Today's Headlines

Bloomberg:

• Asian Stocks Drop as China Economic Reports Prompt Tightening Speculation. Asian stocks fell, with the regional benchmark index sliding the most in almost two months, as Chinese economic reports prompted speculation the country will do more to fight inflation and U.S. earnings disappointed. The MSCI Asia Pacific Index fell 1.3 percent to 138.66 as of 7:34 p.m. in Tokyo, with about seven stocks declining for every that rose. “It’s fair to say that this data will add to pressure on China to tighten,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Ltd., which manages about $93 billion. Hong Kong’s Hang Seng Index dropped 1.7 percent, its biggest intraday decline in a month, and the Shanghai Composite Index fell 2.9 percent. Japan’s Nikkei 225 Stock Average retreated 1.1 percent. South Korea’s Kospi Index slipped 0.4 percent, while Australia’s S&P/ASX 200 Index dropped 1.1 percent. “If the economy keeps growing at the current pace, inflation will remain alarming,” said Liu Li-Gang, a Hong Kong- based economist at Australia & New Zealand Banking Group Ltd.
• Home Sales, Leading Index Show Recovery Widening. Sales of previously owned U.S. homes and the index of leading indicators exceeded forecasts, signs the expansion is gaining momentum at the start of 2011. Purchases of existing houses jumped 12 percent in December to a 5.28 million annual rate, the National Association of Realtors said today in Washington. The New York-based Conference Board’s gauge of the economic outlook for the next three to six months rose 1 percent. Claims for unemployment benefits fell by 37,000 last week, according to the Labor Department.
• Europe's Risk Watchdog May Prove Toothless in Struggle to Prevent Crisis. Europe’s new risk watchdog probably lacks the teeth to avert the region’s next financial crisis, economists and analysts say. The European Systemic Risk Board, which aims to identify and warn of brewing risks in the financial system, may fail to prevent future imbalances as it doesn’t have any legal power to enforce action, according to economists at ING Group, Barclays Capital and ABN Amro. “The problem is that these bodies are set up to solve yesterday’s problems,” said Peter Hahn, a former Citigroup Inc. banker who lectures on finance at Cass Business School in London. “They can never do more than flagging any issues,” and whether they can stop a crisis “is questionable.”
• EU's Leaders Must End Debt Restructuring 'Taboo,' German CDU's Lauk Says. European leaders should drop their “taboo” against debt restructuring, the head of the business caucus of Chancellor Angela Merkel’s party said, indicating that she has support to take more aggressive action in stamping out the euro-area crisis. “I would recommend looking at it very closely, stop declaring it taboo and do the appropriate analysis to see where that would lead,” Kurt Lauk, president of the German Christian Democratic Union’s Economic Council, said in a phone interview.
• Brazil Future Yields Rise on Concern Tombini Debut Increase Too 'Dovish'. Yields on longer-term Brazilian interest-rate futures contracts rose after the central bank failed to signal that it will follow up yesterday’s interest- rate increase with more aggressive moves to rein in inflation. The yield on the contract due in January 2013 rose four basis points, or 0.04 percentage point, to 12.75 percent at 8:45 a.m. New York. The yield on the contracts maturing in January 2017 also increased five basis points, or 0.05 percentage point, to 12.37 percent.
• Morgan Stanley(MS) Earnings Rise on Record Brokerage Fees. Morgan Stanley reported a 35 percent increase in fourth-quarter earnings on record revenue from its brokerage, the world’s biggest. Fixed-income trading revenue was the lowest since the fourth quarter of 2008.
• Oil Falls Most in Nine Weeks on Concern China to Boost Rates. Crude oil fell the most in nine weeks on concern China will raise interest rates to combat inflation, slowing economic growth and demand for energy. Oil dropped as much as 3.2 percent after China said inflation was 4.6 percent in December. Prices also declined after the Energy Department said that U.S. crude supplies rose for the first time in seven weeks. “Worries about what actions China will take to slow the economy are sending the market lower,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Any Chinese move could lower demand growth.” “China’s voracious appetite for every commodity has been pushing prices higher. The country is now facing the inflation monster and will take additional steps to stem runaway growth.” Crude-oil stockpiles increased 2.62 million barrels to 335.7 million, the Energy Department report showed. A 500,000- barrel decline was forecast, according to the median estimate of 17 analysts surveyed by Bloomberg News. Refineries operated at 83 percent of capacity, down 3.4 percentage points from the previous week, the biggest drop since October 2009. Analysts projected that operating rates would slip 0.5 percentage point. Gasoline inventories climbed 4.44 million barrels to 227.7 million, the highest level since the week ended March 5, according to the department. Stockpiles were estimated to increase by 2.5 million barrels. Supplies of distillate fuel, a category that includes heating oil and diesel, increased 1.04 million barrels to 165.8 million. Stockpiles were forecast to climb by 1 million barrels.
• CFTC Weighs Plan to Regulate Agricultural Swaps the Same as Credit Swaps. The U.S. Commodity Futures Trading Commission may remove regulations that for more than a decade treated agricultural swaps and commodity options differently than other transactions in the $583 trillion swaps market. The CFTC’s five commissioners today at a meeting in Washington are considering a proposal that would put agricultural swaps under the same rules as interest rate, credit and other types of swaps. Approval by commissioners would open the measure to public comment before it is completed.
• OPEC to Cut Exports as Asian Demand Slows, Oil Movements Says. The Organization of Petroleum Exporting Countries will reduce crude shipments this month as demand from Asia slackens, according to tanker-tracker Oil Movements. Loadings will drop 1.1 percent to 23.55 million barrels a day in the four weeks to Feb. 5 from 23.8 million barrels in the period to Jan. 8, Oil Movements said today in a report. It’s the fourth straight month-on-month decline shown in the consultant’s weekly figures.
• Copper Drops Most in Two Months on Speculation China to Restrain Economy. Copper fell the most in two months on concern that China, the world’s biggest metal consumer, will take more steps to restrain the economy. Copper futures for March delivery fell 11.1 cents, or 2.5 percent, to $4.259 a pound at 10:25 a.m. on the Comex in New York.
• Hu Flaunts Rising China Power by Using Friendly Confines of Chicago Visit. Chicago is known as a destination for immigrants. Yet in a city with 2.8 million people, the most recent U.S. Census estimates found only about 40,000 Chinese -- just 1.4 percent of the population. So why is the president of China, Hu Jintao, coming to Chicago as the only other stop on a U.S. tour that started in Washington, instead of places with more Chinese residents and businesses, such as San Francisco, New York or Los Angeles? The answer combines long-standing business relationships, pragmatic politicians who have muted their criticism of the Chinese, and one of the first Mandarin-language programs in a U.S. high school. Pushing them all is a mayor whose brother -- a former Commerce secretary and early advocate for China trade -- now works for a city resident, President Barack Obama.
• Man Group Sinks as Investor Pulls $1 Billion, Analyst Question Fee Growth. Man Group Plc, the largest publicly traded hedge-fund firm, fell after a single investor pulled $1 billion from its long-only funds and analysts questioned whether performance fees would meet estimates in future quarters. The stock dropped 2.4 percent to 294.1 pence at the close of trading in London.
• Boehner Says China Has 'Responsibility to Do Better'. China has a “responsibility to do better” at guaranteeing freedom and dignity for its citizens and the U.S. has a “responsibility to hold them to account,” U.S. House Speaker John Boehner said after meeting with Chinese President Hu Jintao.
• Daley Can Defer Capital Gains Tax on $8.3 Million JPMorgan(JPM) Sale. William Daley, President Barack Obama’s new chief of staff, can defer the payment of capital gains taxes on his sale of almost $8.3 million of JPMorgan Chase & Co. shares, based on government ethics rules.

Wall Street Journal:

• Hu Stresses Cooperation With U.S., Sovereignty On Tibet and Taiwan. Chinese President Hu Jintao on Thursday reiterated the need for Beijing and Washington to work together and urged the U.S. to respect China's sovereignty over Taiwan and Tibet. "We should treat each other with respect," Mr. Hu said in a speech at a luncheon held by the U.S.-China business council. "Taiwan and Tibet concern China's sovereignty and territorial integrity and they represent China's core interests," he said.

Bloomberg Businessweek:

• Silver May Drop 20% as Coins Signal 'Crowd': Technical Analysis.
• Hacking Attack Prompts Doubts About Security of EU Carbon Market. Trading in European Union carbon permits fell and the BlueNext SA exchange proposed “isolation accounts” after an alleged hacking raised doubts about security in the world’s biggest emissions market. The European Commission, the Brussels-based regulator, suspended most operations yesterday at all 30 of the region’s greenhouse-gas emissions registries after a Czech firm reported about 6.8 million euros of carbon allowances stolen in a hacking attack.
• Gasoline Prices Threaten U.S. Consumer Optimism: Chart of the Day.
  

CNBC:

• 2011 Revenues May Surprise Investors: Analysts.

Business Insider:

• One Day After Securing a Huge Deal With China, Boeing(BA) Lays Off 1000 American Workers.
• Check Out the 10 Lucky Wall Streeters Who Were Invited to the Obama Dinner.
• Check Out Lloyd Blankfein at the White House State Dinner Last Night.
• Dangerously RIDICULOUS: The World Economic Forum Says We Need $100 Trillion More Credit.
• The Big Inflation Warning Hidden In This Morning's Philly Fed Release.
• Chart of the Day: If History is a Guide Then Chinese Construction Investment Has to Hit the Wall.
  

Zero Hedge:

• Food Inflation Comes to America: General Mills, Kraft and Kellogg Hike Prices on Selected Food Products.

New York Times:

• U.S. Prepares to Lift Ban on Guantanamo Cases. The Obama administration is preparing to increase the use of military commissions to prosecute Guantánamo detainees, an acknowledgment that the prison in Cuba remains open for business.
• Higher Taxes Wouldn't End Some Deficits. What would an increase in the personal income tax of a size similar to that of Illinois do for other fiscally troubled states? The New York Times examined this question in three embattled places, New York, California and New Jersey.
• Cuomo Considers Cutting Up to 15,000 State Jobs. Gov. Andrew M. Cuomo is considering reducing the state workforce by up to 15,000 workers in his budget, the largest cut to the government payroll in recent years, two people briefed on the plan said Wednesday night. The prospective cuts are likely to accompany large reductions in Medicaid and state education spending, those people said, as Mr. Cuomo and his administration seek to close a projected budget gap of more than $9 billion. But the cuts would represent a substantial downsizing of the state’s workforce, including clerical workers, state troopers and park rangers. And that belt-tightening would almost certainly be accompanied by noticeable reductions in government services, though it is hard to predict where and how much until Mr. Cuomo releases his proposed budget in early February.
• Solar Firms Frustrated by Permits. Ken Button, the president of Verengo Solar Plus, a residential solar panel installer in Orange, Calif., says his company — and his industry — are being strangled by municipal red tape.

Boston Globe:

• Massachusetts Slated to Receive Over $150 Million in Additional Medicaid Funding. Massachusetts, under a deal finalized today with the federal government, is slated to receive upwards of $150 million in additional Medicaid funding that will help shore up hospitals that treat many of the state's low-income patients, including Boston Medical Center and Cambridge Health Alliance. The funding comes on top of roughly $300 million that the federal government already agreed to pay for the purpose last fall. Senator John F. Kerry helped lobby the Obama administration for the additional funding. "It was really key that we do this, it was critical," Kerry said in an interview this afternoon. "We've got safety net hospitals that are on the brink. The lack of this (funding) would have been devastating to our hospitals." The state's so-called safety net hospitals have been struggling since 2006, when the state's ground-breaking health insurance law phased out special payments to BMC and Cambridge Hospital for treating the poor. These payments are now being used to subsidize health coverage for thousands of newly insured residents.

Wall Street Pit:

• QE2 Working the Wrong Way - Has the Fed Redefined the Mission? A funny thing happened on the way to QE2: rates rose rather then fall. It appears The Ben Bernank has now redefined the mission from keeping long rates down to pushing stock prices up. He says he wants to create a “wealth effect” among investors that pulls the economy out of the slump. Never mind that rising commodities prices (especially oil) create a corresponding “poverty effect” for the middle class. How will this end?

Seeking Alpha:

• David Tepper Turns Cautious. It appears that Appaloosa Management founder David Tepper has turned cautious on the markets.

Dallas Morning News:

• Federal Reserve Bank of Dallas President Richard Fisher would have voted against the central bank's plan to buy $600 billion of bonds if he had held voting power, he said in an interview. Fisher, who has a vote this year on the policy-setting FOMC, said that he expects the asset purchase program to be completed and that he "would be wary of further accommodation," according to the Dallas Morning News.

Politico:

• Gabrielle Giffords Reading iPad, Trying to Speak.

Reuters:

• Higher Oil Price Empowers Iran, Blunts Sanctions. Oil's ascent towards $100 a barrel, which OPEC blames on western financial speculators, has handed Iran a windfall to help contain domestic discontent and take the sting out of sanctions designed to squeeze its economy. "A particular challenge for the United States is that rising oil prices undermine policy on Iran," said Simon Henderson, of the Gulf and Energy Policy Program at the Washington Institute think-tank.
• China 7-Day Repo Rate up 194 BPS on Money Squeeze.
• Russia Minister Ups CPI Forecast Twice in 20 Minutes. Rising prices will make it difficult to meet the current official inflation target of 6-7%, she said. "So far we do not see any basis to revise our forecast of inflation of around 7 percent, although I stress this is a difficult task," Nabiullina said.
• Goldman's O'Neil: World Stocks To Extend Rally.
  

Financial Times:

• Fears Grow That China is Overheating.

Telegraph:

• SocGen Crafts Strategy for China Hard-Landing.

Handelsblatt:

• Germany plans to reduce the fee paid to private households for the supply of excess solar energy by as much as 15% from July and a further 9% next year, citing government and industry officials.

Rheinische Post:

• Germany should consider completely ending its aid for renewable energy, Lower Saxony's environment minister Hans-Heinrich Sander said, citing an interview.