Today's Headlines

Bloomberg:

• IMF Says Greece Will Need More Money, Has Elevated Risks. The International Monetary Fund warned that risks to Greece’s economic reform plan remain high and said European nations will need to provide more funds and debt relief to the country. “The program is moving in the right direction, but the challenges ahead remain enormous,” the IMF staff wrote in a report on Greece released today. “Timely delivery of Greece’s European partners’ undertakings on debt relief and financing is crucial for program success.” The fund agreed to disburse 3.2 billion euros ($4.3 billion) to Greece earlier this week after the government approved new budget cuts, received more favorable aid terms from European nations and conducted a bond buyback. The fund estimates that the country will need extra funding of as much as 9.5 billion euros for 2015-2016, and see “good prospects” Europeans will finance it if the country implements policies attached to the current loan. 
• Italy’s Recession to Be Deeper Than Expected, Central Bank Says. Italy’s recession will be worse than previously expected, the country’s central bank said today as it cut its 2013 estimate for gross domestic product on weakness in the global economy and disappointing internal demand. Italian GDP will probably contract 1 percent this year, the Bank of Italy said today in its economic bulletin. That compares with a July estimate from the central bank for a 0.2 percent reduction. “In our country, internal demand still hasn’t reached an inflection point,” the Bank of Italy said. The lower GDP forecast was “due to the worsening of the international scenario and the continuation of the weakness in business activity in recent months.”
• Italy Needs 9 Billion Euros for Deficit Goal, Official Says. Italy may need at least 9 billion euros ($12 billion) in additional budget measures in 2013 to meet its deficit targets as the worsening recession hurts tax revenue and fuels unemployment costs, a Finance Ministry official said. Italy will need to find 8 billion euros to finance jobless schemes and faces a 6 billion-euro revenue shortfall from value- added and gambling taxes, Finance Undersecretary Gianfranco Polillo said in an interview in Rome. That will be partly offset by a bigger-than-expected take from a new property tax and falling debt financing costs that will add 5 billion euros in resources.
• U.S. Carmakers Urge Obama to Punish Japan for Weak Yen. President Barack Obama should tell Japan’s new government that the U.S. will retaliate for policies aimed at weakening the yen, a group representing Ford Motor Co. (F), General Motors Co. (GM) and Chrysler LLC said.
• Japan Seeks Deeper U.S. Ties as Envoy Warns on Island Spat. Japan’s new foreign minister visits the U.S. today in a bid to strengthen ties with the Obama administration, which is concerned that its Asian ally’s territorial dispute with China will disrupt regional stability. Fumio Kishida meets with Secretary of State Hillary Clinton today in Washington, in the highest-level meeting between the two countries since Prime Minister Shinzo Abe took office last month. Abe is boosting defense spending in response to China’s increasingly assertive claims to islands in the East China Sea. 
• Algeria Says 30 Hostages Still Missing in Gas Plant Siege. Algerian authorities said about 30 foreigners held hostage by al-Qaeda-linked militants in the southeastern desert are still missing after a rescue attempt by the army. Security forces have freed 573 Algerians and about 100 foreign captives out of 132, the state-run Algerian Press Service reported, without saying where it got the information. A final count hasn’t been made, while the gas complex where the militants and hostages are besieged has been shut down to avert the risk of explosion, APS said. The army launched a second attack today and has killed 18 militants, according to APS. Some captives were reported dead after yesterday’s assault.
• Obama Promise to Boost Middle Class Already in Peril. President Barack Obama, who said his “one mandate” in a second term was to help middle class families, takes the oath of office with many barriers to raising most Americans’ living standards. Most Americans started this year with a cut in take-home pay as Congress let a temporary 2-percentage-point reduction in payroll taxes expire. Workers’ own leverage to gain wage increases will be limited for years by competition from the swollen ranks of jobless Americans as forecasters expect the unemployment rate to remain at or above 7 percent through 2014.
• Oil-Tanker Return Estimates Cut at Evercore as U.S. Demand Wanes. Earnings for the world oil-tanker fleet will be as much as 14 percent lower than previously forecast this year as rising U.S. shale-gas production curbs demand to import crude, Evercore Partners said. Very large crude carriers, each able to hold 2 million barrels, will earn $18,000 daily on average, below the prior estimate of $21,000, the New York-based investment bank said yesterday in a report. Evercore also cut projections for smaller Suezmax and Aframax vessels. Earnings will stay below break-even levels for most tanker owners for a second year, it said. 
• U.S. Oil Demand Falls to 16-Year Low Amid Output Gain, API Says. U.S. oil demand fell to the lowest level in 16 years in 2012 as economic growth weakened while domestic output surged the most in more than 150 years, the American Petroleum Institute said. Total petroleum deliveries, a measure of demand dropped 2% from 2011 to 18.6 million barrels a day last year, the lowest level since 1996, the industry-funded group said in a monthly report today. Oil production increased the most since 1859 to the highest level in 15 years, the API said. 
• Capital One Declines as Profit, Guidance Miss Estimates. Capital One Financial Corp. (COF), the lender that gets more than half of its revenue from credit cards, fell the most on the Standard & Poor’s 500 Index after fourth-quarter profit missed analysts’ estimates. Capital One dropped 7.6 percent to $56.90 at 9:38 a.m. in New York. Net income was $1.41 a share for the three months ended Dec. 31, the McLean, Virginia-based company said yesterday in a statement.

Wall Street Journal: 

• House to Vote on Short-Term Increase in Debt Limit. House Republican leaders Friday proposed a three-month extension of the federal debt limit, a significant shift in GOP strategy that could reduce the market-rattling risk of the U.S. running out of cash to pay its bills. The GOP bill, which is expected to go before the House next week, includes a requirement that the House and Senate pass formal budgets by mid-April, but it does not include specific spending cuts.
• Algeria Hostage Crisis: Live Coverage. 
• Fed's 2007 Transcripts Show Shift to Alarm. Federal Reserve officials in 2007 seemed to underestimate the growing risks in the U.S. financial system before shifting to a state of high alarm, according to newly released transcripts from the central bank's meetings that year.
• Morgan Stanley(MS) Shares Soar on Earnings.

CNBC:

• DeMint Urges Face-Off Over Debt Ceiling. With weeks to go before the U.S. reaches its statutory debt limit, some conservatives inside and outside of Congress have been getting cold feet about refusing permission to authorize new borrowings to pay the country's bills. But Jim DeMint, who quit the Senate late last year to become the next president of the Heritage Foundation, a conservative Washington think-tank, is urging Republicans in Congress to hold their nerve in the upcoming confrontation with the White House.

Zero Hedge:

• EURUSD Slides As ECB Shrugs At LTRO-Implied Deleveraging. (graph)
• Consumer Confidence Plunges To December 2011 Levels, Biggest Miss To Expectations In 7 Years. (graph)
• Europe's Cognitive Dissonance. (graphs)
• If You Are Unemployed In These States, Move! (table)
• How JPMorgan's(JPM) $5 Million Loss Rose 80-Fold In Minutes After "A Confrontation Between Traders".

Business Insider:

• 6 Ways Criminals Are Going To Thwart Gun Control Laws. 
• CDC: Flu-Related Deaths Exceed Epidemic Levels. 
• Japan's Prime Minister Went On A Trip That Appears Designed To Enrage China. 
• Newsweek Likens Obama To Jesus—Calls Second Term 'The Second Coming'. 
• SocGen's Excellent Presentation Dives Into The Question: 'What If China Lands Hard?'. 
• iPad Parts Supplier Has Nearly Halted Production.

Mashable:

• Al Gore Just Got $29.5 Million of Apple(AAPL) Stock For an Insanely Great Discount. What do you do right after selling your company for a half-billion dollars? If you're Al Gore, you go ahead and make another small fortune from Apple stock. Gore, who holds a position as a director on Apple's board, exercised options to purchase 59,000 shares of Apple stock on Jan. 15 for the insanely low price of $7.475 a share, according to a company filing with the Securities and Exchange Commission on Thursday. Based on Apple's current share price of about $500, Gore effectively purchased $29.5 million worth of Apple stock for just $441,000. That's a pretty big discount and one that Gore probably doesn't need.

Financial Times:

• Spain remains shackled by corporate debt. New economic growth is likely to be tepid at best. In Europe, at least, there is still a widespread failure to recognise the need for further radical adjustment. Nothing epitomises this failure so well as Spain.

Telegraph:

• UK retail sales in shock December drop. Retail sales fell 0.1pc in December, dashing hopes that Christmas shoppers would provide a last-minute lift to an economy on the verge of another contraction.
• S&P sees deeper house price falls in eurozone as slump engulfs core. Europe’s housing slump is engulfing large parts of the eurozone core as recession deepens, with prices to keep sliding for another two years, Standard & Poor’s has warned.

Neue Zuercher Zeitung:

• Juncker Says Eurobonds Won't Solve Debt Crisis. Luxembourg Prime Minister Jean-Claude Juncker, who leads the group of euro-area finance ministers, commented in an interview. "I object to the impression that just an agreement on eurobonds will end the debt crisis in the euro area," Juncker said. "A private-sector involvement as was the case in Greece will not be possible in Cyprus," he said.

WAZ:

• Germany Unhappy With Greece Privatization Process. Chancellor Angela Merkel's govt says Greece's progress in selling state assets has been disappointing, citing a govt letter to the lower house of parliament.

Nikkei:

• Japan's ruling Liberal Democratic Paerty and its coalition partner New Komeito plan to raise the highest income tax rate to 45% from 40%, citing Takeshi Noda, head of LDP's tax research commission.