Tuesday Watch

Evening Headlines
Bloomberg:

• Bond Sales Tumbling in Worst Month Since Lehman Aftermath: Credit Markets. Corporate bond sales worldwide are tumbling on concern Ireland’s debt crisis will spread across Europe as returns on the notes approach their worst month since credit markets froze two years ago. Issuance has slumped 31 percent since Nov. 15, compared with the same period a year earlier, after surging 34 percent in the first half of the month, according to data compiled by Bloomberg. Plunging returns on debt of borrowers from France’s Credit Agricole SA to Bentonville, Arkansas-based Wal-Mart Stores Inc. are dragging bonds to a 1.08 percent loss in November, Bank of America Merrill Lynch index data show.
• Hedge Funds Raise Natural Gas Wagers to Four-month High: Energy Markets. Hedge funds increased bullish bets on natural gas to the highest level in four months on speculation that lower-than-normal temperatures will bolster heating demand and trigger withdrawals from record stockpiles. The funds and other large speculators increased so-called net-long positions, or wagers on rising prices, by 50 percent in the seven days ended Nov. 23, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report.
• Forged Comment Letters Sent to Regulators Writing Swaps Rules. Forged comment letters purportedly from an H.J. Heinz Co. executive, a Burger King Co. franchise and at least five other Arkansas-based officials or businesses were sent to the Commodity Futures Trading Commission, which is considering rules for the $583 trillion swaps market. The letters, some of which contain identical passages, criticize banks for their “cartel-like control of the derivatives market.” They include signatures from a circuit court judge, a county sheriff, a lawyer and a mental health counselor. All were forgeries, according to interviews conducted by Bloomberg News.
• U.S., EU Expect Limited Progress at Climate Talks, No Treaty. U.S. and European Union envoys said they expect progress on forming a $100 billion fund to fight global warming and on protecting forests at climate talks in Cancun, Mexico, though no treaty will be agreed.
• Emerging Equity Fund $84.3 Billion Inflows Exceed 2009 Record, EPFR Says. Emerging-market equity funds have taken in $84.3 billion this year, exceeding the record $83.3 billion received last year, EPFR Global said in an e-mailed statement.
• Japan Unemployment Rises, Output Falls, Showing Risk Economy May Contract. Japan’s industrial production decreased and the unemployment rate unexpectedly climbed in October, providing early signs that the country’s economy will likely shrink this quarter. Factory output declined 1.8 percent from September, the sharpest drop since February 2009, the Trade Ministry said in Tokyo today. The jobless rate increased to 5.1 percent from 5 percent and the economy lost 180,000 jobs, the most since May, according to the statistics bureau. Bond prices rose. The figures add to evidence that Japan’s economy may contract for the first time in five quarters, as the expiration of stimulus measures and weak exports prompt companies such as Toyota Motor Corp. to reduce production. Japan’s central bank may face pressure to ease policy further as sluggish demand fuels deflation, according to economist Yuichi Kodama.
• Banks in U.S. Resisting Calls to Repurchase Fannie Mae, Freddie Mac Loans. Fannie Mae and Freddie Mac are facing growing resistance as they attempt to push failed home loans off their books and onto the balance sheets of banks including Bank of America Corp. and JPMorgan Chase & Co.

Wall Street Journal:

• WikiLeaks Using Amazon(AMZN) Servers After Attack. WikiLeaks, the website that published a quarter-million sensitive diplomatic cables on Sunday, is using Amazon.com Inc. servers in the U.S. to help deliver its information. It sounds like an odd choice, but it could make sense. The site cablegate.wikileaks.org, which WikiLeaks is using for the diplomatic documents, is linked to servers run by Amazon Web Services in Seattle, as well as to French company Octopuce. Wikileaks.org, the site’s front page, links back to Amazon servers in the U.S. and in Ireland. Several Internet watchers, including technologist Alex Norcliffe, reported earlier on WikiLeaks’ use of Amazon services.
• Consultant of 'Expert Network' Is Probed. The nation's largest "expert-network firm" could be drawn into the government's insider-trading investigation.
• Russian Missiles Fuel U.S. Worries. The U.S. believes Russia has moved short-range tactical nuclear warheads to facilities near North Atlantic Treaty Organization allies as recently as this spring, U.S. officials say, adding to questions in Congress about Russian compliance with long-standing pledges ahead of a possible vote on a new arms-control treaty. U.S. officials say the movement of warheads to facilities bordering NATO allies appeared to run counter to pledges made by Moscow starting in 1991 to pull tactical nuclear weapons back from frontier posts and to reduce their numbers. The U.S. has long voiced concerns about Russia's lack of transparency when it comes to its arsenal of tactical nuclear weapons, believed to be many times the number possessed by the U.S.
• 'Cyber Monday' Sales Show Strength. Even Following a Weekend With Solid Online Shopping, Heavy Promotions Help Produce Double-Digit Gains for the Day. Early estimates indicated overall sales gains of about 20% from a year earlier for "Cyber Monday," the nickname for the Monday after Thanksgiving. That comes on top of strong online sales growth on Thanksgiving Day and Black Friday. For those two days combined, comScore Inc. reported that online shoppers spent about $1.1 billion, up more than 15% from $913 million a year earlier.
• Attack by WikiLeaks. For all of his self-justification as an agent of "pure" transparency, Mr. Assange is not serving the interest of free societies. His mass, indiscriminate exposure of anything labeled secret that he can lay his hands on is a hostile act against a democracy that is fighting a war against forces bent on killing innocents. Surely, the U.S. government can do more to stop him than send a stiff letter.
• ABB to Acquire Baldor(BEZ) for $3 Billion. Switzerland conglomerate ABB Group plans to announce Tuesday that it is acquiring electric motor manufacturer Baldor Electric Co. for about $3 billion, the companies said. ABB planned to pay about $63.50 per share in cash for Fort Smith, Ark.-based Baldor. The deal would mark ABB's first major acquisition in the U.S. and retain Baldor's headquarters in Arkansas and the brand name. The Baldor sale would give ABB a foundation to establish a presence in the U.S. while the deal would also allow Baldor to take advantage of ABB's global distribution. Shares of Baldor closed at $45.11 on Monday on the New York Stock Exchange, giving the company a market capitalization of $2.12 billion.

CNBC:

• North Korea Says It Has 'Thousands of Centrifuges'. Secretive North Korea detailed for the first time its expanded nuclear program on Tuesday, saying it had thousands of centrifuges as pressure built on China to rein in its ally amid heightened tensions on the peninsula.
• Seagate(STX) Halts Talks With Private Equity Firms. A potential takeover of Seagate Technology, which could have been worth about $9 billion, fell apart on Monday and the hard drive disk maker will instead pursue a share buyback plan.

Zero Hedge:

• Chinese Selloff Intensifies As Traders Expect Imminent Rate Hike Following China State Council Comments.
• Wikileaks Next Target: "A Big US Bank".
  

NY Times:

• Splits in Euro Zone Emerge Amid Debt Crisis. Even as Europe struggles to contain its latest debt crisis, fresh fissures are emerging that show the euro zone diverging into two — or even three — different economic parts that threaten to compound the problems even further.

IBD:

• Drugmaker Diversifies Its Product Lineup Through Acquisitions. To diversify its asset portfolio, Endo Pharmaceuticals (ENDP) went shopping this year. In cutting three deals, Endo convinced many investors and analysts that it could survive the slowing growth and generic competition that inevitably threaten all branded drugs.

Forbes:

• WikiLeaks' Julian Assange Wants to Spill Your Corporate Secrets. In an exclusive sit down with Forbes, WikiLeaks' chief says the release of Pentagon and State Department documents are just the beginning. His next target: big business.
  

Washington Post:

• Is the United States of America really powerless to stop a nomadic cyber-hacker - who sleeps on people's couches and changes his hair color to avoid surveillance - from causing enormous damage to our national security?

ABCNews:

• More Than 8 Million Drop Out of Credit Card Use. Number of credit card users drops by 8 million in past year: some by choice, others cut off.

Reuters:

• US Senate Fails to Repeal Unpopular Tax Provision. Efforts to repeal what is widely seen as a burdensome tax provision in the new federal healthcare law failed in the U.S. Senate on Monday despite broad support to drop it.
• Barclays(BCS) Attracts Unusual Flurry of Put Trading. Unusual put activity on the U.S.-listed shares of British bank Barclays Plc on Monday grabbed a lot of attention among traders due to the massive amount of trading and the unusual order size. In all, about 161,000 puts changed hands in Barclays, well above their average daily volume of 1,167 contracts versus only 3,050 calls, according to option analytics firm Trade Alert.

Telegraph:

• Hedge Fund Manager Mark Hart Bets on China as the Next 'Enormous Credit Bubble' to Burst. Mark Hart, an American hedge fund manager who has made millions predicting the crises in US sub-prime market and European debt, has launched a fund to bet on the imminent implosion of China. Mr Hart, who runs Corriente Advisors from Fort Worth Texas, has told potential investors in a presentation that China is in the "late stages of an enormous credit bubble". When this bursts, the financier said he expects an "economic fall-out" that will be as "extraordinary as China's economic out-performance over the last decade".

The Australian:

• Hillary Clinton Condemns WikiLeaks Cable Release as 'Attack'. THE WikiLeaks release of diplomatic memos was an "attack on the international community", US Secretary of State Hillary Clinton said today. Ms Clinton vowed to prevent future leaks, as other Obama administration officials warned of a criminal investigation against website founder Julian Assange. "This disclosure is not just an attack on America's foreign policy interests. It is an attack on the international community," Ms Clinton said after meeting Turkish Foreign Minister Ahmet Davutoglu. "I want you to know that we are taking aggressive steps to hold responsible those who stole this information.

Financial News:

• China's central bank should clearly state that it is shifting to a "prudent" monetary policy and allow further yuan appreciation to combat rising inflation, Sheng Songcheng wrote. Sheng is head of the central bank's Shenyang branch. China may see inflation quicken this month from October's price rises driven by food costs, making it "almost certain" that inflation will top 3% for the full year, Sheng wrote. There is still room for further increases in reserve requirement ratios for banks, Sheng said. The People's Bank of China should also relax a ceiling on the benchmark deposit rate and allow rates to float higher to help narrow the current negative real rate, Sheng said.
  

China Daily:

• China needs to raise interest rates by another 200 basis points to curb inflation given existing excess liquidity, Zhong Jiyin, an economist with the Chinese Academy of Social Sciences, wrote.
• China's Guangdong province may raise the minimum wage early next year to help ease the region's labor shortage, citing Ge Guoxing, deputy director-general of the province's labor department.
  

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -1.75% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 118.0 +7.5 basis points.
  
• Asia Pacific Sovereign CDS Index 113.50 +1.75 basis points.
  
• S&P 500 futures -.31%
  
• NASDAQ 100 futures -.36%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BKS)/-.10
• (OVTI)/.53
• (CPRT)/.45

Economic Releases
9:00 am EST

• S&P/CS 20 City House Price Index MoM% SA for September is estimated to fall -.4% versus a -.28% decline in August.

9:45 am EST

• Chicago Purchasing Manager for November is estimated to fall to 59.9 versus a reading of 60.6 in October.

10:00 am EST

• Consumer Confidence for November is estimated to rise to 53.0 versus a reading of 50.2 in October.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Kocherlakota speaking, NAPM-Wilwaukee Index, Bloomberg FCI Monthly, weekly retail sales reports, weekly ABC consumer confidence reading, (LOW) analyst meeting, (BIIB) analyst meeting, Barclays Lodging Conference, Citi Basic Materials Conference, Piper Jaffray Healthcare Conference and the Canaccrod Genuity Energy Conference could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and real estate shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Slightly Lower into Final Hour on Rising Euro Debt Fears, Korean Peninsula Worries, Iran Concerns

Broad Market Tone:

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

Equity Investor Angst:

• VIX 22.06 -.72%
  
• ISE Sentiment Index 73.0 -42.06%
  
• Total Put/Call 1.05 +23.53%
  
• NYSE Arms .79 -60.51%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 98.01 bps +2.49%
  
• European Financial Sector CDS Index 146.09 bps +8.56%
  
• Western Europe Sovereign Debt CDS Index 190.66 bps +5.73%
  
• Emerging Market CDS Index 234.99 bps +4.24%
  
• 2-Year Swap Spread 26.0 unch.
  
• TED Spread 14.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .15% unch.
  
• Yield Curve 233.0 -3 bps
  
• China Import Iron Ore Spot $166.70/Metric Tonne +.12%
  
• Citi US Economic Surprise Index +19.40 -4.7 points
  
• 10-Year TIPS Spread 2.13% -1 basis point
  

Overseas Futures:

• Nikkei Futures: Indicating -46 open in Japan
• DAX Futures: Indicating +53 open in Germany

Portfolio:

• Slightly Higher: On gains in my Medical, Biotech and Technology long positions
  
• Disclosed Trades: Covered all of my (IWM)/(QQQQ) hedges and some of my (EEM) short
  
• Market Exposure: Moved to 100% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades at session highs, reversing meaningful morning losses, despite rising Korean Peninsula tensions and increasing euro sovereign debt angst. On the positive side, Coal, Energy, Oil Service, Bank, Hospital, HMO, Construction, Education and Road & Rail shares are especially strong, rising more than .5%. Small-cap and cyclical shares are outperforming. (XLF) has traded very well throughout the day. The 10-year yield is falling -4 bps to 2.83%. The euro currency continues to trade very poorly. Copper is rising +.3% and the S&P GSCI Ag Spot Index is rising +.46% despite euro weakness. On the negative side, Airline, Wireless, Ag, Networking, Telecom and Drug shares are under pressure, falling more than 1.0%. The Russia sovereign cds is rising +5.76% to 172.11 bps, the Hungary sovereign cds is gaining +5.03% to 362.87 bps, the Portugal sovereign cds is surging +6.54% to 538.77 bps, the Spain sovereign cds is climbing +8.27% to 350.46 bps and the UK sovereign cds is rising +11.31% to 78.32 bps. Moreover, the Emerging Markets Sovereign CDS Index is surging +8.75% to 216.22 bps and other key cds indices continue their recent sharp moves higher. While the euro financial sector cds index has soared of late, it is still below levels seen during May/June. The Citi Asia Economic Surprise Index continues to weaken, falling -1 point to -7.9 today, which is the lowest reading globally and the lowest since May 2009. Given the ongoing jump in eurozone debt angst, recent equity gains, China inflation fears, insider trading scandals, rising Korean peninsula tensions and financial sector Basel III concerns, the broad market continues to remain resilient, which is a big positive. Market leaders remain relatively firm. Spain's debt auction on Thursday May be the market's next big test. I expect US stocks to trade mixed-to-higher into the close from current levels on bargain-hunting, diminishing economic fear, seasonal strength, less financial sector pessimism and short-covering.

Today's Headlines

Bloomberg:

• EU's Irish Rescue Fails to Stem Contagion; Spain Bonds Drop. European governments’ 85 billion- euro ($113 billion) bailout package for Ireland failed to quell the market turmoil menacing the euro as stocks, bonds and the currency declined. Irish 10-year bonds slid after an early advance, Spanish bonds slid by the most since the euro’s launch and European shares sank 1.4 percent. The euro slid against 15 of its 16 major counterparts and the cost of insuring the debt of Spain and Portugal against default soared to records. “The notion that a rescue package for Ireland would create a firewall and stop the fear of contagion is clearly discredited,” said Preston Keat, director of research at Eurasia Group, a political consultancy, in London. “Portugal and Spain are already facing pressures in the markets.” Six months after the Greek rescue exposed flaws in the euro’s makeup and fueled doubts whether 16 countries belong in the same currency union, policy makers again found themselves meeting on Sunday in Brussels racing to calm markets.
• Portugal, Spain Debt Risk Soars to Records on Bailout Concern. The cost of insuring against default on Portuguese and Spanish government debt soared to record-high levels as an aid package for Ireland failed to reassure investors the region’s debt crisis will be contained. Credit-default swaps on Portugal jumped 37 basis points to 539, and contracts on Spain climbed 28.75 to 351.5, according to CMA. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments increased 9 basis points to 197, a record based on closing prices. “The market seems to think it’s inevitable Portugal requests assistance next -- perhaps in January? -- and then after that Spain will be scrutinized with a fine tooth comb over the coming months,” said Jim Reid, head of fundamental strategy at Deutsche Bank AG in London. Swaps on Italy rose 28 basis points to 244, the highest level in almost six months, as the nation’s borrowing costs increased at a sale of 6.8 billion euros of bonds. The cost of insuring the subordinated bonds of European banks also rose as investors bet Ireland’s precedent for making junior bondholders share the cost of a rescue will be followed. Finance Minister Brian Lenihan told state broadcaster RTE the government needs to impose “big haircuts” on junior bondholders after the bailout. The Markit iTraxx Financial Index of swaps on the junior debt of 25 European banks and insurers soared 16.5 basis points to 294.5, after earlier rising to the highest level since April 2009, according to JPMorgan Chase & Co. The senior index was up 1 at 165, after earlier falling as much as 9 basis points. Swaps on Ireland increased 5.5 basis points to 604 and Greece, which was bailed out earlier this year, dropped 10 basis points to 962, CMA prices show.
• Euro Falls to Two-Month Low Versus Dollar, Yen on Concern Crisis to Spread. The euro fell to the lowest levels in more than two months against the dollar and yen as an 85 billion-euro ($112 billion) aid package for Ireland failed to stem concern that Europe’s sovereign-debt crisis will broaden. “The euro is unable to sustain even modest upticks, and its weakness is dragging down other major currencies,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York. “The European debt situation is getting more serious. It’s not just about Ireland and Portugal anymore; Spain and Italy are being hit even harder.”
• Hungary Stocks Enter Bear Market, Bonds Sink on Concern Crisis Will Expand. Hungary’s benchmark equity index dropped more than 20 percent from its 2010 peak and government bonds sank as a surprise interest-rate increase compounded concern that Europe’s debt crisis is spreading east. The BUX Index fell 2.6 percent to 20,221.37 at the close in Budapest, the world’s second-biggest drop today after Turkey’s ISE National 100 Index.
• Baltic Index Drops a Third Session as Fleet Growth Lowers Rates. The Baltic Dry Index, a measure of commodity-shipping costs, fell for a third consecutive session as fleet expansion pulled down rates to hire bigger iron-ore carriers, even as steel prices rise. The gauge declined 25 points, or 1.2 percent, to 2,145 points, according to the London-based Baltic Exchange. That was the lowest level since Aug. 9. Rents to hire iron ore-hauling capesize ships retreated 4.6 percent to $29,333 a day, for a 16 percent slide in the vessels’ four-day run of losses. “Despite an improved steel-price backdrop, the dry-bulk market has been unable to participate on the back of increased vessel deliveries,” Omar M. Nokta, head of research at Dahlman Rose & Co. in New York, wrote in a note e-mailed today.
• Supertanker Demand is 'Soft' in Middle East Gulf, Fearnleys Says.
• EU Says Euro-Area Growth to Weaken in 2011 as Crisis Still 'Casts Shadow'. Europe’s economy may weaken next year as budget cuts to stem a mounting debt crisis hurt consumer demand and faltering global expansion curbs exports, the European Commission said. Gross-domestic-product growth in the 16-nation euro region may weaken to 1.5 percent in 2011 from 1.7 percent this year, the Brussels-based commission said in a report published today. While Germany may expand 3.7 percent this year, the economies of Ireland, Greece and Spain will continue to shrink.

Wall Street Journal:

• Kucinich Cancels Fed Hearing. Rep. Dennis Kucinich postponed a hearing to scrutinize the Federal Reserve’s latest round of debt buying — the day after his office announced it. Aides to the Ohio Democrat, who frequently questions the Fed, alerted other committee Democrats last Wednesday that the Oversight and Government Reform subcommittee he chairs will indefinitely delay a hearing, originally scheduled for Tuesday, “in order to work with the Federal Reserve to allow them to testify,” according to an email.
• Japan Rejects China's Proposed Six-Party Talks. Japanese Foreign Minister Seiji Maehara rejected China's new proposal to hold emergency talks between North Korea and related nations, saying Pyongyang must first display sincere effort to ease its confrontational posture.

CNBC:

• Deficits Posing Threat to More Stock Market Gains: Pros. Deficits from governments large and small pose the biggest challenge ahead to a stock market poised to go higher, a panel of experts told CNBC. While the economic climate is favorable and valuations attractive, the market and economy remain susceptible to shocks, said Goldman Sachs analyst Abby Joseph Cohen. "On the intermediate- to long-term side, we must do something to address not only the federal deficit but also the deficit at the state and local level," said Cohen, head of Goldman's Global Markets Institute. "Keep in mind much of this is related to long-term liabilities."
• Dennis Gartman: 'Eventually, the Euro Breaks Apart'. Faced with "almost terminal problems," Dennis Gartman on Monday said the euro could soon unravel. "Eventually, the euro breaks apart into a northern euro and a southern euro," said Gartman, explaining that the Continent's many languages, religions and cultures are too diverse for the singular currency to work.

Business Insider:

• The Real Wikileaks Story On Iran: It's Becoming The Mexico of the Middle East.
• 12 Infuriating Facts About How Much Federal Employees Make.
• The 15 Most Brilliant New Ideas We've Seen This Fall.
• Did You Miss The Blisteringly Good Manufacturing Report From The Dallas Fed
  

Zero Hedge:

• Obama to Freeze Government Salaries at All Time High. Of course, government workers thank him, as this means federal salaries which have exploded in the past 5 years will be stuck at all time highs for at least two years, even as nominal salaries for everyone else (except FIRE workers of course) continue to decline. (graph)
• Goodbye Irish Sovereignty: EU Commissioner Olli Rehn Issues His First Directive As Overlord Of The Emerald Isle.
  

New York Post:

• Tax Battle in DC Promises a 'Lame' Result. The first showdown of the lame duck Congress is expected to take place over extending the Bush tax cuts -- and it will do nothing but highlight the gulf between the Republican and Democratic camps, The Post has learned. Chances of a compromise are growing, though far from certain, as both sides come to grips with the realities of inaction, the source said. "The markets have priced in a two-year extension and I don't think they understand how tenuous that is," the source said, adding that Senate leaders have yet to start working on a compromise plan.
  

New York Times:

• For PayPal, the Future is Mobile. By adding legions of new users and online retailers, PayPal is threatening to overtake eBay’s(EBAY) struggling marketplace as the biggest breadwinner within a few years.
• After Del Monte(DLM), Who's Next on the Shopping List. The buyout of Del Monte Foods is the latest in a series of multibillion-dollar deals in the food industry this year, including the $19.5 billion takeover of Cadbury by Kraft Foods, and Coca-Cola’s $13.6 billion purchase of Coca-Cola Enterprises’ North American operations.

cnet:

• Report: 3D TV Sales to More Than Double in 2011. The adoption of 3DTVs is expected to spike next year. Futuresource Consulting predicts that 4 million 3DTVs to be sold worldwide by the end of this year. The figure could at least double next year to 5 million 3DTVs in the U.S. and 3 million in Western Europe, the market researcher said today. Futuresource added that so far, "year-one adoption of 3DTV is running at a far quicker rate in most territories than it did for high-definition."
• Congressman Wants WikiLeaks Listed as Terrorist Group. The incoming chairman of the House Homeland Security Committee says WikiLeaks should be officially designated as a terrorist organization. Rep. Peter King (R-N.Y.), the panel's presumptive next head, asked the Obama administration today to "determine whether WikiLeaks could be designated a foreign terrorist organization."

Politico:

• WikiLeaks Target: American Power. The first victims of the leaked cables released Sunday are anyone who shared secrets with American diplomats, especially Arab leaders who saw their private security deals — and their insistence that those deals be kept from their people — published online with undiplomatic bluntness. But the main effect of the many details of American diplomacy revealed in the thousands of documents obtained and released by WikiLeaks was to deepen the damage to their intended targets: U.S. foreign policy, prestige and power.

Reuters:

• Fed's Bullard - Funding of Consumer Bureau a Worry. St. Louis Federal Reserve President James Bullard said on Monday funding for a consumer protection office established under regulatory reform laws is not based on a clear sense of how much the bureau needs and is a source of concern. "The amount of money allocated in the law is not based on a careful assessment of what the needs of the bureau will be as it attempts to fulfill the mandate of the Congress," he said in remarks prepared for delivery to a conference at the St. Louis Fed.
• Gartner Cuts PC Shipment Forecasts. Research firm Gartner cut its forecasts for global personal computer sales in 2010 and 2011, citing weaker demand in the face of an uncertain economy and as some customers choose tablet computers over PCs.
• US Commercial Real Estate Vacancies Peaking - Realtors. U.S. commercial real estate vacancy rates have already peaked or will soon top out, though rents are likely to continue to fall, a realtors group said on Monday.

Financial Times Deutschland:

• German CDU Wants Curbs on Solar Capacity Growth. Members of Chancellor Angela Merkel's Christian Democratic Union want to limit the growth in solar-panel installations in Germany because the rising costs to consumers may undermine the acceptance of alternative energy. CDU lawmaker and energy-policy expert Thomas Bareiss said in a letter to Environment Minister Norbert Roettgen that the government should cut the guaranteed gratuity per kilowatt hour for newly installed solar panels by an extra amount on Jan. 1, the newspaper said. Depending on installed solar-panel growth in the first months of 2011, additional special gratuity cuts for new installations should be introduced in the middle of the year, the newspaper cited Bareiss as saying. The annual amount to be paid by consumers to subsidize environmentally friendly energy production will increase to 13 billion euros ($17.3 billion) on Jan. 1 from 8 billion euros, the newspaper said.

IrishTimes.com:

• Opposition Condemns Use of Pension Fund in 85 Billion Euro Bailout. THE €85 billion EU-IMF bailout package for Ireland announced last night was roundly condemned by the Opposition parties who are now all likely to vote against the Budget on December 7th. Fine Gael, Labour and Sinn Féin attacked the intention to use the National Pension Reserve Fund to help provide a further €10 billion in further capital for the banks. In total, the banks could end up getting another €35 billion if their losses are bigger than expected. The remaining €50 billion is to cover the State’s borrowing needs for the next three years. Opposition parties were highly critical of the 5.8 per cent average interest rate that will be charged by the EU and the International Monetary Fund.

DigiTimes:

• Late November DRAM Contract Prices Down 12-13%. DRAM contract prices are dropping amid global oversupply caused by increased supply from Samsung Electronics, Inotera Memories and Nanya Technology, the sources said. As spot market prices for 2GB DDR3 modules have slipped to below US$20, contract prices may also drop to below US$20 by the end of 2010, the sources indicated.

Bear Radar

Style Underperformer:

• Small-Cap Growth (-1.24%)

Sector Underperformers:

• 1) Wireless -1.93% 2) Networking -1.81% 3) Airlines -1.77%

Stocks Falling on Unusual Volume:

• WRLD, CBG, PRXL, VIV, SSRX, REP, VOD, E, SYMC, GSK, AZN, GLNG, NICE, CETV, TRGT, TRS, NKTR, TSTC, MLNX, MICC, ACGL, CYBX, EBAY, MATW, VRSN, LKQX, FSLR, ACOM, PWO, EWG, PEJ, PZJ, EZU, PXQ, TER, TEF, TTM and PHG
  

Stocks With Unusual Put Option Activity:

• 1) BCS 2) STD 3) KMB 4) EFA 5) PM
  

Stocks With Most Negative News Mentions:

• 1) CMCSCA 2) DISH 3) STLD 4) ICE 5) GT
  

Bull Radar

Style Outperformer:

• Large-Cap Value (-.68%)

Sector Outperformers:

• 1) Banks +.74% 2) Oil Service -.11% 3) Hospitals -.40%

Stocks Rising on Unusual Volume:

• FDX, PETS, WAG, AMAG, THRX, GNCMA, ASYS, SPTN, BSFT, NFLX, SINA and NILE
  

Stocks With Unusual Call Option Activity:

• 1) NOK 2) FDX 3) TS 4) BBY 5) DXD
  

Stocks With Most Positive News Mentions:

• 1) LLL 2) DE 3) NBL 4) AEO 5) SBRA
  

Monday Watch

Weekend Headlines
Bloomberg:

• Ireland Wins $113 Billion Aid; Germany Drops Threat on Bonds. European governments sought to quell the market turmoil menacing the euro, handing debt-strapped Ireland an 85 billion-euro ($113 billion) aid package and diluting proposals to force bondholders to cover a share of future bailouts. European finance chiefs ended crisis talks in Brussels yesterday by endorsing a Franco-German compromise on post-2013 rescues that means investors won’t automatically take losses to share the cost with taxpayers as German Chancellor Angela Merkel initially proposed to the consternation of bond traders. The first test of the twin decisions come today with markets resuming trading after speculation intensified last week that Portugal and perhaps even Spain will require external support. In a third move, Greece was told it could have an extra four-and-a-half years to repay emergency loans totaling 110 billion euros to match the seven-year term under Ireland’s deal. “People are now going to focus on Portugal and it’s probably also going to need some help,” said Axel Merk, president and chief investment officer of Merk Investments LLC in Palo Alto, California. “We’ll maybe see some relief in markets, but governments need to show they’re getting their economies in shape.”
  
• Dollar Advances Versus Euro as Noyer Says Low Rates May Cause Imbalances. The dollar rose to a two-month high against the euro after European Central Bank council member Christian Noyer said monetary easing creates the potential for global imbalances, boosting demand for safer assets. The euro weakened against 15 of its 16 major counterparts on lingering concern that Portugal and Spain will ask for aid after Ireland received a bailout. “Noyer’s remarks on low rates and worldwide imbalances seem to be causing some selling of the euro and buying of the dollar,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “Worries over contagion in Europe from Ireland’s woes also remain.”
• Thanksgiving Weekend Sales Rise as Shoppers Scoop Up Deals. The average shopper spent 6.4 percent more than last year over the holiday weekend, the National Retail Federation said today. U.S. retail sales during Thanksgiving weekend totaled $45 billion as more shoppers picked up jewelry and toys, the Washington-based NRF said in a statement, citing a survey conducted by BIGresearch. More people are scouring for deals earlier, with the number of customers shopping on Thanksgiving Day more than doubling over the past five years.
  
• Black Friday Sales Rise .3% as Shoppers Wait for Retailers to Cut Prices. Even as stores across the U.S. reported increased traffic on Black Friday, the busiest shopping day of the year, sales rose just 0.3 percent to $10.7 billion, ShopperTrak, the Chicago-based consulting firm, said yesterday. Still, there were signs of consumer strength. Shoppers took advantage of earlier-than-usual promotions in the first two weeks of November, pushing up sales 6.1 percent and 6.2 percent respectively, according to ShopperTrak. That helps explain why Black Friday sales weren’t more robust, the firm said.
  
• Shadow Chancellor Johnson Says 'Concerned About Contagion' in the Eurozone. Alan Johnson, Treasury spokesman for the U.K. opposition Labour Party, supports the coalition government’s decision to lend money to Ireland and said he was worried about the future of the eurozone. “I am concerned about contagion, about what’s happening in Spain and Portugal,” Johnson told the BBC’s “Andrew Marr Show.” “We should be worried about the eurozone. This is happening at the same time we’re still feeling the effects of the global economic crisis.”
• Lee Vows to Make North Korea Pay for Attack as China Urges Talks. South Korean President Lee Myung Bak vowed to make Kim Jong Il’s regime pay for military attacks as China sought talks to defuse tension on the Korean peninsula. "It’s become clear that more patience and tolerance only leads to bigger provocations," Lee said today in a national address from Seoul. "North Korea will be made to pay for any further provocation no matter what."
• Dublin Protesters Decry Ireland's Budget Cuts as Bailout Agreement Looms. About 50,000 people marched in Dublin to protest the Irish government’s 15 billion-euro ($20 billion) austerity measures aimed at cutting the budget deficit. Today’s march was organized by the Irish Congress of Trade Unions, an umbrella organization for labor groups. The ICTU general secretary, David Begg, said the crowd exceeded 100,000 people, compared with 50,000 estimated by police.
• Bond Buyers Demand Less Collateral as Yield Spreads Widen: Credit Markets. Unsecured bonds are grabbing a bigger slice of global debt sales as central banks’ efforts to boost growth spur investors to take on more risk and demand less collateral, leaving them with less protection in a default. Companies around the world have sold $246.9 billion of unsecured high-yield debt this year, making up 72.6 percent of all speculative-grade issuance, according to data compiled by Bloomberg. That compares with $112.1 billion during the same period in 2009, or 61.5 percent of junk bond offerings. The diminished security comes amid concern Europe’s debt crisis may spread, slowing the global economy as nations enact austerity programs. “There’s so much cash chasing investment opportunities out there that buyers are willing to sacrifice covenants and security,” said Guy LeBas, chief fixed-income strategist and economist at Janney Montgomery Scott LLC in Philadelphia. “We’re trying to dodge these covenant-light and low-security deals right now, even though they’re popular.”
• Arab Leaders Urged U.S. to Stop Iran, WikiLeaks Shows. Saudi Arabia and other Arab governments sided with Israel in urging the U.S. to stop Iran from developing a nuclear bomb, according to a New York Times account of 250,000 classified U.S. embassy cables released by WikiLeaks, the non-profit website.
• Talk of $100 Oil Returns as Options Jump Most in 3 Months: Energy Markets. Oil’s return to $100 has become the biggest bet in the crude options market. The price of options to buy December 2011 futures at $100 a barrel jumped 14 percent on Nov. 24, the largest one-day gain in three months, according to data compiled by Bloomberg. So-called open interest for the contract has risen 51 percent this year to 45,424 lots, the highest for any crude option on the New York Mercantile Exchange. The increase in trading of $100 options shows some investors anticipate oil will rise at least 19 percent to levels last reached in 2008.
• Iran's Atomic Chief Says First Nuclear Plant to Come on Stream by January. Iran finished loading fuel into the country’s first nuclear power reactor and aims to start up the plant in the southern city of Bushehr by late January, the head of Iran’s Atomic Energy Organization said. The water inside the reactor’s core needs to warm gradually, and a series of tests has to be carried out, Ali Akbar Salehi said yesterday, according to state-run news channel Press TV. “We hope the Bushehr power plant will hook up with the national grid in one or two months,” Salehi said in a report published on Press TV’s website.
• FBI Charges Man in Alleged Plot to Bomb Tree-Lighting in Portland, Oregon. A Somali-born teenager was arrested in an undercover operation on charges that he tried to detonate a van that he thought was filled with explosives at a Portland, Oregon, Christmas tree-lighting ceremony. Mohamed Osman Mohamud, 19, obtained what he believed to be the bomb from undercover FBI employees, according to court papers filed with his arrest yesterday. The public was never in danger, a Justice Department statement said. “I want whoever is attending that event to leave, to leave either dead or injured,” Mohamud allegedly told undercover FBI agents, according to an affidavit filed in support of the arrest. At another point, he allegedly said, “It’s gonna be a fireworks show” and “a spectacular show.”
• U.S. State Department Says Planned WikiLeaks Release Will Endanger Lives. The U.S. State Department warned WikiLeaks founder Julian Assange that the planned release of government documents will endanger the lives of “countless individuals” and threaten cooperation with allied countries.
• McCain Says China Not Behaving Responsibly on Restraining Ally North Korea. U.S. Senator John McCain said China’s response to North Korea’s deadly shelling last week shows that the Beijing government isn’t taking on the responsibilities of a world power. China is not doing enough to restrain its ally North Korea following the Nov. 23 artillery attack on the island of Yeonpyeong that killed four South Koreans, McCain, a member of the Senate Armed Services Committee, said today on CNN’s State of the Union. China is North Korea’s biggest trading partner. “We have to understand that China is not behaving in a responsible fashion as a world power,” McCain said. “We have to make adjustments to our policies regarding China.”
• Wall Street Shrinks From Default Swaps as Dodd-Frank Rules Hit Speculators. Trading in credit-default swaps, Wall Street’s fastest-growing business before the credit crisis, has tumbled 40 to 60 percent from three years ago as banks prepare for new regulation of derivatives. The declines estimated by executives at four of the biggest dealers of swaps means lower profits at firms that used to get as much as two-thirds of credit-market trading revenue from the derivatives. Moody’s Investors Service says pending rules may translate into job cuts of as much as 50 percent in groups that trade the contracts.
• China's Defense of North Korean Ally Risks Alienating Top Trading Partners. China’s reluctance to restrain North Korea comes with a price, putting it at odds with its three biggest trading partners and threatening to drive South Korea and Japan into a closer alliance with the U.S.

Wall Street Journal:

• Irish Bank Dumps New York Assets. Anglo Irish Bank Corp., the troubled bank at the heart of Ireland's controversial bailout, is raising cash by dumping New York real estate assets. Its latest move: putting up for sale a $147 million construction loan that financed the Setai Wall Street condominium and spa in the financial district.
• For Cyber Shoppers, Gadgets Look Hot. The holiday shopping season, which starts online Cyber Monday, promises to be very good for Apple Inc(AAPL). The Cupertino, Calif.-based consumer electronics giant will likely take advantage of the gift-giving season to flex its muscles, grabbing market share for its popular iPod, iPhone and iPad products.
• Investing in Fear is Big Business. Call it a bull market in fear. The popularity of the VIX index, which has become a widely watched barometer of investor fear since the financial crisis, is generating a host of spinoffs, copycats and derivatives. It is adding up to big business for VIX's owner, the Chicago Board Options Exchange, as well as partners and competitors that have developed products pegged to, or inspired by, the VIX.
• Emerging Wild Card: Inflation. Price pressures in emerging markets could force central banks to tighten aggressively, roiling assets and currencies.
• Democrats Gird for Tax-Relief Battle. Congressional Democrats, under pressure from their liberal wing, are preparing to put up a fight over tax relief for wealthier Americans before they agree to any compromise with Republicans that could extend the Bush-era breaks.

CNBC:

• Next Debt Crisis May Start in Washington: Bair. The US needs to take urgent action to cut its debt in order to prevent the next financial crisis, which may start in Washington, Sheila Bair, chair of the Federal Deposits Insurance Corp. (FDIC) wrote in an editorial in the Washington Post. The federal debt has doubled over the past seven years, to almost $14 trillion, and the growth is a result of both the financial crisis and the government's "unwillingness over many years to make the hard choices necessary to rein in our long-term structural deficit," Bair wrote. Retiring baby boomers will impact government spending heavily and this year, combined spending on Social Security, Medicare and Medicaid are expected to make up 45 percent of primary federal spending, compared with 27 percent in 1975, she explained."Defense spending is similarly unsustainable, and our tax code is riddled with special-interest provisions that have little to do with our broader economic prosperity," Bair wrote.
• Portugal, Spain in Crosshairs as Ireland Bailed Out. The European Union's bailout of Ireland is unlikely to halt expectations that the euro zone debt crisis will spread to Portugal, or provide reassurance that a firewall can be built around Spain.

IBD:

• Rising Foods Prices Feed Demand for Potash(POT) and Phosphates. Ah, the sweet smell of success. It's a fragrance that fertilizer giant Mosaic Co. (MOS) has been savoring the past few quarters as demand and selling prices for its crop nutrients have surged.

NY Times:

• War Machines: Recruiting Robots for Combat. While smart machines are already very much a part of modern warfare, the Army and its contractors are eager to add more. New robots — none of them particularly human-looking — are being designed to handle a broader range of tasks, from picking off snipers to serving as indefatigable night sentries.

Business Insider:

• Crippling Worker Shortages Hit China's Key Manufacturing Hubs. Worker shortages in China's coastal manufacturing hubs have only gotten worse, with low-end manufacturing and services hit hardest.
• North Korea Once Again Blasts Drills, Says Region On The Brink of War.
• Across The Board, There's Been Real Improvement in The Economic Data.
  

Zero Hedge:

• Smart Money Preparing for Sell Off Like Never Before (graphs).
• Following Hungary and Ireland, France is Next to Seize Pension Funds.
• Is US Foreign Policy Crippled Following Latest Wikileaks Dump? Never before in history has a superpower lost control of such vast amounts of such sensitive information -- data that can help paint a picture of the foundation upon which US foreign policy is built. Never before has the trust America's partners have in the country been as badly shaken. Now, their own personal views and policy recommendations have been made public -- as have America's true views of them. Very soon the once-legendary US foreign service department will be butt of all jokes. Perhaps it is time for someone within the administration to finally take some blame for this fiasco, although we most certainly are not holding our breath for a Hillary Clinton resignation.

Forbes:

• Obama Should Cut The Corporate Tax Rate. Will that be the president's Clintonesque move to the center?

Calcalist:

• Comverse Technology Inc.(CMVT) is in advanced talks to be acquired by Oracle Corp.(ORCL) and Platinum Equity at between $9.50 to $10 a share.

Politico:

• United Nations Climate Talks in Limbo. Cap-and-trade legislation Obama promised two years ago on the campaign trail is dead and buried, and his administration is attempting to regulate carbon dioxide emissions and cover billions of dollars in pledges without majority support in Congress. Internationally, heading into the United Nations-led climate talks in Cancun, Mexico, next week, prospects for a multitrillion-dollar transoceanic carbon market are in tatters and a new binding treaty to succeed the Kyoto Protocol remains years away. Obama won't be going to Mexico for the conference that starts Nov. 29, and neither will Secretary of State Hillary Clinton, House Speaker Nancy Pelosi or many of the other members of Congress who went to ice-cold Copenhagen for last year's U.N. climate negotiations.
• Presidential Historian Curses, Calls Americans 'Lazy and Obese'. Presidential biographer Edmund Morris delivered one of the more, well, colorful lines on this week's Sunday morning shows. On CBS's "Face the Nation," host Bob Schieffer, anchoring an authors roundtable discussion with the likes of Bob Woodward and Arianna Huffington, kept engaging the panelists in discussion about how America’s Founding Fathers would have felt about today’s political climate. Morris went on to criticize the American people, who he said “are insensitive to foreign sensibilities, who are lazy, obese, complacent and increasingly perplexed as to why we are losing our place in the world to people who are more dynamic than us and more disciplined.”

USA Today:

• Some Small Investors Buying Stocks Again.
  

Financial Times:

• George Osborne, the U.K.'s Chancellor of the Exchequer, will today call for changes to make the country "the most competitive corporate tax system in the G20," citing Treasury officials.

Telegraph:

• Jim O'Neill Says the Euro Faces 'Black Swan' Moment. Jim O'Neill, one of Goldman Sachs' most senior partners, has said that the eurozone must embark on a significant round of fiscal and political harmonisation if the euro is to survive. In an interview with The Sunday Telegraph, Mr O'Neill also revealed that the euro should carry a "risk premium" and that it was over-valued by at least 10pc. He said that the only reason it was not weaker was because many of the eurozone's problems were being masked by events in America and worries about weaknesses in the US economy.
• 'Investors Drawn to China Like Moths to a Flame'. NeilWoodford, Invesco Perpetual's star fund manager, has voiced concern that China's growth story is heading for a crossroads. Woodford said world markets seemed to be drawn like moths to a flame by China's GDP growth numbers. "I do not deny that in the long term an economy like China will grow much more rapidly than the West. But I think one has to be very careful about correlating growth necessarily with economic opportunity, and opportunity to make money," said Mr Woodford. "China has got some massive challenges. Ultimately, the main one will be this 180 degree shift from export-led growth to domestic consumption-led growth. Mr Woodford's concerns coincide with figures showing that food prices in China were 10.1pc higher in October than in the same month last year – a level of inflation not seen since mid-2007. This is deepening concern that China's economy is now starting to overheat.

Sunday Independent:

• A majority of Irish people favor defaulting on debts to bondholders at the country's "stricken" banks, citing a poll commissioned by the newspaper. The poll found 57% of respondents favor a default on bank debt, against 43% who oppose such a move. About two-thirds of respondents also opposed austerity measures in the government's four-year budget plan released on Nov. 24, the poll showed.
• Adenauer and Friends Seek to Block Ireland's 85 Billion Euro Bailout. Lawyer and playwright among those against bailout as fears grow that Spain could be next to fall. A German coalition comprising a controversial playwright, the grandson of the first Chancellor of the post-war federal republic and a campaigning constitutional lawyer will challenge Ireland's 85bn Euro bailout this week.

TSF Radio:

• The European Union is not working on any aid package for Portugal, citing Portuguese Defense Minister Augusto Santos Silva.

NRC Handelsblad:

• H&M's CEO Karl-Johan Persson expects higher cotton prices to depress profit margins, he said in an interview. An increase in cotton rates will be "tough" for the fashion industry and may force some companies to raise prices, citing Persson.

Der Spiegel:

• Marco Buti, the European Commission's head of economics, is calling for a doubling of the European bailout fund.

Nikkei English News:

• A Japanese government panel is considering a cut in the corporate tax rate for next fiscal year, to make domestic companies more competitive in global markets.

Zjol.com:

• China will continue a "relatively proactive" fiscal policy in the next few years, citing central bank adviser Li Daokui. The country will shift from the "extremely loose" monetary policy from the past two years, Li said.

Weekend Recommendations
Barron's:

• Made positive comments on (AMP) and (SHOO).
• Made negative comments on (CMG).

Night Trading

• Asian indices are -.75% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 110.50 +3.5 basis points.
• Asia Pacific Sovereign CDS Index 111.75 +5.75 basis points.
• S&P 500 futures +.58%.
• NASDAQ 100 futures +.40%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note
  

Economic Releases

• None of note

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bernanke speaking, Fed's Bullard speaking, Dallas Fed Manufacturing Activity for Nov. and the (ZIOP) analyst day could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the week.