Today's Headlines

Bloomberg:

• Euro Weakens as Spain's Credit Downgrade Revives Debt Concerns in Region. The euro fell to the lowest level in a week against the dollar after Moody’s Investors Service lowered Spain’s credit rating, increasing pressure on European leaders to find a solution to the region’s debt crisis. The shared currency weakened against most of its major peers as Spanish debt was downgraded to Aa2 by Moody’s, which also cut Greece’s ranking this week. Currencies of commodity- exporting countries weakened after China reported an unexpected trade deficit and crude oil prices fell. “The greatest risk that the market is starting to fear is that the spate of downgrades within the euro zone and the expansion of the periphery credit risks could force the European Central Bank to possibly delay the rate hike, which is already priced into the currency.” The euro declined by 0.8 percent to $1.3803 as of 10:54 a.m. in New York, from $1.3909 yesterday.
• Bank of Spain Says 12 Lenders Need to Raise $21 Billion or Risk Takeover. Twelve Spanish lenders need to raise 15.2 billion euros ($21 billion) to meet new minimum capital levels or risk partial nationalization, the Bank of Spain said. Eight savings banks, known as cajas, need to raise capital. Local subsidiaries of Barclays Plc (BARC) and Deutsche Bank AG (DBK), and Spanish lenders Bankinter SA (BKT) and Bankpyme must also seek funds and have committed to do so, the Bank of Spain said in a statement in Madrid today. The lenders have until September to meet new core capital requirements of 8 percent for listed lenders or 10 percent for banks without shareholders that also depend on wholesale financing. They can seek an extension until 2012 if they commit to listing shares.
• Jobless Claims in the U.S. Rose 26,000 Last Week to 397,000. First-time claims for jobless benefits rose last week from an almost three-year low, highlighting the uneven nature of the improvement in the U.S. labor market. Applications for first-time unemployment benefits increased by 26,000 to 397,000 in the week ended March 5, Labor Department figures showed today. Economists forecast claims would climb to 376,000, according to the median estimate in a Bloomberg News survey.
• The cost to protect debt from Morgan Stanley(MS), Bank of America(BAC), Goldman Sachs(GS) and Merrill Lynch climbed as reports cast doubt on the strength of the global economic recovery. Credit default swaps on Morgan Stanley jumped 10 basis points to a mid-price of 148 and those on Bank of America increased 6 basis points to a mid-price of 145 at 9:56 am in NY, according to broker Phoenix Partners Group. Contracts on Goldman Sachs added 5 basis points to a mid-price of 117.5 and those on Merrill climbed to 146.5, the data show. "In the event of a slowdown in global growth, which in turn will put pressure on risk assets, financials will feel the impact on the earnings front as well as their huge balance sheets," Adrian Miller, fixed income strategist at Miller Tabak said.
• Consumer Comfort in U.S. Drops to One-Month Low on Fuel. Consumer confidence fell last week to the lowest level in a month as surging gasoline prices soured Americans’ outlook about their finances and the economy. The Bloomberg Consumer Comfort Index dropped to minus 44.5 in the period to March 6, from the prior week’s minus 39.7, which was close to the highest in almost three years. Sentiment suffered the most among respondents who lacked a full-time job or any employment and those earning less than $50,000 a year. Gasoline costs have increased every day except one since mid-February, dealing a financial blow to households just as the labor market shows signs of improvement. The added burden of higher prices at the pump may restrain the gains in consumer spending that are bolstering the expansion. “Rising gasoline prices extracted a toll,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Those at the lower end of the income ladder and those in the middle are being squeezed by rising costs of fuel and food, which does not bode well for discretionary spending.”
• Green Mountain(GMCR) Soars on Starbucks(SBUX) K-Cup Coffee Distribution Deal. Green Mountain Coffee Roasters Inc. (GMCR) surged as much as 32 percent in early trading after agreeing to distribute Starbucks Corp. (SBUX)’s coffee and teas for its single- serve Keurig brewing systems. Starbucks, the world’s biggest coffee chain, jumped as much as 7.8 percent.
• OPEC Crude Shipments to Fall for Fifth Week, Oil Movements Says. The Organization of Petroleum Exporting Countries will reduce crude exports for a fifth time in the four weeks through March 26, according to tanker-tracker Oil Movements. Loadings will drop to 23.56 million barrels a day in the period, down 1.3 percent from 23.88 million barrels a day in the four weeks to Feb. 26, the Halifax, England-based company said in a report. Exports from Middle Eastern producers, including non-OPEC members Oman and Yemen, will decline 2.3 percent to 17.36 million barrels a day, Oil Movements’ data show. A total of 473.59 million barrels of crude will be on board tankers in the month to March 26, a drop of 2.3 percent from 484.51 million on Feb. 26, according to Oil Movements, which calculates shipments by keeping a tally of tanker-rental agreements.
• Asia Property Commitments Jump 45% as 'Great Wall of Money' Target China. The money earmarked for property investments in the Asia-Pacific region rose 45 percent in the second half as China’s expanding economy made them more attractive, according to estimates compiled by DTZ Group Plc. Real-estate funds and companies had about $104 billion available for investments in the region, up from $71 billion a year earlier, the London-based property broker said in a report today. Local funds and companies accounted for 92 percent of the total, according to DTZ’s “Great Wall of Money” study. “China and Australia remain the most popular target countries in the region,” said David Green-Morgan, head of research for the Asia-Pacific countries. The region accounted for almost 32 percent of the $329 billion set aside for real-estate acquisitions at the end of 2010, up from 24 percent a year earlier, DTZ’s study showed. China attracted the most real-estate investment in the world for a second straight year in 2010, New York-based Real Capital Analytics Inc. said in January. Most of the $197 billion spent in the country was used to buy development sites, the property-research firm said.
• Oil in N.Y. Falls the Most in Almost Four Months on European Debt Concern. Oil in New York fell the most in almost four months after U.S. unemployment claims increased and Spain’s credit rating was cut, bolstering concern that the global economic recovery and fuel-demand growth will slow. Futures slipped as much as 3.6 percent after the Labor Department said applications for jobless benefits rose by 26,000 to 397,000 last week. Moody’s Investors Service reduced Spain’s rating to Aa2, saying the government underestimated the cost of shoring up its banking industry. Oil climbed 0.7 percent earlier as fighting shut Libya’s biggest refinery. “A spate of bad economic news has increased concerns about demand,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The supply losses from Libya have already been factored into the price, now demand worries are being factored in.” Crude oil for April delivery declined $3.33, or 3.2 percent, to $101.05 a barrel at 10:53 a.m. on the New York Mercantile Exchange. Prices are up 23 percent from a year ago.
• Copper Drops to Lowest Price Since December as Imports Into China Tumble. Copper fell to the lowest in almost three months as imports slowed in China, the world’s biggest user, and amid rising concern that global growth may ease. In February, China’s purchases of copper and products tumbled 35 percent from a month earlier to the lowest in more than two years, customs figures showed today. “The market is down for a number of things,” said Rick de los Reyes, who manages $700 million at T. Rowe Price Group Inc.’s Global Metals and Mining Fund in Baltimore. “We still have geopolitical concerns in the Middle East and northern Africa. Now, you’ve got the European sovereign debt concerns coming back. On top of that, there’s a bit of weakness in the physical commodity market.” Copper futures for May delivery dropped 4.35 cents, or 1 percent, to $4.169 a pound at 10:18 a.m. on the Comex in New York. Earlier, the price reached $4.136, the lowest for a most- active contract since Dec. 17. “The market has been waiting expectantly for signs of life in Chinese copper demand in the post-New Year period, but so far the signs are not good,” said Nic Brown, an analyst at Natixis Commodity Markets Ltd. in London. Most of the 550,000 metric tons of copper stockpiled in so- called bonded warehouses in Shanghai at the end of February was being used as collateral to obtain funds, Standard Chartered Plc analyst Dan Smith wrote in a report dated March 7.
• Marijuana IPOs Provide Investors With Entry to Cannabis Boom. In an industrial section of Oakland, California, former Morgan Stanley investment banker Derek Peterson hops into a trailer being outfitted with shower drains, lights and humidifiers, all used for growing marijuana. “This is one we’re finishing up, what we call our bloom room,” he said. Peterson, 36, sells the trailers for $30,000 to $80,000 as “plug-and-play” facilities for cultivating pot. Customers don’t need to buy hydroponic equipment or even stay on-site -- lighting, temperature, nutrients, water and humidity can be operated remotely via an iPhone app. The legalization of medical marijuana -- permitted in at least 15 states -- has kicked off a booming economy in ancillary goods. Startups such as Peterson’s GrowOp Technology Ltd. and General Cannabis Inc. (CANA) compare the phenomenon to the California gold rush, when the people making the real money were the ones selling pick axes and shovels. Both companies are planning initial public offerings, part of an effort to remove the stigma from what’s seen as a multibillion-dollar industry.

Wall Street Journal:

• France Recognizes Libya Rebels, Gadhafi Forces Advance. Col. Moammar Gadhafi's government suffered a series of diplomatic setbacks Thursday—with France formally recognizing Libya's main opposition group, the U.S. saying it will hold talks with the rebels, and European nations extending sanctions on the Libyan government and its banks. Forces loyal to Col. Gadhafi, meanwhile, pressed ahead in offensives against rebel-held towns. Rebel forces retreated from the strategic oil port of Ras Lanuf on Thursday, speeding back to opposition territory by the hundreds as Col. Gadhafi's army pounded the town with artillery, the Associated Press reported. The government also remained in control of the central square of Zawiya, west of the capital, after recapturing it from rebels Wednesday.
• Chaos Reigns in Wisconsin as Democrats Prepare to Return. Wisconsin Senate Democrats prepared to return to the state Capitol, in the wake of the passage Wednesday night by Republicans of a bill that would eliminate most collective-bargaining rights for public employees' unions. The timing of their return, however, remained uncertain, as several Democratic senators said they wanted to wait to see whether the state's Republican-controlled Assembly passed the bill. "The plan is for the Democrats to be in Madison on Saturday," said Democratic Sen. Bob Jauch. "You can't do anything to block the bill," However, Democratic Sen. Fred Risser said the Democrats planned to meet midday Thursday and see what action the Assembly takes before deciding exactly when to come back.
• NY State Senator In Corruption Probe. State Sen. Carl Kruger is expected to surrender to federal authorities on Thursday morning to face corruption charges. The probe threatens to topple a veteran Brooklyn Democrat, who as recently as last year commanded one of the Legislature's most influential posts. The expected charges would make him the third state senator to face corruption allegations in less than four months.
• France's Lagarde: Increase in Oil Speculation Unacceptable. French Finance Minister Christine Lagarde said Thursday that the recent increase in speculation on the oil market is unacceptable. "Since January there has been a significant increase in speculative activities on the oil market, such as derivatives and futures," she said in an interview with local radio France Info. "This is not acceptable." There is a need to set rules for those speculation moves that contribute to boosting the price increases, she said.

MarketWatch:

• US Posts Record Monthly Budget Deficit. The U.S. government posted a budget deficit of $222.5 billion in February, the largest monthly deficit on record, the Treasury Department reported Thursday. The government spent about $333 billion in the month and took in about $110 billion. Compared to February 2010, corporate tax receipts were 69% lower. On the spending side, the U.S. spent 29% more than a year ago on interest on the U.S. debt.

Business Insider:

• The Gory Details: Tim Armstrong's Layoffs Memo. AOL is going to fire hundreds of people today following its merger with the Huffington Post. We have the memo from AOL CEO Tim Armstrong. Highlights:
• Civil War Live: Qaddafi's Son Says It's Time for Full-Scale Military Action.
• Watch Protests Happening in Saudi Arabia Right Now.
• The SEC Warns Hedge Funds: If You Beat The Market By 3%, We Are Looking Into You. Pretty remarkable. If you beat the market, expect the SEC to come calling, as part of its new job of regulating hedge funds. Dow Jones:
• A Big, Beautiful, And Bullish 140-Year Look at Equities Vs. Commodities. (graph)
  

Zero Hedge:

• NYSE Short Interest Declines Again, Just In Time for Market Drop. (graph)
• US Trade Deficit Surges to $46.3 Billion on Expectations of $41.5 Billion: Downward GDP Revisions Coming.
• And Here We Go: Goldman Says "News Reinforces Our Sense of Downside Risk to Q1 Growth".
  

New York Times:

• JPMorgan(JPM) Says Dodd-Frank Favors Europe's Banks. New financial regulations emerging from Washington could increase the bottom lines of some banks — just not banks on Wall Street. The regulations instead encourage big European banks to steal business from their United States rivals, according to a new report by analysts at JPMorgan Chase’s British investment bank in London, JPMorgan Cazenove. The rules lose their authority at the United States border, leaving foreign banks to dominate.
• Researchers Show How a Car's Electronics Can Be Taken Over Remotely. With a modest amount of expertise, computer hackers could gain remote access to someone’s car — just as they do to people’s personal computers — and take over the vehicle’s basic functions, including control of its engine, according to a report by computer scientists from the University of California, San Diego and the University of Washington.
• More Foreign-Born Scholars Lead U.S. Universities. When Molly Easo Smith delivered her inaugural address as president of Manhattanville College last spring, she opened with an unusual line: “Welcome, namaste, vannakkam, namaskaaram, bienvenidos and welcome.” Three of the greetings were in languages from her native India: Hindi, Tamil and Malayalam. They reflected the striking journey Dr. Smith had made from her birthplace in Chennai — where she had never dated or been outdoors past 6 p.m. when she left at age 23 — to the pinnacle of American higher education: a college presidency.

Washington Post:

• Saudi Police Open Fire at Protest. Saudi police opened fire Thursday to disperse a protest in the mainly Shiite east, leaving at least one man injured, as the government struggled to prevent a wave of unrest sweeping the Arab world from reaching the kingdom. The rare violence raised concern about a crackdown ahead of more planned protests after Friday prayers in different cities throughout the oil-rich kingdom. The pro-Western monarchy is concerned protests could open footholds for Shiite powerhouse Iran and has accused foreigners of stoking the protests, which are officially forbidden. Despite the ban and a warning that security forces will act against them, protesters demanding the release of political prisoners took to the streets for a second day in the eastern city of Qatif. Several hundred protesters, some wearing face masks to avoid being identified, marched after dark asking for "Freedom for prisoners." Police, who were lined up opposite the protesters, fired percussion bombs, followed by gunfire, causing the crowd to scatter, a witness said, speaking on condition of anonymity for fear of government retaliation.

All Facebook:

• Facebook Fueling Gas Boycotts. People are posting on Facebook about nationwide gas boycotts — one occurring tomorrow and another on May 15 — at an increasing pace. In some states, the price of gasoline has risen as much as 47 cents a gallon in the past month, fueling consumer rage and pushing many to call for the boycotts.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 23% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Thirty-nine percent (39%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -16 (see trends).

Reuters:

• Libyan TV Reports Clearing Es Sider of Rebels. Libyan state television reported on Thursday that forces loyal to Muammar Gaddafi forces had cleared Es Sider port and airport from what it said were armed elements backed by al Qaeda, a reference to rebels. Gaddafi's forces bombarded rebels positions on Thursday and moved towards rebel positions around the oil terminal of Es Sider and Ras Lanuf, another oil port further to the east.
• Soros, Albright Invest $250 Million in APR Energy. A fund affiliated with hedge fund billionaire George Soros and one linked to former U.S. Secretary of State Madeleine Albright are buying a controlling stake in APR Energy, a company that mainly supplies temporary power in developing countries, for $250 million. APR Energy, which dominates the market for international temporary power generation services along with larger listed rival Aggreko Plc, said it will use the investment from Soros' Quantum Strategic Partners and Albright Capital Management LLC to expand its fleet of power generators.
• Federal Grand Jury Indicts Saudi Accused in U.S. Bomb Plot. A federal grand jury on Wednesday indicted a 20-year-old Saudi student accused in a bomb plot with targets including the Dallas home of former President George W. Bush. Jurors determined federal authorities had enough evidence to take Khalid Aldawsari to trial on a charge of attempting to use a weapon of mass destruction. If convicted, the former chemical engineering exchange student could face up to life in prison. U.S. District Judge Sam Cummings issued a gag order in the case on Wednesday barring Aldawsari and attorneys involved in the case from talking to the media.
• Credit Suisse in $70 Million Accord Over Subprime. Credit Suisse Group AG has agreed to a $70 million settlement of U.S. litigation accusing the Swiss bank of misleading investors about its subprime exposure and ability to limit losses. Investors accused Credit Suisse of falsely representing that it had been successful in limiting its subprime asset exposure and losses from the subprime and credit crises because it had exceptional risk management and internal controls. The proposed settlement also covers several officials, including Chief Executive Brady Dougan.

Telegraph:

• EU Paralysis Drives Fresh Bond Rout. Political paralysis in Brussels and monetary tightening by the European Central Bank has set off a fresh spasm of the eurozone bond crisis, pushing spreads on Portuguese, Irish and Greek bonds to post-EMU records.

Europa Press:

• The Spanish government defeated an amendment repealing cuts in the subsidies for photovoltaic power plants.

Handelsblatt:

• An IMF report shows that regulators haven't gone far enough in taming potential financial-market excesses since the economic crisis began. Banks remain too big and their businesses even more complex even after efforts to curb their latent capacity to rock the financial system, according to the IMF report. "We are at the moment even less well-prepared than when the crisis erupted in 2007," the report said. Co-written by IMF Chief Economist Olivier Blanchard, the document says investors are switching to financial institutions that are less regulated, such as hedge funds, in search of profit, creating new risks for the financial system.

Le Monde:

• France is in favor of joint air strikes alongside the UK aimed at neutralizing the capability of Muammar Qaddafi to bombard his opponents, citing people at France's foreign ministry. France wants air strikes rather than a no-fly zone.

China Forex:

• China should oversee an orderly outflow of capital from the country, including pushing trials to let individuals make direct investments overseas, Sun Lujun, head of the capital account management department at the State Administration of Foreign Exchange, wrote in a commentary. The country should appropriately raise interest rates to east pressure from cross-border capital flows, citing Mei Xinyu, a researcher at the Ministry of Commerce's Chinese Academy of International Trade and Economic Cooperation. China should properly tighten control on capital inflows, including slowing down approvals for Qualified Foreign Institutional Investors, citing Mei.

Libyan State-Run News:

• Libya's state-run news agency said today it has learned a "grave secret" about the finances of the last campaign of French President Nicolas Sarkozy. The secret will "definitely lead to Sarkozy's fall," state-run tv said in an on-screen news bulletin.