Today's Headlines

Bloomberg:

• Sovereign Bond Default Risk Tumbles in Europe on Ireland Bailout Wagers. The cost of insuring against losses on European government bonds fell on speculation pressure from euro-region central bankers will force Ireland to accept an international bailout that would calm markets. Credit-default swaps on Irish government debt fell for a third day, dropping 58.5 basis points to 488, the lowest level since Oct. 29, according to data provider CMA. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments declined 8.5 basis points to 160.Pressure is mounting on Ireland to follow Greece in turning to the European Union’s rescue fund as the region’s deficit crisis worsens. European Central Bank Vice President Vitor Constancio said today that Ireland would be able to tap the fund to save its banks, while fellow central bank council member Miguel Angel Fernandez Ordonez said the nation should make a “final decision” on an aid plan. Swaps on Ireland reached a record high closing price of 599 basis points last week on concern the ballooning cost of rescuing its banking system is becoming unsustainable. Contagion from Ireland also helped push the cost of insuring Portuguese and Spanish debt to records on Nov. 11. Portugal declined 35 basis points to 401 today and Spain was 15 lower at 246. Italy fell 8.5 to 180, CMA prices show. Swaps on Greece declined 7 basis points to 857, reversing an earlier increase after European Union authorities revised the nation’s budget deficit to 15.4 percent of gross domestic product from 13.6 percent, making it the euro region’s largest shortfall. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings declined 3 basis points to 457, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings decreased 1.75 basis points to 101.5. The Markit iTraxx Financial Index linked to the senior debt of 25 banks and insurers dropped 4.5 to 134 and the subordinated index was 9.5 lower at 210.5.
• U.S. Economy: Sales at Retailers Climb by Most in Seven Months. Sales at U.S. retailers climbed in October by the most in seven months, brightening the outlook for holiday shopping even as unemployment holds near 10 percent. Purchases rose 1.2 percent, exceeding the highest forecast among economists surveyed by Bloomberg News, according to data from the Commerce Department issued today in Washington.
• California's $25 Billion Budget Gap Looms Over Revenue Notes: Muni Credit. California is selling $10 billion of one-year notes to boost cash on hand, as the state that produces 13 percent of the U.S. gross domestic product tries to assure investors it can repay the loan amid a $25 billion budget gap.
• Greek Deficit Tops EU Ranking, Putting Pressure on Papandreou. Greece’s budget deficit was revised to the highest in the euro region, putting pressure on Prime Minister George Papandreou to adopt more austerity measures to meet pledges included in the bailout package that allowed the country to avoid default. Greece’s shortfall last year was revised to 15.4 percent of gross domestic product from 13.6 percent, surpassing Ireland at 14.4 percent, Eurostat, the EU’s Luxembourg-based statistics office said today. The shortfall this year will be 9.4 percent of GDP, more than the 8.1 percent the government announced in May, the Greek Finance Ministry said today in a separate statement.
• Manufacturing Growth in New York Region Contracts in November. Manufacturing in the New York region unexpectedly contracted in November for the first time in more than a year, a warning sign the industry that led the economy out of the recession may again be cooling. The Federal Reserve Bank of New York’s general economic index fell to minus 11.1 from 15.7 in October. Readings less than zero signal contractions in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut. Economists forecast the measure would fall to 14 this month, according to the median projection in a Bloomberg News survey.
• Caterpillar(CAT) Buys Bucyrus(BUCY) for $7.6 Billion to Growing Mining Range. Caterpillar Inc., the world’s largest maker of construction equipment, agreed to buy Bucyrus International Inc. for $7.6 billion to add shovels and drills to its range of mining machinery. Bucyrus shareholders will receive $92 a share, 32 percent more than the Nov. 12 closing share price, Peoria, Illinois- based Caterpillar said today in a statement.
• Mortgage-Bond Yields That Guide Home Loans in U.S. Soar to Four-Month High. Yields on Fannie Mae and Freddie Mac mortgage securities that guide home-loan rates reached their highest levels in four months, suggesting borrowing costs may rise from record lows. Fannie Mae’s current-coupon 30-year fixed-rate mortgage bonds climbed to 3.71 percent as of 9:30 a.m. in New York, tracking 10-year Treasuries today as those yields rose from 3.64 percent to the highest since July 13, according to data compiled by Bloomberg. Yields on the mortgage securities, which typically increase loan rates by similar amounts, have risen from 3.27 percent on Nov. 4. Benchmark Treasury yields have jumped as the Federal Reserve embarks on buying an additional $600 billion of U.S. government debt in a bid to spur economic growth.
• Merkel Tells CDU Gathering Europe Can't Afford to Let Shared Currency Fail. German Chancellor Angela Merkel said the euro is the glue that holds Europe together, signaling that an Irish bailout may be the price of preserving European unity. Merkel is “trying to send a clear message that Germany is pro-European, that they are ready to help out Ireland, Portugal and other countries if necessary and they will not put the euro at risk,” Henrik Enderlein, a political economist at the Hertie School of Governance in Berlin, said by phone. She “wants the Irish to take the bailout now to make it clear to everyone that the situation is safe, that markets should calm down.”

Wall Street Journal:

• Portugal Finance Minister: Ireland Must Take Account of What is Best for Euro. Portugal's finance minister said the Irish government must take into account what is best for the euro zone as well as the country when it decides whether to seek financial help from the European Union and International Monetary Fund.
• SEC to Issue Proposal to Register Hedge Funds. The Securities and Exchange Commission will meet Friday to consider new rules to force hedge funds and other private funds to register with the agency and to undergo exams. The SEC, which placed a notice of the meeting on its website, also will vote on proposing rules to quadruple the threshold for SEC oversight of investment advisers, to $100 million of assets under management from $25 million. Under such a move, thousands of smaller hedge funds and other investment advisers would be overseen by state regulators. The SEC will propose language creating an exemption from registration for venture-capital funds and hedge funds with less than $150 million under management in the U.S.

CNBC:

• Bove: Market Doomed Because of QE2? A growing chorus of critics are sounding the alarm about QE2; in fact they think it has the potential to be the downfall of the US. We know that's dramatic but that's effectively what widely followed strategist Dick Bove of Rochdale told us on the Halftime Report. He believes the economic damage generated by QE2 could doom America to a fate similar to the Weimar Republic, which you'll remember disintegrated into Hitler’s chancellorship largely due runaway inflation and a government perceived as grossly inept.
• US Credit Card Delinquencies Fall as Outlook Improves.
• Fed Stimulus Policy is Counterproductive: Economist. The Fed’s stimulus-oriented policy is counterproductive to its mission: boosting jobs and small business confidence, David Malpass, president of Encima Global, an economic research and consulting firm, told CNBC on Monday. “Should the Fed be borrowing $600 billion from banks—banks that otherwise would lend to small businesses and dump it into the federal government?” he said. “It doesn’t make sense; it’s not necessary. And it diverts attention from what should be going on, which is the government getting its act in order.”

Business Insider:

• Oh Boy, California Munis Are Getting Crushed Again Today. This is getting scary. Following a week of utter drubbing in the muni, California bonds are getting crushed today. The PIMCO California Municipal Income Fund is down 3%. There's something extremely PIIG-like about the speed of this collapse right now. Bear in mind that California has at least $12 billion in fresh auctions this week.

Zero Hedge:

• Next Up On The Xtranormal Docket: High Frequency Trading Explained by Cartoons. (video)
• $7.9 Billion POMO Closes as Fed Ties China for Top Global Holder of US Treasurys With $868 Billion.
  

New York Times:

• Putting Money on Lawsuits, Investors Share in the Payouts. Large banks, hedge funds and private investors hungry for new and lucrative opportunities are bankrolling other people’s lawsuits, pumping hundreds of millions of dollars into medical malpractice claims, divorce battles and class actions against corporations — all in the hope of sharing in the potential winnings.
• Cuomo Issues New Subpoena to Quadrangle About Rattner.
  

ProPublica:

• Goldman(GS), JPMorgan(JPM) Lobbyists Top the List With Most Visits to Regulators on FinReg. Since July, financial regulators have had more than 500 meetings with lobbyists from hundreds of companies seeking to shape the interpretation and enforcement of new financial reform law, according to the Los Angeles Times. Most groups in these meetings—more than 90 percent, according to the Times—are banks, hedge funds, and other big companies that rely on the financial industry.

AdWeek:

• Netflix(NFLX) Unbound: Will Its Rise Hasten Hulu's Demise?

Politico:

• Charlie Rangel Walks Out of Ethics Trial. Complaining bitterly that he was denied the right to have an attorney present, an emotional Rep. Charles Rangel (D-N.Y.) walked out of his highly publicized public ethics trial Monday morning, an unexpected twist in the ethics inquiry has tarnished Rangel’s four-decade congressional career. The ethics panel, after an unexpected 40-minute private session, rejected Rangel’s request to delay the trial and went ahead anyway. The witness chair where Rangel was supposed to sit was empty, a dramatic sign of Rangel’s refusal to participate.
• Blue Dogs Target Nancy Pelosi, Democratic Rules. Members of the Blue Dog Coalition of conservative House Democrats are developing a series of amendments to caucus rules that would strip away Democratic leader Nancy Pelosi's power to appoint allies to top party posts. Drafts of the amendments obtained by POLITICO would ensure open elections for the chairmanship of the Democratic Congressional Campaign Committee, the top Democratic slot on the House Rules Committee, the post of assistant to the leader and the co-chairmen of the Democratic Steering and Policy Committee, which hands out committee assignments. A fifth amendment would create new Steering and Policy Committee co-chairmanships for outreach and messaging.

Rasmussen Reports:

• 58% Favor Repeal of Health Care Law, 37% Oppose Repeal. Voters continue to favor repeal of the new national health care plan, and most continue to believe the law will be bad for the country overall. A new Rasmussen Reports national telephone survey finds that 58% of Likely Voters at least somewhat favor repeal of the health care law. Thirty-seven percent (37%) oppose repeal. These findings include 46% who Strongly Favor Repeal and 30% who Strongly Oppose it.

USA Today:

• Napolitano Asks Fliers for 'Patience' on Body Scanners. The nation's Homeland Security chief asked for air travelers' "cooperation" and "patience" with full-body scanning and pat downs this holiday season amid a growing public backlash that the airport tactics are intrusive. "Each and every one of the security measures we implement serves an important goal," Homeland Security Secretary Janet Napolitano writes in a column for today's USA TODAY, which asks the public to be a partner in defending against terrorism. Yet some consumer, civil rights and pilots groups are protesting new Transportation Security Administration (TSA) methods they say go too far. "The public is done with their rights being violated," says Kate Hanni, executive director of the travel group flyersrights.org. "People are just furious" about the body scanners, which peer beneath clothing, and pat downs of their private areas if they refuse to be scanned.

Reuters:

• Q+A - How Tough Will US CFTC Be on Speculators? Companies that trade energy, metals and agricultural futures and swaps are closely watching how tough a stance the U.S. futures regulator takes against speculators in new position limits for commodities.

Financial Times:

• Portugal Warns on Bail-Out Risk.

Irish Independent:

• Lenihan 'to seek EU funds for the banks'. Move would let State save face and avoid bailout threat. FINANCE Minister Brian Lenihan is considering asking for money for Irish banks from the EU emergency fund in a bid to fend off a threatened bailout for the State. The Irish Independent understands Mr Lenihan may ask fellow European finance ministers in Brussels tomorrow if it would be possible for the banking sector alone to access money from the rescue fund.

The Post.IE:

• Pensions to Be Biggest Hedge Fund Investors. Pension funds will be the biggest net investor in hedge funds in the five years to December 2013, according to research from Bank of New York Mellon. A study by the bank predicted that hedge funds would see net inflows of $252 billion from pension funds during the five-year period.