Bull Radar

Style Outperformer:

• Mid-Cap Growth -.08%

Sector Outperformers:

• 1) Gold & Silver +2.64% 2) Computer Harware +1.26% 3) Internet +1.06%
  

Stocks Rising on Unusual Volume:

• BHI, JWN, SC, BITA, RCAP, CST, P, AMZN and MEMP

Stocks With Unusual Call Option Activity:

• 1) RHT 2) GERN 3) CLVS 4) SGMS 5) AVNR

Stocks With Most Positive News Mentions:

• 1) NDAQ  2) NVDA 3) YHOO 4) RGLD 5) WSM
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Friday Watch

Evening Headlines 
Bloomberg:

• NATO Jets Intercept Russia Military Plane Over Baltics. Two Dutch F-16 fighter jets on a NATO mission intercepted a Russian aircraft in the Baltics after it approached Estonian and Lithuanian airspace. The F-16s intercepted an Ilyushin transport plane that hadn’t announced a flight plan yesterday near the two countries and escorted it out of the area, the Dutch Defense Ministry said on its website. The plane flew in the direction of the Russian Baltic Sea exclave of Kaliningrad, the ministry said. Increased Russian aerial activity coincides with rising tension pitting Russia against the U.S. and the European Union over Ukraine. The North Atlantic Treaty Organization detected and tracked Russian military aircraft including fighter jets, long-range bombers and tankers over the Baltic region, the North Sea and the Atlantic Ocean for three days in late October.

• World Outlook Darkening as 89% in Poll See Europe Deflation Risk. The world economy is in its worst shape in two years, with the euro area and emerging markets deteriorating and the danger of deflation rising, according to a Bloomberg Global Poll of international investors. A plurality of 38 percent of those surveyed this week described the global economy as worsening, more than double the number who said that in the last poll in July and the most since September 2012, when Europe was mired in a recession. Much of the concern is again focused on the euro area: Almost two-thirds of those polled said its economy was weakening while 89 percent saw disinflation or deflation as a greater threat there than inflation over the next year.

• Eastern European Recovery Falters as Euro Area Woes Sap Demand. A recovery in the European Union’s eastern nations faltered in the third quarter, derailed by the euro region’s slowdown and deadly fighting in Ukraine. Poland’s $518 billion economy, the largest in the EU’s east, grew 2.7 percent from a year earlier, down from 3.3 percent in the previous three months, according to the median estimate of 29 economists in a Bloomberg survey. Hungary’s expansion slowed to 2.9 percent from 3.9 percent, a separate survey showed. The two countries, along with the Czech Republic, Slovakia, Romania and Bulgaria report growth figures today.

• Beef Bowl Costs Rise as Japan Imports Priciest Since Mad Cow. The cost of U.S. beef for Japanese meat eaters doubled in the past year to the highest in a decade, eroding earnings as the yen weakened and global prices soared. The wholesale price of frozen short-plate, the meat used for beef bowls in Japanese fast-food restaurants such as Yoshinoya Holdings Co. (9861), rose to 1,081 yen ($9.36) a kilogram last month from 555 yen a year ago, according to Tokyo-based Agriculture & Livestock Industries Corp. It’s the highest since 2004, after Japan banned American beef imports because of mad-cow disease.

• Military Chief Weighs Frontline Role for U.S. Troops in Iraq. President Barack Obama’s top military adviser said more U.S. troops may be needed in Iraq for a “long and difficult” fight against Islamic State, as military planners assess the shortcomings of Iraqi forces. Army General Martin Dempsey, chairman of the Joint Chiefs of Staff, told lawmakers today that more complex operations in Iraq, such as efforts to retake Mosul or secure the Syrian border, may require deploying a limited number of additional American military advisers in action with Iraqi soldiers.

• Most Asian Stocks Advance as Japan’s Topix Extends Six-Year High. Most Asian stocks rose for a sixth day as Japanese shares extended a six-year high in Tokyo after the Dow Jones Industrial Average climbed to a record. The MSCI Asia Pacific Index (MXAP) added less than 0.1 percent to 141.72 as of 9:12 a.m. in Tokyo, with two shares rising for each that fell.

• Copper Set for Weekly Drop on Slowing Global Demand. Copper fell for a third day and was set for the first weekly drop in almost a month after weaker-than-expected Chinese manufacturing stoked speculation that slowing global growth will temper demand. The world economy is in its worst shape in two years, with the euro area and emerging markets deteriorating and the danger of deflation rising, according to a Bloomberg Global Poll of international investors. China’s industrial output in October increased 7.7 percent from a year earlier, trailing the 8 percent median estimate in a survey, government data showed yesterday. The dollar rose for a fourth day against a basket of 10 currencies, eroding the investment appeal of commodities. 

Wall Street Journal:

• Halliburton(HAL) Enters Talks to Buy Baker Hughes(BHI). Deal Would Help Big Oil-Field Services Firms Weather Falling Prices.

• The Loneliest President Since Nixon. Facing adversity, Obama has no idea how to respond. 

• Mary Landrieu’s Keystone Lifeline. Harry Reid’s gambit to deny Republicans a 54th Senate seat.

MarketWatch.com:

• U.S. pumped most oil since the 1980s. (graph)

CNBC:

• Hedge fund Lonestar shutting down. Lonestar Capital Management, a $1 billion hedge fund based in San Francisco, is shutting down, according to The Wall Street Journal.

Zero Hedge:

• "World’s Richest Restaurateur" Sees An Imminent Crash In America's "Crazy" Real-Estate Market.

• Putin "Prepares For Economic War", Buys Whopping 55 Tonnes Of Gold In Q3.

• There Will Be Blood - How The Fed Has Flooded The Shale Patch With Junk Debt.

• ObamaCare Creator Admits If He Had Told The Truth "It Would Not Have Passed".

• The Chart That "Amazes" SocGen How The Fed Has Broken The Market. (graph)

• 3 Things Worth Thinking About. (graph)

• And This Is How Central-Planning Broke Housing.

Business Insider:

• REPORT: US Spy Program Uses Airplanes To Collect American Cell Phone Data.

• Pro-Kremlin Russian Media Says Moscow Has A 'Nuclear Surprise' For NATO.

• Syrian Rebel Commander: ISIS And Al Qaeda Made A Truce.

Reuters:

• Applied Materials(AMAT) posts higher results but outlook disappoints. Applied Materials posted higher fiscal fourth-quarter results but the top chip gear-maker's outlook for the first quarter was shy of Wall Street's expectations and its stock fell.

Evening Recommendations

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 105.50 -.5 basis point.

• Asia Pacific Sovereign CDS Index 63.75 -.75 basis point.

• FTSE-100 futures -.01%.

• S&P 500 futures +.03%.

• NASDAQ 100 futures  +.07%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note

Economic Releases
8:30 am EST

• Retail Sales Advance for October are estimated to rise +.2% versus a -.3% decline in September.

• Retail Sales Ex Autos for October are estimated to rise +.2% versus a -.2% decline in September.

• Retail Sales Ex Autos and Gas for October are estimated to rise +.4% versus a -.1% decline in September.

• The Import Price Index for October is estimated to fall -1.5% versus a -.5% decline in September.

9:55 am EST

• Preliminary Univ. of Mich. Consumer Confidence for November is estimated to rise to 87.5 versus 86.9 in October.

10:00 am EST

• Business Inventories for September are estimated to rise +.2% versus a +.2% gain in August.

Upcoming Splits

• (STN) 2-for-1

• (CARO) 2-for-1

Other Potential Market Movers

• The Fed's Powell speaking, Fed's Bullard speaking, 3Q US Mortgage Delinquencies/Mortgage Foreclosures reports and the German gdp report could also impact trading today.

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

Stocks Falling Slightly into Final Hour on Escalating Russia/Ukraine Tensions, Global Growth Fears, Rising European/Emerging Markets Debt Angst, Commodity/Biotech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 13.96 +7.22%

• Euro/Yen Carry Return Index 150.90 +.59%

• Emerging Markets Currency Volatility(VXY) 8.08 +.62%

• S&P 500 Implied Correlation 44.65 +6.23%

• ISE Sentiment Index 74.0 -42.64%

• Total Put/Call .94 +17.50%

• NYSE Arms 1.18 -.96% 

Credit Investor Angst:

• North American Investment Grade CDS Index 65.21 +1.27%

• European Financial Sector CDS Index 65.26 +3.58%

• Western Europe Sovereign Debt CDS Index 31.29 +1.96%
• Asia Pacific Sovereign Debt CDS Index 64.74 +.47%

• Emerging Market CDS Index 280.98 +1.08%

• China Blended Corporate Spread Index 324.52 +.99%
• 2-Year Swap Spread 22.0 +.75 basis point

• TED Spread 22.25 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -10.25 +.5 basis point

Economic Gauges:

• 3-Month T-Bill Yield .01% -1.0 basis point

• Yield Curve 183.0 +1.0 basis point

• China Import Iron Ore Spot $75.98/Metric Tonne -.29%

• Citi US Economic Surprise Index 13.30 -2.4 points
• Citi Eurozone Economic Surprise Index -29.10 +.6 point

• Citi Emerging Markets Economic Surprise Index -7.3 +.7 point

• 10-Year TIPS Spread 1.90 -2.0 basis points

Overseas Futures:

• Nikkei Futures: Indicating +68 open in Japan

• DAX Futures: Indicating -1 open in Germany

Portfolio: 

• Higher: On gains in my tech/medical sector longs and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Today's Headlines

Bloomberg:

• Ukraine Tensions Rise as U.S., EU Weigh More Sanctions. The European Union and the U.S. will weigh further sanctions against Russia’s economy and Ukrainian separatists, after the reported movement of tanks, artillery and combat troops into eastern Ukraine. Representatives of the EU’s 28 member states and the U.S. are meeting today in Brussels to discuss imposing new penalties on individuals or on the Russian economy for the country’s interference in Ukraine, according to diplomats close to the talks. While no consensus has been reached yet, officials will prepare options for an EU foreign ministers meeting in Brussels on Nov. 17, when the group could move to expand penalties, said the diplomats, who spoke on condition of anonymity because they weren’t authorized to be quoted. 
• U.S. Envoy Sees Risk of Ukraine Spinning Out of Control. The crisis in Ukraine is at risk of spinning out of control, a top U.S. diplomat said, as European leaders remained split over imposing deeper sanctions on Russia for backing a rebellion that’s killed thousands of people. Russia must stop violating a Sept. 5 cease-fire agreement signed in Minsk, Belarus, Samantha Power, U.S. Ambassador to the United Nations, told journalists today, citing a growing number of military convoys in Ukraine’s rebel-held regions and increased shelling of the Donetsk airport.
• Putin’s Looming Warships Not About ‘Shirtfronting,’ Abbott Says. A group of Russian warships approaching Australia before the start of a Group of 20 summit meeting isn’t likely a response to Prime Minister Tony Abbott’s pledge to “shirtfront” Russian President Vladimir Putin over the downing of flight MH17, Abbott said. “It takes weeks, if not months to deploy warships thousands of miles from your bases,’ Abbott said today on the sidelines of the East Asia Summit in Naypyidaw, Myanmar. ‘‘So, this Russian deployment into Pacific waters is something that has been a long, long time in preparation.’’ 
• Russia Threat Prompts Nordic Governments to Prepare for Worst. Governments in the Nordic and Baltic region are stepping up their defense preparedness in response to repeated Russian incursions into their territories. “What we are doing is what is to be expected from a military and political alliance: We are preparing ourselves for what we hope will not happen, we are preparing ourselves for the worst,” Norway’s Defense Minister Ine Eriksen Soereide said today in Oslo. “That’s our obligation, that’s an important step in preventing something from happening.”
• Ukraine Bonds Sink as Risk of War in East Stokes Default Concern. Ukrainian bonds slumped the most since March as the threat of open war in the nation’s east deepened concern the government will struggle to repay debt. The yield on Ukraine’s $2.6 billion of bonds due July 2017 soared 154 basis points to a record 17.67 percent at 7:14 p.m. in Kiev, bringing the eight-day increase to 428 basis points, or 4.28 percentage points. 
• Ruble Slides Most in Emerging Markets on Sanctions, Brent. The ruble slumped the most among emerging markets as Brent crude slid to a four-year low and the U.S. and European Union weighed new sanctions against Russia. The ruble weakened 1.4 percent to 46.5885 per dollar by 4:19 p.m. in Moscow, the biggest drop among 24 developing-nation currencies tracked by Bloomberg.
• Ruble Defense Extends Russian Reserves Slide. Russia’s international reserves extended their slide to the longest since 2008, declining by a fifth from last year’s peak as the central bank attempts to smooth the ruble’s decline. The value of the stockpile has declined for 12 consecutive weeks, losing $7.2 billion in the seven days through Nov. 7 to $421.4 billion, the central bank said today. That compares with a $10.5 billion drop the previous week.
• China Slowdown Deepens as Leaders Said to Mull Target Cut. China’s slowdown deepened in October as policy makers refrained from economy-wide stimulus, with industrial output and investment trailing estimates. Factory production rose 7.7 percent from a year earlier, the second weakest pace since 2009, a government report showed today. Investment in fixed assets such as machinery expanded the least since 2001 from January through October, and retail sales gains also missed economists’ forecasts last month.
• China’s Zhu Says Divergent Global Monetary Policies Create Risks. China is concerned about the risks from a “divergence” in monetary policies among developed economies, including the U.S, Europe and Japan, Vice Finance Minister Zhu Guangyao said. “It will create new risks and uncertainties for the global economy,” Zhu said in an interview today on board a plane headed for Brisbane, Australia, where Group of 20 leaders meet this weekend. “China is concerned about the spillover effects. We want to see a stable international monetary environment.” 
• Islamic State Mints Coins as Jihadis Develop Trappings of Power. After seizing oil refineries to fund its self-declared caliphate, Islamic State militants will mint their own money. The group plans to issue gold, silver and copper coins, according to a statement released by its Beit al Mal, or treasury, and posted on websites used by jihadist movements. The currency aims to replace the existing “tyrannic monetary system” that has contributed to poverty, it said. 
• European Stocks Rebound From Biggest Drop in Four Weeks. Ericsson AB’s cost-cutting plan and KBC Groep NV’s better-than-estimated earnings helped European stocks rebound from an intraday drop led by energy producers and utilities. The Stoxx Europe 600 Index gained 0.2 percent to 335.86 at the close of trading, after rising as much as 0.6 percent and falling as much as 0.4 percent. The gauge tumbled 1.1 percent yesterday, the biggest slide in four weeks, as banks retreated amid concern that prosecutions and penalties will widen in a probe into the rigging of exchange-rate benchmarks. 
• Brent Extends Drop to 4-Year Low as OPEC Seen Resisting. Brent for December settlement, which expires today, dropped $1.62, or 2 percent, to $78.76 a barrel at 11:26 a.m. New York time on the London-based ICE Futures Europe exchange. The more active January contract was down $1.72 at $79.40. The volume of all futures traded was about 1 percent below the 100-day average for the time of day.

Fox News:

• GOP warns of ‘explosion’ if Obama rushes immigration executive action. (video)

ZeroHedge:

• Republicans Furious After Obama Announces Will Give 5 Million Illegal Immigrants "Executive Amnesty", Work Permits.
• If WTI Drops To $60, It Will "Trigger A Broader HY Market Default Cycle", Says Deutsche.
• Venezuelan Bonds Are Collapsing, FinMin Denies Devaluation Looming. (graph)
• Initial Jobless Claims Rise 12k To 6-Week Highs But Hovers Near 40 Year Lows. (graph)

Business Insider:

• ART CASHIN: Traders Are Passing Around A Hedge Fund Manager's Warning Of 'Powerful And Dangerous' Delusions.
• One Of The Architects Of Obamacare Is Becoming A Nightmare For The White House.
• Despite Crashing Oil Prices, The Shale Party Rocks On In North Dakota.
• Wall Street Has Decided It's Time For The Fed To Raise Interest Rates.

Reuters: 

• Weak October hurts retailer Kohl's(KSS) profit, revenue. Department store operator Kohl's Corp's quarterly profit and revenue missed estimates as same-store sales dipped below the company's own estimate, in sharp contrast to Wal-Mart Stores Inc, which posted its first rise in U.S. same-store sales in seven quarters.

Bear Radar

Style Underperformer:

• Small-Cap Value -.72%

Sector Underperformers:

• 1) Oil Service -3.54% 2) Coal -2.52% 3) Energy -2.22%

Stocks Falling on Unusual Volume:

• RVNC, MRD, AME, VOYA, RXN, TCBI, JGW, SPWR, HAS, CLFD, LJPC, RESI, NTAP, BRSS, CSIQ, HP, HTHT, DQ, YY, RGLS, OPWR, NNBR, KNDI, SNY, SJM, FSLR, WWE, ADT, WNR, ACHN, RGLS and CSH

Stocks With Unusual Put Option Activity:

• 1) DDS 2) OIH 3) AMAT 4) XLY 5) BHI

Stocks With Most Negative News Mentions:

• 1) JCP 2) HP 3) AMWD 4) KSS 5) ASPS
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth -.07%

Sector Outperformers:

• 1) Gaming +1.45% 2) Gold & Silver +.67% 3) HMOs +.54%
  

Stocks Rising on Unusual Volume:

• FUEL, DWA, CSH, CZR, KING, TSEM, SWI, DDS, TWTR, VIAB and AKRX

Stocks With Unusual Call Option Activity:

• 1) BYD 2) ESRX 3) PEP 4) BSX 5) TSN

Stocks With Most Positive News Mentions:

• 1) AEM  2) WMT 3) AAPL 4) MRK 5) DGX
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume