More Mortgage Bond Downgrades Ahead? [New York Times DealBook] "Two weeks ago, Standard & Poor's put out a news release warning that it was poised to lower its ratings on almost 1,200 complex mortgage securities. So what? Isn't that dog-bites-man at this point? Well, two-thirds of these mortgage bonds were rated only last year, long after the financial crisis. And S.&P. was supposed to have taken the distress of the housing crash and credit crisis into account when it assessed them. But in December, the ratings agency acknowledged that it had made methodological mistakes, including not understanding who would get interest payments when."
China Joins Stealth Club [Wall Street Journal] "A Chinese newspaper published the first state media report Wednesday about pictures circulating online that appear to show a prototype of China's first stealth fighter jet making high-speed taxi tests. The English-language report in the Global Times didn't confirm the existence of the prototype, or the authenticity of the photographs. It quoted one Chinese defense analyst playing up its significance, and another dismissing concerns over China's military buildup."
More Troops Heading to Afghanistan [Wall Street Journal] "Defense Secretary Robert Gates has decided to send an additional 1,400 Marine combat forces to Afghanistan, officials said, in a surprise move ahead of the spring fighting season to try to cement tentative security gains before White House-mandated troop reductions begin in July. The Marine battalion could start arriving on the ground as early as mid-January. The forces would mostly be deployed in the south, around Kandahar, where the U.S. has concentrated troops over the past several months."
Rules Overhaul in Newly Republican House [New York Times] "Jubilant Republicans took control of the House on Wednesday and installed Representative John A. Boehner of Ohio as the new speaker before pushing through an overhaul of House rules intended to expedite their drive to dismantle the new health care law, cut federal spending and provide the tax cuts they see as a way to jump-start the economy."
World Food Prices in 'Alarming' Rise [Financial Times] "Food prices hit a record high last month, surpassing the levels seen during the 2007-08 crisis, the UN's Food and Agriculture Organisation said on Wednesday. The Rome-based organisation said the increase did not constitute a crisis. But Abdolreza Abbassian, senior economist at the FAO, acknowledged that the situation was 'alarming'. He added: 'It will be foolish to assume this is the peak.'
Who's Afraid of a Little Inflation? [Reuters] "Worried about inflation? Neither Federal Reserve Chairman Ben Bernanke nor all those traders currently dumping gold seem to be, but that may be the best time to make sure you're covered if prices go haywire. Some people think the combination of an expansive Fed policy and an expansive fiscal policy make that inevitable. Oh, and as I'm writing this, the United Nations is announcing that world food prices are at an all-time high."
Bad News is Good News for Bond Market [Bloomberg] "Two-year Treasury notes rose, snapping three days of losses, as investors and economists said the recovery in the U.S. job market hasn't gone far enough for the Federal Reserve to consider raising interest rates."
Wall Streeters Rejoice: Your Watering Hole is Safe [Wall Street Journal] "The owner of Elaine's restaurant who died last month has left her Manhattan celebrity hangout to her longtime manager. The New York Times reports that according to her will, Elaine Kaufman also left two five-story buildings to her manager, Diane Becker. The restaurant occupies the first floor of the buildings."