Bloomberg:
- Oil Climbs Above $112 on Libyan Armed Revolt, Dollar Weakness. Crude rose above $112 in New York for the first time in 30 months and Brent topped $125 on skepticism that Libyan output will rebound when fighting ends and as a weaker dollar increased demand for commodities. Futures rose as much as 1.6 percent in New York as Barclays Capital said strikes on Libyan oilfields by forces loyal to Muammar Qaddafi ended hopes for a prompt resumption of exports, and will help send prices toward $130 a barrel. Raw materials surged as the dollar dropped to the lowest level against the euro in more than a year. Crude oil for May delivery rose $1.59, or 1.4 percent, to $111.89 a barrel at 12:27 p.m. on the New York Mercantile Exchange. The contract reached $112.10, the highest intraday price since Sept. 22, 2008. Futures are up 3.7 percent this week and are 31 percent higher than a year ago. Brent oil for May settlement climbed $3.15, or 2.6 percent, to $125.82 a barrel on the London-based ICE Futures Europe exchange. The contract touched $125.79, the highest price since Aug. 1, 2008. The rebels’ six-week drive to topple Qaddafi’s 42-year rule has reached a military impasse as regime forces outgun the opposition and hide their military hardware from NATO jets. Oil output from Libya would still be less than a third of its pre- conflict level even if the rebels took control of the country’s fields, Nomura Holdings Inc. said in a report. Voters in Nigeria, Africa’s biggest oil producer, go to the polls tomorrow to choose members of parliament in the first of a three-stage general election. “We could easily come in Monday and see further disruptions because of the Nigerian election,” said Phil Flynn, vice president of research at PFGBest in Chicago. “This is critical because Nigeria produces high-quality crude that’s similar to the missing barrels from Libya.” The dollar slipped as much as 1 percent to $1.4444, the lowest level since Jan. 10, 2010. “If you want to know why commodities are up, take a look at the dollar,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The dollar is dropping because the Fed is out of whack with the rest of the globe when it comes to rate expectations.”
- Fisher Says Fed at 'Tipping Point' of Overstimulating U.S. Economic Growth. Federal Reserve Bank of Dallas President Richard Fisher said the central bank faces a “significant” risk of providing record stimulus for too long and should weigh curtailing its $600 billion bond-purchase plan. “We at the Fed are near a tipping point,” the 62-year-old regional bank chief said in a speech today in Dallas. “Just as we pressed on in doing our duty through extraordinary, exigent measures, we must now discipline ourselves to just as persistently normalize our operations in a timely way.” “Having done our job, I see many risks to the Fed overstaying its welcome,” Fisher said during the Society of American Business Editors and Writers 2011 Annual Conference. “Inflationary impulses are gaining ground in the rest of the world,” Fisher said today. With businesses grappling with higher commodity prices, “my gut tells me that this will result in some unpleasant general price inflation numbers in the next few reporting periods,” and “there is the risk that we might breach our duty to hold inflation at bay.” “Continued accommodation presents significant risks,” Fisher said. “In my view, no amount of further accommodation by the Fed would be wise,” whether it is adding more purchases or “tapering” the plan to purchase Treasuries beyond June. “Indeed, it may well be that we should consider curtailing what remains” of the bond-purchase program, he said. “We’re there” in terms of the need to end accommodation now, Fisher said, when asked whether he would prefer to wait until June. He added that inflation is “not out of hand yet.”
- Gold Climbs to Record on Demand for Inflation-Hedge; Silver Price Tops $40. Gold rose, setting a record for the fourth time this week, as a weakening dollar boosted demand for the precious metal as an alternative asset and an inflation hedge. Silver climbed above $40 an ounce to a 31-year high. Gold rose to $1,476.20 an ounce in New York, the highest ever, after the dollar slid to the lowest level since December 2009 against a basket of six major currencies. Crude oil touched a 30-month high, and the European Central Bank yesterday raised borrowing costs from a record low to fight accelerating prices. “The Federal Reserve isn’t anywhere near an inflation fight as the ECB,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “Gold’s move is about the weakness in the dollar. Inflation is the buzzword, and it’s the impetus behind the trade.” Gold futures for June delivery rose $13.60, or 0.9 percent, to $1,472.90 at 11:44 a.m. on the Comex in New York. Gold for immediate delivery in London climbed as much as 1.2 percent to a record $1,474.90. Silver futures for May delivery advanced 89.8 cents, or 2.3 percent, to $40.45. Earlier, the price touched $40.48, the highest since January 1980, the year futures reached a record $50.35. The difference between yields on U.S. 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for inflation, widened to as much as 2.62 percentage points, the most in 33 months. “We just don’t hear anything about an inflation fight from the Fed,” Lesh said. “The Fed needs to move back to a neutral policy before they can even think of fighting inflation.” Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, advised clients to sell sterling and buy gold. Earlier this week, Gartman encouraged investors to sell Japanese equities and buy the precious metal. “With the monetary base skyrocketing, and with the U.S. dollar falling, gold has to move higher,” Gartman said.
- U.S. Corn Supply Shrinking as Meat, Ethanol Demand Send Crop Price Higher. Corn stockpiles in the U.S., the world’s largest grower, are plunging to a 15-year low and may be smaller than the government forecast last month as rising demand from makers of feed and ethanol drive prices higher. Stockpiles on Sept. 1, before the harvest, will drop 66 percent from a year earlier to 589 million bushels, a Bloomberg survey of 30 analysts showed. That’s 13 percent less than a March 10 estimate by the U.S. Department of Agriculture, which will update its forecast today. Tightening supply led Goldman Sachs Group Inc. to raise its corn-price forecast last week. About 40 percent of the crop is used to make ethanol as the government subsidizes the fuel additive and retail gasoline nears $4 a gallon. Corn futures have more than doubled in the past year to the highest since July 2008, as rising pork and beef prices encouraged demand from livestock producers and as U.S. export-sales expanded at the fastest pace in three years. “Ethanol demand is strong, and rising cattle prices have been offsetting increased costs of feed,” said Shawn McCambridge, the senior grain analyst for Prudential Bache Commodities LLC. “At this point we haven’t seen a lot of evidence that prices are having a negative impact on demand.”
- EU Stress Tests to Examine 90 Banks, 5% Capital Pass Rate. European regulators will use a tougher measure of capital on 90 lenders in this year’s stress tests following criticism last year’s weren’t stringent enough. Banks will be expected to maintain a Core Tier 1 capital ratio of at least 5 percent under the stress-test scenarios, the European Banking Authority said on its website. Lenders won’t be allowed to use some types of non-voting capital permitted by German bank supervisors, known as silent participations, to calculate the results, the EBA said.
- Portugal Aid Should Focus on First Tranche Before Final Deal, Nowotny Says. European Union leaders should provide a first lifeline to Portugal “as fast as possible” after the government asked for external aid, European Central Bank Governing Council member Ewald Nowotny said. “The best approach is to agree as fast as possible on a first tranche and then to go for the final program,” Nowotny told Bloomberg News late yesterday in Budapest before a meeting of European finance ministers and central bank governors. “It’s the right thing to do,” he said about the aid request. Portugal is the third euro-region nation in less than a year to seek an EU-led bailout after Greece sparked a sovereign- debt crisis that threatened to splinter the currency union.
- The supply of capesize ships competing to haul iron-ore cargoes in the Atlantic Ocean had a "humongous" gain over the past, week, according to RS Platou Markets. Charter rates for the vessels have declined 21% to $8,381 a day so far this week, according to the Baltic Exchange in London, on course for a third retreat in four weeks. There's a "dearth of cargoes," Oslo-based Platou analyst Dag Kilen said.
- Yuan Forwards Have Best Week of 2011 as China May Quicken Gains. Yuan forwards had the biggest weekly gain this year before data due next week that economists estimate will show inflation accelerated to a 32-month high. The currency touched its strongest in 17 years today after State Information Center Chief Economist Zhu Baoliang said the People’s Bank of China should let the yuan appreciate to curb price gains and improve its balance of international payments, in a commentary published yesterday in Shanghai Securities News. “There’s a lot of policy makers urging PBOC to use renminbi strength to help curb imported inflation,” said Ho Woei Chen, an economist at United Overseas Bank Ltd. in Singapore. “There could be another trade deficit for China.”
- Ivanov Says Russia Wants 'Red-Button' Rights on U.S. Missile-Defense Plan. Russia wants to join in the planned U.S. missile shield in Europe with “red-button” rights to launch strikes at incoming weapons, Deputy Prime Minister Sergei Ivanov said. Russia, which is pursuing talks on the issue with the U.S., will only accept an agreement that allows it to have a joint role in operating the defense system, Ivanov said in an interview yesterday in Miami, two days after meeting U.S. Secretary of State Hillary Clinton in Washington. “We insist on only one thing: that we’re an equal part of it,” said Ivanov, a former KGB colleague of Prime Minister Vladimir Putin and defense minister until 2007. “In practical terms, that means our office will sit, for example, in Brussels and agrees on a red-button push to start an anti-missile, regardless of whether it starts from Poland, Russia or the U.K.”
- Europe's $2 Trillion of Distressed Debt Set to Outstrip U.S. The distressed debt market in Europe is set to outstrip the U.S. for the first time as the region’s sovereign crisis forces banks to sell $2 trillion of underperforming assets, Strategic Value Partners LLC said.
- Burqa-Clad Women Face French Fines as Sarkozy Ban Takes Effect. A French law banning facial veils in public places goes into effect April 11, with women clad in burqas with their faces covered risking a 150-euro ($214) fine and mandatory lessons on being French. “No one is allowed to wear a garment that hides the face in public places,” the law, passed in October, proclaims. It will soon be splashed on billboards across France. The government has created a website entitled the “Unmasked Face,” for details on the law, with brochures in English and Arabic to be made available for tourists at French consulates. The burqa ban concludes efforts by the government of President Nicolas Sarkozy to bar what he told parliament two years ago was a sign of “servitude” that isn’t “welcome on French soil.” Sarkozy’s ruling party also began this week a controversial debate on challenges posed by Islam to a 1905 constitutional law on secularism in France, home to Europe’s largest Muslim population.
- Japan, Russia Won't Take on New Kyoto Targets, UN's Climate Chief Says. Japan and Russia reject new targets under the Kyoto Protocol climate treaty, whose current goals expire in 2012, the top United Nations climate diplomat said. “What they’re saying is they will not participate in a second commitment period” of Kyoto, UN Framework Convention on Climate Change Executive Secretary Christiana Figueres told reporters today in Bangkok as a week of climate talks concluded. “They have not said, ‘none of you can do a second commitment period.’”
- Israeli Retaliation Kills Four in Gaza, Brings Toll to 11. An Israeli strike on the Gaza Strip left three people dead, bringing to 14 the number of Palestinians killed after Israel was targeted with mortar shells, rockets and a missile that hit near a school bus. As violence escalates with some of the worst clashes since Israel sent troops into Gaza in December 2008, the territory’s Islamic militant rulers Hamas urged an emergency Arab League meeting and said Arab governments must “raise their voices” to get Israel to halt strikes. The Palestinian Authority called for international protection.
Wall Street Journal:
- Budget Talks Remain at Impasse. Negotiations between the White House and congressional leaders slogged forward Friday, with both sides reporting slow progress toward a deal to keep the government funded beyond midnight.
- NATO Regrets Libyan Misfire. The head of the North Atlantic Treaty Organization said Friday he regretted the loss of life caused by alliance aircraft strikes on tanks operated by anti-government forces in eastern Libya after another alliance official had refused to apologize for the incident. NATO admitted earlier in the day that its aircraft were responsible for two strikes Thursday on tanks being used by rebels to fight government troops which caused up to four rebel deaths, saying it was the first time the alliance had heard that opposition forces were using tanks.
- USDA Considers Cutting Crop Reports. The U.S. Department of Agriculture may eliminate a range of crop reports watched by farmers, commodity traders and foreign buyers to gauge supplies coming from the world's largest grain producer.
- BBVA Chairman Urges Speedy Fix For Troubled Cajas. Spain's government and bank regulator must work swiftly to clean up and recapitalize ailing lenders, and then auction them off to stronger banks, the chairman Banco Bilbao Vizcaya Argentaria SA (BBV) Francisco Gonzalez said Friday.
- Moody's: Global Default Rate Slides In 1Q To 2.6%. The trailing 12-month global default rate among speculative-grade issuers continued to fall in the first quarter, Moody's Investors Service said Friday, in another sign of improving economic conditions.
- An Aggressive Fed? More of the Street Betting On It. After better economic data and increasingly hawkish comments from some US central bankers, Wall Street is beginning to price in a more aggressive Federal Reserve, according to the latest CNBC Fed Survey. The survey found that about a third of the economists, fund managers and strategists who responded to the survey see the Fed hiking interest rates this year, double the percentage from the March survey. About 27 percent believe the Fed will begin selling assets in the second half of 2011, to reduce the size of its portfolio, up from around 16 percent in the prior survey. "The Fed shows more restive Hawks. Inflation expectations show sign of moving up," wrote economist Robert Brusca in response to the survey. Slightly more than half of the 69 respondents believe Fed policy is now "too accomodative," up from 44 percent in March. The percentage who believe the Fed has policy "just right" declined to 42 percent from 50 percent. "Given the lags in monetary policy, there is a significant risk that the Fed will move too late in its tightening process," wrote Lynn Reaser, economics professor at Point Loma Nazarene University. "A 'catch-up' in terms of more rapid rate hikes is likely to be necessary."
- CLSA's Chris Wood: Here's How You'll Know When The US Sovereign Debt Crisis Has Arrived.
- Citi(C): Every Single Major Auto Company is a "Sell", Since The Market STILL Doesn't Appreciate The Japanese Earthquake.
- Iraqi Forces Raid Camp of Iranian Dissidents. Iraqi security forces in bulldozers and Humvees barreled into a camp that is home to an Iranian opposition group early Friday, an event coinciding with what is likely to be U.S. Defense Secretary Robert M. Gates’s last official trip to Iraq, and a replay of a similar entry into the camp during a Gates visit two years ago.
- Witnesses: 20 Killed as Thousands Protest in Syria. Syrian security forces opened fire on tens of thousands of protesters across several cities Friday, killing at least 20 people, wounding hundreds and forcing residents to turn mosques into makeshift hospitals, witnesses and a human rights group said. Ammar Qurabi, who heads Syria's National Organization for Human Rights, said most of the deaths happened in Daraa, a restive southern city that has become a flashpoint for anti-government protests. Sixteen people were killed in Daraa, three in the Damascus suburb of Harasta, and one in the central city of Homs, he said.
- Google's(GOOG) YouTube is Going Live. Today we're announcing the initial roll out of YouTube Live, which will integrate live streaming capabilities and discovery tools directly into the YouTube platform for the first time.
- Auto Group Opposes Ethanol Bill. A group representing major automakers opposes a federal legislative proposal to require nearly all vehicles to run on a high blend of ethanol by 2016. The measure, sponsored by Sen. Tom Harkin, D-Iowa, and now before a Senate panel, would require 90 percent of all vehicles to run on E85 — a blend of 85 percent ethanol — by the 2016 model year. Currently, about 90 percent of all fuel sold at the pump is E10 — or 10 percent ethanol — and all vehicles can run on the blend.
LA Times:
Traders Magazine:
- Where Has All The Volume Gone? Equities trading volume in the first quarter disappointed many industry pros. However, they see several bright spots that could juice volumes the rest of the year.
- Inflation Fears Up, 87% Paying More For Groceries. A new Rasmussen Reports national telephone survey finds that 56% of Adults are Very Concerned about the threat of inflation. That’s up from 52% a month ago and 48% at the first of the year. In addition to those who are Very Concerned, another 28% are Somewhat Concerned about the threat of inflation. Just 14% are not very or not at all concerned. (To see survey question wording, click here.) Eighty-seven percent (87%) of Americans say they are paying more for groceries now than they were a year ago. That’s up 12 points from last April. Looking forward, 77% think they will be paying more for groceries a year from now. That’s well above the range over the past two years. From July 2009 through January of this year, the number that expected to pay more for groceries ranged from 62% to 71%. Just three percent (3%) now expect grocery prices to be a lower in a year’s time, while 16% say they will stay about the same.
- US Says China Rights on 'Negative Trend'. China's human rights record is on a "negative trend" with growing restrictions on freedom of speech and "severe repression" in the Tibet and Xinjiang regions, a US report said Friday. The State Department's annual survey said that China clamped down at key points in 2010, particularly after dissident Liu Xiaobo won the Nobel Peace Prize, but that human rights problems were widespread and persistent. "A negative trend in key areas of the country's human rights record continued," the report said. "The government took additional steps to rein in civil society, particularly organizations and individuals involved in rights advocacy and public interest issues, and increased attempts to limit freedom of speech and to control the press, the Internet and Internet access," it said. The report said that Chinese authorities stepped up efforts "to silence political activists and public interest lawyers" last year, including by placing family members under house arrest. The State Department said that China imposed tight restrictions on citizens' rights to assemble, travel and practice their religions. "The government continued its severe cultural and religious repression of ethnic minorities in Xinjiang Uighur Autonomous Region and Tibetan areas," it said. The report quoted a Human Rights Watch report saying that hundreds of men from Xinjiang's indigenous Uighur community went missing following 2009 clashes with China's majority Han ethnicity. The study said that China also denied passports or restricted travel to many ethnic Tibetans, part of a clampdown since mass protests in the predominantly Buddhist region in 2009. The State Department said that many Chinese -- possibly tens of thousands -- were involuntarily committed to psychiatric hospitals including members of the Falungong, the spiritual movement banned by Beijing in 1999
- The Turkish Group that helped organize the aid convoy for Gaza last year on which nine Turkish activists were killed plans a new flotilla in June.
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