MNI EUROPEAN OPEN: Soft Chinese Inflation Data Headlines Overnight

EXECUTIVE SUMMARY

• EBERLY EMERGES AS FRONTRUNNER TO BE BIDEN’S FED VICE CHAIR PICK (BBG)
• BIDEN TO URGE 25% BILLIONAIRE TAX, LEVIES ON RICH INVESTORS (BBG)
• JAPAN'S LOWER HOUSE APPROVES UEDA AS BOJ GOVERNOR (MNI)
• US, EU TO LAUNCH TALKS ON FREE-TRADE-LIKE STATUS, EASING EV TRADE DISPUTE (RTRS SOURCES)

Fig. 1: BBG/J.P.Morgan ADXY Index Vs. ADXY-Weighted Risk Reversals

Source: MNI - Market News/Bloomberg

UK

ECONOMY: The UK will avoid a recession this year, but sluggish growth means the economy will not recover to pre-pandemic levels until the final quarter of 2024, according to the British Chambers of Commerce. (BBG)

FISCAL: Britain's biggest investors fear that Jeremy Hunt is poised to delay a crucial tax break until the autumn in a move that would put a wave of private sector spending at risk. (Telegraph)

FISCAL: UK Chancellor of the Exchequer Jeremy Hunt is planning to reform pension tax rules in his budget next week in a bid to cut the number of doctors quitting the National Health Service. (BBG)

BREXIT: The UK’s trade agreement with the EU could be immediately terminated if the British government quits the European convention on human rights (EHCR) over the issue of stopping small boat crossings across the Channel, legal experts have said. (Guardian)

EUROPE

FRANCE: The French economy is performing better than previously expected at the start of the year with sustained growth and signs that upward pressures on prices are easing, according to a Bank of France survey. (BBG)

U.S.

FED: Northwestern University Professor Janice Eberly is the frontrunner in the White House search for a successor to Lael Brainard as vice chair of the Federal Reserve, people familiar with the matter said. (BBG)

FED: U.S. inflation pressures are still widespread despite some moderation while economic activity is softening in many parts of the country, the Fed's latest Beige Book report said Wednesday. (MNI)

FED: U.S. small businesses continued to mend from the coronavirus pandemic last year even as these firms faced considerable challenges from high inflation and scarce labor, a report released by the Cleveland Federal Reserve on behalf of the 12 regional central banks, said Wednesday. (RTRS)

FED: High inflation expectations for consumers and businesses are a source of concern for an economy where price pressures are set to abate all too gradually, Cleveland Fed research director Edward Knotek told MNI. (MNI)

ECONOMY: U.S. employment showed a "moderate increase" in February while the pace of moderation on wage growth has slowed, according to a St. Louis Fed analysis of real-time data from employee scheduling software provider Homebase, bank economist Max Dvorkin told MNI. (MNI)

FISCAL: President Joe Biden is proposing a series of new tax increases on billionaires, rich investors and corporations in his latest proposal for how Congress should prioritize taxes and spending. (BBG)

FISCAL: U.S. President Joe Biden's budget for fiscal 2024 will be released Thursday. While the document is always a bit of a wish list, and especially so given the current divided Congress, the Democratic president's spending and revenue priorities will be key factors in upcoming negotiations with Republicans over raising the debt ceiling. (RTRS)

FISCAL: U.S. House Republicans put a spotlight on the government's $31.4 trillion debt in a closed-door meeting on Wednesday, while President Joe Biden pledged more aggressive action on the federal deficit, a day before he was due to unveil his 2024 spending plan. (RTRS)

FISCAL: House Speaker Kevin McCarthy says “I do not believe raising taxes is the answer” to address a growing deficit when asked about President Biden’s budget due Thursday. (BBG)

FISCAL: Three Democrats in the U.S. House introduced a measure to push back against a controversial Republican tax proposal that would abolish the IRS, eliminate income taxes and impose a national sales tax. (CNBC)

OTHER

GLOBAL TRADE: The U.S. and European Union are moving forward with crafting a trade agreement focused on critical minerals, with President Biden and European Commission President Ursula von der Leyen expected to discuss on Friday the plan to reduce their dependence on China. (RTRS)

GLOBAL TRADE: Ukraine's president and United Nations Secretary-General Antonio Guterres called on Wednesday for the extension of a deal with Moscow that has allowed Ukraine to export grain via Black Sea ports during Russia's invasion. (RTRS)

GLOBAL TRADE: The Netherlands' government on Wednesday said it plans new restrictions on exports of semiconductor technology to protect national security, joining the United State's effort to curb chip exports to China. (RTRS)

U.S./CHINA: The U.S. is pushing back on the idea it wants to suppress China and said it doesn’t want to separate the two economies, according to a State Department spokesperson’s comments. (CNBC)

BOJ: Japan’s Lower House of the Diet, which is controlled by the ruling coalition, approved economist and former Bank of Japan board member Kazuo Ueda as the BOJ’s next governor to replace Haruhiko Kuroda, whose term ends on April 8. (MNI)

AUSTRALIA/CHINA: Progress is apparent on almost all instances of trade blockages with China, Australia's trade minister Don Farrell said on Thursday. (RTRS)

AUSTRALIA/CHINA: Australia will drop the requirement for travellers arriving from China to test for COVID-19 before departure from March 11, the country's health minister said in a statement on Thursday. (RTRS)

JAPAN/SOUTH KOREA: South Korean President Yoon Suk Yeol plans to visit Japan on March 16-17 and will meet with Japanese Prime Minister Fumio Kishida, Asahi reports, citing several officials from both countries. (BBG)

BOK: South Korea's central bank said the lagged effects of its aggressive streak of monetary tightening would have a bigger negative impact on economic growth this year than in 2022. (RTRS)

CANADA: Finance Minister Chrystia Freeland said Canada has a “once in a generation” moment to invest in infrastructure that will improve the delivery of health care and help combat climate change, but emphasized that she still must show restraint because the economy is at risk of sliding into a recession. (Financial Post)

USMCA: Canada asked for formal consultations with Mexico over the Latin American nation’s restrictions on genetically modified agricultural imports under their free-trade agreement, following a separate request by the US focused on corn earlier this week. (BBG)

MEXICO: Mexico central bank Deputy Governor Galia Borja said when it comes to imports, the strong peso helps with inflation, but not necessarily in other areas so its impact is “complex and there are many variables.” (BBG)

MEXICO: Mexico's heavily-indebted state oil company Pemex will seek to avoid pricy capital markets even as it faces billions in maturing debts this year and next, its chief executive told Reuters, saying Pemex had been "punished" by ratings agencies despite measurable improvements in its operational numbers. (RTRS)

BRAZIL: A proposed tax reform in Brazil will likely generate additional economic growth of 12% over the next 15 years, the special secretary for tax reform Bernard Appy said on Wednesday. (RTRS)

BRAZIL: Brazil's state-controlled oil company Petrobras is in favor of dialogue first to convince the government to get rid of a recent tax on crude exports, then a fight if necessary, the company's Chief Executive Officer Jean Paul Prates said on Wednesday. (RTRS)

BRAZIL: Brazil’s worsening credit outlook amid troubles facing local retailer Americanas SA raises the risk of a recession that could lead its central bank to change its balance of risks at the upcoming interest rate decision on March 21 and 22, Tony Volpon, a former director at the bank, said in an interview. (BBG)

RUSSIA: Russian strikes hit a series of Ukrainian regions early on Thursday, including the Black Sea port of Odesa and Ukraine's second largest city, Kharkiv, knocking out power to several areas, regional officials said. (RTRS)

RUSSIA: Russian President Vladimir Putin is likely to further upgrade the Kremlin’s arsenal of long-range nuclear-capable missiles in order to deter Kyiv and its powerful Western allies, U.S. officials warned Wednesday. (CNBC)

RUSSIA: Russia is likely to downgrade its ambitions in Ukraine for the time being to hanging onto territory seized after the start of its invasion, even as it enjoys deepening economic and defense support from China, US intelligence chiefs told a Senate committee. (BBG)

RUSSIA: Russia conducted malign influence operations in the 2022 U.S. midterm elections and is using increasingly clandestine means to “penetrate the Western information environment,” the U.S. intelligence community said in a new report Wednesday. (CNBC)

SOUTH AFRICA: South African Finance Minister Enoch Godongwana said in parliament on Wednesday that the tax incentives for individuals to install solar panels, as announced in his budget speech last month, are a temporary measure while the country tries to stabilize its power grid. (BBG)

SOUTH AFRICA/RATINGS: The country’s National Treasury said it acknowledged S&P’s decision and reiterated its commitment to reduce rolling power cuts, which has plagued households and businesses for well over a decade in Africa’s most industrialised economy. (RTRS)

SOUTH AFRICA/RATINGS: S&P affirmed South Africa at BB-; Outlook revised to Stable from Positive

CHILE: With three years left in his term, Chilean President Gabriel Boric is already facing doubts on whether he’ll be able to advance on any key reforms after receiving a crushing blow near his first anniversary as the world’s youngest leader. (BBG)

ENERGY: Enormous challenges remain across global energy markets in the wake of the war in Ukraine, U.S. Energy Secretary Jennifer Granholm said on Wednesday, with continued risks for energy security and the need to mitigate climate change. (RTRS)

ENERGY: The U.S. energy regulator on Wednesday granted Freeport LNG's request to return to service the last of its three gas liquefaction units and phase 1 facilities at its export plant in Texas. (RTRS)

OIL: U.S. Energy Secretary Jennifer Granholm said on Wednesday any further releases from the U.S. Strategic Petroleum Reserve would be due to disruptions like the the war in Ukraine, which led the Biden Adminstration to open the nation’s emergency crude supplies. (RTRS)

OIL: PKN Orlen has all but pivoted away from Russian crude at its refineries in Poland, Lithuania and the Czech Republic a year after its neighbor invaded Ukraine. (BBG)

OIL: The Biden administration needs until the end of this year to finalize a long-awaited five-year plan for offshore oil and gas development in federal waters, according to court documents filed this week. (RTRS)

OIL: The cost of shipping oil is surging globally as ever more vessels get tied up making deliveries with resurgent Chinese demand compounding the effect of ships sailing thousands of miles further due to sanctions on Russia. (BBG)

CHINA

ECONOMY: China is likely to deliver growth above 6% as robust investment compensates for lackluster consumption struggling to return to pre-pandemic levels, with the uncertain outlook for external demand requiring policymakers to remain flexible in adding stimulus, a prominent economic adviser told MNI. (MNI)

YUAN: The People’s Bank of China could be “strongly tempted” to again use state-owned banks to weaken the yuan, disguising Beijing’s attempts to boost exports through a cheaper currency should the rebound in consumption and the property market falter, former U.S. Treasury economist Brad Setser told MNI. (MNI)

POLICY: The creation of a new financial regulator will help solve current problems in cross-supervision and fill regulatory gaps, according to the 21st Century Herald. (MNI)

POLICY: China’s financial industry is stepping up efforts to support the economy in 2023, which is a strong topic of focus at this year's National People’s Congress, according to the Securities Daily. (MNI)

POLICY: China should implement reforms to improve its unified national market and to bolster confidence, according to an financial advisor interviewed at National People's Congress by Caixin. (MNI)

FISCAL/PROPERTY: Cash-strapped local governments in China artificially boosted their revenues last year by selling swaths of land to their own investment vehicles, an official think-tank said, raising concerns about the extent of their financial woes. (FT)

PROPERTY: China Evergrande Group is aiming to unveil some debt restructuring terms before the next winding-up court hearing on March 20 in order to seek another adjournment, two sources with knowledge of the matter told Reuters. (RTRS)

PROPERTY: Defaulted Chinese developer Logan is proposing to issue new dollar bonds in exchange for $3.4 billion of notes outstanding, according to people familiar with the matter. (BBG)

CHINA MARKETS

PBOC NET DRAINS CNY70 BILLION VIA OMOS THURSDAY

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Flag	Country	Event
09/03/2023	0700/0800	**		SE	Private Sector Production
09/03/2023	1330/0830	**		US	Jobless Claims
09/03/2023	1330/0830	**		US	WASDE Weekly Import/Export
09/03/2023	1500/1000			US	Fed Vice Chair Michael Barr
09/03/2023	1530/1030	**		US	Natural Gas Stocks
09/03/2023	1630/1130	**		US	US Bill 04 Week Treasury Auction Result
09/03/2023	1630/1130	*		US	US Bill 08 Week Treasury Auction Result
09/03/2023	1800/1300	***		US	US Treasury Auction Result for 30 Year Bond
09/03/2023	1840/1340			CA	BOC's Rogers "Economic Progress Report" speech