Today's Headlines

Bloomberg:

• Ireland Leads Increase in European Sovereign Debt Risk, Default Swaps Show. Ireland led an increase in the cost of insuring European government debt as finance ministers stopped short of an immediate bailout package and LCH Clearnet Ltd. raised the margin requirement for Irish bond trading. Credit-default swaps on Ireland jumped 35 basis points to 554.5, according to data provider CMA. Contracts on Greece increased 22 basis points to 950, Portugal rose 7 to 429, Italy was 6 higher at 192 and Spain was up 9.5 at 266. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments increased 2 basis points to 170. The cost of insuring against losses on European corporate bonds fell, according to JPMorgan Chase & Co. The Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings declined 3 basis points to 470. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings decreased 0.5 basis point to 103.75. The Markit iTraxx Financial Index linked to the senior debt of 25 banks and insurers fell 1 basis point to 135.5 and the subordinated index was 1.5 lower at 214.5, JPMorgan prices show.
• Spain Boosts Interest Payments as Irish Slump Infects Region: Euro Credit. Spain’s borrowing costs may rise at tomorrow’s auction of as much as 4 billion euros ($5.4 billion) of bonds as the European Union’s squabbling with Ireland over emergency aid threatened to infect neighboring countries. The extra yield investors demand to hold Spanish 10-year bonds over German bunds of similar maturity rose 3 basis points to 201.4, up 29 basis points from Sept. 16 when Spain last sold debt maturing in 2010 and 2041. Spain priced 3.7 billion euros of 12-month bills yesterday to yield 2.363 percent, compared with 1.842 percent a month earlier.
• Republicans Express 'Deep Concerns' in Letter to Bernanke. The four top Republicans in Congress wrote to Federal Reserve Chairman Ben S. Bernanke today expressing “deep concerns” over the central bank’s second- round of Treasury bond purchases. “While intended to improve the short-term growth of the U.S. economy and help maintain a stable price level, such a measure introduces significant uncertainty regarding the future strength of the dollar,” the letter said. The purchases could “result both in hard-to-control, long-term inflation and potentially generate artificial asset bubbles.”
• World Food Import Costs Will Exceed $1 Trillion This Year, UN's FAO Says. World food imports will exceed $1 trillion this year, close to the record reached in the food- crisis year of 2008, on surging commodity prices, the United Nations’ Food and Agricultural Organization said. The global cost of importing foodstuffs will jump 15 percent to $1.026 trillion in 2010, from $893 billion last year and compared with $1.031 trillion in 2008, the Rome-based FAO said in a report today. The world faces “harder times ahead” unless production of major food crops rises next year, it said. “It is unlikely that the effects of higher prices will be contained in their respective sectors, as many of these commodities constitute major feedstock ingredients for the livestock or biofuels sector,” the FAO said. “With price increases largely reflecting scarcity in export supply, global competition for securing foodstuffs is set to intensify.’”
• CFTC's Dunn Says Swaps Industry May Have to Pay for Reforms. The derivatives industry may have to pay for regulatory reforms if Republicans in Congress limit funding, said Commodity Futures Trading Commissioner Michael Dunn.
• First Solar(FSLR) Expects German Market to Shrink Next Year, Handelsblatt Says. First Solar Inc. expects the German solar market to shrink in 2011, Handelsblatt reported, citing an interview with Chief Executive Officer Rob Gillette. The German market, which was until now the biggest market for First Solar, will only represent 25 percent to 30 percent of the company’s revenue at the end of next year, Gillette told the newspaper. North America will become the biggest market, the CEO is cited as saying. The world’s biggest solar company plans to almost double production capacity by 2012, which would give it almost a fifth of the global market, according to the German newspaper.
• The Baltic Dry Index, a measure of commodity-shipping costs, extended its lengthiest decline in more than four months as fleet expansion produced a vessel glut. The gauge fell 1.4% to 2,188 point today. That's a 15th straight retreat, the longest drop since a 35-day slide ended July 15. Rents for grain-hauling panamax ships lost 4.3% to $17,103 a day, the lowest level since July 19, on course for the biggest weekly decline in seven weeks.
• Oil Declines a Fourth Day on China Rate Speculation, Europe Debt. Oil fell for a fourth day as speculation that fuel demand will drop on China’s steps to cool its economy outweighed signs that U.S. consumption is rising. Futures retreated as much as 1.4 percent, extending the biggest three-day decline since August, after Chinese Premier Wen Jiabao said the government was drafting measures to counter inflation in the world’s biggest energy consumer. Prices also fell on concern Europe’s debt crisis is worsening as ministers considered a rescue package for Irish banks.
• McDonald's(MCD) Raises China Prices on Higher Raw Material Costs. McDonald’s Corp., the world’s largest restaurant chain, increased prices for its burgers, drinks and snacks in China to offset costs after the country’s inflation surged to a two-year high.
• Mortgage Applications in U.S. Post Biggest Drop of 2010. The number of U.S. mortgage applications dropped last week by the most this year as an increase in borrowing costs caused refinancing to plunge. The Mortgage Bankers Association’s index fell 14 percent in the week ended Nov. 12, the Washington-based group said today. Refinancing plummeted 17 percent, the most since early April, and purchase applications were down 5 percent. “Yields in the market have moved up, and if the mortgage refinancing window has not shut, it soon will,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report. “Mortgage rates are moving up sharply with Treasury yields. Consumers are still cautious on the outlook for the economy, so they’re hesitating to buy the biggest of big-ticket items, the family house.”
• 'Fed Up' Travelers, Unions Balk at Airport Body Scans. Tension at U.S. airports between security and privacy may peak Nov. 24, one of the year’s busiest travel days, with a protest over growing use of full-body X-rays and of extensive pat-downs for those who reject the scans. That date, just before the Thanksgiving holiday, is National Opt-Out Day for several groups urging passengers to avoid the scanners and to slow the screening by choosing a physical search. Organizers and some airline labor unions object to the radiation exposure and detailed view of bodies, and also call the pat-downs an unwarranted invasion of privacy.
• Boeing(BA) May Delay 787 Dreamliner to 2012, Morgan Stanley Says.
• U.S. Consumer Prices Rose in October; Core Unchanged.
• Goldman(GS) Selects 110 Partners as Wall Street Rebounds.
  

Wall Street Journal:

• Fed to Require Capital Plan From Banks. The Federal Reserve will require all 19 banks that underwent stress tests during the height of the financial crisis to undergo another review of their capital and their ability to absorb losses under an "adverse" economic scenario.
• Osborne Says U.K. Ready to Help Ireland. The U.K. is ready to help Ireland tackle its mounting debt problems, Chancellor of the Exchequer George Osborne said Wednesday.

CNBC:

• Deficit Panel Calls for National Sales Tax, 'Drastic Reform'. Warning of a "death spiral" without drastic changes, a group of experts on the U.S. federal budget deficit on Wednesday called for a 2011 Social Security tax holiday, a soft drink tax and government spending freezes.
• We're Importing Oil From the Enemy: Boone Pickens. Touting his energy plan to get America off foreign oil, financier T. Boone Pickens told CNBC Wednesday that the U.S. is importing oil from its "enemies." "We need to get off OPEC oil, and that's what I want," said Pickens, who is chairman and founder of the BP Capital Management hedge fund. "Right now, with two wars in the Middle East (Iraq and Afghanistan), we are importing oil from the enemy."
• Warren Buffett's Warning on CNBC: Fed Easing Creates 'Dangers' for Confidence in Dollar. In a live telephone interview on CNBC's Squawk Box this morning following up on his New York Times op-ed, Buffett essentially warned that the Fed's $600 billion quantitative easing program probably won't help the economy very much, but could undermine confidence in the U.S. dollar.

Business Insider:

• My Chinese Maid is Breaking The Law to Buy a Second Home. I’ve frequently commented that the Chinese government’s administrative measures, earlier this year, to “cool” its overheated property market had done nothing to change the fundamental dynamics driving so many Chinese to invest in real estate, and in particular, unproductive real estate.
• Bob Rubin: "US in Terribly Dangerous Territory," Bond Market May be Headed for "Implosion". Warning of the risk of an "implosion" in the bond market, former Treasury Secretary Robert Rubin says the soaring federal budget deficit and the Fed's quantitative easing are putting the U.S. in "terribly dangerous territory." Speaking at an event at The Pierre Hotel in New York City honoring Sen. Kent Conrad (D-N.D.), Rubin joined the growing number of current and former officials (foreign and domestic) to criticize QE2. The Fed's plan to buy $600 billion of Treasuries "has a lot of risk," he said, calling the international reaction "horrendous."

Zero Hedge:

• Philadelphia Downgraded by Moody's (A1 to A2). Moody's Investors Service has downgraded to A2 from A1 the rating on City of Philadelphia's $3.8 billion in general obligation bonds and unconditional General Fund debt obligations.
• Greek December Aid Tranche Delayed Until January - Charting Europe's Slow Motion Train Wreck.
  

Forbes:

• California Suggest Suicide; Texas Asks: Can I Lend You a Knife? In the future, historians may likely mark the 2010 midterm elections as the end of the California era and the beginning of the Texas one. In one stunning stroke, amid a national conservative tide, California voters essentially ratified a political and regulatory regime that has left much of the state unemployed and many others looking for the exits.

Fox Business:

• Angelides Launching Probe into Mortgage Market. Add Phil Angelides to the growing list of regulators investigating whether banks committed fraud in the $6.4 trillion mortgage-bond market, the FOX Business Network has learned. The Financial Crisis Inquiry Commission, which Angelides chairs, has begun investigating whether mortgages packaged into bonds and now held by investors including government agencies like Fannie Mae and Freddie Mac were done so improperly, thus calling into question the legality of trillions of dollars of debt, according to people with direct knowledge of the matter.
• Civil 'Servants'? Wealth of Congress Members Grew 16% in 2008-2009. Congressional members' personal wealth collectively rose by more than 16 percent between 2008 and 2009, despite the economy-busting effects of the Great Recession, according to a new study released Wednesday by the Center for Responsive Politics.

St. Louis Beacon:

• St. Louis Fed President Says It's Time to Reform Housing Finance. The time has come to reform housing finance according to best principles and sound lending practices, St. Louis Federal Reserve President James Bullard told participants at a conference Wednesday morning on Government-Sponsored Enterprises -- Fannie Mae and Freddie Mac. "The extent of congressional meddling in this market has been astonishing to the point where one can barely identify what the private sector outcomes would be in the absence of intervention,'' said Bullard in his opening statement. "To the extent possible, we need to let the private sector provide the bulk of U.S. housing finance going forward, without the incentive-distorting set of government programs and taxpayer guarantees that caused our current system to collapse.'' Bullard said that those programs meant well but ended up costing everyone dearly. "It makes little sense to try to design programs that subsidize everyone,'' he said. "If everyone is subsidized, then no one is subsidized."

Real Clear Markets:

• Cities Face a Deepening Fiscal Crisis. The steep fiscal crisis that many states face includes staggering retirement costs for their workers, estimated at some $3 trillion in unfunded future promises. The size of those liabilities has already shaken up some municipal bond investors, and the inadequate, sometimes misleading way that states account for these steep costs has attracted the attention of the Securities and Exchange Commission. But lurking beneath those obligations is another huge set of liabilities from municipal governments, that is, from cities and counties whose politicians have also made astonishing promises to workers that they will have trouble keeping.

Politico:

• Health PACs Favor Dems. Health-sector political action committees — ranging from doctors to hospitals to drug companies — generally favored Democrats. Of the $42 million that 122 health-sector PACs gave to congressional candidates this cycle, 58 percent went to Democrats and 41 percent to Republicans, according to the nonprofit Center for Responsive Politics.
• GOP Gains Upper Hand on Spending. With a bipartisan compromise fading, Democrats appear resigned to another short-term, year-end spending bill that sets up an early fight in the new Congress between the White House and newly empowered Republicans demanding deep cuts in domestic appropriations.

Reuters:

• Best Buy(BBY) Says Holiday Shoppers May Buy at Last Minute. Consumers might delay this year's holiday shopping until the last minute because of the sluggish economy, the head of consumer electronics retailer Best Buy Co Inc (BBY.N) said. Brian Dunn, the chief executive officer of Best Buy, also said he expects strong sales for e-readers, smartphones, tablet computers such as the Apple Inc (AAPL.O) iPad, and gaming products like Microsoft Corp's (MSFT.O) Kinect and Sony Corp's (6758.T) Playstation Move.
• Target(TGT) Sees Holidays Boosting Sales to 3-Year High. Target Corp (TGT.N) expects to post its best same-store sales in three years during the upcoming holiday season, sending its shares up as some analysts bet it will outpace larger rival Wal-Mart Stores Inc (WMT.N).

Telegraph:

• Why the BBC Cannot be Trusted on 'Climate Change': The Full Story. When the history of the greatest pseudoscience fraud in history – aka “Climate Change” – comes to be written, no media organisation, not even the Guardian or the New York Times, will deserve greater censure than the steaming cess pit of ecofascist bias that is the BBC.

Die Welt:

• European Central Bank Governing Council member Yves Mersch said the central bank can't always provide the rear-guard defense for troubled governments and banks, citing an interview.

Kathimerini:

• Greece's Health Minister Andreas Loverdos committed to cut spending on health by 1.4 billion euros in 2011 following a meeting with European Union and IMF officials in Athens.

IrishTimes.com:

• Irish Bailout Amount Likely to be Very Large Figure. ANY NEGOTIATIONS about the provision of support for Ireland’s banks from the European stability fund for Ireland most likely centre around a very large figure, according to informed sources. Any support would have to be large enough to restore international confidence in the Irish banks and also perhaps to allow them to reduce their indebtedness to the European Central Bank. The interest rate that would apply to the funding, how it would be packaged, its size and what it should be used for would be among the issues being negotiated, one source said.

China Finance:

• China should start property tax trials in Shanghai and Chongqing first and then consider expanding to other cities, Jia Kang, head of the Ministry of Finance's research institute, wrote.

Bear Radar

Style Underperformer:

• Large-Cap Value (+.06%)

Sector Underperformers:

• 1) Banks -1.14% 2) Alt Energy -.76% 3) Gaming -.44%

Stocks Falling on Unusual Volume:

• IR, HD, HPQ, LVS, SYNT, HGSI, ASYS, WGOV, PETD, FSLR, TRIT, KVHI, BSFT, BRLI, DORM, GOLD, FEU, ATI, ADX and PEO
  

Stocks With Unusual Put Option Activity:

• 1) RF 2) GGP 3) STP 4) FITB 5) EWH
  

Stocks With Most Negative News Mentions:

• 1) COLM 2) TSL 3) TSN 4) KOSS 5) SOLR
  

Bull Radar

Style Outperformer:

• Mid-Cap Growth (+.68%)

Sector Outperformers:

• 1) Oil Service +1.40% 2) Coal +1.31% 3) Wireless +1.21%

Stocks Rising on Unusual Volume:

• TTM, RES, QCOM, AVID, LDSH, TSTC, CMED, SINA, THOR, CHS and GME
  

Stocks With Unusual Call Option Activity:

• 1) ATI 2) HGSI 3) JCG 4) GME 5) ATVI
  

Stocks With Most Positive News Mentions:

• 1) SYBT 2) AVGO 3) BGC 4) MWV 5) SXCI
  

Wednesday Watch

Evening Headlines
Bloomberg:

• Efforts to Extend Bush-Era Tax Cuts Falter as White House Meeting Delayed. A deal to extend soon-to-expire Bush-era tax cuts won’t be completed until December, and some Democrats in Congress said an accord may not be reached this year. President Barack Obama and congressional leaders postponed until Nov. 30 a White House meeting, previously scheduled for tomorrow, to negotiate whether to extend lower tax rates for all taxpayers or just those with incomes of $250,000 or less. Separately, Democrats, who control the Senate, said they haven’t agreed on a plan. “I don’t even know what the options are at this moment,” Senator Maria Cantwell, a Democrat from Washington state who serves on the tax-writing Finance Committee, said yesterday. The delay sets the stage for year-end brinksmanship that would result in higher taxes for all Americans next year if Congress fails to pass legislation that Obama agrees to sign.
  
• EU Works on Aid for Irish Banks, Spurns Immediate Package. European finance ministers started work on possible aid for Ireland’s debt-laden banks, stopping short of an immediate bailout package and risking a renewed convulsion on bond markets.
  
• Irish Crisis Punishes European Borrowers as Dollar-Bond Sales Slump. U.S. dollar bond sales by European companies are tumbling as investors avoid the debt on concern the region’s budget deficit crisis may spiral out of control as Ireland comes closer to following Greece in getting a bailout. Borrowers in Europe have raised $1 billion this month selling bonds in the U.S., or 2.1 percent of all investment- grade issuance, the smallest share since at least 1998 and down from $9.3 billion, or 32 percent, in the same period of October, according to data compiled by Bloomberg.
• Swaps on Property and Casualty Insurers Jump on Muni Selloff. The selloff in municipal bonds is helping push the cost to protect the debt of property and casualty insurers to the highest in more than a month. Credit-default swaps on New York-based Travelers Cos. and Chubb Corp. climbed to the highest since October. Municipal securities account for 26 percent of the financial assets of property and casualty insurers, Hans Mikkelsen, credit analyst at Bank of America Corp., wrote in a report yesterday. “Some investors view P&C insurer CDS as hedges against muni risk,” Mikkelsen wrote. Municipal bond prices are dropping amid a surge in issuance. Pacific Investment Management Co.’s Municipal Income Fund has dropped 12.3 percent since Nov. 3, when the Federal Reserve said it would undertake a round of quantitative easing, known as QE2, by buying $600 billion in U.S. debt. The cost to protect Travelers jumped 7.4 basis points to 92.2, the highest since Oct. 6, according to data provider CMA. Its investments in municipal debt were $41.4 billion as of Sept. 30, or 63 percent of the company’s fixed-maturity total, according to an Oct. 21 regulatory filing. Swaps on Chubb, which is based in Warren, New Jersey, climbed 8.3 basis points to 67. Contracts on Boston-based Liberty Mutual Insurance Co. increased 6.7 basis points to 130.6 and those on Allstate Corp., based in Northbrook, Illinois, gained 9.8 basis points to 87.6.
• Fed May Hesitate on More Easing After Critics Question Employment Mandate. The Federal Reserve is facing the fiercest political assault on its powers in three decades as it struggles to help revive the U.S. economy. The Fed’s plan to expand its purchases of Treasury securities has triggered criticism from Republican lawmakers, some economists who wrote an open letter to the Fed protesting the move, and finance officials in Germany, China and Brazil. While central bank officials are pressing ahead with the $600 billion bond-buying program announced this month, analysts said the criticism may fan dissent within the Fed over the quantitative-easing policy. That may limit Chairman Ben S. Bernanke’s ability to take further measures if the economy remains weak.
• China's Stocks Drop as Wen's Speech Boosts Rate, Price Control Speculation. China’s stocks fell after Premier Wen Jiabao said the cabinet is drafting measures to curb rapid price gains, boosting speculation the government may raise interest rates and order price controls to slow inflation.
• Nomura Turns 'Bearish' on Chinese Stocks on Outlook for Tightening Policy. Nomura Holdings Inc. is turning “bearish” on China’s yuan-denominated shares, saying that the government may order price controls and “more draconian’” measures to curb accelerating inflation. “The likelihood of a re-introduction of price controls on food is growing,” Sean Darby, a Hong Kong-based strategist at Nomura, which was ranked first in China research by Institutional Investor magazine in its All-China Research Team poll this year, said in a report today. “The recent run-up in agriculture prices worldwide and signs of hoarding appear to have pushed the authorities to reconsider draconian measures.” “Command style economic principles generally mean much lower multiples over time on the sector and stocks,” said Darby. The Shanghai Composite has fallen 12 percent this year after the government raised bank reserve requirements and curbed lending growth to cool the economy. Stocks on the measure trade at an average 19.2 times reported earnings, compared with 26.4 times at the beginning of the year, according to weekly data compiled by Bloomberg.
• China Stock Index Volatility at Six-Month High Means 'Stay Put', CICC Says. China stocks volatility jumped to the highest in six months, spurring China International Capital Corp. to recommend that investors refrain from buying equities as the government intensifies measures to contain inflation. “Investors should stay put,” Hao Hong, a Beijing-based global strategist at CICC, the top-ranked brokerage for China research in Asiamoney’s annual survey, wrote in a report. “Fundamental volatility hasn’t been reflected yet. Inflation risks haven’t been priced in.”
• Commodities Cap Biggest Five-Day Slide Since 2009 as China May Slow Buying. Commodities capped the biggest five- session slide since July 2009 on concern that China will seek to slow its economic growth, curbing raw-material demand in the country that is leading the global recovery. The Thomson Reuters/Jefferies CRB Index of 19 raw materials fell 3.2 percent to settle at 296.22 at 5:34 p.m. in New York. The gauge has dropped 7.2 percent since Nov. 9, the biggest five-session decline since July 2009. Premier Wen Jiabao said today the cabinet is drafting measures to counter the fastest inflation in two years. China may impose price limits on food and toughen punishment for those found speculating on agriculture, the China Securities Journal said, citing an unidentified person. “Some of the bullish catalysts have shrunk with the idea that the dollar is on much more firm footing,” said James Cordier, a portfolio manager at OptionSellers.com in Tampa, Florida. “What we’re seeing today is what happens when you have a crowded space, like commodities have been, get a little bit of negative news, and everyone hits the exit at the same time.” Cotton is up 71 percent this year, the most among futures tracked by the CRB, followed by silver, up 50 percent, and coffee, up 47 percent.
• China's Nickel Pig Iron Production to Increase by 6.2% in 2011, CRU Says. China’s production of nickel pig iron will rise 6.2 percent to 155,000 metric tons next year, with Chinese stainless steel producers substituting about one- third of primary nickel with the cheaper alternative, CRU said.
• Cotton, Sugar, Soybean Futures in China Drop by Limit on Inflation Concern. China agriculture futures including soybeans, sugar and cotton tumbled by the daily limit on concern the government will curb speculation and take additional measures to limit inflation. Soybeans and soybean oil for September delivery both dropped 4 percent to 4,337 yuan a metric ton and 9,396 yuan, respectively, on the Dalian Commodity Exchange. Cotton for May delivery slumped 5 percent to 27,090 yuan a ton and sugar for September shipment also fell 5 percent to 6,196 yuan on the Zhengzhou Commodity Exchange.
• Emerging Markets ETF Put Trading Advances to a Five-Month High in the U.S. Trading of bearish emerging-market stock options jumped to a five-month high in the U.S. yesterday as investors boosted buying of the contracts to protect against losses in the shares amid a global equity retreat. More than 465,000 puts to sell shares of the iShares MSCI Emerging Markets exchange-traded fund changed hands, 3.6 times the four-week average and triple the number of calls to buy. The most-active contracts were December $44 puts, which rose 58 percent and accounted for a quarter of put trades.
• Banks Balancing Competing Foreclosure Interests, Executives Tell Senators. Bank of America Corp. and JPMorgan Chase & Co. must balance the interests of homeowners and investors in handling foreclosures, executives from both companies told lawmakers at a U.S. Senate hearing.
• US Video-Game Sales Decline for Seventh Month, Led by Slump in Hardware. U.S. video-game sales fell for the seventh month in a row, as slumping demand for consoles and other hardware dragged industry revenue down by 4 percent. Hardware sales sank 26 percent to $280 million, researcher NPD Group Inc. said today in a statement.
• Bernanke's 'Cheap Money' Stimulus Spurs Corporate Investment Outside U.S. Southern Copper Corp., a Phoenix- based mining company that boasts some of the industry’s largest copper reserves, plans to invest $800 million this year in projects such as a new smelter and a more efficient natural-gas furnace. Such spending sounds like just what the Federal Reserve had in mind in 2008 when it cut interest rates to near zero and started buying $1.7 trillion in securities to spur job growth. Yet Southern Copper, which raised $1.5 billion in an April debt offering, will use that money at its mines in Mexico and Peru, not the U.S., said Juan Rebolledo, spokesman for parent Grupo Mexico SAB de CV of Mexico City. Southern Copper’s plans illustrate why the Fed’s second round of bond buying may not reduce unemployment, which has stalled near a 26-year high. Chairman Ben S. Bernanke and his colleagues appear to be fueling a foreign-investment surge, underscoring the difficulty of stimulating the economy through monetary policy with interest rates already near record lows. “You’re seeing leakage from quantitative easing,” said Stephen Wood, chief market strategist for Russell Investments in New York, which has $140 billion under management. “That leakage is going into emerging markets, commodity-based economies, commodities themselves and non-U.S. opportunities.”

Wall Street Journal:

• Sweeping Irish Aid Package in Works. Senior European officials laid the groundwork for a bailout of Ireland that could reach €100 billion ($136 billion), saying experts would travel this week to Dublin to examine the country's finances amid alarm about the dire straits of the Irish banking system.
  
• Pressure Builds Over Loan Modifying. State attorneys general are intensifying pressure on lenders to fix the system they use to modify mortgages as part of a potential settlement in their multistate investigation of the foreclosure problems. The attorneys general are scrutinizing whether home-loan servicers violated state laws against deceptive practices by using "robo signers" to submit affidavits and foreclosure documents without confirming the paperwork's accuracy. But the states' investigation, which could lead to civil charges, already has expanded to include other issues, such as the fees charged by servicers.
• Another Deficit Plan Targets Taxes. A panel of Democrats, Republicans, economists and other experts is set to say Wednesday that a complete overhaul of the U.S. tax code is the best way to address the nation's fiscal problems—a new and likely controversial idea aimed at tackling the growing deficit.
• Obama's Overture to Business Gets Wary Reception From CEOs. The Obama administration's effort to reboot its relationship with the business community ran into a tough crowd Tuesday.
• SEC Circuit Breaker Pilot May Extend as New Limits Debated - Sources. A program to halt trading in volatile U.S. stocks is likely to be extended beyond its expiration date next month, giving regulators and exchanges more time to develop longer-term remedies for the wild price swings seen in the May 6 "flash crash."
• Qualcomm(QCOM) Exec Sees 'Rich' Product Roadmap for Processors. The head of Qualcomm Inc.'s (QCOM) chipset unit said the wireless semiconductor company has plans to tap further the strong demand for mobile devices and fight rivals like Intel Corp. (INTC).
• Pittsburgh Bans Natural-Gas Drilling. Pittsburgh's city council voted 9-0 Tuesday to ban natural-gas drilling within city limits, citing health and environmental concerns, becoming the first city in Pennsylvania state to do so. Many rural towns and landowners around the state have embraced gas exploration into the massive Marcellus Shale formation, as an economic boon.
• The Secret $25 Billion Rival Bid for Potash Corp.(POT). As Potash Corp. of Saskatchewan successfully fought off a $38.6 billion hostile takeover attempt by BHP Billiton, it had some unusual allies: a First Nations group that said it raised $25 billion to defend the company from the Anglo-Australian interlopers.
• Las Vegas Sees Some Recovery, But Gambling Outlook Uncertain. By most accounts and even some measures, Las Vegas seems to be finally bouncing out of its recent trough as visitor traffic improves and casino revenue, at least on the upper end, twitches upward. Certainly, as the industry's annual trade show gets going here this week, Sin City seems livelier than it has over the past few years.

CNBC:

• General Motors to Increase IPO Size by 30%.

Business Insider:

• Chart of the Day: Mortgage Rates Just Hit a Four-Month High.

Zero Hedge:

• It Begins: Detroit Neighboring City of Hamtramck Asks for Permission to File for Bankruptcy.

NY Times:

• Currency Fight With China Divides U.S. Business.

IBD:

• Retail Recovery Resonates With Seller Of In-Store Tech Systems. "For us it's all about helping restaurants focus on doing what they do best: cooking really good food and serving their customers," said Heyman, chief executive of Radiant Systems (RADS). "We try to provide tools that are easy to use and simple to understand."

CNN Money:

• Prices for Used Cars Hit a Record High.

Politico:

• Democrats in Chaos Over Nancy Pelosi's Power. The Democratic old guard will try to hold the line Wednesday against a rank-and-file rebellion intent on winning some concession — no matter how small — from a leadership team seeking reelection despite having presided over the loss of at least 60 Democratic seats earlier this month. The leadership election follows on the heels of a brutally long, contentious and divisive leadership meeting Tuesday, and it will determine not only whether Speaker Nancy Pelosi remains the head of the House Democratic contingent but just how much authority she will wield in the new Congress come January.

Foreign Policy:

• George Soros: China Has Better Functioning Government Than U.S. "There is a really remarkable, rapid shift of power and influence from the United States to China," Mr. Soros said, likening the U.S.'s decline to that of the U.K. after the Second World War. Because global economic power is shifting, Mr. Soros said China needs to change its focus. "China has risen very rapidly by looking out for its own interests," he said. "They have now got to accept responsibility for world order and the interests of other people as well." Mr. Soros even went so far as to say that at times China wields more power than the U.S. because of the political gridlock in Washington. "Today China has not only a more vigorous economy, but actually a better functioning government than the United States," he said

Reuters:

• China Telecom Briefly Hijacked US Web Traffic - Panel. China Telecom sent incorrect routing information last April that resulted in Internet traffic to major corporate websites and U.S. military and government sites being sent through China for 18 minutes, according to a report by a congressional advisory group.
• U.S. Advisers Recommend Human Genome(HGSI) Lupus Drug.
  

Telegraph:

• Greek Rescue Frays as Irish Crisis Drags On. The eurozone bail-out for Greece has begun to unravel after Austria suspended aid contributions over failure to comply with the rescue terms, and Germany warned Athens that its patience was running out. The clash caught markets off-guard and heightened fears that Europe's debt crisis may be escalating, with deep confusion over the Irish crisis as Dublin continues to resist EU pressure to request its own rescue. Olli Rehn, the EU economics commissioner, said escalating rhetoric in Europe was turning dangerous. "I want to call on every responsible European to resist the centrifugal tendencies and existential alarmism."

China Securities Journal:

• China could raise interest rates for a second time this year as soon as Nov. 19, citing an analyst. The central bank may raise rates due to sustained inflationary pressure, the report said. Earlier announcements also indicate that rate decisions are often released on Fridays or around the 20th of the month.

Evening Recommendations
Citigroup:

• Reiterated Buy on (SKS), target $15.

Night Trading

• Asian equity indices are -1.50% to -.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 112.0 +3.0 basis points.
  
• Asia Pacific Sovereign CDS Index 110.25 +8.25 basis points.
  
• S&P 500 futures +.31%
  
• NASDAQ 100 futures +.36%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (WMG)/-.13
• (BJ)/.36
• (NTAP)/.49
• (PETM)/.38
• (CHS)/.15
• (TGT)/.68
• (AMAT)/.31
  

Economic Releases
8:30 am EST

• The Consumer Price Index for October is estimated to rise +.3% versus a +.1% gain in September.
• The CPI Ex Food & Energy for October is estimated to rise+.1% versus unch. in September.
• Housing Starts for October are estimated to fall to 598K versus 610K in September.
• Building Permits for October are estimated to rise to 568K versus 539K in September.
  

10:30 am EST

• Bloomberg consensus estimates call for weekly crude oil inventories unch. this week versus a -3,274,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -750,000 barrels versus a -1,917,000 barrel decline the prior week. Distillate inventories are estimated to fall by -2,000,000 barrels versus a -4,972,000 barrel decline the prior week. Finally, Refinery Utilization is expected to rise by +.5% versus a +.6% gain the prior week.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Rosengren speaking, Fed's Bullard speaking on future of GSEs, weekly MBA Mortgage Applications report, (UAM) analyst meeting, (QCOM) analyst meeting, (GWW) analyst meeting, Citigroup Credit Conference, BofA Merrill Credit Conference, Deutsche Bank Media/Telecom Conference and the Morgan Stanley Consumer/Retail Conference could also impact trading today.
  

BOTTOM LINE: Asian indices are 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 modestly lower. The Portfolio is 75% net long heading into the day.

Stocks Falling into Final Hour on Tax Hike Worries, Rising US Municipal Debt Angst, China Hard-Landing Concerns, Eurozone Debt Worries

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  
• Sector Performance: Every Sector Declining
  
• Volume: Around Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 22.71 +12.43%
  
• ISE Sentiment Index 124.0 -22.98%
  
• Total Put/Call .94 +18.99%
  
• NYSE Arms 1.75 +87.27%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 95.78 bps +4.37%
  
• European Financial Sector CDS Index 107.17 bps -5.16%
  
• Western Europe Sovereign Debt CDS Index 162.67 bps -1.81%
  
• Emerging Market CDS Index 225.83 bps +6.10%
  
• 2-Year Swap Spread 20.0 unch.
  
• TED Spread 15.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .13% unch.
  
• Yield Curve 234.0 -5 bps
  
• China Import Iron Ore Spot $163.10/Metric Tonne +1.43%
  
• Citi US Economic Surprise Index +29.20 +.7 point
  
• 10-Year TIPS Spread 2.03% -6 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -100 open in Japan
• DAX Futures: Indicating +5 open in Germany

Portfolio:

• Slightly Lower: On losses in my Medical, Tech and Biotech long positions
  
• Disclosed Trades: Added to my (IWM)/(QQQQ) hedges and then covered them
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is very bearish as the S&P 500 trades near session lows despite a decline in euro sovereign debt angst. On the positive side, Education and Retail Shares are holding up relatively well, falling less than 1%. The declines in the euro financial sector and western europe sovereign cds are positives. Weekly retail sales rose +2.7% this week versus a +2.6% gain the prior week. The 10-year yield is falling -12 bps to 2.84%. On the negative side, Gaming, REIT, Paper, Steel, Gold, Alt Energy, Coal, Restaurant, Construction, Bank, Disk Drive and Energy shares are under meaningful pressure, falling more than -2.75%. (XLF) and especially (IYR) have underperformed throughout the day. (IYR) is breaking convincingly below its 50-day moving average and looks poised to test the 200-day. Cyclical and small-cap shares are also underperforming. Copper is plunging -5.18% and the S&P GSCI Ag Spot Index is dropping -4.8%. Shanghai copper inventories are up another +9.2% today and have surged +28.9% over the last 5 days. Moreover, the Shanghai Composite has decline -8% over the last 5 days and is poised to test its 200-day. The Illinois and California municipal cds are up another +2.3% and +1.83%, respectively. The US Muni CDS Index is rising +3.95% to 197.50 bps. The Greece sovereign cds is jumping +8.1% to 957.75 bps, the Russian sovereign cds is climbing +5.63% to 151.28 bps and the Hungary sovereign cds is rising +3.72% to 318.55 bps. The euro currency continues to trade poorly. The S&P 500 Implied Correlation Index is surging +18.6% to 63.74. Bloomberg TV is reporting that Democratic Senator Dick Durbin is saying that he is not optimistic that tax cuts will be extended now, which would be a major new negative. Overall investor angst is still a bit too bullish given recent headwinds and the market's overbought technical state, which is also a negative. I expect US stocks to trade mixed-to-lower into the close from current levels on rising US municipal debt angst, tax hike worries, profit-taking, more shorting, eurozone debt concerns and China hard-landing fears.

Today's Headlines

Bloomberg:

• Ireland Discusses Bailout as EU Struggles With Debt Crisis. Ireland was in talks over a financial rescue as European Union leaders battled to shield Portugal from the resurgent debt crisis and doubts surfaced over Greece’s economic health. “We are in a survival crisis,” EU President Herman Van Rompuy said at the European Policy Centre in Brussels today. “If we don’t survive with the euro zone we will not survive with the European Union.”
• Greece Leads Jump in Sovereign Debt Swaps After Austria Says Aid Withheld. Greece led a surge in the cost of insuring European government debt after Austria threatened to block its next transfer of European Union funds because the nation isn’t meeting tax revenue and deficit-cutting targets. Credit-default swaps on Greece soared 86 basis points to 944, the highest since June 29, according to data provider CMA. Contracts on Ireland rose 22 basis points to 515, Portugal climbed 13 to 426, Italy increased 7 to 188 and Spain was up 8 at 259. The Greek budget deficit for last year was revised to 15.4 percent of gross domestic product from 13.6 percent by the EU yesterday, just six months after it agreed a bailout with the EU and International Monetary Fund. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments was 7 basis points higher at 168.
• China Stocks Plunge on Concern Inflation May Spur More Controls. China’s stocks fell, driving the benchmark index to the lowest in a month, on speculation the government will intensify measures to curb accelerating inflation including higher interest rates and price controls. PetroChina Co. and Jiangxi Copper Co. plunged more than 6 percent on concern further tightening will curb oil and metals demand. China Vanke Co. slid to the lowest since September, pacing declines by real-estate developers, after the government ordered first-time foreign homebuyers to show proof they don’t own other properties. China Construction Bank Corp. and Agricultural Bank of China Ltd. dropped more than 2 percent on the prospect higher borrowing costs will cut loan growth. “Speculation that the central bank will tighten monetary policy continues to dog the market,” said Wang Cheng, a strategist at Guotai Junan Securities Co. in Shanghai. “The market will be under pressure for the coming three to 12 months from the threat of measures to cool inflation.” The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, tumbled 119.88, or 4 percent, to 2,894.54 at the close, the lowest since Oct. 14. The index has plunged 8 percent in the biggest loss for a three-day period since Sept. 1 on speculation policymakers may raise rates for the second time in two months to curb gains in consumer prices.
• BofA(BAC) in 'Hand-to-Hand Combat' Over Mortgages, CEO Says. Bank of America Corp. Chief Executive Officer Brian T. Moynihan said resolving investor demands for refunds over faulty mortgages is a battle that will last at least several more quarters. “It’s a day-to-day, hand-to-hand combat,” Moynihan said today during an investor conference held by the lender in New York. “It’s manageable in the context of who we are, but we’re not going to spend your money unwisely.” Moynihan’s comments highlight the tensions between Bank of America, the biggest U.S. lender, and clients who bought its mortgages or bet on securities backed by home loans. The Charlotte, North Carolina-based company faces demands to repurchase almost $13 billion of loans that may have failed to document required data such as income and home values.
• Macau to Tighten Control of City's Casino Industry. Macau Chief Executive Fernando Chui said the Chinese city will tighten control of the number of new casinos, gaming tables and slot machines, Xinhua News Agency said, citing Chui’s annual policy address. Regulators will also enhance supervision of casinos, especially in auditing of financial records, Chui said, as cited by Xinhua. The city will also seek to optimize gaming laws and regulations to stabilize industry development, he said. Macau will exclude casinos from allowed uses for land newly filled in from the sea, instead earmarking it for public housing and industries that will help the economy expand beyond gambling, Chui said.
• An announcement of an Irish rescue package may offer only temporary relief for the euro because investors may turn to other so-called peripheral countries in the single-currency region, according to Barclays Plc.
  
• A surplus of supertankers competing for 2 million-barrel cargoes of Middle East crude oil expanded as this month's bookings were concluded, potentially hindering owners' ability to secure better freight rates. There are 9.5% more very large crude carriers, or VLCCs, for hire over the next 30 days than there are cargoes, according to the median estimate of six shipbrokers and two owners surveyed by Bloomberg News today. A week ago, the excess stood at 7%.
• The Baltic Dry Index, a measure of commodity-shipping costs, fell for a 14th day as rents for grain-hauling vessels dropped the most in two months. The gauge lost 42 points, or 1.9%, to 2,219 points today. The index has declined 20% in the current run to a three-month low. Rents for all vessel classes retreated, led by a 3.4% slide for panamax ships that carry coal and iron ore as well as grains.
• Commodity Speculation Should Be Restricted, EU Commissioner Barnier Says. Michel Barnier, the European Union’s financial services commissioner, said he would seek to limit “risk exposures” derived from “agricultural products.” Commodity speculation “can only lead to further disasters,” Barnier said in a speech in Brussels today. The European Commission, the 27-nation EU’s executive, has targeted excessive market speculation in commodities which it blames for making prices more volatile.
• Copper Futures Drop on Concern China May Take More Steps to Slow Growth. Copper fell to the lowest price in almost two weeks on concern that demand will wane in China, the world’s biggest metals user. Global stocks slumped and the Shanghai Composite Index tumbled to a one-month low amid speculation that China will take steps to rein in inflation and curb growth. Copper has rallied fivefold since 2002 as growth in emerging markets boosted demand for the metal used in buildings and electric grids. “Copper is down again after Chinese equities took another pounding,” Alex Heath, the head of industrial-metals trading at Royal Bank of Canada Europe Ltd. in London, said in a report. “The potential for Chinese monetary-policy tightening continued to weigh on investors.” Copper futures for March delivery dropped 11.35 cents, or 2.9 percent, to $3.811 a pound at 10:18 a.m. on the Comex in New York. Earlier, the price touched $3.8005, the lowest level for a most-active contract since Nov. 3.
• Senate's Corker Favors Ending Fed 'Dual Mandate' to Focus on Stable Prices. A Republican member of the Senate Banking Committee called for the Federal Reserve to focus solely on price stability rather than its “dual mandate” to fight inflation and maintain full employment. Tennessee Senator Bob Corker released his statement a day after House Republican Mike Pence introduced legislation to restrict the Fed’s activities to inflation fighting.
• Top-Rated 10-Year Muni Bond Yields Climb to Highest in Four Months. Yields on top-rated tax-exempt bonds due in 10 years climbed to a four-month high as the market absorbed the highest weekly issuance of municipal debt in at least seven years. Ten-year AAA general obligations jumped 0.04 percentage point to 2.67 percent at 11:07 a.m. in New York, the highest since July 9, according to a BVAL municipal benchmark index. States and local governments are selling $16.3 billion in debt this week, the most on record, according to data compiled by Bloomberg dating to 2003. “We’re going to need a bigger boat,” Tony Shields, a principal in the public-finance department at Williams Capital Group in New York, said in an e-mail. “New supply is close to unmanageable.”

CNBC:

• Government Employees Owe Billions in Delinquent Taxes. Deficit cutters struggling to make ends meet in Washington are eyeballing an unusual pot of potential revenue: back taxes owed to the government by federal employees themselves. According to an IRS study last year, those employees and federal retirees owed a staggering $3.3 billion dollars in delinquent tax payments to the government.
• China Behind Chilling Drop in Commodity Prices.
• Tepper Sold Financials as He Gave His 'Everything Will Go Up' Speech.
• FHA Auditors Predict Further Home Price Declines.
  

Business Insider:

• Commercial Real Estate: The Slow-Motion Cliff Dive Gathers Speed.
• The 60-Second Guild to What Hedge Funds are Buying and Selling Right Now.
• Here's That Hilarious Video Explaining The Absurdities of Quantitative Easing. (video)
• 10 Charts That Every Internet Exec Must See Right Now.
  

MarketWatch.com:

• Global Fund Managers at Most Bullish Since April.

New York Times:

• As Payouts Rise, New Tactics by the U.S. Pension Insurer. Even though the government pension agency made sharply higher payments to retirees of bankrupt companies last year, it is using new legal tools to make hobbled companies carry more of the burden and protect itself. The Pension Benefit Guaranty Corporation, which insures corporate pension plans, disclosed on Monday that it paid about $5.6 billion to retirees in its last fiscal year, about 22 percent more than in 2009. The number of retirees it pays each month rose to more than 800,000, as 172 more pension plans collapsed, including those at Crucible Materials, Fraser Papers, Hartmarx and Saint Vincent Catholic Medical Centers.
• Europe Fears That Debt Crisis Is Ready to Spread. European officials, increasingly concerned that the Continent’s debt crisis will spread, are warning that any new rescue plans may need to cover Portugal as well as Ireland to contain the problem they tried to resolve six months ago.

Boston Globe:

• Massachusetts Foreclosures About 1 Home an Hour.

American Thinker:

• George Soros's Next Target: Your State.

Politico:

• Charles Rangel Guilty on 11 Ethics Charges. Rep. Charlie Rangel (D-N.Y.) has been found guilty on 11 ethics charges, ending a two-year investigation into his personal finances. A special eight-member panel of the House ethics committee, after deliberating for roughly six hours, found that there was "clear and convincing evidence" that Rangel had violated House ethics on 11 of the 13 charges he faced heading into a rare public ethics trial.

Reuters:

• Groups Urge US Senate to Pass China Currency Bill. A coalition of U.S. steel manufacturers and other business groups urged the Senate on Tuesday to pass legislation in coming weeks to pressure China to raise the value of its currency.

Kathimerini:

• Greece's government will make final decisions on additional measures for 2011 tomorrow as this year's deficit will be 9.4% of GDP following Eurostat's revision of 2009 data. The extra measures may amount to 4 billion euros. The Finance Ministry has suggested spending cuts of 2 billion euros at hospitals and pension funds, as much as 600 million euros at state organizations, 500 million euros in other operating costs and 500 million euros from improved tax collection and a crackdown on tax evasion.

Caijing:

• China should form a U.S. dollar-denominated bond market to absorb "hot money inflows," citing a report by the Chinese Academy of Social Sciences.

Oriental Morning Post:

• China may resume a 10% consumption tax on vehicles with engines no larger than 1.6 liters next year, citing an executive with an automaker.