Today's Headlines

Bloomberg:

• U.S. Manufacturing Rose More Than Expected in January. Manufacturing in the U.S. unexpectedly accelerated in January at the fastest pace in more than six years, reinforcing forecasts the economic recovery will strengthen in 2011. The Institute for Supply Management’s factory index rose to 60.8, exceeding the most optimistic forecast in a Bloomberg News survey of economists and the highest level since May 2004, figures from the Tempe, Arizona-based group showed today. The ISM’s employment gauge climbed to the highest level since 1973, indicating manufacturers may be more willing to hire as sales pick up. “Businesses have figured out the economic recovery has legs so they’re growing more confident about expanding production and new orders and increasing hiring,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. The ISM’s measure of new orders, jumped in January to 67.8, the highest since January 2004. The employment gauge increased to 61.7 from 58.9 in the prior month.
  
• Construction Spending in U.S. Unexpectedly Fell to Decade Low. Construction spending in the U.S. unexpectedly fell in December to the lowest level in a decade, signaling the industry will continue to lag behind the economic recovery. The 2.5 percent drop was the biggest since July and brought the value of all projects down to a $787.9 billion annual rate, the lowest since July 2000, Commerce Department figures showed today in Washington. The median estimate of economists in a Bloomberg survey called for a 0.1 percent gain. Mounting foreclosures and an unemployment rate that will average more than 9 percent in 2011 indicate homebuilding may take time to rebound. Non-residential projects also will slow as budget-constrained state and local governments restrict funding for public works such as highways.
• Egyptians Face Food Inflation by Day, Looters by Night. Shattered glass fills the streets of Cairo as pedestrians are forced to avoid army tanks that guard banks and government buildings vulnerable to looters. Banks are closed, making it difficult for Cairenes to get cash to buy staples. For those that have money, food prices are skyrocketing as consumers flood the few open stores. Street demonstrations and night-time riots have left the Arab world’s biggest city largely paralyzed, as protester fill the city’s main square and looters and neighborhood groups armed with clubs take over at night.
• Fed's Easy Money Helps European Banks Refinance. Federal Reserve Chairman Ben S. Bernanke’s easy money policies are allowing European banks to sell a record amount of dollar-denominated bonds to refinance about $1 trillion of debt maturing this year. UBS AG, Switzerland’s biggest bank, and Barclays Plc led European financial borrowers that raised $43.8 billion in investment-grade bonds in the U.S. this month, beating the previous record of $42.4 billion last January, data compiled by Bloomberg show.
• House Panel to Remedy Dodd-Frank's 'Unintended Consequences,' Draft Shows. The House Financial Services Committee aims to “identify and remedy” any unintended consequences of the Dodd-Frank regulatory overhaul, with a particular focus on rules governing proprietary trading and derivatives, according to a draft of the panel’s strategic plan. The 20-page document, circulated to committee members and staff for comment by Chairman Spencer Bachus of Alabama, says that the panel will focus this year on overseeing implementation of Dodd-Frank’s new rules for Wall Street.
• Copper Rises to Record, Aluminum, Nickel Climb as China Grows. Copper rose to a record as expanding manufacturing in China added to signs of growth in industrial- metals demand. Aluminum and nickel climbed to two-year highs. Copper futures for March delivery jumped 78.45 cents, or 1.7 percent, to $4.533 a pound at 11:27 a.m. on the Comex in New York, after reaching an all-time high of $4.542.
• Soybeans Rise to 30-Month High, Corn Gains on Argentina Strike. Soybeans rose to a 30-month high and corn climbed as a strike by Argentina’s port workers halted grain vessels, increasing demand for supplies from the U.S., the world’s biggest exporter. As many as 30 ships at Argentina’s main terminals have been blocked, a Chamber of Commerce official said. U.S. exporters reported sales of 120,000 metric tons of corn and 110,000 tons of soybeans to unknown destinations for delivery before Aug. 31, the Department of Agriculture said today. “The Argentina strike is helping to bolster demand for U.S. exports,” said Dale Durchholz, the senior market analyst at AgriVisor LLC in Bloomington, Illinois. “It’s a plus for U.S. exports as long as the strike continues to shift demand.” Soybean futures for March delivery advanced 13.75 cents, or 1 percent, to $14.2675 a bushel at 10:25 a.m. on the Chicago Board of Trade. Before today, the oilseed gained 55 percent in the past year. Corn futures for March delivery climbed 3.5 cents, or 0.5 percent, to $6.63 a bushel, heading for the second straight gain. Before today, the price surged 85 percent in the past 12 months, reaching a 30-month high of $6.67 on Jan. 21.
• Egypt Hired Top Washington Lobbyists to Protect Alliance, Gain U.S. Access. Three of Washington’s top lobbyists have helped Egyptian President Hosni Mubarak’s government get access to lawmakers to protect his nation’s status as a U.S. ally and major recipient of foreign aid, federal records show. Government-relations firms led by two former congressmen, Republican Bob Livingston and Democrat Toby Moffett, formed a joint venture in 2007 with lobbyist Tony Podesta to represent Egypt in Washington, according to records filed with the U.S. Justice Department’s foreign- agent registration office. The contract was for “promoting and safeguarding” the Egyptian government’s interests in the U.S., including “maintaining the amount of United States military and economic aid to Egypt,” according to a draft retainer agreement filed with the foreign-agent registration unit. Records show PLM staff made 1,873 “contacts” with members of Congress, their staffs or administration officials between 2007 and 2010.
• New York City's Snowiest January Meant Sales Drop From Nobu to Gas Pumps. For restauranteur Drew Nieporent and gas station owner John Demeo, New York City’s snowiest January blasted away business that they say won’t return. At Myriad Restaurant Group’s six Manhattan restaurants, including the Tribeca Grill and Nobu, business on some nights fell 50 percent or more from normal, said Nieporent. “That’s business that you’ll never get back,” he said in a telephone interview. “Overall, it’s been a killer month.”
• BP(BP) Reinstates Dividend After Profit Increase, Plans to Sell Two Refineries. BP Plc reinstated the dividend and will sell half of its U.S. refining capacity as Europe’s second- biggest oil company recovers from the Gulf of Mexico spill. BP set the payout at 7 cents a share for the last three months of 2010, half the level before the spill, after canceling the dividend for the first three quarters. It plans to dispose of its Texas City, Texas, and Carson, California, refineries.
• Cuomo to Cut New York State Spending by $8.86 Billion, Fire 9,800 Workers. New York Governor Andrew Cuomo proposed cutting local school funding by 7.3 percent and reducing Medicaid spending by almost $3 billion in a budget that seeks to close a $10 billion deficit. As many as 9,800 workers may be fired under the spending plan for the third most-populous U.S. state, according to Cuomo’s budget documents released today. Aid to 700 school districts, the state’s largest expense, would be cut by $1.5 billion from last year to $19.4 billion in the fiscal year beginning April 1. Cuomo, a 53-year old Democrat elected in November, said the state needs to break the cycle of “continually spending more money at levels you cannot afford,” as required by laws approved in past years. “More money does not equal better service” in Medicaid or education, he said yesterday.

Wall Street Journal:

• Egypt's Mubarak to Address Nation as Protests Mount. President Hosni Mubarak will address the nation as hundreds of thousands of Egyptians gathered in Cairo's Tahrir Square to call for an end of his rule and international pressure mounts to find a peaceful solution to the crisis. There are no specific details of the content of Mr. Mubarak's address, which comes as hundreds of thousands of Egyptians filed into Cairo's Tahrir Square on Tuesday, forming the largest crowd yet in eight days of demonstrations. Al Arabiya TV, without citing its sources, reported the president will say he will step down at the next election but stay in office until then.
• Jordan's King Dismisses Government Amid Protests. Jordan's King Abdullah II dismissed his government and named a new prime minister tasked with introducing "true political reforms," following weeks of street protests calling for economic and political change.
• Interview: Germany Has "Ambitious Plan" to Reform Euro Zone. Germany wants "comprehensive" reforms in the euro zone that achieve greater fiscal discipline, improved policy coordination, an enhanced mechanism for managing debt crises, and more rigorous management of the region's banks, according to the country's deputy finance minister.
• U.S. Banks' Egypt Exposure is $5.4 Billion. As protests continue unabated in Egypt, one analyst sharpens his pencil to figure how much U.S. financial institutions might be hurt by the growing unrest. “According to IMF data, there is approximately $49 billion in loans outstanding to the Egypt sovereign. Of that amount, $5.4 billion – or roughly 11% — is to U.S. banks, which compares to $17.6 billion or 36% to French banks, $10.6 billion or 22% to UK banks, and $6.3 billion or 13% to Italian banks,” Keefe Bruyette & Woods said in a research report. Of course, the amount of Egyptian sovereign debt held by U.S. banks is just one measure of potential financial pain. The bigger risk to banks’ wallets is from rising oil prices or increased inflation trends in emerging markets if tumult spreads to other countries.
• Sentence in Chinese Villager's Suspicious Death Doesn't Satisfy Skeptics. Two days after a relatively light sentence handed down in the infamous “My Dad is Li Gang” case sparked outpourings of cynicism and anger online, China’s justice system has returned another decision in a separate, controversial case that is drawing fresh questions. The case this time revolves around the death of Qian Yunhui, a rural activist in the Zhejiang province city of Yueqing who was crushed under the wheels of a truck last month. Police proclaimed the death an accident, but many of Qian’s supporters said they suspected murder, noting among other issues that he had died on the same road he and others had earlier blocked in protest of the building of a power plant. Fury over the incident spread across China’s Internet, fueled by horrifically gruesome photos and video of Mr. Qian’s corpse.
• Iraqi Kurkish Oil Exports to Resume Within Days - Source. Iraqi Kurdistan is set to resume oil exports in days after an 18-month hitch, a few days later than planned, a person familiar with the situation told a London gathering Tuesday. The resumption could offer some relief to oil markets after Egyptian disruption fears pushed prices to the $100 a barrel threshold.
• U.S. Car Sales Rose 15% in January.
  

MarketWatch:

• Tech Firms, Awash in Cash, Ready to Deal.
• UPS(UPS) Profit Jumps 48%; Shipping Volumes, Prices Rise.
• New Hedge Funds Raised More in 2010. Ramius CEO Strauss says industry assets may double.

Business Insider:

• Meet The 10 Hedge Fund Superstars That John Paulson Just Promoted To Partner.
• Behold China's Three Giant Bridges To Nowhere. (pics) When you now look at the list of longest bridges in the world, China occupies most of the top positions. I will not judge if these bridges are good investments. But the sheer scales of the three projects below and the fact that they cross a super long distance over water are mind-boggling.
• Is Apple(AAPL) Investing $4 Billion Into Displays Because It's About To Start Making TVs?
• The 11 Countries at Risk of Becoming the Next Egypt.
  

Zero Hedge:

• Bernanke's Poverty Effect: Foodstamp Recipients Jump by 400K in November, Hit New Record of 43.6 Million. (graph)
• As World Becomes Zimbabwefied, Cotton Futures Surge 17% In One Month. To wit: Corn spot up 7.76%, wheat up 5.63%, Rice up 10.08%, Hogs up 10.16%, Sugar up 5.64%, Orange Juice up 3.33%, and cotton.... up 17.08%. That's in one month! The chart below shows various commodities performance YTD.
  

MarketWatch.com:

• Retailers Flat After Downbeat Sales Report. Retail stocks were generally flat Tuesday as a lackluster weekly sales report kept the sector from rising with the broader markets. Nasty weather hampered shopping for the week ended Jan. 29, dragging retail sales into the red for the fourth week in a row. Sales fell 1%, according to the International Council of Shopping Centers and Goldman Sachs. However, sales on a year-over-year basis rose 1.6%.

New York Post:

• Wall Street Terror Alert. Terrorists are reportedly planning attacks against top executives at major Wall Street banks. Officials from the FBI-NYPD Joint Terrorism Task Force have been briefing the financial heavyweights and their companies' security chiefs on the various threats, WNBC/Channel 4 reported last might. Some of the banks alerted include Goldman Sachs, Citibank, JPMorgan Chase and Barclays. The threats, which come from al Qaeda in Yemen, are general and there is "no indication of a targeted assassination plot," the network said. Some of the information came from the terrorist magazine Inspire, which also mentioned using anthrax in an attack.

Search Engine Land:

• Google(GOOG): Bing is Cheating, Copying Our Search Results.

Ag Web:

• Funds Aggressively Scooping Up Farm Land. Hedge Funds, Pension Funds and Investment Bankers seem content on swapping out their Jaguars for John Deeres. I was talking with a good client of our's the other day who is not only a large producer, but also active in the Agricultural Banking sector about the continued interest from the "funds" in farmland...and you thought you only had to deal with them in the markets. From what I have been told, the "funds" have been aggressively buying farm land not only globally, but in big chunks right here in the US as they continue to bet on rising food prices. It is now believed that over 50% of all farmland is owned by individuals who do not farm any ground.

The Daily Beast:

• U.S. Must Not Repeat Carter's Mistakes. The Egyptian protests bear an uncanny resemblance to the 1979 Iranian revolution, but historian Geoffrey Wawro urges the U.S. to learn the lessons of supporting a dictator—or risk losing Egypt to the Muslim Brotherhood.

Politico:

• Egypt: The Worst Scenarios for the White House. The uprisings in Egypt and Tunisia caught the Obama administration almost completely off guard, and the White House is still struggling to keep pace with events a week after pro-democracy demonstrations first rocked Cairo. Besides the consequences for Egypt and the Mideast, the United States and the Obama administration have a lot riding on the resolution of the crisis. For a White House that likes to control the narrative — and map out contingencies — the nightmare scenarios are piling up.
• Mitch McConnell Grabs Opening for Health Care Vote. Senate Minority Leader Mitch McConnell told Republicans Tuesday that he plans to force a vote on repealing the health care reform law this week. The plan is to tack the amendment onto the Federal Aviation Administration reauthorization bill this afternoon, a Republican aide told POLITICO. The aviation bill, which allowed a more open amendments process under new Senate rules, offered Republicans a prime opportunity to get a vote on House-passed health care repeal bill. Sen. Jim DeMint (R-S.C.) said Tuesday that he plans to try to force a Senate vote on repealing the health care overhaul, too.“The House of Representatives recently voted to repeal it and now it’s time for the Senate to act,” DeMint said in an email to supporters. “I wanted you to know that I will be working to force a vote as early as this week.” The repeal is all but certain to fail in the Senate, but it could force a tough vote on vulnerable Democrats up for reelection in 2012.

Reuters:

• Egypt General Could Be New Leader - Islamist. Egypt's armed forces chief of staff Sami Enan could be an acceptable successor to Hosni Mubarak because he is perceived as incorruptible, a member of the banned Muslim Brotherhood said on Tuesday. Kamel El-Helbawy, a prominent overseas cleric from Egypt's main opposition movement, told Reuters that Enan, who has good ties with Washington, was a liberal who could be seen as suitable by an opposition coalition taking shape on the streets of Egypt.
• India's Sensex Drops to 5-Month Low, Reliance Industries Falls. The BSE Sensex fell 1.7 percent on Tuesday to its lowest close since August, extending January's worst monthly slide in more than two years, as inflation worries and hardening interest rates continued to spook investors. Traders said rising world oil prices, triggered by concerns the political turmoil in Egypt could spill over to the Middle East, could accelerate price pressures in India which imports about 80 percent of its oil requirement. Input prices jumped in Chinese and Indian factories in January, adding to pressure from food inflation that the fast-growing economies are already struggling to contain, business surveys showed on Tuesday.
• Liongate Backs Hedgie Hendry for Short China Bet. Mr. Hendry, who told the London School of Economics' Alternative Investments Conference last week that he spends "a lot of time (as a hedge fund manager) ... being worried," said China was investing with the wrong goals. "China ... is going more for sovereign profit rather than for corporate profit... They're building their foundations on sand. If you're spending money without an interest in earning an economic return, you're spending it poorly. I worry about their ability to create sustainable wealth," he said. "Shorting is a tortuous and treacherous experience... (So) I've put together a basket of Japanese industries and bought CDS (credit default swaps) for the creditworthiness of these companies deteriorating."
• Egypt Debt Insurance Costs Fall: Markit. Egypt's five-year credit default swaps fell 24 basis points from Monday's close to 412 bps, according to Markit, down from April 2009 highs at 450 hit on Friday and again on Monday. Other Middle Eastern CDS prices edged up, after coming off their highs late in the previous session. Tunisia central bank five-year CDS rose 5 bps to 220, Morocco gained 2 bps to 212, Saudi Arabia rose 3 bps to 118, Bahrain gained 5 bps to 215 and Lebanon rose 9 to 390 bps.
• Brazil Vehicle Sales Sink 36% in January - Source.
  

MailOnline:

• Microsoft(MSFT) Warns of Security Flaw That 'Affects 900 Million People Using Internet Explorer'. Microsoft has issued a 'critical' security alert that affects 900million people using its Internet Explorer web browser. The computer giant warned of a newly-discovered flaw in Windows that could be exploited by hackers to steal personal details or take over computers. The glitch is so severe it potentially affects every user of Internet Explorer.
  

ABC Radio:

• China Blocks Online Comment on Egypt. Chinese authorities are censoring references to the protests in Egypt on the internet - two of the country's biggest web portals have blocked search words like 'Cairo' and 'Egypt' and that is fuelling speculation that the government is deeply concerned about the effects that the protests could have in China. The move follows intense discussion on Chinese social media websites, where bloggers have drawn parallels between the uprisings in Cairo and similar incidents in China, including the 2009 protests in the northwestern province of Xinjiang. SUN: How the media behaves in this case says a lot more about how the government sees itself and how insecure it actually feels, which is not a good idea because it is sending again a signal to the international community that it is worried about a lot of things. Whereas at the same time, the Chinese government is trying to spend a lot of money and effort and energy trying to build this international community as a state and a government that is strong, that is open, that is transparent. So it seems as though there's a lot of complexity, there's quite a few contradictions being played out yet again.