Style Underperformer:
Large-Cap Value (-.68%)

Sector Underperformers:
Banks (-2.67%), Airlines (-1.99%) and Gold (-1.21%)

Stocks Falling on Unusual Volume:

STI, DECK, GILD, BBY and FDS

Stocks With Unusual Put Option Activity:
1) AET 2) BBY 3) AMED 4) GILD 5) WY

Style Outperformer:
Small-Cap Growth (+.44%)

Sector Outperformers:
Hospitals (+2.43%), Oil Service (+1.93%) and Construction (+1.43%)

Stocks Rising on Unusual Volume:
BEXP, SWSI, AET, HUM, ASBC, WFC, FFBC, NIHD, XRTX, SHLM, MGLN, MDCI, PZZA, CSIQ, CAGC, AMED, FWLT, TSTC, NTRI, ACXM, STRA, SPWRA, CPLA, SPWRB, FSLR, KONG, LEAP, WY, PAY, SNS and BCR

Stocks With Unusual Call Option Activity:
1) BSX 2) HOT 3) FRE 4) BBY 5) M

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Late-Night Headlines
Bloomberg:

- The decision to hold trials for several alleged members of Al Qaeda in Manhattan federal court isn’t final, a U.S. spokesman said, leaving open the possibility that the cases will be heard in another jurisdiction. U.S. Attorney General Eric Holder announced Nov. 13 that Khalid Sheikh Mohammed, the self-proclaimed mastermind of the Sept. 11, 2001, attacks on New York and Washington, and four others accused of conspiring with him will be tried in federal court in Manhattan, just blocks from the site of the World Trade Center.

- Ford Motor Co.(F), which failed to win additional concessions from union members last month, told salaried employees it is reinstating raises, 401(k) matches and tuition assistance next year as business improves. Ford has set aside funding for merit raises and will resume matching 401(k) retirement savings for as much as 5 percent of base pay in 2010, Mark Fields, the automaker’s president of the Americas, told employees in a Dec. 10 memo. The Dearborn, Michigan-based automaker also is reinstating tuition assistance for its 17,000 U.S. salaried employees. “Clearly our One Ford transformation plan is not complete, but our plan is working,” Fields told employees in his e-mailed memo, which was reported earlier in the Detroit Free Press. “In this challenging business environment, it is more important than ever that we remain focused.”

- Bank of America Corp.(BAC) is more likely to promote someone from its own ranks to be chief executive officer after the leading outside candidate withdrew, according to a person familiar with the matter. No other outsider is actively engaged in talks with the company now that Bank of New York Mellon Corp. CEO Robert Kelly has dropped out, said the person, who declined to be identified because the search is confidential.

- The Obama administration will announce tomorrow that it has picked the Thomson Correctional Center in western Illinois to house some detainees now held in Guantanamo Bay, Cuba, an administration official said. President Barack Obama has directed the federal government to proceed with the acquisition of the prison 150 miles west of Chicago to house federal inmates and a limited number of Guantanamo Bay prisoners, the official said.

Wall Street Journal:

- Senate Democrats on Monday evening dropped a plan to expand Medicare, winning the support of moderates and the reluctant acquiescence of liberals, in another major step toward building enough support to pass a health-care overhaul. The idea of letting people ages 55 to 64 buy into Medicare, announced just last week, had threatened to explode the Democrats' hopes of getting a bill through the Senate when Sen. Joseph Lieberman came out against it. At an evening caucus of all 58 Democrats and the two independents who sit with the party, including Sen. Lieberman, Majority Leader Harry Reid (D., Nev.) and other party leaders made clear they wanted to head off the dispute.

- The Tehran-Caracas Nuclear Axis. Here's one from the Department of We Are The World: Hugo Chávez and Mahmoud Ahmadinejad will address the U.N.'s climate summit in Copenhagen. Say what you will about these two gentlemen—the support for terrorists, the Holocaust denial, the suppression of civil liberties—at least nobody can accuse them of being global warming "deniers." On the contrary, the two leaders, who met in Caracas last month for at least the 11th time, have been nothing if not cooperative when it comes to environmentally friendly and carbon-neutral technologies. Bicycles, for instance: In 2005, Chávez directed his government to "follow seriously the project of manufacturing Iranian bicycles in Venezuela." An Iranian dairy products plant (no doubt ecologically sensitive) also set up shop hard on the Colombian border, in territory controlled by Colombia's terrorist FARC.

- AIG(AIG), in its current form, is also too large and needs to shrink, Mr. Benmosche said in an interview Monday. "I feel strongly that AIG is too big today--it is extremely complex to manage and we need to make sure it's more transparent, that it's smaller, and that we can make it on our own," he said, in his first public comments to the media in months.

CNBC.com:

- Citigroup(C) and Wells Fargo(WFC) said they were paying back funds to the U.S. government, in transactions that will end taxpayers' capital support of the biggest U.S. banks much sooner than had been expected.

- A bipartisan group of former lawmakers and budget officials called on Congress and President Barack Obama Monday to commit to reining in trillion-dollar plus budget deficits to avoid dragging down the economy. Policymakers must take steps next year to enact policies to stabilize the debt at 60 percent of the size of the economy to avoid higher interest rates or crisis in global markets with disastrous implications for the U.S. economy, according to a report by the Peterson-Pew Commission on Budget Reform, a bipartisan group of deficit hawks. The bipartisan group includes former lawmakers and directors of both the Congressional Budget Office and the White House budget office.

New York Times:

- With only a few weeks left to go, this year has turned out far better for the global hedge fund industry than the debacle of 2008. But assets under management, the key measurement of hedge fund growth, are still on average 32 percent below their peak levels, according to a new study from Barclays Capital.

- China and the United States were at an impasse on Monday at the United Nations climate change conference here over how compliance with any treaty could be monitored and verified. China, which last month for the first time publicly announced a target for reducing the rate of growth of its greenhouse gas emissions, is refusing to accept any kind of international monitoring of its emissions levels, according to negotiators and observers here. The United States is insisting that without stringent verification of China’s actions, it cannot support any deal. The stalemate came on a day of public and private brinkmanship as the talks moved into their second and final week. Earlier Monday, a group of poor nations staged a brief walkout from the bargaining table, and a chaotic registration system left thousands of attendees freezing outside the conference hall and forced the temporary closing of the subway stop near the Bella Center, where the meetings are being held. The slow progress of the climate negotiations could pose problems later in the week, when the heads of government begin arriving.

CNNMoney.com:

- 4 tech trends to watch.

Seeking Alpha:

- Below is a chart of an investment grade CDS (credit default swap) index coupled with the S&P 500 Financial sector. While default risk just made a new low, the Financial sector has not made new 2009 highs. The bulls are hoping this drop in CDS prices is a leading indicator that means financial stocks are on the verge of a resurgence. (Click to enlarge)

Forbes:

- Online display advertising, viewed as inefficient and time-consuming for many marketers, has been a tough sell in recent years. Google(GOOG) aims to change that.

Politico:

- One-hundred-and-seventy-four House Republicans warned House Speaker Nancy Pelosi Monday that they won’t vote for the Defense Department’s spending bill if a hike of the debt ceiling is tacked on. “Unfortunately, there seems to be pattern developing this year of using legislation that supports our men and women in uniform to pass other contentious proposals that are extraneous to our troops,” the Republicans said in a letter to Pelosi. "House Republicans stand ready to help the majority enact a defense bill that meets the need of our troops, but we will not assist your effort to use the troops to enact an increase in our national debt limit so as to finance the irresponsible spending of your party," they continued. It’s a stark threat from Republicans, who are generally supportive of funding the military and one that could throw passage of the massive spending bill into jeopardy.

- Video: Obama gives himself a B+.

- Sen. Jim DeMint (R-S.C.) is putting Capitol Hill on a "Code Red" alert Tuesday in an effort to stop the Senate's health care reform legislation. In a release from his office Monday, DeMint announced he will speak at what is being billed as an "emergency rally" coordinated by several groups, including the American Conservative Union and the Susan B. Anthony List. "The event has 'tea party' trimmings and plenty of muscle, including grass-roots support from six states," according to the GOP senator's Web site. Also on the bill for Tuesday afternoon's rally in Upper Senate Park are Sen. Tom Coburn (R-Okla.), radio talk show host Laura Ingraham and Rick Scott, chairman of Conservatives for Patients Rights. “We can expose them and confront them in the classic American spirit – a public gathering on their doorstep,” Ingraham told the Washington Times. “We will put every politician who supports this travesty on notice. Enjoy your remaining time in the U.S. Capitol because we’re coming for your seat.”

Rasmussen:

- The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 24% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-two percent (42%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -18. That’s a one point improvement from yesterday when Obama’s Approval Index rating fell to the lowest level yet recorded. Prior to the past three days, the Approval Index had never fallen below -15 during Obama’s time in office (see trends).

Real Clear Politics:

- Rep. Ryan Denounces "Crony Capitalism." This morning, Rep. Paul Ryan (R-WI) discussed the Congressional agenda and says the Democrats' plan is to turn America into "a European welfare state." He called the financial regulatory bill "crony capitalism" and said it was "big business in bed with big government." (video)

The Business Insider:

- Matt Taibbi gave a very good interview on CNN this afternoon, discussing his recent Rolling Stone piece on Obama's sellout. One of the more interesting points came when Taibbi was asked about some criticism from Andrew Ross Sorkin. Taibbi's response, basically: sorry mainstream journalists, I don't have to be evenhanded. Good answer. (video)

- Congress Is Blowing It Again: Where Are The Limits On Leverage?!?

USA Today.com:

- Gasoline prices fell to their lowest level in eight weeks, the Energy Department said Monday, as cheaper crude oil costs pushed pump prices lower. The national price for regular unleaded gasoline dropped to $2.60 per gallon, which was still up 94 cents from a year ago, the department's Energy Information Administration said in its weekly survey of service stations. The latest lower motor fuel price reflects the drop in crude oil prices, which account for about half the cost for making gasoline.

- Toyota showed its new plug-in hybrid Monday, available for leasing this month in Japan, the U.S. and Europe, and promised the green vehicle for sale to regular consumers in 2011 at an "affordable" price.

Reuters:

- LUKOIL, the big Russian winner at Iraq's weekend oil auctions, expects a "revolution" in world oil markets when enough crude to add 20 percent to global supply starts to flow from the country's supergiant fields. Billionaire LUKOIL shareholder Leonid Fedun told Reuters on Monday he expected a fivefold rise in Iraqi production to cap oil price growth, while also deterring investors from pursuing more difficult and costly projects in other parts of the world. "A top manager at a leading Western firm said the modern history of the oil business will be split into the pre-Iraq and post-Iraq periods. I agree," Fedun said in an interview. "We're witnessing a revolution in oil production." Iraq, emerging from the shadows of war, has deals on the table to raise oil capacity to 12 million barrels per day from 2.5 million bpd today, a level that would eclipse second-ranked Russia and leave the country behind only Saudi Arabia. "Investment will be in the billions of dollars. The project is colossal," said Fedun, a vice-president of LUKOIL whom Forbes magazine this year ranked Russia's eighth-richest businessman. Fedun said the ministry's target of reaching 12 million bpd was realistic and that, as these plans are realized, the effects on the world market would be widespread. "World oil supplies will rise by a minimum 20 percent and demand won't increase at the same rate over the same period. This raises questions over the long-term oil price," he said. "Despite terrorist acts, the country is politically stable. Yes, there are risks, but the regions where the big companies are working are comparatively stable and located not far from the export infrastructure."

- Goldman Sachs Group Inc (GS) is being sued by an institutional investor who claims the firm is preparing to pay out improper bonuses. The lawsuit, filed with the New York Supreme Court by the Security Police and Fire Professionals of America Retirement Fund, names chief executive Lloyd Blankfein and other executives and board members as defendants.

Financial Times:

- Three Steps to a Safer Financial System by Phillip Purcell. Americans have grudgingly supported the use of their taxes to save the financial system and economy. Unfortunately, this required rescuing many companies considered “too big to fail” that individually did not deserve to be saved. Taxpayers resent their money being used to keep these companies out of bankruptcy and, in some cases, protect the multi-million dollar compensation packages of those who caused the crisis. In short, Americans understand the need to protect the financial system, but do not want the events of a year ago to happen again. So one would think that we would be putting in place changes to prevent future catastrophes or at least substantially reduce the cost to taxpayers. But to date, there have been only short-term, stop-gap measures. There are three areas where action could be taken right now: new capital requirements, profit-based compensation and greater board control over risk management and pay.

- Alistair Darling has warned banks that he will not water down his 50 per cent supertax on bonuses or offer special deals in a standoff in which brokers and banks have threatened to move key staff out of the UK. The chancellor has been deluged with claims by banks that the tax would raise far more than the £550m he predicted. They have demanded that he make the levy less onerous. But an aide to the chancellor said: “The solution to their problem is that they pay less in bonuses. The banks don’t seem to realize this tax is about changing their behavior, not raising revenue.”

Telegraph:

- Copenhagen: support for a global tax on shipping and aviation grows. Support for a global tax or emissions trading scheme for shipping and aviation is growing at the Copenhagen climate change talks, according to two sources close to European Union negotiators.

South China Morning Post:

- China banned the registering of personal Internet domain names and people who have their own Web sites could lose them, citing a government regulation that came into effect yesterday. Under the regulation, Internet service providers can no longer host individually owned Web sites and only businesses or government-authorized organizations can have them.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (CME), boosted target to $385.

- Reiterated Buy on (MOT).

- Reiterated Sell on (RIMM) and (PALM).

- Reiterated Buy on (AVT), target $33.

- Reiterated Buy on (IR) and (UTX).

- Reiterated Buy on (AA), target $17.

- Reiterated Buy on (NTRI), boosted estimates, raised target to $42.

JPMorgan:

- Raised (RTP) to Overweight.

Sanford Bernstein:

- Rated (LEAP) Outperform, target $23.

- Rated (PCS) Outperform, target $10.

Night Trading
Asian Indices are -.50% to +.50% on average.

Asia Ex-Japan Inv Grade CDS Index 103.0 -3.0 basis point.
S&P 500 futures +.13%.
NASDAQ 100 futures +.12%.

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Earnings of Note
Company/EPS Estimate
- (FDS)/.74

- (ADBE)/.37

- (BBY)/.43

- (AIR)/.30

Economic Releases

8:30 am EST

- The Producer Price Index for November is estimated to rise +.8% versus a +.3% increase in October.

- The PPI Ex Food & Energy for November is estimated to rise +.2% versus a -.6% decline in October.

- The Empire Manufacturing Index for December is estimated at 24.0 versus 23.51 in November.

9:00 am EST

- Net Long-term TIC Flows for October are estimated to fall to $37.1B versus $40.7B in September.

9:15 am EST

- Industrial Production for November is estimated to rise +.5% versus a +.1% gain in October.

- Capacity Utilization for November is estimated to rise to 71.1% versus 70.7% in October.

1:00 pm EST

- The NAHB Housing Market Index for December is estimated to rise to 18 versus a reading of 17 in November.

Upcoming Splits
- None of note

Other Potential Market Movers
- The weekly retail sales reports, weekly API energy inventories, Deutsche Bank Biotech Confab, Raymond James Supply Chain Conference, (PBI) guidance call, (BRCM) analyst day, (ABC) analyst meeting, (ARG) analyst meeting, (DAL) investor day, (GOOG) educational webcast, (GE) annual outlook, (HANS) analyst meeting, (GNW) investor day and the ABC consumer confidence reading could also impact trading today.

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Bloomberg:

- Credit-default swaps tied to the debt of US banks fell, signaling an increase in perceptions of credit quality. Contracts on Citigroup Inc. dropped 22 basis points to 137.5 basis points, according to CMA DataVision prices. JPMorgan Chase(JPM) declined 8 basis points to 46, while Morgan Stanley fell 17.5 basis points to 100, CMA prices show. Swaps on debt issued by Goldman Sachs Group slipped 7.5 to 82.5, according to CMA.

- The Standard & Poor’s 500 Index is posed to rise about its highest closing level of the past month as it breaks out of a so-called consolidation phase, according to MKM Partners LLC. The S&P 500 “remained firm within its month-long consolidation phase,” said Katie Stockton, chief market technician at Greenwich, Conn.-based MKM, with the difference between the lowest and highest closing levels not exceeding 2.2 percent since Nov. 11. A crossing of the so-called daily stochastics is a “positive catalyst” and may trigger more gains in the index, she wrote today. “The period of consolidation has been constructive in that it has relieved short-term overbought conditions without a breakdown below support,” Stockton said. “Momentum remains supportive of the S&P 500 from a short- and long-term perspective.

- The Wall Street strategists who correctly predicted U.S. stocks would rebound from the steepest plunge since the Great Depression now say the Standard & Poor’s 500 Index will rally 11 percent next year.

- President Barack Obama’s $1 trillion health-care overhaul won’t buy corporate America relief from medical costs that more than doubled in the last decade, chief executive officers of more than a dozen U.S. companies said. Private companies, providers of benefits to 132 million Americans, will see little savings from legislation under debate in Congress, CEOs at United Parcel Service Inc., Safeway Inc. and Verizon Communications Inc. said in interviews over the past two weeks. The measures are more likely to add expenses, through taxes and fees on employers who don’t offer affordable coverage, said Ellen Kullman, chief of Wilmington, Delaware-based DuPont Co., the world’s third-largest chemical maker. “They’re disasters,” said John Riccitiello, CEO of Electronic Arts Inc., of Redwood City, California, the second- largest video-game maker with 8,000 employees. “What part of either the House or Senate bill is going to do anything with cost? I don’t see anything.”

- Citigroup Inc.(C), recipient of the biggest U.S. bank bailout, struck a deal with regulators to repay $20 billion to taxpayers and escape government-imposed pay restrictions. Citigroup, the only major U.S. lender still dependent on what the government calls “exceptional financial assistance,” will raise the funds with a sale of $20.5 billion of equity and debt. The New York-based company also plans to substitute “substantial common stock” for cash compensation, the bank said in a statement today.

- Asset bubbles are the No. 1 threat to financial stability in Asia, meaning policy makers should avoid an excessive focus on inflation, said Norman Chan, the head of Hong Kong’s de facto central bank. Asia’s experience in the past 20 years shows the biggest threat “is from asset bubbles, rather than inflation,” Chan, chief executive of the Hong Kong Monetary Authority, said in a speech posted on the organization’s Web site today. “I’m not saying that Asia does not need to worry about or guard against inflation, but I think we should focus more on the risk of asset bubbles forming and the associated damages.”

- Iran will put on trial three American hikers who illegally entered the country, Foreign Minister Manouchehr Mottaki said. Interrogation of the three U.S. citizens who “illegally entered Iran with suspicious aims is ongoing,” Mottaki was quoted as saying today by the Iranian Labour News Agency. “They will be put on trial by the judiciary and rulings will be made,” he said, according to ILNA.

- The worst recession since the Great Depression is creating advantages for the U.S. Census Bureau as it prepares for the 2010 count. Unemployed business-school graduates and other highly skilled workers are applying for some of the estimated 1.3 million jobs the agency expects to fill by the middle of 2010. “Our applicant pool contains a set of people with experience and background and training that is unprecedentedly rich,” Robert Groves, director of the Census Bureau, said during a briefing with reporters. “The high unemployment rate has helped us.” The hiring should provide a boost for next year’s unemployment picture. November’s unemployment rate fell to 10 percent from a 26-year high of 10.2 percent in October. Much is at stake with the national head count. More than $400 billion in federal funding is distributed each year based at least partially on demographic data, a Census Bureau report released in June showed.

- The yen is poised to replace the dollar as the top funding currency for investments in cities from Sydney to Sao Paulo after borrowing from Japan became almost as cheap as U.S. loans for the first time in four months.

Wall Street Journal:

- Tensions flared Monday at the United Nations climate summit, as representatives from a group of poor nations briefly walked out of the conference to protest the slow pace of negotiations, and European Union officials expressed exasperation with the U.S. and China.

- The View From Britain. Alistair Darling, the UK’s chancellor of the Exchequer, on the dollar, poor judgment and too big to fail.

- Daimler AG plans to start a pilot program for an electric version of its Smart minicar in China next year, joining a growing list of firms evaluating the potential for next-generation clean-energy vehicles in the world's biggest automobile market.

- Morgan Stanley(MS) Smith Barney is launching a pricing plan for fee-based accounts in April that will charge clients based on the level of service provided rather than the product. Morgan Stanley thinks this change from current pricing procedures will be easier for clients and advisers to understand.

MarketWatch.com:

- Heard on the Street: Days Numbered for Oil Bulls. (video)

- Abu Dhabi has given fellow emirate Dubai $10 billion in financing that will be used to pay part of the debt held by state-owned conglomerate Dubai World and its property unit Nakheel.

- Has Amazon.com(AMZN) Inc. just won the ebook war? That's not as crazy as it may sound.

NY Times:

- Embedded in sweeping health legislation passed by the House and being debated on the Senate floor is a major new federal insurance program for long-term care intended to help people like Anne M. Rader. Critics say that the program is unsustainable and that it could ultimately create serious fiscal problems for the government. “It would create a huge new liability down the road,” said Senator John Thune, Republican of South Dakota. The effort to eliminate the program won support from 11 Democrats, including the chairman of the Finance Committee, Max Baucus of Montana, and the chairman of the Budget Committee, Kent Conrad of North Dakota. Six of those Democrats said the program “would not be fiscally responsible.” The bill would “create a new federal entitlement program with large, long-term spending increases that far exceed revenues,” they said in a letter to the Senate majority leader, Harry Reid, Democrat of Nevada.

NYPost:
- President Obama’s approval rating fell to its lowest ever level in the daily Rasmussen Reports Presidential Tracking Poll published Monday. The telephone poll of 1,500 likely voters found only 44 percent said they somewhat approved of Obama’s performance, a new low in his 11-month presidency. A majority of voters, 55 percent, said they disapproved of the job Obama was doing.

The Business Insider:

- It might feel satisfying to hear the President criticize “reckless”, “fat cat” bankers, but the financial reform legislation passed by the House last Friday (and lauded by the President) provides little incentive to change their behavior. In reality, populism — with nothing of substance behind it — is just cynical posturing designed to mask genuine failure. To use an expression favored by his predecessor, this president is once again showing himself to be all hat, no cattle.

- Uber-bull Jeff Saut says to keep buying, and he would disagree with our recent report on the trebling economic recovery.

Chicago Sun-Times:

- Rod Blagojevich's lawyers want the FBI to give up details of interviews conducted last year of President Obama, his chief of staff, Rahm Emanuel, White House adviser Valerie Jarrett and others as part of the investigation into the former governor. In a Friday filing, Blagojevich attorneys also asked for information regarding first lady Michelle Obama. Then-President-elect Obama, Emanuel and Jarrett sat down with the FBI about a year ago -- just after Blagojevich was arrested on charges of trying to sell Obama's recently vacated Senate seat to the highest bidder.

Chicago Tribune:

- One very big-ticket item has made its way to the top of some high-profile shopping lists this holiday season: the shopping mall itself. Making strides to emerge from a mammoth bankruptcy, Chicago-based General Growth Properties may be in play, as competitors seek to acquire some or all of the nation's second-largest mall company. Valued at about $30 billion, the owner of Water Tower Place, Northbrook Court and more than 200 other malls in 44 states, is exploring its options with "multiple parties," Chief Executive Adam Metz told the Tribune. At least one rival -- Toronto-based Brookfield Asset Management -- already has gained a sizable interest through debt acquisition.

Washington Post:

- Energy Secretary Steven Chu will announce on Monday an international plan to deploy clean technology in developing countries, a $350 million, five-year effort that will include everything from putting solar lanterns in poor households to promoting advanced energy-efficient appliances worldwide, administration officials said. The initiative -- which includes $85 million from the United States and donations from industrialized nations such as Italy and Australia -- aims to make energy-saving technology that already exists cheap enough to penetrate markets in India, parts of Africa and elsewhere. It is distinct from the major financing package the United States is expected to unveil this week as part of a broader climate deal.

LA Times:

- The unemployment rate dropped last month for men and women, blacks and whites, lifting hopes that the long dry spell in the jobs market may be coming to an end. But for recent college graduates and other young adults, the labor situation didn't just remain dire -- it got worse. For 20- to 24-year-olds, the jobless rate rose four-tenths of a percent to 16% in November, even as unemployment nationally slipped to 10% from 10.2%. And data from the Labor Department show that the unemployment figure for college graduates in that age group was 10.6% in the third quarter -- the highest since early 1983 and more than double the rate for older college-educated workers.

The Detroit News:

- Sales of fuel-efficient gas-electric hybrids are expected to rise next year, outpacing the U.S. auto market's overall growth, according to a new forecast. Automotive research firm Edmunds.com predicted U.S. auto sales would recover modestly next year, to 11.5 million cars and light trucks from an estimated 10.3 million this year. Its forecasters expect hybrids to outperform the market, even though they cost more, on average, than comparable gas-powered models. Hybrids are expected to increase their share of the market to 3.2 percent in 2010 from around 2.8 percent this year, according to Edmunds. It expects the market share for hybrids to grow by about half a percentage point a year for the foreseeable future.

- Save jobs from questionable climate rules. Far too many of our family, friends and neighbors have lost their jobs as the auto companies have gone through painful restructuring and manufacturing jobs have been outsourced to lower-wage nations. There is no more pressing issue facing America than getting our economy moving again so jobs can be created. That is why the endangerment finding last week by the Obama administration's Environmental Protection Agency administrator that could trigger regulation of greenhouse gas emissions is so troubling. The announcement coincided with President Barack Obama's trip to the U.N. climate change summit in Copenhagen, Denmark, in a seeming sop to the international community to show movement on this issue in the United States.

Rassmussen:

- Fifty-six percent (56%) of U.S. voters now oppose the health care plan proposed by President Obama and congressional Democrats. That’s the highest level of opposition found - reached three times before - in six months of polling. The latest Rasmussen Reports national telephone survey finds that just 40% of voters favor the health care plan. Perhaps more significantly, 46% now Strongly Oppose the plan, compared to 19% who Strongly Favor it.

Politico:

- The heated Capitol Hill debate over health care coverage for mammograms has exploded onto the political scene, shaping the 2010 electoral landscape and recalibrating the battle for a crucial constituency: the women’s vote. With women’s health issues increasingly at the forefront of the health care debate, pols have turned breast cancer into a potent campaign weapon. The volume in the war has ramped up in recent weeks after a government task force released findings – widely criticized by women’s groups – recommending that it was unnecessary for women under 50 to screen for breast cancer. “It resonates with 52 percent of the electorate,” said Jennifer Duffy, a senior editor for the Cook Political Report. “You can get yourself in a good bit of trouble being on the wrong side of the issue.”

- For critics of the Democrats’ $849 billion health care bill, this may be the ultimate irony: millions of dollars set aside so the government can help teach citizens how to handle their own money better. The funding is part of a broader, $375 million program aimed at promoting responsible lifestyles — a five-year plan to fund state efforts to educate adolescents on abstinence, contraception and other “adult preparation subjects” such as healthy relationships, increased child-parent communication and “financial literacy.”

Citigroup:

- Steel – Higher input costs presage higher finished product pricing as scrap prices jumped with #1 heavy melt scrap rising $50/ton (+24%) to $260/ton, shredding rising $65/ton (+28%) to $300, and #1 busheling rising $80/ton (+30%) to $345/ton.

Reuters:

- A report says that 38 percent of all U.S. stock trading is now done by firms that have "naked sponsored access" to markets, the controversial trading practice said to imperil the marketplace, and which faces a regulatory crackdown. Naked access gives trading firms, using brokers' licenses, unfetted access to stock markets. The firms, usually high-frequency traders, are then able to shave microseconds from the time it takes to trade. Aite Group, a Boston consultancy, found that naked access accounted for just 9 percent in 2005.

- Exxon Mobil Corp(XOM) will buy XTO Energy Inc(XTO) for about $30 billion in stock, in a move that thrusts the U.S. energy giant to the forefront of North America's fast-growing natural gas industry. With the buy, Exxon, the largest publicly traded energy company, gains a major foothold in the newest energy discoveries as it bets on natural gas expanding its share of the world's largest energy market.

Financial Times:

- The crude oil demand issue is perhaps the most glaring right now, considering the year-on-year comparatives relate to what was already a substantial demand retraction last year. On that note, here’s a chart presented by JBC Energy last week on the matter:

RTHK:
- China is reported to have revoked permission for cable operators to distribute commercial network Sun TV due to its outspoken talk shows, as part of a government crackdown on content deemed sensitive and too bold. Censors have become increasingly intolerant of content that pushes the envelope on politically incorrect or sensitive topics. "Sun's broadcast rights were revoked because guests called for political reform." Sun TV is fully owned by Hong Kong-listed Sun Television Cybernetworks Enterprise Ltd.

Style Underperformer:
Large-Cap Value (-.22%)

Sector Underperformers:
Airlines (-.82%), I-Banks (-.36%) and Agriculture (-.27%)

Stocks Falling on Unusual Volume:

OSK, XOM, SCHW, EBIX and NCR

Stocks With Unusual Put Option Activity:
1) XTO 2) MMC 3) JAVA 4) XOM 5) AET

Style Outperformer:
Mid-Cap Growth (+.93%)

Sector Outperformers:
Education (+2.85%), Computer Hardware (+1.63%) and HMOs (+1.61%)

Stocks Rising on Unusual Volume:
XTO, COG, VIP, TSU, IVN, TIE, PEGA, KIRK, NYB, WDR, ASPS, HEAT, IIVI, MDCI, CRZO, TSTC, CSTR, CLNE, TRMK, CENX, WPRT, FGXI, APWR, KIRK, APOL, CSIQ, ATLS, FSYS, CAGC, PPDI, SNP, RRC, EOG, COG, CHK, SBP and XCO

Stocks With Unusual Call Option Activity:
1) CI 2) PXP 3) BIIB 4) XTO 5) COCO

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Weekend Headlines
Bloomberg:

- Former Federal Reserve Chairman Alan Greenspan said today he expects a quick rebound in jobs because companies are stretched to expand production after workforce cuts made during the recession. Greenspan said on NBC’s “Meet the Press” program that businesses were “very frightened” by the financial crisis and deterioration of the U.S. economy early this year and cut their payrolls so deeply that they will have to begin hiring soon. “We have a level of employment at this stage which is barely adequate to staff the level of output,” Greenspan said. “It seems to me virtually inevitable -- if nothing else were to happen -- that employment would start to come back fairly quickly.” Greenspan said the country is experiencing a divide between “two economies,” one for large businesses and wealthy individuals and the other for small businesses, small banks and the unemployed. “I’m very concerned about where the job machine is relative to small businesses, which are doing miserably,” Greenspan said. “They’re having great difficulty financing and great difficulty creating jobs.”

- A Democratic compromise over health- care legislation came under attack today from within the party as 10 senators voiced concern the plan would make it harder for the elderly to get medical care. The senators were responding to a proposal to expand the Medicare program, which serves Americans age 65 and over, to cover people as young as 55. The 10 lawmakers demanded changes in Medicare reimbursement rates, complaining that Medicare currently underpays states with more efficient medical care, driving up the number of physicians unwilling to treat patients in the program. The letter provided more fodder for Republicans who argue that the legislation doesn’t meet a central goal President Barack Obama has set for slowing the increase in health costs and expanding access to medical care. The Democrats’ letter came a day after a report by the Centers for Medicare and Medicaid that found the Senate bill would increase total spending on health care and may contain “unrealistic” promises to save money on Medicare. “We appreciate the rationale underlying the proposed Medicare expansion,” the lawmakers wrote in the Dec. 11 letter, “but fear that provider shortages in states with low reimbursement rates such as ours will make such a program ineffective, or even worsen the problems these states are experiencing.”

-The dollar advanced to a two-month high against the euro as a bigger-than-forecast increase in retail sales and consumer sentiment indicated the U.S. economic recovery may be gaining momentum. “We are dollar bulls,” said David Forrester, a currency economist at Barclays Plc, in an interview on Bloomberg Television. “Data will continue to surprise on the upside.” “That the dollar strengthened against the euro changes this risk-on, risk-off scenario,” said Andrew Busch, a global currency and public policy strategist at Bank of Montreal in Chicago. The trade “will morph into something else.” “I can imagine economic data turning in favor of the U.S. compared with Europe or Japan,” said Sebastien Galy, a currency strategist at BNP Paribas Securities SA in New York. Greece and Ireland are in an “intolerable” economic situation that may lead to bailouts and exits from the euro region before the end of 2010, Steve Barrow, head of Group of 10 foreign-exchange strategy in London at Standard Bank, wrote in a research note yesterday.

- The euro is poised to decline to a three-month low of $1.4446, Gaitame.com Research Institute Ltd. said, citing trading patterns. The 16-nation currency, which climbed to a one-year high of $1.5144 last month, has entered a near-term downtrend as the spot price has fallen below its 60-day moving average, said Tsuyoshi Okada, managing director at the research unit of Japan’s largest foreign-exchange margin dealer in Tokyo. “The charts are now showing signs of change for the euro, and herald an end of its rising trend,” Okada said. “Should the decline of the euro gain traction, the immediate target will be mid-$1.46 and the next target will be the $1.4446 level.”

- Professional golf and its sponsors face an undetermined period of uncertainty following Tiger Woods’s decision to temporarily leave the sport he dominated. Woods said in a statement on his Web site that his “infidelity” has hurt his family, and he needed to focus on being a “better husband, father and person.” He said he was leaving competitive golf “indefinitely.”

- Morgan Stanley’s(MS) James Gorman hired his former Merrill Lynch & Co. colleague Greg Fleming to oversee investment management and global research, according to a person familiar with the matter.

- Goldman Sachs Group Inc.(GS), which took $10 billion in U.S. bailout funds last year, shouldn’t get taxpayer support if the firm focuses on trading over banking, according to former Federal Reserve Chairman Paul Volcker. The “safety net” provided by the U.S. government “should not be extended beyond the core commercial-banking business,” Volcker, 82, said in an interview yesterday at Deutsche Bank AG’s Berlin office, where he was attending a conference. “They can do trading and do anything they want, but then they shouldn’t have access to the safety net.”

- US Spend-a-thon Risks Slide Into Greek Tragedy. The world economy shuddered last week as a rating company downgrade of Greek debt set off fears of default. Investors decided to beware of Greeks bearing bonds, and markets stumbled.

- The Dogs of the Dow strategy of buying the 10 Dow Jones Industrial Average stocks with the highest dividend yields has failed to deliver market-beating returns in 2009, according to Bespoke Investment Group LLC. The 10 dogs have returned 11 percent on average, compared with the 29 percent profit from the other 20 Dow companies and 23 percent gain from the entire measure, Bespoke said in a report yesterday titled “Dogs Remain Dogs in 2009.”

- Banks exiting the U.S. financial bailout program can retain tax deductions for losses when the government sells stakes in the companies, the Internal Revenue Service said. The ruling will prevent the value of banks’ shares from being discounted on concern the tax deductions may no longer apply after Treasury sells them, said Nayyera Haq, a Treasury Department spokeswoman.

- The World Bank is confident authorities in China recognize the threat of asset bubbles in the world’s third-largest economy, said Juan Jose Daboub, managing director of the international lender. “With any kind of stimulus there is always a risk of overdoing it or prolonging it for too long, and so the risk that you’re highlighting is there,” Daboub, who is on an official visit to Egypt, said at a news conference today in Cairo. The World Bank believes that Chinese authorities understand the risks of an asset-price bubble and “will take the measures that they believe are more appropriate. They have done so in the past,” he said.

- Congress gave final approval to a $450 billion U.S. spending bill providing an average 12 percent budget increase for a host of government programs amid what polls show is mounting public concern over federal deficits. The Senate voted 57 to 35 today to forward the measure to President Barack Obama. “We have a $12 trillion debt, a debt that our children and grandchildren are going to have to pay, and here we are” approving a 12 percent spending increase, said Senator George LeMieux, a Florida Republican. “Washington is out of control in its spending.” Democrats said the increase, which far exceeds the inflation rate, was needed to pay for important domestic programs. The consumer price index, minus the volatile food and energy components, rose 1.7 percent for the 12 months ending in October. The vote today came amid growing concern over the budget deficit, projected to reach $1.4 trillion in the 2010 fiscal year. A Bloomberg poll released last week found voters consider the deficit the third-most important issue facing the country, behind the economy and health care and ahead of the war in Afghanistan. The measure’s budget increases would spread the additional money across scores of individual programs; the Democrats’ summary of the legislation’s “key investments” ran more than 20 pages. The Securities and Exchange Commission, the Consumer Product Safety Commission, the Federal Trade Commission and federal enforcement programs at the Occupational Safety and Health Administration all would receive double-digit increases. Some programs would be cut, including abstinence-only sex education programs and the Office of Labor-Management Standards, which regulates unions. The bill would establish a binding arbitration process for auto dealers dropped during the bankruptcies of General Motors Corp. and Chrysler LLC. The legislation would also loosen long- standing restrictions on Washington, D.C., regarding abortion, needle-exchange programs and medical marijuana.

- Developing Countries Say 'No Money, No Deal' in Climate Talks. Four days before 110 world leaders fly to Copenhagen to complete a deal to curb global warming, negotiators are far apart on aid to poorer countries and how to verify nations fulfill their pledges to reduce greenhouse gases. Envoys from 192 countries discussing a climate-protection accord in the Danish capital released a draft on Dec. 11 that shows they cannot agree on how to police an agreement. The document contains no subsidies to help developing nations cut carbon-dioxide emissions and adapt to climate change. “No money, no deal,” Selwin Hart, a Barbadian envoy who speaks on finance issues for 43 island and low-lying states, said in an interview. United Nations climate chief Yvo de Boer said developing nations need at least $100 billion a year. Developing countries including China and India will need as much as 100 billion euros ($145 billion) a year in climate aid from 2010 to 2020, New York-based McKinsey & Co. said in a September report. That’s to help avoid “catastrophic” climate change, McKinsey said. Mobilizing of billions of dollars in climate aid from industrialized nations to pay for clean energy in developing countries would be positive for business, Iberdrola SA Chief Executive Officer Jose Ignacio Sanchez Galan said in an interview. “We’ve bet on clean energy, and anything that takes the world in the direction of clean energy is going to be positive for Iberdrola,” he said. That view is echoed by Ditlev Engel, chief executive of Vestas A/S, the largest wind-turbine maker. China and developing nations are demanding that only rich countries have legally binding targets, while some industrialized nations are calling for enforceable reductions for poor countries.

Wall Street Journal:

- Goldman Sachs Group Inc.(GS) played a bigger role than has been publicly disclosed in fueling the mortgage bets that nearly felled American Insurance Group Inc. Goldman was one of 16 banks paid off when the U.S. government last year spent billions closing out soured trades that AIG made with the financial firms. A Wall Street Journal analysis of AIG's trades, which were on pools of mortgage debt, shows that Goldman was a key player in many of them, even the ones involving other banks. Goldman originated or bought protection from AIG on about $33 billion of the $80 billion of U.S. mortgage assets that AIG insured during the housing boom. That is roughly twice as much as Société Générale and Merrill Lynch, the banks with the biggest exposure to AIG after Goldman, according an analysis of ratings-firm reports and an internal AIG document that details several financial firms' roles in the transactions. In Goldman's biggest deal, it acted as a middleman between AIG and banks, taking on the risk of as much as $14 billion of mortgage-related investments. Then Goldman insured that risk with one trading partner—AIG, according to the Journal's analysis and people familiar with the trades. The trades yielded Goldman less than $50 million in profits, which were mostly booked from 2004 to 2006, according to a person familiar with the matter. But they piled risks onto AIG's books, which later came to haunt the insurer and Goldman. The trades also gave Goldman a unique window into AIG's exposure to losses on securities linked to mortgages. When the federal government bailed out the insurer, Goldman avoided losses on its trades with AIG covering a total of $22 billion in assets. Banks wanted protection in case the housing market tanked. Many turned to Goldman, which effectively insured the securities against losses. Then, to cover its own potential losses, Goldman bought protection from AIG, in the form of credit-default swaps. Goldman charged more than AIG for the protection, so it was able to pocket the difference, making millions while moving the default risks to AIG, according to people familiar with the trades. The trades were low risk for Goldman as long as AIG stayed afloat. "It seems shocking to me that Goldman would become so exposed to AIG and kept doing deals with them and laying on the risk," says Tom Savage, a former chief executive of AIG's financial products unit who left in 2001 before the explosive growth of insuring mortgage-debt pools. When Goldman didn't get as much collateral as it wanted from AIG, in 2007 and 2008 it bought protection against a default of AIG itself from other banks. AIG officials were skeptical of the prices Goldman presented, according to the minutes of a February 2008 AIG audit committee meeting, which noted that Goldman was "unwilling or unable to provide any sources for their determination of market prices." The Journal analysis of that document in conjunction with ratings-firm reports shows that Goldman underwrote roughly $23 billion of the $80 billion in mortgage-linked CDOs that AIG agreed to insure. The special inspector general for the Troubled Asset Relief Program, which recently reviewed the New York Fed's effort to stanch collateral calls last year, said Goldman officials said the company believed it would have been fully protected had AIG been allowed to fail because of collateral it had amassed and the additional insurance it had bought against an AIG default. The auditor, however, questioned that conclusion. The report said Goldman would have had a difficult time selling the collateral and that the firm might have been unable to actually collect on the additional insurance. Additional calls for collateral from Goldman and other banks eventually led to AIG's September 2008 bailout and led the New York Federal Reserve two months later to fully cover $62 billion of insurance contracts Goldman and 15 other banks had with the financial products unit of AIG. Goldman's other big role in the CDO business that few of its competitors appreciated at the time was as an originator of CDOs that other banks invested in and that ended up being insured by AIG, a role recently highlighted by Chicago credit consultant Janet Tavakoli.

- Republicans on Friday seized on a report by government actuaries that said the Senate health bill would cause national health costs to rise. The report, compiled by the chief actuary at the Centers for Medicare and Medicaid Services, estimated that total health costs in the U.S. would be $234 billion higher than if the bill weren't passed. President Barack Obama has said Democrats' health plan would reduce the growth of health-care costs. Sen. Chuck Grassley of Iowa, the top Republican on the Senate Finance Committee, said Democratic lawmakers were spending large sums in the health-care bill "to make things worse." Senate Minority Leader Mitch McConnell (R., Ky.) said the report "confirms what we've known all along," arguing that the bill would "increase costs, raise premiums and slash Medicare."

- Citigroup Inc.(C) is nearing an agreement with the U.S. government that will lay the groundwork for the bank to start untethering itself from Washington, according to people familiar with the matter. Citigroup executives are hoping to unveil a multifaceted deal with the government as early as Monday morning, these people said. They cautioned that an agreement hasn't yet been finalized and might not reach fruition by the morning. The deal is expected to call for the New York bank to raise more than $10 billion in new capital by issuing common stock, these people said. Those funds would help Citigroup pay back some of the $20 billion that the Treasury Department injected into the company last year. They also will increase Citigroup's capital, allowing the bank to exit a program in which the government was shielding it from most losses on $301 billion of assets. Citigroup executives also are hopeful that the Treasury will announce that it is preparing to sell at least a portion of the 34% stake held by the government, according to the people familiar with the matter.

- Google Inc.(GOOG) has designed a cellphone it plans to sell directly to consumers s soon as next year, according to people familiar with the matter. The phone is called the Nexus One and is being manufactured for Google by HTC Corp., these people said. It runs Android, the operating system for mobile phones that Google developed, they added.

- Iraq is Wild Card in World Oil Supply. A loosening of supply constraints is the major risk to the expectations of a rebound priced into oil futures, especially as demand growth will likely prove lackluster. The average size of discoveries has been 35% bigger this year compared with last, according to IHS Cambridge Energy Research Associates. Meanwhile, in a nod to the BRIC countries that helped define the last decade, consultants PFC Energy has coined its own acronym for the next: BRINK, or Brazil, Russia, Iraq, Nigeria and Kazakhstan. Brazil has hosted a string of big discoveries, while Russia has defied expectations by overtaking Saudi Arabia's output. Kazakhstan is expanding three major projects, while a tentative peace is allowing Nigeria to start raising output. The wild card is Iraq, where more licenses for foreign oil companies were awarded Friday. Contract terms encourage firms to maximize output quickly. Winners to date aim to boost output from five fields 12-fold to 8.5 million barrels per day. Even if production increased by a more conservative 1.5 million barrels per day by 2015, it could pressure oil prices through unsettling the organization Iraq helped found 39 years ago: the Organization of Petroleum Exporting Countries. OPFC projects the world will require an extra 3.2 million barrels per day from OPEC by 2015 to meet demand. Leaving aside the fact that effective spare capacity is already 5.4 million barrels per day, Iraq's increased production would take up more than half of the extra amount required. OPEC will have to reintegrate Iraq into its quota system eventually. Other members, which have benefited from Iraq's weakened output for years, will be expected to limit their own to make way. The cartel is struggling to maintain discipline as it is. Compliance with quotas hit 58% in November, down from 83% in March, the IEA says. Many members have large development needs. If sovereign-debt concerns ripple out from places like Dubai to squeeze foreign investment elsewhere, the temptation to pump more oil for cash will increase, pressuring prices. What's more, Iraq's grandiose targets reflect its vast reserves and thirst for recognition and funds. It will likely demand a bigger quota than its old pre-Gulf War level of 3.1 million barrels per day. Saudi Arabia, which maintains a large buffer of spare capacity already and whose public finances can better withstand a lower oil price than rivals like Iran, will likely bridle at taking all the pain of accommodating Iraq. It is worth remembering that when oil prices collapsed in 1986 after the second oil shock, it was due to a combination of competing supplies, lackluster demand growth, and a breakdown in OPEC cohesion.

- When tiny Fisker Automotive Inc. hit a financing glitch last year, threatening its plan to build a fancy gasoline-electric hybrid car in Finland, it turned to the U.S. Department of Energy. The DOE had a bolder idea. Why not also step up the company's plans to develop a less-expensive model, and assemble it in a closed U.S. auto plant? Within months, Vice President Joe Biden, the former senator from Delaware, was helping lure the embryonic car company to a shuttered General Motors Co. factory four miles from his house in Wilmington, right across the tracks from Biden Park. Soon, Fisker Automotive, a two-year-old business that has yet to sell a car, won loans from the federal government totaling $528 million. Fisker had joined a flock of other businesses seeking cash from the biggest venture capitalist of all, the U.S. government.

- Top economists from the U.S. and Europe warned of the danger of creating asset-price bubbles if central banks and governments repeat the past mistake of keeping expansive monetary and spending policies in place for too long. The financial crisis of the past two years is blamed partly on decisions by policy makers, especially the U.S. Federal Reserve, to keep interest rates very low after the 2001 downturn, despite a recovering economy.

- ObamaCare's core promise—better quality care for everyone at lower costs—is being exposed as an illusion as it degenerates into the raw exercise of political power. Naturally, the White House and its media booster club are working furiously to prop up this fiasco, especially on cost control.

MarketWatch.com:

- The Bank of Japan's quarterly tankan survey sent mixed signals Monday on the outlook for the fragile economic recovery, showing better-than-expected sentiment but deteriorating capital-outlay expectations among Japanese companies.

- The pieces to the puzzle of growth in the final three months of the year are starting to fall into place, and a picture of solid growth is emerging, economists say. Reports in the coming week should only add to the sense of confidence that started this past week, analysts said. Given the stronger consumption data this past week, fourth-quarter gross domestic product is beginning to look like it could be above 4%, Gault said.

CNBC.com:
- The Federal Reserve will likely close out the year this week by repeating a pledge to keep interest rates extraordinarily low for an extended period even as it nods to signs of economic healing.

IBD:
- You can kick out a vendor. But you can't kick out the owner. That's been the logic underlying the strategy of RehabCare Group (RHB) under CEO John Short. With his recent acquisition of Triumph Healthcare, Short's RehabCare has taken its biggest step in the evolution from vendor to owner.

NY Times:

- FedEx(FDX), UPS(UPS) Gear Up for Holiday-Season Delivery Crush.

The Business Insider:
- Matt Taibbi's latest article for Rolling Stone is all about how Obama ran as a progressive, but quickly sold out to Wall Street, bringing back all the old deregulation-happy "Rubinites" from the Clinton administration. What Taibbi has done -- and this is truly impressive -- is expose the disintegration of the left and disappointment it's experiencing in Barack Obama. The comments on Fernholz's piece mainly attack him for being a pro-Obama shill. And again, this is coming from the left (as is Taibbi, of course, but he's smart enough to throw hand grenades at anyone as long as it makes for big articles). The bottom line is that people who aren't so interested in partisan politics -- but actually interested in policy and the choices the President makes -- are increasingly disillusioned. Just as Matt Taibb permanently branded Goldman Sachs as the "Vampire Squid" so too has he successfully exposed the deep fractures on the left, less than a year into Barack Obama's first year.

- The Guardian (via Yves Smith): Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organized crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result. This will raise questions about crime's influence on the economic system at times of crisis.

Business Week:
- Why Tech Bows to Best Buy(BBY). As the last major electronics retailer standing, the chain has unparalleled clout. And CEO Brian Dunn means to use it, shaping technologies and helping to develop products.

Kansas City Star:

- A couple of years ago, supporters of global warming theory began referring to skeptics as “deniers” — implying that anyone who doubted climate change should be lumped with Holocaust deniers. Now the shoe is on the other foot, thanks to the eye-popping e-mail dump that hit the Internet recently and quickly became known as “Climategate.” The response of much of the global-warming “community” has been … denial. A New York Times story on the Copenhagen climate summit declared, “In Face of Skeptics, Experts Affirm Climate Peril.” The U.S. negotiator at Copenhagen, Jonathan Pershing, said the hacked e-mails have “no fundamental bearing” on the summit. Al Gore waved off the controversy as so much “sound and fury, signifying nothing.” Meanwhile, the Environmental Protection Agency went right ahead with its “endangerment finding,” laying the basis for the regulatory equivalent of a tax on greenhouse gases. The e-mails from the University of East Anglia’s Climate Research Unit, however, raise serious questions about the theory of anthropogenic global warming, or AGW. The e-mails don’t prove that AGW is a fraud. Indeed, it’s pretty clear the Earth has been warming. But Climategate is a reminder to policymakers that AGW is still too flimsy a foundation on which to justify the EPA endangerment finding, cap-and-trade or the rich-country shakedown under way in Copenhagen. The CRU e-mail trove lifts the veil on one of climatology’s most important nerve centers. In the messages, some of the world’s leading climate scientists discussed how to blackball dissenting opponents, manipulate data, bully certain editors, thwart freedom-of-information filings and distort the peer-review process that’s supposed to be sacred to science. Within this group, there was much more doubt and disagreement than one would expect given the level of certainty of the U.N.’s global warming pronouncements. In one e-mail, Kevin Trenberth of the National Center of Atmospheric Research admits climatologists “can’t account for the lack of warming” in recent years, “and it is a travesty that we can’t.” Worse, some of the Climate Research Unit’s raw data was discarded, preventing scientists from outside the AGW clique from checking how the CRU adjusted, or homogenized, those readings. The CRU files were a mess, in any case. Perhaps the most damning item in the hacked material is a document filled with the notes of programmer Ian “Harry” Harris, who tried to put the CRU’s computer files and raw data — temperature readings from 1901 to 2006 — in some sort of order. “It’s botch after botch,” he wrote. “… this should have all been rewritten from scratch a year ago. … As far as I can see, this renders the [weather] station counts totally meaningless. … What the hell is supposed to happen here? Oh yeah — there is no ‘supposed.’ I can make it up. So I have.” Last week, Australian Willis Eschenbach found evidence that scientists played games when homogenizing some of the raw data from Australia: They appear to have fiddled with readings to show warmer temperature trends than the data would justify. “People who say that ‘Climategate was only about scientists behaving badly, but the data is OK’ are wrong,” Eschenbach wrote. “At least one part of the data is bad, too.” Clive Crook, who blogs at The Atlantic, initially dismissed Climategate but reconsidered: “The stink of intellectual corruption is overpowering. … this scandal is not at the margins of the politicized IPCC [Intergovernmental Panel on Climate Change] process. ... It goes to the core of that process.” It’s not clear yet where all of this will lead, but as the blogger Richard Fernandez aptly put it, “The smoke of doubt has entered the temple.” At the very least, it’s time for AGW hard-liners to climb down from their pulpits and stop treating every dissent as evidence of evil.

Daily Finance:

- Inside Wall Street: Tiffany(TIF) looks like a gem of a stock.

Washington Post:

- The five men from Northern Virginia under arrest in Pakistan had exchanged e-mails written in code for months with a recruiter for the Pakistani Taliban and had a map indicating they were bound for the tribal area where al-Qaeda is thought to be based, Pakistani police officials said Friday. The Americans, Muslims from the Alexandria area, were wearing the traditional dress when they were arrested Tuesday near Lahore. One had a map in his sock and had circled Miranshah, the main town in North Waziristan, the rugged area where al-Qaeda is said to be located, said Usman Anwar, the police chief whose officers interrogated the men.

Politico:

- A judge in New York ordered that ACORN’s federal funding be restored, rolling back a slew of Congressional actions that sought to stop taxpayer money from flowing to the community group on the heels of a fall full of embarrassments for it. Nina Gershon, a district judge in New York, issued a preliminary injunction directing the department of Housing and Urban Development, the Office of Management and Budget and the Treasury department to disregard a bill signed into law by President Obama that prohibited federal funding of the Association of Community Organizations for Reform Now. ACORN was the subject of bipartisan disdain in September, after undercover videos were released that seemed to show the organization’s employees offering advice on how to break the law. Republicans and Democrats voted to stop federal funding of the group – a measure signed into law by the president on the back of an appropriations bill. In November, the group sued the federal government, claiming that the provision, attached to the legislative branch appropriations bill, was a bill of attainder – unconstitutional legislation that unfairly punishes one group. As part of this lawsuit, ACORN sought a restoration of federal funding. With Friday’s injunction, ACORN stands to begin receiving funds once again. It is also is the second in a string of victories for ACORN. An investigation by former Massachusetts Attorney General Scott Harshbarger largely absolved the organization from any wrongdoings or illegalities in a hidden-video scandal which allegedly showed the organization’s employees offering advice on how to dodge taxes while setting up a prostitution ring of underage illegal immigrants. Republicans are already hammering away at the decision. Rep. Darrell Issa (R-Calif.), a longtime critic of ACORN and author of a report on the group’s problems, framed Gershon as an “activist judge” appointed by former President Bill Clinton. “This left-wing activist Judge is setting a dangerous precedent that left-wing political organizations plagued by criminal accusations have a constitutional entitlement to taxpayer dollars,” Issa said in a news release. “The Obama administration should immediately move to appeal this injunction.”

- Next month Tucker Carlson, the Fox News commentator and one-time CNN “Crossfire” host, along with former Cheney aide Neil Patel, plans on launching The Daily Caller, an ambitious and well-funded conservative web site that Carlson says "will be defined by its reporting, by the new facts it adds." But he's going to have company. Andrew Breitbart, who's already made some dents in what he considers the "Democrat-media complex" in 2009, says he’s going to roll out his own site, Big Journalism, a few days earlier - designed, he says, to report stories that the mainstream media is either missing or willfully ignoring. And that’s not the only competition in the suddenly crowded realm of conservative media. Former Bush speechwriter David Frum launched NewMajority in early 2009—which later became Frum Forum—while news organizations like Fox News and the Washington Times have tried attracting conservative eyeballs with Fox Nation and TheConservatives.com, respectively. Meanwhile, sites popular with Republican activists, tea-party-goers and libertarians—like National Review’s The Corner, Townhall, RedState, HotAir, and Instapundit—continue to attract million of readers unhappy with the Obama administration. “Everyone sees an opening, and they’re all trying to fill it,” said Conn Carroll, assistant director for strategic communications at the Heritage Foundation.

Rasmussen Reports:

- The Rasmussen Reports daily Presidential Tracking Poll for Sunday shows that 23% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-two percent (42%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -19. Today is the second straight day that Obama’s Approval Index rating has fallen to a new low. Prior to the past two days, the Approval Index had never fallen below -15 during Obama’s time in office (see trends).

zerohedge:

- A few simple questions for Goldman's(GS) Mr. van Praag: Goldman disclosed that it had $352.2 billion in fair value of principal trading instruments at September 30, 2009. How much of this is considered allocated to prop if this is in fact a distinct strategy from principal? Does the firm's FICC revenue line have absolutely no prop trading embedded within it? Goldman made $20 billion in FICC year to date: is none of this $20 billion due to capital at risk, or is it all due to wide bid/ask spreads? What was the pro rata allocation to Goldman Sachs Foundation as a percentage of capital per each trading ticket in 2008? Does GSF have a dedicated trading silo within Goldman? Why did the Goldman Sachs Foundation not participate in Goldman's prop CDS trades? How much did Goldman's prop operations lose in 2008 trading Russell 1000 futures? How much did Goldman's prop operations lose trading all equity, credit and commodity products? When will Goldman clearly and distinctly segregate on its income statement the prop trading profit and losses, if these are in fact unique from "principal" trading as defined, and attach an MD&A to all relevant disclosure? Lastly, we are still hoping to get a seating chart of Goldman's trading floor (via legitimate channels) which clearly discloses flow and prop traders' seats in order to disclose to the general public that flow and prop traders do not share the same information flow, especially that emanating from core clients who tend to move markets the second they announce their trading axes to Goldman's flow traders.

Seeking Alpha:

- 4 Huge Loopholes in the Derivatives Reform Legislation. The world financial system nearly melted down in 2008. This was a result of the interlocking web of exposures between major financial institutions caused by the unregulated and completely opaque over-the-counter (OTC) derivatives market. The U.S. taxpayer was forced to pledge nearly $24 trillion in cash and loan guarantees to avert financial Armageddon. That amounts to approximately $200,000 for every household in America! Even though the system was saved from total collapse, still the economic pain inflicted upon America and the world was devastating. Trillions of dollars in savings were obliterated and millions of jobs were destroyed as the world’s economy was crushed. All of this could have been averted if OTC derivatives had been properly regulated. The risk to our financial system must be eliminated, not simply regulated. We as Americans should not tolerate our system being put at risk. Barely one year after they were staring at Lehman-style bankruptcy, swaps dealers (the perpetrators of the financial crisis) are already rejecting this strong medicine. They are prioritizing their short-term profits and million dollar bonuses over the long-term health of the financial system. In fact, these recipients of TARP money have spent $344 million in 2009 alone to defeat derivatives reform regulation. More than anyone else, Wall Street knows a good investment when they see it. So what is their $344 million buying them? At least 4 humongous loopholes in the derivatives reform legislation being voted on in the House of Representatives this week:

Reuters:

- The top editor of a Chinese newspaper that interviewed U.S. President Barack Obama has been demoted, sources said, in a move they described as fallout from Communist Party censors' anger over its handling of the story. Xiang Xi, the top editor of the Southern Weekend weekly newspaper who interviewed Obama during his visit to China in mid-November, has been named as "executive" editor-in-chief and placed under a new top editor this week after pressure from the ruling Communist Party's propaganda department, said three employees of the paper. They all requested anonymity, saying they feared punishment for speaking about the move, which has also been discussed on Chinese-language Internet sites. Xiang's demotion could revive debate in Washington about the impact of Obama's visit. It underscored the contention between Washington and Beijing over censorship and access during Obama's visit, when U.S. officials' pressed for opportunities for him to speak directly to the Chinese public. "The propaganda department was certainly unhappy about the interview," said Michael Anti, a Chinese blogger and media commentator based in Beijing who follows censorship.

- The silent revolution in energy effciency. The post-war experience of the United States and other industrialized economies suggests it is possible to combine rising living standards with the same or lower energy use.

Financial Times:

- Every hedge fund will leave the European Union if proposals to clamp down on the sector’s remuneration policies are adopted, a leading law firm has said. Freshfields Bruckhaus Deringer said if the proposals became law the impact would be “rapid and decisive...no hedge funds will operate from within the EU”. “Hedge funds are much more mobile than banks. It’s much easier for three guys in Mayfair to pack their bags and move to Geneva,” said Michael Raffan, head of Freshfields’ financial services group. As a result, Freshfields said the “unobservable” part of the hedge fund industry, outside of major jurisdictions, would attract market share and become more risky from a systemic perspective.

- The value of global hotel investment deals has fallen by two-thirds this year but the market will begin a gradual recovery in 2010, according to an annual review of transactions by Jones Lang LaSalle Hotels. The deals adviser estimates a range of $11bn to $13bn for hotel deals next year, fed by the trade of single hotel assets of up to $100m, but there will be few big portfolio transactions. Asian conglomerates looking for prime hotel assets in key markets such as the US and the UK and taking advantage of currency movements will lead next year’s recovery, JLL Hotels predicts. They will be joined by sovereign wealth funds from the Middle East and Asia, which will want to place capital in hotels to hedge against inflation. New investment vehicles are emerging to buy hotel assets in the absence of traditional lending. Public flotations, rights issues and real estate investment trusts will also push along acquisitions but JLL Hotels said the size of such deals will pale in comparison to the scale of commercial mortgage-backed securities that fed the 2007 peak. The hospitality industry has, by and large, avoided large foreclosures this year, propped up by lenders willing to extend loans to hard-pressed hotel owners and recapitalise debt. Arthur de Haast, chief executive of JLL Hotels, said: “As more assets are placed under the control of banks, we expect more of the upcoming sales activity to be driven by banks, which will provide a lift to hotel transaction volumes. “Particularly in the US and Europe, banks are reviewing their loan portfolios and determining their next steps. But the number of distressed assets on the market will not come in form of a tidal wave.”

- Iraq is on course to overtake Iran as the holder of the world’s second-largest proven oil reserves, solidifying its position as the energy industry’s new frontier in the scramble to secure fresh resources. Baghdad agreed on Friday to deals with Royal Dutch Shell and China’s CNPC for two large oilfields, following on from similar accords with ExxonMobil, Eni and BP . On Saturday, Lukoil sealed a deal on the West Qurna field. Consultants who have analysed the agreements struck by Baghdad said the contracts underlined the companies’ confidence that they would be able to use modern seismic and drilling technology to get far more oil out of the fields than had previously been thought possible. Iraq’s proven reserves now stand at 115bn barrels, below Iran’s 137bn and Saudi Arabia’s record 264bn. But Iraq’s reserves data dates from the 1970s, before the improvements in technology that transformed the industry. Raad Alkadiri, an Iraq expert at PFC Energy in Washington, said the companies offered Iraq very good terms in the deals because they believed that the oilfields held more recoverable oil than was commonly assumed. A second consultant, Falah al-Khawaja, who spent 41 years working in Iraq’s oil sector before becoming an independent consultant, calculated on the basis of the bids that Iraq would overtake Iran in proven reserves in three years. “These are not small companies. They have been studying Iraq for some time,” he said. Mr Alkadiri warned that the resurgence of Iraq as a significant oil producer would cause problems within Opec, as the oil cartel would eventually have to reduce the production quotas of many of its members to accommodate Iraq. “The Iraqis are making it clear that they no longer see themselves in parity with Iran. They are eyeing themselves being potentially on par with Saudi Arabia,” Mr Alkadiri said. Iraq will not necessarily produce oil at full capacity when the deals it is negotiating with global majors take its crude output potential to 12m barrels a day.

TimesOnline:
- Confidential intelligence documents obtained by The Times show that Iran is working on testing a key final component of a nuclear bomb. The notes, from Iran’s most sensitive military nuclear project, describe a four-year plan to test a neutron initiator, the component of a nuclear bomb that triggers an explosion. Foreign intelligence agencies date them to early 2007, four years after Iran was thought to have suspended its weapons program. An Asian intelligence source last week confirmed to The Times that his country also believed that weapons work was being carried out as recently as 2007 — specifically, work on a neutron initiator. The technical document describes the use of a neutron source, uranium deuteride, which independent experts confirm has no possible civilian or military use other than in a nuclear weapon. “Although Iran might claim that this work is for civil purposes, there is no civil application,” said David Albright, a physicist and president of the Institute for Science and International Security in Washington, which has analyzed hundreds of pages of documents related to the Iranian program. “This is a very strong indicator of weapons work.”

Weekend Recommendations
Barron's:
- Made positive comments on (COH), (QCOM), (RIMM), (CAT), (BAC), (BEN), (AXA) and (NKE).

- Made negative comments on (AMZN).

Citigroup:

- Upgraded (WRI), (UDR), (PSA), (KRG), (CSA) and (KRC) to Buy.

- Downgraded (OFC), (KIM) and (HIW) to Sell.

Night Trading
Asian indices are -.75% to +.25% on avg.

Asia Ex-Japan Inv Grade CDS Index 106.0 +2.50 basis points.
S&P 500 futures -.20%.
NASDAQ 100 futures -.21%.

Morning Preview
BNO Breaking Global News of Note

Google Top Stories

Bloomberg Breaking News

Yahoo Most Popular Biz Stories

MarketWatch News Viewer

Asian Financial News

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MarketWatch Pre-market Commentary

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TradeTheNews Morning Report

Briefing.com In Play

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Briefing.com Bond Ticker

US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Stock Quote/Chart
WSJ Intl Markets Performance
Commodity Futures
IBD New America
Economic Preview/Calendar
Earnings Calendar

Conference Calendar

Who’s Speaking?
Upgrades/Downgrades

Politico Headlines
Rasmussen Reports Polling

Earnings of Note
Company/Estimate
- (PAY)/.25

- (AZPN)-.27

Upcoming Splits

- (NEOG) 3-for-2

- (UHS) 2-for-1

Economic Releases

- None of note

Other Potential Market Movers
- The TAF auction, Roth Capital Medical Device Conference, (SYY) investor day and the (IMGN) analyst call could also impact trading today.

Click here for Wall St. Week Ahead by Reuters.

Click here for Stocks to Watch Monday by MarketWatch.

S&P 500 1,106.41 +.04%*

Click here for the Weekly Wrap by Briefing.com.

Indices
S&P 500 1,106.41 +.04%
DJIA 10,471.50 +.80%
NASDAQ 2,190.31 -.18%
Russell 2000 600.37 -.40%
Wilshire 5000 11,239.04 +.07%
Russell 1000 Growth 492.62 +.11%
Russell 1000 Value 563.18 +.09%
Morgan Stanley Consumer 675.50 -.26%

Morgan Stanley Cyclical 806.40 +.55%
Morgan Stanley Technology 553.36 -.62%
Transports 4,093.82 -.19%
Utilities 405.09 +3.93%
MSCI Emerging Markets 41.24 -1.27%

Lyxor L/S Equity Long Bias Index 961.86 +.06%

Lyxor L/S Equity Variable Bias Index 848.11 -.44%

Lyxor L/S Equity Short Bias Index 971.53 +.48%

Sentiment/Internals
NYSE Cumulative A/D Line +64,129 +1.95%
Bloomberg New Highs-Lows Index +173 -286
Bloomberg Crude Oil % Bulls 30.0 +150.0%
CFTC Oil Net Speculative Position +67,817 -11.23%

CFTC Oil Total Open Interest 1,217,908 +.67%
Total Put/Call .87 +6.1%
OEX Put/Call 1.67 +9.87%
ISE Sentiment 154.0 +45.28%
NYSE Arms .80 -9.09%
Volatility(VIX) 21.59 +1.60%
G7 Currency Volatility (VXY) 12.84 -2.58%
Smart Money Flow Index 9,361.07 -1.07%

Money Mkt Mutual Fund Assets $3.321 Trillion unch.
AAII % Bulls 42.68 +2.65%
AAII % Bears 35.37 +5.08%

Futures Spot Prices
CRB Index 270.86 -1.10%

Crude Oil 69.87 -8.03%
Reformulated Gasoline 184.16 -7.17%
Natural Gas 5.16 +12.13%
Heating Oil 190.85 -6.65%
Gold 1,11.90 -3.97%
Bloomberg Base Metals 199.81 +.14%
Copper 313.30 -1.98%

US No. 1 Heavy Melt Scrap Steel 210.67 USD/Ton unch.

China Hot Rolled Domestic Steel Sheet 3,712 Yuan/Ton +.92%

S&P GSCI Agriculture 343.56 +1.13%

Economy
ECRI Weekly Leading Economic Index 130.10 +.46%

Citi US Economic Surprise Index +30.0 +710.81%

Fed Fund Futures imply 5.1% chance of no change, 94.9% chance of 25 basis point cut on 12/16

US Dollar Index 76.57 +.83%

Yield Curve 275.0 +11 basis points

10-year US Treasury Yield 3.55% +8 basis points

Federal Reserve’s Balance Sheet $2.169 Trillion -.81%

U.S. Sovereign Debt Credit Default Swap 36.0 +6 basis points

10-year TIPS Spread 2.19% +1 basis point
TED Spread 23.0 +1 basis point
N. Amer. Investment Grade Credit Default Swap Index 94.45 -3.11%

Euro Financial Sector Credit Default Swap Index 71.64 +3.23%
Emerging Markets Credit Default Swap Index 283.0 -.38%
CMBS Super Senior AAA 10-year Treasury Spread 488.0 -7 basis points

M1 Money Supply $1.691 Trillion +.40%

Business Loans 673.0 +.12%
4-Wk MA of Jobless Claims 473,800 -1.60%

Continuing Claims Unemployment Rate 3.9% -20 basis points
Average 30-year Mortgage Rate 4.81% +10 basis points
Weekly Mortgage Applications 665.60 +8.46%

ABC Consumer Confidence -47 -2 points
Weekly Retail Sales +1.20% -140 basis points
Nationwide Gas $2.62/gallon -.02/gallon
US Heating Demand Next 7 Days 1.0% above normal
Baltic Dry Index 3,671 -9.63%

Oil Tanker Rate(Arabian Gulf to US Gulf Coast) 35.0 unch.

Rail Freight Carloads 207,242 +24.95%

Iraqi 2028 Govt Bonds 75.22 -.33%

Best Performing Style
Mid-Cap Growth +.54%

Worst Performing Style
Small-Cap Growth -.49%

Leading Sectors
Airlines +6.57%

HMOs +6.15%

Education +4.39%

Utilities +3.93%
Telecom +2.15%

Lagging Sectors
REITs -1.67%
I-Banks -2.48%
Homebuilders -2.86%

Oil Tankers -3.34%
Gold -6.21%

One-Week High-Volume Gainers

One-Week High-Volume Losers

Evening Review
BNO Breaking Global News of Note

Google Top Stories

Bloomberg Breaking News

Yahoo Most Popular Biz Stories

MarketWatch News Viewer

Briefing.com In Play

SeekingAlpha Market Currents

Bloomberg:

- The Standard & Poor’s 500 Index will rally 18 percent to 1,300 next year as the economy recovers and Federal Reserve Chairman Ben S. Bernanke holds down interest rates, said Thomas J. Lee, the chief U.S. equity strategist at JPMorgan Chase & Co. The forecast level represents a multiple of 14.4 times the $90 a share the bank estimates the companies in the index will earn in 2011, equity strategists led by Lee in New York said in a report dated yesterday. “Investors remain too pessimistic regarding the durability and trajectory of 2010 U.S. growth as well as valuation upside,” wrote Lee, whose projection that the S&P 500 would end this year at 1,100 tied him with Goldman Sachs Group Inc.’s David Kostin as the most accurate of eight strategists tracked by Bloomberg. “It is a mistake to wait for a correction.” Lee said there’s a 95 percent chance U.S. stocks will rally in the next 12 months based on his analysis of the last 19 bull markets that lasted nine months. The S&P 500’s advance will probably last for years rather than months, helped by improving access to credit for households and small businesses, pent-up consumer demand and a rebound in employment, Lee said.

- “It’s been a very good week for GDP,” said Jay Feldman, an economist a Credit Suisse in New York. “We’ve had a very abrupt swing in inventories, and trade will be a modest plus rather than a modest drag.” Credit Suisse today raised its forecast for gross domestic product this quarter to a gain of 4.5 percent at an annual rate from the 3.5 percent pace projected at the start of week. Stockpiles alone will contribute almost 3 percentage points to growth, Feldman said. Companies have cut inventories for the past six quarters, and reductions reached a record annual pace of $160.2 billion from April through June. A smaller cutback last quarter contributed 0.9 percentage point to the economy’s 2.8 percent pace of expansion last quarter. A 4.5 percent rate of growth would make this quarter the strongest in almost four years. Economists surveyed earlier this month projected a 3 percent pace of expansion from October through December, according to the median estimate.

- The cost of protecting European corporate bonds from default fell to the lowest in 18 months as a surge in China’s industrial output and forecasts of increased U.S. retail sales boosted confidence in an economic recovery. Credit-default swaps on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings declined as much as 9.5 basis points to 479, the lowest since June 2008, and were trading at 481.5, according to JPMorgan Chase & Co. prices at 10:06 a.m. in London.

- Crude oil tumbled for an eighth day, the longest stretch in six years, as the dollar rose against the euro, curbing investor appetite for commodities. Oil fell to a two-month low after the greenback advanced on speculation the Federal Reserve will increase borrowing costs next year because of an improving economy. Prices have dropped 11 percent in eight days on the dollar’s strength and rising U.S. fuel inventories. “Market sentiment has shifted, and is now focused on the weak fundamentals.” “If the dollar continues to strengthen, we are going to see more of the financial interest leave commodities,” said Rick Mueller, a director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “Fuel supplies are very high in the U.S. and demand is weak.” “For some traders there’s anxiety that distillate supplies won’t come down quickly, or at all,” Kirsch said. “There’s the possibility of a much stronger move downward in prices.” “The continuing builds at Cushing are definitely having an impact on prices,” Mueller said. “I don’t think OPEC ministers are going to do very much when they meet on Dec. 22 in Angola,” said Tim Evans, an energy analyst at Citigroup Global Markets Inc. in New York. “The IEA said all 11 members with quotas were producing above quota, so I don’t expect there to be any lectures behind closed doors on compliance. Everyone is doing it.” “I’m expecting energy to fall through the first quarter and the first half of the second quarter,” said Bill Adams, chief energy trader at Intermarkt Investment Strategists, a risk management company in Zurich. “Capacity hasn’t tapered off in any meaningful way, and if Nigeria comes back online, there’s even more” supply coming onto the market.

- House Majority Leader Steny Hoyer said the chamber will vote next week on increasing the U.S. debt limit by $1.8 trillion or $1.9 trillion. Hoyer said the increase will be added to a Defense Department spending measure. Also to be added will be infrastructure spending, a six-month extension of unemployment benefits, and subsidies to help jobless people buy health insurance through their former employer, said Hoyer of Maryland. Hoyer didn’t say how much those items would cost. He said lawmakers haven’t decided whether to attach legislation extending the estate tax beyond its Dec. 31 expiration.

- Kenneth Feinberg, the Obama administration’s special master for executive pay, set $500,000 salary limits for employees at four companies that received “exceptional” U.S. bailout funds. Citigroup Inc., American International Group Inc., General Motors Co. and GMAC Inc. will be subject to today’s rulings, which govern 2009 compensation for the 26th through 100th highest-paid workers at the firms. The limits, which only apply for the remainder of this year, are likely to affect annual bonuses, Feinberg said at a briefing.

- Carlyle Group and Goldman Sachs Group Inc.(GS) are asking investors to pay more than $1 billion for a deepwater-oil explorer with no revenue or profits in the industry’s biggest U.S. initial public offering this decade.

- The closure of refineries on the US East Coast representing nearly 20% of the region’s capacity is driving profit margins higher. Refineries on the East Coast, or PADD 1, processed 1.02 million barrels of crude a day last week, 24% below a year earlier and the least since April, according to the Energy Dept.

- European Union leaders said government measures to stimulate the economy should stay in place until the “recovery is fully secured.” “Forecasts suggest a weak recovery in 2010, followed by a return to stronger growth in 2011,” heads of the 27-nation EU said in a statement after a summit in Brussels today. “But uncertainties and fragilities remain, while the employment and social situation is expected to deteriorate further in 2010,” according to the statement.

- Russia’s economic decline eased last quarter from a record slump in the previous three months as oil, gas and metals prices rebounded and stimulus measures helped offset the impact of the global recession. Output of the world’s biggest energy exporter shrank 8.9 percent in the third quarter from a year earlier, after contracting a record 10.9 percent in the previous period, the State Statistics Service said in a preliminary estimate on its Web site today.

- Nakheel PJSC’s $3.52 billion bond rose to as much as 54 cents on the dollar three days before the debt falls due as some analysts said the Dubai state-controlled developer may seek to avoid a default. The Islamic bond maturing on Dec. 14 advanced as much as 4.8 percent to 54.125 cents today, from its closing level of 51.63 cents yesterday, according to Citigroup Inc. prices.

- Onyx Pharmaceuticals Inc.(ONXX) and Bayer AG said their Nexavar pill, approved for liver and kidney tumors, extended the lives of women with advanced breast cancer by delaying growth of malignancies that had spread or recurred. Tumors in two-thirds of women treated with Nexavar and paclitaxel shrank by at least 25 percent, and were stable for an average of 8.1 months, according to results presented today at the San Antonio Breast Cancer Symposium, an international gathering. About half of those on paclitaxel alone had shrinkage, and they were stable for 5.6 months, the study found.

- The case of five Muslim Americans who traveled to Pakistan, possibly to train to fight against the U.S., may represent part of a growing threat: homegrown Islamic extremists. The number of incidents this year involving American Muslims who have been accused of planning terror attacks, carrying them out, or leaving to join a jihad, or holy war, has risen to the highest level since the Sept. 11 attacks, according to a tally by Brian Michael Jenkins, a terrorism specialist and senior adviser to the Rand Corp., a Santa Monica, California- based policy group. He said he counted 12 cases this year out of a total of 32 in the eight-plus years since the attacks. The rise of American extremists is causing concern among U.S. officials.

- Greece and Ireland are among countries in an “intolerable” economic situation, which may lead to bailouts or even an exit from the euro area by the end of next year, according to Standard Bank Plc. The absence of a mechanism to permit so-called fiscal transfers within the 16-nation region may undermine the exchange-rate system, said Steve Barrow, head of Group of 10 foreign-exchange strategy at the bank in London.

Wall Street Journal:

- Rich countries should commit to cutting their emissions by at least 75% and possibly even more than 95% by 2050, according to a draft United Nations climate agreement disclosed Friday, amid new tension between China and the U.S. over how much rich nations should pay to subsidize efforts by China and other developing nations to cut their emissions. The question of whether China should receive subsidies for cutting greenhouse emissions stirred more volleys between the U.S. and China. Chinese Vice Foreign Minister He Yafei responded Friday, saying he is "shocked" by Chief U.S. climate negotiator Todd Stern's remarks earlier this week that China, with $2 trillion in currency reserves, shouldn't expect climate subsidies from the U.S.

- The government's expected exit from Citigroup Inc. could trigger the re-entry of institutional investors like mutual and pension funds. Institutional ownership in Citi is roughly 20%, the bank calculates. That makes Citigroup "one of the least owned banks" by institutional investors such as mutual funds and pension funds, J.P. Morgan Chase & Co. analyst Vivek Juneja wrote in a research report. Normally, institutions hold 70% or more of large companies' shares.

- Thousands Flee Iran as Noose Tightens.

- Bernard L. Madoff's life of country clubs and luxury homes ended when federal agents arrested him at his Manhattan penthouse apartment exactly one year ago. But he is adjusting to his new life behind rows of gleaming silver razor wire in this small Southern town. Inmate No. 61727-054 shares an unlocked cell at the medium-security prison at Butner Federal Correctional Complex with a younger man named Frank. He wears khaki prison garb and has been spotted walking on an outdoor track. He plays bocce, chess and checkers. He scrubs pots and pans in the prison kitchen.

- After nearly two years of weak activity, mergers and acquisitions among independent registered investment advisers, or RIAs, are likely to rebound, according to a study by clearing firm Pershing's Advisor Solutions unit and FA Insight, a Tacoma, Wash.-based consultancy.

CNBC:

- US consumers stepped up their spending in November and grew more optimistic this month, data showed on Friday, raising hopes a self-sustaining economic recovery was starting to unfold. The Commerce Department said total retail sales increased 1.3 percent last month, the largest advance since August, after rising 1.1 percent in October. It was the second straight monthly gain and beat market expectations for a 0.7 percent gain. A separate report showed consumer sentiment improved in early December on signs of stabilization in the labor market. The data were the latest in a series showing the economy may expand at a brisker pace in the fourth quarter than the 2.8 percent annual rate in the July-September period. "The improvement in confidence is a complement to the good retail sales. It suggests that the consumer is slowly turning upward," said Alan Gayle, senior investment strategist, Ridgeworth Investments in Richmond, Virginia.

- Mammoth financial institutions that have survived the government bailout process, along with their regional peers that have swallowed weaker competitors, are the best-positioned banks to succeed in 2010, according to a new report. Keefe, Bruyette & Woods said in a year-end analysis that the banking industry as a whole will mirror the larger economy in showing slow growth next year. But certain pockets—including global credit card companies—will outperform as conditions begin to improve.

MarketWatch.com

- Capital spending on semiconductor-manufacturing equipment is on track to end this year with a 43% decrease, but investment in new gear is expected to rebound 45% next year as the chip industry recovers from one of its worst downturns, a market researcher said Friday. "While initially this may seem to be a dark time for the equipment segment, as the industry consolidates a much stronger equipment sector will emerge to carry on in the future," Gartner research vice president Bob Johnson said in a prepared statement.

The Business Insider:

- Chart Of The Day: The Average Investor Remains Terrified Of The Stock Market.

TheStreet.com:

- If you are investing in commodity index funds or commodity ETF's, you are being played for a sap. You are footing the bill for commodity storage and the free profits of physical traders and trade groups, all because you - as an investor - have fallen for the sales pitch and siren call of exposure to commodities. You are using these ridiculous, invented financial products in greater and greater numbers and these products ultimately only make money for the salesmen and not for you. Let me try to explain this as simply as I can.

Real Clear Politics:

- The Environm