Today's Headlines

Bloomberg:

- Stocks plunged, erasing the Dow Jones Industrial Average’s gain for the year, and Treasuries rose as President Barack Obama proposed limiting risk-taking at banks and concern grew that China will do more to cool its economy. Oil slid as gasoline supplies grew more than forecast. The Standard & Poor’s 500 Index sank as much as 2 percent at 1:58 p.m. in New York, its biggest loss since November, as financial shares slid 2.7 percent as a group.

- More Americans than anticipated filed claims for unemployment benefits last week, reflecting a backlog of applications from the year-end holidays. Initial jobless claims rose by 36,000 to 482,000 in the week ended Jan. 16, the highest level in two months, from 446,000 the prior week, Labor Department figures showed today in Washington. The jump was due to an “administrative” accumulation from late December and early January holidays, and did not reflect “economic” reasons, a Labor Department spokesman said.

- Three Senate Democrats today joined a Republican effort to stop the Environmental Protection Agency from regulating greenhouse gases under existing law. Democrats Blanche Lincoln of Arkansas, Mary Landrieu of Louisiana and Ben Nelson of Nebraska said they co-sponsored a motion that seeks to overturn the EPA’s finding that greenhouse gases are a threat to public health and should be regulated. The agency has proposed regulations for new cars, power plants, oil refineries and factories that could begin in March. “This command-and-control approach is our worst option for reducing the emissions blamed for climate change,” said Senator Lisa Murkowski, an Alaska Republican, who wrote the measure. “Congress must be given time to develop an appropriate and more responsible solution.” Lincoln said she will support Murkowski’s disapproval motion to block “heavy-handed EPA regulation.” “I am very concerned about the burden that EPA regulation of carbon emissions could put on our economy,” Lincoln said in an e-mail.

- Goldman Sachs Group Inc.(GS), facing criticism from politicians and labor unions for near-record compensation, set aside $16.2 billion to pay employees, the smallest portion of revenue since the firm went public in 1999. The amount, 35.8 percent of revenue, is enough to pay each of the 32,500 employees $498,246. That compares with an average pay of $316,928 a year earlier and is down from the record $661,490 in 2007.

- Credit-default swaps tied to Goldman Sachs Group Inc.(GS) and Morgan Stanley(MS) rose as President Barack Obama proposed limiting the size and trading activities of financial institutions as a way to reduce risk-taking. Swaps on the Markit CDX North America Investment-Grade Index Series 13, which is linked to 125 companies and used to speculate on creditworthiness or to hedge against losses, rose 3 basis points to a mid-price of 88 basis points as of 12:16 p.m. in New York, according to broker Phoenix Partners Group. An increase in the index signals a decline in investor confidence.

- Prince Alwaleed bin Talal, the billionaire Saudi investor, said his choice to succeed Rupert Murdoch at the head of News Corp.(NWS/A) is his son James Murdoch. “If he doesn’t appoint him, I’ll be the first one to nominate him to be the successor of Mr. Rupert Murdoch,” Alwaleed said in an interview on the Charlie Rose show, to be aired tonight. Alwaleed held a 7 percent stake in News Corp. according to an Aug. 20 proxy statement.

- Hudson City Bancorp Inc.(HBCK) never wrote a subprime loan. It wasn’t bailed out by the government. And it just posted a 10th straight quarter of rising profit. Now, Chief Executive Officer Ronald Hermance wants to know why the lender should pay a tax on banks that triggered the economic collapse. “This is more or less an attempt to strike out at an industry,” Hermance said yesterday in an interview. “I think it’s popular -- vindictive, but popular.”

- U.S. stocks will rise as much as 10 percent or more this year as individual investors grow more confident in the market and mergers and share buybacks increase, Laszlo Birinyi said. “The surprise is going to be on the upside,” Birinyi, the founder of Westport, Connecticut-based research and money- management firm Birinyi Associates Inc., said today in a Bloomberg Radio interview. “Most people are still fighting that this is a rally. Everyone is erring on the side of caution.”

- Expansion in Europe’s service and manufacturing industries unexpectedly slowed in January, adding to signs the pace of the economy’s recovery may weaken.

- Mortgage rates in the U.S. dropped for a third week, lowering borrowing costs for consumers and supporting government efforts to boost the housing market. The rate for 30-year fixed U.S. home loans fell to 4.99 percent for the week ended today from 5.06 percent, mortgage finance company Freddie Mac said in a statement today. The average 15-year rate declined to 4.4 percent from 4.45 percent, according to the McLean, Virginia-based company.

- New York City’s jobless rate rose to 10.6 percent last month, the highest since it was the same level in March 1993, the state Labor Department reported today.

- The two mobile phones that Google Inc.(GOOG) had planned to unveil in China this week may now go on sale later this month, CCID.com said, citing the company’s local partner China Unicom Ltd.

- Gold fell to the lowest price in two weeks on speculation that the dollar will extend a rally, curbing demand for the precious metal as an alternative investment. Silver and platinum also dropped. The euro dropped to a five-month low against the dollar. The greenback has rallied partly on demand for a haven amid a slump in equities. “The dollar is just incredibly strong, and that’s forcing gold lower,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois. “China was the driving engine behind commodities,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “You have got a wave of asset liquidation coming through” that triggered more sales, he said. “The next session or two will be very important,” Zeman said. “We need to see gold snap back fairly quickly. If gold can’t recapture the 50-day, you’ve got to get bearish very quickly.”

- Crude oil fell to a four-week low after a U.S. Energy Department report showed that refineries slashed operating rates as fuel demand declined. Plants ran at 78.4 percent of capacity last week, the lowest rate since September 2008 when hurricanes struck the Gulf of Mexico. Gasoline supplies surged to the highest level since March 2008. Fuel use in the past four weeks fell 1.8 percent from a year earlier. “Refineries aren’t running and we still got a big build in gasoline inventories,” said Phil Flynn, vice president of research at PFGBest in Chicago. “This is a signal that demand is very weak in the U.S., and there is no sign that it will increase anytime soon.”

Wall Street Journal:

- President Barack Obama proposed Thursday new rules designed to restrict the size and activities of the U.S.'s biggest banks, the latest in a series of administration moves to curb Wall Street. The White House wants commercial banks that take deposits from customers to be barred from investing on behalf of the bank itself—what's known as proprietary trading—and said the administration will seek new limits on the size and concentration of financial institutions.

- Facebook and other firms have started responding to the problem, and on Thursday tech-security company Websense(WBSN) will announce software called Defensio that allows Facebook users to better police the comments appearing on their wall and fan pages. In addition to detecting and blocking threats such as phishing and malicious Web sites, the software lets users restrict comments that include profanity or adult content.

NY Times:

- Federal authorities are scrutinizing certain financial derivatives that may enable Wall Street banks to avoid collecting billions of dollars in withholding taxes on stock dividends. The instruments, known as equity swaps, mimic ordinary shares and give investors like hedge funds the benefits of stock ownership, including payments similar to dividends, without actually owning the shares. Big banks also benefit from the swaps because, under federal tax rules, the banks may avoid paying a 30 percent tax that is normally levied on stock trades.

- After a last long night of negotiations, the deal to end Mr. O’Brien’s short term as host of “The Tonight Show” was concluded with an agreement that will pay him about $32 million and free him up to return to television in eight months.

FoxNews:

- In a stunning reversal of the nation's federal campaign finance laws, the Supreme Court ruled 5-4 Thursday that free-speech rights permit groups like corporations and labor unions to directly spend on political campaigns, prompting the White House to pledge "forceful" action to undercut the decision.

The Business Insider:

- Several senior financial executives are exploring the possibility of making a bid for Merrill Lynch.There has been increasing chatter about the possibility of a spin-off in recent weeks. But today's announcement of new financial regulations that would rebuild the Glass-Steagal era wall between banking and trading has created a new sense of urgency and opportunity.

CBS News:

- John Edwards' admission that he fathered a child out of wedlock with videographer Rielle Hunter may not have shocked the world ? Edwards had already admitted an affair with Hunter ? but it does raise an interesting question: What if Edwards had won the presidency?

BusinessWeek:

- Iraq's oil exports climbed by about 8.5 percent while revenues surged almost 43 percent in the fourth quarter of 2009 compared to the same period the prior year, the Oil Ministry said Thursday.

Forbes:

- The Global Debt Bomb.

LATimes:

- In an earnings report released this morning, Goldman(GS) reported profits of $4.78 billion for the fourth quarter of 2009, compared with $2.28 billion in losses during the final quarter of 2008. Quarterly profits at the storied investment bank were enough to provide earnings of $8.20 a share, significantly higher than the $5.25 a share that analysts had predicted. Goldman had $13.4 billion in profits for the year.

Rassmussen:

- The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 27% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-two percent (42%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -15 (see trends).

Politico:

- Specter tells Bachmann to “act like a lady.” The deeply odd couple of Sen. Arlen Specter (D-Penn.) and Rep. Michele Bachmann (R-Minn.) appeared together on a Philly radio station yesterday -- and things got ugly in short order.

- Paul Krugman’s announcement that he is near to “giving up” on President Barack Obama is fueling a new round of liberal revolt. Like many influential voices on the left, The New York Times columnist and Nobel Prize-winning economist has not been shy to voice his disapproval with some of the president’s specific policy initiatives over the past year. But in the wake of a devastating surprise loss in the Massachusetts Senate special election, and with prospects of health care reform growing dimmer by the hour, Krugman and others liberals are charging Obama with failing to lead.

HuffingtonPost:

- Sheila Bair, one of the chief regulators overseeing Bank of America's(BAC) federal rescue, took out two mortgages worth more than $1 million from the banking giant last summer during ongoing negotiations about the bank's bailout and its repayment. In the weeks between the closings on her two mortgage loans, Bair met with Bank of America's chief negotiator in the bailout talks. To avoid conflicts of interest, the Federal Deposit Insurance Corp., which Bair heads, prohibits employees from participating in "any particular matter" involving a bank from which they are seeking a loan. Bair did not seek or receive an exemption until last week, when her agency gave her a retroactive waiver from the rules after an inquiry by the Huffington Post Investigative Fund.

USAToday:

- Six companies received $24.8 million in economic stimulus work under federal programs set aside for disadvantaged businesses even though government investigators had found them ineligible, federal records show. The companies got contracts meant for those based in poor neighborhoods or owned by minorities or disabled veterans, according to a USA TODAY analysis of federal contracting records and reports on ineligible companies. Watchdogs including the Government Accountability Office have criticized oversight of the programs. In the past two years, the GAO has singled out 39 businesses, including five that got stimulus work, as improperly getting $235 million in set-aside contracts since 2003.

Reuters:

- The fourth in a string of winter storms, said to be the heaviest to hit Southern California in five years, swept into the area on Thursday, and 800 homes remained evacuated under threat of mudslides. he storms, lashing the Golden State since Sunday night, unleashed torrential rains that flooded low-lying roads, waves as high as 25 feet (7.6 metres) that eroded beaches and snow in mountains areas that forced closure of an interstate highway.

- Greece's most influential think tank warned on Thursday of a social crisis unless the government takes rapid action to repair the damaged economy, including unpopular austerity measures.

Capital.gr:

- Greece’s public sector debt could be higher than the officially reported EUR300 billion, the Kathimerini daily reports Thursday, citing a report by an independent committee formed by the government to examine the country’s fiscal data. According to the paper, the committee’s findings note that certain outstanding obligations relating to things like unpaid arrears to public sector suppliers, interest rate swaps with commercial banks, and debt guarantees for public sector companies are excluded by the official data. "Beyond the officially declared 300 bil. euro, fiscal chaos is covering up a public debt of many billions of euro, according to a report by the committee," the newspaper said.

Sydney Morning Herald:

- Big Tax Looms for Mining Giants. THE Henry tax review has recommended scrapping the state-based royalty taxes applying to mining projects and replacing them with a uniform national resource rent tax set to raise billions more. The tax, most likely to be set at 40 per cent, would be modeled on the existing petroleum resource rent tax levied on petroleum products including crude oil and natural gas mined in Commonwealth waters other than the North-West Shelf and the jointly developed area between Australia and East Timor.