Today's Headlines

Bloomberg:

• ECB May Allot 470 Billion Euros in 3-Year Crisis Loans: Economy. Euro-area banks may tap the European Central Bank next week for almost as much three-year cash as they did in December in an operation that could prolong a rally in bond markets. Financial institutions will ask the ECB for 470 billion euros ($629 billion) in three-year funds for allotment on Feb. 29, the median of 28 estimates in a Bloomberg News survey shows. While that’s less than the record 489 billion euro take-up at the first tender on Dec. 21, it may increase total cash in the system by more than 300 billion euros, said Luca Cazzulani, a senior fixed-income strategist at UniCredit SpA (UCG) in Milan. “Part of the increase will likely be parked, at least temporarily, in the sovereign-bond market and support mainly the performance of Italian and Spanish bonds,” said Cazzulani. Still, “expectations are at a pretty high level, which creates some room for disappointment,” he said. “Gross demand below 400 billion euros would likely put upward pressure on spreads in the short term.” Italian and Spanish bonds have risen since the ECB’s first three-year loan, suggesting banks are investing at least some of the money in higher yielding assets. That’s helped ease concern about a credit crunch and won governments time to agree on measures to contain the sovereign debt crisis.
  
• Deposit Flows Show Money Leaking to Germany. Money is leaking out of banks in southern Europe as customers scoop deposits out of Greece, Spain and Italy to move cash to less indebted nations such as Germany. Greece (TODETOGR)’s total deposits plunged 28 percent from the peak in June 2009 to 169 billion euros ($225 billion) at the end of December, according to data compiled by Bloomberg. In Spain (TODETOES), deposits slid 5 percent in the five months through November to 934 billion euros, the least since April 2008. Italian (TODETOIT) banks held 974 billion euros in November, the lowest in 18 months. Deposits in Germany (TODETODE) have climbed by almost 10 percent since May 2010, when Greece was granted its first bailout. Deposits have risen every month except five since the end of 2009, and reached 2.15 trillion euros at the end of 2011, Bloomberg data show. The deteriorating growth outlook in the euro region risks exacerbating those flows, according to Dario Perkins, an economist at Lombard Street Research in London. “The biggest systemic risk is if people lose confidence in keeping their euros in Spain, Portugal or Italy,” Perkins said. “It makes sense to put your cash into Germany just to be safe and that’s where the real systemic danger lies. That contagion isn’t priced in, and bank deposits are the place we’d spot it.”
• Oil Rises in Longest Rally in Two Years as Iran Spurs Supply Concerns. “The bulls have the oil market by the throat,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “There’s an undercurrent of fear about the Iranian nuclear situation and what that will mean for global supplies as people scramble to replace Iranian barrels.” Crude oil for April delivery rose 61 cents, or 0.6 percent, to $108.44 a barrel at 11:53 a.m. on the New York Mercantile Exchange. The contract reached $108.99, the highest level since May 5. The front-month contract is up 5 percent this week. Brent oil for April settlement gained 60 cents, or 0.5 percent, to $124.22 a barrel on the London-based ICE Futures Europe exchange.
• Northern Alaska May Hold 80Trillion Cubic Feet of Shale Gas. Alaska’s North Slope shales may hold as much as 80 trillion cubic feet of gas, or more than half the highest estimate for the Marcellus formation, and as much as 2 billion barrels of oil, the U.S. Geological Survey said. “Alaska’s energy resources hold great promise and economic opportunity for the American people,” Interior Secretary Ken Salazar said today in an e-mailed statement. The geological service, part of the Interior Department, said in a statement that North Slope shale hasn’t been developed because of economic and infrastructure considerations. The assessment, the first made of North Slope shale resources, is based on success in extracting oil and gas from similar formations, such as the Marcellus Shale in the U.S. East. The agency last year estimated Marcellus may hold as much as 144 trillion cubic feet of gas. Shale gas and shale oil led to record natural gas output in the U.S. last year and 33 percent decline in prices in the past 12 months.
• Gunfire Erupts as Afghans Protest Koran Burning for Fourth Day. Street demonstrations continued in Afghanistan for a fourth day over the burning of the Koran, the Islamic scripture, at the country’s main U.S. air base. While gunfire erupted in some towns, officials confirmed no new deaths by early evening. At least 12 Afghans and soldiers of the U.S.-led coalition force have been killed in the protests. In the northern town of Pul-e-Khumri, Afghan police and Hungarian soldiers fired on a crowd of hundreds of men who besieged the local base of NATO’s International Security Assistance Force, or ISAF, said Ahmad Besharat, the provincial police chief. “There might have been casualties but we cannot yet confirm that because the protest is still going on,” he said in a phone interview.
• Citigroup(C) Subpoenaed in U.S. Justice Probe of Mortgage-Backed Securities.
• Iran 'Dismissed' IAEA, Tripled Uranium Production. Iran dismissed United Nations atomic inspectors’ concerns over possible nuclear-weapon work and the Persian Gulf nation tripled its quarterly rate of producing 20 percent-enriched uranium. Iran “dismissed the agency’s concerns,” the International Atomic Energy Agency said today in an 11-page restricted document obtained by Bloomberg News. “Iran considered them to be based on unfounded allegations.” The report, distributed to IAEA member states, was published three days after inspectors’ talks with Iran broke down. Inspectors said Iran raised the number of machines used to install uranium at its Natanz complex by 14 percent and began enriching material at its Fordo mountainside complex.
• New Home Sales Data Point to Stabilizing Market. Purchases of new homes in the U.S. exceeded forecasts in January after climbing a month earlier to a one-year high, more evidence the housing market is stabilizing. Sales, tabulated when contracts are signed, fell 0.9 percent to a 321,000 annual pace from a 324,000 rate in December that was stronger than previously reported, figures from the Commerce Department showed today in Washington. The median estimate of 77 economists surveyed by Bloomberg News called for a rise to 315,000. The number of homes for sale dropped to a record low.

Wall Street Journal:

• New York Releases Teacher Rankings. New York City on Friday released internal rankings of about 18,000 public schoolteachers who were measured over three years on their ability to affect student test scores.

Barron's:

• Apple(AAPL): 2% to 3% Dividend Makes Sense, Says Sterne Agee.

Business Insider:

• El-Erian: Europe Threatens To Cripple The IMF. G20 finance ministers need to stand in the way of European manipulation of the International Monetary Fund when they meet in Mexico City this weekend, PIMCO chief executive Mohamed El-Erian writes in a column published today in the Financial Times. A staunch critic of Europe's attempts to get around its internal problems by relying on IMF funding, he argues that non-European economies need to stand up for the IMF's professed "uniformity of treatment," particularly given the harsh rules the organizations have imposed on emerging market countries in Asia and Latin America in the past.
• Obama Gives Another Sweetheart Deal To His Friends At GE(GE). GE pays next to no taxes in the US, they haven’t for years. But when it comes to government money, they are on the top of the list for handouts. There is only one reason that GE keeps sucking on the country’s teat, the CEO is best buds with Obama. Not only are they pals, but GE’s top honcho, Jeff Immelt, is advising the President on what to do. There are many segment of our economy and society that need a helping hand from the government. I would put the interests of GE (and KSU) at the very bottom of the list. They are doing fine, they don’t need these handouts. This is not an industrial policy. It’s crony capitalism of the very worst kind.
• Thousands of French Towns are Asking for Bailouts after Discovering Toxic Assets.
• All The Details on the Major Hit Greece's Creditors Are Going To Take.
  

Zero Hedge:

• What Rising Gas Prices Do To The Economy. (graph)
• As Asian Oil Passes $134, PBOC Braces For Inflation Shock Following Premature RRR Cut.
  

cnet:

• Google(GOOG) May Enter Tablet Market With 7-Inch Design to Compete With Kindle.

Reuters:

• German Finmin - No Guarantees Greek Aid Package Will Work. There are no guarantees that a new aid package for Greece will work and Germany may in the future again have to consider aid for the country, German Finance Minister Wolfgang Schaeuble told German lawmakers in a letter, but he asked them nonetheless to support the package in a parliamentary vote on Monday. "There are no guarantees that the chosen path will lead to success. It is also possibly not the last time that the German parliament will have to consider financial aid to Greece," he said in a letter made available to Reuters. "Because I am convinced that the agreed path... is the most likely to lead to success and is therefore a justifiable one, I ask for your support for this package."
• Fed Says Policy Appropriate, Few Hints of New Stimulus.
• Blackstone(BX) Real Estate Fund Tops $10 Billion. Blackstone Group LP has raised more than $10 billion for its latest real estate fund, Blackstone Real Estate Partners VII, and is looking to reach $12 billion, a source familiar with the matter said on Friday.

Handelsblatt:

• Frank Schaeffler, a lawmaker for the German Free Democratic Party, the junior partner in Chancellor Angela Merkel's coalition government, is urging his party to vote against the new aid package for Greece in the lower house on Feb. 27. He thinks Greece will probably be unable to reduce its debt to a sustainable level, citing a letter by Schaeffler to fellow party members.
• Germany's planned cuts in solar power subsidies are a "death blow" for the industry, according to Solarworld AG CEO Frank Asbeck, citing an interview. The plans will wipe out many solar companies and may result in the loss of tens of thousands of jobs, Asbeck said.