Barclays

• Just like last year: A Postholiday Letdown for Retailers (WSJ)
• Obama Fights Republicans on Debt as Investors Seek Growth (BBG)
• Housing a Sweet Spot for U.S. Economy as Recovery Expands (BBG)
• House chooses Boehner as speaker again despite dissent (Reuters)
• Backlash pushes Republicans to seek cuts (FT)
• Jobs Lost Hit 5 Million With Rigged Currencies (BBG)
• Chavez still has "severe" respiratory problem (Reuters)
• Paris promises flurry of economic reforms  (FT)
• Investors Sour on Pro Stock Pickers (WSJ)
• Abe moves to ease South Korea tensions (FT)
• Wildfires Hit Australia Amid Worst Heatwave in Decade (BBG)
• Monti attacks ‘extremist’ rivals (FT)

• Obama Signs Bill Enacting Budget Deal to Avert Most Tax Hikes (BBG)
• GOP Leaders Take Political Risk With Deal (WSJ)
• Basel Becomes Babel as Conflicting Rules Undermine Safety (BBG)
• Portugal Faces Divisions Over Austerity Measures (WSJ)
• The Fiscal Cliff Deal and the Damage Done (BBG)
• Cliff deal threatens second term agenda (FT)
• Deposits stable in euro zone periphery in November (Reuters)
• Fresh Budget Fights Brewing (WSJ)
• China Poised for 2013 Rebound as Debt Risks Rise for Xi (BBG)
• Who's Afraid of Italian Elections?  (WSJ)
• China services growth adds to economic revival hopes (Reuters)
• Asian Economies Show Signs of Strength (WSJ)
• Japan’s Aso Targets Myanmar Markets Amid China Rivalry (Bloomberg)

• Senate-Passed Deal Means Higher Tax on 77% of Households (BBG)
• Bipartisan House Backs Tax Deal Vote as Next Fight Looms (BBG)
• Fresh stand-off looms after US cliff deal (FT)
• Congress Deal Averting Tax Increase Curbs Risk to States (BBG)
• How Colombian drug traffickers used HSBC to launder money (Reuters)
• Danes Face New Reality in Struggle to End Crisis, PM Says (BBG)
• Ban on demanding Facebook passwords among new 2013 state laws (Reuters)
• Oil Climbs to Three-Month High as U.S. House Passes Budget Bill (BBG)
• Cameron seeks bold steps from G8 leaders (FT)
• China to outstrip Europe car production (FT)
• North Korea Picks Stronger Economy, South Ties as Top 2013 Tasks (BBG)

Presented with little comment except to rhetorically ask (Tom Lee) - where's the value?

The US Fed is playing a very dangerous game by purchasing as many Treasuries as it is. But that game can last much longer than anticipated.

• Grand Bargain Shrinks as Congress Nearing U.S. Budget Deadline (BBG)
• Budget Talks Cloud Outlook (WSJ)
• Obama to cut vacation short to deal with fiscal crisis (Reuters)
• Stop-gap fix most likely outcome of "fiscal cliff" talks (Reuters)
• Aso Named Japan’s Next Finance Chief as Abe Primes Fiscal Pump (BBG)
• Aluminum Glut No Bar to Gains as Barclays Says Sell (BBG)
• Morsi signs controversial charter into law  (FT)
• Children, many ill, would be victims of Russia ban on U.S. adoption (Reuters)
• Turkey Central Bank Unveils New Tool to Limit Bank Debt Risk (BBG)
• Refi Program Expansion Eyed (WSJ)
• India Joins Indonesia Facing Heightened Policy Dilemma (BBG)

Presenting Dave Collum's now ubiquitous and all-encompassing annual review of markets and much, much more. From Baptists, Bankers, and Bootleggers to Capitalism, Corporate Debt, Government Corruption, and the Constitution, Dave provides a one-stop-shop summary of everything relevant this year (and how it will affect next year and beyond).

For all economies, the relative pressure of ‘tailwinds’ in relation to ‘headwinds’ will be crucial for the outcome of economic activity. In the chart below, Barclays shows a heat-map that represents their subjective assessment of the relative balance of forces from 2012 into 2013 and beyond. In 2013, the fiscal headwind continues to loom large and is an important basis of caution despite the strong improvement in financial conditions. The fiscal headwind is unlikely to abate by much in the US and Europe until 2014, possibly later. Other sources of ‘headwind’ are likely to continue during 2013; these include private sector de-leveraging in the highly indebted parts of Europe, as well as political uncertainty (in this context, we observe the elections in Italy (Q1) and Germany (Q4)). Monetary policy, policy reforms, and the financial markets themselves are the main tailwinds as vol suppression continues. Headwinds vs Tailwinds once again in 2013...

• IMF Demands Partial Default for Cyprus (Spiegel)
• Boehner's 'Plan B' Gets Pushback (WSJ)
• Beijing criticises US ‘political checks’ (FT)
• White House Said to Tell Business Groups Talks Stall (BBG)
• NYSE tries to get hitched again: IntercontinentalExchange in talks to buy NYSE (Reuters) -> N-Ice coming?
• Greece faces ‘make or break’ year (FT)
• Fed rejects idea of consensus forecasts, "maybe forever": Fisher (Reuters)
• Rajoy Drives Spanish Revolution With Low-Cost Manufacture (BBG)
• Italian Senate Set for Budget Vote Before Monti Resigns (BBG)
• BOJ Loosens With Pledge to Review Inflation Objectives (BBG)
• Bowing To Abe, BOJ To Review Price Goal (WSJ)

A $1.5bn fine. Sounds like a lot but in relation to the trillion dollar derivative markets hanging on every tick and reset from this now-proven-to-be-entirely-false market, it seems a fine is too easy. Just as with Barclays, the UBS traders (who combined their LIBOR submission and proprietary trading units from 2005 to 2009) used hints and suggestions and requests for "market color" to ensure fixes were exactly where they needed them up and down the curve. The quotes and hubris are entirely damning and also show a totally willful disregard for capture (especially following a discussion of the mainstream media noting 'odd' LIBOR quotes during the crisis). This went from top to bottom in the organization, summed up perfectly in this one exchange: "...It is highly advisable to err on the low side with fixings for the time being to protect our franchise in these sensitive markets. Fixing risk and PNL thereof is secondary priority for now."

• Republicans put squeeze on Obama in "fiscal cliff" talks (Reuters)
• Inquiry harshly criticizes State Department over Benghazi attack (Reuters)
• Banks See Biggest Returns Since ’03 as Employees Suffer (BBG)
• Italy president urges election be held on time (Reuters)
• Bank of England Says Sterling Hurting Economy (WSJ) - there's an app for that, it's called a Goldman BOE chairman
• China slowdown hits Indonesian farmers (FT)
• China dispute hits Japanese exports (FT)
• Market to get even more monopolized by the HFT king: Getco wins Knight with $2 bln sweetened offer (Reuters)
• MF Global Cases Focus on 'Letters' (WSJ)
• UBS fined $1.5 billion in growing Libor scandal (Reuters)
• Spotlight swings to interdealer brokers (FT)
• China Widens Access to Capital Markets (WSJ)
• With Instagram, Facebook Spars With Twitter (WSJ)

As the fallout of Liborgate escalates, the next big bank to be impacted in the fallout started by Barclays civil settlement "revelation" is set to be troubled UBS, already some 10,000 bankers lighter, where as many as three dozen bankers are reported by the implicated in the fixing of the rate that until 2009 was the most important for hundreds of trillions in variable rate fixed income products. Only instead of attacking the US or even European jurisdiction, where the next big settlement is set to hit is Japan: a country whose regulators as recently as half a year ago promised there were no major issues with Libor, or Tibor as it is locally known, rate fixings. And while this most recent development will have little material impact on UBS' ongoing business model, the one difference from previous settlements is that it will likely include criminal charges lobbed against some of the 36 bankers. From the FT: "UBS is close to finalising a deal with UK, US and Swiss authorities in which the bank will pay close to $1.5bn and its Japanese securities subsidiary will plead guilty to a US criminal offence. Terms of the guilty plea were still being negotiated, one person familiar with the matter said on Monday, adding that the bank will not lose its ability to conduct business in Japan. The pact between the bank and the US Commodity Futures Trading Commission, US Department of Justice, UK’s Financial Services Authority and UBS’s main Swiss supervisor Finma is expected to be announced on Wednesday, although last minute negotiations continue."

“The Government Has Bought Into the Notion that Too Big to Fail Is Too Big to Jail”

Here, for your comparative studies analytical viewing pleasure, is the current recession recovery in context. Across activity indicators, consumer behavior, labor market developments, and housing & construction, there is a little here for everyone. From vehicle sales to disposable income and from durable goods to industrial production, it seems grading this economy's performance is a matter of 'see no evil, hear no evil, speak no evil'.

Gold fell nearly 1% in illiquid markets in Asia overnight. Some traders may have decided to take profits on the short term long the FOMC announcement trade. Gold bullion prices had already ran up to $1,723 in the 2 weeks prior to the policy statement. Overnight, as prices fell below the 100-day moving average at $1,705, stop-loss selling was triggered which pushed prices lower quickly. Yesterday, the Federal Reserve took the bold, some would say reckless step, of linking its monetary policy to unemployment, creating concerns that the U.S. dollar will be debased even more in the coming months.  The US Federal Reserve will keep interest rates at close to zero until unemployment falls below 6.5%. This is a historic and very radical change to monetary policy. It is the first time a large central bank has ever tied its interest rate policy directly to one facet of the economy – unemployment.