Today's Headlines

Bloomberg: 

• Boehner Says Obama’s Budget Plan ‘Anything But’ Balanced. U.S. House Speaker John Boehner repeated his insistence that President Barack Obama’s budget proposal is “anything but” balanced, and accused the president of being “not serious” about cutting spending. Still, the speaker today didn’t rule out allowing a House vote on extending tax cuts for income up to $250,000 a year for married couples, as Obama has demanded, if a broader tax-and- spending deal isn’t reached soon. “The law of the land today is that everyone’s income taxes are going to go up on Jan. 1,” Boehner said when asked by reporters if he would rule out such a vote. “I have made it clear I think that is unacceptable. Until we get this issue resolved, that risk remains.” “He wants far more in tax hikes than spending cuts,” Boehner, an Ohio Republican, said of the president. Obama, responding to questions from reporters as he walked to a holiday event across the street from the White House, said the negotiations are “still a work in progress.”
• Senate Won’t Consider Stand-Alone AMT Fix, Reid Says. The Senate won’t consider a small- scale bill to avoid an expansion of the alternative minimum tax or a cut in Medicare reimbursements to physicians if no broader budget deal is reached, Senate Majority Leader Harry Reid said. Reid, a Nevada Democrat, today said the Senate won’t address any tax or spending provisions that expire at year’s end unless Republicans agree to let tax rates rise for the top 2 percent of earners, as Democrats are demanding.
• UK's Osborne Says Credit Rating Is ‘One Test’ as S&P Cuts Outlook. Chancellor of the Exchequer George Osborne played down the importance of Britain’s top credit rating, saying it is only one gauge of the economy’s health. Osborne made his comments to lawmakers today hours before Standard & Poor’s lowered its outlook on the U.K. to negative from stable, citing weak economic growth and a worsening debt profile. “It’s one test alongside others and the ultimate test is what you can borrow money at,” Osborne told Parliament’s Treasury Committee in London today. “The test we have is one we have to meet every week when we go and try and sell our gilts.”
• Europe’s Headway on Greece, Banks Masks Deeper Divisions. European policy makers made headway in fighting the three-year-old debt crisis, keeping Greece’s lifeline intact and laying the groundwork for a bank supervisor to prevent financial miscues. Finance ministers declared the two-front victory hours before a summit of European leaders that is set to expose differences between a German-led bloc and France and its allies over the long-term retooling of the euro zone.
• Bersani Says He Backs Role for Monti in Italy After Vote. Italy’s Pier Luigi Bersani, the front-runner for next year’s parliamentary elections, said he wants Prime Minister Mario Monti to remain in public service after the vote. “I confirm my absolute resolution and intention to see Prime Minister Monti engaged again,” Bersani, head of Italy’s Democratic Party, said today at a conference at the foreign press association in Rome. “The role will be discussed.” Bersani confirmed his adherence to Monti’s austerity program.
• Iron Ore Prices in China Show Imports to Slow: Chart of the Day. Chinese iron-ore import costs rose above prices from local mines for the first time in five months indicating shipments to the world's biggest buyer will slow, Oslo-based investment bank RS Platou Markets AS said. The cost of ore arriving at Tianjin port rose above the average price of the steelmaking raw material mined in China for the first time since July, according to Bloomberg. Imports, which climbed to a 22-month high of 65.78 million metric tons in November, may fall from that level as a result, worsening a slump in rates for ore-carrying Capesize ships, Platou analyst Frode Moerkedal said.
• Brazil Calls Hit Four-Year High: Options. Options traders are the most bullish on Brazilian equities in almost four years. The ratio of outstanding calls to buy the iShares MSCI Brazil Index Fund climbed to 1.03-to-1 on Dec. 10 and reached 1.05 last week, the highest level since February 2009, according to Bloomberg. The Bovespa has tumbled 13% since March as the economy grew half as fast as the government predicted during the third quarter.
• U.K. Said to Lift Fracking Ban to Boost Gas Production. U.K. Energy Secretary Ed Davey will rescind a ban on shale-gas exploration, opening the door for Cuadrilla Resources Ltd. to resume its activities, according to a person familiar with the decision.

Wall Street Journal:

• The Fiscal Cliff: Live Stream.
• States Faulted Over Teacher Pension Shortfall.
• PIMCO Says French Bonds Not Attractive. "We are not positive on French valuations given the current risks and the relative value of other assets. France offers less yield than Italy and we expect this differential to narrow," Mr. Bradshaw told Dow Jones Newswires. "While France is a systemically important country in the euro it faces a lot of structural issues--and over the course of the next few years they will be running higher deficits than Germany which will lead to a bigger net supply. There are more attractive assets than French government bonds," he said. 
• Central Banks Extend Currency Swap Deals by 1 Year.

Fox News:

• Italy Tobin Tax to Levy All Equity, Derivatives Trading in Milan. Italy's proposed financial transactions tax would impose a 0.12% levy on all equity trades from March 2013, according to a proposed amendment made Thursday to the 2013 Budget Law. The tax on stock trades is due to decline to 0.1% in 2014. A higher 0.22% levy will be made on trades done in unregulated markets, while trading in shares of companies with market capitalization of below 500 million euros ($650 million) will be exempt from the tax. A 0.02% tax will be levied on so-called high-frequency trading activity, including in derivatives such as interest-rate swaps, according to the latest version of the measure, which is part of a broad European move toward adopting a "Tobin Tax," named after a Nobel Prize winner who once proposed a levy on cross-border capital flows.

CNBC: 

• How the Fed Is Pushing Investors to Buy Junk Bonds. With no end in sight for the Federal Reserve's fixation on low interest rates, a likely scramble for yield has intensified worries about dangers ahead for junk-bond investors.
• Only 15 States Opt to Run Obamacare Exchanges. Only 15 states have told the federal government they plan to operate health insurance exchanges under President Barack Obama's reform law, leaving Washington with the daunting task of creating online marketplaces for two-thirds of the country.
• Retail Up; Jobless Claims, Producer Prices Down. U.S. retail sales rose in November and jobless claims fell sharply last week, hopeful signs for an economy that appears to have slowed sharply in the fourth quarter. Retail sales rose 0.3 percent, rebounding from a 0.3 percent decline in October, the Commerce Department said on Thursday. Economists polled by Reuters had expected an increase of 0.5 percent last month.
• UBS Faces $1 Billion Fine for Libor Rigging: Source.

Zero Hedge: 

• 4th Amendment Over: Public Buses Adding Microphones To Record Conversations. 
• Broken Market Chronicles Part X+1: This Morning's Multi-Symbolic Flash Crash.
• Grade The Recessiovery. (graphs) 
• The Rise And Fall Of Phantom Housing Collateral. 
• Santelli On False Dictatorships And Fed Exit Strategies.

Business Insider:

• What John Boehner's Deficit Chart Means.
• What It Takes To Start A Hedge Fund Has Completely Changed Over The Last Decade.
• GUNDLACH: These 4 Charts Show How Student Loans Have Become A Real Problem. 
• Jury Says Apple(AAPL) iPhone Violated Three Patents, Damages Unclear.
• MORGAN STANLEY(MS) PRESENTS: 17 Big Surprises That Could Rock Markets In 2013.
• CLOCK IS TICKING: Here's The Fiscal Cliff Nightmare Scenario.

Bespoke Investment Group:

• Bullish Sentiment Rises For Fourth Week in a Row. (graph)

Diana Olick:

• Check this out (graph) ...for all those folks yelling that "household formation" is rising and that's going to boost the builders and home prices alike...household formation also means renters. Thanks to Capital Economics' Paul Diggle for pointing this out so well. 

Senator Pat Toomey:

• More Quantitative Easing Is A Mistake. U.S. Senator Pat Toomey (R-Pa.) issued the following statement today on the Federal Reserve's announcement that it will continue monetizing our deficits by buying additional long-term Treasury securities: "The problems damaging our nation's economy are our unsustainable deficit, new regulatory burdens, and the threat of a looming, debilitating tax increase. Creating evermore money to fund our irresponsible deficits might reflate certain assets in the short term, but more quantitative easing will not solve - and might exacerbate - our underlying fiscal mess. This mistaken policy could be very difficult to unwind, will likely lead to future inflation, and will likely not result in stronger job growth."

Reuters:

• Gold falls as post-Fed rally fails to gain traction. Gold prices fell more than 1 percent on Thursday, failing to sustain gains made after the Federal Reserve unveiled a fresh round of bond purchases, as investors switched focus to the prospect of a looming U.S. fiscal crisis. Fed chairman Ben Bernanke also warned that monetary policy would not be enough to offset the damage to growth if talks to close the fiscal deficit in Washington failed, triggering mandatory tax increases and spending cuts. Gold quickly dropped in line with other markets as the new stimulus measures were overshadowed by concerns that the budget talks might fail to head off what would be a crushing blow to growth. Traders cashed in gains ahead of the year-end, with the statement containing few surprises to justify a stronger rise.
• Senate vote deals blow to crisis-era deposit insurance. Efforts by small banks to protect a financial crisis-era deposit insurance program suffered a significant setback on Thursday when a bill to extend the program failed to survive a procedural vote in the U.S. Senate. The Transaction Account Guarantee (TAG) program insures bank deposits above the $250,000 normally covered by the Federal Deposit Insurance Corp in checking accounts that do not collect interest. It is set to expire at the end of the year.
• METALS-Copper falls after Fed announcement; fiscal worries drag.

Financial Times:

• China flies aircraft over disputed islands. China turned up the heat in its simmering dispute with Japan on Thursday when for the first time it used a government aircraft to challenge Tokyo’s control of a contested island group. Tokyo scrambled fighters and made a formal diplomatic protest after a Chinese maritime surveillance aeroplane was spotted in the territorial air space of the remote and uninhabited islands, which Tokyo calls the Senkaku and Beijing knows as the Diaoyu.

Sueddeutsche Zeitung:

• Germany's middle class is shrinking as income declines, pushing wage earners into lower social and economic brackets, citing a study of the DIW institute and Bremen University.

Xinhua:

• China won't have large-scale economic stimulus plans for next year, citing analysts.
• Report warns on China's real estate rebound. A government think tank has warned that 2013 may see continued rises in real estate prices and face the risks of market collapses in some localities. According to a green paper on China's housing sector released by the Chinese Academy of Social Sciences (CASS) on Thursday, the academy is worried that many indexes of the country's housing market have shown rising trends in recent months. According to a report by the National Bureau of Statistics on Dec. 9, China's real estate investment rose 16.7 percent year on year in the first 11 months of this year, compared with 15.4 percent in the first 10 months. The green paper said housing prices in most of Chinese cities will continue rapid increases in the fourth quarter of this year and into 2013, and real estate bubbles in some cities will burst due to a retreat of investment and speculative funds. Some small- and medium-scale real estate companies' fund chains will break, which will leave more unfinished buildings and financial risks in the country, it added. The green paper expressed the CASS's belief that, while the Chinese government's macro-control policies implemented in restraining speculation in real estate have worked, they have not achieved optimal results.