Today's Headlines

Bloomberg:

• Euro-Area Industrial Output Unexpectedly Declined in Nov.Euro-area industrial production unexpectedly fell in November as declines in Italy and Spain offset a return to growth in Germany. Output in the 17-nation euro area dropped 0.3 percent from October, when it declined a revised 1 percent, the European Union’s statistics office in Luxembourg said today. Economists had forecast an increase of 0.2 percent, according to the median of 37 estimates in a Bloomberg News survey. Output fell 3.7 percent from the year-earlier period. Industrial output in Germany, Europe’s largest economy, increased 0.1 percent after a 2 percent decline in October, today’s report showed. French production rose 0.5 percent, while Italy and Spain reported declines of 1 percent and 2.5 percent, respectively. Energy production dropped 1.6 percent after a 0.3 percent decline in October, according to today’s report. Output of durable and non-durable consumer goods fell 1.1 percent and 1.2 percent, respectively, while production of capital goods rose 0.7 percent.
• Italy to Sell First New 15-Year Benchmark Bond in Two Years. Italy will sell a new 15-year benchmark bond for the first time in more than two years as the Treasury takes advantage of a plunge in borrowing costs to extend the life of the country’s debt. The Rome-based Treasury will place the new benchmark security via banks “in the near future and in relation to market conditions,” according to an e-mailed statement today. The Treasury hired Banca IMI SpA, Barclays Bank Plc, Credit Agricole SA (ACA), Goldman Sachs Group Inc., JPMorgan Chase & Co. for the sale.
• European Stocks Decline for Third Day; TNT Express Drops. European stocks declined for a third day as investors watched the U.S. financial-reporting season amid concern that recent gains in share prices have overshot the earnings potential. TNT Express NV (TNTE) plunged 41 percent after United Parcel Service Inc. abandoned its bid to take over the company. Electricite de France SA jumped the most in 13 months after France agreed to compensate EDF for the deficits from its mandatory public-service investments. The Stoxx Europe 600 Index fell 0.4 percent to 286.01 at the close in London, for the longest stretch of losses in four weeks.
• French Strikes in Mali Continue as Islamists Vow Revenge. French forces battled Islamist militants in Mali for a fourth day as a rebel spokesman said the intervention had opened the “gates of hell.” The insurgents are in retreat after French air strikes on the eastern edge of the front line between government- and rebel-controlled territory, France’s defense minister, Jean-Yves Le Drian, told reporters after a meeting of the inner “war Cabinet.” The situation is “evolving favorably,” he said, adding that the Islamist militants are “extremely well armed.”
• Lockhart Says Fed Balance Sheet Expansion Raises Concern. Federal Reserve Bank of Atlanta President Dennis Lockhart said while he’s supported the central bank’s open-ended bond purchases so far, further expansion of a record stimulus could complicate the eventual shrinking of the balance sheet. “Open-ended does not mean without bound,” Lockhart said in a speech in Atlanta. “I do think the growth of the Fed’s balance sheet could have longer-term consequences that are worrisome. While I’ve supported these policy decisions to date, I acknowledge legitimate concerns.”
• Small Firms to Remain Missing Link in U.S. Expansion: Economy. Small companies will probably remain a missing element of the current U.S. expansion as their role in driving growth continues to wane, according to economists at Citigroup Inc. (C) Payrolls at firms with fewer than 500 employees accounted for less than 50 percent of the total workforce for the first time in 2008 during the recession and have barely recovered, according to their research. After hovering close to 50 percent, small businesses’ share of gross domestic product began dropping in 2001 to reach about 45 percent in the latest available data. In contrast to the gains in confidence for their larger counterparts, sentiment among smaller companies remains at recessionary levels.
• China Shuts Factories in Latest Bid to Ease Hazardous Pollution. China shut dozens of factories and pulled government cars off the road to limit pollution that hit hazardous levels for a third day, as state media said Beijing was becoming more famous for its smog than its culture or food. China Daily said yesterday the city was becoming better know for “Beijing Cough” afflicting its residents than it was for Peking Duck or Peking Opera. With hospitals reporting more patients who complained of heart and respiratory ailments, the government orders were part of expanding efforts to tackle the pollution. The reaction reflects a growing awareness within the Communist Party that pollution is becoming a main instigator for social unrest, environmentalist Dai Qing said in an interview.
• JPMorgan(JPM) Seen Facing U.S., U.K. Actions on Whale Trades. JPMorgan Chase & Co. (JPM) is set to face new actions from U.S. and U.K. bank regulators as early as today for botched trades that cost the company more than $6.2 billion last year, according to two people familiar with the matter.

Wall Street Journal:

• Dell(DELL) Shares Jump On Buyout Chatter.

Fox News: 

• Obama demands debt ceiling hike, rejects negotiating cuts with GOP. President Obama used the final press conference of his first term to again warn congressional Republicans that he will not negotiate with them over the debt ceiling, saying that Washington must increase the limit to pay its bills and such brinksmanship would be “absurd” and “irresponsible.”

CNBC: 

• Obama’s ‘Crazy’ Spending Must Be Stopped: Norquist. (video)
• Americans Start Year With Less In Paycheck - Change Ahead? Your paycheck just got smaller. Will it change your spending habits?

Zero Hedge:

• Boehner Responds: "The American People Do Not Support Raising Debt Ceiling Without Reducing Spending".
• Hedge Funds Most Levered And Long Since 2004. 
• French Military Embarrassments Continue As Insurgents Grab More Territory In Mali. 
• The Geopolitical Hotspots Of 2013. 
• JP Morgan(JPM) Mortgage Bank Fires 529.

Business Insider:

• How To Protect Your PC From The Big Hacker Attack That's Going On Right Now. 
• The S&P 5-Day Rule That Traders Swear By Is Baloney.  
• MAP: The Geopolitical Hot-Spots In 2013.
• Bank Of America(BAC) Says These 17 Stocks Could Beat Expectations This Earnings Season. 
• Obama Really Wishes He Never Gave This Speech About The Debt Ceiling. 
• Suddenly, There's A Flood Of Concern From Investors That Britain Could Leave The EU.

NY Post:

• JCPenny(JCP) Stock Plunges After Bad Holiday. The flailing department store’s stock opened down about 8 percent after a Wall Street analyst recommended investors sell their holdings — although it recovered a bit in the afternoon to close down 4.7 percent, at $18.26. Penney’s sales at stores open at least a year plummeted more than 30 percent through most of the crucial holiday season, sources close to the company told The Post this week.

Reuters:

• TNT slumps as UPS pulls bid on EU veto. UPS (UPS) is dropping its $7-billion bid for Dutch delivery firm TNT Express (TNTE.AS) after European anti-trust regulators said they would veto it, leaving TNT's future in doubt and almost halving the value of its shares. Shares in U.S.-based United Parcel Service Inc gained 1.2 percent on Monday after the world leader in the sector said in a statement that European Union officials told it the EU executive Commission would veto the deal. An EU source confirmed that and said the decision could be made public as early as next week. 
• Hedge funds nurse heavy losses after UPS-TNT deal collapses. United Parcel Service's decision to abandon its 5.2 billion euro ($6.9 billion) bid for TNT Express has left hedge funds nursing potential losses of more than $700 million, as the Dutch delivery firm's shares slid. So-called merger arbitrage funds - which make money betting on the outcomes of corporate events including takeovers - are estimated to have owned around 30 percent of TNT shares before Monday's news European anti-trust regulators would veto it, several sources familiar with the sector said.  
• EURO GOVT-Spanish yields rise as dealers prepare for auctions.

Telegraph:

• Detroit motor show: Ford economist warns on America's finances. America must return its public finances to long-term health or risk the burgeoning recovery in the country's car industry, Ford's top economist has warned. The looming stand-off in Washington over lifting America's $16.4trillion (10.2trillion pound) debt ceiling was the chief shadow as the car industry gathered for its first show of the year in Detroit on Monday. "Today we don't have fiscal sustainability," said Ellen Hughes-Cromwick, chief economist at Ford. Failure to fix America's long-term debt problem "will generate a very weak period of economic growth."

Die Welt:

• EU Climate Rules Will Make Cars More Expensive. The planned limitation of cars' carbon dioxide emissions will increase the unit cost of building new vehicles by almost EU1,000, citing a study by ICCT.