Today's Headlines

Bloomberg:

• Monti Sworn In as PM to Solve Italy Debt Crisis. Mario Monti was sworn in as Italian prime minister and finance minister, taking over an unelected government charged with imposing austerity to prevent the euro area’s third-biggest economy from succumbing to the debt crisis. Monti, 68, and his Cabinet took the oath in Rome from President Giorgio Napolitano, who reached outside the political arena to offer Monti the job after the resignation of Prime Minister Silvio Berlusconi on Nov 12. Monti’s ministers include Corrado Passera, chief executive officer of Intesa Sanpaolo SpA (ISP), the new industry minister and Antonio Catricala, head of the antitrust regulator, who will serve as deputy premier. “We have received a lot of encouragement from our European partners and international authorities,” Monti said at a press conference in Rome this morning when he presented his government to Napolitano “I hope this translates into a calming of the markets, especially regarding the tensions facing our country.” Italian bond yields remain near the 7 percent threshold that led Greece, Portugal and Ireland to seek bailouts, piling pressure on Monti to quickly spell out how he plans to cut the world’s fourth-biggest debt. He may be hamstrung by the refusal of the main parties to accept Cabinet positions, leaving Monti’s team of “technocrats” with no political base in parliament to pass legislation.
• U.S. Marines to Be Deployed in Australia. President Barack Obama said the U.S. is sending a “clear message” of its intent to lead in the Asia-Pacific region with an agreement he and Australian Prime Minister Julia Gillard announced to deploy American Marines on Australian bases next year. Moving to counter China’s regional influence, the defense accord will anchor an American presence in the western Pacific that can help safeguard sea lanes that carry more than $5 trillion of commerce, about $1.2 trillion of it U.S. trade. “The United States is stepping up its commitment to the entire Asia Pacific,” Obama said at a news conference yesterday with Gillard in the Australian capital of Canberra. “This is a region of huge strategic importance to us.”
• Oil Rises Above $100 in New York on Announced Reversal of Seaway Pipeline. Oil in New York climbed above $100 a barrel to a five-month high as Enbridge Inc. said it would reverse the direction of the Seaway pipeline, adding an outlet for crude from the central U.S. and Canada. Futures rose as much as 2.9 percent after Enbridge agreed to acquire ConocoPhillips (COP)’s share of the pipeline that runs between Cushing, Oklahoma, and the Gulf Coast and announced the reversal. The change may alleviate a bottleneck at the Cushing storage hub that had lowered the price of West Texas Intermediate, the grade traded in New York, versus other oils. “In the short term, this will definitely clear some of the crude out of Oklahoma,” said Francisco Blanch, head of commodities research at Bank of America Corp. in New York. “This may not be enough to eliminate the glut in the Midwest because output is growing by hundreds of thousands of barrels a year. We still need additional transportation capacity.” Crude oil for December delivery rose $2.31, or 2.3 percent, to $101.68 a barrel at 12:46 p.m. on the New York Mercantile Exchange. Futures reached $102.29, the highest level since June 9. The contract traded at $99.70 before the Seaway announcement. Brent oil for January settlement dropped $1.02, or 0.9 percent, to $111.16 a barrel on the ICE Futures Europe exchange in London.
• Industrial Production Rises More Than Forecast. Industrial production in the U.S. advanced more than forecast in October, adding to evidence the world’s largest economy is weathering disruptions in financial markets caused by the crisis in Europe. Output at factories, mines and utilities climbed 0.7 percent after a revised 0.1 percent drop in September, figures from the Federal Reserve showed today. Other reports showed the cost of living unexpectedly fell and builder sentiment improved. The cost of living dropped in October for the first time in four months, data from the Labor Department showed. The consumer-price index declined 0.1 percent from the prior month after a 0.3 percent rise in September. The so-called core rate that excludes volatile food and fuel costs rose 0.1 percent, matching September as the smallest gain this year. Over the past 12 months prices climbed 3.5 percent, the smallest year-over-year gain since April. Also today, National Association of Home Builders/Wells Fargo index of builder confidence rose to 20 in November, the highest level since May 2010, the Washington-based group said. Readings lower than 50 mean more respondents said conditions were poor.
• Lacker Says Fed's Credit Policies Have Sparked 'Understandable' Antagonism. Federal Reserve Bank of Richmond President Jeffrey Lacker said the Fed’s current purchases of mortgage bonds and financing of private sector assets during the credit crisis has fueled some of the antagonism aimed today at the central bank. Central bank credit allocation is “bound to be controversial,” Lacker said today in remarks prepared for the Cato Institute’s Annual Monetary Conference. “We need to recognize the extent to which some measure of antagonism is an understandable consequence of the Fed’s own credit policy initiatives.” At the same time, Lacker said he is “concerned about the possibility of upside risks to inflation.” He reiterated his belief that the central bank should set an objective for inflation. Lacker warned in his speech that credit allocation policies can “entangle” the Fed in political conflicts that undermine independence, adding that the executive and legislative branches in times of crisis may try to channel credit to particular constituents.
• Banks Face On-Site Checks by Basel Regulators. Global regulators will carry out on- site inspections of banks to ensure they have enough capital and liquidity under rules drawn up to prevent another financial crisis. Details of lenders that fall short of the required standards will be made public, Stefan Ingves, chairman of the Basel Committee on Banking Supervision, said in prepared remarks for a speech in San Francisco today. National authorities will also face checks to make sure they are enforcing the rules. “The corrosive forces of short memories and supervisory complacency” must be avoided, Ingves said. “The committee has not previously taken its assessments to the doorsteps of banks or supervisors. However this is exactly what it seeks to do.”
• Microsoft(MSFT), Oracle(ORCL) Call to Lower Offshore Tax. Multinational companies including Microsoft Corp. (MSFT) and Oracle Corp. (ORCL) are urging Congress to make passing a measure to allow a tax break on their offshore profits a greater priority than a comprehensive tax-code overhaul. The opportunity to boost the economy by encouraging repatriation of more than $1 trillion in earnings held by U.S. corporations overseas should, in the short run, trump the longer process of revamping the tax code, the WIN America Coalition said in a letter congressional leaders released today.

Wall Street Journal:

• Greek Deficit Could Exceed 9%. Greece's budget deficit could exceed 9% of gross domestic product this year compared with an 8.9% to 9% estimate as the economy is expected to sink deeper into recession, a senior government official said Wednesday. "It will likely be above 9% as the recession this year will be around 6%. First estimates call for a budget deficit of around 9.2%," the official with direct knowledge of the country's finances and planning said. "Tax collection remains the main problem," he said.
• Derivatives Pricing In Extreme Fears About The Euro. Foreign-exchange options are sending out strong signals that investors expect a sharp fall in the euro's value against the dollar over the next month, with a key benchmark fear gauge breaching record highs Wednesday. The so-called one-month risk-reversal indicator--a measure of the weight of negative options bets on the euro against the positive bets--jumped to 4 volatility points, surpassing levels seen at the peak of the financial crisis in 2008, when the indicator was trading just below 3.5 volatility points.

CNBC.com:

• Democrats, Republicans Far Apart on Deficit Deal.
• More Americans Want Health Care Law Repealed: Poll. A Gallup survey of more than 1,000 U.S. adults found that 47 percent favor the repeal of healthcare reform, versus 42 percent who want the law kept in place. Eleven percent had no opinion.
• Forget About Italy and Greece, Spain Next on Agenda. Spain has come to the forefront of the European markets agenda again this week as yields on its debt soared and it prepared for a new government. "In a lot of ways it's more worrisome than Italy," Megan Greene, senior research analyst at Roubini Global Economics, told CNBC.com.

Business Insider:

• Outrage of the Month: Insider Trading In Congress. If you're not appalled by this, you should be.
• Protesters Have Regrouped at Zuccotti, And Are Now Getting Ready For A Massive Response Tomorrow.
• Guess What: Prosecutions For Financial Fraud Have Fallen To New Lows Under Obama. (graph) Someone show this to Occupy Wall street.
• Whoops: Everyone's Starting To Tell The Truth About the Euro Rescue Fund.
• Europe Bans X-Ray Body Scanners Used At U.S. Airports Because They Cause Cancer.
  

Zero Hedge:

• Squids, Morgans & Counterparty Risk: Blowing Up The World One Tentacle At A Time.
• Italy Opts Not To Release Preliminary GDP Data As It Sets Off To Raise $600 Billion In Debt In 2012.
• Whatever You Do, Don't Look At The UniCredit Long Bond. (graph)
• Houston: We Have A Funding Crisis (And A Broken Libor Primer). (graph)
  

Reuters:

• Analysis: EU Risks Reopening Pandora's Box With Treaty Change. If there are two words causing quiet alarm across the European Union right now - beyond the turmoil already convulsing the countries that share the euro - they are "treaty change". They may not carry the same drama as "bond market mayhem", but the very idea of altering the fundamental laws underpinning the European Union so soon after they were agreed runs the risk of shaking the 50-year-old European project to its core and may end up exacerbating the sovereign debt crisis. German Chancellor Angela Merkel has been the most forthright of Europe's leaders in calling for changes to the Lisbon Treaty, arguing that amendments are necessary if there is to be more rapid integration and greater stability in the euro zone. The changes she is seeking include much stricter sanctions on countries that miss budget deficit targets. "It is time for a breakthrough to a new Europe," she said in Berlin last week, emphasizing that the survival of the EU depended on being able to amend its treaty, even though it took eight years to negotiate and came into force only two years ago. "A community that says, regardless of what happens in the rest of the world, that it can never again change its ground rules, that community simply can't survive. I'm convinced of this."
• UniCredit Seeks Wider ECB Funding for Italian Banks - Source. The CEO of Italy's UniCredit will ask the European Central Bank at a meeting on Wednesday to extend access to ECB funding for Italian banks by widening the range of collateral that can be offered to get funds, a source close to UniCredit said. Italian banks have increased their reliance on the ECB for cheaper funding since the summer as Italy was sucked ever depeer into the euro zone debt crisis and its lenders faced sharply higher funding costs.
• Juncker Says German Debt Cause for Concern. Eurogroup head Jean-Claude Juncker was quoted in a German newspaper on Wednesday saying that Germany's debt level is worrying and even higher than Spain's. In an interview to appear in Thursday's General-Anzeiger newspaper in Bonn, Juncker also said it would be a disastrous scenario if Greece were to exit the euro zone. "I consider the level of German debts to be a cause for concern," Juncker said. "Germany has higher debts than Spain," he added. "The only thing is that here (in Germany) no one wants to know about that." Juncker said Greece was on the right path. But if it were to leave the euro zone it would lead to a "disastrous scenario".
• French Debt Hit As Euro Zone Crisis Deepens. French borrowing costs rose on Wednesday and were expected to increase further as the euro zone debt crisis spreads to the core of the currency bloc, while European Central Bank buying of Italian and Spanish debt failed to reassure markets. The premium investors demand to hold French rather than German government bonds rose to a new euro-era high near 2 percent for 10-year debt before easing to 190 basis points, largely tracking Italian and Spanish spreads in volatile trade.

USA Today:

• Facebook Tracks User Web Activity for 90 Days. Facebook uses tracking-cookie technology similar to online advertisers, citing the co.'s engineering director Arturo Bejar. Non-members are also tracked after they visit Facebook's website for any reason.

Market News International:

• EU's Barroso Warns On Tough 2012, Calls For Reforms. The economic problems facing Europe in 2012 are likely to be even more urgent than those of today, the president of the European Commission said Wednesday in a speech before the European Parliament in which he outlined his vision for further economic governance reforms. Citing data from the Commission released last week that showed a heightened risk that Europe could fall into a recession next year, Jose Manuel Barroso said there was "no way out of the current crisis except growth" and urged European governments use "all levers of action without delay." The Commission's autumn economic forecast projected that growth in the euro area would grind to a halt by the end of the year and remain stagnant until 2013. It also warned that "a deep and prolonged recession complemented by continued market turmoil cannot be excluded." As well as adopting prudent fiscal policies and structural reforms, the European Union and its members sharing the euro need to integrate their economic policies more closely and accept greater oversight from Brussels, he said.

Financial Times:

• The euro area's members are pointing in all directions, each believing it's done its fair share to resolve a crisis that seems intractable and endless, said Bill Gross, PIMCO's joint chief investment officer. Gross said it's become clear that debt-driven growth is an unsatisfactory business model when financial markets no longer have an appetite for it. Nations' abilities to derive more than their fair share of growth from a weak global economy has become the defining condition of credit worthiness; in this environment, "dysfunctional euroland" is particularly vulnerable, he said. A permanent credit spread of damaging proportions threatens southern European economies with higher bond-market yields, increasing rather than diminishing debt-to-GDP levels; sovereign creditworthiness becomes questionable and potential default looms larger, pointing to greater likelihood of significant losses, he said.

Telegraph:

• Hedge Funds Bet China Is A Bubble Close To Bursting. The world is looking to China as a springboard out of recession - but some hedge funds are betting the country's credit and growth levels cannot be sustained. The manager, who wanted to remain anonymous, said: “The Chinese delegation has said all week that there will be double-digit growth for years to come and the Brits have lapped it up. But the data doesn’t add up. We think we’ve experienced credit bubbles over the past few years, but China is the biggest. And yet the global economy is looking to China as not just a crutch but a springboard out of the recession. It’s crazy.” He is not alone. Hugh Hendry, a former star of Odey Asset Management, has launched a distressed China fund at Eclectica Asset Management. He follows Mark Hart of Corriente Advisors, the American hedge fund manager who made millions of dollars predicting both the subprime crisis and the European sovereign debt crisis, who started a fund based on the belief that rather than being the “key engine for global growth”, China is an “enormous tail-risk”. There have been academics and analysts who have argued about the dangers of China’s economy overheating for some time. But for many, the fact that hedge funds, particularly those with track records on previous crises, are launching specific funds is the sign that the bubble is close to bursting.
• Sir Mervyn King: ECB is Right Not to Bail Out Eurozone.
• Debt Crisis: Live.
  

Financial Times Deutschland:

• German financial markets regulator BaFin is concerned about the effect a potential default by a European country would have on banks because the secondary effects can no longer be accurately calculated, citing BaFin. The European Banking Authority is planning a survey of the region's lenders to determine which ones hold and sold credit default swaps on sovereign debt, citing Raimund Roeseler, head of banking supervision at BaFin.

Frankfurter Allgemeine Zeitung:

• European Financial Stability Facility Chief Executive Officer Klaus Regling is drawing limited interest in his search for investors to boost the fund's firepower. Euro area finance ministers are unlikely to be presented with guidelines on leveraging the bailout mechanism that they can decide on at a meeting in two weeks, citing European Union diplomats.

Epoch Times:

• Chinese TV Host Says Regime Nearly Bankrupt. China’s economy has a reputation for being strong and prosperous, but according to a well-known Chinese television personality the country’s Gross Domestic Product is going in reverse. Larry Lang, chair professor of Finance at the Chinese University of Hong Kong, said in a lecture that he didn’t think was being recorded that the Chinese regime is in a serious economic crisis—on the brink of bankruptcy. In his memorable formulation: every province in China is Greece. The restrictions Lang placed on the Oct. 22 speech in Shenyang City, in northern China’s Liaoning Province, included no audio or video recording, and no media. He can be heard saying that people should not post his speech online, or “everyone will look bad,” in the audio that is now on Youtube.