Today's Headlines

Bloomberg:

• Draghi Urges Action on Debt-Crisis Agreements While ECB Focuses on Prices. European Central Bank President Mario Draghi pushed back against politicians and investors asking him to do more to end the sovereign debt crisis, expressing impatience with leaders’ failure to act. The ECB would quickly lose credibility if it departed from its primary role of keeping prices stable, Draghi said in a speech in Frankfurt today. “Where is the implementation” of government pledges to bolster the region’s rescue fund, he asked. “We should not be waiting any longer.” The comments suggest Draghi is unwilling to make large- scale bond purchases to extinguish a debt crisis that has spread from Greece to Ireland, Portugal, Italy and Spain, threatening to tear the 17-nation monetary union apart. While the ECB is intervening in debt markets in an attempt to lower soaring yields, it’s refusing to unleash the unlimited firepower that some governments are calling for. “Losing credibility can happen quickly -- and history shows that regaining it has huge economic and social costs,” Draghi said. Keeping prices stable “is the major contribution we can make in support of sustainable growth, employment creation and financial stability. And we are making this contribution in full independence.”
• Portugal Heading for 'Shock' Year as Crisis Deepens: Euro Credit. With an economy struggling in a recession, Portuguese Prime Minister Pedro Passos Coelho is fighting to avoid the market mayhem that toppled the Italian government last week. "2012 will be the year of shock," said Diogo Teixeira, chief executive officer of Optimize Investment Partners, a Lisbon-based firm that manages 45 million euros in assets and holds Portuguese government debt. "Most negative effects of the government's austerity measures will be felt in 2012, whereas the good effects, in terms of increased productivity, may only be felt in 2013 and beyond."
  
• Sovereign Debt Concern to Spread Beyond EU, Ackermann Says. Challenges stemming from the loss of sovereign debt’s risk-free status will spread beyond Europe, said Deutsche Bank AG Chief Executive Officer Josef Ackermann. “Another big shift in the financial markets is the still widely underestimated fact that sovereign debt can no longer be considered a risk-free asset,” Ackermann said in a speech at a conference in Frankfurt today. “Europe is at the forefront of these developments, but considering debt dynamics, as well as the political and demographic developments in other countries, it is only matter of time before these considerations will surface in other countries as well.” A renewed Franco-German spat increased concern that the region’s leaders can’t agree on how to contain the debt crisis, which has forced bailouts for Greece, Ireland and Portugal. Ackermann said “it will take years for the system” to recover from the “massive shock” that started in 2007. Banks have booked losses as they write down the value of their government holdings. “It will take years for the system to adjust to the new reality,” Ackermann said. “We are therefore well advised to expect, and, more importantly, to prepare for a prolonged period of volatility and uncertainty.”
• Bank Stress Gauges Show Pain Lasting Through '11: Credit Markets. Three weeks after European leaders hailed an "historic" agreement to restore confidence to the region's banking system, rising gauges of stress in funding markets signal tensions will last at least through year-end. The gap between three-month euro interbank borrowing and lending rates rose to the widest since March 2009 yesterday in the forward market, used to speculate on future interest rates, according to data compiled by Bloomberg. The cost for European banks to fund in dollars surged this month, with the three-month cross currency basis swaps falling to as much as 1.32 percentage points below the euro interbank offered rate, the most since December 2008."We are in the midst of the crisis," Chiara Manenti, a fixed-income strategist at Intesa Sanpaolo Spa in Milan, said in a telephone interview. "The liquidity in the money market is not flowing normally between banks. Tensions in the funding markets will remain through year-end, and will be more pronounced in Europe." Traders are wagering the struggle of the region's banks to obtain short-term funding will worsen as yields of Europe's most indebted nations surge, heightening concern that Italy may follow Greece, Ireland and Portugal in needing a bailout. The gap between two-year German interest-rate swaps and similar- maturity government bond yields climbed to the most since November 2008.
• Leading Economic Indicators in U.S. Climb. The index of U.S. leading indicators climbed more than forecast in October, signaling the world’s largest economy will keep growing in early 2012. The Conference Board’s gauge of the outlook for the next three to six months rose 0.9 percent, the biggest jump since February, after a 0.1 percent September increase, the New York- based research group said today. The median forecast of 56 economists surveyed by Bloomberg News projected the gauge would advance 0.6 percent.
• Oil Declines in New York on Speculation Pipeline Reversal Won't End Glut. Oil in New York declined, widening its discount to Brent crude, on speculation that the reversal of the Seaway pipeline won’t be enough to eliminate a glut in the U.S. Midwest. “People realized that they overreacted when the Seaway pipeline news was announced,” said Phil Flynn, an analyst with PFGBest in Chicago. “One pipeline isn’t enough to alleviate the glut and the reversal isn’t necessarily a bullish event.” Crude for December delivery slid $1.62, or 1.6 percent, to $97.20 a barrel at 1:44 p.m. on the New York Mercantile Exchange. The December contract expires today. The more actively traded January contract fell $1.66 to $97.27. Brent oil for January settlement fell 52 cents, or 0.5 percent, to $107.70 a barrel on the London-based ICE Futures Europe exchange. “The reversal of the pipeline might be a more bearish event than the way the market reacted the first day,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “It allows access to high-quality crude for all Gulf Coast refineries.”
• U.S. Birthrate Declines for Third Year on Economic Worries. The U.S. birthrate fell 3 percent last year, the third straight decline, as the economy faltered and women delayed having children. The birthrate dropped to 66.2 for every 1,000 women ages 15 to 44, the lowest since 1987, according to the Atlanta-based Centers for Disease Control and Prevention.
  

Wall Street Journal:

• Stress Indicators Flash Red in Europe. Many weeks have been called the worst of the financial crisis. But this week has as good a claim as any. Wild swings in euro-zone bond markets and a further deterioration of bank funding conditions have raised many stress indicators to levels last seen following the 2008 collapse of Lehman Brothers. The difference this time is that policy makers have fewer bullets to fire. In government bond markets, the gap between 10-year French and German debt rose to above two percentage points Thursday, a level that hasn't been seen since the early 1990s. That, together with moves in Dutch and Finnish debt, suggests investors are starting to see a real risk of a break-up of the euro-zone. The cost of insuring €10 million ($13.4 million) of European bank and insurer debt for five years via the Markit iTraxx Senior Financials index closed at €300,000 Thursday, close to a record and far above the peak of €211,000 seen in March 2009. The three-month Euribor/OIS spread hit 0.91 percentage points this week, the widest since March 2009, according to Bank of America Merrill Lynch. And European banks are having to pay through the nose to get dollars via the markets: the euro-U.S. dollar cross-currency basis swap reached a negative 1.3 percentage points Friday, according to RBS. This indicator went below minus two percentage points after Lehman's collapse, but quickly recovered. This time it has been deteriorating since April. In the wake of the Lehman collapse, central banks were able to ease strains by slashing interest rates and pumping liquidity into the system. But this time around, interest rates are low and liquidity is abundant: banks have €230.9 billion deposited overnight at the European Central Bank and bid to deposit another €260.5 billion for seven days this week at an €187 billion auction designed to sterilize ECB government-bond purchases. The ECB has announced new one-year refinancing operations and pledged to supply unlimited cash to banks until at least the middle of 2012. That suggests there may be worse weeks to come.
• Sovereign CDS Concerns Shift To Counterparty Risk. Investors and policy makers scrambling to determine how banks may be hurt by losses on risky European sovereign debt are looking beyond the hedges those banks have on and are trying to determine how reliable the banks' trading partners are.
• Inside the Obama Money Machine.
• Poll: Gingrich, Romney in Dead Heat in N.H.
  

CNBC.com:

• ECB Has Secret 20 Billion Euro Bond-Buying Limit: Report. The European Central Bank has secretly imposed a weekly limit of about 20 billion euros ($27 billion) on its euro zone sovereign bond-buying program, according to a report in Germany's Frankfurter Allgemeine Zeitung published on Friday.
• US Deficit-Cutting Talks Appear to Be Near Collapse.
• Euro Zone Woes Squeeze Bank Funding. Fear over European banks' exposure to risky government debt stalked markets and harried bank executives on Friday, as unsecured lending between banks evaporated and the cost of secured loans rose.

Business Insider:

• Nancy Pelosi Wants a Federal Babysitting Service.

Zero Hedge:

• Ireland: "Germany Is Our New Master".
• Instead of Relenting to Demands to Let ECB Print, Germany is Preparing to Kick Countries Out of Eurozone.
• Charting Who Owes What to Whom.
  

Boston Globe:

• Report Says Massachusetts Economy to Slow. Massachusetts’ economy is expected to slow dramatically and the state is unlikely to reach prerecession employment levels until mid-2014, according to a forecast to be released today by the New England Economic Partnership.

Reuters:

• UBS Analysts Predict 70% Collapse in EU CO2 Prices. European Union carbon prices could shed some 70 percent from current levels, as the bloc struggles with a mounting debt crisis and a glut of supply in the carbon market is unlikely to disappear until 2025, analysts at UBS said. The investment bank also said the EU emissions trading scheme (ETS), the 27-nation bloc's main policy tool to fight global warming, "isn't working" because carbon prices are "already too low to have any significant environmental impact." "We expect the recent carbon-price decline to escalate into a 'crash' as carbon market supply should double over the coming months," UBS analysts wrote in a Thursday statement to clients.
• US Tax Evasion Law 'Could Cost Big Banks $100 Million'. A U.S. law aimed at curbing tax evasion by citizens using foreign accounts could cost large multinational banks as much as $100 million apiece to implement in one-off systems costs, a top asset manager and a tax lawyer told a conference on Friday. The overall costs of implementing the Foreign Account Tax Compliance Act (FATCA), could approach the more than $8 billion FATCA is due to raise over 10 years, he said.

Telegraph:

• Debt Crisis: Live. David Cameron and Angela Merkel present united front after meeting in Berlin, calling for more free trade in Europe and a "strong, sustainable" euro – but admit no agreement has been made on a treaty change.

Investment Europe:

• Hedge Fund Recovery Marred by Redemptions. Eleven of the thirteen hedge fund strategies tracked by the Paris-based Edhec Risk Institute posted positive performance in October, although many remained in negative year-to-date territory triggering heavy redemptions. Despite the encouraging returns hedge funds posted in October, investor redemptions were heavy. Total assets in the industry fell by $4.5bn for the month Eurekahedge data revealed, driven primarily by the redemption pipeline built up since August and September. Although the industry has made a significant recovery from the financial crisis over the last two years, these numbers indicate that investors remain edgy and will start to withdraw their capital based on movements in the underlying markets, Eurekahedge concluded.

Xinhua:

• China and North Korea pledged to strengthen military exchanges and cooperation, citing an official visit by a Chinese military delegation.

Bear Radar

Style Underperformer:

• Small-Cap Growth (-.55%)

Sector Underperformers:

• 1) Software -1.32% 2) Semis -1.04% 3) Homebuilders -1.00%

Stocks Falling on Unusual Volume:

• CRM, QLIK, ARBA, CVLT, SIMO, ATW, TSRA, MFN, PANL, PERY, SIRO, SCVL, MASI, CPSI, SHLD, SFLY, CERN, BRKR, AWAY, THOR, THRX, FURX, SGNT, ASPS, MAKO, CYOU, MGI, HNZ, ANN, LNKD, LRN and KRO
  

Stocks With Unusual Put Option Activity:

• 1) ILMN 2) AGO 3) MBI 4) CNX 5) LO
  

Stocks With Most Negative News Mentions:

• 1) SHLD 2) LEN 3) BLK 4) BHI 5) CRM
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value (+.17%)

Sector Outperformers:

• 1) Hospitals +.59% 2) Utilities +.57% 3) Gaming +.49%

Stocks Rising on Unusual Volume:

• MENT, MRVL, BCSI, CME, BRC, DLB, IBA, RLD and SCO
  

Stocks With Unusual Call Option Activity:

• 1) GES 2) MHS 3) KOG 4) AMRN 5) AMSC
  

Stocks With Most Positive News Mentions:

• 1) HPQ 2) SFD 3) SIRI 4) ARUN 5) TSN
  

Charts:

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

Friday Watch

Evening Headlines

Bloomberg:

• Euro Rescue Plan Falling Short Renews Franco-German Spat Over Role of ECB. The failure of European leaders to end the debt crisis with their broadest effort yet has revived a Franco-German dispute over the European Central Bank’s role and fueled investor concerns over policy makers’ economic impotence. As holders of Greek debt begin talks in Athens on structuring a 50 percent writeoff that was the cornerstone of a deal pieced together last month at an all-night summit, officials in Berlin and Paris swapped barbs and European borrowing costs outside of Germany rose to euro-era records. The discord highlighted markets’ brushoff of a package that included a scaled-up rescue fund, proposed guarantees of sovereign debt and a bid to attract more international loans. The accord, which finance ministers aim to implement next month, was at least the fourth plan billed as a comprehensive strategy to end the crisis born in Greece in 2009, none of which provided a lasting fix. “The crisis is clearly broadening,” Riccardo Barbieri, London-based chief European economist at Mizuho International Plc, told Bloomberg Radio’s Ken Prewitt yesterday. “Only Germany, and to some extent the Netherlands, are immune from the crisis at the moment.” The premium France pays over Germany to borrow for 10 years jumped to a record 200 basis points. Yields on bonds of countries from Portugal to Finland, the Netherlands to Austria also rose relative to Germany.
• European Banks Face $270 Billion Goodwill Hangover for Past Acquisitions. European banks may have to write down some of the $270 billion of goodwill from their purchases in the run up to the financial crisis before they can sell assets, or new stock, to bolster capital. UniCredit SpA (UCG), Italy’s biggest lender, this week opted to take an 8.7 billion-euro ($10 billion) impairment charge following a series of acquisitions at home and in eastern Europe. Other European banks are yet to follow, analysts said. Credit Agricole SA (ACA), Banco Santander SA (SAN) and Intesa Sanpaolo SA are among European banks with the most goodwill remaining on their balance sheets, according to data compiled by Bloomberg. “Banks that paid a premium for businesses when the outlook was better will need to reassess the goodwill on their balance sheets,” said Andrew Spooner, an accounting partner at Deloitte LLP in London. “Previous acquisitions which are exposed to peripheral Europe are most vulnerable to impairments.” European bank stocks are trading at an average 58 percent of their book value, according to Bloomberg data. While writing down goodwill won’t deplete banks’ capital for regulatory purposes, it’s a sign that executives overpaid for purchases.
• GM(GM) Sees Europe Crisis 'More Serious' Than 2008 Credit Bubble. Europe’s debt crisis is a “more serious” situation than the housing bubble three years ago that preceded a global recession, General Motors Co. Chief Executive Officer Dan Akerson said today. “The ’08 recession, which was a credit bubble that manifested itself through primarily the real estate market, that was a serious stress,” Akerson told the Detroit Economic Club today. “The government took some insightful actions. This is much more serious.” GM, which hasn’t turned an annual profit in Europe in more than a decade, has declined in New York trading since rescinding its target for break-even results in the region. European operations lost $292 million before interest and taxes in the quarter ending Sept. 30, GM said last week as it reported a 2.5 percent drop in third-quarter net income. Analysts have slashed their estimates for GM’s adjusted earnings in the fourth quarter by 49 percent after the company said last week that results for the period would be similar to a year earlier, citing weakness in Europe as a factor. All 14 analysts surveyed by Bloomberg cut their estimates in the last two weeks, reducing the average to 44 cents a share, from 86 cents. “We’re dealt a hand and we have to play it as best we can,” Akerson, 63, said today of Europe. “It may get a little ugly at times, a little bumpy.” Asked if some countries such as Greece may eventually leave the euro zone and lead to a breakdown of the currency, Akerson said “I wouldn’t doubt it.” GM slid 3.8 percent to $21.79 at the close in New York. Detroit-based GM plunged 34 percent since its initial public offering a year ago.
• The 3-Month EUR/USD cross-currency basis swap fell -6.25 bps to -129 bps, the lowest since hitting -145 bps Dec. 2, 2008, amid increasing funding concerns as solutions for solving the EU debt crisis are at an impasse. "Cross-currency tells you the whole world is short on dollars," says Nomura strategist Marcus Phua. "Everyone is experiencing tightness in the market. It's how the crisis has become global in the sense of impact." "Euro banks don't trust each other and non-euro banks shy away from issuing to the Eurozone," said Phua.
• Bank Stress Gauges Show Pain Lasting Through '11: Credit Markets. Three weeks after European leaders hailed an "historic" agreement to restore confidence to the region's banking system, rising gauges of stress in funding markets signal tensions will last at least through year-end. The gap between three-month euro interbank borrowing and lending rates rose to the wides since March 2009 yesterday in the forward market, used to speculate on future interest rates, according to Bloomberg. The cost for European banks to fund in dollars surged this month, with the three-month cross currency basis swaps falling to as much as 1.32 percentage points below the euro interbank offered rate, the most since December 2008. "We are in the midst of the crisis," Chiara Manenti, a fixed-income strategist at Intesa Sanpaolo Spa in Milan, said in a telephone interview. "The liquidity in the money market is not flowing normally between banks. Tensions in the funding markets will remain through year-end, and will be more pronounced in Europe."
  
• China's New Banking Regulator Said to Warn on Government Loans. China’s new banking regulator warned lenders that some projects backed by local governments may run out of funds, and loans to property developers are likely to sour as sales slow, a person with knowledge of the matter said. Shang Fulin, who replaced Liu Mingkang last month as chairman of the China Banking Regulatory Commission, told lenders last week to step up asset sales and debt restructuring for local government financing vehicles that are struggling to repay loans, the person said, declining to be identified because the instructions were private. Shang also said banks should cut “high-risk” loans to developers, the person said. “He knows that he has big shoes to fill, and that Liu Mingkang’s biggest achievement was probably raising the alarm early and repeatedly about potential risks in the banking system,” said Barry Naughton, author of the 2007 book “The Chinese Economy: Transitions and Growth” and a China specialist at the University of California, San Diego. “He’s trying to show that he is aware of the problems and he can also be tough.” Shang’s predecessor tightened capital requirements and clamped down on off-balance sheet assets this year. Still, the International Monetary Fund this week called for closer oversight of Chinese banks as risks increase. Home sales plunged 25 percent in October from the previous month. Industrial & Commercial Bank of China Ltd. and its three biggest local rivals have lost about $71 billion in market value this year. Home prices may fall as much as 30 percent in the next year, Barclays Plc’s research unit said last week. They had risen by 140 percent from 1998 to the end of last year, according to the national statistics bureau. The regulator said some developers have used projects funded by such bank loans to improperly raise funds from trusts, which may trigger “major credit risks,” according to the person. Property loans that need to be restructured should be classified as “substandard” at a minimum and downgraded, the watchdog said. The CBRC last week told banks to inspect loans to local government financing vehicles, 35 percent of whose debt matures in the next three years, the person said. Local governments, previously barred from directly selling bonds or borrowing from banks to pay for projects including roads and bridges, set up more than 6,000 financing vehicles and amassed 10.7 trillion yuan ($1.7 trillion) of debt by the end of 2010, with 80 percent owed to banks, the National Audit Office said in a June report. Premier Wen had ordered the first audit of local-government borrowing in March, amid concern spending designed to support the economy following the 2008 global financial crisis would leave a legacy of bad debt. The regulator warned last week that some local governments are circumventing regulatory restrictions and raising funds by using companies that aren’t classified as financing vehicles, the person said. The banking regulator said it will also stop approving the sale of wealth-management products with maturities of one month or less, the person said.
• EU Rules May Soak Up $93 Billion of Utility Cash: Energy Markets. Companies from RWE AG to Vattenfall AB may have to find an extra 69 billion euros ($93 billion) to meet unprecedented European Union regulations designed to crack down on speculation in the region's energy markets. A proposal made last month by the EU may for the first time require utilities and other firms with commodity assets to set aside funds safeguard, their power, fuel and carbon permit trades against default. Those companies don't currently need to clear so-called over-the-counter, or OTC, trades which, in power, account for 73 percent of Europe's electricity market. The cost of these financial rules would come on top of $1.9 trillion of capital investment that's needed to expand and upgrade EU power plants through 2035, the International Energy Agency said in a Nov. 9 report. The additional burden of climate-protection rules has already cut 200 billion euros from power-company share values since January 2009, according to Citigroup Inc. Stockholm-based Vattenfall says the new financial rules may cost it more than 1 billion euros. “I can see that the new collateral requirements and costs associated with over-the-counter trades will be high,” said Jacqui Hatfield, a London-based partner and head of financial services at law firm Reed Smith LLP, which has advised on $21 billion of renewable-energy transactions in the past five years.
• Copper Traders Most Bearish in Two Months on European Crisis: Commodities. Copper traders and analysts are the most bearish in almost two months because of mounting concern that Europe’s debt crisis will curb demand in the region that accounts for about 19 percent of global consumption. Eleven of 23 surveyed by Bloomberg expect the metal to decline, the second consecutive week that their outlook worsened and the highest proportion since Sept. 23. The last time so many were bearish, prices dropped 4.6 percent the following week. The commodity fell more than 20 percent into a bear market since reaching a record in February on signs that economic growth is slowing. European industrial production fell the most in 2 1/2 years in September as governments grappled with sovereign debt crises that have toppled governments in Greece and Italy. Copper demand contracted 0.9 percent in 2008 as economies contended with the worst recession since World War II. “There’s a strong chance of Europe going into a recession,” said William Adams, head of research at London- based Basemetals.com. “Asia is getting more worried that the slowdown in Europe will mean demand for their exports will be hit and therefore that’s going to impact demand for their industrial production.” Copper declined 21 percent to $7,541 a metric ton on the London Metal Exchange this year, heading for the biggest annual drop since 2008.
• China Power Firm Margins Worst Since 2006 as Coal Rises. Chinese power plants face the smallest profit margins in at least five years as government- mandated caps on electricity prices prevent utilities from passing along coal-price increases.
• China Home Prices Fall in 33 of 70 Cities. China’s home prices fell in 33 of 70 cities monitored by the government in October, the worst performance since it expanded property curbs and scrapped the reporting of its national average housing data this year. New home prices in China’s three major cities of Shanghai, Shenzhen and Guangzhou retreated from September after prices stalled for three months, while those in the capital city of Beijing were unchanged, the statistics bureau said in a statement on its website today. The eastern city of Wenzhou posted the biggest drop of 4.6 percent, more than 10 times the average slide among the cities that posted declines. China’s Premier Wen Jiabao said the country won’t waver on its property restrictions this month.

Wall Street Journal:

• European Firms Face Lending Woes. Companies Struggle as Banks Lend Less, at Higher Rates, Forcing Businesses Into Public Markets With Selective Investors. Euro-zone countries aren't the only borrowers whose financing costs are rising: European companies are facing higher capital costs as the debt crisis curtails bank lending and keeps wary investors on the sidelines. The amount of European corporate debt in need of refinancing is set to jump in 2012. But banks are lending less and at higher rates, forcing companies into public markets, where investors are becoming increasingly selective. Less corporate borrowing leads to less corporate investment—another drag on already sickly economies.
• Fund Transfers Are Focus of MF Global Probe. Regulators have unearthed new details indicating MF Global Holdings Ltd. shifted hundreds of millions of dollars in customer funds to its own brokerage accounts in the days before its bankruptcy filing, according to people familiar with the matter. Such moves could violate regulations stipulating that commodities brokers can't mix customer funds with brokerage funds. Brokerage funds often are used to back proprietary trading positions. According to MF Global's internal records, the transactions were as large as hundreds of millions of dollars at a time, these people said.
• Prime-Mortgage Standards Tighter Than Pre-Boom Levels. Lending standards for prime mortgages are tighter now than they were even prior to the housing boom. A chart accompanying the Capital column on mortgages this week showed graphically how lenders raised the bar on making loans after the housing bust — and still haven’t returned it to anything resembling what once was normal.
• Tighter Credit Sending Warning Signals. (graph) The US market has been buoyed by a string of better-than-expected economic reports that have helped encourage the belief that the US is a relatively safe haven, insulated from the problems of Europe. But these data are coincident, or lagging, data at best, warns Mike Darda of MKM Partners. Leading indicators are found in the credit markets and are pointing to tighter financial conditions — and lower stock prices — in the future:
• Tax Spat Stymies Debt Panel. Both Parties Dig In Over Bush-Era Cuts as Deadline Looms for Agreement.
• How Congress Occupied Wall Street. Politicians who arrive in Washington as men and women of modest means leave as millionaires. Why?

Business Insider:

• Warren Buffett's Private Jet Company Is Complaining It Was Overtaxed By The IRS.
• Why The ECB Is NOT Going To Be A Lender Of Last Resort.
• US Debt to GDP Hits 98.9% And Rising. (graphs)
• These Inappropriate Crotchless Panties For Kids Are Causing An Uproar In Colorado. A mother who was shopping at a local mall in Greeley, Colo. was aghast when she saw crotchless panties sold in a children's store called Kids N’ Teen (via Jezebel). "I was mortified. My first initial response was, 'Am I really seeing that?' They're sized to fit a seven-year-old girl," Erin French told 9News.

Zero Hedge:

• New York Fed Swap Lines With Europe Increase By $390MM, Rise To $2.248BN.
• Playing Chicken With The ECB: The Market Has Issued A Boycott On Draghi Until He Prints.
• Watch Nigel Farage Dance On The Euro's Grave. (video)
  

CNBC:

• Banks Bracing for 2012 Euro Financial Apocalypse. As the European debt crisis threatens to spiral out of control, banks are scrambling behind the scenes to protect their balance sheets and hedge their exposure to ride-out an increasingly scary 2012. But while some of the moves may help mitigate the losses from Armageddon, market watchers say certain financial insurance policies — particularly credit default swaps on sovereign debt — may not work in a new financial crisis. Banks are loading up on hedges against a possible European financial collapse. The notional amounts outstanding of over-the-counter derivatives rose 18 percent in the first half of 2011 to $708 trillion as of June 2011, a record high, according to a report by the Bank of International Settlements released Wednesday. In the second half of 2010, the notional value rose only by 3 percent. "Given all the increased volatility — the unusual conditions with the dollar and the euro, the debt crisis in Europe, the debt problems of the U.S. — you are seeing an increase in hedging," says Steve Wyatt, professor and Chair of the Finance Department at the Farmer School of Business at Miami University, Ohio. "The more astute observers in the market have come to the conclusion that the ECB will not buy enough paper to change the market view on this because of inflation fears. The only way out of this is fiscal integration or some modification of the membership in the Euro. That is not going to be quick or clean. That is the risk participants are hedging against." Here's a quick snapshot of their exposure and hedges purchased, according to latest disclosures.
• As New Graduates Return to Nest, Economy Also Feels the Pain.
  

IBD:

• Pelosi Leads List Of Conflict Of Interest Dems.

NY Post:

• Con Ed wants to evict Ground Zero mosque developer over $1.7M back rent. Con Edison wants a judge to give it the green light to evict the would-be developer of a controversial community center and mosque near Ground Zero, arguing he doesn't have a prayer of paying the $1.7 million he owes in back rent. At a hearing in Manhattan Supreme Court today , Con Ed lawyer Scott Mollen portrayed Sharif el-Gamal as a deadbeat slumlord who's far too cash-strapped to pay back all the money he owes the utility.

CNN:

• Secret Service Confirms Cain Protection. Presidential candidate Herman Cain will receive protection from the United States Secret Service, the agency confirms to CNN. Cain will be the first candidate in the race for the Republican presidential nomination in the 2012 election cycle to be placed under the protection of this federal law enforcement agency. It is not yet clear why Cain is getting Secret Service protection.

Rasmussen Reports:

• Iowa: Gingrich 32%, Romney 19%, Cain 13%.
• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 20% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-four percent (44%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -24 (see trends).

Reuters:

• S&P to Update Bank Credit Ratings Within 3 Weeks. Standard & Poor's plans to update its credit ratings for the world's 30 biggest banks within three weeks and may well mete out a few downgrades in the process, possibly surprising battered global bond markets. Among the institutions that could be downgraded are Bank of America Corp , Citigroup Inc and Morgan Stanley , said Baylor Lancaster, an analyst at CreditSights Inc.
• UK Banks Sharply Cut Lending to Periphery Eurozone - FT. Britain's banks have shrunk their lending exposure to peripheral euro zone counterparts by a quarter in just three months, the Financial Times reported on Friday. According to data compiled by the newspaper, used as the source for the article, the big four UK banks cut interbank loan volumes by more than 24 percent to 10.5 billion pounds ($16.6 billion) in the three months to end-September, as Europe's debt crisis worsened. UK's Big Four of HSBC, Lloyds, RBS and Barclays reduced sharply their volume of loans to Greek and Spanish banks, continuing an earlier pattern, but the Italian loan slump was new.
• Salesforce.com(CRM) Shares Drop On Tepid Outlook. Web-based software maker Salesforce.com Inc forecast current-quarter earnings broadly in line with Wall Street estimates and posted a quarterly net loss as its marketing and sales costs increased sharply. The tepid outlook from one of the leaders in Internet-based "cloud" computing suggests it will not avoid the effects of broad cutbacks in corporate spending which have ravaged other technology firms. Salesforce shares fell 6 percent after hours.
• North America Oct. Chip-Gear Orders Rise 1.4% vs. Sept.
  

Financial Times:

• Spain Pushed to Frontline of Euro Crisis. Spain was thrust on to the frontline of the eurozone’s debt crisis on Thursday as investors forced its borrowing costs sharply higher just three days ahead of a general election that opinion polls predict will topple the ruling Socialist party.

Telegraph:

• Angela Merkel Says UK Must Work With The Eurozone Or Risk Being 'Left Behind'. Angela Merkel has charged Britain to “work with us on the euro” or risk being “left behind” ahead of a testy summit with David Cameron in Berlin on Friday. The German Chancellor will demand British support for treaty changes to allow greater intervention in national economies – powers she says are vital to stem the crisis engulfing Europe’s core.
• Asian Powers Spurn German Debt On EMU Chaos. Asian investors and central banks have begun to sell German bonds and pull out of the eurozone altogether for the first time since the debt crisis began, deeming EU leaders incapable of agreeing on any coherent policy. Andrew Roberts, rates chief at Royal Bank of Scotland, said Asia's exodus marks a dangerous inflexion point in the unfolding drama. "Japanese and Asian investors are for the first time looking at the euro project and saying `I don't like what I see at all' and fleeing the whole region. "The question on everybody's mind in the debt markets is whether it is time to get out Germany. The European Central Bank has a €2 trillion balance sheet and if the eurozone slides into the abyss, Germany is going to be left holding the baby. We are very close to the point where markets take a close look at this, though we are there yet," he said. Jean-Claude Juncker, Eurogroup chief, fueled the fire by warning that Germany is no longer a sound credit with debt of 82pc of GDP. "I think the level of German debt is worrying. Germany has higher debts than Spain," he said.
  

Caixin Online:

• Weaker external demand shouldn't be the basis for China's policy adjustments as the nation's trade surplus decreases and its contribution to economic growth is currently small, citing Long Guoqiang, a researcher at the State Council's Development Research Center. China's policy easing should depend on whether or not the government's inflation target has been met, Long said.

21st Century Business Herald:

• China plans to allow local government financing vehicles to securitize assets under a trial program in Guangdong, Jiangsu and Zhejiang provinces and in Beijing city, citing National Assoc. of Financial Market Institutional Investors. Airports, toll roads and sewage treatment projects will be among assets that can be securitized.
• China should include financial risk prevention in its 2012 macro policy, citing Zhang Xiaojing, director of the department of macroeconomics at the state-run Chinese Academy of Social Sciences. This year's macro policy doesn't include financial risk as a task. Zhang's team provides policy-making suggestions to the central government.
  

China Securities Journal:

• Chinese exports next year will be "very grim," citing He Fan, deputy director of the Chinese Academy of Social Science's institute of world economics and politics. The euro zone may have another crisis early next year, He says.

Evening Recommendations
Jefferies:

• Rated (KO) Buy, target $80.

Night Trading

• Asian equity indices are -2.0% to -1.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 215.0 +6.0 basis points.
  
• Asia Pacific Sovereign CDS Index 161.0 +3.5 basis points.
• FTSE-100 futures -1.13%.
  
• S&P 500 futures -.19%.
  
• NASDAQ 100 futures -.15%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ANN)/.57
• (CPWM)/-.37
• (HIBB)/.51
• (HNZ)/.80
• (CYBX)/.30
  

Economic Releases
10:00 am EST

• Leading Indicators for October are estimated to rise +.6% versus a +.2% gain in September.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Williams speaking, Fed's Fisher speaking, ECB's Mario Draghi speaking and the (PFCB) investor day could also impact trading today.
  

BOTTOM LINE: Asian indices are lower, weighed down by technology and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Dropping into Final Hour on Rising Eurozone Debt Angst, Tech/Financial Sector Pessimism, Global Growth Fears, High Energy Prices

Broad Market Tone:

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

Equity Investor Angst:

• VIX 35.53 +6.06%
  
• ISE Sentiment Index 79.0 -19.39%
  
• Total Put/Call 1.25 -8.76%
  
• NYSE Arms 3.02 +72.34%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 134.73 +2.35%
  
• European Financial Sector CDS Index 285.80 +6.80%
  
• Western Europe Sovereign Debt CDS Index 356.0 +.51%
  
• Emerging Market CDS Index 333.25 +2.93%
  
• 2-Year Swap Spread 53.0 +2 bps
  
• TED Spread 48.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.
  
• Yield Curve 169.0 -6 bps
  
• China Import Iron Ore Spot $147.60/Metric Tonne +.27%
  
• Citi US Economic Surprise Index 49.10 -.8 point
  
• 10-Year TIPS Spread 1.92 -3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -105 open in Japan
• DAX Futures: Indicating -60 open in Germany

Portfolio:

• Slightly Higher: On gains in my Index hedges and Emerging Markets shorts.
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short and then covered some of them
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is very bearish, as the S&P 500 trades to session lows as it falls back near its 50-day moving average on rising Eurozone debt angst, US Super Committee rumors, rising global growth worries and rising tech/financial sector pessimism. On the positive side, Tobacco, HMO, Utility, Telecom and Drug shares are holding up relatively well, falling less than -1.0%. Gold is falling -2.31%, Oil is falling -2.4%, Lumber is rising +4.1% and the UBS-Bloomberg Ag Spot Index is declining -2.41%. On the negative side, Coal, Oil Service, Ag, Steel, Internet, Software, Computer, Semi, Disk Drive and Airline shares are under significant pressure, falling more than -3.0%. (XLK) has traded poorly throughout the day. Copper is down -3.8%. India's Sensex continues to trade very poorly, falling another -1.87% overnight, and is now down -20% ytd. Major European equity indices fell 1-2% today. The Germany sovereign cds is gaining +1.15% to 95.14 bps, the Spain sovereign cds is climbing +2.4% to 480.82 bps, the Brazil sovereign cds is jumping +3.55% to 173.17 bps, the Russia sovereign cds is rising +2.57% to 246.50 bps, the China sovereign cds is gaining ++2.12% to 146.95 bps and the Japan sovereign cds is gaining +2.22% to 114.99 bps. The TED spread continues to trend higher and is at the highest since June 2010. The 2-Year Swap spread is at the highest since May 2010 today. The FRA/OIS Spread is jumping +3.75 bps to 72.25 bps, which is the highest since May 2010. The 2yr Euro Swap Spread is at the highest since Nov. 2008. The 3M Euro Basis Swap is falling -5.08% to -129.37 bps, which is the worst since November 2008. The Libor-OIS spread is near the widest since July 2009, which is also noteworthy considering the recent strong equity advance off the lows. China Iron Ore Spot has plunged -23.1% since February 16th and -18.5% since Sept. 7th. The 10-year yield is falling -5 bps to 1.95% today despite some more positive US economic data. Ag-related stocks(such as CF, AGU, POT, MOS) are seeing large-volume declines today. I would not try to bottom-fish in these shares around current levels. As well, oil likely made another tradable top over the last 24 hours as its divergence from other economically-sensitive commodities became too great, the euro weakens and imminent Iran attack fears diminish. So far, stocks have just experienced a pullback after a strong surge off the lows, however I still think the risk of another meaningful turn lower in equities is substantial unless a positive catalyst emerges from Europe very soon. I expect US stocks to trade mixed-to-lower into the close from current levels on rising Eurozone debt angst, rising global growth worries, profit-taking, rising financial/tech sector pessimism, more shorting, high energy prices and technical selling.

Today's Headlines

Bloomberg:

• European Stocks Decline as Lower Spanish Bond Demand Fuels Crisis Concern. European stocks fell after Spain’s borrowing costs surged to a euro-era record on waning demand at a bond sale, adding to concern the region’s sovereign debt crisis is deepening. BNP Paribas SA and Societe Generale SA led a sell-off in banks, both dropping at least 3.9 percent as dollar funding costs for European lenders climbed to a three-year high. Mining companies tumbled with metal prices. The benchmark Stoxx Europe 600 Index lost 1.3 percent to 233.97 at the close in London, extending the decline from this year’s high on Feb. 17 to 20 percent as the debt crisis spreads across the region’s core. “You have a lot of pressure on yields, you have the structural issues, the liquidity issues, plus market fears -- it’s very bad,” said Patrick Legland, head of research at Societe Generale, on Bloomberg Television. “We are not very far from the point where the European Central Bank will need to intervene one way or another.” Spanish bonds sank, driving 10-year yields to as much as 6.78 percent, the highest since before the euro was introduced, as borrowing costs climbed to the most in at least seven years at an auction of securities. The benchmark yield was trading at 6.49 percent at 4:39 p.m.
• France Clashes With Germany on ECB's Rescue. German Chancellor Angela Merkel rejected French calls to deploy the European Central Bank as a crisis backstop, defying global leaders and investors calling for more urgent action to halt the turmoil. As the crisis sent borrowing costs in core economies outside Germany to euro-era records, Merkel listed using the ECB as lender of last resort alongside joint euro-area bonds and a “snappy debt cut” as proposals that won’t work. “I’m convinced that none of these approaches, if applied right now, would bring about a solution of this crisis,” Merkel said in a speech in Berlin today. “If politicians believe the ECB can solve the problem of the euro’s weakness, then they’re trying to convince themselves of something that won’t happen.” Merkel’s comments underscore German reluctance to assume more liability for taming the debt crisis even as it roils France, the euro region’s second-largest economy, and threatens to trigger a global recession.
• IMF to Wait for Political Support for Greek Funds. The International Monetary Fund won’t release the next tranche of funding for Greece until there is broad political support for the measures attached to the loan, a spokesman said. “It’s important that the unity government now shares its commitment to the implementation of the economic program” and the decisions agreed by European leaders last month, IMF spokesman David Hawley told reporters today. “Once broad political support” for the measures “is assured, then we can proceed with completion” of the review and the release of the tranche.
• Irish Government Draws Fire as Budget Plans Shown to Lawmakers in Germany. Ireland’s government laid out plans to raise sales tax and pledged to consider “ambitious” asset sales in documents shown to lawmakers in Germany before their Irish counterparts, drawing criticism from opposition politicians in Dublin.
  
• Crude Oil Falls From Five-Month High on Signs Europe Crisis Is Spreading. Oil fell from a five-month high in New York as Spain’s borrowing costs surged, heightening concern that Europe’s debt crisis is spreading and will hurt demand. “We expect the euro zone to get into recession next year,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, who expects the price of Brent to slip to $100 a barrel by the end of the year. “I don’t think prices fully reflect the weakening outlook for Europe. There’s still some geopolitical fears priced in with Brent at $112.” Crude for December delivery fell as much as $2.58 to $100.01 a barrel in electronic trading on the New York Mercantile Exchange and was at $101.04 at 1:19 p.m. London time. Earlier it reached $103.37, the highest price since May 31. Prices have gained 11 percent this year, after increasing 15 percent in 2010. Brent oil for January settlement on the London-based ICE Futures Europe exchange was down $2.26, or 2 percent, at $109.62 a barrel. Supplies at Cushing increased for the fifth time in six weeks, rising to 32 million barrels in the period to Nov. 11, according to yesterday’s Energy Department report. Oil has technical resistance at $103.39 a barrel, near where yesterday’s rally was halted, according to data compiled by Bloomberg. On the weekly chart, that’s the 61.8 percent Fibonacci retracement of the intraday decline to $32.40 in December 2008 from a record high of $147.27 in July that year. The 14-day relative strength index climbed above 70 for the first time since April 8, signaling further gains aren’t sustainable. The reading was 73.5 today.
  
• Gold Falls Most in Seven Weeks as Equities, Commodities Slump on Euro Debt. Gold fell the most in more than seven weeks as commodities and equities slumped after Fitch Rating said U.S. banks face a “serious risk” from Europe’s debt woes. Silver tumbled. The MSCI World Index of equities dropped for a fourth day, and the Standard & Poor’s GSCI index of 24 raw materials fell the most in eight weeks. Fitch said yesterday that “the broad credit outlook for the U.S. banking industry could worsen,” unless Europe’s woes are resolved soon. Before today, gold rose 25 percent this year on demand for a store of value. “Apparent liquidation from fear of possible contagion from the European crisis has commodities, including gold, under continued pressure,” Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York, said in telephone interview. “This is a big collapse.” Gold futures for December delivery fell 2.9 percent to $1,722.60 an ounce at 1:17 p.m. on the Comex in New York. A close at that price would mark the biggest drop for a most- active contract since Sept. 23.
• Sears(SHLD) 3rd-Quarter Loss Widens on Softness in Canada, Weaker Consumer Electronics sales. Sears Holdings Corp. turned in a wider-than-expected loss in its third-quarter, dragged down by weakness in Canada, declining consumer electronics sales and softer clothing sales at its Kmart stores. The downbeat report, announced Thursday, underscored the big challenges the ailing chain faces as it heads into the critical weeks of the holiday shopping season.
• Solyndra Funding Mostly Lost to Taxpayers: Chu. Energy Secretary Steven Chu told lawmakers he was responsible for the $535 million U.S. loan guarantee to Solyndra LLC and said he doubted much of the money would be recovered after the company’s bankruptcy. Chu, who once predicted the California maker of solar panels would be a “shared success story,” testified today before a House Energy and Commerce subcommittee investigating the Energy Department’s reasons for backing Solyndra and providing refinancing as it slid toward collapse. “Red flags” about the company’s prospects were “either ignored or minimized by senior officials” in the Obama administration, Representative Fred Upton, a Michigan Republican and chairman of the Energy Committee, told Chu. “Who is to apologize for the half-billion dollars out the door?” Upton asked. “Was there incompetence?” Chu said. “Was there any influence of a political nature? So I would say no. It is extremely unfortunate what has happened to Solyndra.” Asked how much of the taxpayer funding invested in Solyndra may be recovered, Chu, 63, said, “I’m anticipating not very much.”
• Legg Mason's Miller to Exit Main Fund. Bill Miller, the Legg Mason Inc. (LM) manager famous for beating the Standard & Poor’s 500 Index for a record 15 years through 2005, will step down from his main fund after trailing the index for four of the past five years. Miller, 61, will be succeeded by Sam Peters as manager of Legg Mason Capital Management Value Trust (LMVTX) on April 30, which is the 30-year anniversary of the fund, the Baltimore-based firm said today in an e-mailed statement. Miller will remain chairman of the Legg Mason Capital Management unit while Peters will be chief investment officer.
• Initial U.S. Jobless Claims Fall to 7-Month Low. Claims for unemployment benefits dropped to the lowest level in seven months and housing starts exceeded forecasts, signaling improvement in the weakest areas of the U.S. economy. Applications for jobless benefits decreased 5,000 in the week ended Nov. 12 to 388,000, Labor Department figures showed today in Washington.
• Bullard Warns Additional Stimulus Risks Emergence of 1970s-Style Inflation. “If you try to push really hard, even harder, you might get a lot of inflation in the U.S.,” Bullard said in a CNBC interview today. “You might replay the 1970s. I’m telling you, people will not be happy if we go to that situation.”

Wall Street Journal:

• Interview: Resona Chairman Warns Over Japan Debt "Danger Zone". The chairman of Japan's fourth-largest bank, Resona Holdings Inc. (8308.TO), warned that Japan could face similar problems to Greece or Italy given the country's huge debt holdings.
• Philly Fed Manufacturing Index Slips. The Philadelphia Fed said its index of general business activity within the factory sector has fallen to 3.6 in November. Economists surveyed by Dow Jones Newswires expected the November index to remain at 8.7.
• Obama Abandons (Private) Labor.
  

CNBC.com:

• China Doesn't Have a Forex Bazooka to Bail Out Europe. Europeans searching for a bazooka to blast away euro zone debt problems might well eye China's $3.2 trillion foreign exchange arsenal with envy, but Beijing has far less firepower available than many assume. Most of money in the world's biggest store of FX reserves is prudently kept in near-cash instruments to fund import and debt service bills in the event of an unforeseen domestic emergency, or invested in long-term assets that, if sold in size to help Europe, would spark panic on global financial markets. In fact, analysts reckon China's armory has only about $100 billion to spare. "The sheer size of China's foreign exchange reserves is massive, but the actual amount of money available for investing in Europe each year isn't that big," said Wang Jun, an economist at CCIEE, a top government think-tank in Beijing.
• With MF Global Money Still Missing, Suspicions Grow. Nearly three weeks after $600 million in customer money went missing from MF Global, the search for the cash has been hampered by the bankrupt brokerage firm’s sloppy record-keeping, an increasingly worrisome situation that has left regulators frustrated and customers in the lurch.

Business Insider:

• Here's What It Was Like To Be In The Middle Of This Morning's Dramatic Protest On Wall Street.
• To Save The Euro We Must Destroy Germany. Yesterday German Chancellor Angela Merkel came flat out and said, "To save the Euro we must Destroy Germany". Well not exactly, but she may as well have because that is the implication.
• In His Own Words: GOP Slams Obama for Allowing The National Debt to Break $15 Trillion. (video)
  

Zero Hedge:

• The Technocratic Revulsion Begins: Photos and Video as Thousands of Italians Protest Monti's "Banker" Government.
• Greek Crowd Now Amassed In Front Of US Embassy - Live Video.
• Global Dollar Liquidity Freeze Leads To Pervasive Sell Off. (graphs)
• Presenting The First MF Global Casualty. BCM Has Ceased Operations (source).

NY Post:

• Loading The Dice. Kingpins Bet Feds Will Legalize Online Gambling.

Forbes:

• Smart Money Is Short France, Italy, The Euro, Long Germany.

Carbon Finance:

• US States Formally Quit the Western Climate Initiative Leaving Only California. Six US states have now entirely dropped out of the Western Climate Initiative (WCI), leaving California as the only participating US state. On 10 November, only California of the US and four Canadian provinces—British Columbia, Manitoba, Ontario and Quebec – announced the formation of a non-profit organisation to administer the WCI cap-and-trade programme and service its technical needs. Arizona and the other US states formerly associated with the WCI have now clarified that they are no longer associated with the organisation, according to Arizona Department of Environmental Quality Director Henry Darwin, in announcing that his state has formally withdrawn from the WCI. While some states and provinces may continue to pursue cap and trade, Arizona will not be one of them, he emphasised. “Arizona believes there are more effective, responsible ways to realise the environmental and health benefits the WCI programme seeks to achieve while avoiding the economic costs to industries that are subject to cap and trade,” Darwin said, adding that those costs are ultimately borne by customers.

DesMoinesRegister.com:

• Corn Prices Plunge. The corn market has taken a sudden nasty turn, dropping 30 cents per bushel to $6.12 for December delivery through noon on the Chicago Board of Trade. Soybeans are down 23 cents per bushel to $11.64 and wheat, which has traded at an unusual discount to corn this week, is down 24 cents per bushel to $5.92. The market was spooked by a lackluster weekly export report from the U.S. Department of Agriculture. For the marketing year corn exports are down 18.6 percent, soybeans down 33 percent and wheat down 17 percent.

LA Times:

• California Attorney General's Office Subpoenas Fannie, Freddie. Information is sought on the mortgage giants' roles as landlords who own thousands of foreclosed properties in California. Also sought are details of their mortgage-servicing and home-repossession practices, a source says.

Huffington Post:

• 'The Daily Show' Takes On Occupy Wall Street's Own Class Warfare. (video)

Reuters:

• Fed Alone Cannot Cure Economy's Ills - Pianalto. The U.S. Federal Reserve must do its part to boost a "frustratingly" slow recovery, a top Fed official said on Thursday, but low interest rates alone cannot get households spending again. "Our policy is appropriate in this economic environment; it is supporting a stronger recovery while ensuring that inflation remains consistent with our mandate," Federal Reserve Bank of Cleveland President Sandra Pianalto told the Rotary Club of Lexington, Kentucky. "But in this economy, monetary policy alone cannot cure all of the economy's ills."

Telegraph:

• Debt Crisis: Live. Job of new Italian government will be harder as country is 'likely already in recession', warns ratings agency Fitch, while Spain and France were forced to pay higher borrowing costs in bond auctions.

Frankfurter Allgemeine Zeitung:

• Wolfgang Franz, who heads German Chancellor Angela Merkel's council of economic advisers, is against making the European Central Bank the euro-area's lender of last resort, citing an interview. "Based on all historic experiences, including in Germany, the monetization of government debt is one of the deadly sins for a central bank," Franz said. He said the ECB would lose its policy-making independence and risk stoking inflation.

Rheinische Post:

• Germany aims to reduce annual solar power installations to 1 gigawatt from July 2012 to cut costs, Economy Minister Philipp Roesler said.

Expansion:

• Spanish opposition People's Party advisers are considering the creation of a so-called bad bank to lift from banks the burden of covering losses linked to real estate, citing party officials. The new government will make public funds available to clean up financial entities' balance sheets.

Epikaira:

• Antonis Samaras, Greece's main opposition leader, said he won't sign a letter pledging commitment to new austerity measures, as requested by European Union officials, saying his support for the transitional government is enough, citing an interview.