Monday, March 28, 2011

Libya – rebels make progress – rebels recaptured control of the key Libyan city of Ajdabiya and
also have taken back the critical oil towns of Brega and Ras Lanuf. The progress was only possible
thanks to the assistance of coalition air strikes. On Mon there were reports that rebels had captured
Qadaffi’s hometown of Sirte. Reuters
Obama will address the US nation Mon night to discuss the operations ongoing in Libya
Bahrain opposition weakened; ruling government seen as less vulnerable – the WSJ notes that
the momentum of the opposition forces has weakened materially of late. – WSJ – the probability of a
tail risk event in MENA appears to have come down. One would expect the price of oil to come down as
the risk premium is removed with the more positive news flow…but oil hasn’t budged.

The fact that oil very close to its recent highs probably indicates:
1) The oil market does not believe risks have meaningfully dissipated,
2) The risk premium is being replaced with a better than expected growth outlook (this would be
somewhat contrary to most indicators over the past few weeks)

US Government shutdown – heading into the latest budget deadline of Apr 8 (which both Dems
and Reps have promised will be the last temporary resolution), there are more articles cropping up
discussing how a shutdown this time around is now increasingly likely. NYT/Washington Post
Germany – Merkel suffers setback – her CDU looks like it lost a key regional election on Sunday;
Merkel’s coalition got only 44% of the vote, losing an area it had ruled over for the last 60 years. The
center-left opposition, composed of the Greens and their Social Democratic Party allies, won over 47%
of the vote. – WSJ – Oh Nein!
Debt ceiling - The Treasury Department this week is likely to issue an updated report on when it
expects the ceiling on the federal debt will have to be increased; its most recent estimate was that the
borrowing limit would be reached between April 15 and the end of May – WSJ