Mubarak Fails to Calm Protests With Pledge to Step Down. Egyptian President Hosni Mubarak said he will step down after elections for a new leader, a concession rejected by opposition leaders and protesters who refuse to wait months for an end to his regime. Mubarak said he’ll stay on to ensure “stability” and push through political and economic changes before leaving. The crowd in Cairo’s Tahrir Square began chanting anti-Mubarak slogans in response to the president’s state-television address. “Your last day will be Friday,” some shouted, referring to the Muslim prayer day when more demonstrations are planned.
Jordan's Prime Minister Rifai Resigns; King Asks Bakhit to Form Government. Jordan’s King Abdullah replaced his prime minister following street protests and asked former premier Marouf Bakhit to form a new government that will launch a “genuine political reform process.” Abdullah told Bakhit that he should put the country on the path “to strengthen democracy,” and provide Jordanians with the “dignified life they deserve,” the Royal Court said in an e-mailed statement. Islamic and leftist groups have held demonstrations every Friday since a revolt in Tunisia forced President Zine El Abidine Ben Ali into exile on Jan. 14.
Fed May Discuss Easing If Data Weak, Hoenig Tells Market News. The Federal Reserve may consider buying more U.S. Treasury securities than planned if U.S. economic data show weakness, Kansas City Federal Reserve Bank President Thomas Hoenig told Market News International. The economy will expand at least 3.5 percent this year, Hoenig said yesterday in an interview. He reiterated he would like to “normalize” monetary policy by shrinking the Fed’s balance sheet and raising interest rates, the news service said. The Kansas City Fed president expressed concern over rising land prices, Market News International said. “I don’t predict bubbles, but we certainly are beginning to see an acceleration of prices in this part of the country that I haven’t seen since the late 70s or early 80s,” he was quoted as saying.
Geithner Met With Dimon, Moynihan, Schwarzman on Dodd-Frank Law. Treasury Secretary Timothy F. Geithner met with chief executive officers Jamie Dimon of JPMorgan Chase & Co.(JPM), Brian Moynihan of Bank of America Corp.(BAC) and Stephen Schwarzman of Blackstone Group LP(BX) in December to discuss how the Dodd-Frank financial overhaul law will be implemented. Geithner talked with Dimon and Peter Scher, JPMorgan’s executive vice president for government relations, on Dec. 7 about the Volcker rule, which restricts banks from risking capital by trading for their own accounts, according to calendars posted on the Treasury Department’s website.
Atlanta Pension Panel Suggests Firing Subpar Investment Managers. The chairman of an Atlanta advisory panel looking for solutions to a $1.5 billion pension deficit said the city should consider firing its investment managers because returns don’t justify their cost. Atlanta’s three pension funds, with assets of $1.9 billion, could potentially save $5 million a year in fees for active managers that buy and sell investments with the goal of outperforming an index, according to data compiled by the panel. Managers for Atlanta’s police and general employee funds have underperformed benchmarks, panel Chairman John Mellott said today during a meeting at city hall. “We are closet indexers,” said Mellott, a former publisher of the Atlanta Journal-Constitution and an adviser with Bain & Co. The city should consider moving to a less-expensive passive investment strategy, or hire a new crop of active managers with lower fees, Mellott said. The city’s 50 investment fund managers included JP Morgan/Bank One Invesco Ltd, Mesirow Financial Inc. and Wellington Management, as of Sept. 30. The city’s pension funds combined have returned 3 percent over the past 10 years, compared with an 8 percent assumed return, Mellott said.
India's foreign direct investment is headed for the first drop since the year ending March 2003, hindering a bid to match China's surging economy. FDI fell 24% to $19 billion between April and November compared with the same period a year earlier.
Germans feel prices are rising almost twice as fast as the official rate, fueling wage demands and making it harder for the European Central Bank to keep a rein on inflation, according to UniCredit Bank AG. So-called "perceived inflation" jumped to 3.3% in December compared with Germany's official rate of 1.7%. UniCredit calculates perceived inflation by giving greater weight to the goods people buy most often, such as fuel, food and clothing. "The rise in perceived inflation increases the likelihood of higher wage demands," said Alexander Koch, an economist at UniCredit in Munich. "An excessive round of wage increases would certainly make the ECB nervous."
Mines Close, Ships Flee as Cyclone Yasi Nears Australian Coast. Coal and zinc mines are shut and at least 32 coal ships are steaming out to sea, as sugarcane and banana farmers in northeastern Australia brace for the forecast landfall later today of Tropical Cyclone Yasi.
China's Wen to Curb Property Speculation, Add Low-Cost Homes. China’s Premier Wen Jiabao pledged to curb property speculation and add more affordable housing after home prices rose last month as buyers defied government measures. China’s January home prices posted their biggest month-on- month gain in six months, according to SouFun Holdings Ltd. The country needs to “resolutely control the property market” and “maintain stable housing prices,” Wen said in his Lunar New Year speech yesterday posted on the website of the state-run People’s Daily newspaper, reiterating comments on Jan. 18 ahead of last week’s curbs.
Wall Street Journal:
How Cairo, U.S. Were Blindsided by Revolution. Two months before Egypt exploded in popular rage, Secretary of State Hillary Clinton met Ahmed Aboul Gheit, Egypt's foreign minister, in her seventh-floor offices in Washington. U.S. officials were miffed that Cairo was ignoring their pleas to make coming legislative elections more credible by allowing international ballot monitors. But after the meeting, neither Mrs. Clinton nor Mr. Aboul Gheit mentioned that disagreement when they spoke publicly. Mrs. Clinton praised the longstanding partnership between the U.S. and Egypt as the "cornerstone of stability and security in the Middle East and beyond." Months later, that cornerstone is crumbling. A week-long wave of demonstrations has pushed President Hosni Mubarak to promise he'll leave—and the repercussions of the tumult in the Arab world's most populous land have only begun to reverberate around the strategic and volatile Middle East.
Egypt's Islamist Riddle. Muslim Brotherhood Says It Seeks Limited Role, but Its Radical Roots Spur Questions. The decision by Egyptian President Hosni Mubarak to not stand for re-election forces the U.S. to confront a thorny dilemma—how to deal with Egypt's Muslim Brotherhood. The 83-year-old Islamic movement, Egypt's biggest opposition bloc, played a subdued role in the uprising. But its past performance in parliamentary elections and its dedicated following mean it will be a force to be reckoned with as Egypt moves toward open elections. Newly minted Vice President Omar Suleiman has indicated to U.S. diplomats that he wants any talks with the opposition to include the Brotherhood, U.S. officials say. That would mark a fundamental shift for Egypt's government, which outlawed the group in 1954 and says the Brotherhood is a threat to the country's stability.
Wall Street Pay Hits Record. When it comes to paychecks, Wall Street's law of gravity is back in full force: What goes down must come back up. In 2010, total compensation and benefits at publicly traded Wall Street banks and securities firms hit a record of $135 billion, according to an analysis by The Wall Street Journal. The total is up 5.7% from $128 billion in combined compensation and benefits by the same companies in 2009.
Yemen Leader Summons Parliament. President Ali Abdullah Saleh called for an emergency meeting of Yemen's parliament to be held Wednesday, at which officials close to the president say he will announce measures aimed at tamping down unrest that has swept his country and much of the rest of the Arab world.
Battling a Wireless Deluge. AT&T(T), Other Carriers Use Wi-Fi 'Hotzones' to Siphon Off Smartphone Traffic.
Another Rajaratnam Named in Ring. Younger Brother of Galleon Founder Was Co-Conspirator, Prosecutors Allege; Pressure on Raj Builds. Prosecutors have alleged that a younger brother of Galleon Group founder Raj Rajaratnam was a co-conspirator in a criminal insider-trading ring, according to people familiar with the matter. The latest development—which hasn't previously been made public—comes as the pressure builds on Raj Rajaratnam to plead guilty.
The Nuts and Bolts of the ObamaCare Ruling. According to the government's theory, wrote Judge Vinson, 'the more harm the statute does, the more power Congress could assume for itself under the Necessary and Proper Clause.'
Where Should Egypt Go From Here? Protests in Egypt have rocked the country's political order, and last night President Hosni Mubarak announced he would not run in the September presidential election. Four experts—Francis Fukuyama, Ryan Crocker, Maajid Nawaz and Amr Bargisi—weigh in on where Egypt should go from here.
U.S. Firms, China Are Locked in Major War Over Technology. A titanic battle is under way between U.S. business and China, a battle reflected in President Barack Obama's State of the Union address last week and destined to dominate relations between the two countries for years. At issue: Innovation. China's bureaucrats have been rolling out an array of interlocking regulations and state spending aimed at making their country a global technology powerhouse by 2020. The new initiatives—shaped by rising nationalism and a belief that foreign companies unfairly dominate key technologies—range from big investments in national industries to patent laws that favor Chinese companies and mandates that essentially require foreign companies to transfer technology to China if they hope to sell in that market. To hear U.S. business executives describe it, Beijing's mammoth new industrial policy is like the Borg in "Star Trek"—an enormous organic machine assimilating everything in its path, in this case the inventions of other nations. Notably, China's road map, which is enshrined in the "National Medium- and Long-Term Plan for the Development of Science and Technology (2006-2020)," talks in those terms. China will build its dominance by "enhancing original innovation through co-innovation and re-innovation based on the assimilation of imported technologies." "It's a huge, long-term strategic issue," says a top executive at a U.S. technology firm operating in China. "It isn't just the crisis of the day for U.S. business. It's the crisis."
Embarrassment of Riches by Andy Xie. Despite the dot-com bust, 9-11, the wars in the Middle East, the U.S. property bubble, the euro-zone sovereign credit crisis, the continuing stagnation of the Japanese economy — the first decade of the 21st century was the most prosperous, according to conventional measurements, in our lifetime. But the prosperity on paper isn’t reflected in the moods of peoples around the world. In fact, most people around the world say that they are dissatisfied with their economic plight. The poor quality of economic growth may explain the gap between economic indicators and social moods. The poor growth quality is reflected in (1) inflation of economic necessities, (2) rising debt levels for the support of living standards in the developed world, (3) rising property prices that puts housing out of reach for the middle class in the developing world, and (4) skyrocketing economic inequality that makes the economy dependent on the demand of a small, wealthy minority. The right path forward is slower but results in more equitable growth. The most important policy change should be to move away from using liquidity to boost economic growth. It is the most important cause of inflation and rising inequality.
Why Dinan Worries About Fate of Small Hedge Funds. For the head of a multibillion-dollar hedge fund, James G. Dinan worries a lot about the fate of the industry’s littlest players. Mr. Dinan, the chief executive and founder of York Capital Management, said in a speech on Monday that he wasn’t concerned that added regulation would hurt his bottom line, although he’s significantly beefed up his legal and compliance staff. Rather Mr. Dinan fears that the new rules will keep smaller players out of the hedge fund game — a critical group that keeps large institutions like York from getting lazy.
China Is Poised to Raise Rates Again, Bankers Say. China’s government, increasingly worried about soaring inflation, plans to continue tightening its money supply and will probably raise interest rates again within the month. That is the forecast of economists and bankers with knowledge of policy makers’ views, who insisted on anonymity because of the political and diplomatic sensitivity of Chinese monetary policy.
Pressure Builds for Debt Reduction. The push to come up with a plan to reduce national debt got a bipartisan bear hug in the Senate on Tuesday. Three lawmakers who sat on President Obama's bipartisan debt commission -- Sens. Kent Conrad, Tom Coburn and Mike Crapo -- convened a meeting of more than 30 senators from both parties "to make sure everyone comes to consensus on how big the problem is and how real it is," Coburn told CNN.
Politico:
Anti-Abortion Sting Hits Planned Parenthood. Anti-abortion groups released a video Tuesday that they allege shows a Planned Parenthood employee advising minors to provide false information in order to obtain an abortion. The video was shot by 22-year-old Lila Rose, an anti-abortion activist who has previously worked with James O’Keefe on undercover videos shot inside Planned Parenthood clinics. O’Keefe did a series of undercover sting videos on ACORN workers during the last presidential campaign. This most recent video, involves two activists, allegedly posing as sex traffickers, seeking advice on how to get STD testing, birth control and abortions for 14- and 15-year-old girls at a Planned Parenthood clinic in New Jersey. A clinic employee seemingly advises them on how to skirt reporting requirements and provides a phone number of another clinic where girls 14 and under can more easily obtain abortions. Anti-abortion groups have seized on the video, widely circulating it Tuesday afternoon, calling on Congress to defund Planned Parenthood.
USA Today:
Fees For Home Mortgages Increase. The cost of getting a mortgage is rising as higher fees hit more borrowers, including those with stellar credit. For the first time since 2009, Fannie Mae and Freddie Mac are raising risk fees they charge lenders on loans they buy for resale to investors. The mortgage giants are also adding risk fees to more loans extended to people with stellar credit. To avoid a fee or to get a discount, most borrowers will need FICO scores of 740 or better and down payments of 25% or more. Lenders could absorb the cost, but most are expected to add it to loan costs within days, if they haven't already, says Cameron Findlay, LendingTree economist.
Reuters:
EU Back Curbs on Commodity Speculation - Document. The European Union will pledge a crackdown on speculation in commodities such as grain to combat "unprecedented" price volatility, the EU's executive will say in a strategy document to be released on Wednesday, seen by Reuters. France's President Nicolas Sarkozy has made combating commodity price volatility a priority for his country's presidency of the G20 group of leading countries. "The volatility of prices of agricultural commodities has recently increased to unprecedented levels. This is the case both on EU and international markets, and on spot and futures markets," the Commission said in its strategy document.
Broadcom(BRCM) Outlook Disappoints, Shares Fall. Chip maker Broadcom Corp on Tuesday forecast an increase in first-quarter expenses but a drop in revenue from the fourth quarter, and its shares fell 6 percent.
Acme Packet(APKT) Q4 Profit Tops Street, Raises FY'11 View. Acme Packet Inc posted fourth-quarter results that topped analysts' estimates and raised its 2011 outlook above Wall Street expectations, sending its shares up 4 percent in after-market trade. Acme, which provides communication infrastructure for telecoms and businesses, raised its 2011 adjusted earnings forecast to about $1.05 a share from 99 cents-$1 a share. It also raised its full-year revenue view to about $300 million from $286-$287 million. Analysts on average expected earnings of $1.04 on revenue of $296.3 million, according to Thomson Reuters I/B/E/S.
Financial Times:
Fed Passes China in Treasury Holdings. The Federal Reserve has surpassed China as the leading holder of US Treasury securities even though it has yet to reach the halfway mark in its latest round of quantitative easing, according to official figures. Based on weekly data released on Thursday, the New York Fed’s holdings of Treasuries in its System Open Market Account, known as Soma, total $1,108bn, made up of bills, notes, bonds and Treasury Inflation Protected Securities, or Tips. According to the most recent US Treasury data on foreign holders of US government paper, China holds $896bn and Japan owns $877bn.
Telegraph:
IMF Raises Spectre of Civil Wars as Global Inequalities Worsen. The International Monetary Fund (IMF) has warned that "dangerous" imbalances have emerged that threaten to derail global recovery and stoke tensions that may ultimately set off civil wars in deeply unequal countries. Dominique Strauss-Kahn, the IMF's chief, said the economic rebound across the world is built on unstable foundations, with many rich nations still strapped in job slumps while the rising powers of China, India and Brazil already facing the threat of overheating. "It is not the recovery we wanted. It is a recovery beset by tensions and strain, which could even sow the seeds of the next crisis," he said. "Global unemployment remains at record highs, with widening income inequality adding to social strains," he said, citing turmoil in North Africa as a prelude to what may happen as 400m youths join the workforce over the next decade. "We could see rising social and political instability within nations – even war," he said.
Herald Sun:
Al Qaeda Actively Seeking 'Dirty' Bombs - WikiLeaks Documents. AL-QAEDA is attempting to procure nuclear material and recruit rogue scientists in order to build a radioactive "dirty bomb," leaked documents published in Wednesday's Telegraph newspaper revealed. The cables, released by the WikiLeaks website, showed that security chiefs told a Nato meeting in January 2009 that Al-Qaeda was planning a programme of "dirty radioactive improvised explosive devices (IEDs)." The makeshift nuclear bombs, which could be used against soldiers fighting in Afghanistan, would contaminate the surrounding area for years to come. The leaked documents also revealed that Al-Qaeda papers found in 2007 convinced security officials that "greater advances" had been made in bio-terrorism than was previously feared. US security personnel were warned in 2008 that terrorists had "the technical competence to manufacture an explosive device beyond a mere dirty bomb."
Evening Recommendations
None of note
Night Trading
Asian equity indices are +.75% to +1.75% on average.
Asia Ex-Japan Investment Grade CDS Index 107.0 -2.5 basis points.
Asia Pacific Sovereign CDS Index 119.0 -5.0 basis points.
The ADP Employment Change for January is estimated at 140K versus 297K in December.
10:30 am EST
Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,500,000 barrels versus a +4,836,000 barrel gain the prior week. Distillate supplies are expected to fall by -1,000,000 barrels versus a -140,000 barrel decline the prior week. Gasoline inventories are expected to rise by +2,000,000 barrels versus a +2,404,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.05% versus a -1.20% fall the prior week.
Upcoming Splits
None of note
Other Potential Market Movers
The Fed's Duke speaking, Challenger Job Cuts for January, weekly MBA mortgage applications report and the (GNW) investor day could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by technology and automaker shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.
North American Investment Grade CDS Index 82.75 -1.89%
European Financial Sector CDS Index 136.72 bps -4.52%
Western Europe Sovereign Debt CDS Index 167.17 bps -5.64%
Emerging Market CDS Index 213.44 -3.99%
2-Year Swap Spread 22.0 -1 bp
TED Spread 16.0 unch.
Economic Gauges:
3-Month T-Bill Yield .15% +1 bp
Yield Curve 284.0 +2 bps
China Import Iron Ore Spot $185.60/Metric Tonne unch.
Citi US Economic Surprise Index +40.40 +11.7 points
10-Year TIPS Spread 2.36% +4 bps
Overseas Futures:
Nikkei Futures: Indicating +90 open in Japan
DAX Futures: Indicating +12 open in Germany
Portfolio:
Higher: On gains in my Ag, Biotech, Retail, Medical and Tech long positions
Disclosed Trades: Covered all of my (IWM)/(QQQQ) hedges and some of my (EEM) short
Market Exposure: Moved to 100% Net Long
BOTTOM LINE: Today's overall market action is very bullish as the S&P 500 is breaking above technical resistance at 1,300 on good volume, despite recent equity gains, rising Mideast tensions, emerging markets inflation worries and rising long-term rates. On the positive side, Education, Gaming, Homebuilding, Construction, Insurance, HMO, Hospital, Drug, Bank, Wireless, Networking, Disk Drive, Semi, Computer, Software, Internet, Steel, Ag, Alt Energy and Coal shares are especially strong, rising more than 2.0%. (XLF) has traded well throughout the day. Small-caps are also outperforming. Copper is rising +2.04% and Lumber is rising +2.55%. Oil is declining -1.4%. The Spain sovereign cds is falling -7.88% to 229.29 bps, the Italy sovereign cds is dropping -8.52% to 164.66 bps, the Portugal sovereign cds is falling -6.05% to 407.15 bps, the Hungary sovereign cds is falling -7.78% to 304.57 bps, the Belgium sovereign cds is declining -8.77% to 157.90 bps and the Russia sovereign cds is falling -6.74% to 142.50 bps. Moreover, the Egypt sovereign cds is plunging -16.9% to 350.07 bps and the Saudi sovereign cds is falling -4.8% to 113.95 bps. On the negative side, Oil Tanker shares are lower on the day. (IYR) is underperforming. The UBS-Bloomberg Ag Spot Index is rising +1.0% to another new record high. Rice futures are hitting a new 52-week high today, rising +2.74%, and are very close to a major technical breakout. The 10-Year yield is rising +7 bps to 3.44%. As long as energy prices are contained any short-term flare up in Mideast violence shouldn't have too big a negative impact on equities. The major averages will likely build on today's gains, after a brief pause, before week's end on short-covering and technical buying. I expect US stocks to trade mixed-to-higher into the close from current levels on lower energy prices, short-covering, technical buying, earnings optimism, less financial sector pessimism, declining eurozone debt angst and rising economic optimism.
U.S. Manufacturing Rose More Than Expected in January. Manufacturing in the U.S. unexpectedly accelerated in January at the fastest pace in more than six years, reinforcing forecasts the economic recovery will strengthen in 2011. The Institute for Supply Management’s factory index rose to 60.8, exceeding the most optimistic forecast in a Bloomberg News survey of economists and the highest level since May 2004, figures from the Tempe, Arizona-based group showed today. The ISM’s employment gauge climbed to the highest level since 1973, indicating manufacturers may be more willing to hire as sales pick up. “Businesses have figured out the economic recovery has legs so they’re growing more confident about expanding production and new orders and increasing hiring,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. The ISM’s measure of new orders, jumped in January to 67.8, the highest since January 2004. The employment gauge increased to 61.7 from 58.9 in the prior month.
Construction Spending in U.S. Unexpectedly Fell to Decade Low. Construction spending in the U.S. unexpectedly fell in December to the lowest level in a decade, signaling the industry will continue to lag behind the economic recovery. The 2.5 percent drop was the biggest since July and brought the value of all projects down to a $787.9 billion annual rate, the lowest since July 2000, Commerce Department figures showed today in Washington. The median estimate of economists in a Bloomberg survey called for a 0.1 percent gain. Mounting foreclosures and an unemployment rate that will average more than 9 percent in 2011 indicate homebuilding may take time to rebound. Non-residential projects also will slow as budget-constrained state and local governments restrict funding for public works such as highways.
Egyptians Face Food Inflation by Day, Looters by Night. Shattered glass fills the streets of Cairo as pedestrians are forced to avoid army tanks that guard banks and government buildings vulnerable to looters. Banks are closed, making it difficult for Cairenes to get cash to buy staples. For those that have money, food prices are skyrocketing as consumers flood the few open stores. Street demonstrations and night-time riots have left the Arab world’s biggest city largely paralyzed, as protester fill the city’s main square and looters and neighborhood groups armed with clubs take over at night.
Fed's Easy Money Helps European Banks Refinance. Federal Reserve Chairman Ben S. Bernanke’s easy money policies are allowing European banks to sell a record amount of dollar-denominated bonds to refinance about $1 trillion of debt maturing this year. UBS AG, Switzerland’s biggest bank, and Barclays Plc led European financial borrowers that raised $43.8 billion in investment-grade bonds in the U.S. this month, beating the previous record of $42.4 billion last January, data compiled by Bloomberg show.
House Panel to Remedy Dodd-Frank's 'Unintended Consequences,' Draft Shows. The House Financial Services Committee aims to “identify and remedy” any unintended consequences of the Dodd-Frank regulatory overhaul, with a particular focus on rules governing proprietary trading and derivatives, according to a draft of the panel’s strategic plan. The 20-page document, circulated to committee members and staff for comment by Chairman Spencer Bachus of Alabama, says that the panel will focus this year on overseeing implementation of Dodd-Frank’s new rules for Wall Street.
Copper Rises to Record, Aluminum, Nickel Climb as China Grows. Copper rose to a record as expanding manufacturing in China added to signs of growth in industrial- metals demand. Aluminum and nickel climbed to two-year highs. Copper futures for March delivery jumped 78.45 cents, or 1.7 percent, to $4.533 a pound at 11:27 a.m. on the Comex in New York, after reaching an all-time high of $4.542.
Soybeans Rise to 30-Month High, Corn Gains on Argentina Strike. Soybeans rose to a 30-month high and corn climbed as a strike by Argentina’s port workers halted grain vessels, increasing demand for supplies from the U.S., the world’s biggest exporter. As many as 30 ships at Argentina’s main terminals have been blocked, a Chamber of Commerce official said. U.S. exporters reported sales of 120,000 metric tons of corn and 110,000 tons of soybeans to unknown destinations for delivery before Aug. 31, the Department of Agriculture said today. “The Argentina strike is helping to bolster demand for U.S. exports,” said Dale Durchholz, the senior market analyst at AgriVisor LLC in Bloomington, Illinois. “It’s a plus for U.S. exports as long as the strike continues to shift demand.” Soybean futures for March delivery advanced 13.75 cents, or 1 percent, to $14.2675 a bushel at 10:25 a.m. on the Chicago Board of Trade. Before today, the oilseed gained 55 percent in the past year. Corn futures for March delivery climbed 3.5 cents, or 0.5 percent, to $6.63 a bushel, heading for the second straight gain. Before today, the price surged 85 percent in the past 12 months, reaching a 30-month high of $6.67 on Jan. 21.
Egypt Hired Top Washington Lobbyists to Protect Alliance, Gain U.S. Access. Three of Washington’s top lobbyists have helped Egyptian President Hosni Mubarak’s government get access to lawmakers to protect his nation’s status as a U.S. ally and major recipient of foreign aid, federal records show. Government-relations firms led by two former congressmen, Republican Bob Livingston and Democrat Toby Moffett, formed a joint venture in 2007 with lobbyist Tony Podesta to represent Egypt in Washington, according to records filed with the U.S. Justice Department’s foreign- agent registration office. The contract was for “promoting and safeguarding” the Egyptian government’s interests in the U.S., including “maintaining the amount of United States military and economic aid to Egypt,” according to a draft retainer agreement filed with the foreign-agent registration unit. Records show PLM staff made 1,873 “contacts” with members of Congress, their staffs or administration officials between 2007 and 2010.
New York City's Snowiest January Meant Sales Drop From Nobu to Gas Pumps. For restauranteur Drew Nieporent and gas station owner John Demeo, New York City’s snowiest January blasted away business that they say won’t return. At Myriad Restaurant Group’s six Manhattan restaurants, including the Tribeca Grill and Nobu, business on some nights fell 50 percent or more from normal, said Nieporent. “That’s business that you’ll never get back,” he said in a telephone interview. “Overall, it’s been a killer month.”
BP(BP) Reinstates Dividend After Profit Increase, Plans to Sell Two Refineries. BP Plc reinstated the dividend and will sell half of its U.S. refining capacity as Europe’s second- biggest oil company recovers from the Gulf of Mexico spill. BP set the payout at 7 cents a share for the last three months of 2010, half the level before the spill, after canceling the dividend for the first three quarters. It plans to dispose of its Texas City, Texas, and Carson, California, refineries.
Cuomo to Cut New York State Spending by $8.86 Billion, Fire 9,800 Workers. New York Governor Andrew Cuomo proposed cutting local school funding by 7.3 percent and reducing Medicaid spending by almost $3 billion in a budget that seeks to close a $10 billion deficit. As many as 9,800 workers may be fired under the spending plan for the third most-populous U.S. state, according to Cuomo’s budget documents released today. Aid to 700 school districts, the state’s largest expense, would be cut by $1.5 billion from last year to $19.4 billion in the fiscal year beginning April 1. Cuomo, a 53-year old Democrat elected in November, said the state needs to break the cycle of “continually spending more money at levels you cannot afford,” as required by laws approved in past years. “More money does not equal better service” in Medicaid or education, he said yesterday.
Wall Street Journal:
Egypt's Mubarak to Address Nation as Protests Mount. President Hosni Mubarak will address the nation as hundreds of thousands of Egyptians gathered in Cairo's Tahrir Square to call for an end of his rule and international pressure mounts to find a peaceful solution to the crisis. There are no specific details of the content of Mr. Mubarak's address, which comes as hundreds of thousands of Egyptians filed into Cairo's Tahrir Square on Tuesday, forming the largest crowd yet in eight days of demonstrations. Al Arabiya TV, without citing its sources, reported the president will say he will step down at the next election but stay in office until then.
Jordan's King Dismisses Government Amid Protests. Jordan's King Abdullah II dismissed his government and named a new prime minister tasked with introducing "true political reforms," following weeks of street protests calling for economic and political change.
Interview: Germany Has "Ambitious Plan" to Reform Euro Zone. Germany wants "comprehensive" reforms in the euro zone that achieve greater fiscal discipline, improved policy coordination, an enhanced mechanism for managing debt crises, and more rigorous management of the region's banks, according to the country's deputy finance minister.
U.S. Banks' Egypt Exposure is $5.4 Billion. As protests continue unabated in Egypt, one analyst sharpens his pencil to figure how much U.S. financial institutions might be hurt by the growing unrest. “According to IMF data, there is approximately $49 billion in loans outstanding to the Egypt sovereign. Of that amount, $5.4 billion – or roughly 11% — is to U.S. banks, which compares to $17.6 billion or 36% to French banks, $10.6 billion or 22% to UK banks, and $6.3 billion or 13% to Italian banks,” Keefe Bruyette & Woods said in a research report. Of course, the amount of Egyptian sovereign debt held by U.S. banks is just one measure of potential financial pain. The bigger risk to banks’ wallets is from rising oil prices or increased inflation trends in emerging markets if tumult spreads to other countries.
Sentence in Chinese Villager's Suspicious Death Doesn't Satisfy Skeptics. Two days after a relatively light sentence handed down in the infamous “My Dad is Li Gang” case sparked outpourings of cynicism and anger online, China’s justice system has returned another decision in a separate, controversial case that is drawing fresh questions. The case this time revolves around the death of Qian Yunhui, a rural activist in the Zhejiang province city of Yueqing who was crushed under the wheels of a truck last month. Police proclaimed the death an accident, but many of Qian’s supporters said they suspected murder, noting among other issues that he had died on the same road he and others had earlier blocked in protest of the building of a power plant. Fury over the incident spread across China’s Internet, fueled by horrifically gruesome photos and video of Mr. Qian’s corpse.
Iraqi Kurkish Oil Exports to Resume Within Days - Source. Iraqi Kurdistan is set to resume oil exports in days after an 18-month hitch, a few days later than planned, a person familiar with the situation told a London gathering Tuesday. The resumption could offer some relief to oil markets after Egyptian disruption fears pushed prices to the $100 a barrel threshold.
Behold China's Three Giant Bridges To Nowhere. (pics) When you now look at the list of longest bridges in the world, China occupies most of the top positions. I will not judge if these bridges are good investments. But the sheer scales of the three projects below and the fact that they cross a super long distance over water are mind-boggling.
As World Becomes Zimbabwefied, Cotton Futures Surge 17% In One Month. To wit: Corn spot up 7.76%, wheat up 5.63%, Rice up 10.08%, Hogs up 10.16%, Sugar up 5.64%, Orange Juice up 3.33%, and cotton.... up 17.08%.That's in one month! The chart below shows various commodities performance YTD.
MarketWatch.com:
Retailers Flat After Downbeat Sales Report. Retail stocks were generally flat Tuesday as a lackluster weekly sales report kept the sector from rising with the broader markets. Nasty weather hampered shopping for the week ended Jan. 29, dragging retail sales into the red for the fourth week in a row. Sales fell 1%, according to the International Council of Shopping Centers and Goldman Sachs. However, sales on a year-over-year basis rose 1.6%.
New York Post:
Wall Street Terror Alert. Terrorists are reportedly planning attacks against top executives at major Wall Street banks. Officials from the FBI-NYPD Joint Terrorism Task Force have been briefing the financial heavyweights and their companies' security chiefs on the various threats, WNBC/Channel 4 reported last might. Some of the banks alerted include Goldman Sachs, Citibank, JPMorgan Chase and Barclays. The threats, which come from al Qaeda in Yemen, are general and there is "no indication of a targeted assassination plot," the network said. Some of the information came from the terrorist magazine Inspire, which also mentioned using anthrax in an attack.
Funds Aggressively Scooping Up Farm Land. Hedge Funds, Pension Funds and Investment Bankers seem content on swapping out their Jaguars for John Deeres. I was talking with a good client of our's the other day who is not only a large producer, but also active in the Agricultural Banking sector about the continued interest from the "funds" in farmland...and you thought you only had to deal with them in the markets. From what I have been told, the "funds" have been aggressively buying farm land not only globally, but in big chunks right here in the US as they continue to bet on rising food prices. It is now believed that over 50% of all farmland is owned by individuals who do not farm any ground.
The Daily Beast:
U.S. Must Not Repeat Carter's Mistakes. The Egyptian protests bear an uncanny resemblance to the 1979 Iranian revolution, but historian Geoffrey Wawro urges the U.S. to learn the lessons of supporting a dictator—or risk losing Egypt to the Muslim Brotherhood.
Politico:
Egypt: The Worst Scenarios for the White House. The uprisings in Egypt and Tunisia caught the Obama administration almost completely off guard, and the White House is still struggling to keep pace with events a week after pro-democracy demonstrations first rocked Cairo. Besides the consequences for Egypt and the Mideast, the United States and the Obama administration have a lot riding on the resolution of the crisis. For a White House that likes to control the narrative — and map out contingencies — the nightmare scenarios are piling up.
Mitch McConnell Grabs Opening for Health Care Vote. Senate Minority Leader Mitch McConnell told Republicans Tuesday that he plans to force a vote on repealing the health care reform law this week. The plan is to tack the amendment onto the Federal Aviation Administration reauthorization bill this afternoon, a Republican aide told POLITICO. The aviation bill, which allowed a more open amendments process under new Senate rules, offered Republicans a prime opportunity to get a vote on House-passed health care repeal bill. Sen. Jim DeMint (R-S.C.) said Tuesday that he plans to try to force a Senate vote on repealing the health care overhaul, too.“The House of Representatives recently voted to repeal it and now it’s time for the Senate to act,” DeMint said in an email to supporters. “I wanted you to know that I will be working to force a vote as early as this week.” The repeal is all but certain to fail in the Senate, but it could force a tough vote on vulnerable Democrats up for reelection in 2012.
Reuters:
Egypt General Could Be New Leader - Islamist.Egypt's armed forces chief of staff Sami Enan could be an acceptable successor to Hosni Mubarak because he is perceived as incorruptible, a member of the banned Muslim Brotherhood said on Tuesday. Kamel El-Helbawy, a prominent overseas cleric from Egypt's main opposition movement, told Reuters that Enan, who has good ties with Washington, was a liberal who could be seen as suitable by an opposition coalition taking shape on the streets of Egypt.
India's Sensex Drops to 5-Month Low, Reliance Industries Falls. The BSE Sensex fell 1.7 percent on Tuesday to its lowest close since August, extending January's worst monthly slide in more than two years, as inflation worries and hardening interest rates continued to spook investors. Traders said rising world oil prices, triggered by concerns the political turmoil in Egypt could spill over to the Middle East, could accelerate price pressures in India which imports about 80 percent of its oil requirement. Input prices jumped in Chinese and Indian factories in January, adding to pressure from food inflation that the fast-growing economies are already struggling to contain, business surveys showed on Tuesday.
Liongate Backs Hedgie Hendry for Short China Bet. Mr. Hendry, who told the London School of Economics' Alternative Investments Conference last week that he spends "a lot of time (as a hedge fund manager) ... being worried," said China was investing with the wrong goals. "China ... is going more for sovereign profit rather than for corporate profit... They're building their foundations on sand. If you're spending money without an interest in earning an economic return, you're spending it poorly. I worry about their ability to create sustainable wealth," he said. "Shorting is a tortuous and treacherous experience... (So) I've put together a basket of Japanese industries and bought CDS (credit default swaps) for the creditworthiness of these companies deteriorating."
Egypt Debt Insurance Costs Fall: Markit. Egypt's five-year credit default swaps fell 24 basis points from Monday's close to 412 bps, according to Markit, down from April 2009 highs at 450 hit on Friday and again on Monday. Other Middle Eastern CDS prices edged up, after coming off their highs late in the previous session. Tunisia central bank five-year CDS rose 5 bps to 220, Morocco gained 2 bps to 212, Saudi Arabia rose 3 bps to 118, Bahrain gained 5 bps to 215 and Lebanon rose 9 to 390 bps.
Microsoft(MSFT) Warns of Security Flaw That 'Affects 900 Million People Using Internet Explorer'. Microsoft has issued a 'critical' security alert that affects 900million people using its Internet Explorer web browser. The computer giant warned of a newly-discovered flaw in Windows that could be exploited by hackers to steal personal details or take over computers. The glitch is so severe it potentially affects every user of Internet Explorer.
ABC Radio:
China Blocks Online Comment on Egypt. Chinese authorities are censoring references to the protests in Egypt on the internet - two of the country's biggest web portals have blocked search words like 'Cairo' and 'Egypt' and that is fuelling speculation that the government is deeply concerned about the effects that the protests could have in China. The move follows intense discussion on Chinese social media websites, where bloggers have drawn parallels between the uprisings in Cairo and similar incidents in China, including the 2009 protests in the northwestern province of Xinjiang. SUN: How the media behaves in this case says a lot more about how the government sees itself and how insecure it actually feels, which is not a good idea because it is sending again a signal to the international community that it is worried about a lot of things. Whereas at the same time, the Chinese government is trying to spend a lot of money and effort and energy trying to build this international community as a state and a government that is strong, that is open, that is transparent. So it seems as though there's a lot of complexity, there's quite a few contradictions being played out yet again.
