Bear Radar

Style Underperformer:

• Large-Cap Growth +.04%

Sector Underperformers:

• 1) Gold & Silver -1.50% 2) Oil Service -1.35% 3) Utilities -1.33%

Stocks Falling on Unusual Volume:

• GTT, FIVE, BIG, SRF, AEO, CTRP, COO, CAF, GCO, SSL, ANET, FET, IHS, BTE, AMBA, OAS, TRAK, PRTA, TTC, TD, RRC, SVVC, WCC, LM and VNCE

Stocks With Unusual Put Option Activity:

• 1) AVP 2) EWW 3) MS 4) PSX 5) CNX

Stocks With Most Negative News Mentions:

• 1) SIRI 2) ADP 3) IHS 4) AEO 5) DLTR
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +.69%

Sector Outperformers:

• 1) Banks +1.81% 2) Hospitals +1.71% 3) Airlines +1.61%
  

Stocks Rising on Unusual Volume:

• FRAN, ZION and THC

Stocks With Unusual Call Option Activity:

• 1) VIAB 2) ULTA 3) ETFC 4) SYNA 5) T
  

Stocks With Most Positive News Mentions:

• 1) ULTA 2) FSL 3) PSMT 4) NOC 5) DG
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Friday Watch

Evening Headlines 
Bloomberg: 

• Putin Says Crimea Sacred, Attacks U.S., EU Over Ukraine. President Vladimir Putin attacked the U.S. and Europe for backing Ukraine and said that Crimea, which the Kremlin annexed from the former Soviet republic in March, has “sacred meaning” as Russia’s “Jerusalem.” As Ukrainian officials planned to pause shelling on Dec. 9, Putin said he isn’t surprised by the country’s separatist conflict, given what he termed “the coup and violent takeover of power” in Kiev in February. He said the U.S. and European Union, who have imposed sanctions that are hobbling Russia’s economy over its stance on Ukraine, would have penalized his country even if the conflict hadn’t broken out. 

• Putin Seen Grasping at Straws as Economic Cures Fail to Impress. Russian President Vladimir Putin’s recipe for riding out an economic storm has a whiff of the panic he’s trying to quell. The measures, announced yesterday in a 70-minute Kremlin speech to lawmakers and top officials, ranged from a proposed tax and legal amnesty for those repatriating capital to a four-year moratorium on tax increases. That’s too little, too late, say analysts at banks including VTB Capital and Danske Bank.

• Siege in West Iraq Shows Failure to Reverse Islamic State Gains. Hauling bodies from under the rubble, Ahmed al-Dulaimi’s fighters count the cost of defending the only major city in western Iraq yet to fall to Islamic State. Last week, at least 17 of his men were killed resisting an onslaught to capture Ramadi, the capital of Iraq’s biggest province. With government forces weakened and local government leaders fleeing to safety, tribal fighters like Dulaimi’s group are among the last standing. 

• Japanese Corporate Bankruptcies Linked to Weak Yen at Record. Japanese corporate bankruptcies linked to the yen’s slide rose to a record, highlighting strains on small and medium-sized companies as Prime Minister Shinzo Abe campaigns for re-election on his economic strategy. Forty-two of the companies that failed in November cited the weaker currency as a contributor, bringing the total number of bankruptcies associated with the yen this year to 301, almost triple that of the same period in 2013, according to a survey by Teikoku Databank Ltd. It said surging costs of imported food, metals and construction materials are squeezing small companies.

• China Plans Wealth-Product Rules to Limit Shadow Banking Risks. China urged banks to directly invest money raised from wealth-management products, signaling a more limited role for trusts and securities firms, and said it wanted to end implicit guarantees of the investments. The China Banking Regulatory Commission plans to let wealth management funds set up their own investment accounts, a draft rule seen by Bloomberg News showed. Money can’t be invested in domestic listed shares, shares of unlisted firms, or private placements by listed companies, unless it’s for high-net worth individuals, the rule said. A Beijing-based spokeswoman for the regulator confirmed a document was circulated to banks for feedback. The value of wealth-management products surged to 12.7 trillion yuan ($2.1 trillion) by June, leading growth in so-called shadow banking as high returns and savers’ perceptions of an implicit government guarantee fueled investment.

• Don’t Blink as China Stocks Swing Most Since 2010 on Volume Jump. The Shanghai Composite Index (SHCOMP) surged as much as 2.7 percent before tumbling to a 3 percent drop today: all within the first 90 minutes of trading. The 165-point swing in the benchmark index is the biggest since November 2010 and comes at the end of a week where volumes surged to all-time highs. The gauge rose 0.3 percent to 2,908.43 as of 10:59 a.m. local time. “The market is becoming very speculative,” said Wang Zheng, the Shanghai-based chief investment officer at Jingxi Investment, which oversees about $120 million. “The market will be in for a very wild up-and-down next week.”

• Asian Stocks Little Changed Before U.S. Monthly Jobs Report. Asia’s regional benchmark index was little changed ahead of a monthly U.S. jobs report. Materials shares led declines, while consumer companies advanced. The MSCI Asia Pacific Index (MXAP) slipped less than 0.1 percent to 140.68 as of 9:01 a.m. in Tokyo, before markets opened in Hong Kong and China. Fortescue Metals Group Ltd. slid 4 percent in Sydney. The Asian equity gauge is flat this week.

• Brent Drops From 4-Year Low as Saudi Discounts Deepen Price War. Brent extended losses from a four-year low as Saudi Arabia offered customers in Asia record discounts on its crude, bolstering speculation it’s defending market share. West Texas Intermediate dropped in New York. Futures fell as much as 0.7 percent in London and are headed for a second weekly decline. State-run Saudi Arabian Oil Co. cut its differential for Arab Light sales to Asia next month to $2 a barrel below a regional benchmark, according to a company statement. That’s the lowest in at least 14 years. The kingdom doesn’t want to subsidize Iran, Iraq and Venezuela and is willing to let the market decide prices, said Daniel Yergin, an energy analyst and Pulitzer Prize-winning author. Crude slumped 18 percent last month.

• Greenspan Says He Would Pre-Empt Asset Bubbles Financed by Debt. Former Federal Reserve Chairman Alan Greenspan, who was blamed by some economists for overheating equity and housing prices in the 1990s and 2000s, said that were he in the job today, he would take pre-emptive action to tackle asset bubbles if they were financed by leverage.

Wall Street Journal:

• Protests Spread Across Country Day After Eric Garner Grand-Jury Decision. Thousands of Demonstrators Gather in Lower Manhattan. Protests rippled across the country Thursday, a day after a grand jury didn’t charge a New York City police officer in the death of a black man who allegedly was selling untaxed cigarettes last summer. For a second night, demonstrators gathered in New York, Washington, D.C., and beyond chanting variations of: “Shut the whole system down!” “No justice, no peace” and “I can’t breathe.” The crowd swelled to thousands in New York. 

• Gunbattle Erupts in Chechen Capital of Grozny. Fighting Raged for About 12 Hours; Police Say Wiped out Last of the Gunmen. Islamist rebels launched the largest attack in years in the capital of the Russian republic of Chechnya early Thursday, leaving dozens of wounded and at least 10 police officers and 10 gunmen dead, officials said. The early morning attack came hours before a state-of-the union address by Russian President Vladimir Putin from the Kremlin. The violence shattered the relative calm of Grozny, which has been relatively stable in recent years under Chechen leader Ramzan Kadyrov.

• Uber Snags $41 Billion Valuation. Investors Place $1.2 Billion Bet Ride-Sharing Service Keeps Breakneck Pace.   

• 5 Things to Watch in the November Jobs Report. 

• ‘Peak Oil’ Debunked, Again. The world relearns that supply responds to necessity and price. It has been 216 years since Thomas Malthus gave birth to the idea that mankind’s appetite for natural resources would outstrip nature’s capacity to supply them. There have since been regular warnings that the world is running out of soybeans, helium, chocolate, tunsgsten, you name it—and that population growth has become unsustainable.

Fox News:

• 'Game we can’t win': Coal states brace for growing number of plant closures over EPA rules. The energy industry and coal-producing states are projecting a wave of power plant closures in the final two years of the Obama administration as Environmental Protection Agency regulations take hold. 

• House rebukes Obama over immigration actions, spending fight looms. House Republicans voted Thursday to block President Obama's immigration executive actions, though it was unclear whether the largely symbolic step would be enough to prevent a risky budget stand-off next week. The House voted 219-197 for the bill, by Rep. Ted Yoho, R-Fla., that declares Obama's actions "null and void and without legal effect."

MarketWatch.com:

• American Eagle Outfitters(AEO) shares slip on outlook.

Zero Hedge:

• 3 Things Worth Thinking About. (graph)

• "Draghi Loses The Majority" Blasts A Triumphant German Press.

• ECB Mutiny Sparks Late-Day Selling Scramble As QE Hopes Fade. (graph)

• A Comprehensive Breakdown of America’s Economic House of Cards.

• Could Falling Oil Prices Spark A Financial Crisis?

• Eric Garner Protesters Swarm New York Tunnels, Squares, & Bridges; 100s Heading For 1 Police Plaza - Live Feed.

Business Insider:

• Romney's Inner Circle Is Convinced He's Running.

• Sears'(SHLD) Collapse Is Now 'Inevitable'. 

• The Benghazi Scandal Just Got Very Interesting Again.

• Putin Gives Passionate Speech About The Rise Of Russia And How The West Can't Stop It.

• One Of The Biggest Swiss Watch Brands May Unveil An Intel-Powered Smartwatch Next Month.

US News:

• U.S. Oil Reserves Hit 38-Year High. (graph) Fracking has unleashed a torrent of oil and natural gas, the Energy Information Administration says.

Reuters:

• U.S.-based energy stock funds attract $829 mln over week - Lipper.

Caixin:

• China 2015 GDP Growth May Be 7%, Former NEA Head Says. China's economic growth may drop to about 7% next year, citing Zhang Guobao, former head of National Energy Administration at a forum in Guangdong's Hengqin today.

Evening Recommendations 
Bernstein:

• Rated (EW) Outperform, target $155.

FBR:

• Rated (CAVM) Outperform, target $65.

• Rated (LSCC) Outperform, target $8.50.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 101.0 +1.0 basis point.

• Asia Pacific Sovereign CDS Index 61.75 unch.

• FTSE-100 futures n/a.

• S&P 500 futures -.01%.

• NASDAQ 100 futures  -.02%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BIG)/-.05

• (GCO)/1.44

• (BNS)/1.38

Economic Releases
8:30 am EST

• The Change in Non-Farm Payrolls for November is estimated to rise to 230K versus 214K in October.

• The Unemployment Rate for November is estimated to remain at 5.8%.

• Average Hourly Earnings for November are estimated to rise +2.1% versus a 2.0% gain in October. 

• The Trade Deficit for October is estimated at -$41.2B versus -$43.0B in September.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Meyer speaking, German Factory Orders report, (OMI) investor day, (ITW) investor meeting and the American Society of Hematology Annual Meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and commodity 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 Slightly Lower into Afternoon on Global Growth Fears, Emerging Markets Debt Angst, Technical Selling, Metals & Mining/Road & Rail Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Slightly Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 12.24 -1.84%

• Euro/Yen Carry Return Index 154.77 +.49%

• Emerging Markets Currency Volatility(VXY) 8.52 -1.16%

• S&P 500 Implied Correlation 65.77 +.14%

• ISE Sentiment Index 75.0 -44.85%

• Total Put/Call 1.03 +32.05%

• NYSE Arms 1.42 +83.76% 

Credit Investor Angst:

• North American Investment Grade CDS Index 61.75 +.32%

• European Financial Sector CDS Index 58.75 +.89%

• Western Europe Sovereign Debt CDS Index 26.73 -.09%
• Asia Pacific Sovereign Debt CDS Index 62.66 +1.54%

• Emerging Market CDS Index 293.30 +.70%

• China Blended Corporate Spread Index 326.01 -.59%
• 2-Year Swap Spread 21.0 unch.

• TED Spread 23.0 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -11.25 +1.0 basis point

Economic Gauges:

• 3-Month T-Bill Yield .02% +1.0 basis point

• Yield Curve 172.0 -1.0 basis point

• China Import Iron Ore Spot $71.25/Metric Tonne +2.89%

• Citi US Economic Surprise Index 12.10 -.1 point
• Citi Eurozone Economic Surprise Index -25.60 +.6 point

• Citi Emerging Markets Economic Surprise Index -4.9 -.7 point

• 10-Year TIPS Spread 1.78 -2.0 basis points

Overseas Futures:

• Nikkei Futures: Indicating +8 open in Japan

• DAX Futures: Indicating +72 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech sector longs and index hedges

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

• Market Exposure: Moved to 75% Net Long

Bull Radar

Style Outperformer:

• Large-Cap Growth +.04%

Sector Outperformers:

• 1) Airlines +2.32% 2) Hospitals +1.23% 3) Restaurants +.58%
  

Stocks Rising on Unusual Volume:

• HE, ENB, NOAH, DGLY, EEP, AVGO, RCAP, SPNC, CSTM, HA, SWKS and TASR

Stocks With Unusual Call Option Activity:

• 1) OPK 2) ASHR 3) AEO 4) NFX 5) QEP
  

Stocks With Most Positive News Mentions:

• 1) MBLY 2) AVGO 3) PG 4) PRA 5) LB
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Thursday Watch

Evening Headlines 
Bloomberg: 

• Putin Out to Ease ‘Panic’ at Reeling Economy as Oil Sinks Ruble. President Vladimir Putin will try to persuade Russians today that panic isn’t the answer to their economic pain. His annual speech to both houses of parliament and other officials, delivered in a chandeliered ceremonial hall of the Grand Kremlin Palace in Moscow, is taking on added importance this year. The ruble is near a record low, the economy is headed for a recession and banks are pleading for state aid. “He’ll seek to soothe nerves” in the face of “some panic,” Alexey Panin, deputy director of the Center for Political Information, said by phone from the Russian capital. “But he’ll have to be realistic and present facts and figures that will convince people that all’s well.”

• China’s Commitment to Freedoms in Hong Kong Questioned by U.S. The U.S. State Department’s top official for Asian affairs questioned whether China will keep its promises to preserve Hong Kong’s autonomy amid street protests demanding open elections. “We are concerned by signs that China’s commitment to the ‘One Country, Two Systems’ model,as well as to maintaining a high degree of autonomy, are eroding,” Assistant Secretary of State Daniel Russel told a Senate subcommittee yesterday that questioned the Obama administration’s willingness to prod China.

• China Government Control Endures Through Xi’s Embrace of Market. A year after China’s Communist Party vowed to give markets a decisive role in allocating resources, state intervention in the economy remains pervasive.

• Brazil Doubles Pace of Rate Increase to Meet Inflation Vow. Brazil doubled the pace of the interest rate increases as the government of re-elected President Dilma Rousseff pledges to slow inflation to its 4.5 percent target, a level unseen for more than four years. The bank’s board, led by its President Alexandre Tombini, voted unanimously today to raise the benchmark Selic by half a point to 11.75 percent after a quarter-point increase Oct. 29, as forecast by 31 of 55 economists surveyed by Bloomberg. (BZSTSETA) Twenty-four analysts forecast a quarter-point increase.

• Honda’s Escalating Air-Bag Crisis Frays Half-Century Partnership. Honda Motor Co. signaled a growing rift in its more than 50-year relationship with air-bag maker Takata Corp., as the automaker struggles to contain a crisis that’s killed five motorists in its cars. Honda turned to Stockholm-based Autoliv Inc. to supply replacement parts for recalled vehicles and is negotiating with Japan’s Daicel Corp. on securing more of the components. The carmaker also volunteered to a nationwide recall to replace driver-side safety devices, hours after Takata snubbed a deadline set by the U.S. auto regulator to take similar action.

• Asia Stocks Gain, Led by Japan on Yen; Oil Advances. Asian stocks rose, as Japanese shares extended gains with the dollar near its strongest level since 2007 versus the yen. South Korea’s won slipped while oil climbed in New York and London. The MSCI Asia Pacific Index added 0.4 percent by 11:01 a.m. in Tokyo, as Japan’s Topix index rose 0.8 percent toward the highest level since December 2007.

• Sub-$50 Oil Surfaces in North Dakota Amid Regional Discounts. Oil market analysts are debating if oil will fall to $50. In North Dakota, prices are already there. Crude sold at the wellhead in the Bakken shale region in North Dakota fell to $49.69 a barrel on Nov. 28, according to the marketing arm of Plains All America (PAA) Pipeline LP. That’s down 47 percent from this year’s peak in June, and 29 percent less than the $70.15 paid for Brent, the global benchmark. 

• Canada’s Oil Dividends Threatened as $70 Crude Hurts Cash. The ability of Canadian oil producers to lure investors with generous dividends is being tested as cash flow is squeezed by crude trading near five-year lows. Canadian Oil Sands Ltd. (COS) will cut its quarterly dividend 42 percent to 20 cents a share in late January, the Calgary-based company said in a 2015 budget forecast statement today after the close of North American markets. Companies will have to choose between reducing spending or payments to shareholders, said Sprott Asset Management LP’s Eric Nuttall.

Wall Street Journal: 

• Dollar’s Rise Causes Pain Abroad. A surging dollar and falling commodities prices are delivering a windfall to American shoppers and confounding central bankers by widening the gap between the expanding U.S. economy and struggling countries in Europe and Asia.

Fox News: 

• GOP lawmakers, Benghazi survivors fume over House report. A recent report by a GOP-led committee that was seen as going easy on the Obama administration's Benghazi response is drawing stinging complaints from a number of Republicans on the panel, as well as survivors of the attack. Some GOP members on the House Intelligence Committee grumble that the final product "might as well have been written by the minority," while other House Republicans say they are frustrated with the committee's decision to release a report with so many "holes."

MarketWatch.com:

• Hindenburg Omen cries bear market, again. (graph)

• Stock-market correction imminent. (graph)

CNBC:

• Texas AG: 17 states to sue Obama over immigration executive order. Texas is leading a 17-state coalition that sued the Obama administration on Wednesday over its executive order to ease the threat of deportation for some 4.7 million undocumented immigrants, Texas Attorney General Greg Abbott said.

• OPEC won't stop US oil production growth. (video) U.S. oil production could increase next year to levels not seen since the 1970s, despite OPEC's efforts to muscle out American shale producers. While U.S. oil production is predicted to rise by another million barrels a day during 2015 from the current 9 million barrels a day, forecasts are coming down on expectations that OPEC's unwillingness to cut production will keep a lid on prices well into next year. Lower prices limit new drilling and hit high-cost wells first.

Zero Hedge: 

• The Oil-Drenched Black Swan, Part 3: Multiple Risks, Multiple Unknowns.

• Activist Hedge Fund Goes Postal On Jim Cramer.

• James Montier: "Stocks Are Hideously Expensive" In "The First Central Bank Sponsored Bubble".

• And If You Act Now, We'll Throw In A Subprime Car Loan Bubble For Free.

• "We Are All In A Ponzi-World Right Now, Hoping To Get Bailed-Out By The Next Person".

• B-Dud Explains The Fed’s Economic Coup (Or Why Every Asset Price Influencing Monetary Policy Transmission Is Now Manipulated).

Business Insider:

• 9 Crazy Details About The Unprecedented Sony Hack.

• Protests Erupt In NYC After A Grand Jury Didn't Indict Cop Involved In Chokehold Death.

Reuters:

• Brazil steps up monetary tightening to regain investor confidence. Brazil raised its key interest rate on Wednesday to a three year high, accelerating monetary tightening in a bold move to quell inflation and reinforce President Dilma Rousseff's shift toward more business-friendly policies. In a unanimous vote, the central bank's monetary policy committee raised its benchmark Selic rate by 50 basis points to 11.75 percent, its highest since August 2011. The size of the rate increase surprised many analysts who had expected the bank to opt for a second straight 25-basis-point hike to lower inflation that remains above the 6.5 percent ceiling of the official target.

• Plosser says Fed at risk of getting behind curve on rate hikes. The Federal Reserve is at risk of letting too much data put it "behind the curve" on raising interest rates, a top Fed official said on Wednesday, adding that inflation pressures would build the longer the central bank waited for "lift-off." "We're always going to get more data. Maybe it will be good data, maybe bad ... And if you allow that to freeze your policy-making process, you're always going to be stuck behind the curve," Philadelphia Federal Reserve Bank President Charles Plosser said to reporters after a speech at a luncheon here.

Evening Recommendations 
BofA:

• Cut (RIO) to Underperform.

Night Trading

• Asian equity indices are -.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 100.0 -1.0 basis point.

• Asia Pacific Sovereign CDS Index 61.75 -.75 basis point.

• FTSE-100 futures n/a.

• S&P 500 futures -.01%.

• NASDAQ 100 futures  +.03%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (KR)/.61

• (CBK)/.21

• (EXPR)/.15

• (UNFI)/.63

• (SHLD(-3.31)

• (DG)/.80

• (TTC)/.15

• (BKS)/.31

• (COO)/2.03

• (ULTA)/.84

• (AEO)/.22

• (SWHC)/.07

• (FNSR)/.25

• (ZUMZ)/.53

Economic Releases
7:30 am EST

• Challenger Job Cuts for November.

• RBC Consumer Outlook Index.

8:30 am EST

• Initial Jobless Claims are estimated to fall to 295K versus 313K the prior week.

• Continuing Claims are estimated to rise to 2318K versus 2316K prior.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Meyer speaking, ECB rate decision, Draghi press conference, BoE decision, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index, Goldman Automotive Conference, RBC Telecom/Media/Tech Conference, (LSTR) mid-quarter conference call, (HUM) investor day, (URI) analyst day, (SBUX) investor day, (ALK) investor meeting and the (ARG) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the early close, finishing mixed. The Portfolio is 50% net long heading into the day.