Today's Headlines

Bloomberg:

- Citigroup Inc.(C) Chief Executive Officer Vikram Pandit said his bank is having the best quarter since 2007, when it last posted a profit. The shares rose as much as 38 percent and helped spur gains for finance company stocks. “I am most encouraged with the strength of our business so far in 2009,” Pandit wrote in an internal memorandum obtained today by Bloomberg. “We are profitable through the first two months of 2009 and are having our best quarter-to-date performance since the third quarter of 2007.”

- Federal Reserve Chairman Ben S. Bernanke urged a sweeping overhaul of U.S. financial regulations in an effort to smooth out the boom-and-bust cycles in financial markets. “We should review regulatory policies and accounting rules to ensure that they do not induce excessive” swings in the financial system and economy, the central bank chief said today in remarks prepared for an address to the Council on Foreign Relations in Washington. Bernanke recommended that lawmakers and supervisors rethink everything from the amounts firms set aside against potential trading losses and deposit-insurance fees to protections for money-market funds.

- Gold fell for a second day in London as a gain in equities may reduce demand for the precious metal as an alternative investment. Silver and platinum also declined. Trading of gold options and other derivatives through ICAP Plc, the world’s largest broker of transactions between banks, and spot gold through its EBS electronic trading platform has declined because of limited credit, said Michael Greenacre, manager of precious metals at ICAP in London. “A lot of our customers’ customers are the funds, and the funds are having a tough time,” he said. More trading is going to exchanges, he said. Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged yesterday while investment in Gold Bullion Securities Ltd. on the London Stock Exchange rose 2,485 ounces to 4.09 million ounces, the highest since March 5, the ETF Securities Ltd. Web site shows.

- Chinese home prices fell by a record last month, paced by a 15 percent plunge in the southern export hub of Shenzhen, where factories closed as growth in the world’s third-biggest economy slowed. About 40 percent of the factories in Guangdong, which accounts for 12 percent of China’s gross domestic product, extended their Lunar New Year, or Spring Festival, holiday this year because of the global recession, said Stanley Lau, vice chairman of the Federation of Hong Kong Industries last month.

- The U.S. reduced its forecast for global crude oil consumption this year as the economic slowdown cuts fuel purchases. World oil demand will average 84.27 million barrels a day this year, down 400,030 barrels from a forecast in February, the Energy Department said in its monthly Short-Term Energy Outlook. The estimate is down 1.38 million barrels from demand in 2008, according to the report, released today in Washington.

- Chevron Corp.(CVX), the second-biggest U.S. oil company, is drilling 43 major prospects from Australia to Canada after posting its biggest drop in output since 2003. New fields will allow Chevron to meet its target of 4 percent production growth this year without acquisitions, Chief Executive Officer David O’Reilly said today in a meeting with analysts in New York.

- OPEC, supplier of about 40 percent of the world’s oil, needs full compliance with production quotas before discussing a further reduction in output, Qatar’s oil minister said. “We cannot discuss another cut until we see the compliance at 100 percent,” Qatar’s Oil Minister Abdullah bin Hamad al- Attiyah said in an interview in the capital Doha today. “The first step is to make sure we see full compliance.”

- China faces a “grave” employment situation as the global recession increases the difficulty of finding jobs for the 24 million people entering the nation’s workforce each year, Labor Minister Yin Weimin said. China lost 3 million jobs in the fourth quarter, when economic growth hit a seven-year low, Yin said. About 11 million migrant workers that traveled to towns and cities from the countryside in search of work after the Lunar New Year holiday in January are still unemployed, he said. In previous years, the government has only been able to create enough jobs for half the new workforce, which in 2009 will include 6 million new graduates, Yin said. China has an estimated 225 million surplus laborers composed of farmers from rural areas. Of that total, 140 million have left their homes in search of work in other towns and cities. About half of those 140 million migrants went home for the Lunar New Year holiday and 80% of those who went home returned to the cities to look for jobs after the break, he said. Of those, 45 million have found work and 11 million are still looking.

- Hedge funds may cut 20,000 workers worldwide this year, a record 14 percent of the industry’s jobs, as investment losses and client withdrawals erode fees. The dismissals will come on top of the 10,000 jobs that disappeared last year at the investment partnerships, according to estimates by New York-based Options Group, an executive-search firm. Employment peaked at 155,000 in 2007, and has since dropped to about 145,000, the firm said.

- Brazil’s economy shrank the most on record in the fourth quarter, going against predictions that Latin America’s largest economy would be a bright spot in the deepening global recession. Gross domestic product fell 3.6 percent in the fourth quarter from the previous three-month period as companies slashed output, the national statistics agency said today in Rio de Janeiro. The drop exceeded forecasts from all 31 analysts surveyed by Bloomberg. The biggest quarterly contraction since the series started in 1996 may lead central bank policy makers to cut lending costs 1.5 percentage points tomorrow to bolster the economy. Analysts predict the bank will trim the lending rate to 11.25 percent, matching a record low reached in September 2007, according to the median estimate of 49 economists surveyed by Bloomberg.

Wall Street Journal:

- Barely a week after the third rescue of Citigroup Inc.(C), U.S. officials are examining what fresh steps they might need to take to stabilize the bank if its problems mount, according to people familiar with the matter.

- Over a third of U.S. companies in China -- a percentage that has grown sharply in the past year -- say they expect their revenues to drop in 2009, according to a survey by the American Chamber of Commerce in China, reflecting the slowdown in the Chinese economy. The annual survey to be released Tuesday shows that 35% of Amcham members expect revenue to decrease this year, up significantly from 13% who projected a decline last year. In all, 39% of respondents are postponing or have canceled planned investments this year, while 21% expect to shrink their China work force. Almost half the companies surveyed are pessimistic about this year's business prospects, and only 5% are optimistic. The Amcham investment numbers are in line with official Chinese data, which show that foreign-direct investment plunged 33% from a year earlier to $7.5 billion in January. This year's Amcham survey showed that 84% of U.S. companies felt China is losing some of its competitive edge because of rising labor and regulatory costs, compared with 72% last year.

- Honda Motor Co. said orders for its recently launched Insight hybrid vehicle are more than triple the budget-priced vehicle's monthly sales target. The Japanese auto maker said it had received orders for about 18,000 Insights as of Monday.

CNBC.com:
- Hedge funds of funds, the middlemen that pension funds and endowments often use to create alternative portfolios, lost roughly one-third of their assets last year, according to new data released Tuesday. The industry's largest funds of funds, managing more than $1 billion, now jointly control $744 billion in assets, according to industry publication InvestHedge. In all, the hedge fund industry has $1.8 trillion under management, the magazine estimated. Some industry trackers have said that number is much lower — closer to $1 trillion or $1.5 trillion, after last year's worst-ever returns.

- The so-called uptick rule, which limits short-selling in stocks, could be restored soon, Rep. Barney Frank of the House Financial Services Committee said. "I've spoken to Chair (Mary) Schapiro of the SEC. I am hopeful the uptick rule will be restored within a month," Frank told reporters.

NY Times:

- Down Economic Times Elicit Upbeat Ad Campaigns.

- The five detainees at Guantánamo Bay charged with planning the Sept. 11, 2001, terrorist attacks have filed a document with the military commission at the United States naval base there expressing pride at their accomplishment and accepting full responsibility for the killing of nearly 3,000 people. The document, which may be released publicly on Tuesday, uses the Arabic term for a consultative assembly in describing the five men as the “9/11 Shura Council,” and it says their actions were an offering to God, according to excerpts of the document that were read to a reporter by a government official who was not authorized to discuss it publicly.

CNNMoney.com:

- Revealed: 15 AIG bailout counterparties. A list obtained by Fortune includes the names of many foreign banks – as well as US giants such as Goldman Sachs(GS).

NYPost:

- The top online publishers are moving beyond boring banners and other display ads that adorn most Web sites, seeking more attention-grabbing alternatives. The Online Publishers Association, whose members include ESPN, CNN, The Wall Street Journal and The New York Times, is unveiling several ad formats to breathe new life into the lowly banner ad.

Washington Post:

- The government's plan to strip banks of troubled assets could force some firms to record large losses, but the painful purge would help restore confidence in the banking system, according to Sheila C. Bair, chairman of the Federal Deposit Insurance Corp. Bair said yesterday that the effort might require more money than the $700 billion Congress has approved to aid the financial industry, but she added that taxpayers would probably reap an eventual profit on the asset purchases. She said the greatest challenge was persuading banks and taxpayers to accept the necessity of the costly program.

- Democratic leaders in Congress did not expect much Republican support as they pressed President Obama's ambitious legislative agenda. But the pushback they are receiving from some of their own has come as an unwelcome surprise. As the Senate inches closer to approving a $410 billion spending bill, the internal revolt has served as a warning to party leaders pursuing Obama's far-reaching plans for health-care, energy and education reform. Climate-change legislation is months away from emerging, but some Democrats already worry about the political consequences of creating a cap-and-trade system that could result in higher utility bills.

Miami Herald:

- Imagine going to Burger King(BKC) and ordering barbecued ribs, a grilled salmon sandwich or a steak kabob. Those sound more like choices at a casual dining restaurant than a fast-food chain, but they are some of the more than 45 new menu items the Miami-based company has in various stages of testing.

Reuters:
- Shares of General Electric Co (GE) soared 15.9 percent on Tuesday amid a broad rally in U.S. stocks triggered by assurances from Citigroup Inc (C) that the big bank was profitable through the first two months of 2009.

Boersen-Zeitung:

- European Central Bank Executive Board member Lorenzo Bini Smaghi said the bank is ready to lower interest rates to zero if necessary. “If the situation deteriorates, the ECB is ready to lower interest rates further, even to zero,” Bini Smaghi said. “That’s especially the case if the economy is in fact threatened by sustained deflation. In such a situation, it would be the best strategy to react sooner rather than later.”