Today's Headlines

Bloomberg:

• Oil Declines Most in a Week on Arab League's Libya Crisis Resolution Plan. Oil slipped for the first time in three days in New York after Venezuela offered to mediate a resolution to the crisis in Libya, which has cut crude supplies from Africa’s third-biggest producer. Crude dropped the most in a week after the Arab League said it’s weighing an offer by Venezuela’s Hugo Chavez to intervene in Libya’s civil conflict. Prices may be starting to hurt global economic growth, said Adam Sieminski, chief energy economist at Deutsche Bank AG. “Things still look grim in Libya, with all the signs of a prolonged conflict that will severely hamper oil and gas exports,” said Christopher Bellew, senior broker with Bache Commodities Ltd. in London. Crude for April delivery slid as much as $1.86, the biggest decline since Feb. 24, to $100.37 a barrel in electronic trading on the New York Mercantile Exchange and was at $101.19 at 1:34 p.m. in London.
• World Food Prices Increase to a Record, United Nations Says. Global food prices rose to a record in February and grain costs may continue to rise in the next several months, with only rice keeping the world from a repeat of the crisis three years ago, the United Nations said. An index of 55 food commodities rose 2.2 percent to 236 points from 230.7 in January, the eighth consecutive gain, the UN’s Food and Agriculture Organization said today. Wheat rose as much as 58 percent on the Chicago Board of Trade in the past 12 months, corn gained 87 percent and rice added 6.5 percent. “I’ve never loved rice more than now,” Abdolreza Abbassian, a senior economist at the FAO in Rome, said by phone. The grain is the staple food of more than half of the world population, according to the International Rice Research Institute. “Probably rice is the commodity which is separating us from a food crisis,” Abbassian said. Turmoil in oil-producing countries including Libya has pushed crude above $100 a barrel, which may drive corn and wheat prices even higher, Abbassian said. Higher crude prices make biofuels produced from crops more competitive while raising the cost of tractor fuel and fertilizer for farmers. “The hike in food prices is deeply worrying,” Thierry Kesteloot, a food-policy adviser at Oxford, England-based hunger-relief charity Oxfam, said in an e-mailed statement. “Millions more people are sliding into poverty as they struggle to afford basic food supplies, and more and more are at risk of going hungry.” The World Bank said last month 44 million people have been forced into extreme poverty since June by food inflation. The UN’s food-price index rose 34 percent from 175.9 points a year earlier, with all five food groups advancing.
• U.S. Service Industries Grow at Fastest Pace in Five Years. Service industries expanded more than forecast in February, showing the U.S. expansion has broadened beyond manufacturing. The Institute for Supply Management’s index of non- manufacturing businesses increased to 59.7, the highest level since August 2005, from 59.4 in January. Economists forecast the gauge would fall to 59.3, according to the median estimate in a Bloomberg News survey. The group’s employment gauge increased to 55.6, the highest since April 2006, from 54.5 a month earlier. The index of prices paid jumped to 73.3 from 72.1. Other reports today showed consumer confidence held near a three-year high last week as more Americans said their finances were in good shape, and claims for jobless benefits unexpectedly dropped. The Bloomberg Consumer Comfort Index, formerly the ABC News U.S. Weekly Consumer Comfort Index, was minus 39.3 in the period to Feb. 27, compared with minus 39.2 the prior week. Respondents’ view of their financial situation climbed to an almost two-year high. At the same time, rising food and fuel costs may strain household budgets. The cost of gasoline advanced 8.8 percent last month, with regular fuel averaging $3.17 a gallon in February, according to AAA, the nation’s largest motorist organization. It reached $3.39 a gallon on March 1, the highest price since October 2008. The number of applications for unemployment insurance payments fell by 20,000 to 368,000 in the week ended Feb. 26, according to the Labor Department. Economists forecast claims would climb to 395,000, according to the median estimate in a Bloomberg survey.
• Shanghai Stocks Fall on Concern Economic Growth is Slowing, CPI Rising. China’s stocks fell, driving down the benchmark index by the most in a week, on concern higher material prices will fuel inflation and the nation’s tightening policies are slowing the world’s second-biggest economy.
• Merkel Digs In On Bailout Terms as Discord Mars European Debt Crisis Talks. German Chancellor Angela Merkel is digging in against easing bailout conditions as haggling over a blueprint to end the euro debt crisis enters its home stretch. With the European Union nearing its March 25 deadline for a reinforced plan to aid debt-strapped countries, Merkel has told parliamentary allies that a deal was unlikely on cutting rescue- loan rates, a sign that German officials are stepping back from a willingness to forge a grand bargain to protect the euro.
• Frankfurt Airport Gun Suspect May Be 'Radicalized Muslim' Who Acted Alone. The Kosovar man suspected of killing two U.S. airmen yesterday at Frankfurt Airport during a personnel transfer to Afghanistan, may be a “radicalized Muslim” acting alone, a German state official said. The alleged gunman, a 21-year-old postal worker at the airport who wasn’t based in a high-security area, admitted to the attack, said Boris Rhein, interior minister of the state of Hesse. The suspect, previously unknown to authorities, was arrested while fleeing to the terminal when his gun jammed as he was attacking the U.S. military bus picking up the airmen, Rhein said today. Relatives of the suspect in Kosovo described him as a devout Muslim who was born and raised in Germany and worked at the airport, the Associated Press reported, citing an uncle identified as Rexhep Uka.
• Trichet Says ECB May Raise Rates, Show 'Strong Vigilance'. European Central Bank President Jean-Claude Trichet said the ECB may raise interest rates next month for the first time in almost three years to fight mounting inflation pressures. An “increase of interest rates in the next meeting is possible,” Trichet told reporters in Frankfurt today after the central bank set its benchmark rate at a record low of 1 percent for a 23rd month. “Strong vigilance is warranted,” he said, adding that any move would not necessarily be the start of a “series.” The comments surprised economists and investors, most of whom hadn’t expected the ECB to raise rates before August.
• EU Banks Face 50% Capital Surcharge on Private-Equity Stakes. European banks will have to hold 50 percent more capital in reserve against investments in private equity and hedge funds under draft capital rules being considered by the European Union to curb risk. Lenders will have to price risky investments at one-and-a- half times their current value, according to a draft European Commission document obtained by Bloomberg News, and so hold more regulatory capital against those holdings on their balance sheets to cover potential losses. The higher-risk categories include “investments in venture capital firms, private equity investments, hedge funds and speculative real estate financing and investments,” according to the undated document.
• Fink Says He's a 'Big Buyer' of Dollars That Gross Says Avoid. BlackRock Inc. (BLK)’s Laurence D. Fink, chief executive officer of the world’s largest asset manager, said he’s a “big buyer” of the U.S. dollar, which rival Bill Gross has urged investors to avoid. Fink, 58, doesn’t see a “bear market” in bonds and would buy U.S. Treasuries if yields rise above 4 percent, he said today in an interview from New York with Bloomberg Television’s Erik Schatzker. Gross, manager of the world’s largest mutual fund, has said the best days for bonds are over. He has cut holdings in U.S. government debt to the smallest level in two years, while boosting non-dollar securities. “We believe rates will creep up,” Fink said. Still, with inflation likely to be muted, “we’re not calling that a bear market.”
• No Sex for Almost 30% of Americans Under 24 as Virginity Jumps. Almost a third of Americans ages 15 to 24 say they have never had sexual contact with another person, a higher percentage than in a 2002 survey, according to a U.S. government study. Of those surveyed by the Centers for Disease Control and Prevention, 27 percent of men and 29 percent of women ages 15 to 24 reported being virgins, the Atlanta-based agency said today. In the previous study, about 22 percent of males and females 15 to 24 said they never had sex.
• iPad, Rival Tablet Demand Crimping Personal-Computer Growth, Gartner Says. Personal-computer shipments will grow at a slower pace than previously forecast as consumers reach for Apple Inc. (AAPL)’s iPad and other tablet devices, Gartner Inc. (IT) said. Gartner lowered its projection for worldwide shipments this year to 387.8 million units, or 10.5 percent growth, from an earlier projection of 15.9 percent growth, according to a report today. The Stamford, Connecticut-based research firm cited decreased demand for laptop computers as the main reason. The recalculation is also the result of a slowdown in China of mobile-PC sales, Gartner said. Laptops and simpler netbooks have driven growth in the global computer market during the past five years. Consumers who used those devices to e-mail and search the Web are now often turning to tablets. In addition, laptop owners are holding on to their machines longer instead of buying new ones, Gartner said. “We expect growing consumer enthusiasm for mobile-PC alternatives, such as the iPad and other media tablets, to dramatically slow home mobile-PC sales, especially in mature markets,” said George Shiffler, a research director at Gartner.
• Egypt Stock Exchange Postpones Opening Again After Prime Minister Quits. Egypt’s bourse, home to the world’s worst performing benchmark index this year, postponed plans to resume trading for the second time in a week after Prime Minister Ahmed Shafik quit. No date was given for the opening.

Wall Street Journal:

• California Cap-and-Trade Faces Potential Hurdle. California's cap-and-trade program is being threatened by groups of local residents, even after the ambitious climate plan survived an electoral challenge in November. Communities For A Better Environment, California Communities Against Toxics, Society For Positive Action and other groups and individuals have sued state regulators, claiming the climate plan won't reduce pollution. The plaintiffs argue that industrial facilities should cut their actual emissions, rather than trade rights to pollute. "All the evidence showed that cap-and-trade programs have failed environmental justice communities," said Alegria de la Cruz, an attorney with the Center on Race, Poverty & The Environment, who is representing the plaintiffs.
• IEA: Libya Unrest Starting to Hit Oil Supplies. Unrest in Libya is starting to affect Europe's oil supplies, although no member country of the International Energy Agency has requested permission to release strategic oil stocks, IEA Executive Director Nobuo Tanaka said Thursday. "This disruption is starting to have an impact, especially on European countries," Mr. Tanaka said in an interview on the sidelines of an Extractive Industries Transparency Initiative in Paris. But no country has asked the IEA to release their stockpiles.
• Consumer Outlook Index Falls, Hurt by Gas, Food Costs. Sticker shock at the gas pump and grocery aisle are taking a toll on consumer psyches in March. The Royal Bank of Canada‘s consumer outlook index fell to 42.5 this month from a reading of 44.5 in February. The index has fallen for three consecutive months. The RBC current conditions index fell to 32.4 this month from 34.4 in February, while the expectations index dropped to 53.6 from 56.8. “What really stands out to us is worry about the future,” says Tom Porcelli, chief U.S. economist at RBC. He said consumers are worried about their ability to save and invest. In a series of special questions, RBC asked consumers about the impact of higher gas prices on other spending decisions. A third of consumers, 32%, say they have already cut back on discretionary spending because of higher fuel costs. Another 36% said a price between $3.25 and $4 per gallon would force changes in shopping. Another 23% need prices to rise above $4 before cutting back elsewhere.
• China Autos in a Growth Shift. The world's biggest auto market is getting congested. Lured to China by a powerful trend—rising incomes mean rising demand for autos—auto makers now face a slowdown in growth. The government has phased out tax breaks that encouraged car buying in 2009 and 2010, financing purchases has become more difficult and Beijing has begun to restrict issuance of license plates.

CNBC.com:

• US Standard of Living in Peril From Dollar's Weakness: Zell. The US standard of living could drop 25 percent if the dollar loses its standing as the world's reserve currency, investor Sam Zell told CNBC.
• JPMorgan(JPM) Chase Made Nearly a Billion Dollars From Madoff.
• Most Retailers Top Estimates, Some See Weak March. The Thomson Reuters Same-Store Sales Index rose 4.2 percent in February, topping not only estimates, which called for an increase of 3.6 percent, but also growth in the year-ago period.

Business Insider:

• Obama Says Military Response IS an Option: Qaddafi Must Go.
• John Edwards Masterminded The Whole Rielle Hunter Cover-Up, Says Accomplice. Former presidential candidate John Edwards is still being investigated for using campaign funds to cover up his affair and love-child with Rielle Hunter.
• The 23 Governments That Could Get Crushed by Food Price Inflation.
  
• Libyan Rebels to Chavez: NO WAY.
• Sam Zell: Obamacare and Dodd-Frank Are Economy-Killling Monstrosities, And There Won't Be New Construction for Years.
• David Rosenberg: Business Insider is Right, Rates Will Move Down after QEII Ends.
  

Zero Hedge:

• On Charles Ponzi Day We Celebrate Another All Time Record in Food Stamp Usage. (graph)

NJ.com:

• Murray Hill-Based Bell Labs Develops 2-Inch Cube That Could Replace Unsightly Cell Towers. They tower over the landscape, sometimes disguised in a way that does not fool anyone. Big trees that look so fake, they are derided as "Frankenpines." Flagpoles that soar higher than any flag would warrant. Or unadorned towers that offer absolutely no pretense as to their purpose. But a day could soon come when those sky-high, unsightly cell phone towers that litter the countryside may be replaced with something no bigger than a Rubik’s cube. Called the lightRadio cube, the new device developed by Bell Labs in Murray Hill is generating major buzz by cell phone carriers around the world. "The lightRadio could radically transform the model for wireless networks and could actually change the way the wireless industry operates," predicted Dan Hays, a telecommunications consultant with PRTM in Washington, D.C.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 25% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-one percent (41%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -16 (see trends).

Politico:

• Report: Union Heads Make Six Figures. As the standoff between unions and Wisconsin Republicans wages on, an analysis of the nation’s 10 largest labor unions shows some top leaders — who are being derided as “union bosses” — make six-figure salaries funded by members’ dues. Leaders earned between $173,000 and $618,000 at major unions, the Center for Public Integrity found in examining 2009 tax records, with some groups paying dozens of employees in the six figures. At the three major unions , which together represent more than 5.6 million public workers, presidents’ salaries in 2009 ranged between $400,000 and $500,000.

Reuters:

• Shi'ites Stage Small Protest in Saudi Oil Province. Around 100 Saudi Shi'ites staged a protest in Saudi Arabia's oil-producing Eastern Province on Thursday, demanding the release of prisoners they say are being held without trial, witnesses said. Mostly young men marched through the small town of Awwamiya, near the Shi'ite centre of Qatif on the Gulf coast. "Peaceful, peaceful," the demonstrators shouted, holding up pictures of Shi'ites they say have been long held without trial, while policemen stood by without interfering.
• FACTBOX - Coming Events in Eurozone Debt Crisis.
  

Telegraph:

• Saudi Shiites Call for 'Day of Anger' in Kingdom. Saudi cyber activists have created a group on Facebook calling for a "Day of Anger" on Friday in the eastern Shiite-majority region following the arrest of a Shiite cleric. The group of more than 500 members is calling for protests after Friday prayers in Al-Hufuf, in Eastern Province's Al-Ihsaa governorate, to demand the release of Sheikh Tawfiq al-Amer. Mr Amer was arrested after calling for a "constitutional monarchy" in the Sunni-dominated kingdom, according to the Rasid website, which specialises in Shiite Saudi news. It said that Mr Amer has been held several times in the ultraconservative absolute monarchy over his calls "for giving Shiites further freedom to exercise their religious rights". The Shiites, who are mainly concentrated in the oil-rich Eastern Province, and make up about 10 per cent of the Saudi population as a whole, complain of marginalisation in the kingdom.
• America Must Escape the Doomed Path of EU-Style Decline. Since the Greek financial debacle last year, there has been a great deal of interest across the Atlantic in Europe’s debt crisis and the lessons that can be learned for America. Not least because the United States may face its own Greek-style economic meltdown in a few years time unless it gets its own house in order. Fortunately, there is a new wave of political leaders on Capitol Hill who are serious about cutting spending, reining in the deficit, and challenging the Big Government culture that has dominated Washington in recent years.

CTK:

• Only 15% of Czechs are in favor of adopting the euro, citing a poll by Medea Research.

Xinhua:

• The aging of China's population has quickened, citing the National Bureau of Statistics. About 12.5% of the total population consists of people 60 years or older. Since 2005, the proportion of people aged 14 years or younger has declined, while those over 14 has risen.

China Business News:

• Shenzhen will raise the minimum wage to 1,320 yuan a month, a 20% increase from 1,100 yuan, with effect from April 1, citing the city government.

Al Watan:

• Libyan authorities have detained a "large number" of Syrian workers on charges of "inciting revolution" in the North African nation.

Bull Radar

Style Outperformer:

• Small-Cap Growth (+1.95%)

Sector Outperformers:

• 1) HMOs +2.90% 2) Coal +2.65% 3) Disk Drives +2.45%

Stocks Rising on Unusual Volume:

• RY, ZUMZ, SKS, HEES, ACTG, CETV, NVMI, OVTI, SGI, ITMN, MDAS, HOLX, KNM, SHS, WTS, RY, MBT, SXI, MED, SKH, CVH, WNR, CVI, TTI, VLO, CALX, TDC, PLT, LNC, RCL, NLC, RLD and TUP
  

Stocks With Unusual Call Option Activity:

• 1) AMLN 2) RSX 3) CAG 4) TJX 5) QLD
  

Stocks With Most Positive News Mentions:

• 1) GGP 2) WTS 3) VPRT 4) CRDN 5) UNH

Charts:

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

Thursday Watch

Evening Headlines
Bloomberg:

• Oil Rises for Third Day on Mideast Unrest Concern, U.S. Stockpile Decline. Oil climbed for a third day as a U.S. government report showed crude stockpiles unexpectedly dropped last week while fighting in Libya renewed concern that supply disruptions may spread to the Middle East. Futures gained as much as 0.7 percent, rising from the highest close in 29 months, after Libyan forces loyal to Muammar Qaddafi attacked rebels on the east coast where much of the country’s oil is refined and shipped. Nouriel Roubini said an escalation of unrest in the Middle East may push prices as high as $140 to $150 per barrel. U.S. crude inventories dropped for the first time in seven weeks, a report showed yesterday. “The big risk at the moment does remain around the Middle East, in particular Iran,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. Crude for April delivery gained as much as 71 cents to $102.94 in electronic trading on the New York Mercantile Exchange, and was at $102.49 at 12:42 p.m. Sydney time. Yesterday, the contract rose $2.60 to $102.23, the highest settlement since Sept. 26, 2008. Prices are up 27 percent from a year ago. Brent crude for April settlement increased 26 cents, or 0.2 percent, to $116.61 a barrel on the London-based ICE Futures Europe exchange. Yesterday, it rose 93 cents, or 0.8 percent, to $116.35, the highest since Aug. 21, 2008. Websites have called for a nationwide Saudi “Day of Rage” on March 11 and March 20, according to Human Rights Watch.
• Food Prices to Extend Gains as Stockpiles Rebuilt, Led by Corn, UBS Says. Food prices will extend gains even as harvests expand, as exporters need to rebuild stockpiles, tightening global supplies and driving corn, wheat and soybeans higher, UBS AG said. Corn may advance to $8.30 a bushel, 15 percent higher than yesterday’s close, Dominic Schnider, director for wealth management research at UBS, said in an interview in Singapore yesterday. Wheat may jump 23 percent to $10 a bushel, while soybeans may surge 7.6 percent to $15 a bushel, he said. “We need to have at least two or three years of good harvests” to rebuild stockpiles, Schnider said. The global food price index, compiled by the United Nations’ Food and Agriculture Organization, surged to a record for a second month in January, driven by higher prices of cereals, dairy and sugar. Extending those gains may push millions more people into extreme hunger and poverty, prompting governments to pay more for food subsidies, widening national budget deficits. Food prices are already at “dangerous levels” after pushing 44 million people into poverty since June, World Bank President Robert Zoellick said Feb. 15. That adds to the more than 900 million people around the world who go hungry each day, he said.
• China Signals Potential Opposition to No-Fly Zone Over Libya. China joined Russia today in signaling potential opposition to imposing a no-fly zone over Libya if fighting continues between protesters and forces loyal to leader Muammar Qaddafi.
• Brazil Increases Key Rate to 11.75% as Inflation Threatens Bank's Target. Brazil’s central bank raised its benchmark overnight rate by a half-point for a second straight meeting to cool inflation that is approaching the upper limit of the government’s target range. The bank’s policy committee, led by President Alexandre Tombini, today voted unanimously, without a bias, to raise the Selic rate 50 basis points, or 0.5 percentage point, to 11.75 percent, matching the estimates of 44 of 51 analysts surveyed by Bloomberg. Six economists forecast a 0.75-point increase and one predicted a full percentage-point increase. “Following the process of adjustment of monetary conditions, the monetary policy committee decided, unanimously, to raise the rate to 11.75 percent a year, without a bias,” policy makers said in the statement announcing their decision. Annual inflation in the $1.57 trillion economy has accelerated every month since August, prompting the bank to raise interest rates in January for the first time since July. “There is a slowdown happening, and that helps the central bank,” said Marcelo Salomon, chief Brazil economist for Barclays Capital. “It clearly gives the bank more time to work around the necessary adjustment cycle.” Brazil’s economy expanded in December at its slowest pace in six months, after retail sales stalled and credit growth slowed, according to the central bank’s economic activity index, a proxy for gross domestic product. Inflation, as measured by the benchmark IPCA-15 index, accelerated to 6.08 percent in the year through mid-February, the fastest pace since December 2008. In the month through mid-February, prices rose 0.97 percent, the highest since April 2003. The central bank targets inflation of 4.5 percent, plus or minus two percentage points.

Wall Street Journal:

• West Cools on No-Fly Zone. Senior U.S. defense officials tried to lower expectations of an international military intervention in Libya, as rebels, fighting off a key offensive by forces loyal to Col. Moammar Gadhafi, called for foreign airstrikes.
• Ohio Vote Puts Curbs on Unions in Reach. Ohio state senators narrowly approved a bill that would prohibit public-employee unions representing 400,000 state and local workers from bargaining over health benefits and pensions, while also eliminating the right to strike. While national attention has focused for weeks on a similar battle in Wisconsin, the vote, by 17-16 in Ohio's Republican-controlled Senate, virtually ensured that the Buckeye State will become the first to strip collective-bargaining rights from public employees as states grapple with recent gaping budget deficits. The move is especially significant because Ohio is larger than Wisconsin, and like its fellow Midwestern state, is both a stronghold of public-sector labor unions and a swing state politically.
• SEC Probe Examines Bank-Loan Practices. The Securities and Exchange Commission is scrutinizing U.S. banks that have restructured troubled loans in order to make them appear healthier than they really are, according to people familiar with the situation. Officials at the SEC are seeking information from an unknown number of regional and community banks with large concentrations of commercial real-estate loans, these people said.
• Bill Gates Says High Pension Costs Hurt Education. Billionaire philanthropist Bill Gates will step into the national debate over state budgets Thursday with a call for states to rethink their health care and pension systems, which he says stifle funding for public schools. Mr. Gates in an interview said he will use a high-profile conference Thursday in Long Beach, Calif., to urge that more attention be paid to how states calculate their employee-pension funding and health-care obligations. "These budgets are way out of whack," Mr. Gates said. "They've used accounting gimmicks and lot things that are truly extreme." The comments come after Mr. Gates spent more than a year studying the issue and enlisting the advice of leading academics and others.
• Mets Owners Threatened With More Charges. The owners of the New York Mets, who face a $1 billion lawsuit related to withdrawals they made from Bernard Madoff's investment firm, are expected to face additional allegations from a court-appointed trustee about how they may have benefitted from the multibillion-dollar Ponzi scheme if they fail to reach a settlement, according to a person familiar with the situation.
• Heads of U.S., Mexico to Meet as Tensions Rise. President Felipe Calderón will meet in Washington on Thursday with President Barack Obama in an attempt to repair relations at a time when spiraling violence in Mexico's drug war has frayed ties between the two allies.
• Fed Finds Climbing Costs Hit Shoppers. Many manufacturers are passing along higher input costs to their customers, a sign that rising prices for wheat, cotton, iron, and other commodities could increasingly reach consumers in coming months, according to the Federal Reserve's beige book survey. The report, a summary of economic conditions across the central bank's 12 regional districts, said manufacturers "in a number of districts reported having greater ability" to pass through higher costs. "Retailers in some districts mentioned they had implemented price increases or were anticipating such action in the next few months," the Fed said.
• U.S. Troops Shot in Germany; Terror Suspected. A lone gunman killed two American servicemen and wounded at least two others on a U.S. military bus outside Frankfurt Airport in what officials described as a possible terrorist attack. The shooting was the first deadly assault on U.S. military personnel in Europe in years. The official said it was too early to tell if the suspect was aligned with Al Qaeda or localized Islamic organizations in Kosovo, a former Yugoslav territory that is majority Muslim.
• Message to the GOP: Austerity Is Not Enough. Republicans won't capture the White House without a pro-growth platform.
• Obama's Health Waiver Gambit. The White House offers the mirage of state flexibility.
• Time to Get Serious About American Oil. Why is Washington blocking oil exploration in states like Alaska and Louisiana when the Middle East is such a powder keg?

CNBC:

• Democrats Ready Spending Bill With Few Cuts: Aide. U.S. Senate Democrats are preparing a spending bill that yields no ground to House Republicans who are seeking deep cuts in government spending, a Democratic aide said on Wednesday.The spending bill would essentially keep government spending at its current level through the end of the fiscal year on Sept. 30.

MarketWatch:

• Walt Mossberg Talks Apple(AAPL) iPad 2. (video)

Business Insider:

• An Orgy of Speculation. Ben Bernanke is confident that his policies have paved the way for a self sustaining recovery, but there's plenty of reason to be skeptical. For one thing, the Fed's zero rates and bond buying program (QE2) have had a negligible effect on unemployment and housing. And for another, they've led to a surge in speculation. That's hardly a reason to celebrate. In the last week, a number of reports confirm that hedge funds have been loading up on debt believing that improving economic data and the Fed's liquidity support will push stocks even higher. That seems like a risky bet given the unevenness of the rebound and the spreading mayhem in the Middle East. Even so, fund managers are levering-up like there's no tomorrow convinced that this is the beginning of another bull market. Here's the rundown from Bloomberg:
• Wall Street to Trade Municipal Bonds Like It Trades Mortgages. The major players in muni CDSX will be hedge funds, Lo says. "There's a lot of money sloshing round hedge funds. I wouldn't be surprised if John Paulson [who shorted residential mortgage backed security CDOs with credit default swaps and made a fortune] put a large chunk of his very large fund into a bet against the muni bond market using these CDS instruments." We know the signs this time. It remains to be seen if they will they be ignored.
• At Least Five Legal Complaints Brought Against Ray Dalio's "Demoralizing" Management Style.
• Here's That Pentagon "Financial Terrorism" Report Glenn Beck and Maria Bartiromo Are Talking About.
• Murder in Pakistan: A Chilling Message. Shahbaz Bhatti, Pakistan's federal minister for minorities, was assassinated today by Islamic extremists determined to bring down Pakistan's civilian government.
• Clinton's Biggest Fear: Al Qaeda Rising in Libya. US Secretary of State Hillary Clinton appeared before the Senate Foreign Relations Committee today and revealed her greatest fear about the events unfolding in Libya. ABC News reports:
  

Zero Hedge:

• Complete List of Which Countries Sold Weapons to Libya.
• Watch the Highlight of Today's Congressional Hearing: Ron Paul vs. The Bernank. (video)
• US Naval Update: It's a Mediterranean Party and The Enterprise is Invited - Libyan Endgame Expected Within 5-7 Days.
  

IBD:

• Chipotle(CMG) to Up Overseas Presence, Test Asian Eatery.

Forbes:

• China's High-Speed Rail, Highly Suspect. It may be another symptom of a bubble economy in which vast sums are misspent on underutilized assets. (Hmmm…like in the financial whirl of America’s “cowboy capitalism”!) “The costs are raising worries over financing,” the SCMP reports. “Major state-owned railway and rail car building companies with shares listed in Hong Kong and Shanghai [see China Railway Construction Corp., China Railway Engineering Corp. and subsidiaries ] are relying on bonds and bank loans to finance projects, with onerous repayment obligations that may be difficult to meet given the revenue projections for many projects.” It all stems from the state and the railways ministry has amassed $300 billion in debt.

CNN Money:

• The Big Deal About the NYSE's(NYX) Big Deal: Derivatives. As regulators start to scrutinize the proposed combination of the NYSE and the Deutsche Börse, they'll need to take into account much more than just equity trading.
• Libya: Spending Oil Money Across the Globe. In the span of a few years, Libya's financial tendrils have reached across oceans, across borders and across continents.

Washington Post:

• Bradley Manning, WikiLeaks' Alleged Source, Faces 22 New Charges. The Army has brought new charges - including one that carries the death penalty - against Pfc. Bradley E. Manning, a former intelligence analyst accused of leaking hundreds of thousands of classified military and diplomatic documents to the anti-secrecy Web site WikiLeaks.

All About Alpha:

• Hedge Funds and "Stock Manipulation": Perpetrators, Accomplices or Just in the Wrong Place at the Wrong Time (again)? (graphs)
  

Chicago Tribune:

• Missing Wisconsin Dems Now Face $100 Daily Fines. The 14 Wisconsin state Senate Democrats who left the state two weeks ago now face fines of $100 for each day they stay away.

Politico:

• GAO: Medicare Losing $48 Billion. Nearly 10 percent of all Medicare payments are fraudulent or otherwise improper, and the government isn’t doing enough to stop them. That’s the conclusion of a Government Accountability Office report released Wednesday. The report, issued at the request of a House subcommittee investigating Medicare and Medicaid fraud, estimates that the federal government is losing $48 billion on the improper payments – a significant amount for a program that “is fiscally unsustainable in the long term” unless action is taken.
  

Reuters:

• China's annualized inflation for the first quarter of the year will likely exceed 5%, citing Fan Jianping, head of economic forecasting at the State Information Center.
• Monster U.S. Online Jobs Index Rises in February. A monthly gauge of online labor demand in the United States rose 4 percent in February compared with the same month a year ago, led by gains in the utilities and retail sectors, according to data released on Thursday. Compared with January, Monster Worldwide Inc(MWW), an online recruiting firm, said its monthly index rose by 6 percent in February.
• QE-2 May Be Peak for Profits by US Primary Dealers. The securities firms waiting to join the ranks of the U.S. primary dealers may be in a race against the clock -- the QE-2 clock. Several firms are waiting for approval from the Federal Reserve Bank of New York to become primary dealers, designated banks and securities dealers responsible for dealing directly with the New York Fed and the Treasury Department. The sooner they get approved, the sooner they'll get a cut of the Fed's quantitative easing business, set to end in June.

Telegraph:

• SEC Eyes Hedge Fund Bonus Curbs. The US financial regulator has proposed a clampdown on hedge fund bonuses deemed to encourage dangerous risk-taking. The Securities and Exchange Commission (SEC) voted yesterday for a proposal that would force brokers and investment advisers, including hedge funds, with more than $1bn (£610m) in assets to reveal staff bonus arrangements annually. The regulator could then ban bonuses if they were judged to cause excessive risk-taking. The proposal by the SEC, which failed to win the backing of the regulator’s two Republican commissioners, follows a similar proposal made last month for banks by the Federal Deposit Insurance Corporation (FDIC), a fellow regulator.
• Saudi Arabia Contagion Triggers Gulf Rout. Fears of sectarian uprisings in Bahrain and Saudi Arabia have set off the first serious wave of investor flight from the Gulf, compounding market turmoil as civil war in Libya pushes Brent crude over $116 a barrel. Saudi Arabia’s Tadawul stock index has tumbled 11pc in wild trading over the past two days, led by banks and insurers. Dubai’s bourse has hit a 7-year low. The latest sell-off was triggered by the arrest of a Shi’ite cleric in the Kingdom’s Eastern Province after he called for democratic reforms and a constitutional monarchy. The province is home to Saudi Arabia’s aggrieved Shi’ite minority and also holds the country’s vast Ghawar oilfield, placing it at the epicentre of global crude supply. “Unrest in this region can have fatal consequences for the world,” said JBC Energy. “The plunge on the Saudi stock exchange can be interpreted as a sign of waning trust.”

Spiegel Online:

• The gunman who killed two U.S. airmen at Frankfurt Airport was specifically targeting American military personnel, citing officials familiar with the matter. Investigators haven't determined whether the attacker, identified as a citizen of Kosovo, was acting alone or as part of an organized group.

The Australian:

• US Obsessed With Doing Nothing About Debt Says Hedge Fund Guru Julian Robertson. THE US Federal Reserve's policy of printing money -- quantitative easing -- is pushing up commodity prices sharply, according to the world's best known hedge fund manager, Julian Robertson. Speaking in Sydney yesterday, the US-based founder of the legendary Tiger Fund said quantitative easing was encouraging reckless spending and sending investors to non-cash assets as they sought a safe place for their investments. "Not just gold and silver but cotton, soybeans, you name it, they're all rising," he said, noting that the US dollar was now no longer the safe haven it was. "It's not my refuge," he said emphatically. He said the US approach to rectifying its financial problems was making it look as though "things will go along OK" when they would not, in the long run. "We are obsessed with not doing anything about it," he said, referring to the debt burden and the giant budget deficit left over from the global financial crisis. Looking at the US economy, Mr Robertson said: "We are broke, broker than all get out. "We prefer to put on the Santa Claus suit and celebrate Christmas" rather than address underlying problems in the US economy such as the budget deficit. China was "a fascinating place and a new market", but far from a simple boom story. "There are more price dislocations, both ways, in stocks there, than almost anywhere else," he said. But he is not convinced overseas demand will fuel growth in China forever. "Demand out of China is going to depend on whether other economies around take up the supply of goods that China produces," he said. Alex Robertson said that there was a serious demographic problem from the effects of the one-child policy: "Men will outnumber women, and that could impede the economy."

China Securities Journal:

• China is moving away from the double-digit growth era in the next five years because of the threat of inflation and environmental problems. China can no longer sustain high investment, high consumption and low benefit growth, the commentary said.
• China's central bank will raise the reserve requirement ratio "shortly" to ease liquidity pressure, citing analysts.
  

Financial News:

• China should levy a property tax in regions with surging real estate prices, citing Yan Qingmin, an assistant chairman of the China Banking Regulatory Commission. The banking regulator will enhance efforts to prevent risks stemming from property loans, citing Yan. The effects of lending policies in property curbs should not be exaggerated, citing Yan.
• China's consumer prices may rise about 4% in February, citing Wang Xiaoguang, a researcher with the Chinese Academy of Governance. The country is facing strong inflation expectations, citing Pan Jiancheng, deputy director-general of the China Economic Monitoring and Analysis Center of the National Bureau of Statistics.
  

China Daily:

• Only 6% of Chinese People See Themselves as Happy, citing a survey of about 1,350 people carried out by government information portal china.com.cn. Almost 40% of those surveyed believe that happiness is determined by how wealthy a person is, and people living in first-tier cities are the least content due to pressure from the high prices of housing and traffic congestion, citing the results of the poll. Zhang Jing, a 25-year-old procurement agent at a Shanghai-based foreign-invested company, described her life as "unexciting" to China Daily, saying entertainment was rare. "More than one-third of my salary goes on the rent and the rest has to cover transportation and food. In the end, my disposable income is almost nothing," she said. Zhang Lifan, a well-known expert on China's modern history, noted that it is imperative that the government redistributes the fruits of economic development so more people benefit because the widening wealth gap is "tearing society apart". According to a World Bank report, the Gini coefficient for China is now close to 0.5, which points to an unequal distribution of income that could lead to social unrest. On the Gini coefficient, 0.4 is considered as the threshold of serious inequality.

Evening Recommendations
Citigroup:

• Reiterated Sell on (IR), target $41.

Night Trading

• Asian equity indices are -.50% to +1.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 109.50 -.5 basis point.
  
• Asia Pacific Sovereign CDS Index 120.0 +.75 basis point.
  
• S&P 500 futures +.45%.
  
• NASDAQ 100 futures +.37%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (COO)/.67
• (BIG)/1.38
• (HNZ)/.82
• (KR)/.44
• (GCO)/1.29
• (NOVL)/.06
• (DLM)/.40

Economic Releases
8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 395K versus 391K the prior week.
• Continuing Claims are estimated to rise to 3815K versus 3790K prior.
• Final 4Q Non-Farm Productivity is estimated to rise +2.3% versus a prior estimate of a +2.6% gain.
• Final 4Q Unit Labor Costs are estimated to fall by -.5% versus a prior estimate of a -.6% decline.
  

10:00 am EST

• ISM Non-Manufacturing for February is estimated to fall to 59.3 versus 59.4 in January.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Kocherlakota speaking, Fed's Lockhart speaking, ICSC Feb. Chain Store Sales, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index, RBC Capital Restaurant/Leisure Investor Day, (A) analyst meeting, (ANSS) investor day, (SWK) analyst day, (JNPR) analyst meeting and the (MXIM) analyst day could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and automaker shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Rising into Final Hour on Economic Optimism, Short-Covering, Fund Inflows

Broad Market Tone:

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

Equity Investor Angst:

• VIX 20.37 -3.05%
  
• ISE Sentiment Index 104.0 +5.05%
  
• Total Put/Call .85 -6.59%
  
• NYSE Arms .90 -65.40%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 83.74 +.86%
  
• European Financial Sector CDS Index 115.75 +.12%
  
• Western Europe Sovereign Debt CDS Index 172.83 bps -.48%
  
• Emerging Market CDS Index 221.89 -1.17%
  
• 2-Year Swap Spread 20.0 unch.
  
• TED Spread 19.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .12% -1 bp
  
• Yield Curve 279.0 +4 bps
  
• China Import Iron Ore Spot $178.0/Metric Tonne -1.17%
  
• Citi US Economic Surprise Index +83.60 +6.3 points
  
• 10-Year TIPS Spread 2.47% +4 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +63 open in Japan
• DAX Futures: Indicating +11 open in Germany

Portfolio:

• Slightly Higher: On gains in my Technology and Biotech longs
  
• Disclosed Trades: None
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades near session highs, despite rising energy prices, growing Mideast unrest, higher long-term rates and emerging markets inflation fears. On the positive side, Road&Rail, Homebuilding, HMO, Construction, Hospital, Networking, Semi and Coal shares are especially strong, rising more than 1.5%. Small-cap and Cyclical shares are outperforming. On the negative side, Airline, Restaurant, REIT, Insurance, Bank, Wireless and Utility shares are lower on the day. (XLF)/(IYR) are a bit heavy. The 10-year yield is rising +6 bps to 3.45%. China Iron Ore Spot is falling another -1.1% and is down -7.2% in about 2 weeks. The US Scrap Steel Benchmark has fallen about -5% in 2 days, which is the largest 2-day decline since Oct. of last year. The UBS-Bloomberg Ag Spot Index is rising +1.35% and is back near its record high. Moreover, copper is falling -.39%, lumber is dropping -1.33% and oil is surging +2.0%. The Saudi sovereign cds is rising +2.55% to 142.33 bps. The avg. US price for a gallon of gas is up another .02/gallon today to $3.39/gallon. It is now up .27/gallon in 15 days. The US dollar is trading poorly today given the data and Fed commentary. I suspect this weakness may reverse after the ECB meeting tomorrow. However, more dollar weakness would be another boost to oil. Investor complacency regarding the deteriorating situation in the Mideast remains high. The market's resiliency is impressive nonetheless. This could be a result of investors' anticipating a likely better-than-expected February jobs report on Fri. I would like to see better breadth, higher volume and a meaningful reversal lower in oil before shifting exposure in anticipation of further equity gains. As of now, this move looks like a bounce with further stock weakness likely before week's end. I expect US stocks to trade mixed-to-lower into the close from current levels on higher energy prices, growing Mideast unrest, more shorting, emerging markets inflation fears, higher long-term rates and profit-taking.

Today's Headlines

Bloomberg:

• Dubai Stocks Slump to 7-Year Low. Middle East shares fell, sending Dubai’s benchmark index to the lowest in almost seven years, as concern political unrest may spread to Saudi Arabia, the Arab world’s largest economy, sparked demand for safer assets. Saudi Arabia’s Tadawul All Share Index slumped 3.9 percent to close at the lowest since April 2009 at 3:30 p.m in Riyadh. The DFM General Index declined 3.5 percent to 1,374.43, the lowest level since June 2004. The gauge has lost 15 percent since Tunisia’s Zine El Abidine Ben Ali was ousted in January. Emaar Properties PJSC retreated to the lowest since 2009 and Dubai Financial Market PJSC slumped 4.9 percent. Investors are shunning assets in the Middle East and North Africa as the political turmoil, which started in Tunisia more than two months ago, expanded to Oman, Bahrain, Yemen, Libya and Iran. Websites have called for a nationwide Saudi “Day of Rage” on March 11 and March 20, Human Rights Watch said in a statement on its website on Feb. 28. “A lot of the selling has been from onshore, local and regional investors; the speed of the decline tells you it’s pure panic,” said Dubai-based Ibrahim Masood, who helps manage about $400 million at Mashreqbank PSC. Saudi Arabia’s benchmark stock index plunged the most in more than two years yesterday on concern disturbances may extend to the kingdom, the biggest supplier in the Organization of Petroleum Exporting Countries. The measure has tumbled 20 percent in the past 13 days, the longest losing streak since 1996. About 271 million shares changed hands, the most since May, according to data compiled by Bloomberg. Saudi nationals accounted for about 80 percent of stock purchases in February, according to the exchange’s website. “There are fears political risk may spread,” to Saudi Arabia, said Mohammed Ali Yasin, chief investment officer at Abu Dhabi-based financial services company CAPM Investments PJSC. Credit-default swaps on Saudi Arabia are the worst performing sovereign contracts this year, even though the kingdom has no debt to insure. Swaps almost doubled in two months to a more than 19-month high of 143 basis points from 75 at the start of 2011, according to CMA. The Bloomberg GCC 200 Index of Persian Gulf stocks dropped 3.3 percent today, bringing declines this year to 15 percent.
• Oil Extends Gains After Unexpected Decline in U.S. Inventories. Crude oil in New York rose above $100 a barrel for a second day and gasoline surged to a 30-month high on concern that the unrest curbing exports from Libya will spread to other countries in the region. Oil futures advanced as much as 2.8 percent as Libyan forces loyal to Muammar Qaddafi attacked rebels on the east coast where much of the country’s oil is refined and shipped abroad. Prices extended gains after a U.S. Energy Department report showed that crude and fuel supplies fell last week. Crude oil for April delivery climbed $2.08, or 2.1 percent, to $101.71 a barrel at 12:06 p.m. on the New York Mercantile Exchange. Yesterday, the contract surged 2.7 percent to $99.63, the highest settlement since September 2008. Prices are up 28 percent from a year ago.
• Gasoline Surges to 30-Month High as Mideast Tensions Escalate. Gasoline surged above $3 a gallon as spreading political unrest in North Africa and the Middle East threatened crude oil supplies for refiners. Gasoline rose to a 30-month high as Libyan forces loyal to Muammar Qaddafi counterattacked against rebels who have seized the east coast ports where much of the country’s oil is refined or shipped abroad. “Everything is escalating in Libya, it looks like Qaddafi is gaining ground and the market is a little bit edgy,” said Dan Flynn, an energy analyst at PFGBest in Chicago. “Everything could explode today.” Gasoline for April delivery rose 2.06 cents, or 0.7 percent, to $3.004 a gallon at 9:27 a.m. on the New York Mercantile Exchange. Prices touched $3.0215, the highest level for the contract closest to expiration since Aug. 29, 2008. Regular gasoline at the pump, averaged nationwide, advanced 1.2 cents to $3.387 a gallon yesterday, AAA said on its website.
• China's Founder of High-Speed Railways Under Investigation. China’s Ministry of Railways removed Zhang Shuguang as deputy chief engineer and is investigating him for alleged “severe violation of discipline,” Xinhua News Agency said, in the second probe of an official from the ministry in a week. Zhang, 54, is known as the founder of China’s high-speed railway technology and an ally of former railway minister Liu Zhijun, Caixin Online reported yesterday. He was being investigated by the Communist Party of China Central Commission for Discipline Inspection, Xinhua said.
• General Motors(GM) is in talks with Turkish authorities to build a plant in western Kocaeli province to make Chevrolet cars, citing Kocaeli chamber of industry head Ayhan Zeytinoglu.
• U.S. Companies Added More-Than-Estimated 217,000 Jobs Last Month, ADP Says. Companies in the U.S. added more workers in February than forecast, indicating the labor market may be strengthening, data from a private report based on payrolls showed today. Employment increased by 217,000 last month after a revised 189,000 gain in January, according to figures from ADP Employer Services. The median estimate in the Bloomberg News survey called for a 180,000 gain last month.
• Hedge Funds, Brokers May Face Fresh Calls for Risk Data. Hedge funds, broker-dealers and mortgage companies may face unprecedented demands for data on everything from risk exposure to trading partners as U.S. regulators seek to identify firms that pose a potential threat to the financial system, a confidential government report says. The staff of the Financial Stability Oversight Council identified dozens of “potential metrics” to decide which non- bank financial firms should be designated “systemically important” and subject to Federal Reserve supervision, according to an 80-page study obtained by Bloomberg News.
• Bridgewater Made $8.7 Billion in 2010 Second Half, Survey Finds. Ray Dalio’s Bridgewater Associates Inc. made $8.7 billion for investors during the second half of 2010, the largest profit posted during the period by any of the world’s 10 biggest hedge-fund managers, according to LCH Investments NV. Bridgewater, based in Westport, Connecticut, has earned $22 billion for investors since its inception in 1975, with more than one-third of the profits generated last year, according to the analysis by LCH, a firm overseen by the Edmond de Rothschild Group, which invests in hedge funds.
• El-Erian Says Pimco Won't Buy EU Peripheral Bonds Until Debt Restructuring. Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian said his funds won’t buy bonds from Greece, Portugal or Ireland until the countries undertake debt restructuring. “We would rather stay on the sidelines until these countries are both willing and able to confront their problems and at that stage, we will consider buying their bonds,” El- Erian told Andrea Catherwood in Bloomberg Television’s “The Last Word” program. El-Erian said he would need to see “an orderly, pre- emptive and voluntary restructuring of the debt, something that we’ve seen in other countries like Uruguay. ‘‘The second condition is a set of structural reforms that allow these economies to grow over time,’’ he said.
• Cotton Futures Top $2 a Pound as Limited Worldwide Supplies Trail Demand. Cotton prices rose, extending a rally above $2 a pound, on signs that global supplies will remain limited this year amid increased demand from China, the world’s biggest consumer. Imports by China in January jumped 31 percent from a year earlier after an 86 percent surge in 2010, government data show. The price in New York more than doubled in the past 12 months, reaching a record of $2.0893 on Feb. 18. The fiber jumped by the exchange limit on ICE Futures U.S. for the fourth straight day after dropping by the maximum in the previous four sessions. Cotton for May delivery rose by the limit of 7 cents, or 3.6 percent, to $2.006 at 12:29 p.m. on ICE in New York. The price has jumped 13 percent since Feb. 24.

Wall Street Journal:

• Rebels Seek Airstrikes by Foreign Forces. Forces loyal to Libyan leader Col. Moammar Gadhafi pushed an offensive into the east, but were resisted by antiregime forces, as Col. Gadhafi warned against a foreign military intervention and rebels called on outside powers to launch tactical airstrikes. Forces loyal to Libyan leader Col. Moammar Gadhafi pushed an offensive into the east Wednesday, but were resisted by antiregime forces, as Col. Gadhafi warned the U.S. and Europe against a military intervention, saying, "we will fight until the last man and woman." U.S. Defense Secretary Robert Gates, testifying before Congress, criticized "loose talk" about any military intervention in Libya. He also said the U.S. military would have to launch pre-emptive strikes to destroy Libya's air defenses, should President Barack Obama order the imposition of a no-fly zone over the North African country, "Let's just call a spade a spade," Mr. Gates said. "A no-fly zone begins with an attack on Libya."
• Muni Default Estimate: $100 Billion. A consulting firm founded by economist Nouriel Roubini said there could be close to $100 billion of municipal-bond defaults over the next five years as state and local government-debt problems damp the U.S. economic recovery. That figure would by most estimates represent a significant increase over defaults in recent history, but it doesn't appear to be as dire as a prediction last year by analyst Meredith Whitney

Bloomberg Businessweek:

• Fed's Treasury Purchases 'Monetizing Debt,' Hoenig Says. Federal Reserve Bank of Kansas City President Thomas Hoenig said the central bank is “monetizing debt” with its purchases of U.S. Treasuries, a program that he says may spur inflation. “Yes, we are monetizing debt,” Hoenig said today in a speech in New York. “You buy bonds and you monetize debt. Right now, a lot of that is going into excess reserves so it is not having an immediate effect on inflation. It will initiate inflationary impulses. It takes time.” Philadelphia Fed President Charles Plosser, Richmond Fed President Jeffrey Lacker and St. Louis’s James Bullard have urged a review of the purchases in light of a strengthening economy and concern over future inflation. The central bank should raise the target federal funds rate to 1 percent from near zero rather than ease during the current economic recovery, Hoenig said, reiterating comments from last year. “You really need to get off of zero, in my opinion,” Hoenig said. “I would think of moving back to 1 percent, and then I would pause. Let the market settle out” and then move to a higher rate, possibly 2 percent. The Kansas City Fed leader also urged breaking up the largest banks, which he said have a lower cost of funds because of an implied government safety net. He would restore the barrier between commercial and investment banking. “I think this is a good idea as they are so large they cannot be allowed to fail,” Hoenig said. Hoenig also said standards for bank capital need to be raised further, and the Basel Committee on Banking Supervision’s overhaul of standards may not go far enough in reducing leverage.

MarketWatch:

• IATA Cuts Airlines' 2011 Profit Forecast. The International Air Transport Association, the global trade organization for airlines, cut its 2011 industry profit forecast Wednesday to $8.6 billion from $9.1 billion, citing the recent spike in jet-fuel prices. Driving the downgrade were Asia-Pacific and Latin American carriers, which are more exposed to the higher fuel costs, the group said. The profit outlook for North American carriers was unchanged.

CNBC.com:

• Apple's(AAPL) Jobs Takes Stage at Apple iPad 2 Launch. Apple CEO Steve Jobs briefly emerged from his medical leave and walked on stage to standing ovation Wednesday to unveil the second-generation of the popular iPad, which will go on sale March 11 in the United States.
• Economy Expands Throughout US: Fed's Beige Book. U.S. economic activity kept slowly gaining strength as 2011 opened and manufacturers and retailers were having some success in pushing their prices up, the Federal Reserve said on Wednesday.
• Buffett: US Should Cut Back on Economic Stimulus.
• 225 Hedge Funds in 'Billion Dollar Club'.
  

Business Insider:

• LIVE: Apple(AAPL) iPad 2 Event.
• LIVE: Retired Libyan General Says Qaddafi Could Hold Out For Months.
• Uh-Oh: There's A Report Going Around That a Saudi Facebook Activist Has Been Killed.
• Map of the Day: The Mass Protest in Tehran That The Government Says Never Happened. Reports are trickling out of Iran of a massive anti-government protest that took place yesterday. Protesters in Tehran's Vali Asr Square chanted "Death to Khamenei," according to Iran Focus. Opposition groups say 79 protesters were arrested.

Zero Hedge:

• How Did Gaddafi Bypass US Anti-Money Laundering Rules to Bank With Goldman(GS) and JPMorgan(JPM).

CBS News:

• Gates: Libyan No-Fly Zone Would Require Attack. Defense Secretary Robert Gates is sharpening his words of caution about providing air cover for Libyan rebels, telling a U.S. congressional committee that establishing a no-fly zone would have to begin with an attack on Libyan territory. Such an attack would be designed to destroy the North African country's air defense weapons.

San Francisco Chronicle:

• Nearly 500 in S.F. Schools to Get Pink Slips. Nearly 500 San Francisco teachers, aides and administrators will find pink slips in their mailboxes within the next two weeks as the school board works to backfill an estimated $27 million shortfall if the state's worst-case budget scenario pans out later this year.

MSNBC:

• U.S. Service Member Shot Dead in Germany. A gunman fired shots at U.S. military personnel on a bus outside Frankfurt airport on Wednesday, killing two people and wounding two others before being taken into custody, police said. U.S. military officials told NBC News that one of the dead was a U.S. service member. The other fatality was the bus driver, police said. Kosovo's interior minister told The Associated Press that German police have identified the gunman as a Kosovo citizen. Kosovo Interior Minister Bajram Rexhepi said in an interview that German police have identified the suspect Arif Uka, a Kosovo citizen from the northern town of Mitrovica.

American Journalism Review:

• The Bloomberg Juggernaut. While many news organizations are struggling and retreating, Bloomberg News keeps adding talented journalists, expanding its empire and elevating its ambitions.

Reuters:

• NYC Police Pension Fund OKs Hedge Fund Stake. The board of New York City's police pension fund has approved the first investment in a hedge fund by any of the city's pension funds, the city comptroller said on Wednesday.
• Record Oil Futures Trading Volumes in February. Traded volumes on the world's two biggest oil futures markets reached record levels in February, boosted by growth of close to 40 percent in futures and options trade on benchmark Brent and WTI contracts. Intercontinental Exchange (ICE) said the average daily trading volume for its futures markets rose 27 percent from the same month a year before to a record 1.74 million contracts. The total futures volume for the month was a record 33 million contracts. Volume in energy futures traded on markets run by the CME Group CME.N, including the New York Mercantile Exchange (NYMEX), averaged 2.2 million contracts a day, up 26 percent from February 2010, CME said. The driving force behind this strong growth was the trade in futures on the NYMEX light, sweet crude oil contract CLc1 known as West Texas Intermediate or WTI, which rose 39 percent to an average daily volume of 935,000 contracts. The options contract rose 35 percent for the month and set its third daily volume record of the year with 325,000 contracts on Feb. 23 surpassing the previous record of 294,000 contracts set at the end of January.

Telegraph:

• Libya: SAS Ready to Seize Col Gaddafi's Stores of Mustard Gas. British special forces are poised to seize caches of mustard gas and other potential chemical weapons being stored by Colonel Muammar Gaddafi’s regime in the Libyan desert.

ICIS:

• Asia will import 200,000 to 300,000 metric tons of naphtha from western markets in April compared with 400,000 tons to 500,000 tons expected to arrive this month, citing traders.

Bangkok Post:

• Burma Halts Rice Exports. Burma has halted rice exports to stockpile the staple, aiming to shield food costs at home from the possible impact of rising oil prices caused by Middle East unrest, an official said Wednesday. "I think the authorities are just concerned about local consumption because of what has happened in Libya,'' an official of the Union of Burma Federation of Chambers of Commerce and Industry told AFP on condition of anonymity. He explained that an increase in oil prices might push up transportation costs and subsequently food prices. "All commodity prices depend on transportation charges, not only rice,'' he added. Firms were told last week to suspend shipments of rice and cancel all contracts for overseas supply, he said.

China National Radio:

• Some Chinese provinces including Shandong, Shanghai and Guangdong may raise minimum wages by as much as 25%, citing local provincial authorities.

CCTV:

• China will offer subsidies to low-income individuals when inflation rises to a "certain level," citing Zhou Wangjun, deputy director of the pricing department at the National Development and Reform Commission.

Bear Radar

Style Underperformer:

• Small-Cap Value (+.05%)

Sector Underperformers:

• 1) Restaurants -1.22% 2) REITs -1.09% 3) Insurance -1.05%

Stocks Falling on Unusual Volume:

• NVDA, USMO, SNP, GTY, MET, PRU, HON, BA, HITK, CEDC, ATNI, SINA, CISG, JOYG, TTEC, BGFV, TWGP, ASNA, HTWR, DWA, COST, GPOR, UFPI, MELI, RDEN, IART, MIDD, TRS, WFT, WTI, BCA, DY, DDR, ORI, AH, DGI, CWH and CCG
  

Stocks With Unusual Put Option Activity:

• 1) WFT 2) KEY 3) KWK 4) XLNX 5) SWY
  

Stocks With Most Negative News Mentions:

• 1) JBLU 2) FDO 3) BIG 4) DAL 5) BKS

Charts:

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