Bull Radar

Style Outperformer:

• Large-Cap Value (+.84%)

Sector Outperformers:

• 1) Education +1.52% 2) Homebuilders +1.51% 3) HMOs +1.29%

Stocks Rising on Unusual Volume:

• TDS, NGD, RIMM, CPRT, INHX, GOLD and STX
  

Stocks With Unusual Call Option Activity:

• 1) NGD 2) CMC 3) UAL 4) MJN 5) INHX
  

Stocks With Most Positive News Mentions:

• 1) STX 2) PPG 3) RIMM 4) SCSS 5) TIF
  

Charts:

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

Tuesday Watch

Evening Headlines

Bloomberg:

• Moody's Signals Possible Cut for Europe. Moody’s Investors Service said it’s considering lowering debt ratings for banks in 15 European nations reflecting the potential removal of government support. All subordinated, junior-subordinated and Tier 3 debt ratings of 87 banks in countries where the subordinated debt incorporates an assumption of government support were placed on review for downgrade, the ratings company said in a statement today. The subordinated debt may be cut on average by two levels, while the rest of the debt by one grade, it said. Lenders in Spain, Italy, Austria and France have the most ratings to be reviewed as governments in Europe face limited financial flexibility and the region’s policy makers are considering reducing support to creditors, the rating company said. Moody’s has said that a “rapid escalation” of Europe’s sovereign debt crisis threatens the entire region. “Systemic support for subordinated debt may no longer be sufficiently predictable or reliable to be a sound basis for incorporating uplift into Moody’s ratings,” the company said in the statement.
• France Could Get S&P 'Negative Outlook' in Week, Tribune Reports. Standard & Poor’s Ratings Services may give France a “negative outlook,” La Tribune reported, citing “several sources.” It could make the change on the country’s credit rating within a week to 10 days, La Tribune cited an unidentified diplomatic source as saying. La Tribune cited another unidentified person as saying the announcement could have been made Nov. 25, but was delayed for an unknown reason.
• Italy Set for a ‘Sizeable’ Cost Increase at 8 Billion-Euro Bond Auction. Italy may again be forced to pay above the 7 percent threshold that prompted Greece, Portugal and Ireland to seek aid when it auctions as much as 8 billion euros ($11 billion) in bonds today. The Rome-based Treasury aims to sell as much as 3.5 billion euros of a three-year bond, 2.5 billion euros of 2022 bonds and 2 billion euros in 2020 bonds. Italy had to pay more than 7 percent in debt auctions yesterday and on Nov. 25. Today’s results are due shortly after 11 a.m. Rome time. “The Treasury will experience a sizeable increase in the cost of funding,” said Chiara Cremonesi, a fixed-income strategist at UniCredit SpA in London, noting that a similar- maturity 2014 bond yielded 4.93 percent at a sale on Oct. 28. “We see a risk that the 3-year and the 10-year are issued at roughly the same level.” The auction is competing this week with sales of securities in Belgium, France and Spain of as much as 10 billion euros.
• King Says U.K. Must Have Contingency Plan as Euro Risks Increase. Bank of England Governor Mervyn King said the U.K. is being “increasingly threatened” by the euro- area crisis, and authorities must be ready to act if it continues to escalate. “What we have to do is to be ready and prepared with contingency plans and to make sure that as far as possible our banking system is as robust as possible to withstand whatever shocks that come from the eurozone,” King told lawmakers at a Parliament committee in London yesterday. There are “early signs” of a credit crunch emerging in euro area in the difficulties banks have in accessing funding, he said.
• Goldman Advises Exiting China Stocks on Challenging Outlook. Goldman Sachs Group Inc.(GS) recommended clients exit a bet that Hong Kong-listed companies in China will gain amid concern over a "relatively challenging" outlook in the country. "We are closing our recommended long position in Chinese equities," Goldman Sachs analysts including Noah Weisberger wrote in a report.
  
• UBS Cuts 2012 Global Economic Growth Estimate on Europe Concerns. UBS AG lowered its estimate for global economic growth next year to 2.7 percent from 3.1 percent as it forecast the Euro area to enter recession. The Euro area will contract by 0.7 percent in 2012 compared with a previous forecast of 0.2 percent growth, with a recession to “formally” begin in the current quarter, Larry Hatheway, an economist at UBS wrote in a report. UBS also lowered its 2012 economic growth estimate for the U.S. to 2.0 percent from 2.3 percent and for China to 8.0 percent from 8.3 percent, according to the report. “The reasons for our more cautious view include the recent sharp deterioration in leading indicators of global growth (e.g., PMI surveys) alongside the deepening crisis in Europe,” the economist wrote.
• Oil Drops From One-Week High on Europe Crisis, Signs of Rising Stockpiles. Crude oil for January delivery fell as much as 74 cents to $97.47 a barrel in electronic trading on the New York Mercantile at was at $97.58 at 12:35 p.m. Sydney time. Hedge-funds and other money managers cut bullish bets on Brent crude by 5,356 contracts in the week ended Nov. 22, London-based ICE said yesterday in its weekly Commitment of Traders report. Net-long bets on West Texas Intermediate, the Nymex contract for crude delivered to the Cushing, Oklahoma, storage hub, fell by 26,387, or 12 percent, to 189,688, CFTC data show. It was the largest drop since the week ended Aug. 2. U.S. crude inventories probably rose 1 million barrels last week, according to the median of seven analyst estimates in a Bloomberg News survey.
• China Halts U.S. Academic Freedom at Classroom Door for Colleges. “You think you’re going to a place that has academic freedom, and maybe in theory you do, but in reality you don’t,” said Stewart, 27, who earned a master’s degree in international studies this year from Hopkins-Nanjing and now works for an accounting firm in Beijing. “The place is run by Chinese administrators, and I don’t think the U.S. side had a lot of bargaining power to protect the interests of its students. At the end of the day, it’s a campus on Chinese soil.”
• Corzine Pushed Fatal Europe Bet to $11.5 Billion as MF Global Board Balked. Jon Corzine bet $11.5 billion on European sovereign debt in his bid to rebuild profits at MF Global Holdings Ltd., almost twice the net amount disclosed to investors, and relied on short-term hedges that left the firm exposed to larger losses if they couldn’t be rolled over. Corzine, who was chairman and chief executive officer of the futures broker before it went bankrupt last month, overcame resistance from directors, senior traders and risk managers to accumulate the bonds, according to two people with knowledge of the situation. He used the hedges, or offsetting trades, to cut the net risk reported to shareholders to $6.4 billion, according to an Aug. 3 regulatory filing by the company.

Wall Street Journal:

• Fitch Cuts Its Outlook on U.S. Credit. Fitch Ratings lowered the outlook on its triple-A rating of the U.S. government to negative Monday, citing concern lawmakers aren't prepared to take necessary steps to rein in the nation's ballooning deficit. A negative outlook means there is a slightly higher than one-in-two chance of a downgrade within the next two years. Fitch's move brings its U.S. rating in line with Moody's Investors Service and one notch above Standard & Poor's, which downgraded the country to double-A-plus in August. Fitch said in a statement that its decision reflects its analysts' "declining confidence that timely fiscal measures necessary to place U.S. public finances on a sustainable path and secure the U.S. 'AAA' sovereign rating will be forthcoming." The inability of the so-called congressional supercommittee, a group of 12 lawmakers, to reach an agreement on deficit cuts last week "underlines the challenge of securing broad-based consensus on how to reduce the out-sized federal budget deficit," Fitch said. The firm said it kept its top-notch triple-A rating in part because the "dollar's status as the pre-eminent global reserve currency and depth of the U.S. Treasury market render financing risks minimal and underpin a low cost of fiscal funding." Fitch said Monday that, if lawmakers push through a "credible medium-term deficit reduction plan" in 2013, it would make a downgrade less likely. If no such agreement is reached, however, that could trigger a downgrade, Fitch said. Ira Jersey, a U.S. interest-rates strategist at Credit Suisse, said Fitch's statement was "pretty pessimistic" but also leaves "room for Washington to make things better." "The question is: Will the political establishment do that?" he said. Mr. Jersey suspects that, if Congress attempts to decrease the $1.2 trillion of automatic budget cuts imposed through so-called sequestration, that could prompt further action on the U.S. triple-A rating. "I think that would likely push at least Fitch and Moody's over the edge to downgrade the U.S.," said Mr. Jersey. Other strategists picked up on Fitch's highlighting of 2013, indicating that much hinges on events after the election next November. "I think it does reflect what investors and credit analysts outside the ratings agencies really do think about the U.S. debt situation," said Jim Vogel, interest-rate strategist at FTN Financial. "The time that it's going to get the most serious consideration is after the election."
• U.K. to Boost Rate on Bank Levy. The U.K. government will increase the rate of its bank levy in a bid to raise the £2.5 billion ($3.9 billion) the cash-strapped country first targeted with the tax, according to a person familiar with the matter. Treasury chief George Osborne will announce the increased levy in his budget statement on Tuesday. Other new measures set to be announced by Mr. Osborne will include an extension of business-tax relief for small companies, according to that person.
• European Nations Pressure Own Banks for Loans. Some European nations, struggling to find buyers for their bonds, are pressuring their own already-stressed banks to fill the gap by acting as lenders of last resort—in certain cases, pushing the amount of risky European debt on those institutions' books even higher. Italy and Portugal, among other European governments, are leaning on their banks to continue buying—or at least to stop selling—government bonds, according to people familiar with the matter. Meanwhile, in Spain and other European countries, the quantities of loans banks are doling out to local and national governments have been rising sharply.
• Citi(C) Ruling Could Chill SEC, Street Legal Pacts. A decades-old blueprint used by many federal agencies to settle charges of wrongdoing with companies and avoid court was challenged by a U.S. judge, in a ruling that legal experts said could have a significant impact on future law-enforcement efforts against Wall Street firms.
• Facebook Targets Huge IPO. Offering Next Year Could Raise $10 Billion, Valuing Company at $100 Billion.
• The Great Global Warming Fizzle. The climate religion fades in spasms of anger and twitches of boredom.
• Europe's Currency Road to Nowhere. The euro has punished Southern Europe the way China's currency has hurt the United States.

MarketWatch:

• Australia Cuts Growth Outlook. Australia’s real gross domestic product is now expected to grow by 3.25% in 2011-12 and 2012-13, representing downgrades of 0.75 of a percentage point for 2011-12, and 0.5 of a percentage point for 2012-13.
• Google(GOOG) Up As Citi(C) Discounts Facebook Threat. New competition dismissed; stock is up 12% the past 3 months.

Business Insider:

• 5 Charts That Raise Red Flags For The Consumer.

Zero Hedge:

• Is It Finally Japan's Turn? (graphs) Japan is starting to heat up a little in terms of risk and we hope that Noda is watching carefully. While the strengthening trend in USDJPY and JGBs has been a long one, the last few days are starting to worry some traders and most notably, Bloomberg points out that not only are FX options the most USD bullish-biased (JPY-bearish) in seven years, swaptions have screamed to their highest in over seven months at 54bps. The growing concern that the European crisis will spread to Japan is evident in recent underperformance but these option bets support the view that the JPY strength and trade surplus arguments are much less support than they have been recently.
• Complete List Of European Sovereign Events Through The End Of 2011.
  

CNBC:

• Daniel Yergin: Clock Ticking on Iran's Nuclear Program. Daniel Yergin shared his thoughts with CNBC on some of the hot topics in the energy world. Yergin is the author of the new best-seller "The Quest: Energy Security and the Remaking of the Modern World," the successor to his Pulitzer Prize winning book, "The Prize."
• THL Eyes Buyout of Yahoo's(YHOO) US Business.
  

NY Times:

• Italian Bond Dispute Illustrates Obsatacles to Triggering C.D.S.
• Crisis in Europe Tightens Credit Across the Globe. Europe’s worsening sovereign debt crisis has spread beyond its banks and the spillover now threatens businesses on the Continent and around the world. From global airlines and shipping giants to small manufacturers, all kinds of companies are feeling the strain as European banks pull back on lending in an effort to hoard capital and shore up their balance sheets. The result is a credit squeeze for companies from Berlin to Beijing, edging the world economy toward another slump.

Forbes:

• Shanghai Housing Sales Drop 12.7% In Week.

Politico:

• Elijah Cummings: Quiz Ben Bernanke on Bank Loans. The top Democrat on the House Committee on Oversight and Government Reform is calling on the panel to grill Federal Reserve Chairman Ben Bernanke following a bombshell report Monday that the Fed committed nearly $8 trillion in previously undisclosed loans to prop up the nation’s financial system. Rep. Elijah Cummings (D-Md.), the ranking member of the oversight committee, said in a letter to Chairman Darrell Issa (R-Calif.), that Bernanke, along with officials from the country’s largest financial institutions that reportedly benefitted from the trillions of dollars in loans and other assistance, must answer questions from lawmakers about details of Bloomberg Markets Magazine’s report.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 21% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-one percent (41%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -20 (see trends).

USA Today:

• Buyers Click Away as Cyber Monday Sales Jump 18%.
  

Reuters:

• Slice of Missing MF Global Customer Cash May Be In Britain - NYT. About $200 million in customer funds missing at MF Global may have surfaced at JP Morgan Chase in Britain, the New York Times said, citing people briefed on the matter. During MF Global's last days, it overdrew an account at JPMorgan, the newspaper said, citing a person close to the matter. MF Global transferred roughly $200 million in the days before the firm filed for bankruptcy, the paper reported.
• Seagate(STX) Sees Q2 Revenue Topping Analysts' View. Seagate Technology forecast market-topping revenue for the current quarter and said it expects hard disk drive shipments to rise sequentially in the third quarter, sending its shares up 10 percent in extended trade. Seagate said it expects to ship 43 million hard drives in the October-December quarter and projected revenue of about $2.8 billion. It had previously forecast shipments of 41-45 million hard drives during the quarter. Analysts were looking for revenue of $2.67 billion in the second quarter, according to Thomson Reuters I/B/E/S.

Financial Times:

• Hedge Funds See Global Growth Dipping. About 60% of hedge fund managers think there's a "real possibility" Greece will leave the euro in the next two years, while 41% think Italy or Spain will default, citing a survey of more than a third of the world's hedge fund managers conducted by Aksia. The managers see global growth in gdp dropping a full percentage point next year, citing the study.
• Fears Rise of Global Protectionism. EU Trade Commissioner Karel De Gucht said global economic weakness could bring a "second wave of protectionism" on top of the protectionist measures introduced in 2008 and 2009 that "were supposed to disappear" yet are still in force, citing an interview. Only 17% of the short-term protectionist measures put in place in the global financial crisis of 2008 have been reversed, De Gucht said.
  

Telegraph:

• Europe's Shrinking Money Supply Flashes Slump Warning. All key measures of the money supply in the eurozone contracted in October with drastic falls across parts of southern Europe, raising the risk of severe recession over coming months. The three main gauges – M1, M2, and M3 – have each begun to decline in absolute terms after slowing sharply over the Autumn. The broad M3 measure tracked closely by the European Central Bank as an early warning indicator shrank last month by €59bn to €9.78 trillion, a sign that Europe's long-feared credit squeeze is underway as banks retrench to meet tougher capital requirements. "This is very worrying," said Tim Congdon from International Monetary Research. "What it shows is that the implosion of the banking system on the periphery is now outweighing any growth left in the core. We are seeing the destruction of money and it is a clear warning of serious trouble over the next six months." "This is the first sign of an emerging credit crunch," said James Nixon from Societe Generale. Banks cut their balance sheets by €79bn in October, while mortage lending saw the biggest drop since December 2008. Simon Ward from Henderson Global Investors said "narrow" M1 money – which includes cash and overnight deposits, and signals short-term spending plans – shows an alarming split between North and South.
• £50bn black hole as UK seen sliding back into recession. Weak growth has blown a £50bn black hole in the Chancellor's deficit reduction programme, according to the Organisation for Economic Co-operation & Development (OECD).

Shanghai Securities News:

• Shanghai's home prices may fall 20-30% from the highest levels seen in 2009, citing China Real Estate Information Corp's hedge of Shanghai unit Yu Dandan. The property market will remain weak with continued govt. curbs on purchases and credit. Recent remarks of high-ranking officials indicate China's resolve to curb home prices. New home sales were 10% lower than this year's avg. in 8 major cities last week and used home transactions were 29% lower than the 4-week avg. in 5 major cities.
• China may keep its limits on home purchases as current curbs expire by the end of the year, citing Wang Juelin, deputy director of the Ministry of Housing and Urban-Rural Development's policy research department. For home purchase limits to end, support from the "external environment" will be required, Wang said.
  

China Securities Journal:

• China should raise deposit rates while keeping lending rates unchanged to narrow the spread of interest rates, citing Yu Bin, a researcher from the State Council's Development Research Center. China's growth may slow to 8.5% next year under current policy conditions, Yu said. The country should continue a proactive fiscal policy and prudent monetary policy, Yu said.

Evening Recommendations
Deutsche Bank:

• Rated (LRCX) Buy, target $45.
• Rated (TER) Buy, target $17.

Night Trading

• Asian equity indices are -.25% to +1.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 224.0 -7.0 basis points.
  
• Asia Pacific Sovereign CDS Index 166.25 -6.75 basis points.
• FTSE-100 futures +.29%.
  
• S&P 500 futures +.58%.
  
• NASDAQ 100 futures +.50%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (TIF)/.61
• (OVTI)/.32
• (RAH)/1.39

Economic Releases
9:00 am EST

• The S&P/CS 20 City MoM% SA for September is estimated to fall -.1% versus a -.05% decline in August.
  

10:00 am EST

• Consumer Confidence for November is estimated to rise to 44.0 versus a reading of 39.8 in October.
• The House Price Index for September is estimated to fall -.1% versus a -.1% decline in August.
  

Upcoming Splits

• (SXL) 3-for-1
  

Other Potential Market Movers

• The Fed's Kocherlakota speaking, Fed's Lockhart speaking, Fed's Yellen speaking, EU Finance Ministers Meeting, weekly retail sales reports, RW Baird Clean Tech Conference, Piper Jaffray Healthcare Conference, Scotia Mining Conference, Citi Basic Materials Symposium, Goldman Steel Conference and the FBR Investor Conference could also impact trading today.
  

BOTTOM LINE: Asian indices are higher, boosted by industrial 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 day.

Stocks Surging into Final Hour on Euro Bounce, Short-Covering, Bargain-Hunting, Technical Buying

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Every Sector Rising
  
• Volume: Light
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 32.85 -4.70%
  
• ISE Sentiment Index 182.0 +152.78%
  
• Total Put/Call .89 -32.58%
  
• NYSE Arms .18 -83.68%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 139.59 -3.57%
  
• European Financial Sector CDS Index 324.25 -1.54%
  
• Western Europe Sovereign Debt CDS Index 366.0 -1.40%
  
• Emerging Market CDS Index 329.57 -5.05%
  
• 2-Year Swap Spread 54.0 -1 bp
  
• TED Spread 51.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .01% unch.
  
• Yield Curve 171.0 +2 bps
  
• China Import Iron Ore Spot $132.0/Metric Tonne -5.98%
  
• Citi US Economic Surprise Index 40.50 -.6 point
  
• 10-Year TIPS Spread 1.96 +2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +87 open in Japan
• DAX Futures: Indicating -23 open in Germany

Portfolio:

• Higher: On gains in my tech, retail, medical and biotech sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added some back
  
• Market Exposure: Moved to 75% Net Long

BOTTOM LINE: Today's overall market action is bullish, as the S&P 500 recoups some of its recent losses, despite Eurozone debt angst, rising global growth fears and rising food/energy prices. On the positive side, Coal, Alt Energy, Steel, Internet, Computer, Disk Drive, Networking, Hospital, HMO, Gaming and Airline shares are especially strong, rising more than +3.5%. Small-caps and cyclicals are outperforming. (XLK) has outperformed throughout the day. Copper is rising +2.01%. Major European equity indices soared 3-5% today. The Germany sovereign cds is falling -5.53% to 111.17 bps, the France sovereign cds is dropping -4.93% to 236.50 bps, the Hungary sovereign cds is falling -4.05% to 577.21 bps, the Belgium sovereign cds is dropping -6.88% to 378.17 bps and the UK sovereign cds is falling -5.65% to 99.0 bps. On the negative side, Utility, REIT, Bank and Telecom shares are underperforming, rising less than 2%. Oil is rising +1.6%, gold is jumping +1.8%, the UBS-Bloomberg Ag Spot Index is rising +.98% and lumber is falling -1.8%. The Italian 10-year yield is just -2 bps lower today to 7.23%. The France and Belgium sovereign cds are still very near all-time highs and the Spain, Hungary, Italy sovereign cds are still close to their recent record highs. The Germany sovereign cds is still near its Oct. 4th multi-year high and the UK sovereign cds is still very near a new multi-year high. The TED spread continues to trend higher and is at the highest since May 2009. The 2-Year Swap spread is very near the highest since May 2010. The FRA/OIS Spread is near the highest since May 2010. The 2yr Euro Swap Spread is near the highest since Nov. 2008. The 3M Euro/Dollar Cross Currency Basis Swap is down -1.75% to -148.50 bps, which is the worst since October 2008 on a closing basis. The Libor-OIS spread is the widest since June 2009, which is also noteworthy considering the equity bounce off the recent lows. The Shanghai Composite was flat overnight despite gains in the rest of Asia. The Citi Asia-Pacific Economic Surprise Index is falling -10.10 points today and is near a 52-week low at -20.80 points. The China Blended Corporate Spread Index is rising +14.0 bps to 790.0 bps and is breaking out technically. China Iron Ore Spot has plunged -26.83% since February 16th and -27.1% since Sept. 7th. The 10-year yield is flat at 1.97% despite the large equity rally. US stocks are surging today on optimism over the possibility of a plan to "solve" the European debt crisis and "strong" US retail sales. Volume is very light with very few sellers(ARMS .19), which is a concern. I suspect retail sales for the holiday season will just be ok and not strong. There is much talk out of Europe once again, but little action so far. Given the market's very oversold state, investment manager underperformance and seasonal strength, I suspect stocks can build on today's gains over the short-term. However, I still believe that even if the market eventually gets what it appears to want, money printing and greater debt for the Eurozone, these measures are not long-term solutions for an acute debt crisis. Moreover, any US "bailout" of the Eurozone, which the President hinted at today, would prove disastrous for all parties over the intermediate-term. I still think the risk in equities remains substantial over the intermediate-term unless a real positive catalyst emerges from Europe. I expect US stocks to trade mixed-to-lower into the close from current levels on Eurozone debt angst, rising global growth fears, more shorting, rising food/energy prices and profit-taking.

Today's Headlines

Bloomberg:

• European Stocks Rise as Euro-Area Leaders Boost Efforts to Contain Crisis. European stocks surged, rebounding from their biggest selloff in two months, amid speculation euro- area policy makers are intensifying their efforts to contain the sovereign-debt crisis. Banks rose after draft guidelines showed Europe’s rescue fund may insure as much as 30 percent of sovereign bonds. The benchmark Stoxx Europe 600 Index jumped 3.8 percent to 229.84 at the close, its biggest increase in two months, as all 19 industry groups advanced more than 2 percent. The Euro Stoxx 50 Index surged 5.2 percent. “European (SXXP) leaders have been pushed into a position that they have to do something,” said Mike Lenhoff, London-based chief strategist at Brewin Dolphin Securities Ltd., which oversees about $39 billion. “We are getting to a point where policy makers are now responding. The message from the market is clear: get your act together or we are going to destroy you.” “There are so many rumors flying around, so many things that are being presented as a done deal, which are simply not even on the table,” said Bill Blain, a strategist a Newedge Group on Bloomberg Television in London. “They leave more questions than they possibly answer. It illustrates the fervid nature of the market that is on a knife edge at the moment.”
  
• Sovereign Credit-Default Swap Index Falls From Record in Europe. The cost of insuring against default on European sovereign debt fell from a record closing price, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments dropped 12 basis points to 373 at 3 p.m. in London. Contracts on Belgium and France fell from record closing prices, while Spain and Germany also decreased. A decline signals improved perceptions of credit quality. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers dropped 28 basis points to 330 and the subordinated gauge tumbled 42 to 573, both down from all-time highs, according to JPMorgan Chase & Co. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings fell 42 basis points to 792.5. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings was down eight at 197.25.
• Euro Region Needs Bigger Backstoop, Rostowski Says. The euro region needs a financial backstop of as much as 3 trillion euros ($4 trillion), Polish Finance Minister Jacek Rostowski told Germany’s Handelsblatt newspaper. A lending capacity of 1 trillion euros for the European Financial Stability Facility isn’t enough to impress investors, he said. A 50 percent reduction of large euro members’ outstanding debt wouldn’t be possible without pushing the countries’ banking systems into insolvency, Rostowski, who chairs meetings of European Union finance ministers, also told the newspaper. Deeper and faster integration of the 17-member euro region must not lead to a division of the 27-member EU, he said.
• IMF Says No Talks Under Way With Italy On Financing Program. The International Monetary Fund said it isn’t discussing a rescue package with Italy and Japan said no such talks have occurred within the Group of Seven, amid concern that Italy will struggle to bring down borrowing costs. The Washington-based lender isn’t in discussions with Italian authorities on a program for IMF financing, a spokesperson for the fund said today in an e-mailed statement. Italy’s La Stampa newspaper reported that the IMF may be preparing a loan of as much as 600 billion euros ($798 billion) to support Italian efforts to restore investor confidence. “The IMF simply does not have the resources” on its own for such aid, Marc Chandler at Brown Brothers Harriman & Co., chief currency strategist at the bank in New York, wrote in a note to clients. It’s also unclear whether the fund would be able to get agreement on leveraging its lending capacity to such a degree, he wrote.
• Banks to Slash Bond Sales By 60% as Costs Soar, SocGen Forecasts. Banks will slash bond sales by 60 percent in Europe next year as the sovereign debt crisis sends issuance costs soaring, Societe Generale SA predicts. Lenders will sell 50 billion euros ($67 billion) of senior notes, down from a euro-era low of 121 billion euros so far this year, according to SocGen. The extra yield that investors demand to hold European bank bonds is the highest since May 5, 2009, while the cost of insuring the debt is near a record. Banks are the biggest holders of plunging euro-region government bonds, and are already finding it hard to sell their own debt. That's forcing them to consider alternative sources of funding such as top-rated covered bonds and even asset sales to help refinance some of the $800 billion of notes that Moody's Corp. estimates will come due next year. "We can expect massively reduced issuance of unsecured bank debt," said Roger Francis, an analyst at Mizuho Securities Co. Ltd. in London. "Most banks have got contingency plans for how to get around this. Banks are saying they can do more private placements and then there's always the covered bond market, which has been open intermittently." Spreads on euro-denominated bank bonds widened to 424 basis points, from 336 on Oct. 31, Bank of America Merrill Lynch's EUR Corporates, Banking index shows. The average yield climbed to 6.08 percent from 4.85 percent.
• OECD Reduces Growth Forecasts, Blames Euro Doubts: Economy. The Organization for Economic Cooperation and Development said growing doubts about the survival of Europe’s monetary union has caused global growth to stall and represents the main risk to the world economy. The 34 OECD nations will grow 1.9 percent this year and 1.6 percent next, down from 2.3 percent and 2.8 percent predicted in May, the Paris-based organization said in its twice-annual global economic outlook released today. In a separate report, Morgan Stanley cut its forecast for 2012 global growth. “Skepticism has grown that euro-area policy makers can deal effectively with the key challenges they face,” OECD Chief Economist Pier Carlo Padoan wrote in the report. Serious downside risks remain, linked to “loss of confidence in sovereign-debt markets and the monetary union itself.” The remarks are the first from a major government body to highlight the possibility of a euro breakup and reflect the shift in the two-year-old crisis from the region’s periphery to its so-called core. Government bond yields for both Germany and France, Europe’s two largest economies, climbed last week as a German bond auction failed to get bids for 35 percent of the 10- year debt on offer.
• Fewer New Home Sales in U.S. Than Forecast. Builders sold fewer new houses in the U.S. than forecast in October, delaying a recovery as the industry heads for the weakest year on record. Sales increased 1.3 percent to a 307,000 annual pace, data from the Commerce Department showed today in Washington. The median estimate of 70 economists surveyed by Bloomberg News projected a 315,000 rate. Demand is on pace to reach 301,000 this year, less than the 323,000 homes sold in 2010 that were the fewest since data-keeping began in 1963.
• Household Debt Falls by .6% in Third Quarter. Household debt in the U.S. declined by 0.6 percent in the third quarter as mortgage balances shrank, according to a survey by the Federal Reserve Bank of New York. Consumer indebtedness fell by $60 billion from the end of June to $11.66 trillion on Sept. 30, according to a quarterly report on household debt and credit released today by the district bank. Mortgage balances declined by about $114 billion, or 1.3 percent.
• iPad-Crazed Toddlers to Spur Holiday Rush.
• Citi(C) Settlement With SEC Rejected by Judge. Citigroup Inc. (C)’s $285 million settlement with the U.S. Securities and Exchange Commission over mortgage-backed securities was rejected by federal judge who said he hadn’t been given enough facts to approve it. U.S. District Judge Jed Rakoff in Manhattan rejected the settlement in an opinion released today and set a trial date. He has criticized the SEC’s practice of letting financial institutions such as New York-based Citigroup settle without admitting or denying liability.
• China's Chen Sees No Europe Progress, Signals Concern at Opening Markets. Chinese Commerce Minister Chen Deming said Europe has yet to take any significant step in tackling the region’s debt crisis and signaled that his nation may resist further opening its markets. “We have yet to see a step towards success,” Chen said at a conference in Beijing today. “We are willing to further reform and further open our market, but other economies must be more open to us in return.”
• Syrian Security Forces Committed Human-Rights Violations, UN Agency Says. Syria’s military and security forces have committed crimes against humanity and “gross violations of human rights” since pro-democracy demonstrations began in mid- March, a United Nations panel said. The UN Human Rights Council’s independent international commission of inquiry said in a report released today in Geneva it is “gravely concerned that crimes against humanity have been committed in different locations” in Syria. The panel said it documented patterns of summary execution, arbitrary arrest, enforced disappearance, torture including sexual violence and violations of children’s rights.
• Icahn Bids for Commercial Metals(CMC) in Deal Worth $1.73 Billion. Billionaire investor Carl Icahn said he plans to acquire Commercial Metals Co. in a deal valuing the steel-scrap recycler at about $1.73 billion and combine it with his existing metals operations. Icahn Enterprises LP, which owns a 10 percent stake in CMC, is offering $15 apiece for the other shares without any financing or due diligence conditions, Icahn said today in a letter to CMC directors. The offer is 31 percent more than the stock's Nov. 25 closing price.
• Senate Democrats Eye 3.25% Millionaire Levy to Extend Cut in Payroll Tax. Democrats in the U.S. Senate are proposing to use a 3.25 percent tax on income over $1 million to pay for extending and expanding a payroll tax cut, said Senate Majority Leader Harry Reid. If Congress doesn’t act, a 2 percentage-point cut in the payroll tax for workers will expire Dec. 31. The Democrats’ proposal would cut the 6.2 percent Social Security portion of the payroll tax in half for workers and would also cut the employer portion in half for most companies.
  

Wall Street Journal:

• Ministers to Reject Pan-Europe Bank Guarantees. European Union finance ministers at their meeting Wednesday are set to reject calls from EU institutions and banking experts for a pan-European system of bank debt guarantees aimed at thawing the region's frozen long-term funding markets. Instead, the ministers are expected to back a plan for national government to provide the guarantees. But EU officials and banking experts doubt this plan will address the core problem: Banks based in the bloc's troubled regions— the euro-zone periphery and Eastern Europe—won't benefit from guarantees from governments that are themselves facing grave funding problems.
• ECB Keeps Bond Buying Restrained. The European Central Bank showed no signs of abandoning its conservative approach to bond purchases in recent days, despite louder calls for it to do more to prop up Europe's shaky debt markets. The central bank purchased €8.6 billion ($11.5 billion) in bonds last week, the largest amount in three weeks but well below what many policy makers believe is necessary to calm markets. The ECB doesn't disclose country details, but the vast majority of the buys are thought to be of Spanish and Italian bonds.
• The United States of EPA. Ms. Jackson's agency takes over automobile design. Here's one good way to consider the vote in 2012: It's about whether to re-elect President Lisa Jackson, the head of the Environmental Protection Agency, which these days runs most the U.S. economy. The EPA heaved its weight against another industry this month, issuing a regulation to sharply increase fuel economy. Under this new rule, America's fleet of passenger cars and light trucks will have to meet an average of 54.5 miles per gallon by 2025, a doubling of today's average of about 27 mpg. By the EPA's estimate the rule will cost $157 billion, meaning the real number is vastly greater.
• Wall Street Pay Hits a Wall. Annual Compensation Could Drop 30% to Lowest Level Since 2008 Crisis.
• Singapore Home Prices May Be Poised to Plunge. If you’ve been waiting for a chance to purchase a property in Singapore, maybe you should wait some more. The city-state’s red-hot residential real estate market could be poised to plummet 20% to 30% over the next three years – at least according to some analysts, who say demand is dampening just as a flood of new flats is hitting the market.
• Could Hedge Funds Come Full Circle and Be Alternative Investments Again? Last week we pointed out some interesting data from a Morgan Stanley note showing how equity hedge funds have completely lost their ability to generate any returns above and beyond the broader market in recent years.

CNBC.com:

• Why Facebook Won't Challenge Google(GOOG) in Search.
• Cyber Monday May Set Record as US Goes on Buying Binge.
  

Business Insider:

• Jon Huntsman Has A Radical Financial Reform Plan That Even Occupy Wall Street Will Love. We have to save capitalism from crony capitalists.
• Secret Bill To Be Voted On Today Would Allow The Military To Sweep Up US Citizens At Home Or Abroad.
• Guess Which State Has The Highest Debt Per Person. (graph) This chart about debt per capita by state is interesting, both due to the high level of debt in California and the low level of debt in Texas, which of course goes along way to describe the fortunes of each state today, with Texas doing considerably doing better.
• Chart of the Day: Guess Which Country Has The Highest Percentage Of Workers Employed By The Government.
  

Zero Hedge:

• No New Shorts In Early November As NYSE Short Interest Drops To 3 Month Low. (graph)
• Egan Jones Downgrades Italy From BB+ to BB, Projects 157% Debt/GDP by 2014.
• Presenting a Full List of the ECB's Non-Monetization Options.
  

Wall Street All-Stars:

• Tiffany's(TIF) Reports Tuesday Before The Bell.

LA Times:

• International Banks Have Aided Mexican Drug Gangs. Despite strict rules, some banks have failed to 'know their customer' or ask about the source of large amounts of cash, allowing billions in dirty money from Mexico to be laundered.

Politico:

• Barney Frank Will Not Seek Reelection in 2012. Massachusetts Rep. Barney Frank, the powerful top Democrat on the House Financial Services Committee, will announce Monday that he is retiring from the seat he has held for more than three decades.
• Reports: U.S. Flags Burn in Pakistan. Tensions between the United States and Pakistan boiled over as angry Pakistani demonstrators burned an effigy of President Barack Obama and set fire to U.S. flags on Sunday in protest of NATO air strikes that killed 24 soldiers. In Karachi, dozens of political activists torched an effigy of Obama, reported Agence France-Presse, while more than 300 activists burnt U.S. and NATO flags in the central city of Multan.
  

Reuters:

• Pakistan PM: No more "business as usual" with U.S. Pakistan's Prime Minister Yusuf Raza Gilani ruled out "business as usual" with the United States on Monday after a NATO attack killed 24 Pakistani soldiers, and the army threatened to curtail cooperation with Washington on Afghanistan drastically. Saturday's incident on Pakistan's border with Afghanistan has complicated U.S. attempts to ease a crisis in relations with Islamabad and stabilize the region before foreign combat troops leave Afghanistan. "Business as usual will not be there," Gilani told CNN when asked if the relationship with the United States would continue. "We have to have something bigger so as to satisfy my nation."
• Euro Split Scenarios Risk Becoming Self-Fulfilling. Mobilising an army takes on such a momentum of its own that a point of no return is eventually reached. So it may be with the euro zone crisis: before long, the slide towards break-up of the single currency might prove impossible to reverse.
• New Year Debt Pile-Up Puts New Pressure on Euro Zone. France and Germany are aiming to lay out plans for deeper euro zone integration by mid-December and have a formal framework in place for achieving it by the end of January, aware that intense financial market pressures will resume early in the new year.

Telegraph:

• Debt Crisis: Live.

Tagesspiegel:

• German Economy Minister Philipp Roesler said he rejects joint euro-area bonds "in whatever form." Roesler, chairman of Chancellor Angela Merkel's Free Democrat coalition partner, said his party won't support any kind of euro bonds or "elite bonds". The minister said the path to currency stability consists of intensified and automatic penalties for states who break debt rules.

El Pais:

• A majority of Spain's regional governments plan to cut annual investment in public works and "freeze" social spending next year. Public works outlays will drop about 14%, or by 1.7 billion euros, citing the 2012 budgets of the 10 administrations that have published them.
  

Les Echos:

• Friedrich von Metzler, partner of family owned German private bank B. Metzler Seel Sohn & Co. KgaA, said the creation of eurobonds would only "aggravate" Europe's sovereign debt crisis in the long term. Refusing eurobonds would also be the best way for France to keep its AAA rating, Metzler said in an interview.

CTV:

• Canada to Pull Out of Kyoto Protocol Next Month. Canada will announce next month that it will formally withdraw from the Kyoto Protocol, CTV News has learned. The Harper government has tentatively planned an announcement for a few days before Christmas, CTV's Roger Smith reported Sunday evening. The developments come as Environment Minister Peter Kent prepares for a climate conference in Durban, South Africa that opens on Monday, with delegates from 190 countries seeking a new international agreement for cutting emissions. Issues on the agenda include extending the Kyoto emission targets, a move being championed by Christiana Figueres, head of the UN climate secretariat. "Canada goes to Durban with a number of countries sharing the same objective, and that is to put Kyoto behind us," Kent said.

Caixin:

• China doesn't need to rescue the world and has no power to do so, Wu Xiaoling, a lawmaker and former central bank deputy governor said.

ynet news:

• Cairo Rally: One Day We'll Kill All The Jews. Muslim Brotherhood holds venomous anti-Israel rally in Cairo mosque Friday; Islamic activists chant: Tel Aviv, judgment day has come. A Muslim Brotherhood rally in Cairo's most prominent mosque Friday turned into a venomous anti-Israel protest, with attendants vowing to "one day kill all Jews." Some 5,000 people joined the rally, called to promote the "battle against Jerusalem's Judaization." The event coincided with the anniversary of the United Nations' partition plan in 1947, which called for the establishment of a Jewish state.

Bear Radar

Style Underperformer:

• Mid-Cal Value (+2.69%)

Sector Underperformers:

• 1) Utilities +1.69% 2) REITs +1.79% 3) Retailers +2.36%

Stocks Falling on Unusual Volume:

• SINA, FMCN, SOHU, SPRD, GOLD, AWAY and GEF
  

Stocks With Unusual Put Option Activity:

• 1) VIA/B 2) SINA 3) SU 4) FNSR 5) TIF
  

Stocks With Most Negative News Mentions:

• 1) AXP 2) NTRS 3) NYT 4) R 5) STT
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth (+4.79%)

Sector Outperformers:

• 1) Coal +5.90% 2) Disk Drives +5.29% 3) Airlines +4.79%

Stocks Rising on Unusual Volume:

• DB, ANDE, BCO, JKK, CMC, VAW, IJR, JOE, DMND, TPX, CRM, SIL and SCSS
  

Stocks With Unusual Call Option Activity:

• 1) MTG 2) CMC 3) AFFY 4) MJN 5) GOLD
  

Stocks With Most Positive News Mentions:

• 1) WYNN 2) NFLX 3) FL 4) VZ 5) TXN
  

Charts:

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