Today's Headlines

Bloomberg:

• Credit-Default Swaps Index Little Changed From Near 8-Month Low. The cost to protect U.S. corporate bonds was little changed from near an eight-month low. The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, fell 0.1 basis point to a mid- price of 85.6 basis points as of 11:17 a.m. in New York, according to index administrator Markit Group Ltd.
• London Copper Stockpiles May Be 80% to 89% Held by One Company, LME Says. The potential share of London Metal Exchange copper stockpiles held by one unidentified company fell to 80 percent to 89 percent, from at least 90 percent. The holding covers inventory already owned and contracts expiring in the next two trading days, according to the Dec. 23 data, released today. One party actually owned 50 percent to 79 percent of the stockpiles, not counting open futures positions, as of Dec. 23, according to the exchange.
• India's New Home Sales Drop Up to 25% on Higher Rates, Knight Frank Says. India’s new home sales fell as much as 25 percent after prices reached a record earlier this year and aren’t expected to recover in the next six months following six interest rate increases, Knight Frank LLP said. “The first half of next year will be damp for home sales and prices,” Mumbai-based Anand Narayanan, national director of residential agency at the Indian unit of real-estate brokerage Knight Frank, said in an interview yesterday. “We could see a 5 percent correction in prices through incentives given by builders to woo customers.”
• Equinix(EQIX) Call-Option Trading Jumps to Record With Bet on 25% Gain.
• Potash Corp.(POT) Shares Advance as Corn, Soybeans Seen Extending Price Gains. Potash Corp. of Saskatchewan Inc., the world’s largest producer of its namesake crop nutrient, rose the most in more than two months in New York amid speculation corn and soybean futures will extend price gains into next year. Potash Corp. climbed $7.41, or 5.1 percent, to $152.08 at 12:51 p.m. in New York Stock Exchange composite trading.
• Blackstone(BX) Said Among Bidders Interested in Centro Properties. Blackstone Group LP, the world’s largest private-equity firm, has made a preliminary bid for assets of Australian shopping-mall owner Centro Properties Group, according to a person briefed on the offer.

Wall Street Journal:

• Insurers Bid for State Medicaid Plans. Health insurers are preparing to capitalize on $40 billion of new opportunities to run privately managed Medicaid plans for the states, which would position insurers to benefit from the health overhaul's expansion of Medicaid in 2014. Medicaid, the state and federal program for the poor, has become a growth area for big insurers such as UnitedHealth Group Inc. and more specialized plans such as Molina Healthcare Inc. Texas and Georgia will solicit new contracts for their private Medicaid plans early next year, while California, Florida and others are likely to meaningfully expand their programs, companies and states have said.
• Capitol Friends With Benefits. In 2010, short-sellers scored a knockdown against for-profit education stocks, but a well-financed lobbying campaign could spur Congress to punch back on the industry's behalf.
• Oil Industry Cranks Up Spending. Big Jump in Capital-Expenditure Budgets for 2011 Signals Rising Demand, Rebound in Fuel Prices.

CNBC:

• Treasurys Bounce Back as Traders Flock to 7-Year Sale. The bond market recovered Wednesday from the previous day's miserable auction, receiving strong demand for a $29 billion sale of seven-year notes in a sale that helped push Treasurys prices higher.
• US Foreclosures Jump in 3Q: Regulators. U.S. home foreclosures jumped in the third quarter and banks' efforts to keep borrowers in their homes dropped as the housing market continues to struggle, U.S. bank regulators said on Wednesday.
• OPEC Not Likely to Stand in the Way of $100 Oil. Oil has burst above top exporter Saudi Arabia's preferred $70-$80 range and yet OPEC is unlikely to stop the rally, helping to prepare the way for the market to bound above $100 a barrel.

Business Insider:

• Drum Roll Please....Here Are THE Entrepreneurs of 2010.
• Petrobras(PBR) Prepares For More Deep Water Drilling Than You Can Imagine, With "Underwater Cities".
• Bill Ackman: Ignore Plummeting House Prices and Real-Estate Doomsayers - Houses Are a Screaming Buy.
• Illinois's Plan To 'Balance' The Budget: Borrow $15 Billion And Ignore $185 Billion Hole. The state of Illinois elected a Keynesian nutcase of epic magnitude in Governor Quinn. Quinn's latest brainstorm is to borrow $15 billion to "stabilize things".

Zero Hedge:

• NYSE November Margin Debt Rises to Fresh Post-Lehman High. (graph)

New York Post:

• Private-Equity Firm Mulls Hostile Takeover of BJ's(BJ). BJ's Wholesale Club still isn't safe from the clutches of private equity. Leonard Green & Partners -- a Los Angeles buyout firm that disclosed a 9.5 percent stake in the warehouse chain in July -- remains keen to acquire the retailer and may launch a hostile bid if an auction isn't initiated in the coming weeks, sources told The Post.
  

New York Times:

• Suspicious Death Ignites Fury in China. The photograph is so graphic that it appears cartoonish at first glance. A man lies on a road with his eyes closed, blood streaming from his half-open mouth, his torso completely crushed under the large tire of a red truck. One arm reaches out from beneath the tire. His shoulder is a bloody pile of flesh. His head is no longer attached to the flattened spinal cord. The man in the photograph, Qian Yunhui, 53, has become the latest Internet sensation in China, as thousands of people viewing the image online since the weekend have accused government officials of gruesomely killing Mr. Qian to silence his six-year campaign to protect fellow villagers in a land dispute. Illegal land seizures by officials are common in China, but the horrific photographs of Mr. Qian’s death on Saturday have ignited widespread fury, forcing local officials to offer explanations in a news conference.
• California Woman Charged in Insider Trading Inquiry. Federal authorities on Wednesday charged Winifred Jiau of Fremont, Calif., with conspiracy and securities fraud in the ever-widening insider trading investigation. Prosecutors say that Ms. Jiau provided two money managers at different hedge funds with nonpublic information about Marvell Technology Group and other companies.
• China Cracks Down on Illegal Rare Earth Mines.
  

Forbes:

• Google(GOOG) and Yahoo(YHOO): Buy Both, Analyst Says. For Google, which yesterday closed a little under $600, he sets a $750 target. “Continued product improvements, accelerated shift of local advertising dollars online, and growth from emerging countries should drive double-digit search growth over the medium term,” he writes, adding that “mobile searches are quickly becoming material” – and incremental – to the top line. And he contends that “the risks from social networks and other emerging online businesses are overblown.”

Washington Post:

• Stimulus On the Slow Track. When Democratic senators and representatives voted to approve the $787 billion stimulus package nearly two years ago, the ones who came from swing states and districts knew they were taking a political risk. What they didn't know was that the economic benefits of the stimulus would become so entangled in red tape that even today, much of that money remains unspent. A story that ran Sunday in the Los Angeles Times estimated that only a quarter of the $630 million in federal funds allotted to the city of Los Angeles had been spent. Los Angeles is in no way exceptional.

AppleInsider:

• Apple's(AAPL) iTunes Rental Service Believed to be 10% the Size of Netflix(NFLX). Though it is half as old as Netflix, Apple's iTunes rental service is believed to be about one-tenth the size of the competing rental service, one analyst has projected. Analyst Brian Marshall with Gleacher & Company said Wednesday he believes Apple sells about 475,000 rentals daily through iTunes, compared to the 5.1 million daily rentals seen by Netflix. iTunes rentals began in 2005, while Netflix first launched in 1999. If Apple can grow its rental business at the same rate as Netflix, Marshall believes annual TV and movie rental revenue from iTunes could exceed $1 billion within 5 years. Assuming Apple keeps about 30 percent of that, it would be another $300 million per year for Apple's bottom line.
  

Wired:

• Algorithms Take Control of Wall Street.

Real Clear Politics:

• Promises and Riots by Thomas Sowell. Economists are the real "party of No." They keep saying that there is no such thing as a free lunch-- and politicians keep on getting elected by promising free lunches. Such promises may seem to be kept, for a while. There are ways the government can juggle money around to make everything look OK, but it is only a matter of time before that money runs out and the ultimate reality hits, that there is no free lunch. We are currently seeing what happens, in fierce riots raging in various countries in Europe, when the money runs out and the brutal truth is finally revealed, that there is no free lunch.

Reuters:

• S&P 500 Eyes Best December Since 1991. The S&P 500 has gained 6.7 percent so far this month and has risen in 17 of the last 20 sessions.
• Major Banks' Economic Outlooks for 2011.
  

Financial Times:

• Supplies of grain are likely to be tight until well into 2011, according to Alberto Weisser, the chief executive officer of Bunge Ltd.(BG), a U.S. company that trades in agricultural products.
• Chilly Tests Loom for Eurozone Bonds. Banks forecast eurozone nations could attempt to borrow up to €80bn in January. The European Union and the European financial stability facility, the eurozone’s bail-out fund, are likely to be in the market for up to €13bn to go towards the Irish bail-out.

Telegraph:

• G20 and EU 'Posturing' Could Exacerbate Future Banking Crises. The efforts of the G20 and European Union to overhaul financial regulations have been lambasted for being "disingenuous political posturing" that are "increasing the likelihood of future meltdowns", an influential think-tank has warned. The TaxPayers' Alliance has published a paper accusing politicians and regulators of basing their response to the financial crisis on a "mistaken view of its causes" and "political considerations". The paper, which was co-written with the Lagatum Institute, an academic group that focuses on wealth, attacks the key aim of politicians including Prime Minister David Cameron and Chancellor George Osborne for internationally co-ordinated regulation. It warns that "global regulation causes global crises". The authors, Dalibor Rohac of the Legatum Institute and Matthew Sinclair of the Taxpayers' Alliance, said in the report: "Common capital adequacy rules, while increasing transparency, also encourage homogeneity in investment strategy and undertaking of risk, leading to a high concentration of risk. That means that global regulations can be dangerous because they increase the amplitude of global credit cycles." The paper adds: "The Basel regulations may still be procyclical, imposing more onerous requirements on institutions at times when the system is in trouble." The authors claim the new regulations, including the G20-sponsored Basel rules and the Capital Requirements Directive of the EU, have been based on too narrow a view that "greed and insufficient regulation" were the causes. They argue that "regulations and poor policy choices" were also to blame - and that the authorities are in danger of making similarly dangerous mistakes. The paper claims that parts of the G20 agenda are "completely irrelevant" to reducing risk in the system. It argues: "The idea that "tax havens" and banking secrecy are among the issues that contributed to the financial crisis is completely unfounded. If anything, tax competition could curb some of the excesses of the big, fiscally irresponsible, welfare states by making it difficult for governments to impose too onerous fiscal burdens on mobile tax bases."

Kathimerini:

• Residential property prices in Greece are likely to fall 5-10% next year because of a squeeze on income, unemployment and a drop in bank lending, citing Babis Charalampopoulos, president of the Hellenic Institute of Valuation. Price declines may be higher in some areas, reaching 15% in northern regions including Thessaloniki, Greece's second-largest city.

Xinhua:

• China needs to stabilize commodity prices, boost employment and maintain social stability, citing Chinese President Hu Jintao.
• China will "resolutely" enhance property measures and curb excessive price gains in 2011, citing Housing Minister Jiang Weixin. The nation plans to increase its housing supply in 2011 and the government is preparing more macro control policies.
  

DigiTimes:

• NAND Flash Contract Prices Flat in 2H December. Late December 2010 contract prices for most MLC NAND flash chips have remained flat with mainstream 16Gb and 32Gb parts quoted at US$3-3.50 and US$4-5, respectively, according to industry sources. The sources expect prices for the first quarter of 2011 to be buoyed by Toshiba's NAND supply cutback as well as demand coming from the tablet PC sector. A recent power outage in Yokkaichi, Japan hit Toshiba's shipments, with NAND flash chips estimated to fall by up to 20% in January and February. A reduction in global supply is anticipated simultaneously to prop up prices during the period, the sources said. Meanwhile, if consumption of NAND flash in tablet devices expands at a fast pace, chip prices will see more significant growth in the first quarter of 2011, the sources indicated.

21st Century Business Herald:

• China won't loosen curbs on the property market in 2011 and will continue to crack down on speculative housing purchases, citing Jiang Weixin, minister of Housing and Urban-Rural Development.

Bear Radar

Style Underperformer:

• Mid-Cap Value (+.17%)

Sector Underperformers:

• 1) I-Banks -.57% 2) Utilities -.29% 3) Insurance -.03%

Stocks Falling on Unusual Volume:

• CPWM, TRS, ACOM, GNI and GRR
  

Stocks With Unusual Put Option Activity:

• 1) AVP 2) IP 3) CDE 4) MCP 5) XLE
  

Stocks With Most Negative News Mentions:

• 1) WSBC 2) DTE 3) DUK 4) TWC 5) MRVL
  

Bull Radar

Style Outperformer:

• Large-Cap Growth (+.29%)

Sector Outperformers:

• 1) Oil Service +1.45% 2) Agriculture +1.24% 3) Airline +1.13%

Stocks Rising on Unusual Volume:

• ATPG, NBR, CCJ, ELP, CPL, RNOW, AMRS, AGNC, SHLD, CAGC, CRNT, TSLA, ROVI, LULU, BJ, NBL, IM, MTR, ABV, AXR and MIM
  

Stocks With Unusual Call Option Activity:

• 1) EWJ 2) AMD 3) KEY 4) GPS 5) AGU
  

Stocks With Most Positive News Mentions:

• 1) OSIS 2) RTN 3) BJ 4) NE 5) ASEI
  

Wednesday Watch

Evening Headlines
Bloomberg:

• Hedge Funds More Optimistic About U.S. Stocks, Survey Shows. Hedge funds have become more optimistic about U.S. stocks, with the percentage of managers saying they’re upbeat rising to the highest level in at least seven months, according to TrimTabs Investment Research and BarclayHedge Ltd. About 46 percent of the 92 hedge-fund managers surveyed in the past week were bullish on the Standard & Poor’s 500 Index, compared with 31 percent in November, the firms said today in a report. The share of managers who said they were pessimistic about U.S. stocks fell to 19 percent from 39 percent, and both readings were the most extreme for the survey that began in May. “An inflationary growth consensus has emerged heading into 2011,” said Vincent Deluard, global equity strategist in New York for Sausalito, California-based TrimTabs. “Managers are betting aggressively on the economic recovery.” The funds, with worldwide assets of about $1.8 trillion, gained an average of 5 percent this year through November, according to Bloomberg’s aggregate index, compared with a 7.9 percent rally in the S&P 500, including dividends. A majority of managers said precious metals were the most “overbought” asset, meaning they could be poised for a decline, according to the report.
• U.S. Loans Make Comeback as New Issuance Doubles. Leveraged-loan issuance in the U.S. more than doubled this year, as private-equity firms sought funds for buyouts and borrowers refinanced debt amid a rebound from the worst financial crisis since the Great Depression.
• Chavez Says He's Ready for U.S. to Expel Venezuela Ambassador, Break Ties. President Hugo Chavez said he’s ready for the U.S. to expel his ambassador and break off diplomatic ties in retaliation for Venezuela’s five-month refusal to welcome the Obama administration’s choice to be its next envoy to Caracas. “If the U.S. government is going to expel our ambassador there, then do it. If the U.S. government is going to break off diplomatic relations -- do it,” Chavez said in comments carried on state television yesterday. “It’s not my fault. It’s theirs for naming an ambassador who immediately goes to the press to rant against the country where he is going as ambassador.” State Department spokesman Philip J. Crowley said Dec. 20 “there will be consequences” to Venezuela’s decision to protest President Barack Obama’s nomination of diplomat Larry Palmer as the next American ambassador to Caracas.
• Passenger Outrage Rises as Winter Storm Snarls U.S. Air Travel. Anger mounted over passengers stranded on airport tarmacs and in terminals as flight delays threatened to stretch into the weekend following the worst December snowstorm to hit New York City in six decades.

Wall Street Journal:

• China Squeezes Foreigners for Share of Global Riches. Foreign companies have been teaming up with Chinese ones for years to gain access to the giant Chinese market. Now some of the world's biggest companies are taking a risky but potentially rewarding second step—folding pieces of their world-wide operations into partnerships with Chinese companies to do business around the globe. General Electric Co. is finalizing plans for a 50-50 joint venture with a Chinese military-jet maker to produce avionics, the electronic brains of aircraft. The deal with Aviation Industry Corp. of China would give GE access to a Chinese government project aimed at challenging Boeing Co. and Airbus in the civilian-aircraft market.
• Death Panels Revisited. At a stroke, Medicare chief Donald Berwick has revived the "death panel" debate from two summers ago. Allow us to referee, because this topic has been badly distorted by the political process—and in a rational world, it wouldn't be a political question at all. On Sunday, Robert Pear reported in the New York Times that Medicare will now pay for voluntary end-of-life counseling as part of seniors' annual physicals. A similar provision was originally included in ObamaCare, but Democrats stripped it out amid the death panel furor. Now Medicare will enact the same policy through regulation. We hadn't heard about this development until Mr. Pear's story, but evidently Medicare tried to prevent the change from becoming public knowledge.

CNBC:

• Citigroup(C) to Exceed New Rules, Shrink Bad Assets: CEO. Citigroup is on track to exceed expected regulatory requirements and shrink its worst assets to less than 20 percent of its balance sheet, Chief Executive Vikram Pandit told employees in an end-of-year internal memo on Monday.
• Europe's Economic Pain Re-Opens Debate on Currency. A noisy band of dissenters, many of them economists from outside the Continent, issued a warning: the euro was doomed to struggle, they proclaimed, maybe not immediately but certainly before long. Different countries would pursue such different economic policies, they argued, that it would ultimately place an unbearable strain on the currency and some of its members.

Business Insider:

• Glenview's Larry Robbins Sets The World's Most Bullish Target: DOW 20,000. He predicts P/E multiples will expand by 45% by the end of 2013. This means the Dow Jones Industrial Average (DJIA) will surpass 20000 level in three years, assuming earnings will grow by a modest 5% per year.
• Groupon Prepares To Raise As Much As $950 Million. Groupon just filed a certificate to authorize an astounding $950 million fundraise at a $6.4 billion valuation, VC Experts reports.
  

IBD:

• Defense Work Is The Big Revenue Generator For This Chipmaker. In his first remarks after his chip company's earnings report in mid-November, Microsemi (MSCC) CEO Jim Peterson expressed his appreciation to the country's troops.

Forbes:

• 2011 Will Be The Year of M&A. Companies sitting on piles of cash will look to leap-frog competitors with strategic acquisitions.

CNN Money:

• Bull vs. Bear: How High Will Oil Go in 2011? The already fragile economic recovery would be vulnerable to rising oil prices. Where will the price of a barrel go in 2011? Analysts argue both sides.
• $50 Billion So You Can Watch YouTube. Wireless carriers are spending $50 billion a year to improve their networks to deal with rising data demands from smartphones and tablets. Here's a look at what they're spending that on.

USA Today:

• Top Chinese Blogger's Magazine Shut Down. One of China's most popular bloggers announced Tuesday he was forced to shut down his freewheeling print magazine after just one issue because government officials appear to have blocked the printing of any new editions. Han Han, a novelist and race car driver, has amassed a huge readership with his sly online critiques of China's social problems and hoped to tap that audience with an arts and literature magazine, Party. Han wrote in a blog post that it appeared that the government was behind the closure, but he's unsure which department and why it objected to the magazine.

Reuters:

• "Big Push" Could Be Over for California Solar. After record solar-plant approval in 2010, the California Energy Commission believes its "big push" in solar-thermal projects is over. Because so many developers were rushing to meet a Dec. 31 deadline for federal incentives, CEC staff are expecting a slower year in 2011. In hindsight, the rush was overdone, given that Congress has now extended that deadline for federal funding by another year.
• China Says Undecided on 2011 Rare Earth Export Quotas. China has not decided full-year rare earth export quotas for 2011, the Ministry of Commerce said in a short statement, in an apparent move to soothe market concerns.

21st Century Business Herald:

• Some luxury cosmetics may raise retail prices in China by as much as 20% from Jan. 1, citing market rumors.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are unch. to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 104.0 -1.0 basis point.
  
• Asia Pacific Sovereign CDS Index 102.5 -1.0 basis point.
  
• S&P 500 futures +.06%
  
• NASDAQ 100 futures +.15%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note
  

Economic Releases

• None of note

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The $29 Billion 7-Year Treasury Notes Auction could also impact trading today.
  

BOTTOM LINE: Asian indices are higher, boosted by commodity and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.

Stocks Rising Slightly Into Final Hour on Seasonal Strength, Short-Covering, Investor Performance Angst

Broad Market Tone:

• Advance/Decline Line: Slightly Lower
  
• Sector Performance: Mixed
  
• Volume: Light
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 17.88 +1.19%
  
• ISE Sentiment Index 162.0 +33.88%
  
• Total Put/Call .78 +1.30%
  
• NYSE Arms .81 -16.80%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 85.68 -.37%
  
• European Financial Sector CDS Index 152.41 bps -.04%
  
• Western Europe Sovereign Debt CDS Index 192.75 bps -1.74%
  
• Emerging Market CDS Index 206.51 +.14%
  
• 2-Year Swap Spread 19.0 -3 bps
  
• TED Spread 16.0 -2 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .14% +2 bps
  
• Yield Curve 273.0 +5 bps
  
• China Import Iron Ore Spot $170.70/Metric Tonne unch.
  
• Citi US Economic Surprise Index +6.50 -5.4 points
  
• 10-Year TIPS Spread 2.31% +2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +48 open in Japan
• DAX Futures: Indicating +19 open in Germany

Portfolio:

• Slightly Higher: On gains in my Medical, Tech, Retail and Ag long positions
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite recent stock gains, China inflation worries, soaring long-term rates and some disappointing economic data. On the positive side, Bank, Energy, I-Banking, Medical Equipment and Drug shares are especially strong, rising more than .5%. (IYR) is trading very well again today. Copper is climbing +.99% despite the Chinese rate hike, some weaker economic data and declining euro. Moreover, the S&P GSCI Ag Spot Index is rising another +1.25% to another new record high. The TED and 2-year swap spreads have been trending lower over the last week, which is a big positive. On the negative side, Education, Oil Tanker, Homebuilding, Hospital, Gaming, Disk Drive and Steel shares are under mild pressure, falling more than .5%. The Greece sovereign cds is climbing +1.69% to 1,053.52 bps and the Emerging Markets Sovereign CDS Index is jumping +3.07% to 198.l20 bps. The Euro Financial Sector CDS Index remains at the highest level since mid-June and the Western Europe Sovereign CDS Index remains very near its record high set last month, which is also a big negative. Gold is surging +1.64% and the 10-year yield is soaring +14 bps to 3.47%. The Shanghai Composite continues to trade poorly, breaking down through its 200-day moving average overnight. The broad market continues to display exceptional resiliency as most negatives are ignored. Today's broad market action is another healthy consolidation of recent gains. I expect US stocks to trade mixed-to-higher into the close from current levels on seasonal strength, short-covering, technical buying, buyout speculation and investment manager performance angst.

Today's Headlines

Bloomberg:

• Out of Lehman's Ashes Wall Street Gets Most of What it Wants. Wall Street’s biggest banks, whose missteps caused a global financial crisis and economic slowdown two years ago, were more agile when it came to countering the political and regulatory response. The U.S. government, promising to make the system safer, buckled under many of the financial industry’s protests. Lawmakers spurned changes that would wall off deposit-taking banks from riskier trading. They declined to limit the size of lenders or ban any form of derivatives. Higher capital and liquidity requirements agreed to by regulators worldwide have been delayed for years to aid economic recovery. “We continue to listen to the same people whose errors in judgment were central to the problem,” said John Reed, 71, a former co-chief executive officer of Citigroup Inc., who estimated only 25 percent of needed changes have been enacted. “I’m astounded because we basically dropped the world’s biggest economy because of an error in bank management.” The last two years have been the best ever for combined investment-banking and trading revenue at Bank of America Corp., JPMorgan Chase & Co., Citigroup, Goldman Sachs Group Inc. and Morgan Stanley, according to data compiled by Bloomberg. Goldman Sachs CEO Lloyd Blankfein, 56, and his top deputies are in line to collect more than $100 million in delayed 2007 bonuses -- six months after paying $550 million to settle a fraud lawsuit related to the firm’s behavior that year. Citigroup, the bank that needed more taxpayer support than any other, has a balance sheet 14 percent bigger than it was four years ago.
  
• U.S. Retailers' Holiday Sales Increase 5.5%, Most Since 2005. U.S. retailers’ 2010 holiday sales jumped 5.5 percent for the best performance in five years as shoppers snapped up clothing and jewelry at Macy’s Inc., Tiffany & Co. and other stores. Retail sales, excluding autos, rose to $584 billion from Nov. 5 through Dec. 24, said MasterCard Advisors’ SpendingPulse, which measures retail sales by all payment forms. That compared with a 4.1 percent gain a year earlier. The numbers include sales made over the Web.
• China Cuts First-Round Rare Earth Export Quotas by 11%. China cut its export quotas for rare earths by 11 percent in the first round of permits for 2011, threatening to extend a global shortage of the minerals needed for smartphones, hybrid cars and guided missiles.
• Sugar Extends Rally to 30-Year High as Worldwide Demand Outpaces Supplies. Sugar futures extended a rally to a 30-year high on mounting concern that dry weather in Brazil, the world’s biggest producer, and record rainfall in Australia will slash worldwide supplies.
• Muslim Group Claims Attacks on Two Nigerian Cities That Killed 86 People. A Muslim group in Nigeria identifying itself as Jama’atu Ahlus-Sunnah Lidda’Awati Wal Jihad said it carried out Christmas Eve attacks on the cities of Jos and Maiduguri that killed at least 86 people. The group is “avenging the atrocities committed against Muslims in those areas, and the country in general,” according to a statement on its website. “Therefore we will continue with our attacks on disbelievers and their allies and all those who help them.” Multiple bomb blasts in Jos, capital of the central state of Plateau, targeted public places, including a Catholic church, killing at least 80 people, according to Nigeria’s National Emergency Management Agency. Two churches were also attacked by gunmen on the same day in Maiduguri, capital of Borno state in northeast Nigeria, killing six people, said Mohammed Abubakar, the commissioner of police.
• Home Prices in U.S. Decrease More Than Forecast. Home prices dropped more than forecast in October, a sign housing will remain a weak link as the U.S. recovery accelerates into the new year. The S&P/Case-Shiller index of property values fell 0.8 percent from October 2009, the biggest year-over-year decline since December 2009, the group said today in New York. The decrease exceeded the 0.2 percent drop projected by the median forecast of economists surveyed by Bloomberg News.
• Petrobras(PBR) Jumps to Six-Week High on Record Brazil Production, Rising Oil. Petroleo Brasileiro SA, Brazil’s state-controlled oil company, advanced to a six-week high after the country’s oil output climbed to a record in November and crude traded near a two-year high. Brazil’s production of oil rose to a record 2.089 million barrels a day last month, the agency known as ANP said on its website yesterday. Petrobras’ total November oil and gas production was 2.6 million barrels a day, of which 2.03 million barrels was in Brazil, according to an e-mailed statement.
• Wagers Against S&P 500 Drop to Lowest Level in 12 Months as Optimism Gains. Wagers against the Standard & Poor’s 500 Index fell to a one-year low as short sellers slashed bets that phone and consumer discretionary stocks, including Qwest Communications Inc. and Abercrombie & Fitch Co., will retreat. Short interest on the S&P 500 dropped to 7.29 billion shares, or 4.15 percent of shares available for trading, as of Dec. 15, down 2.9 percent from two weeks earlier, according to data compiled by U.S. exchanges and Bloomberg. For phone companies, it slid 12 percent to 440.9 million, and fell 8.7 percent to 1.2 billion shares for consumer discretionary stocks.
• Allstate(ALL) Sues Countrywide Over $700 Million Investment. Allstate Corp. sued Bank of America Corp. and its Countrywide mortgage unit over $700 million in residential mortgage-backed securities the insurer purchased, claiming Countrywide misrepresented the investments. “Countrywide was singularly focused on increasing its market share, offloading the risk onto Allstate and other institutional investors that purchased securities backed by pools of Countrywide’s mortgages,” Allstate said in a complaint filed in federal court in Manhattan yesterday.
• Gramley Says Plosser, Fisher May Dissent From Fed Ease Plan. Federal Reserve Bank of Philadelphia President Charles Plosser and Dallas Fed President Richard Fisher may dissent from Fed Chairman Ben S. Bernanke’s plan to purchase $600 billion in Treasuries, former Fed governor Lyle Gramley said. “I think Charles Plosser of Philadelphia and Richard Fisher of Dallas probably will dissent from time to time,” Gramley said today in an interview on Bloomberg Television’s “Fast Forward” with Peter Cook. “It probably isn’t going to affect the outcome of monetary policy decisions. Ben Bernanke still has control of the committee.”

Wall Street Journal:

• Firms Enlist More Recruiters. As Demand in Hiring Slowly Increases, Companies Fill Headhunter Positions.
• Police Fatalities Are Up 37% in 2010. So-called cluster killings helped make 2010 a particularly deadly year for law enforcement, with deaths in the line of duty jumping 37% to about 160 from 117 the year before, according to numbers as of Tuesday compiled by the National Law Enforcement Officers Memorial Fund.
• Obama's Presidency Joins the Fray. Americans prefer a leader who does not stand aloof from the weight and the lessons of our history.

CNBC:

• Consumer Confidence Shows Surprise Drop in December.
• Treasurys Accelerate Slide After Weak Five-Year Auction.
  

Business Insider:

• In 2010 Fox News Had More Total Viewers Than MSNBC, CNN and HLN COMBINED. That dominance came primarily at the expense of CNN which lost 29% of its total viewership in 2010 and 34% of its prime time viewers. Yes, you read that right.
• A Personal Investigation Into One of China's Ghost Cities.
  

Forbes:

• Research In Motion(RIMM): PlayBook Battery Life Too Short?

24/7 Wall St.:

• Short Sellers Make Big Push into Telecom, Tech.

Adweek:

• Sources: Netflix(NFLX) Thinking World Domination. Online video and DVD distributor Netflix is talking with several advertising and media agencies about potential international assignments, according to sources. Currently, Netflix provides service in the U.S. and Canada. But the company is poised for overseas expansion, according to Netflix CEO Reed Hastings, who recently told The Hollywood Reporter that Europe, Latin America and Asia are markets the company would consider entering as soon as the recently launched Canadian operation gets its bearings.

cnet:

• Rumor: Apple(AAPL) Prepping Three iPad 2 Versions.

Real Clear Politics:

• 'Shall' D.C. Decide for Patients & Doctors? The text of Obamacare is dry and legalistic, except when it summons the majesty of the King James Bible to intone imperiously, "the secretary shall . . ." The secretary in question is the secretary of health and human services, Kathleen Sebelius, who "shall" and "may" do all manner of things to complete the great unfinished canvas that is Obamacare. As George W. Bush might say, Sebelius is "the decider." Because of the discretion she's granted to remake American health care, she rivals Nancy Pelosi, Hillary Clinton, and Oprah Winfrey as the most powerful woman in America.

Reuters:

• Institutional Investor Confidence Rises in December. Confidence among global institutional investors rose in December, as improved sentiment toward the United States outweighed continued concerns about Europe, State Street Corp said on Tuesday.

Financial Times:

• Consumption Growth Could Power US in 2011. The answer to one simple question is enough to give a good idea of what will happen to US growth in 2011: how much of their income will US consumers spend and how much of it will they save? Economists – including some noted pessimists – are starting to believe that they will spend quite a lot. As a result, there is hope that 2011 will be the year when recovery from the Great Recession truly begins with growth as high as 4 per cent.

Der Spiegel:

• Opposition to the Euro Grows in Germany. Surveys show that many Germans are worried about the future of the euro, but the country's political parties are not taking their fears seriously. The number of grassroots initiatives against the common currency is increasing, and political observers say a Tea Party-style anti-euro movement could do well.

Rheinische Post:

• Passengers at German airports should be divided into risk groups for purposes of security checks, the future president of the ADV association of German airports said. So-called profiling, in effect at airports in Israel and announced for the U.K., would allow security services to adapt the intensity of searches to the security risk, Chritoph Blume, president of the ADV from Jan. 1, said.

Imerisia:

• Greek sales in the holiday season decreased 25% on average, with clothing and restaurants the hardest hit, citing the National Federation of Commerce. Sales in overall clothing retail and at restaurants fell by 40%.
  

China National Radio:

• China's Vice Premier Li Keqiang said the country will place more emphasis on inflation controls.

Economic Observer:

• About one third of foreign direct investments in China entered the country's property market this year, citing an official from the Ministry of Commerce.

Financial News:

• China may raise interest rates when inflationary pressure escalates in the first half of 2011, citing Ba Shusong, a researcher at the State Council's Development Research Center.

Caixin:

• China needs to "moderately" raise capital requirements on the nation's biggest banks to counter cyclical risks and take into account big lenders' systemic importance, Liu Mingkang, Chairman of the China Banking Regulatory Commission said in an interview.