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Cost Cutting Battles Erupt, As House Changes Hands

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Portuguese Bond Yields Spike (CNBC via Reuters) "Portugal paid almost twice as much to sell 500 million euros ($660 million) of six-month paper on Wednesday as it did in September, keeping the country at the sharp end of persistent market concerns about euro zone debt. The yield rose to 3.686 percent from 2.045 percent in the previous auction. The auction produced a bid to cover ratio of 2.6, compared with 2.4 previously."

Treasury Prices Up As Fed Prepares to Buy (Bloomberg) "Treasuries rose as the Federal Reserve prepared to buy long-term debt today after saying improvements in the economy fell short of what's needed to scale back its bond-purchase program. Ten-year yields approached a two-week low after Vincent Reinhart, who was the Fed's chief monetary-policy strategist from 2001 until September 2007, said unemployment may lead the central bank to extend its purchases beyond the current plan to scoop up $600 billion of debt. A report today is forecast to show that private employment rose by the most since November 2007 last month. The notes also rose as the MSCI World Index of stocks fell for the first time in four days."

Indiana Governor Mitch Daniels Talks Smaller Government(New York Times) "Of all the Republicans talking about the deficit these days, Mitch Daniels, the governor of Indiana, has arguably the most credibility. Congressional Republicans have spent much of the last decade voting for tax cuts and spending increases, all the while giving speeches decrying the deficit. Mr. Daniels, who took office in 2005, has reduced the number of state workers by 18 percent and held spending growth below inflation. He has raised the sales tax to help make up for a property tax cut. Largely as a result, Indiana finds itself in better fiscal shape than many other states."

Cost Cutting Battles Erupt, As House Changes Hands (Wall Street Journal) "House Republican leaders said Tuesday highway and mass-transit programs should no longer be shielded from budget cuts, and immediately drew fire from states, the construction industry and the U.S. Chamber of Commerce. The reaction offered a preview of the challenges incoming Republican House Speaker John Boehner and his leadership team will face as they start work Wednesday to make good on promises to cut as much as $100 billion from annual federal spending"

Qualcomm to Buy Chipmaker Atheros (New York Times DealBook) "Qualcomm, the pioneering wireless technology company, has agreed to acquire the chip maker Atheros Communications for $3.1 billion, or $45 per share, in a deal that underscores the emerging dominance of smartphones and tablet computers. The transaction, announced on Wednesday morning, represents a premium of 29 percent to Atheros's average stock price over the last month and a premium of 21 percent to its trading on Tuesday afternoon, when The New York Times DealBook reported news of the talks."

China and U.S. Talk Trade Imbalance & N. Korea (Reuters) "President Barack Obama's national security adviser pressed for efforts to reduce U.S.-China trade imbalances and also discussed ways to rein in North Korea in talks on Tuesday with China's foreign minister. Obama, who joined the meeting with Chinese Foreign Minister Yang Jiechi, re-committed to improving global cooperation with Beijing as he prepared to host President Hu Jintao on a state visit to Washington on January 19, the White House said. While Beijing and Washington are likely to use the summit to cast their relationship in a positive light, strains over China's currency and trade practices and tensions over North Korea are expected to loom large."