Thursday Watch

Evening Headlines 
Bloomberg:

• Rutte Sees Possible Extra Steps to Keep Greece on Track. Dutch Prime Minister Mark Rutte said Greece may need more financial help to stay in the euro, retreating from a hard line that included a willingness to consider the country’s exit from the currency bloc. Echoing his German allies, Rutte declined to speculate on Greece leaving the 17-nation euro. “Wolfgang Schaeuble, the German finance minister, is entirely right that you have to take a view on the situation of Greece every couple of years again, whether we are on track and whether extra steps have to be taken,” Rutte said in an interview yesterday in The Hague. Rutte said he opposed granting concessions to Ireland and Portugal that euro-area finance ministers this week agreed to give the government in Athens to keep it solvent. He declined to comment on a potential aid request by Spain and ruled out writing off European taxpayers’ loans to Greece. “I absolutely believe that investors understand that Greece is a particularly difficult case,” said Rutte, who spoke in English. “I understand Ireland and Portugal are looking with keen interest at the Greek package and what that might mean for their countries.” 
• Japan’s Retail Sales Fall in October as Car, TV Sales Fall. Japan’s retail sales fell in October by the most in 11 months as consumers purchased fewer cars and televisions, adding pressure on the government to stimulate an economy that may be entering a recession. Sales fell 1.2 percent from a year earlier, the Trade Ministry said in Tokyo today, after a 0.4 percent advance in September. The median estimate of 10 economists surveyed by Bloomberg News was for a 0.8 percent decline.
• Korea Manufacturer Confidence Falls to Lowest in 3 Years. South Korean manufacturers’ confidence fell to the lowest level in more than three years as gains in the won threaten to slow a rebound in exports and the country prepares to vote for a new president next month. An index measuring expectations for December fell to 67 from 70 for November, the lowest since April 2009, the Bank of Korea said in a statement in Seoul today. A reading below 100 indicates that pessimists outnumber optimists.
• CFTC Said to Give Swaps Dealers 3-Month Clearing Time Delay. The Commodity Futures Trading Commission granted JPMorgan Chase & Co., Barclays Plc and six other lenders a three-month delay to meet swaps-clearing rules, according to a person with knowledge of the decision.
• Unaffordable Cost Seen for Some Under Affordable Care Act. To Megan Hildebrandt, President Barack Obama’s Affordable Care Act means she can no longer be denied health insurance because of her lymphatic cancer. There’s a big catch: Coverage for the 28-year-old artist and many other Americans without insurance will come at a potentially unaffordable cost.
• Rio Tinto(RIO) Targets $5 Billion Spending Cuts, Production Boost. Rio Tinto Group, the world’s second- largest mining company, said it’s targeting savings of $5 billion by the end of 2014, while simultaneously boosting production at its iron ore, copper and alumina units. “We are taking further tough action to roll back the unsustainable cost increases of the past few years,” Tom Albanese, chief executive officer of the London-based company, said today in a statement. “Our two most challenged businesses are aluminum and coal, and in particular Australian coal,” he later told reporters in Sydney.
• China, EU Comments Show Reduced Scope of UN Climate Talks. China teamed with the European Union and envoys from the bloc of 48 Least Developed Countries to dial back expectations for United Nations climate talks, indicating that there probably aren’t any new promises for aid or cuts in greenhouse gases on the horizon. China ruled out the idea of capping growth in fossil-fuel emissions from developing nations before 2020, while EU Climate Commissioner Connie Hedegaard said she can’t provide specific details about how the bloc’s 27 countries plan to meet meet commitments for boosting aid to poorer nations.

Wall Street Journal:

• Fiscal Cliff: Live Stream.
• Palestinian Vote in U.N. Seen Buoying Fatah. The United Nations General Assembly is expected to recognize the Palestinian territories as a nonmember state in a vote Thursday, giving President Mahmoud Abbas and his Fatah party a rare diplomatic victory after being sidelined by the recent conflict in the Gaza Strip.
• For Small Firms, Election Results Dampen Optimism. The results of the presidential election dampened the spirits of many small-business owners who now worry that forthcoming federal policies, including potentially higher taxes and health-care reform, could stunt growth and hiring at their firms. A November survey from Vistage International Inc. and The Wall Street Journal found a significant drop in optimism compared with the months leading up to the election, as respondents anticipated a worsening economy in 2013. The survey's overall confidence index, based on responses of 740 small-business owners, fell to 83.9 from 95.3 in October. That is the lowest in the survey's six-month history. Specifically, the survey's index of expected economic conditions fell to 77 from 105, a result of 43% of the respondents anticipating worse U.S. conditions in the next 12 months. That is nearly twice as many as October's 23%. The index of business profits also fell to 122 from 135 as only 43% of owners anticipate higher profits in the coming year, down from 50% last month.
• Heart Gadgets Test Privacy-Law Limits. The small box inside Amanda Hubbard's chest beams all kinds of data about her faulty heart to the company that makes her defibrillator implant. Ms. Hubbard herself, however, can't easily get that information unless she requests summaries from her doctor—whom she rarely sees since losing her insurance. In short, the data gathered by the Medtronic Inc. implant isn't readily accessible to the person whose heartbeat it tracks. "This is my health information," said Ms. Hubbard, 36 years old. "They are collecting it from my chest."
• Henninger: The Racializing of American Politics. Even the exit polls now force people to put themselves in a racial category.

Fox News: 

• Debt ceiling looms, as bill for Sandy mounts. While lawmakers scramble to avoid a catastrophic budget meltdown known as the "fiscal cliff," the nation also is fast approaching its borrowing limit -- and expenses like the nearly $100 billion tab for superstorm Sandy damage are only pushing the nation further into a rising sea of red ink.

CNBC: 

• Herbert Hoover Obama? Obama never mentioned spending cuts. Never. Not once. Yet Boehner has argued that the Republican revenue concession depends on some entitlement cuts as well as other spending reductions that would make up the trillion dollars or so in the across-the-board sequestration plan that appears to have been junked by both parties. Republicans should not sign a tax deal that doesn’t have a sizeable spending component.

Zero Hedge: 

• Europe's Good, Bad, And Ugly Charts.
• The Top Ten 'Fiscal Cliff' To-Do List. The debate over deductions underscores many of our themes around the cliff: A long and painful negotiation. A multi-step deal into the Spring is much more likely than a quick fix. Fade the various press fakes around alleged done deals. Don’t be surprised if deals fall apart once the details are vetted. 
• 4 Fun Facts On 2012/2013 Earnings.

Business Insider:

• What's Really Driving The Housing Recovery?
• This Burger-Making Robot Could Revolutionize The Fast Food Industry.
  

NY Times: 

• Medicare Is Faulted on Shift to Electronic Records. The conversion to electronic medical records — a critical piece of the Obama administration’s plan for health care reform — is “vulnerable” to fraud and abuse because of the failure of Medicare officials to develop appropriate safeguards, according to a sharply critical report to be issued Thursday by federal investigators.

Reuters: 

• Moody's cuts Detroit debt ratings deeper into junk. Moody's Investors Service lowered Detroit's debt ratings deeper into junk territory on Wednesday and warned there was a higher risk the cash-strapped city could default on bonds or file for bankruptcy. The credit rating agency, which placed Detroit on review for possible downgrades in June, assigned a negative outlook to the lowered ratings, citing "the rising possibility that the city could file for bankruptcy or default on an obligation over the next 12 to 24 months."
• Wells Fargo(WFC) says it won't face SEC action on mortgages. U.S. securities regulators have dropped an inquiry into Wells Fargo & Co mortgage securities offerings, the bank said in a securities filing on Wednesday. 
• American Eagle(AEO) sees strong holidays, Aeropostale(ARO) wary. Teen clothing retailer American Eagle Outfitters Inc said it got off to a strong start fo the holiday selling season and raised its earnings forecast for the year, while Aeropostale Inc's forecast showed it expects a tougher season than its rival.

Financial Times:

• Dismal year for quantitative hedge funds. BlueTrend, the $11bn Geneva-based fund run by Leda Braga, dropped 5.3 per cent in October, bringing year-to-date losses to 3.1 per cent, an investor in the fund said. Winton Capital, the world’s largest quant fund, with $26bn under management, has seen its flagship futures fund drop 5.65 per cent in the year to November 27. Aspect Capital, another large London-based quant fund, is down 11.7 per cent in the year to November 21. AHL, the $16bn flagship fund of the Man Group has fared better, though is still on course to lose money – the fund was down 2.8 per cent as of November 19.

Sueddeutsche Zeitung:

• Banks to contribute to Greek financial rescue less than previously believed. Central banks set to transfer revenue of about EU10b from Greek government bonds they hold minus costs of EU1b-EU2b. May result in additional costs to Germany Finance Ministry budget of as much as EU500m. Euro-zone central banks bought Greek bonds with nominal value of EU50b. Euro-zone finance ministers pledged the full EU10b in revenue to Greece, but now need to make up the different from national budgets. German Finance Minister Schaeuble had promised about EU2.7b over several years, but may get only EU2.2b from Bundesbank.

CTVNews: 

• Canada to oppose Palestinian statehood bid at UN. Prime Minister Stephen Harper said Canada will vote against the bid of the Palestinian Authority to raise its status at the United Nations. While Harper said he favours a two-state solution in the Middle East, his government wants to see Israel and the Palestine Authority return to the bargaining table before supporting Palestine’s statehood.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are +.25% to +1.0% on average.
• Asia Ex-Japan Investment Grade CDS Index 112.0 -1.0 basis point.
• Asia Pacific Sovereign CDS Index 83.75 +.5 basis point.
• FTSE-100 futures +.53%.
• S&P 500 futures +.36%.
• NASDAQ 100 futures +.45%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (KR)/.42 
• (TIF)/.63
• (CBRL)/1.06
• (BKS)/-.04
• (OVTI)/.31
• (ULTA)/.56
• (JCG)/.74 

Economic Releases
8:30 am EST 

• 3Q GDP is estimated to rise +2.8% versus a prior estimate of a +2.0% gain.
• 3Q Personal Consumption is estimated to rise +1.9% versus a prior estimate of a +2.0% gain.
• 3Q GDP Price Index is estimated to rise +2.8% versus a prior estimate of a +2.8% gain.
• 3Q Core PCE is estimated to rise +1.3% versus a prior estimate of a +1.3% gain.
• Initial Jobless Claims are estimated to fall to 390K versus 410K the prior week.
• Continuing Claims are estimated to fall to 3325K versus 3337K prior.

10:00 am EST

• Pending Home Sales for October are estimated to rise +1.0% versus a +.3% gain in September.

 11:00 am EST

• The Kansas City Fed Manufacturing Activity Index for November is estimated to rise to -1.0 versus -4.0 in October.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Fisher speaking, Germany unemployment rate, Italy 10Y auction, 7Y T-Note auction, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index and the (CPLA) investor day could also impact trading today.

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