Mexico

• Tunisian opposition politician shot dead, protests erupt (Reuters)
• China says extremely concerned after latest North Korea threats (Reuters)
• Postal Service to cut Saturday mail to trim costs (AP)
• Debt Rise Colors Budget Talks (WSJ)
• Obama proposes short-term budget fix, Republicans swiftly object (Reuters)
• S&P Analyst Joked of Bringing Down the House Before Crash (BBG)
• Dell’s Bigger Challenge Ahead in Turnaround After Buyout (BBG)
• Some of the Mark Carney Gloss Is Coming Off (WSJ)
• Japan Official Says BOJ Tools Sufficient as Shake-Up Looms (BBG)
• S&P Lawsuit Undermined by SEC Rules That Impede Competition (BBG)
• Heavy Clashes Erupt in Syrian Capital (WSJ)

The Chairman of Goldman's Asset Management group, unwise supporter of Man Utd, promoter of 'decoupling' myths, and creator of the BRIC mnemonic has decided, with everything looking so tickety-boo, to retire. Whether his great Buy BRICS fail or his BoE leadership bid fail was the final straw is unclear, but for now, the erstwhile permabull (and mocker of market skeptics) leaves us on a bright note:

• *O'NEILL SAYS CLEAR EVIDENCE OF THINGS DOING BETTER ECONOMICALLY

20 years of 'broken record' survival and the Brit throws in his chips now - just as everything looks be taking off? Leave your farewell message below...

One-stop summary of the key events and issues in the week ahead.

• 'London Whale' Sounded an Alarm on Risky Bets (WSJ)
• Deadly Blast Strikes U.S. Embassy in Turkey (WSJ)
• Abe Shortens List for BOJ Chief as Japan Faces Monetary Overhaul (BBG)
• Endowment Returns Fail to Keep Pace with College Spending (BBG) - More student loans
• Mexico rescue workers search for survivors after Pemex blast kills 25 (Reuters)
• Lingering Bad Debts Stifle Europe Recovery (WSJ)
• Peregrine Founder Hit With 50 Years (WSJ) - there is hope Corzine will get pardoned yet
• Deutsche Bank to Limit Immediate Bonuses to 300,000 Euros
• France's Hollande to visit Mali Saturday (Reuters)
• France, Africa face tough Sahara phase of Mali war (Reuters)
• Barclays CEO refuses bonus (Barclays)
• Edward Koch, Brash New York Mayor During 1980s Boom, Dies at 88 (BBG)
• Samsung Doubles Tablet PC Market Share Amid Apple’s Lead (BBG)

Our credit-based financial markets and the economy it supports are levered, fragile and increasingly entropic – it is running out of energy and time. When does money run out of time? The countdown begins when investable assets pose too much risk for too little return; when lenders desert credit markets for other alternatives such as cash or real assets.

One look at the headline December data and one would get the impression that millions of Americans had started dealing meth out of some New Mexico RV, as personal income exploded by the most in 8 years, soaring some 2.6% in December to $13.936 billion. And since the surge in income, which was expected to rise some 0.8%, was hardly matched by a comparable boost to spending which missed expectations of 0.3%, rising just 0.2% - somewhat paradoxical considering the biggest boost to the otherwise negative Q4 GDP print was precisely this: spending and consumption, meant that the personal saving rate (which is merely a function of income less spending) soared to 6.5% or the highest since May 2009 - superficially an indication that consumers are hunkering down in expectation of something very bad.

The “tipping point” occurs at about the time when the local stock market returns fall below the currency depreciation.

• Boeing misses Q4 top line ($22.3 bn, Exp. $22.33 bn) beats EPS ($1.28, Exp. $1.18), guides lower: 2013 revenue $82-85 bn, Exp. 87.9 bn
• Hilsenrath discovers DV01: Fed Risks Losses From Bonds  (WSJ)
• Airlines had 787 battery issues before groundings (Reuters)
• Monte Paschi ignored warnings over risk, documents show (Reuters) as did Mario Draghi
• China averts local government defaults (FT)
• Economy Probably Slowed as U.S. Spending Gain Drained Stockpiles (Bloomberg)
• Bono Is No Match for Retail Slump Hitting Dublin’s Fifth Avenue (BBG)
• Catalonia requests €9bn from rescue fund (FT)
• US plans more skilled migrant visas (FT)
• Japan PM shrugs off global criticism over latest stimulus steps (Reuters)
• CIA nominee had detailed knowledge of "enhanced interrogation techniques" (Reuters)
• Cleanliness Meets Godliness as Russia Reeled Into Cyprus (BBG)
• Deutsche Bank Seen Missing Goldman-Led Gains on Cost Rise (BBG)

Department of Energy Wants to Let Radioactive Scrap Metal Back into Consumer Products

It's going to be a week of being bombarded with data and earnings from all angles. This week will see the first reading of US Q4 GDP as well as the first FOMC statement, Payrolls and ISM print of the year. In Europe we will get a handful of confidence indicators in the earlier part of the week but the main highlight will be the Spanish and Italian manufacturing PMIs on Friday.  The coming week could see further sizeable moves in FX, mainly because investors – and policymakers – have become a lot more focused on currency markets. Finally, a few potentially interesting policy speeches are scheduled in the upcoming week. In Japan, Prime Minister Abe will likely talk in parliament about his economic policy, which could contain more comments on the BoJ and the Yen. In Germany, Buba President Weidmann will talk at the car manufacturers association and the recent sharp move in EUR/JPY may well be a subject given the competition between German and Japanese brands. Interestingly, Mr. Weidmann already mentioned the BoJ in a recent speech about global pressures on central bank independence.

Just because there is a superficially-pacifist, yet supraficially genocidal, dictatorially-inclined egomaniac in every one of us, the moment the Maisto Fresh Metal Tailwinds 1:97 Scale Die Cast United States Military Aircraft - US Air Force Medium Altitude, Long Endurance, Unmanned Aerial Vehicle (UAV) RQ-1 Predator went on loss at Amazon (we would say sale, but that would imply some probability of profit, which as even the hotdog guy, knows is never going to happen at AMZN), everyone scrambled to buy one.  However, only those first in line got one: everyone else was greeted by a "Currently unavailable. We don't know when or if this item will be back in stock" sign. So what does one do: what one should have done in the first place before going for the one impulse purchase that can murder innocent children half way around the world courtesy of the latest iPad app "iKiller": read the customer reviews of course. Below is a broad sample of the rather bipolar main street America response when faced with the opportunity of having the same great power, if not so great - or any - responsibility, as is  given, by some 25% of the population (factoring for the 55% or so who don't vote) to the president of the USA, even if on a 1:97 scale.

The World Gold Council and leading academics and international think tanks believe that using a portion of a nation's gold reserves to back sovereign debt would lower sovereign debt yields and give some of the Eurozone's most distressed countries time to work on economic reform and recovery. According to research done by the World Gold Council using the European gold reserves as collateral for new sovereign debt issues would mean that without selling an ounce of gold, Eurozone countries could raise €413 billion. This is over 20% of Italy's and Portugal's two year borrowing requirements.  The move to back sovereign bonds with gold would lower sovereign debt yields, without increasing inflation, which would help to calm markets. This should give European countries some vital breathing space to work on economic reform and recovery. Some citizens would be concerned that there may be a risk that the sovereign nations who pledge their gold as collateral could ultimately end up losing their gold reserves to the ECB, or whoever the collateral of the gold reserves are pledged to, in the event of a default. Unlike currency debasement and the printing and electronic creation of money to buy sovereign debt, under schemes such as Draghi's “outright monetary transactions” (OMT), the use of gold as collateral would not create fiscal transfers between Eurozone members, long term inflation or currency devaluation risk.

The market gets smoked for 1/4 Trillion in a single name, and we're trading at the highs. Go figure.

Earlier today, we reported that "Assistant Attorney General Admits On TV That In The US Justice Does Not Apply To The Banks" when we commented on last night's PBS special "The Untouchables." Explicitly, we said that it was "Lenny Breuer who made it very clear that when it comes to the concept of justice the banks are and always have been "more equal" than others. He does so in such shocking clarity and enthusiasm that it is a miracle that this person is still employed by the US Department of Justice." As of minutes ago that is no longer the case as his employment contract has been torn up. The WaPo reports, that Lanny A. Breuer is leaving the Justice Department "after leading the agency’s efforts to clamp down on public corruption and financial fraud at the nation’s largest banks, according to several people familiar with the matter....It is not clear when Breuer intends to leave, nor what he plans to do once he departs, but it is certain that the prosecutor’s days in office are winding down, according to people who were not authorized to speak publicly about the matter."

• Doubt Greets Bank of Japan's Easing Shift (WSJ)
• Japan hits back at currency critics (FT)
• Japan upgrades economic view for first time in eight months (Australian) - only to lower them in a few months again
• GOP critics get opportunity to grill Secretary Clinton on Benghazi (Hill)
• Global economy set for ‘slow recovery’ (FT)
• Obama to back short debt limit extension (FT)
• Unfinished Luxury Tower Is Stark Reminder of Las Vegas’s Economic Reversal (NYT)
• Draghi Says ‘Darkest Clouds’ Over Europe Have Subsided (BBG)
• High-Speed Dustup Hits a Clubby Corner (WSJ)
• U.S. Budget Discord Is Top Threat to Global Economy in Poll (BBG)
• Sir Mervyn King says abandoning inflation target would be 'irresponsible' (Telegraph)
• Spain Says It May Cover 13% of 2013 Funding in January (BBG)