Bear Radar

Style Underperformer:

• Large-Cap Value +.89%

Sector Underperformers:

• 1) Homebuilders -2.43% 2) REITs -1.41% 3) Gold & Silver -1.32%

Stocks Falling on Unusual Volume:

• LEN, CST, SLCA, AREX, AVG, NSM, FF, EAC, MSCC, UNXL, TOL, HNT, MTD, MNTX, NVO, BFAM, SWY, UEIC, CUBE, ALJ, POWR, CIB, TSLA, EXR, SAH, POWR, TTS, FF, AREX, EZPW and FUEL

Stocks With Unusual Put Option Activity:

• 1) TWX 2) ITB 3) IYR 4) SHLD 5) XLU
  

Stocks With Most Negative News Mentions:

• 1) FB 2) TSLA 3) WCG 4) WMT 5) DE
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.66%

Sector Outperformers:

• 1) Biotech +2.88% 2) Banks +2.59% 3) Hospitals +2.16%
  

Stocks Rising on Unusual Volume:

• CSTM, SNTS, BCC, SLXP, ZLTQ, AIRM, OLED, RVBD, LCI, UBNT, HMSY, PCLN, NKTR, HALO, INFI, BAS, SUNE, PCYC, SGMS, GPS, GRPN, LNC, ISIS, ENDP, VCLK, UNM, MET, NVDA, PRU, CXO and SCHW

Stocks With Unusual Call Option Activity:

• 1) SNTS 2) NBL 3) FE 4) JNY 5) ARAY

Stocks With Most Positive News Mentions:

• 1) RVDB 2) GPS 3) GRPN 4) MCD 5) YHOO
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Friday Watch

Evening Headlines 
Bloomberg:

• Japanese Households Without Savings Climb to Most Since ’63. The share of Japanese households with no financial assets rose to a record as falling incomes forced people to dig into their savings, highlighting the potential for widening disparities under Abenomics. The proportion reached 31 percent, according to a Bank of Japan survey released in Tokyo yesterday, up from 26 percent a year earlier and the highest since the poll began in 1963. The BOJ surveyed 8,000 households of two or more people aged 20 years or older from June 14 though July 23. 

• China Muni-Bond Stalling Shows Debt Threat as Party Meets. Two years after China started a trial municipal-bond program, plans to take it nationwide have stalled, leaving local authorities reliant on off-budget funding fueled partly by land seizures. While authorities added two provinces to the trial this year, a draft budget proposal authorizing national sales with approved quotas was dropped in June 2012 and has yet to be revived. This year’s municipal-bond issuance is equivalent to less than 1 percent of local-government borrowing as of 2010, the last official tally.

• Asia Stocks Fall on U.S. Stimulus Bets After GDP Quickens. Asian stocks fell, with the regional benchmark index heading for the longest streak of weekly losses in five months, after faster U.S. economic growth fueled concern the Federal Reserve may reduce stimulus sooner than expected. Fortescue Metals Group Ltd. (FMG) sank 4.4 percent after Teck Resources Ltd. sold a stake worth about A$500 million ($473 million) in Australia’s third-biggest iron-ore exporter. Sony Corp., a TV maker that gets 68 percent of sales outside Japan, lost 3.1 percent after the yen yesterday surged against the dollar, curbing the outlook for exporters. Samsung Electronics Co. preferred shares declined 4.8 percent in Seoul after Citigroup Inc. managed the sale of a $350 million stake in the electronics firm. The MSCI Asia Pacific Index dropped 0.5 percent to 139.62 as of 12:34 p.m. in Hong Kong, extending this week’s retreat to 1.1 percent, its third straight weekly loss.

• Indian Rupee Leads Losses in Asian Currencies on Fed Outlook. India’s rupee led losses in Asian currencies this week as overseas investors cut holdings of the region’s stocks on speculation U.S. policy makers will cut stimulus this year. The Bloomberg-JPMorgan Asia Dollar Index fell 0.1 percent in the five days, following last week’s 0.5 percent drop. Economists surveyed by Bloomberg Oct. 17-18 predicted the Fed would begin paring stimulus in March. 

• Rebar Futures in Shanghai Swing Before Communist Party Plenum. Steel reinforcement-bar futures in Shanghai swung between gains and losses before a key policy meeting in China starting tomorrow that may introduce measures to curb polluting industries. Rebar for May delivery, the most-active contract on the Shanghai Futures Exchange, rose as much as 0.2 percent and declined as much 0.4 percent before trading at 3,670 yuan ($602) per metric ton at 11:21 a.m. local time.

• Euro Bulls Crack as Odds of Return to 2013 Lows Jump: Currencies. The surprise decision by the European Central Bank to cut interest rates means there’s now about an even chance that the euro, this year’s best performing major currency, erases all of its gains in a matter of months. There is an almost 50 percent probability the euro, which has risen more than 5 percent against the greenback since reaching a 2013 low in April, will give back its increase by mid-2014, according to data compiled by Bloomberg. The odds are the highest in seven weeks and up from 37 percent prior to the ECB lowering its key rate yesterday to a record.

• JPMorgan(JPM) Banker Backed $200 Million Madoff Loan in 2008. A former JPMorgan Chase & Co. (JPM) banker who managed Bernard Madoff’s account said the con man was on track to receive a $200 million loan less than a month before his arrest if the request hadn’t been dropped.

• Fed Anxiety Rises as QE Raises Risk of Loss With Political Cost. The longer the Federal Reserve continues its bond-buying stimulus, the higher the odds it will face a year without any money to give the U.S. Treasury after taxpayers received a record $88.4 billion profit in 2012. The Fed’s financial-crisis actions -- from acquiring debt in the 2008 rescues of Bear Stearns Cos. and American International Group Inc. to three rounds of quantitative easing -- have led so far to the record payments. Now, the prospect of a stronger economy and rising interest rates means the value of the Fed’s bond holdings will fall at the same time its funding costs climb because the central bank pays interest on the excess reserves it holds for banks.

• Obama Said to Favor $10 U.S. Minimum Wage Pushed by Democrats. President Barack Obama supports an effort by congressional Democrats to raise the federal minimum wage to about $10 an hour, higher than the rate he called for earlier this year, according to a White House official.

Wall Street Journal: 

• Yellen Hearing to Stir Up Fed Issues. Senators will press Janet Yellen on a number of issues next week during a confirmation hearing on her nomination to lead the Federal Reserve, but one likely topic is a matter over which she has no control: the vacancy for a Fed vice chairman for supervision. It is up to President Barack Obama to nominate a candidate for the job, a new role within the seven-member Fed board created by the Dodd-Frank financial law more than three years ago. He has yet to do so, frustrating Republican critics and some Democratic supporters of the law.

• Shift on Defense Gives GOP Budget Leverage. As More Republican Lawmakers Back Pentagon Cuts, a Democratic Bargaining Chip Loses Value. 

• Iran Nuclear Deal Expected as Early as Friday. Agreement Will Mark the First Agreement in Decades.

• Boom Years Are Over, Says Russia's Economy Ministry. The Energy-Driven Growth Model Is Exhausted and There Is Little to Replace It.

• Fred Siegel: Fracking, Poverty and the New Liberal Gentry. The energy bonanza has bypassed New York, where socialites and celebrities have come out in force to stop it.

MarketWatch.com:

• Fed’s Dudley blasts big banks for ethical lapses. There is evidence of deep-seated cultural and ethical failures at many large U.S. banks, a top Federal Reserve official said Thursday. William Dudley, the president of the New York Federal Reserve Bank, said many large financial institutions display an “apparent lack of respect for law, regulation, and the public trust.”

• Three things that could trigger a near-term correction: B. of A. Merrill Lynch.

CNBC: 

• Get ready for the Obamacare fight in 2014. 

• Why small caps might be signaling bigger problems: Pro. Selling that started in small caps has spread to the major indexes, and now the S&P 500 and Dow are both signaling a possible broader selloff. Paul LaRosa, chief market technician at Maxim Group, points out that the Dow and the S&P 500 both had "outside days" Thursday.

Zero Hedge: 

• Obama: "I Am Sorry" Americans Will Lose Their Existing Health Plan Because Of Obamacare.

• David Stockman Blasts, Brace For "The Explosion Of The Mother Of All Bubbles".

• UBS Warns The Fed Is Trapped.

• Does The CIA Pay AT&T $10 Million A Year To "Surrender" Phone Logs?

• Which America Do You Live In? – 21 Hard To Believe Facts About 'Wealthy America' And 'Poor America'.

Business Insider:

• The World's Most Powerful Storm Slams Into The Philippines.

• John Kerry Warns Of A Third Intifada If Israel Doesn't Back Down.

The Blaze:

• Two Major Fact Checkers Are Saying President Obama Isn’t Telling You the Full Truth. As the White House flails to defend President Barack Obama’s discredited pledge about keeping your old insurance even under Obamacare, it’s not just Republicans pointing out that the administration has being less than honest when explaining what it really meant. On Thursday, The Washington Post’s Fact Checker gave Obama and White House press secretary Jay Carney three out of four “Pinocchios” for blaming the insurance companies, rather than the new health care law, for the growing number of cancellation letters. On Wednesday, the Pulitzer-winning PolitiFact website gave Obama its highest ranking for dishonesty, “Pants on Fire,” for his tortured defense earlier this week of what he really meant when promising no one would lose their current plan.

Reuters: 

• Exclusive: Snowden persuaded other NSA workers to give up passwords - sources. Former U.S. National Security Agency contractor Edward Snowden used login credentials and passwords provided unwittingly by colleagues at a spy base in Hawaii to access some of the classified material he leaked to the media, sources said. 

• Priceline.com(PCLN) posts higher profit, names new CEO. Priceline.com, the online travel agency known for its name-your-own price auction, on Thursday said quarterly profit rose and named a new president and chief executive as of next year. 

• Nvidia's(NVDA) current-quarter revenue misses Street. Nvidia Corp gave a revenue forecast for the current quarter that was shy of Wall Street's expectations as the graphics chipmaker faces tough competition in tablets and a slow personal computer market. With the personal computer industry losing steam, Nvidia has expanded its graphics chips into mobile devices, but it is meeting stiff competition from Qualcomm In c and other rivals. In the third quarter, revenue from Nvidia's Tegra mobile business fell 54 percent and revenue from its PC graphics chip business declined 2 percent.

• U.S.-based stock funds have $2 bln outflow -Lipper.

Telegraph:

• It could be time to prick the housing bubble. The Bank of England must find a way of slowing demand without bringing the economic recovery to a halt.

Economic Daily News:

• Cathay Pacific Sees Cargo Volume Slowing Next Year. Co. doesn't expect performance of its cargo unit to return to "stable growth" this and next year, citing James Woodrow, director for cargo.

Jiefang Daily:

• Shanghai Urges Strengthening of Property Curbs. Shanghai Mayor Yang Xiong aks the city to "strictly" implement property curb policies, strengthen market supervision and ensure healthy and orderly development of the city's real estate industry, citing Yang speaking at a government meeting. The city should strictly carry out differentiated credit, tax polices and restrictions on home purchases, according to the meeting.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -1.0% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 138.0 +.5 basis point.

• Asia Pacific Sovereign CDS Index 107.25 -1.0 basis point. 

• FTSE-100 futures -.47%.

• S&P 500 futures +.21%.

• NASDAQ 100 futures +.22%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CVC)/.12

• (COV)/.90

• (EBIX)/.33

• (HMSY)/.22

• (MINI)/.31

Economic Releases
8:30 am EST

• The Change in Non-farm Payrolls for October is estimated at 120K versus 148K in September.

• The Unemployment Rate for October is estimated to rise to 7.3% versus 7.2% in September.

• Average Hourly Earnings for October are estimated to rise +.2% versus a +.1% gain in September.

• Personal Income for September is estimated to rise +.3% versus a +.4% gain in August.

• Personal Spending for September is estimated to rise +.2% versus a +.3% gain in August.

• The PCE Core for September is estimated to rise +.1% versus a +.2% gain in August.

9:55 pm EST

• Preliminary Univ. of Mich. Consumer Confidence for November is estimated to rise to 74.5 versus 73.2 in October.

Upcoming Splits

• (VXX) 1-for-4

Other Potential Market Movers

• The Fed's Bernanke speaking, Fed's Williams speaking, Fed's Lockhart speaking,   China Trade Balance, USDA Crop Report, China Inflation Data and the (OC) investor day could also impact trading today.

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

Stocks Dropping into Final Hour on Rising Emerging Markets Debt Angst, Global Growth Concerns, Earnings Worries, Healthcare/Commodity Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Every Sector Declining
  

• Volume: Above Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 13.71 +8.21%

• Euro/Yen Carry Return Index 137.01 -1.51%

• Emerging Markets Currency Volatility(VXY) 9.35 +2.52%

• S&P 500 Implied Correlation 40.73 +10.49%

• ISE Sentiment Index 105.0 +38.16%

• Total Put/Call .95 +4.40%

• NYSE Arms 1.18 +55.44% 

Credit Investor Angst:

• North American Investment Grade CDS Index 73.28 +.80%

• European Financial Sector CDS Index 110.02 -4.36%

• Western Europe Sovereign Debt CDS Index 66.04 -1.43%

• Emerging Market CDS Index 287.78 +2.51%

• 2-Year Swap Spread 11.75 -.25 basis point

• TED Spread 18.25 -1 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -4.0 unch.

Economic Gauges:

• 3-Month T-Bill Yield .06% +1 basis point

• Yield Curve 232.0 -3 basis points

• China Import Iron Ore Spot $136.90/Metric Tonne -.15%

• Citi US Economic Surprise Index 13.0 +12.6 points

• Citi Emerging Markets Economic Surprise Index -12.60 -.9 point

• 10-Year TIPS Spread 2.17 -2 basis points

Overseas Futures:

• Nikkei Futures: Indicating -230 open in Japan

• DAX Futures: Indicating -75 open in Germany

Portfolio: 

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 25% Net Long

Today's Headlines

Bloomberg: 

• Draghi Cuts ECB Rates to Combat ‘Prolonged’ Inflation Weakness. The European Central Bank unexpectedly cut its benchmark interest rate to a record low in a bid to prevent slowing inflation from taking hold in a still-fragile euro-area economy. With inflation at the weakest level in four years and less than half the ECB’s target, the Frankfurt-based bank halved its key refinancing rate to 0.25 percent in a shift anticipated by just three of 70 economists in a Bloomberg News survey. “Our monetary-policy stance will remain accommodative for as long as necessary,” ECB President Mario Draghi told reporters in Frankfurt. “We may experience a prolonged period of low inflation.” 

• German Industrial Production Falls as Recovery Slows. German industrial production dropped in September, signaling that growth in Europe’s largest economy may have cooled in the third quarter. Output (GRIPIMOM), adjusted for seasonal swings, fell 0.9 percent from August, when it rose a revised 1.6 percent, the Economy Ministry in Berlin said today. Economists forecast no change, according to the median of 36 estimates in a Bloomberg News survey. 

• Russia Forecasts Losing Ground in Global Economy by 2030. Russia’s share of the world economy will probably shrink during the next 20 years as growth trails the global average, Economy Minister Alexei Ulyukayev said. Gross domestic product will rise at an average pace of 2.5 percent through 2030, less than the 3.4 percent to 3.5 percent global rate, according to the ministry’s updated forecasts. That would reduce Russia’s share of world economic output to 3.4 percent by 2030 from 4 percent last year, the ministry said. 

• Most European Stocks Fall as ECB Lowers Benchmark Rate. Most stocks in Europe fell as an unexpected European Central Bank interest rate cut pointed to prolonged weak growth in the region and stronger U.S. economic data fueled speculation the Federal Reserve may reduce the pace of its bond buying in the coming meetings. HeidelbergCement AG dropped 3.8 percent after saying third-quarter profit fell 7 percent. Bureau Veritas SA lost 3.6 percent as quarterly sales missed analysts’ estimates. Siemens AG rose 3.4 percent after reporting better-than-forecast profit and saying it plans to buy back shares. Swiss Re Ltd. climbed 1.9 percent after third-quarter net income exceeded predictions. The Stoxx Europe 600 Index lost less than 0.1 percent to 323.23 at the close of trading, paring earlier gains of as much as 1.5 percent.

• Euro Falls on Unexpected Interest-Rate Cut; Czech Koruna Tumbles. The euro fell the most in two years versus the dollar after the European Central Bank unexpectedly cut its main refinancing rate to a record-low 0.25 percent to boost growth in the 17-member currency region. The euro fell 0.6 percent to $1.3431 at 2:26 p.m. New York time after slipping as much as 1.6 percent, the biggest drop since December 2011. It touched $1.3296, the weakest level since Sept. 16. The 17-nation shared currency slid 1.5 percent to 131.32 yen. Japan’s currency added 0.9 percent to 97.75 per dollar. The Bloomberg U.S. Dollar Index climbed 0.3 percent to 1,016.04 after touching 1,022.30, highest since Sept. 13. It gained as much as 0.9 percent, the most since Aug. 1. 

• Brent Falls to Four-Month Low as Euro Falls on ECB Cut. Brent crude for December settlement fell $1.54, or 1.5 percent, to $103.70 a barrel on the London-based ICE Futures Europe exchange at 1:23 p.m. in New York. The contract touched $103.52, the lowest intraday price since July 2. The volume of all futures traded was 47 percent above the 100-day average.

• Lew Said to Warn Banks of Tough Volcker Rule in Meetings. Treasury Secretary Jacob J. Lew warned chief executive officers of top U.S. banks in a private meeting last month that the final Volcker rule ban on proprietary trading would be tougher than Wall Street expects.

Wall Street Journal:

• FDA Says Trans Fats Aren't Safe in Food. Determination Could Lead to Ban in Baked Goods, Other Foods. The Food and Drug Administration on Thursday ruled for the first time that trans fats aren't generally considered safe in foods, a sharp shift in policy that could lead to a ban on a substance blamed for contributing to heart attacks and strokes. The move capped a growing movement against trans fats that has included bans in New York City, Seattle and elsewhere. Major food makers and restaurant chains such as McDonald's Corp. have pledged in recent years to avoid trans fats, which are found in some baked goods, refrigerated dough products, frosting and other foods.

Fox News:

• White House website at odds with latest Obama statement. Millions of health insurance plans have been cancelled after ObamaCare went into effect, and President Obama backed away Monday from his previous oft-repeated statement that “if you like your plan, you can keep your plan.”

MarketWatch:

• Italian stocks erase ECB-fueled gains. Italian stocks erased earlier gains and turned lower in afternoon action on Thursday, with banks posting some of the biggest losses. The FTSE MIB index XX:FTSEMIB -2.07% dropped 1.6% to 18,960.56, after trading as high as 19,462.80 earlier in the day. In Italy, shares of Banca Popolare di Milano Scarl IT:PMI -4.99% dropped 3.6%, Mediobanca SpA IT:MB -2.80% fell 3% and Banca Monte dei Paschi di Siena SpA IT:BMPS -3.49% dropped -2.9%.

CNBC: 

• The Twitter IPO Live. 

• ECB cuts rates to new low of 0.25%, euro sinks. (video)

• Obamacare odyssey: Month-long effort to log on to HealthCare.gov. He spent a month on an online Obamacare Odyssey. Since Oct. 2, Miami resident Nick Athanassiadis has spent several hours a day—nearly every day—on the Internet repeatedly trying to create an account on the federal Obamacare marketplace to see if insurance plans being sold there might be less expensive than his current coverage. But despite having a long background in digital and software companies, Athanassiadis was repeatedly thwarted by a head-spinning series of glitches, system outages, blank screens, error messages, broken or nonexistent Web links and other hurdles on the HealthCare.gov site that kept his goal out of reach for weeks. And even when he finally—finally—reached that goal, he didn't like what he saw. 

• Watch Art Cashin: Nobody rings a bell at the top. (video)

Zero Hedge: 

• Consumer Comfort Plunges To 13 Month Lows. (graph)

• Goldman(GS) Cuts Q4 GDP Forecast To 1.5% From 2.0% On Q3 Inventory Buildup.

• And The Latest Firm Under Investigation For Currency Manipulation Is... Goldman(GS).

• European Stocks Dump, Reverse Gains; Demand Moar From Draghi. (graph)

• Japanese Stocks Are Crashing As JPY Surges. (graph)

ValueWalk:

• Third Tesla(TSLA) Model S Catches Fire In Tennessee.

Business Insider: 

• New Video Shows Toronto Mayor Rob Ford Ranting About Wanting To Kill Someone.

DailyFX: 

• Japanese Yen at Potentially Substantial Turning Point. (graph)

The Economist:

• Sleepless nights. After a decade-long boom, emerging markets have flopped and then bounced in the past six months. The gyrations are not over yet.

Reuters: 

• U.S. budget talks hit snag, Republican senator says. The panel of U.S. lawmakers seeking to craft a bipartisan budget deal is in a deadlock early in its deliberations, according to a Senate member, reinforcing fears that a Dec. 13 deadline could produce no agreement. 

• U.S. growth picks up as restocking offsets weak spending.

Telegraph:

• Italy to join deflation club? (graph)

Bear Radar

Style Underperformer:

• Mid-Cap Growth -1.30%

Sector Underperformers:

• 1) Gaming -3.34% 2) Alt Energy -3.25% 3) Hospitals -3.0%

Stocks Falling on Unusual Volume:

• SCTY, TSLA, MEI, SNI, BDBD, ROSE, LPI, ATHN, MATX, SN, TWTC, FET, URI, RJET, NLY, WAC, YELP, ENV, QCOM, HPT, CLMT, WFM, TFM, ANSS, FXCM, ALDW, FOXF, CKEC, SBGI, KERX, POWR, JCOM, CTL, RDN, CNQR, NDLS, WPX, CDE, ALNY, FWM, TIPH, KAR, HPT, NSM, HNT, AWI, FSYS, NXTM, SVVC, CKP, WAC, FLO, FET, SOCL, EZPW, IEP, GSVC, CLMT, CRZO, PXD, KLIC, RST and PRSC

Stocks With Unusual Put Option Activity:

• 1) HMA 2) FOXA 3) IGT 4) WFM 5) EWW
  

Stocks With Most Negative News Mentions:

• 1) TSLA 2) BAC 3) Z 4) CREE 5) CMI
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume