Stocks Slightly Higher into Final Hour on Euro Bounce, Better US Economic Data, Short-Covering, Window-Dressing

Broad Market Tone:

• Advance/Decline Line: About Even
  
• Sector Performance: Mixed
  
• Volume: Light
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 21.89 +5.60%
  
• ISE Sentiment Index 140.0 +35.92%
  
• Total Put/Call .90 +4.65%
  
• NYSE Arms 1.10 +73.07%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 120.60 -.65%
  
• European Financial Sector CDS Index 277.85 +6.06%
  
• Western Europe Sovereign Debt CDS Index 357.85 -1.43%
  
• Emerging Market CDS Index 308.58 -.26%
  
• 2-Year Swap Spread 49.0 +1 bp
  
• TED Spread 57.0 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -127.0 +2.0 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.
  
• Yield Curve 171.0 +3 bps
  
• China Import Iron Ore Spot $135.20/Metric Tonne n/a
  
• Citi US Economic Surprise Index 71.20 n/a
  
• 10-Year TIPS Spread 2.04 +1 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +35 open in Japan
• DAX Futures: Indicating +9 open in Germany

Portfolio:

• Higher: On gains in my Tech, Medical and Biotech sector longs
  
• Disclosed Trades: None
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish, as the S&P 500 trades right above its 200-day moving average, despite Eurozone debt angst, financial sector pessimism, rising global growth fears, technical resistance and rising energy prices. On the positive side, Utility, Biotech, Gaming and Education shares are especially strong, rising more than +.75%. "Growth" stocks are outperforming "value" shares. Small-caps are also relatively strong. Gold is falling -.88% and Lumber is gaining +2.64%. On the negative side, Coal, Disk Drive, Computer Service, Bank, I-Bank and Airline shares are under pressure, falling more than -.75%. (XLF) has underperformed throughout the day. Cyclicals are also relatively weak. Oil is up +1.38% and Copper is falling -1.6%. The Italian/German 10Y Yield Spread is rising +1.12% to 507.66 bps. The Western Europe Sovereign CDS Index is still very near its all-time high. The TED spread continues to trend higher and is very near the highest since May 2009. The 2Y Euro Swap Spread is near the highest since Nov. 2008. The 3M Euribor-OIS spread is very near the highest since February 2009. The 3M EUR/USD Cross-Currency Basis Swap is falling +1.09% to -127.0 bps, which is 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 -29.5% since February 16th and -25.3% since Sept. 7th. The China Corporate Blended Spread Index remains close to another technical breakout. The Citi Asia Economic Surprise Index is fell another -.1 point today to -31.80, the lowest since April 2009. Asian shares continue to trade poorly. The Shanghai Composite fell another -1.09% overnight and is hovering right off multi-year lows, falling -22.86% ytd. As well, India’s Sensex fell -.61% and is down -22.6% ytd. Despite the decoupling this year, slowing economic growth and weak equity markets in the region are also red flags for US equity investors. European shares are mildly weaker today, led lower by Italian equities’ -1.04% decline. European credit gauges are still performing very poorly given that the European debt crisis “can-kicking” solution is supposedly at hand, which remains a large red flag. Cyclicals are weighing on the major averages today with the MS Cyclical Index dropping -1.36%. This index is down -14.0% ytd and I expect it to continue to underpeform next year. Year-end window-dressing, short-covering, better US economic data and seasonal strength continue to help out US stocks short-term. The S&P 500 has entered significant technical resistance. For a sustainable equity advance into the new year, I would expect to see meaningful European credit gauge improvement, subsiding hard-landing fears in key emerging markets, better volume and higher-quality leadership. I expect US stocks to trade mixed-to-higher into the close from current levels on better US economic data, short-covering, a bounce in the euro, year-end window dressing and seasonal strength.

Today's Headlines

Bloomberg:

• German Government Notes Climb, Italian Benchmark Bonds Fall Before Auction. German notes rose, pushing the rate on two-year notes to less than 0.2 percent for the first time, as investors sought the safest assets before Italy auctions as much as 20 billion euros ($26.2 billion) of debt. Italian benchmark debt held three days of declines. German bonds snapped a two-day drop after International Monetary Fund Managing Director Christine Lagarde said the world economy is in danger because of Europe’s financial woes. Dutch and Finnish note yields also fell. Italy plans to sell 9 billion euros of 179-day bills and as much as 2.5 billion euros of zero-coupon notes due in 2013 tomorrow. It will offer bonds due between 2014 and 2022 on Dec. 29. “The auction will be quite a big event,” said Alessandro Giansanti, a senior rates strategist at ING Groep NV in Amsterdam. “It will continue to drive Italian yields higher and will have an effect on bunds with a flight to quality.” The yield on two-year German notes dropped six basis points to 0.17 percent at 4:50 p.m. London time, after reaching 0.158 percent, the least since Bloomberg began collecting the data in 1990. The 0.25 percent security due December 2013 rose 0.115, or 1.15 euros per 1,000-euro face amount, to 100.16. Italian 10-year note yields were two basis points higher at 7 percent. The additional yield investors demand to hold the benchmark securities instead of German bunds widened to as much as 520 basis points, or 5.2 percentage points, the most since Nov. 17.
• Italy Retailers in Worst Christmas in 10 Years. Italian retailers had the worst Christmas in 10 years, consumer group Codacons said, as austerity measures to combat the sovereign debt crisis prompted households to cut spending. Italians spent 48 euros ($62.75) less per person this holiday season than the average of the past five years, Rome- based Codacons said in a statement on its website. The shoe and clothing sector was hit the most, with sales dropping 30 percent from previous years, it said, adding retailers won’t recover the decline during seasonal promotions that start in January. The discount period “will be a flop,” with sales declining as much as 40 percent compared with 2010, Carlo Rienzi, the head of Codacons, said in the statement.
• Will the Euro Survive in 2012? (video)
  
• Consumer Confidence Rose More Than Forecast. The Conference Board’s index increased to 64.5, exceeding all estimates in a Bloomberg News survey and the highest since April, from a revised 55.2 reading in November, figures from the New York-based private research group showed today. Another report showed home prices fell more than projected in October.
• Oil Extends Longest Rally Since 2010. Crude advanced as much as 1.9 percent after Iran’s official Islamic Republic News Agency cited Vice President Mohammad Reza Rahimi as saying the country would bar shipments through the strait if sanctions are imposed on its oil exports. “The Iranian threats are getting increasingly bold,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. Crude oil for February delivery rose $1.78, or 1.8 percent, to $101.46 a barrel at 2:01 p.m. on the New York Mercantile Exchange. The contract reached $101.53, the highest level since Dec. 8. Futures have climbed 11 percent this year after increasing 15 percent in 2010. Brent oil for February settlement gained $1.45, or 1.3 percent, to $109.41 a barrel on the London-based ICE Futures Europe exchange.
• Sears(SHLD) Plunges on Plans to Close Stores. Sears Holdings Corp. tumbled the most in 8 1/2 years after saying it will close as many as 120 stores, with a deeper-than-expected sales decline casting doubt on Chairman Edward Lampert’sefforts to turn around the chain.
• S&P Index in 2011 Moves Least Since 1970. Stock swings that reached twice the five-decade average left the Standard & Poor’s 500 Index (SPX) with the smallest price change in 41 years and utilities, soapmakers and health-care providers at the highest valuations since 2008. The S&P 500 rose 3.7 percent last week, sending the measure to a gain of 0.6 percent for the year. The last time it moved less on an annual basis was in 1970, when it fell 0.1 percent.

Wall Street Journal:

• 2011 Year in Photos.

CNBC.com:

• Obama to Nominate Powell, Stein as Fed Governors. U.S. President Barack Obama will nominate Harvard economist Jeremy Stein and Jerome Powell, an investment banker and former Treasury official, to the two empty seats on the Federal Reserve's policy-setting board of governors.
• Recession? Not If You Are a Member of Congress. When Representative Ed Pastor was first elected to Congress two decades ago, he was comfortably ensconced in the middle class. Mr. Pastor, a Democrat from Arizona, held $100,000 or so in savings accounts in the mid-1990s and had a retirement pension, but like many Americans, he also owed the banks nearly as much in loans. Today, Mr. Pastor, a miner’s son and a former high school teacher, is a member of a not-so-exclusive club: Capitol Hill millionaires.
• White House to Raise Borrowing Limit by $1.2 Trillion. The Obama administration will ask Congress to raise the nation's borrowing limit by $1.2 trillion this week, marking the third and final increase from a deal negotiated over summer. Treasury officials said Tuesday that the increase is necessary because the government will be within $100 billion of its current limit by Friday. The debt limit is the amount the government can borrow to finance its operations. The latest increase will boost that limit to $16.4 trillion. Officials say that should be enough to allow the government to keep borrowing until the end of 2012 — just after the presidential election.

Business Insider:

• The Sad Reason Why This Indian Billionaire Refuses To Invest In India.
• Zing! The GOP's Hysterical New Year's Resolution Suggestions For Obama.
• Reports Are That The U.S. Just Lost Another Drone, This Time It's In Afghanistan.
  

Zero Hedge:

• LTRO "Bazooka" Is Epic Disaster As Banks Scramble To Redeposit "Free Carry" Cash With ECB, Lose Money On "Inverse Carry".

iSuppli:

• Wireless Infrastructure Market Rebounds in 2011 as Carriers Upgrade Networks for Data Services.

AppleInsider:

• iOS, Android Activations Surge 353% On Record Setting Christmas Day.
• Suppliers Rumored to Prepare for 32", 37" Apple Televisions in Early 2012.
  

Politico:

• Ben Nelson Retiring From Senate. Democratic Sen. Ben Nelson of Nebraska will announce today that he is retiring after two terms, a serious blow to Democratic efforts to hold on to their majority in the chamber next November.

Bild:

• Wolfgang Bosbach, a German politician from Chancellor Angela Merkel's Christian Democratic Union, said continued aid payments to Greece depend on the country's meeting its commitments, citing an interview. "As long as it's entirely unclear where Greece is going politically, the country can't expect that further billion-euro aid is paid all the time," citing Bosbach.

Diario Economico:

• Retail sales in December through Christmas, in Portugal, dropped about 15% from a year earlier, citing Joao Vieira Lopes, the chairman of the country's Commerce and Services Confederation.

Bear Radar

Style Underperformer:

• Large-Cap Value (-.11%)

Sector Underperformers:

• 1) Airlines -1.91% 2) Coal -1.81% 3) Gold & Silver -1.40%

Stocks Falling on Unusual Volume:

• SHLD, SSRI, CIB, CSC, ARGN, HMIN, WHR, CIX and EOC
  

Stocks With Unusual Put Option Activity:

• 1) PHM 2) SHLD 3) TWX 4) ETFC 5) WHR
  

Stocks With Most Negative News Mentions:

• 1) WHR 2) GM 3) NAV 4) ICE 5) RIG
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth (+.07%)

Sector Outperformers:

• 1) Oil Tankers +.89% 2) Gaming +.79% 3) Utilities +.59%

Stocks Rising on Unusual Volume:

• CALM, AWAY, PHH, MJN, EBIX, MGM and VHC
  

Stocks With Unusual Call Option Activity:

• 1) UUP 2) SHLD 3) MJN 4) SPRD 5) STEC
  

Stocks With Most Positive News Mentions:

• 1) VMW 2) APP 3) CALM 4) S 5) CAG
  

Charts:

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

Tuesday Watch

Weekend Headlines
Bloomberg:

• Euro Maintains Decline Against Yen Before Italy Auctions Government Debt. The euro maintained a two-day drop against the yen before Italy sells bills and bonds this week amid concern Europe’s debt crisis will drive up borrowing costs for the region’s larger economies. The Dollar Index held losses from last week before U.S. reports forecast to show consumer confidence rose to the most since July and regional manufacturing gauges increased, reducing demand for haven assets. Australia’s currency ended a five-day rally as Asian stocks slid. Thailand’s baht weakened versus the greenback as investors reduced holdings of the nation’s assets. “The markets are waiting to see how much demand there’ll be for Italian debt,” said Junichi Ishikawa, a Tokyo-based market analyst at IG Markets Securities Ltd. “If the results deepen doubts about Italy’s funding ability, they will weigh on the euro. I still don’t see any reason to buy the currency.” Italy is scheduled to sell 9 billion euros ($11.8 billion) of 179-day bills and as much as 2.5 billion euros of zero-coupon 2013 bonds tomorrow. The nation will auction debt due in 2014, 2018, 2021 and 2022 the following day. Ten-year bond yields in Italy advanced six basis points to 6.98 percent on Dec. 23, approaching the 7 percent level that spurred Greece, Ireland and Portugal to seek bailouts.
• China Stocks Drop to 20-Year Low on Cash Crunch, Slowing Industrial Profit. China’s stocks fell, driving the benchmark index lower for the sixth time in seven days, on concern about a cash crunch after interbank lending rates jumped and profit growth for industrial companies slowed. China Construction Bank Corp. (601939) and China Minsheng Banking Corp. paced declines for lenders after one-month interbank borrowing costs surged the most since June. Anhui Conch Cement Co. and Sany Heavy Industry Co. dropped more than 2 percent, leading losses for industrial companies after a report showed earnings growth for the first 11 months of the year decelerated. “Tight liquidity and slowing economic growth are key concerns for investors and that hasn’t changed,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “Stocks have room for further declines because we don’t see a reversal of fundamentals.” The Shanghai Composite Index (SHCOMP) slid 18.97 points, or 0.9 percent, to 2,171.14 as of 10:31 a.m. local time, heading for the lowest level since March 16, 2009. The CSI 300 Index (SHSZ300) fell 0.9 percent to 2,313.82. A measure of small and medium-size companies slid 1.4 percent in Shenzhen. Hong Kong’s market is shut today, while the U.S. was closed yesterday for the Christmas holiday. The Shanghai Composite has fallen 7 percent in December as concern about an economic slowdown overshadowed the first cut in reserve requirement ratios in three years on Nov. 30. For the year, the measure is down 23 percent after the central bank raised interest rates three times to cool inflation and exports to Europe slowed because of the region’s debt crisis.
  
• Rubber Demand in China to Slow in 2012 as Auto Sales Decline, Okachi Says. Natural rubber demand in China, the world’s largest consumer, may slow in 2012 and prices may extend the biggest annual decline in three years as economic growth and auto sales ease, an executive at Okachi & Co. said. “There’s growing concern that the whole economic situation will face downward pressure in the first quarter next year because of weak economies in both emerging and developed countries,” said Lizhi Tang, president of Okachi’s greater China region. Okachi is the largest broker for rubber contracts on the Tokyo Commodity Exchange, he said. Slower demand may extend a 33 percent decline in prices this year, the biggest drop since 2008, amid higher supply from producing countries including Thailand, and as the sovereign debt crisis in Europe deepens and growth in the U.S. slows. China accounted for about 34 percent of global demand last year, according to the International Rubber Study Group. “Growth in China’s demand for natural rubber next year is poised to slow down amid sluggish new auto sales,” Li Shiqiang, general manager at Sri Trang (Shanghai) Ltd. (STA), a unit of Thailand’s largest publicly traded rubber exporter, said in a phone interview on Dec. 22. “Chinese tire makers are confronting problems such as tight cash flow, declining sales, overcapacity, pressure to lower tire prices and consolidation,” Li at Sri Trang said. Shares in Giti Tire Corp. (600182), China’s largest tiremaker, have dropped 30 percent this year in Shanghai and Double Coin Holdings (600623) has plunged 42 percent as auto sales have slowed. The benchmark Shanghai bourse has dropped 22 percent. “Next year it’s likely that supply will outstrip demand because of a slowdown in the global economy and the subsequent weak demand from the auto and tire sectors,” He Yihua, a trading manager at Okachi, said in an e-mail. The increasing use of substitute synthetic rubber will also lead to reduced use of the natural product, He said. Synthetic rubber may have reduced natural rubber consumption by about 545,000 tons in 2011, he said. “The weak fundamentals in the real estate market and other infrastructure sectors will also reduce the demand for tires in the logistics chain,” Sri Trang’s Li said. “So far there’s nothing to be optimistic about in 2012.”
• PBOC's Zhou Says China Should Cut Reliance on Foreign Rating. China should reduce its reliance on overseas rating companies by encouraging large financial institutions to strengthen their research and make their own judgments, central bank Governor Zhou Xiaochuan said. The nation is also considering establishing credit-rating companies backed by the government, Zhou said at a financial forum in Beijing today. A copy of his speech transcript was posted on financial news portal hexun.com. Zhou’s remarks reflect China’s desire to seek alternatives to the top-three global rating companies amid skepticism among officials about the firms’ independence.
• U.S.. Says Iran Elite Profiting From Currency Plunge Triggered by Sanctions.
• Obama Campaign Returns $70,000 of Corzine Campaign Donations. President Barack Obama’s re-election campaign returned campaign contributions from Jon S. Corzine, former chairman and chief executive officer of MF Global Holdings Ltd., according to a Democratic official. Obama for America and the Democratic National Committee refunded the money from the former New Jersey governor out of an abundance of caution, said the official, who requested anonymity. Republicans have criticized the president for keeping contributions from the head of a firm that collapsed and filed for bankruptcy.
• Job Creation is Price for New U.S. Health Law: Andrew Puzder.
  

Wall Street Journal:

• Views Dim on NYSE(NYX) Tie-Up. Some shareholders of NYSE Euronext are losing enthusiasm for the planned tie-up with Deutsche Börse AG, in another sign that prospects for the deal have dimmed amid protracted negotiations with European antitrust regulators.
• Banks Struggle With Euro Contingencies. As the euro-zone debt crisis intensified in recent months, at least two global banks took steps to install back-up technology systems that could handle trades in old European currencies like drachmas, escudos and lire. That, the banks quickly found, is not so easy in a financial world that is trying to both exhibit confidence in the ailing euro and—just in case—plan for its possible demise. Technology managers at the banks contacted Swift, the Belgium-based consortium that manages the network used in financial transactions, said people familiar with the matter.
• SEC Ups Its Game to Identify Rogue Firms. It is the Securities and Exchange Commission's new "most-wanted" list: a chart covered with handwritten notes, yellow highlighter and the names of about 100 hedge funds. The hedge funds have one thing in common: Their performance seems too good to be true, with some trouncing the overall market and others churning out modest results without ever suffering a down month. Some funds on the list stumble but still always outperform rival hedge funds. "There is serious fraud in this space, and we have been attacking it," said Bruce Karpati, co-chief of the SEC's asset-management enforcement unit. The hedge-fund chart dominates a corner of his lower Manhattan office.
• Iraq Crisis Grows With New Threat. Iraq's political crisis entered its second week one step closer to the potential dissolution of the government, with a call for elections by a vital coalition partner and a suicide attack that extended the spate of violence that has followed the withdrawal of U.S. troops.
• Badly Written Bad Rules. New studies show the quality of federal regulation is plummeting. President Obama is leading his regulators in an anvil chorus unlike anything in modern U.S. history. So it is unsurprising but still instructive that independent students of regulation say the quality of the many rules they're putting out seems to be at all-time lows.

CNBC:

• Bank of America(BAC) Mulls More Asset Sales to Boost Capital.
• Syria Tanks Fire, 23 Die in Fighting; Monitors Awaited.
• Tens of Thousands in Moscow Put Pressure on Putin. Tens of thousands of flag-waving and chanting protesters called on Saturday for a disputed parliamentary election to be rerun and an end to Vladimir Putin's rule, increasing pressure on the Russian leader as he tries to win back the presidency.

Business Insider:

• Online Shopping Spiked 16.4% On Christmas Day, 7% Of Purchases Were Made On iPads.
• Nancy Pelosi Is Spending Her Christmas In A $10,000-A-Night Suite.
• Turkey Could Well Be Sliding Into Authoritarianism.
• This Monster From The Deep Could Change Everything For Norwegian Oil. With relatively little fanfare on the international stage, Lundin Petroleum and Statoil (and partners) have just recently jointly discovered one of the largest oil fields ever found in the North Sea.
• A Few Chinese Storm Clouds To Spoil A Happy New Year. (graphs)
  

Zero Hedge:

• Hold On Tight: European Bond Issuance In January Is About To Get Very Bumpy.
  
• China Insolvency Wave Begins As Nation's Biggest Provincial Borrowers "Defer" Loan Payments.
  

NY Times:

• U.S. Embraces a Low-Key Response to Turmoil in Iraq. Sectarian violence and political turmoil in Iraq escalated within days of the United States military’s withdrawal, but officials said in interviews that President Obama had no intention of sending troops back into the country, even if it devolved into civil war.
• Foreclosure Relief? Don't Hold Your Breath. THROUGHOUT the foreclosure crisis, Washington has done little to help people hang on to their homes. All those programs that were supposed to help — HAMP, HARP, Hope for Homeowners — have mostly failed.
• Hackers Breach the Web Site of Stratfor Global Intelligence. While the rest of the world engaged in merriment and good cheer, hackers used the holidays to attack a United States research group that puts out a daily newsletter on security issues.
• Nigeria Arrests 2 in Blast That Killed 26 in Church on Christmas Day. As Nigerian officials announced arrests Monday in connection with the deadly bombing of a church on Christmas Day, American officials and analysts said the violence underscored the increasing ability of a shadowy Islamist insurgency to carry out complex strikes against multiple targets, complicating the fight against it.

The Sacramento Bee:

• Congressional Recess Means the End of 30 Years of US Tariffs on Imported Ethanol.

Washington Post:

• Falling Home Values Mean Budget Crunches for Cities. The nation’s housing crisis is five years old, but for local governments across the country, the worst of the reckoning might only now be at hand. Because of the time it often takes for property assessments to reflect falling home values, the bust that began in 2007 has just begun to ravage tax revenues in communities from coast to coast. The problem is unlikely to subside soon.

The Telegraph:

• UK Treasury Plans for Euro Failure. The Government is considering plans to restrict the flow of money in and out of Britain to protect the economy in the event of a full-blown euro break-up. The Treasury is working on contingency plans for the disintegration of the single currency that include capital controls. The preparations are being made only for a worst-case scenario and would run alongside similar limited capital controls across Europe, imposed to reduce the economic fall-out of a break-up and to ease the transition to new currencies. Officials fear that if one member state left the euro, investors in both that country and other vulnerable eurozone nations would transfer their funds to safe havens abroad. Capital flight from weak euro nations to countries such as the UK would drive up sterling, dealing a devastating blow to the Government’s plans to rebalance the economy towards exports.

Focus:

• Germany's government is revising its forecast for 1 percent economic growth in 2012 and will present a lower figure in mid-January.
  

Efe:

• Spain's economy will contract in the fourth quarter of 2011 and the first quarter of 2012, a trend that would constitute entering into recession, citing comments by Economy Minister Luis de Guindos.

Il Sole 24-Ore:

• The European Central Bank won't become the lender of last resort for governments struggling to finance their debt, and will also focus on prospects for economic growth when settling monetary policy, Governing Council member Ignazio Visco said in an interview. "It's not in the nature of a central bank to be the ultimate financier of the state," he said. "That role isn't permitted in the European treaty." In his role as top regulator of the Italian banking system, Visco said that Italian lenders are mistaken in calling for the European Banking Authority to ease its demands for higher capital levels.
• Italy plans to sell almost $586 billion of debt next year to pay for maturing bonds and bills and cover the government's budget deficit, citing an interview with Maria Cannata, director of public debt.
  

Xinhua:

• China Should Be Prepared for Possible Inflation Rebound. China should be prepared for a possible inflation rebound next year, citing Yang Weimin, vice chairman of the Office of the Central Leading Group on Financial and Economic Affairs. The global economic situation will be "very tough and complicated" next year with increasing instability and uncertainty, Yang says.
• Shanghai started today a trial of requiring new users of microblogging services to register with real names, citing China's internet information regulator. Chinese cities including Beijing, Shanghai, Tianjin, Guangzhou and Shenzhen have started the trial.

Financial News:

• Japan's purchases of Chinese government bonds may add to inflationary pressures in China because of the foreign capital inflow, citing Wang Yongzhong, a researcher at the Chinese Academy of Social Sciences.
  

Study Times:

• China will keep its macro policy basically stable in 2012, citing Ma Jiantang, head of the National Bureau of Statistics.
  

Weekend Recommendations

Barron's:

• Made positive comments on (GPS).
• Made negative comments on (PPC) and (HOV).
  

Night Trading

• Asian indices are -.75% to -.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 207.0 unch.
• Asia Pacific Sovereign CDS Index 158.0 unch.
• FTSE-100 futures n/a.
  
• S&P 500 futures n/a.
• NASDAQ 100 futures n/a.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CALM)/.89

Economic Releases
9:00 am EST

• The S&P/CS 20 City MoM% SA for October is estimated to fall -.34% versus a -.57% decline in September.

10:00 am EST

• Consumer Confidence for December is estimated to rise to 58.6 versus 56.0 in November.
• Richmond Fed Manufacturing Index for December is estimated to rise to 5.0 versus 0.0 in November.

10:30 am EST

• Dallas Fed Manufacturing Activity for December is estimated to rise to 4.5 versus 3.2 in November.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• None of note
  

BOTTOM LINE: Asian indices are lower, weighed down by industrial and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the week.

Weekly Outlook

U.S. Week Ahead by MarketWatch (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Tuesday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as seasonal strength, year-end window-dressing and lower food/energy prices offsets rising global growth fears, technical selling and rising Eurozone debt angst. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.