Today's Headlines

Bloomberg:

• Spanish Jobless Rate Hits Record 26.0% After Rajoy’s First Year. The number of jobless approached 6 million people, or 26.02 percent, from 25.01 percent in the previous three months, the National Statistics Institute in Madrid said today. That matched the median forecast of 10 economists surveyed by Bloomberg. Spain is now home to a third of the euro region’s unemployed. 

• Merkel Says Japanese Yen, Central-Bank Liquidity Are Concerns. German Chancellor Angela Merkel said the Japanese government’s call for monetary easing and central- bank cash that’s been unleashed to stem Europe’s debt crisis constitute risks to the global economic recovery. “I can’t say I’m completely free of worry when I look at Japan right now,” Merkel said today during a question-and- answer session after addressing the World Economic Forum in Davos, Switzerland. For Europe, the “large amount of liquidity” pumped into the financial system last year, particularly to help banks, has to be mopped up again, she said.

• Osborne Says Credibility ‘Easily Lost’ as IMF Warns on Austerity. U.K. Chancellor of the Exchequer George Osborne said there can be no letup in his budget-cutting program after the International Monetary Fund urged him to consider easing the pace of austerity if the recovery falters. “Credibility is very hard won and easily lost and it would be a huge mistake to put that at risk,” Osborne said at an event today at the World Economic Forum annual meeting in Davos, Switzerland.

• Deutsche Bank(DB) Said to Sell CDOs to Help Meet Capital Goal. Deutsche Bank AG (DBK), Germany’s biggest lender, is said to have issued collateralized debt obligations, using a structure common before the credit crunch to shed its riskier assets and boost its capital ratio.

• Emerging Stocks Drop as Apple Sales Hit Asian Suppliers. Emerging-market stocks retreated the most in a week as slower sales growth at Apple Inc. (AAPL) dragged down Asian suppliers and earnings reports disappointed investors.

• Consumer Comfort Falls Amid Mounting Concern Over U.S. Economy. Consumer confidence fell last week to its lowest level in more than three months as concern about the U.S. economy mounted. The Bloomberg Consumer Comfort Index declined to minus 36.4 in the seven days ended Jan. 20, the weakest since early October, from minus 35.5 the prior period. The measure has fallen for three straight weeks, the longest slump since August.

• Gasoline to U.S. Seen Slumping Amid Biggest Stocks in Years. The flow of European gasoline to the U.S. is poised to decline in the next two weeks as record fuel stocks for the time of year deter imports and cause shipping rates to slump, a Bloomberg survey showed. Traders and oil companies will book 24 tankers to load the fuel during the two weeks to Feb. 6, according to the median estimate in a survey yesterday of seven shipbrokers and traders specializing in the trade. A week ago they expected 27 ships to be chartered in the corresponding period. 

• Iron Ore Seen Falling in Second Quarter as China Restocking Ends. Iron ore will almost erase the past two months’ rally and fall 19 percent in the second quarter as weather stops disrupting supply and Chinese restocking ends, according to a Barclays Plc trader of the commodity. The raw material used to make steel will average $120 a dry metric ton in the three months from April, said Richard Lee, who most accurately predicted Chinese ore imports in a September survey of 11 analysts, traders and brokers. Iron ore traded at $147.70 a ton yesterday, prices from The Steel Index Ltd. show.

• Kerry Issues Iran Warning as He Seeks Senate Confirmation. Senator John Kerry stressed the need to prevent Iran from acquiring nuclear weapons as he described the “immediate, dangerous challenges” for the nation that he will deal with if confirmed as secretary of state. “The president has made it definitive -- we will do what we must to prevent Iran from obtaining a nuclear weapon,” Kerry said in testimony today to the Senate Foreign Relations Committee. “And I repeat here today: our policy is not containment. It is prevention, and the clock is ticking on our efforts to secure responsible compliance.”

• EU Carbon Plunges 40% as Lawmakers Suggest Rejection of Glut Fix. European Union carbon prices plunged a record 40 percent after a panel in the 27-nation bloc’s parliament recommended rejection of a strategy to strengthen the world’s biggest cap-and-trade market. The European Parliament’s industry committee advised against the plan by the EU’s regulatory arm to change the emissions-trading law to tackle a glut by 42 votes against versus 18 for. Carbon permits for December sank to a record 2.81 euros ($3.75) a metric ton immediately after the ballot. 

• Senate Leaders Said to Agree on Filibuster Rule Changes. U.S. Senate leaders reached a bipartisan agreement to change the chamber’s rules to make it harder for a single member to slow down action on legislation, according to a Senate aide and a summary of the plan.

• Focus Media(FMCN) Says SEC Probes Possible Securities Violation. Focus Media Holding Ltd. (FMCN) said the U.S. Securities and Exchange Commission is probing potential “violations” of securities law, with special attention to purchases and resales of companies including Allyes Online Media Holding. The Shanghai-based advertising company is cooperating with the SEC, it said in a regulatory filing on Jan. 18 about its going-private transaction with Carlyle Group LP (CG) and other firms.

MarketWatch.com:

• Obama sends tough prosecutor to police Wall Street. Commentary: Mary Jo White: ‘We know who to look for’.

Fox News:

• Republicans challenge Clinton claims on budget cuts, Benghazi cable. Republicans are challenging a host of statements made by Secretary of State Hillary Clinton and Democratic allies during Wednesday's heated Libya testimony -- claiming that complaints about a lack of funding are bogus and questioning the secretary's insistence she never saw urgent cables warning about the danger of an attack. 

CNBC: 

• Leading Indicators Rise 0.5 Percent, Top Forecasts. A gauge of future U.S. economic activity rose in December, pointing to an improvement in growth despite an ongoing political fight in Washington over fiscal policy. The private Conference Board said on Thursday its Leading Economic Index gained 0.5 percent to 93.9 last month, after being unchanged in November.

Zero Hedge: 

• It's Official: Worst. Recovery. EVER. (graphs) As the following chart from the St Louis Fed shows, as of the just completed quarter, US GDP "growth" since the "recovery" is now the worst in US history, having just dipped below the heretofore lowest on record.  

• And The Reason For Today's Five Years Initial Claims Low Is...

• Spot The 'Different This Time' Seasonal Fudging In Macro Data. (graphs) 

• Kansas Fed Joins NY, Philly And Richmond Fed In Contracting; Employment Index Drops To 2009 Levels. 

• Insurers To White House: Delay ObamaCare Or Risk "Chaos".

Business Insider: 

• Iran Says War Is The Only Thing That Can Stop Them Now. 

• Here's The First Set Of Hard Numbers On Google's(GOOG) Attempt To Steal Amazon's Shopping Business. 

• The 10 Hedge Funds With The Biggest Stakes In Apple(AAPL). 

• BREMMER: The Japan-China Crisis Is The Most Significant Geopolitical Tension In The World.

Reuters:

• Gold drops 1 pct on waning investor appetite. Gold fell 1.2 percent to a 10-day low on Thursday after a repeated failure to break above a key chart level hurt investor confidence in the metal. A recovery in gold prices this month ran out of steam as the metal hit strong resistance at $1,695, its 55-day moving average and early January high. After failing to break decisively above that level for five straight sessions, gold fell.

• Red flags revealed in filings of firm linked to Caterpillar(CAT) fraud. A Chinese mining equipment company at the centre of an alleged accounting fraud was also involved in a web of insider loans and asset transfers prior to its purchase by Caterpillar Inc., public filings show. The transactions, while not illegal, should have sounded warnings about the company's finances when the U.S. firm came calling last year, corporate governance experts said.

Financial Times:

• Business chiefs show backing for Cameron. Business leaders including the chief executive of the London Stock Exchange and the chairman of Standard Chartered have backed the British prime minister’s plan for a referendum on EU membership. In a letter to The Times, 56 industry and City leaders said they agreed with David Cameron that Britain’s “best chance of success is as part of a reformed Europe”.

France 24:

• Italian retail sales drop 0.4% in November: Istat. Italian retail sales dropped 0.4 percent in November compared to the level in October, official data showed on Thursday, in the fifth monthly drop running. A breakdown of figures published by the national statistics institute Istat showed that sales of food items had gained 0.1 percent, while non-food sales were 0.6 percent lower on the month. On a 12-month basis, retail sales fell by 3.1 percent, Istat said. Retail sales dropped 2.0 percent in the 11-month period from January to November 2012 compared to the same period in 2011, pulled down in particular by non-food sales, which plunged 2.6 percent, Istat said.

Europe 1:

• Hollande Abandons Plan  to Renew France's 75% Tax. President Francois Hollande has abandoned plans to create a new version of his 75% tax on earnings of more than 1 million euros. The tax was struck down by France's highest court in December.