- Euro-Area Inflation Slows to 0.8% as Economy Strains to Grow. Euro-area inflation slowed in December, retreating farther from the European Central Bank’s ceiling as the 18-nation currency bloc struggled to strengthen its recovery from a record-long recession. The annual rate dipped to 0.8 percent from 0.9 percent in November, the European Union’s statistics office in Luxembourg said in a preliminary estimate today. That’s in line with the median forecast in a Bloomberg News survey of 31 economists. The rate has been below the ECB’s 2 percent ceiling for 11 months, and sank to a four-year low of 0.7 percent in October.
- Gold Falls for Second Day on Dollar Rally, Fed Taper Bets. Gold futures for February delivery fell 0.8 percent to $1,227.60 an ounce at 9:56 a.m. on the Comex in New York. Yesterday, the price settled less than 0.1 percent lower after plunging by more than $30 in about a minute, spurring a 10-second trading pause.
- Syria Rebel Infighting Erupts on Rising al-Qaeda Influence. Syrian rebels seeking to topple President Bashar al-Assad are turning on al-Qaeda militants who previously fought alongside them as the rising influence of the group threatens to scuttle their foreign backing. Fighters from the Free Syrian Army, the main rebel force, and other Islamist groups clashed with the al-Qaeda linked Islamic State of Iraq and the Levant in its northeastern stronghold, the U.K.-based Syrian Observatory for Human Rights said yesterday. Other battles broke out in the northern Aleppo province. At least 274 people, including 46 civilians, were killed in fighting from Jan. 3 to Jan. 6, the Observatory said in an e-mailed statement.
- Yellen’s Record-Low Senate Support Reflects Fed’s Politicization. Janet Yellen’s confirmation as chairman of the Federal Reserve with the least Senate support on record shows that the central bank still faces intense political scrutiny six years after the financial crisis. The Senate vote of 56-26 to confirm Yellen means she garnered even less support than outgoing Chairman Ben S. Bernanke, whose 2010 confirmation for a second term by a vote of 70-30 represented the most opposition for a Fed chief. Bernanke’s term ends Jan. 31.
- Rosengren Signals Support for Taper Strategy After Dissent. Federal Reserve Bank of Boston President Eric Rosengren, the only dissenter against a Fed decision to taper bond buying, said he is now comfortable with the strategy to gradually cut monthly purchases in the future. “I preferred to wait before beginning the program, but the program it looks like we’re embarked on is a very gradual program and I think a gradual removal of accommodation is appropriate,” Rosengren said today in an interview with Bloomberg News, indicating he would not persist in objecting to the Fed’s strategy.
- Chicago Colder Than South Pole as Frigid Air Clamps Down on U.S. Frigid air clamped down on much of the U.S. for a second day, giving Chicago a morning temperature lower than the South Pole and breaking records across the country as road, rail and air transportation snarled.
Wall Street Journal:
- Brazil Stocks Reverse to Decline Intraday on Ratings Worries. Brazil's Bovespa stocks index gave up an early advance to decline in intraday trading Tuesday following talk that ratings agency Standard & Poors could consider lowering the country's credit ratings in 2014. As of 12:30 p.m. EST, the main Sao Paulo index declined 0.9% to 50,513 points. Traders noted the Bovespa erased moderate gains posted earlier in the session after reports that S&P representatives in a roundtable discussion with journalists Tuesday affirmed they might still consider a ratings cut this year before Brazil's October general elections.
- Danger on the rails: New rules could hit stocks. Recent accidents involving crude oil being shipped from the Bakken area of North Dakota and Montana are raising eyebrows on Wall Street and have analysts looking at companies that could be exposed to new rules governing oil shipments from the region.
- Muppets Crucified After Goldman Closes One Of Its "Top Trades For 2014" At A 13.5% Loss Less Than A Week Into 2014. "Goldman is selling China equities (via the HSCWI Index), while buying copper (via Dec 2014 futs), or at least advising its flow clients to do the opposite while admitting that "for the long China equity/short commodity pair trade to “work” best, these two assets, which are usually positively correlated, will have to move in opposite directions."
Reuters:
- Fed to ease foot off accelerator, but won't hit brakes: Williams. The Federal Reserve will likely phase out its massive bond-buying stimulus this year if the U.S. economic recovery strengthens as expected, a top Fed official said on Tuesday, but it is still far from any thought of hiking interest rates.
- Brazil auto sales fall for 1st time in decade, rebound looks weak. Motor vehicle sales in Brazil are likely to stage a feeble recovery in 2014 from their first annual drop in a decade, an industry group said on Tuesday, as tighter credit and higher taxes stifle the world's fourth-largest car market.
- Eurozone losing 'safety margin' against deflation trap as core gauge falls to record low. Fall in inflation raises fears that eurozone is 'sleepwalking into a deflation trap'. The great unknown is what will happen in China, now the epicentre of global risk. Societe Generale said Beijing may be tempted to push down the yuan to cushion the blow as it pops the credit bubble, and to counter devaluation by Japan. This would risk a repeat of the East Asia currency war in 1998, this time on a bigger scale and with the world less able to handle the consequences.
Xinhua:
- China to Improve GDP Calculation Method in 2014. Ma Jiantang, head of China's statistics bureau, said China will be rigorous in calculating quarterly GDP data and local GDP data this year. China faces problem that the sum of provincial GDP data is higher than the national figure, the report said. NBS will steadily promote setting up a "national unified economic calculation system," Ma said.
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