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<ul><li><p>BY THE ASSOCIATED PRESS</p><p>Seeking to calm a furor overU.S.surveillance, President Obamaon Friday called for ending thegovernments control of phonedatafromhundredsofmillionsofAmericans and immediately or-dered intelligenceagencies togetasecretivecourtspermissionbe-foreaccessingsuchrecords.Still,hedefendedthespyingap-paratusoverall, sayingthe intelli-gence community is not cava-lierabout civil liberties.Obama also ordered intelli-gence agencies to stop spying onallies leaders and called for ex-tendingsomeprivacyprotectionsto foreignerswhose communica-tionsarescoopedupby theU.S.The reforms Im proposingtoday should give the Americanpeople greater confidence thattheir rights are being protected,even as our intelligence and lawenforcement agencies maintainthe tools they need to keep ussafe, thepresidentsaid inahigh-ly anticipated speech at the Jus-ticeDepartment.The announcements capped areview following formerNation-al Security Agency analyst Ed-ward Snowdens leaks about se-cretsurveillanceprograms.</p><p>Wholl Store The Data?Although Obama wants to endthe NSAs storage of phonerecords,heofferednorecommen-dation forwhere the data shouldgo. Instead, he gave intelligenceagencies and the attorney gener-al60daystostudyoptions.Apres-idential reviewboardhas recom-mended telephone companies oranunspecifiedthirdparty.Civil libertarianssaid thepresi-dentdidnotgo farenough.Obamas surveillance adjust-ments will be remembered asmusic on the Titanic unless hisadministrationadoptsdeeperre-forms,saidStevenHawkins,ex-ecutive director of Amnesty In-ternational USA, in a statement.Shifting the storage of informa-tion does not address the funda-mental problem: the collectionofmasspersonaldata.</p><p>Critics have noted that thereslittleevidencethatsweepingsur-veillancehasstoppedterrorplots.An administration official saidObama could codify the datatransfer via an executive order,butsomecongressionalaidessaidlegislationwouldberequired.Congresswouldhave toOKthepresidents plan for a panel ofoutsideattorneyswhowouldcon-sult with the secretive ForeignIntelligence Surveillance Court(FISA). TheWhiteHouse says itwould advocate for privacy andcivil liberties as the FISAweighed requests for accessingthephonerecords.</p><p>Fox Guarding Henhouse?Sen. Rand Paul, R-Ky., calledthe changes the same unconsti-tutionalprogramwithanewcon-figuration. He said hewill keepchallenging the NSAs spyingprograms.The American people shouldnot expect the fox to guard thehenhouse,hesaid.While thepresidenthassaidhewelcomed the reviewof the gov-ernments sweepingsurveillanceprograms, its all but certain itwould not have happened with-out the leaks. Snowden faces es-pionage charges in the U.S.Some privacy advocates haveurged Obama to grant Snowdenamnesty or a plea deal if he re-turns from Russia, where he hastemporary asylum. The WhiteHousehasdismissedthose ideas.The sensational way inwhichthese disclosures have come outhas often shed more heat thanlight, while revealing methodsto our adversaries that could im-pact our operations in ways thatwemay not fully understand foryears tocome,Obamasaid.The revelations have causedanger abroad, especially U.S.eavesdropping on friendly lead-ers likeAngelaMerkel ofGerma-ny. Obama said new guidelineswill largelyendsuchmonitoring.Many Obama proposals areaimed at making Americansmore comfortable with the spy-ing, rather reining it in. The gov-ernmentwould still demandcus-tomer data from telecom, Inter-net and other businesses butsuch national security letterswouldnolongerremainsecret in-definitely unless the governmentestablishes cause. The FBI sendsabout20,000suchlettersyearly.Obama also ordered the Jus-ticeDepartmentandthedirectorof National Intelligence to lookfor ways to declassify futureFISAcourtopinions.</p><p>B Y A N D R E A R I Q U I E RINVESTOR'S BUSINESS DAILY</p><p>Builders broke ground on morehomes thanexpected inDecem-ber, a sign of continued confi-dence in a tenacious housing re-covery.Housing starts fell 9.8% to anannualized rate of 999,000, theCommerceDepartmentsaidFri-day, but that followed Novem-bers 23.1% spike to a 6-yearhigh. Last months pace washigherthanthe985,000consen-sus,with theharshweather like-lycontributing to thedecline.Some 923,400 homes werestarted last year, up more than18%over2012.Sales are moving along andthe future is bright, said KeithGumbinger, vice president ofHSH.com, a mortgage-lendingwebsite.The National Association ofHome Builders said Thursdaythat optimism among buildersslippedanotchinJanuary, to56,but remained firmly in positiveterritory. That surveys subin-dexes signaled even strongerconditions for current and fu-turesales.Builders have been increas-ingly happy because theyrebuilding again, Gumbingersaid. Thats because 2014 is ex-pected tobeaprettygoodyear.New construction of single-family homes hit 667,000 unitsin December, well above the12-monthaverageof621,000.Thenumberofnewhomes fin-ished but not sold has increasedfrom a record low earlier in thecycle,butat167,000remainshis-torically low.There are 5.1monthsworth ofexisting homes at the currentsales pace, according to the Na-tional Association of Realtors.Normal inventories would besix to six-and-a-half monthsworth, said Celia Chen, a direc-torwithMoodysAnalytics.Foreclosure activity has fallento a six-year low, meaning thehuge overhang of supply is fad-ingaway.Such constrained inventory</p><p>has been very supportive forbuilders, who started to re-spond.Homesales did take a breatherin the summer as interest ratesjumpedmorethanafullpercent-age point in anticipation of Fed-eralReservetapering.TheMort-gage Bankers Association onJan. 14 lowered its 2014 forecastfor mortgage purchases byabout 5% based on higher bor-rowingcosts.</p><p>But most analysts believe thatwith the Fed actually starting totaper asset purchases over thecourseof 2014, suchhuge spikeswont be repeated. Rates aver-aged4.72%in theJan. 10week, a6-basis-point decline over theprior week, and applications tobuyahomesurged12%.No ones interested in seeinghigher financing costs, buthigh-er rates are already in play,Gumbingersaid. Nooneshouldbeafraidof a5-handle.But it would be worrisome ifrateskept risingalongwithpric-es,Gumbingersaid.Rates had been kept unnatu-rally low,Chensaid,andshebe-lieves future increases willmoveintandemwithanimprov-ing economy. Even if prices risealongwith rates, she said, an im-proving job market should off-set those increases. Prices willlikely appreciate at a slowerpace in 2014 after running red-hot formuchof 2013,whichwillhelpkeepaffordability inreach.Builders have been conserva-tive with supply in part to keepprices and profits rising.Butdespitestrongearningsgainsand generally bullish outlooks,shares of PulteGroupPHM, Len-narLEN andD.R.HortonDHI remainwellbelowtheirMaypeaks.</p><p>THEBIG PICTURECurrent outlook:Confirmed uptrendBroad indexes fall,blue chips gain. B8</p><p>S&amp;P500 INDEX1838.70-7.19 (-0.4%)Second loss, but stillnear record highs</p><p>DOWJONES IND.16,458.56+41.55 (+0.3%)AmericanExpress,Visa charge higher</p><p>NYSEVOL. (MIL)3,551+153 (+4.5%)Options expirationboosts turnover</p><p>NASDAQ4197.58-21.11 (-0.5%)Ends three-day run,but up for theweek</p><p>NASDAQVOL. (MIL)2,155+192 (+9.8%)Losers edgewinnersby a 3-2margin</p><p>10-YEAR T-NOTE2.82%-0.02 (-0.7%)Housing starts dip,but still top views</p><p>EURO1.3534-0.0085 (-0.6%)Pound jumps as U.K.retail sales surge</p><p>REUTERSCRB FUT.279.01-0.01 (0.0%)Cocoa slides on signsof rising supplies</p><p>Stocks End With Split Decision1 The blue-chip Dow rose 0.3% asAmerican ExpressAXP rallied 4% fol-lowing its earnings report and VisaVjoined with a 5% gain. Meanwhile, theNasdaq fell 0.5% and the S&amp;P 500 lost0.4%, though both closed off sessionlows. Options expiration lifted tradingvolume. The 10-year Treasury yieldeased2basispoints to2.82%.MoreonB8</p><p>Obama Defends Surveillance2 The president proposed ending theNSAs control of massive phone-callrecords, requiring the agency to getcourt permission to access such datafromanas-yet unspecified 3rdparty. ButObama defended the surveillance pro-grams, which have raised a furor world-wide since ex-NSA contractor EdwardSnowden issued leaks.Civil libertyadvo-cates, including Sen. Rand Paul, R-Ky.,weredisappointed.Moreonthispage</p><p>Housing Starts Top Forecasts3 Builders broke ground on fewerhomes inDec. afternewstarts spikedtoa6-yearbest inNov.YetDec.s annual-ized 999,000 continued a positive trend,especially among single-family units.Builders remain confident, and tight in-ventory is likely helping boost new con-struction. Permits fell for a 2nd straightmonth.Analystsexpect jobgrowthtooff-setmodestrises inhomepricesandmort-gagerates in2014.Moreonthispage</p><p>GE Meets, Margins Fall Short4 TheconglomeratesQ4EPSclimbed20%to53cents, in linewithexpecta-tions. Revenue rose 2.7% to $40.4 bil,slightly above views.General ElectricsGEaviation revenue climbed 13%, and theoil and gas segment reported a 17% in-crease.Butheathcare resultswere tepid.Full-year adjusted industrial profit mar-ginsdidntwidenasmuchasGEhadfore-cast.GEfell 2%.Moreonthispage</p><p>Industrial Output Powers Up5 Dec. production rose 0.3% vs. Nov.,meeting views and putting 2013sgainat3.7%themostsince2010.Manu-facturing output climbed 0.4%, the 5thstraight increase. Auto production rose1.6% following Nov.s 3.6% jump. Utilityoutput fell 1.4% after 3 months of gains.Overall capacity utilization edged up to79.2%, thehighest sinceJune2008.</p><p>Holiday Rush Tramples UPS6 The No. 1 global package shippersaid it likely earned $1.25 a share inQ4,downfrom$1.32ayearearlierandan-alyst forecasts for $1.43. UPSUPS citedcosts from a last-minute rush on onlineorders in a compressed holiday season,as well as bad weather. Full results areslated for Jan. 30.UPSand rival FedExFDXpared losses toclosedownless than1%.</p><p>Intel To Cut More Than 5,0007 After reporting lower-than-expect-edQ4earningslateThu.andforecast-ing flat sales in 2014, IntelINTC said Fri. itplans to reduce its global workforce of107,000 by about 5% this year to cutcosts. Theworlds largest chipmaker hasbeen battered as its core PC marketshrinksanditstruggles toget intothemo-bile smart-device market. Shares closeddown3%,butnear thedayshigh.</p><p>China Mobile Gets iPhone8 AppleAAPL launched its iPhone onChinaMobileCHLafteryearsofnegoti-ations between the smartphone makerand the worlds No. 1 wireless carrier.CEOTimCooksaidheisincrediblyopti-mistic about Apples future sales inmainland China, where it trails low-costsmartphonesrunningGoogleGOOGAndroidsoftware.Apple fell 2%.MoreonA6</p><p>Schlumberger Earnings Top9 TheNo. 1 oilfield services providersQ4EPS jumped25% to$1.35 a share,beating views by 2 cents. Revenue rose6.6%to$11.91bil, onMideastandAsiaac-tivity, but that missed estimates of $12bil. SchlumbergerSLB shares rose 2%.Royal Dutch ShellRDSA fell nearly 2% afterissuing its firstprofitwarning in 10years.ChevronCVX warned earlier this month.Energy giants are struggling with loweroilpricesandwithreplacingreserves.</p><p>Job Market Picks Up Steam10 Job openings topped 4mil for thefirst time since2008, according toNov.s JOLTS report. Hires edged up,while layoffshita freshlow.Quitscontin-ued to climbupward, a sign thatworkershave increasingconfidence in their abili-ty to findnewjobs.SeeVitalSignsonA2</p><p>IBDS TOP 10 Builders Revving UpAs Sentiment RisesAnd Supplies FallHome Starts Up 18% In 13</p><p>Foreclosures at 6-yr. lowas starts near 6-yr. highdespite Dec.s pullback</p><p>B Y G I L L I A N R I C HINVESTOR'S BUSINESS DAILY</p><p>General Electric met Q4 earn-ings estimates Friday, but full-yearmargins fell short of a high-ly touted target, raising doubtsabout the conglomerates abilitytomeet future goals as it focusesoncorebusinesses.Industrial full-year adjustedprofit marginswidened 66 basispoints,not the70pointsGeneralElectricGE had pledged. Q4 mar-gins rose100basispoints.GE cited supply woes with itswind turbines andweaker-than-expectedprofitat itsenergyman-agement business, which hasbeenlaggingrivals.CEOJeffImmeltsaid inastate-ment thatGE is well positionedto achieve our framework for2014.Christian Mayes, an analystwithEdwardJones,said, Inves-tors are going to take some ofthose other profit margin tar-getswithagrainof salt.Shares fell 2% to 26.55. GE isdownmorethan5%in2014afterhittinga5-yearhighonDec.31.Q4 earnings rose 20% to 53cents a share, excluding variousitems, in linewithexpectations.Revenue rose 3% to $40.4 bil-</p><p>lion, just above views for $40.2billion. It was the first gain infourquarters.Industrial revenues rose 6%yearover year. Industrial profitsclimbed12%to$5.5billion.The backlog rose 6% from Q3toa record$244billion.The aerospace segment tookoff inQ4,helpedbyan$11billioncommitment for 300 GE9X en-gines from Emirates airline attheDubaiAirshowinNovember.Airlines have cut back on thelevel of inventory theywere car-ryingonspareparts in2012.Andthen the fleet has continued togrow, and the fleet is aging, andwere seeing more instances ofoverhauls, CFO Jeff Bornsteinsaidduring theconferencecall.Aviation revenue climbed 13%to $6.1 billion. The oil and gassegment reported a 17% in-crease to$5.3billion.Healthcare,anotherkeyindus-trialunit, sawsalesdip 1%to$5.1billiononRussiaandChinaweak-ness.GEsaidJan.6 itllpay$1.06billion for Thermo FishersTMOcell culture, gene modulationandmagneticbeadsbusinesses.GE continues to pare its Capi-tal divisionwith a goal of 70%ofrevenue from industry and 30%from finance. It has said it willspinoff itscreditcardbusinessasaseparately traded firmin2014.</p><p>Obama Defends Spying,Vows Privacy SafeguardsCivil Libertarians Dismissive</p><p>NSA would lose controlof mass phone call datato unspecified 3rd party</p><p>I S S U E S &amp; I N S I G H T S / A 1 8 - 1 9</p><p>Its TimeToPut ALeashOnTheNSA</p><p>L E A D E R S &amp; S U CC E S S / A 4</p><p>Coretta King CarriedMLKs Flame</p><p>MANAG I NG FO R S UCC E S S / A 9</p><p>U.S. Silica Landed The Right Leader</p><p>I N D U S T R Y S N A P S HO T / A 1 0</p><p>U.S. Shale Complicates Oils Outlook</p><p>F U ND S &amp; P E R SONA L F I N A NC E / A 1 1 - 1 6</p><p>When You Need A Financial Adviser</p><p>Housing StartsAnnual rate, in millions</p><p>Sources: Commerce Dept., Datastream</p><p>0</p><p>0.5</p><p>1.0</p><p>1.5</p><p>2.0</p><p>2.5</p><p> 1312111009080706</p><p>Dec.:999,000</p><p>GE Earnings Jump, Sales Rise,But Shares Fall On Margin MissAviation Sales, Orders Hot</p><p>Effectiveimmediately,wewillonlypursuephonecallsthataretwosteps removed fromanumber associatedwith a terrorist organiza-tion instead of three, PresidentObama saidFriday inWashington.</p><p>..with a FREE IBD Training Session!</p><p>PUT ALL THE PIECES TOGETHER..</p><p>Register today for a </p><p>FREE Training Session </p><p>with an IBD Expert!</p><p>Investors.com/FreeTraining</p><p>VOL. 30, NO. 199 W W W . I N V E S T O R S . C O M TUESDAY, JANUARY 21, 2014 $3.00</p></li><li><p>BANKS</p><p>Morgan Stanley profit jumpsN.Y.investment bankMorgan Stan-leyMS rose the most in nearly 6months after it reported better-than-expected Q4 profit on higherequity trading revenue and recordwealth management earnings. EPSclimbed 11% to 50 cents, beating by5 cents. Revenue grew 10% to $8.2bil. Analysts expected $8 bil. Mor-gan Stanleys stock rose 64% in 13,the largest gain among the top 10global investment banks as it cutcosts and improved margins. Dur-ing the quarter, the bank repur-chased about $228 mil of..</p></li></ul>
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