Bull Radar

Style Outperformer:

• Small-Cap Growth (+3.49%)

Sector Outperformers:

• 1) Networking +5.69% 2) Oil Service +4.99% 3) I-Banks +4.65%

Stocks Rising on Unusual Volume:

• AIXG, SLXP, CHTR, LRCX, NVLS, ADTN, CIEN, CIE, JEF, FIO, KBR, NAV, CAG, MENT, DISH, PBH, IEO, SI, PUW and CVS
  

Stocks With Unusual Call Option Activity:

• 1) CROX 2) CI 3) VLO 4) UBS 5) TXT
  

Stocks With Most Positive News Mentions:

• 1) CCO 2) FFIV 3) IMGN 4) SLXP 5) EW
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume
  

Tuesday Watch

Evening Headlines

Bloomberg:

• U.K. Shuns Crisis Aid as Europe Channels $195 Billion to IMF. Europe bolstered its anti-crisis arsenal, channeling 150 billion euros ($195 billion) to the International Monetary Fund as the European Central Bank widened its support for sagging bond markets. Four countries not using the single currency also pledged to add to the IMF war chest while Britain refused to commit, in a sign of the difficulty of attracting outside cash to ease the euro area’s home-grown debt burdens. The U.K. will “define its contribution” in early 2012, euro finance ministers said in a Brussels statement after a conference call yesterday. The IMF track is “obviously a small-scale solution,” former UBS AG Chairman Peter Kurer told Maryam Nemazee on Bloomberg Television’s “The Pulse” program. Germany continued to oppose an early decision to raise the limit of 500 billion euros on overall emergency aid. European leaders plan to tackle that question by March.
  
• Europe Dragging Down U.S. in Record Correlation: Credit Markets. For all the evidence that the U.S.economy is expanding, the nation's credit markets are unable to decouple from Europe as everything from junk bonds to interest-rate swaps move increasingly in lockstep with the euro region. Correlation between the 17-nation currency and prices of a credit-default swaps index tied to U.S. junk bonds is at about the highest on record, Bloomberg data show. Interest-rate swap spreads in the U.S., a gauge of fear in credit markets, are trading the most in tandem with European corporate credit since 2007. Correlation between the euro-dollar exchange rate and the price of the Markit CDX North America High Yield Index reached a record .76 on Dec. 2, when measured over 60-day periods, and held at .74 yesterday, Bloomberg data show. The measure has climbed from .1 on April 7.
• German Debt Sales Set to Swell as Economy Falters: Euro Credit. Germany is poised to overshoot its 2012 borrowing target as the growth outlook in Europe's largest economy worsens and the cost of bailing out banks and troubled neighbors increases. As the euro region's debt crisis enters its third year, the German economy is buckling. S&P said Dec. 5 it may strip the nation of its AAA rating and demand at a bund auction last month fell to its lowest since 1995. The debt agency is scheduled to reveal next year's funding plans this week.
  
• Default Swaps Jump Most in BRICs as Gandhi Subsidizes Food: India Credit. India’s plan to boost food subsidies by 50 percent is threatening efforts to cut the budget deficit, extending the biggest jump in bond risk among the largest developing nations. The cost to protect the debt of State Bank of India, seen as a proxy for the nation, against non-payment rose 234 basis points in 2011 to 395 basis points, the most in three years, according to data provider CMA. Credit-default swaps on China’s government bonds increased 78 to 146, while those for Russia climbed 124 to 270 and Brazil’s added 53 to 164. Indian Prime Minister Manmohan Singh is tapping public finances to boost assistance as the economy of the nation, where the World Bank says more than 75 percent of the people live on less than $2 a day, slows.
• Hedge-Fund Refuge Sought by Traders Amid Bank Cuts: Commodities. Damien Bombell left JPMorgan Chase & Co. a year ago after the largest and most profitable U.S. bank shut its group trading commodities for the company's own account. Now chief investment officer of his own hedge fund, he's hiring four people before accepting money from investors next month. “I can't say there's anything I miss about banking,” said Bombell, who turned 40 last week and plans to have at least $200 million under management at the Strand Global Macro Fund in Zug, Switzerland. “I have more freedom.”
• Hainan Home Bubble Pops as Curbs Deflate Prices. Zhu Lei, a property agent for the Serenity Coast luxury residential and hotel complex in Sanya on China’s Hainan island, recalls clients carrying suitcases of cash to shop for holiday apartments last year. “We didn’t even have time for toilet breaks because there were just too many clients,” Zhu said. Today, sales in the second-biggest city on the tropical island compared to Hawaii for its sandy beaches and weather, are “bleak,” he said. A two-year lending binge and the government’s plan to transform Hainan, in the South China Sea, into an international tourism destination helped fuel a 48 percent surge in Sanya’s home prices last year, making it the nation’s best-performing property market. As China in 2011 switched gears with policies such as increased deposit requirements designed to curb speculation, Sanya’s home prices have dropped 28 percent since last December. “It was really no different to what was driving prices in other cities in China, which was an explosion of liquidity that caused asset inflation across the country,” said Patrick Chovanec, an associate professor at Tsinghua University’s School of Economics and Management in Beijing. China spent 4 trillion yuan ($628 billion) to shield its economy as credit markets froze when Lehman Brothers Holdings Inc. collapsed in September 2008. It also encouraged banks to lend out a record $2.7 trillion in 2009 and 2010, fueling a surge in home prices and construction that it’s now battling to restrain after warning of an asset bubble.

Wall Street Journal:

• Just Don't Call It a 'Bailout'. European Governments Devise Unusual Measures to Prop Up Their Ailing Banks. Governments in Europe are tying themselves in knots to prop up their banks, desperate to blunt the cost and embarrassment of a fresh wave of taxpayer-funded bailouts. In Italy, for example, the government is encouraging banks to buy public properties that the banks then can use to borrow money. As part of a broader deficit-reduction program in Portugal, the government essentially is borrowing money from bank pension funds and could use some of the funds to help state-owned companies repay bank loans. Governments in Germany and Spain also are using unorthodox measures to support their ailing banks.
• Dictator's Death Stokes Fears. U.S. officials aggressively lobbied China, Russia and Japan and suspended a food-aid plan for North Korea following the death of the country's leader, aiming to gain a diplomatic foothold as control over the authoritarian, nuclear-armed country appeared to pass to Kim Jong Il's untested young son. North Korea officially returned to its customary silence on Monday after announcing the death of its supreme leader early in the day, underscoring the world's anxiety over its trajectory under Kim Jong Eun, the former ruler's youngest son, whom state media says will now lead the isolated country.
• The World's Most Repressive State. A few minutes after the news of the death of North Korean dictator Kim Jong Il flashed across computer screens on Sunday night—Monday morning on the Korean Peninsula—I received an email from a North Korean defector. The man, who is now living in Seoul and is a Christian, was exultant: "God blesses all of us," he wrote. The defector's sentiments will be shared by many, especially his long-suffering countrymen.

MarketWatch:

• China Governments in Hole as Land Sales Plummet. Property market slowdown is chilling China’s local governments. The development-ready land market, long a reliable revenue source for local governments across China, has suddenly turned cold. And city halls are shivering. Government-sponsored land auctions in cities nationwide have slowed dramatically in recent months, reflecting shrinking consumer demand and what one executive called a “winter mode” strategy among major developers. Nominal land values have fallen, and some auctions have been canceled due to a lack of bidders. “The land market is basically deadlocked,” said Chen Xiaotian, president of China Real Estate Information Corp. (CIRC), a market research firm.

Business Insider:

• Here Are The 10 Hedge Funds With The Most Exposure To Bank Of America(BAC).
• Derivatives Exchange Looks To Offer Political Contracts.
• PwC: Shale Gas Will Generate Billions Of Dollars Of Savings And Create Over A Million Jobs.
• AT&T(T) Just Pulled Its Bid For T-Mobile USA.
  

Zero Hedge:

• Europe Is Now Officially Bazooko's Circus - Italy To Provide €23.5 Billion In IMF Cash To Bailout Italy.
• Why Oil Prices Are Killing the Economy.
• Bureau of Labor Statistics Caught Red Handed Leaking Confidential Employment Data.
  

NY Times:

• U.S. Backs Apple(AAPL) in Patent Ruling That Hits Google(GOOG). A federal agency ruled on Monday that a set of important features commonly found in smartphones are protected by an Apple patent, a decision that could force changes in how Google’s Android phones function.

Forbes:

• 5 Big Trends in Business Innovation in 2012.

Reuters:

• Weaker Euro to hurt Red Hat Q4 revenue, shares fall. Business software maker Red Hat Inc forecast fourth-quarter revenue largely below analysts' expectations hurt mainly by a weaker euro, sending its shares down 7 percent in after-market trade. The company forecast current-quarter earnings of 26-27 cents a share on revenue of $289-$292 million. Analysts on average had expected a profit of 26 cents a share on revenue of $292.5 million, according to Thomson Reuters I/B/E/S.

Financial Times:

• Clinton Urges EU to Drop Carbon Levy Plan for Airlines. U.S. Secretary of State Hillary Clinton wrote to EU Foreign Policy Chief Catherine Ashton on Dec. 16 to "strongly urge" the bloc to abandon its plan to start charging any airline flying into the region for its carbon pollution, citing the letter. If the EU doesn't drop the plan "we will be compelled to take appropriate action," Clinton wrote. If the EU doesn't drop the plan "we will be compelled to take appropriate action," Clinton wrote.
• Hedge Fund Alarm Bells Are Ringing Over China. The past few weeks have seen China loom large in the nightmares of many hedge fund managers still smarting from a less-than glory-filled 2011. Concerns are rising for the global outlook over the increasingly negative economic signals emanating from the country. As the Emerging Sovereign Group, a $1bn hedge fund backed by Julian Robertson and half owned by Carlyle, one of the world’s biggest private equity groups, told its clients in a recent note: “[we have a] gathering sense that the next act of this rolling global debt crisis may well play out in the East.”

Telegraph:

• ECB Says Eurozone Leaders Created 'Cycle of Risk'. Protracted indecision among political leaders has created a "cycle of risk" with "systemic crisis proportions not witnessed since the collapse of Lehman Brothers", the European Central Bank (ECB) has warned.
• Spain Grits Teeth Yet Again As Austerity Deepens. Spain's new premier Mariano Rajoy has launched a fresh blast of fiscal austerity at his inauguration, describing the national outlook as "desolate" and his task like that of a father feeding four hungry mouths with bread for two.

Die Welt:

• Nagel Doesn't See End to EU Financial Crisis in 2012. Bundesbank's Nagel also spoke against a possible solution involving large purchases of state securities by the ECB, saying markets would soon raise concerns that it may overwhelm Germany. The "bazooka solution" wouldn't work, he said.

China Business News:

• China Should Stick to Property Tax as Control Measure. China should continue to levy property taxes and increase transaction taxes as a control measure against real-estate market speculation, citing Yin Zhongqing, deputy director of the National People's Congress Finance and Economic Affairs Committee. Property taxes may reduce the local government's reliance on revenue from land sales, Yin says. Government worries society-wide credit is not developed and data are not reliable, Yin said.
  

AfricaAsia.com:

• Clinton Blasts Egypt's 'Shocking' Treatment of Women. US Secretary of State Hillary Clinton denounced Egypt's treatment of women as "shocking" and a "disgrace" to the state after troops were shown ripping off a female protester's clothes. In unusually strong remarks, Clinton accused Egyptian authorities of failing the country's women since the revolution that overthrew president Hosni Mubarak, both by excluding them from power and humiliating them in the streets. "This systematic degradation of Egyptian women dishonors the revolution, disgraces the state and its uniform and is not worthy of a great people," Clinton said in a speech at Georgetown University. In images widely seen over YouTube, helmeted troops were shown beating a veiled woman after having ripped her clothes off to reveal her bra and stomach. Other pictures circulating on social media networks that have enraged protesters include one of a military policeman looming over a sobbing elderly woman with his truncheon.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.50% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 214.50 +3.5 basis points.
  
• Asia Pacific Sovereign CDS Index 158.0 +1.0 basis point.
• FTSE-100 futures -.13%.
  
• S&P 500 futures +.49%.
  
• NASDAQ 100 futures +.49%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (GIS)/.79
• (SAFM)/-.60
• (CAG)/.42
• (JEF)/.14
• (PAYX)/.38
• (JBL)/.65
• (NKE)/.97
• (CTAS)/.48
• (ORCL)/.57
• (NAV)/3.12
• (CCL)/.29

Economic Releases
8:30 am EST

• Housing Starts for November are estimated at 635K versus 628K in October.
• Building Permits for November are estimated at 635K versus 653K in October.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Spain/Greece auctions, 5-Year Treasury Note Auction, weekly retail sales reports, (BCR) Investor Conference and the (CVS) Analyst Day could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and commodity 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.

Stocks Dropping into Final Hour on Rising Eurozone Debt Angst, Financial/Tech Sector Pessimism, Global Growth Fears, Technical Selling

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Light
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 24.53 +.99%
  
• ISE Sentiment Index 123.0 +12.84%
  
• Total Put/Call .86 -28.33%
  
• NYSE Arms 1.88 +128.67%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 130.98 +1.78%
  
• European Financial Sector CDS Index 303.43 +1.33%
  
• Western Europe Sovereign Debt CDS Index 378.20 -.22%
  
• Emerging Market CDS Index 317.70 +1.51%
  
• 2-Year Swap Spread 50.0 +1 bp
  
• TED Spread 57.0 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -115.25 +6.5 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.
  
• Yield Curve 158.0 -4 bps
  
• China Import Iron Ore Spot $131.30/Metric Tonne -.61%
  
• Citi US Economic Surprise Index 73.40 -2.1 points
  
• 10-Year TIPS Spread 1.93 +2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -9 open in Japan
• DAX Futures: Indicating -39 open in Germany

Portfolio:

• Slightly Higher: On gains in my index hedges and emerging markets shorts
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and then covered some of them
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is very bearish, as the S&P 500 moves further below its 50-day moving average and trades to session lows on rising Eurozone debt angst, rising global growth fears, technical selling and tech/financial sector pessimism. On the positive side, Drug and Tobacco shares are slightly higher today. Lumber is up +1.9% and Oil is falling -.39%. The Spain sovereign cds is down -2.04% to 411.17 bps. On the negative side, Coal, Alt Energy, Oil Tanker, Oil Service, Steel, Software, Semi, Disk Drive, Networking, Bank, I-Bank, Construction, Homebuilding and Airline shares are under meaningful pressure, falling more than -2.0%. (XLK) and (XLF) have traded poorly throughout the day. The UBS-Bloomberg Ag Spot Index is up +1.1%. The 10-year yield is falling -4 bps to 1.81% despite recent better economic data and equity strength. The Brazil sovereign cds is jumping +2.78% to 164.0 bps, the Belgium sovereign cds is gaining +1.33% to 325.83 bps, the Japan sovereign cds is rising +1.73% to 137.05 bps, the France sovereign cds is gaining +.74% to 229.33 bps and the Germany sovereign cds is rising +.6% to 106.83 bps. The Italian/German 10Y Yield Spread is surging +4.55% to 495.60 bps. The Western Europe Sovereign CDS Index is still very near its all-time high. The TED spread continues to trend higher and is at the highest since May 2009. The 2Y Euro Swap Spread is near the highest since Nov. 2008. The 3M Euribor-OIS spread is very near the highest since February 2009. The 3M EUR/USD Cross-Currency Basis Swap is rising +5.25% to -11535 bps, which is back to mid-Nov. levels. The Libor-OIS spread is rising to the widest since May 2009, which is also noteworthy considering the equity surge off the recent lows. China Iron Ore Spot has plunged -31.6% since February 16th and -27.5% since Sept. 7th. The China Corporate Blended Spread Index remains very close to another technical breakout. The Citi Asia-Pacific Economic Surprise Index is falling another -2.6 points today to -27.70, which is the lowest level since April 2009. Asian equities continue to trade very poorly with most down around -2% before the North Korea news last night. Their averages cut losses into the closes after the initial swoon on the news. Taiwan shares closed down another -2.2%(down -26.07% ytd) and are at the lowest levels since July 2009. Brazil's Bovespa fell another -1.42% today and is down -20.2% ytd. Fears over the possibility of hard landings in some key emerging market economies appear to be intensifying again. Moreover, European credit gauges are still performing very poorly given that the European debt crisis “can-kicking” solution is supposedly at hand, which remains a large red flag. Tech share technical action is also troubling as the MS Tech Index is now down -12.63% ytd. Equity trading still maintains an overall complacent feel, given the still developing significant macro headwinds. This is likely due to year-end window-dressing and seasonality. A significant positive catalyst needs to emerge very soon to prevent more equity weakness during 1Q, in my opinion. I expect US stocks to trade modestly lower into the close from current levels on rising Eurozone debt angst, rising global growth fears, tech/financial sector pessimism, technical selling and more shorting.

Today's Headlines

Bloomberg:

• Draghi Says There's No 'External Savior' for Countries That Won't Reform. European Central Bank President Mario Draghi said there is no “external savior” for countries that don’t implement structural reforms to restore confidence to debt markets. “There is no external savior for a country that doesn’t want to save itself,” Draghi said in a speech in Berlin today. “I will never tire of saying the first response should come from the countries.” The ECB is buying the bonds of debt-strapped nations such as Italy and Spain after they agreed to implement austerity measures to improve their finances. Draghi nevertheless reiterated today that the ECB’s bond program is “neither eternal nor infinite.” He said an “unavoidable” short-term economic contraction in the euro area may be mitigated by a return of confidence if governments implement budget consolidation plans. “In the medium term, sustainable growth can be achieved only by undertaking deep structural reforms that have been procrastinated for too long,” he said.
• Schaeuble Says 'No Chance' U.S. Will Help in IMF Boost. German Finance Minister Wolfgang Schaeuble said he sees “no chance” that Congress would approve more U.S. money for the International Monetary Fund as a backstop against Europe’s debt crisis. Getting European countries to boost their IMF contributions is “more of a technical matter,” Schaeuble said in an interview on Deutschlandradio today, before a conference call among euro-area finance ministers. Germany’s Bundesbank will contribute if it’s guaranteed that the money will flow as a bilateral credit to the Washington-based fund’s general account, Schaeuble said. “In that case, the Bundesbank is in agreement.”
  
• German FDP’s Bruederle Sees Dissent on ESM Vote, Bild Says. Some lawmakers from Chancellor Angela Merkel’s Free Democratic coalition partner will probably vote against approving Europe’s permanent rescue fund when it goes to the German lower house, Rainer Bruederle, the party’s parliamentary leader, was quoted as saying by Bild. A few FDP members dissented in recent votes on euro-area matters and a similar thing is likely to happen when the European Stability Mechanism goes before the Bundestag in Berlin, Bruederle was quoted as saying in an interview in the newspaper today.
• Spain Bad Loans Rise to Highest Level Since '94 on Property Crash: Economy. Spanish banks reported more bad loans and lower lending and deposits in October, hurt by the fallout of the country’s property crash and the European sovereign debt crisis. The ratio of bad loans as a proportion of total lending climbed to 7.42 percent, the highest level since 1994, from 7.16 percent in September and 5.68 percent a year earlier as the value of borrowings in default rose to 131.9 billion euros ($171.9 billion), the Bank of Spain in Madrid said in a statement today. Lending fell 2.5 percent from a year ago, following a record 2.6 percent drop in September, and deposits slid 2.2 percent to their lowest level since 2008. Rising defaults and declining loans and deposits show how banks are suffering from the fallout of Spain’s property slump and a wider European debt crisis that has shut them out of wholesale debt markets. Spain’s Prime Minister-elect Mariano Rajoy, who is making an inaugural speech to parliament today, said that a “second wave” of restructuring of Spain’s banks is inevitable, including more mergers. “What we have been saying for a while, and I think the banks themselves have been in denial on this, is that the asset quality decline has not bottomed out yet because unemployment is still going up,” said Inigo Lecubarri, who helps manage about $300 million at Abaco Financials Fund in London. “A non- performing loans ratio of 7.4 percent is already very bad. Ten percent would be catastrophic and it’s not impossible we could get there.”
• Rajoy Vows Leaner Public Sector Amid 'Dark' Spain Outlook. Prime Minister-elect Mariano Rajoy pledged to shrink Spain’s public sector and reduce spending to tackle the euro area’s third-largest budget deficit without saying how he’ll finance higher pensions and tax breaks. “Expectations for the next two quarters are not good at all,” Rajoy said. With the economy “growing by half the rate of the rest of the European Union,” Spain is “being left behind” and “the outlook couldn’t be darker,” he said.
• U.S. Homebuilder Confidence Rises. Confidence among U.S. homebuilders rose in December for a third consecutive month, a sign of stabilization in the housing market. The National Association of Home Builders/Wells Fargo index of builder confidence climbed to 21, the highest level since May 2010, from a revised 19 in November that was lower than first reported, the Washington-based group said today. Economists projected an index of 20, according to the median forecast in a Bloomberg News survey. Readings below 50 mean more respondents said conditions were poor. Borrowing costs near a record low are attracting some prospective home buyers.
• Fed's Lacker Predicts U.S. Growt of Up to 2.5% in '12 Amid Inflation Risk. Federal Reserve Bank of Richmond President Jeffrey Lacker predicted the U.S. economy will grow 2 percent to 2.5 percent next year, with inflation likely to meet goals though posing a risk. The recent cooling in prices “is likely to prove as transitory, as did the acceleration we saw earlier in the year,” Lacker said in a speech in Charlotte, North Carolina. “Despite this year’s run-up, I believe the inflation outlook is reasonably good” though “I still view the risks to inflation as tilted to the upside.”
  
• Twitter Gets $300 Million Alwaleed Investment Amid Site Revamp. Twitter Inc., the microblogging service with more than 100 million users, won a $300 million investment from Saudi investor Prince Alwaleed bin Talal as it pushes through a redesign of its site to attract advertisers. Alwaleed and his investment company agreed to buy a “strategic stake,” Kingdom Holding said today, without giving details.
• North Korean Stability May Hinge on Military's Acceptance of Kim Dynasty. The stability of nuclear-armed North Korea may hinge on whether its military and the family of deceased dictator Kim Jong Il agree that his little-known, twenty-something son can extend six decades of dynastic rule. Kim Jong Un was named to high-level military and party posts in September 2010. Kim Jong Il, who died of a heart attack Dec. 17, groomed his son for succession by featuring him prominently at a party congress and having him meet with foreign dignitaries. The younger Kim is slated to take the reins of an economy whose 24 million largely impoverished people -- five percent of whom serve in the military -- have almost no access to outside media and suffer from chronic malnutrition. North Korea shows no signs of abandoning its nuclear weapons program in the face of global sanctions and any sign of concessions from the new leader could undermine his position.
• Egypt's Army Blames Protestors for Violence. Egypt’s military accused protesters of “methodical” attacks and said soldiers showed self- restraint as clashes continued for the fourth day in central Cairo, leaving 12 people dead and hundreds injured. Groups of demonstrators surrounded the bloodstains of a protester they said was killed by a bullet to the head when soldiers charged at dawn into Tahrir square, the focus of the revolt that toppled President Hosni Mubarak. In addition to the deaths, 815 people were injured, the state-run Middle East News Agency said. The violence is the latest confrontation between protesters and the military, which took interim power after Mubarak was ousted in February. The unrest threatens to further undermine the ailing economy, with the benchmark stock index down more than 46 percent this year and the country missing its target for the sale of Treasury bills today. “The ruling supreme military council is becoming more rigid and aggressive and appears incapable of marginalizing protesters without resorting to violence,” Hani Sabra, an analyst on the region for the New York-based Eurasia Group, said today by e-mail. “The military appears incapable of discipline and has failed to capitalize on its popularity.”

Wall Street Journal:

• EU Loans to IMF Likely to Fall Short of Expected EUR200 Billion: Sources. Euro-zone finance ministers will try Monday to finalize a loan to the International Monetary Fund, but the European Union as a whole is unlikely to meet the EUR200 billion target set by leaders on Dec 9, IMF and euro-zone officials said. "There will be an effort to get an agreement on the EUR150 billion committed by the euro zone, but it's not certain it will happen today and it certainly looks like we'll fall short of the total EUR200 billion by all of the EU," said a senior IMF official.
• EU Admits Tax Hikes, Spending Cuts Risk For Jobs. A new report released by the European Commission late last week underlines the devastating consequences of the financial crisis on youth employment, and acknowledged the difficulty in implementing policies to alleviate this crisis as the European Union focuses on austerity. “Young people remain the hardest hit by the crisis and its aftermath,” says the report, and the faltering recovery is expected to make things worse. “In short, income shocks may prove permanent and income losses at the bottom of the distribution can be persistent.” The consequences can be long-term scarring for youth, with future employability and earnings at risk. The EU report also concludes that the risks of long-term exclusion from the labor market and society are increasing for the jobless.
• Foreign Banks Stressed in U.S. as Funds Dry Up: Credit Markets. U.S. branches of foreign banks, struggling to tap American markets for short-term funding amid the European debt crisis, are using up their cash at the fastest pace since at least 2006 and seeking infusions of dollars from their home countries. Non-U.S. banks' cash plunged almost 40 percent, or $420 billion, in the five months ended Nov. 30, leading to an 18 percent decline in assets, according to Federal Reserve data tracked by Barclays Plc. The Fed's swap lines to foreign central banks, used to make dollars available abroad, surged last week after six central banks lowered the cost of obtaining greenbacks on Nov. 30. U.S. commercial paper issued by foreign banks fell to the lowest level since August 2009. "There has been a dramatic melting away since the end of June of non-U.S. banks cash holdings," said Joseph Abate, a strategist at Barclays Capital in New York. "As financing conditions have tightened and come under stress, foreign banks' U.S. branches have switched from exporting dollars back to their headquarters to effectively importing them." Banks are losing access to U.S. funding as European leaders fail to convince investors they can contain a crisis that led to bailouts of Greece, Ireland and Portugal and now threatens Italy and Spain. French banks lost almost 50 percent of their financing from money-market funds in the five-month period ended Nov. 30, Barclays said. The premium lenders pay to convert euro payments into dollars soared to the most since 2008.
• House Members Received VIP Loans. Oversight Panel Raises Concern of 'Possible Wrongdoing' in Borrowings From Countrywide Financial by Four in Congress. Four current members of the House of Representatives received loans through the controversial VIP program of Countrywide Financial Corp., according to the chairman of a congressional committee, raising new questions about possible efforts to curry political influence by the onetime mortgage giant whose troubles helped spark the 2008 financial meltdown. The disclosure of the congressional loans came in a Friday letter from Rep. Darrell Issa (R., Calif.) to the House ethics committee alerting members of that panel of "possible wrongdoing by Members of Congress."
• Schnitzer(SCHN) Sees Worse-Than-Expected 1Q On Weakened Demand. Schnitzer Steel Industries Inc. (SCHN) expects to post weaker than expected fiscal first-quarter results as a result of a weaker-than-anticipated global market for recycled metals. Shares were down roughly 6% at $43.01 in recent premarket trading. Through Friday's close, the stock is down 31% this year. The company said heightened concerns about the global economy led to a significant slowdown in buying patterns and a rapid decline in average selling prices during the quarter. For the period ended Nov. 30, Schnitzer forecast per-share earnings of 18 cents to 25 cents. Analysts polled by Thomson Reuters recently projected 55 cents. Schnitzer now expects operating earnings per ferrous ton to fall about 50% from year-earlier levels of $21 a ton in the metals recycling segment -- its largest business. In December, Schnitzer had expected operating earnings would be roughly flat with the year-earlier period. Operating income in the auto-parts segment is expected to decline 30%.
• Chinese Villagers Vow Protests Will Persist. Residents of this besieged southern village vowed to carry on protests this week and showed signs of settling in for a protracted standoff with Chinese authorities, even amid indications that the government has stepped up security efforts in the region. On Sunday, residents from other villages donated bags of rice and other supplies to Wukan, according to locals. The village's main square was quiet Sunday night, but resident left benches and a stage set up for more rallies planned later this week.

Business Insider:

• El-Erian: The REAL Reason Europe Is Begging For Help From The IMF.
• China's Housing Bust: A Potentially Devastating Blind Side In 2012.
• A Look at the North Korean Military Forces Now in the Hands of 29 Year Old Kim Jong Un.
• DSK: No 'Firewall' Exists, Europe Has 'Only Weeks'. In his first formal public address since facing charges, later dropped, for the attempted rape of a hotel maid in New York, Dominique Strauss-Kahn offered a blunt assessment of his former peers' performance during the European debt crisis.

Zero Hedge:

• As Liquidity Swap Impact Fades, ECB Is Back To Propping Up Peripheral Bond Markets In Size. (graph)
• Jon Corzine, MF Global, And Unaccountability.
• A Quick And Dirty Look At Japan's Nearly ¥1 Quadrillion In Debt.
• Bill Gross Insinuates The ECB's Upcoming LTRO Is Merely A Shell Game.

New York Times:

• ECB Warns of Dangers Ahead for Euro Zone Economy. The European Central Bank warned Monday of a perilous year ahead as the sovereign debt crisis collides with slower economic growth and a dearth of market funding for banks. But the E.C.B., in its twice-yearly assessment of risks to the euro area financial system, did not mention one risk that clearly weighs on many investors, economists and political leaders: the possibility that the euro zone could break up.

The Daily:

• FBI Launches Probe of Fannie, Freddie. Federal investigators want to know whether executives at mortgage finance giants Fannie Mae and Freddie Mac misled investors and the public about risky mortgages in the lead-up to the 2008 financial crisis. High-ranking sources with the Department of Justice told The Daily that the FBI and other federal authorities have launched investigations into the matter. The development comes as the Securities and Exchange Commission filed suit yesterday against six former top executives at Fannie and Freddie.
  

Opalesque:

• NYC Takes Anti-Hedge Fund Tax Stance. New York City has long held a reputation as America's financial center. The city is home to major exchanges, banks and some of the world’s largest hedge funds. Indeed, the city's mayor Michael Bloomberg made a name for himself providing services for financial professionals. However, this may be changing as city finance officials have opted to abruptly reassess how they collect taxes from hedge funds. I spoke with Alexis Gelinas, Attorney at New York based law firm Sadis & Goldberg LLP, about the shift and its potential impact.

Reuters:

• Britain Refuses to Take Part in EU IMF Fund: Sources. British finance minister George Osborne told European Union colleagues on Monday he would not take part in any proposed EU cash boost to the International Monetary Fund specifically aimed at the euro zone debt crisis, Treasury sources said. "We were clear that we would not be making a contribution," one source said. Another said there was "no agreement on the 200 billion" fund.
• Copper Slips on China Slowdown Fears.
  

The Economist:

• Gasping for Breath. Short of authority and direction, India’s rulers flail in the face of growing problems.

Telegraph:

• Debt Crisis: Live.

Kathimerini:

• Greece's government needs to adopt additional measures worth $2.6 billion in the first quarter of next year. A team of officials from the European Commission, ECB and IMF asked Greece to have the additional measures ready when it returns to Athens next month. The troika wants the measures, which are to be implemented in the first three months of next year, to be part of a second international bailout Greece is negotiating which is due to be signed in June.

Bear Radar

Style Underperformer:

• Mid-Cap Value (-.91%)

Sector Underperformers:

• 1) Coal -3.70% 2) Airlines -3.10% 3) Steel -2.20%

Stocks Falling on Unusual Volume:

• C, JPM, CLF, IOC, BP, TEVA, JAKK, SCHN, VPRT, AWAY, ARUN, ATHN, LRCX, ABMD, CVV, NVLS, FSLR, PLCE, MAT, SINA, PEGA, PICO, IOO, IXG, WBK, RGC, IAK, EXI, AWAY and P
  

Stocks With Unusual Put Option Activity:

• 1) NSC 2) C 3) SOHU 4) EWY 5) HD
  

Stocks With Most Negative News Mentions:

• 1) RIMM 2) FSLR 3) DO 4) XLNX 5) WFC
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume