Tuesday Watch

Evening Headlines 
Bloomberg: 

• Credit-Driven China Glut Threatens Surge Into Bank Crisis. A $6.6 trillion credit binge during the past five years, encouraged by Beijing policy makers as stimulus to combat a global economic slowdown, now threatens to stoke a debt crisis. At stake are trillions of yuan in bank loans that companies producing everything from ships to steel to solar power are struggling to repay as the world’s second-largest economy heads for the weakest annual expansion since 1999. 
• Onions Bring Tears to RBI’s Rajan as Prices Surge: India Credit. Record onion prices and the soaring cost of rice and coriander are frustrating Reserve Bank of India Governor Raghuram Rajan’s battle to curb inflation while supporting growth in Asia’s third-largest economy. The wholesale-price index for onions, a staple food for India’s 1.24 billion people, has climbed 155 percent this year, hitting an all-time high of 820.5 in September, according to the Ministry of Commerce and Industry. The index, set at 100 in 2004, has almost quadrupled in 12 months. A broader measure for food is up 19 percent in 2013, while spot prices for coriander climbed about 29 percent and basmati rice advanced 40 percent. 
• Asia Stocks Outside Japan Rise as Hong Kong Extends Rally. Asian stocks outside Japan rose, with a regional benchmark index heading for a four-day rally, as Hong Kong stocks extended yesterday’s gains amid optimism China’s economic reforms will boost growth. China Life Insurance Co., the nation’s biggest insurer, rose 5.2 percent in Hong Kong after Citigroup Inc. named the company as one of the beneficiaries of Communist Party reforms. Olympus Corp. added 3.5 percent in Tokyo on a newspaper report the company will increase endoscope production capacity by 30 percent. Commonwealth Property Office Fund jumped 4.6 percent in Sydney after the Australian property fund received a higher competing bid. Honda Motor Co., which gets 83 percent of its revenue outside of Japan, lost 1.2 percent as the yen gained. The MSCI Asia Pacific excluding Japan Index added 0.2 percent to 478.59 as of 12:31 p.m. in Hong Kong.
• Rubber Declines for Second Day as Yen’s Rebound Weakens Appeal. Rubber declined for a second day as Japan’s currency rebounded from a two-month low against the dollar, reducing the appeal of yen-denominated futures. The contract for delivery in April on the Tokyo Commodity Exchange lost as much as 1.4 percent to 257.5 yen a kilogram ($2,581 a metric ton) and traded at 258.4 yen at 10:17 a.m. local time. Futures have fallen 15 percent this year. 
• Rebar Futures Swing as Investors Weigh Stockpiles, Steel Output. Steel reinforcement-bar futures in Shanghai swung between gains and losses as investors weighed falling stockpiles in China against higher steel production. Rebar for May delivery, the most-active contract by volume on the Shanghai Futures Exchange, earlier rose as much as 0.5 percent and fell as much as 0.2 percent before trading at 3,599 yuan ($591) a metric ton by 11:14 a.m. local time. The contract fell 1.9 percent last week. 
• Treasury Volatility Approaches Record Low Before Bernanke Speech. Treasury market volatility fell to near a record low on speculation Federal Reserve Chairman Ben S. Bernanke will support the case for maintaining bond purchases in a speech today. The Merrill Lynch MOVE Index slid to a six-month low of 58.31 yesterday, approaching the record of 48.87 set May 9. Bernanke is scheduled to speak at 7 p.m. in Washington. Vice Chairman Janet Yellen, in her confirmation hearing last week to be the next central bank chairman, said she’s committed to promoting an economic recovery and will ensure stimulus isn’t removed too soon.

Wall Street Journal:

• Gen. Dempsey Warns Syria Options Growing More Complex. The nation’s top military general warned Monday that America’s options for resolving the conflict in Syria are becoming more complex, narrowing the country’s ability to influence the outcome in the Middle East. Speaking at The Wall Street Journal CEO Council annual meeting, Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, said that the U.S. has few good options for dealing with a conflict that has claimed more than 100,000 lives.
• J.P. Morgan, U.S. Reach Historic Settlement. Some $4 Billion in Aid to Homeowners Was Final Hurdle in $13 Billion Accord.
• Marco Rubio: No Bailouts for ObamaCare. The health-care law's 'risk corridors' could result in a huge taxpayer burden. With every passing day, ObamaCare's flaws are being exposed in painful ways for the American people. What started as a broken website—and nonexistent Spanish one—is now snowballing into a full-scale disaster that makes it increasingly clear this law can't be fixed. Under ObamaCare, people are being recklessly exposed to identity theft and fraud through the dysfunctional website and navigator network.

Fox News: 

• Students suffer ObamaCare sticker shock as premiums soar, plans get cut. While millions of Americans are watching their individual polices get canceled due to ObamaCare regulations, the new health care rules are also having a major impact on college campuses.

CNBC:

• Market milestones feed fear of bubbles. "I think we're starting to get to the point where psychology is taking over," said Brad McMillan, chief investment officer for Commonwealth Financial. "You're seeing retail flows move back to equities. You have expectations in the institutions where the market is going to move up toward the end of the year. … Once you get disconnect from the fundamentals, you can drift as high as you want."

Zero Hedge: 

• Bitcoin Trades Over $1000 On BTC China Exchange And Crashes 30% ... Then Rebounds. (graph)
• Carl Icahn's "Personal Views" About The Market.
• Is Obamacare The Final Nail In The Coffin Of The Middle Class?
• "Bubble" In Riskiest Credit Exceeds 2008 Peak.
• How Wall Street Manipulates Everything: The Infographics.
• A Peek Beneath Tesla's(TSLA) Non-GAAP Hood Reveals Nothing But Cockroaches.
• Jeremy Grantham's GMO: "The S&P Is Approximately 75% Overvalued; Its Fair Value Is 1100".

Business Insider: 

• Panera Bread(PNRA) Is Making Four Changes To Win Customers Back. 
• Maria Bartiromo Is Leaving CNBC.

NY Post:

• Census 'Faked' 2012 Election Jobs Report. In the home stretch of the 2012 presidential campaign, from August to September, the unemployment rate fell sharply — raising eyebrows from Wall Street to Washington. The decline — from 8.1 percent in August to 7.8 percent in September — might not have been all it seemed. The numbers, according to a reliable source, were manipulated. And the Census Bureau, which does the unemployment survey, knew it.

National Journal: 

• President Obama and His Gang That (Still) Isn't Shooting Straight. Incompetence, deception, and lack of accountability still hound White House and health reform.

Reuters:

• Salesforce.com(CRM) Q4 sales forecast bolstered by ExactTarget. Salesforce.com Inc forecast fourth-quarter revenue to come in slightly better than analysts' projections, helped by a strong performance by newly acquired email marketing firm ExactTarget.

Telegraph: 

• Bundesbank says Italian and Spanish banks still hooked on home state debt. The Bundesbank always like to spoil the party. Tucked away on page 33 if its November monthly report is a reminder that the banking systems and sovereign states of southern Europe remain stuck in a vicious circle:

China Securities Journal: 

• Guangzhou Raises Down Payment for 2nd-Home to 70%. The southern Chinese city of Guangzhou will raise the minimum down payment for 2nd-home purchasers to 70% starting Nov. 25, citing a statement from PBOC's Guangzhou branch.

Evening Recommendations

• None of note
  

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 130.0 -2.0 basis points.

• Asia Pacific Sovereign CDS Index 101.75 -2.25 basis points. 

• FTSE-100 futures -.39%.

• S&P 500 futures +.06%.

• NASDAQ 100 futures +.09%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SPLS)/.42
• (DE)/1.90
• (ADT)/.46
• (LOW)/.47
• (JCP)/-1.74
• (JACK)/.39
• (GMCR)/.75
• (POST)/.21
• (LTD)/.28
• (WSM)/.54

Economic Releases
8:30 am EST

• The 3Q Employment Cost Index is estimated to rise +.5% versus a +.5% gain in 2Q.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed Bernanke speaking, Fed's Evans speaking, Germany ZEW Index, weekly retail sales reports, Deutsche Bank SMID-Cap Conference, Morgan Stanley Consumer/Retail Conference, UBS Tech Conference and the (CHRW) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and commodity 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 Slightly Higher into Afternoon on Central Bank Hopes, Less Emerging Markets Debt Angst, Investor Performance Angst, Homebuilding/Defense Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 12.69 +4.10%

• Euro/Yen Carry Return Index 141.07 +.04%

• Emerging Markets Currency Volatility(VXY) 8.39 -2.10%

• S&P 500 Implied Correlation 33.41 unch.

• ISE Sentiment Index 99.0 -35.29%

• Total Put/Call .76 +1.33%

• NYSE Arms .97 +23.92% 

Credit Investor Angst:

• North American Investment Grade CDS Index 70.73 +.54%

• European Financial Sector CDS Index 105.79 -1.17%

• Western Europe Sovereign Debt CDS Index 64.0 +1.0%

• Emerging Market CDS Index 279.12 -1.91%

• 2-Year Swap Spread 10.5 +.25 basis point

• TED Spread 17.25 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -2.75 +.25 basis point

Economic Gauges:

• 3-Month T-Bill Yield .07% unch.

• Yield Curve 239.0 -2 basis points

• China Import Iron Ore Spot $137.0/Metric Tonne +.15%

• Citi US Economic Surprise Index 5.00 -1.9 points

• Citi Emerging Markets Economic Surprise Index -12.10 +.5 point

• 10-Year TIPS Spread 2.20 +1 basis point

Overseas Futures:

• Nikkei Futures: Indicating +126 open in Japan

• DAX Futures: Indicating +6 open in Germany

Portfolio: 

• Slightly Lower: On losses in my tech/retail sector longs and emerging markets shorts 

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

• Market Exposure: Moved to 25% Net Long

Today's Headlines

Bloomberg:

• European Stocks Jump to Highest Since ’08. European shares rose to their highest level in more than five years before a publication of Federal Open Market Committee minutes later this week. Aberdeen Asset Management Plc jumped 15 percent after Lloyds Banking Group Plc (LLOY) agreed to sell its Scottish Widows Investment Partnership division to the money manager. Sonova Holding AG rose 5.4 percent as the world’s largest hearing-aid maker raised its full-year forecast and said first-half revenue beat analyst estimates. Petrofac Ltd. (PFC) plunged 17 percent. The Stoxx Europe 600 Index increased 0.5 percent to 324.70 at the close of trading in London.

• Copper Falls After Funds Turn Bearish. Speculators turned bearish on copper, with bets on price declines outnumbering wagers on gains by 8,117 contracts in futures and options in the week ended Nov. 12, U.S. Commodity Futures Trading Commission data show. That’s the first time investors turned net short since Sept. 17. “Money managers significantly cut their net long positions in copper for the third week running,” Daniel Briesemann, an analyst at Commerzbank AG, wrote in a report today. Price declines since the Nov. 12 reporting date “point to a further retreat on the part of speculative financial investors,” he wrote. The contract for delivery in three months fell 0.2 percent to $6,995 a metric ton by 11 a.m. on the London Metal Exchange.

• WTI Declines After Reversing Earlier Advance of 0.5%. West Texas Intermediate crude declined in New York, giving up an earlier gain of 0.5 percent. WTI for December delivery fell 65 cents, or 0.7 percent, to $93.19 a barrel at 12:27 p.m. on the New York Mercantile Exchange. The volume of all futures traded was 32 percent below the 100-day average.

• Gold Falls First Time in Three Days. Gold futures for December delivery lost 0.6 percent to $1,279.20 an ounce at 10:54 a.m. on the Comex in New York. Prices rose 0.2 percent last week. Trading was 39 percent below average for the past 100 days for this time of day, data compiled by Bloomberg showed.

Wall Street Journal:

• Court Orders MF Global to Pay $1.2 Billion. Regulator Says Payment Is Restitution to Customers of Failed Brokerage Firm. 

• OECD Economic Growth Stalls. GDP of Organization's Members Rose 0.5% From the Second Quarter.

CNBC:

• Fed's Dudley: I'm 'getting more hopeful' on US economic recovery. William Dudley, an influential U.S. central banker who has been one of the staunchest supporters of easy-money policies, on Monday said he was "getting more hopeful" on prospects for the beleaguered U.S. economic recovery.

Zero Hedge:

• Bitcoin Soars Above $600: Rises 20% In One Day Ahead Of Senate Hearing. (graph)

• Spanish Bad Loans Re-Accelerate To New Record High. (graph)

• Homebuilder Confidence Drops To 5 Month Low. (graph)

• Foreign Purchases Of US Securities Drop To New Post-Lehman Low. (graph)

• China Adopts "New" GDP-Boosting Accounting System.

Business Insider:

• TRADER: Here Are The Two Pillars Of Facebook's Bear Case You Should Know In Your Sleep.

• Dave Eggers' Frightening Vision Of Where Social Media Could Lead Us. 

• CREDIT SUISSE: These 4 Charts Look Terrible For Future US Growth.

• 2 Bubble-Like Developments In The Markets. (graph)

Washington Examiner:

• 27 Democratic senators who promised you could keep your health coverage.

Financial Times:

• US hospitals look to provide insurance for poor patients. US hospitals look to provide insurance for poor patients. US hospitals are exploring ways to buy “Obamacare” insurance plans for their sickest and poorest patients as they strain under the weight of tens of billions of dollars in uncompensated costs from the uninsured. But the move is opposed by the Obama administration and insurers, who fear it could add to the turmoil surrounding the new healthcare marketplace.

Bear Radar

Style Underperformer:

• Large-Cap Growth -.40%

Sector Underperformers:

• 1) Coal -3.90% 2) Gold & Silver -2.03% 3) Oil Service -1.63%

Stocks Falling on Unusual Volume:

• Q, IBKR, CHKR, MELI, STML, HOS, GOGO, FI, TRN, TRS, CRM, IGT, GBX, AGIO, CPA, GTLS, ANFI, TSLA, ARII, VNDA, XOOM, AWAY, ARUN, LNG, CRZO and REGI

Stocks With Unusual Put Option Activity:

• 1) DAR 2) TWTR 3) YRCW 4) USB 5) CRM
  

Stocks With Most Negative News Mentions:

• 1) TWTR 2) WMT 3) FB 4) MELI 5) TSLA
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Value +.25%

Sector Outperformers:

• 1) Homebuilding +1.29% 2) Steel +1.23% 3) Defense +.83%
  

Stocks Rising on Unusual Volume:

• ICLD, FONR, RDWR, JKS, EDU, TTS, DBD, DDD and AHT

Stocks With Unusual Call Option Activity:

• 1) TWTR 2) S 3) TSN 4) ANF 5) CLDX

Stocks With Most Positive News Mentions:

• 1) TSN 2) BA 3) MXIM 4) GOOG 5) IBM
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Monday Watch

Weekend Headlines 
Bloomberg:

• China Reform Plan Sets Scene for Local Clampdown: Economy. China’s Communist Party signaled a bigger focus on fiscal concerns during President Xi Jinping’s tenure, setting the scene for a clampdown to control the finances of indebted regional authorities. Local governments will be able to sell bonds to fund construction and officials will be rated on measures including borrowing levels, the party said Nov. 15. An easing of the one-child policy and extra land rights for farmers also featured in the biggest package of reforms since at least the 1990s. 

• China Homes Prices Jumped in October Led by Guangzhou, Shenzhen. New home prices in China’s four major cities rose the most since January 2011, raising concerns of a bubble as homebuyers were emboldened by a lack of new nationwide property curbs. New home prices in October jumped 21 percent from a year earlier in the southern city of Guangzhou and 20 percent in nearby Shenzhen, 18 percent in Shanghai and 16 percent in Beijing, the National Bureau of Statistics said in a statement today. Prices rose in 69 of the 70 cities tracked by the government. Shenzhen and Shanghai this month raised minimum down payments for second homes to 70 percent, following a similar move by Beijing in March, as local authorities struggle to contain price gains. Housing sales jumped 33 percent in the first 10 months of this year as Premier Li Keqiang refrained from adding new nationwide restrictions that would hurt economic growth.

• Thailand Cuts Economic Growth Forecast as Exports Falter. Thailand cut its growth forecast for the year after the economy expanded less than analysts estimated last quarter and weakening exports damp the outlook for consumption and investment. Gross domestic product rose 1.3 percent in the three months through September from the previous quarter, the National Economic & Social Development Board said in Bangkok today. It revised a contraction in the second quarter to no growth from the previous three months. GDP grew 2.7 percent from a year earlier, compared to a median estimate of 2.9 percent in a Bloomberg survey of 15 analysts.

• Asian Stocks Extends Two-Week High After China Reforms. Asian stocks rose for a third day, with the benchmark index extending a two-week high, after China vowed to carry out the broadest expansion of economic freedoms since at least the 1990s. China Mengniu Dairy Co., a maker of milk products, jumped 4.8 percent after policy makers pledged to relax the nation’s one-child policy. China Galaxy Securities Co. jumped 7.2 percent in Hong Kong as prospects for financial reform boosted brokerages. Dwango Co. soared by the daily limit in Tokyo for a second day after saying Nintendo Co. bought a stake in the company that provides content through mobile phones. The MSCI Asia Pacific Index added 0.8 percent to 142.64 as of 12:33 p.m. in Tokyo after closing at the highest level since Oct. 31 last week.

• WTI Drops as Saudi Arabia’s Oil Exports Surge to Eight-Year High. WTI for December delivery slid as much as 34 cents to $93.50 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.60 at 2:34 p.m. Sydney time. The contract climbed 8 cents to $93.84 on Nov. 15. The volume of all futures traded was about 37 percent below the 100-day average. 

• Rebar Swings as Investors Weigh China Reforms, Weak Demand. Steel reinforcement-bar futures in Shanghai swung between gains and losses as investors weighed China’s reform plans against weak demand in winter. Rebar for May delivery, the most-active contract by volume on the Shanghai Futures Exchange, was little changed at 3,593 yuan ($590) a metric ton at 11:21 a.m. local time, after rising and falling as much as 0.2 percent. 

• Rubber Declines From Two-Week High as Stockpiles in China Expand. Rubber fell from a two-week high after data showed stockpiles in China swelled to a nine-year high, boosting concern that demand from the largest user is waning. The contract for delivery in April on the Tokyo Commodity Exchange lost as much as 1.1 percent to 259.3 yen a kilogram ($2,586 a metric ton) and traded at 261.5 yen at 11:05 a.m. local time.

• CME(CME) Hack Draws FBI Probe While Renewing Market Structure Anxiety. The computer intrusion at CME Group Inc. has spurred a federal investigation and renewed concerns about the trustworthiness of electronic markets. The Chicago Mercantile Exchange’s owner said yesterday that its systems were hacked in July and some customer information was compromised. CME Group said there’s no evidence that transactions on its electronic-trading system or its clearing services were affected. 

• Yahoo!(YHOO) Sued in California for Allegedly Intercepting E-Mails. Yahoo! Inc. was accused in a lawsuit of intercepting e-mails sent to users of its mail service and using personal information to profit from related advertisements.

Wall Street Journal:

• Strains With Israel Over Iran Snarl U.S. Goals in Mideast. As Netanyahu Embraces Hollande, State Department Weighs Another Kerry Visit. The Obama administration's overtures to Iran are straining the U.S. alliance with Israel in ways not seen in decades, compounding concerns about the White House's ability to manage the Middle East's proliferating security crises, said current and former American diplomats. In a sign of Israel's growing disaffection with Washington, French President François Hollande was given a hero's welcome when he arrived in Tel Aviv on Sunday for a three-day visit that would showcase Paris's hard line against Iran's nuclear program ahead of international talks in Geneva this week.

• High-Risk Patients Fuel More Health-Law Worry. High-Risk Health-Insurance Pools Gain Brief Second Life. So-called high-risk pools for people rejected by commercial health-insurance companies were supposed to be largely phased out when President Barack Obama's health law kicked in. Instead, they are gaining a brief second life in some states due to the problems with the federal health-insurance exchange created by the law. The development may represent short-term good news for the law, because it would keep some people with costly medical conditions out of the new policies, at least temporarily. But it adds to the uncertainty for insurers, analysts say, increasing concerns that could cause rates to rise for everyone next year.

• UnitedHealth(UNH) Culls Doctors From Medicare Advantage Plans. Physicians in 10 States Notified; Insurer Cites 'Funding Pressure' From Federal Government. UnitedHealth Group Inc., the nation's largest provider of privately managed Medicare Advantage plans, has dropped thousands of doctors from its networks in recent weeks—spurring protest from lawmakers and physician groups and leaving many elderly patients unsure about whether they need to switch plans to keep seeing their doctors. Doctors in at least 10 states have received termination letters, some citing "significant changes and pressures in the health-care environment." The notices also tell doctors they can appeal within 30 days. That means many physicians and patients won't know for sure who is in or out of UnitedHealth's Medicare Advantage networks before the open-enrollment period to switch Medicare plans ends on Dec. 7.

• Geithner Heads to Private Equity. Former Treasury Secretary Is Joining Warburg Pincus. Former U.S. Treasury Secretary Timothy Geithner, one of the architects of the federal government's rescue of the financial system, is joining private-equity firm Warburg Pincus LLC. Mr. Geithner, who has spent most of his career outside the private sector, said in an interview he plans to start in March at the New York-based firm, known for its role in buyouts of companies including eye-care firm Bausch & Lomb Inc., luxury retailer Neiman Marcus Group Inc. and stadium concessionaire Aramark Corp.

• Caterpillar(CAT) Plans to Close Plant in Pulaski, Va. Facility Employs About 240 and Makes Equipment Used in Underground Mining. 

• Boeing(BA), Airbus Reel In Persian Gulf Orders. Region's Airlines Seek to Establish Crucial Global Transit Point.

• Beijing Plans to Loosen Control Over IPO System. Pledge to Adopt More Western-Style, Market-Oriented Mechanism.

• On Wish List: Boost From Holiday Sales. Will American consumers give the economy a boost in coming weeks with their holiday shopping sprees—or leave it with a lump of coal? Many signs point to the coal. Morgan Stanley is predicting the weakest holiday shopping season since 2008, which was in the depth of the last recession. Consumer sentiment dropped in November to its lowest point in nearly two years, a preliminary reading of the Thomson-Reuters/University of Michigan index showed.

• ObamaCare's Union Favor. The White House may let Big Labor dodge a reinsurance tax. The Affordable Care Act's greatest hits keep coming, and one that hasn't received enough attention is a looming favor for President Obama's friends in Big Labor. Millions of Americans are losing their plans and paying more for health care, and doctors are being forced out of insurance networks, but a lucky few may soon get relief.

Marketwatch.com:

• 5 ways to know you’re in a bubble. Commentary: The irrational-exuberance indicators are there for all to see.

• Is Dr. Copper a liar? Dr. Copper looks sick — and needs a doctor — but according to the SPX, everything is wonderful. The world is blissful. Then again, which market is reflecting "the truth" about the underlying fundamentals? If it is the SPX, then we should expect a major upturn in copper demand, and in copper prices. Conversely, if copper speaks the truth — and prices continue to deteriorate, then the equity indices in general, and the SPX in particular, are in for a rude awakening and a forthcoming major downside reversal.

Fox News:

• Liz Cheney rips Obama on health care, says he 'lied'. (video) Republican Liz Cheney turned up the flames Sunday in her bid to win a Senate seat in Wyoming -- suggesting President Obama lied about his signature health care law while also taking shots at her incumbent opponent and the liberal media.

CNBC:

• Caught in unemployment's revolving door. The long-term jobless, after all, tend to be in poorer health, and to have higher rates of suicide and strained family relations. Even the children of the long-term unemployed see lower earnings down the road. The consequences are grave for the country, too: lost production, increased social spending, decreased tax revenue and slower growth. Policy makers and academics are now asking whether an improving economy might absorb those workers in time to prevent long-term economic damage.

Zero Hedge:

• The Unspoken, Festering Secret At The Heart Of Shadow Banking: "Self-Securitization" ... With Central Banks. (graph)

• No Inflation To See Here...

• 6 Things To Ponder This Weekend.

• The Internet Is Now Weaponized, And You Are The Target.

• Bad News For Keynesians: Data Shows The Austerians Are Right.

• Israel Working With Saudi Arabia On Iran "Contingency" Attack.

• The Most Puzzling (And Haunting) Statement About The Obamacare Fiasco. (video)

• Bitcoin Rises Over $500. (graph)

• The Onion Revealed As Mystery Source Of Larry Summers' And Paul Krugman's Economic Insight. (video)

• Taleb Blasts Bernanke & Greenspan, Warns "Debt Raises The Risk Of Catastrophe". (video)

• BofAML Warns "Don't Get Complacent". (graph)

• The Surprising Death Of "Surprise". (graph)

Business Insider:

• Here Are The 39 Democrats Who Defied Obama And Voted Against Obamacare Today.

• Here's Why Toronto Can't Fire 'Crack Mayor' Rob Ford.

• Snapchat's Value: 'A Form Of Delusion'.

• FBI Warns That Anonymous Hackers Have Breached US Government Computers In Multiple Agencies.

• The 12 Countries Most Vulnerable To A Financial Crisis.

• An Eccentric But Dangerous Conflict In The Sinai Peninsula Is Threatening To Engulf The Suez Canal.

• Here's Why Celebrating The Big Pop In IPO Pricing Is Idiotic.

• Economists Are Starting To Wonder Whether The US Economy Can Ever Again Grow Like It Used To.

• Watch Nancy Pelosi Struggle To Defend Obama's Promise That People Could Keep Their Health Insurance.

• China's 'Big Four' Banks Are The Losers Of Sweeping New Reforms.

• This Magazine Cover Shows Just How Pissed The Germans Are With Mario Draghi.

• Photos Show Parts Of Illinois And Indiana Completely Leveled Due To Today's Tornadoes.

Wall Street All-Stars:

• Indicator Update: Can Investors Think Beyond the Bubble Machine?

New York Times:

• Washington Insurance Official Is Ousted. The insurance commissioner for the District of Columbia was dismissed from his job just a day after he publicly questioned a decision by President Obama to reverse a provision of the Affordable Care Act, a person with knowledge of the events said on Sunday.

Washington Post:

• Capital gains: Spending on contracts and lobbying propels a wave of new wealth in D .C. So much money to be had if you know where to look. The avalanche of cash that made Washington rich in the last decade has transformed the culture of a once staid capital and created a new wave of well-heeled insiders. The winners in the new Washington are not just the former senators, party consiglieri and four-star generals who have always profited from their connections. Now they are also the former bureaucrats, accountants and staff officers for whom unimagined riches are suddenly possible.

The Economist:

• Haunted housing. Even big developers and state-owned newspapers are beginning to express fears of a property bubble. IN CHINA, property prices can keep going up forever. At least, that is what optimists seem to think.

Financial Times:

• Yellen respite for EM may prove temporary. Emerging markets suffered a bout of fevered selling in the summer, as investors absorbed the import of the US Federal Reserve’s plans to start scaling back its vast stimulus programme. Now, their malaise is starting to look more like a persistent winter flu. Each time a run of stronger US data prompts speculation that Fed “tapering” is imminent, the pressure on emerging markets ratchets up – as it has this month, sending the more fragile currencies tumbling against the dollar.

• Hedge funds get ‘too cosy’ with prime brokers. Concerns are arising over the “cosy” relationships that tie hedge funds to prime brokers, as claims surface that hedge funds inappropriately reward brokers for sending new investors their way. Tens of billions of dollars each year in indirect and direct commissions are paid by hedge funds to brokers. And analysts, some of whom declined to go on the record, warn that hedge funds are incentivised to pay fat commissions and award larger trading volumes to those that find investors for their funds.

• Federal Reserve considering a delay to Volcker rule. The Federal Reserve is considering a delay in the compliance date for the highly anticipated Volcker regulation, giving banks additional time to conform with its provisions, according to people familiar with the matter.

FAZ:

• EBA to Take Tough Stance on Europe Banks, Chief Enria Says. EBA will take a tough stance in its bank stress tests as so far as "too few banks in Europe have been unwound and disappeared from the market," Chairman Andrea Enria said. Govts "tend to keep their national banks in the market," which has slowed the reparation process. Says EBA will test banks "in much more detail" than previously. Says criteria for assessing assets such as high-yield government bonds on banks' balance sheets will be "unilateral and conservative".

The Economic Times:

• Slack Tax Revenues May Force Indian Government to Tighten Fist to Nail Fiscal Deficit Target. NEW DELHI: The finance ministry is taking the knife to spending to ensure that the fiscal deficit 'red line' is not breached, as tax revenues look to be falling short of target and other receipts risk coming in below expectation while subsidies mount.

Nikkei:

• Japan Considers Cutting Solar Incentive. Industry ministry may cut price that utilities pay for solar by 20% over two years.

Sydney Morning Herald:

• First-home crisis triggers call for action. (graph) A record plunge in first-home buyer activity has sparked calls for a national debate on housing affordability. While the housing market has reached boom levels in a low interest-rate environment, first-home buyers are being squeezed out of the property market, making up a record low 6.8 per cent of new housing loan commitments in NSW in September, a sharp fall from the peak of 34 per cent in May 2009. Across Australia, the proportion of first-home buyers taking out loans sank to 12.5 per cent for the month. Property prices in Sydney have soared by 13.2 per cent over the year, according to RP Data.

Night Trading

• Asian indices are -.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 132.0 -2.0 basis points.

• Asia Pacific Sovereign CDS Index 104.0 -3.5 basis points.

• FTSE-100 futures -.06%.

• S&P 500 futures -.08%.

• NASDAQ 100 futures -.02%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (TSN)/.70

• (URBN)/.45

• (CRM)/.09

• (JEC)/.87

• (CTB)/.53

Economic Releases
9:00 am EST

• Net Long-Term TIC Flows for September are estimated to rise to $20.0B versus -$8.9B in August.

10:00 am EST

• The NAHB Housing Market Index for November is estimated at 55 versus 55 in October.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kocherlakota speaking, Fed's Plosser speaking, Fed's Dudley speaking, Eurozone trade balance, Barclays Growth Conference, (ALTR) investor meeting, (RAI) investor day and the (RVBD) analyst meeting could also impact trading today.

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