Today's Headlines

Bloomberg:

• German Government Cuts 2013 Growth Forecast on Euro Woes. German Chancellor Angela Merkel’s government cut its growth forecast for Europe’s biggest economy as austerity policies in cash-strapped euro-region countries and cooling world trade damp exports. German gross domestic product growth will slow to 0.4 percent this year from 0.7 percent in 2012, the Economy Ministry said in its annual report today. That compares with a previous forecast for 1 percent expansion.  
• European December Car Sales Fall 16% on U.S. Producers. European car sales in December plunged the most in more than two years as recessions in the southern part of the region cut demand at Ford Motor Co. (F), General Motors Co. (GM) and Renault SA. (RNO) Registrations fell 16 percent to 838,428 vehicles from 997,842 a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. Full-year sales declined 7.8 percent to 12.5 million cars, with the slump in the European Union the worst in 19 years. “The concern is that German, Spanish and U.K. consumer confidence is slipping away,” Michael Tyndall, an analyst at Barclays Plc, said by phone. “Before we get too excited about stabilization in demand, we need to see consumers in those key markets to start to feel a bit happier.” GM slid 4.1 percent to $29.35 at 9:43 a.m. New York time, after earlier declining as much as 5 percent to $29.07, the biggest intraday decline since June 4. The ACEA compiles figures from the 27-nation EU, Switzerland, Norway and Iceland. The drop in December was the biggest since October 2010, when demand declined as government incentives to trade in older vehicles expired, and 2012 was the fifth consecutive year of declining registrations. “The actual decline is much worse than the statistics would have us believe, as sales figures for the year were artificially inflated as a result of self-registrations by dealers and automakers, especially in the region’s biggest market, Germany,” Peter Fuss, senior advisory partner at Ernst & Young’s Global Automotive Center, said today in a report.
• In China, Slowdown Is a Bigger Danger Than Growth. The bigger danger over the medium term, however, may be a slowdown in Chinese growth -- which appears to be more likely than most U.S.-based commentators seem to realize.
• Default Alarm Rings as Trust Loans Jump Sevenfold: China Credit. A seven-fold jump in last month's lending by China's trust companies is setting off alarm bells for regulators to guard against the risk of default. So-called trust loans rose 679% to 264 billion yuan from a year earlier, central bank data showed. That accounted for 16% of aggregate financing, which includes bond and stock sales. The amount of loans in China due to mature within 12 months doubled in four years to 24.8 trillion yuan, equivalent to more than half of gdp in 2011, and the People's Bank of China has set itself a new goal of limiting risks in the financial system. "Short-term financing instruments such as trust loans have been rising really quickly," said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. "Quite a number of companies resort to trust loans when they face financing troubles. A breakdown in this financing chain will eventually lead to a default on debt this year."
• U.S. Industrial Production Rises 0.3% on Equipment Demand. Production at U.S. factories climbed more than forecast in December and the cost of living was little changed, showing the economy gained momentum entering 2013 while inflation remained at bay. Manufacturing output advanced 0.8 percent after jumping 1.3 percent in November, the strongest back-to-back reading in almost a year, Federal Reserve figures showed today. The Labor Department said its consumer-price index was unchanged last month, capping the third-smallest annual gain in a decade. 
• OPEC Cuts Oil Output to 14-Month Low Amid Economic Uncertainty. OPEC reduced its production to the lowest level in 14 months as budget wrangles in the U.S., uncertain impact of stimulus measures in Japan and Europe’s struggle to boost growth cloud outlook for fuel demand. The Organization of Petroleum Exporting Countries cut output by 465,000 barrels a day in December to 30.4 million, the lowest since October 2011, led by a reduction in Saudi Arabia, the group said today in its monthly report,citing secondary sources. That’s 800,000 a day more than the average 29.6 million the group estimates it will need to provide this year. OPEC kept is 2013 global demand forecast unchanged.
• Goldman(GS), Morgan Stanley(MS) Set $557 Million Fed Mortgage Accord. Goldman Sachs Group Inc. and Morgan Stanley agreed to offer a $557 million package of cash and other assistance for mortgage borrowers to settle a federal probe into allegations that the banks improperly seized homes.

Wall Street Journal: 

• Americans Among Hostages Seized in Algeria. Militants seized an unconfirmed number of foreign hostages, including some Americans, at a Western-operated energy field in Algeria, fanning fears of spreading violence amid France's efforts to uproot an al Qaeda-linked insurgency in Mali. France's main target in Mali, al Qaeda in the Islamic Maghreb, claimed responsibility for the attack, calling it a retaliation for the French intervention. The claim of responsibility couldn't be verified, as a standoff continued on Wednesday between the militants and the Algerian army.

MarketWatch.com:  

• Economy held back by fiscal concerns, Fed finds. The U.S. economy expanded at either a modest or moderate pace across the country into early January, as spending and hiring were held down by concerns over fiscal policy, according to the latest Federal Reserve Beige Book survey released Wednesday. 
• Four leading indicators of a market top. 

Fox News:

• Obama urges new restrictions on assault weapons, magazines as part of gun control plan. President Obama called Wednesday for a new and tougher assault-weapons ban and a 10-round limit on magazines, as part of a comprehensive plan to curb gun violence that includes 23 steps he took without congressional action. Already facing stiff opposition from gun-rights advocates and Republican lawmakers, the president called on Congress to pass several major changes to the country's current gun laws -- some of which are already being considered like the restrictions on semi-automatic weapons and high-capacity magazines. Obama called as well for legislation to bar the possession and importation of armor-piercing bullets and to require criminal background checks for nearly all gun sales. The president, speaking at the White House, said he would use "whatever weight this office holds" to get the proposals passed. 
• Kansas governor wants to get rid of a popular mortgage deduction.

CNBC: 

• The China Beige Book Has Some 'Shocking' Data. China's growth is expected to have re-accelerated to near 8 percent in the fourth quarter of last year, but there are some troubling inconsistencies in the economy, according to the China Beige Book released on Wednesday. The latest survey by the U.S. based China Beige Book (CBB) International has found "shocking" evidence of falling loan demand in the world's second-largest economy. "In the fourth quarter, we're seeing corporate loans decline significantly, very shockingly most of our bankers say less than 20 percent of their lending goes to new loans. Most of its going to debt rollovers or increases, they are not funding expansion. That indicates that this is not a period of strong expansion," Leland Miller, president at CBB told CNBC on Wednesday. 
• Dem Elder Statesman: We Spend Too Much. (video) The government has a "spending problem" and that needs to change, former House Majority Leader Richard Gephardt told CNBC on Wednesday. "We're spending 24 percent of GDP and we're taking in 16 percent," the Missouri Democrat said in a "Squawk Box" interview.
• After an Eight-Month Ride, Home Builder Confidence Stalls.

Zero Hedge:

• JPM(JPM) Beats Thanks To Ongoing Loan Loss Reserve Releases; NIM And Trading Revenues Decline, CIO Posts Loss.
• Goldman(GS) Beats On Solid Top Line Results; Average 2012 Employee Pay Rises To $399,506. 
• World War Is Coming, Currency War That Is - Russia Warns.
• NYSE Short Interest Plunges To March 2012 Levels. (graph)
• Citi(C) On The Debt Ceiling: "First Complacency, Then Horror".

Business Insider:

• Here's The White House's Full Gun Control Proposal.
• Facebook(FB) Has A Bad Habit Of Coming Out With Half-Baked Products. 
• Facebook's(FB) 'Graph Search' Might Start An Un-Liking Rebellion. 
• TOM DEMARK: Apple's Stock Has Bottomed And Should Rally 22% From Here.

SanDiego6.com:

• White House, Congress Create Gun-Buying Frenzy After Newtown. While constructive dialogue should be the first course of action when it comes to discussing America’s pressing issues, the White House and congressional members insistence on politicizing everything, including banning assault rifles and large capacity ammunition magazines, their efforts have produced the opposite result and created a firearms buying frenzy.