Today's Headlines

Bloomberg:

• Irish, Portuguese Bonds Sink on Debt Concern; Euro Falls. Irish notes slid, leading bonds of Europe’s most indebted nations lower, and the euro fell on concern Europe is struggling to fix its government-finance crisis. Irish 2-year note yields surged 63 basis points to 9.87 percent and rose as high as 10.18 percent, the most since 2003. Yields on similar-maturity Portuguese and Greek debt climbed at least 18 basis points. The slump in Irish notes came after EU finance chiefs settled yesterday on how to enable a permanent rescue fund to lend 500 billion euros ($712 billion) as of 2013, while remaining divided over how to get the current stopgap fund to its full capacity. The Portuguese government forecast that the economy will contract this year as investment declines and it cuts spending to narrow the budget deficit. “The problems in the periphery have not lessened,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York, said in a note to clients. “ The real immediate focus is on Portugal. The government’s new austerity measures will be debated tomorrow.” Ten-year Portuguese yields jumped 13 basis points to 7.50 percent, after retreating for two straight days, and the spread above benchmark German bund yields widened 10 basis points to 4.23 percentage points. Portugal’s government may collapse tomorrow as the country’s parliament votes on a plan for fiscal austerity measures, JPMorgan Chase & Co. economist Nicola Mai said in a note e-mailed to investors. Credit-default swaps protecting Irish government debt rose 40.1 basis points to 628.8 basis points, according to data provider CMA, and the yield on the 10-year note surged 24 basis points to 9.84 percent. Europe’s efforts to tackle its sovereign debt crisis aren’t persuading money managers to buy bonds from the region’s most indebted nations. Work toward a solution to the region’s credit woes is scheduled to culminate at a March 24-25 summit of European leaders.
• U.S. Says Libyan Campaign to Ease as No-Fly Zone Secured. U.S. Defense Secretary Robert Gates said the intensity of the military campaign in Libya will ease soon after allied forces imposed a no-fly zone on Muammar Qaddafi’s regime, enabling rebels to push out of their eastern Benghazi stronghold. The fighting “should recede in the next few days,” Gates said at a press conference in Moscow today. Opposition fighters advanced on the central gateway city of Ajdabiya, which is held by loyalist troops, according to the Associated Press. Qaddafi’s army units continued to shell the western, rebel-held city of Misrata for a second day, residents said.
• Crude Oil Futures Increase as Japan Reconstruction May Bolster Fuel Demand. Crude rose on speculation Japanese rebuilding efforts will bolster fuel consumption and as unrest spread in the Middle East and North Africa. Crude oil for April delivery increased $1.55, or 1.5 percent, to $103.88 a barrel at 12:38 p.m. on the New York Mercantile Exchange. April futures expire today. The more-active May oil contract advanced $1.33, or 1.3 percent, to $104.42. Brent oil for May settlement rose 83 cents, or 0.7 percent, to $115.79 a barrel on the London-based ICE Futures Europe exchange.
• U.S. Facing Loss of Key Ally Against Al-Qaeda Group in Yemen. President Barack Obama is on the verge of losing a key ally in the fight against al-Qaeda, as Yemeni President Ali Abdullah Saleh attempted today to set conditions for quitting in the face of a popular uprising and defections among his ruling elite. “It’s clear at this point that Saleh will have to step down,” Barbara Bodine, a former U.S. ambassador to Yemen, said in an interview yesterday. With the “mounting numbers of senior people in his administration resigning, we know it’s over. The terms of his departure, I think, are still being negotiated.” The March 18 killing of at least 46 protesters allegedly by police and pro-regime gunmen -- which drew condemnation from Obama and Secretary of State Hillary Clinton and prompted the defection of key military, tribal and government officials -- may well be the tipping point.
• Bad Weather Hampers Japan Aid Efforts For Thousands in Temporary Shelters. Freezing rain and snow is slowing Japan’s relief efforts in areas hardest hit by the record earthquake and tsunami 11 days ago as the government struggles to restore communications to cut-off towns and villages.
• Sony(SNE) Shuts More Plants in Japan, Toyota(TM) Extends Halts as Recession Looms. Sony Corp. (6758) shut five more plants and Toyota Motor Corp. (7203) extended production halts, 11 days after an earthquake and tsunami that’s bringing scores of Japanese factories to a standstill and threatening to spark a recession. Sony, Japan’s biggest exporter of consumer electronics, today suspended some work at five plants in the central and southern regions until March 31 because of trouble getting supplies after power outages, the Tokyo-based company said in a statement. Toyota, the world’s biggest carmaker, said all domestic car-assembly will be stopped until March 26, while Honda Motor Co. also extended closures. The moves come as Morgan Stanley estimated that damage to the earthquake-stricken northeast, including disruptions to power and distribution systems, may cause the world’s third- largest economy to shrink in the second quarter at an annualized rate of 6 percent to 12 percent. A recession is “almost certain,” according to Mizuho Securities Co. “Companies’ production and people’s consumption will be stuck in an abnormal state at least for the next six months,” said Naoki Iizuka, a senior economist at Mizuho Financial Group Inc. (8411) in Tokyo. “The electricity shortage will continue to hamper economic activity.”
• Hynix Semiconductor, the world's second-largest maker of computer-memory chips, said it is increasing orders for silicon wafers to preempt any possible shortage of the material following Japan's March 11 earthquake. Hynix has asked its suppliers to increase shipments of the components, Park Hyun, a spokesman for the Ichon, South-Korea-based company said. The semiconductor industry faces possible shortages of silicon after the March 11 earthquake and tsunami in Japan caused suspension of 25% of the global production of the material key to making chips, IHS iSuppli said.
• Walgreen(WAG) Declines as Profit Margin Falls Short of Expectations. Walgreen Co. (WAG), the largest U.S. drugstore chain, dropped the most since October 2008 in New York trading after profit margins failed to improve as some analysts anticipated. The shares fell $3.38, or 8.1 percent, to $38.59 at 9:52 a.m. in New York Stock Exchange composite trading, after earlier dropping as much as 8.4 percent.
• State and Local Tax to Rise to Keep Services, GAO's Offutt Says. States and localities will likely raise taxes to maintain health-care services, said the chief economist at the U.S. Government Accountability Office. The difference between what states and localities spend and what they take in will grow to about 2 percent of gross domestic product over the next 40 to 50 years without changes in spending and revenue policies, said Susan Offutt, whose department evaluates government activities for Congress. The growth will be driven by an increase in spending on health care, including Medicaid and payments to retirees, she said. “The nature of the fiscal problem is so daunting that to think about achieving reasonable debt-to-GDP ratios without tax increases of some kind is difficult,” she said today at the State and Municipal Finance Briefing hosted by Bloomberg Link in New York. Some 44 states face a collective budget gap of $112 billion for fiscal 2012, according to the Washington-based Center on Budget and Policy Priorities. Without spending and tax changes, the cumulative gap is likely to grow and states may have problems making payments, Offutt said.
• The U.S. spent at least $168 million hitting Libya's air defense systems with Raytheon Co. Tomahawk cruise missiles and North African nation, according to data compiled by Bloomberg.
• Rise in Officer Fatalities Called 'Unacceptable' by Holder. U.S. attorneys will meet with law enforcement officials around the country to devise ways to reduce an increasing and “unacceptable” number of fatal attacks on officers, Attorney General Eric Holder said. Holder made the comments at a meeting today with police officials at the Justice Department in Washington. Holder described the gathering as a “listening session” on officer safety. Following a two-year decline, law enforcement fatalities in 2010 increased to 162, from 117 the year before, according to preliminary data from the National Law Enforcement Officers Memorial Fund in Washington. There have been 49 deaths this year, up from 41 during the same period last year.

Wall Street Journal:

• Portugal Prime Minister May Step Down After Austerity Vote. The future of Portuguese Prime Minister Jose Socrates is in doubt, as rising political tensions over a fresh austerity drive may spark his resignation on Wednesday. Such a move could make it even more likely that the government would become the third in the euro zone to seek financial help from the European Union and the International Monetary Fund. Legislators will vote Wednesday on a series of new austerity measures that the government unveiled earlier this month. The main opposition parties plan to vote against those measures.

CNBC.com:

• France Could Extend Libya Operations Beyond Benghazi. France could extend its military operations over Libya beyond the Benghazi area from Wednesday, a spokesman for the French armed forces said on Tuesday.

Business Insider:

• CAUGHT ON TAPE: Former SEIU Official Reveals Secret Plan to Destroy JPMorgan(JPM), Crash the Stock Market, And Redistribute Wealth in America. A former official of one of the country's most-powerful unions, SEIU, has a secret plan to "destabilize" the country. The plan is designed to destroy JP Morgan, nuke the stock market, and weaken Wall Street's grip on power, thus creating the conditions necessary for a redistribution of wealth and a change in government. The former SEIU official, Stephen Lerner, spoke in a closed session at a Pace University forum last weekend. The Blaze procured what appears to be a tape of Lerner's remarks.
• 15 Companies That Will Get Slammed In An Asian Downturn.
• Insane Video of Qaddafi Tanks Firing Hundreds of Missiles.
• West Virginia Democrat Goes Rogue In Federal Budget Battle - Will Vote AGAINST Raising Debt Ceiling.
• Fed Chief Thomas Hoenig On Why The Fed Is Anti-Capitalistic and QE2 Was a Mistake.
• Egypt is Back. Interior Ministry on Fire in Cairo.
• CHART OF THE DAY: Hedge Funds Bought The Dip.
• If You Say "Protest" On A Phone In China, It Cuts Off Automatically.

Zero Hedge:

• OPEC Says Perfectly Happy With $120 Oil, Does Not Think It Will Impair Growth.
• Stratfor On Libya, The West and The Narrative of Democracy.
• Following Radioactive Rain, Radiation in Tokyo Jumps 10 Fold, Hitachinaka Iodine 131 Surges to 85,000 Becquerels.
  

LA Times:

• U.S. Fighter Jet Crashes in Libya; Crew Members Safe. The F-15E Strike Eagle crashed in northeast Libya after experiencing 'equipment malfunction,' a U.S. statement says. One crew member is rescued by an American search team and the other by Libyan rebels.

Detroit Free Press:

• General Motors(GM) Halts Some Production at N.Y. Plant. General Motors Co. is halting some production at its Buffalo, N.Y., engine plant because of a slowdown in parts from Japan. GM is also temporarily laying off 59 of the 623 workers at the Tonawanda Engine Plant. The workers make engines for a GM pickup factory in Shreveport, La., that is closed this week because of a shortage of parts from Japan. GM has also laid off 800 workers in Shreveport.

New York Fed:

• New York Federal Reserve Bank economists have launched Liberty Street Economics, a new blog.
  

Rasmussen Reports:

• Fewer Americans Than Ever Think U.S. Economy Will Be Stronger In Five Years.

Reuters:

• Verizon Wireless CEO Says No Interest in Sprint Deal. The chief executive of Verizon Wireless said he has no interest in buying Sprint Nextel Corp (S.N) even as the company stands to lose its top position in the U.S. wireless market because of a merger between AT&T Inc (T.N) and T-Mobile USA. Verizon Wireless CEO Daniel Mead also said he would not oppose AT&T's plans to buy Deutsche Telekom's (DTEGn.DE) T-Mobile USA for $39 billion. The CEO said the company did not want to be distracted from its goal of being the most profitable U.S. wireless operator.
• Fed Officials See U.S. Recovery Taking Hold. The U.S. recovery is gaining traction, two top Federal Reserve officials said on Tuesday, though they differed on the risks of inflation in the U.S. economy. Cleveland Fed President Sandra Pianalto said she expects the U.S. recovery to continue at a moderate pace, with rising commodity and energy prices only temporarily putting pressure on broader consumer prices.

Kyodo News:

• Radioactive iodine was found in the tap water of five areas in Japan's Fukushima prefecture, citing the nation's health ministry. The ministry said infants should not drink the water.
• Japan's health ministry detected radioactive material beyond legal limits in raw milk from Ibaraki prefecture, and broccoli and mustard spinach from Fukushima prefecture.