Today's Headlines

Bloomberg:

• Merkel Shuns ECB Role in Favor of Budget Limits. German Chancellor Angela Merkel is set to snub investor pleas to back an expanded European Central Bank role in solving the debt crisis, as she pushes her demand for tighter economic ties in Europe as the only way forward. In the days before a speech to German lawmakers tomorrow outlining her stance for a Dec. 9 European summit, Merkel has repeated her push to rework European Union rules to lock in budget monitoring and enforcement and seal off the ECB from political pressure. That risks a showdown with fellow EU leaders and extends her conflict with financial markets looking for immediate measures to end the contagion. “The market is questioning Merkel’s tough approach,” Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc in London, said by phone today. Investors want “clarity on what the framework will look like and what the financial bridge will look like” to fund euro-area governments and banks that need aid while fiscal ties are negotiated. Merkel’s refusal to deploy the ECB is a rebuff to President Barack Obama after he exhorted Europe’s leaders to take more action to combat the crisis. The chancellor is loath to agree to follow the Federal Reserve and the Bank of England in policies she views as akin to fighting debt with more debt. Enlisting the ECB in battling the crisis would violate the central bank’s independence and set it on a course of action that might not work, destroying its credibility.
• Sovereign Bond Risk Falls in Europe as Spain, France Sell Debt. The cost of insuring against default on European sovereign debt fell for a third day after Spain and France sold 8.1 billion euros ($10.9 billion) of bonds. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments dropped seven basis points to 361 at 1:30 p.m. in London. Contracts on Spain decreased 26 basis points to 381 and France declined 10 to 190, according to CMA. Swaps on Belgium tumbled 13 basis points to 292, Germany was 2.5 lower at 95.5 and Ireland fell 27 to 691, while Italy was 21 lower at 459 and Portugal was down 34 at 1,032. An increase signals deterioration in perceptions of credit quality; a decline, the opposite. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers declined 12.5 basis points to 285.5 and the subordinated gauge was 20 lower at 507. The benchmarks are down for a fourth day after falling yesterday by the most in five weeks. The cost of insuring corporate debt fell for a sixth day. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings dropped 14 basis points to 741.5, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell 6.25 basis points to 178.25.
• ISM Index of U.S. Manufacturing Increases. U.S. manufacturing expanded in November at the fastest pace in five months, buttressing other reports this week that signal the economy is picking up as 2011 comes to an end. The Institute for Supply Management’s factory index increased to 52.7 last month from 50.8 in October, the Tempe, Arizona-based group said today.
• Bullard: Fed Shouldn't Rush to Ease. James Bullard, president of the Federal Reserve Bank of St. Louis, said recent economic reports point to stronger economic growth, and policy makers shouldn’t rush to ease further. “The data have come in stronger than expected, so I think the logical thing now is to wait and see,” Bullard said in an interview in New York today at the Bloomberg Hedge Fund Conference hosted by Bloomberg Link. “See if we continue to get a good read on the holiday season and start out the New Year stronger or weaker, and also assess the situation in Europe and see how that feeds back to the United States.”
• GM, Chrysler, Nissan Signal Best Month of 2011. General Motors Co. (GM), Chrysler Group LLC and Nissan Motor Co. said deliveries in the U.S. last month climbed as the industry heads for its best sales pace this year. GM deliveries rose 6.9 percent to 180,402 cars and light trucks, the Detroit-based automaker said today in a statement. Chrysler sales increased 45 percent to 107,172 and Nissan deliveries gained 19 percent to 85,182.
• U.S. Jobless Claims Unexpectedly Rise. More Americans than forecast filed applications for unemployment benefits during the holiday- shortened week, signaling limited recovery in the labor market. Jobless claims climbed by 6,000 to 402,000 in the week ended Nov. 26 that included the Thanksgiving holiday, Labor Department figures showed today in Washington. Today’s data showed the four-week moving average, a less volatile measure than the weekly figures, rose to 395,750 last week from 395,250, which was a seven-month low. The unemployment rate among people eligible for benefits increased to 3 percent from 2.9 percent in the prior week, today’s report showed.
• JPMorgan(JPM), BofA(BAC) Sued by Massachusetts Over Foreclosures. JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. were among five banks sued by Massachusetts for “unlawful and deceptive conduct” in foreclosures, according to the state's attorney general.
• Oil Drops in N.Y. as U.S. Jobless Claims Gain, Chinese Industry Slows. Oil fell after more Americans filed applications for jobless benefits and as European and Chinese manufacturing weakened. Crude for January delivery declined 94 cents, or 0.9 percent, to $99.42 a barrel at 12:28 p.m. on the New York Mercantile Exchange. The contract increased to $101.17 and dropped to $98.87 today. Futures climbed 7.7 percent in November and are up 8.8 percent this year. Brent oil for January settlement fell $1.80, or 1.6 percent, to $108.72 a barrel on the London-based ICE Futures Europe exchange.

Wall Street Journal:

• Draghi Opens Door to Bigger ECB Crisis Role. European Central Bank President Mario Draghi opened the door to an escalation in the central bank's efforts to battle the debt crisis, hinting that the bank would be willing, under certain conditions, to expand the scope of its bond-purchase program. Mr. Draghi stopped short of promising unlimited support for euro-zone bond markets, as a number of European policy makers have recently demanded, but his comments nevertheless signal that the ECB is willing to do more.
• Google(GOOG), Retailers in Talks on Fast-Delivery Service. In a potential strike against Amazon.com Inc.(AMZN), Google Inc. is in talks with major retailers and shippers to create a service that lets consumers shop for goods on the Web and receive orders within a day for a low fee, according to people familiar with the matter.

CNBC.com:

• Retail Sales Mixed, Black Friday Made All The Difference.

Business Insider:

• Suddenly, Europe's Gameplan To Save Itself Is Becoming Very Clear.

Zero Hedge:

• The Fed's European "Rescue": Another Back-Door Bank/Goldman(GS) Bailout?

LA Times:

• California to Propose Tax on High-Income Earners. In the latest proposed fix for California’s fiscal crisis, Gov. Jerry Brown is expected to announce a multibillion-dollar tax initiative in the coming days, asking voters to raise levies on upper-income earners and increase the state’s sales tax by half a cent.

Seeking Alpha:

• 20 S&P 500 Stocks With The Highest Hedge Fund Buying.

The Detroit News:

• GM(GM), Ford(F) Warn Rail Strike Could Cripple Auto Industry. Automakers are growing increasingly concerned that a rail strike next month could cripple auto production and prevent thousands of cars from getting to dealers. General Motors Co. and Ford Motor Co. both sent letters to congressional leaders on Wednesday, warning that a work stoppage by three railroad unions "would cripple our nation's freight rail system."

Reuters:

• Maxim(MXIM) Says End of Chip Correction Is Unclear. Short lead times from manufacturing customers are making it tough to predict end demand for microchips and hard to say whether an inventory correction is bottoming out, the chief executive of Maxim Integrated Products said. Struggling economies in the United States and Europe have crimped demand for electronics and in recent months pushed many manufacturers to reduce high inventories of chips and other components.
• Germany to Propose Special Funds for High EU Debt. Germany will propose setting up special national funds for euro zone sovereign debt that is over 60 percent of gross domestic product to help build market confidence, the country's finance minister said on Thursday. Wolfgang Schaeuble told reporters that Germany would make the proposal at a European Union summit next week. The funds should be supported by public revenues and dismantled within 20 years, he said. The proposal looks similar to an idea touted by the government's independent "wise men" advisors on Nov 9, only their idea was to set up a European Redemption Pact with common liability. It was rejected by Chancellor Angela Merkel who saw it creating constitutional problems. But Schaeuble's funds would be national, which would get around German concerns about the "communitarization" of debt between European states.

Financial Times:

• Moral Hazard Will Result From ECB Bond Buying by Otmar Issing.
• Eurozone Crisis: Live Blog.
  

Financial Times Deutschland:

• The European Union wants creditors and shareholders of European banks to take bigger losses in the even that a financial institution is restructured or wound up.