Today's Headlines

Bloomberg:

• Business Activity in U.S. Grows at Fastest Pace in Two Decades. Businesses in the U.S. expanded in December at the fastest pace in two decades, adding to evidence the world’s largest economy is accelerating heading into 2011. The Institute for Supply Management-Chicago Inc. said today its business barometer rose to 68.6 this month, exceeding the most optimistic forecast of economists surveyed by Bloomberg News and the highest level since July 1988. “The economy is gathering momentum,” John Silvia, chief economist at Wells Fargo Securities Inc. in Charlotte, North Carolina, said in an interview on Bloomberg Television. “New orders will follow the better business confidence that is showing up. Once the American consumer starts kicking in, we will see stronger orders data.” The median forecast of 49 economists surveyed by Bloomberg News projected the gauge would fall to 61. The Chicago group’s production gauge rose to 74, the highest level since October 2004, from 71.3 in November. The gauge of new orders climbed to 73.6 from 67.2. The employment measure increased to 60.2, last exceeded in April 2005, from 56.3 the prior month.
• Jobless Claims in U.S. Fall to Lowest Level Since July 2008. Initial U.S. jobless claims fell last week to the lowest level since July 2008, a sign that the labor market is improving heading into 2011. First-time filings for unemployment insurance decreased by 34,000 to 388,000 in the week ended Dec. 25, compared with the median forecast of 415,000 in a Bloomberg News survey, Labor Department figures showed today in Washington. There were no special factors behind the drop, an official at the agency said as the data were released. The four-week moving average, a less-volatile measure, dropped to 414,000 last week, the lowest since July 26, 2008, from 426,500, today’s data showed. The number of people continuing to receive jobless benefits rose by 57,000 in the week ended Dec. 18 to 4.13 million. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs. The unemployment rate among people eligible for benefits rose to 3.3 percent in the week ended Dec. 18, from 3.2 percent in the prior week, today’s report showed. Thirty-three states and territories reported an increase in claims, while 20 reported a decline.
• MBIA(MBI) Climbs Most in Two Months as It May Resume Coverage of Municipal Debt. Bond insurer MBIA Inc. gained the most in more than two months after a court development raised prospects it may resume guaranteeing city and state debt. The company has held off insuring municipal bonds because of a 2009 lawsuit by Bank of America Corp., JPMorgan Chase & Co., UBS AG and 15 of the world’s largest financial companies challenging MBIA’s decision to separate its municipal bond insurance business from its structured-finance guarantees. JPMorgan and Barclay’s are now withdrawing from the litigation. “There is going to be a market for public finance insurance and if the split is upheld, I think the market would invest in a pure municipal finance insurer,” Brian Charles, an analyst with R.W. Pressprich & Co. in New York, said in a telephone interview.
• Crude Oil Falls the Most in Six Weeks as Supplies Drop Less Than Estimated. Futures retreated below $90 a barrel for the first time in more than a week after supplies decreased 1.26 million barrels to 339.4 million in the seven days ended Dec. 24, the Energy Department said today. Stockpiles of distillate fuel, a category that includes heating oil and diesel, unexpectedly increased. “Two out of the three headline numbers were bearish, and that’s what’s dominating the trade here,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. Crude oil for February delivery fell $2, or 2.2 percent, to $89.12 a barrel at 12:22 p.m. on the New York Mercantile Exchange.
• Copper Futures Climb to Record After Data Showing Growth in China, U.S. Copper climbed to records in New York and London after U.S. businesses grew at the fastest pace in two decades and Chinese manufacturing expanded, signaling robust demand.
• China Officials Shared Concerns About Asset Bubbles With U.S. Chinese officials shared concerns about growing asset bubbles in their nation’s economy in meetings in January with the U.S., according to American diplomatic cables released by Wikileaks. “On an overheating economy, Vice Minister Liu He pointed to asset bubbles as a potential problem for China’s recovery,” said the unclassified cable dated Feb. 10 from the U.S. Embassy in Beijing and posted by Wikileaks on Dec. 26. Liu, a senior adviser who works with the Central Leading Group on Financial and Economic Affairs, “did not yet see the problem as serious” while also noting that people were withdrawing money from banks to invest in assets, the cable said.
• U.S. Consumer Spending May Prompt Acceleration in Mergers. U.S. consumers put the brakes on dealmaking in 2010. They may be the accelerator next year. Chief executives maintained record levels of cash this year as the recession-weary consumer fueled doubts about an economic recovery. While mergers and acquisitions topped $2 trillion in 2010 -- the first increase in three years -- the amount failed to approach 2007’s $4 trillion peak in global takeovers. Shoppers may help bring 2011 closer to that total. Holiday sales jumped 5.5 percent in the U.S., the best performance in five years, on purchases of clothing and jewelry, according to MasterCard Advisors’ SpendingPulse. As spending rises, companies are more optimistic and willing to take on risk, according to Joseph Gromek, chief executive officer of New York-based Warnaco Group Inc., owner of the Calvin Klein and Speedo brands. “There will be a very aggressive approach,” Gromek said. “The companies that have strong balance sheets with lots of cash on hand will try to be as opportunistic as possible."
• Rousseff Is No Lula as Brazil Stock Index Slumps in Runup to Inauguration. Brazil’s President-elect Dilma Rousseff, faced with the highest inflation in 23 months and a growing budget deficit, is failing to convince investors that she can match her mentor Luiz Inacio Lula da Silva’s record for spurring economic growth. The Bovespa index of most-traded stocks has fallen 2.4 percent since Rousseff was elected Brazil’s first female president Oct. 31 and yesterday, as traders stepped up bets the central bank will raise interest rates next year to keep consumer prices in check. The index gained 0.5 percent this year through yesterday, heading toward its worst-ever annual performance when measured against the MSCI Emerging Markets index, which has risen 15 percent.

Wall Street Journal:

• Bank Failures at Highest Level Since 1992. More banks failed in 2010 than any year since the savings-and-loan crisis ended in 1992, but regulators said Wednesday that they believe failures have passed their peak.
• Illinois Politicians Studying Derivatives On State's Debt. Illinois politicians are reviewing whether to follow in California's footsteps by forcing its bond underwriters to disclose what credit derivatives they have entered into on the state's debt. Staff members working for Illinois House of Representatives Speaker Michael Madigan reached out to California officials on Wednesday for information about how the Golden State has gone about improving disclosures relating to credit default swaps on its own state debt. Hedge funds are increasingly using municipal CDS to speculate on the likelihood of state defaults rather than as legitimate risk mitigation tools.

CNBC:

• Average Rate on 30-Year Mortgage Up to 4.86%.
• December US Auto Sales to Bode Well for 2011: Analysts.
  

Business Insider:

• 17 Statistics That Prove We Have Sold Our Grandchildren Into Perpetual Debt Slavery.
• Pension "Armageddon" Hits Pittsburgh As State Threatens Takeover of City's Plan.
• Chinese Pro-Democracy Activist Explains How Inflation Will Cause The Collapse Of The Regime. Everyone recognizes the economic dangers of inflation in China. But the black swan in the room is regime change. Prominent democracy activist Wei Jingsheng says China's inflationary policies are causing social pressures that will lead to the collapse of the regime.
• Why Apple(AAPL) Will Be The First Company to Reach a Trillion Dollar Market Cap.
• Meet The Hundreds of NYC Sanitation Workers Who Earn Over $100,000.
  
  New York City sanitation bosses think they've got it so bad that they intentionally delayed snow-removal, according to the NY Post. So how bad have they got it? City workers enjoyed steady employment through the recession, killer benefits and a generous pension package. Then there's the pay. 315 sanitation workers earned over $100,000 in 2009, according to SeeThroughNY. The top guy, John Doherty, earned $205,180. There are also perks that come with the job. While delaying clean-up for the city, sanitation workers promptly plowed the street in front of Doherty's Staten Island home, according to the Daily News.
• Julian Assange Threatens to Name Arab Leaders With CIA Ties.
  

Zero Hedge:

• Why Does Brian Sack Interact With Goldman's(GS) "FX Committee"? Following the release of Bill Dudley's daily schedules from the beginning of 2009, through September 30, 2010, there have been some amusing, if not very surprising, disclosures.

New York Post:

• Hedges Clipped. The normally boisterous and upbeat hedge fund crowd is limping into 2011 bearing the heavy weight of lackluster performance and an ominous insider-trading probe -- leading some industry watchers to wonder if the new year could be marred by another round of fund closures. In 2010, the number of hedge funds to close their doors permanently declined 32 percent to just 585 firms through the end of the third quarter, according to fund tracking outfit Hedge Fund Research. But fund watchers say the recent downturn in closures may just represent a lull in the storm. In terms of performance, the hedge fund industry -- which prides itself on being smarter than the Average Joe and charging clients 2 percent management fees and 20 percent on the profit -- struggled to eke out superior returns this year, leading the average hedge fund to close 2010 up a mere 7.5 percent, according to Hedge Fund Research. That's below returns for average stock market indexes like the S&P 500, which is up 13 percent this year.
  

New York Times:

• New York Growing as a Base for Tech Companies. In the first three quarters of 2010 compared with a year earlier, the number of venture capital deals grew more than three times faster in the city than it did in Silicon Valley.

LA Times:

• Amazon(AMZN) Patents System to Stop Bad Gifts. Amazon.com has been awarded a patent for an online system that would give users the ability to exchange unwanted gifts before receiving them. The technology could prevent the shipment of thousands of superfluous ties to fathers, ugly sweaters to grandchildren and various other lackluster presents that are currently being bought and shipped through the online retail giant.

Forbes:

• Obama's New 'Unreasonable' Standard. Last week we saw a troubling new pattern: The Obama administration is embracing an “unreasonable” standard — pun not necessarily intended, but it fits — for deciding if it likes what private sector companies are doing. The unreasonable standard is being applied to both private sector health insurers and companies that provide Internet service. But expect the White House to impose the standard on a lot more industries as the Obama blob continues to absorb every aspect of the economy. What it means is that we are abandoning the rule of law for the rule by bureaucrats. Unelected officials have been given the power to fundamentally remake industries based on their political and value judgments.

The Detroit News:

• Ford(F) Offers Smartphone Traffic App That Syncs With Sync. A new smartphone app is available for owners of 2010 and 2011 Ford Motor Co. vehicles equipped with the Sync system offering traffic and navigation information. Ford launched the free mobile app today that works with Apple and Android-based devices. Blackberry smartphones will be able to use the app in the near future, the automaker said.

Reuters:

• U.S. Losing IPO Pole Position: Survey. The United States is losing its appeal as leading global center for stock market flotations, hit by restrictive regulations and competition from other financial centers, a survey of American lawyers showed on Thursday. Just over 70 percent of a 50-strong sample of transaction attorneys, whose firms advised on three-quarters of initial public offerings (IPO) listed on major U.S. exchanges this year, said the country is losing its attraction as IPO venue of choice. "The simple fact is that as the U.S. regulatory environment has become more restrictive, other global exchanges have become more sophisticated and liquid and therefore have gained market share," said Joshua Ford Bonnie, a partner at Simpson Thacher & Bartlett.

AP:

• Ex-Car Czar Rattner Settles NY Probe for $10M. The investment banker who helped lead the Obama administration's auto industry overhaul has agreed to pay $10 million to settle influence-peddling allegations in New York. Former "car czar" Steven Rattner admitted no wrongdoing as part of the deal, which was announced by state Attorney General Andrew Cuomo on Thursday. Cuomo's office had filed civil lawsuits against Rattner in November, accusing him of paying kickbacks to help his company land $150 million in state pension fund investments. He denied the charges. The attorney general had initially sought $26 million in fines and penalties and a lifetime ban from the securities industry. The settlement announced Thursday only bars Rattner from doing business with any public pension fund in the state for five years.

MailOnline:

• Kloppers Back on the Bid Trail. Speculation now suggests that BHP Billiton(BHP) is lining up a $90 a share cash offer for Anadarko Petroleum(APC), one of the world's largest independent oil and gas exploration companies, which also has coal and industrial mineral mines interests. Strongly supported of late, Anadarko's share price advanced $1.02 to $70.18 in active early trading on Wall Street yesterday.

Der Spiegel:

• Chancellor Angela Merkel's government is drawing up a plan for a future euro-region bailout mechanism that includes mandatory "debt brakes" in countries seeking aid.

Imerisia:

• Greece's Finance Ministry is considering a new state-backed guarantee package for the country's banks worth as much as $26.5 billion. The package is being examined to avoid any possibility of systemic risk and liquidity problems in the event rating services proceed with downgrading Greek sovereign and bank debt instruments. Any downgrade may lead to a higher so-called haircut for Greek government bonds that banks use as collateral for liquidity lines at the ECB.

Kathimerini:

• Bad loans at Greek banks in 2011 are likely to exceed $41 Billion, or 12% of total loans, up from 10% this year, citing bank officials. The deterioration is probable because of falling household and business incomes, amid recession and rising unemployment. This year's bad loans ratio for households alone is likely to be about 20%, up from 16.7% at the end of June.