BETWEEN THE HEDGES: Today's Headlines

Bloomberg:

- Companies in the U.S. cut an estimated 84,000 jobs in December, according to a private report based on payroll data. The drop, the smallest since March 2008, was larger than forecast and compares with a revised 145,000 decline the prior month, data from ADP Employer Services showed today. ADP figures overstated the Labor Department’s estimate of private payroll losses by 85,000 per month on average in the six months to November after today’s revisions. Another report today showed employers last month announced the fewest job cuts since the recession began in December 2007 as the economic recovery encouraged companies to retain staff. Planned firings fell 73 percent in December to 45,094 from 166,348 during the same month the prior year, Chicago-based placement firm Challenger, Gray & Christmas Inc. said.

- Yields on Fannie Mae and Freddie Mac mortgage securities fell to the lowest relative to government notes in more than 17 years.

- The Standard & Poor’s 500 Index will gain 8 percent after it jumped to a 15-month high, said Mary Ann Bartels, a Bank of America Corp.(BAC) technical analyst. The advance in the first two days of this year lifted the S&P 500 out of a 3 percent range where trading was confined for most of November and December. The “breakout,” with more stocks rising than falling, suggests the index will climb to as much as 1,230, Bartels said. New York-based Bartels, ranked second among analysts who study price charts in Institutional Investor magazine’s most recent survey, predicted three months ago that the market might slump as much as 20 percent from its September peak before resuming its gains. Since then, the S&P 500 lost as much as 5.6 percent from an Oct. 19 high, then rallied to complete a 23 percent increase for the year.

- Credit insurance on Iraq government debt is being quoted for the first time since 2007 by data provider CMA DataVision, and prices put the Mideast nation’s perceived default risk almost on a par with Iceland. Credit-default swaps on Iraq are quoted at $475,000 a year to protect $10 million of debt for five years. Contracts on Iceland, downgraded to junk by Fitch Ratings yesterday, cost $479,000, CMA prices show. “We have seen sufficient interest from clients to be able to publish prices on Iraq for the first time since 2007,” said said Sebastian Meyer, a senior analyst at London-based CMA in London. “That means it’s gone above a certain liquidity threshold.”

- The U.S. should “explicitly” regulate derivatives dealers, said Gary Gensler, who has pushed Congress to impose new rules on the $300 trillion over-the- counter derivatives market. Gensler, chairman of the Commodity Futures Trading Commission, has asked Congress to give the commission greater authority to regulate over-the-counter contracts, a move that may give it more control of commodity speculation that takes place outside of regulated exchanges. “Leading up the financial crisis, it was assumed that the banks that deal in derivatives were already regulated, and thus did not need to be explicitly regulated for their derivatives transactions,” he said in a speech today to the Council on Foreign Relations in New York. This was a “flawed assumption,” he said.

- As many as one in five former Guantanamo Bay detainees are suspected of or are confirmed to have engaged in terrorist activity after their release, U.S. officials said, citing the latest government statistics. The 20 percent rate is an increase over the 14 percent of former inmates an April Pentagon report said were thought to have joined terrorist efforts, said the officials, who requested anonymity. The officials didn’t provide the numbers on which the 20 percent is based. The increase adds a complication to President Barack Obama’s efforts to close the detention facility for terrorist suspects at the naval base in Cuba, a national security analyst said. “This makes it more difficult to close Guantanamo,” said Dan Byman, director of the Center for Peace and Security Studies at Georgetown University in Washington. “No one wants to be responsible for releasing someone who goes on to kill Americans.”

- JPMorgan Chase & Co.(JPM), Bank of America Corp.(BAC) and U.S. Bancorp(USB) are among the most attractive stocks for 2010 because large lenders are almost finished with capital raising, analysts at KBW Inc. said in a report today. JPMorgan, U.S. Bancorp and BB&T Corp. are “higher-quality banks” with earnings that are likely to rebound more quickly, KBW analysts including David Konrad wrote. They’ll benefit from acquisitions and U.S.-assisted takeovers and will pay higher dividends than the rest of the industry, KBW said. Bank of America is inexpensive compared with normalized earnings, the analysts wrote. “We are more positive on the large-cap group now that it is through the bulk of capital raising and the group is approximately 53 percent through our cumulative loss estimates,” the analysts wrote. “We view the current environment as an opportunity to trade up in quality.”

- Orange-juice futures surged to a two- year high on speculation that freezing weather will reduce citrus crops in Florida, the world’s biggest producer of the fruit after Brazil. Last night’s freeze may have damaged less than 1 percent of the crop, said Dale Mohler, an AccuWeather Inc. meteorologist. Colder weather forecast for the early hours of Jan. 10 and Jan. 11 may harm 2 percent to 5 percent of the crop, he said. Oranges can be ruined when exposed for too long to temperatures below 28 degrees Fahrenheit (minus 2.2 degrees Celsius). Prices are up on “concern over cold, freezing weather conditions possibly adversely affecting the orange crop, and the size, by what could be a significant amount,” said Carlos Sanchez, a CPM Group associate research director in New York.

- GMAC Inc., the auto and home lender that became majority-owned by the U.S. government last week after a third bailout, may post a loss of more than $10 billion for 2009 as more borrowers defaulted on mortgages. The company received a $3.79 billion infusion from the Treasury Department on Dec. 30. The U.S. earmarked about $13.5 billion for GMAC in two previous capital infusions and now controls a 56 percent stake. If the government converts preferred shares to common equity, it would own more than 70 percent of GMAC, the lender said during a conference call. “I think for the taxpayer it’s going to be a loss,” said Christopher Whalen, managing director of Torrance, California- based Institutional Risk Analytics. “Who is going to buy this? What is the compelling business model that wants us to have this company continue to exist?”

- European Central Bank Executive Board member Juergen Stark said investors can’t assume that the rest of the European Union will bail out Greece if such a move were necessary, Il Sole said, citing an interview. “The markets are deluding themselves when they think at a certain point the other member states will put their hands on their wallets to save Greece,” the paper cited Stark as saying in an interview published today.

Wall Street Journal:

- A group of wealthy investors represented by a unit of HSBC Holdings PLC has purchased a 90% stake in a Washington office building, in a further sign of the relative strength of the U.S. capital's office market and the dominant role foreign investors are playing as buyers of commercial property.

- BofA, Citi Supported by Out-Of Money Shorts. Nothing turns investors' stomachs more than out-of-the-money positions. All they have to do to feel better is cover those positions. Bank of America Corp.'s stock jumped 7.6% over the first two sessions of 2010 to $16.20. Not only did the rally erase everything the stock lost in December, it's now apparent that a lot of short position holders may be getting a pretty bad feeling in their gut. That should not only provide support for the stock on dips, but could also fuel a further rally.

- The failed terrorist attack aboard Northwest Flight 253 is proving to be highly educational, not least about the Obama Administration and its pre-September 11 antiterror worldview. Yesterday, the White House reversed itself on repatriating Guantanamo detainees to chaotic Yemen, a step in the right direction. Now if it would only revisit its Ramzi Yousef standard for interrogating captured terrorists like Umar Farouk Abdulmutallab.

CNBC:

- Blackrock's(BLK) Bob Doll predictions for 2010:

- Some U.S. Federal Reserve officials worried last month that waning government support could snuff out a fragile housing market recovery and a few believed it might be desirable to step up asset purchases.

- Cramer’s Top 21 Smartphone Stocks.

NY Times:

- As Congress moves to reform U.S. financial regulation, key senators are nearing bipartisan agreement on stripping the Federal Reserve of its authority to supervise banks, two people familiar with the matter said. Senate Banking Committee Chairman Christopher Dodd, in charge of shepherding reform legislation through the Senate, has introduced a bill aimed at preventing a recurrence of the 2008 financial crisis that shook economies worldwide. The outlook for that legislation and Dodd's handling of it shifted suddenly on Wednesday, however, with news that he has decided not to seek re-election in November. "Dodd is freed up to do what he thinks is good policy not good politics," said a financial services industry executive.

The Business Insider:

- With all the reports on specs coming out, most people think they know what Apple's (AAPL) forthcoming tablet computer will look like. Don't buy it. Why?

- A new report on sustainable biofuels points out that the U.S. government spent $4 billion in 2008 on subsidies to replace just 2% of the U.S. gasoline supply. The average cost to taxpayers for the substituted barrels of gasoline was roughly $82 per barrel, or $1.95 per gallon on top of the gasoline retail price.

- We actually enjoy The Oil Drum greatly, it's an excellent site. We just don't always agree with some of the things they have to say. Yet on this we agree -- Iraq could be a massive game changer for the oil industry.

- Russia is now the world's largest oil exporter thanks to a new pipeline and port complex, as well as declining production in Saudi Arabia, reports Robert Morley of Trumpet.com. The new complex, which Putin calls one of the "biggest projects in contemporary Russia," will create a two-way gate through which Russia’s large Siberian oilfields will pour into Asia’s energy-thirsty economies.

Boston Globe:

- PRESIDENT OBAMA is a great admirer of the Mayo Clinic. Time and again he has extolled it as an outstanding model of health care excellence and efficiency. So perhaps the president will give some thought to the clinic’s recent decision to stop accepting Medicare payments at its primary care facility in Glendale, Ariz. More than 3,000 patients will have to start paying cash if they wish to continue being seen by doctors at the clinic; those unable or unwilling to do so must look for new physicians. For now, Mayo is limiting the change in policy to its Glendale facility. But it may be just a matter of time before it drops Medicare at its other facilities in Arizona, Florida, and Minnesota as well. Why would an institution renowned for providing health care of “the best quality and the lowest cost’’ choose to sever its ties with the government’s flagship single-payer insurance program? Because the relationship is one it can’t afford.

TheStreet.com:

- Citigroup's(C) credit default swap (CDS) spreads point to likely upside for the stock, according to an analyst report published Wednesday. Kelly argues the market's perception of diminished credit risk for Citigroup is not reflected in the stock. "With CDS implying that Citi will continue as a going concern we have to believe that if any of this confidence is reflected in the stock then we will see it move higher," he writes.

electronista:

- Apple(AAPL) and Verizon(VZ) are allegedly involved in negotiations regarding a CDMA-equipped iPhone, although both companies are said to be unable to agree on pricing, according to UBS analyst Maynard J. Um. A separate Wall Street analyst, Brian Marshall of Broadpoint AmTech, suggests that Apple is focusing on Verizon to be the 3G carrier for the rumored tablet device.

SeekingAlpha:

- The mobile Web grew 110 percent in the U.S. last year and 148 percent worldwide as measured by growth in pageviews, according to a new Quantcast Mobile Trends report (embedded below). Even so, the mobile Web accounted for only 1.26 percent of Web consumption in the U.S. (and 0.99 percent worldwide).

PRNewswire:

- OmniVision Technologies, Inc. (OVTI), a leading developer of advanced digital imaging solutions, today unveiled its first native high-definition (HD) video sensor built on OmniBSI(TM) pixel technology. The compact 1/6-inch OV9726 delivers 720p HD video at 30 frames per second (fps), making it ideal for high-performance HD cameras in notebooks, netbooks, webcams, mobile phones, portable media players (PMPs) and other mobile entertainment devices.

NYPost:

- Ford(F) proved once again that rejecting a government bailout is the secret to selling more cars, as the automaker for the fifth time in six months posted a jump in sales while its Detroit rivals continued to lose ground.

Politico:

- The grim outlook for Democrats in the 2010 midterm elections just got a little worse. Four top Democrats — including veteran Sens. Chris Dodd and Byron Dorgan — all prepared to pull the plug on their campaigns in a 24-hour period that began Tuesday, and in the process, offered an unnerving glimpse at the perilous election year ahead. With Dorgan’s stunning retirement announcement Tuesday evening, Democrats are now facing their bleakest election outlook in years — and the very real possibility the party will lose its 60-40 Senate supermajority after the November elections. On the House side, the prospect of a 20 to 30 seat loss is already looking increasingly likely.

- The top House Republican said Wednesday it would be “a disgrace” if Democrats ignore President Barack Obama’s campaign commitment to broadcast negotiations on the health care bill on C-SPAN. “Let’s be clear,” House Minority Leader John Boehner (R-Ohio) said in a news release. “Skipping a real, open conference would shut out the American people and break one of President Obama’s signature campaign promises.”

- President Barack Obama enters 2010 with one of the lowest approval ratings of any president heading into his second year, according to a new Gallup poll out Wednesday. Fifty percent approve of how Obama has handled his job as president, the second lowest total since Gallup started polling.

ScienceDaily:

- A minimally invasive surgical approach developed by head and neck surgeons at the University of Pennsylvania School of Medicine has been cleared by the U.S. Food and Drug Administration (FDA). The da Vinci Surgical System (Intuitive Surgical, Inc.(ISRG), Sunnyvale, California) has been cleared for TransOral otolaryngologic surgical procedures to treat benign tumors and select malignant tumors in adults.

Lloyd’s List:

- The number of tankers chartered for short-term crude and oil product storage fell by 5% month-on-month to 141 vessels by the end of December as traders started to offload gasoil in the northern hemisphere markets.