Today's Headlines

Bloomberg:

• Protests Across Arab World Gain Momentum as Libyans Revolt Against Qaddafi. Protesters surged into city centers across the Middle East and North Africa to demand more rights today as Muammar Qaddafi of Libya became the latest regional autocrat to see his grip on power crumble. There were demonstrations in Yemen, Jordan, Tunisia, Egypt and Iraq, with protesters in each country demanding more accountable governments and better living standards. In Yemen, tens of thousands gathered in the capital, Sana’a, calling for an end to President Ali Abdullah Saleh’s three-decade rule. Protests there have persisted for 15 days even as police resorted to tear gas, truncheons and at times guns, leaving at least seven people dead. In Tunisia, thousands called for the resignation of Mohamed Ghannouchi, the interim prime minister who was a close ally of ousted President Zine El Abidine Ben Ali. In Egypt today, Cairo’s Tahrir Square once again filled with demonstrators, this time demanding the removal of a Cabinet sworn in on Feb. 22. The protesters were reacting against the failure of the military rulers who took over from Mubarak to change the leadership of key ministries, including foreign affairs, finance and defense. In Jordan, thousands demanded reforms and protested the use of force last week to suppress a similar rally. The demonstrators demanded faster social and political change, and the abolition of the country’s peace treaty with Israel. In Iraq, at least five were killed in the northern city of Mosul and rallies across the country led to clashes with security forces, Al-Jazeera reported. Demonstrations demanding more accountability from elected leaders and better services have intensified this month, though they began before the current wave of regional unrest.
• Oil Heads for Biggest Weekly Gain in Two Years on Libyan Unrest. Crude oil headed for its biggest weekly gain in two years on concern the turmoil that has cut Libya’s output may spread to other parts of the Middle East. Futures in New York surged to a 29-month high yesterday amid estimates that Libya’s output was cut by as much as two- thirds. Crude oil for April delivery climbed 20 cents to $97.48 a barrel at 11:02 a.m. on the New York Mercantile Exchange. Oil surged to $103.41 yesterday, the highest intraday price since Sept. 29, 2008. Prices for futures closest to expiration are up 13 percent this week in New York, the biggest increase since the five days ended Feb. 27, 2009. Brent crude oil for April settlement rose 22 cents to $111.58 a barrel on the London-based ICE Futures Europe exchange. Yesterday, it climbed to $119.79, the highest price since Aug. 22, 2008. Brent is up 8.8 percent this week.
• Hedge Funds Cut Food-Price Bets as Grains Take a Fall. Hedge funds are leading an exodus from agricultural markets, slashing bullish bets in the U.S. from almost the highest levels on record after grain prices slumped, money managers said. The 8.6 percent plunge in wheat since Feb. 18 and a decline in corn and soybeans means speculators probably kept cutting positions this week, said Nic Johnson, who helps manage about $30 billion in commodities at Pacific Investment Management Co. in Newport Beach, California. Speculators reduced bets on rising wheat prices by 23 percent in the week ended Feb. 15, Commodity Futures Trading Commission data show. Bullish bets on soybeans fell 18 percent and those for corn slid 3.4 percent. Holdings in eight agriculture commodities by money managers are higher than during the global food crisis three years ago. “The amount of speculative positions is off the charts,” Johnson said. “What you’ve seen in the last few days is liquidation of that length.” In agricluture, “the big speculators were holding very large net-long positions and have begun to liquidate those positions to take some profits after the strong rally,” said Dan Cekander, the director of grain research at Newedge USA LLC in Chicago. “We may have reached the limit of their buying.” The move into agriculture accelerated in the past six months. Corn is up 40 percent since the end of September, while soybeans advanced 20 percent and wheat 16 percent. Open interest, or contracts outstanding, reached record levels this month for all three commodities, according to Chris Grams, a spokesman for CME Group Inc., the world’s largest futures market. Investors put a record $2.6 billion into agriculture-index swaps, exchange-traded products and medium-term notes last month, after pouring $5.7 billion during the fourth quarter of 2010, according to Barclays Capital. Demand for new shares of 19 exchange-traded products tracking agricultural commodities rose 33 percent this year, according to data compiled by Bloomberg. Shares outstanding in Deutsche Bank AG’s $3.5 billion PowerShares DB Agriculture exchange-traded fund expanded 24 percent, data compiled by Bloomberg show. “The trend itself is based on fundamentals, but price moves are magnified on the upside and downside by demand from speculators,” said James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, which oversees $340 billion. “There are a whole host of portfolios out there, and for a small fraction of them to be convinced to own some commodities, that is a huge new demand.” Barclays Plc’s iPath Dow Jones-UBS ETNs also attracted money. Shares outstanding in its $347 million grains ETN rose 83 percent since the start of the year, the $295 million agriculture index ETN more than doubled, and units in the $117 million livestock ETN increased 75 percent, according to data compiled by Bloomberg. “There’s real scarcity there,” said Peter Timmer, a professor emeritus at Harvard University and an expert in food policy. “We need to deal with that. But we don’t need to exacerbate the scarcity with all this hot money.”
• Rice Surges Limit as Leaders Seek to Avoid Food-Price Inflation. Rice, the staple food for half the world, rallied by the daily limit from a four-day losing streak in Chicago as governments boosted stockpiles to curb prices that sparked protests in North Africa and the Middle East. Bangladesh, South Asia’s biggest buyer, said it’s seeking supply from India as part of more regular grain purchases to bolster food security. Japan bought 68,000 metric tons of rice from the U.S., Australia and Thailand in a tender two days ago. “When we go for international tenders and prices suddenly rise, private suppliers sometimes fail to fulfill their commitments,” Muhammad Abdur Razzaque, the Bangladeshi food minister, said in an interview yesterday. “They don’t supply us and put us in trouble. It has happened.” Rice traded in Chicago has gained 48 percent since the end of June, part of a surge in agriculture prices that the United Nations says drove world food prices to a record last month. Rice for May delivery rose 50 cents, or 3.6 percent, to $14.31 per 100 pounds at 11:45 a.m. on the Chicago Board of Trade. The grain climbed 8.5 percent in January. The grain represents almost 50 percent of food costs of the poorest across the developing world and 20 percent of total household spending, according to the International Rice Research Institute, based in Los Banos, the Philippines.
• Fed May Need to Reduce $600 Billion Easing, Lacker Tells CNBC. Federal Reserve Bank of Richmond President Jeffrey Lacker said an early end to the central bank’s plan to purchase $600 billion in Treasury securities may be needed to limit inflation pressures. “The improvement in the growth outlook has been noticeable enough to tilt the case further against QE2,” Lacker said today in a CNBC television interview, referring to the second round of so-called quantitative easing. “To my mind, it was a close call to begin with.” Lacker also said in the interview that rising oil and commodities prices pose a risk to inflation later in the year as companies seek to recoup the costs. “As long as inflation expectations are managed pretty well, I think we’re going to get through this without a big burst of inflation,” he told CNBC.
• The cost of hiring capesize ships to haul iron ore and coal fell to the lowest level in more than two years on prospects for deliveries of more ships. Capesize rents slid 30% for the week to $4,653 a day, the lowest since Dec. 9, 2008. That compares with average operating costs estimated at about $7,000 by Dag Kilen, an analyst with RS Platou Markets AS in Oslo. "The market seems crippled with oversupply," Kilen said today. "The only option for the owners left could be idling vessels', primarily the older tonnage, and creating an artificial tonnage shortage."
• Republicans Urge Democrats to Accept Budget Cut, Avoid Shutdown. House Republicans demanded that Senate Democrats accept their plan to cut $4 billion in federal spending while keeping the government open until mid-March or bear responsibility for “actively engineering” a shutdown. “If Senate Democrats walk away from this offer” then “they are actively engineering a government shutdown,” Deputy Republican Whip Pete Roskam of Illinois told reporters on a conference call. "We hope the Senate is going to finally join us in these common-sense cuts to keep the government running and not continue to play chicken with government shutdowns,” said House Majority Leader Eric Cantor of Virginia. “We don’t want to shut the government down. That is not an acceptable or responsible option for any of us,” Cantor said.
• US Economy: Consumer Sentiment Climbs to Three-Year High. The Thomson Reuters/University of Michigan final index of sentiment climbed to 77.5, exceeding the median forecast of economists surveyed by Bloomberg News, from 74.2 in January, a report today showed.

Wall Street Journal:

• Gadhahi Forces Fire on Tripoli Protests. Tripoli residents mounted their first mass demonstrations in days Friday, gathering across the capital to pray and demonstrate against their leader, but were met with heavy gunfire in several places by forces loyal to Col. Moammar Gadhafi. Residents in several spots of the capital, reached by telephone, described a heavy presence of Gadhafi loyalists who were armed with machine guns and manning roadblocks. Witnesses and march participants in at least three neighborhoods reported that security forces had opened fire on crowds of demonstrators, with witnesses describing streets strewn with bodies. Col. Gadhafi's move against Libyans in the capital came as several cities across the country—most of those to the east, as well as the strategic oil hub of Al-Zawiya to the west of Tripoli—came under control of those who oppose his regime.
• Troopers Hunt for Wisconsin Senators. Wisconsin Republican lawmakers dispatched state troopers to the homes of absent Democratic senators in search of a quorum Thursday but came up empty as the state's legislative standoff continued.
• Banks Bristle at Mortgage-Loan Plan. The banking industry privately knocked the Obama administration's nascent proposal to force banks to modify mortgage loans, saying the plan won't help solve problems facing troubled borrowers. The nation's largest banks haven't yet seen a proposal that is designed to help resolve mortgage-servicing errors that affected troubled borrowers. But industry executives are bristling at the administration's new approach, disagreeing that principal reductions will help borrowers and, in turn, the broader housing market.
• Libya Instability Should Buoy US Dollar, Energy Expert Says. Rising oil prices often depress the value of the U.S. dollar, but political instability in Libya and other countries is likely to buoy the U.S. currency, said Daniel Yergin, chairman of IHS Cambridge Energy.

CNBC.com:

• Does the US Have More Oil Than Saudi Arabia? (video)

Business Insider:

• Iran's Desperate Quest To Get Nukes Finds Hope In Zimbabwe. US foreign policy planners think about (and plan for) "hinges of history;" events and developments that alter the course of human events.
• Mary Meeker's Definitive Guide to the American Public Debt Crisis.
  
  Kleiner Perkins partner Mary Meeker analyzes America as a corporation in an epic presentation: USA Inc.: A Basic Summary of America's Financial Statements. Meeker says USA Inc. is on a parallel course to GM before its bankruptcy. Only through drastic cost-cutting can our country bounce back -- like GM has done in the past two years. Here are some key slides from her definitive report:
• Live: Qaddafi Says He Will Fight To The Death.
  

Zero Hedge:

• The Impact of Surging Oil Prices on the US Consumer: A Primer.

Philly.com:

• Al-Jazeera Seeks TV Distribution Deal With Comcast(CMCSA).

LA Times:

• Libya: State TV Announces Salary Increases, Money to Families as Protesters Push to Oust Kadafi. In an apparent bid to mitigate swelling anti-government protests that have resulted in the Libyan regime losing control over large swaths of land to demonstrators in recent days, Libyan state TV announced on Friday that the government will give Libyan families $400 each. The broadcast, aired as demonstrators were reported to be gearing up for massive protests to try to oust embattled Libyan leader Moammar Kadafi from power, also said that the government pledged to increase salaries for state employees by as much as 150%. Media reports say it's the first time the Kadafi regime has offered incentives to Libyans in an attempt to keep their loyalty, and suggested that the government is making use of its large oil earnings to try to retain public support.

Rasmussen Reports:

• Voters Continue to Give Obama Low Marks on the Economy. A new Rasmussen Reports telephone survey finds that 35% of Likely U.S. Voters feel the president is doing a good or excellent job handling the economy, but 47% rate the job he's doing in this area as poor, the most negative finding since mid-November.

Reuters:

• Saudi Raises Oil Output as Libyan Exports Disrupted. Saudi Arabia has raised oil output about 8 percent to above 9 million barrels per day (bpd) to make up for a near halt in Libyan exports, an industry source said, helping prices fall further from the highest since 2008. Some European oil firms said they were looking to buy more crude from Iran and the West's energy watchdog, the International Energy Agency, said Friday there was no need for an immediate strategic stock release. "We have started producing over 9 million barrels per day. We have a lot of production capacity," the industry source familiar with Saudi production told Reuters. That would be up more than 700,000 bpd from January.
• US Leading Economic Growth Gauge Rose Last Week - ECRI. A measure of future U.S. economic growth rose in the latest week, while its annualized growth rate jumped to its highest level since May, a research group said on Friday. The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index climbed to 130.5 in the week ended Feb. 18 from 129.5 the previous week. The index's annualized growth rate increased to 6.1 percent from 4.9 percent a week earlier. It was the highest level since the week ended May 14, 2010 when it stood at 9.4 percent.