic cost reductions, which are due to take effect next Friday. The impact of the cuts will be exacerbated by the DOD not receiving an appropriation for this year, with much of its money in the wrong accounts.

Bausch & Lomb may be heading for IPO. Warburg Pincus is reportedly considering an IPO for its Bausch & Lomb eyecare unit after efforts to find a buyer fell flat. Big names such as Abbott Laboratories (ABT), Johnson & Johnson (JNJ) and Sanofi (SNY) showed early interest, but Warburg wasn't able to secure a bid of at least $9B.

GM to invest $7.3B in Korea over five years. GM (GM) intends to invest $7.3B in its South Korean operations over the next five years to improve its manufacturing and engineering capabilities, and double the size of its design center at its HQ in Incheon. The plan runs counter to recent speculation that GM was intending to cut production and jobs in Korea.

Top Economic & Other News
German business confidence strengthens. While the outlook for the eurozone is all doom and gloom, German businesses are becoming increasingly confident about their prospects, with the Ifo climate index climbing more than expected to 107.4 in February from 104.3 in January. The increase was the biggest monthly rise since July 2010 and the fourth in a row; it also ties in with improving PMI data.

Chinese new-house prices continue to rise. Chinese new-home prices climbed in 53 out of 70 cities in January on a monthly basis, increasing expectations that the government will continue the tightening policies that have caused Chinese stocks to fall sharply this week. Prices in Shenzen led the way with an increase of 2.2%, while those in Beijing and Shanghai rose as well.

Italian markets calm ahead of election. Italy is due to hold an election on Sunday and Monday, with the center-left Democratic Party leading in the polls with a projected 34-35% share of the vote, although that's below the 42.5% needed to form a government. Silvio Berlusconi's Freedom Party has recovered to second with 30%, roiling bond and stock markets over the past few weeks. However, today all seems calm - the FTSE MIB was +1.1% at midday in Europe and 10-year bond yields were -4 bps at 4.46%.

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Today's Markets:
In Asia, Japan +0.7% to 11386. Hong Kong -0.5% to 22782. China -0.5% to 2314. India flat at 19317.
In Europe, at midday, London +0.8%. Paris +1.8%. Frankfurt +1.1%.
Futures at 7:00: Dow +0.3%. S&P +0.4%. Nasdaq +0.3%. Crude +0.1% to $92.97. Gold +0.1% to $1580.

Today's economic calendar:
10:15 Fed's Rosengren participates in panel on "Crunch Time: Fiscal Crises and the Role of Monetary Policy"

Notable earnings before today's open: AGU, ANF, B, EGO, HMSY, IPG, NVE, WCRX

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Source: Wall Street Breakfast: Must-Know News