Stocks Slightly Higher into Final Hour on Central Bank Hopes, Oil Bounce, Short-Covering, Energy/Defense Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Slightly Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 20.84 +2.06%

• Euro/Yen Carry Return Index 152.91 -.09%

• Emerging Markets Currency Volatility(VXY) 11.41 +5.26%

• S&P 500 Implied Correlation 67.10 -1.25%

• ISE Sentiment Index 109.0 +81.67%

• Total Put/Call .95 -9.52%

• NYSE Arms .63 -53.90% 

Credit Investor Angst:

• North American Investment Grade CDS Index 75.35 +1.24% 

• America Energy Sector High-Yield CDS Index 672.0 +1.04%

• European Financial Sector CDS Index 72.37 +2.18%

• Western Europe Sovereign Debt CDS Index 33.12 +4.58%

• Asia Pacific Sovereign Debt CDS Index 77.25 +3.57%

• Emerging Market CDS Index 417.70 +.08%

• China Blended Corporate Spread Index 345.85 +.20%

• 2-Year Swap Spread 23.25 -.5 basis point

• TED Spread 22.25 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -9.25 -.25 basis point

Economic Gauges:

• 3-Month T-Bill Yield .03% +2.0 basis points

• Yield Curve 151.0 -2.0 basis points

• China Import Iron Ore Spot $68.58/Metric Tonne -.70%

• Citi US Economic Surprise Index 31.40 -3.0 points

• Citi Eurozone Economic Surprise Index -3.0 +16.6 points

• Citi Emerging Markets Economic Surprise Index -13.70 +1.5 points

• 10-Year TIPS Spread 1.64 +2.0 basis points

Overseas Futures:

• Nikkei Futures: Indicating +50 open in Japan

• DAX Futures: Indicating -75 open in Germany

Portfolio: 

• Slightly Lower: On losses in my retail/tech sector longs and index hedges

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +.27%

Sector Underperformers:

• 1) Airlines -2.51% 2) Gaming -2.42% 3) Software -.82%

Stocks Falling on Unusual Volume:

• YNDX, NAV, QIWI, EXAS, MGM, WHR, FRGI and LOGM

Stocks With Unusual Put Option Activity:

• 1) AMJ 2) S 3) VMW 4) AGNC 5) PEIX

Stocks With Most Negative News Mentions:

• 1) ADSK 2) PCLN 3) LUV 4) TSLA 5) AMBC
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value +1.26%

Sector Outperformers:

• 1) Oil Service +3.68% 2) Energy +3.24% 3) Road & Rail +1.65%
  

Stocks Rising on Unusual Volume:

• CXO, PAY, LINE, CVE, WLL, OAS, LGCY, VNR, LNCO, ATLS, ROSE, RRC, SYRG, FANG, CLR, UIS, MEMP, SLXP, CLMT, BCEI, EPD, ZEN, XEC, DOV, ISIL, EVEP, CVS, PXD, APC, BWP, UNT, GTLS and TRGP

Stocks With Unusual Call Option Activity:

• 1) RSX 2) HYG 3) CVS 4) NUE 5) APO
  

Stocks With Most Positive News Mentions:

• 1) MNST 2) CVS 3) MMM 4) HES 5) APC
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Tuesday Watch

Evening Headlines 
Bloomberg: 

• Russia Defends Ruble With Biggest Rate Rise Since 1998. Russia took its biggest step yet to shore up the ruble and defuse the currency crisis threatening its stricken economy. In a surprise announcement just before 1 a.m. in Moscow, the Russian central bank said it would raise its key interest rate to 17 percent from 10.5 percent, effective today. The move was the largest single increase since 1998, when Russian rates soared past 100 percent and the government defaulted on debt. The news prompted an immediate gain in the ruble, with one-month ruble forwards up 1.6 percent in Asian trading. Yet the announcement, as well as its timing, underscored the financial straits in which Russia now finds itself. If sustained, the new higher rates would squeeze an economy that is already being hurt by sanctions led by the U.S. and European Union, and by a collapse in oil prices. Some analysts said they doubted the economy could withstand such high rates for long. 

• Russia Takes Ukraine’s Spot in Currency Abyss: Chart of the Day.

• Russia ADRs Fall Most in Five Years on Ruble’s Plunge. Russian stocks slid the most in five years in the U.S. as concern mounted that plunging oil prices and a weakening currency will further harm an economy already forecast to fall into a recession next year. The Bloomberg Russia-US Equity Index dropped 11 percent in New York yesterday, an eighth day of declines and its longest losing streak since October 2008. Oil producer OAO Surgutneftegas (SGTPY) sank the most on the gauge, losing 22 percent. Crude fell to a five-year low as the United Arab Emirates said OPEC won’t rein in production. Russia’s central bank raised its benchmark interest rate to 17 percent from 10.5 percent after the close of stock trading as the ruble slid below 64 per dollar for the first time.

• Japanese Companies See Weaker Inflation in Kuroda Challenge. Japanese companies see a weaker inflation outlook than three months ago, challenging central bank chief Haruhiko Kuroda’s effort to stoke faster price gains in the world’s third-biggest economy. Firms forecast annual inflation of 1.4 percent in a year, slower than 1.5 percent seen three months earlier, the Bank of Japan said today. They predict annual price gains of 1.6 percent in three years and 1.7 percent in five years.

• China’s H Shares Decline After Flash Manufacturing Gauge Drops. Chinese stocks declined in Hong Kong, led by energy companies and banks, after a factory gauge fell to a seven-month low in December. PetroChina Co. dropped 2.4 percent and China Shenhua Energy Co. slid 2.2 percent after crude oil retreated to a five-year low. Bank of China Ltd. slumped 1.5 percent. The preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was at 49.5, missing the median estimate of 49.8 in a Bloomberg survey and lower than last month’s 50.0. Numbers below 50 indicate contraction. Citic Securities Co. jumped 9.9 percent to lead gains in Shanghai. Hong Kong’s Hang Seng China Enterprises Index (HSCEI) fell 1.2 percent to 11,074.74 at 10:12 a.m. local time, heading for its lowest close since Dec. 3.

• Asian Stocks Extend Drop on Oil, China While Ruble Climbs. Asian stocks fell, with the regional index at a two-month low, as oil’s slump and weaker-than-estimated Chinese manufacturing stoked concern that the global economy may falter. Russia’s ruble jumped after interest rates were raised by the most since 1998, while Indonesia’s rupiah tumbled. The MSCI Asia Pacific Index (MXAP) slipped 0.7 percent by 11:04 a.m. in Tokyo, falling for a second day. A gauge of Chinese shares in Hong Kong lost 1.1 percent. 

• China Steel Capacity Transfer Is ‘Imaginary’: Chart of the Day. China’s push to transfer excess steel capacity by building plants overseas faces skepticism from analysts because of the size of the mills being proposed.

• Oil Sands Output Rises as Canadian Crude Falls Below $40. Canadian heavy crude traded below $40 a barrel for the first time in five years just as surge of new projects are scheduled to start operation. A total of 14 new oil sands projects are scheduled to start next year with a combined capacity of 266,240 barrels a day, according to data published by Oilsands Review. That’s 36 percent more than was started in 2014. 

• Copper Declines as China Factory Data Falls to Seven-Month Low. Copper fell a second day after data today showed industrial activity is contracting in China, the biggest consumer of base metals. Copper lost as much as 0.6 percent after dropping the most in two weeks yesterday. The China preliminary manufacturing Purchasing Managers’ Index figure from HSBC Holdings Plc and Markit Economics was 49.5, the lowest since May and down from 50 in November. A number below 50 signals contraction.

Wall Street Journal: 

• Australian Hostage Drama Ends in Deaths, Questions. Lone Gunman Identified as Man Haron Monis Pronounced Dead at Hospital, Along With Two Hostages. The 16-hour siege of a Sydney cafe ended with three people dead, including the lone gunmen whose Islamist rhetoric raised fears in Australia about the threat posed by radicalized individuals with no clear links to organized terror groups. Police stormed the Lindt Chocolate Café in the heart of this city’s business district behind a barrage of gunfire after hours of fruitless negotiations, during which most of the captor’s 17 hostages managed to escape. Two hostages—a 34-year-old man and a 38-year-old woman—were killed during the siege. Police didn’t say whether the victims’ wounds came from the gunman or from police.

• GE’s(GE) Oil and Gas Gambit Falters. After Bulking Up Through Billions in Acquisitions, CEO Immelt to Address Impact of Crude’s Collapse. 

• China Wants ‘Made in China’ Nuclear Reactors. Foreign Suppliers Risk Getting Left Out; Westinghouse Hands Over Plans.

• I Am Not Sorry the CIA Waterboarded. Dick Cheney says he would “do it again in a minute.” He’s right.

Zero Hedge: 

• Russia Shocks With Emergency Rate Hike, Boosts Interest Rate From 10.5% To 17%.

• The Bloodbathery Continues - "Some Folks Were Selling... Everything".

• When The Tide Rolls Out - COO, CEO & Chairman Flee FBI-Probed REIT.

• China, Russia Dump US Treasurys In October As Foreigners Sell Most US Stocks Since 2007. (graph)

• Oil: The Battle For Market Share & The Saudi's 1985 Playbook.

• The First Sellside Reactions Trickle In: "17% Rate Hike Not Enough" According To Citi, JPM.

• China Manufacturing PMI Drops Back Into Triple-Dip Contraction, Lowest In 7 Months. (graph)

• It's Not The Economy; It's The Flow, Stupid. (graph)

• When Central-Planning Fails: "Stimulative" Chinese Rate Cuts Spark Surge In Borrowing Costs. (graph)

Business Insider:

• High-Yield Energy Bonds Are Getting Crushed. (graph)

• China's Lost It. HSBC's purchasing managers index (PMI) came in at 49.5, analysts expected a read of 49.8.

Reuters:

• Boeing(BA) boosts share buyback to $12 bln, lifts dividend 25 pct.

Telegraph: 

• Russian crisis turns systemic as rouble crashes 13pc. Russia's central bank is letting the rouble plunge as the path of least resistance, but this is becoming dangerous as fear spreads.

China Business News:

• China Local Debt Actual Amount Larger Than Reported. Actual amount of local govt debt is hugely different than amount reported to central govt, citing Li Tie, director-general of NDRC's China Center for Urban Development. Some cities reported 10%-30% of local debt to central govt, Li said, citing a research trip to more than 10 cities.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -2.0% to .5% on average.

• Asia Ex-Japan Investment Grade CDS Index 115.0 +3.0 basis points.

• Asia Pacific Sovereign CDS Index 74.5 -.25 basis point.

• S&P 500 futures +.19%.

• NASDAQ 100 futures  +.14%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (NAV)/.00

• (FDS)/1.32

• (DRI)/.27

Economic Releases
8:30 pm EST

• Housing Starts for November are estimated to rise to 1040K versus 1009K in October.

• Building Permits for November are estimated to fall to 1065K versus 1080K in October.
  

9:45 am EST

• Preliminary Markit US Manufacturing PMI for December is estimated to rise to 55.2 versus 54.8 in November.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Manufacturing PMI, Germany ZEW Index, US weekly retail sales reports, (BLMN) investor day, (MMM) outlook and the (GE) investor meeting 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 modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 25% net long heading into the day.

Stocks Reversing Lower into Final Hour on Surging Emerging Markets/Eurozone/US High-Yield Debt Angst, Global Growth Fears, Yen Strength, Biotech/Commodity Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 20.78 -1.42%

• Euro/Yen Carry Return Index 152.86 -1.12%

• Emerging Markets Currency Volatility(VXY) 10.82 +10.97%

• S&P 500 Implied Correlation 69.97 -1.58%

• ISE Sentiment Index 60.0 -10.45%

• Total Put/Call 1.05 -3.67%

• NYSE Arms 1.22 -16.39% 

Credit Investor Angst:

• North American Investment Grade CDS Index 74.23 +2.25% 

• America Energy Sector High-Yield CDS Index 660.0 +1.10%

• European Financial Sector CDS Index 70.91 +9.59%

• Western Europe Sovereign Debt CDS Index 31.67 +1.10%

• Asia Pacific Sovereign Debt CDS Index 74.50 -.33%

• Emerging Market CDS Index 416.86 +7.61%

• China Blended Corporate Spread Index 345.18 +3.51%

• 2-Year Swap Spread 23.75 -.25 basis point

• TED Spread 22.75 +.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -9.0 -1.0 basis point

Economic Gauges:

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

• Yield Curve 153.0 -2.0 basis points

• China Import Iron Ore Spot $69.06/Metric Tonne +.10%

• Citi US Economic Surprise Index 34.40 +4.8 points

• Citi Eurozone Economic Surprise Index -19.60 +.7 point

• Citi Emerging Markets Economic Surprise Index -15.20 +.3 point

• 10-Year TIPS Spread 1.62 -1.0 basis point

Overseas Futures:

• Nikkei Futures: Indicating -314 open in Japan

• DAX Futures: Indicating +21 open in Germany

Portfolio: 

• Slightly Higher: On gains in my retail sector longs, index hedges and emerging markets shorts

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

• Market Exposure: 25% Net Long

Today's Headlines

Bloomberg:

• Russia, Venezuela Rekindle Memories of 1998 Emerging-Market Rout. Emerging markets are ending the year much like how they began it -- in freefall. From Russia to Venezuela, Thailand to Brazil, stocks, bonds and currencies across the developing world are plunging. The Russian ruble tumbled past 60 for the first time on record today while Venezuelan dollar bonds sank below 40 cents on the dollar and Thai stocks fell the most in 11 months. Brazil’s corporate debt market is reeling as a graft probe of state oil producer Petroleo Brasileiro SA infects the market. All of this has something of a familiar feel to it, dating back to 1998, when, just like now, oil was tumbling and driving crude exporters Russia and Venezuela into financial crisis. While lots has changed in emerging markets since then -- perhaps most importantly, countries have higher foreign reserves and more flexible exchange rates -- the signs of contagion are mounting.

• Russian Industrial Output Unexpectedly Drops Amid Ruble Debacle. (video) Russian industrial output unexpectedly shrank for the first time in 10 months as the country’s biggest currency crisis since 1998 spilled over to manufacturing. Output at factories, mines and utilities fell 0.4 percent in November from a year earlier after a 2.9 percent increase in October, the Federal Statistics Service in Moscow said today in an e-mailed statement. The median estimate of 21 economists in a Bloomberg survey was for a 1.2 percent gain. The contagion from the collapse of the ruble is spreading to manufacturing, dealing another blow to an economy on the brink of its first recession since 2009.

• Ruble Tumbles Most Since 1998 as Traders Pressure Central Bank. The ruble tumbled the most since 1998, sliding past 60 for the first time, as traders tested Russia’s willingness to defend the currency amid an oil slump that’s pushing the economy toward recession. The ruble weakened 9.1 percent to 64.0005 per dollar at 7:57 p.m. in Moscow, the steepest slide on a closing basis since the year Russia defaulted on local-currency debt. The 10-year government bond yield rose 23 basis points to 13.23 percent. Three-month implied volatility for the ruble climbed to a six-year high as the rout triggered the Bank of Russia to sell foreign exchange, according to BCS Financial Group and MDM Bank. 

• Russia Sees GDP Shrinking at Least 4.5% in 2015 With $60 Oil. (video) Russia’s economy may shrink the most next year since 2009 if oil averages $60 a barrel under a “stress scenario,” the central bank said, underscoring the toll exacted by plunging crude prices.

• Indonesia Rupiah Sinks to 16-Year Low as Bonds Slide on Outflows. Indonesia’s rupiah tumbled to the lowest level since the Asian financial crisis as an uptick in dollar buying by local companies before the year-end coincided with a rout in the sovereign bond market. The currency slid 1.9 percent to 12,698 per dollar in Jakarta, the lowest close since August 1998, prices from local banks show. That was the biggest drop since Aug. 1. In the offshore market, one-month non-deliverable forwards declined 1.4 percent to 12,919, according to data compiled by Bloomberg. Overseas investors have pulled 10.09 trillion rupiah ($795 million) from local-currency sovereign bonds this month through Dec. 11, finance ministry data show, as the prospect of U.S. interest-rate increases damped demand for emerging-market assets. 

• Forget the Toaster. Chinese Bank Offers Mercedes to Get Deposits. Chinese banks, desperate to attract customers who are finding alternatives for their savings, are turning to giveaways. On offer at one branch in Beijing: an iPhone 6 Plus or a Mercedes-Benz. Cash rebates, trips abroad, interest rates at the highest premium ever over the official benchmark rate, even free vegetables are among other goodies banks are dangling to get Chinese savers to deposit their yuan in savings accounts. The competition is expensive. “Chinese banks are hemorrhaging their deposits,” said Rainy Yuan, a Shanghai-based analyst at brokerage Masterlink Securities Corp. “There is no fix for this. All the efforts they made to win savers back will only push up the costs, so it’s a losing battle to fight.”

• Emerging-Market Stocks Fall to 10-Month Low as Currencies Plunge. Emerging-market stocks declined, with the benchmark index set for a 10-month low, as the ruble slid beyond 60 against the dollar for the first time ever and Indonesia’s rupiah sank to the weakest level in 16 years. PTT Pcl, a Bangkok-based oil company, slumped 4.9 percent, dragging Thailand’s stock gauge down the most since January. China Mobile Ltd. fell to a seven-week low in Hong Kong. The Ibovespa slid 3.1 percent as a report signaled that Brazil’s economy unexpectedly contracted in October. The ruble plunged to 63.5 per dollar before Russia’s central bank holds a long-term auction to provide rubles to banks. Indonesia’s rupiah depreciated 2 percent. A Bloomberg gauge tracking 20 developing-economy currencies declined 1.3 percent. The MSCI Emerging Markets Index lost 1.6 percent to 923.58 at 11:24 a.m. in New York.

• European Stocks Erase 2014 Gain as Miners, Energy Shares Tumble. European stocks reversed an earlier advance, posting their biggest six-day slump since August 2011, after data showed a decline in manufacturing for the New York area and oil prices resumed a decline. With today’s 2.2 percent slump to 323.29, the Stoxx Europe 600 Index has erased its annual increase, closing at its lowest level since Oct. 20. The gauge reversed an advance of as much as 0.8 percent today as the Federal Reserve Bank of New York’s Empire State Index unexpectedly dropped this month and oil prices erased gains. Stoxx 600 energy and commodity producers slid at least 2.9 percent. 

• Oil Falls; UAE Says OPEC Won’t Cut Output to Boost Price. (video) West Texas Intermediate for January delivery declined $1.32, or 2.3 percent, to $56.49 a barrel at 1:36 p.m. on the New York Mercantile Exchange. Futures touched $55.87, the lowest since May 2009. Total volume was 51 percent above the 100-day average for the time of day. It’s dropped 43 percent this year.

• Oil-Bust Vets Brace for Storm Unseen by Shale-Boom Neophytes. The West Texas wildcatter, 76, has weathered four such cycles in his 52 years draining crude from the Permian basin, still the most prolific U.S. oilfield. Though the collapse in prices since June doesn’t yet have him in a panic, Stephens recognizes the signs of another downturn on the horizon. And like many bust-hardened veterans in this region -- which has made and broken the fortunes of thousands -- he’s talking about it like a gathering storm. The ups and downs of oil are a way of life in Midland and Odessa, Texas, dating all the way back to the Great Depression. It’s as much a part of the culture as Gulf Coast hurricanes, and residents often prepare accordingly.

• Copper Drops on ‘Mixed’ U.S. Reports on Homes, Industrial Output. Copper futures for March delivery fell 1.7 percent to $2.8835 a pound at 11:49 a.m. on the Comex in New York. A close at that price would mark the biggest drop for a most-active contract since Nov. 28. Trading was 30 percent below the 100-day average for this time, data compiled by Bloomberg show.

Wall Street Journal:

• Sydney Cafe Siege: Three Dead in Standoff. Lone Gunman Identified as Man Haron Monis Pronounced Dead at Hospital, Along With Two Unnamed Hostage. A siege that shut down a large part of central Sydney for more than 16 hours ended in bloodshed early Tuesday, after two hostages and their armed captor were killed when police stormed the cafe behind volleys of bullets. New South Wales police said the lone gunman—identified as 50-year-old self-proclaimed cleric Man Haron Monis —was pronounced dead in hospital following the shootout at the Lindt Chocolate Café in Martin Place around 2:10 a.m. The two unnamed hostages, a 34-year-old man and a 38-year-old woman, also died following the confrontation between the gunman and police.

• Investors Fear Industry Is at ‘Top of the Cycle'. Investors are worried that the private equity market is at the “top of the cycle” and there is too much money chasing deals, according to a survey released this week. The survey of 90 global institutional investors by placement agent Probitas Partners found that the top concern for investors was that “too much money is pursuing too few attractive opportunities,” with 55% of respondents saying this was something that kept them up at night.

• UAW Chief Aims to Eliminate Two-Tier Wage. Union President Says Battling Right-to-Work Not Among Top Priorities. United Auto Workers President Dennis Williams said on Monday the lower wage scale for newer auto workers make is unacceptable, and the roughly $19.50 hourly wage new hires earn should only be seen as a “good starting point” or negotiations with Detroit auto makers next year. 

• Junk-Bond Worries Spread Beyond Oil. A Pullback From Junk Bonds Can Be Harbinger That Risk Is Being Reassessed.

MarketWatch.com: 

• Carl Icahn says oil’s woes may be proof of a junk-bond bubble. Billionaire investor Carl Icahn says high-yield corporate debt may be in bubble territory and that a recent hiccup in the market, as a result of plunging oil prices, support his suspicions.

CNBC:

• Now is not the time to play the market: McNamee. (video) There are times you just do not want to play the market, and this is one of them, Elevation Partners co-founder Roger McNamee told CNBC's "Squawk Alley" on Monday.

ZeroHedge: 

• That Escalated Quickly: Europe Goes From Up 7% To Down 1.5% For 2014 In Under A Week. (graph)

• WTI Crude Craters To $55 Handle, High-Yield Credit Crashing-er. (graph)

• Goldman Pours More Crude On The Fire: "Oil Prices Can Go Lower For Longer".

• Taper Tantrum 2.0: Emerging Currencies Are Crashing. (graph)

• Today's Market Contagion: Energy High-Yield Credit Spreads Blow Above 1000bps For First Time Ever. (graph)

• Industrial Production Surges Most Since May 2010 Thanks To Subprime Auto Loans & Polar Vortex 2.0. (graph)

• Empire Fed Crashes To Almost 2-Year Lows, Biggest Miss In 4 Years. (graph)

• Oil Volatility Is Exploding (And It's Spreading). (graph)

Business Insider:

• The Ex-Goldman Trader Who Correctly Shorted Subprime Mortgages During The Financial Crisis Has Made A New Bet. Now he's betting against something else: high-yield bonds.

• Incredibly Dramatic Photos Of The Hostage Crisis In Sydney.

• Mutual Funds Haven't Performed This Crappily Since 1997.

• The Reported Sydney Hostage-Taker Is A 'Spiritual Healer' With A Long Rap Sheet.

• DEUTSCHE BANK: The 10-Year Yield Is Going Under 2%.

Telegraph:

• Coal prices tumble on China slowdown. Coal prices have fallen sharply this year as China slowdown hits demand, writes Andrew Critchlow.

Handelsblatt:

• German Stability Council Sees Growth Goal Too High. The German stability council says 4 German states need to cut spending further, citing a paper due to be published today.

RIA Novosti:

• Russia to Send 10th Aid Convoy to Ukraine Soon. Russia's Emergencies Ministry organizing convoy, which will deliver New Year's presents to Donetsk, Luhansk regions, citing ministry spokesman.

meps:

• EU Steel Prices Fall in Line with Drop in Input Costs - to 58-Month Low.