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By Robert Gates
Tough. Indefatigable. Patient. Smart. Knowledgeable. Superior political instincts. Funny. Loyal team player. Finds opportunities in crises and challenges. Skilled global advocate for American interests and American values. That is my job description for U.S. Secretary of State. Fortunately, the job has been filled for the past three-plus years by someone who has all those qualities: Hillary Rodham Clinton.
In a world that is ever more complex, turbulent and dangerous, Secretary Clinton, 64, has made a singular contribution to strengthening this country's relationships with allies, partners and friends; rallying other countries to join us in dealing with challenges to the global order, from Libya and Iran to the South China Sea; and reaching out to people in scores of countries to demonstrate that America cares about them.
She has developed, for the first time, long-range, comprehensive strategies for diplomacy and development that will strengthen the critical civilian contribution to America's national security abroad. We worked closely together to integrate and coordinate the efforts of the departments of State and Defense.
Equally important, Secretary Clinton has been thoughtful and tough-minded about where and how the U.S. should engage its prestige, its resources and its men and women in the field, both civilian and military. She is an idealistic realist and a superb Secretary of State and has well served the President and our country.
Gates is a former Defense Secretary of the U.S. and current chancellor of the College of William and Mary
The Philippine government said its newest warship is locked in a standoff with two Chinese surveillance vessels in a fresh dispute over fishing rights in the resource-rich South China Sea, potentially escalating an already-tense security environment in the contested region.
Wednesday afternoon, the Philippines said it had agreed with China to diplomatically resolve the dispute, according to the Associated Press.
European Pressphoto Agency The BRP Gregorio del Pilar, the Philippines' first Hamilton-class warship, docks at the Port of Manila in 2011.
Philippine Foreign Secretary Albert Del Rosario said he met with Chinese Ambassador Ma Keqing and both reaffirmed their governments' positions that the Scarborough Shoal where the ships are facing off was part of their own country's territory and neither was ready to stand down.
Mr. del Rosario said that despite the impasse, "we resolved to seek a diplomatic solution to the issue."
"The ambassador of China took the view that they have full sovereignty over the Scarborough Shoal," Mr. del Rosario told reporters after the meeting at his Manila office, according to AP. "So, in a sense we had reached an impasse in terms of our positions. And so there's a real challenge for us in terms of our agreement to keep on talking today."
The two navies engaged each other after the Philippine vessel—a former Coast Guard cutter provided by the U.S. Navy—attempted to arrest the crew of several Chinese fishing boats who were anchored at Scarborough Shoal, off the Philippines' northwest coast but which is also claimed by China. The Philippine government said Chinese surveillance vessels intervened to prevent any arrests, leading to the standoff, and that Filipino sailors who inspected the Chinese vessels on Tuesday found illegally collected corals and live sharks in one of the fishing boats.
China is locked in a series of overlapping territorial disputes with the Philippines, Vietnam, Malaysia, Taiwan and Brunei, who claim either all or part of the South China Sea as their sovereign territory. The dispute has flared in recent months as the region's potential energy reserves begin to draw growing attention.
Over the past year, Vietnam and the Philippines have accused Chinese navy craft of harassing oil-exploration vessels operating in their United Nations-defined maritime economic zones. Beijing has denied that, but has warned Vietnam and the Philippines from prospecting in the area without its permission.
"This is part of larger pattern. These new standoffs are coming to light only because we are better positioned to stand up to China now," said a Philippine military official who asked not to be identified.
China's foreign ministry in Beijing couldn't immediately be reached for comment. The Chinese Embassy in Manila released a statement earlier in the day saying that 12 fishing boats had sought shelter from a storm in a lagoon. "Two Chinese marine surveillance ships are in this area fulfilling the duties of safeguarding Chinese maritime rights and interests," the statement said, adding that the shoal "is an integral part of the Chinese territory and the waters around the traditional fishing area for Chinese fishermen."
Reuters Vietnamese navy personnel patrolled on Truong Sa islands, also known as the Spratly islands, on April 13, 2010.
The U.S., too, has angered China in stating that the South China Sea, which carries about half the world's trade, remains free for navigation. Washington has stepped up military and diplomatic ties with Hanoi and Manila, providing the refurbished cutter, now named the Gregorio del Pilar, to the Philippine navy last year and pledging to deliver another craft. Next week, the U.S. and Philippine militaries will resume an annual series of military exercises, including drills off the Philippines' western coast.
Those exercises appear likely to further antagonize Beijing. Already this week, a hawkish Chinese general has warned that the Philippines is facing its "last chance" to peacefully resolve sovereignty disputes over the South China Sea. Maj. Gen. Luo Yuan, writing in the Global Times newspaper, accused the Philippines of hijacking a recent Southeast Asian summit in order to further pressure China over the South China Sea, and warned that Manila's alleged provocations would fail.
"The biggest miscalculation of the Philippines is that it has misestimated the strength and willpower of China to defends its territorial integrity," Gen. Luo wrote.
While not necessarily reflecting the Chinese governments views, Gen. Luo's comments show signs of growing impatience with the Philippines after Manila adopted a more aggressive stance towards its South China Sea claims under President Benigno Aquino III, who was elected in 2010 and has since sought to revive the Philippines' sometimes fragile ties to the U.S.
Diplomats say the administration of former President Gloria Macapagal Arroyo was much more wary of antagonizing Beijing.
The Philippines is also working on developing a closer relationship with Vietnam.
Previously there was relatively little contact between the two countries, but now there is a growing military-to-military relationship that might soon result in the two countries holding formal exercises, or at least joint search-and-rescue training, diplomats say.
In addition, the Philippines has proposed holding soccer matches between Filipino and Vietnamese troops on some of the contested atolls in the South China Sea. Philippine Admiral Alexander Pama Tuesday told reporters the Philippines has suggested sending some sailors and troops to Vietnamese-occupied islands, while Vietnamese troops could visit Philippine-held islands. Adm. Pama said it could be called the "fun games," and stressed there would be no firearms training involved.
Source:The Wall Street Journal
Mrs Clinton has also said Syrians in the military who still support President Bashar Assad should turn against him.
Speaking at a news conference in Morocco yesterday she added: 'The longer you support the regime's campaign of violence against your brothers and sisters, the more it will stain your honour.
'If you refuse, however, to prop up the regime or take part in attacks on your fellow citizens, your countrymen and women will hail you as heroes.'
The statement came as 45 Syrian civilians and soldiers were killed yesterday in fighting over Syria's future that coincided with the vote on a new constitution that could keep President Bashar Assad in power until 2028.
Source: Daily Mail
By the CNN Wire Staff
updated 4:58 AM EST, Tue February 7, 2012
"Parliament is ready to stop oil exports to Europe," Iranian parliament speaker Ali Larijani said, according to the Fars News Agency.
Another member of parliament agreed, citing the demands of students who demonstrated on Monday.
"Parliament should take a revolutionary action and ban oil sales to Europe," said Mohammad Javad Karimi Ghodousi.
A military official said the sanctions don't really matter.
"Western sanctions are doomed (to failure) from the very outset and useless, as they are not economical in nature and their essence is official and bureaucratic," Brig. Gen. Mohammad Reza Naqdi, commander of Iran's Basij force, said.
The sanctions put in place last month are meant to force Iran to provide more information on its nuclear program by shutting off its sale of crude oil, which generates half of Iran's revenue.
The West believes Tehran may be trying to develop nuclear weapons, but Iran has long maintained that its nuclear program is solely for civilian energy production.
Iran exports 2.2 million barrels of oil a day, 18% of which is bound for European markets, according to the U.S. Energy Information Administration. The world consumes about 89 million barrels of oil per day.
Final details of the E.U. sanctions are still being worked out, and it's expected that they will have a grace period of up to eight months, an EU diplomat told CNN last month
The grace period will allow European refiners to find new suppliers and Iran to find new buyers.
Analysts have said that while the new sanctions are the toughest ever imposed, they still contain many loopholes.
Iran is expected to still be able to sell its oil to places like China, India and other Asian countries, but perhaps at a discount of 10% to 15%. About 35% of Iran's oil exports currently go to China and India.
Western leaders have been walking a fine line with Iran, working to come up with a plan that squeezes the country's finances yet doesn't result in a loss of Iranian oil exports, which could send crude and gasoline prices skyrocketing.
But Naqdi argues that the sanctions will do exactly that.
"Iran can still sell the 82% of its oil and the rise in oil prices caused by the sanctions will more than make up for the remaining 18% that was previously sold to the Europeans, which Tehran can keep," Fars quoted him as saying.
In late December, Iran threatened to block the Strait of Hormuz if sanctions were imposed on its oil exports.
The strait is a critical shipping lane, through which 17 million barrels of oil passed per day in 2011, according to the U.S. Energy Information Agency.
The U.S. closed its embassy in Damascus on Monday, citing rising violence, a day before Moscow was due to dispatch high-level envoys to Syria for talks with one of the Kremlin's last allies in the region, besieged President Bashar al-Assad.
The Obama administration shut the U.S. embassy in Syria Monday due to rising violence in the country that U.S. officials said placed American diplomats in Damascus at increasing risk. Jerry Seib has details on Lunch Break.
WSJ's Charles Levinson reports pressure is mounting to force Syrian President Bashar al-Assad from office. U.S. Secretary of State Hillary Clinton is calling on an international coalition to help drive al-Assad fron office. AP Photo
But with the Syrian army renewing assaults on rebel positions on Monday, there seemed to be little chance that the Russian officials would be able to avert a deepening of the conflict, which the United Nations said had killed 5,400 even before bloodshed reached new levels in recent weeks.
Western leaders stepped up their criticism of the Kremlin, which was joined by China over the weekend in vetoing a draft resolution at the U.N. Security Council that would have called on Mr. Assad to step aside.
At a summit on Monday, French President Nicolas Sarkozy called the failure of the resolution a "scandal." His German colleague, Angela Merkel, denounced the result as "appalling" and warned Russia that it risks being on the wrong side in "a historic situation."
Mr. Sarkozy said he planned to speak by phone later Monday with Russian President Dmitry Medvedev on the issue, but a Kremlin spokeswoman said no call was scheduled.
The European condemnation came one day U.S. Secretary of State Hillary Clinton called the Russia-China veto a "travesty" and said Washington and its allies would seek to work outside the Security Council to ensure political change in Syria. She said the U.S., Europe and some Arab states would establish a "Friends of Syria" network to strengthen Syria's political opposition and increase the Assad regime's diplomatic and economic isolation.
A member of the Free Syrian Army stands guard as anti-Syrian regime protesters hold a demonstration Monday in Idlib province, which borders Turkey.
Mrs. Clinton stressed that this alliance wasn't considering undertaking military action inside Syria.
Moscow denounced the international barbs aimed in its direction. Foreign Minister Sergei Lavrov dismissed them as "on the edge of hysteria," telling Russian news agencies in Moscow that a compromise might have been possible had the Security Council held off on its vote until after the Russian mission to Damascus on Tuesday. "But for somebody, it was more important to have someone else to blame for what's happening," he said.
China rejected accusations that its veto was obstructionist, saying it was forced into staking out that position after some Security Council members pressed for a vote before disagreements had been resolved.
"China does not have selfish desires in the Syria issue," said Foreign Ministry spokesman Liu Weimin during a daily press briefing Monday. "As a responsible large country, China will join together with the international community to continue playing an active and constructive role on the Syria issue."
Mr. Liu didn't offer specifics on how China proposes to end the violence in Syria in the absence of a U.N. resolution.
The Security Council vote was held Saturday, following reports that a Syrian attack in the city of Homs had killed more than 200 people, in one of the conflict's deadliest episodes yet.
On Monday, Syrian forces continued a heavy assault on Homs for the third straight day, with tanks surrounding restive neighborhoods and pounding them with artillery, rockets, mortars and tank shells throughout the day, according to residents reached by phone.
The Syrian Observatory for Human Rights, a U.K.-based opposition group that tabulates casualty reports from across Syria, said at least 23 people had been killed as of early afternoon Monday, and expected that number to rise. At least 10 people were killed in clashes elsewhere in the country, the group said.
Regional Upheaval Track events day by day in the region.
A resident of the city's Inshaat neighborhood said by telephone that helicopter gunships were deployed for the first time Monday in Homs, firing rockets into residential areas. The claim couldn't be verified, but if true would mark a significant and largely expected escalation by President Assad in the wake of the U.N. veto.
"The regime hasn't used artillery and tanks much, and it hasn't used aviation at all, until recently," said a Damascus-based political analyst. "Now its beginning to use heavier weapons to punish whole neighborhoods collectively. This is something new and what happened at the U.N. is providing cover for that."
Mr. Lavrov declined to detail Monday what message he and spy chief Mikhail Fradkov will carry to Damascus on Tuesday, saying only that Moscow will renew its calls for Mr. Assad to "accelerate the reforms that have been announced."
After watching as a number of key clients and allies in the Middle East have fallen victim to revolutions in the Arab Spring, Moscow is reluctant to abandon Mr. Assad, one of its closest and most important partners in the region, diplomats and analysts said. And with Prime Minister Vladimir Putin facing unexpectedly strong opposition at home to his bid to return to the presidency in next month's election, the Kremlin also is looking for ways to demonstrate its toughness on the international stage, these people said.
At the same time, the Kremlin wants to avoid being too closely associated with Mr. Assad if his regime is in its death throes.
Last week, Mr. Lavrov for the first time seemed to distance Moscow from the Assad regime, saying the Kremlin was seeking to defend the principle of non-intervention, not Mr. Assad personally.
But it isn't clear whether Moscow has yet concluded that Mr. Assad is a political goner. In an article in the official Rossiiskaya Gazeta newspaper Monday, Yevgeny Primakov, a former prime minister and Middle East expert who often advises the Kremlin informally on foreign policy issues, wrote that "a significant, if not a majority share of the population is on the side of the Bashar Assad leadership."
The article accused the U.S. of taking advantage of the Arab Spring to "remove undesired Arab regimes" and said ousting the Assad government would lead to "chaos" in the region.
Mr. Assad has been one of Russia's most important weapons customers and Syria is home to a naval facility that is the Kremlin's only major military outpost outside the former Soviet Union.
"We really need to hold onto Syria," Sergei Chemezov, a top arms-industry official and close Putin ally, told the Interfax news agency in late January. "It's a litmus test for all the Arab countries that are still working with us. They're watching us."
Last week, Russian officials said the sanctions against the Moammar Gadhafi government in Libya had cost Moscow $4 billion in arms sales.
Georgy Mirsky, an analyst at the state-run IMEMO think tank in Moscow, said the Kremlin had "miscalculated" in vetoing the resolution Saturday, which already reflected major concessions to Moscow's demands.
"We should have voted for it and declared it a victory for our diplomacy," Mr. Mirsky said, noting that the Kremlin seems focused on "creating the impression among our population that we don't give up our own" ahead of the elections. Kremlin officials deny any domestic-political motivation.
China's veto stands in stark contrast to Beijing's decision last March not to veto a resolution against Libya, which paved the way for the toppling of Moammar Gadhafi's regime.
China's economic interests in Syria are much smaller than in Libya, where it appears to have made a decision to get out of the way of the Security Council vote not to antagonize Libya's likely new leaders and jeopardize Chinese investments there.
Trade between China and Syria was $2.5 billion in 2010, while trade between Libya and China was $6.6 billion, according to Chinese customs data.
China's veto of the Syria resolution on largely ideological grounds suggests growing concern for Beijing over widening resistance toward authoritarian regimes across the Arab world. China was spooked last year by online calls for a "Jasmine Revolution," and has embarked on its most severe crackdown on political dissent in more than decade as a result.
In a commentary Monday, the Communist Party's flagship People's Daily argued the U.N. resolution was illegal. Commentaries in the paper are often a reflection of high-level government thinking, though they are not always an endorsement of policy.
"The United Nations can stop aggression, but it cannot force a country to replace its regime," the commentary read. "As long as there is a 1% hope for peace, we must pay it a 100% effort."
Shortly after the U.S. announcement that it was pulling its ambassador from Damascus, the U.K. Foreign Secretary William Hague said the British ambassador to Syria will be recalled for consultations. "This is a doomed regime as well as a murdering regime," he said. "There is no way it can recover its credibility internationally."
The U.S. ambassador, Robert Ford, will perform his duties from Washington but will focus on working with Syria's political opposition to ensure an eventual political transition inside the Arab country, the State Department said.
"The recent surge in violence, including bombings in Damascus on Dec. 23 and Jan. 6, has raised serious concerns that our embassy is not sufficiently protected from armed attack," the State Department said in a statement Monday.
The State Department said Mr. Ford will work particularly as an interlocutor with President Assad's political opponents."Ambassador Ford will maintain contacts with the Syrian opposition and continue our efforts to support the peaceful political transition which the Syrian people have so bravely sought," the statement added.
The State Department said Ambassador Ford and all remaining American officials safely departed Syria over the weekend.
The career U.S. diplomat had been attacked on at least two occasions by Syrian mobs loyal to President Assad in recent months. The ambassador had also faced a number of death threats, U.S. officials said.
Source:The Wall Street Journal
By the CNN Wire Staff
updated 12:46 PM EST, Mon February 6, 2012
The Obama administration says the U.S. is freezing assets of Iran's government and financial institutions.
An executive order signed Sunday by Obama freezes all assets of the Iranian government and banks held in the United States, according to John Sullivan, a Treasury Department spokesman.
Previously, recipients of Iranian funds covered by U.S. law were required to "reject" such transactions under sanctions first imposed in 1995, according to the Treasury Department.
"I have determined that additional sanctions are warranted, particularly in light of the deceptive practices of the Central Bank of Iran and other Iranian banks to conceal transactions of sanctioned parties, the deficiencies in Iran's anti-money laundering regime and the weaknesses in its implementation, and the continuing and unacceptable risk posed to the international financial system by Iran's activities," Obama said in a statement to Congress released by the White House.
Iran is under intense international pressure over its nuclear program, which the International Atomic Energy Agency has said may be designed to develop a nuclear weapon.
The new sanctions send Iran the message that "it will face ever-increasing economic and diplomatic pressure until it addresses the international community's well-founded and well-documented concerns regarding the nature of its nuclear program," the U.S. Treasury Department said in a fact sheet on the new sanctions.
Even prior to Monday's sanctions, dozens of Iranian companies, financial institutions and individuals were under Western sanctions related to the nuclear program. The United States has repeatedly sanctioned Iranian banks, companies and individuals over the nuclear program, most recently in January.
Also in January, the European Union announced a prohibition on oil imports from Iran and banned trade in petrochemical equipment and technology, diamonds and precious metals with the Middle Eastern state.
U.S. Secretary of State Hillary Rodham Clinton works from a desk inside a C-17 military plane upon her departure from Malta, in the Mediterranean Sea, bound for Tripoli, Libya, Tuesday Oct.18, 2011. Photo: AP / SA
US Secretary of State Hillary Clinton has described as a "travesty" Russia and China's veto of a UN resolution condemning Syria's crackdown against anti-government protesters.
Speaking in Bulgaria, Mrs. Clinton said efforts outside the world body to help Syria's people should be redoubled.
The US, she said, would work with "friends of a democratic Syria" to support opponents of Syria's president.
The vetoing of the resolution drew an angry reaction from around the world.
"What happened yesterday at the United Nations was a travesty," Mrs. Clinton said in strongly worded remarks during a visit to the Bulgarian capital, Sofia.
"Faced with a neutered Security Council, we have to redouble our efforts outside of the United Nations with those allies and partners who support the Syrian people's right to have a better future," she said.
Analysts say Mrs. Clinton appeared to be alluding to the formation of a grouping of nations similar to the Contact Group on Libya. That group - a collection of Arab and other countries - oversaw international help for opponents of former Libyan leader Muammar Gaddafi.
Mrs. Clinton also said the US would work to tighten "regional and national" sanctions against Syria to hamper its ability to use arms against the protesters.
"We will work to expose those who are still funding the regime and sending it weapons to be used against defenseless Syrians, including women and children."
French Foreign Minister Alain Juppe called the Russian-Chinese veto a "moral stain" on the UN. He said Europe would strengthen sanctions against Syria and eventually "the regime will have to realize that it is completely isolated and cannot continue".
At least 28 civilians were killed by security forces across Syria on Sunday, mainly in the central city of Homs, said the London-based campaign group Syrian Observatory for Human Rights. One report quoting the group said an equivalent number of Syrian troops were also killed.
Human rights groups and activists say more than 7,000 people have been killed by Syrian security forces since the uprising began in March.
The UN stopped estimating the death toll in Syria after it passed 5,400 in January, saying it was too difficult to confirm.
The government says at least 2,000 members of the security forces have been killed fighting "armed gangs and terrorists".
'License to kill'
The draft resolution - which had already been watered down in an apparent attempt to overcome Russian objections - was supported by 13 of the 15 members of the UN Security Council, when it was put to a vote on Saturday.
It was the second time in four months that Russia had obstructed a resolution condemning Syria.
Russia's Deputy Foreign Minister Gennady Gatilov said the compromise over the text did not go far enough, saying its authors "did not want to undertake an extra effort and come to a consensus".
China's state news agency Xinhua said the two countries believed more time and patience was needed to solve the crisis in Syria.
The move, however, drew a sharp reaction from Western nations and the Syrian opposition.
The Syrian National Council, the biggest opposition group, said Russia and China were "responsible for the escalating acts of killing", calling the veto "an irresponsible step that is tantamount to a license to kill with impunity".
UK Foreign Secretary William Hague said the two countries were making a "great mistake", accusing them of "turning their backs on the Arab world".
The BBC's Jim Muir in Beirut says the Russians do seem to be feeling the pressure. They are sending their foreign minister, Sergei Lavrov, to talk to Syrian President Bashar al-Assad in Damascus on Tuesday.
Russia would like to help mediate a political solution, but the opposition does not see the Russians as honest brokers, our correspondent says.
The veto coincided with one of the bloodiest days since protests began last March.
Activists circulated a list of 55 names of people killed after Syrian government forces began to bombard Homs on Friday night. Other activists said the toll was more than 200, though the figure cannot be confirmed.
Homs was one of the first cities to join the uprising and has been repeatedly targeted by government forces.
In continuing violence on Sunday, at least two civilians and nine soldiers were killed in clashes in the north-western province of Idlib, opposition groups said.
Casualty figures are hard to verify as most foreign media are barred from Syria.
Violence was also continuing, particularly in the north, where nine security personnel were reported killed in clashes in Idlib province.
The Dow Jones Industrial Average broke through to its highest close since May 2008, back before the Lehman Brothers Holdings Inc. collapse, as investors increasingly put aside fears of economic calamity and focused again on fundamentals.
News of strong job growth, a three-year low in unemployment and other positive developments Friday pushed the Dow ahead 156.82 points, or 1.23%, to 12862.23, its first triple-digit gain since Jan. 3. The blue-chip index would have to rise just 10% to reach its record close of 14164.53, hit Oct. 9, 2007.
The Nasdaq Composite Index, dominated by surging technology stocks, jumped 1.61% to 2905.66, its highest close since December 2000, as hopes spread that global growth would be strong enough to boost demand for technology gear.
Financial and industrial stocks also posted strong gains on those same economic hopes. Utility stocks, whose dividends make them good investments in a weaker economy—and which led the market amid economic doubts late last year—were among Friday's weaklings.
The Dow's surge is a sign of the extent to which investors have put aside the global fears that gripped them last summer. Then, the Dow fell almost 20%, which would have marked a new bear market.
"People are deciding that it may not be the end of the world after all. They are getting used to the idea that there are some European countries that are struggling but that the U.S. is continuing to plod along," said Janna Sampson, co-chief investment officer at OakBrook Investments, which oversees $2.6 billion in Lisle, Ill.
Since Lehman collapsed in September 2008, stocks have often been driven by raw fear of financial meltdown rather than by economic fundamentals. Stocks plunged when fears were strong. They recovered only when fears quieted enough for investors to focus on the fact that bargain-basement interest rates and government stimulus were helping economic growth.
In 2011, the panoply of fears erupted again, including the risk of a European debt meltdown, a "double dip" by the U.S. into another recession or a sharp slowdown in China. But just when a bear market seemed inevitable, the European Central Bank began loosening monetary policy. It eventually launched a new three-year lending program to support European banks. The Federal Reserve committed itself to keeping interest rates low and hinted that it would resume spending tens of billions of dollars buying bonds if needed.
As the Fed reiterated its intentions and the ECB pursued its relaxed monetary policies, businesses have resumed investments, consumers have bought more goods, and investors have bid stocks higher. The upbeat employment news could extend that trend, said James Paulsen, chief investment strategist at Wells Capital Management.
" 'Fear' has arguably been the biggest hurdle to stronger economic growth so far in this recovery and the prospect of rising confidence might be the best sign yet that the U.S. recovery will sustain and broaden,' " he wrote in a report to clients.
A quiet U.S. economic recovery, with slow growth and low inflation, is a fertile background for stock gains. Unemployment remains high, but as long as it doesn't hold back profits, it helps keep down inflation, which in turn keeps interest rates low and provides support to stocks.
That said, fears of a euro-zone meltdown or a problem in China remain could surge back at any time. The anxieties continue to keep many individuals away from stocks, leaving the market firmly in the hands of professionals.
On Friday, besides the U.S. jobs report, investors learned of strength in the U.S. service sector and in a gauge of European manufacturing activity.
European borrowing costs have been steadily declining. Corporate news also has been upbeat, with January auto sales surprisingly strong and Facebook Inc. choosing this time for its big initial public offering.
Stock markets in Britain, Germany and France all rose, finishing the week at their highest levels since the summer. Industrial commodities such as copper were up, as was oil, which had been down earlier in the week. Treasury bonds, which had been a refuge for nervous investors, fell in price, sending their yields higher.
Despite stock gains of well over 20% since the autumn lows, many investors believe stocks remain reasonably priced and have room to rise so long as the worries about a European meltdown remain in the background.
The broader Standard & Poor's 500-stock index, which rose 1.46% Friday to 1344.90, is up 6.9% so far this year, its best start to a year since 1987. It still hasn't returned to its own post-Lehman high, however.
Stocks in the S&P 500 are trading at around 13 times forecast 2012 corporate-profit levels, well below the price-earnings multiples of 16 and more that are common when markets are rising. It would be normal for stocks to pull back now, as investors view the breakthroughs for the Dow and Nasdaq as a good time to cash in some profits.
But analysts say they aren't yet seeing the kind of excessive investor optimism that can be a sign of more serious stock pullbacks to come. On Friday, economists were warning that 2012 could be a bumpy year for economic growth and the stock market.
"While today's data is unequivocally good news, it's too early to declare 'mission accomplished,' " said Neal Soss, Credit Suisse's head of U.S. economics, in a report to clients on Friday.
Chief Economist Don Rissmiller of Strategas Research Partners said that the U.S. economy, and housing in particular, remain weak enough that the Fed still should be preparing to launch a multibillion-dollar bond-buying program.
The months heading into presidential elections historically have been unsettled ones for stocks. If the Fed were to signal that it no longer views the economy as weak enough to merit a bond-buying effort, that also would be bad for stocks. But a Fed program of bond buying would provide billions in new money for financial markets, which in the past has been very good news for stocks.
All of this left many investors believing that the environment isn't bad at all for stocks, as long as those primal fears don't start looking again as if they are going to come true.
Source:The Wall Street Journal
Jason Fox, Chairman