Today's Headlines

Bloomberg: 

• Draghi Signals Euro Strength May Hurt ECB’s Recovery Efforts. European Central Bank President Mario Draghi signaled policy makers are concerned that the euro’s strength will hamper their efforts to pull the economy out of recession. “The exchange rate is not a policy target, but it is important for growth and price stability,” Draghi said at a press conference in Frankfurt today after the ECB kept its benchmark rate at a record low of 0.75 percent. “We want to see if the appreciation is sustained, and if it alters our assessment of the risks to price stability.” The comments pushed the currency down more than a cent against the dollar. While latest data show the 17-nation euro economy is starting to stabilize after the sovereign debt crisis drove it into recession last year, the euro’s gains could stymie a recovery before it has begun by curbing exports and pushing inflation too low. Draghi noted that the ECB will publish new economic projections next month and stressed that officials will “maintain our accommodative monetary stance.” “This was a verbal intervention,” said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt. “Draghi reinforced multiple times that the ECB will keep up its accommodative policy stance and he indirectly suggested that the ECB may revise its inflation projections downward next month.”
• Spain Borrowing Costs Rise Amid Corruption Allegations. Spain’s borrowing costs rose even as it beat its maximum target of 4.5 billion euros ($6.11 billion) at a debt sale today as corruption allegations targeting the government threaten to reverse last month’s rally. The Madrid-based Treasury sold a total of 4.61 billion euros of debt, including a 2.75 percent 2015 note with a yield of 2.823 percent, compared with 2.476 percent the last time it was sold on Jan. 10. A 2018 note yielded 4.123 percent, up from 3.770 percent on Jan. 17, and it sold a 2029 bond at 5.787 percent, compared with 5.555 percent at its last 15-year benchmark bond sale on Jan. 10.
• Euro Falls Most Since July as Draghi Warns of Slowing Inflation. The euro fell the most since July against the dollar after European Central Bank President Mario Draghi said the recent strength of the currency creates a concern that inflation will slow. The 17-nation euro declined versus all but two of 16 major counterparts as Draghi said after a policy meeting in Frankfurt that the risk to the region’s growth remains on the “downside.”
• Leverage Comeback in Stocks Seen as Sentiment Improves: EcoPulse. Shares of companies with high operating or financial leverage are outperforming the market, as investor sentiment about the economy improves. Two portfolio indexes of such stocks maintained by Goldman Sachs Group Inc. have outpaced the Standard & Poor’s 500 Index since October, a sign that riskier investment strategies are gaining favor. As the expansion strengthens, companies with higher fixed cost structures or weaker balance sheets are “more likely to benefit from that recovery,” said Tim Ghriskey, who oversees about $2 billion as chief investment officer of Solaris Group LLC, based in Bedford Hills, New York.
• India Predicts Growth at Decade Low as Investment Slows. India forecast the weakest economic growth in a decade as subdued investment and elevated inflation add pressure on Prime Minister Manmohan Singh to extend policy changes and revive his development agenda.
• Brazil’s Prices Rise at Fastest Pace in Almost Eight Years. Brazilian consumer prices rose in January at the fastest pace since April 2005, raising pressure on the central bank, which has said it will keep interest rates at a record low for a prolonged period. Swap rates rose. Prices as measured by the benchmark IPCA index climbed 0.86 percent in the month, marking the fifth-straight acceleration, the national statistics agency said today in Rio de Janeiro. Annual inflation accelerated to 6.15 percent from 5.84 percent the previous month.
• Worker Productivity in U.S. Declines, Pushing Up Labor Costs. The productivity of U.S. workers fell more than projected in the fourth quarter as the economy shrank, pushing labor expenses up and showing companies are approaching the limit of how much efficiency they can wring from employees. The measure of employee output per hour decreased at a 2 percent annual rate, the worst performance in almost two years, after a 3.2 percent gain in the prior three months, a Labor Department report showed today in Washington. The median forecast in a Bloomberg survey of 63 economists called for a 1.4 percent drop. Expenses per worker increased at a 4.5 percent rate, more than estimated.
• Fed’s Evans Says QE Could Stop Before Drop to 7% Jobless. Charles Evans, president of the Federal Reserve Bank of Chicago, said today the central bank may stop its asset-purchase program before unemployment falls to 7 percent. “I tend to think it might be possible to turn off the quantitative easing,” Evans said in a CNBC interview. “We might be able to stop before 7 percent” assuming momentum builds and keeps going.
• Einhorn: What Tim Cook Should Do With Apple Cash. (video) 
• Obama Administration to Stay Course on Biofuel Law, Vilsack Says. President Barack Obama’s administration won’t abandon the nation’s ethanol program and will encourage Congress to maintain it, Agriculture Secretary Tom Vilsack said. The Renewable Fuels Standard, passed in 2007, requires the U.S. to use 13.8 billion gallons of renewable fuels such as ethanol this year and 15 billion gallons by 2015. The Agriculture Department estimated this month that 42 percent of this year’s corn crop will go toward making the fuel. Last summer, lawmakers from both parties called for a temporary suspension or reduction of the ethanol program as a drought drove up corn prices. The Environmental Protection Agency declined the requests.

Wall Street Journal:

• Italian Bank Was Aided by Covert Loan. Monte dei Paschi di Siena SpA, the 541-year-old Italian bank at the center of a burgeoning financial scandal, was so strapped for cash in late 2011 that it negotiated a covert loan of nearly €2 billion ($2.7 billion) from the Bank of Italy even as executives were publicly describing the lender's funding position as comfortable, according to the Bank of Italy and people familiar with the deal.
• Live Blog: Brennan’s CIA Confirmation Hearing at 2:30 p.m.
• Fed’s Stein: Signs of Overheating in Credit Markets. A top Federal Reserve official in a speech Thursday said he sees some signs that credit markets may be overheating, although he said there is not an imminent threat to the wider financial system. Federal Reserve Board governor Jeremy Stein highlighted developments in several markets, including junk bonds, mortgage real-estate investment trusts and commercial banks’ securities holdings, as areas where potentially troubling trends are emerging as a result of the Fed’s easy-money policies. Mr. Stein made his remarks at a symposium at the Federal Reserve Bank of St. Louis.

Fox News:

• Supermarkets cry foul as FDA proposes new food labeling rule under ObamaCare. If the Food and Drug Administration gets its way, your trip to the grocery store could get a tad pricier.
  Supermarket owners argue a pending federal food-labeling rule that stems from the new health care law would overburden thousands of grocers and convenience store owners -- to the tune of $1 billion in the first year alone.

CNBC:

• Currency Wars Return, 1930s Style: Who Will Lose Out?

Zero Hedge:

• Initial Claims Miss For Second Week In A Row As Nonfarm Productivity Tumbles Most Since 2008. (graph)
• Russian Flyover Prompts Japanese Fighter Jet Scramble As Abe Opens Second "Disputed Island" Front.
• Forget Europe's Periphery, The Core Is Collapsing. (graphs) 
• Soros Fears 'Rebellion', Warns "The Euro Could Destroy The EU". (video) 
• Modern Market Alchemy Explained: Converting Junk Debt Into Supersafe Treasurys Out Of Thin Air.

Business Insider:

• Potentially Historic Nor'easter Is A Two-Pronged Monster.  
• Rich Californians Are Fed Up With The State's Crazy Taxes  –– Here's Where They Should Move.
• Jon Stewart Shreds Obama On Hypocrisy Over Drones: You're Only 'Transparent About The Last Guy's Secrets'.

Reuters:

• Copper slips along with euro on Draghi comments.
• U.S. retailers' sales beat forecasts, but worries remain.

Telegraph: 

• David Cameron threatens to veto EU budget that is 'too high'. David Cameron has arrived at an European Union budget summit, threatening to block any deal that does not cut Brussels spending significantly.

Xinhua:

• China Bans 'Pompous Speeches' at Advisory-Body Meeting. The Chinese People's Political Consultative Conference to adopt reasonable schedule, print fewer documents, simplify conference hall, reception arrangements, citing rules issued by CPPCC's general office. Delegates are told to speak "honestly and briefly" on own concrete opinions and suggestions, not follow scripts. A no-banquet policy is in effect.