Today's Headlines

Bloomberg:

• Ukraine Rebel Meets Russia Senate as EU Warns on Conflict. A Ukrainian separatist leader met with senators in Moscow after holding elections condemned by the U.S. and the European Union, which warned it could increase sanctions on Russia if the conflict intensifies. Andrei Purgin, deputy premier of the self-proclaimed Donetsk People’s Republic, advocated the use of rubles in some transactions in eastern Ukraine as he visited the Federation Council in Russia’s upper house of parliament today. Ukraine accused Russia of stepping up efforts to reinforce rebels with arms and supplies, while EU foreign affairs chief Federica Mogherini told German lawmakers that Russia risks new sanctions if it escalates the military conflict.

• Russia Says Sanctions Hurting as Bank Moves to Defend Ruble. Russia’s financial guardians made their broadest acknowledgment yet that sanctions are sinking the economy, as the central bank moved to protect the ruble after the currency’s worst week in more than a decade. The Bank of Russia said in Moscow today that gross domestic product will probably stagnate in 2015, highlighting the damage wrought by a slump in oil prices and international measures linked to the conflict in Ukraine. Governor Elvira Nabiullina said the ruble’s slide has gone too far and pledged to limit local-currency funding to ward off speculators. 

• Sinking Ruble Drags Down Global Companies That Lean on Russian Business. 

• European Stocks Climb Amid Earnings; Carlsberg Advances. European stocks advanced, after posting a weekly decline, as investors weighed corporate results from companies including Carlsberg (CARLB) A/S and Lonmin (LMI) Plc. Carlsberg added 3.1 percent after Russia’s biggest brewer said its markets share improved in the country as it reported better-than-expected third-quarter profit. Lonmin climbed to its highest price in seven weeks after saying it didn’t see the need to raise funds this financial year. Nutreco NV jumped 14 percent after a Dutch investment company raised its bid for the animal-feed maker by 11 percent, fending off a rival approach by Cargill Inc. The Stoxx Europe 600 Index rose 0.7 percent to 337.71 at the close, extending gains in the last 90 minutes of trading.

• Crude Retreats on Concern OPEC in No Hurry to Cut Output. West Texas Intermediate crude and Brent slipped on speculation that the Organization of Petroleum Exporting Countries is in no hurry to cut output to reverse a slide in prices. Crude has slumped into a bear market this year amid a global glut. The largest OPEC producers have responded by cutting prices, resisting calls to reduce supply as they compete with the highest U.S. production in three decades. Kuwait’s oil minister said he doesn’t expect OPEC to trim output at the group’s next meeting in Vienna on Nov. 27.

• Predictors of ’29 Crash See 65% Chance of 2015 Recession. In 1929, a businessman and economist by the name of Jerome Levy didn’t like what he saw in his analysis of corporate profits. He sold his stocks before the October crash. Almost eight decades later, the consultancy company that bears his name declared “the next recession will be caused by the deflating housing bubble.” By February 2007, it predicted problems in the subprime-mortgage market would spread “to virtually all financial markets.” In October 2007, it saw imminent recession -- the slump began two months later. The Jerome Levy Forecasting Center, based in Mount Kisco, New York, and run by Jerome’s grandson David, is again more worried than its peers. Its half-dozen analysts attach a 65 percent probability of a worldwide recession forcing a contraction in the U.S. by the end of next year. Why the gloom? Levy argues the U.S. and many advanced economies still have balance-sheet excesses exposing them to renewed financial crisis. There is limited room for policy makers to reverse any slump, and low inflation risks tipping into deflation in many parts of the world.

• Iron Ore Seen Extending Slump by ANZ as Global Glut Doubles. Iron ore will extend declines next year as a global glut more than doubles, according to Australia & New Zealand Banking Group Ltd., which reduced its price forecasts through 2017. The raw material will average $78 a metric ton in 2015, from an earlier forecast of $101, Head of Commodity Research Mark Pervan wrote in a report dated today. The 2016 forecast was cut to $85 from $95 and the 2017 outlook was reduced to $89 from $94, Pervan wrote. While prices won’t drop below $70, they are unlikely to recover to more than $100 again, he said. Iron ore plunged 44 percent this year to a five-year low as rising supplies from BHP Billiton Ltd. (BHP) and Rio Tinto Group in Australia created a glut as China’s economy slowed. The increase in low-cost global production would trigger permanent mine closures in China, creating a lower industry floor price, according to Pervan, who said he’d just returned from a tour of mills and traders in the world’s largest steelmaker. “The party’s over for iron ore,” Pervan wrote in the report, which forecast a global surplus next year of 56 million tons, up from 20 million tons this year. “Demand conditions are more challenging than we thought.”

Wall Street Journal:

• Some BOJ Board Members Question ‘Easy Money’ Stance. Skepticism Arises Over Kuroda’s Asserting That Printing Money Will Raise Inflation Expectations. The rare split vote that decided the Bank of Japan’s recent move to boost asset purchases shows that some policy board members are beginning to question Gov. Haruhiko Kuroda’s belief that printing money will raise inflation expectations.

• Estimated Enrollees for 2015 Health Care Decrease. Rates to Rise in the Health Law’s Second Year for Those Who Keep 2014 Plan.

CNBC:

• There’s a big problem with the Nasdaq: Technician. (video)

ZeroHedge:

• "If You Like Your Internet"... Obama Calls For Regulation To Keep "Internet Open".

• Saxobank CIO Warns We're About To See A Full-Scale Currency War.

• Alibaba(BABA) Closing In On 6th Largest Company In The US.

• Natives Getting Restless: Protesters Set Fire To Door Of Mexican President's Ceremonial Palace. (video)

• Despite "Great" Jobs Data, Fed's Labor Market Conditions Index Unchanged In October. (graph)

• The Last Nail In The Millennials' Coffin: A Negative 2% Savings Rate. (graph)

• Where Will Risk Erupt This Time?

Business Insider:

• The US Government Is Struggling To Protect Social Security Numbers And Military Secrets.

• Even With A Ceasefire, Ukraine Is Experiencing Some Of Its Worst Shelling In Months.

• Why Europe Might Have Already Spiraled Into Deflation.

• Putin Wants Total Victory In Eastern Ukraine — Not A 'Frozen Conflict'.

Bear Radar

Style Underperformer:

• Small-Cap Value -.10%

Sector Underperformers:

• 1) Gold & Silver -4.96% 2) Coal -2.03% 3) Steel -1.61%

Stocks Falling on Unusual Volume:

• RYN, PAGP, TWC, DY, WWAV, CMCSA, HYGS, QTWO, CHTR, GOGO, VSAT, MTZ, ERJ, LBTYK, TX, SNI, COMM, UVV, TLLP, CR, KITE, SAGE, EV, MRO, CLMT, NSM, ADTN, RYAM and RYN

Stocks With Unusual Put Option Activity:

• 1) JWN 2) COH 3) PHM 4) DHR 5) M

Stocks With Most Negative News Mentions:

• 1) GM 2) TWTR 3) TWC 4) SFY 5) AEO
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth +.29%

Sector Outperformers:

• 1) Hospitals +2.27% 2) Homebuilders +2.07% 3) Road & Rail +1.90%
  

Stocks Rising on Unusual Volume:

• ACHN, DF, RGLS, WBAI, AOL, JD, DDD, MPAA and ICPT

Stocks With Unusual Call Option Activity:

• 1) LGF 2) BSX 3) PEIX 4) OREX 5) WAG

Stocks With Most Positive News Mentions:

• 1) AEP  2) RIG 3) LMT 4) YHOO 5) IBM
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Monday Watch

Weekend Headlines 
Bloomberg:

• Russia Expands Ukraine Military Presence as Rebels Killed. Ukraine said Russia is expanding its military presence in rebel-held areas as pro-Russian fighters attacked Ukrainian forces with artillery after as many as 200 separatists were killed. “The war is not over yet,” Igor Plotniskiy, the newly-elected head of the self-proclaimed Luhansk People’s Republic said in video statement televised and posted on the LPR website. The LPR wants “maximal integration with Russia,” he said. Ukraine said yesterday its forces killed the rebels at Donetsk Airport in the biggest separatist loss since a Sept. 5 truce. Russia sent tanks and military vehicles across the border into rebel areas, military spokesman Andriy Lysenko said yesterday. The U.S. State Department and Pentagon, while saying Russia is massing troops and armor on its side of the border, said they couldn’t confirm a Russian tank incursion. 

• Russia’s Military Encounters Risk Clash in Europe: Report. Russia is engaged in “dangerous brinkmanship” toward NATO and Nordic nations in its military moves, with almost 40 incidents of incursions and close encounters since March, according to a European security research group. The European Leadership Network said the incidents present a “highly disturbing picture” of violations of national airspace, emergency air-defense scrambles, narrowly avoided mid-air collisions, close encounters at sea and other dangerous actions on a regular basis over a wide area. 

• Catalan Turnout Reaches 2 Million as Mas Defies Rajoy. More than two million Catalans voted overwhelmingly in favor of leaving Spain yesterday in a ballot ruled illegal by the Constitutional Court, adding to pressure on Prime Minister Mariano Rajoy to open talks on a roadmap to independence. Eighty-one percent of voters, about 1.6 million people, backed independence, regional vice president Joana Ortega said early today, with 88 percent of polling stations counted. The regional government projected overall turnout would be about 2.3 million out of a total electorate of 5.5 million.

• Reported Islamist Plot Against Queen Underscores Security Threat. A report Queen Elizabeth II was targeted by radical Muslims underscored today the threat facing Britain, the U.S. and their allies as they seek to blunt Islamic State’s advance in the Middle East. Four men arrested yesterday in Britain planned a knife attack on the U.K. monarch, The Sun said today without attribution.

• China Regions Show Economies Differ as Slowdown Deepens. Of China’s 31 provinces and municipalities, 19 recorded a slowdown, three posted the same pace and nine saw a pickup in the January-September growth rate from the first half, according to Bloomberg calculations of data released by the governments or state media. All are missing their own expansion targets.

• China Factory-Gate Prices Decline for Record 32nd Month: Economy. China’s factory-gate prices fell for a record 32nd month in October and consumer prices remained subdued, raising pressure on policymakers to bolster the world’s second-largest economy as disinflation spreads. The producer-price index dropped 2.2 percent from a year earlier, the National Bureau of Statistics said in Beijing today, compared with the median projection of a 2 percent decline in a survey of analysts by Bloomberg News. Consumer prices (CNCPIYOY) rose 1.6 percent and the rate was unchanged from the prior month and matched economists’ estimates.

• Mexico Finds Evidence 43 Students Murdered by Drug Gangs. Forty-three college students kidnapped by police under orders of a mayor in southern Mexico were probably killed by a drug gang that tried to destroy all evidence of the crime, according to investigators. Criminal suspects rounded up in the probe said police in Iguala, Guerrero, handed them more than 40 people they had taken into custody, Mexican Attorney General Jesus Murillosaid in a news conference in the capital yesterday. The mayor and his wife are accused of asking drug gangs to help police prevent students from disrupting a public event held by the wife, Murillo said.

• Central Banks Warn of Possible Bumpy Ride for Markets. Global central bankers said financial markets could suffer a bout of turbulence -- again -- when they begin to withdraw monetary stimulus. Janet Yellen and William C. Dudley of the Federal Reserve, Mexico’s Agustin Carstens and Bank of England Governor Mark Carney were among those to use a Paris conference of policy makers yesterday to talk about potential fallout from the eventual shift from record-low interest rates used to revive growth since the global financial crisis in 2008. 

• Corn to Soybean Price Forecasts Cut by Morgan Stanley on Supply. Morgan Stanley reduced its price forecasts for corn, soybeans and wheat because global surpluses are larger than expected and said rates will probably fall to a level that may curb supplies in high-cost producers like Brazil. The bank cut its estimate for corn to $3.90 a bushel in 2014-2015 from $4.35 in October and for soybeans to $9 a bushel from $10.10, according to analysts Bennett Meier and Lee Jackson. Wheat was lowered to $5.40 a bushel from $5.75. The latest forecasts were issued in a report dated yesterday.

• Coldest November Since 2000 Turning Gas Traders Bullish. Hedge funds almost tripled bullish bets on natural gas as forecasts for frigid weather east of the Rocky Mountains signaled a surge in demand for the heating fuel. Speculator net-long position across four benchmark contracts rebounded from the lowest level since March 2012, U.S. Commodity Futures Trading Commission data show. Short positions, or bets on falling prices, fell by the most in more than nine months in the report covering the week ended Nov. 4. 

• Macro Funds That Lamented Boring Market Lose in October. Hedge-fund managers Paul Tudor Jones and Michael Novogratz said in May that calm markets made it hard to make money. In October, investors that bet on macro-economic themes got their desired volatility. By the end of the month, some of the biggest managers, including Ray Dalio’s Bridgewater Associates LP, Fortress Investment Group LLC (FIG) and Jones’ Tudor Investment Corp., posted losses. The strategy had its worst performance in more than a year and two smaller firms said they were shutting.

• Paulson Event-Driven Fund Said to Plunge 14% in October. Billionaire John Paulson posted a 14 percent loss in his firm’s event-driven hedge fund during October, adding to declines this year, two people with knowledge of the matter said. The monthly drop left the Paulson Advantage fund down about 25 percent in 2014, said the people, who asked not to be identified because the information is private. Paulson Credit Opportunities lost 6.8 percent in October, leaving it down 3.4 percent in 2014.

• Kaiser Nurses in California Plan to Strike Over Ebola. Some 18,000 nurses in Northern California are planning a two-day strike starting Nov. 11, partly over equipment and training standards for the Ebola virus.

Wall Street Journal:

• Wal-Mart(WMT) Feels Pinch From China Austerity Campaign. Executive Cites Drop in Sales of Gift Cards and Goods Tied to Culture of Gift Giving. China’s austerity campaign has taken a toll on sales of high-end handbags and expensive jewelry.

• Revenue Softness Worries Stock Investors. Third-Quarter Earnings Reports Show Solid Profits but Also Possible Warning Signs. While profit gains have generally been solid, many blue-chip companies are posting weak sales growth or outright year-over-year revenue declines, causing worries about their long-term growth prospects. Others are reporting earnings increases driven by factors that don’t reflect sustainable improvements in their business, such as share buybacks and cost-cutting efforts.

Zero Hedge:

• Russia Nears Completion Of Second "Holy Grail" Gas Deal With China.

• Death Of The Working Class In 12 Charts.

• Best Day For Gold Since September 2013. (graph)

• 5 Things To Ponder: GOP Takes Control.

• Are The Russians Coming?

• The Great Volatility Crush. (graph)

• Speculators Have Never Been More Long The Dollar. (graph)

• Chaos In The Middle East, Paralysis In The West.

• US Economy Shudders: East Coast Set To Freeze As Polar Vortex 2 Arrives.

• The Reality Of US Earnings In 3 Simple Charts.

• The Broken Model Of The Eurozone.

• Government Has "Trampled On Us Too Much"; Over 2 Million Catalans Vote In Symbolic Referendum For Independence.

• Republicans "Extremely Concerned" At Mel Watt's Taxpayer-Backed Risky-Home-Loan Reforms.

• "Brutally Callous" Emails Show GM(GM) Ordered New Ignition Switches Months Before Alerting Regulators.

• What Stocks Say About The State Of The Global Economy, In Two Charts. (graph)

• And The Biggest "Source Of Equity Demand In Recent Years", According To Goldman Sachs, Is... (graph)

• Catalanstrophe - 81% Of 2.25 Million Voters Choose Independence; Government Responds: "Useless Sham".

Business Insider:

• End of the road for Chinese growth. The world's biggest car market, and the major driver of global growth in recent years, is showing signs of slowdown. 

• We're Not Ready To Handle 4 Upcoming Economic Changes That Could Tank The Economy.

• Scores Of American Troops Were Exposed To Chemical Weapons During The Iraq War.

• Putin Is Reverting To The Cold War Era, And It's Incredibly Troubling.

• GORBACHEV: 'The World Is On The Brink Of A New Cold War'.

• Jim Yong Kim's Efforts To Reform The World Bank Are In Trouble.

• This Divergence Historically Leads To A Major Stock Market Sell-Off.

• Unfortunate CNN Headline Confuses 'Osama' And 'Obama'.

• Heavy Shelling In East Ukraine Threatens The Country's Fragile Ceasefire.

• Iranian Supreme Leader: There's No Cure For Barbaric Israel But Annihilation.

Reuters:

• China Oct trade data shows signs of manipulation, hot money inflows - state newspaper. China's exports and large trade surplus in October pointed to signs of manipulation and inflows of speculative hot money, the official Shanghai Securities News said on Monday, suggesting that firms continue to over-invoice trade deals to avoid capital controls.
  "There are signs that faked trade deals have raised their head of late," the newspaper said in a report, quoting economists.

Financial Times:

• US turns up heat with criminal investigation into Petrobras(PBR). US authorities are investigating whether Petrobras or its employees were paid bribes, adding to the mounting domestic corruption probes facing the Brazilian state-controlled oil company, people familiar with the matter say.

• European banks’ riskier debt deals nearly double. European financial institutions have nearly doubled volumes of riskier debt deals as yield-starved investors are prepared to snap up racier assets in their struggle to generate a return. Issuance of subordinated debt – which would suffer losses during a default before senior debt in a bank’s capital hierarchy – have risen by 80 per cent year on year to $122.4bn so far in 2014 according to Dealogic, the data provider.

Telegraph:

• US oil production surge to break Saudi Arabia's grip on world energy. Citibank report claims that rising US production over the next decade will erode the role of Saudi Arabia and Opec in supplying the world's largest energy consumer.

Welt:

• German Economist Warns Against More European Integration. Economist Michael Huether of the Cologne Institute for Business Research says Europe doesn't automatically need to become a federal state, citing interview. Such a move would impose excessive demands on the continent. Unrealistic to think that Europe can continually change, he said. Proposals to create a European finance minister or follow the Swiss model have no practical relevance since no one in Europe and no national parliament will accept a financial policy decided on in Brussels. Says terms and conditions of European club agreed on in 1957 aren't immutable.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 108.0 +1.0 basis point.

• Asia Pacific Sovereign CDS Index 64.5 +1.0 basis point.

• FTSE-100 futures +.19%.

• S&P 500 futures +.09%.

• NASDAQ 100 futures +.18%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DF)/-.13

• (DDD)/.17

• (BID)/-.34

• (RAX)/.16

• (CZR)/-1.47

• (KWK)/-.09

Economic Releases

• None of note

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Rosengren speaking, Japan trade data, USDA's WASDE report, 3Y $26B T-Note auction, RBC Capital Tech/Internet/Media/Telecom Conference, Labor Market Conditions Index for October, Robert Baird Industrial Conference, CSFB Healthcare Conference, (LUV) investor day, (HES) investor day and the (ICPT) investor meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by real estate and technology 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 week.

Weekly Outlook

Week Ahead by Bloomberg. 
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on global growth worries, Russia/Ukraine tensions, rising European/Emerging Markets debt angst, technical selling, more shorting and profit-taking. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Market Week in Review

• S&P 500 2,031.92 +.69%*

The Weekly Wrap by Briefing.com.

*5-Day Change