Today's Headlines

Bloomberg: 

• Third Avenue Ripples Hit Credit Across Globe as Bond Risk Rises. (video) Measures of bond risk surged worldwide amid concern that investors may face more losses in the roiling debt markets after Third Avenue Management froze redemptions from a high-yield fund and London-based Lucidus Capital Partners liquidated its entire portfolio. Credit-default swaps that are used to insure against losses on junk bonds rose in the U.S. and Europe, with the risk premium on the Markit CDX North American High Yield Index rising to the highest level since November 2012 and the Markit iTraxx Europe Crossover Index that tracks speculative-grade debt in Europe climbing for a fifth day. BlackRock’s iShares iBoxx High Yield Corporate Bond ETF, the largest fund of its kind, dropped as much as 1.1 percent to the lowest levels since 2009. “Everyone is nervous,” said Bill Blain, a strategist in London with brokerage Mint Partners. “We know energy names are in most trouble and that defaults are set to soar. At the moment it’s a false calm before the storm moment. There are no bids or offers. Nobody wants to be the first to jump."
• CLOs Hammered as Energy Rout Plays Havoc With Other Debt Markets. The bust in commodities that’s roiling junk bonds is also taking its toll on funds that bundle loans used to finance buyouts. The riskiest slices of collateralized loan obligations raised after the financial crisis plunged 9 cents on the dollar since September to about 58 cents at the end of last month, down from 84 cents a year ago, according to JPMorgan Chase & Co. Intensifying price declines in recent months have led to one of the "more challenging years in recent memory," JPMorgan analysts Rishad Ahluwalia and Jacob Kurosaki wrote in a Dec. 11 note to clients. CLOs purchase high-yield, high-risk loans and bundle them into securities of varying risk and return. Investors in the lowest-ranked CLO slices, also called the equity tranche, are first in line to absorb any potential losses. The sell-off comes amid concern about the creditworthiness of speculative-grade borrowers as volatility spreads beyond the energy sector. “The price declines are alarming and worrying," Ahluwalia, JPMorgan’s head of global CLO research, said in a telephone interview.
• Citic Short-Selling Offer to Funds Led Police to Its Door. The fall from grace for China’s biggest brokerage and investment bank, Citic Securities Co., has been fast and steep. The firm -- sometimes referred to as the Goldman Sachs of China -- began the year on its way to eclipsing UBS Group AG in the ranks of the top four securities firms in the world. Now it’s embroiled in a police investigation and a probe by the stock-market regulator. Short selling, stock-index futures, cross-border return swaps -- all were on the table, all permitted with qualified nods by China’s regulators, until the rules changed and suddenly they weren’t. "The sands of regulation in China are always shifting, and the rules are never quite as solid as you would expect in a more advanced economy," said Arthur Kroeber, Beijing-based managing director of Gavekal Dragonomics, an economic research firm. "They come up with a product at a time when the markets are fairly quiet, and the regulators say fine. Then when there’s a problem, the reflex of the authorities is volatility is bad and this psychology of ‘If markets go down, then someone must be at fault.’"
• Questioning the Stability of China's Economy. (video)
• India Now Has a Keqiang Index -- And It Paints a Bleaker Growth Picture. Indian brokerage created gauge as signals from the ground contradicted upbeat GDP. Chinese Premier Li Keqiang's name has been attached to another economic gauge, covering another billion people: this time in India. And the picture the Indian Keqiang index is painting is more downbeat than glowing official data. Indian stock brokerage Ambit Capital established the Keqiang index for the subcontinent as it tries to unravel the mysteries of new gross domestic product data introduced in January that has puzzled economists since.
• How Bad Is Brazil Car Market? Drop Equals All of Mexico's Sales. (graph) Brazil’s car dealers expect 2015 sales to plunge by 1.3 million vehicles, a decline as big as Mexico’s auto market, as economic and political turmoil pummel the South American country. “It’s been the worst year ever for the sector,’’ Alarico Assumpcao, president of the Brazil Car Dealerships Federation, said in an interview. “The country needs to move on and now it is halted. Actually, it is walking backwards.’’
• Indonesian Bonds Slump as Rupiah Leads Losses in Asia Before Fed. Indonesia’s government bonds dropped the most in almost two years and the rupiah fell to a two-month low on concern a slump in commodity prices and higher U.S. interest rates will curb demand for local assets. A slide in the Bloomberg Commodity Index to its weakest level since 1999 Monday damped the outlook for Indonesia, the world’s biggest palm oil grower and thermal coal exporter. Foreign funds own 38 percent of Indonesian domestic sovereign bonds, the highest proportion in Southeast Asia. Asian currencies declined ahead of the Federal Reserve’s Dec. 15-16 meeting and on speculation China will allow the yuan to drop after policy makers unveiled a new index that valued it against a broad range of currencies. The yield on Indonesia’s 10-year bonds climbed 28 basis points to 9 percent, the biggest jump since January 2014, according to the Inter Dealer Market Association. The Jakarta Composite Index of shares lost 0.4 percent to close at its lowest level since early October.
• European Stocks Drop to 10-Week Low as Miners Slide Before Fed. (video) Declines in miners and energy producers dragged European stocks lower for a fifth session, two days before the Federal Reserve’s rate decision. Glencore Plc and ArcelorMittal slipped at least 6.3 percent, pushing a gauge of miners to its lowest level since 2009. Tullow Oil Plc and Royal Dutch Shell Plc slid at least 3.5 percent as oil also fell. Investors have turned averse to risky assets before Wednesday’s Fed decision, and traders are pricing in a 74 percent chance that officials will then announce the first rate increase since 2006. The Stoxx Europe 600 Index fell 1.8 percent at the close of trading, wiping out early gains of as much as 1 percent to cap its longest losing streak since July.
• OPEC History Shows It Can Deal Even Bigger Blows to Oil Price. Oil’s slump of 14 percent in New York since OPEC met on Dec. 4 has struck fear into any remaining crude bulls. The last time the group rattled the market like this -- after its November 2014 meeting -- the pain was more than twice as deep. The message the Organization of Petroleum Exporting Countries delivered this month -- that it will keep pumping until rival producers scatter -- is really just a repeat of the stance taken last November. After that gathering, crude prices plunged 40 percent in seven weeks of losses as the market realized the global surplus would remain. A similar performance this time around would take prices down to the mid-$20s.
• Beware Energy's Junk Debt Army. Of the $1.35 trillion face value of debt in the BofA Merrill Lynch U.S. High Yield Index, the two biggest sectors, energy and basic industries, account for 28 percent. Apart from their sheer size, though, there is another thing that sets these two sectors apart and should worry anyone holding them: They are incredibly diffuse.
• Junk Rated Stocks Flashing Same Signal as High-Yield Bond Market. Think equity investors have been blind to warning signs coming from junk bonds? Not quite. For most of the year pessimists have warned that equity markets were missing signals in high-yield credit, where losses snowballed even as gauges like the Standard & Poor’s 500 Index remained relatively stable. While true, most of that is an illusion of index composition -- not evidence of complacency. What if you look at stocks that are representative of the high-yield universe? A basket compiled by Bloomberg of below investment-grade companies, including Chesapeake Energy Corp. and Cliffs Natural Resources Inc., has dropped a lot more -- 51 percent in 2015.
• Five Mind-Blowing Stats from the Selloff in the Biggest Junk Bond ETF. (video) Big numbers from a big day in bonds. Regardless of which side you fall on, the numbers behind Friday’s trading of the iShares iBoxx High Yield Corporate Bond ETF, better known as HYG, are fascinating. Here's what caught our eye.  
• Muni Bonds Backed by Junk Companies Feel Pain of High-Yield Rout. The corporate junk-bond rout has mostly left few ripples in the $3.7 trillion municipal market, with one exception: Tax-exempt debt issued by the high-yield companies. Local-government bonds sold on behalf of U.S. Steel Corp., the nation’s second-largest producer, traded Monday at an average of about 67 cents on the dollar, the lowest price since they were issued in November 2009 and down from 113 cents to start the year, data compiled by Bloomberg show.
• Hedge Funds Burned by Commodities Lose $40 Billion Since '08. The biggest commodities meltdown in a generation has cost hedge funds more than $40 billion in seven years. Losses due to poor performance and investor withdrawals have left assets at the top 10 commodities hedge funds at less than $10 billion, compared with more than $50 billion in 2008, according to estimates from Trafigura Pte Ltd.’s annual report. The trader and asset manager said the perception of commodities as an investable asset has been replaced by a “generalized aversion."

CNBC:

• NBC Poll: Clinton Would Trounce Trump But Lose to Rubio, Carson. Hillary Clinton would defeat Ted Cruz and trounce Donald Trump in a hypothetical head-to-head general election matchup, but she would lose to Marco Rubio or Ben Carson, a new NBC News/Wall Street Journal poll finds. Clinton, who leads the Democratic primary field by nearly 20 points, would have a strong advantage over Trump with independent voters but would be bested by the three other Republicans with the important swing group. Against Trump, the Democratic front-runner would win 50 percent to 40 percent. Among independents, she would capture 43 percent of the vote, compared to 36 percent for Trump. Among Hispanics, Clinton would get 69 percent of the vote, compared to just 24 percent for Trump. And against Cruz, who has surged in recent polls in the important early state of Iowa, Clinton would win with 48 percent to Cruz's 45 percent, though that's within the poll's margin of error of plus-minus 3.36 percentage points. Despite losing significant support in the NBC/WSJ poll among Republican primary voters, Carson, a former neurosurgeon, still performs competitively against the former secretary of state. He would get 47 percent of the vote in a hypothetical matchup, compared to Clinton's 46 percent. His strong showing would largely be fueled by independent voters, who made up about 11 percent of the poll's sample of registered voters. They would back Carson by double digits, 48 percent to 34 percent. Rubio, a senator from Florida, would fare the best overall against Clinton, winning a head-to-head clash 48 percent to 45 percent (also within the poll's margin of error.) Among independents, his margin of victory would be 44 percent to her 37 percent. Among Hispanics, Rubio would get 36 percent of the vote, compared to Clinton's 59 percent. Rubio would also perform best with female voters out of the top GOP contenders, capturing 44 percent to Clinton's 51 percent. That's compared to Trump's dismal showing of 33 percent to Clinton's 57 percent.

Zero Hedge: 

• Junk Contagion Spreads: Investment Grade Bonds Plunge To 2-Year Lows, Treasury Liquidity Collapses, CLOs Next. (graph)
• The Market Has Just Gone Nuts. (graph)
• SEC Arrives "On Site" At Third Avenue, And Is "Closely" Monitoring The Situation.
• Marine Le Pen Will Reap What The EU Has Sown.
• Did Goldman Just Do It Again? (graph)
• Janet Yellen's "Junk Bonds Are Contained" Moment.
• Deja Vu All Over Again.
• Camera-On-A-Stick(GPRO) Goes Full Kodak - Crashes 16% To Record Lows. (graph)
• How To Determine If Your Fund Is At Risk Of Runs, Gating And Liquidation, In One Chart.
• Dubai Crude Price Crashes To Lowest Since 2004, Stocks Hit 2 Year Lows. (graph)
• All The World's Debt (And Yield). (graph)
• High Yield Bond ETFs Tumble To Friday's Lows, Break Below Lehman-Aftermath Lows. (graph)
• People Are Finally Worried About People Being Worried.
• NatGas Bloodbath Accelerates Amid LNG Glut Worse Than Oil. (graph)
• Why Fund Gates Are Terrible News For Great Asset Managers.
• Another High Yield Domino Falls As $900 Million Lucidus Capital Liquidates.

Business Insider:

• How the problems in junk bonds impact stocks.
• A secret US policy reportedly prevents officials from looking at the social media of visa applicants.
• We may look back at 2015 as 'peak iPhone'. (graph)
• India plans to double coal output despite Paris climate deal.
• Wall Street is throwing around scary words about a once booming business.
• The ‘wishful thinking’ behind US foreign policy has given Russia and Iran the upper hand in Syria.
• Chinese officials admit to faking economic data.

Reuters:

• Iran crude exports on track to hit 6-month high in Dec -source. Iran's crude oil exports are set to hit a six-month high in December as buyers ramp up purchases in expectation that sanctions against the country will be lifted early next year. Iran is on track to ship 1.26 million barrels a day (bpd) of crude this month, according to an industry source with knowledge of the OPEC member's tanker loading schedule.

Telegraph:

• Angela Merkel warns eurozone crisis is far from over after 'year of crises'. German Chancellor Angela Merkel reflects on a year of turmoil, including the Greek crisis and Paris terror attacks.

Bear Radar

Style Underperformer: 

• Small-Cap Growth -.82%

Sector Underperformers: 

• 1) Gold & Silver -5.7% 2) Hospitals -5.0% 3) Computer Hardware -2.2%

Stocks Falling on Unusual Volume:

• NWL, BOKF, RH, NMFC, ARCC, GOF, CRF, AMG, IVH, FLTX, BHI, CLM, ZBRA, BLDR, UVV, LBRDK, APOG, KMI, FFC, TSEM, ETP, VIIX, WDR, MEOH, BEN, GMT, AB, ARCC, BX, ZBRA, APO, ETP, EEQ, SEMG, OKS, CLR, AM, RRC, KYN, NMFC, BKD, GPRO and ATRA

Stocks With Unusual Put Option Activity: 

• 1) EWC 2) A 3) HYG 4) XHB 5) BAC

Stocks With Most Negative News Mentions: 

• 1) GPRO 2) MW 3) LSTR 4) SWKS 5) CHK

Charts:

• ETFs Falling on Unusual Volume 
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth -.21%

Sector Outperformers: 

• 1) Alt Energy +1.57% 2) Internet +.29% 3) Computer Services +.19%

Stocks Rising on Unusual Volume: 

• AKBA, PBYI, TSL, SPWR and CEQP

Stocks With Unusual Call Option Activity: 

• 1) WMB 2) VMW 3) BX 4) VXX 5) SGMS

Stocks With Most Positive News Mentions: 

• 1) KMB 2) WM 3) COH 4) BNED 5) NAT

Charts: 

• ETFs Rising on Unusual Volume 
• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running +18.6% Above 100-Day Average
• 1 Sector Rising, 9 Sectors Declining
• 17.1% of Issues Advancing, 81.4% Declining
• 3 New 52-Week Highs, 536 New Lows
• 26.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 34.3
• Vix 26.5 +8.7%
• Total Put/Call 1.0 +2.8%
• TRIN/Arms .97 -36.25%

Monday Watch

Today's Headlines

Bloomberg:  

• Asian Bond Risk Surges to Two-Month High on Contagion Concerns. Asian bond risk surged to a two-month high after Third Avenue Management’s decision to freeze redemptions at a high-yield credit fund underscored concern about reduced market liquidity and a potential exodus of investors. The cost of protecting debt against non-payment has risen across the Asia-Pacific region amid anxiety that recent losses in U.S. junk bonds have further to run and could spread to other regions. The Markit iTraxx Asia index of credit-default swaps rose 5 basis points to 147 basis points as of 9:33 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. That’s on track for its highest close since Oct. 8, according to data provider CMA. “Spreads widened on both investment-grade and junk bonds in Asia today because of a combination of factors, including the equity selloff in the U.S. on Friday, the upcoming potential Fed rate hike, the news on frozen redemption in some U.S. funds and the crude price dive,” said Ross Lee, a credit analyst at Bank of China Hong Kong Ltd.
• Hong Kong Property Foreclosures Seen Doubling in 2016 on Economy. Property foreclosures in Hong Kong will double from current levels by the end of next year as a slowing economy hurts borrowers’ ability to service their mortgages, according to an auctioneer with 23 years of industry experience. The average number of foreclosures has risen to 80 a month from about 50 to 60 in the first half of 2015, Tsang Kit-chun, Managing Director of AA Property Auctioneers Ltd., said in a phone interview on Friday. That’s still way slower than the the 6,000-a-month pace in 2003, following a six-year property bear market, he said.  
• Korean Won Drops to Two-Month Low After China Unveils Yuan Index. South Korea’s won fell to the lowest in more than two months on speculation China will allow the yuan to weaken after policy makers unveiled a measure that valued it against a broad range of currencies. The yuan fell to a four-year low in Shanghai after China Foreign Exchange Trade System on Friday published an index composed of 13 currencies. The CFETS, which is run by the central bank to facilitate interbank trading, said the gauge will “help bring about a shift in how the public and the market observe” exchange-rate moves. Global investors sold more South Korean stocks than they bought for a ninth day as a plunge in oil prices and the prospect of the Federal Reserve raising interest rates this week damped demand for riskier assets. The won weakened 0.7 percent to 1,187.84 a dollar as of 10:13 a.m. in Seoul, data compiled by Bloomberg show.
• Qatar Leads Mideast Stock Retreat After Oil Sinks to 2008 Low. Qatari stocks led a retreat in Middle Eastern markets as oil’s decline to a seven-year low, scant evidence of a pick-up in Chinese growth and the prospect of a U.S. interest-rate increase next week unsettled investors across the region. The QE Index sank 3.7 percent to close below 10,000, a key support level, for the first time since November 2013 and Saudi Arabia’s Tadawul All Share Index slumped to the lowest since 2012. The DFM General Index chalked up the longest losing streak in a year on investor concern that companies in Dubai, the Middle East’s commercial hub, may suffer if Gulf Arab governments reduce spending next year. The ADX General Index in Abu Dhabi, home to about 6 percent of the world’s proven oil reserves, lost 2.1 percent.  
• Emerging Stocks Slump to Six-Year Low Before Fed as Yuan Weakens. Emerging-market stocks headed for their lowest close in six years as investors exited riskier assets before this week’s Federal Reserve meeting and crude extended a rout. The yuan extended six weeks of declines. The MSCI Emerging Markets Index dropped for a ninth day, its longest losing streak since June. Equity gauges in Hong Kong, Taiwan and South Korea slumped more than 1 percent. Fosun International Ltd. plunged after saying Chairman Guo Guangchang was assisting with a probe. Asia’s developing-nation currencies weakened after China’s central bank said its exchange-rate moves shouldn’t be measured against the dollar alone, fueling speculation the yuan will extend declines. The rand surged the most in seven years after President Jacob Zuma backtracked on his choice of finance minister. The MSCI Emerging Markets Index fell 0.6 percent to 768.63 at 10:06 a.m. local time. The Hang Seng China Enterprises Index dropped 1.5 percent.
• Asian Stocks Join Global Selloff as Commodity Producers Retreat. Asian stocks joined a global selloff as concern about turmoil in the credit and commodities markets ahead of this week’s Federal Reserve meeting overshadowed a batch of better-than-expected Chinese economic data. The MSCI Asia Pacific Index dropped 1.4 percent to 127.69 as of 9:05 a.m. in Tokyo, falling for a fifth day in its longest stretch of declines since the measure’s August slump. The Standard & Poor’s 500 Index sank 1.9 percent on Friday as crude traded below $36 a barrel and asset managers were routed after a high-yield mutual fund suspended redemptions. Traders see a 74 percent chance the Fed will increase rates on Dec. 16, futures show.
• Oil Trades Near Lowest Since 2009 as Iran Pledges More Supply. Oil traded near the lowest price since February 2009 as Iran pledged to boost crude exports, bolstering speculation OPEC members will exacerbate the global oversupply. Futures were little changed in New York after losing almost 11 percent last week, the most in a year. There’s “absolutely no chance” Iran will delay its plan to increase shipments even as prices decline, said Amir Hossein Zamaninia, the deputy oil minister for international and commerce affairs. Hedge funds and other large speculators raised bearish bets to an all-time high, U.S. Commodity Futures Trading Commission data showed.
• Miners Shoveling Furiously Prop Up Aussie GDP as Iron Melts. The price of Australia’s top export has been almost slashed in half this year. That makes it all the more surprising economists increasingly see iron ore propping up growth as they assemble their 2016 forecasts. The reason: Australian producers are making up for the price destruction by doubling down on volume, in the process worsening a global supply glut. There’s even a new entrant to the market -- Gina Rinehart, Australia’s richest person, last week oversaw her company’s first shipment of iron ore to South Korea. The surging exports are also papering over a massive drag on the economy from collapsing mining investment and could account for most of next year’s growth, according to Citigroup Inc. and Goldman Sachs Group Inc. Still, the fall in commodity prices will hurt fiscal revenue, making it more difficult for the government to pare back a deficit and reach its goal for a surplus by the end of the decade. 
• Cotton Is Piling Up at Warehouses Around the World. (graph) There’s enough cotton sitting in global warehouses to make more than 127 billion T-shirts, or 17 for each person on the planet. That’s bad news for investors betting prices will rise. World inventories at the end of this season will be the second-largest ever, just slightly less than last year’s record, according to a U.S Department of Agriculture forecast last week. That’s a signal that supplies will remain ample even after the agency cut its outlook for production. Hedge funds raised their bullish cotton bets to the highest in more than a year, only to face the first weekly price drop since early November. 
• Investors See More Carnage Amid Third Avenue Contagion Risk. Top bond investors are predicting more carnage for high-yield funds amid a market rout that forced a Third Avenue Management mutual fund last week to freeze redemptions. Scott Minerd, global chief investment officer at Guggenheim Partners, predicts 10 percent to 15 percent of junk bond funds may face high withdrawals as more investors worry about getting their money back. He joins money managers Jeffrey Gundlach, Carl Icahn, Bill Gross and Wilbur Ross in warning of more high-yield trouble ahead. “The risk is that this is going to cascade into something bigger,” Minerd, whose firm oversees $240 billion, said in an interview at his oceanfront office in Santa Monica, California. “If we’re going to see contagion, the most vulnerable funds are going to be the ones that are down significantly.”
• Like Obamacare, Climate Gives President Huge Win on Shaky Ground. For Barack Obama, the landmark climate-change deal in Paris should leave a familiar -- and familiarly fragile -- sense of victory. As with Obamacare, the president’s signature health care reform, the victory rests on shaky ground. Even supporters say the new deal won’t go far enough on its own to stop global warming. Republicans in Congress, meanwhile, many of whom question whether human activity is affecting the global climate, are vowing to kill Obama’s domestic regulations, which they paint as a job killer, an economic disaster, and a “war on coal.” The Paris accord also rests on scores of nations following through on voluntary pollution pledges and technological innovations in energy production that may take years to emerge.

Wall Street Journal:

• Climate Agreement’s Success Hinges on Countries Making Painful Decisions. Supporters hope the deal will unleash an avalanche of investment in renewable energy, new technologies. The landmark climate agreement that more than 190 countries struck over the weekend ushers in a broad, new international effort to wind down the fossil-fuel era.
• Obama Faces Political Fight at Home Over Climate Deal. Republican candidates vow to unravel efforts aimed at curbing global warming. President Barack Obama notched a victory on the world stage with the completion of a global climate accord, but the White House still faces resistance at home as Republicans and some U.S. industries push back against the policies underpinning the deal.
• Junk Bonds Stagger as Funds Flee. After junk-bond prices posted their largest drop since 2011 on Friday, investors are bracing for a difficult week. Traders and regulators have fretted for more than a year that mayhem might ensue if U.S. mutual funds sought to sell rarely traded bond investments. After junk-bond prices posted their largest drop since 2011 on Friday, investors say they are bracing for another difficult week, likely featuring hectic trading and large splits between buy and sell orders. 
• Brazilians Stage Protests to Pressure Lawmakers on Rousseff Impeachment. Proceedings to impeach president began earlier in December. Thousands of Brazilians took to the streets throughout the country to pressure lawmakers to follow through with efforts to impeach President Dilma Rousseff. Polling company Datafolha estimated 40,300 people attended the protest in Sao Paulo, Brazil’s biggest city, less than the 135,000 people it said went to an antigovernment protest in August. A protest in March, 2015, attracted 210,000 people to Sao Paulo’s
• Third Avenue CEO Barse Departs. Firm is barring investor withdrawals as it liquidates high-yield bond fund. Third Avenue Management LLC has parted ways with Chief Executive David Barse, said people familiar with the matter, a move that comes just days after the firm rattled financial markets and the mutual-fund industry by barring withdrawals from its junk-bond fund.
• Sen. Bob Corker Failed to Properly Disclose Millions of Dollars in Income. Tennessee Republican files amendments to reports going back to 2007; ‘I am extremely disappointed in the filing errors’. Sen. Bob Corker failed to properly disclose millions of dollars in income from real estate, hedge funds and other investments since entering the Senate in 2007, according to new financial reports filed by the Tennessee Republican.
• Paris Climate of Conformity. It pays to be skeptical of politicians who claim to be saving the planet. The moment to be wariest of political enthusiasms is precisely when elite opinion is all lined up on one side. So it is with the weekend agreement out of Paris on climate policy, which President Obama declared with his familiar modesty “can be a turning point for the world” and is “the best chance we have to save the one planet that we’ve got.”

Fox News:  

• Kerry touts climate deal as jobs creator, defends criticism about no sanctions, penalties. (video) Secretary of State John Kerry on Sunday defended the global carbon-emissions deal reached this weekend amid criticism that it lacks enforcement and touted the pact as a jobs creator. Kerry, who helped negotiate the deal with China and 185 other countries, told “Fox News Sunday” that enforcement mechanisms and sanctions were not possible because Congress and other nations would not have agreed to them. “If there had been a penalty, we wouldn’t have gotten an agreement,” Kerry said from Paris, where the international deal was announced Saturday. “So it has to be voluntary. We got the best deal we could.” 
• Fox News Poll: Cruz, Trump ahead in Iowa, Clinton holds caucus lead. (video)

CNBC:

• Visa Screening Missed an Attacker's Zealotry on Social Media. Tashfeen Malik, who with her husband carried out the massacre in San Bernardino, Calif., passed three background checks by American immigration officials as she moved to the United States from Pakistan. None uncovered what Ms. Malik had made little effort to hide— that she talked openly on social media about her views on violent jihad. She said she supported it. And she said she wanted to be a part of it.

Zero Hedge:

• China's Currency Continues To Tumble As AsiaPac Credit Markets Plunge, EM Stocks Lowest Since 2009. (graph)
• Credit Suisse Is "Worried" These Two Charts May Abort The Fed Hiking Cycle. (graph)
• Hilsenrath Just Reset Market Expectations: "Fed Is Worried Rates Will End Up Right Back At Zero".
• San Francisco Housing Bubble Goes Subterranean: $500/Month To Live In A Crawlspace.
• Goldman Confirms China's New FX Index Signals Further Yuan Devaluation To Continue.
• Hit-And-Run Driver Arrested After Her Car Calls Police. As reported by local news outlets, an unusual 911 call to emergency services took place on Friday in Port St. Lucie, Florida. You would usually expect a human voice on the end of the line, but in this scenario, a Ford vehicle alerted the police to a collision. 
• About That Rate Hike... (graph) 
• "Stick With The Bull" Indeed: 10 Out Of 10 Barrons "Experts" Again Predict The S&P Will Rise 10% In 2016.
• The Coincidences Are Just Too Eerie: This Is The Last Time CCC Yields Were Here And Rising. (graph)
• France's Far-Right Nationalist Party Swings From First To Worst; "Routed' In Regional Election Run-Off.
• Cuomo, Schumer Unveil Cunning "No Guns For Dangerous Terrorists" Plan.
• The End Of The Bubble Finance Era. (graph)
• The Godfather Of Climate Change Calls Obama's Deal "A Fraud, It's Bullshit".
• "It's An Epic Bloodbath" - Presenting The 2015 Junk Bond Heatmap. (graph) 
• JPM Takes The Axe To iPhone Sales Estimates, Says Consensus Is 10% Too High. (graph)
• The Eerie Echo Of 2007: It Really Is Bear Stearns, All Over Again.
• Middle-East Opens Weak: Dubai Stocks Slump To 2-Year Lows As Financials Tumble. (graph)

Business Insider: 

• OK, you can now officially call me 'Chicken Little' — but I still think the sky will fall! Stocks are still frighteningly expensive on almost all historically predictive measures. Unless it is "different this time," this high level of prices will lead to lousy returns over the next decade.
• Alibaba(BABA) is buying South China Morning Post for $266 million.
• UBS: China's 'delicate balancing act' points to a slowdown in economic growth.
• Study reveals that nearly 90% of traditional Chinese medicines contain trace amounts of disturbing and toxic substances.
• The newest member of OPEC actually likes low oil prices.
• Merkel wants to 'drastically decrease' refugee arrivals in Germany.
• A Wall Street analyst just nailed the most important thing we don't know about China's economy. However, there is no formula on how much credit risk China’s financial market can handle by itself without plunging into a full-blown crisis" (emphasis ours).
• Brazilians protest to demand President Rousseff's impeachment.
• Meet the Christian female fighters taking the fight to ISIS in Syria.

Reuters:

• France's Sarkozy says strong FN vote a 'warning' to all politicians. The far-right National Front's high score in regional elections should be a warning to all mainstream politicians, former French President Nicolas Sarkozy said on Sunday after exit polls showed the FN had failed to win any regions. "This mobilization in favor of our candidates should in no way let us forget the warning sent to all politicians, ourselves included, in the first round," he said. "We now have to take the time for in-depth debates about what worries the French, who expect strong and precise answers," he said, citing Europe, unemployment, security and identity issues.

Telegraph:

• Why the coming US interest rate hike is like none ever witnessed before. Central bank watchers believe the Federal Reserve is finally ready to pull the trigger on an interest rate hike.

Night Trading

• Asian indices are -2.0% to -1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 142.0 +4.75 basis points.

• Asia Pacific Sovereign CDS Index 78.25 +5.25 basis points.
• Bloomberg Emerging Markets Currency Index 69.21 -.09%.  

• S&P 500 futures +.25%.

• NASDAQ 100 futures +.19%.

Morning Preview Links 

Earnings of Note

Company/Estimate 

• (NX)/.26
• (FCEL)/-.28
• (PAY)/.48

Economic Releases

• None of note

Upcoming Splits

• None of note

Other Potential Market Movers

• The RBA minutes could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by technology and industrial 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 week.

Weekly Outlook

Week Ahead by Bloomberg. 

Wall St. Week Ahead by Reuters.

Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as commodity weakness, rising European/Emerging Markets/US High-Yield debt angst and global growth concerns offset bargain-hunting, short-covering and seasonal strength. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 25% net long heading into the week.