Today's Headlines

Bloomberg:

• European Stocks Rise as Next Rallies on Profit Outlook. European stocks advanced the most in a week, paring a weekly drop for the benchmark Stoxx Europe 600 Index, as Next Plc led retailers higher and investors awaited a speech by Federal Reserve Chairman Ben S. Bernanke. Next jumped to its highest price in at least 25 years after raising the profit forecast for its full accounting year and announcing a special dividend. Schroders Plc gained 1.2 percent after Barclays Plc advised investors to buy the stock. Remy Cointreau (RCO) SA slipped 2.6 percent after Frederic Pflanz resigned as chief executive officer. The Stoxx 600 added 0.6 percent to 327.64 at the close and was little changed for the week.
• China Service Industry Index Falls After Manufacturing Declines. A China services index fell to a four-month low in December, highlighting limits on the strength of economic growth after declines in manufacturing gauges. The non-manufacturing Purchasing Managers’ Index slid to 54.6 in December from 56 in November, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. 
• WTI Crude Falls as U.S. Fuel Supplies Increase. WTI for February delivery dropped $1.27, or 1.3 percent, to $94.17 a barrel at 1:58 p.m. on the New York Mercantile Exchange. Prices fell $2.98, or 3 percent, to $95.44 yesterday, the biggest decline since Nov. 7, 2012. The volume of all contracts traded was 10 percent lower than the 100-day average. 
• Gold Rises to Two-Week High on Physical Demand; Platinum Gains. Gold futures for February delivery climbed 0.8 percent to $1,235.20 at 11:33 a.m. on Comex in New York. Earlier, the price reached $1,238.30, the highest for a most-active contract since Dec. 18.
• McCain Says Netanyahu Has Serious Concerns on Kerry Plan. Israeli Prime Minister Benjamin Netanyahu has grave doubts about elements of an Israeli-Palestinian peace plan being pressed by Secretary of State John Kerry, said U.S. Senator John McCain. McCain, an Arizona Republican, spoke to reporters in Jerusalem following a meeting with Netanyahu. His remarks signal the hurdles facing Kerry both in Israel and among pro-Israel lawmakers at home as he seeks agreement on a framework accord to guide negotiations to a two-state resolution of the Israeli-Palestinian conflict.
• Iraq Fights to Retake Towns From Al-Qaeda Amid Violence. Iraqi forces backed by aircraft and Sunni tribal militias launched assaults to expel al-Qaeda-linked militants from two key towns in Anbar province after they seized police stations and other buildings. The air strikes targeted fighters suspected of belonging to an al-Qaeda offshoot in Ramadi and Fallujah, Al Jazeera said, citing video footage released by the country’s Defense Ministry. Iraqi forces later recaptured Fallujah’s police headquarters, Al Arabiya television reported, citing its own correspondent. Prime Minister Nouri al-Maliki sent reinforcements on Jan. 1 to dislodge the militants from the cities, which were one focus of the 2007 “surge” of U.S. forces.
• Detroit Emergency Manager Calls Swaps ‘Ticking Time Bomb'. Bankers who sold Detroit interest rate swaps placed “a ticking time bomb” in their structure, the city’s emergency manager said in court as a trial resumed over a proposal for ending the swaps. Although the city collected $40 million over eight months from the swaps deal, falling interest rates helped the banks behind the deals turn a profit, Orr testified today before U.S. Bankruptcy Judge Steven Rhodes in Detroit. Since 2009, the city has paid more than $200 million to the banks behind the swaps, according to public records.

Wall Street Journal: 

• Storm Halts Travel, Work in Northeast. Many Flights Canceled, Massachusetts Governor Closes Government Offices. The Northeast U.S. awoke Friday to a thick blanket of snow and frigid temperatures that severely disrupted travel, extended winter breaks for schools and kept state workers at home.

Fox News: 

• Administration to high court: Don't exempt Catholic groups from contraception mandate. The Obama administration on Friday asked the Supreme Court not to exempt Catholic groups from an ObamaCare requirement to offer contraceptive coverage, after the high court gave them a temporary reprieve earlier this week.
• Obama administration proposes new executive actions on gun background checks. The Obama administration on Friday proposed two new executive actions to make it easier for states to provide mental health information to the national background check system, wading back into the gun control debate after a months-long hiatus.

MarketWatch:

• Richmond Fed's Lacker sees 2% growth in 2014. In the upcoming months, Lacker said he also expects the Fed to continue to wind down its bond-buying stimulus program.
• Philly Fed's Plosser warns of rapid rate rise. Philadelphia Fed President Charles Plosser warned Friday that the central bank may have to be "aggressive" in lifting interest rates and may have to chase market rates higher, if banks were to quickly release reserves. He also suggested the expectations of his colleagues by the end of 2016 that calls for Fed funds rates to be below 2% even when the job market is back to normal may be too low. He also said the Fed is monitoring asset prices and leverage to avoid "frothiness" in markets.
• Gold has its S.O.S. moment, and it’s bullish.
• China is No. 1 risk for world economy: Soros. The major uncertainty facing the world today is China, writes the billionaire investor in a column for the Project Syndicate website. He says: “There is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years.”

CNBC:

• Adding baby to Obamacare plan isn't easy. There's another quirk in the Obama administration's new health insurance system: It lacks a way for consumers to quickly and easily update their coverage for the birth of a baby and other common life changes. 
• 1930s-style debt defaults likely, says IMF research. Many advanced economies are likely to require financial repression, outright debt restructuring, higher inflation and a variety of capital controls, a new research paper commissioned by the International Monetary Fund (IMF) has warned. The magnitude of today's debt in Western economies will mean fiscal austerity will not be sufficient, Harvard economists Carmen Reinhart and Kenneth Rogoff said in the report, as policymakers continue to underestimate the depth and duration of the downturn.

ZeroHedge:

• JPMorgan(JPM) Reveals That Stocks Are More Expensive Now Than At Their 2007 Peak. (graph)
• No Waking From Draghi's Monetary Nightmare: Eurozone Credit Creation Tumbles To New All Time Low. (graph)
• GM(GM) Misses Sales Expectations, Blames Weather; Ends Year With Most Ever December "Channels Stuffed". (graph)
• 75% Of Spaniards Don't Believe Rajoy's "Economic Recovery" Meme. (graph)
• Debunking Real Estate Myths – Part 1: House Price Indexes.
• Window Dressing On, Window Dressing Off... Amounting To $140 Billion In Two Days.

Business Insider:

• Atmospheric Pressure Has Entered 'Bomb' Territory And Now It's About To Get Insanely Cold. 
• Kim Jong-Un Killed His Uncle With A Pack Of 120 Hungry Dogs [REPORT].
• All Of The Big Automakers Are Reporting Weak Sales.
• ISM New York Falls. The December ISM New York came in at 63.8, down from 69.5 the previous month.

Reuters:

• Loeb's Third Point fund beats rivals, ends 2013 with 25 pct gain. Activist investor and hedge fund manager Daniel Loeb beat most rivals hands down last year as his flagship fund kept pace with a rallying U.S. stock market and returned 25.2 percent in 2013. 
• METALS-Copper eases from seven-month high as supply surplus looms. Copper dipped on Friday, easing from a seven-month high as expectations of higher supplies and concerns over Chinese growth weighed on the market. 
• Brazil car dealers expect weak 2014 sales after 2013 decline. Brazilian car dealerships on Friday forecast stable or slightly lower sales of new vehicles in 2014 after the pace of registrations fell in 2013 for the first time in 10 years. Sales of new cars, trucks and buses are likely to hold steady in 2014 but could fall up to 3.5 percent if inflation accelerates or the exchange rate fluctuates widely, national dealership group Fenabrave said. Rising borrowing costs, disappointing economic growth and fading consumer confidence have been dampening demand in Brazil, the world's fourth-largest auto market. 
• FOREX-Yen bounces as investors shun risk in quiet trade.

Telegraph:

• Bubble fears as house prices jump most in four years. House prices stage biggest monthly jump in four years, adding to worries of a bubble.