Market Week in Review

S&P 500 1,430.15 +1.17%*




The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,430.15 +1.17%

• DJIA 13,190.84 +.42%

• NASDAQ 3,021.0 +1.67%

• Russell 2000 847.92 +2.93%

• Value Line Geometric(broad market) 367.82 +2.19%

• Russell 1000 Growth 659.79 +1.22%

• Russell 1000 Value 718.37 +1.24%

• Morgan Stanley Consumer 840.80 +.16%

• Morgan Stanley Cyclical 1,038.55 +1.84%

• Morgan Stanley Technology 689.99 +2.02%

• Transports 5,340.80 +2.97%

• Utilities 457.63 +1.45%

• Bloomberg European Bank/Financial Services 90.32 +1.43%

• MSCI Emerging Markets 43.0 -.65%

• Lyxor L/S Equity Long Bias 1,071.83 +.46%

• Lyxor L/S Equity Variable Bias 804.96 -.32%

Sentiment/Internals

• NYSE Cumulative A/D Line 162,086 +2.1%

• Bloomberg New Highs-Lows Index 312 +427

• Bloomberg Crude Oil % Bulls 35.8 +38.8%

• CFTC Oil Net Speculative Position 182,991 +9.96%

• CFTC Oil Total Open Interest 1,493,851 -3.21%

• Total Put/Call 1.04 +16.85%

• OEX Put/Call 1.07 -55.97%

• ISE Sentiment 98.0 -26.3%

• NYSE Arms 1.72 +82.98%

• Volatility(VIX) 17.84 +4.94%

• S&P 500 Implied Correlation 65.59 -.29%

• G7 Currency Volatility (VXY) 7.79 +5.84%

• Smart Money Flow Index 10,987.47 +1.15%

• Money Mkt Mutual Fund Assets $2.637 Trillion -.3%

• AAII % Bulls 46.4 +7.3%

• AAII % Bears 24.8 -17.6%

Futures Spot Prices

• CRB Index 294.13 -.26%

• Crude Oil 88.66 +2.13%

• Reformulated Gasoline 273.47 +2.73%

• Natural Gas 3.45 +4.45%

• Heating Oil 302.24 +1.28%

• Gold 1,660.10 -2.20%

• Bloomberg Base Metals Index 210.53 -3.0%

• Copper 356.70 -3.03%

• US No. 1 Heavy Melt Scrap Steel 349.67 USD/Ton unch.

• China Iron Ore Spot 135.40 USD/Ton +4.72%

• Lumber 366.60 +3.27%

• UBS-Bloomberg Agriculture 1,580.73 -1.76%

Economy

• ECRI Weekly Leading Economic Index Growth Rate 4.6% +70 basis points

• Philly Fed ADS Real-Time Business Conditions Index .3690 -8.32%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 112.19 -.03%

• Citi US Economic Surprise Index 54.80 +4.2 points

• Fed Fund Futures imply 58.0% chance of no change, 42.0% chance of 25 basis point cut on 1/30

• US Dollar Index 79.53 -.03%

• Yield Curve 149.0 +2 basis points

• 10-Year US Treasury Yield 1.76% +6 basis points

• Federal Reserve's Balance Sheet $2.902 Trillion +.11%

• U.S. Sovereign Debt Credit Default Swap 38.10 +2.25%

• Illinois Municipal Debt Credit Default Swap 180.0 +1.31%

• Western Europe Sovereign Debt Credit Default Swap Index 110.13 -.24%
  

• Emerging Markets Sovereign Debt CDS Index 161.15 -1.74%
  

• Israel Sovereign Debt Credit Default Swap 133.33 -4.31%

• Iraq Sovereign Debt Credit Default Swap 456.79 -3.84%

• China Blended Corporate Spread Index 366.0 -11 basis points

• 10-Year TIPS Spread 2.48% +2 basis points

• TED Spread 25.5 -2.75 basis points

• 2-Year Swap Spread 13.0 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -25.25 -2.75 basis points

• N. America Investment Grade Credit Default Swap Index 92.29 -3.09%
  

• European Financial Sector Credit Default Swap Index 138.83 -8.69%
  

• Emerging Markets Credit Default Swap Index 210.99 +.83%
  

• CMBS Super Senior AAA 10-Year Treasury Spread 90.0 unch.

• M1 Money Supply $2.476 Trillion +.33%

• Commercial Paper Outstanding 1,058.30 +.90%

• 4-Week Moving Average of Jobless Claims 367,800 -13,700

• Continuing Claims Unemployment Rate 2.5% unch.

• Average 30-Year Mortgage Rate 3.37% +5 basis points

• Weekly Mortgage Applications 817.0 -12.3%

• Bloomberg Consumer Comfort -31.9 +2.6 points

• Weekly Retail Sales +2.20% unch.

• Nationwide Gas $3.23/gallon -.06/gallon

• U.S. Heating Demand Next 7 Days 24.0% below normal 

• Baltic Dry Index 708 -9.69%

• China (Export) Containerized Freight Index 1,107.55 +.55%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 27.50 unch.

• Rail Freight Carloads 251,985 +4.95%

Best Performing Style

• Small-Cap Value +3.11%

Worst Performing Style

• Large-Cap Growth +1.22%

Leading Sectors

• I-Banks +5.6%

• Homebuilders +4.2%

• Banks +4.1%

• Oil Tankers +4.02%

• Networking +4.0%

Lagging Sectors

• Telecom -.39%

• Retail -.76%

• Education -2.0%

• Gold & Silver -2.70%

• Coal -3.19%

Weekly High-Volume Stock Gainers (18)

• ROMA, NYX, CBOU, ELOQ, ARB, VVUS, SGI, CPWR, HSII, EGOV, QUAD, AH, VRTU, ISIS, SCSC, LOGM, ARII and ARRS

Weekly High-Volume Stock Losers (7)

• NAV, RGR, ISRG, MKL, NUS, ARIA and AFFY

Weekly Charts
ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change

Stocks Falling into Afternoon on Rising Fiscal Cliff Fears, Global Growth Worries, Eurozone Debt Angst, Homebuilding/Tech/Commodity Sector Weakness

Today's Market Take:

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Above Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• VIX 18.45 +4.41%

• ISE Sentiment Index 95.0 -25.2%

• Total Put/Call 1.03 +19.77%

• NYSE Arms 2.91 +339.91%

Credit Investor Angst:

• North American Investment Grade CDS Index 92.92 +4.8%

• European Financial Sector CDS Index 138.83 +3.1%

• Western Europe Sovereign Debt CDS Index 110.14 +1.1%

• Emerging Market CDS Index 211.27 +1.3%

• 2-Year Swap Spread 13.25 +.5 bp

• TED Spread 26.0 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -25.5 unch.

Economic Gauges:

• 3-Month T-Bill Yield .05% unch.

• Yield Curve 148.0 -4 bps

• China Import Iron Ore Spot $135.40/Metric Tonne -.07%

• Citi US Economic Surprise Index 54.80 -1.2 points

• 10-Year TIPS Spread 2.48 -1 bp

Overseas Futures:

• Nikkei Futures: Indicating +111 open in Japan

• DAX Futures: Indicating +11 open in Germany

Portfolio:

• Slightly Higher: On gains in my index hedges and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value -1.30%

Sector Underperformers:

• 1) Homebuilders -2.70% 2) Coal -2.12% 3) Steel -2.02%
  

Stocks Falling on Unusual Volume:

• GDP, SZYM, UBS, PBR, STI, TRMK, XOM, CLUB, HLF, GBX, ICE, PFS, RIMM, NX, RECN, TISI, MSA, NUS, KBR, PAYX, GSM, ARII, YUM, THR, DAR, FFIN, MATW, ACO, AGII, SYT, SHEN, TTWO, SGI, WAC, CTAS, USNA, THR, WAG, PNRA, YUM, SHLD, KBR and GTIV

Stocks With Unusual Put Option Activity:

• 1) AET 2) USB 3) XOM 4) SPLS 5) CTSH
  

Stocks With Most Negative News Mentions:

• 1) UNP 2) ENH 3) DAR 4) XOM 5) BHI
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth -.82%

Sector Outperformers:

• 1) Gold & Silver -.03% 2) REITs -.31% 3) Drugs -.70%
  

Stocks Rising on Unusual Volume:

• MHK, NKE, ASCA, PNK, TIBX, RHT and CIG

Stocks With Unusual Call Option Activity:

• 1) KEY 2) XRX 3) NIHD 4) AEGR 5) MU
  

Stocks With Most Positive News Mentions:

• 1) TYC 2) PWR 3) LMT 4) ORCL 5) MSFT

Charts:

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

Friday Watch

Evening Headlines 
Bloomberg: 

• House Scraps Vote on Boehner’s Tax `Plan B'. (video)

• Spain 2012 Deficit Slippage Looms as Recession Deepens. Spain will struggle to meet its 2012 deficit target as a contracting economy hinders the impact of the deepest budget cuts in the nation’s democratic history, Deputy Budget Minister Marta Fernandez Curras said. “It will be difficult, but who says it’s impossible?” Curras told reporters in Madrid yesterday evening after Budget Ministry data showed the central-government’s shortfall through November was 4.37 percent of gross domestic product. Curras said the social security system, combining Spain’s tax-funded pensions and unemployment insurance, is expected to register a gap of around 1 percent of output in 2012. The central government and social security together have a full-year deficit goal of 4.5 percent.

• Monti Praised by Merkel Favored Less by Taxed Italians. European leaders have praised outgoing Italian Prime Minister Mario Monti and encouraged him to run in next year’s elections. Italians are less enthusiastic. Monti, who will resign as soon as tomorrow after 13 months in office, would win at most 20 percent of votes in elections expected on Feb. 24, said Maurizio Pessato, vice-president of polling company SWG SpA. Sixty-one percent don’t even want him to run, a Dec. 14 poll by SWG showed. “Monti has managed to get policies pushed through because he was seen as ‘super partes,’” said Pessato, using the Latin term for above the political fray. “If he chooses to run, then he has to choose his ‘partes.’” 

• U.K. Consumer Confidence Index Falls as Economic View Plunges. A sentiment index fell to minus 29 from minus 22 in November, which was the strongest reading since May 2011, the London-based research group said in an e-mailed report today. Economists had forecast a drop to minus 25, according to the median of 21 estimates in a Bloomberg News survey. A measure of Britons’ outlook for the economy over the next 12 months fell 16 points to minus 31, the lowest in six months.

• Copper Traders Turn Bearish as Hedge Funds Buy More: Commodities. Copper traders are bearish for the first time in 10 weeks after stockpiles surged, at a time when hedge funds are making their biggest bullish bet in two months because of mounting confidence economic growth will accelerate. 14 traders and analysts surveyed by Bloomberg said they expect prices to decline next week, seven were bullish and six were neutral. That's the highest proportion of bears since Oct. 12. Stockpiles monitored by the LME rose 14% in the past four days to the highest since February. Supply will exceed demand by the widest margin in a decade next year, the Intl. Copper Study Group estimates. Hedge funds turned bullish this month, after bettering on lower prices since Nov. 13. "The fact that LME stocks have surged has been unnerving a few," said Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Coperhagen, who has traded raw materials for more than a decade.

• Diggers Pile Up Unsold After Caterpillar(CAT) Adds to China Capacity. Caterpillar Inc. (CAT), Komatsu Ltd. (6301) and other construction-equipment makers have built enough capacity in China to satisfy global demand twice over while sales in the country are falling, according to a research company. Manufacturing capacity in China is almost 600,000 excavators a year while the worldwide market is about 300,000, according to London-based Off-Highway Research. Inventories of crawler excavators in China are about 100,000, almost equal to projected 2012 domestic sales, the firm’s Managing Director David C.A. Phillips said. The supply glut is a blow to Peoria, Illinois-based Caterpillar and its competitors who built factories and bought local companies to grab a share of the biggest construction equipment market. Now, with government property controls slowing construction, those companies are cutting output and trying to export unsold equipment. “It’s all very scary,” Phillips, who visited China in November, said in an Dec. 12 interview.

• Major Banks Under Renewed Cyber Attack Targeting Websites. The websites of major U.S. banks are facing a new round of cyber attacks linked to the same group responsible for similar assaults earlier this year. The latest attacks started last week and have hit Bank of America Corp. (BAC), SunTrust Banks Inc. (STI), JPMorgan Chase & Co. (JPM), U.S. Bancorp, Wells Fargo & Co. (WFC) and PNC Financial Services Group Inc. (PNC), according to two executives at companies providing security to some of the targeted banks, who asked for anonymity because they weren’t authorized to discuss clients and didn’t want their companies to become targets of computer assaults. PNC was under attack today, the executives said. 

• Peter Madoff Gets 10 Years for Aiding Brother’s Ponzi Scheme. Peter Madoff, who admitted aiding Bernard Madoff’s fraud while claiming he didn’t know his older brother was running a vast, decades-long Ponzi scheme, was sentenced to 10 years in prison. U.S. District Judge Laura Taylor Swain today sentenced Peter Madoff after considering pleas from victims of the fraud that she not show him any mercy. As part of an agreement with prosecutors, Madoff agreed not to seek less than the maximum 10- year prison term allowed by law.

Wall Street Journal: 

• Boehner's Budget 'Plan B' Collapses. House Speaker John Boehner, facing a rebellion in his party's conservative ranks, abandoned his own plan to avert tax increases for most Americans Thursday night, throwing Washington's high-stakes budget negotiations into disarray and bringing the prospect of tumbling over the fiscal cliff into sudden focus. After pulling his bill without taking a formal vote, Mr. Boehner unexpectedly disbanded the House until after Christmas, leaving behind uncertainty about whether Congress and President Barack Obama would be able to avoid $500 billion in spending cuts and tax increases that begin in January. House Republicans' refusal to go along with Mr. Boehner's tax plan represents a rebuke to the Speaker that raises questions about his ability to lead his party in further budget negotiations with Mr. Obama. 

• Teetering on the Cliff. Boehner's tax bill failure reflects Obama's failure to negotiate seriously. Republicans pulled their Plan B tax bill from the House floor late Thursday, announcing that they lacked the votes to pass it and won't return to Washington until after Christmas. The White House may chortle that the GOP is in disarray, and it is, but this failure to govern also owes much to President Obama's failure to negotiate with any degree of seriousness. If Washington now goes off the tax cliff, Mr. Obama may not enjoy the plunge as much as some of his partisans believe.

• CEOs Frustrated Over Fiscal-Cliff Talks. A long line of America's top chief executives have rotated through Washington in recent weeks, loudly urging lawmakers and the White House to reach a broad deal to fix the budget. They once sounded optimistic. Now many of them aren't talking, and if they are, they're gloomy. Mark Bertolini, chief executive of health-insurance company Aetna Inc., AET +2.15% called the state of play "pitiful and embarrassing," saying the chances are growing that a deal might not be reached by the end of the year to avert $500 billion in tax increases and spending cuts. "Set aside my interest as the CEO of a participant in the economy here—as an American, I'm embarrassed if that's where we end up," Mr. Bertolini said in an interview. "It feels like it's starting to fall apart."

• The Fiscal Cliff: Live Stream.

• S&P Cuts Cyprus Rating, Calling Default Risk 'Considerable'. Standard & Poor's Ratings Services has cut Cyprus's rating two notches into highly speculative territory, citing escalating financial pressure and uncertainty as bailout negotiations remain unresolved ahead of a presidential election. S&P now rates Cyprus's long-term sovereign credit rating at triple-C-plus, seven steps into junk territory. The outlook is negative. The firm said the risk of a sovereign default is "considerable and rising" amid continuing negotiations between Cyprus and its euro-zone partners and the International Monetary Fund on a bailout package. Cyprus applied for a bailout in June 2012, and the S&P noted intensifying pressures ahead of the presidential elections scheduled for Feb. 2013. The government's short-term financing is "increasingly vulnerable," the firm said.

• Doctors Move to Webcams.

• Regulatory 'Whale' Hunt Advances. Comptroller Is Expected to Take Formal Action Regarding J.P. Morgan's $6 Billion Trading Fiasco.

• U.S. on Track to End Year At Tepid Pace. Economy Seen as Vulnerable Into 2013.

• Eastern, Gulf Ports Brace for Strike. More than 14,500 Longshoreman From Boston to Houston Threaten to Halt Unloading Containers. 

• Strassel: Big Business Sells Out Small Business. CEOs say yes to higher individual taxes in return for Obama's promise of corporate tax reform.

Fox News:

• Nike's(NKE) 2Q Net Sinks 18%, Tops Views Despite China Trouble. Nike (NKE) disclosed an 18% slide in fiscal second-quarter profits on Thursday amid slumping sales in China, but the apparel and sneaker maker’s earnings still topped forecasts from analysts. Shares of Nike, which have been stagnant for much of this year, turned about 3% higher on the stronger-than-expected numbers. Despite a double-digit decline in Greater China, overall revenue rose 7% to $5.96 billion, nearly matching the Street’s view of $5.99 billion. Excluding the impact of currency fluctuations, revenues would have climbed 10%. However, gross margins shrank for the eighth quarter in a row, dropping to 42.5% last quarter from 42.8% the year before amid higher labor costs and unfavorable forex rates. Nike said global futures orders, a closely-watched metric, climbed 6% year-over-year last quarter to $9.3 billion. Excluding currency changes, orders would be up 7%.

Zero Hedge: 

• Futures Flash Crash As ES Plummets To Limit Down.

• On The Self-Destructiveness Of Fed Policy.

• The Complete Politicization Of The Fed.

• Is The Short Squeeze Over?

• A Fiscal Flowchart For Dummies: Here Is What Happens Next.

IBD:

• Federal Spending Up 78% After Inflation Since 1998. (graph)

Reuters: 

• Chipmaker Micron(MU) posts net loss as PC industry wavers. Micron Technology posted a quarterly net loss and lower revenue as it struggled with a slowing PC industry and macroeconomic uncertainty. Consumers' growing preference for smartphones and tablets instead of laptops has been hurting PC manufacturers, which traditionally have been major buyers of DRAM chips made by Micron and rivals like Samsung Electronics.

• Euro falls, yen rises as Boehner drops "fiscal cliff" plan.

• China probes Yum Brands'(YUM) KFC over safety of chicken products. Yum Brands Inc's fast-food chain KFC was supplied with chicken in China that contained excessive amounts of antibiotics, said food safety authorities investigating allegations of tainted KFC products. 

• Red Hat(RHT) revenue beats estimates on subscription gains. Red Hat Inc, the world's largest distributor of Linux operating software, posted third-quarter revenue above analysts' estimates on strong growth in its subscription business, sending its shares up 6 percent in after-market trading. 

• Egyptian Islamists plan big rally as referendum looms. Egyptian Islamists are planning a mass protest in Alexandria on Friday in a move likely to raise tensions on the eve of a divisive referendum that will determine the political future of the Arab world's biggest nation. The Muslim Brotherhood called for the rally after a violent confrontation between Islamists and the liberal, secular opposition in Egypt's second city last week ended with a Muslim preacher besieged inside his mosque for 14 hours. Rival factions were armed with clubs, knives and swords.

forexlive:

• Flash MNI China Business Sentiment at 52.23 (vs. Nov 53.78).

 AFP: 

• China ships in disputed waters, first since poll. Chinese state-owned ships entered the territorial waters of disputed islands on Friday, Japan's coastguard said, in the first intrusion since a new government was elected in Tokyo. The move is a setback to hopes in Japan that Beijing might use the poll as a chance for a fresh start after months of bitter wrangling and rhetoric over an issue that neither side is prepared to budge on. "Three Chinese surveillance ships entered the territorial waters near Kubajima," said a Japanese coastguard official, referring to one of the islands in the Senkaku chain, known as Diaoyu in China.

Financial Times:

• US banks face rise in bad loans cover. The US accounting standards setter has unveiled tough new rules that will increase the amount of money banks have to set aside to cover soured loans and bonds. The proposed rules from the US Financial Accounting Standards Board are likely to prove controversial among bankers, as well as FASB’s counterparts at the International Accounting Standards Board.

Telegraph: 

• Doubts remain over Spain's austerity miracle. Spain has made dramatic strides in cutting labour costs and reviving exports since the debt crisis erupted, turning the country into the new poster-child of Europe’s austerity regime.

• Brazil Central Bank cuts GDP growth forecast. Brazil's Central Bank on Thursday cut its GDP growth forecast for 2012 from 1.6 percent to one percent, confirming a marked slowdown in Latin America's biggest economy.  

Les Echos:

• Insee Says France GDP to Contract .2% in 4Q. GDP to grow .1% in 1Q, citing Insee. France won't meet target for .8% growth. France to borrow EU169b in 2013, according to Insee. Unemployment to be at 10.5% mid-2013.

China Securities Journal: 

• China May Introduce New Housing Curbs. China will likely introduce new housing curbs after the property market rebounded in Nov. and some regions saw "irrational exuberance."

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -.75% to -.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 108.0 unch.

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

• FTSE-100 futures -.35%.

• S&P 500 futures -1.55%.

• NASDAQ 100 futures -1.57%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (NX)/.21

• (WAG)/.69 

Economic Releases
 8:30 am EST

• Personal Income for November is estimated to rise +.3% versus unch. in October.

• Personal Spending for November is estimated to rise +.4% versus a -.2% decline in October.

• PCE Core for November is estimated to rise .1% versus a +.1% gain in October.

• Durable Goods Orders for November are estimated to rise +.3% versus unch. in October.

• Cap Goods Orders Non-Defense Ex Air for November are estimated unch. versus a +2.9% gain in October.   

9:55 am EST  

• Final Univ. of Mich. Consumer Confidence for December is estimated to rise to 75.0 versus a prior estimate of 74.5.

11:00 am EST

• Kansas City Fed Manufacturing Activity for December is estimated to rise to -5 versus -6 in November.

Upcoming Splits

• (NKE) 2-for-1
  

Other Potential Market Movers

• The Chicago Fed National Activity Index for Dec. and the UK/Canadian GDP reports could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by technology and financial shares in the region. I expect US stocks to open lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the day.