Bloomberg:
- Geithner Quietly Tells Obama Debt-to-GDP Cost Poised to Increase to Record. Barack Obama may lose the advantage of low borrowing costs as the U.S. Treasury Department says what it pays to service the national debt is poised to triple amid record budget deficits. Interest expense will rise to 3.1 percent of gross domestic product by 2016, from 1.3 percent in 2010 with the government forecast to run cumulative deficits of more than $4 trillion through the end of 2015, according to page 23 of a 24-page presentation made to a 13-member committee of bond dealers and investors that meet quarterly with Treasury officials. Net interest expense will triple to an all-time high of $554 billion in 2015 from $185 billion in 2010, according to the Obama administration’s adjusted 2011 budget. “It’s a slow train wreck coming and we all know it’s going to happen,” said Bret Barker, an interest-rate analyst at Los Angeles-based TCW Group Inc., which manages about $115 billion in assets. “It’s just a question of whether we want to deal with it. There are huge structural changes that have to go on with this economy.” The amount of marketable U.S. government debt outstanding has risen to $8.96 trillion from $5.8 trillion at the end of 2008, according to the Treasury Department. Debt-service costs will climb to 82 percent of the $757 billion shortfall projected for 2016 from about 12 percent in last year’s deficit, according to the budget projections. “If government debt and deficits were actually to grow at the pace envisioned, the economic and financial effects would be severe,” Federal Reserve Chairman Ben S. Bernanke told the House Budget Committee Feb. 9. “Sustained high rates of government borrowing would both drain funds away from private investment and increase our debt to foreigners, with adverse long-run effects on U.S. output, incomes, and standards of living.”
- Republicans Dismiss Obama Budget as 'Path to Bankruptcy'. President Barack Obama’s $3.7 trillion budget sets off a clash with congressional Republicans who seek deeper spending cuts. Obama’s first budget request since Republicans took House control was met immediately today with demands for a far bolder reshaping of government. House Speaker John Boehner, an Ohio Republican, said the president’s plan “will destroy jobs by spending too much, taxing too much and borrowing too much.” He promised a rival plan for 2012 within weeks. Republicans said the president ignored the need to address the growth of entitlement programs, such as Social Security and Medicare, that make up most government spending. “The president’s budget accelerates our country down the path to bankruptcy,” House Budget Committee Chairman Paul Ryan, a Wisconsin Republican, said in a statement. He said the plan “puts the government on track to nearly double in size since the day he took office -- a direct result of his party’s reckless spending spree.” The current fiscal year’s deficit is forecast to reach a record $1.6 trillion -- 10.9 percent of gross domestic product. “I still don’t see a sense of urgency from the president about the massive federal debt,” Senator Lamar Alexander of Tennessee, the third-ranking Republican, said in a statement. He said Obama’s blueprint calls for too much government borrowing. Republican Senator John Cornyn of Texas called the budget proposal “timid.”
- Gross Cuts Government Holdings to Lowest Since 2009. Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., reduced its holdings of government related debt to the lowest level since January 2009 while saying low yields cheat investors. Gross cut the proportion of U.S. government and related securities in Pimco’s $239 billion Total Return Fund to 12 percent of assets in January from 22 percent in December, according to the Newport Beach, California-based company’s website. He increased the percentage of cash equivalent holdings to 5 percent, the highest since April. Policy makers are robbing savers by driving down real interest rates as they keep borrowing costs at record lows in a “devil’s bargain,” Gross said in his monthly investment commentary on Feb. 2. Because of so-called easy monetary policies in developed countries, combined with larger debt loads and increasing inflation expectations, investors in developed market sovereign debt are taking a “haircut,” he said.
- IRS Would Add 5,000 Employees Under Obama's Budget Proposal.
- 'Swipe' Fee Cap May Force Fees, Job Cuts, Bankers Say. U.S. community banks may eliminate free products, fire workers and shelve expansion plans if the Federal Reserve imposes proposed debit-card “swipe” fee caps, according to a survey conducted by a trade group. The caps, required by the Dodd-Frank Act, are “deeply flawed,” and an exemption for firms with less than $10 billion in assets won’t shield smaller banks from its negative effects, Independent Community Bankers of America President Camden Fine said in a statement. To back up its case, the group plans to release results of a survey today highlighting steps it says bankers would have to take in response to the new rule. Of the bankers surveyed, 93 percent said they would be required to charge customers for services that are currently free. Another 50 percent said they would charge customers a fee each time they use a debit card.
- Copper Rises to Record in London After China's Imports Increase. Copper rose to a record in London after imports increased in China, the world’s largest metal consumer. On the Comex in New York, copper futures for March delivery rose 8.95 cents, or 2 percent, to $4.6255 a pound.
Wall Street Journal:
- Consumer and Business Spending to Spur Expanding U.S. Economy. A newly resilient economy is poised to expand this year at its fastest pace since 2003, thanks in part to brisk spending by consumers and businesses. In a new Wall Street Journal survey, many economists ratcheted up their growth forecasts because of recent reports suggesting a greater willingness to spend. "We're in a lot different place from last year," said Goldman Sachs's Jan Hatzius, who last year was one of the most bearish economists on Wall Street, but now is among the most optimistic on growth. The 51 economists polled—not all of whom answer every question in the survey—expect gross domestic product will be 3.5% higher in the fourth quarter of 2011 than a year earlier, up from the 3.3% increase they projected in last month's survey. That would be the largest increase since 2003. They look for GDP to expand at a 3.6% annual rate in the current quarter, accelerating from the 3.2% rate recorded in the final months of 2010.
- Bahraini Police Break Up Protests. Bahraini riot police fired tear gas and rubber bullets to disperse protesters Monday, according to eyewitnesses, while thousands of Yemenis returned to the streets for a third day of demonstrations, with regime supporters and protesters facing off violently with each other in the capital, San'a.
- Interview: Nowotny Says ECB "Vehemently Not" Turning Soft On Inflation.
- Obama Budget Includes Derivatives Fees for CFTC. The Obama administration's fiscal-2012 budget proposes new derivatives fees for entities regulated by the Commodity Futures Trading Commission, a way to boost the regulator's funding as it gears up to police the $583 trillion over-the-counter derivatives market. The Obama budget includes about $117 million in proposed CFTC fees. The agency would see its funding jump to $308 million in fiscal year 2012, up from roughly $168 million in 2010.
- European, North African Debt Markets Pressured by Higher Risk. The cost of insuring debt rose for European and Middle Eastern countries Monday as sovereign default worries in Greece and Ireland coincided with spreading political unrest in North Africa and the Persian Gulf.
CNBC.com:
Business Insider:
- 15 Tax Hikes Hidden in Obama's New Budget.
- Netflix(NFLX) Explodes Higher After Announcement That Includes The Words "Android" and "Qualcomm" and "Tablet".
- China Has Started Fining Companies That Dare to Hike Food Prices.
- Mexico Drug War Carnage: Nearly 40 Killed Over the Weekend.
- Iran Police Disperse Tens of Thousands of Tehran Protesters With Teargas as Rioting Spreads: Follow Events in Real-Time.
- China Investment Corp Hikes Stake in Morgan Stanley(MS) to Just Under 10%, Becomes Second Largest Holder.
- According to Its National Bureau of Statistics, Chinese Food Prices Have Increased by 4.6% in 10 Days!
- A 50% Pick Up In Revenue in 2 Years: A Cheat Sheet for Obama's Wacky and Wonderful Budget.
- Obama's Approval Rating Slips Further in Michigan, Survey Says. Michiganders are optimistic about the next year financially, despite 43% who say their personal finances are worse than a year ago, according to a survey last fall released today by Michigan State University. And Michigan’s opinion of President Barack Obama continues to plummet; only 33% rate his job performance fair or excellent, his lowest level yet in the state.
- Charlie Gasparino: CME(CME) Could Go Hostile for NYSE Euronext(NYX). Charlie Gasparino is reporting that a potential love triangle could be happening between the CME Group (NASDAQ: CME), NYSE Euronext (NYSE: NYX) and Deutsche Borse could be happening. The CME could pursue a hostile bid for the NYSE, and the company refuses to deny the speculation. Gasparino is reporting that the CME has the money to bid for NYSE Euronext, and there are a bevy of other options that the CME has for the plans of the NYSE.
- China Gets First Official Hedge Fund. China's hedge fund industry took a small but significant step on Monday as Guotai Junan Securities Co readies a $45 million (28 million pound) hedge fund, the first such product approved by securities regulators. The move, if successful, could spur other brokerages, fund managers and even trust firms to follow suit, sowing the seeds for China's own George Soros or James Simons.
- EchoStar(SATS) to Buy Hughes Communications(HUGH) for $1.33 Billion. EchoStar Corp agreed to buy Hughes Communications Inc for about $1.33 billion as the digital set-top box maker looks to beef up its satellite television and broadband services. Hughes is one of the world's largest providers of broadband satellite services and the deal could give EchoStar the width to expand its customer base and its array of services, including mobile television and Internet Protocol TV.
- BofA Merrill Lynch Raises S&P 500 EPS Outlook. Bofa Merrill Lynch Global Research has raised 2011 and 2012 S&P 500 .SPX earnings-per-share (EPS) estimates, citing a pickup in growth and strong fourth-quarter reporting. The estimates on the S&P 500 for 2011 was raised to $95 from $93 and to $102 from $99 for 2012. The new 2011 target is a 12 percent EPS growth from 2010, BofA said in a research note. "We expect sales growth of 7.5 percent and 7 percent for 2011 and 2012 driven by strong business capex, exports and foreign sales on healthy global GDP growth and acquisition." But BofA retained its target on the S&P 500 at 1,400 for 2011.
- Fannie, Freddie to Need Almost $90 Billion More - White House. The White House expects to shovel close to $90 billion to Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) over the next few years.
- US Hedge Fund Managers' Top Picks, Pans.
- Drugmakers Could Take Hit Under Obama Budget. Big pharmaceutical companies could face increased competition from generic drugmakers under two proposals put forth by the Obama administration on Monday. President Barack Obama, as part of his 2012 budget proposal, called for cutting the number of years drugmakers could exclusively market brandname biologic drugs to 7 years from 12.
- Fairholme Leaders Resign from St. Joe(JOE) Board.
- Greece will probably have to restructure its debt as interest payments rise, Lars Feld, who is joining Germany's council of economic advisers, was quoted as saying.
- Beijing vehicle sales may fall by 60 billion yuan this year after the city issued measures to limit the number of automobiles, citing local government estimates.
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