Today's Headlines

Bloomberg:

- China’s central bank sold three-month bills at a higher interest rate for the first time in 19 weeks after saying its focus for 2010 is controlling the record expansion in lending and curbing price increases. Stocks fell across Asia and oil declined on concern growth will slow in China, the engine of the world economy’s recovery from its worst recession since World War II. The People’s Bank of China offered 60 billion yuan ($8.8 billion) of bills at a yield of 1.3684 percent, four basis points higher than at last week’s sale, according to a statement. “It’s definitely a signal that the central bank is tightening liquidity,” said Jiang Chao, a fixed-income analyst in Shanghai at Guotai Junan Securities Co., the nation’s largest brokerage by revenue. “The rising yield is used to prevent excessive growth in bank lending.”

- Mortgage rates in the U.S. fell for the first time in five weeks, lowering borrowing costs and offering a boost to potential buyers. The rate for 30-year fixed U.S. home loans fell to 5.09 percent for the week ended today from 5.14 percent, mortgage finance company Freddie Mac said. Rates hit a record low 4.71 percent the week of Dec. 3. This week’s average 15-year rate was 4.50 percent, Freddie Mac said in today’s statement.

- The U.S. labor market is improving amid a recovery in domestic consumption and as the housing industry stabilizes, Federal Reserve Bank of St. Louis President James Bullard said. Stronger global growth, especially in Asia, is driving the improvement in the U.S. economy, Bullard, who votes on monetary policy decisions this year, said today in a speech in Shanghai. U.S. inflation uncertainties remain high even though prices are well contained for now, he said.

- Sears Holdings Corp.(SHLD), the largest U.S. department-store chain, reported a fourth-quarter profit forecast that exceeded analysts’ estimates as its Kmart division sold more toys, clothing and home goods. The shares rose. Earnings will range from $3.36 to $4.06 a share in the period ending Jan. 30, the Hoffman Estates, Illinois-based company said today in a statement. Six analysts surveyed by Bloomberg estimated profit of $2.71 on average. Sears rose 12 percent to $99.90 at 8:36 a.m. in New York, before the start of regular trading on the Nasdaq.

- Tax credits designed to revive the US housing industry are costing taxpayers as much as $80,000 for every additional home sold, according to Michael R. Widner, a Stifel Nicolaus & Co. analyst. The federal program is “an exceptionally inefficient use of tax dollars,” Widner wrote in a report. He estimated the total cost through last November at $17 billion, “a high price to us for relatively little benefit.”

Wall Street Journal:

- Texas Instruments Inc.(TXN) plans to announce Thursday that it is entering the e-reader market with new processors and software for manufacturers of the increasingly popular devices.

- After President Obama devoted much of 2009 to health care and global warming—two issues far down Americans' list of concerns—the White House says he will pivot to jobs and deficit reduction in his State of the Union speech in a few weeks. The White House is considering dramatic gestures, perhaps announcing a spending freeze or even a 2% or 3% reduction in nondefense spending. But Americans shouldn't be misled by the election year ploy: Mr. Obama rigged the game by giving himself plenty of room to look tough on spending. He did that by increasing discretionary domestic spending for the last half of fiscal year 2009 by 8% and then increasing it another 12% for fiscal year 2010. So discretionary domestic spending now stands at $536 billion, up nearly 24% from President George W. Bush's last full year budget in fiscal 2008 of $433.6 billion.

- Google Inc. (GOOG) will get "first dibs" at signing a search deal with AOL Inc. (AOL) when the two companies' current agreement expires at the end of this year, AOL Chief Executive Tim Armstrong said Thursday.

- Is the Obama Administration going to side with school reformers, or will it reward state and local teachers union affiliates that defend the status quo? This is a question states are asking as they prepare their applications for $4.35 billion in Race to the Top competitive grants. Some guidance from Education Secretary Arne Duncan would be helpful. Teachers unions in Minnesota and Florida are currently threatening to withhold support for their state Race to the Top applications, which are due later this month.

MarketWatch.com:

- Inventory control, coupled with last-minute shopping and post-holiday bargain hunting, drove U.S. retailers' best monthly sales in more than 20 months. Several -- from discounter Target Corp. to upscale retailer Nordstrom Inc. -- gave rosier profit outlooks.

- The correlations between asset classes and U.S. stocks fell dramatically in December, a bullish signal for near-term equity market performance, according to Nicholas Colas, chief market strategist at ConvergEx.

CNBC:

- Schork Oil Outlook: The Not-So Smart Money.

- Commercial Real Estate a Buy. Here are some numbers we reported yesterday from Trepp, a leading provider of CMBS and commercial mortgage information and analytics:

Barron’s:

- Shares of Apple (AAPL) are down 48 cents, a quarter percent, at $210.48 after Barclay’s Capital analyst Ben Reitzes this morning raised his price target on the stock to $260 from $235, writing that his “end of quarter checks” of retail and the supply chain indicate sales of Macs and iPhones are picking up. Reitzes has an “Overweight” rating on Apple.

NY Times:

- Starting in November 2008, the Federal Reserve Bank of New York under Timothy Geithner ordered American International Group(AIG), the huge insurer that the government had bailed out, to limit disclosure on payments made to banks at the height of the financial crisis, e-mail messages obtained by DealBook show. The e-mail exchange between the bailed-out insurance giant and its regulator portray a strange reversal of roles, with A.I.G. staff urging disclosure of certain details on payments for credit-default swaps to major banks, only to be discouraged by officials at, or representing, the Federal Reserve. In a draft of one regulatory filing, A.I.G. stated that it had paid banks — including Goldman Sachs Group(GS) and Societe Generale— the full value of C.D.O.s, or collateralized debt obligations, that they had bought from the company. In the response to that draft from the law firm Davis Polk and Wardwell, which represented the New York Fed, that crucial sentence was crossed out, and did not appear in the final version filed on Dec. 24, 2008. “It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information to the S.E.C.,” Representative Issa said in an e-mailed statement.

- Only foolhardy parents would allow their children to provide only the grades on their report cards that they were happy with. Yet hedge funds are given this luxury in reporting their performance to compilers of sectorwide performance indexes, Breakingviews says. One result is that, while a single fund’s track record is clear enough, hedge fund index returns still flatter the average fund in the industry, the publication says. Investors would be smart to call for a cleanup, Breakingviews argues.

The Business Insider:

- It might just be tough talk, but Interior Secretary Ken Salazar has warned the energy industry that expansion could be much harder than under the Bush administration. Americans should be amply rewarded when companies win exploration and production rights, but let's hope this doesn't mean that new exploration will be significantly restricted. Especially when it comes to natural gas, which could provide the U.S. with an enormous source of relatively cheap energy.

TheStreet.com:

- Cisco(CSCO) has vowed to push the video revolution into new areas, transforming the way that consumers access health care and education. "The next generation will be all about video literally changing lives in ways that we can't even imagine," said John Chambers, the Cisco CEO, during a press event organized by the networking giant. "It's to see an experience, to live it and share it."

clipsyndicate:

- S&P’s Schulz Says Ford(F) Has ‘Traction’ With Consumers. (video)

ZDNet Blog:

- Ford(F) announces MyFord Touch with dual 4.2” LCDs, Wi-Fi and improved voice recognition.

McClatchy:

- Riding high a year ago, Democrats now fear disaster ahead.

Rassmussen:

- A new Rasmussen Reports national telephone survey shows that 45% of likely U.S. voters now think a group of people selected at random from the phone book would do a better job addressing the nation’s problems than the current Congress. That’s up 12 points from October 2008, just before the last congressional elections. Thirty-six percent (36%) disagree.

Mother Jones:

- How Big Finance Bought Uncle Sam.

AP:

- Thousands clashed with police during a funeral procession Thursday for six of seven people killed in an attack on churchgoers leaving a midnight Mass for Coptic Christians, security officials said. Christians, mostly Copts, account for about 10 percent of Egypt's predominantly Muslim population of some 80 million people. Wednesday's attack, which happened on the holiest day in the Coptic calendar, was the worst known incident of sectarian violence in a decade. The bishop said the attack could have been motivated by revenge and blamed it on "Muslim radicals." "Suppose it is vengeance, where was the security?" he asked. "We are facing a religious war and lax security."

Reuters:

- Sony Corp said U.S. electronics sales are looking positive after the holiday season, and that it was optimistic about meeting its full-year target for PlayStation 3 video game console sales. The comments from Sony executives come after the Japanese conglomerate said on Wednesday that flat-screen televisions, electronic readers and Blu-ray video players had helped its U.S. holiday season sales top expectations.

Telegraph:

- Four directors at Paulson Europe, the London-based arm of one of the world's most successful hedge funds, took home more than £50m last year after successfully betting on the near-collapse of the UK banking sector.

National Post:

- As the United Nations' Copenhagen global warming catastrophe fades from memory, its emaciated remains quietly bulldozed into the freezing blue Danske harbour, public opinion had few places to go. And so it went nowhere. In fact, according to new tri-national polls released yesterday by Angus Read, the people of Canada, the Unites States and Britain are rapidly losing confidence in the whole enterprise. Perhaps the most stunning poll result is the general lack of any confidence or hope or belief that Copenhagen could or would ever produce a binding agreement that would force the world's countries to reduce carbon emissions. To the question "Do you think the Copenhagen Accord will become a legally binding treaty in the future?", only 19% of Americans, 16% of Britons and 12% of Canadians said "yes." Not that there was a whole lot of good feeling about Copenhagen going into last month's assembly. Under the auspices of the Intergovernmental Panel on Climate Change, Copenhagen opened with 170 nations clamoring for attention amid growing public doubts about the validity of global warming theory. Increasing uncertainty shows up in yesterday's poll numbers. Angus Reid surveyed people in all three countries in November and December, before and after Copenhagen. The drop off in public support for the idea that global warming is a fact mostly caused by human activity looks most pronounced in Canada. In November, 63% of Canadians supported global warming as a man-made phenomenon. By Dec. 23, that support had fallen 52%. Among Canadians, 13% are now not sure. A similar trend has been noted in the United States, where confidence in global warming theory has dropped to 46%, down from 49% in November -- and down from 51% in July last year. In Britain, only 43% believe man-made global warming is a fact, down from 47% in November and from 55% in July. There may be more going on in the public mind than emailfed skepticism. The emails, after all, received relatively little mainstream media attention, and they were only released in mid-November. The trend has been underway for months, even years, making it difficult if not impossible for politicians looking for a way out of the global warming policy swamp their governments helped create.

Xinhua:
- Another strong cold wave is expected to hit China's central, eastern and southern regions from Friday to next Tuesday, bringing snowstorms and temperature plummet to these areas, China's Central Meteorological Station (CMS) said Thursday. The cold snap would be much stronger than the previous one, which caused up to 18 degrees Celsius temperature fall in China's northern regions from last Saturday. The fresh one is expected to bring icy weather to the country's southern areas, the CMS said.