By Yigal Grayeff and the Market Currents team
Eurozone hit by triple data blow. Data released today shows how the eurozone economy continues to weaken, with unemployment hitting a euro-era record of 10.7% in January and highlighting the sharp divergence between north and south. February PMI improved to 49.0 in February from 48.8 in January, but the sector is still contracting, while inflation rose to +2.7% from +2.6%.
Fisher: Break up the large banks. The five biggest U.S. banks are too powerful and should be broken up, Dallas Fed President Richard Fisher said after a speech lauding Mexico's economic reforms. BofA (NYSE:BAC), JP Morgan (NYSE:JPM), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and Citigroup (NYSE:C) have "a higher concentration of deposits than they did before the crisis... perversely, these banks are now even bigger, they are too 'bigger' to fail than before."
Jump in Japanese capex signals better times. Japan's Q4 capital spending excluding software unexpectedly jumped 4.9% vs. -11% in Q3 and -7.4% forecast. Reconstruction demand was probably the biggest factor in the Q4 rise, which was the biggest in almost five years and will probably cause GDP to be revised up from a preliminary estimate of -2.3%.
Chinese manufacturing data mixed. Two Chinese manufacturing surveys indicated mild improvement in February, but surging input prices and deteriorating new orders suggest further weakening in the economy. HSBC's index came in at 49.6, indicating contraction, while the government-backed PMI was 50.5, showing expansion.
China slashes dollar reserves. China has sharply cut the share of its foreign reserves held in dollars, Dow Jones calculates. Although the exact composition of China's $3.2T reserves has always been a mystery, the portion of dollar holdings appears to have dropped to a decade-low 54% as of June 2011 from 65% in 2010 and 74% in 2006.
Could Greece's second bailout agony be finally over? EU leaders are meeting today and tomorrow to finalize Greece's second bailout package and discuss ways to boost long-term growth. The bloc has already reportedly approved a €5.8B aid payment for Ireland, and while officials said there will be no decision on increasing the size of the eurozone's rescue fund, Italian PM Mario Monti tells Bloomberg that he's confident it will be expanded by the end of the month.
ISDA to decide whether to declare "credit event" on Greece. The International Swaps & Derivatives Association (ISDA) was due to meet this morning to decide whether the headshave that Greece's private debt holders will be forced to take constitutes a credit event. If so, CDSs would be triggered, although the ISDA apparently has until Monday to reach a verdict.
BofA tries again over fees. Bank of America (BAC) is working on plans to once again revamp its fee system, tagging some clients with monthly charges unless they agree to bank online, buy more products or maintain certain balances. Last time BofA tried to up its fees, a public outcry forced the bank to retreat.
HSBC close to selling $1B insurance ops. HSBC (HBC) is nearing a deal to sell its general insurance business for around $1B, Reuters reports, as the bank continues to divest non-core assets worldwide. French insurer AXA and Australia's QBE Insurance Group would split the business.
Tata could rival Vodafone for C&W. Tata Communications (NYSE:TCL) is reportedly considering a bid for Cable & Wireless Worldwide (OTC:CBWWY), the same fiber-network operator that Vodafone (NASDAQ:VOD) said it may try to acquire.
Chevron aims to close Arctic-sized gap in its portfolio. Chevron (NYSE:CVX) has helds talks with Russia over possibly helping to drill for the vast oil reserves in the Arctic, an area it sees as "a huge gap in our portfolio." The news comes a day after Vladimir Putin said he intended to ease access to Russia's Northern offshore fields.
Judge removes hurdle for Kinder Morgan's El Paso acquisition. Kinder Morgan (NYSE:KMI) scored a win when a judge refused to block its acquisition of El Paso (EP), disappointing the latter's shareholders who had argued that a conflict of interests resulted in a deal that undervalued EP's shares.
Judge confirms ban on graphic cigarette warnings. A federal judge yesterday confirmed a preliminary injunction blocking the FDA from forcing tobacco companies to put gruesome health warnings on cigarette packaging, including a corpse and cancerous lungs. "These mandatory graphic images violate the First Amendment by unconstitutionally compelling speech," the judge explained.
In Asia, Japan -0.2% to 9707. Hong Kong -1.4% to 21388. China -0.1% to 2426. India -0.9% to 17584.
In Europe, at midday, London +0.7%. Paris +0.8%. Frankfurt +0.7%.
Futures at 7:00: Dow +0.3%. S&P +0.2%. Nasdaq +0.4%. Crude +0.1% to $107.19. Gold +0.05% to $1712.10.
Thursday's economic calendar:
Chain Store Sales
8:00 Fed's Pianalto: 'Keys to Growth for the Nation and the Region'
8:30 Initial Jobless Claims
8:30 Personal Income and Outlays
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:00 Hearing: 'The Semiannual Monetary Policy' (Bernanke)
10:30 EIA Natural Gas Inventory
12:30 PM Fed's Lockhart: Economic Outlook
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
10:00 PM Fed's Williams: Economic Outlook
Earnings Results: Companies that beat EPS expectations last night and today include Babcock & Wilcox (NYSE:BWC), Edison International (NYSE:EIX), Finisar (NASDAQ:FNSR), MasTec (NYSE:MTZ), PetSmart (NASDAQ:PETM).
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