Today's Headlines

Bloomberg:

• Xi Says 2014 Environment for Economic Development Not Optimistic. Chinese President Xi Jinping said the environment for economic and social development next year isn’t optimistic, in a signal that leaders may be willing to accept slower growth in 2014. All of society should be allowed to feel “tangible benefits” from reforms, Xi said at a symposium on Nov. 22, according to the official Xinhua News Agency. Xi’s comments, which echoed past statements by party officials, may reflect efforts to tamp expectations for growth in 2014. While industrial investment is picking up and the Ministry of Commerce says retail sales will rise more than 13 percent this year, China faces headwinds that include factory overcapacity, excessive corporate debt and slower export demand. 

• China Air Zone Seen Step to West Pacific Access as Navy Expands. China’s escalation in its challenge to Japan’s administration of islands near Taiwan reflects an effort to gain greater command of the air and seas in the western Pacific as it builds itself into a maritime power. Establishing control over airspace covering uninhabited islands which China claims as its own would offer cover for warships heading east between Taiwan and Japan’s Okinawa Islands. The islands lie along one of two direct channels from China’s coast to the Pacific Ocean, to which the U.S. has unfettered approaches from its west coast as well as Alaska, Hawaii and other island possessions.

• Brazil Economy Shrinks More Than Forecast on Investment Fall. Brazil’s economy shrank in the third quarter more than analysts forecast as above-target inflation, deteriorating fiscal accounts and rising interest rates sapped confidence and crimped investment. Swap rates fell. Brazil’s gross domestic product fell 0.5 percent in the July to September period from the previous three months, the biggest drop since the first quarter of 2009, the national statistics agency said today in Rio de Janeiro. The drop was larger than forecast from 38 economists surveyed by Bloomberg, whose median estimate was for a 0.3 percent drop, and follows a revised 1.8 percent gain in the second quarter. On an annualized basis, the third quarter decline was 1.9 percent. 

• Thousands Protest as Ukrainian No-Confidence Vote Fails. Tens of thousands of Ukrainians marched to the presidential palace in central Kiev to demand the government be fired after the opposition lost a no-confidence vote in the parliament. 

• European Stocks Drop Most Since August as Orange Falls. European stocks fell the most in more than three months as investors weighed valuations before U.S. jobs data this week that may help gauge when the Federal Reserve will pare its stimulus. ThyssenKrupp AG slid to a 10-week low after raising 882.3 million euros ($1.2 billion) through a share sale. Antofagasta Plc led a measure of mining companies lower. Orange SA slipped 3.4 percent amid concern a price war in the French mobile market will extend to fourth-generation data services. Sonova Holding AG (SOON) declined 1.8 percent as Morgan Stanley cut its rating on the Swiss hearing-aid maker. The Stoxx Europe 600 Index fell 1.5 percent to 319.13 at the close of trading, its biggest loss since Aug. 27.

• Yen Rises From 6-Month Low Versus Dollar; Euro Gains Before ECB. The yen rose from a six-month low against the dollar as investors awaited U.S. job data this week that may provide further evidence as to when the Federal Reserve will reduce stimulus that has weakened America’s currency.

• Miners Slump as U.S. Growth Signs Fuel Tapering Speculation. Shares in the world’s biggest mining companies fell to the lowest in almost four months as signs the U.S economy is strengthening increased speculation that the Federal Reserve will reduce its monetary stimulus. The 108-member Bloomberg World Mining Index dropped as much as 1.2 percent to the lowest since Aug. 8.

• Copper Falls as Reviving U.S. Economy Fuels Tapering Speculation. Copper futures for delivery in March slumped 0.5 percent to settle at $3.1675 a pound at 1:20 p.m. on the Comex in New York, after touching $3.158, the lowest since Nov. 21. Prices have retreated 13 percent in 2013, heading for a second drop in three years.

• Morgan Stanley(MS) Says Munis Set for Unprecedented Two-Year Slump. Investors in the $3.7 trillion municipal market will probably face negative returns in 2014 following declines this year, the first back-to-back annual losses since at least the 1980s, according to Morgan Stanley. The company’s base-case scenario for city and state debt in 2014 calls for a loss of 1.7 percent to 4.1 percent, Michael Zezas, the bank’s chief muni strategist, said in a report released today. A year ago, he correctly predicted that munis would lose money in 2013 as yields rose from the lowest since the 1960s.

• Holiday Angst Seen in U.S. Discretionary-Staples: EcoPulse. Investor optimism about U.S. holiday sales is declining, as signaled by the performance of two small-cap stock groups. The Russell 2000 Consumer Discretionary Index has trailed the Russell 2000 Consumer Staples Index by 2 percentage points since Nov. 25 as of 10 a.m. in New York, reversing about one-third of its relative gains during the prior two months.

CNBC: 

• US oil prices surge on expectations of supply drop. Nymex WTI oil futures climbed more than $2 a barrel to reach a session high of $96.04 a barrel. Front-month WTI futures have not settled above the $96-a-barrel mark since Oct. 31. Brent crude oil futures rose more modestly, up about $1 to a session high of $112.70 a barrel.

• Lacker: Banks' bankruptcy plans will reduce risk. U.S. banks are likely to cut back on risky short-term funding if markets believe bankruptcy not bailouts await them, a top Federal Reserve official is set to tell lawmakers on Tuesday. 

• 'Hit the reset button’ for Obamacare: Democrat. (video)

Zero Hedge: 

• Black "Weekend" Shopper Traffic Down 4% Led By Plunge In Electronics.

• With Top 4 US Banks Holding $217 Trillion In Derivatives, Total Number Of US Banks Drops To Record Low. (graph)

• Richemont Chairman Warns Global Economy Is "Very Precarious... There Will Be Tears".

• GM(GM) Channel Stuffing Surges To Second Highest Ever. (graph)

• US Weakness Sparks Biggest European Stock Drop In 10 Weeks. (graph)

• JPM(JPM) Comes Out Against Bernanke's Helicopter: "Raising Inflation Expectations Is A Bad Idea".

• Chart Of The Day: What's Bad For America Is Good For... Washington, D.C. (graph)

ValueWalk:

• Kyle Bass On Potential War Between Japan And China.

Business Insider: 

• Institutions Have Been Dumping Billions Of Dollars Of Stocks All Year, But Now The Selling Is Really Accelerating. (graph)

• Home Prices Rise For The 20th Straight Month But Economists Warn A Slowdown Is Coming.

• Market Bubbles And The Wisdom Of Looking Like An Idiot Today.

• Now There's A Foolproof Way To Know Which Of Your Facebook Friends Hate Your Guts.

• Money Managers Haven't Bet On Stocks With This Much Borrowed Money Since 2006. (graph)

• An Anti-Western Post Called 'You're Nothing Without The Motherland' Is Going Viral In China.

Washington Examiner:

• Democrats can't hide from Obamacare's middle-class pinch.

Reuters:

• Brazil real sinks to 3-month low, fueling inflation concern. Brazil's real sank to a three-month low on Tuesday, fueling inflation fears and causing interest-rate futures to change course and rise as investors bet the central bank will be forced to keep tightening monetary policy despite a weak economy.

• Expiring jobless benefits to lower U.S. unemployment rate. The U.S. unemployment rate could fall substantially early next year as belt-tightening in Washington throws more than a million long-term unemployed Americans off the benefit rolls. The loss of benefits could spur former recipients to either drop out of the labor force or accept jobs they previously would not have considered. Some economists estimate this could lower the current unemployment rate of 7.3 percent by as much as half a percentage point.

• U.S. auto sales rise in November, boosted by discounts.

• Global economies increasingly at risk -Pimco's Gross. Bill Gross, co-founder and co-chief investment officer of bond giant Pimco, said Tuesday that easy-money policies worldwide have put global economies and their capital markets increasingly at risk.

Financial Times:

• Europe to unleash heavy rate-fixing fines. Brussels will unveil hefty fines as soon as Wednesday on global banks that allegedly formed cartels to rig two global interest rate benchmarks, in a settlement that is set to break European antitrust enforcement records.

Financial Post:

• Potash Corp(POT) slashes 18% of its workforce because of weak demand. Potash Corp. of Saskatchewan Inc. has announced plans to slash 18% of its workforce as fertilizer demand in emerging markets remains at extremely sluggish levels. Prices for potash, phosphate and nitrogen have been trending down since last year, and the potash market was thrown into chaos last summer when OAO Uralkali disbanded a cartel-like marketing company. Buyers have pulled back on purchases because of the uncertainty.