Today's Headlines

Bloomberg:

- The Federal Reserve may purchase Treasuries within the next few days or weeks as it broadens its policy beyond interest rate cuts to ease credit conditions amid the worst recession in 25 years, according to UBS AG. “Fed officials use every chance they get to highlight Treasury purchases as an important arrow in their quiver,” William O’Donnell, U.S. government bond strategist at UBS Securities LLC in Stamford, Connecticut, wrote in a research report today. “It now appears as if the Fed may use Treasury purchases as a blunt tool to bring loan rates down further. This makes it more likely that Treasury purchases come sooner.”

- The heads of the U.S. Treasury and Federal Deposit Insurance Corp. gave further momentum to the idea of a new government-backed bank to remove toxic assets from lenders’ balance sheets.

- Israel may be a step closer to ending its 21-day campaign against Hamas after the U.S. agreed to help stop the flow of smuggled weapons into the Gaza Strip. Israeli Foreign Minister Tzipi Livni, making a joint announcement in Washington with Secretary of State Condoleezza Rice, called the accord signed with the U.S. on arms smuggling a “vital component to the cessation of hostilities” in Gaza.

- Morgan Stanley(MS) and Citigroup Inc.(C), which are forming a venture to be the largest investment adviser to individuals, had $1.8 billion of clients’ cash in a fund that invested with Bernard Madoff, said two people familiar with the matter.

- Chrysler Financial, the credit arm of Chrysler LLC, received a $1.5 billion, five-year loan from the U.S. Treasury, prompting the automaker to offer no-interest financing to buyers of some of its vehicles. As a condition of the aid, part of the $700 billion Troubled Asset Relief Program passed last year, Chrysler Financial agreed to limits on corporate governance and executive compensation. The loan will be secured by a pool of new consumer auto loans, the Treasury said today in a statement released in Washington.

- General Electric Co.’s(GE) finance arm may cut 7,500 to 11,000 jobs, or at least 10 percent of its workforce, because of the global financial slump, people familiar with the company’s plans said.

- Oil demand will fall for a second year, the first back-to-back contractions since 1983, as a deepening recession erodes consumer spending, the International Energy Agency said. The adviser to 28 nations cut its global 2009 forecast by 1 million barrels a day on expectations the economic outlook will deteriorate. The IEA estimates consumption will shrink 0.6 percent to 85.3 million barrels a day. Forecasters including OPEC, JPMorgan Chase & Co. and Deutsche Bank AG have already said demand will fall this year. “It’s a major shift,” said Gareth Lewis-Davies, an analyst at Dresdner Kleinwort Group Ltd. in London who worked at the IEA.

- European Central Bank President Jean- Claude Trichet said while the bank is likely to cut interest rates further, it will not reduce its benchmark to zero. “To the question is 2 percent the lowest level we will attain, I say no,” Trichet told Japanese broadcaster NHK in an interview broadcast earlier today.

- European Central Bank President Jean-Claude Trichet’s vision of economies converging behind the shield of a shared currency may be unraveling. The gap between the interest rates Spain, Italy, Greece and Portugal must pay investors to borrow for 10 years and the rate charged to Germany has ballooned to the widest since before they joined the euro. The difference may grow further as Europe’s worst recession since World War II hurts budgets and credit ratings across the region. Diverging bond yields hurt Trichet’s argument that the ECB’s inflation-fighting mandate ushered in an era of stability for nations that once suffered rampant price growth. They also make it tougher for the ECB, which cut its key rate to a record yesterday, to set one benchmark for all 16 euro nations. That may delay recovery as governments try to fund stimulus plans.

- Wilbur L. Ross, the investor who made billions turning around distressed steel and textile companies, will buy a majority stake in First Bank and Trust Co., giving him a platform to purchase more banking assets. The bank has “good opportunities” to expand, Ross said in a Bloomberg Television interview today. “We view the whole financial services sector as a very interesting one.”

- Circuit City Stores Inc., the bankrupt consumer-electronics retailer, named four liquidators to sell the remaining merchandise in 567 U.S. stores before it goes out of business.

- The ruble dropped, heading for the biggest weekly decline against the dollar in a decade, as Russia’s central bank quickened the pace of devaluations to stanch the erosion of currency reserves.

CNBC.com:
- McDonald's(MCD) is prepared for another tough year economically but believes it is well-positioned to thrive despite the recession, company CEO Jim Skinner said Friday.

AP:

- A schedule of events for Obama’s inauguration.

Lloyd’s List:

- Shippers forecast Hong Kong’s container throughput would fall 10% this year.
The port of Hong Kong handled 24.24m teu in the full year 2008, up 1% from the previous year. It managed to retain its third place in the world’s container port league. However, users of the port are not optimistic about its performance in the new year. Hong Kong Shippers Council executive director Sunny Ho estimated that the port would see a 10% decrease in container throughput this year. He explained the forecast is not too pessimistic as Hong Kong had seen its volume fall 24% in the single month of December last year, compared with the same month in 2007.

VentureBeat:

- Apple’s(AAPL) stock was down today, but not as much as you might expect on the day following an announcement that its chief executive Steve Jobs will be taking a five month medical leave of absence. Why? Maybe it’s because Apple’s investors (and bargain hunters) realized that with or without Steve Jobs, Apple is likely set for at least the next few years.

Silicon Alley Insider:

- Apple(AAPL) iPhone App Downloads Accelerating, Crossed 500 Million.

Reuters:
- The U.S. Treasury has been in discussions with Ford Motor Co. (F) regarding its financing needs and the $700 billion federal rescue fund since December, a U.S. government official said on Friday.

Telegraph:
- Sales of Ugg boots, the wooly footwear favored by celebrities, have jumped in recent weeks thanks to the sub-zero temperatures that have hit Britain.