Today's Headlines

Bloomberg:

• How Will China React to Trump's Trade Policies? (video)
• Americans’ Market Sentiment Jumps Most Since Dot-com Boom: Chart.

Wall Street Journal:

• Donald Trump’s Cabinet Picks Disagree With President-Elect on Some Key Issues. Divergent views on deficit, trade, climate change and foreign policy pose challenge for the incoming administration.
• Bankruptcy Becomes an Option for Some Borrowers Burdened by Student Loans. An argument that focuses on the legal definition of a student loan is at the crux of efforts to discharge the debt.
• Obama’s Parting Betrayal of Israel. Trump must ensure there are consequences for supporting U.N. Security Council Resolution 2334.

Fox News:

• Carrie Fisher, best known as Princess Leia in Star Wars, dead at 60. (video)

CNBC:

• Trump wants to spend $1 trillion on infrastructure. Here's how he can get a better deal.
• US accuses Chinese citizens of hacking law firms for insider trading.

Zero Hedge:

• Post-Christmas Chaos Strikes America's Malls: SWAT, Gunfire, & Mass Brawls From Texas To New Jersey.
• 2016 Stock Surprises, Sentiment Swings, & Sector Surges (In 1 Simple Chart).
• ECB Lowers Deutsche Bank's Capital Requirements, Allowing It To Pay Bonuses.
• Chinese Interbank Funding Freezes Again As Overnight Repo Hits 33%. (graph)
• Guess Which Billionaire (From Omaha) Made More Money Than Anyone Else In The World Thanks To Trump.
• Consumer Confidence Jumps To Highest Since 2001 As "Trump Hope" Soars. (graph)
• Taiwan Warns Beijing Threat "Growing By The Day" As Chinese Carrier Conducts Drills.
• Barack Backhands Bibi.
• US Home Prices Hit A Record High In October - What Happens Next. (graph)

Business Insider:

• The Fed has given Trump cover to unwind a key Wall Street rule.
• GOLDMAN SACHS(GS): 4 key transitions we’re watching in 2017.
• These are Stratfor's chilling predictions for a tumultuous 2017.

The Telegraph:

• Why the crisis in Greece has no end in sight - and another summer of stress is on the way.
• From a US/Germany trade war to a tech collapse in China: Five black swans for 2017.

Bear Radar

Style Underperformer:

• Large-Cap Value +.1%

Sector Underperformers:

• 1) Gaming -.5% 2) Construction -.2% 3) Utilities -.1%

Stocks Falling on Unusual Volume: 

• SGEN, PTLA, SRG, EROS, AMPH, DQ, LE, RHT, NDRM, IEP, NBIX, CCRC, RLI, RBA, OMAB, POL, AVXS, ACAD, TLND and WTW

Stocks With Unusual Put Option Activity:

• 1) HLT 2) LOW 3) REGN 4) NVDA 5) WMT

Stocks With Most Negative News Mentions:

• 1) ALR 2) ALXN 3) ALN 4) AVXS 5) ARWR

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.4%

Sector Outperformers:

• 1) Gold & Silver +1.7% 2) Steel +1.6% 3) Alt Energy +1.5%

Stocks Rising on Unusual Volume:

• SCMP, YELP, NVDA and CSIQ

Stocks With Unusual Call Option Activity:

• 1) HLT 2) YELP 3) IONS 4) SWHC 5) WATT

Stocks With Most Positive News Mentions:

• 1) VRX 2) WMT 3) CNC 4) DUK 5) AVID

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -49.4% Below 100-Day Average
• 6 Sectors Rising, 4 Sectors Declining
• 66.8% of Issues Advancing, 29.5% Declining
• 111 New 52-Week Highs, 11 New Lows
• 58.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 42.0%
• Vix 12.1 +5.7%
• Total Put/Call .76 -11.6%
• TRIN/Arms .79 -5.8%

Tuesday Watch

Today's Headlines

Bloomberg:

• China to Cut Solar, Wind Power Prices as Project Costs Fall. China is reducing the amount of money it pays to newly completed solar and wind power generators for their electricity, in order to reflect declines in construction costs, the country’s price regulator and economic planner said Monday. The nation will cut tariffs paid to solar farms by as much as 19 percent in 2017 from this year’s levels, and by as much as 15 percent for wind mills in 2018 from current prices, according to a statement posted on the National Development and Reform Commission’s website. The changes will help reduce subsidies paid to new photovoltaic and wind power projects by about 6 billion yuan ($863 million) annually, the NDRC said.
• Bundesbank’s Weidmann Warns of Hasty Rescue for Monte Paschi. Bundesbank President Jens Weidmann said the bar should be high for government funds being used in a rescue of Italian lender Banca Monte dei Paschi di Siena SpA. Government funds are intended as a “last resort,” Weidmann said in an interview with German newspaper Bild, with the banker adding that planned measures by the Italian government should only be directed to banks that are healthy at “their core.” If government funds are used, there should be matching public funding because of high government debt, he said.
• Asia Stocks Poised for Mixed Open After Holiday: Markets Wrap. Futures on the Nikkei 225 Stock Average traded in Chicago were lower while contracts on South Korea’s Kospi Index indicated gains. Contracts on the FTSE China A50 index were lower, after the Shanghai Composite Index erased a decline of 1.3 percent on Monday. The yen slipped after climbing 0.7 percent over the previous four sessions. Financial markets in Australia, New Zealand and Hong Kong are shut on Tuesday, while those in the U.S. and Europe will resume trading after a holiday Monday.
• Democrats Plotting ‘Collision Course’ With Trump’s Tax Plan. Congressional Democrats say they’ll try to thwart Republican plans to overhaul the U.S. tax code by portraying them as a boon for the rich that betrays President-elect Donald Trump’s campaign promise to fight for working Americans.

Wall Street Journal:

• Xi’s Power Play Foreshadows Historic Transformation of How China Is Ruled. Party insiders say president wants to remain in office after his second term, breaking succession conventions.
• As Obama Steps Aside, Banks See New Opportunity in Student-Lending Business. Trump administration seen receptive to shifting origination of student loans to private lenders.
• Financial Holdings of Some Donald Trump Nominees Complicate Approval Process. Cabinet picks with vast holdings must work to get their books in line ahead of Senate hearings.
• Dollar’s Rise Threatens Manufacturing Recovery. Greenback surges to 14-year high in wake of Trump win and Fed move, making U.S. goods more expensive abroad.

Fox News:

• China's 1st aircraft carrier sails into South China Sea.
• Bloody Christmas weekend: More than 40 shot, 11 killed in Chicago.

CNBC:

• Suddenly hot smart home devices are ripe for hacking, experts warn.

Zero Hedge:

• How Americans Spent Their Money In The Last 75 Years (In 1 Simple Chart). 
• The Italian Bank Run: Monte Paschi Capital Shortfall Surges 75% To €8.8Bn Due To "Rapid Liquidity Deterioration".
• As Mystery Of China's Multi-Billionaire Default Deepens, A New "Bond Scare" Emerges.
• Here's How Your State Ranks On Credit Card Debt Per Household. (graph)
• Israel Urges Jews To Leave France, Suspends "Working Ties" With Countries That Voted For UN Resolution. 
• U.S. Prepares To Sell Off Its Oil Reserves. (graph)
• Iran Negotiated Boeing Plane Purchases At Half Price. (graph)
• The Bank of Japan Was The Top Buyer Of Japanese Stocks In 2016. (graph)
• Global Shares Trade Mixed In Thin Holiday Trade; Yen Rises As China Rebounds.
• Bank Of Canada Lays Out In YouTube Clip How The Economy Could Tank. (video)
• Islamists Attack Christmas, But Europeans Abolish It.
• An Angry Israel Summons Foreign Ambassadors, Accuses Obama Of Conspiring Against It.
• Demographic Shock Ground Zero: Japan Births Drop Below Million For The First Time On Record.

Business Insider:

• Israel has reportedly suspended ties with 12 UN Security Council nations.
• Vietnam could be 'sowing the seeds of the next crisis'.
• Chinese cities are undergoing an insane housing boom with prices up as much as 43% in a year.
• Trump: The UN 'is just a club for people to get together' and 'have a good time'.
• The African country the suspected Berlin market attacker was from has become a breeding ground for ISIS.

NY Times:

• China’s ‘Godfather of Real Estate’ Pitches Reverse Mortgages to Skeptical Elders.

Night Trading

• Asian indices are -.25% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 115.0 -.25 basis point.
• Asia Pacific Sovereign CDS Index 37.0 -.5 basis point.
• Bloomberg Emerging Markets Currency Index 69.57 -.11%.
• S&P 500 futures -.07%.
• NASDAQ 100 futures -.01%.

Morning Preview Links

Earnings of Note

Company/Estimate

• None of note

Economic Releases
9:00 am EST

• The S&P CoreLogic CS 20-City MoM for October is estimated to rise +.51% versus a +.37% gain in September.

10:00 am EST

• Consumer Confidence for December is estimated to rise to 108.5 versus 107.1 in November.
• The Richmond Fed Manufacturing Index for December is estimated to rise to 5.0 versus 4.0 in November. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Jobless rate, Japan CPI, Japan Industrial Production and the $26B 2Y T-Note auction could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by consumer 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 50% net long heading into the week.

Today's Headlines

Bloomberg:

• Obama Staged ‘Shameful Ambush’ of Israel, Netanyahu Says. President Barack Obama’s administration staged a “shameful ambush” by allowing the UN Security Council to pass a resolution declaring Israel’s West Bank settlements illegal, Israeli Prime Minister Benjamin Netanyahu said in his first public comments since Friday’s vote. Netanyahu said Obama broke a long-standing U.S. commitment not to allow the UN to impose conditions on Israel in its conflict with the Palestinians. He spoke Saturday night at a ceremony for the start of the Hanukkah holiday, a day after the Security Council voted 14-0, with the U.S. abstaining, in favor of Resolution 2334. The measure demands that Israel cease construction in all areas it captured in the 1967 Middle East war. While the immediate practical impact is unclear, the resolution could strengthen the movement to boycott Israel and open the door for lawsuits against Israel in international bodies.  
• Investors Betting on Oil Price Drop Flee as Production Cuts Near. Oil investors seem to have less reason to doubt that OPEC and other producers will make the cuts needed to balance the market. Money managers trimmed bets on falling West Texas Intermediate crude prices to the lowest level since August 2014 as the Organization of Petroleum Exporting Countries and other crude-exporters prepare to start curbing output in January. Oil market volatility dropped to the lowest level in more than two years on Dec. 20 and futures settled at a 17-month high on Friday.

Wall Street Journal:

• Donald Trump Says He Will 'Dissolve' Trump Foundation. President-elect says he is taking the step to avoid the ‘appearance’ of a conflict of interest.
• Obama’s Anti-Israel Tantrum. The U.N. resolution is a defining act of Obama’s Presidency.

Barron's:

• Had bullish commentary on (HDS) and (XOXO).

Fox News:

• After UN veto, Kerry suggests Israel's West Bank foray spawning 'terrorism'. (video)

Zero Hedge:

• Obama Quietly Signs The "Countering Disinformation And Propaganda Act" Into Law.
• While Blaming Trump For "Arms Race", Obama Signs Momentous "Star Wars II" Defense Bill.
• The Real Cost Of Christmas Has Never Been Higher.
• 2 Charts That Debunk The Bullish Case For Stocks.
• FBI Warns Of Possible "ISIS-Inspired" Attacks On US Churches, Holiday Gatherings.
• Dave Collum's 2016 Year In Review - "And Then Things Got Really Weird...".
• Guess Which Country's Credit Risk Has Improved The Most Since Trump's Election. (graph)
• Top Ex-White House Economist Admits 94% Of All New Jobs Under Obama Were Part-Time. (graph)
• Europe's Future - Merkel Or Le Pen?
• They're Back: Foreign Central Banks Quietly Unleash A Treasury Buying Spree. (graph)
• Trump's Ominous Warning To The UN: "Things Will Be Different After Jan. 20th".
• "Not An Algo Was Stirring..." - Dow's Tightest Trading Range In 30 Years. (graph)

Business Insider:

• The Fed has thrown in the towel.
• Jeremy Corbyn used his Christmas message to warn of a 'shocking rise' in homelessness.
• NOBEL ECONOMIST: 'I don’t think globalisation is anywhere near the threat that robots are'.
• The UN just put Israel on notice — and the US let it happen.
• Trump goes off on Germany terrorist: 'Such hatred! When will the U.S., and all countries, fight back?'
• Democrats scorch Obama over UN vote condemning Israeli settlements.
• Bank of America didn't waste any time raising its own interest rates.