Libya Rebels Dig in After Qaddafi Attacks as UN Rebukes Regime. Libyan rebels dug in for battle after repulsing attacks by forces loyal to Muammar Qaddafi that fueled talk of a civil war, as the full membership of the United Nations rebuked the regime. Rebels in Zawiyah, a rebel outpost 28 miles (45 kilometers) west of Tripoli, the capital, held their ground yesterday at the entrances to the city, Ibrahim al-Hajj, a 58-year-old resident, said by telephone. Many were armed with machine guns and rocket- propelled grenades taken from Libyan military depots, said Belgassem al-Zawee, a 50-year-old protester in the city. Forces loyal to Qaddafi had taken control of Libya’s western border with Tunisia Feb. 28 before attacking and failing to recapture Zawiyah. They also attacked Misratah, a city 115 miles east of the capital, according to the Associated Press. “Libya is essentially split into two, an eastern and a western part,” Mohammed Dangor, South Africa’s ambassador to Libya, who left Tripoli on Feb. 27, told reporters in Cape Town. “This is moving toward civil war, that’s the danger.”
Crude Oil Rises a Second Day, Exceeds $100 in New York on Supply Concerns. Oil advanced for a second day in New York, exceeding $100 a barrel amid speculation turmoil in the Middle East may spread from Libya to Iran, the second-largest producer in the Organization of Petroleum Exporting Countries. Futures rose to the highest since September 2008 yesterday as Libyan rebels braced for renewed clashes with forces loyal to leader Muammar Qaddafi. Saudi Arabia’s benchmark stock index plunged the most since November 2008 on concern regional unrest may extend to the kingdom. Iranian protesters clashed with security forces in Tehran, Al Arabiya television reported. “The unrest is threatening to spread to Iran, OPEC’s second-largest producer,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in an e-mailed note today. “Given the speed at which events are unfolding, we do not rule out a further spike of $10 a barrel or beyond in the coming weeks.” Oil for April delivery gained as much as $1.01, or 1 percent, to $100.64 a barrel, in electronic trading on the New York Mercantile Exchange, and was at $100.30 at 11:26 a.m. Sydney time. Political turmoil has spread to Saudi Arabia’s neighbors, with protests erupting in Oman and Bahrain. Websites have called for a nationwide Saudi “Day of Rage” on March 11 and 20, according to Human Rights Watch.
Raw-Sugar Deliveries for March Futures in N.Y. Surge to JPMorgan(JPM). Almost 1 million metric tons of raw sugar was delivered to JPMorgan Chase & Co. to settle the expiring futures contract in New York, the most for the commodity since 2009, exchange data show. JPMorgan Futures, a unit of the second-largest U.S. bank by assets, took delivery on 18,748 sugar contracts, or the equivalent of 952,398 tons, ICE Futures U.S. said today in a report on its website. That’s 9.2 percent of what the government expects the U.S. to use this year. Prices have rallied 75 percent in the past 11 months.
Short sellers are increasing bets against emerging market stocks at the fastest pace in four years after wagers on a tumble in U.S. stocks backfired. Short interest in the iShares MSCI Emerging Markets Index ETF(EEM) jumped to 21% of shares outstanding as of Feb. 15, from 11% two weeks earlier, according to NYSE data compiled by Bloomberg. While the S&P 500 has climbed 3.9% this year and reached a 32-month high on Feb. 18 amid evidence the U.S. economy is strengthening, the emerging market index retreated 3.5% as surging inflation prompted countries including China and Brazil to raise interest rates.
CFTC Warned Algorithm Rules 'Virtually Impossible' to Enforce. It would be “virtually impossible” for the U.S. Commodity Futures Trading Commission to enforce rules governing how traders use algorithms before they complete transactions, an advisory subcommittee told the agency. “The only way to independently enforce any sort of specific regulations on quality assurance for trading firms would be to have a virtual army of CFTC employed quality assurance professionals who have complete access to all trading firms’ intellectual property,” the CFTC Technology Advisory Committee’s pre-trade functionality unit said in a report. Exchanges should require trading firms to have measures in place that can disable algorithms, including a “kill button” that could simultaneously cancel all existing orders and prevent a firm from placing new orders, said the group, which met in Washington today.
Saudi King's $15 Billion Housing Grant Won't Eliminate Shortage. Saudi King Abdullah’s pledge to increase spending on housing by 55 billion riyals ($15 billion) probably will do little to relieve the country’s home shortage unless it’s coupled with long-delayed changes in mortgage financing laws. “This is largely symbolic,” said Jarmo Kotilaine, chief economist at National Commercial Bank, Saudi Arabia’s largest lender by assets. “We have a significant structural issue that can never be solved through government spending alone.” Saudi Arabia, the world’s largest oil exporter, needs 2 million homes by 2014 to keep up with the demands of a population that quadrupled over 40 years, Credit Suisse Group AG estimates.
San Francisco Fed Names Researcher John Williams President. John C. Williams, research director for the Federal Reserve Bank of San Francisco, was named as the bank’s new president to succeed Janet Yellen, who became the Fed board’s vice chairman in October.
JPMorgan's(JPM) Commercial-Mortgage Bonds Set to Sell as Spreads Widen in U.S. JPMorgan Chase & Co. sold a $1.5 billion commercial-mortgage bond as Middle East turmoil slows a three-month rally for the debt. Top-rated securities tied to skyscraper, shopping mall and hotel loans are yielding 1.95 percentage points more than Treasuries, up from a spread of 1.88 percentage points on Feb. 18, the lowest level in at least three years, according to a Barclays Plc index.
Highbridge Said to Shut Asia Fund After Huttenlocher Resigned. Highbridge Capital Management LLC, the hedge-fund firm owned by JPMorgan Chase & Co., is liquidating its $1.4 billion Asia Opportunities Fund after manager Carl Huttenlocher resigned, according to two people with knowledge of the matter.
China's aluminum market will continue to be oversupplied in the next few years as production capacity grows in the west and demand drops, said Hu Changping, director of the aluminum department at the China Nonferrous Metals Industry Association. "The expansion will continue, as some market players will try to grab a bigger market share with low-cost products," HU said. Still, "huge unrecorded commercial stocks at home and abroad and increasing recycling will curb an increase in demand."
Copper, Corn May Drop on Mideast Unrest as Gold Jumps, UBS Says. Copper, corn and rubber may tumble in the next six months, while gold climbs to a record $1,500 an ounce as turmoil in the Middle East boosts oil, fuels inflation and weakens Chinese raw-material demand, according to UBS AG. “There’s more potential for a correction in most of the commodities,” Peter Hickson, global commodities strategist at Switzerland’s largest bank, said by phone yesterday. “There’s a risk. And the risk is driven by concerns over inflation, rising oil prices and uncertainty the Middle East represents.” “There’s a fear that China confidence has been damaged by rising oil prices and the uncertainty,” said Hickson, who joined UBS in 1996 and moved to Hong Kong from London in January. Chinese demand for commodities may be waning, hurt by the civil uprisings in the Middle East and accelerating inflation, Hickson said. China is the world’s largest metals user. “We’re seeing inventories rising in steel, iron ore and coal prices in China haven’t shown a lot of life,” he said.
Wall Street Journal:
Libya Rebels March West as Fronts Firm. Gadhafi Opponents Are Seen Moving Out of Benghazi; Pentagon Orders Two Warships to Mediterranean. A ragtag army of opponents to Col. Moammar Gadhafi began moving west toward Tripoli from the east and the U.S. ordered two warships to the Mediterranean Sea, as the prospect of an extended war loomed over Libya.
Actually, AOL's(AOL) Mark Ellis Is Headed to Yahoo(YHOO). As AOL CEO Tim Armstrong works to integrate his $315 million purchase of the Huffington Post into the Internet portal, one of its top advertising leaders is departing for a big job at Yahoo.
Amazon.com(AMZN) Threatens to Sever Affiliate Ties in California. Ramping up its battle against Internet sales taxes, Amazon.com Inc. (AMZN) has warned it will sever ties with thousands of California-based advertising affiliates if the state government passes legislation requiring the ecommerce giant to collect taxes on items sold to residents.
Fed, FTC Call for Lenders to Share Credit Scores. Free credit scores could be easier to obtain under a rule U.S. federal regulators proposed Tuesday. Starting in July, lenders would be required to disclose credit scores to consumers when the scores are used to set certain credit terms. The Federal Reserve and Federal Trade Commission proposed the rules to comply with a provision included in the sweeping Dodd-Frank financial overhaul Congress passed last summer. Lenders frequently review credit reports to determine a loan applicant's creditworthiness. Low credit scores and negative information on credit reports can leave a consumer paying higher interest rates. Under the proposal, a lender would be required to provide free credit scores to borrowers when the lender uses a credit report to set high interest rates or other loan terms that aren't the best available. Lenders would also need to provide credit scores when they deny credit, change the terms of an existing credit arrangement or refuse to grant credit in the amount or on the terms requested. John Ulzheimer, president of consumer education for SmartCredit.com, said the new regulations would be "hugely empowering" for consumers. This means that "any financial-services product you apply for where you're denied or adversely approved based on a score, you're going to get the score, which is historical," he said.
States Fumble Revenue Forecasts. Many of the budget deficits that blindsided states—and sparked emergency tax increases and spending cuts—stem in part from the states' unduly rosy revenue forecasts, a new study said.
States Make Play for Web Gambling. Efforts to legalize online gambling in the U.S. are moving to the states as lawmakers roll the dice on bills that aim to steer around federal laws effectively prohibiting Internet wagering. The first real test of the state efforts comes this week in New Jersey, where Gov. Chris Christie is expected to decide the fate of a bill that would let Atlantic City casino companies run gambling websites for state residents.
Fed Chief Discusses Exit From Stimulus. Federal Reserve Chairman Ben Bernanke, after spending much of the past six months formulating and then defending a new central-bank effort to stimulate the economy, is turning his eyes toward an eventual exit from the program. Mr. Bernanke faced repeated questions from Republicans and Democrats Tuesday on Capitol Hill about when he would begin to pull back the flood of money the Fed has pumped into the economy in recent months. While not indicating any timetable, he did answer lawmakers' concerns by spelling out in more detail than previously what would get him to take his foot off the accelerator. "Once we see the economy is in a self-sustaining recovery and employment is beginning to improve and labor markets are improving, and meanwhile that inflation is stable, approaching roughly 2% or so," Mr. Bernanke said at a Senate Banking Committee hearing, "at that point we'll need to begin withdrawing."
Bloomberg Businessweek:
Railway Yield Gap at Six-Month High as Debt Mounts: China Credit. China’s state-owned railroad is increasing debt sales by 50 percent, driving yield premiums on its bonds to the highest levels in more than six months, as the world’s biggest high-speed network is rolled out. The yield on the railway ministry’s 3.88 percent September 2020 bonds exceeded the rate for similar-maturity government notes by 115 basis points yesterday, almost double the 59-point gap when the security began trading in September, according to Chinabond prices. “A lot of investors believe the ministry’s debt is too much,” said Fan Wei, a Beijing-based senior vice president of fixed income at Hong Yuan Securities Co., a unit of the nation’s sovereign wealth fund. Spending on China’s railways totaled 1.42 trillion yuan over the last two years, 33 percent more than was invested in the previous five, and the government predicts a further 700 billion yuan will be used to fund construction in 2011. Investors looking into the history of rail expansion have reason to be concerned about China’s growth, which will result in the nation having almost as much high-speed track by the end of next year as the entire rest of the world. Railroads led a collapse in the U.S. corporate bond market in the late 1800s after a flood of defaults on debt sold to extend networks into the American West. China replaced Minister of Railways Liu Zhijun after the ruling Communist Party said he was under investigation for “severe” disciplinary violations, the official Xinhua News Agency reported Feb. 25. The “blind pursuit” of high-speed rail is “highly likely to develop into a debt crisis,” wrote Zhao Jian, a professor of economics at Beijing Jiaotong University, in an April 2010 commentary in the China Daily newspaper. The Beijing-based railway ministry has sold the equivalent of $339 billion of debt since January 1997, according to data compiled by Bloomberg. Indian Railway Finance Corp. raised $11.4 billion-equivalent since March 1996, while Russian Railways has sold $10.6 billion since December 2004, the data show. Five-year credit default swaps on Chinese government debt are 7.5 basis points higher this year on concern three interest rate rises in four months may threaten economic growth.
Business Insider:
A Super Quick and Dirty Overview of the Saudi Economy. All you might know about Saudi Arabia is that it's swimming in oil, and that it's got a hardline Islamic regime that's been allied with the US. In light of the crash in the Tadawul All Shares index, let's just do a quick and dirty look at the Saudi economy courtesy of a recent BofA/ML rreport.
Terrified China Warns Hong Kong Media About Covering The "Jasmine Revolution". China was strongly condemned after multiple reports this past weekend about mistreatment of journalists covering the budding protest movement in the country. Beijing continues to express its fear, as it now lashes out at the Hong Kong press, threatening any media org that covers the revolution:
Hedge Fund Case Takes Aim at Side Pockets. The Securities and Exchange Commission on Tuesday charged a Bay Area hedge fund manager with “concealing” more than $12 million of investors’ money — a case that casts a harsh spotlight on the controversial accounts known as side pockets.
Forbes:
How ObamaCare Is Putting Medical Innovation In The Hospital. How will we know if ObamaCare is successful? One way is if it keeps the country from driving off a fiscal cliff. Supporters of the law think it will, critics think it won’t; time will tell. Another way to judge ObamaCare’s success or failure is its effect on medical care innovation. Odds are rising it will be deadly to innovation. Here’s why.
Platts:
US Energy Head Chu Says Libya Unrest Not Enough to Tap Oil Reserve Yet. US Energy Secretary Steven Chu on Tuesday reiterated President Barack Obama's stance that the US has no plans to tap the Strategic Petroleum Reserve despite unrest in Libya and the Middle East causing oil prices to rise. "The strategic reserve is there for a serious disruption of supply," Chu said on the sidelines of the US Department of Energy's Energy Innovation Summit. "As the president has pointed out, the events in Libya are a very small disruption, and so far it's manageable." Chu said the administration continues to monitor oil prices and will act if necessary. He noted that the reserve has only been tapped twice before. "It's an emergency fund," he said. "We want to keep it that way."
Reuters:
Two U.S. Amphibious Assault Ships Head to Med Via Suez.Two U.S. amphibious assault ships, the USS Kearsarge, which can carry 2,000 Marines, and the USS Ponce, will pass through Egypt's Suez Canal on Wednesday morning, an Egyptian official said on Tuesday. The United States said on Monday it was moving ships and planes closer to Libya, where a rebellion against Muammar Gaddafi's rule is underway.
Hedge Funds Took in Nearly $11 Billion in January. Investors poured nearly $11 billion into hedge funds in January, according to a new report which suggests that investors are ready to take fresh risks on these loosely regulated portfolios. Total hedge fund assets stood at $2.5 trillion at the end of January, marking a $17.7 billion in increase from the end of December, HedgeFund.net said on Tuesday. "Performance accounted for a small part of the increase and net investor flows were positive and significantly above January 2010," the group wrote in its monthly report. The group said performance accounted for a $6.8 billion gain while net inflows accounted for $10.9 billion.
Sina(SINA) Q1 Revenue Forecast is Tepid, Shares Fall. Sina Corp , China's largest Internet portal, forecast first-quarter revenue largely below estimates after posting quarterly earnings that exceeded expectations, and its shares fell sharply. Sina reported a fourth-quarter net loss of $100 million, or $1.51 a share. Mobile-related revenue dropped 26 percent to about $21 million.
Weatherford(WFT) to Adjust 2007-10 Results by $500 Million. Oilfield services company Weatherford Ltd is adjusting its results for the past four years by a total of about $500 million because of a "material weakness" in its income tax reporting. Weatherford shares, which fell 2.7 percent in regular trading, fell another 2.8 percent to $22.87 after-hours on the New York Stock Exchange, as the company also spelled out the risks from Libya to its $236 million tied to the country.
Cal Dive Sees Slow Recovery in US Gulf Activity. Oilfield services provider Cal Dive International said it expects activity levels in the U.S. Gulf of Mexico to recover slowly in 2011 as the issuance of permits in the region has not picked up since last year's oil spill. The permitting process in the U.S. Gulf has slowed down since the Macondo blowout triggered the massive oil spill in April last year, which led to stringent regulations in permits being handed out.
Watchdog Takes Last Jab at US Housing Rescue Effort. The U.S. Treasury's outgoing bailout watchdog took his last shot at the Obama administration's program to keep Americans in their homes and questioned whether taxpayer funds should continue to be used for an ill-conceived housing plan. There is "near universal agreement that the program failed to meet its goals" and the current debate centers "mostly on whether the program should be terminated, replaced or revamped," said Neil Barofsky, the top government auditor for the $700 billion bank bailout fund, in prepared remarks to Congress.
Jump in World Factory Costs Raises Inflation Risk. Factory input costs rose across the globe in February, the latest sign of brewing inflation pressures, as manufacturing in the United States and the euro zone grew at the fastest pace in years.
Financial Times:
Top 10 Hedge Funds Make $28 Billion. The top 10 hedge funds made $28bn for clients in the second half of last year, $2bn more than the net profits of Goldman Sachs, JPMorgan, Citigroup, Morgan Stanley, Barclays and HSBC combined, according to new data.Even the biggest of the hedge funds have only a few hundred employees, while the six banks employ 1m between them.
Alarm Over Plans for Libya No-Fly Zone. US and British moves to consider military action against Muammer Gaddafi in Libya triggered international alarm on Tuesday, with Turkey and Russia opposing the idea and France and Germany expressing deep unease.
Nong Thon Ngay Nay:
Vietnam's economic growth will be de-emphasized this year as the country puts curbing inflation and stabilizing the economy as its top priorities, citing Finance Minister Vu Van Ninh. Ninh placed economic growth in fourth place among Vietnam's national objectives.
Shanghai Securities News:
China's management of inflation expectations cannot only rely on mopping up excess liquidity, Wang Yong, a professor at the training school of the People's Bank of China, wrote in a commentary. The People's Bank of China still faces difficulty in managing liquidity, he wrote, citing the impact of quantitative easing in the U.S., turbulence in the Middle East, rising global agricultural commodity prices and drought in China. The task of managing inflation expectations remains "grim," Wang said.
Evening Recommendations Citigroup:
Reiterated Buy on (CBE), target $74.
Night Trading
Asian equity indices are -2.0% to -.50% on average.
Asia Ex-Japan Investment Grade CDS Index 110.0 +1.5 basis points.
Asia Pacific Sovereign CDS Index 119.25 -2.25 basis points.
ADP Employment Change for February is estimated to fall to 180K versus 187K in January.
10:30 am EST
Bloomberg consensus estimates call for a weekly crude oil inventory build of 750,000 barrels versus a +822,000 barrel gain the prior week. Distillate supplies are estimated to fall by -1,500,000 barrels versus a -1,333,000 barrel decline the prior week. Gasoline inventories are expected to fall by -350,000 barrels versus a -2,798,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.3% versus a -1.8% decline the prior week.
2:00 pm EST
Fed's Beige Book
Upcoming Splits
None of note
Other Potential Market Movers
The Fed's Bernanke speaking, Fed's Hoenig speaking, Challenger Job Cuts for February, weekly MBA Mortgage Applications report, RBC Healthcare Conference, (IR) investor meeting, (AEIS) analyst meeting and the (TAP) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by technology and real estate shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 75% net long heading into the day.
North American Investment Grade CDS Index 83.03 +1.79%
European Financial Sector CDS Index 115.33 -3.28%
Western Europe Sovereign Debt CDS Index 173.67 bps -.86%
Emerging Market CDS Index 223.31 +1.51%
2-Year Swap Spread 20.0 +1 bp
TED Spread 18.0 +1 bp
Economic Gauges:
3-Month T-Bill Yield .13% unch.
Yield Curve 275.0 +2 bps
China Import Iron Ore Spot $180.10/Metric Tonne -1.48%
Citi US Economic Surprise Index +77.30 +2.8 points
10-Year TIPS Spread 2.43% +3 bps
Overseas Futures:
Nikkei Futures: Indicating -154 open in Japan
DAX Futures: Indicating -41 open in Germany
Portfolio:
Lower: On losses in my Technology and Medical longs
Disclosed Trades: Added (IWM)/(QQQQ) hedges, added to my (EEM) short
Market Exposure: Moved to 75% Net Long
BOTTOM LINE: Today's overall market action is very bearish as the S&P 500 trades near session lows, despite positive economic data, less eurozone debt angst, gains in Asian equities overnight and earnings optimism. On the positive side, Drug shares are outperforming, falling less than .5%. The 10-year yield is falling -2 bps to 3.40%. The Belgium sovereign cds is falling -2.3% to 169.67 bps. The Israel sovereign cds is falling -2.88% to 166.18 bps, which is also a big positive. The UBS-Bloomberg Spot Ag Index is dropping -.22%. On the negative side, Airline, Road&Rail, Gaming, REIT, Homebuilding, Bank, Networking, Disk Drive, Computer, Steel, Oil Service, Oil Tanker and Alt Energy shares are under significant pressure, falling more than 2.0%. Small-Cap and Cyclical shares are underperforming. The Transports continue to trade poorly. The Saudi sovereign cds is rising +1.67% to 138.79 bps. The avg. US price for a gallon of gas is up another .04/gallon today to $3.37/gallon. It is now up .25/gallon in 14 days. Oil trades technically like it is about to burst above $100 and the stock market is now starting to anticipate this. Gold is also poised to break out technically. Weekly retail sales rose +2.6% last week versus a +2.5% gain the prior week, but are down from a 3.6% increase the first week of January. The US Muni CDS Index is rising +2.91% to 161.67 bps. The US dollar put in a reversal today versus the euro. Sentiment regarding the currency is at bearish extremes. As well, the Citi US economic surprise index is at the highest level since Sept. 2008, while the Citi Eurozone economic surprise index continues to break down, falling to the lowest level since April 15th of last year. In my opinion, oil has to reverse lower very soon or more broad market weakness is likely in store. I expect US stocks to trade mixed-to-lower into the close from current levels on higher energy prices, growing Mideast unrest, more shorting, technical selling and profit-taking.
Iran Rejects Western Criticism, Says Opposition Issue an Internal Affair. Iran’s Foreign Ministry said issues relating to the country’s opposition are “internal affairs” and rejected Western criticism after the reported arrests of two prominent dissidents. “These are internal affairs and no country has the right to interfere,” Ramin Mehmanparast, a ministry spokesman, told journalists in Tehran today. His comments were aired live by state television’s news channel. He was replying to a question about the reported arrests of opposition leaders Mir-Hossein Mousavi and Mehdi Karrubi. Mehmanparast, who didn’t mention the two men’s whereabouts, spoke before a planned opposition march in Tehran later today to protest the arrests.
Iran Arms Proxies to Destabilize Middle East, Mattis Says. Iran’s nuclear weapons ambitions and arming of proxy fighters still represent the “greatest long- term challenge” in the Middle East, the top U.S. commander for the region says. Iran, after four rounds of United Nations sanctions, still “appears determined to mature its nuclear weapons program -- an ambition that could lead to the proliferation of illicit nuclear materials and spark a nuclear arms race in the region,” Marine Corps General James Mattis, who leads the U.S. Central Command, said in testimony today to the Senate Armed Services Committee.
Saudi Stocks Slump Most Since 2008 on Concern Unrest to Spread. Saudi Arabia’s benchmark stock index plunged the most since November 2008 and entered bear-market territory on concern political unrest in the Middle East may spread to the kingdom. Al-Rajhi Bank fell to the lowest in a year and Saudi Basic Industries Corp., the world’s biggest petrochemicals maker, tumbled 7.8 percent. Saudi Arabia’s Tadawul All Share Index slumped 6.8 percent to 5,538.72 at the 3:30 p.m. close in Riyadh. The measure has lost 20 percent since reaching its 2010 high, the common definition of a bear market. Credit-default swaps linked to Saudi Arabia, used as a measure of confidence although they reference no debt, rose 4 basis points to 140, according to CMA prices in London. “Performance in Saudi exemplifies that geo-political risk still remains unresolved within the region,” said Omair Ansari, equity strategist at Gulfmena Alternative Investments in Dubai. Markets will continue to capitulate due to the inability to price in top-down risk.” Political turmoil in the region has spread to the Persian Gulf, with protests erupting in Oman and Bahrain inspired by popular uprisings that toppled leaders in Tunisia and Egypt. Websites have called for a nationwide Saudi “Day of Rage” on March 11 and March 20, Human Rights Watch said in a statement yesterday.
Libyan Rebels Face Pro-Qaddafi Army as No-Fly Zone Planned. Libyan rebels braced for possible renewed clashes with forces loyal to leader Muammar Qaddafi, who is attempting to regain control of major cities after the U.S. and European nations began planning for a no-fly zone. Armed rebels in Zawiyah, 28 miles (45 kilometers) west of Tripoli, the capital, were stationed at the entrances to the city after repelling an attack by pro-Qaddafi fighters overnight, Ibrahim al-Hajj, a 58-year-old resident, said by telephone. Many were armed with machine guns and rocket- propelled grenades taken from weapons depots, said Belgassem al- Zawee, a 50-year-old protester in the city.
Crude Oil Advances From a One-Week Low as Supply Concern Extends to Iran. Oil rose from the lowest price in a week as unrest in the Middle East threatened to spread from Libya to Iran, OPEC’s second-largest oil producer. Crude jumped as much as 1.9 percent after Iran arrested opposition leaders to derail demonstrations scheduled for today. “The focus has shifted to another country as we’ve seen problems arise in Iran with opposition leaders being relocated to prison,” said Matt Smith, a commodities analyst for Summit Energy in Louisville, Kentucky. “With the potential for negative developments in so many countries, we’re starting to see the risk premium return for crude after yesterday’s selloff.” Oil for April delivery rose $1.72, or 1.8 percent, to $98.69 a barrel at 10:55 a.m. on the New York Mercantile Exchange.
ISM Index of U.S. Manufacturing Rose to 61.4 in February. Manufacturing in the U.S. grew in February at the fastest pace in almost seven years, driven by gains in orders, employment and exports that signal factories will continue to propel the expansion. The Institute for Supply Management’s factory index increased to 61.4, exceeding the median forecast of economists surveyed by Bloomberg News and the highest level since May 2004, the Tempe, Arizona-based group said today. The ISM’s order gauge climbed to the highest level since January 2004 and its employment measure reached a 38-year high, today’s report showed. Exports accelerated at the fastest pace since December 1988, and the gauge of prices paid increased to a seven-year high.
China Says Police 'Properly Handled' Reporters at Protest Who Broke Rules. China’s Foreign Ministry said some journalists at the site of a planned protest in Beijing on Feb. 27 had broken reporting rules, disrupting “normal order,” and that police “properly handled” the situation. Several journalists said they were forcibly removed and detained without explanation as they tried to report from Wangfujing Street on protests called to demand an end to corruption and misrule. A Bloomberg News reporter was beaten by at least five plain-clothes men in front of uniformed police. Hundreds of uniformed police including paramilitary units, squads of dogs, and at least 100 vehicles, patrolled Wangfujing Street on Feb. 27. Three water trucks drove up and down the pedestrian-only thoroughfare, spraying water and soap on the road as police ushered crowds to the sidewalks. U.S. Ambassador Jon Huntsman yesterday said the illegal detention and harassment of foreign journalists in Beijing was “unacceptable and deeply disturbing.” The European Union’s delegation to China said it was “troubled” by accounts of physical intimidation or assault from journalists.
Goldman Sachs(GS) Lost Money From Trading on 25 Days in 2010. Goldman Sachs Group Inc., the fifth- biggest U.S. bank by assets, lost money from trading on 25 days during 2010, up from a record-low 19 days in 2009, according to a regulatory filing. After incurring losses on trades during 12 days in the first 9 months, the full-year figures indicate that Goldman Sachs lost money on 13 days in the fourth quarter. The firm’s traders also made $100 million or more on 68 days in 2010, down from the record 131 days in 2009, according to the New York- based company’s annual 10-K filing with the Securities and Exchange Commission.
SEC Says Ex-Goldman(GS) Director Gupta Tipped Rajaratnam. Rajat K. Gupta, a former Goldman Sachs Group Inc. board member, was sued by U.S. regulators on claims he passed inside information to Galleon Group founder Raj Rajaratnam ahead of deals including Berkshire Hathaway Inc.’s $5 billion investment in Goldman Sachs Group Inc. Gupta also tipped Rajaratnam on quarterly earnings at Goldman Sachs and Procter & Gamble Co., where he also served as a board member, according to a Securities and Exchange Commission administrative order filed today. Rajaratnam and others made more than $18 million trading on the tips, the SEC said.
Feldstein Says U.S. Economy Has Slowed as Consumers Cut Back. Harvard University economics professor Martin Feldstein said the U.S. economy has cooled at the start of this year as consumers cut back on spending amid higher gas prices and a decline in housing wealth. “There is a mixed picture now in terms of how much the economy is on track,” Feldstein said in an interview on Bloomberg Television’s “InBusiness With Margaret Brennan.” Growth “started slowing down toward the end of the fourth quarter. The January numbers are not very good at all.”
Health Overhaul May Raise States' Costs by $118 Billion, Republicans Say. The U.S. health-care law will cost states almost double the amount that congressional auditors estimate, Republican lawmakers said. Representative Fred Upton, a Michigan Republican who is chairman of the House Energy and Commerce Committee, said in prepared statements before a hearing today that states estimate the overhaul signed by President Barack Obama last year will increase health expenditures by about $118 billion through 2023. The Congressional Budget Office, the chamber’s accounting arm, has estimated the law would cost states about $60 billion. The additional expense stems mainly from an expansion of Medicaid under the law. The chief actuary for the Centers for Medicare and Medicaid Services, which supervises the program, has said the expansion may add 20 million Americans to Medicaid rolls starting in 2014. The law is “onerous and unsustainable” for states, Upton said in a statement prepared for the hearing to examine Medicaid’s effect on state budgets.
Cotton Soars as China Use Tightens World Supply. Cotton surged by the daily limit for a third straight session in New York on concern that global supplies are failing to keep pace with demand from China, the biggest consumer. Cotton for May delivery surged the exchange limit of 7 cents, or 3.7 percent, to $1.9823 a pound as of 9:55 a.m. in New York. Prices, up 12 percent since Feb. 24, reached a record $2.0893 on Feb. 18.
Gold Futures Approach Record High on Libyan Unrest; Silver Extends Rally. Gold climbed close to a record as unrest in Libya spurred demand for the metal as an investment haven. Silver advanced to the highest since 1980. Libya’s opposition gained support from the U.S. and European nations as leader Muammar Qaddafi sent forces to regain lost territory. Protests have spread in the Middle East and North Africa, partly because food prices have soared. Crude oil in New York topped $100 a barrel last week. Gold was up for the 10th time in 11 sessions. “The continued violence in the Middle East is bringing in new buyers and spurring gold to new territory,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “The rush to economic health is fading. Crude above $100 is an energy tax that will force governments to put more money into the system. Our old fear of stagflation returns.”
Wall Street Journal:
Yemeni President Says U.S. Behind Unrest. Yemeni President Ali Abdullah Saleh accused U.S. President Barack Obama of fomenting unrest in the Arab world, in a speech on a university campus here, as around 10,000 protesters nearby called for his resignation. Mr. Saleh told his audience of around 500 students and academics that he would "reveal a secret" that there is an "operations room in Tel Aviv with the aim of destabilizing the Arab world." He said the White House ran the operations room. The U.S. has viewed Mr. Saleh as a key counterterrorism ally, and has given his government millions of dollars in military aid.
Overcapacity Weighs on Europe's Auto Makers.Europe's auto industry suffers from excess manufacturing capacity and is unlikely to see relief anytime soon, the head of Ford Motor Co.'s(F) European operations said on Monday. Few European auto plants were closed during auto industry's deep downturn in 2009 and 2010, a contrast to North America where the industry was overhauled, in large part because of the bankruptcy-court restructurings at General Motors Co. and Chrysler Group LLC.
India Insists on BlackBerry Monitoring. India Tuesday reiterated that companies that offer encrypted communication services will have to allow monitoring of such services by security agencies if they want to operate in the country.
Highbridge's Asia Chief Departs. The head of Highbridge Capital Management's Asia investments is leaving the multibillion-dollar hedge-fund firm owned by J.P. Morgan Chase & Co., say people familiar with the matter.
Obama Move to the Center is All Talk So Far: Welch. President Obama's attempts to move to the political center have been more cosmetic than concrete, author and former General Electric CEO Jack Welch told CNBC.
10 Questions Bernanke Must Answer. I think there are some very serious questions that the citizens of this nation deserve answers to. The following is what I would ask if I were allowed to sit on the panel:
Irish Hopes of Debt Relief Probably Doomed. The Financial Times reports that "sentiment in some European capitals has turned against renegotiating Dublin’s €85bn bail-out package, casting into doubt the incoming Irish government’s push to ease the repayment terms." The report continues:
Public Employees Paid More Than Private Workers in 41 States. Public employees in 41 states earn higher average pay and benefits than private workers in the same state, a USA TODAY analysis finds. The analysis of government data found "that public employees' compensation has grown faster than the earnings of private workers since 2000. Primary cause: the rising value of benefits." Among the findings of the USA Today survey:
Las Vegas Sands(LVS) Receives SEC Subpoena. Las Vegas Sandsis in the red Tuesday morning, after it received a subpoena request from the Securities and Exchange Commission requesting the company provide compliance documents related to the Foreign Corrupt Practices Act. The casino giant also noted that it is the subject of an investigation by the Department of Justice.
Anger at the Banks is Justified, Mervyn King Says.The Governor of the Bank of England, Mervyn King, has expressed "surprise" that the public is not more angry with the bankers who caused the recession.
Vancouver Sun:
China's Bank Chief Issues Warning on Excessively Fast Lending. Lending by Chinese banks has been excessively fast, topping the "extreme upper limit" set by regulators, the country's banking chief said at an internal meeting at the start of this year, a source told Reuters on Tuesday. The unusually sharp warning by Liu Mingkang, head of the China Banking Regulatory Commission, highlighted deep official unease about the threat to the Chinese financial sector and the broader economy posed by rampant credit growth. "Over the past two years, to confront the financial crisis loan growth has been abnormally explosive," he said, according to the source, who attended the meeting. "It has exceeded the extreme upper managed limits," he added, apparently referring to the lending caps that China imposes on its banks. Chinese banks issued a combined 17.5 trillion yuan ($2.7 trillion) of new local currency loans in 2009 and 2010, almost a quarter of the economy's total output during that time. The government kick-started the lending binge at the height of the global financial turmoil, when it called on banks to unleash a blast of credit to power the Chinese economy to recovery. But with growth once again soaring, it has struggled to pull credit issuance back to a more normal pace. Liu's words captured that sense of exasperation. "The scale of new loans has increased incredibly fast, even doubling, in just a short period, but the expertise and efficiency of loan officers can't have doubled at the same time," he said. Liu warned that "irrational factors" in the Chinese real estate market had increased and that credit risks were accumulating. "Banks must pay close attention to the potential impact of a sharp decline in property demand," he said. "Banks should explore ways of conducting comprehensive stress tests on real estate loans."
Shanghai Daily:
High-Speed Railways 'Too Expensive'. CHINA should rein in the current pace of high-speed railway construction and revamp operational policies, a member of the China Public Interest Party urged yesterday. The proposal will be discussed during the upcoming national session of the Chinese People's Political Consultative Conference which begins in Beijing tomorrow. Some 10,000-plus kilometers of high-speed railways are under construction or planned at present while the service nationwide now extends to more than 7,500 kilometers. Bullet trains on the special tracks can reach speeds of 350kph and will be quicker on lines still be completed. But high-speed railway development has gone far beyond the current economic situation of Chinese society, said Wu Youying, a leader of the party's Shanghai committee. Passenger traffic is slack on many high-speed trains because fares are too expensive, she said. "But considering the large income gap between average Chinese people and residents in these countries, China's current high-speed railway service is unaffordable for ordinary people," Wu said in her proposal.
