Evening Headlines
Bloomberg:
- Qaddafi's Grip on Power Weakens on Loss of Territory. Libyan leader Muammar Qaddafi’s world was shrinking yesterday as a close adviser abandoned him, opponents consolidated their control of the country’s oil-rich east, and Switzerland froze some of his assets. The leader responded by reinforcing his defenses in and around the capital, Tripoli, with tanks and mercenaries. “It’s a massacre in there,” Egyptian Mohamed Yehia said, describing recent violence after fleeing his home in the eastern coastal city of al-Bayda. Forces still loyal to the Libyan dictator moved against cities near Tripoli, and more than 100 people were killed in Az-Zawiyah, a town west of the capital, Al Jazeera reported.
- Chavez Says Qaddafi Faces Civil War Amid Speculation on Asylum. Venezuelan President Hugo Chavez said Libya is bracing for civil war, his first comments on the unrest that follow speculation he may offer Libyan leader Muammar Qaddafi asylum. “Long live Libya and its independence,” Chavez said today in a post on his Twitter account, which came after comments from his Foreign Minister Nicolas Maduro on Libya before the National Assembly. “Qaddafi is facing a civil war.”
- LinkedIn Blocked in China After 'Jasmine' Pro-Democracy Postings. LinkedIn Corp., operator of the largest networking site for professionals, became inaccessible in China after a user posted comments that Tunisia’s Jasmine Revolution should spread to the Asian country. The blockage of the service "appears to be part of a broader effort in China going on right now, involving other sites as well," Hani Durzy, a spokesman for Mountain View, California-based LinkedIn, said in an e-mail. Since 2009, the world’s largest Internet market by users has shut out sites such as those operated by Facebook Inc. and Twitter Inc. that don’t comply with Chinese rules to self censor information on politically sensitive subjects. A LinkedIn user identified as “Jasmine Z” last week set up a discussion group to post opinions on whether the revolutions that brought down the leaders of Tunisia and Egypt should be brought to China.
- Investors Stretch for Yield Amid 'Collapsing' CMBS Spreads. Buyers are snapping up newly issued bonds tied to real estate, driving yield-starved investors toward riskier debt sold during the lending boom. “Collapsing new issue spreads have helped to spur further tightening in legacy securities” as the market is “on track for a strong resurgence” this year, Morgan Stanley analysts led by Richard Parkus said in a report today. Banks have arranged about $5 billion in commercial- mortgage-backed bond sales this month, and a $1.5 billion offering from JPMorgan Chase & Co. is currently being marketed, according to data compiled by Bloomberg. Spreads have tightened “dramatically” with each successive deal, creating more demand for older bonds, according to New York-based Morgan Stanley. “The problem with new issue is it’s scarce,” Parkus said in a telephone interview. “There are just not enough bonds, which means investors are left looking for additional bonds in the legacy universe.” Legacy securities are those sold before the credit market seized up in 2008, when underwriting standards were looser and as property values soared.
- Russia's Terrorists Threaten Olympics as Focus Moves to Sochi. Islamic militants in southern Russia, inspired by uprisings across the Arab world, are changing tactics and attacking targets closer to Sochi in a bid to derail the 2014 Winter Olympics. The killing of Muscovites and bombing of a ski lift at a resort in Kabardino-Balkaria, a region between Chechnya and Sochi, last week is part of “new terror campaign” against Russian rule designed to elicit maximum media coverage, said Grigory Shvedov, chief editor of Caucasian Knot, a Moscow-based news and analysis group that tracks the situation in the North and South Caucasus.
- U.S. Arrests 100 People in Nationwide Sweep Against Mexican Drug Cartels. U.S. authorities arrested 100 people and seized more than $4 million in a nationwide sweep against Mexican drug cartels sparked by the killing of a U.S. immigration agent last week, Drug Enforcement Administration officials said.
- Brown Says California Faces $25 Billion in Budget Cuts Without Tax Vote. California Governor Jerry Brown pledged to cut $25 billion from an $85 billion spending plan to close the state’s budget gap if lawmakers block a special election to allow voters to extend temporary tax increases. If lawmakers don’t approve the special election, Brown said he’d hold up the budget for as long as it takes to eliminate the $25 billion deficit through spending cuts. “It’s very fundamental, whether you vote the taxes or you vote the cuts,” said Brown, a 72-year-old Democrat who was governor from 1975 to 1983.
- Boeing(BA) Defeats EADS for $35 Billion Air Force Tanker Program. Boeing Co., the sole supplier of aerial refueling tankers to the U.S. Air Force since 1948, beat European Aeronautic, Defence & Space Co. for a $35 billion program to build 179 new tankers, the Pentagon said today. It was the Chicago-based company’s third try at the contract since Congress and the Air Force first proposed the tanker replacement program in late 2001. “Boeing was the clear winner,” Deputy Defense Secretary William Lynn said at a Pentagon news conference. “This competition favored no one, except the taxpayer and the war fighter.”
- AIG(AIG) Says Risk of Losses Has Increased on $46.6 Billion Muni-Bond Portfolio. American International Group Inc., the bailed-out insurer, said it faces increased risk of losses on its $46.6 billion municipal bond portfolio and that defaults could pressure the company’s liquidity. “Because of the budget deficits that most states and many municipalities are continuing to incur in the current economic environment, the risks associated with this portfolio have increased,” New York-based AIG said today in its annual report to the Securities and Exchange Commission. AIG said that “several” issuers of the bonds it holds have been downgraded, amid budget pressures. As of Dec. 31, the company had more than $700 million of state general-obligation bonds from California, which has the lowest Standard & Poor’s credit rating of any state. It also held more than $200 million in the bonds from Illinois.
- Libya Rebels Tighten Noose. Rebels menaced Col. Moammar Gadhafi's stronghold from all sides Thursday, as insurgent commanders said they have sent troops for an offensive against Tripoli and residents of the capital prepared their first mass demonstration in days on Friday. Just 30 miles west of Col. Gadhafi's shrinking base of power, antiregime forces battled for the oil-industry town of Al-Zawiya. On Thursday evening, opposition forces gained control of Misrata, a coastal city 130 miles east of Tripoli. In Benghazi, the country's second-largest city and the hub of eastern Libya, a group of army colonels who recently defected said they are plotting the end their former commander's 42-year reign, which began to crumble last week as Libyans joined the antiauthoritarian protests roiling the Arab world. "We have a plan to bring down Tripoli," Col. Tareq Saad Hussein, one of seven former colonels who have taken charge of rebel forces in Benghazi, said in an interview. "We will not stop until we liberate the whole country."
- Libya Power Void Raises Terror Fears. It's unlikely al Qaeda is to blame for the uprising in Libya, as embattled strongman Moammar Gadhafi asserts—but the country is home to a young cadre of Islamist extremists, many of whom fought against U.S. forces in Iraq and Afghanistan. As anti-government forces take over the eastern part of Libya, concern is growing that extremists from that region could take advantage of the government's disintegration to morph into a wider terrorist threat.
- Pressures Mount to Resume Drilling. Interior Secretary Ken Salazar plans to meet with oil industry executives in Houston Friday to assess the industry's readiness to handle a major offshore oil spill, amid growing pressure from congressional Republicans and a federal judge to resume deep-water drilling in the Gulf of Mexico. The recent jump in world oil prices and U.S. gasoline prices following unrest in Libya has spurred renewed calls from many Republicans and Gulf Coast Democrats in Congress to allow more domestic production. One House committee is scheduled to hold hearings on drilling policy next month.
- Publishers Expand E-Textbook Offerings for Classroom. In a sign that tablet computers are becoming increasingly mainstream, schools are beginning to incorporate the devices into the classroom, leading publishers to strike deals to expand their e-textbook offerings.
- Did Goldman Sachs(GS) Secretly Write Some Democratic Propaganda And Disguise It as Research? A Goldman Sachs research report warning that austerity measures and a possible budget shut down would be a drag to growth is being seen as a covert piece of Democratic propaganda by some on the right. The report, by Goldman economist Alec Phillips, was first surfaced yesterday by ABC, which published a few key paragraphs. See if you can spot the propaganda.
- Google(GOOG) Announces Massive Algorithm Change, Declares War on Content Farms, Including Demand Media.
- Hugh Hendry's Awesome New Presentation On How And Why He's Shorting China. Hugh Hendry spoke about why he's shorting China today at the Grant Interest Rate Observer conference today. In the following presentation, he explains his trade in 20 charts that are of course, bursting with eccentric personality, just like he is.
- As Expected, CME(CME) Follows ICE(ICE), Proceeds With First Crude Margin Hike Since March 2009.
- Stratfor On Why Developments In Bahrain Are More Important Than Libya's.
New York Times:
Forbes:
- ObamaCare Is Starting To Bleed Insurers Dry. In an industry that already suffers low profit margins, mandates are driving insurers from the health insurance sector altogether.
- Short Sellers Flee the Market. It's been a frustrating six months for Wall Street's short sellers.
Reuters:
- First Solar(FSLR) Weakens Sales Forecast, Stock Drops. U.S. solar company First Solar Inc lowered the top end of its 2011 sales forecast and said it cut prices in anticipation of solar subsidy cutbacks that could hamper demand in Europe, and its stock fell 3.8 percent after hours.
- Offshore Drillers Eye Brazil Boost for Deepwater. Leading offshore drilling contractors expect deepwater demand to improve this year as an impending contracting move by Petrobras (PETR4.SA) is likely to prompt other oil executives to secure rigs while they can.
- Salesforce.com(CRM) Beats Street, Shares Jump. Cloud-based software maker Salesforce.com Inc (CRM.N) announced stronger-than-expected quarterly results and an upbeat sales forecast for the current quarter, sending its shares up 7.4 percent.
- Deckers Outdoor(DECK) Q4 Beats on Strong UGG Sales. Deckers Outdoor Corp reported a better-than-expected quarterly profit for the ninth straight quarter at least, helped by strong demand for its UGG boots, driving its shares up 7 percent in extended trading.
- Sovereigns Turn to Pre-Crisis Financial Wizardry. Warren Buffett, one of the world’s most respected investors, labelled them “weapons of mass destruction”. In the wake of the financial crisis, various policymakers and regulators chimed in to demonise derivatives, along with structured finance and hedge funds, as causes of the turmoil. But in recent months, these tools have been increasingly embraced by countries to help them out of crisis.
- Fears Over CFTC Derivatives Rule. Leading US exchanges are gravely concerned about proposed rules that could hamper the launch of new derivatives products – a key strategy in the current round of exchange mergers. The issue revolves around a rule proposed by the Commodity Futures Trading Commission that 85 per cent of annual trading in a futures contract or swap must occur on an exchange, or what is called a Designated Contract Market.
- BP(BP) Gulf of Mexico Spill: Greenpeace can bring case against UK deepwater oil drilling. The safety of deepwater drilling near the Shetland Islands, where BP, Total and Chevron operate, will be challenged in a landmark court case brought against the British Government.
- Saudi Arabia's King Abdullah will shuffle his cabinet today as he attempts to counter a growing pro-democracy movement.
- South China's Guangzhou city unveiled its rules to restrict home purchases, citing a government document.
Citigroup:
- Reiterated Buy on (SXCI), raised target to $59.
- Reiterated Buy on (TGT), raised target to $69.
- Asian equity indices are +.25% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 110.50 -1.5 basis points.
- Asia Pacific Sovereign CDS Index 123.0 +1.0 basis point.
- S&P 500 futures +.42%.
- NASDAQ 100 futures +.39%.
Earnings of Note
Company/Estimate
- (THC)/.08
- (CTB)/.67
- (RDC)/.29
- (IPG)/.31
- (JCP)/1.16
- (PSA)/1.37
8:30 am EST
- 4Q Revised GDP is estimated to rise +3.3% versus a prior estimate of a +3.2% rise.
- 4Q Revised Personal Consumption is estimated to rise +4.2% versus a prior estimate of a +4.4% gain.
- 4Q Revised GDP Price Index is estimated to rise +.3% versus a prior estimate of a +.3% gain.
- 4Q Revised Core PCE is estimated to rise +.4% versus a prior estimate of a +.4% gain.
- Final Univ. of Mich. Consumer Confidence for February is estimated to rise to 75.4 versus a prior estimate of 75.1.
- (ETN) 2-for-1
- The Fed's Lacker speaking, Fed's Yellen speaking, (ETN) analyst meeting, (IMGN) investment community meeting and the (TXN) international conference could also impact trading today.
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