Tuesday Watch

Evening Headlines 
Bloomberg: 

• Greek Aid Deal Reached by EU, Debt Relief Ruled Out. European finance ministers cut Greece’s interest rates and gave it more time to pay back rescue loans while dismissing for now calls for debt relief that may be needed to keep the country afloat over the longer term. In the fourth Greek crisis meeting in two weeks, the ministers persuaded a skeptical International Monetary Fund that Europe has a formula for putting the country that triggered the debt crisis onto a path back out of it. Greece was also cleared to receive a 34.4 billion-euro loan installment in December. “All initiatives decided upon today will bring Greece’s public debt clearly back on a sustainable path,” Luxembourg Prime Minister Jean-Claude Juncker told reporters after chairing a 13-hour meeting that ended early today. “This has been a very difficult deal.” After three years of false starts, the creditor governments led by Germany proclaimed the latest fix for Greece just as they grapple with swelling financing needs in Cyprus and a potential aid request by Spain, the fourth-largest euro economy.
• Hollande to Meet Mittal After Minister Calls for Nationalization. President Francois Hollande will meet today with Lakshmi Mittal, chief executive officer of ArcelorMittal, the world’s biggest steelmaker, after a member of the French government called for the nationalization of the company’s troubled local unit. The meeting at the Elysee presidential palace in Paris follows Industry Minister Arnaud Montebourg’s remarks to Les Echos newspaper yesterday that the state “doesn’t want Mittal in France anymore,” accusing the company and its CEO of lying and calling Mittal “the problem.” Mittal’s family told Le Monde dated today it was “extremely shocked” by the comments. 
• China’s Stocks Drop Below 2,000 as Trading Value Hits 2008 Low. China’s stocks fell, dragging the benchmark index below the 2,000 level, after the value of shares traded slumped to the lowest in four years. Industrial companies and property developers led losses. Sany Heavy Industry Co. (600031) retreated 2.6 percent to a two-year low even after data showed industrial companies’ profits accelerated to 20.5 percent in October. JiuGuiJiu Co. tumbled 10 percent after the Beijing News said the liquor maker will halt production to replace equipment. The Shanghai Composite Index (SHCOMP) dropped 1 percent to 1,998.20 at the 11:30 a.m. local-time break, heading for its lowest close since Jan. 23, 2009. Shares worth 33.1 billion yuan changed hands in the measure yesterday, the least since Nov. 7, 2008. “Investors have no confidence in long-term growth prospects and the government isn’t doing much to reverse the situation,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages $120 million. “Trading values may fall even further.” The Shanghai Composite is heading for a third straight annual loss after declining 9.2 percent this year. The gauge has plunged 42 percent through yesterday since Aug. 4, 2009, when the gauge reached its highest level since the global financial crisis.
• Speculators Raise Wagers First Time in Seven Weeks: Commodities. Speculators raised bullish commodity wagers for the first time since early October as signs of improving economic growth in the U.S. and China pushed prices higher for three straight weeks. Hedge funds and other money managers increased combined net-long positions across 18 U.S. futures and options by 9.6 percent to 846,321 contracts in the week ended Nov. 20, Commodity Futures Trading Commission data show. That was the biggest gain since mid-August. Corn holdings rose the most since July, and those on silver reached a five-week high.
• India Growth Seen Slowing Adds Policy-Overhaul Pressure: Economy. India’s economy probably expanded at the weakest pace last quarter since the 2009 global recession as elevated inflation and subdued investment add pressure on Prime Minister Manmohan Singh to extend a recent policy overhaul.
• Dubai Risking Bubble Redux With Lowest Rates: Mortgages. Dubai, the desert sheikdom where home prices have plunged 65 percent since 2008, risks re- inflating its property bubble with the help of mortgage lenders offering easy terms and the lowest rates ever. “I don’t like it when I see mortgages going back to 90 percent lending, that’s not good for the industry,” said Abdul Aziz Al Ghurair, head of the United Arab Emirates’ Bankers’ Association and chief executive officer of Dubai’s Mashreqbank PSC. (MASQ) “We don’t want to encourage people to gamble.”
• Vietnam Empty Office Towers Show Dreams Turned to Rubble.
• Equity Residential(EQR), AvalonBay(AVB) to Buy Lehman’s Archstone. Lehman Brothers Holdings Inc. agreed to sell its Archstone Inc. apartment unit to Equity Residential and AvalonBay Communities Inc. for $6.5 billion, dropping plans to take the landlord public in an initial stock offering.

Wall Street Journal: 

• The Fiscal Cliff: Live Stream.
• SEC Chief's Exit Opens Void. Banks, Investors Fear Regulatory Limbo; For Schapiro, Victories and Controversy.
• Fighting to Hold Damascus,Syria Flattens Rebel 'Slums'. 
• In China, Hidden Risk of 'Shadow Finance'. State Banks Could Share Liability for Defaults, Analysts Say. 
• Republicans and the Tax Pledge. Grover Norquist is not the problem in Washington.
• Cox and Archer: Why $16 Trillion Only Hints at the True U.S. Debt. Hiding the government's liabilities from the public makes it seem that we can tax our way out of mounting deficits. We can't.

Fox News: 

• Egypt's Morsi hasn't heard from Obama since power grab. President Obama, who praised Egyptian President Mohamed Morsi for brokering a cease-fire between Israel and Hamas, has not spoken to the Islamist since his alarming power grab, a White House spokesman said Monday.

MarketWatch.com: 

• Anti-tax champion Norquist slams Republican ‘impure thoughts’. (video) Anti-tax crusader Grover Norquist, facing a growing rebellion of Republican lawmakers against his no-tax-increase pledge, says that members of the GOP are merely discussing their “impure thoughts” and that the party won’t cave in.

Zero Hedge: 

• CFNAI: Not Seeing The Growth Economists' Predict. (graphs) 
• An Age Of Illusionists.
• Mark Grant On Greece: "There Is No Deal Here".

Business Insider: 

• The Left And Right Are Miles Apart On A Fiscal Cliff Deal. 
• INTRADE: US Residents Should Begin Closing Down Their Accounts Immediately. 
• Pro-Iranian Hackers Infiltrate Top Nuclear Watchdog And Call For Investigation Of Israel.

IBD: 

• Williams-Sonoma(WSM) Could See Lift From New Offerings.

NY Times:

• Mortgage Interest Deduction, Once a Sacred Cow, Is Under Scrutiny. A tax break that has long been untouchable could soon be in for some serious scrutiny. Many home buyers deduct their mortgage interest when assessing their tax bill, a perk that has helped bolster the income of millions of families — and the broader housing market. But as President Obama and Congress try to hash out a deal to reduce the budget deficit, the mortgage interest deduction will likely be part of the discussion.

Forbes:

• The Democrats' Fallback Plan For When Obamacare Inevitably Fails by Scott W. Atlas, M.D. Will Single Payer Healthcare Emerge as the Next Battleground?

Reuters: 

• MF Global customers to seek subpoenas for Corzine, others. A group of former MF Global customers on Monday asked a court for permission to subpoena the commodities broker's executives, including former CEO Jon Corzine, who was blamed in a congressional report this month for MF Global's collapse.
• With US 'fiscal cliff' deadline nearing, parties still at odds. Republicans in the U.S. Congress on Monday called on President Barack Obama to detail long-term spending cuts to help solve the country's fiscal crisis, while holding firm against the income tax rate increases for the wealthy that Democrats seek. In a further sign of tense relations between negotiators who are trying to avert a year-end "fiscal cliff" of steep tax increases and spending cuts, the White House expressed doubts that "balanced" deficit reductions can be achieved merely by limiting tax breaks and cutting spending, as Republicans propose.

Financial Times:

• GMO abandons bond market. GMO, the Boston-based asset manager, says it has “given up” on the bond market, deciding to ditch long-dated sovereign debt as investors continue to pour billions into government bonds, including US Treasuries. Ben Inker, co-head of asset allocation for the $104bn group, told the Financial Times it is holding large, high-quality companies in the US but that its main bet is to keep money on the sidelines while it waits for better times.
  

Kyodo:

• The Japanese govt. is in the final stages of compiling an 880b yen package as a second round of economic stimulus.

Economic Daily:

• Apple(AAPL) Asks AUO to Halt Panel Production for iPad Mini.  Apple asks AUO to halt panel shipments because of defects, citing a person from the supply industry. 

China Daily: 

• Campaign targeting smuggling 'grim' task. Authorities are facing a "grim'' situation with the value of smuggled goods rising annually by about 20 percent from January to September, an official said. Customs had uncovered 1,415 cases of smuggling by the end of September, involving goods worth 22.8 billion yuan ($3.66 billion). The value marked a 20 percent annual increase, according to the General Administration of Customs. 

Financial News:

• China should aim to prevent economic "bubbles" after the government transitions next year, China Everbright Bank Co. Chairman Tang Shuangning said in an article.
• China's monetary policy should give a higher priority to stabilizing prices, Financial News says in a front-page unsigned commentary.

China National Radio:  

• Wal-Mart(WMT) May Close 100 Unprofitable Stores in China. Co. may close 100 unprofitable stores in China between 2013 and 2015, citing people familiar with the situation. Between 2007 to 2012, the co. increased the number of stores in China from 100 to more than 380, according to the report.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -.50% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 114.75 -1.25 basis points.
• Asia Pacific Sovereign CDS Index 84.75 unch.
• FTSE-100 futures +.67%.
• S&P 500 futures +.24%.
• NASDAQ 100 futures +.30%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note

Economic Releases
8:30 am EST

• Durable Goods Orders for October are estimated to fall -.7% versus a +9.9% gain in September.
• Durables Ex Transports for October are estimated to fall -.5% versus a +2.0% gain in September.
• Cap Goods Orders Non-Defense Ex Air for October are estimated to fall -.5% versus unch. in September.

 9:00 am EST

• The S&P/CS 20 City Home Price Index (MoM% SA) for September is estimated to rise +.4% versus a +.49% gain in August.

 10:00 am EST

• The Richmond Fed Manufacturing Index for November is estimated to fall to -9 versus -7 in October.
• Consumer Confidence for November is estimated to rise to 73.0 versus a reading of 72.2 in October.   

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bernanke speaking, Fed's NY VP Christine Cumming speaking, Fed's Evans speaking, Fed's Fisher speaking, Fed's Lockhart speaking, UK GDP report, Germany inflation data, 2Y T-Note auction, weekly retail sales reports, Piper Jaffray Healthcare Conference, Goldman Metals/Mining Conference and the (PNR) analyst day could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and industrial 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.