Today's Headlines

Bloomberg:

• Dubai Stocks Slump to 7-Year Low. Middle East shares fell, sending Dubai’s benchmark index to the lowest in almost seven years, as concern political unrest may spread to Saudi Arabia, the Arab world’s largest economy, sparked demand for safer assets. Saudi Arabia’s Tadawul All Share Index slumped 3.9 percent to close at the lowest since April 2009 at 3:30 p.m in Riyadh. The DFM General Index declined 3.5 percent to 1,374.43, the lowest level since June 2004. The gauge has lost 15 percent since Tunisia’s Zine El Abidine Ben Ali was ousted in January. Emaar Properties PJSC retreated to the lowest since 2009 and Dubai Financial Market PJSC slumped 4.9 percent. Investors are shunning assets in the Middle East and North Africa as the political turmoil, which started in Tunisia more than two months ago, expanded to Oman, Bahrain, Yemen, Libya and Iran. Websites have called for a nationwide Saudi “Day of Rage” on March 11 and March 20, Human Rights Watch said in a statement on its website on Feb. 28. “A lot of the selling has been from onshore, local and regional investors; the speed of the decline tells you it’s pure panic,” said Dubai-based Ibrahim Masood, who helps manage about $400 million at Mashreqbank PSC. Saudi Arabia’s benchmark stock index plunged the most in more than two years yesterday on concern disturbances may extend to the kingdom, the biggest supplier in the Organization of Petroleum Exporting Countries. The measure has tumbled 20 percent in the past 13 days, the longest losing streak since 1996. About 271 million shares changed hands, the most since May, according to data compiled by Bloomberg. Saudi nationals accounted for about 80 percent of stock purchases in February, according to the exchange’s website. “There are fears political risk may spread,” to Saudi Arabia, said Mohammed Ali Yasin, chief investment officer at Abu Dhabi-based financial services company CAPM Investments PJSC. Credit-default swaps on Saudi Arabia are the worst performing sovereign contracts this year, even though the kingdom has no debt to insure. Swaps almost doubled in two months to a more than 19-month high of 143 basis points from 75 at the start of 2011, according to CMA. The Bloomberg GCC 200 Index of Persian Gulf stocks dropped 3.3 percent today, bringing declines this year to 15 percent.
• Oil Extends Gains After Unexpected Decline in U.S. Inventories. Crude oil in New York rose above $100 a barrel for a second day and gasoline surged to a 30-month high on concern that the unrest curbing exports from Libya will spread to other countries in the region. Oil futures advanced as much as 2.8 percent as Libyan forces loyal to Muammar Qaddafi attacked rebels on the east coast where much of the country’s oil is refined and shipped abroad. Prices extended gains after a U.S. Energy Department report showed that crude and fuel supplies fell last week. Crude oil for April delivery climbed $2.08, or 2.1 percent, to $101.71 a barrel at 12:06 p.m. on the New York Mercantile Exchange. Yesterday, the contract surged 2.7 percent to $99.63, the highest settlement since September 2008. Prices are up 28 percent from a year ago.
• Gasoline Surges to 30-Month High as Mideast Tensions Escalate. Gasoline surged above $3 a gallon as spreading political unrest in North Africa and the Middle East threatened crude oil supplies for refiners. Gasoline rose to a 30-month high as Libyan forces loyal to Muammar Qaddafi counterattacked against rebels who have seized the east coast ports where much of the country’s oil is refined or shipped abroad. “Everything is escalating in Libya, it looks like Qaddafi is gaining ground and the market is a little bit edgy,” said Dan Flynn, an energy analyst at PFGBest in Chicago. “Everything could explode today.” Gasoline for April delivery rose 2.06 cents, or 0.7 percent, to $3.004 a gallon at 9:27 a.m. on the New York Mercantile Exchange. Prices touched $3.0215, the highest level for the contract closest to expiration since Aug. 29, 2008. Regular gasoline at the pump, averaged nationwide, advanced 1.2 cents to $3.387 a gallon yesterday, AAA said on its website.
• China's Founder of High-Speed Railways Under Investigation. China’s Ministry of Railways removed Zhang Shuguang as deputy chief engineer and is investigating him for alleged “severe violation of discipline,” Xinhua News Agency said, in the second probe of an official from the ministry in a week. Zhang, 54, is known as the founder of China’s high-speed railway technology and an ally of former railway minister Liu Zhijun, Caixin Online reported yesterday. He was being investigated by the Communist Party of China Central Commission for Discipline Inspection, Xinhua said.
• General Motors(GM) is in talks with Turkish authorities to build a plant in western Kocaeli province to make Chevrolet cars, citing Kocaeli chamber of industry head Ayhan Zeytinoglu.
• U.S. Companies Added More-Than-Estimated 217,000 Jobs Last Month, ADP Says. Companies in the U.S. added more workers in February than forecast, indicating the labor market may be strengthening, data from a private report based on payrolls showed today. Employment increased by 217,000 last month after a revised 189,000 gain in January, according to figures from ADP Employer Services. The median estimate in the Bloomberg News survey called for a 180,000 gain last month.
• Hedge Funds, Brokers May Face Fresh Calls for Risk Data. Hedge funds, broker-dealers and mortgage companies may face unprecedented demands for data on everything from risk exposure to trading partners as U.S. regulators seek to identify firms that pose a potential threat to the financial system, a confidential government report says. The staff of the Financial Stability Oversight Council identified dozens of “potential metrics” to decide which non- bank financial firms should be designated “systemically important” and subject to Federal Reserve supervision, according to an 80-page study obtained by Bloomberg News.
• Bridgewater Made $8.7 Billion in 2010 Second Half, Survey Finds. Ray Dalio’s Bridgewater Associates Inc. made $8.7 billion for investors during the second half of 2010, the largest profit posted during the period by any of the world’s 10 biggest hedge-fund managers, according to LCH Investments NV. Bridgewater, based in Westport, Connecticut, has earned $22 billion for investors since its inception in 1975, with more than one-third of the profits generated last year, according to the analysis by LCH, a firm overseen by the Edmond de Rothschild Group, which invests in hedge funds.
• El-Erian Says Pimco Won't Buy EU Peripheral Bonds Until Debt Restructuring. Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian said his funds won’t buy bonds from Greece, Portugal or Ireland until the countries undertake debt restructuring. “We would rather stay on the sidelines until these countries are both willing and able to confront their problems and at that stage, we will consider buying their bonds,” El- Erian told Andrea Catherwood in Bloomberg Television’s “The Last Word” program. El-Erian said he would need to see “an orderly, pre- emptive and voluntary restructuring of the debt, something that we’ve seen in other countries like Uruguay. ‘‘The second condition is a set of structural reforms that allow these economies to grow over time,’’ he said.
• Cotton Futures Top $2 a Pound as Limited Worldwide Supplies Trail Demand. Cotton prices rose, extending a rally above $2 a pound, on signs that global supplies will remain limited this year amid increased demand from China, the world’s biggest consumer. Imports by China in January jumped 31 percent from a year earlier after an 86 percent surge in 2010, government data show. The price in New York more than doubled in the past 12 months, reaching a record of $2.0893 on Feb. 18. The fiber jumped by the exchange limit on ICE Futures U.S. for the fourth straight day after dropping by the maximum in the previous four sessions. Cotton for May delivery rose by the limit of 7 cents, or 3.6 percent, to $2.006 at 12:29 p.m. on ICE in New York. The price has jumped 13 percent since Feb. 24.

Wall Street Journal:

• Rebels Seek Airstrikes by Foreign Forces. Forces loyal to Libyan leader Col. Moammar Gadhafi pushed an offensive into the east, but were resisted by antiregime forces, as Col. Gadhafi warned against a foreign military intervention and rebels called on outside powers to launch tactical airstrikes. Forces loyal to Libyan leader Col. Moammar Gadhafi pushed an offensive into the east Wednesday, but were resisted by antiregime forces, as Col. Gadhafi warned the U.S. and Europe against a military intervention, saying, "we will fight until the last man and woman." U.S. Defense Secretary Robert Gates, testifying before Congress, criticized "loose talk" about any military intervention in Libya. He also said the U.S. military would have to launch pre-emptive strikes to destroy Libya's air defenses, should President Barack Obama order the imposition of a no-fly zone over the North African country, "Let's just call a spade a spade," Mr. Gates said. "A no-fly zone begins with an attack on Libya."
• Muni Default Estimate: $100 Billion. A consulting firm founded by economist Nouriel Roubini said there could be close to $100 billion of municipal-bond defaults over the next five years as state and local government-debt problems damp the U.S. economic recovery. That figure would by most estimates represent a significant increase over defaults in recent history, but it doesn't appear to be as dire as a prediction last year by analyst Meredith Whitney

Bloomberg Businessweek:

• Fed's Treasury Purchases 'Monetizing Debt,' Hoenig Says. Federal Reserve Bank of Kansas City President Thomas Hoenig said the central bank is “monetizing debt” with its purchases of U.S. Treasuries, a program that he says may spur inflation. “Yes, we are monetizing debt,” Hoenig said today in a speech in New York. “You buy bonds and you monetize debt. Right now, a lot of that is going into excess reserves so it is not having an immediate effect on inflation. It will initiate inflationary impulses. It takes time.” Philadelphia Fed President Charles Plosser, Richmond Fed President Jeffrey Lacker and St. Louis’s James Bullard have urged a review of the purchases in light of a strengthening economy and concern over future inflation. The central bank should raise the target federal funds rate to 1 percent from near zero rather than ease during the current economic recovery, Hoenig said, reiterating comments from last year. “You really need to get off of zero, in my opinion,” Hoenig said. “I would think of moving back to 1 percent, and then I would pause. Let the market settle out” and then move to a higher rate, possibly 2 percent. The Kansas City Fed leader also urged breaking up the largest banks, which he said have a lower cost of funds because of an implied government safety net. He would restore the barrier between commercial and investment banking. “I think this is a good idea as they are so large they cannot be allowed to fail,” Hoenig said. Hoenig also said standards for bank capital need to be raised further, and the Basel Committee on Banking Supervision’s overhaul of standards may not go far enough in reducing leverage.

MarketWatch:

• IATA Cuts Airlines' 2011 Profit Forecast. The International Air Transport Association, the global trade organization for airlines, cut its 2011 industry profit forecast Wednesday to $8.6 billion from $9.1 billion, citing the recent spike in jet-fuel prices. Driving the downgrade were Asia-Pacific and Latin American carriers, which are more exposed to the higher fuel costs, the group said. The profit outlook for North American carriers was unchanged.

CNBC.com:

• Apple's(AAPL) Jobs Takes Stage at Apple iPad 2 Launch. Apple CEO Steve Jobs briefly emerged from his medical leave and walked on stage to standing ovation Wednesday to unveil the second-generation of the popular iPad, which will go on sale March 11 in the United States.
• Economy Expands Throughout US: Fed's Beige Book. U.S. economic activity kept slowly gaining strength as 2011 opened and manufacturers and retailers were having some success in pushing their prices up, the Federal Reserve said on Wednesday.
• Buffett: US Should Cut Back on Economic Stimulus.
• 225 Hedge Funds in 'Billion Dollar Club'.
  

Business Insider:

• LIVE: Apple(AAPL) iPad 2 Event.
• LIVE: Retired Libyan General Says Qaddafi Could Hold Out For Months.
• Uh-Oh: There's A Report Going Around That a Saudi Facebook Activist Has Been Killed.
• Map of the Day: The Mass Protest in Tehran That The Government Says Never Happened. Reports are trickling out of Iran of a massive anti-government protest that took place yesterday. Protesters in Tehran's Vali Asr Square chanted "Death to Khamenei," according to Iran Focus. Opposition groups say 79 protesters were arrested.

Zero Hedge:

• How Did Gaddafi Bypass US Anti-Money Laundering Rules to Bank With Goldman(GS) and JPMorgan(JPM).

CBS News:

• Gates: Libyan No-Fly Zone Would Require Attack. Defense Secretary Robert Gates is sharpening his words of caution about providing air cover for Libyan rebels, telling a U.S. congressional committee that establishing a no-fly zone would have to begin with an attack on Libyan territory. Such an attack would be designed to destroy the North African country's air defense weapons.

San Francisco Chronicle:

• Nearly 500 in S.F. Schools to Get Pink Slips. Nearly 500 San Francisco teachers, aides and administrators will find pink slips in their mailboxes within the next two weeks as the school board works to backfill an estimated $27 million shortfall if the state's worst-case budget scenario pans out later this year.

MSNBC:

• U.S. Service Member Shot Dead in Germany. A gunman fired shots at U.S. military personnel on a bus outside Frankfurt airport on Wednesday, killing two people and wounding two others before being taken into custody, police said. U.S. military officials told NBC News that one of the dead was a U.S. service member. The other fatality was the bus driver, police said. Kosovo's interior minister told The Associated Press that German police have identified the gunman as a Kosovo citizen. Kosovo Interior Minister Bajram Rexhepi said in an interview that German police have identified the suspect Arif Uka, a Kosovo citizen from the northern town of Mitrovica.

American Journalism Review:

• The Bloomberg Juggernaut. While many news organizations are struggling and retreating, Bloomberg News keeps adding talented journalists, expanding its empire and elevating its ambitions.

Reuters:

• NYC Police Pension Fund OKs Hedge Fund Stake. The board of New York City's police pension fund has approved the first investment in a hedge fund by any of the city's pension funds, the city comptroller said on Wednesday.
• Record Oil Futures Trading Volumes in February. Traded volumes on the world's two biggest oil futures markets reached record levels in February, boosted by growth of close to 40 percent in futures and options trade on benchmark Brent and WTI contracts. Intercontinental Exchange (ICE) said the average daily trading volume for its futures markets rose 27 percent from the same month a year before to a record 1.74 million contracts. The total futures volume for the month was a record 33 million contracts. Volume in energy futures traded on markets run by the CME Group CME.N, including the New York Mercantile Exchange (NYMEX), averaged 2.2 million contracts a day, up 26 percent from February 2010, CME said. The driving force behind this strong growth was the trade in futures on the NYMEX light, sweet crude oil contract CLc1 known as West Texas Intermediate or WTI, which rose 39 percent to an average daily volume of 935,000 contracts. The options contract rose 35 percent for the month and set its third daily volume record of the year with 325,000 contracts on Feb. 23 surpassing the previous record of 294,000 contracts set at the end of January.

Telegraph:

• Libya: SAS Ready to Seize Col Gaddafi's Stores of Mustard Gas. British special forces are poised to seize caches of mustard gas and other potential chemical weapons being stored by Colonel Muammar Gaddafi’s regime in the Libyan desert.

ICIS:

• Asia will import 200,000 to 300,000 metric tons of naphtha from western markets in April compared with 400,000 tons to 500,000 tons expected to arrive this month, citing traders.

Bangkok Post:

• Burma Halts Rice Exports. Burma has halted rice exports to stockpile the staple, aiming to shield food costs at home from the possible impact of rising oil prices caused by Middle East unrest, an official said Wednesday. "I think the authorities are just concerned about local consumption because of what has happened in Libya,'' an official of the Union of Burma Federation of Chambers of Commerce and Industry told AFP on condition of anonymity. He explained that an increase in oil prices might push up transportation costs and subsequently food prices. "All commodity prices depend on transportation charges, not only rice,'' he added. Firms were told last week to suspend shipments of rice and cancel all contracts for overseas supply, he said.

China National Radio:

• Some Chinese provinces including Shandong, Shanghai and Guangdong may raise minimum wages by as much as 25%, citing local provincial authorities.

CCTV:

• China will offer subsidies to low-income individuals when inflation rises to a "certain level," citing Zhou Wangjun, deputy director of the pricing department at the National Development and Reform Commission.