Late-Night Headlines
Bloomberg:
- Jeremy Grantham, who oversees $85 billion as chief investment strategist of Grantham Mayo Van Otterloo & Co., urged investors to start moving money from cash to stocks before “rigor mortis” sets in. “Typically, those with a lot of cash will miss a very large chunk of the market recovery” because they are paralyzed by fear, Grantham wrote in a March 4 commentary posted today on the Boston-based firm’s Web site. “Remember that you will never catch the low,” wrote Grantham, one of the co-founders of GMO. He expects stocks to return 10 percent to 13 percent after inflation in the next seven years.
- Bernard Madoff, the New York money manager accused of leading the largest Ponzi scheme in U.S. history, will plead guilty later this week to 11 criminal charges, his lawyer told a federal judge. Madoff, 70, will admit he directed a fraud that prosecutors alleged began in the 1980s. By last November, Madoff told 4,800 investors their accounts held $64.8 billion, according to court papers filed in Manhattan federal court. Prosecutors will seek forfeiture from Madoff of as much as $170 billion. Madoff, free on $10 million bail, faces 150 years in prison.
- Paulson & Co., the hedge-fund firm run by billionaire John Paulson, may have made 311 million pounds ($428 million) since September by short selling Lloyds Banking Group Plc and HBOS Plc, bringing its potential profit from shorting U.K. banks to 606 million pounds. Paulson, which oversees about $30 billion, made more than $3 billion in 2007 by betting the U.S. housing market and subprime mortgages would collapse. The firm has held a short position of 1.17 percent in Barclays Plc since Oct. 30, according to regulatory filings. Shares of the third-largest U.K. bank have fallen 67 percent since that date.
- The cost of protecting Asia-Pacific bonds from default fell from records, according to traders of credit-default swaps. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 17 basis points to 433 as of 9:15 am in Hong Kong , according to ICAP Plc. The Markit iTraxx Japan index fell 15 basis points to 540 at 10:15 am in Tokyo The Markit iTraxx Australia index fell 30 basis points to 415 as of 12:15 pm in Sydney
- China , the world’s largest steel producing nation, exported 1.56 million metric tons of the metal in February, the lowest level since 2006, industry researcher Umetal Research Center
- Prime Minister Vladimir Putin said Russia has enough oil and gas to meet demand for the next century as OAO Gazprom seeks to increase its market share in Europe with two new pipeline projects. “Russia has enough hydrocarbon resources to meet our own growing needs and the demand of our European consumers for at least 100 years,” Putin said after meeting with Hungarian Prime Minister Ferenc Gyurcsany in Moscow today.
- Orders for Japanese machinery fell for a fourth month in January, the longest losing streak in at least 20 years, as exports crashed and profits evaporated. Bookings, an indicator of capital investment in the next three to six months, declined 3.2 percent from December, the Cabinet Office said today in Tokyo. The median estimate of economists surveyed was for a 4.8 percent drop.
- President Barack Obama’s administration is committed to Iraq’s stability and U.S. policy hasn’t been altered by a recent spate of suicide attacks in the country, White House press secretary Robert Gibbs said. Attacks like one today that killed at least 30 people on the western outskirts of Baghdad aren’t altering Obama’s plans for withdrawal of U.S. combat forces, Gibbs said.
- Royal Dutch Shell Plc and other international oil companies may get greater access to reserves as resource-rich nations seek capital and technology for fields that have become harder to develop since crude prices slumped. “Oil prices are lower, and may continue to stay low for a period, and that will ease access to reserves,” Shell Chief Executive Officer Jeroen van der Veer told Bloomberg News in an interview in London on March 4. “It is not happening now, but it will happen.” Cost deflation will make it easier for Shell to negotiate contracts with oil service companies and suppliers, according to van der Veer. It typically takes about “12 to 18 months” for the drop in prices to take hold, he said.
- The U.S. urged China to reconsider its policies in Tibet, saying they have created tensions and had a “harmful impact” on religion and culture in the region. In a statement marking the 50th anniversary of a Tibetan uprising yesterday, the State Department said it is “deeply concerned by the human rights situation in Tibetan areas.”
- China’s exports fell 25.7 percent in February from a year earlier and imports dropped 24.1 percent, the customs bureau said in a statement on its Web site.
Wall Street Journal:
- House Energy and Commerce Chairman Henry Waxman defended proposals for a public insurance option as part of health-care reform efforts, telling an audience of doctors Tuesday that a government plan is not "socialized medicine." Waxman, D-Calif., in a speech before a national meeting of the American Medical Association, defended proposals by some congressional Democrats for the creation of a government-run health plan to compete with private insurers as part of larger health-care reforms.
- Cities, counties and states across the nation are launching home-grown economic-stimulus plans aimed at spurring local spending and keeping small businesses afloat during the recession. Some are taking the traditional route of cutting corporate taxes. Others are trying all sorts of ideas: Paying residents to shop in local stores; giving real-estate brokers bonuses for bringing tenants to empty strip malls; reducing fees on new development; even critiquing local restaurants and giving owners feedback on how best to bring in customers.
- The Senate Tuesday approved a $410 billion spending bill for 2009, handing the Democrats a legislative and fiscal victory but putting them on the defensive regarding earmarks and the deficit. The 62-35 vote on the key procedural vote, including support from eight Republicans, reflected relatively strong backing for the long-delayed bill, which funds the government for the rest of fiscal 2009, which began Oct.1. Passage came on a voice vote after a barrage of criticism that the measure was too expensive and contained billions of dollars in earmarks. This first annual spending measure of the new Democratic era showed an 8% increase over last year and reflected new priorities. On the Senate floor, Senate Minority Leader Mitch McConnell (R., Ky.) charged Tuesday that the bill showed "no recognition whatsoever of the current economic climate," and that "this bill costs far too much for a government that should be watching every dime." The vote, however, did not fall strictly along party lines. The eight Republicans who supported the bill included members of the Senate Appropriations Committee who had helped to draft it. And three Democrats -- Sens. Evan Bayh of Indiana, Russ Feingold of Wisconsin, and Claire McCaskill of Missouri -- opposed the bill as wasteful. "The bloated omnibus requires sacrifice from no one, least of all the government," Mr. Bayh wrote in the Journal on March 4, announcing his opposition. The Democratic defections were small but could signal problems for Mr. Reid as he tries to hold his troops together as Congress faces an array of complex bills. Congressional Democrats said the omnibus was important and thoughtful, but White House officials did not defend it, saying only that it was time to pass it and move on.
- Federal Reserve officials, preparing for a policy meeting next week, are considering whether to pump more money into the economy by expanding their lending and securities-purchase programs. Struck by the sharp deterioration in stock markets -- despite Tuesday's rally -- and renewed strains in credit markets, Fed officials are likely at next week's meeting to assess what success they have had with existing efforts and what more they can do to ease financial strains and prop up the economy
- Big Labor's drive to eliminate secret ballots for union elections has united American business in opposition, so labor chiefs are putting on the brass knuckles: The new strategy is to threaten companies with government retaliation if they don't stop lobbying against turning U.S. labor markets into Europe.
MarketWatch.com: Short interest on the New York Stock Exchange and the Nasdaq rose during the final two weeks of February, a period when stocks in some of the country's largest companies fell sharply, the two stock exchanges said Tuesday. The NYSE Group, Inc. said the number of short-selling positions not closed out -- or short interest -- rose to 14.624 billion in the two weeks ended Feb. 27, up 3% from 14.189 billion shares in the two weeks ended Feb. 13. This was the highest level since the week ended Nov. 28, the NYSE said in an update to its Web site late Tuesday. Nasdaq OMX Group Inc. said short interest rose to 7.037 billion, up about 2% from 6.893 billion in the prior two weeks.
NY Times:
- Wal-Mart Stores(WMT) is striding into the market for electronic health records, seeking to bring the technology into the mainstream for physicians in small offices, where most of America’s doctors practice medicine. The company plans to team its Sam’s Club division with Dell for computers and eClinicalWorks, a fast-growing private company, for software. Wal-Mart says its package deal of hardware, software, installation, maintenance and training will make the technology more accessible and affordable, undercutting rival health information technology suppliers by as much as half.
Politico:
- The vast new left-wing conspiracy sets its tone every morning at 8:45 a.m., when officials from more than 20 labor, environmental and other Democratic-leaning groups dial into a private conference call hosted by two left-leaning Washington organizations.
USA Today.com:
- Recession Boosts Number of Stay-at-Home Mothers
- U.S. officials say the Taliban's new top operations officer in southern Afghanistan is a former prisoner at the Guantanamo detention center. Pentagon and CIA officials say Abdullah Ghulam Rasoul was among 13 prisoners released to the Afghan government in December 2007. He is now known as Mullah Abdullah Zakir, a name officials say is used by the Taliban leader in charge of operations against U.S. and Afghan forces in southern Afghanistan. One intelligence official told The Associated Press that Rasoul's stated mission is to counter the growing U.S. troop surge.
Reuters:
- The $173 billion government rescue of American International Group Inc (AIG) is stoking resentment among investors who see it as a backdoor taxpayer bailout of Goldman Sachs (GS) and other banks. Six months after the U.S. government stepped in save an insurance giant overwhelmed by derivative losses, AIG continues to bleed red ink. Its stock and bond holders have been crushed, but one group has suffered almost no damage: banks that bought credit protection from AIG Financial Products. Regulatory filings show that since the Federal Reserve announced its rescue of AIG on September 15, about $50 billion of government money has passed through the company to banks. "Treasury is providing a massive wealth transfer from taxpayers to Goldman Sachs and other parties, and it's something that absolutely should be investigated," said Eric Hovde, chief executive of Hovde Capital Advisors, where he manages financial services-focused hedge funds. The bailout has stirred resentment not just in the U.S. Congress but on Wall Street, where investors speculate that Goldman and its connections helped it get a better deal. "The whole point of the bailout is to save Goldman Sachs," said Christopher Whalen, head of financial advisory services for Institutional Risk Analytics. "The whole thing is so rancid and so hideous." A Goldman Sachs spokesman declined to comment on the AIG bailout or how much of the government funds it has received. Goldman and Deutsche Bank AG (DBKGn.DE) were the largest trading parties, each receiving about $6 billion, the newspaper said. Goldman has been singled out by critics who question why Chief Executive Lloyd Blankfein attended meetings that discussed a bailout of AIG. A Goldman spokesman said Blankfein, at the invitation of then-New York Fed President Tim Geithner, attended a meeting at the Fed along with co-President Jon Winkelried and a group of investment bankers to discuss a private sector solution for AIG. Then-Treasury Secretary Henry Paulson, who left Goldman in 2006 as CEO, played a lead role in the negotiations. The chairman of the Federal Reserve Bank of New York, which hosted the meeting and invited Goldman officials to attend, is former Goldman head Steve Friedman. The results, investors say, have been poor. With no end in sight for the losses, some investors argue that taxpayers would be better off letting AIG go bankrupt. "AIG should be put through bankruptcy and the federal government should stop funding of all these losses," Hovde said. "I'm opposed to seeing parties that should be taking some financial consequences walking away free and clear off the taxpayer's back."
- U.S. Treasury Secretary Timothy Geithner pledged on Tuesday to "do what is necessary" to jolt the United States out of recession but said the rest of the world should agree to act in a coordinated way. On Public Broadcasting Corp's "Charlie Rose Show," Geithner claimed that steady overseas demand for U.S. Treasury debt was a vote of confidence that the Obama administration was on the right track in countering the "deep mess" the economy is in. "This president is going to do what is necessary to get us through this. ... We're a terrifically strong country with abundant resources, and we will get through this," said Geithner, referring to President Barack Obama's commitment to end the more than year-long U.S. recession. But ahead of this weekend's Group of 20 gathering of finance chiefs near London, and a later one in April for political leaders, Geithner said the United States will push for action by others to match the aggressive U.S. approach.
- U.S. Regulators will consider reviving the "uptick" restriction on short-sellers of stocks and a top monetary official lent his support on Tuesday to modifying an accounting rule that has forced banks to take billions of dollars in writedowns. Federal Reserve Chairman Ben Bernanke said he was opposed to suspending mark-to-market accounting but said the rule tended to reinforce economic trends and improvements could be made. The prospect of the changes helped U.S. stocks to their best day in four months, cheered by Citigroup (C) saying it was profitable in the first two months of 2009.
- Lobbyists, telecommunications industry officials and others crowded into a public meeting on Tuesday to suggest how the government should dole out $7.2 billion to spur development of high-speed Internet service. The meeting at the U.S. Commerce Department marked the first step in deciding which companies will benefit from broadband funding included in the Obama administration's economic stimulus program valued at nearly $800 billion.
- Suspected drug gang hitmen dumped five severed human heads in ice coolers on a road in western Mexico on Tuesday with a message threatening rivals, a state attorney general's office said. Police patrolling a highway on the edge of the Mexican colonial city of Guadalajara found the heads inside five coolers left on the roadside, the Jalisco state attorney general's office said.
Financial Times: Disagreements between the European Union and the US over how to combat the global recession widened on Tuesday as EU governments made clear they had little appetite for piling up more debt to fight the collapse in output and jobs. Finance ministers from the 27-nation bloc insisted in Brussels that it was doing enough to support world demand and did not need at present to adopt another fiscal stimulus plan, as Washington is urging.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (RIG), added to Top Picks Live list, target $98.
Night Trading
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Earnings of Note
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- (KFY)/.10
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Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +250,000 barrels versus a -757,000 barrel decline the prior week. Gasoline supplies are expected to fall by -1,000,000 barrels versus a +168,000 barrel increase the prior week. Distillate inventories are estimated to rise by +200,000 barrels versus a +1,662,000 barrel gain the prior week. Finally, Refinery Utilization is expected to remain unch. versus a +1.76% increase the prior week.
2:00 pm EST
- The Monthly Budget Deficit for February is estimated at -$205.0B versus -$175.6B in January.
Upcoming Splits
Other Potential Market Movers
BOTTOM LINE: Asian indices are higher, boosted by financial and automaker stocks in the region. I expect US equities to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.
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