Today's Headlines

Bloomberg:

• European Stocks Rise as Euro-Area Leaders Boost Efforts to Contain Crisis. European stocks surged, rebounding from their biggest selloff in two months, amid speculation euro- area policy makers are intensifying their efforts to contain the sovereign-debt crisis. Banks rose after draft guidelines showed Europe’s rescue fund may insure as much as 30 percent of sovereign bonds. The benchmark Stoxx Europe 600 Index jumped 3.8 percent to 229.84 at the close, its biggest increase in two months, as all 19 industry groups advanced more than 2 percent. The Euro Stoxx 50 Index surged 5.2 percent. “European (SXXP) leaders have been pushed into a position that they have to do something,” said Mike Lenhoff, London-based chief strategist at Brewin Dolphin Securities Ltd., which oversees about $39 billion. “We are getting to a point where policy makers are now responding. The message from the market is clear: get your act together or we are going to destroy you.” “There are so many rumors flying around, so many things that are being presented as a done deal, which are simply not even on the table,” said Bill Blain, a strategist a Newedge Group on Bloomberg Television in London. “They leave more questions than they possibly answer. It illustrates the fervid nature of the market that is on a knife edge at the moment.”
  
• Sovereign Credit-Default Swap Index Falls From Record in Europe. The cost of insuring against default on European sovereign debt fell from a record closing price, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments dropped 12 basis points to 373 at 3 p.m. in London. Contracts on Belgium and France fell from record closing prices, while Spain and Germany also decreased. A decline signals improved perceptions of credit quality. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers dropped 28 basis points to 330 and the subordinated gauge tumbled 42 to 573, both down from all-time highs, according to JPMorgan Chase & Co. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings fell 42 basis points to 792.5. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings was down eight at 197.25.
• Euro Region Needs Bigger Backstoop, Rostowski Says. The euro region needs a financial backstop of as much as 3 trillion euros ($4 trillion), Polish Finance Minister Jacek Rostowski told Germany’s Handelsblatt newspaper. A lending capacity of 1 trillion euros for the European Financial Stability Facility isn’t enough to impress investors, he said. A 50 percent reduction of large euro members’ outstanding debt wouldn’t be possible without pushing the countries’ banking systems into insolvency, Rostowski, who chairs meetings of European Union finance ministers, also told the newspaper. Deeper and faster integration of the 17-member euro region must not lead to a division of the 27-member EU, he said.
• IMF Says No Talks Under Way With Italy On Financing Program. The International Monetary Fund said it isn’t discussing a rescue package with Italy and Japan said no such talks have occurred within the Group of Seven, amid concern that Italy will struggle to bring down borrowing costs. The Washington-based lender isn’t in discussions with Italian authorities on a program for IMF financing, a spokesperson for the fund said today in an e-mailed statement. Italy’s La Stampa newspaper reported that the IMF may be preparing a loan of as much as 600 billion euros ($798 billion) to support Italian efforts to restore investor confidence. “The IMF simply does not have the resources” on its own for such aid, Marc Chandler at Brown Brothers Harriman & Co., chief currency strategist at the bank in New York, wrote in a note to clients. It’s also unclear whether the fund would be able to get agreement on leveraging its lending capacity to such a degree, he wrote.
• Banks to Slash Bond Sales By 60% as Costs Soar, SocGen Forecasts. Banks will slash bond sales by 60 percent in Europe next year as the sovereign debt crisis sends issuance costs soaring, Societe Generale SA predicts. Lenders will sell 50 billion euros ($67 billion) of senior notes, down from a euro-era low of 121 billion euros so far this year, according to SocGen. The extra yield that investors demand to hold European bank bonds is the highest since May 5, 2009, while the cost of insuring the debt is near a record. Banks are the biggest holders of plunging euro-region government bonds, and are already finding it hard to sell their own debt. That's forcing them to consider alternative sources of funding such as top-rated covered bonds and even asset sales to help refinance some of the $800 billion of notes that Moody's Corp. estimates will come due next year. "We can expect massively reduced issuance of unsecured bank debt," said Roger Francis, an analyst at Mizuho Securities Co. Ltd. in London. "Most banks have got contingency plans for how to get around this. Banks are saying they can do more private placements and then there's always the covered bond market, which has been open intermittently." Spreads on euro-denominated bank bonds widened to 424 basis points, from 336 on Oct. 31, Bank of America Merrill Lynch's EUR Corporates, Banking index shows. The average yield climbed to 6.08 percent from 4.85 percent.
• OECD Reduces Growth Forecasts, Blames Euro Doubts: Economy. The Organization for Economic Cooperation and Development said growing doubts about the survival of Europe’s monetary union has caused global growth to stall and represents the main risk to the world economy. The 34 OECD nations will grow 1.9 percent this year and 1.6 percent next, down from 2.3 percent and 2.8 percent predicted in May, the Paris-based organization said in its twice-annual global economic outlook released today. In a separate report, Morgan Stanley cut its forecast for 2012 global growth. “Skepticism has grown that euro-area policy makers can deal effectively with the key challenges they face,” OECD Chief Economist Pier Carlo Padoan wrote in the report. Serious downside risks remain, linked to “loss of confidence in sovereign-debt markets and the monetary union itself.” The remarks are the first from a major government body to highlight the possibility of a euro breakup and reflect the shift in the two-year-old crisis from the region’s periphery to its so-called core. Government bond yields for both Germany and France, Europe’s two largest economies, climbed last week as a German bond auction failed to get bids for 35 percent of the 10- year debt on offer.
• Fewer New Home Sales in U.S. Than Forecast. Builders sold fewer new houses in the U.S. than forecast in October, delaying a recovery as the industry heads for the weakest year on record. Sales increased 1.3 percent to a 307,000 annual pace, data from the Commerce Department showed today in Washington. The median estimate of 70 economists surveyed by Bloomberg News projected a 315,000 rate. Demand is on pace to reach 301,000 this year, less than the 323,000 homes sold in 2010 that were the fewest since data-keeping began in 1963.
• Household Debt Falls by .6% in Third Quarter. Household debt in the U.S. declined by 0.6 percent in the third quarter as mortgage balances shrank, according to a survey by the Federal Reserve Bank of New York. Consumer indebtedness fell by $60 billion from the end of June to $11.66 trillion on Sept. 30, according to a quarterly report on household debt and credit released today by the district bank. Mortgage balances declined by about $114 billion, or 1.3 percent.
• iPad-Crazed Toddlers to Spur Holiday Rush.
• Citi(C) Settlement With SEC Rejected by Judge. Citigroup Inc. (C)’s $285 million settlement with the U.S. Securities and Exchange Commission over mortgage-backed securities was rejected by federal judge who said he hadn’t been given enough facts to approve it. U.S. District Judge Jed Rakoff in Manhattan rejected the settlement in an opinion released today and set a trial date. He has criticized the SEC’s practice of letting financial institutions such as New York-based Citigroup settle without admitting or denying liability.
• China's Chen Sees No Europe Progress, Signals Concern at Opening Markets. Chinese Commerce Minister Chen Deming said Europe has yet to take any significant step in tackling the region’s debt crisis and signaled that his nation may resist further opening its markets. “We have yet to see a step towards success,” Chen said at a conference in Beijing today. “We are willing to further reform and further open our market, but other economies must be more open to us in return.”
• Syrian Security Forces Committed Human-Rights Violations, UN Agency Says. Syria’s military and security forces have committed crimes against humanity and “gross violations of human rights” since pro-democracy demonstrations began in mid- March, a United Nations panel said. The UN Human Rights Council’s independent international commission of inquiry said in a report released today in Geneva it is “gravely concerned that crimes against humanity have been committed in different locations” in Syria. The panel said it documented patterns of summary execution, arbitrary arrest, enforced disappearance, torture including sexual violence and violations of children’s rights.
• Icahn Bids for Commercial Metals(CMC) in Deal Worth $1.73 Billion. Billionaire investor Carl Icahn said he plans to acquire Commercial Metals Co. in a deal valuing the steel-scrap recycler at about $1.73 billion and combine it with his existing metals operations. Icahn Enterprises LP, which owns a 10 percent stake in CMC, is offering $15 apiece for the other shares without any financing or due diligence conditions, Icahn said today in a letter to CMC directors. The offer is 31 percent more than the stock's Nov. 25 closing price.
• Senate Democrats Eye 3.25% Millionaire Levy to Extend Cut in Payroll Tax. Democrats in the U.S. Senate are proposing to use a 3.25 percent tax on income over $1 million to pay for extending and expanding a payroll tax cut, said Senate Majority Leader Harry Reid. If Congress doesn’t act, a 2 percentage-point cut in the payroll tax for workers will expire Dec. 31. The Democrats’ proposal would cut the 6.2 percent Social Security portion of the payroll tax in half for workers and would also cut the employer portion in half for most companies.
  

Wall Street Journal:

• Ministers to Reject Pan-Europe Bank Guarantees. European Union finance ministers at their meeting Wednesday are set to reject calls from EU institutions and banking experts for a pan-European system of bank debt guarantees aimed at thawing the region's frozen long-term funding markets. Instead, the ministers are expected to back a plan for national government to provide the guarantees. But EU officials and banking experts doubt this plan will address the core problem: Banks based in the bloc's troubled regions— the euro-zone periphery and Eastern Europe—won't benefit from guarantees from governments that are themselves facing grave funding problems.
• ECB Keeps Bond Buying Restrained. The European Central Bank showed no signs of abandoning its conservative approach to bond purchases in recent days, despite louder calls for it to do more to prop up Europe's shaky debt markets. The central bank purchased €8.6 billion ($11.5 billion) in bonds last week, the largest amount in three weeks but well below what many policy makers believe is necessary to calm markets. The ECB doesn't disclose country details, but the vast majority of the buys are thought to be of Spanish and Italian bonds.
• The United States of EPA. Ms. Jackson's agency takes over automobile design. Here's one good way to consider the vote in 2012: It's about whether to re-elect President Lisa Jackson, the head of the Environmental Protection Agency, which these days runs most the U.S. economy. The EPA heaved its weight against another industry this month, issuing a regulation to sharply increase fuel economy. Under this new rule, America's fleet of passenger cars and light trucks will have to meet an average of 54.5 miles per gallon by 2025, a doubling of today's average of about 27 mpg. By the EPA's estimate the rule will cost $157 billion, meaning the real number is vastly greater.
• Wall Street Pay Hits a Wall. Annual Compensation Could Drop 30% to Lowest Level Since 2008 Crisis.
• Singapore Home Prices May Be Poised to Plunge. If you’ve been waiting for a chance to purchase a property in Singapore, maybe you should wait some more. The city-state’s red-hot residential real estate market could be poised to plummet 20% to 30% over the next three years – at least according to some analysts, who say demand is dampening just as a flood of new flats is hitting the market.
• Could Hedge Funds Come Full Circle and Be Alternative Investments Again? Last week we pointed out some interesting data from a Morgan Stanley note showing how equity hedge funds have completely lost their ability to generate any returns above and beyond the broader market in recent years.

CNBC.com:

• Why Facebook Won't Challenge Google(GOOG) in Search.
• Cyber Monday May Set Record as US Goes on Buying Binge.
  

Business Insider:

• Jon Huntsman Has A Radical Financial Reform Plan That Even Occupy Wall Street Will Love. We have to save capitalism from crony capitalists.
• Secret Bill To Be Voted On Today Would Allow The Military To Sweep Up US Citizens At Home Or Abroad.
• Guess Which State Has The Highest Debt Per Person. (graph) This chart about debt per capita by state is interesting, both due to the high level of debt in California and the low level of debt in Texas, which of course goes along way to describe the fortunes of each state today, with Texas doing considerably doing better.
• Chart of the Day: Guess Which Country Has The Highest Percentage Of Workers Employed By The Government.
  

Zero Hedge:

• No New Shorts In Early November As NYSE Short Interest Drops To 3 Month Low. (graph)
• Egan Jones Downgrades Italy From BB+ to BB, Projects 157% Debt/GDP by 2014.
• Presenting a Full List of the ECB's Non-Monetization Options.
  

Wall Street All-Stars:

• Tiffany's(TIF) Reports Tuesday Before The Bell.

LA Times:

• International Banks Have Aided Mexican Drug Gangs. Despite strict rules, some banks have failed to 'know their customer' or ask about the source of large amounts of cash, allowing billions in dirty money from Mexico to be laundered.

Politico:

• Barney Frank Will Not Seek Reelection in 2012. Massachusetts Rep. Barney Frank, the powerful top Democrat on the House Financial Services Committee, will announce Monday that he is retiring from the seat he has held for more than three decades.
• Reports: U.S. Flags Burn in Pakistan. Tensions between the United States and Pakistan boiled over as angry Pakistani demonstrators burned an effigy of President Barack Obama and set fire to U.S. flags on Sunday in protest of NATO air strikes that killed 24 soldiers. In Karachi, dozens of political activists torched an effigy of Obama, reported Agence France-Presse, while more than 300 activists burnt U.S. and NATO flags in the central city of Multan.
  

Reuters:

• Pakistan PM: No more "business as usual" with U.S. Pakistan's Prime Minister Yusuf Raza Gilani ruled out "business as usual" with the United States on Monday after a NATO attack killed 24 Pakistani soldiers, and the army threatened to curtail cooperation with Washington on Afghanistan drastically. Saturday's incident on Pakistan's border with Afghanistan has complicated U.S. attempts to ease a crisis in relations with Islamabad and stabilize the region before foreign combat troops leave Afghanistan. "Business as usual will not be there," Gilani told CNN when asked if the relationship with the United States would continue. "We have to have something bigger so as to satisfy my nation."
• Euro Split Scenarios Risk Becoming Self-Fulfilling. Mobilising an army takes on such a momentum of its own that a point of no return is eventually reached. So it may be with the euro zone crisis: before long, the slide towards break-up of the single currency might prove impossible to reverse.
• New Year Debt Pile-Up Puts New Pressure on Euro Zone. France and Germany are aiming to lay out plans for deeper euro zone integration by mid-December and have a formal framework in place for achieving it by the end of January, aware that intense financial market pressures will resume early in the new year.

Telegraph:

• Debt Crisis: Live.

Tagesspiegel:

• German Economy Minister Philipp Roesler said he rejects joint euro-area bonds "in whatever form." Roesler, chairman of Chancellor Angela Merkel's Free Democrat coalition partner, said his party won't support any kind of euro bonds or "elite bonds". The minister said the path to currency stability consists of intensified and automatic penalties for states who break debt rules.

El Pais:

• A majority of Spain's regional governments plan to cut annual investment in public works and "freeze" social spending next year. Public works outlays will drop about 14%, or by 1.7 billion euros, citing the 2012 budgets of the 10 administrations that have published them.
  

Les Echos:

• Friedrich von Metzler, partner of family owned German private bank B. Metzler Seel Sohn & Co. KgaA, said the creation of eurobonds would only "aggravate" Europe's sovereign debt crisis in the long term. Refusing eurobonds would also be the best way for France to keep its AAA rating, Metzler said in an interview.

CTV:

• Canada to Pull Out of Kyoto Protocol Next Month. Canada will announce next month that it will formally withdraw from the Kyoto Protocol, CTV News has learned. The Harper government has tentatively planned an announcement for a few days before Christmas, CTV's Roger Smith reported Sunday evening. The developments come as Environment Minister Peter Kent prepares for a climate conference in Durban, South Africa that opens on Monday, with delegates from 190 countries seeking a new international agreement for cutting emissions. Issues on the agenda include extending the Kyoto emission targets, a move being championed by Christiana Figueres, head of the UN climate secretariat. "Canada goes to Durban with a number of countries sharing the same objective, and that is to put Kyoto behind us," Kent said.

Caixin:

• China doesn't need to rescue the world and has no power to do so, Wu Xiaoling, a lawmaker and former central bank deputy governor said.

ynet news:

• Cairo Rally: One Day We'll Kill All The Jews. Muslim Brotherhood holds venomous anti-Israel rally in Cairo mosque Friday; Islamic activists chant: Tel Aviv, judgment day has come. A Muslim Brotherhood rally in Cairo's most prominent mosque Friday turned into a venomous anti-Israel protest, with attendants vowing to "one day kill all Jews." Some 5,000 people joined the rally, called to promote the "battle against Jerusalem's Judaization." The event coincided with the anniversary of the United Nations' partition plan in 1947, which called for the establishment of a Jewish state.