- Qaddafi Is No Mubarak; Overthrow May Mean 'Descent to Chaos'. Muammar Qaddafi may leave Libya without a way of avoiding further bloodshed. After protesters forced out the leaders of Tunisia and Egypt, both countries had constitutions that laid out the transfer of power to caretakers who are now negotiating a path to greater democracy. Libya, where Qaddafi has ruled since his coup overthrew the monarchy in 1969, has no constitution and political parties and unions have been banned for 35 years. “If Qaddafi goes, there will be an enormous vacuum, not just politically, but also socially and economically,” Diederick Vandewalle, a professor at Dartmouth College in New Hampshire, said by telephone. “There’s no organization that could interact between the government and the protesters.” Libya, home of Africa’s largest oil reserves, may be set for a longer and bloodier period of unrest than its neighbors as Qaddafi, the world’s longest serving non-royal leader, clings to power and no alternative leader emerges.
- Cameron Says World May Need to Act to Stop Libyan Repression. The international community may need to take action to halt attempts by the Libyan leader, Muammar Qaddafi, to crush a revolt against his regime, U.K. Prime Minister David Cameron said. It’s still open to Colonel Qaddafi to stop that behavior,” Cameron said in an interview in Qatar yesterday for Al Jazeera television. “More will have to be done if this violence continues.”
- Oil Surges on Libya Disruption; Goldman(GS) Sees 'Upside Risk'. Oil surged to the highest in almost two and half years in London as Libya’s violent uprising cut supplies from Africa’s third-biggest producer. Futures in New York gained a sixth day, after trading at $100 a barrel yesterday, amid estimates the revolt has resulted in the loss of as much as two-thirds of the Libya’s oil output. The cuts create “significant upside risk” to prices by reducing OPEC’s ability to absorb any escalation of supply disruptions in the Middle East, Goldman Sachs Group Inc. said. Brent oil for April settlement rose as much as $1.75, or 1.6 percent, to $113 a barrel on London’s ICE Futures Europe exchange today, the highest since Sept. 1, 2008. The contract traded at $112.95 at 10:18 a.m. in Singapore. It rallied 5.2 percent yesterday. Crude for April delivery gained as much as $1.33, or 1.4 percent, to $99.43 a barrel in electronic trading on the New York Mercantile Exchange. Yesterday, it closed up $2.68 at $98.10, the highest since Oct. 1, 2008. Prices are 24 percent higher than a year ago.
- Gadhafi Flails as Libya Splinters. Forces loyal to strongman Col. Moammar Gadhafi imposed rough order in Libya's increasingly fearful capital Wednesday, witnesses said, that stood in sharp contrast to rebel gains in much of the oil-rich country. Gunshots echoed through the night in Tripoli as Col. Gadhafi clung to power even as the international community discussed ways to isolate him with sanctions. More territory slipped from his control, and rebels began to set up rudimentary governments in outlying areas under their sway. "No-one should count him out, but momentum isn't going his way," a U.S. official said.
- Second Suspected Syria Nuclear Site Is Found. A second suspected nuclear installation has been identified in Syria, according to commercial satellite photos, providing new evidence that Damascus may have been pursuing atomic weapons before a 2007 Israeli military strike. The publishing Wednesday of the photos by Washington's Institute for Science and International Security could increase pressure on the United Nations to demand expansive new inspections of suspect Syrian facilities during a March board meeting of the International Atomic Energy Agency.
- Inflation Concerns Rise Around Asia. Vietnam, Singapore Data, India Rally Underscore Challenges in Price Fight. Worries over inflation in Asia intensified as tens of thousands of people protested rising food prices in India and inflation rates jumped higher in Singapore and Vietnam. Big street rallies aren't uncommon in India, where millions of people subsist on low incomes. Moreover, similar protests have occurred in past years ahead of the Indian government's annual presentation of its budget, which this year is scheduled for Monday. Still, the rallies in Delhi Wednesday underscored how higher food costs, which helped trigger some of the unrest now sweeping the Middle East, represent an increasingly difficult challenge for some Asian governments.
- Rising Oil Prices Raise the Specter of a Double Dip. A sustained and significant rise in oil prices could derail the U.S. economic recovery by stirring inflation and putting the brakes on spending.
- US Pushes Mortgage Deal. The Obama administration is trying to push through a settlement over mortgage-servicing breakdowns that could force America's largest banks to pay for reductions in loan principal worth billions of dollars.
- Chevron(CVX) Exec: Gulf Water Drilling Expected To Resume Before Midyear. Chevron Corp. (CVX), the second-largest U.S. oil company, expects to be able to resume its ambitious drilling program in the deepwater Gulf of Mexico before the first half of 2011 is over, executives with the company said Wednesday. "We are getting at the end of the road," Gary Luquette, Chevron's head for exploration and production in North America, said in an interview. "One time we thought it will be the end of the year, now our estimate is that it could be before the middle of the year."
- Soros, Silver Lake Make Clean-Energy Bet. Two of the biggest names in the investing world are teaming up to wager on clean energy.
- The Public Worker Gravy Train. Leaders across the country are proposing restrictions on public employees' pay and benefits in order to put their budgets on a more sustainable path. The political left's counterattack is that government workers aren't overpaid compared to those in the private economy. Who's right?
- Priceline(PCLN) Posts Higher Profit, Gives Rosy Forecast. Online travel agency Priceline.com posted on Wednesday a larger-than-expected quarterly profit on bookings growth and the company forecast stronger growth in the first quarter. The company's shares gained more than 5 percent in after-hour trading.
- Stagflation Still Regarded as Economy's Dirty Little Secret. Despite rising commodity prices and a bleak employment picture, “stagflation” remains a word not uttered in the polite company of the financial world. But there remain only a few more tumblers to fall into place for a return to that awful word that conjures up images of the “malaise days” of the late 1970's and early ‘80s, where rising inflation and slumping employment tamped down economic growth.
- Q&A With Kansas City Fed's Thomas Hoenig. Federal Reserve Bank of Kansas City President Thomas Hoenig is going to step down in October when he reaches the central bank's mandatory retirement age of 65, but he is not exactly going quietly into the night. Hoenig is pressing his message that the Fed needs to move away from zero-interest rate and that the $600 billion bond buying program was a mistake. While Federal Reserve Chairman Ben Bernanke has tried to distance Fed policy from the recent spike in global food and fuel prices, Hoenig says the easy money stance is clearly a factor.
- A Haunting Journey Into The Ruins Of Detroit. (pics) French photographers Yves Marchand & Romain Meffre compare the ruins of Detroit to "the Pyramids of Egypt, the Coliseum of Rome, or the Acropolis in Athens." Detroit's ruins are "remnants of the passing of a great Empire."
- Nomura On The Emerging Markets That Are Most Vulnerable To An Oil Price Shock.
- Chinese Consumer Confidence Hits Lowest Level Since '09, And Everyone Expects More Inflation. Fears of inflation are widespread in China, and it's causing consumer confidence to slide.
- A Gripping Account Of Life Right Now In Tripoli, The "City In The Shadow Of Death". Robert Fisk, the legendary UK journalist who has reported from some of the most dangerous spots in the world, has a great account of life right now in Tripoli, the Libyan capital.
- Meet The 14 Wisconsin Dems Everyone is Talking About.
- Prepare For a Trading Revolution: Here Comes Credit Default Swaps for Retail Investors. Ever felt excluded from the list of people who can (allegedly) buy insurance on their neighbor's house, and then burn it down? That's all about to change. The CBOE has announced that that on Tuesday, March 8, the Exchange will begin trading newly-designed Credit Event Binary Options (CEBOs) contracts. In essence these will be like Credit Default Swaps, accessible to everyone, which will have a $1000 payoff per contract in the event of a bankruptcy before contract expiration.
- Five People Killed As Protests Shift To North Korea: Government Mobilizes In Preparation For Violent Demonstrations.
New York Times:
- Airfares Are Climbing With Oil Prices. Airline passengers should prepare themselves for sticker shock this year.
- Pakistan's Intelligence Ready to Split With CIA. Pakistan's ISI spy agency is ready to split with the CIA because of frustration over what it calls heavy-handed pressure and its anger over what it believes is a covert U.S. operation involving hundreds of contract spies, according to an internal document obtained by The Associated Press and interviews with U.S. and Pakistani officials. Such a move could seriously damage the U.S war effort in Afghanistan, limit a program targeting al-Qaida insurgents along the Pakistan frontier, and restrict Washington's access to information in the nuclear-armed country.
- Fraga Warns on Brazilian Credit Growth. The former central banker who laid the foundation for Brazil’s boom by helping to slay inflation has warned that rapid credit growth in the country needs close scrutiny from policymakers. Arminio Fraga, one of Brazil’s most successful former central bank presidents, said in an interview with the Financial Times that the quality of some new consumer lending was open to question, although Brazil was not approaching a “subprime”-style crisis.
- Nervous China Puts Security Apparatus Into Overdrive.
- China Files Subversion Charges Against Internet Users Who Spread Call to Protest. China filed subversion charges against Internet users who reposted a call for protests as the authoritarian government enforced its crackdown against any Middle East-style democracy movement, activists said. In addition to well-known activists who apparently remained in custody after being taken away ahead of the planned protests on Sunday, at least three people were detained on charges of "inciting subversion of state power," according to the Hong Kong-based Information Center for Human Rights and Democracy. China often uses the vaguely worded charge to lock up outspoken government critics.
- Shanghai set two rates for its new property tax based on the price per square meter of a property, citing the city's statistics bureau.
- A Jasmine Revolution in China is an "absurd" possibility, citing Zhao Qizheng, head of the Committee of Foreign Affairs of the National Committee of the Chinese People's Political Consultative Conference.
- Five banks in Beijing stopped giving discounts on the benchmark interest rate for mortgage loans to buy first homes, citing bank officials.
- China's money supply growth and the money expansion multiplier may drop in the second half of the year as fewer central bank bills come due.
- North Korea recently set up a special police squad team to stamp out any riot movement in North Korea, citing Daily NK, a Seoul-based group that opposes the government of Kim Jong Il.
- China will this year "closely" prevent and "strictly" crack down on violence and terrorism activities that aim at splitting up China, Zhang Qingli, Tibet's Communist Party chief, wrote in a commentary.
- China's southern province of Hainan will take measures to curb soaring property prices, citing Qu Jianmin, deputy secretary-general of the provincial government. Hainan must take steps to increase its housing supply and stop speculation in the market by the end of March, Qu said.
- Reiterated Buy on (PCLN), raised target to $575.
- Rated (CIEN) Outperform.
- Asian equity indices are -1.50% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 112.0 -1.5 basis points.
- Asia Pacific Sovereign CDS Index 123.0 unch.
- S&P 500 futures +.19%.
- NASDAQ 100 futures +.10%.
Earnings of Note
8:30 am EST
- The Chicago Fed National Activity Index for January is estimated to rise to .09 versus a reading of .03 in December.
- Initial Jobless Claims for last week are estimated to fall to 405K versus 410K the prior week.
- Continuing Claims are estimated to fall to 3880K versus 3911K prior.
- Durable Goods Orders for January are estimated to rise +2.8% versus a -2.5% decline in December.
- Durables Ex Transports for January are estimated to rise +.5% versus a +.5% gain in December.
- Cap Goods Orders Non-Defense Ex Air for January are estimated to fall -1.0% versus a +1.4% gain in December.
- New Home Sales for January are estimated to fall to 305K versus 329K in December.
- The House Price Index for December is estimated to fall -.1% versus unch. in November.
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,100,000 barrels versus a +860,000 barrel gain the prior week. Distillate supplies are expected to fall by -1,200,000 barrels versus a -3,096,000 barrel decline the prior week. Gasoline inventories are estimated to rise by +850,000 barrels versus a +205,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.5% versus a -3.5% decline the prior week.
- (POT) 3-for-1
- (UGP) 4-for-1
- The Fed's Bullard speaking, $29 Billion 7-Year Treasury Notes Auction, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, (GGC) investor day and the (SNDK) analyst meeting could also impact trading today.