Today's Headlines

Bloomberg:

- A dozen U.S. real estate investment trusts, part of an industry that raised $33 billion last year, likely will increase their next quarterly dividends. Public Storage(PSA), Annaly Capital Management Inc.(NLY), and Inland Real Estate Corp.(IRC) are among those that may boost payouts, data compiled by Bloomberg show. Vornado Realty Trust(VNO) said this week it would resume paying its dividend fully in cash after a year of issuing it partially in stock.

- Paul Volcker, the former Federal Reserve chairman advising the Obama administration, said bank lobbyists are promoting “reform light” and blocking regulatory changes that would stave off future crises. “If you agree, make your voices heard somehow or another,” Volcker, 82, said yesterday at the Economic Club of New York, whose members include bankers, hedge-fund managers, economists, lawyers and former government officials. Almost 1,200 people attended the lunch, according to Jan Hopkins, the club’s president. “There is heavy lobbying on the other side, and that has to be overcome.”

- U.S. interest-rate swap spreads mostly narrowed, with the two-year decreasing to the least since 2003, amid a continued rise in corporate debt issuance and as implied yields on Eurodollar futures declined. The difference between the two-year swap rate and the similar-maturity Treasury note yield, known as the swap spread, contracted as much as 1 basis point to 25.13 basis points, before trading at 26.19 basis points. The spread is partly based on expectations for the London interbank offered rate, or Libor, and is used as a measure of investor perceptions of credit risk.

- Senate Banking Committee Chairman Christopher Dodd has indicated he may consider dropping the Consumer Financial Protection Agency from the financial regulatory overhaul bill he is drafting with members of his panel, according to people familiar with negotiations.

- Corporate credit quality is improving at the fastest pace in almost three years, underpinning the surge in bond sales as economies rebound. Moody’s Investors Service is upgrading more U.S. companies than it’s downgrading for the first time since the second quarter of 2007, according to data compiled by Bloomberg. Ford Motor Co.(F) sold $500 million of bonds yesterday after Fitch Ratings raised the carmaker’s ratings by two levels.

- Walgreen Co.(WAG) plans to offer fresh foods, including salads and cut fruit, and prepared meals to draw “time-starved” shoppers to its more than 7,000 stores. The drugstore chain has been talking with foodmakers including Unilever NV, Nestle SA, Sara Lee Corp. about creating private-label and branded products for “tonight’s meal,” said Bryan Pugh, vice president of merchandising.

- Bank of America Corp.(BAC), the biggest U.S. lender, said late payments on credit-card loans fell to the lowest level in almost a year, signaling that damage to consumers from the recession may be abating. Loans at least 30 days overdue, an indicator of future write-offs, fell to 7.44 percent in December, the least since last January, according to data in a regulatory filing by the Charlotte, North Carolina-based bank today. Delinquencies of 30 to 59 days, the earliest gauge of overdue loans, fell to 1.8 percent, the lowest in more than a year.

Wall Street Journal:

- The first signs of food, medicine and other international aid began trickling in to the devastated Haitian capital on Friday, even as despair grew among the survivors of this week's deadly earthquake. In neighborhoods where the aid began to arrive, Haitians swarmed to find help and medical supplies. Outside Haiti's national public-health laboratory, scores of wounded pleaded to get inside, where a squad of Belgian first-responders and Canadian military medics had set up a temporary field hospital. People carried injured relatives on makeshift gurneys. One the sidewalk outside the gates, a teenage girl lay on a filthy mattress, near an old woman on a table with a crumpled umbrella shielding a bleeding knee. A young man, eyes wide with terror, was carried by compatriots on a piece of plywood. His distended leg was swollen and leaking pus.

- Want to help victims of the earthquake in Haiti? Aid organizations need your assistance, but warn that well-intentioned efforts like collecting bottled water and clothing on your own may not be the most helpful thing for a disaster-ravaged country that does not have the infrastructure to distribute them. Some tips from InterAction, a coalition of U.S.-based international non-governmental organizations:

- The International Energy Agency on Friday modestly revised down its forecast for world oil demand and said the big overhang in unused crude, a buffer against higher prices, was likely to persist unless economic activity increases.

- On average, the 56 surveyed economists, not all of whom answer every question, expect the government will report later this month that gross domestic product grew 4.3% in the fourth quarter at a seasonally adjusted annual rate, up from the 2.2% recorded in the third quarter of 2009. GDP expansion is expected to slow to around 3% throughout this year. They put just a 16% chance that the economy will enter another recession in 2010. A lot of the fourth-quarter gain is seen coming from companies rebuilding inventories or trimming them at a slower rate, which could contribute up to three percentage points to growth. As 2010 wears on, it remains unclear whether there is enough demand in the economy to create significant growth, especially as the impact of fiscal stimulus wanes and the Federal Reserve begins to curtail its emergency programs in the second half of the year.

CNBC:

- Just as regulators, lawmakers and all forms of financial oversight boards are talking about new regulations to guard against mortgage fraud and another mortgage meltdown, there appears to be yet a new mortgage fraud out there today, allegedly perpetuated by agents of, yes, the big banks.

- The U.S. economy will expand at a decent clip this year as a recovery in housing and consumer spending offset troubles in commercial real estate, Richmond Fed President Jeffrey Lacker said Friday.

NY Times:

- The military’s defenses against threats from inside its own ranks are outdated and ineffective, Defense Secretary Robert M. Gates said on Friday as he described the findings of a Pentagon review of the Nov. 5 shooting spree at Fort Hood, Texas.

NY Post:

- Former Major League All- Star Lenny Dykstra looks like he is in for a crash landing. Airplane leasing company Avantair is trying to force him out of his latest lodgings -- offices in their Camarillo, Calif., hangar. The company, which advertised in his defunct Players Club magazine, managed to have Dykstra's sublease voided because he hadn't paid a penny of rent since signing the agreement in September 2008. But a new filing by Avantair claims that the bankrupt Dykstra "proceeded to move in additional personal belongings and other items to the office premises." The lawsuit claims that Dykstra told Avantair's attorneys that the sheriff would have to drag him out.

FoxNews:

- J.P. Morgan Chase & Co.'s (JPM) fourth-quarter profit remained solidly tied to its business with Wall Street, while its business with Main Street continued to struggle with delinquent loans. The $2 trillion-asset bank's fourth-quarter earnings quadrupled as the banking giant closed out a year in which it made it through the financial crisis more strongly than its rivals. Though its $3.3 billion profit fell 9% from the third quarter, J.P. Morgan beat analyst expectations with a clean quarter almost free of one-time items.

BostonHerald:

- Riding a wave of opposition to Democratic health-care reform, GOP upstart Scott Brown is leading in the U.S. Senate race, raising the odds of a historic upset that would reverberate all the way to the White House, a new poll shows. Although Brown’s 4-point lead over Democrat Martha Coakley is within the Suffolk University/7News survey’s margin of error, the underdog’s position at the top of the results stunned even pollster David Paleologos. “It’s a Brown-out,” said Paleologos, director of Suffolk’s Political Research Center. “It’s a massive change in the political landscape.” The poll shows Brown, a state senator from Wrentham, besting Coakley, the state’s attorney general, by 50 percent to 46 percent, the first major survey to show Brown in the lead. Unenrolled long-shot Joseph L. Kennedy, an information technology executive with no relation to the famous family, gets 3 percent of the vote. Only 1 percent of voters were undecided. Paleologos said bellwether models show high numbers of independent voters turning out on election day, which benefits Brown, who has 65 percent of that bloc compared to Coakley’s 30 percent. Kennedy earns just 3 percent of the independent vote, and 1 percent are undecided. Given the 4.4-point margin of error, the poll shows Coakley could win the race, Paleologos said. But if Brown’s momentum holds, he is poised to succeed the late Sen. Edward M. Kennedy - and to halt health-care reform, the issue the late senator dubbed “the cause of my life.” Yet even in the bluest state, it appears Kennedy’s quest for universal health care has fallen out of favor, with 51 percent of voters saying they oppose the “national near-universal health-care package” and 61 percent saying they believe the government cannot afford to pay for it. The poll, conducted Monday through Wednesday, surveyed 500 registered likely voters who knew the date of Tuesday’s election. It shows Brown leading all regions of the state except Suffolk County.

The Business Insider:

- China uber-bear Jim Chanos adds some thoughts to the Chinese real estate bubble story: Owning your own home is fast becoming the number one goal — and fear — of the working and middle-classes of China. Compounded by the fact that there are few modern public or private pension plans for retired workers, this “nation of frugal savers” has made the bet of a lifetime (literally) on already over-priced residential real estate — often with accumulated family savings. If it turns out that foreign “hot money” and Party insiders have been the sellers (or more accurately, the “flippers”), while the workers have been the buyers, the potential for social unrest will soar. More importantly, confidence in Beijing’s economic “Miracle” and its mandarins will soon shatter as investors around the world realize that Chinese policymakers learned nothing from the West’s crisis of just a few years ago.

- Yesterday our colleague Graham Winfrey reported that Exxon had just added 25 years of life and 40 million barrels of oil to what was thought to be a pretty dead Texas oil field. We'd like to add an additional angle to the analysis -- For this new project, Exxon plans to invest only $340 million. This means that for just $8.5 per barrel Exxon has discovered another 40 million barrels of recoverable oil in a 70-year old field right within its own backyard. More importantly, the latest project is an experiment, using some of the latest extraction technology. If it succeeds, it could be applied to other old U.S. oil fields. For just $8.5 per barrel. It's further evidence of how technology works wonders at solving energy problems, and that with the right technology there's far more oil out there than most of us can imagine, especially in a world where $50 oil is considered cheap.

Washington Times:

- Superlobbyist Paul Magliocchetti, the focus of a federal criminal investigation, held an ownership interest in three small, privately held companies that his lobbying firm had helped obtain millions of federal tax dollars in congressional earmarks. In effect, he was trying to profit twice from his firm's success in getting members of Congress to set aside, or earmark, tax money for his clients in annual appropriations bills by collecting hefty lobbying fees from the companies and, at the same time, hoping to make money by investing in their stock.

StarTribune.com:

- A long-simmering dispute between North Dakota and Minnesota appears to be coming to a head. North Dakota Attorney General Wayne Stenehjem is saying he very likely will sue Minnesota over its so-called "carbon tax" on emissions, calling it an illegal attempt to regulate another state's industry. "We simply feel that we've been forced into this posture," Stenehjem said in an interview this week. "We have attempted everything we can think of to work with officials in Minnesota."

Houston Chronicle:

- His health care bill at stake, President Barack Obama plans a weekend trip to Massachusetts to campaign for endangered Senate candidate Martha Coakley after a poll showed an edge for Republicans in the race for a seat Democrats have held for over a half-century. The White House said he will travel there Sunday. "If Scott Brown wins, it'll kill the health bill," Democrat Barney Frank, D-Mass., said, underscoring the stakes of Tuesday's special election.

Politico:

- Twenty Republican governors and governors-elect are accusing the White House of providing too little transparency on health care, causing worry that “deals” are being cut without their input. In a letter sent Wednesday to the congressional leaders of both parties, the governors wrote that they are “disappointed with the lack of transparency” as health care moves forward. “We urge you not to circumvent the normal committee process and to conduct an open, fully bipartisan negotiation,” the governors wrote. “It is time to slow down and pass meaningful health care reform, not hastily prepared partisan legislation which omits reform and saddles American taxpayers for generations to come.”

- Democrats moved closer to a final deal on health care reform Thursday — and for some vulnerable members, the end can’t come soon enough. In an emotional talk with other Democrats on the Ways and Means Committee this week, North Dakota Rep. Earl Pomeroy said the protracted debate is hurting him so badly back home that he might as well retire if it drags on much longer. A Democrat who attended the Ways and Means session said Pomeroy was “very angry” as he spoke about the delay. “Other folks were upset, but he was the maddest by far.” “I believe Congress needs to resolve fairly quickly this protracted health care debate,” Pomeroy told POLITICO on Thursday.

Real Clear Politics:

- What happens when the irresistible force of the Democratic urge to tax runs up against the immovable object of Democratic loyalty to the labor unions? Another ugly deal in a health-care bill that already was a grotesquerie of pay offs to favored politicians and interests. The levy in question is a 40 percent excise tax on high-end employer-provided insurance plans that - typically - has been sold as a tax on "the rich." It's called the "Cadillac tax," a name redolent of corporate executives cackling in their Escalades over their cushy benefits. The unions, which make it a point to negotiate generous insurance plans with their employers (to the point of bankrupting them), were chagrined to learn that for purposes of this tax, they're among the rich. They howled in terms that could have been drawn from Henry Hazlitt's free-market classic, Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics. The excise tax is supposed to be paid by evil insurers and employers. Except in this one case affecting their self-interest directly, the unions see through the fiction and understand that the tax will trickle down onto them. How disorienting to hear unions implicitly recognize that corporations ultimately don't pay taxes, their customers and employees do. "While the excise tax is slated to be imposed on the insurers on so-called high cost plans, the tax will be passed on to enrollees in the form of higher premiums, co-pays or reduced benefits," a coalition of public-employee unions wrote congressional leaders. "Characterizing this tax proposal as a ‘Cadillac tax' is a misnomer. It hits the average blue collar and white collar employee."

Benzinga:

- Below are the top 5 large-cap technology stocks on the NASDAQ and the NYSE in terms of cash.

USAToday:

- The Obama administration is considering a trial in Washington for one of the most notorious Guantanamo Bay terrorism suspects. Officials tell the Associated Press that Hambali, an Indonesian linked to Osama bin Laden, is one of several detainees being considered for Washington trials. Others are being considered for New York City. Hambali is the suspected mastermind of a 2002 Bali nightclub bombing that killed 202 people.

Reuters:

- A weekly gauge of future U.S. economic growth continued its climb in the latest week, though its yearly growth rate dropped again, a research group said on Friday. The steady upticks in the leading index suggest, however, an enduring smooth recovery, the Economic Cycle Research Institute said. The New York-based independent forecasting group said its Weekly Leading Index climbed to an 82-week high of 132.1 for the week ended Jan. 8, from an upwardly revised 131.6 the previous week, which was originally reported as 131.5. The index's annualized growth rate edged down to a 17-week low of 23.5 percent from 23.8 percent the previous week, which was also revised higher from 23.6 percent.

- Fertilizer is increasingly being sold in spot deals rather than long-term contracts as buyers prefer to play safe while the global economic outlook remains uncertain, the chief executive of Mosaic Co (MOS) said on Thursday. "It's effectively becoming a spot market," said CEO Jim Prokopanko of the leading global producer of concentrated phosphate and potash crop nutrients, which is majority owned by the private food giant Cargill Inc [CARG.UL]. "We're prepared to sell that way. But if it's a spot market, it's definitely going to be a different price" than a long-term contract, he told Reuters in an interview at Mosaic's "Ag College" in Orlando this past week to educate customers about trends for 2010.

- A 'crisis tax' proposed by the Obama administration would cut substantially into bank earnings across Europe and could sidetrack the sector's recovery, analysts and industry officials said on Friday. While there is little clarity over the practical effect of the levy, many questioned its fairness given that the European banks it would affect did not get bailouts in the United States and lack many of the guarantees their U.S. competitors received. Under the proposal made on Thursday, financial institutions with balance sheets above $50 billion would be assessed a fee equal to 0.15 percent of certain assets. About 15 international firms fall under that umbrella. Europe's three biggest economies were quick to distance themselves from the proposal.

Globe and Mail:

- The new cheap stock on the block: Apple(AAPL). Its 33 P/E is about to drop significantly to 13 because of an accounting-method change and will set up the opportunity of 2010.