Today's Headlines

Bloomberg: 

• Bundesbank Slashes 2013 German Growth Forecast to 0.4% on Global Growth Slowdown. The Bundesbank sliced more than 1 percentage point off its forecast for economic expansion in Germany next year after the sovereign debt crisis pushed the euro area into recession and global growth slowed. The Bundesbank cut its 2013 projection to 0.4 percent from the 1.6 percent predicted in June and said the economy, Europe’s largest, will grow 0.7 percent this year, down from its previous forecast of 1 percent. Separately, the German Economy Ministry said industrial output fell 2.6 percent in October as investment goods production and construction activity slumped. “With today’s industrial production data, a contraction of the economy in the fourth quarter has almost become inevitable,” said Carsten Brzeski, an economist at ING Group in Brussels. “Even a technical recession of two consecutive quarters cannot be excluded entirely. However, the German economy should be able to pick up speed relatively quickly.”
• Euro Declines. The shared currency fell to the lowest in more than a week against the dollar after the Bundesbank lowered its 2013 forecast for economic expansion in Germany, following the ECB’s euro-area downgrade. The yen briefly extended gains after a magnitude 7.3 earthquake hit Tokyo, fueling haven demand for the Japanese currency.
• HSBC Rating Cut One Step by Fitch on Regulation, Compensation. HSBC Holdings Plc (HSBA), Europe’s biggest bank, had its Long-term Issuer Default Rating downgraded by Fitch Ratings to AA- from AA as it braces itself for stiffer regulation and additional compliance costs. The ratings company also downgraded the lender’s HSBC Bank Plc unit to AA- from AA and its Hongkong and Shanghai Banking Corp. Ltd. unit to AA- from AA, it said in a statement today.
• Whale’s Trade in Comeback as Junk Fervor Fades: Credit Markets. Nine months after the JPMorgan Chase & Co. (JPM) trader known as the London Whale amassed credit- derivatives bets that sparked $6 billion in losses for the bank, rivals from Bank of America Corp. (BAC) to Morgan Stanley are recommending one of his main strategies. Morgan Stanley analysts included among their top 13 trades for 2013 a bet that the cost of credit derivatives protecting against losses on junk bonds will get more expensive relative to investment-grade debt as sluggish growth fuels more corporate defaults. After the difference between the measures plunged to a 14-month low in September, Bank of America credit trader Kavi Gupta wrote in an e-mail to clients last month that the so- called decompression trade was his favorite strategy. 
• Let’s All Jump Off the Fiscal Cliff By Bradley Belt, Jared Bernstein, William Gale & Phillip Swagel. With less than four weeks left, reaching an agreement to avoid the negative short-term economic impact of the so-called fiscal cliff might be beyond the ability of the strained U.S. political system. Just kicking the can down the road, averting the more than $600 billion in automatic spending cuts and tax increases scheduled to take effect in January, requires one side to give ground on a core belief. 
• Fed Exit Plan May Be Redrawn as Assets Near $3 Trillion. A decision by the Federal Reserve to expand its bond buying next week is likely to prompt policy makers to rewrite their 18-month-old blueprint for an exit from record monetary stimulus. Under the exit strategy, the Fed would start selling bonds in mid-2015 in a bid to return its holdings to pre-crisis proportions in two to three years. An accelerated buildup of assets would also mean a faster pace of sales when the time comes to exit -- increasing the risk that a jump in interest rates would crush the economic recovery.
• Gross May Shift to Lower 2013 Risk Profile: Tom Keene. Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, said the investment company may reduce its risk profile in 2013 after posting higher-than-average returns this year. With interest rates so low and corporate spreads so tight, “you have to be leery of prices going the other way,” Gross said in a radio interview on “Bloomberg Surveillance” with Tom Keene. Newport Beach, California-based Pimco “might begin a shift toward something safer, and something more clean in terms of those dirty-shirt investments.” 
• Financial Puts Drop to 19-Month Low: Options. Implied volatility for three-month contracts with an exercise price closet to the Financial Select Sector SPDR Fund was 21% higher than for the SPDR S&P 500 ETF Trust yesterday. That's the smallest gap since May 2011.

Wall Street Journal: 

• The Fiscal Cliff: Live Stream. 
• U.N. Chief Warns Syria on Weapons, Raises Refugee Alarm. 
• Obama's Famous Tax 'Victory'. Top marginal income tax rates may go up. But the president's second-term spending wish list will be history.

CNBC: 

• Boehner: Obama Walking Economy to Edge of 'Cliff'. 
• More US Service Jobs Heading Offshore.

Zero Hedge:

• 146,000 Jobs Added In November, Beat Expectation Of 85,000, Unemployment Rate Lower At 7.7%. (graph)

• Chart Of The Day: Jobs "Additions" By Age Group Reveals The Scariest Picture. 

• UMich Confidence Plunges, Biggest Miss On Record As Outlook Crashes. (graph) 

• Just How Bad Is It In Europe? (graph) 

• Number Of Workers Aged 25-54 Back To April 1997 Levels. 
• Meanwhile In Egypt...

Business Insider:

• America Faces Another Cliff That's $1.5 Trillion High, And It Could Send Interest Rates Plunging. 

• BOEHNER: 'The White House Has Wasted Another Week'. 

• These Wild New DVRs Will Spy On Your Living Room With Cameras And Microphones. Google TV, Microsoft, Comcast, and now Verizon have all submitted patent applications to create televisions and DVRs that will watch you as you watch TV.  
• Google(GOOG) Is One Vote Away From Being Slammed With A Massive Anti-Trust Suit By The FTC.

Economic Policy Journal:

• Joe Weisenthal's Amazing Don't Sweat the Debt Chart. Warren Buffett, Sheldon Adelson and other oligarchs may have total net worth in the trillions, but what exactly does this have to do with most Americans, who if they have any substantial wealth, have a large part tied up in a house? In other words, if the government needs to pay off its debt, and it goes to the average American to do so, it is a big problem, especially since the oligarchs are part of the "protected rich," which means they will always have legislation that will protect them from, among other things, severe taxation.

New York Times:

• E.U. Panel to Pressure Google(GOOG) on Privacy Rules.

Reuters:

• S&P sees Italy GDP contracting in 2013, political risk on reform. Ratings agency Standard & Poor's said on Friday it sees a significant risk that Italy's recession-hit economy will not recover in the second half of 2013, and instead will continue to contract. "We expect the Italian economy will contract in 2012 and 2013 before returning to a weak annual GDP growth rate of no more than one percent," the agency said in a statement. "We believe the key near-term constraints on growth include tight credit conditions and fiscal drag, as well as uncertain external demand." S&P has an negative outlook for Italian sovereign debt, and rates the country at BBB+. The agency said that political uncertainty was another factor that clouded the outlook for Italy's public finances. "We note, in particular, the uncertainty around whether the next government coalition would remain committed to the structural reform agenda initiated by the current government," the agency said. Italy is due to have a national election in 2013. If the economy does not recover in 2013, as the agency believes, it said the resulting risks could create an increase in Italy's debt burden which could result in S&P cutting Italy's credit rating.
• California November revenue misses budget estimate by $806.8 mln. California's November revenue came in $806.8 million below projection in its budget, a disappointing development in light of signs that the most populous U.S. state's economy is on the mend, State Controller John Chiang's office said on Friday. The office said in a statement that revenue from personal income taxes, the state's most important source of revenue, missed budget estimates by $842.5 million and revenue from corporate taxes missed projections by $187.8 million. Revenue from sales taxes, the state's third key source of revenue, exceeded expectations by $99.0 million.
• Global Warming ‘Damages’ Spur Rift at UN Climate Treaty Talks. The world’s richest and poorest countries are divided over whether to create a new fund to help vulnerable nations such as Bangladesh, Kenya and the Philippines cope with loss and damage caused by climate changes. Developing nations at United Nations climate treaty talks in Doha are seeking aid through a mechanism that would insure against conditions the countries say they can’t adapt to, including extreme storms, erosion, floods and drought. The U.S. says there are already initiatives in place to deal with such issues, including a recently created UN adaptation committee. “The issue with the big guys is whether there should be a new mechanism at all or we use existing mechanisms,” said Tony de Brum, head of the delegation of the Marshall Islands and representative of the Alliance of Small Island States, or AOSIS, a bloc of 43 island nations pushing for a loss-and-damage fund. 
• US extends waivers on Iran sanctions to China, India and 7 others. The United States will grant 180-day waivers on Iran sanctions to China, India and seven other countries on Friday in exchange for those economies cutting purchases of oil from the Islamic Republic, a congressional aide said. President Barack Obama's administration is renewing waivers for all of Iran's major oil buyers, after granting them to Japan and 10 countries in the European Union in September.
• Italy president says to speak to Monti about political crisis.
• Brazil inflation defies easing trend in Latin America. 
• Spain's bad bank swerves critical questions. Spain has left major questions unanswered in its rush to set up a "bad bank" to manage toxic loans built up by the country's lenders, creating a detail vacuum that is keeping potential investors at arm's length.

Telegraph:

• UK manufacturing output drops sharply in October. UK manufacturing output fell in October at the fastest pace since June when extra public holidays dented production, data showed on Friday.

Le Figaro:

• The French government has introduced an annual tax on vacant secondary properties in dense areas in the 2013 draft budget bill. The new tax will affect the Paris, Lyon and Toulouse areas, as well as regions such as the French Riviera, finance committee lawmaker Gilles Carrez said. The French govt has also introduced a tax surcharge that will hit capital gains on sales of secondary properties from 2014.

Bear Radar

Style Underperformer:

• Large-Cap Growth -.34%

Sector Underperformers:

• 1) Disk Drives -1.01% 2) Gaming -.91% 3) Networking -.90%
  

Stocks Falling on Unusual Volume:

• YOKU, SOHU, AAPL, DB, IRE, TOT, ACHC, QRE, WBS, CMTL, FMCN, AVGO, PANW, ALOG, TDG, CP, NTES, FRAN, BLOX, LULU, AVB, RBA, ET, GPOR, TD, SRPT, ALGT, RGR and ABMD

Stocks With Unusual Put Option Activity:

• 1) RCL 2) XLP 3) XLB 4) AIG 5) DISH
  

Stocks With Most Negative News Mentions:

• 1) IDCC 2) TD 3) PNX 4) BIG 5) PFE
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.09%

Sector Outperformers:

• 1) Steel +.88% 2) HMOs +.79% 3) Gold & Silver +.66%
  

Stocks Rising on Unusual Volume:

• SD, YPF, VNTV, GEO, FCX, SHLD, AVP and PANL

Stocks With Unusual Call Option Activity:

• 1) TIVO 2) SD 3) SWHC 4) HYG 5) UUP
  

Stocks With Most Positive News Mentions:

• 1) ATHN 2) JBHT 3) EBAY 4) BLK 5) CSCO

Charts:

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

Friday Watch

Evening Headlines 
Bloomberg: 

• Draghi’s Go-to ECB Seen Risking Credibility Through Overload. Mario Draghi isn’t just battling to save Europe’s monetary union, he’s being asked to run it. The European Central Bank president is taking on more and more responsibility to keep the currency bloc afloat, from propping up bond markets to monitoring fiscal policies and assuming supervision of the region’s 6,000 banks. Economists, academics and officials past and present say the ECB is at risk of becoming overloaded, which could erode the credibility it needs to achieve its primary goal of price stability. “The ECB saved the euro,” says Andrew Bosomworth, managing director at Pacific Investment Management Co. in Munich. “But the extra responsibilities, in particular its supervisory role, put additional burdens and risks onto its mandate.” 
• Monti Clings to Power as Berlusconi Seeks Early Vote. Italian Prime Minister Mario Monti said he plans to keep his government intact as his biggest parliamentary supporter, billionaire media magnate Silvio Berlusconi, threatens to withdraw his backing.
• Rates to ship iron ore dropped the most since August on speculation new vessels are joining the fleet as demand declines on a slowdown in Chinese industrial output. Daily earnings for Capesizes carrying 160,000 metric tons of the steel-making raw material fell 7.4% to $12,827, the lowest since Oct. 15, according to the Baltic Exchange, the London-based publisher of freight rates. That's the biggest decline since Aug. 15, and it led the Baltic Dry Index, a broader gauge of commodity shipping costs, down 3.1% to 990 points, the bourse's figures showed today. Rates have fallen 30% since an almost 10-month high reached Oct. 23. The global fleet will expand 14% in 2012, according to data from Clarkson Plc, the world's largest shipbroker. 
• China State-Driven Rebound at Risk as Small Firms Suffer. China’s rebound from a seven-quarter slowdown is being driven by state-funded transport projects, boosting the shares of railcar makers such as China CNR Corp. even as the benchmark stock index dropped. The focus on infrastructure and the lack of a more widespread pickup may threaten the sustainability of the economic recovery. “The recovery is uneven as the recent rebound is mainly driven by government-sponsored investment projects,” said Ding Shuang, a Hong Kong-based economist with Citigroup Inc. “Since the policy easing this time is more measured than previous rounds, the rebound is likely to be mild and may not persist. More support is needed for smaller firms to sustain growth and jobs."
• China Deserts Dealers of Japanese Cars Over Clash. Three months after a territorial dispute led rioters to vandalize Japanese cars in China, automakers from Toyota Motor Corp. (7203) to Nissan Motor Co. are luring back buyers with discounts and guarantees. Dealers like William Chen may take more persuasion to invest in the brands. “Sales of Japanese brands plunged about a third at my outlets,” said Chen, whose family owns about 30 showrooms selling Nissan and nine other brands in the eastern city of Taizhou. “I would prefer safer brands over Japanese ones in the future.” More distributors than ever are considering quitting Japanese car brands, even as showroom traffic and orders begin to rebound, according to the China Automobile Dealers Association.
• Dodd-Frank Swap Rules Delayed as Agency Eases Transition. The main U.S. derivatives regulator may delay applying some Dodd-Frank Act overseas swaps rules for about six months, part of a wave of last-minute exemptions and postponements designed to ease the shift to new regulations. 
• Palo Alto Networks(PANW) First-Quarter Sales Miss Top Estimates. Palo Alto Networks Inc. (PANW) fell after reporting fiscal first-quarter sales that failed to meet analysts’ most bullish estimates, a sign of lofty projections for growth at the maker of firewalls and other security technologies.
• U.S. Bancorp(USB) Lowered by Moody’s as Low Rates Damp Profit. U.S. Bancorp, the nation’s fifth- largest lender by deposits, was downgraded by Moody’s Investors Service as record-low interest rates pressure earnings. The senior debt rating was lowered to A1 from Aa3, reflecting “the inescapable challenges that even a well-managed and diverse banking franchise currently faces,” the ratings firm said today in a statement on the Minneapolis-based lender. “Among these challenges are protracted low interest rates that will place pressure on U.S. Bancorp’s net interest margin.” 
• Netflix(NFLX) CEO Hastings Faces SEC Action Over Facebook Post.
• Morgan Stanley(MS) Alters Broker Pay Plan as Revenue Bonus Takes Hit. Morgan Stanley, the brokerage with the biggest corps of financial advisers, changed its wealth- management compensation plan to encourage brokers to increase revenue and allow them to buy discounted stock. The 2013 program pays a bonus of 2 to 5 percentage points of revenue for advisers who bring in new assets and are in the top 40 percent in revenue growth, according to terms outlined in a summary obtained yesterday by Bloomberg News. That comes at the expense of a 2 percentage-point reduction in the revenue bonus paid to all brokers who generate at least $750,000.

Wall Street Journal: 

• McConnell Takes Hard Line. Veteran Senate Deal-Maker Says Re-Election Isn't Behind His Tough Talk on Budget.
• Fiscal Cliff: Live Stream.  
• Egypt Leader Tries to Calm Opposition. Morsi Offers to Meet With Political Opponents Saturday Over His Expanded Powers, as More Protests Are Set for Friday.
• Danger Lurks Inside the Bond Boom. Amid Corporate-Borrowing Bonanza, Some Money Managers Warn of Little Room Left for Gains.
• Apple's(AAPL) Power Within.
• Martha Stewart(MSO) to Shut Down 'Whole Living'. 
• The Iron Dome Military Revolution. Historically, defensive measures lag behind offensive capabilities. Not so with Israel's new antimissile system. 
• Fidelity Offering Hedge-Fund Play.
• Terror Fight Shifts to Africa. Military counterterrorism officials are seeking more capability to pursue extremist groups in Africa and elsewhere that they believe threaten the U.S., and the Obama administration is considering asking Congress to approve expanded authority to do it. The move, according to administration and congressional officials, would be aimed at allowing U.S. military operations in Mali, Nigeria, Libya and possibly other countries where militants have loose or nonexistent ties to al Qaeda's Pakistan headquarters. 
• Poll Finds Support Grows for Gas Drilling.

Fox News: 

• EXCLUSIVE: FEMA teams told to 'sightsee' as Sandy victims suffered.

CNBC: 

• Tata Raps India for Driving Off Investment. Ratan Tata, the outgoing head of the Tata group, India's most global business, has warned that government inaction is driving investment away from the country and forcing groups like his own to seek growth abroad.

Zero Hedge: 

• Gun Sales Surge: Smith & Wesson Announces Sales +48%.
• "Other Assets" Of $210 Billion Is Now The Fed's Third Largest Asset. (graph)
• On The Demise Of Animal Spirits. (graph)
• Drones In America? They are Already Here...
• What Has (And Hasn't) Worked So Far This Year?

Business Insider: 

• The US Is Entering A New Era Of Fiscal Austerity.
• CITI'S(C) MATT KING PRESENTS: 'The Most Depressing Slide I've Ever Created'.
• Climate Talks Are On Brink Of Collapse As Anger Rises Against Qatari Hosts. 

IBD: 

• Ingredion(INGR) Mixes New Products, Locales To Spur Growth.

NY Times:

• Planning His Legacy, Cisco(CSCO) Chief Maps an Expansion.

Forbes: 

• November U.S. Video Game Retail Sales Drop 11%. 
• Message To GOP: No Tax Increases! Go On Offense! by Steve Forbes.
  

Reuters: 

• Exclusive: Schwab eyes commission-free ETF supermarket - sources. Corp has been quietly meeting with exchange-traded fund providers to try to persuade them to join a new network that would make ETFs available commission-free to the brokerage's 8.6 million customers. ETF providers, however, have been reluctant to sign on to Schwab's plan because they would have to pay the firm a marketing fee they say is too high, according to people with knowledge of the discussions.
• No sign US Congress meant to limit health exchange subsidy -CBO. In a development that could complicate Republican efforts to limit funding for a key provision of President Barack Obama's healthcare law, a top congressional researcher said the issue of restricting subsidies never arose in producing the legislation. Congressional staff involved in the creation of the law did not suggest that federal insurance subsidies be restricted only to states that run their own healthcare exchanges, the head of the nonpartisan Congressional Budget Office said on Thursday.  
• Toyota sees Japan sales dropping 20 pct in 2013 -media. Toyota Motor Corp expects Japan vehicle sales to fall by a fifth next year, in part due to the end of government tax incentives for fuel-efficient automobiles, domestic media reported, adding to the pain from a decline in China sales.
• US stock mutual funds suffer biggest outflows this year -Lipper.
• Michigan House approves 'right-to-work' bill to weaken unions. The Michigan House on Thursday voted to approve a "right-to-work" bill that would weaken labor union powers after Democratic representatives left the chambers in protest at the decision earlier to lock the state Capitol doors.

Yonhap News Agency: 

• U.S. moving warships to monitor N. Korea's rocket move: Adm. Locklear. The United States has moved naval ships with ballistic missile defense to the periphery of the Korean Peninsula to keep close tabs on Pyongyang's possible rocket launch, the top U.S. military commander in Asia and the Pacific said Thursday. "It should seem logical that we will move them around so we have the best situational awareness," Adm. Samuel Locklear, head of the U.S. Pacific Command, said at a press conference in the Pentagon.

China Daily:

• China must make progress on housing "de-inventory" to reduce the risk of a "systemic" financial crisis triggered by real estate bubbles, Chinese Academy of Social Sciences researcher Yi Zianrong writes in a commentary. Loosening the country's property market regulations would hurt efforts to reduce overcapacity in mining, steel, construction materials and other related industries, Yi said.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are unch. to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 112.0 -1.0 basis point.

• Asia Pacific Sovereign CDS Index 85.50 unch.

• FTSE-100 futures +.18%.

• S&P 500 futures +.06%.

• NASDAQ 100 futures +.08%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note

Economic Releases
8:30 am EST

• The Change in Non-Farm Payrolls for November is estimated at 85K versus 171K in October. 
• The Unemployment Rate for November is estimated at 7.9% versus 7.9% in October.
• Average Hourly Earnings for November is estimated to rise +.2% versus unch. in October.

 9:55 am EST

• Preliminary Univ. of Mich. Consumer Confidence for December is estimated to fall to 82.0 versus 82.7 in November.

3:00 pm EST

•  Consumer Credit for October is estimated to fall to $10.0B versus $11.36B in September.

Upcoming Splits

• (MNRK) 6-for-5
  

Other Potential Market Movers

• The (CSCO) analyst day could also impact trading today.

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

Stocks Slightly Higher into Final Hour on Fiscal Cliff Optimism, Seasonal Strength, Short-Covering, Consumer Discretionary/Tech Sector Strength

Broad Market Tone:

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

Equity Investor Angst:

• VIX 16.59 +.79%
• ISE Sentiment Index 145.0 -2.0%
• Total Put/Call .93 +6.90%
• NYSE Arms .88 +67.40%

Credit Investor Angst:

• North American Investment Grade CDS Index 97.69 -.04%
• European Financial Sector CDS Index 150.39 -.97%
• Western Europe Sovereign Debt CDS Index 105.54 bps +.85%
• Emerging Market CDS Index 217.18 bps -2.0%
• 2-Year Swap Spread 11.5 -.25 bp
• TED Spread 22.0 unch.
• 3-Month EUR/USD Cross-Currency Basis Swap -24.25 unch.

Economic Gauges:

• 3-Month T-Bill Yield .09% unch.
• Yield Curve 134.0 -1 bp
• China Import Iron Ore Spot $118.40/Metric Tonne +.42%
• Citi US Economic Surprise Index 35.50 +.8 point
• 10-Year TIPS Spread 2.46 +1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating -15 open in Japan
• DAX Futures: Indicating +9 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech and medical sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg: 

• Draghi Leaves Rate-Cut Door Ajar as ECB Reduces Forecasts. The European Central Bank cut its growth and inflation forecasts and President Mario Draghi said the euro area won’t start to shake off its slump until the second half of 2013, leaving the door ajar for further interest- rate reductions. “Weak activity is expected to extend into next year,” Draghi said today at a press conference in Frankfurt after policy makers left the benchmark rate at a record low of 0.75 percent. “By the second part of the next year, we should see the beginning of a recovery” as global demand strengthens and the ECB’s low rates feed through to the economy, he said.
• Depression Deepens Greek Middle Class Despair With Crime. Anastasia Karagaitanaki, 57, is a former model and cafe owner in Thessaloniki, Greece. After losing her business to the financial crisis, she now sleeps on a daybed next to the refrigerator in her mother’s kitchen and depends on charity for food and insulin for her diabetes. “I feel like my life has slipped through my hands,” said Karagaitanaki, whose brother also shares the one-bedroom apartment. “I feel like I’m dead.” For thousands of Greeks like Karagaitanaki, the fabric of middle-class life is unraveling. Teachers, salaries slashed by a third, are stealing electricity. Families in once-stable neighborhoods are afraid to leave their homes because of rising street crime.
• Euro Weakens as ECB Reduces Economic Forecasts. The euro declined the most in a month against the dollar after European Central Bank President Mario Draghi said economic weakness will persist next year, suggesting the central bank has scope to lower interest rates. The 17-nation currency dropped from almost a seven-month high against the yen after the ECB cut its growth forecasts and said it saw “downside risks” for the region. The yen strengthened versus most of its major counterparts as investors sought safer assets. New Zealand’s dollar rose to a two-month high against the greenback after the nation’s Reserve Bank said growth was likely to quicken.
• 54% of used-vehicle loans were subprime in 3Q vs 52% during the same period in 2011, S&P analyst Erkan Erturk wrote, citing Experian, subprimenews.com. Subprime loans made up 25% of financing of new vehicles in Q3, up from 22% in Q3 2011. 
• Copper Retreats as European Growth Concerns Dim Demand Outlook. Copper futures dropped the most in four weeks amid concern that persistent economic weakness in Europe will undercut demand for the metal. A report today showed the euro-area’s economy shrank in the third quarter, slipping 0.1 percent from the previous three months and confirming data from last month showing the currency union fell into a recession. The European Central Bank cut its forecast for 2013 to a contraction of 0.3 percent, rather than expected growth of 0.5 percent. “The commentary out of the ECB is weighing on the market,” Fain Shaffer, the president of Infinity Trading Corp. in Medford, Oregon, said in a telephone interview. “The problems in Europe aren’t going away.” Copper futures for March delivery fell 1.1 percent to $3.6445 a pound at 1:17 p.m. on the Comex in New York, the biggest drop since Nov. 7. 
• IRS Warns Congress About Failure to Address Alternate Tax. Failure by Congress to act on the alternative minimum tax by year’s end will lead to “significant” delays in tax filing and a strain on taxpayers, said Steven Miller, the Internal Revenue Service’s acting commissioner. The alternative minimum tax, or AMT, is part of the so- called fiscal negotiations in Congress. Leaving it untouched would affect taxpayers early in 2013, because its reach would be expanded for returns filed for tax year 2012.
• Greenspan Says Painless Solution to U.S. Debt is Fantasy. (video)
• Jobless Claims in U.S. Decline as Sandy Effect Wanes. Fewer Americans than projected filed applications for unemployment benefits last week as disruptions caused by superstorm Sandy waned. Jobless claims decreased by 25,000 to 370,000 in the week ended Dec. 1, Labor Department figures showed today in Washington. The median forecast of 52 economists surveyed by Bloomberg called for a drop to 380,000. A Labor Department spokesman said there was nothing unusual in last week’s data. 
• U.S. Shows Signs of Flexibility at UN Climate Discussions. President Barack Obama’s envoy at United Nations global-warming negotiations said he’s willing to participate in discussions on the issue of fairness in how nations plan to curb climate change, paving the way for drafting a new treaty by 2015. Todd Stern, the State Department official heading the U.S. delegation at the UN climate conference in Doha, also acknowledged yesterday that the U.S. has more work to do to reduce fossil-fuel emissions. “As President Obama said just a few weeks ago, we need to do more and we intend to do more,” he told delegates. 
• Apple to Invest in Manufacturing Macs in U.S., Cook Says. Apple Inc. (AAPL) plans to spend more than $100 million next year on building Mac computers in the U.S., shifting a small portion of manufacturing away from China, the country that has handled assembly of its products for years. 
• Apple(AAPL) IPhone to Be Sold by T-Mobile in 2013. T-Mobile USA Inc. will begin offering Apple Inc. (AAPL)’s iPhone next year, becoming the last of the four largest U.S. carriers to offer the best-selling device. Deutsche Telekom AG (DTE), T-Mobile’s parent, disclosed the agreement to sell Apple products in 2013 in a statement today. Larger U.S. competitors Verizon Wireless, AT&T Inc. (T) and Sprint Nextel Corp. (S) all sell the iPhone.

Wall Street Journal:

• Fund Managers Lift Results With Timely Trading Sprees. 
• Reactions: Departure of DeMint’s ‘Powerful Voice’. 
• Army Moves to Restore Order in Cairo. 
• Rivkin and Casey: The Opening for a Fresh ObamaCare Challenge. By defining the mandate as a tax, one that will not be uniformly applied, the Supreme Court ran afoul of the Constitution.
• Henninger: Obama's Ruinous Course. Where in his career did Barack Obama ever learn the art of the political deal? Nowhere.

CNBC: 

• Grover Norquist: Republicans Aren't Cracking on Taxes. 
• Customers ‘Scared to Death’ of Going Off 'Cliff': Caterpillar(CAT) CEO.

Zero Hedge:

• Sentiment Shaken By Concerns Of Political Circus Returning To Italy. 
• Diamondback To Liquidate: Here Are Its Largest Holdings.
• Greece 'Selective Default' And Geithner's 'Selective Memory'. 
• ISM Composite - Back To Pre-Crash Levels, But... (graph) 
• Margin Debt Rises To 18 Month High As Net Free Credit Plunges To -44 Billion. (graph) 
• Il Giornale: "The Monti Government Is Increasingly Hanging By A Thread".
• The Total Animated, Annotated US Debt. (video) 
• Europe's Scariest Chart - Update.

Business Insider: 

• Bloomberg BRIEF's Guide To The Fiscal Cliff Is The Best Summary That's Been Done Yet.

Reuters: 

• Monti govt at risk after Berlusconi withdraws support. Silvio Berlusconi's party withdrew its support for Prime Minister Mario Monti on Thursday, raising the risk of a snap election in Italy, but President Giorgio Napolitano said he would work to avoid a crisis and there was no need for alarm. 
• Russia says US rights bill 'absurd', may retaliate. Russia denounced as "absurd" a trade bill that passed the U.S. Senate on Thursday with a provision to punish Russian human rights violators, and a senior Russian lawmaker said Moscow may respond with a similar law. "The decision of the U.S. Senate...is a performance in the theatre of the absurd," the Foreign Ministry said in a statement on its website.
  Alexei Pushkov, the head of the lower house of parliament's international affairs committee told Itar-Tass that Moscow could pass a "corresponding law".
  
  

Telegraph:

• ECB mulls negative rates as Europe's economic crisis deepens. The European Central Bank has slashed its eurozone growth forecasts and warned that recession will drag on into the middle of next year, sending the euro plunging below €1.30 to the dollar.

Ansa:

• Finance Minister Grilli Says Italy Not on Verge of Abyss. "We certainly know that the situation is difficult", Grilli said. Grilli's comments come after former PM Berlusconi last night signaled he may run for the premiership as Italy is on "the edge of the abyss."