Weekly Scoreboard*

Indices

• S&P 500 1,255.19 +.88%
  
• DJIA 12,184.20 +1.37%
  
• NASDAQ 2,646.85 +.76%
  
• Russell 2000 745.40 +1.41%
  
• Wilshire 5000 13,013.10 +.82%
  
• Russell 1000 Growth 585.32 +.51%
  
• Russell 1000 Value 620.03 +1.02%
  
• Morgan Stanley Consumer 747.84 +1.46%
  
• Morgan Stanley Cyclical 902.39 +.33%
• Morgan Stanley Technology 614.92 +.50%
  
• Transports 4,957.02 +.21%
  
• Utilities 446.93 +.74%
  
• MSCI Emerging Markets 38.91 -2.42%
  
• Lyxor L/S Equity Long Bias Index 979.81 +3.05%
  
• Lyxor L/S Equity Variable Bias Index 830.81 -.07%
  
• Lyxor L/S Equity Short Bias Index 591.21 -2.34%
  

Sentiment/Internals

• NYSE Cumulative A/D Line 126,951 +1.46%
  
• Bloomberg New Highs-Lows Index -268 -132
  
• Bloomberg Crude Oil % Bulls 33.0 -13.2%
  
• CFTC Oil Net Speculative Position 155,804 -.43%
  
• CFTC Oil Total Open Interest 1,332,544 +2.31%
  
• Total Put/Call 1.19 +21.43%
  
• OEX Put/Call 1.88 +29.66%
  
• ISE Sentiment 153.0 +93.67%
  
• NYSE Arms .52 -52.29%
  
• Volatility(VIX) 26.38 -4.14%
• S&P 500 Implied Correlation 78.93 +1.35%
  
• G7 Currency Volatility (VXY) 12.87 +.23%
  
• Smart Money Flow Index 10,291.53 -1.74%
  
• Money Mkt Mutual Fund Assets $2.678 Trillion +1.0%
  
• AAII % Bulls 38.57 +16.74%
  
• AAII % Bears 34.76 -11.82%

Futures Spot Prices

• CRB Index 306.43 -2.27%
  
• Crude Oil 99.41 -1.70%
  
• Reformulated Gasoline 259.61 -1.33%
  
• Natural Gas 3.32 -7.50%
  
• Heating Oil 291.25 -2.84%
  
• Gold 1,716.80 -1.85%
  
• Bloomberg Base Metals 209.52 -1.10%
  
• Copper 355.75 -.78%
  
• US No. 1 Heavy Melt Scrap Steel 401.67 USD/Ton unch.
  
• China Iron Ore Spot 139.50 USD/Ton +.50%
  
• UBS-Bloomberg Agriculture 1,430.56 -1.82%
  

Economy

• ECRI Weekly Leading Economic Index Growth Rate -7.6% +20 basis points
• Philly Fed ADS Real-Time Business Conditions Index -.0053 +69.36%
  
• S&P 500 EPS Estimates (FY 2012 Mean) 108.89 -.06%
  
• Citi US Economic Surprise Index 78.0 -7.7 points
  
• Fed Fund Futures imply 32.0% chance of no change, 68.0% chance of 25 basis point cut on 12/13
• US Dollar Index 78.63 -.06%
  
• Yield Curve 183.0 +5 basis points
  
• 10-Year US Treasury Yield 2.06% +3 basis points
  
• Federal Reserve's Balance Sheet $2.803 Trillion +.22%
  
• U.S. Sovereign Debt Credit Default Swap 52.41 +3.65%
  
• Illinois Municipal Debt Credit Default Swap 269.0 -3.14%
  
• Western Europe Sovereign Debt Credit Default Swap Index 367.34 +8.20%
• Emerging Markets Sovereign Debt CDS Index 292.67 +1.62%
  
• Saudi Sovereign Debt Credit Default Swap 127.64 +.50%
• Iraqi 2028 Government Bonds 82.93 +.50%
• China Blended Corporate Spread Index 764.0 +10 basis points
  
• 10-Year TIPS Spread 2.03% -3 basis points
  
• TED Spread 54.0 +1 basis point
  
• 3-Month Euribor/OIS Spread 96.0 -3 basis points
• 3-Month EUR/USD Cross-Currency Basis Swap -122.0 +4 basis points
  
• N. America Investment Grade Credit Default Swap Index 122.59 -1.32%
  
• Euro Financial Sector Credit Default Swap Index 282.22 +4.36%
  
• Emerging Markets Credit Default Swap Index 295.05 -1.01%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 276.0 unch.
  
• M1 Money Supply $2.151 Trillion +.72%
  
• Commercial Paper Outstanding 997.30 -.50%
  
• 4-Week Moving Average of Jobless Claims 393,300 -.80%
  
• Continuing Claims Unemployment Rate 2.8% -20 basis points
  
• Average 30-Year Mortgage Rate 3.99% -1 basis point
  
• Weekly Mortgage Applications 650.40 +12.84%
  
• Bloomberg Consumer Comfort -50.3 -.1 point
  
• Weekly Retail Sales +3.20% -70 basis points
  
• Nationwide Gas $3.29/gallon unch.
  
• U.S. Heating Demand Next 7 Days 12.0% below normal
• Baltic Dry Index 1,922 +3.0%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 37.50 unch.
  
• Rail Freight Carloads 243,997 +27.84%
  

Best Performing Style

• Small-Cap Growth +1.47%

Worst Performing Style

• Mid-Cap Growth -.18%

Leading Sectors

• Airlines +5.08%
  
• Computer Services +2.28%
  
• Tobacco +2.34%
• I-Banks +2.27%
• Drugs +2.03%

Lagging Sectors

• Gaming -1.28%
• Alternative Energy -1.28%
  
• Oil Service -1.91%
• Agriculture -2.46%
• Coal -3.55%

Weekly High-Volume Stock Gainers (17)

• DMAN, SFSF, GIII, MIND, ZUMZ, TLEO, MW, MPWR, GCI, AMRC, CSOD, KNXA, RATE, OXM, BAH, CPMK and TRGP
  

Weekly High-Volume Stock Losers (7)

• ATO, UVV, WABC, TEA, DRI, GTY and IVC
  

Weekly Charts
ETFs

• High-Volume Gainers
• High-Volume Losers

Stocks

• High-Volume Gainers
• High-Volume Losers
  

*5-Day Change

Stocks Higher into Final Hour on Euro Bounce, Short-Covering, Less Financial Sector Pessimism, Seasonality

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Every Sector Rising
  
• Volume: Light
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 27.06 -11.54%
  
• ISE Sentiment Index 160.0 +58.42%
  
• Total Put/Call 1.27 +32.29%
  
• NYSE Arms .58 -89.29%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 122.59 -1.74%
  
• European Financial Sector CDS Index 286.01 +2.69%
  
• Western Europe Sovereign Debt CDS Index 368.17 +2.77%
  
• Emerging Market CDS Index 293.60 -2.45%
  
• 2-Year Swap Spread 43.0 +1 bp
  
• TED Spread 54.0 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -125.50 -9.0 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.
  
• Yield Curve 183.0 +8 bps
  
• China Import Iron Ore Spot $139.50/Metric Tonne +.07%
  
• Citi US Economic Surprise Index 78.0 +1.9 points
  
• 10-Year TIPS Spread 2.03 +5 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +91 open in Japan
• DAX Futures: Indicating +13 open in Germany

Portfolio:

• Higher: On gains in my tech, retail, biotech and medical sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added some back
  
• Market Exposure: Moved to 75% Net Long

BOTTOM LINE: Today's overall market action is bullish, as the S&P 500 rebounds back near its 200-day moving average despite rising Eurozone debt angst, rising global growth fears, some earnings jitters and rising energy prices. On the positive side, Coal, Disk Drive, Homebuilding, Networking and Steel shares are especially strong, rising more than +2.75%. Small-caps are outperforming. (XLF) has traded well throughout the day. The UBS-Bloomberg Ag Spot Index is falling -1.9%, Lumber is rising +2.88% and Copper is gaining +2.4%. The 10-year Yield is rising +8 bps to 2.05%. Major European stock indices rose 1-3% today. The Germany sovereign cds is falling -4.79% to 99.0 bps, the Belgium sovereign cds is falling -2.28% to 315.67 bps and the France sovereign cds is falling -1.98% to 209.33 bps. On the negative side, Ag, Telecom and Retail shares are flat-to-slightly higher on the day. Oil is rising +1.62% and Gold is rising +.44%. The Italy sovereign cds is rising +1.82% to 532.50 bps, the China sovereign cds is gaining +1.68% to 139.41 bps, the Japan sovereign cds is jumping +6.7% to 128.04 bps, the Russia sovereign cds is gaining +3.78% to 263.0 bps, the Israel sovereign cds is climbing +3.6% to 200.35 bps and the Brazil sovereign cds is gaining +4.4% to 150.28 bps. The TED spread continues to trend higher and is at the highest since June 2009. The 2Y Euro Swap Spread is near the highest since Nov. 2008. The 3M Euribor-OIS spread is the highest since February 2009. The 3M EUR/USD Cross-Currency Basis Swap is falling -7.73% to -125.50 bps. The Libor-OIS spread is very near the widest since May 2009, which is also noteworthy considering the equity surge off the recent lows. China Iron Ore Spot has plunged -27.3% since February 16th and -22.9% since Sept. 7th. Asian indices shrugged off the European news as it trickled out overnight and finished materially lower. Hong Kong shares closed near session lows despite the better China CPI/PPI data, falling -2.7%, and are now down -19.3% ytd. There are a number of red flags today. European credit gauges are performing very poorly given that the European debt crisis “can-kicking” solution is supposedly at hand. As well, equity index volume is light and leadership is mostly found in lower-quality stocks. While I still think equities can build on today's gains over the short-term, I still suspect this rally will be less robust and sustainable than many expect due to excess bullish sentiment and the ongoing deterioration in the global economy. I expect US stocks to trade mixed-to-higher into the close from current levels on a bounce in the euro, less financial sector pessimism, short-covering, seasonality, better US economic data and investor performance angst.

Bear Radar

Style Underperformer:

• Large-Cap Growth (+1.06%)

Sector Underperformers:

• 1) Agriculture -.60% 2) Semis +.29% 3) Retail +.48%

Stocks Falling on Unusual Volume:

• DD, SFLY, POT, ALB, MBT, PCYC, SPPI, FURX, PEET, ALTR, SHLD, CMTL, STMP, YNDX, SGA, NYC, TXN, BTH and IVR
  

Stocks With Unusual Put Option Activity:

• 1) LDK 2) ERTS 3) DD 4) TXN 5) ADBE
  

Stocks With Most Negative News Mentions:

• 1) PCYC 2) COST 3) MOS 4) DD 5) BK
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth (+1.90%)

Sector Outperformers:

• 1) Airlines +3.19% 2) Coal +2.65% 3) Banks +2.59%

Stocks Rising on Unusual Volume:

• WBSN, DB, OLN, BCSI, DMND, QCOR, SSRI, PLL, IVC and COO
  

Stocks With Unusual Call Option Activity:

• 1) JBLU 2) ONNN 3) TIBX 4) SPPI 5) UUP
  

Stocks With Most Positive News Mentions:

• 1) ESL 2) DUK 3) ESV 4) RIMM 5) TXN
  

Charts:

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

Friday Watch

Evening Headlines

Bloomberg:

• EU States to Send IMF $267 Billion in New Crisis Fight. European leaders added 200 billion euros ($267 billion) to their crisis-fighting warchest and tightened anti-deficit rules, seeking to lure the European Central Bank into stepping up its rescue operations. In an accord hailed by ECB President Mario Draghi, the leaders laid out a new “fiscal compact” to prevent future debt runups, accelerated the startup of a planned 500 billion-euro rescue fund and scaled back bondholder loss-sharing provisions. “It’s a very good outcome for euro-area members and it’s going to be the basis for a good fiscal compact and more disciplined economic policy in euro-area countries,” Draghi told reporters after 12 hours of overnight talks in Brussels. European leaders navigated a labyrinth of political, legal and economic constraints amid unrelenting pressure from financial markets to craft a new approach to fighting the crisis, which now threatens to engulf Italy and Spain. At the same time, the leaders ventured into untested legal territory by plotting to anchor the tougher budget rules in a separate euro-area treaty after Britain and Hungary balked at amending the existing treaty covering all 27 European Union countries. The euro was little changed in reaction to the measures, the fifth wide-ranging crisis-containment package since the unprecedented 110 billion-euro bailout of Greece and was followed by the setup of a 440 billion-euro rescue fund in May 2010.
• Draghi Answers Bond Market Prayers by Saying 'No': Euro Credit. Bruce Richards, co-founder of Marathon Asset Management LP, wants the European Central Bank to spend 100 billion euros ($133 billion) a month to backstop euro- region government debt. ECB President Mario Draghi isn't buying. The central bank's bond purchase program is "neither eternal nor infinite," Draghi said at a press conference yesterday. He was explaining the ECB's decision to extend the range and maturity of loans it offers to banks and cut its key interest rate by a quarter-point to 1 percent, which came after "a lively discussion that did not lead to unanimity." Italian 10-year government bonds fell the most in four weeks after he spoke, the euro slid to a two-week low and German bunds rallied, as investors decided the ECB was prioritizing bank lending over supporting bonds. "There were some expectations that the ECB might hint that bond purchases would be increased and those were disappointed," said Werner Fey, a fund manager at Frankfurt Trust Investment GmbH in Frankfurt, which oversees the equivalent of 6.5 billion euros of fixed-income assets. "If Spain and Italian bond yields escalate again, the ECB will be forced to increase its role. At the moment, there is no commitment." The ECB's statutes prohibit monetary financing of its member governments, Draghi said. "We shouldn't try to circumvent the spirit of the treaty, no matter what the legal trick is," he said.
• European Banks Told Not to Cut Lending, Change Capital Definitions by EBA. European regulators warned banks not to cut lending or inflate capital levels artificially as they ordered the region’s financial firms to raise 114.7 billion euros ($153 billion). The European Banking Authority told lenders yesterday to bolster their Core Tier 1 capital ratios to more than 9 percent of risk-weighted assets by the middle of next year to reassure investors the region’s banks can withstand the debt crisis. The EBA told banks to raise the money from investors, retained earnings and lower bonuses. Failing that, companies may sell assets, provided the disposals don’t limit overall lending to the “real” economy, the EBA said in a statement. The measure sets up a clash between lenders and regulators trying to avert a potential credit crunch. The Bloomberg Europe Banks and Financial Services Index (BEBANKS) has slumped 33 percent this year, leaving bank shares trading at an average discount to book value of 39 percent. That makes it more attractive for banks to sell assets than stock. “Who is going to pump money into banks in the euro zone in its darkest hour when their shares are already trading at a huge discount to book value?” said Bob Penn, a partner at Allen & Overy LLP in London. “Banks will deleverage because they feel that they have no other choice.” Bankers and lawyers question whether the EBA will be able to enforce its lending rules and halt a process by which European banks may shrink their assets by 2.5 trillion euros over the next 18 months, according to estimates by Morgan Stanley analysts led by Huw van Steenis in London.
• U.S. Company Borrowing Reached Slowest Since '10: Credit Markets. Corporate borrowing grew at the slowest pace this year in the U.S. in the third quarter as Europe's sovereign-debt crisis roiled financial markets, according to the most recent data from the Federal Reserve. Credit-market debt of nonfinancial companies, from commercial paper to bonds and bank loans, rose at an annual pace of 4.5%, compared with 6.9% in the prior three months and 4.9% a year earlier, the central bank said yesterday in its flow of funds report. The outstanding amount reached a record $7.63 trillion.
• Beware of ETFs on Steroids. New versions of exchange-traded funds give investors triple the action. The tools traders use to play the market are getting more powerful—and potentially dangerous. Investors have long been able to buy leveraged ETFs, exchange-traded funds that aim to magnify the daily returns of the indexes they follow. On Dec. 1, Direxion Funds upped the ante by converting its “two-times” funds to provide triple the return of the indexes they track. Supersizing has been good business for Newton (Mass.)-based Direxion, which offers more than 40 leveraged ETFs, up from eight three years ago, according to Chief Marketing Officer Andy O’Rourke. Yet some critics say the pumped-up investment vehicles are adding to daily volatility and scaring off general investors from the market. Laurence D. Fink, chairman of BlackRock (BLK), the world’s largest asset manager, has called leveraged ETFs “toxic.”
• Corzine, MF Global Executives Sued by Commodity Traders. Jon Corzine and four other former executives of bankrupt MF Global Holdings Ltd. were sued for damages by a group of commodity traders. Henning-Carey Proprietary Trading LLC, a clearing firm and member of CME Group Inc., joined with eight traders in seeking recovery of an unaccounted-for $1.2 billion in customer funds at the brokerage unit MF Global Inc. “Defendants were responsible for insuring that the plaintiffs’ property was properly segregated and accounted for,” the traders said in the complaint filed today in federal court in Chicago. The suit is one of several filed by brokerage customers and former employees against Corzine, MF Global executives or the company since it filed for bankruptcy protection on Oct. 31. Corzine told the House Agriculture Committee at a hearing in Washington today that he “would never have intended” transfers from segregated accounts and had teams in place at the firm to ensure they didn’t occur. He wouldn’t say if he and other executives were willing to share customers’ losses.
• Analysts Cut JPMorgan(JPM) Earnings Estimates on Revenue Forecast. JPMorgan Chase & Co.'s earnings estimates were reduced by analysts after Chief Executive Officer Jamie Dimon forecast "flat" investment-banking revenue and a "moderate" loss at the private-equity unit. Analysts including Richard Bove at Rochdale Securities LLC cut fourth-quarter outlooks for the largest and most profitable U.S. bank yesterday, even as Dimon touted its long-term prospects. Bove cut his profit estimate 13 percent to 88 cents a share as International Strategy & Investment Group Inc. analysts led by Ed Najarian pared their forecast 11 percent to 85 cents. "Dimon's outlook for the fourth quarter is not positive," Lutz, Florida-based Bove said in a note. "His view of the next two years is subdued." Dimon is restructuring the business to adjust to new regulatory and economic realities, and "the result may be lackluster earnings for some time," Bove said.
• Climate Talks Closer to Deal on $100B Aid Plan. Envoys at United Nations talks are near an agreement that would set up a fund channeling a portion of the $100 billion a year in pledged climate aid to developing nations, part of a package to keep a lid on global warming. Delegates from more than 190 nations are scheduled to finish two weeks of talks today in Durban, South Africa, where they’ve also considered how to extend the Kyoto Protocol’s limits on fossil fuel emissions, which expire next year. “Things are starting to move,” said Alden Meyer, who has followed the annual gatherings for more than a decade for the Union of Concerned Scientists, a Washington-based lobby group. “We’re likely to get an agreement. The question is how ambitious it will be, whether we can get the higher level of ambition needed to save the planet.”
• Russia Futures Slide as Mass Anti-Putin Rally Planned: Russia Overnight. Russian stock futures slid and U.S.- traded shares (SNGSP) retreated after oil fell and concern grew that anti-government protests in Moscow will fan political unrest. Futures expiring in December on the dollar-denominated RTS index tumbled 2.4 percent to 143,170 yesterday in U.S. trading, while the Bloomberg Russia-US 14 Index of Russian companies listed in New York dropped 2.5 percent to 93.48, a two-week low. Thousands of people have taken to Moscow streets to protest the result of the Dec. 4 parliamentary election, which was marred by complaints of violations and ballot-stuffing. The Solidarity movement, an umbrella opposition group, has planned a rally tomorrow near the Kremlin. Prime Minister Vladimir Putin’s United Russia party lost 12 million votes, or more than a quarter of the support it garnered four years ago. Urals crude, Russia’s chief export blend, hit a two-week low. “Russian politics has become an issue, and for investors, that’s something new, and for some people, it does create uncertainty,” Martin Diggle, director of the $70 million Vulpes Russian Opportunities Fund, said in a phone interview from Geneva. “Europe remains a drag on stocks, and oil is also down.”
• S&P's Adelson Steps Down as Jacob Leaves Amid Ratings Scrutiny. Standard & Poor’s is replacing its chief credit officer, Mark Adelson, as the world’s largest ratings company winds down a year in which its grades of governments have faced growing scrutiny. Adelson, 51, who oversaw an overhaul of S&P’s methodologies that was designed to address their failures during the collapse of the mortgage-bond market, will become a “senior research fellow,” the New York-based unit of McGraw-Hill Cos. said yesterday in a statement. Also, David Jacob, global head of structured finance, will depart at the end of the month. The changes come three months after Douglas Peterson left Citigroup Inc. to become S&P’s president, following its decision to strip the U.S. of its top AAA ranking. This week, the firm warned it may downgrade Germany, France and 13 other European countries. Even as S&P’s moves roil credit markets, McGraw-Hill is planning to separate its financial businesses from its textbook publishing unit under pressure from hedge fund Jana Partners LLC.
• Pakistan will deploy air defense weapons along its border with Afghanistan after last month's NATO airstrike that killed 24 soldiers, the Dawn newspaper reported citing the country's head of military operations.
  

Wall Street Journal:

• Crisis Live Blog: High-Stakes Summit.
  
• EU Still Far Apart On ESM, EFSF - Source. European Union leaders are still apart early Friday on the future role of the euro-zone's bailout fund mechanisms with Germany ruling out provisions in a draft by the European Council to turn them into a credit institution which could be funded by the European Central bank to help counties in distress. "They are still far apart on the EFSF and the ESM," a person present at the talks said. According to the draft conclusions, the transitional rescue fund -- the European Financial Stability Facility -- and the permanent rescue fund -- the European Stability Mechanism -- would run alongside each other. Under original arrangements, the EFSF would lapse once the ESM became operational. "Germany is against the two funds running together and combining their funds," the person said. "They left the issue hanging and will come back to it later," he added. The draft, reviewed by Dow Jones Newswires, had said that the ESM would be allowed to have a total endowment of EUR500 billion ($667 billion) on top of funds in the EFSF. "The ESM will have a maximum lending volume of EUR500 billion, irrespective of the EFSF commitments," the document said. There did seem to be agreement among the 17 leaders of euro-area countries that the ESM start date also should be moved one year sooner, to July 2012. "They're only agreeing on the date being brought forward," a second EU source said. EU leaders, under severe pressure to reach agreement over the tools to deal with the ongoing debt crisis, were discussing proposals for closer fiscal integration over a dinner Thursday ahead the formal EU summit Friday.
• Should Hedge Funds Hedge Against Asia? A piece of advice for all the hedge funds flocking to Asia: think twice when investing here. According to data just released by Chicago-based Hedge Fund Research, hedge fund investments in Asia ex-Japan posted the worst year-to-date performance in 2011, dropping nearly 16%. Energy and basic materials are the second worst performer at a drop of 13.6%.
• Corzine's Loss May Be Soros's Gain. Investor George Soros's family fund bought about $2 billion of European bonds formerly owned by MF Global Holdings Ltd., the very debt that helped force the securities firm to file for bankruptcy protection Oct. 31, according to people close to the matter.
• How The U.S. Can Help Europe: Just Say No. The greatest threat to our economy is not the debt crisis across the pond, but the one right here on American soil. If the United States wants to help Europe find a way out of its current debt crisis, we must be a strong, world economic leader, not merely the lender of last resort. American taxpayers sent $40 billion to Greece last year, through the International Monetary Fund, to stave off an economic collapse. But the bailout did not prevent Greece's day of fiscal reckoning. It only delayed it. Austerity measures are still needed throughout Europe's socialized economy and the debt contagion has not been stopped. Financial chaos has spread from Greece to Ireland, Portugal, Italy and Spain, and it now threatens the very future of the 17-member euro zone. Undeterred, President Obama last month told the press after breaking from a closed-door meeting with European leaders, "the United States stands ready to do our part to help them resolve this issue." He would do better to focus his attention stateside. The most dangerous threat to the U.S. economy is not across the pond. It's in the swampland of Washington, D.C.

MarketWatch:

• China's November Inflation Eases. The monthly consumer price index rose 4.2% from the year-ago period, reflecting a huge easing from October’s 5.5% increase. The producer price index, which reflects wholesale prices, eased even more steeply to 2.7% from a 5% increase in October.

Business Insider:

• There's About To Be A Massive Real Estate Decline In Central Europe. Banks with big exposure to Central European real estate are essentially insolvent, but this is masked because they have not revalued the underlying assets, industry sources say. However, with many loans issued in the boom years ahead of the crisis coming up for refinancing and a pullback in funding of regional subsidiaries, these banks could finally be forced to act.
  

Zero Hedge:

• Complete November Hedge Fund Performance.
• Are Dim Sum Bonds The Next Chinese Reverse Merger Fraud?
• Europe Agrees to Disagree, Next Summit Date Set For March 2012 As David Cameron Kills Compromise.
  

CNBC:

• EU Leaders Agree Fiscal Pact, Falter on Treaty Change. European Union leaders sealed a new fiscal pact ensuring tougher budget discipline but failed to agree on a treaty change to enshrine the rules, meaning a deal may now involve the 17 euro zone nations plus any others that want to join, diplomats said. An agreement involving all 27 EU members fell through - raising the prospect of a two-speed Europe - after British Prime Minister David Cameron demanded concessions that Germany and France were not willing to give, one of the officials said. "We've always said we would do it at 17 if it didn't work at 27. That's what happened," one senior EU diplomat told Reuters.
  
• China Alarms Go Off - Time to Hedge Bets. I'm concerned with what's possibly a massive bubble in China. The real-estate market is signaling alarms and may eventually fall into a worse situation than we had in the U.S.
• Hedge Funds Braced for Worst Year Since 2008. Hedge funds are set to rack up their second-worst year in two decades after taking a beating from the eurozone crisis and an unexpected slowing in global economic growth. The average hedge fund manager has lost 4.37 percent in the year to the end of November, according to data just released by Hedge Fund Research — losing money in six of the past seven months. Only in 2008, following the collapse of Lehman Brothers, did the industry fare worse. High volatility and correlation have wrongfooted even the most skilled of traders.
• Texas Instruments(TXN) Cuts Revenue Outlook; Shares Slump. Texas Instruments cut its outlook for the current quarter and warned demand was broadly lower as customers reduce their inventories, sending the No. 3 chipmaker's shares down sharply. Weak economies in the United States and Europe have sapped demand for microchips and investors have been looking for signs of when the industry will bottom out and begin to improve. Adding to negative sentiment in the electronics industry on Thursday, Altera(ALTR) cut its fourth-quarter revenue due to lower demand for its programmable chips. "Even with an earlier Chinese New Year and excitement over Black Friday sales, you're not seeing an inflection in demand and that's reflected both in TI and Altera," Evercore Partners analyst Patrick Wang said.

IBD:

• Orphan Drug Key Mover For Salix Parmaceuticals(SLXP).

Forbes:

• MF Global Was Leveraged 30 Times Measly Capital. John Corzine paid absolutely no attention to the main cause of the 2008 meltdown; LEVERAGE. TOO MUCH DEBT IN RELATION TO CAPITAL. So, he let MF Global operate with leverage of 30 to 1– precisely the ratio of debt to equity that sank Lehman Brothers, Bear Stearns, and required a $1.5 Trillion money massage of all the other banks. That’s right. The risk Corzine took was that if his gambling cost MF Global 4% on the securities it owned, it was in effect out of business. Moreover, from, my reading of Corzine’s prepared testimony MF Global owned a gross amount of $14.5 billion of French, Italian, Portugal, Irish and Belgian debt– of which only 52.6% was collateralized.
  

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 22% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-one percent (41%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -19 (see trends).

Reuters:

• BOJ's Nishimura: slowdown in Japan economy unavoidable. Japan cannot avoid a slowdown in its economy due to the strong yen, the impact of floods in Thailand and a global economic slowing, Bank of Japan Deputy Governor Kiyohiko Nishimura said on Friday.
• Euro Struggles as EU Disappoints Again on Debt Crisis Deal. The euro clawed back losses on Friday after dipping close to a recent one-week low as hopes dimmed that a European Union summit would make substantial progress toward containing the euro zone debt crisis.
• China Unrest Spreads to Bamboo Furniture Factory. Hundreds of Chinese workers at a bankrupt furniture factory staged a mass rally on Thursday, facing off with riot police in the latest flare-up of industrial unrest.

Telegraph:

• This EU Summit Will Accelerate A Euro Break-Up Not Slow It Down Or Save It. Can of worms? Pandora's box? Take your pick but that's what is being opened in Brussels.

This Is Money:

• Tesco Plans For Collapse of Eurozone As It Posts Sales Fall. Tesco said it was making contingency plans for the collapse of the eurozone as it posted its fourth quarterly sales fall in a row. Finance director Laurie McIlwee said the grocer wouldn’t enter into long-term contracts with suppliers to reduce its exposure to the crisis. Britain’s biggest retailer added to the gloom sweeping the High Street warning that the economic headwinds are not making it easy for anyone, and that consumers remain under pressure from ‘rising unemployment, falling real wages and increasing living costs’.
  

Sueddeutsche Zeitung:

• The European Union sees nuclear energy as "an important factor" and forecasts that as many as 40 new plants will be built in Europe between now and 2030, even as Germany has decided to exit nuclear power, citing a draft document by EU Energy Commissioner Guenther Oettinger.

China Daily:

• China Should Maintain Property Controls. China should maintain property curbs because the results of the policies haven't been solidified, Ren Xingzhou, a director at the market economy research department of the State Council's Development Research Center, wrote in an article, along with Deng Yusong and Xu Wei from the same department. Housing prices in Chinese cities are still relatively high, they wrote.

Shanghai Securities News:

• China Shouldn't Relax Property Control Measures, Wang Says. Shanghai Securities News cites Wang Juelin, deputy director of the Ministry of Housing and Urban Rural Development's policy research department. Housing prices will rebound should China start to relax controls now because buying demand remains large, the report cites Wang.

China Securities Journal:

• Risks of a depreciation in the Chinese currency are rising in the short-term, triggered by "large scale" capital outflows, Zhang Monan, a researcher with the State Information Center, writes in a commentary.

Evening Recommendations
Wells Fargo:

• Rated (APKT) Outperform.
  

Night Trading

• Asian equity indices are -2.25% to -1.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 205.0 +14.0 basis points.
  
• Asia Pacific Sovereign CDS Index 154.0 +3.0 basis points.
• FTSE-100 futures -.82%.
  
• S&P 500 futures -.09%.
  
• NASDAQ 100 futures -.23%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (TITN)/.50

Economic Releases
8:30 am EST

• The Trade Deficit for October is estimated to widen to -$44.0B versus -$43.1B in September.
  

9:55 am EST

• The Preliminary Univ. of Mich. Consumer Confidence for December is estimated to rise to 65.8 versus 64.1 in November.
  

Upcoming Splits

• (HBNC) 3-for-2
  

Other Potential Market Movers

• The USDA Crop report and (EW) Investor Conference could also impact trading today.
  

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

Today's Headlines

Bloomberg:

• Stocks, Euro, Italy Bonds Retreat as ECB Damps Debt-Buying Bets. Stocks slid, while the euro weakened and Spanish and Italian bonds tumbled, as the European Central Bank damped speculation it would boost debt purchases and regulators said the region’s lenders need to raise more capital than previously estimated. The Standard & Poor’s 500 Index lost 1.3 percent to 1,244.58 at 12:35 p.m. in New York. The Stoxx Europe 600 Index retreated 1.5 percent, reversing a 1 percent advance. The euro slid 0.9 percent to $1.3295. Yields on 10-year Italian and Spanish bonds jumped at least 47 basis points. The S&P GSCI Index of commodities lost 1.1 percent, erasing a gain of as much as 0.9 percent. Ten-year U.S. Treasury yields fell four basis points to 1.99 percent after gaining six points earlier. European equities and the euro turned lower as ECB President Mario Draghi said he did not necessarily signal the central bank would step up government bond purchases when he spoke last week, adding that the program was not eternal or infinite. Stocks extended losses as the European Banking Authority said the region’s banks will need to raise 114.7 billion euros ($152.7 billion) in fresh capital, up from a previous estimate of 106 billion euros. “The pessimism is coming from the fact that the ECB didn’t go any further on the possibility of buying debt,” Peter Jankovskis, who helps manage about $2.4 billion at Oakbrook Investments in Lisle, Illinois, said in a telephone interview. “They continue to do things to Band-Aid the banking sector, but they aren’t getting at the fundamental issue here, which is that some of these underlying countries are nearing insolvency.”
• Draghi Acts to Expand Credit to Banks, Doesn't Signal More ECB Bond Buying. European Central Bank President Mario Draghi cut interest rates and offered banks unlimited cash for three years while damping speculation the ECB will buy more government bonds to stem the region’s debt crisis. Policy makers meeting in Frankfurt today reduced the benchmark rate by a quarter percentage point to 1 percent, matching a record low. They also loosened collateral rules so that banks can borrow more from the ECB and announced two unlimited three-year loans. The measures “should ensure enhanced access of the banking sector to liquidity,” Draghi said at a press conference. Hours before European leaders meet in Brussels, Draghi kept the onus on them to solve the two-year debt crisis by repeating his call for a “fiscal compact” and denying he had hinted the ECB would automatically support such an initiative with more bond purchases. Draghi’s comments roiled markets, with stocks and the euro rising on the bank-lending measures before falling after he damped expectations of more ECB bond buying. The euro sank more than 1 percent and traded at $1.3310 at 6:30 p.m. in Frankfurt. “All euro-area governments urgently need to do their utmost” to deliver fiscal sustainability, Draghi said. He denied his Dec. 1 remark that “other elements” could follow a push toward fiscal union was a signal the ECB could step up its bond-market intervention, saying he was “kind of surprised” it had been interpreted that way.
• EU Banks Must Raise $153B of Extra Capital: EBA. Europe’s banks will need to raise 114.7 billion euros ($152.8 billion) in fresh capital as part of measures introduced to respond to the euro area’s sovereign-debt crisis, according to documents from the region’s banking regulator. German banks need 13.1 billion euros and Italian banks 15.4 billion euros in core tier 1 capital, the European Banking Authority said in a document. European lenders will have to raise a total of 8 billion euros more than previously estimated by the EBA in October. The EBA estimated two months ago that the region’s financial institutions needed 106 billion euros to reach the 9 percent core Tier 1 capital goal by mid-2012, after marking their sovereign bonds to match market prices. European leaders are demanding the region’s banks bolster capital to withstand writedowns after they agreed to take losses on Greek bonds. The Bloomberg Europe Banks and Financial Services Index (BEBANKS) fell 3.1 percent to 72.45 in London.
  
• Sovereign Debt Risk Jumps Most in Five Months Amid No Extra Bond Purchases. The cost of insuring against default on sovereign debt rose the most in five months after European Central Bank President Mario Draghi failed to signal the lender will buy more bonds. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments climbed 31 basis points to 363 at 5 p.m. in London, the biggest jump since July. The Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings increased 48.5 basis points to 763, the highest in more than a week, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 10.5 basis points to 176.75 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased 30 basis points to 297 and the subordinated index rose 51 to 530.
  
• China Money Rate Rises on Speculation PBOC Favors Stability. China’s money-market rate rose for a third day as the central bank drained the most cash from the financial system in eight months, spurring speculation it will hold off from easing monetary policy further. “There’s limited scope for the repo rate to decline because the central bank hasn’t shown any sign that it will further ease monetary policy,” said Wang Botao, a bond analyst at China Post Securities Co. in Beijing.
• Iran to Boost Oil Output by 45,000 Barrels a Day, PressTV Says. Iran, OPEC’s second-largest oil producer, plans to raise daily crude output by 45,000 barrels a day next year, Press TV reported, citing Mehdi Fakour, managing director of the Iranian Central Oil Fields Co. The increase would occur once the Sarvestan, Saadatabad and Khesht oil fields in southern Iran come on stream in March, Fakour said, according to the state-run news channel. Khesht has proven crude reserves of more than 1 billion barrels, and the other two fields together hold more than 1.4 billion barrels, the report said.
• US Household Wealth Falls for Second Straight Quarter. Household wealth in the U.S. fell from July through September for a second straight quarter as the European debt crisis depressed stocks and home values decreased. Net worth for households and non-profit groups decreased by $2.45 trillion to $57.4 trillion, the Federal Reserve said today in its flow of funds report from Washington. Americans reduced debt in the third quarter, extending a string of declines dating back three years. A 14 percent slump in the Standard & Poor’s 500 Index, the worst quarter since 2008, combined with another decrease in households’ real estate values in the third quarter.
• Jobless Claims in U.S. at Lowest in Nine Months. Jobless claims fell by 23,000 to 381,000 in the week ended Dec. 3, the fewest since February, Labor Department figures showed today in Washington. Other data showed consumer sentiment has stabilized around levels usually associated with recessions, and wholesalers boosted inventories heading into the holidays.
• McDonald's(MCD) November Store Sales Rise 7.4%.
• Oil Retreats in New York as ECB's Draghi Damps Bond-Purchase Speculation. Futures fell as much as 2.2 percent after Draghi said the ECB’s bond-purchase program was “neither eternal nor infinite,” damping speculation that the bank will buy more debt. Crude oil for January delivery dropped $1.70, or 1.7 percent, to $98.79 a barrel at 12:49 p.m. on the New York Mercantile Exchange. The contract was up as much as 1.2 percent before Draghi spoke. Futures are up 8.1 percent this year after advancing 15 percent in 2010. Brent oil for January settlement declined $1.22, or 1.1 percent, to $108.31 a barrel on the London-based ICE Futures Europe exchange.
• Virginia Tech Says Two Killed in Campus Shooting After Police Traffic Stop. Virginia Tech University, the site of a 2007 massacre in which 33 people were killed, reported a police officer and another person were shot and killed on campus after a traffic stop. The suspect remains at large and students were instructed by the university to stay indoors and in a secure place, according to alerts posted on the Blacksburg, Virginia, school’s website. The school’s transit system was also suspended.

Wall Street Journal:

• Debit-Fee Cap Has Nasty Side Effect. Jason Scherr had a lot on his mind the day after he opened his fifth Think Coffee shop in Manhattan last week. The fan was blowing too hard, the classical music was playing a little too loudly—and he was trying to figure out how to get more customers to pay with cash. A new law that was supposed to reduce costs for merchants that accept debit cards has instead sent Mr. Scherr's monthly processing bills much higher and forced him to reassess the way he does business. "My choice is to raise prices, discount for cash or get an ATM," says Mr. Scherr, a lawyer who has been in the coffee-shop business for more than a decade. Just two months after one of the most controversial parts of the Dodd-Frank financial-overhaul law was enacted, some merchants and consumers are starting to pay the price.
• More Scrutiny of Former New Mexico Governor Bill Richardson(D). Besides Campaign Probe, Former Governor Faces a 'Pay to Play' Investigation.
• Firms, In Shift, See End To Yuan's Steady Gains. A significant shift in trading of China's yuan is sending signals that investors and companies expect China to halt the appreciation of its currency, despite heightened pressure from Washington.
  

CNBC.com:

• European Central Bank Chief Offers No 'Bazooka' for Markets.
• Jon Corzine: MF Global's Failure Was Not My Fault. MF Global's former chief Jon Corzine testified to Congress Thursday, saying that he doesn't know the location of client money that went missing and that he inherited a firm doomed by the risks his predecessors took.

Business Insider:

• Live Coverage: Jon Corzine Testifying Right Now.

Zero Hedge:

• The "Treaty" Negotiations.
• Iran Releases Video of Captured US Drone Plane.
• Fortress Commodities Fund "We're Long Gold, Short Base Metals, And A Seller Of Crude."
  

Forbes:

• How's The Euro Crisis Affecting Hedge Funds? It's Shutting Them Down. Looks like John Paulson isn’t the only hedge fund manager who can’t get it right this year. In the third quarter 213 hedge funds went out of business. That’s the largest number of liquidations since the first quarter of 2010 when 240 funds closed, according to new data from Chicago-based Hedge Fund Research Inc. The European debt crisis and overall weak economy appears to making the jobs of so-called smart money managers tougher than they’ve been in awhile.
  

TechCrunch:

• Verizon(VZ) and RedBox Planning Major Partnership For Early 2012 Launch.

The Detroit News:

• Nissan Emerges as Likely UAW Organizing Focus. As the United Auto Workers ramps up efforts to organize foreign-owned auto factories in the United States, union leaders say they have decided not to name a target — at least not publicly. But a source told The Detroit News that members of the UAW's executive board voted Tuesday night to focus those efforts on Nissan Motor Co.
  

Reuters:

• Copper Falls on Renewed Euro Zone Worries.
• Tullow Aims for 120,000 BPD From Ghana Early 2012. British oil firm Tullow Oil said on Thursday it hoped reach plateau production of 120,000 barrels per day from its Jubilee oil field in Ghana by "early next year" following a delay due to technical problems. "The Jubilee resources are intact so we are hoping to reach the 120,000 bpd (target) early next year," Tullow spokesman Gayheart Mensah told Reuters. Tullow Chief Financial Officer Ian Springett had said last month that the 120,000 bpd target would be achieved "sometime during 2012" after the company delayed the target twice in 2011.

Financial Times:

• Eurozone Crisis Live: Blog.
  

Telegraph:

• Better A Horrible End for Euroland, or Endless Horror? While we are waiting for Mario and Merkozy plus, just a quick thought on one of the EMU break-up reports hitting my desk daily, and sometimes in twos and threes.
• Eurogeddon - Fear Not, It's Under Control. Draghi's insistence that the fiscal contract eurozone leaders are attempting to thrash out at their latest summit will be sufficient in itself to restore confidence is cloud cuckoo land. He cannot sincerely believe it. The problem in the eurozone is not fiscal indiscipline, though there has certainly been a lot of it, but current account imbalances entrenched by big differences in competitiveness. These cannot be made to go away with repeated rounds of growth stifling austerity, and as for Mr Draghi's claim that it is possible to have both fiscal austerity and decent growth provided competitiveness is improved, it's simply naive to believe that's what is going to happen in practice. In fact, most of the evidence from the eurozone periphery is that it is continuing to lose competitiveness against the surplus north, with Germany progressively improving its share of an ever-shrinking market. As long as that goes on, the debt problem is going to get worse, not better. This weekend's summit will do little to solve the fundamentals of this crisis. Only a fully functioning fiscal and political union, with tax and spending decisions centralised in one authority across all 17 nations can do that. Even turbo-charged by financial and economic crisis, that's a very long road indeed.

Bild:

• Chancellor Angela Merkel is prepared to call another European Union summit this month should the meeting that convenes today fail to achieve its goals, citing government officials.

Handelsblatt:

• European banks have 1.7 trillion euros of non-strategic or non-performing assets they could divest as regulators order them to raise capital.

Shanghai Daily:

• Shanghai Home Supply Expected to Double Over Weekend. ABOUT 900 homes at five projects in Shanghai will be released in the market over the weekend, nearly doubling from last weekend, according to data released yesterday by real estate website Soufun.com. The average selling price of the five developments, located beyond the city's Outer Ring Road, is about 17,000 yuan (US$2,681) per square meter, a drop of 5 percent from the same period a week earlier.
  

The Diplomat:

• If China's Property Bubble Bursts. The cooling of China’s real estate sector is good for the economy. But the government is right to be worried about the social consequences of the bubble bursting.