Feb 28, 2011

February 28, 2011

February 28, 2011

This week we are expecting a slew of economic data to be released. This morning Personal Income for January came in ahead of expectations on a 0.3% increase in wages and extended tax cuts. Personal spending rose by 0.2%, less than the 0.4% consensus as higher food and energy prices forced Americans to cut back on other goods and services. Adjusted for inflation, consumer spending fell by 0.1%, the first decline in over a year. The Chicago PMI came in at 71.2 vs. expectations of 67.5.

The dollar is under pressure this morning as global markets are betting that the ECB begins to combat inflation sooner than the Fed. Consumer price inflation in Germany hit its highest annual rate in more than two years on higher energy costs.

Voters in Ireland unseated the Fianna Fail party, replacing them with the Fine Gael party. "We now stand at a transformative moment in Ireland's history," Fine Gael leader Enda Kenny said. "We stand on the brink of fundamental change in how we regard ourselves, how we regard our economy and how we regard our society."

Approximately 70K people rallied to protest an effort in Wisconsin to restrict state workers’ right to collective bargaining. It is interesting to note that Federal workers have never had the right to collective bargaining.

After months of hot air being spewed about a government shutdown, it appears that Republicans and Democrats are close to an agreement that will extend the government’s spending authority for two weeks.

The FSB has been focused on reducing the reliance by financial markets on credit ratings. Some countries have even begun removing references to ratings in their regulations.

Stocks on the Egyptian exchange in Cairo are set to resume trading tomorrow for the first time since January 27th.

Iceland has begun conducting a feasibility study into building an 1170 Km (727 mile) power cable to Scotland to transport up to 18 terawatt-hours of geothermal and hydro power. The cable would be the longest ever built. The country presently generates the bulk of its electricity from hydropower (glaciers) and geothermal (volcanoes) sources, and is hoping to export this low cost source of power. Alcoa and other metal manufacturers have already set up plants in Iceland to take advantage of the cheap power, and Alcoa announced that it plans to build another geothermal-powered smelter.

Support has been building to allow states to file for bankruptcy as a way to escape their unfunded pension obligations. If the Federal government picks up the obligations, will the states actually learn to live within their means?

Asian markets were mixed last night as concerns about rapidly rising food and energy prices pressured some markets. Singapore, Thailand, Australia, and South Korean markets were all down while Japan, Hong Kong, and Chinese markets rose. European markets are strong this morning.

The King’s Speech won top honors at the Academy Awards last night. The film grossed $237 million worldwide after a $15 million total production cost. For 2010 industry revenues in the US and Canada fell slightly on a 6% attendance drop but higher ticket prices for 3-D films. So far this year sales are down 21% from 2010 and attendance is down 22%.

Frank Buckles, who was the last known surviving American Veteran from World War I died yesterday at 110.

Have a great Monday


Feb 25, 2011

Bad News is Good News

February 25, 2011

Evidently we have entered the point in the cycle where bad news is good news. The bad news this morning is that the revised GDP for Q4 2010 came in at 2.8% vs. expectations of 3.3% and an initial reading of 3.2%. While still enough growth to slowly reduce unemployment in private payrolls, the reduction is being attributed to lower levels of state and local spending. The reduction in state and local spending is going to put a damper on employment growth. Why is this good news? The markets are up on the data as it decreases the likelihood of the Fed cutting back on QE2.

Violence in Libya is escalating as protestors have begun utilizing weapons and tanks confiscated from the military. Qaddafi has pulled his troops back to Tripoli to bolster his defense of the capital. As if he didn’t have enough troubles, Switzerland levied a huge blow to the troubled leader by freezing all of his foreign assets.

The US Air Force awarded a $35 billion tanker contract to Boeing after the close yesterday. Boeing has estimated this will save/create 50K jobs over the course of the project.

The White House has floated a trial balloon to the markets, saying they might tap the Strategic Petroleum Reserve to counter rising crude prices. As a candidate the President was very vocal in his support of using the SPR to dampen the rise in oil prices. Across the country gas prices are soaring, and here in California the price of gasoline is approaching $4.00 per gallon. A station in the San Gabriel Valley reportedly has the highest prices in the country at $4.80.

Higher oil prices could pressure a fragile US economy. According to Bloomberg, a $.10 per gallon increase in gasoline costs the US economy $10 billion.

The focus on mass transit in the US is primarily folly in my view. If you consider Europe, which has 288 people per square mile, mass transit works because of the population density. The US has a population density of 87 people per square mile, which means that high speed rail and other mass transit proposals would also require a mass migration back to urban areas.

The US government is moving closer to a shutdown as the continuing resolution currently in place expires March 4th. Republicans want spending cuts, Democrats are asking for more time.

Japan’s Government Pension Investment Fund set it expects to become a net seller of bonds. The fund presently manages $1.4 trillion in assets. The proceeds will be used to pay retirees in Japan, which has the highest rate of aging in the world. Next year the first Japanese baby boomers will begin retiring.

Treasury Secretary Geithner told the Senate Finance Committee that Congress should revisit the rules that allow businesses a choice to report as either an S corp, C corp, or partnership. This could be harmful to small businesses, law firms, and investment partnerships.

GM posted its largest annual profit since 1999, $4.7 billion last year. The stock was down as this was less than analyst expectations.

Google demonstrating its first Robotic Car. The car utilizes high speed cameras, CPU’s and radar to drive itself. The passengers just enter destination data and sit back and surf the net, watch a movie, or enjoy the scenery.

Risk-margin debt now sits at 3-year highs. It is ironic that market participants, mainly hedge funds, are increasing their risk and market exposure after the market has moved 100% off its bottom.

A recent Tax Foundation study showed that New Jersey residents have the highest state and local tax burden in the nation at 12.2% of income. The average state burden is 9.9%.

APAC markets were strong last night, and EMEA markets are very robust today.

Have a great weekend


Feb 23, 2011

Risk on, Risk off

February 23, 2011

Oil soared over 6% yesterday on concerns about growing tensions in the Middle East, and is bid up again this morning after a Libyan oil company producing 100K barrels of oil per day was shut down . Violence in Libya spooked the markets as Muammar Qadafi vowed to fight the rebellion until “his last drop of blood.” Analysts are estimating that oil could move to $220 per barrel should production become constrained or halted by the violence. Libya is the 17th largest oil producer in the world, but concerns about unrest in Iran and potentially Saudi Arabia are also contributing to the oil market concerns.

Equity markets are bid up today after suffering their largest one-day correction since August yesterday. Economic data for the past two days has been in line with expectations as the S&P Case/Shiller Home Price Index fell by 4% in the 4th quarter vs. an expected decline of 3.4%. The Richmond Fed Manufacturing Index for February came in at 25 vs. expectations of 18, and Consumer Confidence came in ahead of expectations at 70.4 vs. 65.5. Bonds actually strengthened in yesterday’s trading as the 10 year yield moved under 3.5%. Given the “risk off” nature of yesterday’s trading, it was surprising to see the dollar didn’t benefit, which could reflect global concerns about the dollar’s status as a safe haven.

The chart below, courtesy of Kimble Charting Solutions, is a composite creating by dividing the Emerging Markets ETF (EEM) by the EFA ETF (EFA). When emerging markets are outperforming, the chart is rising, when they are underperforming, the chart is falling. Kimble’s conclusion is that risk is greater when this index turns down.

Moody’s downgraded its outlook for Japan’s government debt from stable to negative. Concerns about economic and fiscal policies may not be strong enough to achieve the deficit reduction targets outlined by the government.

Petrobras, the Brazilian oil company, is now operating all of its refineries at maximum capacity. CEO Jose Sergio Gabrielli said “not investing in refineries at this moment is long-term suicide.”

According to the Economist, a $1.8 billion ship order by Maersk for 10 new ships will change the container-shipping industry’s economics. They will be the largest container ships in the world, each carrying 2500 more boxes than any ship in service. Additionally, the new vehicles will use 50% less fuel per container than present vessels.

Last week the ECB disclosed it had lent 16 billion euro through its emergency marginal-lending facility without much explanation. Now is has been disclosed that Anglo Irish Bank and Irish Nationwide Building Society moved collateral to the ECB’ overnight-lending program from longer-term facilities. The move will allow the banks to sell assets on short notice. Keep an eye on this one.

APAC markets were weak last night after the weak showing by the US markets yesterday. European markets are down this morning as well.

Have a great day


Feb 18, 2011

Inflation Worries Continue

February 18, 2011

There has been a slew of economic data over the past couple of days. Yesterday CPI and Core CPI both came in ahead of expectations at the highest levels since October 2009. Jobless claims were higher than expectations at 410K, up from 385K the prior week. I would expect that measure to continue bouncing around, with some downward bias as the hiring market continues to improve. The Index of Leading Economic Indicators and the Philadelphia Fed Survey were both better than expected. The LEI has improved for 21 of the past 22 months.

Inflation continues to be a concern around the world (except at the Fed) as the Chinese Central Bank announced they would raise the reserve ratio by 50bps beginning Feb 24th after just raising rates 10 days ago. An official with the European Central Bank said the bank may need to raise rates as well to combat inflation. German producer prices rose to their highest level in over two years on rising energy costs. Last night Chile raised interest rates by 25bps to 3.5%, the highest rate since March 2009. Talk about fighting the Fed!

In the US corporations are caught in the middle of the inflation battle. They are seeing increased production cost pressures, yet due to high domestic unemployment they have so far been unable to successfully pass on the price increases. This should put pressure on the very high margins companies have been experiencing over the past few years.

Earlier in the week Apple announced plans to restrict the access publishers have to consumers initiating subscriptions via Apple products through their Apps Store. Publishers are howling about the access restrictions and Apple’s plan to take a 30% cut of most subscriptions. The Justice Department has announced plans to review the proposal.

Unrest continues to spread throughout the Middle East as Iran sends two warships towards the Suez Canal. Credit default swaps in Bahrain climbed to 292 and yields on the country’s 10 year debt rose to a record 6.56% after anti-government protesters were attacked by government forces and at least four died.

The ECB announced that banks borrowed more than 15.8 billion Euro from its emergency marginal-lending facility on Wednesday, the highest level in 19 months. They offered no explanation as to why the facility borrowing surged. Typically this would indicate a liquidity problem.

Nearly $16 billion flowed into stock mutual funds in January, the highest level since February 2006.

Over 25K workers in Madison Wisconsin turned out to protest at the Capitol-not higher food prices, but a potential restriction on collective bargaining rights for public employees. The President has chimed in on the side of unions, Speaker Boehner on the side of tax payers. The fight will be a key component for many states as they wrestle with enormous pension deficits. Cuts to state spending will impact a fragile job market as states primarily provide services (i.e. jobs), yet will improve the tax burden on the private sector. There will be no easy solution.

The markets are closed for President’s Day on Monday. Have a great three-day weekend.


Feb 16, 2011

February 16, 2011

Equity markets are opening with a positive bid this morning after a mixed bag of economic data and more takeout activity. On the economic front, housing starts were up 14.6% vs. expectations of a 2% increase, fueling the homebuilders. Building permits declined by 10%. Producer Prices (PPI) increased by 3.6%, slightly ahead of expectations, while the same measure ex-food and energy jumped by 1.6% vs. expectations of a 1.2% increase. Industrial production declined by 0.1% vs. an expected increase of 0.5%, and capacity utilization (chart below) was roughly in-line with expectations at 76.1%.

Deficit hawks have subjected the President’s budget proposal to harsh criticism due to its perceived inattention to the budget deficit. I thought the numbers which highlighted the rising cost of the deficit were that the 2006 budget deficit was $250 billion. This year, fiscal 2011, the overall interest cost is expected to be $225 billion. That number will rise if rates continue their ascent.

Bloomberg reported that S&P 500 companies have been drawing down their cash from an all-time high of $2.46 trillion to $2.4 trillion, the first decline since the middle of 2009.

Merrill Lynch released their fund manager survey earlier this week, and managers are the most bullish in the history of the survey. I haven’t seen any correlation to that study and the markets, but my guess would be that is a contrary indicator. Managers were extremely bullish on technology stocks (a record 52% exposure), with their biggest concern being inflation. Managers also said that they have their highest risk appetite since Jan ’06. Hedge fund net exposure rose to 39%, the highest level since July ’07. Emerging market exposure dropped from 43% to 5%, commodity exposure rose to a at record overweight of 28%, and bond exposure dropped to record low.

The UN warned yesterday that soaring food prices (up 15% since October) could touch off riots in Latin America and Africa. World Bank President Robert Zoellick said the “cost of food and agricultural commodities is climbing to dangerous levels and threaten tens of millions of poor people.”

Sanofi-Aventis agreed to takeover Genzyme for $20 billion in cash. Family Dollar is up over 20% as the Trian Group has offered to acquire Family Dollar for up to $7.6 billion. Competitor Dollar General is up over 10% on the news.

Bernie Madoff told the NY Times that banks and hedge funds he did business with adopted “willful blindness” to his scheme. He insisted that they “had to know” he was doing something wrong, but didn’t want to admit it.

APAC stocks were mixed last night as the Nikkei and Shanghai both rose but the Hang Seng and Kospi were both down.

Have a great day


Feb 14, 2011

Day 1, Post Mubarak

February 14, 2011

Equity markets are opening flat this morning with the macro news being somewhat quiet this morning. Bond and commodity markets are also flat this morning.

Credit Suisse announced a direct, $6.2 billion investment from Qatar Holding and Olayan Group in the form of convertible bonds. Emergency Medical Services’ stock is down 10% after agreeing to be acquired by Clayton Dubilier for $64 per share in cash-a 9% discount from Friday’s $70.66 per share close. Onex is the company’s largest shareholder.

The news out of Egypt should pale in comparison to the riot coverage of the past few weeks, however, this will be when the real work begins. The country is being run by the military for now, and the constitution has been suspended and the parliament, dissolved. The new government is focusing on economic stimulus measures to expand employment and head off further turmoil. The anarchists may be patient for a short while, but will quickly expect improved conditions and lower food prices, which may lead to further unrest.

President Obama delivered his 2012 budget proposal to Congress this morning. Although this is an initial proposal and there will be much debate going forward, the initial view looks pretty fat at $3.7 trillion. In typical DC fashion the “savings” are built into the long term, not the near term. The elephant in the room, entitlement spending, wasn’t addressed. The deficit as a percent of GDP now sits at 11%, the highest level since the end of World War 2. By comparison, Germany’s deficit is 3.7% of GDP, 2.9% for Canada, and 8.9% for Japan.

A severe drought in China has put even more pressure on wheat prices. The country’s drought-control office (you read that right) called conditions across northern China’s wheat belt “grim”. The country is looking at emergency measures to increase irrigation.

APAC markets were up strong last night on the back of Mubarak’s resignation The Nikkei, Kospi, Hang Seng, Taiex, and Shanghai were all up over 1% last night.

Have a great Monday


Feb 11, 2011

February 11, 2011

Equity markets are opening weak today while the bond market and the dollar get a bid. Global concerns regarding inflation and political unrest in Egypt, Tunisia, Bolivia, etc, are helping to migrate assets towards the more traditional safe haven US investments. The University of Michigan Consumer Confidence Index was in-line this morning at 75.1, up from 74.2 last month.

The economics in the oil sector may start changing as supplies rise while demand moderates. Oil storage is now at record levels in the US, and a new pipeline opened from Canada last week is now sending 150K barrels per day into Oklahoma . Oil has backed off over the past week as concerns over demand emerge with APAC and some EMEA economies focusing on slowing their rampant inflation.

Washingtonites are discussing major changes to the domestic mortgage market, questioning the role of government in the market. Today 9 out of 10 loans are backed by Freddie and Fannie, and the proposals contemplate multiple options in the short term to reduce the impact of the GSE’s. Reduction of the maximum loan the GSE’s will back, requiring a 10% down payment, and higher fees are among the short term proposals being discussed. The longer term proposals include eliminating the firms altogether by having the government exiting the market completely; having the FHA be the only government entity in the mortgage business for low-income borrowers; and leaving the market to private insurers with a government backstop for market disasters (is that really leaving?).

China has been slowly relaxing their currency controls in preparation for the day when the Yuan becomes a global currency. The country has been allowing US companies to finance projects in China by issuing yuan-denominated bonds in Hong Kong. Trade between some countries is now being settled in Yuan.

Weak earnings were reported by Cisco Systems, Blue Nile, Akamai, with stronger earnings from Bunge, Stamps.com, and Wynn Resorts.

Speaking of mortgages, the average rate on a 30-year fixed has moved above 5% for the first time since April. The rate hasn’t been consistently above 5% since early 2008.

One of the longest running romances is back on track as Ken and Barbie will be reunited by Mattel on Valentine’s Day. The couple had been together for 43 years before breaking up in 2004, reportedly over a disagreement related to their roles in the Toy Story series.

Have a great weekend


Feb 9, 2011


February 9, 2011

Equity futures are slightly down this morning in spite of robust earnings as concerns about inflation roll through the global markets. Emerging markets fell for a 5th straight day as wheat hit its highest level since before the financial crisis. The S&P 500 closed yesterday at its highest level since June 2008 on optimism that the recovery will be sustainable. The 10 year treasury continues to weaken, rising to 3.72%. Commodities are flat today.

The US Labor Department announced today that there is a widening gap between the creation of jobs and hiring. The number of private-sector jobs being advertised has increased since 2009, but the rate of hiring fell off in late 2010. As of December, there were nearly five job seekers per advertised opening.

The DOT announced today that the “unintended acceleration” problem facing Toyota was not an electrical problem. The report tested 3000 vehicles, but could not replicate the issue. The conclusion was that possibly floor mats became bunched up and kept the pedal from coming back up when pressure was reduced by the driver. That was an expensive floor mat for Toyota, who recalled millions of vehicles and saw its reputation damaged and its market position in the US drop from #2 to #3.

UK food prices rose at the fastest pace in 19 months, and China raised rates again, the third time since October, putting pressure on copper and other industrial commodities. The rate was raised from 5.81% to 6.06%. Chairman Bernanke will be on the defensive again today as speaks in Washington, however, this time the pressure is being applied by his own team as two Fed Presidents call for higher rates, saying the Fed is now compliant with Congress in sustaining the budget crisis.

Deutsche Bank is reporting that declining rental vacancies will drive up the housing payment component of core CPI this year, driving the measure up to over 2% vs. 0.8% in 2010. Rents account for 40% of the core measure of CPI. The vacancy rate dropped in Dec 2010 by a record 0.9% to 9.4%.

Strong earnings last night and this morning were reported by Disney, Northrop Grumman, and Coca Cola. Disney reported strength at their theme parks and in advertising sales at both ABC and ESPN. The stock is approaching its all-time high set on May 3, 2000.

Danaher agreed to acquired Beckman Coulter yesterday in a $7 billion transaction valuing Beckman at $83.50 per share, or 8.6x the past 12 months’ EBITDA. That valuation is the cheapest deal on record for a medical-instruments maker. This is the first deal in the space over $1 billion that has been valued at less than 10x EBITDA.

The Pirates are back! Not in Pittsburgh, but in the high seas. An 1100 foot supertanker carrying almost 2 million barrels Kuwaiti oil to the US was high jacked this morning off the coast of Oman. This is the first high jacking of a large vessel since April. During 2010 pirates hijacked 53 ships and 1181 crew members, primarily off the coast of Somalia. The average ransom payment rose to $5.4 million last year vs. $150K in 2005. The value of the oil on the ship taken today is roughly $168 million.

Asian markets were weak last night in response to China’s rate increase. European markets are down slightly in afternoon trading. Investors are expecting spending cuts of $24 billion in Brazil, and rates declined in response, falling 17 bps to 12.68% on the 2-year note.

Have a great day


Feb 7, 2011

The Pack is Back

February 7, 2011

Good morning. The biggest show on television, Super Bowl XLV, survived the Texas ice storm, and the Steelers and new World Champion Packers put on a great show. I thought the commercials were a complete disappointment, and that Christina Aguilera’s performance was epic, right up to the point where she skipped a line. The half-time show was fabulous.

Equities are getting a bid to open the week after Ford announced plans to add an additional shift to meet increasing demand for new autos. Morgan Stanley upgraded Proctor & Gamble this morning, citing upcoming easy comps after 2+ years of negative growth. Oil is backing off slightly this morning as tensions in Egypt and emerging market growth both appear to be easing. The US bond market continues to fade as the 10 year approaches 3.7%, the highest level since April.

More US companies are exceeding sales forecasts than at any time in the past four years. Over 70% of companies have exceeded sales estimates this quarter, exceeding by an average of 2.2%. Earnings have exceeded estimates for the past seven quarters, but sales have trailed over the past three years. Street estimates are expect revenues for the S&P 500 to increase by 7.5%, the best since 2007 after a 13% decline from Nov ’08 to Oct ’09.

Bloomberg is reporting that last month was the worst January for precious metal prices in over 20 years. Despite that pull back, bullish bets on gold via ETF products still exceed 2.1 metric tons, worth $88 billion, a reduction of 4.1% since the beginning of the year.

Nasdaq OMX acknowledged that their system had been breached by hackers, but insist that no trades were impacted. Both the FBI and the Justice Department are investigating the breach.

AOL announced plans to buy Huffington Post for $300 million in an effort to stimulate their moribund online presence.

Showing an incredible lack of tact in criticizing those who saved the company, Chrysler CEO Sergio Marchionne said that Chrysler and Fiat should eventually be combined, but “I want to pack back the shyster loans first.” Wow!

APAC markets were mixed last night, with the Nikkei rising 0.5% but the Hang Seng falling 1.5%. Markets in China, Taiwan and Vietnam are still closed for the Lunar New Year. European markets are up today.

Have a great day


Feb 4, 2011

Big Drop in Unemployment Rate

February 4, 2011

Equity markets are opening with a slight positive bid this morning after a confusing employment report this morning. The unemployment rate unexpectedly fell from 9.4% to 9.0%, yet nonfarm payrolls increased by only 36K versus an expected increase of 146K. Manufacturing payrolls increased by 49K versus an expected increase of 10K, but private payrolls overall only increased by 50K versus and expected increase of 145K. Weather certainly had some impact on these reports, the revisions next month will be interesting. The drop in the unemployment rate can be directly attributed to a magical BLS adjustment to the size of the labor force, lowering it by 504K.

The retail comp report for January was very strong yesterday in spite of the weather. A list of 25 specialty retailers that I track posted an increase of 2.6% vs. a consensus of 2.1%, with 16 of the 26 exceeding estimates.

Chairman Bernanke said yesterday that the US central bank’s expansionist monetary policy cannot be blamed for a rapid increase in food costs, which has triggered unrest in many poor countries. He stated those countries have all the tools they need to address excess demand, hinting that they should let their currencies appreciate. In the same speech (I’m not sure why, but I kept finding myself watching the Q&A session) he went way off topic and began lecturing lawmakers on the perils of not raising the debt ceiling. So much for Fed independence.

In an about face from comments made two days ago, ECB President Trichet said that a rate increase in the short term is unlikely and that increasing commodity prices have not resulted in significant, lasting inflation.

The Economist is reporting that after analyzing CBO and Federal Reserve data it is apparent that the US is on track towards full employment. “With QE2 in place, American unemployment is likely to be between 6% and 7% in 2012.”

A lawsuit was filed claiming that the Bank of New York Mellon overcharged Virginia government pension funds by $20 million + by manipulating F-X trades.

BP announced they would be selling their California based refining and retail assets which were formerly owned by ARCO. Chevron is the only other major refiner in California, but may be precluded from buying the Carson based refinery due to antitrust concerns. California typically has higher priced gas than the rest of the country due to a required special blend that is only made by local refineries (and of course higher per gallon taxes).

Have a great Super Bowl weekend.


Feb 2, 2011

Groundhog Day

Feb 2, 2011

Happy Groundhog Day. The big news from Gobbler’s Knob today is that Punxsutawney Phil (shown below) didn’t see his shadow this morning, and predicted we’ll have an early spring.

Equity markets are bid down this morning after yesterday’s snap back rally. On the economic front yesterday’s ISM (see chart below, courtesy Briefing.com) was robust, posting its highest result since May 2004 at 60.8, ahead of the consensus estimate of 58.4. This morning the ADP employment report showed a gain of 187K jobs, ahead of the 140K estimate and below last months’ 247K (which was revised down by 50K). As I mentioned Monday, the big employment reports from the labor Department are released Friday, with expectations for an increase in nonfarm payrolls of 150K and a drop in the unemployment rate to 9.5%. Bloomberg reported that during the recession we lost 2.5 million manufacturing jobs, and have only rehired 140K.

Protests in Egypt continue, with pro-Mubarak demonstrators now taking to the street, including police. The violence appears to be getting worse based upon television reports. Mr. Mubarak has vowed not to seek reelection. The US, long an ally and supporter of Mubarak, has asked for him to create an orderly transition.

The NY Times is predicting that China’s policymakers are still concerned about accelerating inflation and are likely to raise interest rates again, soon.

The EU is prepared to rein in commodity speculation to battle “unprecedented” price volatility. “The volatility of prices of agricultural commodities has recently increased to unprecedented levels. This is the case both on EU and international markets, and on spot and futures markets” stated a report from the commission.

Wall Street is back! The Journal reported that 2010 total street comp at publicly traded Wall Street banks and brokerages topped $135 billion, a new record, and up 5.7% from 2009. At 25 large firms revenues rose to $417 billion, an all-time high. Just think, most of these companies would have been out of business without trillions in taxpayer bailouts.

Brent crude now sits over $100 per barrel, while West Texas Intermediate (the primary US stock) is now at $91. Typically these blends tend to trade together, and most traders are anticipating a rise in the WTI to approach the levels of Brent.

Asian markets were strong last night, driven by optimism after the bounce in the US markets. Automotive and tech stocks were strong in Japan.

Have a great day.