Bull Radar

Style Outperformer:

• Large-Cap Value -.52%

Sector Outperformers:

• 1) Retail +.64% 2) Foods +.23% 3) Biotech +.18%
  

Stocks Rising on Unusual Volume:

• OPLK, DL, DISH, AGIO, SSI, TGT, SPLS, RCPT, MAC, Z, LOW, CLDX, RUBI, TGT, LZB, NGL, IPI, TRLA and RCPT

Stocks With Unusual Call Option Activity:

• 1) DGX 2) K 3) SIRI 4) MYL 5) MDLZ
  

Stocks With Most Positive News Mentions:

• 1) PETM  2) LOW 3) DSW 4) MOS 5) TGT
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Wednesday Watch

Evening Headlines 
Bloomberg: 

• Iran Failure to Evade Sanctions Offers Russia Little Hope. Russian companies from OAO Rosneft (ROSN) to OAO Sberbank (SBER) appealing to European courts to circumvent sanctions on the country might want to take their cue from Iran’s failed efforts and save on the legal bills. That’s because a series of hollow victories by Iranian companies over sanctions for the Islamic nation’s nuclear program have mostly failed to dislodge the European Union’s economic reprisals, according to lawyers. 

• Shanghai Stock Link Flows Plunge as CLSA Sees Ghost Train. The flood of buy orders for Shanghai shares through the Hong Kong exchange link has slowed to a trickle two days after the program’s debut. Net purchases of mainland equities by global investors totaled 1.1 billion yuan ($180 million) at the midday break, down from 2.7 billion yuan at the same time yesterday and 10.6 billion yuan on Nov. 17. Hong Kong stock buying slowed 66 percent from yesterday to 117 million yuan. The Shanghai Composite Index (SHCOMP) slipped 0.2 percent and shares of Hong Kong Exchanges & Clearing Ltd. (388) headed for the biggest three-day drop since 2012.

• Europe Must Pay Heed to Japan's New Slide.

• NHTSA Calls for Nationwide Recall of Takata Air Bags. The U.S. government demanded a nationwide recall of vehicles with faulty Takata Corp. (7312) air bags after a recent incident showed the problem may not be confined to high-humidity areas.

• Dollar Rises to 7-Year High Versus Yen; Oil, Gold Retreat. The dollar climbed, reaching a seven-year high against Japan’s yen after Prime Minister Shinzo Abe called an early election and postponed a sales-tax increase. Asian equity gauges were mixed, while gold retreated and oil extended its slump. The Bloomberg Dollar Spot Index added 0.1 percent by 10:56 a.m. in Tokyo, with the greenback climbing as high as 117.22 yen. Japan’s Topix index rose 0.4 percent while Hong Kong’s Hang Seng Index was little changed after two days of losses.

• Mining’s $120 Billion Ore Bet Sours as Peak Steel Looms in China. Chinese President Xi Jinping obviously wasn’t speaking for the world’s iron-ore producers when he pronounced this month that the risks from his country’s slowing growth “aren’t that scary.” The world’s mining giants have wagered $120 billion that steel production in China won’t peak until as late as 2030. Increasingly, it looks like they got that wrong, a miscalculation that could have huge consequences for companies led by BHP Billiton Ltd. (BHP) and Rio Tinto Group. “I’ve always taken the view that the miners had the best intelligence on this as large investment decisions are based on it,” Richard Knights, a mining analyst at Liberum Capital Ltd. said by phone. “But if they get it wrong by a just a small margin, that has major implications for profitability and the share price for years to come.” 

Wall Street Journal: 

• U.S. Seeks Nationwide Recall of Takata Air Bags. Acting NHTSA Director Urges Action Over Faulty Air Bags Linked to Several Deaths.

• Future Presents: A Tech Gift Guide From the Cutting Edge. The Innovative Gadgets and Electronic Toys to Buy This Holiday Season. 

• Goldman(GS) Hits Mother Lode on Deals. Bank’s Roles on Actavis and Halliburton Takeovers Will Result in Big Chunk of the Fees.

• ECB’s Knot Sees No Reason Now to Pursue Quantitative Easing. ‘We’re Not Categorically Ruling It Out, but I’m Skeptical’.

• Congress Will Fight Obama’s Power Grab. The president’s amnesty plan for millions of unlawful immigrants clearly violates the Constitution. President Obama seems poised to announce one of the biggest executive power grabs in American history. He is expected to declare unilaterally that millions of unlawful immigrants can stay in the U.S. without facing the consequences of violating immigration laws. Congress has not agreed on how to reform the immigration system, but the president has decided to ignore the Constitution and alter the law without new statutes.

Fox News:

• Keystone pipeline bill fails in Senate. (video) A bill to approve the Keystone XL oil pipeline failed in the Senate on Tuesday by just one vote, in a setback not only for the energy project but the politically imperiled Democratic senator who pushed the legislation. The bill failed on a 59-41 vote. It needed 60 to pass. 

CNBC:

• Why is Putin buying gold? (video)

Zero Hedge:

• Why, Despite Its Failure, Abenomics Is "Still Working" For These People, In Quotes.

• Goldman(GS) FX Trader Fired For Participating In Currency-Rigging Cartel Even As Goldman Avoids Any Charges.

• 60% Of Households Get More Benefits Than They Pay In Taxes. (graph)

• Japan Is Dying And We Still Don't Get It?!

• We Go Again: Demand For Subprime Debt Is "Out Of Control".

• Despite Record Highs, These 5 'People' Are Still Flipping Out. (graph)

• One Reader's Shocked Response Upon Learning His Health Insurance Cost Just Doubled.

• Goldman's(GS) "Best Ideas" Hedge Fund Is Down 2.6% In 2014.

• China Home Price Slump Sends Iron Ore Plunging To 2009 Lows (-50% In 2014). (graph)

Business Insider:

• Powerful Photographs Show Everyday Life In Ukraine Before And During Wartime.

Liquidity crunch a catalyst for big China slowdown – analysts The mini liquidity crunch is the early warning sign of a substantial economic correction long overdue, amid rising leverage and a broken growth model, say bearish analysts.


While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3222433/Liquidity-crunch-a-catalyst-for-big-China-slowdownanalysts.html?copyrightInfo=true

Evening Recommendations

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 105.50 -1.0 basis point.

• Asia Pacific Sovereign CDS Index 63.5 -.25 basis point.

• FTSE-100 futures n/a.

• S&P 500 futures -.13%.

• NASDAQ 100 futures  -.06%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SPLS)/.36

• (SJM)/1.53

• (TGT)/.47

• (LOW)/.58

• (LB)/.40 

• (GMCR)/.77

• (CRM)/.13

• (WSM)/.63

• (SD)/.04

Economic Releases
8:30 am EST

• Housing Starts for October are estimated to rise to 1025K versus 1017K in September.

• Building Permits for October are estimated to rise to 1040K versus 1018K in September.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -872,730 barrels versus a -1,735,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +590,910 barrels versus a +1,805,000 barrel increase the prior week. Distillate inventories are estimated to fall by -1,636,630 barrels versus a -2,803,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise +.64% versus a +1.7% gain the prior week.

2:00 pm EST

• Fed Minutes from Oct. 28-29 Meeting.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The weekly MBA mortgage applications report, Jefferies Healthcare Conference, Goldman Sachs Metals/Mining/Steel Conference, (JBLU) investor day, (QCOM) analyst meeting, (ROK) investor meeting and the (BSX) investor event could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and real estate shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Higher into Final Hour on Central Bank Hopes, Buyout Speculation, Yen Weakness, Biotech/Healthcare Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 13.56 -3.07%

• Euro/Yen Carry Return Index 153.03 +.93%

• Emerging Markets Currency Volatility(VXY) 7.96 -2.21%

• S&P 500 Implied Correlation 35.62 -7.48%

• ISE Sentiment Index 94.0 -17.54%

• Total Put/Call .94 +9.30%

• NYSE Arms .74 -6.31% 

Credit Investor Angst:

• North American Investment Grade CDS Index 66.70 +.4%

• European Financial Sector CDS Index 68.06 +1.98%

• Western Europe Sovereign Debt CDS Index 30.92 -1.87%
• Asia Pacific Sovereign Debt CDS Index 63.64 -.33%

• Emerging Market CDS Index 283.88 -1.57%

• China Blended Corporate Spread Index 323.40 -.11%
• 2-Year Swap Spread 21.25 unch.

• TED Spread 21.75 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -9.25 unch.

Economic Gauges:

• 3-Month T-Bill Yield .01% unch.

• Yield Curve 182.0 -1.0 basis point

• China Import Iron Ore Spot $71.80/Metric Tonne -4.37%

• Citi US Economic Surprise Index 10.50 +2.1 points
• Citi Eurozone Economic Surprise Index -15.70 +8.3 points

• Citi Emerging Markets Economic Surprise Index -2.20 +.7 point

• 10-Year TIPS Spread 1.86 -1.0 basis point

Overseas Futures:

• Nikkei Futures: Indicating +105 open in Japan

• DAX Futures: Indicating +23 open in Germany

Portfolio: 

• Higher: On gains in my biotech/medical/tech sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg: 

• Russia, Ukraine Dispute Truce Format as NATO Sees Buildup. Ukraine and Russia clashed over how to move toward a new cease-fire agreement, after President Petro Poroshenko said his country is ready for “total war” with Vladimir Putin’s forces. As NATO Secretary General Jens Stoltenberg criticized Russia for staging a “serious military buildup” and sending troops and weapons across its western border, Ukrainian Prime Minister Arseniy Yatsenyuk advocated new “Geneva format” talks including the U.S. to de-escalate the crisis. Russia said that framework, which followed April talks in the Swiss city that excluded pro-Russian separatists, would skirt a process that led to a Sept. 5 cease-fire in Minsk, Belarus. 
• Russia Sees Recession Next Year If Oil Price Falls to $60. Russia’s economy will sink into a recession next year if the price of oil slumps to $60 a barrel and the U.S. and its allies tighten sanctions over the conflict in Ukraine, Finance Minister Anton Siluanov said. The economy of the world’s largest energy exporter won’t grow faster than 1 percent in 2015 even if oil prices hold steady and the severity of sanctions remains unchanged, Siluanov said in an interview in Singapore yesterday. The price of Brent has slumped by almost a third this year to below $80 a barrel.
• Four Killed in Palestinian Attack at Jerusalem Synagogue. Palestinians armed with butcher’s cleavers and a gun killed four worshipers at a synagogue in Jerusalem in an attack that escalated months of violence in the city. Three of the victims had dual U.S. and Israeli citizenship, and the fourth was an Israeli and British citizen. The two assailants, both from east Jerusalem, were shot and killed, and a Palestinian group claimed responsibility. Public Security Minister Yitzhak Aharonovitch urged soldiers and security guards to start carrying their weapons even when off-duty.
• ECB Plans ‘Intrusive’ Probe of Banks’ Risk-Weight Models. The European Central Bank plans to clamp down on the complex models lenders use to gauge the risk of their assets, as it works to restore trust in the euro area’s financial system. The ECB, newly installed as the euro area’s single supervisor, plans to scrutinize lenders’ models and eliminate variations across the currency bloc, top policy makers have said. The Frankfurt-based central bank didn’t look at the way banks calculate asset risk in its year-long balance-sheet probe, completed last month. 
• ECB Must Weaken Euro to Aid France and Italy, Ex-BOE’s King Says. (video) Euro-area stagnation poses the largest threat to the global economy and Mario Draghi should weaken the euro to help boost the flagging economies of France and Italy, according to former Bank of England Governor Mervyn King. “The euro area is the biggest risk because I don’t think the leaders in the euro area actually have a true vision of how to cope with the problem,” King said in an interview yesterday with Bloomberg Television’s Olivia Sterns in Naples, Florida.
• Europe Stocks Advance as German Investor Confidence Gains. European stocks rose for a second day as a report showed German investor confidence advanced for the first time this year. The Stoxx Europe 600 Index climbed 0.6 percent to 339.3 at the close of trading in London.
• Iron Ore Bear Market Deepens as China Home Prices Add to Concern. Iron ore extended a tumble to the lowest level in more than five years as declining home prices in China added to concern that an economic slowdown in the biggest buyer will deepen, exacerbating an oversupply. Ore with 62 percent content delivered to Qingdao, China, retreated 4.4 percent to $71.80 a dry ton, the lowest level since June 2009, according to data from Metal Bulletin Ltd. yesterday. It’s 47 percent lower this year, heading for the biggest annual drop in data going back to 2009.
• Oil Drops as Investors Weigh Likelihood of OPEC Cutback. WTI for December delivery fell $1.08, or 1.4 percent, to $74.56 a barrel at 12:58 p.m. on the New York Mercantile Exchange. The more-active January future slipped $1.12, or 1.5 percent, to $74.54. The volume of all contracts traded was 1.7 percent below the 100-day average for the time of day.
• Moody’s Joins Fitch Slamming Subprime Auto Bonds. The booming market for securities backed by subprime car loans is riskier than their ratings imply, say two of the biggest assessors of bond credit quality. Moody’s Investors Service (MCO) and Fitch Ratings analysts said in interviews that the grades their competitors have assigned to a crop of new issuers -- most of which are backed by private-equity firms -- are too high. The lenders lack a track record in the bond market proving their underwriting acumen and ability to handle the specialized task of collecting on soured debt during a downturn, according to the analysts.

ZeroHedge: 

• Hugh Hendry: "I Believe Central Bankers Are Terrified".
• Japan’s Last Stand - Portent Of Keynesian Collapse.
• Greek Bonds Tumble As Bailout Talks Stall On $3bn Troika 'Savings' Demands. (graph)
• The Biggest Beneficiary Of Mario Draghi's ABS-Purchasing Plan Has Been Revealed.
• Don't Show The Exuberant Homebuilders These 2 Charts. (graph)
• Wholesale Inflation Heats Up Due To Jump In Car, Food Costs, New Calculation Method. (graph)
• US Equity-Credit Divergence: A Warning. (graph)

Business Insider: 

• Brazil's Massive State-Owned Oil Company Has Become A National Nightmare. 
• Russia Is Tumbling Toward Its Economic Catastrophe Scenario.

Susan Lund:

• China credit bubble? It accounts for half of new private sector debt worldwide since 2007 - growth of $10T. (graph)

Telegraph:

• For believes in monetary voodoo, try this for a spin. too much On Thursday, British MPs are to debate money creation, including so-called "helicopter money". This is supposedly the first time parliament has debated such matters since 1844. Back then, it didn't work out so well. 
• CB entering 'very dangerous territory' warns S&P. “The risk of a triple-dip recession have increased. The ECB has one last arrow and that is quantitative easing of €1 trillion," said the credit rating agency. 

Bear Radar

Style Underperformer:

• Large-Cap Value +.47%

Sector Underperformers:

• 1) Steel -1.40% 2) Social Media -1.03% 3) Computer Services -.86%

Stocks Falling on Unusual Volume:

• PF, OME, CQP, IPAR, URBN, TJX, MC, CLDX, SC, DKS, MTLS, A, KOF, KEX, CLF, TX, HD, YOKU, CEO, AGTC, LXFT, TSN, TDW, ESNT and LOGM

Stocks With Unusual Put Option Activity:

• 1) MPC 2) SMH 3) HD 4) JNK 5) XLE

Stocks With Most Negative News Mentions:

• 1) F 2) WFC 3) URBN 4) A 5) TJX
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +.63%

Sector Outperformers:

• 1) Gold & Silver +2.29% 2) Hospitals +2.23% 3) Biotech +1.73%
  

Stocks Rising on Unusual Volume:

• ABGB, ACT, SUNE, TERP, POT, AMBA and GNRC

Stocks With Unusual Call Option Activity:

• 1) MOS 2) TJX 3) SUNE 4) AVP 5) DNKN

Stocks With Most Positive News Mentions:

• 1) REV  2) NOC 3) THOR 4) DISCA 5) MDT
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume