Today's Headlines

Bloomberg: 

• Merkel and Hollande Put on Show of Unity as Economies Diverge. Chancellor Angela Merkel and President Francois Hollande put on a show of unity to mark a half century of Franco-German cooperation even as economic malaise in the euro area exposes divergences between the two. The leaders of Europe’s two biggest economies met in Berlin today to celebrate the 50th anniversary of the Elysee Treaty, which sealed the countries’ cooperation after World War II. The two said they’ll forge a common approach to stabilize the 17- member euro area by May. The joint overture at wresting the euro area out of crisis comes as the two countries’ economies head in opposite directions, with France’s unemployment approaching a euro-era record and German joblessness near a two-decade low. 
• King Confronts Triple-Dip Risk as Snow Freezes U.K. Britain’s cold snap and its echoes of previous winter disruption risk leaving Bank of England Governor Mervyn King with the danger of a triple-dip recession just as he counts down his final months in office.
• GM(GM) May Close German Plant Two Years Early as Sales Drop. General Motors Co. (GM), which is unprofitable in Europe, may shutter a German plant two years earlier than planned as the region’s auto market sinks for a sixth straight year. 
• Spain Seen Selling 7 Billion Euros in 10-Year Bonds. Spain will sell 7 billion euros ($9.3 billion) of 10-year bonds via banks, said a person familiar with the deal, after Economy Minister Luis de Guindos said the sale generated record demand. The debt will be priced to yield 365 basis points more than the mid-swap rate, the person told Bloomberg today, declining to be identified because the details of the transaction aren’t public yet. That amounts to around 5.4 percent.
• Schwab Calls Iran, Syria ‘Black Swans’ as Euro Crisis Fades. “The world is still full of risks and we do not have only to address the economic risks, I think it is very important that we become more resilient in terms of the political risks,” Schwab, 78, said in a Bloomberg Television interview in Davos, Switzerland, yesterday. “There are many black swans around,” he said, referring to the Japan-China dispute in the East China Sea, the Syrian civil war and the nuclear inspections in Iran.
• CFA Level 1 Exam Pass Rate Declines to 37% for December Test. A lower percentage of hopefuls for the Chartered Financial Analyst designation passed the first level of their three-part exam in December. Thirty-seven percent of applicants passed the first test, the CFA Institute said on its website today, down from 38 percent when the test was last given in June 2012 and a year earlier in December 2011. 
• Existing Home Sales Decline as U.S. Supply Dwindles: Economy. Purchases fell 1 percent to a 4.94 million annual rate last month, figures from the National Association of Realtors showed today in Washington. The median forecast of 79 economists surveyed by Bloomberg called for a gain to a 5.1 million rate. 
• Verizon Earnings Fall as Discounts Yield Customer Record. Verizon Communications Inc. (VZ), the second-largest U.S. phone company, missed earnings estimates after a record number of new wireless subscribers led to a surge in profit-squeezing smartphone subsidies.

MarketWatch.com: 

• Oil above $96 as traders weigh demand signals. Gasoline paces broad-based gains for energy futures. Crude-oil futures climbed above $96 a barrel Tuesday, shaking off some earlier pressure from disappointing data on U.S. home sales, as traders focused on upbeat economic news elsewhere that lent support to prospects for stronger oil demand. Crude for February delivery added 71 cents, or 0.7%, to $96.27 a barrel on the New York Mercantile Exchange. 
• Pimco’s Bill Gross warns QE will make discount bonds ‘road kill’.

CNBC:

• Microsoft(MSFT) May Invest $1-$3 Billion in Dell(DELL) Buyout.
• House to Vote on 'No Budget, No Pay' Wednesday. House Republican leaders have scheduled a vote on Wednesday on a nearly four-month extension of U.S. borrowing capacity, but the bill does not specify a dollar amount.
• Sarkozy May Move to London Over France's 75% Tax Rate. (video)
• New Housing Fears: Home Prices Are Rising Too Fast.

Zero Hedge: 

• Nebraska Governor Appoves Alternative Route Of Keystone XL Pipeline: Will Buffett/Obama Give The Green Light?
• US Macro Turns Negative - Worst In Almost 5 Months. (graph)
• Why Stimulus Has Failed. 
• January Richmond Fed Plunges, Quadruple Dips In Biggest Miss To Expectations Since 2009. (graphs) 
• Global Unemployment Expected To Surpass 200 Million. (graphs)

Business Insider: 

• ASSAD: ‘I Will Win, Even If Damascus Is Destroyed’. 
• DYLAN GRICE: Investors Today Face A Problem That Has Plagued Societies Throughout History. 
• This Massive Outbreak Of Bullishness Is Starting To Get Crazy.

Reuters:

• Egan-Jones barred from some ratings to resolve SEC case. Egan-Jones barred from some ratings to resolve SEC case. Credit rating firm Egan-Jones and its president Sean Egan agreed to be barred for 18 months from rating asset-backed or government securities to resolve charges they lied on registration forms, U.S. regulators said on Tuesday. The U.S. Securities and Exchange Commission announced that it found the firm said it had rated certain securities since 1995 on its registration application, even though the firm had not issued such ratings before filing its application in 2008.
• German exporters fear devaluations round after BOJ moves. The head of Germany's foreign trade association, Anton Boerner, told Reuters on Tuesday he feared that efforts by the Bank of Japan to end years of economic stagnation by monetary easing would spark rounds of competitive devaluations.

Financial Times:

• Fed To Review Its Market Communications. In particular, some officials see a case for giving more information about what factors would trigger a halt in asset purchases, and how fast interest rates will go up when the time comes to raise them. That could mean a further easing of policy because the market expects a rapid take-off for interest rates, but at least some officials think the rise will be slower.

Telegraph:

• EU officials hope to use Leveson's proposals to ensure British press promotes 'European values'. 
• UK public borrowing rises in December threatening AAA rating. Britain's government borrowed more than expected in December, which could lead to Chancellor George Osborne missing his target set out in the Autumn statement, economists have warned, and threatens the country's AAA rating. 

Express Tribune:

• Indian Kashmir advises people to prepare for nuclear war. Police in Indian Kashmir have warned residents to build underground bunkers to prepare for a possible nuclear war in the disputed region, which is on edge after a string of deadly border clashes. “If the blast wave does not arrive within five seconds of the flash you were far enough from the ground zero,” says the notice, headed “Protection against Nuclear, Biological and Chemical (NBC) Weapons”. It warns of “initial disorientation” from a nuclear attack, saying the blast may “carry away many prominent and familiar features”. The instructions were issued Monday in a local English-language Greater Kashmir newspaper by the State Disaster Response Force, which is part of the police. They vividly describe a nuclear war scenario to prepare residents to deal with “the initial shock wave”. The notice tells them to “wait for the winds to die down and debris to stop falling”. “Blast wind will generally end in one or two minutes after burst and burns, cuts and bruises are no different than conventional injuries. (The) dazzle is temporary and vision should return in few seconds,” it says. It tells residents to build basement shelters “where the whole family can stay for a fortnight” and stock them with non-perishable food.

Jiji Press:

• Japan Parties Agree on Tax Hikes for Wealthy. The ruling Liberal Democratic Party, its New Komeito ally and the major opposition Democratic Party of Japan agreed Tuesday on steps to raise tax burdens on wealthy people, including a 5-percentage-point increase in the top income and inheritance tax rates. The ruling coalition of the LDP and New Komeito will include the agreed measures in their comprehensive tax system reform package to be compiled on Thursday, hoping to implement them in January 2015. Last June, the three parties agreed to raise the 5 pct consumption tax rate to 8 pct in April 2014 and to 10 pct in October 2015, while deciding to reach an accord on steps to raise tax burdens on wealthy people by the end of March 2013. In Tuesday's talks, the three parties agreed to raise the maximum income tax rate from 40 pct to 45 pct and apply the new rate to people with annual incomes of over 40 million yen. The current top rate is imposed on those earning more than 18 million yen a year. The top inheritance tax rate will be hiked to 55 pct for taxable assets of over 600 million yen, from 50 pct for those of over 300 million yen.