Weekend Headlines
Bloomberg:
- The crisis in Greece will "last a long time," Tommaso Padoa-Schioppa, a former European Central Bank executive board member and Italian finance minister, wrote today in the front-page of the Corriere della Sera.
- The euro traded near the lowest level in almost nine months as European leaders refused to detail how they would rescue debt-laden Greece if it fails to finance its debt. The 16-nation currency may decline for a fifth-straight day against the dollar as Greece’s finance minister said his task was akin to changing “the course of the Titanic.” The dollar may rise against the yen before a report forecast to show manufacturing in the New York region improved this month. “The market has been a little disappointed with the lack of progress to date, so we need something reasonably definitive in terms of support for Greece,” said Mike Jones, a currency strategist in Wellington at Bank of New Zealand Ltd. “We’re not going to see a recovery in risk appetite, and we may see the euro continue to slide” until that happens.
- The U.S. Chamber of Commerce, the country’s largest business-lobbying group, is asking a federal court to review the Obama administration’s decision to declare greenhouse gases a health risk under the Clean Air Act. The Chamber’s petition, filed yesterday with the U.S. Court of Appeals in Washington, challenges the Environmental Protection Agency’s ruling made in December, said Abram Olmstead, a spokesman for the Washington-based group. The EPA’s decision paves the way for the agency to regulate carbon-dioxide emissions from sources such as power plants and factories. The ruling is aimed at curbing climate change. Opponents say the move would hurt the economy and cost jobs. “The U.S. chamber strongly supports efforts to reduce greenhouse gas emissions in the atmosphere, but we believe there’s a right way and a wrong way to achieve that goal,” Steven Law, chief legal officer for the chamber, said in a statement yesterday. The business group said it supports an approach in which emissions are controlled through bipartisan legislation promoting new technology. Senator Lisa Murkowski, an Alaska Republican, is leading an effort in Congress to stop the EPA from regulating greenhouse gases under existing federal law. Last month, three Democrats -- Senators Blanche Lincoln of Arkansas, Mary Landrieu of Louisiana and Ben Nelson of Nebraska -- joined Murkowski’s cause.
- David Tepper, the money manager with one of last year’s top-performing hedge funds, bought four U.S. airline stocks and raised his Citigroup Inc.(C) stake by 73 percent in the fourth quarter, a regulatory filing shows. His Appaloosa Management LP’s holdings in Citigroup rose to 138.1 million common shares at yearend from 79.7 million shares at Sept. 30, according to a Form 13F filed yesterday with the U.S. Securities and Exchange Commission. The shares of New York- based Citigroup had a market value of $457.2 million, making it the second-biggest position with about 13 percent of the holdings reported in the filing. Tepper invested in bank stocks as they declined during the market rout of early 2009, then pocketed gains when the financial industry recovered in April and May. That helped his flagship fund, Appaloosa Investment LP, deliver a 117.3 percent return for the nine months ended Sept. 30, the best showing among hedge funds with assets exceeding $1 billion, according to Bloomberg data. Appaloosa also acquired 11 million common shares of Wells Fargo & Co. in the quarter, supplementing its holdings of the bank’s preferred stock. According to Bloomberg data, financial stocks comprised 86 percent of the $3.4 billion in holdings listed in the Form 13F as of Dec. 31. Appaloosa’s hedge funds invested in four U.S. airline companies during the quarter: AMR Corp., Delta Air Lines Inc., UAL Corp. and US Airways Group Inc. The firm’s shares in the airlines had a combined market value of about $133 million at yearend.
- European Union finance ministers are uniting to oppose President Barack Obama’s proposal to limit banks’ size and risk-taking, saying his plan may run counter to EU policy, according to a draft document.
- Restrictions on oil and gas drilling will cost the U.S. economy $2.36 trillion through 2029, according to a study requested by state utility regulators and paid for in part by industry-sponsored groups.
- President Barack Obama’s union with labor unions has become a marriage made in hell. If he wants to save his presidency, and his party, he should seek a divorce. When Obama met with House Republicans last month, he chastised them for mischaracterizing his health-care agenda. “You’d think that this thing was some Bolshevik plot,” he said. It’s not, of course, but Republicans can be forgiven for observing the truth that this president has been more in the tank for the labor movement than any U.S. president since World War II. It certainly has made great financial sense for the president to align himself with the unions. After all, organized labor spent more than $100 million in the last election supporting Democrats. And for unions, the investment looks like a good one. Since taking office, Obama has doggedly pursued their agenda.
- Rubber prices in Shanghai may drop as much as 17 percent this year and drag down Tokyo futures after gains outpaced demand growth in China, the largest consumer, Global Broker Services Ltd. said. “Market participants in China are becoming cautiously bearish,” Wakao said in Tokyo yesterday. The rise in prices since mid-2009 was too rapid to sustain, he added. Futures were also curbed by concern that China’s monetary tightening may slow economic growth, leading to weaker demand for rubber. The country’s central bank took the second step in a month to restrain inflation and damp asset prices, ordering lenders on the eve of a weeklong Lunar New Year holiday to set aside larger reserves. “China may raise interest rates later this year, which could curb investment and consumption,” said Kazuhiko Saito, chief analyst at commodity broker Fujitomi Co. in Tokyo. “That might be negative for the nation’s raw material demand.”
Wall Street Journal:
- The Continuing Climate Meltdown. More embarrassments for the UN and 'settled' science. It has been a bad—make that dreadful—few weeks for what used to be called the "settled science" of global warming, and especially for the U.N. Intergovernmental Panel on Climate Change that is supposed to be its gold standard. First it turns out that the Himalayan glaciers are not going to melt anytime soon, notwithstanding dire U.N. predictions. Next came news that an IPCC claim that global warming could destroy 40% of the Amazon was based on a report by an environmental pressure group. Other IPCC sources of scholarly note have included a mountaineering magazine and a student paper. Since the climategate email story broke in November, the standard defense is that while the scandal may have revealed some all-too-human behavior by a handful of leading climatologists, it made no difference to the underlying science. We think the science is still disputable. But there's no doubt that climategate has spurred at least some reporters to scrutinize the IPCC's headline-grabbing claims in a way they had rarely done previously. All of this matters because the IPCC has been advertised as the last and definitive word on climate science. Its reports are the basis on which Al Gore, President Obama and others have claimed that climate ruin is inevitable unless the world reorganizes its economies with huge new taxes on carbon. Now we are discovering the U.N. reports are sloppy political documents intended to drive the climate lobby's regulatory agenda. The lesson of climategate and now the IPCC's shoddy sourcing is that the claims of the global warming lobby need far more rigorous scrutiny.
- The pledges that countries have made to reduce their CO2 emissions "fall short" of what is needed to reach a key target set at the Copenhagen climate summit last year, according to a study by the International Energy Agency. The so-called Copenhagen Accord hashed out at last December's United Nations summit said the increase in global temperature "should be below two degrees Celsius," and many climate scientists say that failing to meet that target would have dire consequences for the environment.
Barron’s:
- Apple(AAPL), J&J(JNJ), Procter & Gamble(PG), IBM(IBM) and Berkshire Hathaway(BRK/A) top our annual list of the 100 companies most admired by major investors. Not surprisingly, ethics matter more this time around. Video: Apple of the Market's Eye.
CNBC:
IBD:
- That's part of what's driving demand for Volterra Semiconductor's (VLTR) power-management chips. These circuits regulate the computer's voltage to save energy, which is useful enough. But their real distinction is that they can squeeze the functions of as many as 30 traditional components into one chip.
NY Times:
- Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts. As worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs(GS) helped obscure billions in debt from the budget overseers in Brussels. Even as the crisis was nearing the flashpoint, banks were searching for ways to help Greece forestall the day of reckoning. In early November — three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in the ancient city with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting. The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards. It had worked before. In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means. As in the American subprime crisis and the implosion of the American International Group, financial derivatives played a role in the run-up of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere. In dozens of deals across the Continent, banks provided cash upfront in return for government payments in the future, with those liabilities then left off the books. Critics say that such deals, because they are not recorded as loans, mislead investors and regulators about the depth of a country’s liabilities. The crisis in Greece poses the most significant challenge yet to Europe’s common currency, the euro, and the Continent’s goal of economic unity. The country is, in the argot of banking, too big to be allowed to fail. Greece owes the world $300 billion, and major banks are on the hook for much of that debt. A default would reverberate around the globe. Such derivatives, which are not openly documented or disclosed, add to the uncertainty over how deep the troubles go in Greece and which other governments might have used similar off-balance sheet accounting. The tide of fear is now washing over other economically troubled countries on the periphery of Europe, making it more expensive for Italy, Spain and Portugal to borrow.
- When the Congressional Black Caucus wanted to pay off the mortgage on its foundation’s stately 1930s redbrick headquarters on Embassy Row, it turned to a familiar roster of friends: corporate backers like Wal-Mart, AT&T, General Motors, Coca-Cola and Altria, the nation’s largest tobacco company. Soon enough, in 2008, a jazz band was playing at what amounted to a mortgage-burning party for the $4 million town house. Most political groups in Washington would have been barred by law from accepting that kind of direct aid from corporations. But by taking advantage of political finance laws, the caucus has built a fund-raising juggernaut unlike anything else in town. It has a traditional political fund-raising arm subject to federal rules. But it also has a network of nonprofit groups and charities that allow it to collect unlimited amounts of money from corporations and labor unions. From 2004 to 2008, the Congressional Black Caucus’s political and charitable wings took in at least $55 million in corporate and union contributions, according to an analysis by The New York Times, an impressive amount even by the standards of a Washington awash in cash. Only $1 million of that went to the caucus’s political action committee; the rest poured into the largely unregulated nonprofit network.
Crain's NY Business:
- The Securities and Exchange Commission is stepping back from its proposed “universal ban” on placement agents, the controversial marketing firms that private equity and hedge funds hire to pitch themselves to public-sector pension managers. Back in November, the SEC proposed barring placement agents from any investment transaction with a government pension fund.
- Did you hear? The credit crisis is officially over—at least according to the handful of hedge fund managers who have shut down their “credit crisis funds” over the past few weeks. Manhattan-based BlueMountain Capital Management abruptly liquidated its distressed debt fund in early February, after just 11 months of operation, returning the money to investors. The $100 million fund was launched last spring to take advantage of the liquidity crisis by snapping up cheap debt that investment firms were unloading for cents on the dollar. By January, the fund had gained 34%. BlueMountain co-founder Stephen Siderow decided to quit while he was ahead. It was initially marketed as a two-year fund. “Most of the opportunity is behind us,” said Mr. Siderow, whose firm manages about $4 billion. “I just don't see a whole lot of upside. There will still be opportunities, but nothing like what we just had.” Also moving on is Highland Capital, a $25 billion Dallas-based money manager, which just liquidated its distressed debt fund four years earlier than planned. The fund launched in November 2008, investing in collateralized debt obligations, the toxic securities largely credited for causing the financial crisis, and surprised its managers with gains of 138% by the beginning of this year. Highland managers decided to fold the fund, rather than push their luck.
CNNMoney.com:
- Curbing Debt: Shoulda, Coulda. Now Gotta.
Business Insider:
Business Week:
Rasmussen Report:
- Questions continue to mount over the science behind years of studies that say humans are chiefly to blame for global warming. But reflecting a trend that has been going on for more than a year, just 35% of U.S. voters now believe global warming is caused primarily by human activity. The latest Rasmussen Reports national telephone survey finds that 47% think long-term planetary trends are mostly to blame. But 56% say President Obama still believes that human activity is the main cause of global warming. That's the highest finding on that question since last March.
Politico:
- Sen. Evan Bayh, a leading moderate Democrat from Indiana who was once thought to be a rising national political star, won’t run for a third term, a decision which imperils his party’s hold on the seat. Bayh’s stunning decision – announced Monday afternoon in Indianapolis – came as he geared up for what may have been his most difficult campaign in an otherwise gilded political life. The son of a senator, Bayh never lost a race over a career in which he was elected as secretary of state at the age of 30 and served as governor and senator for two terms each. Until Monday morning, Bayh gave no hint that he was thinking about giving up his Senate seat. Just the opposite: he had nearly $13 million on hand, had taken on a new role as the de facto head of a Senate moderate rump group and Democratic operatives in Washington and Indiana had already launched a withering series of attacks against former Sen. Dan Coats, whose seat Bayh took when the Republican retired in 1998 and who had begun exploring taking on the incumbent earlier this month.
- Sen. Scott Brown thinks Vice President Joe Biden was “off base” when he suggested Sunday that the Massachusetts Republican get his facts straight on the legal procedures for military tribunals. “It was insulting,” said Brown, who frequently jabbed the administration during his Senate campaign for giving suspected terrorists legal representation. On CBS's “Face the Nation” last weekend, Biden shot back that he doesn’t “know whether the new senator from Massachusetts understands: When you get tried in a military tribunal, you get a lawyer, too.” “He’s trying to give me a lesson on military law, and I didn’t think it was appropriate,” Brown told POLITICO. “And I thought he was off base when it comes to explaining to the American people that somehow I need a lesson on whether people get attorneys — of course they get attorneys. There’s a difference as to what type of attorney they’re going to get and when they’re going to get that attorney, and how are they treated, and what rights do they, in fact, get.” Brown said he is particularly incensed by Biden’s remarks because he’s served in the Massachusetts Army National Guard for more than 30 years and is currently the Guard's top defense attorney in New England. “I know the military rules and regulations and procedures from A to Z,” Brown said.
- Former Vice President Dick Cheney appeared on ABC's "This Week" on Sunday, and his line of attack of was predictable: President Barack Obama projects weakness to terrorists and puts American lives at risk. After the Christmas Day sky-bombing attempt, Cheney said, “The administration was slow to ... come to [the] recognition that we are at war, not dealing with criminal acts.” He said Vice President Joe Biden was “dead wrong” to say that another Sept. 11-style attack is unlikely. And Cheney said he gets “nervous and very upset” when suspected terrorists are treated as criminals instead of enemy combatants. They’re the kind of brutal charges — largely nuance-free and often politically explosive — that have become a Cheney specialty since he left office 13 months ago. “The reason I've been outspoken is because there were some things being said, especially after we left office,” Cheney told anchor Jonathan Karl, “about prosecuting CIA personnel that had carried out our counterterrorism policy or disbarring lawyers in the Justice Department who had helped us put those policies together, and I was deeply offended by that, and I thought it was important that some senior person in the administration stand up and defend those people who'd done what we asked them to do."
TVNewser:
Washington Post:
- Bayh to Obama: take this job and shove it. Millions of Americans long to tell their bosses “take this job and shove it.” Hardly any have the power and money to do so, especially in these recessionary times. Sen. Evan Bayh (D) of Indiana, however, is the exception. His stunning retirement from the Senate is essentially a loud and emphatic “screw you” to President Obama and Senate Majority Leader Harry Reid. For months now, Bayh has been screaming at the top of his voice that the party needs to reorient toward a more popular, centrist agenda -- one that emphasizes jobs and fiscal responsibility over health care and cap and trade. Neither the White House nor the Senate leadership has given him the response he wanted. Their bungling of what should have been a routine bipartisan jobs bill last week seems to have been the last straw.
The Philadelphia Inquirer:
- Our forefathers brought to this nation barometers and thermometers - the harvests of the Enlightenment - but evidently they forgot to bring the rulers. The likes of Franklin and Jefferson wrote rich accounts, made observations, and waxed philosophical about the atmosphere. What they didn't do was measure snow precisely and keep records, something that wouldn't start happening in Philadelphia until 1884. Based on the somewhat scant evidence, however, it is at least possible that at 72.1 inches of snow - with maybe four to eight more starting tomorrow - we are living through the snowiest winter since William Penn sailed into town on the Welcome in 1682.
alternet:
- Goldman Sachs’s(GS) Greek adventure got an in-depth look from the New York Times yesterday. The article extends on last week’s Spiegel piece, which reported that the bank helped Greece hide the true extent of its debt through the use of specialized derivative products. We first reported on the parallels between AIG and Greece in a post last week, following the lead of Zero Hedge. Entry into the paper of record means the story now has legs this side of the pond, and MIT economist Simon Johnson is arguing that Goldman Sachs is set to be blacklisted in Europe. One question looming over this story: did Goldman position itself to profit from the Greek fiasco? Did it use its special knowledge of Greek’s hidden debt to build profitable bets on its future downfall and rescue? If the bank’s past behavior is any guide, the answer is yes. Ignoring the impending catastrophe (obvious from their vantage point), and failing to properly “hedge” (extract massive profits), would have been “irresponsible” (insufficiently greedy/corrupt) on the part of senior management. Considering this, hedge fund king John Paulson’s role in Greece deserves far more scrutiny. I wrote about this last week, pointing out that they shared the same vulture flight pattern in Greece, but at the time did not realize that Paulson and Goldman actually partnered in executing massive and profitable bets against the subprime market. Are they doing the same with Greece? News of Paulson’s fund taking large positions against Greek debt has barely risen above rumor in the English-language press, despite this article in a Greek daily, which says that Paulson is “orchestrating the pressure on Greek government bonds and the Euro,” and reports that Paulson has a team of 20-30 traders focused on Greece. A research firm is now calling Paulson the George Soros of derivatives markets, where the bulk of speculation against European debt and the Euro is happening; the Telegraph says that so far “no hedge fund has put its head above the parapet in this destructive trade,” but the rumor is that Paulson is behind it. If Paulson is the hedge fund king behind the parapet, as rumored in English and reported in Greek, then it would seem fairly likely that Paulson and Goldman partnered — colluded? — to build profitable short positions against Greek debt. That Goldman was shepherding hedge fund client Paulson around Athens in recent weeks would seem to suggest that the bank and hedge fund are working together in Greece. Paulson and Goldman have partnered before — on the subprime short trades that won them enormous profits in the midst of the housing meltdown. Those trades have gotten a lot of attention, but the fact that Paulson and Goldman worked together to make it all happen has received much less ink. These parallels raise obvious questions: was Paulson also in the room with Goldman before it tried to sell Greece on a new way to hide its debt this past November? As a hedge fund client of Goldman’s, did Paulson have special information about Greece’s true debt situation? Are Goldman and Paulson partnering, once again, to profit from the downfall of an entire country/continent?
LA Times:
- Even as the financial industry has sought to keep a low public profile, some of the country's largest banks have ramped up their spending on lobbying to fight off some of the stiffest regulatory proposals pending in Congress. Lobbying expenditures jumped 12% from 2008 to $29.8 million last year among the eight banks and private equity firms that spent the most to influence legislation, according to data compiled from disclosure forms filed with Congress. The biggest spender was JPMorgan Chase & Co.(JPM), whose lobbying budget rose 12% to $6.2 million, enough for the firm to have more than 30 lobbyists working for it. Among other banks, spending on lobbying rose 27% at Wells Fargo & Co.(WFC) and 16% at Morgan Stanley(MS). "I have never seen such a scrum of bank lobbyists as I have in the last year -- and I've worked on quite a few bank issues over the years," said Ed Mierzwinski, a lobbyist for the U.S. Public Interest Research Group, a coalition of state consumer organizations. "It seems like everybody is out of work except for bank lobbyists."
Seeking Alpha:
- The Greek debt crisis is a perfect example of what is wrong with the Credit Default Swaps market. As I have said many times previously, starting in 2007, CDS are not real swaps (as in forward FX swaps or interest rate swaps) but insurance contracts. (I am more than suspicious that Wall Street and The City came up with this obviously misleading name in order to avoid regulation from the staid and conservative insurance regulators.)
AND... as this very good article in the Financial Times makes clear, everyone in the CDS market plays with fire without having any insurable interest in the underlying credit risk (i.e. without owning the bonds). The FT writer says it succinctly: "We have given Wall Street huge incentives to burn down your house". The "arsonists" are to be found everywhere in our investment community (a better term would be juvenile delinquent gang) and they are profiting mightily: pension funds make hefty premiums from selling CDS, investment banks make fat profits by "making markets" ( e.g. Greek CDS commonly have 20 bp bid-offer spreads) and by attacking bonds directly, hedge funds make a quick buck by buying and selling CDS. Happy times everywhere, except for the poor people who have to foot the bill in the end, i.e. those who have to borrow. This utter nonsense has got to stop NOW. Global regulators can do this with two strokes of a pen: 1) You want to sell CDS? Fine - you must become a regulated insurance company with adequate segragated reserves, actuarial departments, etc. 2) You want to buy CDS? Fine - show proof of insurable interest, i.e. you must own the underlying bonds.
Reuters:
- Online dating gaining worldwide acceptance - study.
Financial Times:
- Why we should not fear the spectre of deflation by Edward Gottesman.
- Europe cannot afford to recue Greece by Otmar Issing.
- The US Federal Reserve is sitting on significant paper losses on the real estate assets it acquired in the Bear Stearns rescue, with much of the red ink coming from debt used to back some of the most high-profile buy-out deals of the bubble years. Among the debts weighing on the central bank’s portfolio are those used in financing the acquisitions of Hilton Hotels, which is being restructured, and hotel operator Extended Stay, which is in bankruptcy, people familiar with the matter say. The Fed holds these and other real estate assets in a vehicle known as Maiden Lane I, which was set up to pave the way for JPMorgan Chase’s purchase of Bear. At the time the deal was struck in March 2008, JPMorgan feared that if it bought all of Bear’s assets it would be left with too much exposure to the real estate market. People familiar with the portfolio said Maiden Lane I’s losses were concentrated in commercial real estate assets, which had a face value of $8.4bn and an estimated worth of $7.7bn when they were acquired by the Fed. As of September they had been marked down to $4bn, filings show. About two-thirds of the Maiden Lane I portfolio involved mortgage debt backed by government-created entities, people familiar with the matter said. Those people describe the debt as highly illiquid, a factor that has resulted in its failure to rally strongly as credit markets recovered and interest rates fell. The Fed has disclosed little detail on these or other assets in the Maiden Lane I portfolio, fearing such revelations could hurt sales efforts, a person familiar with the matter said. JPMorgan and the New York Fed declined to comment. Maiden Lane I was funded with $28.8bn from the New York Fed and $1.15bn from JPMorgan, which agreed to absorb the first $1bn of any losses. The struggles of the portfolio could stir the debate on Wall Street over whether the New York Fed, then run by Tim Geithner, who is now Treasury secretary, struck a particularly good deal for taxpayers in the Bear rescue. In a typical restructuring, creditors are made whole before shareholders are paid. In the Bear case, shareholders received $10 a share while creditors – in this case, the Fed – may lose money.
Telegraph:
- Hedge funds turn on Euro stocks. Global hedge funds have staked millions of dollars against some of Europe's biggest companies amid continuing fears over the strength of the euro. A raft of European banks, healthcare companies and property firms have attracted a sudden spike in "short positions" over the past two weeks, according to figures from DataExplorers. Financial stocks, considered to be in the frontline in the event of a full-blown attack on the euro, have been particularly targeted. David Carruthers of DataExplorers said: "The Spanish financial firms stand out in the data as being targeted by short sellers. But the same pattern is being followed in other European stocks across the sectors." Experts said that although many of the companies have individual concerns for investors, the fears over the euro have exacerbated them in recent weeks. The CME figures have sparked fears that, like George Soros in the early 1990s, hedge funds will lay siege to the single currency. Since Greece, Portugal, Spain and Italy cannot devalue or inflate their way out of the crisis, economists suspect that they will have to receive assistance from other euro nations to avoid inflicting cuts of unprecedented ferocity on their economies.
The Independent:
- Investors switched their attention to the Gulf yesterday as markets reacted to fears that a restructuring plan from the state-owned conglomerate Dubai World would pay creditors only 60 per cent of the money they are owed. With sovereign debt fears high after Europe's leaders failed to detail a bailout for Greece last week, the reports of Dubai World's limited repayment plans added fuel to the fire. Even though Dubai tried to play down the talk, its stock market fell and the cost of insuring five-year Dubai debt against default, as shown by credit default swap prices, rocketed to its highest level since March.
BBC:
- Phil Jones, the professor behind the "Climategate" affair, has admitted some of his decades-old weather data was not well enough organized. He said this contributed to his refusal to share raw data with critics - a decision he says he regretted. But Professor Jones said he had not cheated over the data, or unfairly influenced the scientific process. He said he stood by the view that recent climate warming was most likely predominantly man-made. But he agreed that two periods in recent times had experienced similar warming. And he agreed that the debate had not been settled over whether the Medieval Warm Period was warmer than the current period. These statements are likely to be welcomed by people skeptical of man-made climate change who have felt insulted to be labeled by government ministers as flat-earthers and deniers. His account is the most revealing so far about his decision to block repeated requests from people demanding to see raw data behind records showing an unprecedented warming in the late 20th Century.
Guardian:
- Tougher regulation is needed on the derivatives market to curb the activities of traders gambling on the downfall of sovereign states such as Greece, politicians, investors and bankers have warned. Fresh calls for controls on the market for Credit Default Swaps (CDSs) – a type of insurance against a nation defaulting on its borrowings – came after the latest European turmoil showed again that these unregulated instruments can worsen a financial crisis.
Interfax:
- Russia's Security Council said Iran shouldn't be cornered by sanctions.
Handelsblatt:
- The European Central Bank and European Union finance ministers are at odds over demands for Greece's budget-deficit cuts, citing a draft EU document listing possible measures. The ECB seeks tougher steps than most EU finance ministers. The ECB demands include increases in value-added, energy and luxury taxes and additional cost cuts. The euro-area ministers will consider the measures at a meeting tomorrow in Brussels.
Bildzeitung:
- Greece should be forced to leave the euro-area should its debts endanger the currency's stability, 53% of Germans said in a e poll. Germany and other European Union members shouldn't provide financial aid to Greece, 67% said in the Emnid poll.
Corriere della Sera:
- Europe will grow less than the US and emerging economies and needs a plan to "strengthen" its rate of expansion, the chief economist at the OECD, said in an interview.
Globe and Mail:
- Canada should be bracing itself for the reality that house prices
are more likely to go down than up in the next few years, says former Bank of Canada governor David Dodge. He is not taking sides in the simmering debate about whether there is a housing bubble in this country, noting that policy-makers are still struggling with a long-standing dilemma: you don't know a bubble until it bursts. What he is saying is that prices are certainly strong enough that it would be wise for Ottawa to take action. “These prices look pretty high by any conventional measure,” he said in an interview, citing measures such as the ratio of house prices to incomes and rents to house prices. “So, the likelihood of house prices falling a bit over the next few years is probably somewhat greater than that they would rise over the next few years.” “Whether there's a bubble or not you can only see after the fact,” he added. But it wouldn't take a bubble bursting to cause consumers pain. If your house price goes down 10 per cent and you've borrowed 95 per cent of its value, all of a sudden you'd be in hot water, Mr. Dodge noted. His comments come as Ottawa weighs action to take a bit of steam out of the housing market.
La Vanguardia:
- Petrobras(PBR) SA CEO Jose Sergio Gabrielli said oil prices will move between $60 and $80 per barrel this year. A range from $45 to $65 is most favorable for the state-controlled Brazilian company, said Gabrielli in an interview. Brazil doesn't have interest in joining OPEC as the country's strategy is focused on exporting refined products rather than crude oil, he said.
Barron's:
- Made positive comments on (ORCL).
- Made negative comments on (NILE) and (NG).
Night Trading
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S&P 500 futures -.06%.
NASDAQ 100 futures -.07%.
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Economic Releases
8:30 am EST
- Empire Manufacturing for February is estimated to rise to 18.0 versus a reading of 15.92 in January.
9:00 am EST
- Net Long-term TIC Flows for December are estimated at $50.0B versus $126.8B in November.
1:00 pm EST
- The NAHB Housing Market Index for February is estimated to rise to 16.0 versus a reading of 15 in January.
Upcoming Splits
- None of note
Other Potential Market Movers
- The Fed's Hoenig speaking, Fed's Lockhart speaking, Fed's Kocherlakota speaking ABC consumer confidence reading, weekly retail sales reports, (ALU) analyst event, (DUK) analyst meeting and the (LF) analyst day could also impact trading today.
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