Tuesday Watch

Evening Headlines
Bloomberg:

• Brussels Extends Lockdown as U.S. Issues Terror Alert. Authorities in Brussels extended the city’s highest-level terror alert into next week as they maintained their warning Islamic State terrorists plan to attack highly populated areas like shopping malls and public transport systems. The city’s schools and subway will be closed for one more day before gradually reopening on Wednesday, Belgian Prime Minister Charles Michel told a press conference late Monday in Brussels. Belgium-born Salah Abdeslam, one of two brothers believed to have been involved in the Nov. 13 Paris assaults that killed 130, is still at large. “Shopping centers, streets, public transport” are all potential targets, Michel said. The government is doing “everything in our power to keep the situation under control” and will review things each day. He warned the threat he had told the Belgian people about over the weekend had not diminished. 
• Paris Suffers Slump in Christmas Bookings After Terror Attacks. Passenger bookings for flights arriving in Paris during the Christmas period are down 13 percent on last year after the Nov. 13 terrorist attacks, with visits from the U.S, Spain, Japan and Germany worst affected, according to a study based on figures from 200,000 travel agencies. While a 25 percent jump in cancellations the week after the tragedy has now eased, new bookings remain “dramatically below” last year’s level, travel-data specialist ForwardKeys said, citing reservation numbers through Nov. 20. “The booking situation for arrivals during the Christmas holidays has become worrisome,” ForwardKeys Chief Executive Officer Olivier Jaeger said in an interview, citing figures for arrivals in the Dec. 25 to Dec. 31 period. “Paris will rebound. The question is, when will that start?”
• Bank of America: The 'Great Divorce' Between the World's Two Largest Economies Will Drive Currency and Rates Markets in 2016. The "marriage of convenience" is over. "On the eve of the December FOMC meeting, we think the question is not whether the U.S. economy can live with higher interest rates and a higher U.S. dollar. The question is, given the semi USD/RMB peg and China's increasing open capital account (which come at the expense of China's monetary independence), whether China can live with higher U.S. interest rates and a higher U.S. dollar. We are skeptical. This is why we think the USD/RMB peg, a marriage of convenience that has been the anchor for the global growth model for the better part of the last 15 years, is headed for a divorce, and we think the RMB devaluation on Aug. 11 was a first small step in this direction."
• Chinese Stocks Drop for Second Day as Commodity Shares Slump. Chinese stocks fell for a second day, dragged down by metal producers and industrial companies. The Shanghai Composite Index dropped 0.8 percent to 3,582.90 at 9:57 a.m., with trading volumes 22 percent below the 30-day average for this time of day. Aluminum Corp. of China Ltd. declined to a three-week low and Jiangxi Copper Co. retreated 2 percent. Copper fell below $4,500 a metric ton for the first time in six years and nickel touched the lowest in more than a decade. The Hang Seng China Enterprises Index slid 0.8 percent in Hong Kong. 
• Asia Stocks Drop as Tumbling Commodity Prices Weigh on Producers. Asian stocks fell as tumbling commodity prices dragged raw-materials shares lower, with BHP Billiton Ltd. on course to close at the lowest since 2008. The MSCI Asia Pacific Index lost 0.1 percent to 134.16 as of 9:00 a.m. in Tokyo, as Japanese markets opened after a holiday. Material shares led losses among the regional measure’s 10 industry groups.
• OPEC Seen Holding the Line as $40 Oil Looms Over Vienna Meeting. It’ll take more than $40 crude to make OPEC change its mind, analysts said before the group’s Dec. 4 meeting in Vienna. In the year since the Organization of Petroleum Exporting Countries chose to defend its market share, and let prices sink, a 44 percent plunge in crude has slashed members’ revenues by almost half a trillion dollars. Undeterred, the group will press on with its strategy to batter rival producers when ministers meet next week, according to 30 analysts and traders surveyed by Bloomberg.
• Industrial Metals Trade Near Multi-Year Lows on Supply Glut. Industrial metals traded near multi-year lows amid a supply surplus and a strong dollar. BHP Billiton Ltd., the world’s biggest mining company, reached a 10-year low in Sydney. Prices have declined 28 percent this year, the worst annual drop since the global financial crisis, amid the slowest growth in a quarter of a century in China, the world’s biggest consumer, and concern that mining companies are not willing to cut production enough. The U.S. currency is trading near the highest level since at least 2005, making commodities more expensive for buyers in other currencies. Aluminum rose 0.7 percent, while copper, nickel and zinc fell at least 0.3 percent.
• Fed Rate Odds Rise to 74% in Bond Market as Pimco Sees Liftoff. The odds the Federal Reserve will raise interest rates at its next meeting in December climbed to 74 percent, and Pacific Investment Management Co. says a move is likely. The probability the central bank will act at its Dec. 15-16 session increased from less than 30 percent as recently as mid-October, futures contracts show.

Wall Street Journal:

• Suicide Vest Is New Clue in Terror Manhunt as Brussels Extends Lockdown. Investigators believe fugitive suspect aborted suicide mission before fleeing France. An explosive vest suspected of belonging to a Paris attacker still at large was discovered on the French capital’s outskirts Monday, while Belgian authorities said they would keep Brussels on lockdown for a fourth day as they try to head off what they called a similar attack.
• As China’s Workforce Dwindles, the World Scrambles for Alternatives. Over the coming decades, a labor shortage will force Levi and scores of other Western brands to remake their China operations or pack up and leave.
• China’s Rising Service Sector Won’t Ease Import Pain, Report Says. The San Francisco Fed report gives a dour near-term outlook but says trade over the long-term should grow ‘more balanced’.
• 5 Things to Watch in the 3Q GDP Report.
• Radical Parents, Despotic Children. Sooner or later, Orwellian methods on campus will lead to Orwellian outcomes.
• Mrs. Clinton’s Intelligence. ISIS was more careful with its sensitive communications than Hillary was. Here’s a post-Paris question: Will America really elect as president someone who, as secretary of state, was more reckless communicating sensitive information than the Islamic State terrorists who pulled off their bloody attack? The question has become more urgent now that Hillary Clinton has vowed to put an “immediate intelligence surge” at the top of her security agenda. Leave aside...

Breaking News:

• Paris Attack/Belgium Updates.

Fox News:

• State Department issues worldwide travel alert. (video) The State Department issued a worldwide travel alert Monday over possible risks due to increased terrorism threats. The alert comes amid information that ISIS, Al Qaeda, Boko Haram, and other terrorist groups continue to plan attacks in multiple regions by employing a “wide variety of tactics,” according to the State Department.

CNBC: 

• Insiders sending an ominous market signal. (video) The recent jump in stock prices has one important group of disbelievers. Corporate insiders have been dumping shares at the highest pace in 4½ years, according to market data firm TrimTabs. The selling averaged $450 million a day in November, the highest since May 2011.

Zero Hedge: 

• "This Is The Most Dangerous Time Ever" Ex-CIA Boss Says US To Blame For "Scourge Without Parallel" ISIS.
• Saudi De-Peg Looms As FX Market Signals Loudest "Black Swan Warning" In 13 Years. (graph)
• It Might Be A "Services Economy" But Manufacturing Drives Recessions. (graph)
• Bill Ackman Triples-Down On Valeant(VRX): Boosts Stake To 9.9% By Buying Calls, Selling Puts.
• Swiss Bank "Goes There", Applies Negative Rates To Retail Deposits.
• "Central Banks Are Out Of Dry Powder" Stockman Warns "Another Financial Crisis Is Unavoidable". (audio)
• Stocks Dip As Credit, Copper, & Yield Curve Dump Trumps Crude & Dollar Pump. (graph)

Business Insider: 

• Donald Trump is firing warning shots at the national Republican Party.
• The price of oil is doomed for longer than everyone's expecting.
• San Francisco is seeing one of the 'biggest new-housing construction booms in history'.
• ISIS militants are using an incredibly addictive drug to feel invincible on the battlefield. (video)
• Carl Icahn has acquired a 7% stake in Xerox(XRX).
• There's a growing discontent with Obamacare. (graph)
• Leveraged loans may push the markets 'to the point of tears'.

Reuters: 

• Texas student arrested over clock seeks $15 million. The family of a Texas Muslim teenager arrested for bringing a homemade clock that was mistaken for a bomb to school demanded $15 million in damages and an apology from the city of Irving and its schools to avoid a lawsuit, lawyers said on Monday. The Mohamed family is asking for $10 million from the city and $5 million from the school district or they will file civil lawsuits within 60 days, the letter said. 
• Latam currencies weaken on China.
• 4 nations risk breaking EU budget rules in 2016 - euro zone finmins warn. Euro zone finance ministers warned Italy, Spain, Austria and Lithuania on Monday against breaking EU fiscal rules with their draft budgets for 2016, endorsing an assessment last week by the EU executive.
• New York prepares for Thanksgiving parade as Islamic State threat looms. Millions of New Yorkers and tourists are expected to line the streets on Thursday for the parade, more than a week after Islamic State, also known as ISIS or ISIL, released a video showing images of New York juxtaposed with a scene depicting a suicide bomber preparing for an attack.

Evening Recommendations 

• None of note

Night Trading 

• Asian equity indices are -.75% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 128.0 +1.75 basis points.
• Asia Pacific Sovereign CDS Index 68.25 +.5 basis point.
• Bloomberg Emerging Markets Currency Index 70.76 +.07%.
• S&P 500 futures -.08%.
• NASDAQ 100 futures -.10%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

• (AMWD)/.79
• (ADI)/.83
• (BURL)/.23
• (CPB)/.76
• (CHS)/.20
• (DLTR)/.52
• (DSW)/.44
• (EV)/.59
• (FRED)/.10
• (FRO)/.07
• (SIG)/.39
• (TIF)/.75
• (TECD)/1.39
• (PDCO)/.59
• (HRL)/.68
• (AVAV)/.09
• (GES)/.11
• (HPQ)/.97

Economic Releases
8:30 am EST

• Advance Goods Trade Deficit for October is estimated at -$60.9B versus -$58.63B in September.
• 3Q GDP is estimated to rise +2.1% versus a +1.5% prior estimate.
• 3Q Personal Consumption is estimated to rise +3.2% versus a +3.2% prior estimate.
• 3Q GDP Price Index is estimated to rise +1.2% versus a +1.2% prior estimate. 
• 3Q Core PCE is estimated to rise +1.3% versus a +1.3% prior estimate.   
  

9:00 am EST

• The S&P/CS 20 City MoM SA for September is estimated to rise +.3% versus a +.11% gain in August.

10:00 am EST

• Consumer Confidence for November is estimated to rise to 99.5 versus 97.6 in October.
• The Richmond Fed Manufacturing Index for November is estimated to rise to 1.0 versus -1.0 in October. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The German IFO report, 2Y T-Note auction, US weekly retail sales reports and the (JEC) analyst day could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by real estate and commodity 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 day.