Today's Headlines

Bloomberg:

• ECB Says Overnight Deposits Surge to Record. The European Central Bank said overnight deposits soared to a record after its second allocation of three-year loans. Financial institutions parked 776.9 billion euros ($1.03 trillion) with the Frankfurt-based ECB. That’s the most since the euro was founded in 1999 and up from 475.2 billion euros a day earlier. Banks get 0.25 percent on the deposits. The ECB this week lent banks 529.5 billion euros for three years in the biggest single refinancing operation in its history, taking total long-term lending above 1 trillion euros. Banks received the funds yesterday and pay the average of the ECB’s benchmark rate -- currently 1 percent -- over the period of the loans. The ECB said 800 financial institutions, more than a third of the 2,267 registered to borrow from it, took part in the operation.
  
• Sovereign, Corporate Bond Risk Rises, Credit-Default Swaps Show. The cost of insuring against default on European sovereign and corporate debt rose, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments gained two basis points to 339 at 8:30 a.m. in London. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings increased four basis points to 562.5, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 0.75 basis point to 127.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased two basis points to 201 and the subordinated index climbed 3.5 to 343.5.
• Troika to Have Permanent Presence in Greece, Wieser Tells Format. The “troika” of the European Commission, International Monetary Fund and European Central Bank will have a permanent presence in Greece, Eurogroup Working Group head Thomas Wieser told Austria’s Format magazine. “A permanent presence of the troika on site to monitor the reforms will definitely be the case for several years,” Wieser was cited as saying. Wieser also told the Vienna-based magazine that he is “optimistic” that the Greek economy will grow again in 2013, “be it at a slow pace.” From the middle of the century, growth will “speed up,” he said according to the report.
  
• EIB Privileges in Greek Debt Plan Spur Complaints From Private Investors. Investors are complaining that the European Investment Bank doesn’t deserve the same exemption from losses on its Greek bond holdings as the euro region’s central bank because it didn’t buy the notes to support monetary policy.
• China to Grow Less Than World Bank Estimates, Dow Jones Reports. China’s economic growth will probably be slower than the World Bank estimates, Dow Jones reported, citing Bert Hofman, the Washington-based lender’s chief economist for East Asia and Pacific. The slowdown in China is happening more rapidly than the World Bank expected and expansion may be less than the 8.4 percent the development lender has projected, according to the report published on the website of the Wall Street Journal, citing Hofman in Singapore today.
• Copper Falls as China's Inventories Rise to Highest Since 2003. Copper futures fell on signs of ample supplies as inventories rose to the highest in at least nine years in China, the world’s biggest consumer of industrial metals. Stockpiles monitored by the Shanghai Futures Exchange climbed 2.5 percent to 221,487 metric tons, the highest since at least January 2003, weekly data showed. The dollar’s rally against a basket of major currencies eroded the appeal of raw materials as alternative investment. “Any sign that China is slowing is certainly going to weigh on commodities across the board,” Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “The stronger dollar is also a factor.” “Builds in Chinese stocks reflect what is still a weak spot market currently, with consumers keeping buying to an absolute minimum due to uncertainty over future demand levels,” Gayle Berry, an analyst at Barclays Capital, said in a report.
• Crude Drops for First Time in Three Days. Oil fell the most since December as President Barack Obama said a pre-emptive strike on Iran might generate “sympathy” for the Persian Gulf country, easing concern that an attack would take place. Prices fell as much as 2.8 percent after Obama said in an interview with The Atlantic magazine that a strike without warning might allow Iran to portray itself as a victim. Oil for April delivery fell $2.76, or 2.5 percent, to $106.08 a barrel at 1:28 p.m. on the New York Mercantile Exchange. Earlier, prices touched $105.80 a barrel in the largest intraday decline since Dec. 14. Prices are down 3.4 percent this week, the biggest drop since Dec. 16. Brent oil for April settlement slipped $2.41, or 1.9 percent, to $123.79 a barrel on the London-based ICE Futures Europe exchange. It surged to $128.40 yesterday, the highest intraday price since July 2008.
• Buffett's Insurance Growth Engine May Stall. Warren Buffett, the former hedge fund manager who built Berkshire Hathaway Inc. into a $195 billion company by gaining leverage through insurance premiums, said this traditional source of new funds is drying up.
• Yelp(YELP) Surges as Much as 73% in Trade Debut. Yelp Inc. (YELP), the site that lets users review businesses ranging from diners to dentists, surged as much as 73 percent in its first day of trading after selling shares for more than planned in an initial public offering. The stock climbed 64 percent to $24.60 at 11:06 a.m. in New York, after soaring to $26, giving Yelp a market valuation of $1.56 billion. That price is about 19 times Yelp’s annual revenue.

Wall Street Journal:

• Spain Raises Budget Deficit Target. Spanish Prime Minister Mariano Rajoy said Friday his government has raised the budget deficit target for this year to 5.8% of gross domestic product, in what he called a "sovereign" decision that may rile up European Union partners. The new estimate contrasts with the 4.4%-of-GDP target set by Spain's previous left-of-center government, in office until December.
• Copper's Problems Pile Up Quietly.
  
• New Report: Seniors Can't Make Ends Meet. A new report released Thursday for all 50 states, called the Elder Economic Security Standard Index, found that people who are over 65 are struggling to cover basic expenses in all 50 states.
  

CNBC.com:

• Geithner Shows Own 'Amnesia' Over Bank Crisis: Bove. Treasury Secretary Timothy Geithner should have done more to stop the financial crisis before it started, rather than try now to impose unnecessary reforms on the banking system, analyst Dick Bove said.

Business Insider:

• Here's The New Restriction Some Hedge Funds Are Putting On Their Employee's Social Media Activity.
• The Horrific Eurozone Youth Unemployment Chart That Makes Everyone Cringe. (graph)
  

Zero Hedge:

• Foodstamp Use Hits Another Record in December. (graph)
• Who Is Most Exposed To The Oil Price Shock? (graph)
• Bank of America(BAC) Joins Goldman(GS) In Cutting Its Q1 GDP Forecast.
  

Reuters:

• Euro Drops for 3rd Day as Spain Defies EU Fiscal Pact. The euro dropped against the dollar for a third straight day on Friday and was on track for its worst week since mid-December after debt-burdened Spain challenged the European Union's new fiscal pact.

Telegraph:

• Euroland Will Pay For This Monetary Madness. The flood of cheap money from the European Central Bank is storing up grave trouble for the future.
• Debt Crisis: Live. Spain defies Brussels on day leaders sign fiscal pact.

RTHK:

• Fund inflows could cause an asset bubble in Hong Kong after a capital injection into the eurozone banking system, HKMA Chief Executive Norman Chan said.

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.50%

Sector Underperformers:

• 1) Coal -3.74% 2) HMOs -2.0% 3) Gold & Silver -2.0%

Stocks Falling on Unusual Volume:

• SKS, TTEC, CIG, WTI, CCJ, FCX, PSMT, USHS, CCMP, GCOM, BANR, TRS, PEGA, MIND, CINF, IPHS, LSTR, MINI, EXLS, CRDN, FNSR, CEVA, EBIX, GIFI, DXPE, SPPI, WOOF, DPM, GNI, CGV, FPO, CNC, FPO, BX, KRA, DGI, BIG, OMG, AH, TPC and QUAD
  

Stocks With Unusual Put Option Activity:

• 1) NYX 2) XME 3) XLU 4) MPEL 5) AIG
  

Stocks With Most Negative News Mentions:

• 1) ITT 2) LSTR 3) TRV 4) CMA 5) BHI
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume
  

Bull Radar

Style Outperformer:

• Mid-Cap Growth -.10%

Sector Outperformers:

• 1) Airlines +1.68% 2) Computer Hardware +.68% 3) Defense +.45%

Stocks Rising on Unusual Volume:

• CALL, YOKU, WYNN, DAL, ALJ, VLO, SFLY, ASNA, ZNGA, CALL, SINA, FMCN, MITK, SLE, GCO, KMX, FIO, BID, RAX, XLS and ANN
  

Stocks With Unusual Call Option Activity:

• 1) NYX 2) AMRN 3) UUP 4) SIRI 5) TLAB
  

Stocks With Most Positive News Mentions:

• 1) SPLS 2) NOC 3) DAL 4) GD 5) AAPL
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume
  

Friday Watch

Evening Headlines
Bloomberg:

• Banks Miss Out on Best Bond Market Gains as Fear Trumps Greed: Euro Credit. Europe’s banks, cutting their holdings of euro-area government bonds, are missing the region’s biggest returns. Italian and Irish bonds are leading gains among sovereign debt this year, followed by Belgian and Spanish securities, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Royal Bank of Scotland, Britain’s biggest government-owned lender, Germany’s Commerzbank (CBK) AG and France’s Credit Agricole SA (ACA) have reduced their investments in so-called euro-zone peripheral debt.
  
• EU Speeds Payments to Permanent Aid Fund. European leaders agreed to provide capital faster for the planned permanent bailout fund in a concession to international pressure to strengthen the bloc’s defenses against the debt crisis. Euro governments might pay the first two annual installments into the 500 billion-euro ($666 billion) fund this year and complete the capitalization in 2015, a year ahead of schedule. A decision will come later today.
• Spain Foreclosures Stymied by Nun Make Debt Investors Skittish: Mortgages. With Spain’s economy set to contract in 2012 for the third year out of five and unemployment at 23 percent, banks are increasingly easing terms for customers who are missing payments on mortgages underwritten during the country’s decade-long housing boom. Pressure to renegotiate debt and delays in repossessions are raising doubts that default rates on Spain’s 613 billion euros ($817 billion) of mortgages have stabilized. “It probably is going to be worse than people expect, even though the banks say it’s not a problem,” said Daragh Quinn, an analyst at Nomura International Plc in Madrid, on the outlook for mortgage arrears. “The more they kick the can down the road, the less visibility we have on what is really happening with asset quality.”
  
• Euro Defaults Loom as National Ponzi Schemes 'Run Out of Suckers': Books. Western governments are now poised to repeat that ignoble history, be it through outright default or inflating their debt away, says Philip Coggan in “Paper Promises,” a crisply written look at how the debt crisis may overturn the global economic order. “The massive debts accumulated over the last 40 years can’t be paid in full, and they won’t be paid,” Coggan says. “The debt crises of Greece, Ireland and Portugal are just the start.” With its aging populations and overstretched budgets, the West’s “Ponzi scheme is running out of suckers,” he says.
• China to Stop Local Governments' Property Easing, Securities News Reports. China will stem any new property easing by local governments as the central authority is determined to maintain curbs on housing, Shanghai Securities News reported today. The central government will “absolutely” not allow local authorities to “sing a different tune” on property control policies, the newspaper affiliated with state-run Xinhua news agency said, citing an unidentified director at the country’s housing ministry. Tensions between the two levels of authority will be on show next week as officials gather in Beijing for the annual National People’s Congress starting March 5. China’s local governments have attempted to ease property tightening policies with little success, while Premier Wen Jiabao has maintained that he won’t waver on real estate controls and efforts to bring prices down to a reasonable level. “The central government will not relax its property tightening this year,” Jeffrey Gao, a Shanghai-based analyst at Macquarie Capital Securities, said in a phone interview today. China’s February home prices posted the biggest decline in 19 months as the government pledged to maintain curbs on property, SouFun Holdings Ltd. (SFUN), the nation’s biggest real-estate website owner, said yesterday.
• BRIC Investors Losing as State Companies Forgo Earnings Amid Slower Growth. Investors in the biggest state- controlled companies are being punished with the lowest valuations in six years by emerging-market leaders putting public services ahead of shareholder profits as economies slow.
• Goldman Sachs(GS) Criticized by Judge on Kinder Morgan Conflicts. Goldman Sachs Group Inc. (GS) was rebuked by Delaware Chancery Court Judge Leo Strine for “incomplete and inadequate” handling of a conflict of interest, less than 14 months after the firm finished examining its business practices. Strine, in a ruling yesterday, cited “the disturbing nature of some of the behavior” leading to the terms of pipeline operator Kinder Morgan Inc. (KMI)’s $21.1 billion purchase of El Paso Corp., Goldman Sachs’s biggest takeover assignment last year. The bank, which stands to get a $20 million fee from El Paso, has a $4 billion stake in Kinder Morgan and two employees on its board, both of whom recused themselves from negotiations.
• Oil Rises to $110 on Report of Pipeline Explosion. Oil climbed over $110 a barrel for the first time since May after an Iranian state-run news channel reported an explosion on a pipeline in Saudi Arabia. A Saudi official said no oil facilities were sabotaged. Futures reached $110.55 at 3:17 p.m. in New York after Iran’s Press TV reported on its English-language website that “an explosion has hit oil pipelines in the flashpoint Saudi Arabian city of Awwamiya,” then fell back below $109. Major General Mansour Al-Turki, a spokesman for the Saudi Interior Ministry, said no oil facility in the region has been sabotaged after reports of a fire near the Ras Tanura refinery.
• Asia's Strong Job Market May Limit Policy Easing. Asia’s job markets are holding up even as the European crisis hurts exports, auguring stability in domestic demand that reduces the case for the region’s central banks to add monetary stimulus. “We have tight labor markets across Asia,” said Frederic Neumann, Hong Kong-based co-head of Asian economic research at HSBC Holdings Plc. “Rather than sit back and let inflation rise again, policy makers will want to be proactive and tighten the screws before it becomes a problem. We could even see rate hikes coming through at the end of the year.”
• U.S. Exporters Sell 120,000 Tons of Wheat to Iran, Most Since August 2008. U.S. exporters sold the most wheat to Iran in more than three years, the government said, raising speculation that the Persian Gulf country may be boosting stockpiles after production from last year’s crop declined. The sale of 120,000 metric tons of hard, red winter wheat is for delivery in the marketing year that ends May 31, the U.S. Department of Agriculture said today in an e-mailed statement. The sale was the biggest since Iran purchased 689,310 tons in a deal announced on Aug. 15, 2008. The U.S. hasn’t exported any wheat to Iran since a 54,267-ton shipment was sent in November 2009, USDA data show. Iran’s production of wheat, the country’s biggest crop, fell to 13.75 million tons in 2011, 13 percent less than a year earlier, the USDA estimates. While Iran is facing international sanctions over its nuclear program, U.S. restrictions provide exemptions for “licensed exports of agricultural commodities,” according to the Office of Foreign Assets Control, a division of the Treasury Department.
• U.S. Commercial Paper Falls to Lowest Level Since January 2011, Fed Says. The market for corporate borrowing through U.S. commercial paper declined to the lowest level in more than a year as investors shunned short-term IOUs from financial institutions on investor concern that Europe’s fiscal strains will taint bank balance sheets globally. The seasonally adjusted amount of commercial paper outstanding fell $10.4 billion to $927.2 billion in the week ended yesterday, the third consecutive decrease, the Federal Reserve said today on its website. That’s the longest stretch of declines since the period ended Jan. 4 and the lowest level since the market touched $916.8 billion on Jan. 19, 2011, according to Fed data compiled by Bloomberg. Demand from U.S. money-market funds, among the biggest investors in short-term financial obligations, has been capped by concern that European debt stresses may push the price of these securities lower, even after unprecedented financial aid measures for the area’s banks.
• Iranians Vote in Parliamentary Election. Iranians vote today in the country’s first election since the disputed presidential contest of 2009 sparked mass protests, as sanctions targeting the country’s nuclear program squeeze the economy. Iranian authorities have urged voters to go to the polls in a display of defiance toward the countries that are applying the pressure. The election “will be a slap in the face of enemies of the nation,” Supreme Leader Ayatollah Ali Khamenei said on his website this week.

Wall Street Journal:

• Retailers Join Payment Chase. Two Words: Digital Wallet—Wal-Mart and Target Join Project Aiming to Make Plastic Obsolete.
• Executive Pay Votes Spur Shifts in Policies. Shareholder votes on executive pay are starting to change the shape of compensation at some big companies. A group of institutional investors recently joined forces to seek executive-pay and governance changes at 10 companies where nonbinding "say on pay" votes narrowly passed last year. The informal coalition, led by unions and public pension funds, already has persuaded Allstate Corp., Northern Trust Co. and five other companies to ban "gross-up" payments to executives. Those payments cover taxes executives owe on benefits provided by their employer.
• What's a Splunk? Part of the Next Wave of Start-Ups Going Public. Silicon Valley's initial public offering machine is shifting to a new sweet spot: enterprise technology companies. After a year of high-profile consumer Internet IPOs—from Groupon Inc., LinkedIn Corp. and Zynga Inc. last year to Yelp Inc. and Facebook Inc. now—a slew of Silicon Valley companies that sell technology mainly to businesses are also getting ready to hit the stock market. This new crop of IPO-ready companies are solving problems that businesses are willing to spend money on, such as improved security or better insight into customer behavior.
• Greek Debt Deal Won't Trigger Payouts, for Now. Owners of insurance-like contracts designed to protect against potential losses on Greek sovereign debt won't receive payouts, at least for now, even though the country took steps in its restructuring in recent days that could force private creditors to accept losses on the face value of their bonds, a committee of dealers and investors decided. Thursday's decision marks the first time the panel of experts has held a vote on whether compensation is owed to holders of the credit-default swap protection on Greece.

MarketWatch:

• Japan Household Spending Drops, Jobless Rate Rises. January real spending by households of two or more people dropped 2.3% from a year earlier, the Ministry of Internal Affairs said. The result was well below projections for a 0.8% fall in separate surveys from Dow Jones Newswires and Reuters. January's jobless rate rose to 4.6% from December's 4.5%, with the Dow Jones Newswires survey having called unemployment to remain flat.

Business Insider:

• FBI Director: Hacking Will Replace Terrorism As The Nation's Top Worry.
• In the Middle Of The Euro Crisis, These 12 EU Countries Sunk Even Further Into Debt. Despite the fact that European countries have bailed out Greece and Ireland, and countries like Hungary were facing harsh criticism for not reducing their GDP to debt ratios, new data from Eurostat (pdf) shows that of the 27 countries in Europe, 21 had a higher ratio in the third Quarter of 2011 than the year before. The ratio also increased in both the euro area and the EU27 , compared with the third quarter of 2010. What chance do they have now?
• How Yelp's Business Works.
  

Zero Hedge:

• Juncker Says There Is A "Plan B" If Greek Debt Swap Fails.
• Capturing Sarkozy's Close Encounter Of The Third Estate Kind. (videos)
  

NY Times:

• Greek Crisis May Test the Value of Swaps. The restructuring of Greece’s debt that is scheduled to start next week may well demonstrate how effective credit-default swaps are. These financial instruments, which played a major role in both the 2008 financial crisis and in the European debt crisis, are meant to pay out if a company or country defaults. But the twists and turns over Greece’s debt are revealing their potential limitations for investors who hope the swaps will protect them against losses if Greece defaults.

Forbes:

• Oil Continues to Rise Because the Dollar Continues to Fall. The primary reason that crude oil today – Brent is at $123 per barrel – is higher than its prior average around $20 in the 1990s, or the $3.00 of the 1960s, is that the dollar has lost value over that time.

The Baltimore Sun:

• Breitbart A Provocateur To The End by Jonah Goldberg.

The Hill:

• Gingrich Says Obama Should Fire Energy Secretary For Remark About Gas Prices. Republican candidate Newt Gingrich said President Obama should fire Energy Secretary Steven Chu following his remark this week that reducing gas prices is not the “overall goal” of his agency. Gingrich said President Obama’s continued support for Chu signals a commitment to “his radical ideology, which wants to artificially raise the cost of energy.” “Just this week, Obama’s own Energy secretary, Steven Chu, admitted what we all know is true — that the Obama Energy Department really isn’t trying to lower gasoline prices,” Gingrich said while campaigning Thursday in Georgia.

Rasmussen Reports:

• National GOP: Romney 40%, Santorum 24%, Gingrich 16%, Paul 12%.

Reuters:

• Fed Officials Flag Soft Economy But Mum On Easing. Federal Reserve Chairman Ben Bernanke and other top officials of the U.S. central bank on Thursday highlighted risks to the economic recovery despite recent signs of strength, but offered few hints that any additional monetary stimulus might be needed. Bernanke told lawmakers there was reason to be suspicious of the recent decline in unemployment given the weakness of economic growth. "There's still a bit of a contradiction between the improvement in the labor market and the speed of the overall recovery," Bernanke said in a second day of testimony to Congress. "You've still got consumption spending growing relatively weakly." Two of the Fed's regional presidents, Sandra Pianalto of Cleveland and Dennis Lockhart of Atlanta, also cited the economy's shaky stance, with Pianalto signaling that policy was appropriate for the current environment. "There'd have to be a significant change to my outlook to change my position on policy at this time," she said in rare press briefing.

Financial Times:

• Brazil Declares New "Currency War'. Brazil has declared a fresh “currency war” on the US and Europe, extending a tax on foreign borrowings and threatening further capital controls in an effort to protect the country’s struggling manufacturers. Guido Mantega, the finance minister who was the first to use the controversial term in 2010, said the government would not “sit by passively” as developed nations continue to pursue expansionary monetary policies at the expense of Brazil.

Telegraph:

• EU Finance Chiefs Give Greece $58Bn But Stock Fears Of Default After Delaying Bail-Out Decision.
  

Chosun Ilbo:

• North Korea has several hidden uranium enrichment plants other than the Yongbyon facility, citing a South Korean government official.

Shanghai Securities News:

• China may impose more rules ordering local governments to reinforce property curbs if new easing attempts are made, citing housing ministry researcher Wang Juelin.
  

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are +.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 157.0 -3.5 basis points.
  
• Asia Pacific Sovereign CDS Index 131.50 +2.5 basis points.
• FTSE-100 futures +.13%.
  
• S&P 500 futures -.03%.
  
• NASDAQ 100 futures +.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (GCO)/1.67
• (BIG)/1.74

Economic Releases

• None of note

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bullard speaking, Fed's Evan speaking, ISM New York for February and the (HW) Investor Day could also impact trading today.
  

BOTTOM LINE: Asian indices are higher, boosted by financial and industrial 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.

Stocks Rising into Final Hour on Less Eurozone Debt Angst, Financial Sector Optimism, Short-Covering, Investor Performance Angst

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Most Rising
  
• Volume: Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 17.47 -5.21%
  
• ISE Sentiment Index 120.0 -2.44%
  
• Total Put/Call .94 -10.48%
  
• NYSE Arms .92 -27.09%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 92.99 -.69%
  
• European Financial Sector CDS Index 161.10 -3.69%
  
• Western Europe Sovereign Debt CDS Index 340.41 -2.14%
  
• Emerging Market CDS Index 242.46 -3.36%
  
• 2-Year Swap Spread 26.25 +.25 bp
  
• TED Spread 41.0 +.25 bp
  
• 3-Month EUR/USD Cross-Currency Basis Swap -72.25 -5.25 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .07% -1 bp
  
• Yield Curve 173.0 +4 bps
  
• China Import Iron Ore Spot $143.20/Metric Tonne +.14%
  
• Citi US Economic Surprise Index 45.10 -4.8 points
  
• 10-Year TIPS Spread 2.28 unch.
  

Overseas Futures:

• Nikkei Futures: Indicating +69 open in Japan
• DAX Futures: Indicating +2 open in Germany

Portfolio:

• Higher: On gains in my Retail, Biotech and Tech sector longs
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them
  
• Market Exposure: 75% Net Long

Today's Headlines

Bloomberg:

• Europe Waters Down Fiscal Pact With Sanction Rules, Welt Says. European Union leaders are planning to sign an agreement at a summit starting today that “waters down” the sanctions process against countries that breach fiscal rules, Welt said, citing the agreement. The agreement states that only countries have the right to file a suit and not independent institutions such as the European Union Commission, the German newspaper reported. The country that holds the European Council presidency as well as its predecessor and successor are supposed to sue, Welt said. While the rules stipulate which countries are supposed to take debt violators to court, there are various exemptions from the obligation, the newspaper said.
• Euro Bailout Fund Gets Ministers' Approval to Raise Money for Greek Swap. Euro-area finance ministers authorized the region’s bailout fund to raise money for Greece’s bond exchange, the first step in releasing funds from a 130 billion-euro ($173 billion) rescue package. Greece has passed “all required legislation” and the ministers “note with satisfaction” the progress achieved, said Luxembourg Prime Minister Jean-Claude Juncker in a statement after chairing a meeting of the finance chiefs in Brussels today. As a result, they gave the go-ahead to the European Financial Stability Facility to issue bonds to finance their role in the debt swap.
• Europe Factory Report Shows Region Trailing as Joblessness Rises: Economy. Euro-area manufacturing shrank for a seventh month and unemployment rose to the highest in more than 14 years, stoking concern that the regional economy may struggle even as global growth improves. A manufacturing gauge based on a survey of purchasing managers in the 17-nation region increased to 49 in February from 48.8 in January, remaining below the 50 line that divides expansion from contraction, London-based Markit Economics said today. Separate reports showed the jobless rate rose to 10.7 percent in January, the highest since October 1997, and inflation accelerated last month.
• The euro's rally to a more than two-month high against the dollar is poised to reverse as demand fueled by ECB loans wanes and foreign investors shun the region's assets, Morgan Stanley said. The three-month cumulative sum of investment in the euro area's bonds and money markets fell in December for the first time in a year, a sign that global funds were withdrawing money from the region.
• Manufacturing in U.S. Expands at Slower Pace; Jobless Claims Fall: Economy. Manufacturing in the U.S. grew less than forecast in February as orders eased, slowing the industry that has powered the two-year expansion. The Institute for Supply Management’s factory index fell to 52.4 from 54.1 in January, the Tempe, Arizona-based group said today. Readings above 50 signal growth. Jobless claims fell to an almost four-year low last week, and household purchases adjusted for prices were little changed for a third straight month in January, other reports showed.
• US Consumer Spending, Incomes Rise Less Than Estimates. Consumer spending in the U.S. rose less than forecast in January after little change the previous month, showing a lack of improvement in the biggest part of the economy. Purchases climbed 0.2 percent, while incomes increased 0.3 percent, Commerce Department figures showed today in Washington. The median estimate of economists surveyed by Bloomberg News called for a 0.4 percent increase in spending and a 0.5 percent rise in incomes. Warmer weather may have restrained spending on services such as utilities.
• Crude Advances for Second Day on Iran Risk, U.S. Manufacturing Growth. Oil climbed a second day as the U.S. increased pressure on Iran to halt its nuclear program and improving American economic data bolstered optimism that fuel demand will grow. Futures in New York rose as much as 1.2 percent as U.S. officials escalated warnings that the nation may join Israel in attacking Iran. Crude oil for April delivery rose $1.07, or 1 percent, to $108.14 a barrel at 12:25 p.m. on the New York Mercantile Exchange. Prices have advanced 8.5 percent in the past year. Brent oil for April settlement climbed $2.59, or 2.1 percent, to $125.25 a barrel on the London-based ICE Futures Europe exchange.
• Obama Tops in Primary Spending Even Without Opponent. During 2012’s primary campaign, one presidential candidate has bought more advertising, hired more people and spent more on a grassroots organization than any other White House hopeful. If money is ammunition in politics, President Barack Obama so far is outgunning all the Republicans vying to challenge him, building a national network of staff and volunteers even while he’s unopposed for the Democratic nomination. Through Jan. 31, the Obama campaign’s payroll spending was more than twice the total for the four remaining Republican candidates combined. With the general election still more than eight months away, Obama’s re-election committee has spent $66 million overall, almost 20 percent more than the $56 million outlay by the best-financed Republican, former Massachusetts Governor Mitt Romney.
• IMF Says Global Economy Still Facing Major Risk From European Debt Crisis. The global economy faces “major downside risks” as its recovery continues to be threatened by stresses in the euro area, the International Monetary Fund said in a report prepared for the Group of 20 nations. The world economic expansion will slow to 3.3 percent this year from 3.8 percent in 2011, according to the surveillance report prepared for the meeting of G-20 finance ministers and central bank governors in Mexico City Feb 25-26. The euro economy is forecast to contract 0.5 percent this year, compared with growth of 1.6 percent in 2011. “The overarching risk remains an intensified global ‘paradox of thrift’ as households, firms, and governments around the world reduce demand,” the Washington-based IMF said in the report. “This risk is further exacerbated by fragile financial systems, high public deficits and debt and already-low interest rates.”

Wall Street Journal:

• Bank of America(BAC) Weighs Fee Revamp. Bank of America Corp. is working on sweeping changes that would require many users of basic checking accounts to pay a monthly fee unless they agree to bank online, buy more products or maintain certain balances. The plan by the nation's second-largest bank by assets is the latest sign of stresses in the banking industry at a time of low interest rates, slow economic growth and new rules limiting many types of service charges. Many other big banks, including J.P. Morgan Chase & Co.—the nation's largest—and Wells Fargo & Co., have rolled out plans that aim to raise fee revenue or push customers to do more business with the bank.
• ISDA's Greek Ruling Not Last Word. There’s a swirl of excitement over the International Swaps and Derivatives Association’s ruling today not to declare Greece in default on its government bonds. Relax.

Dow Jones:

• Egan Jones senior analyst William Hassiepen says QE3 may trigger a downgrade of U.S. credit. "It would definitely trigger another review," he said.

Fox News:

• In Memoriam: Andrew Breitbart (1969-2012). (videos) With a terrible feeling of pain and loss we announce the passing of Andrew Breitbart. Andrew passed away unexpectedly from natural causes shortly after midnight this morning in Los Angeles.

CNBC.com:

• Apple(AAPL) Stock to Hit $1,000? Steve Wozniak Believes So. Apple's stock price has the potential to hit $1,000 as the company has a tremendous amount of growth ahead of it due to the integrated nature of its products and services, Steve Wozniak, Apple co-founder, told CNBC in an exclusive interview on Thursday.

Business Insider:

• Apple's(AAPL) TV Will Be 'The Biggest Thing In Consumer Electronics Since The Smartphone' - Munster.
• Check Out These Shocking Photos Of Austerity Riots In Barcelona.
• Chart of the Day: 'Total Collapse' In Greece.
  

Zero Hedge:

• Mario Draghi Is Becoming Germany's Most Hated Man.
• EUR Bent Takes Out All Time Highs. (graph)
• Pictures From a French Mob - Watch as Sarkozy Bravely Retreats From Furious Frenchmen.
  

LA Times:

• Backlash in Egypt Follows Lifting of Travel Ban on U.s. Activists. Egypt’s military-backed government faced criticism Thursday for appearing to bow to U.S. pressure by allowing seven Americans accused of fomenting political unrest to leave the country despite months of Cairo casting them as spies and enemies of “foreign hands.”

Forbes:

• The 40 Highest-Earning Hedge Fund Managers.
• Dalio and Simons: A Peek Inside Their Winning Hedge Fund Portfolios.
  

pandodaily:

• Source: AOL(AOL) Planning to Lay Off Hundreds Next Week. We are hearing that AOL is planning on laying off hundreds of employees next week. Some of the cuts will undoubtably come from the bloated Patch division, but not all, from what we hear. The conjecture by our source is that AOL may disappoint Wall Street this quarter, and the company wants to have a story around cost cutting already in place.

Wall Street All-Stars:

• On Israel and Iran.

TheStreet.com:

• Gold Prices Recover After Wednesday's Bloodbath. Gold for April delivery was rising $6.40 to $1,717.70 an ounce at the Comex division of the New York Mercantile Exchange.

Boston Globe:

• Spain Student Protests Turn Violent In Barcelona. Tens of thousands of students protested education spending cuts in big cities across Spain on Wednesday, and the demonstrations turned violent in Barcelona as angry young adults clashed with police. Riot police charged a crowd outside the stock market in Barcelona, Spain's second largest city, after protesters who broke away from a peaceful rally numbering thousands threw rocks and other objects. Video in Spanish media showed protesters setting plastic garbage containers alight with flares, causing a blaze that destroyed at least one car. They also hurled rocks at the glass front door of a bank branch.

Gigaom:

• U.S. Smartphone Ownership Eclipses Feature Phones. The U.S. is now officially a smartphone nation, with 53 percent of all adult cell phone owners claiming ownership of a smartphone, according to a new report by the Pew Internet & American Life Project.

Chicago Tribune:

• Greek Debt Ruling Dangerous Precedent: PIMCO's Gross. Bill Gross, the co-cio and co-founder of bond giant PIMCO, said on Thursday the decision by a major derivatives agency to not declare a credit event on the writedown of Greek sovereign debt sets a dangerous precedent. PIMCO was one of 15 banks, hedge funds, and asset managers in the International Swaps and Derivatives Association that voted on Thursday against declaring the debt restructuring a credit event that would trigger a payout on credit default swaps. The vote by the ISDA group was unanimous.
  

Politico:

• K Street Democrats Warn Businesses on Donations to GOP. Democrats on K Street are warning their corporate clients: Give to Republican challengers in the 2012 election, and you’ll regret it come tax reform time. Lobbyists are getting that message from allies of powerful Democrats such as Senate Finance Chairman Max Baucus (D-Mont.), who is closely watching support for Rep. Denny Rehberg, a Republican challenging Sen. Jon Tester (D-Mont.). Baucus supporters fear that if Rehberg ousts Tester, Baucus could be next to face a serious Republican challenge in the state.

Xinhua:

• ICBC, China Construction Bank, Bank of China and Agricultural Bank of China promised to abide by govt controls on the real-estate market.