Today's Headlines

Bloomberg: 

• European Stocks Post Weekly Drop on Valuation, China. European stocks fell in the second week of 2013 amid the highest valuation in 11 quarters for the benchmark Stoxx Europe 600 Index and concern that quickening inflation in China will limit the scope for economic stimulus. 

• U.K. Economy Shrank 0.3% in Fourth Quarter, Niesr Estimates. Britain’s economy probably shrank in the fourth quarter, tipping it closer to a triple-dip recession, according to an estimate from the National Institute of Economic and Social Research. Gross domestic product fell 0.3 percent in the period after rising 0.1 percent in the three months through November, the London-based institute, whose clients include the Bank of England and the U.K. Treasury, said in a statement today.

• Fed’s Plosser Says Stimulus May Backfire, Fuel Inflation. Federal Reserve Bank of Philadelphia President Charles Plosser said the central bank’s record stimulus risks a surge in inflation and may impair efforts by households to repair their finances. “Attempts to increase economic ‘stimulus’ may not help speed up the process and may actually prolong it,” Plosser said in the text of a speech today in Somerset, New Jersey.

• Trade Gap in U.S. Widens. The gap swelled 15.8 percent to $48.7 billion, the largest since April, Commerce Department data showed today in Washington. The shortfall exceeded all projections in a Bloomberg survey of economists.

• Clive Hedge Fund Assets Said to Fall by 46% After Loss. Clive Capital LLP’s assets plunged 46 percent in 2012 after the commodity hedge fund lost money for a second year running and investors withdrew their cash, said two people with knowledge of the matter.

• Flu Spread Opens Hospital Wings in U.S. as Cases Rise. Hospitals in the U.S. are adding more beds and boosting staff to meet increasing admissions of patients stricken by the influenza outbreak that prompted Boston to declare a health emergency in the city.

Wall Street Journal:

• SAC Is Bracing for Big Exodus of Funds. Hedge-fund group SAC Capital Advisors has told employees and business partners it is bracing for client withdrawals of at least $1 billion this year—nearly 17% of the money it manages for outside investors—amid intense regulatory scrutiny of alleged insider trading, people briefed on the conversations said.

• Fed’s Plosser: Platinum Coin Not Worth Risk to Credibility. The “mint the coin” gang doesn’t have a friend in Philadelphia Fed chief Charles Plosser. The currency in question is the so called “platinum coin” some say the Treasury could create in a bid to do an end run around hitting the debt ceiling.

CNBC:

• Weaker Profit Margin Sends Wells Fargo(WFC) Shares Lower. Wells Fargo posted earnings and revenue that topped expectations Friday, driven by robust loan growth, but shares fell amid disappointment with the profit margin in the bank's lending business.

• Why Stock Market Is 'Going to Hit a Brick Wall'. If mom-and-pop investors are always the last ones to the stock party, then it might be time to call a cab. Market behavior in recent weeks suggest that after years of running from equities, the retail crowd is coming back in a big way.

Zero Hedge: 

• Spanish Tax Hike Sends Industrial Output Back To 1993 Levels. (graph)

• Mark Grant: "2013: The Year The Resplendent Masks Are Removed". 

• US Q4 GDP: From 2.5% To Sub 1% in Under Six Months.

Business Insider:

• China Warns Citizens To 'Prepare For The Worst' As It Sends Fighters To East China Sea.

• Surprise: Teenagers Say Facebook(FB) Isn't Their Most Used Site. 

• CHART OF THE DAY: The Historic Surge Into Stock Mutual Funds That Has Everyone Talking About The 'Great Rotation'.

RTT News:

• China's 2012 Auto Sales Miss Expectations. China's automobile sales missed official estimate in 2012 due to anti-congestion measures adopted by the government and low imports from Japan on territorial dispute. Auto sales grew 4.3 percent in 2012, which was much below the official estimate of 8 percent growth, data from the China Association of Automobile Manufacturers showed Friday.

NY Post:

• Atlantic City casinos were bad bet for hedge funders. Turns out, the house doesn’t always win. Hedge-fund high rollers who bet big on a comeback for Atlantic City’s casinos are watching their gambling profits dwindle. The city’s casino industry suffered its sixth straight decline last year, with winnings down 8 percent to $3.05 billion, the New Jersey Division of Gaming Enforcement said in its latest annual report, released yesterday. Even before Sandy laid waste to the city’s famed boardwalk and emptied its casinos, the gaming industry was down 4.8 percent through September, the regulator said. The numbers suggest the odds are increasingly stacked against deep-pocketed backers who play a key role in reviving the city’s fortunes.
• Bad Insta karma. Nearly 8 million users bail.Facebook’s(FB) Instagram continues to slide after an Internet uproar last month over policy changes to the photo-sharing service, new data show. Instagram has shed nearly half its daily active users — the highest frequency group — since the fiasco over its terms of use, according to AppStats. Its figures show that Instagram’s active daily users dropped to 8.42 million this week, from 16.35 million on Dec. 17, the day the controversial news broke.

Pragmatic Capitalism:

• Rail Traffic Starting to Show Signs of Weakness. (graph)

Reuters: 

• U.S. corn stockpile smaller than expected, prices jump. The U.S. quarterly corn stockpile came in well below expectations because of drought losses that also led the government to forecast on Friday the smallest corn carry-out in 17 years. 

• US Fed official warns about slipping into currency wars. A top U.S. Federal Reserve official waded into the sticky debate over global currency wars on Friday, warning that such beggar-thy-neighbor monetary policies would only hurt world trade and the economies that were involved.

MF: 

• Italy May Need to Pass EU 7b Austerity Measures in Spring. A new austerity package worth as much as EU 7b in the spring is "more than likely," citing government officials. Without the measures, Italy risks not meeting its structural deficit target. Tax revenue is less than expected, Finance undersecretary Gianfranco Polillo said on La7 yesterday.

Xinhua:

• China sends fighters to counter Japanese aircraft. China's Ministry of National Defense on Friday denounced Japanese military aircraft disrupting the routine patrols of Chinese administrative aircraft. At a press conference, an official with the ministry confirmed that China sent two J-10 fighters to the East China Sea after a Y-8 aircraft was closely followed by two Japanese F-15 fighters as it patrolled the southwest airspace of the East China Sea oil platform on Thursday. The two J-10 fighters were sent to monitor the Japanese fighter jets tailing the Y-8 as well as another Japanese reconnaissance plane spotted in the same airspace, the official said. Furthermore, the official said Japanese military aircraft have been increasingly active in closely scouting Chinese aircraft. The activity zone of Japanese military aircraft has also expanded recently, which is the root cause of security disputes concerning territorial waters and airspace between the two countries. The Chinese military will be on high alert and China will resolutely protect the security of its air defense force and uphold its legitimate rights, the official said.