Today's Headlines

Bloomberg:

• Italian Consumer Confidence Declines to 17-Year Low. Italian consumer confidence unexpectedly declined this month to the lowest in at least 17 years as the country’s fourth recession since 2001 damped optimism. The confidence index dropped to 84.6, the lowest since the series began in 1996, from 85.7 percent in December, the Italian statistics office Istat said in Rome today. Economists had predicted an increase to 86, according to the median of 12 forecasts in a Bloomberg News survey.
• Goldman Sachs(GS) to Raise $1 Billion Selling Stake in ICBC. Goldman Sachs Group Inc. (GS) is seeking to sell a $1 billion stake in Industrial & Commercial Bank of China Ltd. after the world’s biggest lender by market value rebounded almost 50 percent from last year’s low. The shares are being offered at HK$5.77 each, 3 percent lower than the Chinese lender’s HK$5.95 (1398) closing price in Hong Kong today, according to a term sheet obtained by Bloomberg News.
• Rehn Signals EU Might Ease Spain Budget Goal as Growth Suffers. European Union budget enforcer Olli Rehn signaled he may seek to ease Spain’s targets for cutting its budget deficit as austerity measures deepen the country’s economic slump. EU officials will make a decision on the best pace for Spain’s budget consolidation process when they deliver a scheduled assessment of the program next month, Rehn said at a press conference in Madrid today. “If there has been a serious deterioration in the economy, we can propose an extension of a country’s adjustment path,” said Rehn, the EU’s economic and monetary affairs commissioner, as he sat alongside Spanish Economy Minister Luis de Guindos. “That’s what we did last year in the case of Spain.”
• Turkey Stocks Drop Most in 16 Months on Moody’s Ratings Upset. Turkey’s stocks fell the most in 16 months as a credit rating upgrade anticipated by some analysts from Moody’s Investors Service failed to materialize. The benchmark ISE National 100 Index (XU100) dropped 4.2 percent, the most since September 2011, to 81,165.81 at the close in Istanbul. Of the 100 stocks, 98 fell, with trading volume at 38 percent above the gauge’s 30-day moving average. The measure hit a record high on Jan. 24. The nation’s banking index slid 5.6 percent. The three-day decline in banking stocks was the steepest loss since August 2011. 
• Facebook(FB) Calls Reach Record: Options. Options traders are more bullish on Facebook Inc. shares than ever as the operator of the world's most-popular social network expands into mobile and search services to boost revenue. The ratio of oustanding calls to buy the stock versus puts to sell reached 1.51-to-1 last week, the highest level since options started trading after the company's IPO in May, according to Bloomberg. The shares have rallied 78% from a record low in September.

Wall Street Journal: 

• Moody's Downgrades Six of Canada's Big Banks. Moody's Investors Service Inc. MCO +0.28% downgraded six of Canada's largest banks, citing concern about high consumer-debt levels and elevated house prices—underscoring the headwinds buffeting what was once one of the more resilient developed economies amid the global economic crisis. Bank of Montreal, BMO +0.67% Bank of Nova Scotia, BNS.T +0.92% Caisse centrale Desjardins, Canadian Imperial Bank of Commerce, CM.T +0.64% National Bank of Canada and Toronto-Dominion Bank TD.T +0.34% were all downgraded one notch, with a stable outlook, the New York-based debt-rating firm said. TD, Canada's second biggest bank by assets behind Royal Bank of Canada, RY.T +0.90% lost its top triple-A rating, the only Canadian bank that had continued to maintain one. It is now rated Aa1. The "banks' exposure to the increasingly indebted Canadian consumer and elevated housing prices leaves them more vulnerable to unpredictable downside risks facing the Canadian economy than in the past," David Beattie, a Moody's vice president, said in a statement.

CNBC: 

• Caterpiller(CAT) Earnings Hit by China Fraud; Cautious for 2013. Caterpillar earnings after adjusting for a big write-down in China topped analysts' estimates Monday. The company said it expects earnings to improve later this year, but its outlook shows it isn't banking on it. The world's largest maker of construction equipment posted sharply lower profit due to a charge connected with accounting fraud at a Chinese subsidiary and weak demand among its dealers. Caterpillar's bulldozers, tractors, and other machines have been accumulating in warehouses due to slowing economies in China, Europe, and the U.S.
• Fighting Climate Change Could Come at a High Price. President Barack Obama is making climate change a key issue in his second term, but the cost of cutting the nation's carbon footprint is likely to place a heavy burden on average Americans—and the U.S. economy.Trying to be energy efficient and cutting greenhouse gases might slow the growth of the U.S. gross domestic product anywhere from two to four percentage points each year over the next 10 years due to potential job losses, manufacturing slowdowns and switching energy sources, according to research from the Stern Review on the Economics of Social Change. That translates to nearly $1,000 a year for every American toward higher energy bills and items like subsidies for solar and wind programs—as well as taxes on gasoline to reduce oil consumption. "You're taking money out of people's budgets when you put on a gas tax and that could really hurt lower incomes," said Chad Stone, chief economist at the Center on Policy and Budget Priorities. "Purchasing power would be pulled out of the economy and slow growth down," Stone added. That burden would be especially difficult when the economy is barely growing 2%-3% now.
• At Fed, Nascent Debate on When to Slow Asset Buying. The Federal Reserve has left little doubt about its plans for the next few months, and thus little mystery about the statement it will release Wednesday after the latest meeting of its policy-making committee. The economy remains weak. The Fed will keep buying bonds to hold down borrowing costs. Inside the central bank, however, debate is once again shifting from whether the Fed should do more to stimulate the economy to when it should start doing less.

Zero Hedge:

• The Cycling Of Money.
• December Core Capital Goods Plunge 4.3% Y/Y As Durables Headline Boosted By Boeing Orders. (graph)
• As The Euro Soars, This Is Where The "Max Pain" In Europe Is. (graphs)
• Rioting Returns To Cairo: Live Webcast.

Business Insider:

• Hagel Warned Obama Of Rogue Pentagon Leading A 'New World Order'. As Chuck Hagel seeks support for his nomination to Secretary of Defense, Bob Woodward has released a story about a White House trip the former Senator made in 2009. The Washington Post reports: 
• Check Out The Insane, Parabolic Surge In Japan's 'Mothers' Index. (graph)
• HUGE MISS: Pending Home Sales Plunge In December. (graph)
• Bank Of America(BAC) Sees First Signs That The Rally Could Reverse.

PCBDesign:

• Semiconductor Revenue Down on High Level of Inventory. Chip inventory held by semiconductor suppliers reached alarmingly high levels in the third quarter of 2012 amid weak market conditions, according to an IHS iSuppli Semiconductor Inventory Insider Market Brief from information and analytics provider IHS. Overall semiconductor revenue declined by 0.7 percent sequentially during the fourth quarter last year. The poor results came after inventory reached exceedingly high levels by the end of the third quarter in 2012, amounting to 49.3 percent of total semiconductor revenue—more elevated than at any point since the first quarter of 2006. Chip stockpiles among semiconductor suppliers had actually gone down during the final two quarters of 2011, showing a promising drawdown, as depicted in the figure attached. But then inventories steadily ticked up again after that, reaching 47.5 percent of total revenue in the second quarter before hitting the current peak in the third—the latest time.

Reuters:

• EMERGING MARKETS-Brazil stocks fall on Bradesco profit miss.
• NRF sees slower sales growth in 2013. U.S. retail sales should rise 3.4 percent this year, down from 4.2 percent growth in 2012, as higher payroll taxes cut into discretionary spending for consumers, the world's largest retail trade association said on Monday.

RTCC:

• Russia Threatens 'Radical Measures' In Response to Kyoto Protocol Extension. Russia, Belarus, Ukraine and Kazakhstan have agreed what they term a “series of measures” in response to an agreement at the UN climate talks in Doha last December to extend the Kyoto Protocol.