Monday Watch

Weekend Headlines 
Bloomberg: 

• Catalan Pro-Independence Parties Win Regional Vote. Pro-independence parties in Catalonia won a regional vote, strengthening a drive for a referendum on secession in defiance of Spanish Prime Minister Mariano Rajoy. Catalan President Artur Mas, who called early elections to force the debate on independence, won 50 of the 135 seats in the regional assembly for his Convergencia i Unio party, down from 62, with 99 percent of the vote counted. The separatist Catalan Republican Left, known as the ERC, more than doubled its seats to 21 from 10. Two smaller parties that also back a plebiscite secured 16 seats. Rajoy, weakened by recession and speculation that Spain needs a European bailout, says a referendum on secession is unconstitutional. Mas’s losses showed his bid for a mandate backfired, leaving him dependent on anti-austerity separatists to govern Spain’s largest regional economy.
• Euro Ministers Take Third Swing at Clearing Greek Payment. Euro-area finance ministers try for the third time this month to clear an aid payment to Greece and forge a blueprint to keep the country a solvent member of the currency bloc. Finance chiefs from the 17-member single currency return to Brussels today, less than a week after an all-night meeting failed to yield agreement and days after a European Union summit broke up without a proposed seven-year budget. At stake at the euro meeting is the continuation of a three-year mission to return Greece to financial health. 
• France Lags Euro-Area Economy Overhaul Effort, Study Says. France is lagging efforts by other euro-area countries to overhaul their economies, work that may check the region’s debt crisis, according to a study. “France remains the only major European economy which is beset by serious health problems and has yet to do anything about it,” say the Hamburg-based Berenberg Bank and the Lisbon Council, a research institute in Brussels.
• Italy’s Bersani Wins Primary Round in Bid to Succeed Monti. Democratic Party head Pier Luigi Bersani, whose party leads in opinion polls, won the first round of a primary in his bid to succeed Italian Prime Minister Mario Monti in elections next year. Bersani won 44.6 percent, compared to 36.6 percent for Florence Mayor Matteo Renzi, the closest of the four candidates who were vying to lead a coalition of center-left parties in elections due by May, with about 40 percent of votes counted. As Bersani, 61, failed to win more than half of the vote, he will face Renzi in a second round on Dec. 2.
• Retailers’ Thanksgiving Deals Cut Black Friday Spending. Thanksgiving Day openings and midnight deals at retailers from Target Corp. (TGT) to Wal-Mart Stores Inc. (WMT) drew U.S. shoppers out earlier than ever, trimming spending on Black Friday. Sales on the day after the Thanksgiving holiday in the U.S. fell 1.8 percent from last year to $11.2 billion, according to a report today from ShopperTrak, a Chicago-based researcher. That compares with a 6.6 percent gain in Black Friday sales in 2011. Foot traffic this year rose 3.5 percent 307.7 million store visits, ShopperTrak said.
• China Wage Gains Hurt by Weaker Profit Damp Consumption. China’s wage gains have moderated on weaker corporate profits, capping consumer demand as the government seeks to sustain a rebound after a seven-quarter economic slowdown.
• Most China Stocks Fall Before Industrial Data; JiuGuiJiu Drops. Most Chinese stocks declined, with the benchmark index approaching the 2,000 level, before the release of industrial profits data tomorrow. Liquor maker JiuGuiJiu Co. (000799) plunged by the 10 percent daily limit for a second straight day after its products were found to have excessive levels of plasticizer. Hebei Iron & Steel Co. gained among steelmakers after Xinhua News Agency said the industry may perform better this quarter. “The 2,000 level is a psychological important gateway for investors,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “Once it’s approached, some money will buy on dips on expectations about possible government support. But there’s no big room for the index to go up either as there’s a lack of positive macroeconomic news.”
• India Pledges to Lower Deficit, Cap Debt Amid Slowing Growth. Indian officials pledged to cut the widest budget deficit among the world’s largest emerging markets and curb public debt, as a report this week may show the economy grew at close to the slowest pace in three years.
• Japan Puts Reach 7-Year Low on Election Speculation: Options. The cost of options to protect against losses in a fund tracking Japanese shares slipped to the lowest in almost 7 years on speculation a new government will enact stimulus and weaken the yen. Puts protecting against a 10% drop in the iShares MSCI Japan Index ETF cost 1.08 times more than calls betting on a 10% advance, according to data on three-month options compiles by Bloomberg. The price relationship known as skew plunged to .99 on Nov. 16, the lowest since Jan. 18, 2006.
• Pemex Finds Oil in Area That Could Hold 1 Billion Barrels. Petroleos Mexicanos, the world’s fourth-largest oil producer, is expanding drilling after discovering a crude deposit in Tabasco state, estimating the area could hold as much as 1 billion barrels of reserves. The light-crude deposit announced today in the Navegante I well may have as much as 500 million barrels, said a press official who asked not to be named because of company policy. The deposit has a depth of 6 kilometers (3.7 miles), the official said in a phone interview. The well is Mexico’s most important solid-ground discovery in the past decade, President Felipe Calderon said today in a speech in Veracruz state. It’s the company’s third major discovery announced in the past three months, following two deep-water deposits in the Gulf of Mexico.
• SAC Fund Manager Faces Choice of Trial or Deal.

Wall Street Journal: 

• Geithner to Play Key Negotiator Role in 'Fiscal Cliff' Talks.
• European Debt Crisis: Live Stream.
• New 'Friends and Family' Plan: Cut Them Out. "Friends and family" stock-buying programs, a signature feature of the late '90s Internet boom, enable companies pursuing initial public offerings to let their employees, customers and others buy shares before their potential rise in the broader market.
• Deadline Looms for Long-Term Unemployed. Benefits for More Than 2 Million Could Expire at Year-End. 
• 'Fear' Gauge Showing Little of It. Barometers of Anxiety Could Rise as 'Cliff' Nears, Some Investors Say; 'Complacency Running Pretty High'.
• Risks Are Mounting in Canada.
• The U.N.'s Internet Sneak Attack. Letting the Internet be rewired by bureaucrats would be like handing a Stradivarius to a gorilla. Who runs the Internet? For now, the answer remains no one, or at least no government, which explains the Web's success as a new technology. But as of next week, unless the U.S. gets serious, the answer could be the United Nations.

CNBC:  

• European Union Confronts the Risk of a 'Brixit'. Crucial talks on the future of the European Union ended in stalemate Friday prolonging a dispute over a $1.25 trillion spending plan that's poisoning Britain's relations with its continental neighbors.

Zero Hedge: 

• Fiscal Cliff Update: 'Little Progress Toward A Compromise In Past Ten Days".
• The Four Debt Ceiling Possibilities For 2013.
• What A Difference A Year Makes. (graphs) Real speculative positioning is at multi-year record high longs.
• Will LGIVs Be The 'Straw' To Break China's Credit-Fueled Growth 'Back'?
• The Greek Debt Buyback 'Boondoggle' - Questions Answered.
• Chart Of The Day: LEI - Leading-To-Lagging Ratio. (graph)
• Russia Sends Warships To Gaza Coast.

Business Insider:

• Both Benghazi And The Petraeus Scandal Suggest US Media Is Way Too Cozy With The State. 
• Congress Is Thinking About A Sneaky New Scheme To Raise Taxes — And The Upper Middle Class Could Get Seriously Hosed. 
• FABER: 44 Worrisome Global Economic Charts.
• 2 Brilliant Investors Worried About World Growth. (charts)
• There's Part Of The Fiscal Cliff That Hits Workers Directly — And Almost Nobody Is Talking About Fixing It.
• The Hong Kong Housing Bubble Has Gotten So Bad, The Birthrate Is Collapsing.

IBD:

• ResMed(RMD) Moves Up On Home Sleep Tests For Sleep Apnea.

Wall Street All-Stars: 

• Indicator Update: Trying to find a signal out of all of the noise.

LA Times:

• Solar power plants burden the counties that host them. Eager for jobs and tax money, Mojave Desert counties welcomed big solar projects. But they may have been too optimistic. And expanding emergency services and infrastructure isn't cheap.

Forbes:

• Apple(AAPL): UBS Pounds The Table; Cites Valuation, Technicals. In a research note dated Monday, UBS analyst Steve Milunovich affirmed his Buy rating and $780 price target on Apple shares, asserting that a combination of valuation, earnings momentum and technical factors “suggest that it is a good time to be building positions into the new year.”

Reuters:

• Black Friday sales online top $1 billion for 1st time: comScore. Black Friday retail sales online this year topped $1 billion for the first time ever as more consumers used the Internet do their early holiday shopping, comScore Inc said on Sunday. Online sales jumped 26 percent on Black Friday to $1.04 billion from sales of $816 million on the corresponding day last year, according to comScore data.
• Egypt stocks plunge after Mursi power grab. Egypt's stock market plunged on Sunday in its first day open since Islamist President Mohamed Mursi seizure of new powers set off street violence and a political crisis, unravelling efforts to restore stability after last year's revolution. More than 500 people have been injured in protests since Friday, when Egyptians awoke to news that Mursi had issued a decree widening his powers and shielding them from judicial review. Mursi's Muslim Brotherhood supporters were expected to turn out again on the streets in a show of support after prayers on Sunday afternoon. His supporters and opponents are both planning massive demonstrations on Tuesday that many fear will lead to more violence. Sunday's stock market fall of nearly 10 percent - halted only by automatic curbs - was the worst since the uprising that toppled Hosni Mubarak in Feb 2011. Images of protesters clashing with riot police and tear gas wafting through Cairo's Tahrir Square were an unsettling reminder of that revolution. "We are back to square one, politically, socially," said Mohamed Radwan of Pharos Securities, an Egyptian brokerage firm. Judges announced on Saturday they would go on strike. Liberal politician Mohammed ElBaradei called Mursi a "dictator".
• Hezbollah says could hit all of Israel in future war. Hezbollah leader Sayyed Hassan Nasrallah warned Israel on Sunday that thousands of rockets would rain down on Tel Aviv and cities across the Jewish state if it attacked Lebanon. Speaking four days after the ceasefire which ended a week of conflict between Israel and the Islamist Hamas rulers of Gaza, Nasrallah said Hezbollah's response to any attack would dwarf the rocket fire launched from Palestinian territories. "Israel, which was shaken by a handful of Fajr-5 rockets during eight days - how would it cope with thousands of rockets which would fall on Tel Aviv and other (cities) ... if it attacked Lebanon?" Nasrallah said.

Financial Times: 

• Republicans bargain hard over fiscal cliff. Republicans in Congress are demanding structural changes to popular government pension and healthcare schemes, including higher eligibility ages, in any deal to avert the fiscal cliff. 
• Banks face more regulation over scandals. Several high-profile scandals for banks, ranging from JPMorgan 's hefty trading loss to UBS 's rogue trader, have sparked a new regulatory drive to force lenders to spend more time and probably hold more capital guarding against such operational risks. The Financial Stability Board, the global banking regulator, and the Basel Committee on Banking Supervision, which sets global capital rules, have recently announced plans to tackle the issue next year as part of efforts to make the world's biggest banks safer.

Bild am Sonntag:

• Peer Steinbrueck, Social Democratic Party challenger to Chancellor Angela Merkel, said Germany may have to cover billions of euros in Greek debt payments, citing an interview. Greece won't return to the capital markets for 8 years, he said. Germany must help Greece with financing until it returns to capital markets, Steinbrueck said.

Wirtschafts Woche:

• The German government wants European banks to conduct "health checks" before a banking union begins, German Deputy Finance Minister Hartmut Koschyk said in an interview.
• Merkel Adviser Says End of Euro Is a 'Conceivable Option'. Peter Bofinger, member of the economic panel advising Merkel, said euro survival requires fundamental strategy change including temporary joint debt financing until growth returns, citing an interview. Bofinger said plan to reduce deficit by about 1 ppt will increase unemployment in Europe, undermine competitiveness and worsen situation for banks. 

Sueddeutsche Zeitung:

• The German Finance Ministry is preparing a law to require big German banks to draft "living wills" to help them react to severe financial losses, citing internal ministry documents. The law would affect about 10 banks including Deutche Bank, Commerzbank, DZ Bank and some Landesbanks. Government ministers will approve the proposal as early as December. "Living wills" will allow banks to wind down or restructure without a cost to taxpayers.

El Pais:

• EU to Demand 8,000 Job Cuts at Spanish Banks. European Union to demand Bankia, Novagalicia cut 8,000 jobs, shutter 1,000 branches, as condition of bailout loans, citing an EU document. The EU may demand another 1,000 job cuts at CatalunyaCaixa.

China Daily: 

• Japan's Abe Has 'Dangerous' Policies, China Daily Editorial Says. Shinzo Abe, head of the Liberal Democratic Party, has pledged to be tough on Japan's Asian neighbors to maintain his popularity with his party's base and other voters, setting a "dangerous manifesto," the editorial said. Abe's strategy, which may win him votes, will also isolate Japan in the region, the newspaper said.

Caixin:

• Inflation prevention is the most important task for the Chinese central bank and accounts for the biggest weight in monetary policies, Zhou wrote.

Al Arabiya: 

• Meet Egyptian President Mohammed Mursi ... aka ‘Morsillini'. You can call him “Morsillini,” if you concur with what Twitter users are nicknaming the Egyptian president following a recent power-consuming decree announced by the leader. A portmanteau of Mursi and Mussolini, the new tag is just one example of how Mursi’s decree on Thursday drew fire from international commentators. With the “revolutionary aim,” he claimed, of sacking the state prosecutor and demanding a retrial of officials involved in the 2011 protester killings, Mursi awarded himself powers that inflamed a standoff with the country's judiciary.

Weekend Recommendations

Barron's:

• Made positive comments on (PHH), (APA) and (ESRX).
• Made negative comments on (CZR).

Night Trading

• Asian indices are -.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 116.0 +.5 basis point.
• Asia Pacific Sovereign CDS Index 84.75 -.25 basis point.
• FTSE-100 futures -.13%.
• S&P 500 futures -.30%.
• NASDAQ 100 futures -.27%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (HI)/.44

Economic Releases
10:30 am EST

• Dallas Fed Manufacturing Activity for November is estimated to rise to 2.0 versus 1.8 in October.

Upcoming Splits

• None of note

Other Potential Market Movers

• The EuroGroup Meeting, BoJ Minutes, CSFB Tech Conference and the Chicago Fed National Activity Index for October could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and automaker shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the week.