Oil Rises for Third Day on Mideast Unrest Concern, U.S. Stockpile Decline. Oil climbed for a third day as a U.S. government report showed crude stockpiles unexpectedly dropped last week while fighting in Libya renewed concern that supply disruptions may spread to the Middle East. Futures gained as much as 0.7 percent, rising from the highest close in 29 months, after Libyan forces loyal to Muammar Qaddafi attacked rebels on the east coast where much of the country’s oil is refined and shipped. Nouriel Roubini said an escalation of unrest in the Middle East may push prices as high as $140 to $150 per barrel. U.S. crude inventories dropped for the first time in seven weeks, a report showed yesterday. “The big risk at the moment does remain around the Middle East, in particular Iran,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. Crude for April delivery gained as much as 71 cents to $102.94 in electronic trading on the New York Mercantile Exchange, and was at $102.49 at 12:42 p.m. Sydney time. Yesterday, the contract rose $2.60 to $102.23, the highest settlement since Sept. 26, 2008. Prices are up 27 percent from a year ago. Brent crude for April settlement increased 26 cents, or 0.2 percent, to $116.61 a barrel on the London-based ICE Futures Europe exchange. Yesterday, it rose 93 cents, or 0.8 percent, to $116.35, the highest since Aug. 21, 2008. Websites have called for a nationwide Saudi “Day of Rage” on March 11 and March 20, according to Human Rights Watch.
Food Prices to Extend Gains as Stockpiles Rebuilt, Led by Corn, UBS Says. Food prices will extend gains even as harvests expand, as exporters need to rebuild stockpiles, tightening global supplies and driving corn, wheat and soybeans higher, UBS AG said. Corn may advance to $8.30 a bushel, 15 percent higher than yesterday’s close, Dominic Schnider, director for wealth management research at UBS, said in an interview in Singapore yesterday. Wheat may jump 23 percent to $10 a bushel, while soybeans may surge 7.6 percent to $15 a bushel, he said. “We need to have at least two or three years of good harvests” to rebuild stockpiles, Schnider said. The global food price index, compiled by the United Nations’ Food and Agriculture Organization, surged to a record for a second month in January, driven by higher prices of cereals, dairy and sugar. Extending those gains may push millions more people into extreme hunger and poverty, prompting governments to pay more for food subsidies, widening national budget deficits. Food prices are already at “dangerous levels” after pushing 44 million people into poverty since June, World Bank President Robert Zoellick said Feb. 15. That adds to the more than 900 million people around the world who go hungry each day, he said.
China Signals Potential Opposition to No-Fly Zone Over Libya. China joined Russia today in signaling potential opposition to imposing a no-fly zone over Libya if fighting continues between protesters and forces loyal to leader Muammar Qaddafi.
Brazil Increases Key Rate to 11.75% as Inflation Threatens Bank's Target. Brazil’s central bank raised its benchmark overnight rate by a half-point for a second straight meeting to cool inflation that is approaching the upper limit of the government’s target range. The bank’s policy committee, led by President Alexandre Tombini, today voted unanimously, without a bias, to raise the Selic rate 50 basis points, or 0.5 percentage point, to 11.75 percent, matching the estimates of 44 of 51 analysts surveyed by Bloomberg. Six economists forecast a 0.75-point increase and one predicted a full percentage-point increase. “Following the process of adjustment of monetary conditions, the monetary policy committee decided, unanimously, to raise the rate to 11.75 percent a year, without a bias,” policy makers said in the statement announcing their decision. Annual inflation in the $1.57 trillion economy has accelerated every month since August, prompting the bank to raise interest rates in January for the first time since July. “There is a slowdown happening, and that helps the central bank,” said Marcelo Salomon, chief Brazil economist for Barclays Capital. “It clearly gives the bank more time to work around the necessary adjustment cycle.” Brazil’s economy expanded in December at its slowest pace in six months, after retail sales stalled and credit growth slowed, according to the central bank’s economic activity index, a proxy for gross domestic product. Inflation, as measured by the benchmark IPCA-15 index, accelerated to 6.08 percent in the year through mid-February, the fastest pace since December 2008. In the month through mid-February, prices rose 0.97 percent, the highest since April 2003. The central bank targets inflation of 4.5 percent, plus or minus two percentage points.
Wall Street Journal:
West Cools on No-Fly Zone. Senior U.S. defense officials tried to lower expectations of an international military intervention in Libya, as rebels, fighting off a key offensive by forces loyal to Col. Moammar Gadhafi, called for foreign airstrikes.
Ohio Vote Puts Curbs on Unions in Reach. Ohio state senators narrowly approved a bill that would prohibit public-employee unions representing 400,000 state and local workers from bargaining over health benefits and pensions, while also eliminating the right to strike. While national attention has focused for weeks on a similar battle in Wisconsin, the vote, by 17-16 in Ohio's Republican-controlled Senate, virtually ensured that the Buckeye State will become the first to strip collective-bargaining rights from public employees as states grapple with recent gaping budget deficits. The move is especially significant because Ohio is larger than Wisconsin, and like its fellow Midwestern state, is both a stronghold of public-sector labor unions and a swing state politically.
SEC Probe Examines Bank-Loan Practices. The Securities and Exchange Commission is scrutinizing U.S. banks that have restructured troubled loans in order to make them appear healthier than they really are, according to people familiar with the situation. Officials at the SEC are seeking information from an unknown number of regional and community banks with large concentrations of commercial real-estate loans, these people said.
Bill Gates Says High Pension Costs Hurt Education. Billionaire philanthropist Bill Gates will step into the national debate over state budgets Thursday with a call for states to rethink their health care and pension systems, which he says stifle funding for public schools. Mr. Gates in an interview said he will use a high-profile conference Thursday in Long Beach, Calif., to urge that more attention be paid to how states calculate their employee-pension funding and health-care obligations. "These budgets are way out of whack," Mr. Gates said. "They've used accounting gimmicks and lot things that are truly extreme." The comments come after Mr. Gates spent more than a year studying the issue and enlisting the advice of leading academics and others.
Mets Owners Threatened With More Charges. The owners of the New York Mets, who face a $1 billion lawsuit related to withdrawals they made from Bernard Madoff's investment firm, are expected to face additional allegations from a court-appointed trustee about how they may have benefitted from the multibillion-dollar Ponzi scheme if they fail to reach a settlement, according to a person familiar with the situation.
Heads of U.S., Mexico to Meet as Tensions Rise. President Felipe Calderón will meet in Washington on Thursday with President Barack Obama in an attempt to repair relations at a time when spiraling violence in Mexico's drug war has frayed ties between the two allies.
Fed Finds Climbing Costs Hit Shoppers. Many manufacturers are passing along higher input costs to their customers, a sign that rising prices for wheat, cotton, iron, and other commodities could increasingly reach consumers in coming months, according to the Federal Reserve's beige book survey. The report, a summary of economic conditions across the central bank's 12 regional districts, said manufacturers "in a number of districts reported having greater ability" to pass through higher costs. "Retailers in some districts mentioned they had implemented price increases or were anticipating such action in the next few months," the Fed said.
U.S. Troops Shot in Germany; Terror Suspected. A lone gunman killed two American servicemen and wounded at least two others on a U.S. military bus outside Frankfurt Airport in what officials described as a possible terrorist attack. The shooting was the first deadly assault on U.S. military personnel in Europe in years. The official said it was too early to tell if the suspect was aligned with Al Qaeda or localized Islamic organizations in Kosovo, a former Yugoslav territory that is majority Muslim.
Time to Get Serious About American Oil. Why is Washington blocking oil exploration in states like Alaska and Louisiana when the Middle East is such a powder keg?
CNBC:
Democrats Ready Spending Bill With Few Cuts: Aide. U.S. Senate Democrats are preparing a spending bill that yields no ground to House Republicans who are seeking deep cuts in government spending, a Democratic aide said on Wednesday.The spending bill would essentially keep government spending at its current level through the end of the fiscal year on Sept. 30.
An Orgy of Speculation. Ben Bernanke is confident that his policies have paved the way for a self sustaining recovery, but there's plenty of reason to be skeptical. For one thing, the Fed's zero rates and bond buying program (QE2) have had a negligible effect on unemployment and housing. And for another, they've led to a surge in speculation. That's hardly a reason to celebrate. In the last week, a number of reports confirm that hedge funds have been loading up on debt believing that improving economic data and the Fed's liquidity support will push stocks even higher. That seems like a risky bet given the unevenness of the rebound and the spreading mayhem in the Middle East. Even so, fund managers are levering-up like there's no tomorrow convinced that this is the beginning of another bull market. Here's the rundown from Bloomberg:
Wall Street to Trade Municipal Bonds Like It Trades Mortgages. The major players in muni CDSX will be hedge funds, Lo says. "There's a lot of money sloshing round hedge funds. I wouldn't be surprised if John Paulson [who shorted residential mortgage backed security CDOs with credit default swaps and made a fortune] put a large chunk of his very large fund into a bet against the muni bond market using these CDS instruments." We know the signs this time. It remains to be seen if they will they be ignored.
Murder in Pakistan: A Chilling Message. Shahbaz Bhatti, Pakistan's federal minister for minorities, was assassinated today by Islamic extremists determined to bring down Pakistan's civilian government.
Clinton's Biggest Fear: Al Qaeda Rising in Libya. US Secretary of State Hillary Clinton appeared before the Senate Foreign Relations Committee today and revealed her greatest fear about the events unfolding in Libya. ABC News reports:
China's High-Speed Rail, Highly Suspect. It may be another symptom of a bubble economy in which vast sums are misspent on underutilized assets. (Hmmm…like in the financial whirl of America’s “cowboy capitalism”!) “The costs are raising worries over financing,” the SCMP reports. “Major state-owned railway and rail car building companies with shares listed in Hong Kong and Shanghai [see China Railway Construction Corp., China Railway Engineering Corp. and subsidiaries ] are relying on bonds and bank loans to finance projects, with onerous repayment obligations that may be difficult to meet given the revenue projections for many projects.” It all stems from the state and the railways ministry has amassed $300 billion in debt.
Bradley Manning, WikiLeaks' Alleged Source, Faces 22 New Charges. The Army has brought new charges - including one that carries the death penalty - against Pfc. Bradley E. Manning, a former intelligence analyst accused of leaking hundreds of thousands of classified military and diplomatic documents to the anti-secrecy Web site WikiLeaks.
GAO: Medicare Losing $48 Billion. Nearly 10 percent of all Medicare payments are fraudulent or otherwise improper, and the government isn’t doing enough to stop them. That’s the conclusion of a Government Accountability Office report released Wednesday. The report, issued at the request of a House subcommittee investigating Medicare and Medicaid fraud, estimates that the federal government is losing $48 billion on the improper payments – a significant amount for a program that “is fiscally unsustainable in the long term” unless action is taken.
Reuters:
China's annualized inflation for the first quarter of the year will likely exceed 5%, citing Fan Jianping, head of economic forecasting at the State Information Center.
Monster U.S. Online Jobs Index Rises in February. A monthly gauge of online labor demand in the United States rose 4 percent in February compared with the same month a year ago, led by gains in the utilities and retail sectors, according to data released on Thursday. Compared with January, Monster Worldwide Inc(MWW), an online recruiting firm, said its monthly index rose by 6 percent in February.
QE-2 May Be Peak for Profits by US Primary Dealers.The securities firms waiting to join the ranks of the U.S. primary dealers may be in a race against the clock -- the QE-2 clock. Several firms are waiting for approval from the Federal Reserve Bank of New York to become primary dealers, designated banks and securities dealers responsible for dealing directly with the New York Fed and the Treasury Department. The sooner they get approved, the sooner they'll get a cut of the Fed's quantitative easing business, set to end in June.
Telegraph:
SEC Eyes Hedge Fund Bonus Curbs. The US financial regulator has proposed a clampdown on hedge fund bonuses deemed to encourage dangerous risk-taking. The Securities and Exchange Commission (SEC) voted yesterday for a proposal that would force brokers and investment advisers, including hedge funds, with more than $1bn (£610m) in assets to reveal staff bonus arrangements annually. The regulator could then ban bonuses if they were judged to cause excessive risk-taking. The proposal by the SEC, which failed to win the backing of the regulator’s two Republican commissioners, follows a similar proposal made last month for banks by the Federal Deposit Insurance Corporation (FDIC), a fellow regulator.
Saudi Arabia Contagion Triggers Gulf Rout. Fears of sectarian uprisings in Bahrain and Saudi Arabia have set off the first serious wave of investor flight from the Gulf, compounding market turmoil as civil war in Libya pushes Brent crude over $116 a barrel. Saudi Arabia’s Tadawul stock index has tumbled 11pc in wild trading over the past two days, led by banks and insurers. Dubai’s bourse has hit a 7-year low. The latest sell-off was triggered by the arrest of a Shi’ite cleric in the Kingdom’s Eastern Province after he called for democratic reforms and a constitutional monarchy. The province is home to Saudi Arabia’s aggrieved Shi’ite minority and also holds the country’s vast Ghawar oilfield, placing it at the epicentre of global crude supply. “Unrest in this region can have fatal consequences for the world,” said JBC Energy. “The plunge on the Saudi stock exchange can be interpreted as a sign of waning trust.”
Spiegel Online:
The gunman who killed two U.S. airmen at Frankfurt Airport was specifically targeting American military personnel, citing officials familiar with the matter. Investigators haven't determined whether the attacker, identified as a citizen of Kosovo, was acting alone or as part of an organized group.
The Australian:
US Obsessed With Doing Nothing About Debt Says Hedge Fund Guru Julian Robertson. THE US Federal Reserve's policy of printing money -- quantitative easing -- is pushing up commodity prices sharply, according to the world's best known hedge fund manager, Julian Robertson.Speaking in Sydney yesterday, the US-based founder of the legendary Tiger Fund said quantitative easing was encouraging reckless spending and sending investors to non-cash assets as they sought a safe place for their investments. "Not just gold and silver but cotton, soybeans, you name it, they're all rising," he said, noting that the US dollar was now no longer the safe haven it was. "It's not my refuge," he said emphatically. He said the US approach to rectifying its financial problems was making it look as though "things will go along OK" when they would not, in the long run. "We are obsessed with not doing anything about it," he said, referring to the debt burden and the giant budget deficit left over from the global financial crisis. Looking at the US economy, Mr Robertson said: "We are broke, broker than all get out. "We prefer to put on the Santa Claus suit and celebrate Christmas" rather than address underlying problems in the US economy such as the budget deficit. China was "a fascinating place and a new market", but far from a simple boom story. "There are more price dislocations, both ways, in stocks there, than almost anywhere else," he said. But he is not convinced overseas demand will fuel growth in China forever. "Demand out of China is going to depend on whether other economies around take up the supply of goods that China produces," he said. Alex Robertson said that there was a serious demographic problem from the effects of the one-child policy: "Men will outnumber women, and that could impede the economy."
China Securities Journal:
China is moving away from the double-digit growth era in the next five years because of the threat of inflation and environmental problems. China can no longer sustain high investment, high consumption and low benefit growth, the commentary said.
China's central bank will raise the reserve requirement ratio "shortly" to ease liquidity pressure, citing analysts.
Financial News:
China should levy a property tax in regions with surging real estate prices, citing Yan Qingmin, an assistant chairman of the China Banking Regulatory Commission. The banking regulator will enhance efforts to prevent risks stemming from property loans, citing Yan. The effects of lending policies in property curbs should not be exaggerated, citing Yan.
China's consumer prices may rise about 4% in February, citing Wang Xiaoguang, a researcher with the Chinese Academy of Governance. The country is facing strong inflation expectations, citing Pan Jiancheng, deputy director-general of the China Economic Monitoring and Analysis Center of the National Bureau of Statistics.
China Daily:
Only 6% of Chinese People See Themselves as Happy, citing a survey of about 1,350 people carried out by government information portal china.com.cn. Almost 40% of those surveyed believe that happiness is determined by how wealthy a person is, and people living in first-tier cities are the least content due to pressure from the high prices of housing and traffic congestion, citing the results of the poll. Zhang Jing, a 25-year-old procurement agent at a Shanghai-based foreign-invested company, described her life as "unexciting" to China Daily, saying entertainment was rare. "More than one-third of my salary goes on the rent and the rest has to cover transportation and food. In the end, my disposable income is almost nothing," she said. Zhang Lifan, a well-known expert on China's modern history, noted that it is imperative that the government redistributes the fruits of economic development so more people benefit because the widening wealth gap is "tearing society apart". According to a World Bank report, the Gini coefficient for China is now close to 0.5, which points to an unequal distribution of income that could lead to social unrest. On the Gini coefficient, 0.4 is considered as the threshold of serious inequality.
Evening Recommendations Citigroup:
Reiterated Sell on (IR), target $41.
Night Trading
Asian equity indices are -.50% to +1.25% on average.
Asia Ex-Japan Investment Grade CDS Index 109.50 -.5 basis point.
Asia Pacific Sovereign CDS Index 120.0 +.75 basis point.
Initial Jobless Claims for last week are estimated to rise to 395K versus 391K the prior week.
Continuing Claims are estimated to rise to 3815K versus 3790K prior.
Final 4Q Non-Farm Productivity is estimated to rise +2.3% versus a prior estimate of a +2.6% gain.
Final 4Q Unit Labor Costs are estimated to fall by -.5% versus a prior estimate of a -.6% decline.
10:00 am EST
ISM Non-Manufacturing for February is estimated to fall to 59.3 versus 59.4 in January.
Upcoming Splits
None of note
Other Potential Market Movers
The Fed's Kocherlakota speaking, Fed's Lockhart speaking, ICSC Feb. Chain Store Sales, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index, RBC Capital Restaurant/Leisure Investor Day, (A) analyst meeting, (ANSS) investor day, (SWK) analyst day, (JNPR) analyst meeting and the (MXIM) analyst day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and automaker shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
North American Investment Grade CDS Index 83.74 +.86%
European Financial Sector CDS Index 115.75 +.12%
Western Europe Sovereign Debt CDS Index 172.83 bps -.48%
Emerging Market CDS Index 221.89 -1.17%
2-Year Swap Spread 20.0 unch.
TED Spread 19.0 +1 bp
Economic Gauges:
3-Month T-Bill Yield .12% -1 bp
Yield Curve 279.0 +4 bps
China Import Iron Ore Spot $178.0/Metric Tonne -1.17%
Citi US Economic Surprise Index +83.60 +6.3 points
10-Year TIPS Spread 2.47% +4 bps
Overseas Futures:
Nikkei Futures: Indicating +63 open in Japan
DAX Futures: Indicating +11 open in Germany
Portfolio:
Slightly Higher: On gains in my Technology and Biotech longs
Disclosed Trades: None
Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades near session highs, despite rising energy prices, growing Mideast unrest, higher long-term rates and emerging markets inflation fears. On the positive side, Road&Rail, Homebuilding, HMO, Construction, Hospital, Networking, Semi and Coal shares are especially strong, rising more than 1.5%. Small-cap and Cyclical shares are outperforming. On the negative side, Airline, Restaurant, REIT, Insurance, Bank, Wireless and Utility shares are lower on the day. (XLF)/(IYR) are a bit heavy. The 10-year yield is rising +6 bps to 3.45%. China Iron Ore Spot is falling another -1.1% and is down -7.2% in about 2 weeks. The US Scrap Steel Benchmark has fallen about -5% in 2 days, which is the largest 2-day decline since Oct. of last year. The UBS-Bloomberg Ag Spot Index is rising +1.35% and is back near its record high. Moreover, copper is falling -.39%, lumber is dropping -1.33% and oil is surging +2.0%. The Saudi sovereign cds is rising +2.55% to 142.33 bps. The avg. US price for a gallon of gas is up another .02/gallon today to $3.39/gallon. It is now up .27/gallon in 15 days. The US dollar is trading poorly today given the data and Fed commentary. I suspect this weakness may reverse after the ECB meeting tomorrow. However, more dollar weakness would be another boost to oil. Investor complacency regarding the deteriorating situation in the Mideast remains high. The market's resiliency is impressive nonetheless. This could be a result of investors' anticipating a likely better-than-expected February jobs report on Fri. I would like to see better breadth, higher volume and a meaningful reversal lower in oil before shifting exposure in anticipation of further equity gains. As of now, this move looks like a bounce with further stock weakness likely before week's end. I expect US stocks to trade mixed-to-lower into the close from current levels on higher energy prices, growing Mideast unrest, more shorting, emerging markets inflation fears, higher long-term rates and profit-taking.
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.
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.
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.
