Bloomberg:
- France Loses Top Rating at Moody’s in Blow to Hollande. France lost its top credit rating at Moody’s Investors Service, which also maintained a negative outlook for Europe’s second-largest economy, citing what it called a worsening growth outlook. France was cut to Aa1 from Aaa, the rating company said yesterday. The Moody’s downgrade follows one by Standard & Poor’s in January and increases pressure on President Francois Hollande to find ways to bolster growth. “France’s fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short term due to subdued domestic and external demand” and “structural rigidities” in the longer term, Moody’s said in a statement in Frankfurt. Since taking office in May, Hollande has pressed Germany to do more to end the European debt crisis, while focusing on tax increases at home to pare France’s budget shortfall. With an economy that has failed to grow in three quarters and unemployment at a 13-year high, Hollande needs to act quickly to address France’s lack of competitiveness by improving labor-market flexibility and lowering wage costs, economists say.
- Europe Leaders Face Greek Aid Gap in Brinkmanship With IMF. European finance ministers will try to plug a 15 billion-euro ($19 billion) hole in Greece’s finances and win over the International Monetary Fund in the latest installment of three years of debt-crisis brinkmanship. Recycling European Central Bank profits on Greek bonds, charging Greece lower interest rates and extending repayment deadlines are among the options under consideration today for filling the new gap in Greece’s public accounts. European governments tore open the hole last week, by giving Greece two extra years to cut its budget deficit. The required extra financing provoked a clash with the IMF, since it would add to Greece’s debt load instead of reducing it. “Greece is in a mess,” James Mirrlees, a Nobel economics laureate, told Bloomberg Television yesterday. Europe won’t solve the problem by “fiddling around with little bits of extra bailout and allowing them to go a bit slower.”
- Misconstruing Germany Will Prove to Be Death of the Euro. When I go from one European capital to another, talking to officials and senior politicians about the future of the euro, Germany feels less like another country than a different planet. In Madrid and Dublin, a euro-area banking union -- the prerequisite for bailing out banks directly -- is discussed as if it were a foregone conclusion. Both Spain and Ireland are hoping their governments ultimately won’t have to finance the rescue of their banks alone. Top officials in Germany work on the assumption that a meaningful banking union will never happen.
- China Foreign Investment Falls for 11th Time in 12 Months. Foreign direct investment in China fell for the 11th time in 12 months as labor costs rose, a slowdown threatened to drag growth to a 13-year low and a territorial dispute with Japan weighed on trade. Investment dropped 0.2 percent in October from a year earlier to $8.31 billion, the Ministry of Commerce said in Beijing today. FDI inflows in the first 10 months of the year declined 3.5 percent to $91.7 billion, compared with a slide of 3.8 percent in the first nine months.
- Purple Palace Abandoned Shows China Shadow-Banking Risk. “The risks are significant there, and something must be done by the government to stop potential defaults of property trusts from spreading nationwide,” said Lian Ping, an economist at Shanghai-based Bank of Communications Co. “Trusts have become too large to fail.”
- Most Chinese Stocks Fall After FDI Drops; Banks, Ping An Decline. Most Chinese stocks fell, led by financial companies, as a decline in foreign direct investment in China overshadowed a jump in U.S. home sales. China Construction Bank Corp. (939) slumped 1.4 percent, dragging a gauge of financial companies to the steepest loss among industry groups in the CSI 300 Index. Foreign direct investment in China fell 0.2 percent in October. Ping An Insurance Group Co. (2318) slid 2.6 percent as Bank of Communications Co. said HSBC Holdings Plc’s possible sale of Ping An shares may hurt investor sentiment.
- Oil Trades Near One-Month High as Israel Unrest Threatens Supply.
- Norquist Derides ‘Fantasy’ of Higher Tax Rates. A defiant Grover Norquist said Monday it was a “fantasy” that Republicans would agree to raise tax rates for the top two income brackets to reach a deal to avert a year-end fiscal crisis. “The fantasy is that Republicans would cave on marginal tax rates,” Mr. Norquist, a prominent anti-tax conservative, said Monday at an event sponsored by the Center for the National Interest. He concluded it was “a little tough to see a strong mandate” for President Barack Obama to raise taxes because the president won re-election by a smaller margin than in 2008. The comments, which reflect a strain of thinking within the Republican party, raise the prospects of challenging negotiations over avoiding the combination of tax increases and spending cuts set for next year.
- Entitlements Split Democrats. Changes to Medicare, Other Safety-Net Programs Debated as 'Fiscal Cliff' Looms.
- Exchanges Get Closer Inspection. Federal securities regulators are stepping up oversight of stock exchanges as they scramble to catch up to trading advantages that some say have developed for sophisticated clients at the expense of ordinary investors. That effort has led the Securities and Exchange Commission to expand an enforcement probe into a broader look at how exchanges develop new products, communicate with investors and provide incentives to trade, according to people familiar with the probe.
- Gaza Toll Rises as a Top Militant Is Targeted. Hamas's leader refused to stop rocket attacks on Israel on Monday while Israeli forces stepped up their bombardment of Hamas targets in the Gaza Strip, deepening the conflict even as officials on both sides held up a faint hope for a diplomatic resolution. The death toll from nearly a week of Israeli strikes into the Gaza Strip hit 115 on Monday, with the day's fatalities including a propaganda chief for a Gaza militant group.
- Islamists Reject Syria Rebel Group, as EU Embraces It. Syrian Islamists fighting the Assad regime rejected a newly formed opposition umbrella group, raising questions about whether the new alliance can achieve its objective: to create a moderate force that can get funds and arms from foreign allies. The umbrella group also got a boost Monday when the European Union labeled the coalition "legitimate representatives" of the Syrian people. The move stopped short of a French push for the EU to formally recognize the group, as did France, Qatar and Turkey earlier.
- Health Panel Backs Broad HIV Tests. A government health panel on Monday for the first time recommended testing for the human immunodeficiency virus for all Americans aged 15 to 65, in an effort to slow its spread. There are many people who are skeptical about wider HIV testing, said Michael S. Lyons, an emergency room physician at the University of Cincinnati. "The benefits of diagnosing someone as early as possible are basically proven," he said, "but the difficulty is how do you do that?" Mr. Lyons said many relatively poor people who show up at the emergency room may well be HIV-positive, "but emergency departments are very strained at this point. This is a compelling example of the tension between what would be good to do and what practically can be done."
- As Coal Mines Shut, 'Big Iron' Gets Dirt Cheap.
- France Is Dealt Another Downgrade — Who Is Next? Ratings agency Moody's Investors Service stripped France of its prized triple-A credit rating on Tuesday, triggering worries the move could heighten the risk of a downgrade for other top-rated nations, including the United States and the single currency bloc’s largest economy Germany. “The downgrade is extremely significant considering there has been a lot of talk about the U.S. being downgraded as well. The first image that comes to mind is a line of dominos all standing upright, and one of them now tipping,” Ben Lichtenstein, president at Tradersaudio.com told CNBC Asia’s “Squawk Box" on Tuesday, adding that the spotlight could turn to Germany next.
- Citi(C) Has First Reaction To Moody's Downgrade: Not Surprising But More EURUSD Downside.
- More Lies About Your Taxes...
- Chart Of The Day: Decoupling Has Ended.
- A Spanish Casa (And Residency) Es Su Casa For $200,000.
- There's Another Massive Source Of Energy Coming, And The World Has George W. Bush To Thank. Citi's commodities team believes Iraqi oil production is set to explode in the coming years, causing prices to turn downward. In a massive survey helmed by analyst Edward Morse, Citi's team projects Brent crude to fall to $99 next year. One of the main reasons: Iraq's oil production is poised to reach heights never seen in its history — neither prior to America's 2003 invasion nor in Iraq's '80s heyday. This would be the world's second huge energy boom, with the US being the other big story.
- Why Heavily Taxing The Rich Doesn't Work.
- NEW DATA: How The Tablet Revolution Is Already Turning Ecommerce On Its Head.
NY Times:
USA Today: - American Shippers Are Left Behind in Cargo Program. It began in the mid-1990s as a way to boost America’s vanishing international shipping business. But an obscure program to subsidize the shipment of United States military cargo around the world has become something quite different: a $2 billion operation that, paradoxically, is dominated by a handful of shipping giants, all owned overseas.
- Indiana home explosion now homicide investigation. The investigation into the Nov. 10 explosion that killed two people and damaged dozens of homes in the Richmond Hills subdivision is now a criminal homicide investigation that includes a hunt for a white van seen in the neighborhood before the blast, authorities announced Monday night. "At this time we're here to inform you that we're turning this into a criminal homicide investigation," Gary Coons, chief of the Indianapolis Department of Public Safety's Homeland Security division, told the media at a press conference.
- Credit Suisse faces NY lawsuit. The New York attorney-general is preparing to file a lawsuit against Credit Suisse, alleging the Swiss bank misled investors who lost more than $11bn on mortgage-backed securities. In the lawsuit, which is expected to be filed this week, Credit Suisse faces claims that it misled investors regarding its due diligence practices on home loans it packaged into bonds, people familiar with the matter said. The bank also allegedly misled investors over the lending practices of the loan originators it worked with, the lawsuit is to claim.
- Greek companies face 'annihilation' amid debt crisis. Greece's recession-hit businesses face "annihilation", a leading chamber of commerce has warned, as a fatal combination of falling sales and job cuts meant the country was in its worst economic shape for 14 years.
- Central bank warns of capital flows. Rising inflation, commodity prices major threats to emerging markets. It is vital for emerging markets to cooperate better in monitoring cross-border capital flows and reducing the risks of currency exchange-rate fluctuation, a deputy governor of China's central bank said on Monday. Pan Gongsheng also said the international monetary system should be further reformed to reflect the increasing influence of emerging currencies. This would help reduce global dependence on the dollar and thus avoid US monetary policy from affecting other parts of the world too much. Pan said increasing volatility of capital flows in and out of emerging economies, including China, have placed great pressure on domestic macroeconomic regulation and financial stability. "The economic adjustment and recovery is still at a difficult stage. Easing policies of certain developed economies would generate a negative spill-over effect in emerging markets and hinder the global economic recovery," said Pan, deputy governor of the People's Bank of China. "And inflation would be a threat as commodity prices would rise after a further easing in monetary stance."
- China should gradually replace administrative controls on the property market with market-based measures such as property taxes, according to a commentary written by reporter Zhang Ming. The "technical conditions" exist to expand property tax trials. The expansion will break the current "deadlock" in home market controls.
- China has "decided on the direction" of an expansion of a property tax trial, Jia Kang, a researcher for the Ministry of Finance, was cited as saying. The expansion is expected to begin with commercial properties and then extend to residential properties, citing researchers.
- None of note
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 121.0 -5.0 basis points.
- Asia Pacific Sovereign CDS Index 90.50 -4.5 basis points.
- FTSE-100 futures -.05%.
- S&P 500 futures -.10%.
- NASDAQ 100 futures -.03%.
Earnings of Note
Company/Estimate
- (TECD)/1.35
- (CHS)/.23
- (HPQ)/1.14
- (HRL)/.50
- (PDCO)/.48
- (BWS)/.46
- (HNZ)/.88
- (CPB)/.85
- (DSW)/.89
- (MDT)/.88
- (BBY)/.12
- (EV)/.48
- (CRM)/.32
8:30 am EST
- Housing Starts for October are estimated to fall to 840K versus 872K in September.
- Building Permits for October are estimated to fall to 864K versus 894K in September.
- None of note
- The Fed's Bernanke speaking, Fed's Lacker speaking, Euro Group Meeting on Greece, Eurozone PPI, Germany PPI, BOJ meeting and the weekly retail sales reports could also impact trading today.
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