Today's Headlines

Bloomberg: 

• Boehner Says ‘We’ve Got Some Serious Differences’ on Budget Plan. Republicans in Congress hardened their resistance to President Barack Obama’s proposed higher taxes for top earners and called on him to propose spending cuts. Obama’s budget plan is “mainly tax hikes,” House Speaker John Boehner told reporters today in Washington. “We’ve got some serious differences,” he said. During a phone call yesterday, Boehner said, he and the president were “frank” about “how far apart we are.”
• Fed Expands Asset Buying, Links Rates to Joblessness. The Federal Reserve said it will buy $45 billion a month of Treasury securities starting in January, expanding its asset-purchase program, and for the first time linked the outlook for its main interest rate to unemployment and inflation. “The committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor-market conditions,” the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington. The Fed said interest rates will stay low “at least as long” as the unemployment rate remains above 6.5 percent and if inflation “between one and two years ahead” is projected to be no more than 2.5 percent. The committee “views these thresholds as consistent with its earlier date-based guidance.” The Fed dropped its earlier pledge to hold interest rates near zero “at least through mid-2015.” 
• Greece Plans to Retire $41.5 Billion of Debt in Buyback. Greece plans to repurchase government bonds with a face value of 31.9 billion euros ($41.5 billion) from private investors including its own banks to free up aid for the cash-strapped country. Greece will pay an average weighted price of 33.8 percent of face value for government bonds maturing from 2023 to 2042 after agreeing to pay the maximum price from the range it had indicated for each bond, the Athens-based Public Debt Management Agency said in a statement on its website today. The buyback offer began Dec. 3 and ran until noon London time yesterday. The buyback was part of a package of measures approved by euro-area finance ministers to cut the nation’s debt to 124 percent of gross domestic product in 2020 from a projected 190 percent in 2014.
• EU Lawmakers Seek Greek Swap Details After ECB Bars Files. Lawmakers in Italy and Germany are urging their governments to demand greater transparency from the European Central Bank after a court upheld its decision to keep documents secret that show what the central bank knew about Greece’s finances before its bailout. “Technocracies and kleptocracies cannot prevail over politics and democracy,” Senator Elio Lannutti, a member of the Italian Values party, said in a phone interview today. “The ECB is impermeable to transparency.”
• Spanish Repossessed Property Prices Tumble 65% in Credit Crunch.Prices of repossessed Spanish homes offloaded by lenders this year tumbled 65 percent as a million new properties remain unsold and buyers find it more difficult to get mortgages, according to Fitch Ratings. The price decline is relative to the value of the property when the loans were made and is more than double the drop in real estate values recorded in government data. That compares with a 45 percent slump in Portuguese repossessed house values. 
• London’s Dominance in Shipping Seen Threatened by EU Regulation. The Baltic Exchange, the London- based bourse whose data are used to set freight rates for about 75 percent of seaborne trade, said European moves to tighten controls over financial benchmarks may drive business abroad.
• Unilever CEO Polman Says Europe Faces 10-Year Economic Slump. Unilever Chief Executive Officer Paul Polman said Europe is facing 10 years of economic stagnation while the U.S. grapples with the rise of an “emerging poor” class dependent on government benefits.“We are in for at least 10 years of slow economic growth in Europe, and I don’t see that changing,” Polman said yesterday in an interview at Bloomberg headquarters in New York. “If you run a business like mine and don’t assume that, you are fooling yourself. I hope for the benefit of Europe I am proven wrong, but even then we are in a better position by taking that as our starting point. The key thing is to see reality in the eye.” Polman said declining consumer confidence in the U.S. has “people worried” and the recovery in the world’s largest economy will be muted, with GDP growth of 2 percent “if you’re lucky.” With 46 million people relying on government benefits to buy food, he said, “people scrape by until the end of the month.”
• Swiss Feel Jobless Chill as Axe Falls on Alpine Idyll.For decades, the town of Visp at the foot of the Swiss Alps enjoyed the steady stream of affluent skiers heading to Zermatt and the tax income from chemicals maker Lonza Group AG. (LONN) Lately, the inflow of money has ebbed. Lonza is making the deepest cuts in its 115-year history, as the drug-additive maker seeks to eliminate 400 jobs out of 2,890 at its complex in Visp. The plant employs about one in 10 of the valley’s workers, and every third person depends on the site indirectly, facility manager Stefan Troger said.
• Japan’s Abe Set to Inherit Deepest Manufacturing Gloom Since ‘10. When Shinzo Abe was prime minister in 2007, optimism among Japanese manufacturers such as Sony Corp. (6758) was near a 16-year high. Now, as polls suggest Abe’s party will retake power in elections on Dec. 16, the Bank of Japan’s Tankan survey will probably show tomorrow that large manufacturers are the most pessimistic since the aftermath of the global recession. Sony hasn’t made a net profit in four years.
• California Psychiatrists Paid $400,000 Shows Bidding War. The prisons raised pay to lure psychiatrists, the mental health department followed suit to keep employees, and costs soared. Last year, 16 California psychiatrists, including Safi, made more than $400,000, while only one did in the other 11 most populous states, according to data compiled by Bloomberg. The jockeying between agencies for the same doctors demonstrates a payroll system run amok and chronic mismanagement, said Jeffrey Sonnenfeld, senior associate dean at the Yale University School of Management and founder of a training institute for chief executive officers.

Wall Street Journal: 

• The Fiscal Cliff: Live Stream.
• Apple(AAPL) Moves Closer to Making TV Set. 
• Hispanics to Nearly Double Share of U.S. by 2060. 
• 3M(MMM) Forecasts 2013 Profit Slightly Below Estimates.

CNBC: 

• 'Cliff' Talks at Standstill: 'It's Getting Worse, Not Better'. Talks to avoid the "fiscal cliff" showed little progress on Wednesday, with Republicans publicly rebuking the Obama administration and one House member saying "it's getting worse, not better." At a morning briefing, House Majority Leader Eric Cantor lashed out at President Barack Obama, saying "let's stop playing games" and present a proposal to cut entitlement spending. But House Democratic leader Nancy Pelosi warned Republicans against raising the Medicare eligibility age to 67. "Don't go there," she said. 
• Italy’s Clown Prince: Monti ‘Needs to Disappear’. The anarchic comedian and blogger who leads one of Italy's most rapidly-growing political parties has told CNBC that Prime Minister Mario Monti is a mere "bankruptcy curator" who "needs to disappear."

Zero Hedge: 

• Baltic Dry Plunges By Over 8% Overnight, Most Since 2008. (graph)
• How A Handful Of Unsupervised MIT Economists Run The World.
• Berkshire Seeks To Avoid 2013 Tax Hike, Buys Back BRK Shares. 
• Chart Of The Day: The Collapsing Half-Life Of Unsterilized Central Bank Intervention. 
• QE4EVA Expands Fed-Eligible Treasury Purchases To All Risky Paper.

Business Insider:

• RAY DALIO: The US Economy Is Facing A Rare Set Of Circumstances That Will Be Bad For Markets.
• The 50 Coolest New Businesses In America. 
• BLANKFEIN: Any Fiscal Cliff Deal Is Going To Hurt The Economy. 
• The Scariest Chart At The Dealbook Conference. 
• London's Rare Burger Ban Could 'Open Pandora's Box'.  
• Apparently Google(GOOG) Is Just Getting Started With Its Plan To Kill The Cable Companies.

Reuters:

• North Korea's new leader burnishes credentials with rocket. North Korea successfully launched a rocket on Wednesday, boosting the credentials of its new leader and stepping up the threat the isolated and impoverished state poses to opponents. 
• US CEOs' view of economy slips a tad amid cliff debate. U.S. chief executives' view of the domestic economy drifted down to a three-year low in the fourth quarter, with concerns about the fiscal cliff undermining their confidence, a Business Roundtable survey found. The group's CEO Economic Outlook Index , released on Wednesday, fell to 65.6 in the fourth quarter following a sharp drop to 66 in the third quarter. Any reading above 50 indicates forecast growth.
• U.S. governors plead for urgent online sales tax authority. U.S. governors are urgently pressing Congress to pass Internet sales tax legislation in the coming weeks, saying states cannot afford to wait to collect billions of dollars from online retailers. Washington state Governor Chris Gregoire, a Democrat, and Tennessee Governor Bill Haslam, a Republican, wrote to Senate leaders on Tuesday urging them to pass legislation granting states the authority to collect sales taxes from online businesses. The letter was released on Wednesday.

Telegraph:

• Debt Crisis: Ministers gather in Brussels to thrash out bank supervision deal - live. European finance ministers have gathered in Brussels to thrash out the details of the ECB's bank supervision mechanism after a meeting on December 4 ended in deadlock. 

BBC:

• Conservative London Mayor Boris Johnson said UK voters need to be asked in a referendum whether they want to stay part of the European Union or not. 

Times:

• German Finance Minister Wolfgang Schaeuble said the UK is leaving itself with "no voice in Europe," citing comments the minister made at a private dinner. 

Bull Radar

Style Outperformer:

• Large-Cap Value +.29%

Sector Outperformers:

• 1) Homebuilders +2.46% 2) Education +1.83% 3) Alt Energy +1.64%
  

Stocks Rising on Unusual Volume:

• DLB, NDAQ, FMC, AET and INFA

Stocks With Unusual Call Option Activity:

• 1) NWS 2) NRG 3) JDSU 4) ZQK 5) DLTR
  

Stocks With Most Positive News Mentions:

• 1) DDD 2) FTI 3) CAT 4) PGR 5) IO

Charts:

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

Wednesday Watch

Evening Headlines 
Bloomberg:

• North Korea Launches Rocket in Defiance of Sanctions. North Korea today launched a rocket that deployed a device into orbit, defying international sanctions and indicating the totalitarian regime is making progress in its ballistic missile technology. The North America Aerospace Defense Command said in a statement that it detected the launch at 9:49 a.m. Korea time, after which the first stage fell into the Yellow Sea and second stage dropped into the Philippine Sea. The U.S. agency said the missile deployed an object that appeared to achieve orbit, after North Korea’s official news agency said its Unha-3 rocket had successfully put a satellite into space. 

• China’s Stocks Drop for Second Day, Led by Materials Producers. China’s stocks declined for a second day as materials and energy producers retreated, overshadowing gains by banks. Jiangxi Copper Co. slid 1.4 percent, heading for its biggest loss in two weeks after the price of the metal declined yesterday.

• Hong Kong at Risk of Property Price Correction, IMF Says. (video) Hong Kong is at risk of an abrupt decline in property prices after gains fueled by low interest rates and a limited supply of new housing, the International Monetary Fund said. “The property sector is the main source of domestic economic risk,” the IMF said in a report on the city released today. The odds of a slump that has major economic and financial consequences is “fairly low in the near term,” the fund said. The city should mantain its currency peg, it said. 

• Peugeot to Cut Added 1,500 Jobs as European Sales Plunge. PSA Peugeot Citroen (UG), Europe’s second-largest carmaker, will eliminate an additional 1,500 jobs by 2014, deepening its workforce reduction as auto sales in the region plunge to a 17-year low. The cuts, which come on top of 8,000 announced in July, will be made by not replacing people who leave, Jonathan Goodman, a spokesman for the Paris-based company, said in a telephone interview. Peugeot is also closing a factory on the outskirts of Paris, selling assets and negotiating a strategic alliance with General Motors Co. (GM) to reduce spending. Europe’s auto market is on track to drop this year to the lowest sales volume since 1995, according to the ACEA trade group.

• Egypt Turmoil Puts IMF Cash at Risk as Mursi Halts Tax Rises. Mohamed Mursi’s focus on defusing a resurgent protest movement in Egypt is starting to derail his plans for help rescue the economy with a $4.8 billion International Monetary Fund loan. Mursi’s decision to hold a Dec. 15 referendum on a new constitution has polarized the country and sparked rival demonstrations, most recently last night, that have sometimes turned violent. Egypt’s government said yesterday it asked the IMF to delay next week’s meeting to approve the loan, probably until January. As protests escalated, Mursi suspended a raft of tax increases aimed at meeting IMF concerns about the region’s biggest budget deficit. 

• Aetna(AET) backs 2012 outlook, offers 2013 forecast. Health insurer Aetna Inc. said Tuesday that it expects to earn about $5.40 per share from operations in 2013, up about 6 percent from this year.

• U.S. Probe of SAC Trading Said to Be Linked to 2010 Case. A U.S. investigation of possible insider trading at SAC Capital Advisors LP, the $14 billion hedge fund run by Steven A. Cohen, is linked to a 2010 regulatory lawsuit over allegedly illegal trades in InterMune Inc. (ITMN), a person familiar with the matter said.

Wall Street Journal:

• Corporate Taxes on Table in Cliff Talks. The White House has told Republicans it would include an overhaul of the corporate-tax code as part of any deal to reduce the deficit, people familiar with the talks said, a move to court business groups as budget negotiations intensify. Corporate taxes hadn't until now been part of budget talks aimed at averting spending cuts and tax increases set for January. Much of the focus has instead been on the expiring individual income-tax rates.

• The Fiscal Cliff: Live Stream. 

• Inside the Risky Bets of Central Banks. Every two months, more than a dozen bankers meet here on Sunday evenings to talk and dine on the 18th floor of a cylindrical building looking out on the Rhine. The dinner discussions on money and economics are more than academic. At the table are the chiefs of the world's biggest central banks, representing countries that annually produce more than $51 trillion of gross domestic product, three-quarters of the world's economic output.

• Fed Puts Deal Freeze on Big Banks. The Federal Reserve is pushing large U.S. banks to forget about all but the smallest acquisitions for a while amid a raging debate over the risk big lenders pose to the financial system. The Fed this year told Capital One Financial Corp. not to pursue more major deals in the near term after its $9 billion purchase of ING Groep NV's U.S. online-banking business, said people familiar with the conversations. The deal made Capital One, McLean, Va., the nation's fifth-largest bank by deposits, according to Federal Deposit Insurance Corp. data.

• Gross Cut MBS Holdings to Lowest Level in 2012. Bill Gross, who runs the world’s biggest bond fund, slashed his exposure to U.S. mortgage-backed securities in November to the lowest level of the year.

• On the Way Out, Schapiro Steps In to 'Volcker' Rift.

• Prescott and Ohanian: Taxes Are Much Higher Than You Think. The combined levies on labor income and consumer spending have seriously reduced the hours that Europeans work. The U.S. isn't too far behind.

CNBC: 

• Hedge Funds Stride the Stage of World Affairs. With the right idea at the right time, and with the requisite financial firepower, hedge fund investors can exert significant political and economic influence. That may even prompt political scientists and economists to consider analyzing hedge funds the way they do trade unions and political parties.

• Obama Says U.S. Will Recognize Syrian Rebels. President Obama said Tuesday that the United States would formally recognize a coalition of Syrian opposition groups as that country’s legitimate representative, intensifying the pressure on President Bashar al-Assad to give up his bloody struggle to stay in power.

Zero Hedge:

• A Five Minute Example of HFT Shenanigans.

• "Better Off On Benefits".

• North Korea Launches Missile Towards Japan - Passes Over Okinawa.

• Jimmy Hoffa Warns Of "Civil War" As Michigan Governor Signs "Right-To-Work" Into Law.

• Hong Kong Fed's Epiphany: Is Bernanke Wrong About Everything?

Business Insider:

• TO CATCH A THIEF: Jeff Gundlach's Epic First Presentation On The Economy Since He Was Burglarized.

IBD:

• Macy's(M), Foot Locker(FL), Lululemon(LULU) Are Merry This Holiday.

Forbes:

• Obamacare's Cruel War On Patient-Centered Healthcare.

CNN: 

• U.S. oil prices could sink to $50. U.S. oil prices could sink to $50 a barrel at some point over the next two years, according to analysts at Bank of America Merrill Lynch.

• The real debt problem: What will eat the tax dollars. Often missing from the hyper-politicized debate over spending cuts and tax increases is a central point: Why the federal budget is on an unsustainable course. Today, the United States spends about 71 cents of every federal tax dollar it collects on the Big 4: Medicare, Medicaid, Social Security and interest on the debt.

Politico: 

• Cliff chaos: Hundreds of billions apart. The bellowing on Capitol Hill about which side has offered more “specifics” to resolve the fiscal cliff showdown masks a larger problem for Washington: The two sides are still hundreds of billions of dollars apart on revenue and entitlement cuts. Not to mention, Republicans and Democrats are also light-years apart on policy details that back up those budget targets. That’s why there’s increasing skepticism in Washington that a deal actually can be reached before Jan. 1, and the country will go over the fiscal cliff.

Reuters: 

• DuPont(DD) boosts forecast; to buy back $1 billion in shares. DuPont boosted its 2012 forecast and announced a $1 billion stock buy back on Tuesday. The chemical company now expects profit this year to be at the high end of its forecast to earn $3.25 to $3.30 per share. Analysts expect earnings of $3.29 per share, according to Thomson Reuters I/B/E/S. Shares of DuPont rose 2.2 percent to $44.65 in after-hours trading.

• U.S. should automatically register voters -attorney general. Attorney General Eric Holder said on Tuesday that U.S. election officials should register eligible voters automatically and take steps to reduce the long lines Americans encountered in national elections on Nov. 6. 

• Compromise emerges in global talks on Internet oversight. Hopes rose on Tuesday for a compromise agreement that would keep intrusive government regulation of the Internet from being enshrined in a global treaty. As a 12-day conference of the International Telecommunication Union drew near its Friday closing, the chairman of the gathering in Dubai circulated a draft that sidelined proposals from Russia, China and other countries that have been seeking the right to know where each piece of Internet traffic comes from. "The United States believes it is the basis for any further progress toward reaching an agreement at this conference," said U.S. Ambassador Terry Kramer, who had led Western opposition to the earlier proposals.

Evening Recommendations 
Janney:

• Rated (DECK) Buy, target $50.

• Rated (TRIP) Buy, target $49.

Night Trading

• Asian equity indices are -.25% to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 111.0 -3.0 basis points.

• Asia Pacific Sovereign CDS Index 85.75 -.5 basis point.

• FTSE-100 futures +.03%.

• S&P 500 futures -.10%.

• NASDAQ 100 futures -.05%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (JOY)/1.91

• (COST)/.93

• (RH)/.03

• (NX)/.21

Economic Releases
 8:30 am EST

• The Import Price Index for November is estimated to fall -.5% versus a +.5% gain in October.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,500,000 barrels versus a -2,357,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +2,000,000 barrels versus a +7,860,000 barrel gain the prior week. Distillate inventories are estimated to rise by +1,100,000 barrels versus a +3,027,000 barrel gain the prior week. Finally, Refinery Utilization is estimated unch. versus a +2.0% gain the prior week.

12:30 pm EST

• The FOMC is expected to leave the benchmark fed funds rate at .25%.

2:00 pm EST

• The Monthly Budget Deficit for November is estimated to widen to -$170.0B versus -$137.3B in October.

Upcoming Splits

• (MTX) 2-for-1
  

Other Potential Market Movers

• The Fed's Bernanke speaking, Spanish 10Y bond auction, Eurozone inflation data, UK jobless rate, Eurozone Financial Minsters meeting, OPEC meeting, weekly MBA mortgage applications report, 10Y T-Note auction, Oppenheimer Healthcare Conference, (AKAM) analyst meeting, (TSO) analyst presentation, (ENR) investor conference, (AET) investor conference, (HI) investor day, (ABC) investor day, (EMN) investor day and the (BF/A) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by consumer 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 Rising into Final Hour on Fiscal Cliff Hopes, Short-Covering, Technical Buying, Tech Sector Strength

Broad Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• VIX 15.76 -1.81%

• ISE Sentiment Index 172.0 +51.0%

• Total Put/Call .81 -8.99%

• NYSE Arms 1.01 -5.42%

Credit Investor Angst:

• North American Investment Grade CDS Index 94.29 -1.29%

• European Financial Sector CDS Index 151.32 -3.93%

• Western Europe Sovereign Debt CDS Index 114.0 bps +.81%

• Emerging Market CDS Index 214.41 bps -1.11%

• 2-Year Swap Spread 11.25 -.5 bp

• TED Spread 24.25 +.75 bp

• 3-Month EUR/USD Cross-Currency Basis Swap -23.0 +1.5 bps

Economic Gauges:

• 3-Month T-Bill Yield .07% -1 bp

• Yield Curve 140.0 +2 bps

• China Import Iron Ore Spot $124.90/Metric Tonne +1.22%

• Citi US Economic Surprise Index 48.0 -1.7 points

• 10-Year TIPS Spread 2.49 unch.

Overseas Futures:

• Nikkei Futures: Indicating +39 open in Japan

• DAX Futures: Indicating -10 open in Germany

Portfolio:

• Higher: On gains in my tech, medical and biotech sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg:

• Boehner Says He’s Waiting for Obama’s Specific Spending Cuts. U.S. House Speaker John Boehner reiterated his call for President Barack Obama to offer proposed spending cuts as part of a deficit-reduction package. “Where are the president’s spending cuts?” Boehner, an Ohio Republican, said on the House floor today in Washington. He said he is still “hopeful” the parties can reach a budget agreement before the end of the year. “The longer the White House slow-walks this process, the closer” the economy gets to the so-called fiscal cliff of tax increases and spending cuts set to begin in January, the speaker said in his first public comments since meeting with Obama Dec. 9. “Right now the American people have to be scratching their heads and wondering: When is the president going to be serious?” Boehner said.

• Pimco Sees Global Growth Slowing After U.S. Tightening. Pacific Investment Management Co., manager of the world’s largest mutual fund, said global growth will be hampered next year by a slowdown in the U.S. economy. Global growth will slow to 1.3 percent to 1.8 percent from about 2 percent this year as the private sector isn’t healthy enough to step in and extend credit amid deleveraging, Saumil Parikh, a portfolio manager who leads Newport Beach, California- based Pimco’s cyclical forum, said in a December report being posted on the firm’s website today. Economists expect growth of 2.5 percent in 2013, the average forecast in a Bloomberg survey. “Central banks, while they are effective in boosting asset prices, we think gradually they’re losing effectiveness in helping the real economy,” Parikh said in a telephone interview before the report was released. “The low growth rate of corporate profits and the low rate of investment means a near stall speed of the global economy.” U.S. economic growth will drop to 1.25 to 1.75 percent in 2013 from 2.2 percent in the four quarters ended Sept. 30 because of “a policy mix of untimely fiscal tightening and increasingly ineffective monetary easing,” Parikh said in the report. 

• U.K. Fraud Agency Makes First Arrests Over Libor-Rigging. A former Citigroup Inc. (C) trader is among three people held in the first U.K. arrests as part of global probes into tampering with the London interbank offered rate, according to two people familiar with the matter. 

• Portugal Considers Measures If Revenue Misses Budget Plan. The Portuguese government is ready to implement additional measures in 2013 if there are slippages in meeting budget targets, the European Commission said. Fiscal consolidation efforts are “in line” with the budget-deficit targets of 5 percent and 4.5 percent of gross domestic product for 2012 and 2013, respectively, the commission said in a report obtained by Bloomberg News about the sixth review of the aid program it conducted together with the International Monetary Fund and the European Central Bank. The program is “broadly on track,” it said.

• Oil Trades Near One-Month Low as Fuel Stockpiles Seen Rising. Oil traded near the lowest close in almost a month in New York on speculation that an Energy Department report will show fuel stockpiles climbed in the U.S., the world’s biggest crude consumer. Futures were little changed after dropping for a fifth day yesterday, the longest losing streak since October. Distillate supplies, including diesel and heating oil, are projected to rise a second week while gasoline inventories may reach the highest level since April, according to a Bloomberg News survey before the government report tomorrow. The Organization of Petroleum Exporting Countries is gathering in Vienna to determine the group’s targets for crude production. “Crude is starting to feel the weight of softer demand given lower refining activity expected in the first quarter,” said Filip Petersson, a commodities strategist at SEB AB in Stockholm.

• U.S. Energy Puts at 18-Month Low. The cost of hedging against losses in U.S. energy companies has fallen to an 18-month low. Puts protecting against a 10% decline in the Energy Select Sector SPDR Fund cost 5.57 points more than calls betting on a 10% rally, the smallest gap since May 2011, according to Bloomberg. 

• $822,000 Worker Shows California Leads U.S. Pay Giveaway. Nine years ago, California Democrat Gray Davis became the first U.S. governor in 82 years to be recalled by voters. The state’s 20 million taxpayers still bear the cost of his four years and 10 months on the job. Davis escalated salaries and benefits for 164,000 state workers, including a 34 percent raise for prison guards, the first of a series of steps in which he and successors saddled California with a legacy of dysfunction. Today, the state’s highest-paid employees make far more than comparable workers elsewhere in almost all job and wage categories, from public safety to health care, base pay to overtime.

Wall Street Journal: 

• Boehner Calls for Details From Obama. Speaker John Boehner (R., Ohio) took to the House floor Tuesday to complain about the status of tax and spending talks with President Barack Obama, accusing the White House of "slow walking" the negotiations and calling again for the administration to say more about how it would cut spending.

• Fiscal Cliff: Live Coverage.

• Corporate Pensions on Pace to Hit Year-end Deficit Record. $607.4 billion: The combined amount by which the pension plans of S&P 1500 companies were underfunded at the end of November.

• Italy's Monti Defends Austerity Measures.

Fox News:

• US sending 20 more F-16s to Egypt, despite turmoil in Cairo. Instability in Egypt, where a newly-elected Islamic government teeters over an angry population, isn't enough to stop the U.S. from sending more than 20 F-16 fighter jets, as part of a $1 billion foreign aid package.

• New insurance fee in health overhaul law likely to hit consumers.

CNBC: 

• Stocks Pare Gains After Reid's 'Cliff' Remarks. Stocks eased off their best levels Tuesday after Senate Majority Leader Harry Reid threw cold water on the ongoing "fiscal cliff" negotiations. Reid said it will be hard to reach a budget deal by Christmas, adding that Democrats aren't going to make an offer on spending cuts for Republicans. Earlier, Wall Street shrugged off Speaker John Boehner's negative comments on the ongoing "fiscal cliff" negotiations.

• Why More States May Adopt Right-to-Work Laws. Michigan moved on Tuesday to become the 24th state to adopt a "right to work" law—the controversial provision that prohibits unions from forcing workers to join and pay dues. But while the issue is politically charged—protesters marched in the capital of Lansing during the voting—Michigan's move is partly a matter of economic survival, some analysts say. 

• Norquist: Still No Better Argument for Tax Hikes. A powerful anti-tax crusader said President Barack Obama doesn't have a better argument for tax increases today than he did two years ago, when he agreed to extend the Bush tax cuts for all Americans. "Raising taxes is always bad for the economy," Americans For Tax Reform President Grover Norquist told CNBC's "Squawk Box" on Tuesday. "Tax increases are what's done instead of reforming government."

• Unemployment Benefits Hang on 'Fiscal Cliff' Deal.

• Wholesale Inventories Hit Record as Sales Tumble. U.S. wholesale inventories rose more than expected in October as sales fell for the first time in three months, according to a government report on Tuesday that hinted at some piling up of goods in warehouses. The Commerce Department said wholesale inventories increased 0.6 percent to a record $497.1 billion after an unrevised 1.1 percent rise in September.Economists polled by Reuters had expected stocks of unsold goods at U.S. wholesalers to rise 0.4 percent.

Zero Hedge:

• So Much For "Confidence" - NFIB Small Business Outlook Drops To Record Low. (graph)

• October US Exports Plunge By Most Since January 2009 As Trade Deficit With China Hits Record. (graph)

• Goldman Q4 GDP Forecast At 1.0% Following Trade Data.

• Berlusconi to Run Against Merkel. An outline of his strategy can be gleaned from the latest FT/Harris Poll: 83% of Italians (surveyed) think that Germany has too much influence in the EU, up from 53% a year ago. Nearly three-quarters of Italians do not think Germany is doing enough (55% of Germans think they are doing too much). Three-quarters also do not have confidence that their government can handle the debt crisis. Two-thirds of Italians think there has been too much austerity. 

• Is The EUR Too Expensive?

Business Insider:

• Heavily Shorted Stocks Are Booming In Today's Market. 

• Investors Take To The Streets In China As 'Ponzi' Wealth Management Products Fail To Pay Out As Promised. 

• TORONTO: The Epicenter Of The Gigantic Canadian Housing Bubble [Infographic].

• The Socialist Heart Of France Spit Out Its First Victim.  

• One Chinese Ghost Town Has Turned Into A Skateboarder's Paradise.

FINalternatives:

• Citadel, SAC Lead Hedge Funds' November Winners.

Reuters:

• METALS-Copper dips from two-month high; China, dollar support. 

• Egypt army seeks national unity as crisis mounts. Egypt's army chief called for talks on national unity to end the country's mounting political crisis after a vital loan from the IMF was delayed and thousands of pro- and anti-government demonstrators took to the streets. The meeting scheduled for Wednesday afternoon was called in response to an increasingly destabilising series of protests that has unfolded since President Mohamed Mursi awarded himself sweeping powers on Nov. 22 to push through a new constitution shaped by his Islamist allies in a referendum on Saturday.

• Italy's Monti warns against populism as Berlusconi attacks. Italian Prime Minister Mario Monti warned against a slide into populism on Tuesday as Silvio Berlusconi attacked his technocrat government, accusing it of failed "Germano-centric" policies that had dragged Italy into recession.

Telegraph: 

• Uncertainty in Greece as buyback programme misses target. Eurozone finance ministers held a conference call on Tuesday evening to discuss the next steps for Greece after its bond buyback programme failed to achieve the debt reduction target set by the IMF, according to reports. 

• The Current State of World Debt. (slideshow)

La Stampa:

• Political elections in February don't change much, European Union President Herman Van Rompuy said in an interview. Hopes future govt will continue on Monti's path; there's no alternative to having "solid public finances and a competitive economy. They are the only remedy to beat the recession and create jobs," Van Rompuy said.

Bear Radar

Style Underperformer:

• Mid-Cap Value +.51%

Sector Underperformers:

• 1) Oil Tankers -.40% 2) Road & Rail -.32% 3) Retail -.03%
  

Stocks Falling on Unusual Volume:

• TNAV, NGD, S, GOL, DEO, FMX, IBN, YNDX, SPW, MAIN, SXC, UNXL, KMP, DG, INFI, MGLN, HCA, FDO, PDCE, DLTR, HWAY, OPTR, CTRX, TEVA, WDC, JWN, RGR, GEF, ACE, ACTG and PANW

Stocks With Unusual Put Option Activity:

• 1) GNW 2) TXN 3) SKS 4) AET 5) MMM
  

Stocks With Most Negative News Mentions:

• 1) CBL 2) FDO 3) WFC 4) F 5) GS
  

Charts:

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