Tuesday Watch

Evening Headlines 
Bloomberg: 

• Greek Aid Deal Reached by EU, Debt Relief Ruled Out. European finance ministers cut Greece’s interest rates and gave it more time to pay back rescue loans while dismissing for now calls for debt relief that may be needed to keep the country afloat over the longer term. In the fourth Greek crisis meeting in two weeks, the ministers persuaded a skeptical International Monetary Fund that Europe has a formula for putting the country that triggered the debt crisis onto a path back out of it. Greece was also cleared to receive a 34.4 billion-euro loan installment in December. “All initiatives decided upon today will bring Greece’s public debt clearly back on a sustainable path,” Luxembourg Prime Minister Jean-Claude Juncker told reporters after chairing a 13-hour meeting that ended early today. “This has been a very difficult deal.” After three years of false starts, the creditor governments led by Germany proclaimed the latest fix for Greece just as they grapple with swelling financing needs in Cyprus and a potential aid request by Spain, the fourth-largest euro economy.
• Hollande to Meet Mittal After Minister Calls for Nationalization. President Francois Hollande will meet today with Lakshmi Mittal, chief executive officer of ArcelorMittal, the world’s biggest steelmaker, after a member of the French government called for the nationalization of the company’s troubled local unit. The meeting at the Elysee presidential palace in Paris follows Industry Minister Arnaud Montebourg’s remarks to Les Echos newspaper yesterday that the state “doesn’t want Mittal in France anymore,” accusing the company and its CEO of lying and calling Mittal “the problem.” Mittal’s family told Le Monde dated today it was “extremely shocked” by the comments. 
• China’s Stocks Drop Below 2,000 as Trading Value Hits 2008 Low. China’s stocks fell, dragging the benchmark index below the 2,000 level, after the value of shares traded slumped to the lowest in four years. Industrial companies and property developers led losses. Sany Heavy Industry Co. (600031) retreated 2.6 percent to a two-year low even after data showed industrial companies’ profits accelerated to 20.5 percent in October. JiuGuiJiu Co. tumbled 10 percent after the Beijing News said the liquor maker will halt production to replace equipment. The Shanghai Composite Index (SHCOMP) dropped 1 percent to 1,998.20 at the 11:30 a.m. local-time break, heading for its lowest close since Jan. 23, 2009. Shares worth 33.1 billion yuan changed hands in the measure yesterday, the least since Nov. 7, 2008. “Investors have no confidence in long-term growth prospects and the government isn’t doing much to reverse the situation,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages $120 million. “Trading values may fall even further.” The Shanghai Composite is heading for a third straight annual loss after declining 9.2 percent this year. The gauge has plunged 42 percent through yesterday since Aug. 4, 2009, when the gauge reached its highest level since the global financial crisis.
• Speculators Raise Wagers First Time in Seven Weeks: Commodities. Speculators raised bullish commodity wagers for the first time since early October as signs of improving economic growth in the U.S. and China pushed prices higher for three straight weeks. Hedge funds and other money managers increased combined net-long positions across 18 U.S. futures and options by 9.6 percent to 846,321 contracts in the week ended Nov. 20, Commodity Futures Trading Commission data show. That was the biggest gain since mid-August. Corn holdings rose the most since July, and those on silver reached a five-week high.
• India Growth Seen Slowing Adds Policy-Overhaul Pressure: Economy. India’s economy probably expanded at the weakest pace last quarter since the 2009 global recession as elevated inflation and subdued investment add pressure on Prime Minister Manmohan Singh to extend a recent policy overhaul.
• Dubai Risking Bubble Redux With Lowest Rates: Mortgages. Dubai, the desert sheikdom where home prices have plunged 65 percent since 2008, risks re- inflating its property bubble with the help of mortgage lenders offering easy terms and the lowest rates ever. “I don’t like it when I see mortgages going back to 90 percent lending, that’s not good for the industry,” said Abdul Aziz Al Ghurair, head of the United Arab Emirates’ Bankers’ Association and chief executive officer of Dubai’s Mashreqbank PSC. (MASQ) “We don’t want to encourage people to gamble.”
• Vietnam Empty Office Towers Show Dreams Turned to Rubble.
• Equity Residential(EQR), AvalonBay(AVB) to Buy Lehman’s Archstone. Lehman Brothers Holdings Inc. agreed to sell its Archstone Inc. apartment unit to Equity Residential and AvalonBay Communities Inc. for $6.5 billion, dropping plans to take the landlord public in an initial stock offering.

Wall Street Journal: 

• The Fiscal Cliff: Live Stream.
• SEC Chief's Exit Opens Void. Banks, Investors Fear Regulatory Limbo; For Schapiro, Victories and Controversy.
• Fighting to Hold Damascus,Syria Flattens Rebel 'Slums'. 
• In China, Hidden Risk of 'Shadow Finance'. State Banks Could Share Liability for Defaults, Analysts Say. 
• Republicans and the Tax Pledge. Grover Norquist is not the problem in Washington.
• Cox and Archer: Why $16 Trillion Only Hints at the True U.S. Debt. Hiding the government's liabilities from the public makes it seem that we can tax our way out of mounting deficits. We can't.

Fox News: 

• Egypt's Morsi hasn't heard from Obama since power grab. President Obama, who praised Egyptian President Mohamed Morsi for brokering a cease-fire between Israel and Hamas, has not spoken to the Islamist since his alarming power grab, a White House spokesman said Monday.

MarketWatch.com: 

• Anti-tax champion Norquist slams Republican ‘impure thoughts’. (video) Anti-tax crusader Grover Norquist, facing a growing rebellion of Republican lawmakers against his no-tax-increase pledge, says that members of the GOP are merely discussing their “impure thoughts” and that the party won’t cave in.

Zero Hedge: 

• CFNAI: Not Seeing The Growth Economists' Predict. (graphs) 
• An Age Of Illusionists.
• Mark Grant On Greece: "There Is No Deal Here".

Business Insider: 

• The Left And Right Are Miles Apart On A Fiscal Cliff Deal. 
• INTRADE: US Residents Should Begin Closing Down Their Accounts Immediately. 
• Pro-Iranian Hackers Infiltrate Top Nuclear Watchdog And Call For Investigation Of Israel.

IBD: 

• Williams-Sonoma(WSM) Could See Lift From New Offerings.

NY Times:

• Mortgage Interest Deduction, Once a Sacred Cow, Is Under Scrutiny. A tax break that has long been untouchable could soon be in for some serious scrutiny. Many home buyers deduct their mortgage interest when assessing their tax bill, a perk that has helped bolster the income of millions of families — and the broader housing market. But as President Obama and Congress try to hash out a deal to reduce the budget deficit, the mortgage interest deduction will likely be part of the discussion.

Forbes:

• The Democrats' Fallback Plan For When Obamacare Inevitably Fails by Scott W. Atlas, M.D. Will Single Payer Healthcare Emerge as the Next Battleground?

Reuters: 

• MF Global customers to seek subpoenas for Corzine, others. A group of former MF Global customers on Monday asked a court for permission to subpoena the commodities broker's executives, including former CEO Jon Corzine, who was blamed in a congressional report this month for MF Global's collapse.
• With US 'fiscal cliff' deadline nearing, parties still at odds. Republicans in the U.S. Congress on Monday called on President Barack Obama to detail long-term spending cuts to help solve the country's fiscal crisis, while holding firm against the income tax rate increases for the wealthy that Democrats seek. In a further sign of tense relations between negotiators who are trying to avert a year-end "fiscal cliff" of steep tax increases and spending cuts, the White House expressed doubts that "balanced" deficit reductions can be achieved merely by limiting tax breaks and cutting spending, as Republicans propose.

Financial Times:

• GMO abandons bond market. GMO, the Boston-based asset manager, says it has “given up” on the bond market, deciding to ditch long-dated sovereign debt as investors continue to pour billions into government bonds, including US Treasuries. Ben Inker, co-head of asset allocation for the $104bn group, told the Financial Times it is holding large, high-quality companies in the US but that its main bet is to keep money on the sidelines while it waits for better times.
  

Kyodo:

• The Japanese govt. is in the final stages of compiling an 880b yen package as a second round of economic stimulus.

Economic Daily:

• Apple(AAPL) Asks AUO to Halt Panel Production for iPad Mini.  Apple asks AUO to halt panel shipments because of defects, citing a person from the supply industry. 

China Daily: 

• Campaign targeting smuggling 'grim' task. Authorities are facing a "grim'' situation with the value of smuggled goods rising annually by about 20 percent from January to September, an official said. Customs had uncovered 1,415 cases of smuggling by the end of September, involving goods worth 22.8 billion yuan ($3.66 billion). The value marked a 20 percent annual increase, according to the General Administration of Customs. 

Financial News:

• China should aim to prevent economic "bubbles" after the government transitions next year, China Everbright Bank Co. Chairman Tang Shuangning said in an article.
• China's monetary policy should give a higher priority to stabilizing prices, Financial News says in a front-page unsigned commentary.

China National Radio:  

• Wal-Mart(WMT) May Close 100 Unprofitable Stores in China. Co. may close 100 unprofitable stores in China between 2013 and 2015, citing people familiar with the situation. Between 2007 to 2012, the co. increased the number of stores in China from 100 to more than 380, according to the report.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -.50% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 114.75 -1.25 basis points.
• Asia Pacific Sovereign CDS Index 84.75 unch.
• FTSE-100 futures +.67%.
• S&P 500 futures +.24%.
• NASDAQ 100 futures +.30%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note

Economic Releases
8:30 am EST

• Durable Goods Orders for October are estimated to fall -.7% versus a +9.9% gain in September.
• Durables Ex Transports for October are estimated to fall -.5% versus a +2.0% gain in September.
• Cap Goods Orders Non-Defense Ex Air for October are estimated to fall -.5% versus unch. in September.

 9:00 am EST

• The S&P/CS 20 City Home Price Index (MoM% SA) for September is estimated to rise +.4% versus a +.49% gain in August.

 10:00 am EST

• The Richmond Fed Manufacturing Index for November is estimated to fall to -9 versus -7 in October.
• Consumer Confidence for November is estimated to rise to 73.0 versus a reading of 72.2 in October.   

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bernanke speaking, Fed's NY VP Christine Cumming speaking, Fed's Evans speaking, Fed's Fisher speaking, Fed's Lockhart speaking, UK GDP report, Germany inflation data, 2Y T-Note auction, weekly retail sales reports, Piper Jaffray Healthcare Conference, Goldman Metals/Mining Conference and the (PNR) analyst day could also impact trading today.

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

Stocks Slightly Lower into Final Hour on Rising Fiscal Cliff Concerns, More Eurozone Debt Angst, Growing Global Growth Fears, Consumer Discretionary/Energy Sector Weakness

Today's Market Take:
 
Broad Market Tone:

• Advance/Decline Line: Modestly Lower
  
• Sector Performance: Most Sectors Declining
• Volume: Light
• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• VIX 15.70 +3.70%
• ISE Sentiment Index 146.0 +37.7%
• Total Put/Call .62 -30.34%
• NYSE Arms 1.20 +184.88%

Credit Investor Angst:

• North American Investment Grade CDS Index 101.14 +2.09%
• European Financial Sector CDS Index 166.08 +3.45%
• Western Europe Sovereign Debt CDS Index 113.46 bps -1.0%
• Emerging Market CDS Index 257.0 bps +1.74%
• 2-Year Swap Spread 13.5 -.5 basis point
• TED Spread 22.0 -.5 basis point
• 3-Month EUR/USD Cross-Currency Basis Swap -28.0 -.75 basis point

Economic Gauges:

• 3-Month T-Bill Yield .09% +2 basis point
• Yield Curve 140.0 -2 basis points
• China Import Iron Ore Spot $118.20/Metric Tonne -.59%
• Citi US Economic Surprise Index 47.50 +.1 point
• 10-Year TIPS Spread 2.39 -1 basis point
  

Overseas Futures:

• Nikkei Futures: Indicating -22 open in Japan
• DAX Futures: Indicating +15 open in Germany

Portfolio:

• Slightly Higher: On gains in my Tech sector longs and Emerging Markets shorts
• Disclosed Trades: None
• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg: 

• Euro Chiefs Claim Greek Progress, Seek to Persuade ECB. Euro-area finance ministers will push the International Monetary Fund and central bankers to endorse new plans to save Greece from the fiscal abyss, seeking to overcome the latest impasse in the debt crisis and restart aid payments to Athens. Finance chiefs will brief the IMF and European Central Bank on “further concessions” that would plug Greece’s deficit gap without forcing a writeoff of official loans, Austria’s Maria Fekter said today before the ministers’ fourth round of talks on the Greek crisis in two weeks.
• Catalonia’s Republican Left May Resist Austerity After Vote. The Catalan Republican Left, the biggest gainer in yesterday’s regional election, may use its leverage to reverse the austerity policies that Spain and the European Union have imposed on Catalonia and raise bank taxes. ERC, as the party is known, will push for a new tax on banks to help fund an increase in public investment and a tax cut for the workers, leader Oriol Junqueras said at press conference in Barcelona today. “Austerity is a mistake,” Junqueras said. “We insist on the need for a change in the budget policies.”
• Italian Consumer Confidence Falls to Record Low on Recession. Italian consumer confidence fell to a record low this month as households grew more pessimistic about the economic outlook after the country’s fourth recession since 2001 entered its second year. The confidence index fell to 84.8, the lowest since the series begin in 1996, from a revised 86.2 in October, the national statistics office, Istat, said in Rome today. The reading was lower than the median forecast of 86.3 in a survey of 13 economists by Bloomberg News.
• Goldman Turns Down Southern Europe Banks as Crisis Lingers. Goldman Sachs Group Inc. (GS), the No. 1 stock underwriter in Europe, turned down roles in offerings by banks in Spain and Italy this year, the only top U.S. securities firm not to take part in the fundraisings by southern European lenders as the region’s debt crisis stretches to a fourth year.
• European Stocks Decline as Ministers Debate Greek Rescue. European stocks declined, following the benchmark Stoxx Europe 600 Index’s biggest weekly rally this year, as euro-area finance ministers met for a third time this month on Greece’s finances. Barclays Plc (BARC) dropped the most in almost five months as Qatar Holding LLC disposed of its remaining warrants in the U.K. lender. ThyssenKrupp AG (TKA) slid 5.1 percent after Credit Suisse Group AG lowered its recommendation on Germany’s largest steelmaker. 
• China Starts Dumping Probe on U.S., European Polysilicon. The Chinese government started investigating whether foreign suppliers of polysilicon are selling below cost in China, the world’s biggest consumer of the raw material used in making solar-energy devices. The Chinese Ministry of Commerce said it will determine if retroactive duties, or penalties, should be imposed on the suppliers from the U.S., the European Union and South Korea. It will also probe whether the U.S. and EU are subsidizing makers of the silicon-based commodity, according to a statement today. China is expanding the trade disagreement between the world’s biggest economies as the global solar-energy industry grapples with overcapacity, lower prices and declining profits.
• China Blames Fed’s QE Policy for High Currency Volatility. China says the U.S. program of asset-purchases known as quantitative easing is increasing the volatility of emerging-market currencies. The Asian nation and many others have criticized “this irresponsible and beggar-thy-neighbor policy” because it has a “lingering negative impact on developing, emerging economies in particular,” Zhu Hong, China’s deputy permanent representative to the World Trade Organization, said in meeting today in Geneva, according to a statement issued afterward.

Wall Street Journal: 

• The Fiscal Cliff: Live Stream.

CNBC:

• Greece Debt Talks Likely to Result in 'Sticking Plaster' Solution.
• Short Japan Over Its Business Culture: Ex-Olympus CEO. Japan has a miserable future ahead of it without radical changes to the business climate, the former chief executive of camera and medical equipment maker Olympus has told CNBC.  
• Why the Catalonia Election Results Should Worry Markets.
• Why Europe Debt Defaults Are About to Rattle Stocks.

Zero Hedge:

• Goldman's(GS) Global Domination Is Now Complete As Bank of Canada's Mark Carney Takes Over Bank Of England.
• The Farcical Tragicomedy Of The "Sustainable" Greek Debt/GDP "Denominator".
• Premature Release Of Dallas Fed Data Shows Biggest Miss In 4 Months. (graph)
• Meet The SEC's New Head.

Business Insider:

• The Supreme Court Just Paved The Way For Another Obamacare Fight. 
• CHART OF THE DAY: 10 Stocks Account For 88% Of S&P 500 Earnings Growth. 
• GREG MANKIW: Warren Buffett Doesn't Tell You About How He's A Master Of Tax Avoidance. 
• An Updated List Of The Former Goldmanites(GS) That Rule The World. 
• 2013 Will Be Another Huge Year For Offshore Oil Drilling. (graph)

Telegraph:

• ArcelorMittal(MT) not welcome in France anymore, says finance minister. Steel giant ArcelorMittal is not welcome in France anymore, the country's industrial minister has said, as he accused the steel giant of "not respecting France". "Mittal's lies since 2006 are damning," the French minister said, adding that the company "has never honoured its commitments" to the country. ArcelorMittal has shut down blast furnaces in Florange, eastern France, but wants to maintain its other activities there, in what has become a showdown with the new Socialist government in France. Montebourg told Les Echos he was working on a "transitory nationalisation" project for the site. The newspaper said that "the idea would be to associate an industrial operator with a minority capital stake for as long as it takes to stabilise activity" at the plant.

O Estado de S. Paulo:

• Brazil Economic Growth Above 4% Isn't Sustainable. Growth faces difficulties due to lack of work force and infrastructure, citing a govt officials from the economic team it didn't identify.

China Daily: 

• Abe's dangerous manifesto. When Shinzo Abe, the leader of Japan's main opposition party, talks about his vision for the country's diplomacy and security, East Asia has every reason to prick up its ears. Opinion polls in Japan suggest the Liberal Democratic Party will win the House of Representatives election on Dec 16, positioning Abe to become the next prime minister.

Bear Radar

Style Underperformer:

• Mid-Cap Growth -.70%

Sector Underperformers:

• 1) Coal -2.63% 2) Hospitals -1.70% 3) Steel -1.30%
  

Stocks Faling on Unusual Volume:

• MMR, EXXI, BXS, VIV, TCB, AN, COT, AFCE, GNRC, SIR, DWA, FMCN, CNH, FLT, ANN, JWN, DGX, SUPN, AN, CHS, BAX, GTLS, MSB, ARO, FET, BEAM, MRC and ARLP

Stocks With Unusual Put Option Activity:

• 1) ITB 2) FITB 3) JWN 4) ETN 5) OIH
  

Stocks With Most Negative News Mentions:

• 1) VRSN 2) MCD 3) CHS 4) BAC 5) WFC
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth -.50%

Sector Outperformers:

• 1) Utilities +1.19% 2) Networking +.97% 3) Education +.37%
  

Stocks Rising on Unusual Volume:

• FB, DECK, DDD, SRPT and  EXPR

Stocks With Unusual Call Option Activity:

• 1) KCG 2) ACAD 3) ANF 4) ZNGA 5) BSX
  

Stocks With Most Positive News Mentions:

• 1) BRCM 2) NSP 3) RIMM 4) BXS 5) GD

Charts:

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

Monday Watch

Weekend Headlines 
Bloomberg: 

• Catalan Pro-Independence Parties Win Regional Vote. Pro-independence parties in Catalonia won a regional vote, strengthening a drive for a referendum on secession in defiance of Spanish Prime Minister Mariano Rajoy. Catalan President Artur Mas, who called early elections to force the debate on independence, won 50 of the 135 seats in the regional assembly for his Convergencia i Unio party, down from 62, with 99 percent of the vote counted. The separatist Catalan Republican Left, known as the ERC, more than doubled its seats to 21 from 10. Two smaller parties that also back a plebiscite secured 16 seats. Rajoy, weakened by recession and speculation that Spain needs a European bailout, says a referendum on secession is unconstitutional. Mas’s losses showed his bid for a mandate backfired, leaving him dependent on anti-austerity separatists to govern Spain’s largest regional economy.
• Euro Ministers Take Third Swing at Clearing Greek Payment. Euro-area finance ministers try for the third time this month to clear an aid payment to Greece and forge a blueprint to keep the country a solvent member of the currency bloc. Finance chiefs from the 17-member single currency return to Brussels today, less than a week after an all-night meeting failed to yield agreement and days after a European Union summit broke up without a proposed seven-year budget. At stake at the euro meeting is the continuation of a three-year mission to return Greece to financial health. 
• France Lags Euro-Area Economy Overhaul Effort, Study Says. France is lagging efforts by other euro-area countries to overhaul their economies, work that may check the region’s debt crisis, according to a study. “France remains the only major European economy which is beset by serious health problems and has yet to do anything about it,” say the Hamburg-based Berenberg Bank and the Lisbon Council, a research institute in Brussels.
• Italy’s Bersani Wins Primary Round in Bid to Succeed Monti. Democratic Party head Pier Luigi Bersani, whose party leads in opinion polls, won the first round of a primary in his bid to succeed Italian Prime Minister Mario Monti in elections next year. Bersani won 44.6 percent, compared to 36.6 percent for Florence Mayor Matteo Renzi, the closest of the four candidates who were vying to lead a coalition of center-left parties in elections due by May, with about 40 percent of votes counted. As Bersani, 61, failed to win more than half of the vote, he will face Renzi in a second round on Dec. 2.
• Retailers’ Thanksgiving Deals Cut Black Friday Spending. Thanksgiving Day openings and midnight deals at retailers from Target Corp. (TGT) to Wal-Mart Stores Inc. (WMT) drew U.S. shoppers out earlier than ever, trimming spending on Black Friday. Sales on the day after the Thanksgiving holiday in the U.S. fell 1.8 percent from last year to $11.2 billion, according to a report today from ShopperTrak, a Chicago-based researcher. That compares with a 6.6 percent gain in Black Friday sales in 2011. Foot traffic this year rose 3.5 percent 307.7 million store visits, ShopperTrak said.
• China Wage Gains Hurt by Weaker Profit Damp Consumption. China’s wage gains have moderated on weaker corporate profits, capping consumer demand as the government seeks to sustain a rebound after a seven-quarter economic slowdown.
• Most China Stocks Fall Before Industrial Data; JiuGuiJiu Drops. Most Chinese stocks declined, with the benchmark index approaching the 2,000 level, before the release of industrial profits data tomorrow. Liquor maker JiuGuiJiu Co. (000799) plunged by the 10 percent daily limit for a second straight day after its products were found to have excessive levels of plasticizer. Hebei Iron & Steel Co. gained among steelmakers after Xinhua News Agency said the industry may perform better this quarter. “The 2,000 level is a psychological important gateway for investors,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “Once it’s approached, some money will buy on dips on expectations about possible government support. But there’s no big room for the index to go up either as there’s a lack of positive macroeconomic news.”
• India Pledges to Lower Deficit, Cap Debt Amid Slowing Growth. Indian officials pledged to cut the widest budget deficit among the world’s largest emerging markets and curb public debt, as a report this week may show the economy grew at close to the slowest pace in three years.
• Japan Puts Reach 7-Year Low on Election Speculation: Options. The cost of options to protect against losses in a fund tracking Japanese shares slipped to the lowest in almost 7 years on speculation a new government will enact stimulus and weaken the yen. Puts protecting against a 10% drop in the iShares MSCI Japan Index ETF cost 1.08 times more than calls betting on a 10% advance, according to data on three-month options compiles by Bloomberg. The price relationship known as skew plunged to .99 on Nov. 16, the lowest since Jan. 18, 2006.
• Pemex Finds Oil in Area That Could Hold 1 Billion Barrels. Petroleos Mexicanos, the world’s fourth-largest oil producer, is expanding drilling after discovering a crude deposit in Tabasco state, estimating the area could hold as much as 1 billion barrels of reserves. The light-crude deposit announced today in the Navegante I well may have as much as 500 million barrels, said a press official who asked not to be named because of company policy. The deposit has a depth of 6 kilometers (3.7 miles), the official said in a phone interview. The well is Mexico’s most important solid-ground discovery in the past decade, President Felipe Calderon said today in a speech in Veracruz state. It’s the company’s third major discovery announced in the past three months, following two deep-water deposits in the Gulf of Mexico.
• SAC Fund Manager Faces Choice of Trial or Deal.

Wall Street Journal: 

• Geithner to Play Key Negotiator Role in 'Fiscal Cliff' Talks.
• European Debt Crisis: Live Stream.
• New 'Friends and Family' Plan: Cut Them Out. "Friends and family" stock-buying programs, a signature feature of the late '90s Internet boom, enable companies pursuing initial public offerings to let their employees, customers and others buy shares before their potential rise in the broader market.
• Deadline Looms for Long-Term Unemployed. Benefits for More Than 2 Million Could Expire at Year-End. 
• 'Fear' Gauge Showing Little of It. Barometers of Anxiety Could Rise as 'Cliff' Nears, Some Investors Say; 'Complacency Running Pretty High'.
• Risks Are Mounting in Canada.
• The U.N.'s Internet Sneak Attack. Letting the Internet be rewired by bureaucrats would be like handing a Stradivarius to a gorilla. Who runs the Internet? For now, the answer remains no one, or at least no government, which explains the Web's success as a new technology. But as of next week, unless the U.S. gets serious, the answer could be the United Nations.

CNBC:  

• European Union Confronts the Risk of a 'Brixit'. Crucial talks on the future of the European Union ended in stalemate Friday prolonging a dispute over a $1.25 trillion spending plan that's poisoning Britain's relations with its continental neighbors.

Zero Hedge: 

• Fiscal Cliff Update: 'Little Progress Toward A Compromise In Past Ten Days".
• The Four Debt Ceiling Possibilities For 2013.
• What A Difference A Year Makes. (graphs) Real speculative positioning is at multi-year record high longs.
• Will LGIVs Be The 'Straw' To Break China's Credit-Fueled Growth 'Back'?
• The Greek Debt Buyback 'Boondoggle' - Questions Answered.
• Chart Of The Day: LEI - Leading-To-Lagging Ratio. (graph)
• Russia Sends Warships To Gaza Coast.

Business Insider:

• Both Benghazi And The Petraeus Scandal Suggest US Media Is Way Too Cozy With The State. 
• Congress Is Thinking About A Sneaky New Scheme To Raise Taxes — And The Upper Middle Class Could Get Seriously Hosed. 
• FABER: 44 Worrisome Global Economic Charts.
• 2 Brilliant Investors Worried About World Growth. (charts)
• There's Part Of The Fiscal Cliff That Hits Workers Directly — And Almost Nobody Is Talking About Fixing It.
• The Hong Kong Housing Bubble Has Gotten So Bad, The Birthrate Is Collapsing.

IBD:

• ResMed(RMD) Moves Up On Home Sleep Tests For Sleep Apnea.

Wall Street All-Stars: 

• Indicator Update: Trying to find a signal out of all of the noise.

LA Times:

• Solar power plants burden the counties that host them. Eager for jobs and tax money, Mojave Desert counties welcomed big solar projects. But they may have been too optimistic. And expanding emergency services and infrastructure isn't cheap.

Forbes:

• Apple(AAPL): UBS Pounds The Table; Cites Valuation, Technicals. In a research note dated Monday, UBS analyst Steve Milunovich affirmed his Buy rating and $780 price target on Apple shares, asserting that a combination of valuation, earnings momentum and technical factors “suggest that it is a good time to be building positions into the new year.”

Reuters:

• Black Friday sales online top $1 billion for 1st time: comScore. Black Friday retail sales online this year topped $1 billion for the first time ever as more consumers used the Internet do their early holiday shopping, comScore Inc said on Sunday. Online sales jumped 26 percent on Black Friday to $1.04 billion from sales of $816 million on the corresponding day last year, according to comScore data.
• Egypt stocks plunge after Mursi power grab. Egypt's stock market plunged on Sunday in its first day open since Islamist President Mohamed Mursi seizure of new powers set off street violence and a political crisis, unravelling efforts to restore stability after last year's revolution. More than 500 people have been injured in protests since Friday, when Egyptians awoke to news that Mursi had issued a decree widening his powers and shielding them from judicial review. Mursi's Muslim Brotherhood supporters were expected to turn out again on the streets in a show of support after prayers on Sunday afternoon. His supporters and opponents are both planning massive demonstrations on Tuesday that many fear will lead to more violence. Sunday's stock market fall of nearly 10 percent - halted only by automatic curbs - was the worst since the uprising that toppled Hosni Mubarak in Feb 2011. Images of protesters clashing with riot police and tear gas wafting through Cairo's Tahrir Square were an unsettling reminder of that revolution. "We are back to square one, politically, socially," said Mohamed Radwan of Pharos Securities, an Egyptian brokerage firm. Judges announced on Saturday they would go on strike. Liberal politician Mohammed ElBaradei called Mursi a "dictator".
• Hezbollah says could hit all of Israel in future war. Hezbollah leader Sayyed Hassan Nasrallah warned Israel on Sunday that thousands of rockets would rain down on Tel Aviv and cities across the Jewish state if it attacked Lebanon. Speaking four days after the ceasefire which ended a week of conflict between Israel and the Islamist Hamas rulers of Gaza, Nasrallah said Hezbollah's response to any attack would dwarf the rocket fire launched from Palestinian territories. "Israel, which was shaken by a handful of Fajr-5 rockets during eight days - how would it cope with thousands of rockets which would fall on Tel Aviv and other (cities) ... if it attacked Lebanon?" Nasrallah said.

Financial Times: 

• Republicans bargain hard over fiscal cliff. Republicans in Congress are demanding structural changes to popular government pension and healthcare schemes, including higher eligibility ages, in any deal to avert the fiscal cliff. 
• Banks face more regulation over scandals. Several high-profile scandals for banks, ranging from JPMorgan 's hefty trading loss to UBS 's rogue trader, have sparked a new regulatory drive to force lenders to spend more time and probably hold more capital guarding against such operational risks. The Financial Stability Board, the global banking regulator, and the Basel Committee on Banking Supervision, which sets global capital rules, have recently announced plans to tackle the issue next year as part of efforts to make the world's biggest banks safer.

Bild am Sonntag:

• Peer Steinbrueck, Social Democratic Party challenger to Chancellor Angela Merkel, said Germany may have to cover billions of euros in Greek debt payments, citing an interview. Greece won't return to the capital markets for 8 years, he said. Germany must help Greece with financing until it returns to capital markets, Steinbrueck said.

Wirtschafts Woche:

• The German government wants European banks to conduct "health checks" before a banking union begins, German Deputy Finance Minister Hartmut Koschyk said in an interview.
• Merkel Adviser Says End of Euro Is a 'Conceivable Option'. Peter Bofinger, member of the economic panel advising Merkel, said euro survival requires fundamental strategy change including temporary joint debt financing until growth returns, citing an interview. Bofinger said plan to reduce deficit by about 1 ppt will increase unemployment in Europe, undermine competitiveness and worsen situation for banks. 

Sueddeutsche Zeitung:

• The German Finance Ministry is preparing a law to require big German banks to draft "living wills" to help them react to severe financial losses, citing internal ministry documents. The law would affect about 10 banks including Deutche Bank, Commerzbank, DZ Bank and some Landesbanks. Government ministers will approve the proposal as early as December. "Living wills" will allow banks to wind down or restructure without a cost to taxpayers.

El Pais:

• EU to Demand 8,000 Job Cuts at Spanish Banks. European Union to demand Bankia, Novagalicia cut 8,000 jobs, shutter 1,000 branches, as condition of bailout loans, citing an EU document. The EU may demand another 1,000 job cuts at CatalunyaCaixa.

China Daily: 

• Japan's Abe Has 'Dangerous' Policies, China Daily Editorial Says. Shinzo Abe, head of the Liberal Democratic Party, has pledged to be tough on Japan's Asian neighbors to maintain his popularity with his party's base and other voters, setting a "dangerous manifesto," the editorial said. Abe's strategy, which may win him votes, will also isolate Japan in the region, the newspaper said.

Caixin:

• Inflation prevention is the most important task for the Chinese central bank and accounts for the biggest weight in monetary policies, Zhou wrote.

Al Arabiya: 

• Meet Egyptian President Mohammed Mursi ... aka ‘Morsillini'. You can call him “Morsillini,” if you concur with what Twitter users are nicknaming the Egyptian president following a recent power-consuming decree announced by the leader. A portmanteau of Mursi and Mussolini, the new tag is just one example of how Mursi’s decree on Thursday drew fire from international commentators. With the “revolutionary aim,” he claimed, of sacking the state prosecutor and demanding a retrial of officials involved in the 2011 protester killings, Mursi awarded himself powers that inflamed a standoff with the country's judiciary.

Weekend Recommendations

Barron's:

• Made positive comments on (PHH), (APA) and (ESRX).
• Made negative comments on (CZR).

Night Trading

• Asian indices are -.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 116.0 +.5 basis point.
• Asia Pacific Sovereign CDS Index 84.75 -.25 basis point.
• FTSE-100 futures -.13%.
• S&P 500 futures -.30%.
• NASDAQ 100 futures -.27%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (HI)/.44

Economic Releases
10:30 am EST

• Dallas Fed Manufacturing Activity for November is estimated to rise to 2.0 versus 1.8 in October.

Upcoming Splits

• None of note

Other Potential Market Movers

• The EuroGroup Meeting, BoJ Minutes, CSFB Tech Conference and the Chicago Fed National Activity Index for October could also impact trading today.

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