Today's Headlines

Bloomberg:

• Qaddafi Escalates War Against Rebels as Libya Fight Deepens. Libyan troops loyal to Muammar Qaddafi used artillery and helicopter gunships to block rebels from advancing west from the oil hub of Ras Lanuf toward the leader’s hometown of Sirte. Rebel fighters withdrew from Bin Jawad, 110 miles (160 kilometers) east of Sirte, after battling reinforced pro-Qaddafi troops, said Khaled el-Sayeh, a coordinator between the opposition’s military forces and its interim ruling council in Benghazi. Nine rebels and two of Qaddafi’s soldiers were killed in the fighting, he said. The rebels said today they will bring in reinforcements from the east, the Associated Press reported.
• Greek Debt Rating Cut Three Steps to B1 by Moody's on Rising Default Risk. The cost of insuring Greek debt against default rose to a record after Moody’s Investors Service cut the country’s credit rating by three notches. The Finance Ministry in Athens called the move, which sent its rating to B1 from Ba1, “completely unjustified.” Moody’s said lagging tax collection and “implementation risks” would make it more difficult to reach budget-cutting targets in a 110 billion-euro ($154 billion) bailout. “The risk has materially increased of a default event,” said Sarah Carlson, Moody’s senior analyst for Greece, said in a telephone interview today from London. “Our central view is that the Greek government will achieve its objectives and it won’t need to impose losses on credits, but there are material risks to that outcome.” Credit-default swaps on Greece jumped 50 basis points to a record 1,036, according to CMA. The yield on 10-year Greek notes rose 11 basis points to 12.36 percent, the most in the euro region. The premium that investors demand to hold the bonds instead of benchmark German bunds widened 9 basis points to 907 basis points, the highest since Jan. 10. The outcome of EU summits this month won’t significantly affect Greece’s long-term prospects, Carlson said. “We did consider a range of likely outcomes, but really our concern is much more long term,” she said. “Whatever decisions are taken at the end of the month are not something that would change our long-term outlook.” The Moody’s decision “was hardly a surprise, but it did remind the market of Greece’s deteriorating finances, the high interest-rate burden they face along with the roll-over risk and potential need for restructuring,” said Charles Diebel, head of market strategy at Lloyds Bank Corporate Markets in London. “Greece at this point in time is in considerable trouble.”
• Oil Rises to 29-Month High; Citigroup Sees Brent 'Fear Premium'. Oil rose to a 29-month high in New York as escalating violence in Libya bolstered concern that supply disruptions may spread through the Middle East. Crude climbed 1 percent after fighting between Libyan rebels and troops loyal to Muammar Qaddafi intensified. Hedge funds raised purchases of futures to a record for a second week on speculation unrest will cut output further. Citigroup Inc. increased its Brent oil price estimate, saying the threat of more disruptions supports a “fear premium.” “The focus remains on Libya and on fears of a contagion effect that will impact other oil-exporting countries in the Middle East,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Libya appears to be spiraling into civil war, which will keep prices rising.” Crude oil for April delivery rose $1.02 to $105.44 a barrel on the New York Mercantile Exchange, the highest closing price since Sept. 26, 2008. The contract is up 29 percent from a year ago. Brent crude oil for April settlement slipped 79 cents, or 0.7 percent, to $115.18 a barrel on the London-based ICE Futures Europe exchange.
• Oil at $110 May Trigger Pain U.S. CEOs Weathered at $100. A recovering economy helped U.S. chief executive officers weather crude’s surge past the $100 mark. At $110 a barrel, the pain would start to kick in. As oil traded at 29-month highs last week on concern that violence in Libya would further crimp Middle Eastern supplies, CEOs said they were waiting to see how much the price rises, and for how long. “Any time something like oil goes up dramatically overnight, it becomes very hard to adequately plan,” said Samuel Allen, 57, chairman and CEO of Deere & Co. (DE), the world’s largest maker of agricultural equipment. “It has caused us to be more careful or cautious in watching the outlook, but we have still moved forward with all our plans.” Corporate assumptions would have to start changing when oil reaches $110 a barrel, according to economists such as Chris Low of FTN Financial in New York.
• Evans Says Hurdle 'High' for Fed to Alter Bond Purchase Plan. Chicago Federal Reserve Bank President Charles Evans said the hurdle for altering the Fed’s current $600 billion Treasury purchase plan is “high,” and that a tapering of the purchases is unlikely. “It looks more and more to me like $600 billion is a good number,” Evans, 53, said today in an interview today with CNBC. “I continue to think the hurdle is pretty high” for changing the program and “we’re going to continue to need short-term interest rates to be low for an extended period of time.” Rising oil prices are a “headwind for the real economy” and yet shouldn’t lead to higher underlying inflation, said Evans, who votes on the Federal Open Market Committee this year. Treasury markets are “so deep and liquid that there doesn’t seem to be a need” to taper the purchases, Evans said. “I wouldn’t be surprised that if we decide to end it, we just end it,” he said, referring to the purchase plan.
• Goldman(GS) Leads M&A List Spurred by Commodities Demand in BRICs. The merger boom that started in 2010 isn’t looking like any of the past three. The takeover binge of the 1980s was fueled by Michael Milken’s junk bonds; the late- 1990s wave of Internet and telecom deals, by inflated stock prices; and the private-equity frenzy that produced a record year for deals in 2007, by leveraged loans. The more recent surge comes from the expanding BRIC economies -- Brazil, Russia, India and China -- and beyond. Deals are rising among the companies that supply raw materials to these countries. Worldwide deals in energy, power and basic materials made up about a third of the merger and acquisition market in 2010, compared with about 20 percent in the previous decade, according to data compiled by Bloomberg. Companies with headquarters in emerging markets played a role in more than a third of 2010 takeovers, about twice their historical share.
• Rajaratnam Trial May Tarnish Goldman(GS), McKinsey, Spark Lawsuits. Goldman Sachs Group Inc. (GS), McKinsey & Co. and Intel Corp. (INTC) are among the companies that may be sued or suffer damage to their reputations after witnesses at the trial of Galleon Group LLC co-founder Raj Rajaratnam describe insider leaks. Rajaratnam, 52, goes on trial tomorrow for trading on tips gleaned from sources inside these and other companies, including Morgan Stanley, International Business Machines Corp. (IBM) and Moody’s Investors Service Inc. If the billionaire native of Sri Lanka is convicted by a Manhattan jury, U.S. prosecutors may seek to jail him for more than 10 years.
• Teacher Security Blanket May Shred as Governors Hit 'Ignorance Factories'. U.S. public-school teachers are facing the biggest challenge to their job security in more than half a century as politicians target seniority rules that make the last hired the first fired when jobs are cut. New Jersey Governor Chris Christie, a Republican, Los Angeles Mayor Antonio Villaraigosa, a Democrat, and New York Mayor Michael Bloomberg, an independent, are among officials pushing for changes in laws in coming months to let them fire underperforming teachers. As budget cuts threaten the jobs of thousands of school employees, officials are demanding the right to keep the most talented, even if they’re the least experienced. The proposed changes may undercut the power of teachers’ unions. They intensify the debate on how to judge instructor’s effectiveness as U.S. students lag behind international peers.
• The US dollar may reverse declines that have seen the currency drop 3.5% this year after bets on its depreciation against its major counterparts climbed to the most on record, according to UBS AG. Bets on the dollar weakening, so-called net shorts, surged in the week ended March 1 to the highest since the CFTC began publishing the data in 2003. "Investors should prepare for possible unwinding of these negative bets against the dollar, which are extreme at the moment."
• Fed's Fisher Says He May Vote to Curtail Asset Purchase Program. Federal Reserve Bank of Dallas President Richard W. Fisher said he might vote to cut short the central bank’s program of large-scale asset purchases if he believed it to be “counterproductive.” “I remain doubtful enough as to its efficacy that if at any time between now and June, it should prove demonstrably counterproductive, I will vote to curtail or perhaps discontinue it,” Fisher said in the text of a speech today in Washington. Fisher repeated that he would vote against extending or enlarging the purchases “barring some frightful development.” “The liquidity tanks are full, if not brimming over,” Fisher said at the Institute of International Bankers Annual Washington Conference. “The Fed has done its job. What is needed now is for business to be incentivized to commit that liquidity to creating American jobs. This is the task of the fiscal authorities, not the Federal Reserve.” The program “might well retard job creation,” Fisher said, if it leads to rising inflation expectations or a perception that the Fed was enabling the “fiscal irresponsibility” of Congress. This fiscal year’s budget deficit is projected to reach $1.5 trillion, according to a Congressional Budget Office estimate released Jan. 26. The deficit was $1.29 trillion last year after a record $1.42 trillion in 2009. “The U.S. economy is afflicted with the pathology of structural deficits,” Fisher said. “This leaves the nation poorly positioned to weather the next recession or shock to come our way. I devoutly hope our next downturn won’t come for quite some time, but it surely will come eventually.”
• Western Digital(WDC) Agrees to Buy Hitachi Unit for $4.3 Billion. Western Digital Corp. (WDC), the largest maker of computer hard-disk drives, agreed to buy a rival unit of Hitachi Ltd. (6501) for about $4.3 billion in cash and stock to reduce costs as the industry shrinks amid waning demand. Western Digital will pay $3.5 billion in cash and give Hitachi 25 million of its shares, the companies said in a statement today. Hitachi will own about 10 percent of Irvine, California-based Western Digital after the deal is completed and will gain two seats on the company’s board.

Wall Street Journal:

• Gadhafi Forces Strike Rebels; No-Fly Plan Discussed. Forces loyal to Col. Moammar Gadhafi launched airstrikes on a rebel-held town Monday to check the rebels' advance west toward the capital, as the U.S. and allies said they were discussing military options.
• Bahrain Protesters Defy Police. Hundreds of hard-line Bahraini opposition protesters gathered in Manama's financial center on Monday, defying a police order to disperse, in a new escalation of tensions between antigovernment demonstrators and the ruling Al-Khalifa family. A small number of protesters pitched tents Sunday night at the base of two skyscrapers in the heart of the financial center, but were warned by police to move on, demonstrators said. Amid fears of a crackdown, the number of protesters began to swell, with hundreds calling for the fall of the ruling family and choking traffic at one of the capital's busiest intersections.
• Airlines to Load On More Fees. After Checked Bags, Carriers Seek to Charge for Early Boarding, Fancier Foods and Reclining Seats.
• Schwab Survey: 77% of Advisers See S&P 500 Rising in Next 6 Months. Optimism is growing among independent registered investment advisers, with 77% expecting the Standard and Poor's 500 stock index to rise in the next six months, compared with 63% in July.
• UBS's(UBS) Prime-Brokerage Head Bolts for BofA(BAC).
• "China is on the verge of exporting inflation globally," according to Andrew Milligan, head of global strategy at Standard Life Investments. Chinese producer prices for light industry, including toys and home appliances, rose faster in December than they did when the inflation rate peaked in July 2008. Prices were 4.8% higher than a year ago. Rising wages are largely responsible for the pickup in inflation, Milligan wrote today. Pay for rural migrant workers rose last year by about 15%, exceeding a 10% increase in average urban wages, he wrote. Land, energy and environmental costs are contributing to price increases as well, he said. Sale prices for land advanced 14.8% in the fourth quarter from a year earlier after surging more than 20% in each of the first three quarters. "Long-term inflation trends are a concern," Milligan wrote. "The authorities are behind the curve, and have more to do."
• ObamaCare's March Madness. After one year as the law of the land, mayhem abounds.

MarketWatch:

• Ciena(CIEN) Shares Drop After Disappointing Forecast. Ciena Corp. reported a wider net loss for its fiscal first quarter Monday despite a sizable jump in revenue, which came in even higher than analysts expected. However, Ciena’s (CIEN 25.42, -3.39, -11.77%) shares slumped more than 9% by midmorning after the maker of optical-networking gear issued a lower-than-expected revenue forecast for the current quarter.

CNBC.com:

• Hedge Fund Titans Struggling to Outrun S&P. Some of the best-known hedge funds have struggled this year to outperform the stock market, with many turning in 3 percent or 4 percent year-to-date returns during a period where the S&P 500 was up nearly 6 percent.
• Will California Fall into 'The Black Hole'? California only has a short amount of time to fix its troubled economy, with an $84 billion budget and $24 billion deficit, or else it will deteriorate to the point of no return, Sean Egan, founding partner and president of Egan-Jones Rating Company, told CNBC on Monday.
• Gaddafi 'Unlikely' to Leave Libya Despite Report: US. Libyan leader Muammar Gaddafi is "unlikely" to be seeking safe passage out of his war-torn country despite a BBC report that he was preparing to leave, US officials told NBC News.

Business Insider:

• Cotton: The Fabric of Our Lives and The Trade of a Lifetime. It looks like cotton is the new gold.
• Civil War Live: Qaddafi Bombs Ras Lanuf Again. (pic)
  

Zero Hedge:

• February $233 Billion Budget Deficit Largest Ever.
• Obama Says NATO Considering Military Options Against Libya.
• Goldman(GS) Now 3 Out of 5 in World Monetary Domination: Goldmanite to Replace Andrew Sentance at Bank of England.
  

Washington Post:

• Obama to Restart Guantanamo Trials. The Associated Press has learned that President Barack Obama is approving the resumption of military trials for detainees at the U.S. prison at Guantanamo Bay, Cuba, ending a two-year ban. A senior military official says Obama will issue an executive order Monday. Defense Secretary Robert Gates will rescind his January 2009 ban against bringing new cases against the terror suspects at the detention facility. Obama vowed when he took office to close the detention facility at Guantanamo, but officials have recently acknowledged that closure is not likely because of questions about where terror suspects would be held.

Charlotte Observer:

• Analysts Have Hard Questions for Bank of America(BAC). Investors will be looking for answers about lingering mortgage losses and future growth strategies at Bank of America’s investor conference Tuesday, but they shouldn’t expect any big surprises, analysts say.
  

Rasmussen Reports:

• 54% Favor Repeal of Health Care Bill. The latest Rasmussen Reports national telephone survey of Likely Voters shows that 54% favor repeal of the law, including 44% who Strongly Favor repeal. Thirty-nine percent (39%) oppose repeal of the law, including 31% who are Strongly Opposed.

Reuters:

• Morgan Stanley(MS) Cancels All Libya Oil Trade. Wall Street bank Morgan Stanley has stopped trading crude and refined products with Libya to comply with U.S. sanctions against the Gaddafi government, a source familiar with the firm's transactions said. All contracts were cancelled over the past week "due to the OFAC," he said, referring to the U.S. Office of Foreign Assets Control, which controls trade sanctions.
• Rising Food Prices Could Force US Eatery Overhaul. Record-high food prices could be the tipping point this year for U.S. restaurants already struggling with high debt loads and tight-fisted consumers. The economic downturn and drop in consumer spending has sent a handful of restaurant chains -- such as Uno Chicago Grill pizza, Fuddruckers and Charlie Brown's Steakhouse -- into bankruptcy court during the past year. And 2011 is not likely to be much better, experts say.

Financial Times:

• The European Banking Authority plans to introduce a "near-fail" category into the stress-test process as part of a more robust mechanism for compelling weaker banks to recapitalize.

The Independent:

• Stephen King: The ECB Needs to Look at the Bigger Picture Beyond the German Economy. Outlook: With 70 per cent of the eurozone in a sickly economic state, is it right that interest rates should be going up?

Shanghai Daily:

• China Reserve Ratio May Increase This Week. CHINA'S central bank may raise bank reserve requirement ratio as early as this week as it continues to step up its fight against inflation because China has prioritized keeping prices stable in this year's government agenda, analysts said yesterday. In his government work report delivered to the annual session of the National People's Congress over the weekend, Premier Wen Jiabao reaffirmed the central government's determination to battle inflation this year. "It's rare to see 15 mentions of pricing in the government's prudent work report," said Lu Zhengwei, Industrial Bank's senior economist said yesterday. "As short-term policy follow-up, one more reserve requirement increase is likely to come between March 11 and March 20," Lu said.