Merrill

• Frustrated by Karzai, U.S. Shifts Afghanistan Exit Plans (WSJ)
• Yellen Testimony Guide From Payrolls Report to Emerging Markets (BBG)
• Gold hits three-month high, shares up ahead of Yellen (Reuters)
• Tightfisted New Owners Put Heinz on Diet (WSJ)
• Senator describes "gruesome" bin Laden photos (Reuters)
• More reasons for the ongoing economic contraction: U.S. Winter Storm Seen Spreading Snow, Sleet Across South (BBG)
• Barclays Cuts Up to 12,000 Jobs as Quarterly Profit Falls  (BBG)
• Boeing Considering 787-Size Medium-Range Jetliners (WSJ)
• AOL Chief Apologizes for ‘Distressed Babies’ Comment (BBG)

• Yellen's first test (Reuters)
• Let weak banks die, says eurozone super-regulator (FT)
• Yellen, Carney Face Explaining Policy as Benchmarks Near (BBG)
• Commerzbank Said Seeking Debt Buyers in $6.8 Billion Spain Exit (BBG)
• Junk Yield Premiums Soar on China’s Looming First Default (BBG)
• Millions Trapped in Health-Law Coverage Gap (WSJ)
• Mandel Tops Best-Earning Hedge Funds for Clients in 2013 (BBG)
• Swiss Brace for Sour EU Relations After Immigration Vote (BBG)
• Detroit Bankruptcy Talks to Resume (WSJ)

• Here is why AAPL bounced off $500: Apple Repurchases $14 Billion of Own Shares in Two Weeks (WSJ)
• German Court Refers OMT Decision to Europe's Top Court (WSJ)
• Inflation Fuels Crises in Two Latin Nations (WSJ)
• U.S. job growth seen snapping back from winter chill (Reuters)
• Google to own $750 million Lenovo stake after Motorola deal closes: HK exchange (Reuters)
• Frigid Winter Spells Trouble for U.S. Economy (BBG)
• Winter Games to open, Putin keen to prove doubters wrong (Reuters)
• Regulators Ready to Proceed on Bank Leverage Limit (WSJ)
• Abe Eyes Window for Biggest Military-Rule Change Since WWII (BBG)

• Draghi as ECB Master of Suspense Keeps Investors on Edge (BBG)
• Abe lays out detailed plan for expanding defense powers (Nikkei)
• Inflation Fuels Crises in Two Latin Nations (WSJ)
• Obama walks into crossfire of Asian tensions (FT)
• Harvard Makes Professor Disclose More After Blinkx Slides (BBG)
• Hedge Funds Rework Currency Positions in Market Drop (BBG)
• Canada, U.S. Strike Tax-Information Sharing Deal (WSJ)
• Indonesia calls for greater clarity from Fed on tapering (FT)
• Sony to cut 5,000 jobs, split off PC, TV operations (Reuters)

• Goldman to Fidelity Call for Calm After Global Stock Wipeout (BBG)
• Turnabout on Global Outlook Darkens Investor Mood (Hilsenrath)
• EU Said to Weigh Extending Greek Loans to 50 Years (BBG)
• Second Storm Hitting Northeast Halts Planes, Schools (BBG)
• Small Banks Face TARP Hit (WSJ)
• As Sony prepares PCs exit, pressure mounts for reboot on TVs (Reuters)
• IBM Uses Dutch Tax Haven to Boost Profits as Sales Slide (BBG)
• ECB faces dilemma with inflation drop (FT)
• London Subway Strike Snarls Traffic as Union Opposes Cuts  (BBG)

"As we and others have said, the Fed is overly reliant upon models that do not account for real-world elements of instruments, markets and traders in the derivatives age. Models cannot possibly take into account unpredictable interactions among huge positions and traders in new and very complicated instruments. Thus, the Fed should be careful, humble and conservative. Instead, it is just blithely plowing ahead as if it knows exactly what is going on. Intelligent captains sail uncharted waters with extra caution and high alert; only fools think that each mile they sail without sinking the vessel further demonstrates that they are wise and the naysayers were fools. This is a formula for destruction. The crash of 2008 should have been smoking-gun evidence of the folly of this approach, but every mistake leading up to the crash, especially excessive and “invisible” leverage and interest rates that were too low, has been doubled down upon in the years since."

A classicial economist... and Harvard professor... preaching to the world that one's money is not safe in the US banking system due to Ben Bernanke's actions? And putting his withdrawal slip where his mouth is and pulling $1 million out of Bank America? Say it isn't so...

If a third of all US homes cannot trade due to being underwater or not sufficiently above water to clear closing costs, then the US economy is going to suffer

• Only time will define Bernanke's crisis-era legacy at Fed (Reuters)
• Record Cash Leaves Emerging Market ETFs (BBG)
• Investors Look Toward Safer Options as Ground Shifts (WSJ)
• Fed Policy Makers Rally Behind Tapering QE as Yellen Era Begins (BBG)
• Rating agencies criticise China’s bailout of failed $500m trust (FT)
• Russia to await new Ukraine government before fully implementing rescue (Reuters)
• U.S. readies financial sanctions against Ukraine: congressional aides (Reuters)
• Companies resist president’s call for minimum wage rise (FT)
• Secret Swiss Funds at Risk as Italy’s Saccomanni Visits Bern (BBG)
• Top Democrat puts Obama trade deals in doubt (FT)
• Erdogan to Give Rate Increase Time Before Trying Other Plans (BBG)

• Obama warns divided Congress that he will act alone (Reuters)
• Fed Decision Day Guide From Emerging Markets to FOMC Voter Shift (BBG)
• Fed poised for $10 billion taper as Bernanke bids adieu (Reuters)
• Bernanke’s Unprecedented Rescue Unlikely to Be Repeated (BBG)
• Argentina Spends $115 Million to Steady Peso (WSJ)
• Billionaires Fuming Over Market Selloff That Sinks Magnit (BBG)
• SAC’s Counsel Testifies at Insider Trading Trial in Unexpected Move by the Defense (NYT)
• Automakers Fuel Japan’s Longest Profit Growth Streak Since 2007 (BBG)
• Turkey Crisis Puts Jailed Millionaire at Heart of Gold Trail (BBG)
• Ukraine expects $2 billion tranche of Russian aid soon (Reuters)

• Emerging markets pray for Wall Street tumble (Reuters)
• Yellen Faces Test Bernanke Failed: Ease Bubbles (BBG)
• Samsung sets new smartphone sales record in fourth quarter, widens lead over Apple (Reuters)
• China’s Foreign-Reserves Investment Chief Said to Depart Agency (BBG)
• China’s Rescue of Troubled Trust May Stoke Risk-Taking (BBG)
• Ukraine PM Azarov offers to resign 'to help end conflict' (Reuters) ... And Russia says may reconsider aid if this happens
• But... but... it was all gold's fault: India Unexpectedly Raises Rate as Rupee Risks Inflation Goal (BBG)
• Former Belgian king 'boycotting' public events after complaining £760,000 is not enough to live on (Telegraph)
• Greek disposable income tumbles 8% in Q3 (Kathimerini)

• Emerging sell-off hits European shares, lifts yen (Reuters) - but not really if you hit refresh since the latest central bank bailout announcement
• Apple’s Holiday Results to Show Whether Growth Is Back (BBG)
• Israel attacked Syrian base in Latakia, Lebanese media reports (Haaretz)
• Abenomics FTW: Japan Posts Record Annual Trade Deficit as Import Bill Soars (BBG)
• When all else fails, Spain's hope lie in a 16th century saint: Saint “might help Spain out of crisis,” says interior minister (El Pais)
• Global Woes Fail to Send Cash Into U.S. Stocks (WSJ)
• IMF's Lagarde sees eurozone inflation "way below target" (Reuters)
• Minimum wage bills pushed in at least 30 states (AP)
• AT&T Gives Up Right to Offer to Buy Vodafone Within 6 Months (BBG)

• Emerging market sell-off raises specter of contagion (Reuters)
• China Bank Regulator Said to Issue Alert on Coal Mine Loans (BBG)
• Argentina to Ease FX Controls After Peso Devaluation (BBG)
• Pimco's Gross problem: who can succeed the 'Bond King'? (Reuters)
• Ukraine protesters seize building, put up more barricades (Reuters)
• Mideast Turmoil Dominates Gathering of Business Elite (WSJ)
• Central Banks Withdraw Dollar Funding (WSJ) - oh really?
• Samsung warns of weak earnings growth this quarter (FT)
• Three explosions rock Cairo, killing 5 (USA Today)

• Gross Told El-Erian ‘Hell No’ Seeking to Stop Departure (BBG)
• How Caterpillar got bulldozed in China (Reuters)
• Davos Bankers Struggle to Convince Elite That Markets Are Safer (BBG)
• Lucrative Role as Middleman Puts Amazon in Tough Spot (WSJ)
• Arctic Air Blankets Northern U.S. as Texas to Get Snow (BBG)
• Lenovo buys IBM's server business in China's biggest IT acquisition (Reuters)
• SEC judge bars "Big Four" China units for six months over audits (Reuters)
• U.S. Accuses Security Background Check Firm of Fraud (WSJ)
• RIP BOE forward guidance: Bank of England rate rise is 'still some way off' - Fisher (Reuters)

After five years of aggressive Federal Reserve and government intervention in our monetary and financial systems, it's time to ask: Where are we? The "plan," such as it has been, is to let future growth sweep everything under the rug. To print some money, close their eyes, cross their fingers, and hope for the best. On that, we give them an "A" for wishful thinking – and an "F" for actual results. If we take a closer look at the projections, the idea that we're going to grow – even remotely – into a gigantic future that will consume all entitlement shortfalls within its cornucopian maw becomes all but laughable. Of course, the purpose of this exercise is not to make fun of anyone, nor to mock any particular beliefs, but to create an actionable understanding of the true nature of where we really are and what you should be doing about it.