Evening Headlines
Bloomberg:
- U.S. Backs Libya Rebels as Qaddafi Says 'My People Love Me'. Libya’s opposition gained fresh support from the U.S. and European nations, who promised humanitarian aid and began planning for a no-fly zone, as leader Muammar Qaddafi declared that “my people love me” and sent forces to regain lost territory.
- JPMorgan(JPM) May Face Enforcement, Added Costs in Mortgage Probe. JPMorgan Chase & Co., the second- largest U.S. bank by assets, may face enforcement actions, fines and other added costs stemming from probes of its mortgage- servicing procedures. “The firm expects to incur additional costs and expenses in connection with its efforts to correct and enhance its mortgage foreclosure procedures,” the New York-based company said in its annual filing with the Securities and Exchange Commission yesterday. JPMorgan said it can’t predict the outcome of the federal and state investigations or the financial impact.
- Health Care REIT to Buy Genesis Real Estate Assets in $2.4 Billion Deal. Health Care REIT Inc., the third- largest U.S. health-care real estate investment trust, agreed to buy substantially all the property assets of closely held Genesis HealthCare for $2.4 billion. Health Care REIT will buy 147 post-acute, skilled nursing and assisted living properties in 11 states, the Toledo, Ohio- based company said in a statement. Genesis, of Kennett Square, Pennsylvania, will rent the properties from Health Care REIT and operate them, according to the statement.
- Oscar Viewers Fall 9.8%.
- Morgan Stanley(MS) Hacked in China-Based Attacks That Hit Google(GOOG). experienced a “very sensitive” break-in to its network by the same China-based hackers who attacked Morgan StanleyGoogle Inc.’s computers more than a year ago, according to leaked e-mails from a cyber-security company working for the bank. The e-mails from the Sacramento, California-based computer security firm HBGary Inc., which identify the first financial institution targeted in the series of attacks, said the bank considered details of the intrusion a closely guarded secret. “They were hit hard by the real Aurora attacks (not the crap in the news),” wrote Phil Wallisch, a senior security engineer at HBGary, who said he read an internal Morgan Stanley report detailing the so-called Operation Aurora attacks.
- Baidu(BIDU), Taobao Identified as 'Notorius Markets' by U.S. for Piracy. Baidu Inc. and Alibaba Group Holding Ltd.’s Taobao, China’s biggest Internet search engine and retailer, were named “notorious markets” by the U.S. Trade Representative for helping sustain piracy and counterfeiting. The two Chinese companies were among more than 30 Internet and physical markets worldwide identified by the USTR for helping the illegal sale of goods or materials protected by copyright or patents. Others on the list include the Pirate Bay file-sharing website in Sweden and the Silk Market in Beijing, according to the statement.
- RBA Keeps Rate Unchanged, Extending Pause as Inflation Eases. The Reserve Bank of Australia left its benchmark interest rate at the highest level in the developed world, saying a stronger currency and an earlier decline in wage growth are helping to contain inflation. Governor Glenn Stevens held the overnight cash rate target at 4.75 percent today, as forecast by all 25 economists surveyed by Bloomberg News. The central bank expects inflation to stay within its target range of 2 percent to 3 percent over the next year, he said in a statement in Sydney.
- No-Fly Zone Eyed in Libya. Col. Moammar Gadhafi went on a broad offensive Monday in a bid to shift momentum against Libya's uprising, as the White House imposed record sanctions against the embattled strongman and international leaders discussed clipping his wings by imposing a no-fly zone. Forces loyal to Col. Gadhafi attacked two opposition-held cities east of the capital of Tripoli on Monday, said witnesses and rebel army commanders. A rebel commander said Monday that government forces regained control of a seafront oil-terminal town east of Tripoli, extending eastward the government's front line against the rebels.
- Small US Firms Wants Strong Dollar, Big Firms Want It Weak. Small U.S. firms want a strong dollar while big companies prefer a weak dollar, according to a new survey published Monday. According to the survey of more than 1,200 privately owned businesses by the Pepperdine University's Graziadio School of Business and Management, 36.7% of firms with less than $5 million in annual revenue believe that a stronger dollar would be a boon to their bottom lines. More than 43% of businesses with more than $100 million in yearly revenue, however, believe that the weaker dollar is better for the economy. The report comes as Federal Reserve Chairman Ben Bernanke is scheduled to testify before Congress on monetary policy and the state of the U.S. economy. He is expected to face a grilling from lawmakers concerned about inflation and job creation, questioning the effectiveness of the Fed's loose monetary policy. Although the Fed isn't specifically targeting a weak dollar, it acknowledges that a weaker currency is a consequence of lowering rates, which can aid the U.S. economic recovery. John Paglia, lead researcher on the survey and associate finance professor at the university, said the Fed's latest round of monetary easing "has benefited large publicly traded companies at the expense of smaller privately held businesses." "Small businesses, the vast majority of which don't receive a significant amount of revenues through exporting, are losing purchasing power, which is resulting in margin compression and reduced profitability levels," he said.
- Fannie, Freddie Stuck In a Dividends Circle. For the first time since the financial crisis, Fannie Mae and Freddie Mac are showing glimmers of profitability. But the two mortgage behemoths still ask the Treasury Department every quarter for billions of dollars in cash, most of it going right back out the door to pay dividends to the same U.S. agency. The requirement that both companies pay a 10% dividend on preferred shares—which the U.S. government receives for its infusions after taking over Fannie and Freddie in 2008—costs them about $15 billion a year at the current rate. In the last two quarters, the firms have paid $7.5 billion in total dividend payments, while receiving injections of $5.7 billion to help keep them in business.
- States Mull Shift in Worker Pensions. Policy makers across the country are considering scrapping guaranteed retirement benefits for public workers in favor of 401(k)-like plans. In pursuing the switch, some state and local governments hope to shift more responsibility and risk—as well as potential reward—to employees.
- Billions in Bloat Uncovered in Beltway. The U.S. government has 15 different agencies overseeing food-safety laws, 20 separate programs to help the homeless and 80 programs for economic development. These are a few of the findings in a massive study of overlapping and duplicative programs that cost taxpayers billions of dollars each year, according to a new Government Accountability Office report to be released Tuesday.
- U.S. Confirms Parcel-Delivery Probe. The Justice Department confirmed Monday that it is conducting an investigation into possible anticompetitive behavior in the parcel-delivery market. United Parcel Service Inc.(UPS) and FedEx Corp.(FDX) both said in January that they were being investigated by the Justice Department.
- Oil's Rise Threatens Economic Growth. As unrest in Libya keeps crude prices high, the U.S., Europe and Japan might have to spend almost $200 billion more on imports of crude this year than they did in 2010, potentially threatening their economic recoveries, the International Energy Agency said. IEA chief economist Fatih Birol said in an interview that if the price of oil averages $100 a barrel this year, the U.S. would have to spend $385 billion on oil imports—nearly $80 billion more than it did last year.
- Why Koch Industries is Speaking Out by Charles G. Koch. Crony capitalism and bloated government prevent entrepreneurs from producing the products and services that make people's lives better. Years of tremendous overspending by federal, state and local governments have brought us face-to-face with an economic crisis. Federal spending will total at least $3.8 trillion this year—double what it was 10 years ago. And unlike in 2001, when there was a small federal surplus, this year's projected budget deficit is more than $1.6 trillion. Several trillions more in debt have been accumulated by state and local governments. States are looking at a combined total of more than $130 billion in budget shortfalls this year. Next year, they will be in even worse shape as most so-called stimulus payments end.
- A Union Education. What Wisconsin reveals about public workers and political power.
- China PMI Dips to 6-Month Low as Tightening Bites. Chinese manufacturing growth slowed in February to a six-month low, according to an official survey, as the government's sustained campaign to tame inflation weighed on industrial activity. But soaring global commodity costs complicated the task of monetary tightening, pushing a gauge of industrial input prices to a three-month high in China's official purchasing managers' index. The overall PMI, which is designed to provide a timely snapshot of conditions in the manufacturing sector, fell to 52.2 in February from 52.9 in January, the China Federation of Logistics and Purchasing said on Tuesday. The input prices sub-index, a measure of how much factories pay for raw materials and intermediate goods, rose to 70.1 in February from 69.3 in January.
- What's The Significance of Kim Jong Un's Huge State Visit to China? A collapse in North Korea could have clear destabilizing effects on China (with which it shares a border) and there's some speculation that the two countries are moving closer back together to beat back the world's democratic wave.
- Iran Trying to Buy Nuclear Missile Technology in Norway.
IBD:
Forbes:
- Government Backs Futuristic Flu Shots. The U.S. government is pledging $215 million — and as much as $375 million — to two biotechnology companies working to pioneer faster, more efficient ways to make vaccines for influenza.
- JPMorgan(JPM) Admits Legal Bills Could Get Bigger, Like $4.5 Billion Bigger.
Reuters:
- JPMorgan(JPM) Says Tablets to Grow Into $35 Billion Market. J.P. Morgan Securities expects tablets to evolve into a $35 billion market by 2012, eating into the share of PCs, and competition to drive down premium prices. The brokerage, which nudged up its forecast for tablet unit shipment and revenue, sees steep adoption rate and increasing number of available devices driving tablet market growth. It sees tablet market growth spurred by improved operating system platforms and penetration of enterprise and education customer verticals.
- Citi(C) Could Lose $10 Billion From US Tax Change - Analyst. Citigroup Inc could write down some $5 billion to $10 billion in expected future tax benefits if the United States decreases corporate tax rates, veteran banking analyst Mike Mayo estimated on Monday.
- US Oks First Deepwater Drilling Permit After Spill.
- CME(CME) to Slash Rate Traders' costs to Fight NYSE(NYX). CME Group Inc unveiled a plan that would slash costs for interest-rate traders to shore up its key Treasury futures franchise ahead of an imminent challenge from NYSE Euronext.
- Warnaco(WRC) Outlook Below Estimates, Shares Down. n">Warnaco Group Inc forecast full-year earnings that fell short of estimates as the maker of Calvin Klein underwear and jeans faces high product costs, and its shares fell as much as 6 percent.
- ARM Holdings Plc(ARMH) expects its sales of memory chips to increase by a third this year, citing an interview with CEO Warren East.
- South Korea's President Says Koreas Cannot Repeat 'Dark History,' Urges North to Abandon Nukes. South Korea's president called Tuesday for serious talks with North Korea, warning that the rivals must not repeat their "dark history" and urging Pyongyang to abandon its nuclear programs. President Lee Myung-bak made the remarks in a nationally televised speech amid worries over rising animosity following Monday's launch of annual South Korea-U.S. military drills, which Pyongyang calls a rehearsal for invasion. The North's state media said Tuesday that the drills could cause a "nuclear catastrophe" on the Korean peninsula. "The Korean nation cannot afford to lag behind the currents of the times, repeating the dark history of yesteryear," Lee said, referring to the Koreas' bloody 1950-53 war and the subsequent decades of violence and tension. "Now is the opportune time to open a new kind of future on the Korean peninsula." Lee said South Korea could provide aid to the impoverished North and is ready to resume inter-Korean talks "anytime with an open mind." He said, however, that "the North should step forward for serious dialogue and co-operation and refrain from developing nuclear weapons and missiles."
- Hedge Funds' Oil Bets Soar to Record on Libya Fears. Hedge funds raised bullish oil bets to a record as violent clashes in Libya curbed output from Africa's third-largest producer, driving crude to $US100 a barrel for the first time in more than two years. The funds and other large speculators increased net-long positions, or wagers on rising prices, by 30 percent in the seven days ended February 22 to 240,572 futures and options combined, the highest in records dating back to June 2006, according to the Commodity Futures Trading Commission's weekly Commitments of Traders report.
Citigroup:
- Reiterated Buy on (LCAPA), raised target to $95.
- Reiterated Buy on (RIG), (NR) and (DO).
- Asian equity indices are +.25% to +1.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 108.50 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 121.50 unch.
- S&P 500 futures +.20%.
- NASDAQ 100 futures +.17%.
Earnings of Note
Company/Estimate
- (AZO/3.06
- (TECD)/1.43
- (FDP)/.11
- (PAY)/.39
- (HOV)/-.69
- (DPZ)/.40
- (JOE)/-.10
- (MDR)/.29
- (DNDN)/-.45
10:00 am EST
- Construction Spending for January is estimated to fall -.4% versus a -2.5% decline in December.
- ISM Manufacturing for February is estimated to rise to 61.0 versus a reading of 60.8 in January.
- ISM Prices Paid for February is estimated to rise to 83.0 versus a reading of 81.5 in January.
- Total Vehicle Sales for February are estimated to rise to 12.6M versus 12.53M in January.
- (WEC) 2-for-1
- (DEST) 2-for-1
- The Fed's Bernanke speaking, weekly retail sales reports, Citi Healthcare Conference, KeyBanc Consumer Conference, Pac Crest Emerging Tech Summit, CSFB Healthcare Conference, (KBW) Bank Conference, (TMRK) analyst day, (EMN) investor day, (CHS) analyst meeting and the (SD) analyst meeting could also impact trading today.
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