ITALIAN STOCKS PLUNGE 5%, SPAIN TANK 3% AND FRANCE 2,5%!!! German Government Cuts Welfare Benefits!! Banks Diving Around The World!!! JPM To Fire 4,000 Workers!!! MORGAN STANLEY: Sell Your Euros, This Election Could Be A Broad Setback


ITALIAN STOCKS PLUNGE NEARLY 5% — Borrowing Costs Surge After Upset On Election Night



Italy 10yr /quotes/zigman/3483462 4.76 +0.33 7.47%
Spain 10yr /quotes/zigman/3483373 5.36 +0.25 4.96%

ECB bond-buying program may not be there to save Italy! Italy’s inconclusive election results have thrown financial markets into a tizzy.


The Spanish Market Is Collapsing Too

Berlusconi won’t ally with Monti’s party: report

Gregor Peter‏@L0gg0l

Big Italian bill auction today … € 8.75 bln in short-term debt

Banks Are Diving Around The World

The uncertainty caused by the Italian election is hitting all markets.

But in particular, bank stocks are getting cracked.

A quick look at some names today:
Intesa Sanpaolo (huge Italian bank) -8%
Banca Monte Dei Pachi (another big Italian bank) -6%
Barclays -3.4%
Deutsche Bank -1.9%
Societe Generale (France) -4.5%
Credit Agricole (France) -5.4%

And in case you missed it, during yesterday’s trading Morgan Stanley fell 6%.



Why Europe Just Got Its First ‘Rebellion’ Of The Crisis Era

The most dramatic moment in last night’s Italian election came from the second in command in the center-left PD party.


He announced to a room of reporters that voters had staged a “rebellion” and that the country would likely be ungovernable.

That “rebellion” was ultimately against outside powers (Angela Merkel, the ECB, the markets even) who have pushed austerity on Italy.

Read more:


MORGAN STANLEY: Sell Your Euros, This Election Could Be A Broad Setback

Article Continues Below

A very negative take on what just happened in Italy.

Morgan Stanley is out with a simple note titled: Closing EUR longs.

That translates to English as: Dump your euros.

In the wake of the Italian election, Ian Stannard, head of Morgan Stanley’s European FX Strategy, says to use any rebounds in the euro as a chance to sell.

…the surprising Italian election results, which have increased the political uncertainty in Italy, will have broader implications for the EUR and currency markets generally, in our view. Hence, we would now look to use any EURUSD rebounds over the coming days into the 1.3150 area to close this long position, and await clarification/stabilisation of the political picture in Italy before re-entering bullish EUR strategies.
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KRUGMAN: This Is How The Euro Ends…

Paul Krugman has a great little post up analyzing the situation in Europe.


He hints that this is the beginning of the end for Europe, and that if the Eurocrats don’t get the lesson that people need growth — not just austere stability — then it’s all over.

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German government report threatens cuts to welfare benefits

At the beginning of February, the German government released to the media an evaluation of the €200 billion (US$265 billion) spent on benefits to families, describing the state spending as ineffective, inefficient or counter-productive.

The study was commissioned by the Ministry of Finance and the Ministry for Families. As is usual in such cases, both ministries distanced themselves from the report. The family ministry led by Christina Schröder of the Christian Democratic Union (CDU) stated that a full evaluation of all 156 services aimed at families was not yet ready, and it had not been decided if the results would be published in the current legislative period.

After yesterday’s big moves in markets, today we get a big day for economic events.

Via Bill McBride at Calculated Risk, here they are:
Case-Shiller home prices: Analysts expect a 6.8% year-over-year increase.
FHFA home prices: Analysts expect a 0.7% rise.
January new home sales: Analysts expect sales at a 381K annualized rate.
Richmond Fed Manufacturing: Analysts expect a reading of -3, up from -12.
Conference Board: Expect an increase to 61.0.
Bernanke’s Testimony to Congress: Starts at 10:00 AM.

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