Today's Headlines

Bloomberg:

• Euro Weakens to 11-Month Low Versus Dollar. The euro fell to an 11-month low against the dollar on concern European leaders won’t agree on ways to expand the region’s rescue capacities as debt-strapped nations struggle to fund their deficits. The 17-nation currency dropped against most of its major counterparts after Chancellor Angela Merkel told German coalition lawmakers that the 500 billion euro ($654 billion) cap on Europe’s planned permanent bailout fund will stay in place, two officials with knowledge of the discussion said. The dollar declined against the yen before the Federal Reserve holds a meeting today amid speculation officials will maintain their pledge to keep borrowing costs at almost zero. “You continue to see strains within the euro group,” said John McCarthy, managing director of currency trading at ING Groep NV (INGA) in New York. “A division means a lower euro. The euro was already a little weaker and once we got convincingly through $1.3170, it dropped more.” The euro dropped 0.7 percent to $1.3094 at 1:32 p.m. in New York, touching $1.3057, the lowest level since Jan. 12.
• The 1-Year EUR/USD Cross-Currency Basis Swap is falling -7.1 bps to -96.0 bps, the lowest since Nov. 29 on a closing basis, amid lingering concerns about interbank funding. "The ECB allocated $51B last week and it doesn't seem like anything has changed," says TD funding strategist Mike Lin. "I'm concerned about the one-week auction tomorrow. I see a pick-up as something's going on."
• RBS Says Buy German CDS in 'Talismanic' Trade as Crisis Deepens. Royal Bank of Scotland Group Plc advised investors to buy insurance on German government debt, betting that Europe's financial woes will deepen in 2012. Investors should bet the cost to protect German bonds for five years will increase to 200 basis points from 98 basis points, the strategists wrote.
• Greece's Budget Deficit Widens to $27.1 Billion in First 11 Months of Year. Greece’s state budget deficit widened 5 percent in the first 11 months of the year, better than a revised target for the period. The gap, which excludes outlays by state-owned institutions and companies, rose to 20.5 billion euros ($26.5 billion) from 19.5 billion euros a year earlier, according to preliminary figures received by e-mail from the Finance Ministry. The figure came in below a target of 21 billion euros set in the 2012 budget, it said. Final figures are due later this month. Ordinary budget revenue declined 3.1 percent in the first 11 months as Greece’s recession weighed on tax collection. Spending rose 3 percent, or by 3.7 billion euros, boosted by a 20 percent increase in debt-servicing costs that added 2.6 billion euros to the bill, the Athens-based ministry said. Efforts to trim the shortfall have deepened the recession, now in its fourth year. The Organization for Economic Cooperation and Development expects the economy to contract 6.1 percent this year, more than the 5.5 percent forecast in the government’s budget.
• Retail Sales in U.S. Climbed Less Than Forecast. Retail sales rose in November at the slowest pace in five months, indicating American consumers were trying to live within their means heading into the holiday shopping season as wages dropped. The 0.2 percent gain in purchases fell short of the 0.6 percent median forecast of economists surveyed by Bloomberg News and followed increases in the prior two months that were larger than previously estimated, according to data from the Commerce Department today in Washington. Other reports showed inventories climbed in October and job openings fell.
• Treasuries Advance After $21 Billion 10-Year Auction Draws Strong Demand. Treasuries gained for a second day after the U.S. sale of $21 billion in 10-year notes attracted higher-than-average demand, bolstered by concern Europe’s sovereign-debt crisis is far from a resolution. The securities drew a yield of 2.020 percent, compared with a forecast of 2.050 percent in a Bloomberg News survey of seven of the Federal Reserve’s 21 primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of debt offered, was 3.53, the strongest level since April 2010.
• Oil Surges on Speculation of Supply Disruption, U.S. Stimulus. Oil surged above $100 a barrel on speculation supplies will be disrupted after a report that Iran will hold drills to close the Strait of Hormuz and that the Federal Reserve may announce additional stimulus measures. Crude advanced as much as 3.6 percent after the state-run Fars news agency reported the military maneuvers will be “soon,” citing Parvis Sorouri, a member of the parliament’s national security and foreign policy committee. “I saw the Iran story yesterday but those headlines seem to have got traction this morning. There are also rumors for further action by the Fed, but where they come from I don’t know. In this electronic world things can jump quickly and trigger stops.” Crude for January delivery gained $1.91, or 2 percent, to $99.68 a barrel at 11:07 a.m. on the New York Mercantile Exchange. Crude pared gains after an Iranian Foreign Ministry spokesman said the Strait of Hormuz isn’t closed. The comments on the strait were made by people who don’t have an official title, said Ramin Mehmanparast, the spokesman.
• Oil-Tanker Glut Seen Expanding for Fourth Consecutive Week. A surplus of crude-oil tankers competing to collect crude from ports in the Persian Gulf expanded for a fourth consecutive week, according to Bloomberg. There are 20% more VLCCs for hire over the next 30 days than there are probable cargoes, according to the median survey of four brokers and two owners. The excess was 19% a week ago and 13% on Nov. 22.
• Record Aluminum Glut as Traders Seen Betting on Price Slump. Aluminum stockpiles rose to a record and orders to withdraw metal from warehouses fell to a 15-month low amid speculation traders are adding to bets the commodity will extend its biggest slump since the global recession. Inventories monitored by the LME rose 2% to 4.81 million metric tons today, enough to supply China, the biggest consumer for about 3 months. Canceled warrants fell 2.6% to 152,350 tons, the lowest since September 2010, bourse data show. Open interest, or contracts outstanding, rose 54% since mid-July, at a time when prices were falling, suggesting traders were adding to short positions, VTB Capital said in a report.
• Fitch Sees China Home Slowdown as Officials Hold Planning Session: Economy. Fitch Ratings said China faces slower growth in home sales and construction next year and UBS AG predicted stagnant exports as top officials meet in Beijing for an annual conference to map out economic policies. Lending to developers will remain tightly controlled as the government prolongs a campaign to stabilize property prices, Fitch said in a report today. The slowdown in trade may add pressure for monetary and fiscal easing, UBS said separately.
• China-Based Hacking of 760 Firms Reflects Global Cyber War. Google Inc. (GOOG) and Intel Corp. (INTC) were logical targets for China-based hackers, given the solid-gold intellectual property data stored in their computers. An attack by cyber spies on iBahn, a provider of Internet services to hotels, takes some explaining. iBahn provides broadband business and entertainment access to guests of Marriott International Inc. and other hotel chains, including multinational companies that hold meetings on site. Breaking into iBahn’s networks, according to a senior U.S. intelligence official familiar with the matter, may have let hackers see millions of confidential e-mails, even encrypted ones, as executives from Dubai to New York reported back on everything from new product development to merger negotiations. More worrisome, hackers might have used iBahn’s system as a launching pad into corporate networks that are connected to it, using traveling employees to create a backdoor to company secrets, said Nick Percoco, head of Trustwave Corp.’s SpiderLabs, a security firm.

Wall Street Journal:

• Banks in Push for Pact. Five large lenders could be forced to make concessions worth roughly $19 billion as bank representatives and government officials push to put the finishing touches on a settlement of most state and federal investigations of alleged foreclosure improprieties. Housing and Urban Development Secretary Shaun Donovan and state officials hope to reach a deal as soon as this week, though any agreement could be delayed by unresolved issues including the naming of a monitor to oversee the agreement.
• Greece, Private Creditors At Odds Over 50% Haircut: Sources. The Greek government is at odds with its private creditors over a 50% haircut in the value of bonds they own, two people with direct knowledge of the negotiations said Tuesday.
• OIL DATA: IEA Cuts 2011, '12 Demand By 0.2M B/D On Economic Woes. Global oil demand is set to fall in 2012 on the worsening global economic backdrop and persistently elevated oil prices, the International Energy Agency said Tuesday in its monthly oil market report. The Paris-based energy watchdog also trimmed its oil demand growth forecasts for the next five years in its medium-term outlook led by assumptions of slower economic growth in North America and Europe. A lower baseline figure for 2011 due to economic turmoil in the euro zone has also impacted the forecasts for this year and next, the IEA said.
  

Dow Jones:

• Merkel Rejects Raising ESM Limit, Lawmaker Says. German Chancellor Angela Merkel Tuesday at a party meeting reiterated her rejection to raise the EUR500 billion lending limit for the planned future European Stability Mechanism, or ESM, a government coalition official said. The euro after Merkel's comment continued its slide, falling to $1.3061 from $ 1.3186 before her comment. Countering fears that Germany's overall contribution to euro zone rescues may rise further, Merkel during a meeting with lawmakers of the Christian Democrats stressed that a planned increase of funds to the International Monetary Fund by Germany's Bundesbank was independent of government commitments to the ESM, the coalition official said.
  

CNBC.com:

• Europe May Be Preview Of What Is Happening In The US. (video)

Business Insider:

• FED HOLDS RATES STEADY, SAYS ECONOMY 'EXPANDING MODERATELY'.
• This Abandoned Theme Park On The Edge Of Shanghai Is Only The First Sign Of A Major Crash.
  

Zero Hedge:

• S&P Warns of Increased Corporate Bond Downgrade Risk Following Sovereign Action.
• Who Gave Permission To A Bankrupt MF Global To Sell Italian Bonds To JPM(JPM) At A 5% Discount To Market Value?
• Greek Bank Run Hits Record: Unprecedented €6.8 Billion In Deposits Pulled From Greek Banks In October. (graph)
  

The Detroit News:

• Muslims Consider Lowe's(LOW) Boycott. Local Muslim and Arab-American leaders from across the country were considering a national boycott against Lowe's after the home improvement retailer pulled its ads from the cable reality show "All-American Muslim." The move comes as Lowe's defended its position. Dawud Walid, the executive director of the Council on American-Islamic Relations Michigan, said Monday the issue has "invoked outrage in our community like I haven't seen in a while."

Hedgeweek:

• Hedge Fund Redemptions More Than Triple in October. Hedge fund redemptions in October totalled USD9 billion, more than triple September’s USD2.59 billion outflow, according to figures released by BarclayHedge and TrimTabs Investment Research. Industry assets decreased to USD1.66 trillion in October from USD1.73 trillion in September, the third straight monthly decline.

CNN:

• Best Buy's(BBY) Results Serve as a Holiday Warning. Electronics retailer Best Buy reported a large drop in quarterly earnings Tuesday, as weak sales in the months leading up to Thanksgiving cast a shadow on the all-important holiday season. Shares of Best Buy (BBY, Fortune 500) tumbled $3.23, or 11.6%, to $24.83 in early trading. Shares are now down more than 27% since the start of the year. Investors fretted the company's future even though Best Buy confirmed its full fiscal-year earnings guidance.

LA Times:

• NTSB Recommends Ban On All Driver Cell Phone Use. States should ban all driver use of cell phones and other portable electronic devices, except in emergencies, the National Transportation Board said Tuesday. The recommendation, unanimously agreed to by the five-member board, applies to both hands-free and hand-held phones and significantly exceeds any existing state laws restricting texting and cellphone use behind the wheel.

Reuters:

• Exclusive: Steve Cohen Calls Insider Trading Rules "Vague".
• Italian, Spanish Yields Rise as Ratings Threat Looms. Italian bond yields rose on Tuesday as the risk of sovereign rating downgrades across the euro zone kept markets on edge after steps towards fiscal integration failed to ease the debt crisis in the short term.Longer-dated Spanish bonds also rose as riskier assets suffered due to the risk that rating agency Standard and Poor's could act on its warning over the region's debt ratings. Measures to strengthen budget discipline agreed at a European Union summit last week were not seen as sufficient to ease immediate market worries over sovereign debt -- something only a huge financial backstop provided by the European Central Bank was seen likely to achieve. "Clearly investors have reassessed the EU agreement and the response of the sovereign ratings is at the forefront of investors' minds," said Nick Stamenkovic, strategist at RIA Capital Markets in Edinburgh. "Against that backdrop investors continue to shift away from the likes of Italy and Spain."

AP:

• Corzine Says He Never Authorized "Misuse" of Money. Jon Corzine has told a Senate panel that he never told anyone to "misuse" customer money that vanished when MF Global collapsed this fall. An estimated $1.2 billion in client funds are missing. Senators are demanding Corzine and two other executives at the securities firm explain who authorized the transfer of money in the days before the firm collapsed in the eighth-largest bankruptcy in U.S. history. "I never gave any instruction to anyone at MF Global to misuse customer funds," Corzine testified at a hearing of the Senate Agriculture Committee on Tuesday. Corzine, a former Democratic New Jersey senator and governor, resigned as CEO of the securities firm last month.

Financial Times:

• European Banks 'need tons of money', says GMO's Grantham. In a note released on Tuesday, GMO, the global asset management firm headed by Jeremy Grantham, writes that ”European banks need tons of money” to correct capital shortfalls. This much, we know.
• Meet The Credit Derivative "end-users".
  

Telegraph:

• Debt Crisis: Live.
  

Il Sole 24 Ore:

• Italy's government may delay until 2013 measures in its emergency budget plan to open up some closed professions and liberalize some businesses.

Xinhua:

• China Reasonable Home Price Fall Won't Cause Crisis. China property investment growth will slow in 2012 with falling home prices, citing Wang Yiming, director of the investment research institute under the planning body.
• China Needs 'Tight Controls' on Homes, Researcher Says. Even a "slight" change in curbs on property prices may cause a "dramatic price rebound", citing Wang Yulin, vice director of the housing ministry's policy research center. The government has set a clear tone on controlling home prices. Prices may drop 15-20% in 2012, citing Zhao Xiao, a professor at the University of Science and Technology in Beijing.
  

Bear Radar

Style Underperformer:

• Mid-Cap Growth (-.60%)

Sector Underperformers:

• 1) Gold & Silver -1.40% 2) Semis -1.20% 3) Retail -1.0%

Stocks Falling on Unusual Volume:

• BBY, IVN, RSH, DKS, FDS, VCI, PLT, CCOI, PTRY, ADTN, TIBX, ZUMZ, AWAY, DMND, HAYN, AMZN, NXPI, GMCR, NFLX, AEGR, RIMM, CONN, FSL, PRI, HGG and LRN
  

Stocks With Unusual Put Option Activity:

• 1) DHI 2) BBY 3) MGM 4) EWZ 5) EOG
  

Stocks With Most Negative News Mentions:

• 1) NSC 2) GS 3) ADTN 4) TOL 5) SCCO
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value (+.64%)

Sector Outperformers:

• 1) Energy +.99% 2) Defense +.79% 3) Utilities +.78%

Stocks Rising on Unusual Volume:

• TWTC, CCMP, URBN, OPEN, ITMN, JOE, VCI and P
  

Stocks With Unusual Call Option Activity:

• 1) PAAS 2) IVN 3) BBY 4) LCC 5) WLP
  

Stocks With Most Positive News Mentions:

• 1) JEC 2) NKTR 3) STJ 4) LMT 5) BBY
  

Charts:

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

Tuesday Watch

Evening Headlines

Bloomberg:

• Investors May Shun Banks' Contingent Convertibles as Regulator Adds Limits. European banks seeking to meet capital targets by selling contingent convertible bonds may struggle to attract investors after regulators imposed limits on the form the instruments must take. The European Banking Authority said last week lenders could use the securities, bonds that convert into equity or are written down if a bank’s capital drops below a set level, to help plug a 115 billion-euro ($153 billion) capital shortfall. It published a standard set of terms for the securities, which investors said were unlikely to be attractive to buyers because the risk of triggering a conversion is too high and issuers will have too much control over interest payments. “The majority of institutions that actually need capital to reach the EBA target will not be able to attract private investors for these instruments,” said Satish Pulle, a portfolio manager at London-based European Credit Management Ltd., which oversees a fund that invests in CoCos and bank debt.
  
• Spain's 'Cayenne Crisis' Spreads to BMW. Roberto Murga, a construction manager from Barcelona, loved his platinum gray Porsche Cayenne until the debt crisis made the sport-utility vehicle’s leather interior and electronic seats expendable. The 66,370-euro ($88,800) status symbol is now unnecessary ballast for Murga, 33, who like other Spaniards has been forced to cut spending because of the country’s weakening economy. Car demand, which has halved since peaking in 2007, probably won’t recover this decade, analysts predict. “I can’t splurge anymore, and maintaining my precious Cayenne is just too expensive,” said Murga, who made as much as 8,000 euros a month before the real estate bubble went bust three years ago, forcing him to fire half his workers. “We have no profit at all. We just try to survive.” Murga has lots of company. “This car was the paradigm of how we lived above what we could afford,” Conde said. “Banks were giving way too many loans and everybody here was driving a Cayenne.” Those days are over and may never be coming back. Porsche sales in Spain and Portugal have fallen 34 percent from the 2007 peak to 1,900 cars last year. Deliveries of Bayerische Motoren Werke AG’s namesake brand have dropped 47 percent to 32,500.
• MF Global Officials Say They Don't Know. Henri Steenkamp, chief financial officer of MF Global Holdings Ltd., said he doesn’t know the location of $1.2 billion in missing client funds and didn’t have direct involvement with accounts and fund transfers at the failed brokerage. “I do not know why these funds cannot be accounted for, but based on the fact that no shortfalls had been reported to me previously, it appears that any irregularities were likely caused by events that occurred shortly before the bankruptcy filing."
• Australia Cuts Estimate for Agricultural Exports on World Economic Outlook. Australia, set to be the world’s second-biggest wheat shipper, cut its forecast for agricultural- export earnings on concern that the European debt crisis may damp global economic growth and hurt commodity demand. Earnings from farm, forest and fisheries products may total A$38.4 billion ($38.6 billion) in the year to June 30, the Australian Bureau of Agricultural and Resource Economics and Sciences said today. That compares with A$38.6 billion forecast in September and a revised A$36.1 billion in 2010-2011, it said.
• Oil Trades Near Two-Week Low; Kuwait Says OPEC Production Cut Not Needed. Oil traded near a two-week low as signs Europe is struggling to tame a debt crisis that threatens economic growth countered a forecast drop in crude stockpiles in the U.S., the world’s biggest consumer of the commodity. Futures were little changed after falling 1.7 percent yesterday as Moody’s Investors Service said it will review the credit ratings of all European Union countries. An Energy Department report tomorrow may show U.S. crude supplies dropped for the first time in three weeks. Kuwait’s oil minister Mohammad al-Busairy said there is no need to change OPEC’s output or production quotas because “the market is stable.” “We’re expecting further pressure on the market and most of it relates to Europe,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty. in Sydney who predicts oil in New York will trade just above $95 a barrel in the short-term.
• Democratic Payroll Tax Position Hardens Ahead of Deadline. Democratic leaders in the U.S. Senate are hardening their opposition to a House Republican measure that would extend the payroll tax cut for workers while restructuring unemployment compensation and speeding approval of a Canadian oil pipeline. Senator Richard Durbin of Illinois, the chamber's No. 2 Democrat, said lawmakers must cover the cost of extending a payroll tax cut for workers with new revenue. Republicans have blocked Democratic proposals in the Senate to pay for the payroll tax cut by imposing a surtax on income exceeding $1 million a year. "If we do pay for it, it's going to be paid for with a revenue source, such as the millionaire's tax," Durbin said in an interview today. "It's not going to be paid for with spending cuts." Durbin's comments underscore the differences that exist between congressional leaders over how to extend the payroll tax cut. If Congress doesn't act by Dec. 31, employees will begin paying a 6.2 percent tax on their first $110,100 in wages in January, up from 4.2 percent this year.
• China's 'Interventionist Policies' Remain a Concern, U.S. Says. China’s trade restrictions and “interventionist policies” in areas such as intellectual property rights remain a concern for American companies doing business in the Asian nation, the U.S. said. China discriminates against foreign business in “numerous sectors” of the economy, the U.S. Trade Representative said in its annual report on Chinese compliance with World Trade Organization rules.
• Zoomlion Biggest Short on Wagers China Building Binge Will Slow. Short sellers have never been so sure that Zoomlion Heavy Industry Science & Technology Co., China's second-biggest maker of construction equipment, will drop as building slows and customers fall behind on payments. Speculators lifted bets against Zoomlion to 22 percent of shares outstanding last month, the highest proportion on record and the most among Hong Kong-traded stocks tracked by Data Explorers. Bearish wagers increased even after the stock tumbled as much as 47 percent this year to an all-time low on Sept. 26. Zoomlion, whose sales of cranes and concrete machinery in China make it a gauge of the world's largest building boom, posted a 50 percent gain in first-half revenue and a 110 percent jump in profit, four times more than the Hang Seng China Enterprises Index average. The company spurred sales by letting customers buy machinery without paying upfront, a strategy that some investors say may backfire after banks curbed real-estate loans.
• Sino-Forest Will Miss Earnings Deadline, May Default. Sino-Forest Corp. (TRE), the timber producer fending off fraud allegations, said it will default on its bonds and miss a self-imposed deadline to report earnings as it considers putting itself up for sale. Sino-Forest won’t make a $9.78 million interest payment on its 2016 convertible notes that’s due Dec. 15, the Hong Kong-and Mississauga, Ontario-based company said yesterday in a statement. There’s no assurance if or when the earnings results will be released, it said.
• Cash Crunch Driving ICICI Risk Up By Most in Asia: India Credit. Costs to protect the bonds of Indian banks against default are rising at the fastest pace among Asian lenders as a worsening cash crunch threatens profits. Five-year credit-default swaps on Mumbai-based ICICI Bank Ltd., the nation's largest private lender, jumped 87 basis points in the past month to 482 basis points, the biggest advance in the region.
  

Wall Street Journal:

• Markets Doubt Europe Deal. Investors and Ratings Firms Skeptical of Fiscal Unity Pact; Euro Falls Sharply. Investors and Ratings Firms Skeptical of Fiscal Unity Pact; Euro Falls Sharply.
• Europe's Banks Retreat From the East. Dozens of euro-zone banks flocked to Eastern Europe in recent years, hoping to harness the region's fast-growing economies and relatively untapped banking markets. Amid Europe's banking crisis, the situation has suddenly been thrown into reverse. Banks are beating hasty retreats from the region, scrambling to conserve limited resources and facing pressure to concentrate on their domestic markets. The withdrawal is fanning fears that the economies of Eastern Europe, which so far have held up reasonably well despite the crisis to the west, could fall victim to a downturn.
• China To Withhold Aid To EU Until It Meets Certain Conditions - Scholar. China will withhold aid to the European Union until the region meets certain conditions, including the "conferral of market-economy status" on China, a Chinese scholar said in a commentary published in the state-run China Daily on Tuesday. Yao Yang, director of the China Center for Economic Research at Peking University, said a failed euro hurts China, as it would weigh on China's export and leave the U.S. dollar as the single international reserve currency. However, he said China won't provide substantial financial assistance without the EU's "ironclad guarantee" of the investment.
• Sen. Grassley: Hedge Funds May Have Gotten ‘Special Treatment’ From Medicare Administrator. Sen. Chuck Grassley sent a letter on Monday to the Centers for Medicare and Medicaid Services, saying he believes the organization may have given special treatment to information requests from hedge funds and political intelligence brokers “who seek to profit from government information.”
• Wall Street Group Puts Up Defense of High-Frequency Trading. Wall Street's largest trade group wants to broaden the discussion surrounding high-frequency trading and its ramifications on investors and broader market structure. High-frequency trading represents a growing, albeit contentious, part of the investing community. These traders use powerful computers to rapidly move in and out of stocks and other securities in fractions of a second. Critics say this practice has been one of the contributors to the stock market's heightened volatility.
• A Rare Apple(AAPL) Compromise. Facing challenges winning over customers for its iAd mobile advertising service, Apple is softening its approach as it loses ground to Google Inc.(GOOG) in the fast-growing mobile-ad market.
• Christians Face Murky Future After Egypt Polls. When Victor Anis goes to the polls Wednesday to vote in the second round of Egypt's parliamentary elections, he plans to cast his ballot for the Egyptian Bloc, a list of liberal politicians who represent the strongest answer to the rise of hardline Islamists. "What's happening now is turning voting into religion," said Mr. Anis, 60 years old. Egypt's religious ideologies and organizations, he complains, all appear to be using the ballot box to orchestrate a kind of power grab. All of them, that is, except the institution that represents his own faith, the Coptic Orthodox Church.
• Congress's Phony Insider-Trading Reform. The denizens of Capitol Hill are remarkable investors. A new law meant to curb abuses would only make their shenanigans easier.
  

MarketWatch:

• Moody's May Downgrade Spanish Banks. Moody's on Monday placed eight Spanish banks and two holding companies on review for possible downgrades due to expectations of increased losses stemming from their commercial real estate exposure. The move was prompted by Moody's reassessment of all Spanish banks which indicated a projected decline in earnings generation capacity due to a weaker growth outlook for the Spanish economy.

Business Insider:

• Everything You Need To Know About Federal Debt And Deficits In One Graphic.
• 15 Awesome New Gadgets To Get For The Holidays.
• Canada Will Pull Out Of The Kyoto Protocol On Climate Change. Reuters reports that Canada will pull out of the Kyoto agreement to tackle climate change, according to a Canadian government official. While the official said Canada is in agreement with a new pact to control greenhouse emissions, saying the country objects to the fact that India, China, and other nations do not have to follow the agreement.

Zero Hedge:

• The Ghost Of The Bundesbank Haunting The Halls Of Brussels.
• Six Tail Scenarios That Deutsche Bank Are Watching For Next Year.

LA Times:

• FCC's Michael Copps Worried About Media Landscape.

USA Today:

• Household Electricity Bills Skyrocket. Electric bills have skyrocketed in the last five years, a sharp reversal from a quarter-century when Americans enjoyed stable power bills even as they used more electricity. Households paid a record $1,419 on average for electricity in 2010, the fifth consecutive yearly increase above the inflation rate, a USA TODAY analysis of government data found. The jump has added about $300 a year to what households pay for electricity. That's the largest sustained increase since a run-up in electricity prices during the 1970s. Electricty is consuming a greater share of Americans' after-tax income than at any time since 1996 — about $1.50 of every $100 in income at a time when income growth has stagnated, a USA TODAY analysis of Bureau of Economic Analysis data found.

Reuters:

• Chicago Traders Revolt At Change In CME Rules. Chicago pit traders are up in arms against a CME Group plan to use electronic trading to set grain and livestock closing prices, a move they fear will drive another nail in the coffin of open-outcry dealing.
• Italy cannot mould policy only to suit markets - formin. Italy is sensitive to financial market movements, but it cannot adjust policy every time there is a negative reaction among investors, Foreign Minister Giulio Terzi said on Monday.

Hong Kong Economic Times:

• UBS Analyst Sees Hong Kong Home Prices Falling 15-20% in 2013. Prices for new properties in the city are expected to fall on government plans to increase land supply, citing UBS analyst Eva Lee. Office rents in the city's Central district may decline 25-30% next year on unfavorable economic conditions, Lee says.

The Standard:

• Cathay Braces for Carbon Tax to Bite. Cathay Pacific Airways (0293) admitted that demand for passenger flights to Europe will be hurt by fare hikes stemming from a tax on carbon dioxide emissions which is effective next month. "We have to pass the additional cost to our passengers, with each single ticket to the [EU] bloc at about HK$50," chief executive John Slosar said yesterday. "It might be more expensive later." The charge will amount to about 0.5 percent on a ticket from Hong Kong to Frankfurt airport, which costs HK$9,240. "Passengers might be put off by additional fees," Slosar said.

China Daily:

• Researcher Sees Risk of China's Slowdown Accelerating. China faces risks of accelerating slowdown in economic growth, Ba Shusong, a researcher at the State Council's Development Research Center, wrote in a commentary. China's exports growth may see an "obvious" slowdown. The country should allow fiscal policy to play a more proactive role while maintaining tightness in monetary policy to curb inflation.

Financial News:

• The country's consumer price increases will stay at a high level, the Financial News said in a commentary. The causes for China's price increases are systematic issues, including financing mechanisms that fail to meet market demand for funds, a system that easily leads to unbalanced government investment, and exchange rate mechanisms that lacks flexibility.

China Securities Journal:

• China may be on track to resume the development of its nuclear power industry after March next year, citing Zhang Guobao, former head of the National Energy Administration.
• China's Oil Import Growth May Slow in 2012. Import growth may slow as oil prices become volatile, citing a research report by the Chinese Academy of Social Sciences. Global oil prices may fluctuate between $70 and $90 a barrel in 2012, citing the research report.
  

Evening Recommendations
Jefferies:

• Rated (SBUX) Buy, target $50.
• Rated (BAGL) Buy, target $17.
• Rated (PNRA) Buy, target $165.
• Rated (PEET) Buy, target $68.
• Rated (DNKN) Buy, target $30.
  

Night Trading

• Asian equity indices are -1.75% to -.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 206.0 +12.5 basis points.
  
• Asia Pacific Sovereign CDS Index 155.0 +2.0 basis points.
• FTSE-100 futures -.10%.
  
• S&P 500 futures +.02%.
  
• NASDAQ 100 futures +.02%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (FDS)/1.00
• (BBY)/.51
• (ABM)/.36

Economic Releases
7:30 am EST

• The NFIB Small Business Optimism Index for November is estimated to rise to 91.5 versus 90.2 in October.
  

8:30 am EST

• Advance Retail Sales for November are estimated to rise +.6% versus a +.5% gain in October.
• Retail Sales Less Autos for November are estimated to rise +.4% versus a +.6% gain in October.
• Retail Sales Ex Auto & Gas for November are estimated to rise +.4% versus a +.7% gain in October.

10:00 am EST

• Business Inventories for October are estimated to rise +.8% versus unch. in September.

2:15 pm EST

• The FOMC is expected to leave the benchmark fed funds rate at .25%.
  

Upcoming Splits

• (ROST) 2-for-1
  

Other Potential Market Movers

• The Bundesbank's President Weidmann speaking, weekly retail sales reports, Raymond James IT Supply Chain Conference, Oppenheimer Healthcare Conference, RBC Silver Conference and the (ESIO) analyst conference could also impact trading today.
  

BOTTOM LINE: Asian indices are lower, weighed down by commodity and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Falling into Final Hour on Rising Eurozone Debt Angst, Rising Global Growth Fear, Earnings Jitters, Technical Selling

Broad Market Tone:

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

Equity Investor Angst:

• VIX 27.18 +3.03%
  
• ISE Sentiment Index 88.0 -42.48%
  
• Total Put/Call .88 -26.05%
  
• NYSE Arms 2.66 +407.97%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 126.02 +2.79%
  
• European Financial Sector CDS Index 305.84 +8.4%
  
• Western Europe Sovereign Debt CDS Index 381.17 +3.76%
  
• Emerging Market CDS Index 304.43 +3.49%
  
• 2-Year Swap Spread 45.0 +2 bps
  
• TED Spread 54.0 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -127.75 -2.25 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.
  
• Yield Curve 179.0 -4 bps
  
• China Import Iron Ore Spot $138.30/Metric Tonne -.86%
  
• Citi US Economic Surprise Index 77.80 -.2 point
  
• 10-Year TIPS Spread 2.05 +2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -125 open in Japan
• DAX Futures: Indicating -1 open in Germany

Portfolio:

• Slightly Lower: On losses in my tech, biotech and medical sector longs
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short, then covered some
  
• Market Exposure: Moved to 50% Net Long

BOTTOM LINE: Today's overall market action is bearish, as the S&P 500 rolls over again near its 200-day moving average on rising Eurozone debt angst, rising global growth fears, some earnings jitters, technical selling, profit-taking, more shorting and high energy prices. On the positive side, Restaurant shares are just slightly lower on the day. Oil is falling -1.8% and gold is down -2.7%. On the negative side, Coal, Alt Energy, Oil Tankers, Energy, Oil Service, Steel, Semi, Networking, Bank, I-Banking and Construction shares are under substantial pressure, falling more than -3.0%. (XLF) has traded poorly throughout the day. Cyclical and small-cap shares are underperforming. Copper is falling -2.94% and Lumber is dropping -4.2%. The 10-year yield is falling -4 bps to 2.02%. The Italy sovereign cds is rising +5.6% to 564.0 bps, the France sovereign cds is jumping +9.54% to 229.17 bps, the German sovereign cds is gaining +4.96% to 103.83 bps, the Spain sovereign cds is surging +6.2% to 448.67 bps, the Russia sovereign cds is gaining +5.8% to 277.67 bps, the Belgium sovereign cds is climbing +5.33% to 333.33 bps and the UK sovereign cds gaining +4.68% to 101.0 bps. The Western Europe Sovereign CDS Index made a new all-time high today. 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 -4.4% to -127.75 bps(back to late-Nov. levels). 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 -27.9% since February 16th and -23.6% since Sept. 7th. The Citi Asia-Pacific Economic Surprise Index fell -8.5 points today to -25.30, which is the worst since April 2009. Asian equities continue to trade very poorly. India shares fell -2.1% and are now down -22.6% ytd. The Shanghai Composite broke down to the lowest level since March 2009 overnight and is now down -18.4% ytd. Major European equities fell 2-3.75% today, led lower by Italian shares which plunged -3.8% and are now down -26.2% ytd. European credit gauges are still performing very poorly given that the European debt crisis “can-kicking” solution is supposedly at hand. Equity index volume remains light and trading has an overall complacent feel given the action overseas, which is likely related to year-end window-dressing. The short-term rally I had expected on the perceived Eurozone "solution" may now occur from lower levels. I still remain very cautious on the intermediate-term. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, seasonality and investor performance angst.

Today's Headlines

Bloomberg:

• Sarkozy Says Loss of AAA Wouldn't Be 'Insurmountable'. President Nicolas Sarkozy said that the loss of France’s top credit rating wouldn’t be an “insurmountable” economic difficulty, according to an interview published in Le Monde newspaper. If the rating companies “pull it, we’ll face the situation coolly and calmly,” Sarkozy was quoted as saying by the newspaper. “It would be an additional difficulty but it’s not insurmountable. What is important is the credibility of our economic policy and our strategy of reducing spending.” Moody’s Investors Service said today it will review the ratings of all European Union countries after a summit last week Brussels failed to produce “decisive policy measures” to end the region’s debt turmoil. Standard & Poor’s placed the ratings of 15 euro nations, including AAA rated France and Germany, on review for possible downgrade on Dec. 5 pending an assessment of the summit. George Magnus, senior economic adviser at UBS AG, said he expects one of Europe’s AAA rated countries to lose its top rating. “It’s inevitable,” Magnus said in a interview with Maryam Nemazee on Bloomberg Television in London today. “It’s just a question of when S&P or the other rating agencies decide to pull the trigger.” Of the five euro zone countries with the top debt rating, France may be the most vulnerable. Its 10-year notes traded at 3.30 percent at 1:55 p.m. in Paris, higher than the other four, and 121 basis points above similarly dated German debt. Credit-default swaps on France climbed 13 basis points to 222 basis points today, while those on Germany rose half a point to 99.5 basis points.
• Sovereign, Corporate Bond Risk Rise, Credit-Default Swaps Show. The cost of insuring against default on European sovereign and corporate debt rose, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments jumped 13 basis points to 376.5 at 9 a.m. in London, approaching the record 385 set Nov. 25. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings rose 20.5 basis points to 770.5, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings climbed six basis points to 179.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased 11 basis points to 307 and the subordinated index rose 17.5 to 547.5.
• 5th European Solution Failing to Ease Stress: Credit Markets. The fifth agreement in 19 months intended to resolve Europe's sovereign crisis is failing to ease stress in the debt markets. A credit-default swaps index tied to Greece, Italy, Spain and 12 other western European nations rose today, extending a reversal of its biggest drop ever and approaching the record reached Nov. 25. A gauge of banks' reluctance to lend to one another in euros remains at about the highest since February 2009. The premium they pay to convert euro payments into dollars jumped the most in five weeks and is more than double this year's average.
• EU Summit's Failure May Consign Top-Rated Bonds to History. Europe’s failure to agree on a comprehensive solution to the sovereign debt crisis threatens to consign AAA rated bonds in the region to history. Top-rated agencies in the 17-nation euro area have at least 847.5 billion euros ($1.1 trillion) of debt outstanding, according to data compiled by Bloomberg, and will be at risk should their sovereigns be downgraded. Moody’s Investors Service said today it will review the ratings of all European Union nations after last week’s summit failed to produce “decisive policy measures,” while Standard & Poor’s announced Dec. 5 it may cut 15 euro members, including AAA rated Germany and France. “Double A is the new triple A,” said Raphael Gallardo, the head of economic research at Axa Investment Managers in Paris, which manages about $690 billion. “De facto, there are no more highly liquid, risk-free assets. It’s a dangerous problem because in a market crash, liquid AAA assets are the dam that contains the total exodus of liquidity.” European leaders’ fifth attempt to draw a line under their debt woes ended in a fiscal accord that will bring tighter deficit rules, though with many details still to be ironed out and the U.K. vetoing an agreement among all 27 EU members. A lack of top-rated sovereigns would make it harder to gauge a risk-free benchmark for securities, reduce participation in euro-region debt markets and threaten ratings of agencies and supranationals such as the European Investment Bank and World Bank.
• Italy's $71 Billion Needs Remain Crisis Flashpoint: Euro Credit. Italy holds the key to the euro's survival, shouldering one-third of the region's first-quarter funding burden as the debt crisis saps demand for its assets and shrinks its investor base. The euro zone's third-largest nation has to repay about 53 billion euros ($70.5 billion) in the first quarter from the region's total maturing debt of 157 billion euros, according to UBS AG. It owes a further 3.2 billion euros in interest payments based on the average five-year yield of the past three months. Italy's five-year borrowing costs rose to as much as 7.11 percent today, down from the Nov. 25 euro-era high of 7.85 percent. Credit-default swaps on the nation's debt surged 21 basis points to 555 on concern that crisis-fighting agreements forged by European leaders to end the region's crisis will prove insufficient. The first three months of 2012 "will be a very painful auction experience, which is detrimental to investor confidence," said Padhraic Garvey, head of developed-market debt strategy at ING Groep NV in Amsterdam. "Italian yields at about 7 percent represent fantastic value for investors, but demand is low because there's no confidence that the debt crisis can be solved quickly enough." The nation's debt-servicing costs will rise by about 30 billion euros in the next two years, Confindustria, Italy's employers' lobby, said on Dec. 1. Those costs will eat up 5.1 percent of gross domestic product next year, up from 4.2 percent this year, and climb to 5.6 percent in 2013, the report said.
• Intel Says Q4 Revenue to Miss Forecast on Shortage. Intel Corp. (INTC), the world’s largest chipmaker, reduced its fourth-quarter revenue forecast by about $1 billion, saying a shortage of hard-disk drives is cutting customers’ production of personal computers. The company said revenue will be $13.7 billion, plus or minus $300 million, compared with a previous estimate of $14.7 billion, give or take $500 million, according to a statement today. Analysts predicted $14.7 billion, the average of estimates compiled by Bloomberg. While PC sales will rise in the fourth quarter from the prior three months, Intel said customers are stockpiling fewer parts because output has been hurt by a shortage of disk drives, the main data-storage devices in computers. The supply constraints, resulting from the worst flooding in Thailand in 70 years, will continue into the first quarter, the chipmaker said. The reduced outlook from Intel, whose microprocessors power more than 80 percent of all PCs, comes after some drive makers had indicated the industry was recovering from the floods in Thailand, home to production for about a quarter of the world’s hard-disk drives. The forecast sent the Philadelphia Semiconductor Index (SOX) down 3.6 percent. Intel’s customers have cut chip orders in the past two weeks after their hard-disk suppliers updated them on the availability of their products, Intel Chief Financial Officer Stacy Smith said on a conference call today.
• Speculators Miss Oil Drop on European Debt Woes: Energy Markets. Hedge funds increased bullish bets on crude oil just before prices dropped the most in three weeks amid concern the European debt crisis will trigger a global economic slowdown. The funds and other large speculators boosted long positions, or wagers that prices will rise, 4.1 percent in the seven days ended Dec. 6, according to the Commodity Futures Trading Commission's Commitments of Traders report on Dec. 9. The net-long positions increased for a second week amid rising tensions with Iran, the second-largest producer in the Organization of Petroleum Exporting Countries. Futures dropped 2.1 percent on Dec. 8 on the New York Mercantile Exchange, the most since Nov. 17, after European Central Bank President Mario Draghi signaled policy makers wouldn't increase government bond purchases to stabilize the region's economy.
• Crude Oil Declines on Moody's Review of European Ratings, China Exports. Oil extended last week’s decline as Moody’s Investors Service said it will review the credit ratings of all European Union countries and China’s export growth slowed to the weakest pace since 2009. Crude dropped as much as 1.9 percent after Moody’s said last week’s EU summit failed to deliver “decisive policy measures” to end the debt crisis. China’s exports rose 13.8 percent in November from a year earlier, compared with 15.9 percent in October, the customs bureau said Dec. 10. “The Moody’s announcement really affects market sentiment,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “There is a pretty good chance that the global oil demand will be pretty weak next year because of the European crisis and China.” Crude for January delivery fell $1.43, or 1.4 percent, to $97.98 a barrel at 12:33 p.m. on the New York Mercantile Exchange. Prices dropped 1.5 percent last week and are up 7.2 percent this year. China’s November export growth was the least since December 2009, excluding distortions in January and February each year, customs data showed. Exports to the European Union, China’s biggest market, rose 5 percent from a year earlier, a quarter of the pace reported in July and August. “The news from China is another indicator of the economic weakness in Europe and it means China will use less oil,” said James Williams, an economist at WTRG Economics, an energy research firm in London, Arkansas. Libya pumped 500,000 barrels a day in November, from a low of 45,000 barrels in the midst of the rebellion against former leader Muammar Qaddafi, according to Bloomberg estimates.
• Obama Backers Make President Top Fundraiser From Big Business. President Barack Obama, who has been characterized as anti-business by his political opponents, has received more in campaign contributions from business executives this year than any Republican presidential candidate. Obama raised $5.6 million from executives, or about a third of all their donations through Sept. 30, according to data compiled by Bloomberg. Republican candidate Mitt Romney raised $5.2 million, far outpacing his primary challengers. Former House Speaker Newt Gingrich, the front-runner in the latest national polls, raised about $272,000, or 5 percent of Romney’s total.
• U.S. Economic Data is Surprising Forecasters. U.S. economic data are outperforming expectations by the most in nine months, a trend Federal Reserve officials may incorporate into their policy statement tomorrow. The Citigroup Economic Surprise Index, a daily measure of whether economic data is better or worse than economists’ projections, improved to 85.7 on Dec. 2, the highest since March 9.
• India's Rupee Tumbles to Record as Factory Output Shrinks For 1st Time in 2 Years. India’s rupee tumbled to a record low after industrial production declined for the first time in more than two years. The currency fell 1.5 percent, the most in three weeks, as the Central Statistical Office said factory output shrank 5.1 percent in October from a year earlier, compared with the median estimate for a 0.7 percent contraction in a Bloomberg News survey. That was the first drop in output since June 2009. The Reserve Bank of India sold dollars today to curb the rupee’s slide, according to IndusInd Bank Ltd. “The bearish sentiment is very strong and there is nothing going for the rupee,” said J. Moses Harding, a Mumbai-based executive vice president at IndusInd. “The RBI has been intervening intermittently today at various levels.”
• German Voters Dissatisfied With Merkel's Leadership in ARD Poll. German voters are dissatisfied with Chancellor Angela Merkel’s leadership during the euro crisis, according to an Infratest poll conducted for ARD television. Some 55 percent of those surveyed said they were “less satisfied” or “not satisfied at all” with Merkel’s handling of the criticism while 65 percent of the respondents said solidarity with troubled euro member countries is in Germany’s best interest. Last week’s EU accord wouldn’t help stabilize the euro area, according to 57 percent.
• Martin Marietta Seeks to Buy Vulcan Materials(VMC) in $4.7 Billion Hostile Bid. Martin Marietta Materials Inc. (MLM) is seeking a hostile takeover of Vulcan Materials Co. in an all- stock transaction valued at $4.7 billion that would create the world’s largest aggregates supplier.

Wall Street Journal:

• CFOs Less Optimistic About Growth In 2012 - BofA Survey. Financial chiefs at U.S. companies are less optimistic about economic growth in 2012 than in previous years, however, the majority don't expect work force reductions next year, according to a recent chief financial officer outlook survey by Bank Of America Corp. (BAC) According to the annual latest survey of 600 executives by Bank Of America Merrill Lynch, 38% of respondents said they expect the U.S. economy to grow in 2012, down from 56% a year ago and 66% the prior year. CFOs rated the economy a score of 44 out of 100 -- its lowest score in the survey's 14-year history. A year ago, CFOs gave the economy a score of 47.
• Interview: Adecco Prepared For European Recession - CEO. Adecco SA (ADEN.VX) the world's largest staffing company, is preparing for a recession in Europe in 2012 and a long, slow recovery thereafter.
• Banks Sit in a Tangled Web. Dozens of banks across Europe have sold large quantities of insurance to other banks and investors that protects against the risk of ailing countries defaulting on their debts, the latest illustration of the extensive financial entanglements among the continent's banks and governments. New data released last week by European banking regulators suggest the risks of banks suffering losses tied to European government bonds could be higher and more widespread than previously realised. The numbers show European banks have sold a total of €178bn worth of insurance policies, in the form of financial derivatives known as credit-default swaps, on bonds issued by the financially struggling Greek, Irish, Italian, Portuguese and Spanish governments. If those bonds default, as some investors fear they might, banks could be on the hook for making large payments to the holders of the swaps. The banks have at least partly insulated themselves from such potential losses by buying large quantities—roughly €169bn worth—of credit-default swaps tied to the same bonds, apparently in large part from other European banks, according to European Banking Authority data. The disclosures highlight another layer of risk interwoven through the continent's banking system.
• Italian, Spanish Bond Yields Rise.
  

MarketWatch:

• France's Hollande Wants to Renegotiate EU Deal. French presidential hopeful Francois Hollande said Monday that, if elected, he would seek to renegotiate the new euro-zone accord agreed by European leaders at last week’s Brussels summit, sparking concern that a power shift in France could derail the plan. In an interview with RTL Radio, Hollande said the treaty “is not the right answer” to the crisis, because it doesn’t respond to the current market pressure or stimulate sufficient growth. An LH2 poll on behalf Yahoo published on Sunday showed Hollande would capture 31.5% of the vote, while Sarkozy would win 26% in the first round of voting. The poll indicated Hollande would also triumph in a second round against Sarkozy, with a 57% majority, and therefore could act on his promise to revamp the euro-zone accord.

CNBC.com:

• Why Europe Has Investors Running Scared - Again.

Business Insider:

• Hedge Funder Hugh Hendry Is Making Breathtaking Returns Shorting China. U.K. hedge fund titan Hugh Hendry, a partner and chief investment officer at Eclectica Asset Management, is continuing to kill it this year with his "China short" fund. According to the Financial Times, his "China short" fund is up an astonishing 52% YTD. That's one awesome bet Hendry made, especially since the average hedge fund is down 4.37% YTD, the report said. Hendry's credit fund is able to go short China via Japanese credit default swaps by betting that Chinese demand to Japanese corporate credits will slow. Hendry, who has long been a bear on China, told students at the London School of Economics in October that his Confucius saying on the country is "wise man not invest in over capacity."
• David Zervos: Every Investor Must Be Prepared For This One Headline In 2012. David Zervos, the fixed income strategist from Jefferies, is very quickly becoming one of Wall Street's must-reads.
• Morning Joe: Obama Thinks His Remarkable Talents Are Wasted On America.
  

Zero Hedge:

• French Downgrade - Even More Likely Than Yesterday.

New York Times:

• A Greek What-If Draws Concern: Dropping the Euro. It would be Europe’s worst nightmare: After weeks of rumors, the Greek prime announces late on a Saturday night that the country will abandon the euro currency and return to the drachma. The danger that Greece or some other deeply damaged country in the euro zone could leave the single-currency union can no longer be ruled out. And it was largely this prospect that drove leaders last week to agree to adopt strict fiscal rules that they hope will wrap the 17 European Union nations that use the euro into an even tighter embrace.

Washington Times:

• Obama to Slash National Guard Force on U.S.-Mexico Border. Blaming budget cuts, the Obama administration early next year will cut the number of National Guard troops patrolling the U.S.-Mexico border by at least half, according to a congressman who was briefed on the plan. The National Guard said an announcement will be made by the White House “in the near future,” but Rep. Duncan Hunter, a California Republican who has learned of the plans, said slashing the deployment in half is the minimum number, and he said it will mean reshuffling the remaining troops along the nearly 2,000-mile border. In California, that will mean going from 264 Guard troops down to just 14, he said.

The Journal of Commerce:

• U.S. Box Imports Estimate Cut on 'Stubbornly Slow' Recovery. The U.S. will import 2.8% more containerized goods next year, down from a previous forecast of 4.7%, The Journal of Commerce/PIERS said, blaming a "stubbornly slow" economic recovery.
  

Reuters:

• Italy Starts Strikes Against Monti's Austerity. Italy began a week of strikes by the three biggest labour unions against Prime Minister Mario Monti's 33-billion-euro austerity package, which the government may soften slightly to meet some of their demands. Port, highway, and haulage personnel stopped work for three hours and metal workers -- including those at carmaker Fiat -- put down their tools for eight hours. Printing press operators stopped for a full shift and most newspapers won't publish on Tuesday. Public transport strikes will be held on Dec 15-16. Bank employees will halt work for the afternoon of Dec 16, and the public administration will close down for a whole day on Dec 19. For the first time in six years of division, the three main union leaders shared a stage together when they spoke to striking workers in front of parliament. "We're not giving up on the idea that the austerity package must be changed," Susanna Camusso, chief of the largest labour group Cgil, told the crowd. "It hurts workers, pensions and the country as a whole," she said.
• Exclusive: Commerzbank in State Aid Talks. German lender Commerzbank (CBKG.DE) and the government have been in talks for several days over possible state aid, five people familiar with the matter told Reuters on Monday. The aim was to reach an agreement in principle by Christmas, coalition sources said on Monday. While Commerzbank, 25 percent-owned by Germany, wants to avoid state aid, it needs to find 5.3 billion euros ($7 billion) capital by mid-2012 to meet European Banking Authority capital rules. Since Germany's second-largest bank raised 5.3 billion euros from shareholders in June, writedowns on Greek sovereign debt and tougher capital rules have eroded its capital cushion. How Germany could help strengthen Commerzbank's balance sheet remains open, coalition and banking sources said.
• Copper Falls on Economic Growth, Demand Concerns.
  
• OECD Oct Indicator Signals Deeper Slowdown. All major economies are losing momentum, the Organisation for Economic Cooperation and Development said on Monday, with activity across the think tank's member countries at its weakest in two years. The Paris-based organisation's October composite leading indicator for its member states fell to its lowest level since November 2009, easing to 100.1 from 100.4 in September, barely staying above its long-term average of 100. "Composite leading indicators (CLIs) ... point to a slowdown in economic activity in all major economies, but with some variation in the strength of the slowdown across countries," the OECD said in statement. The Group of Seven's CLI fell to 100.2 from 100.5 while the reading for the euro zone dropped to 98.5 from 99.2, slipping further from its long-term average of 100. Among major emerging market economies, China's CLI slipped marginally to 100.2 from 100.3, India's fell to 93.1 from 93.9 and Brazil's to 94.2 from 94.7.
• S&P Says Eurozone May Need Another Shock. Ratings agency Standard & Poor's put more pressure on the euro zone on Monday, with its chief economist saying time was running out for the currency bloc to resolve its debt problems and that it might need another financial shock to get it moving.

Financial Times:

• Wave of Insolvencies Looms for Shipping Industry. Fears are mounting that the eurozone financial crisis could spark a fresh wave of shipping insolvencies, after funding problems at many leading European banks accelerated falls in vessel values, triggered by the worst conditions in some shipping markets in 25 years.

Telegraph:

• QE Might Not Work, BIS Tells Bank of England. The Bank for International Settlements (BIS), the world’s financial supervisor, has warned the Bank of England that printing more money to boost the economy may not succeed.
• Debt Crisis: Live.

Kurier:

• China's Vice Foreign Minister Fu Ying said it is 'important' for China that the euro area solves its crisis, and the nation is following closely the efforts led by Germany and France, according to an interview. "This is important for China, the EU is our biggest trade partner," she said. "Our exports to the EU dropping in October," she added.

Xinhua:

• China Needs Long-Term Measures to Control Property Speculation, citing Zhang Liqun, a researcher at the State Council's development research center.

Shanghai Daily:

• Shanghai Luxury House Sales Lift Price. THE improved sales of luxury house pushed the average cost of new homes in Shanghai to a three-month high even as the overall local buying sentiment weakened again.
• China's Competitiveness On The Decline. CHINA'S industrial competitiveness showed signs of decline this year, with higher-tech industries suffering more than those at the lower end, the Chinese Academy of Social Sciences said yesterday. Whether China can rebound in 2012 depends on economic conditions in developed countries and the pressure on China's exchange rate, said Zhang Qizi, a researcher at the academy's Institute of Industrial Economics. Industrial competitiveness in the academy's report involves non-financial sectors dedicated to global trade. The global slump will put great pressure on exports and as protectionism against Chinese products is on the rise, global trade is unlikely to grow much, he said.