Tuesday Watch

Evening Headlines 
Bloomberg: 

• Japan Salaries Extend Slide as Inflation Begins to Take Root. Japan’s salaries extended the longest tumble since 2010, increasing pressure on household finances as inflation begins to take root. Regular wages excluding overtime and bonuses fell 0.4 percent in October from a year earlier, a 17th straight monthly decline, according to labor ministry data released today.

• China IPO Flood Seen Bursting Small-Cap Bubble: Chart of the Day. The benchmark index for Chinese small-company stocks will probably enter a bear market after the government’s plan to resume initial public offerings sparked a record rout yesterday, Bocom International Holdings Co. said.

• Japan’s Secrets Bill Turns Journalists Into Terrorists by William Pesek.

• Hong Kong Confirms City’s First Human Case of Bird Flu. Hong Kong reported its first case of a form of bird flu that killed 45 people in China this year, suggesting the virus is spreading further south in poultry. A 36-year-old Indonesian domestic helper is in critical condition after being infected with the new H7N9 flu strain, Hong Kong’s government said yesterday. She’d traveled to the neighboring mainland Chinese city of Shenzhen, where she bought and slaughtered a chicken, according to a statement. 

• Thai Anti-Government Protesters Vow to Seize Police Headquarters. Thai protesters said they will seize Bangkok’s police headquarters today after failing to secure the facility yesterday, signaling their month-long effort to oust Prime Minister Yingluck Shinawatra may be losing momentum.

• Rio Tinto(RIO) to Halve Capital Spending by 2015 in Focus on Cash. Rio Tinto Group (RIO), the world’s second-biggest mining company, will cut capital spending to about $8 billion in 2015, less than half its outlay last year, as mineral producers conserve cash after prices fell. “Our capex is reducing, and will come down further,” Sam Walsh, chief executive officer of London-based Rio, said today in a statement. “From where I stand, we continue to see market fragility and volatility.” Rio’s cutback underlines efforts by the world’s largest mining companies to rein in spending as a decade-long boom in metal prices wanes. Vale SA (VALE5), the biggest iron ore producer, yesterday slashed its investment budget for a third straight year to $14.8 billion, the lowest since 2010. “It’s quite a substantial drop and it does suggest that right now Sam Walsh is concentrated very, very hard on affordability,” Evan Lucas, a Melbourne-based markets strategist at IG Ltd., said by phone.

• Australia Food-Bowl Dream at Risk as Foreigners Shunned: Economy. Prime Minister Tony Abbott’s election pledge to turn Australia’s remote north into a food bowl for Asia has set him on a collision course with his own government over foreign ownership of agricultural land. 

• Asian Stocks Outside Japan Fall on Fed Tapering Outlook. Asian stocks outside Japan fell as signs the U.S. economy is strengthening fueled speculation that the Federal Reserve will soon start tapering stimulus. Newcrest Mining Ltd. (NCM), Australia’s biggest gold producer, sank 6.6 percent as the bullion’s price headed for its first annual drop in 13 years as it traded near a five-month low. Hyundai Motor Co., South Korea’s No. 1 carmaker, fell 4.2 percent as November sales fell. Sekisui Chemical Co. led Japanese stocks higher, rising 7.5 percent after a report that it developed a cheaper and longer-lasting material for lithium-ion batteries used in the electric vehicles. The MSCI Asia Pacific excluding Japan Index dropped 0.6 percent to 471.88 as of 12:41 p.m. in Tokyo, with eight of the 10 industry groups on the gauge falling.

• Rubber Retreats as Rally to Two-Month High May Weaken Demand. Rubber dropped from a two-month high, snapping a three-day winning streak amid concern that rising prices may sap demand from China, the largest consumer. The contract for delivery in May on the Tokyo Commodity Exchange lost as much as 1 percent to 272.5 yen a kilogram ($2,643 a metric ton) and traded at 274.1 yen at 11:35 a.m. local time. Futures settled yesterday at the highest level since Sept. 26. 

• Rebar Trades Near Highest in Six Weeks. Steel reinforcement-bar futures in Shanghai traded near the highest level in six weeks on speculation that the Chinese economy is stabilizing. Rebar for May delivery, the most-active contract on the Shanghai Futures Exchange, climbed as much as 0.2 percent to 3,702 yuan ($608) a metric ton, the highest level since Oct. 17, before trading little changed at 3,693 yuan at 10:51 a.m. local time.

• JPMorgan(JPM), Goldman Sachs(GS) Capital Plans Clear Fed Review. JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS), the world’s biggest trading firms, had their revised capital plans for 2013 cleared by the Federal Reserve yesterday, a month before next year’s submissions are required.

• NCR(NCR) to Buy Digital Insight for $1.65 Billion for Web Banking. NCR Corp. (NCR), the 129-year-old maker of cash registers and other payment-processing systems, agreed to acquire Digital Insight Corp. for $1.65 billion to gain software for online and mobile banking. The purchase of Digital Insight, controlled by private-equity firm Thoma Bravo LLC, is expected to be completed in the first quarter of next year, NCR said today in a statement. The transaction will boost adjusted 2014 profit, the company said.

Wall Street Journal: 

• Speed Cited in Fatal Crash. NTSB: Metro-North train was traveling 82 mph as it entered a 30 mph zone ahead of derailment. Federal investigators said the commuter train that crashed Sunday, killing four people, was going 82 miles an hour as it entered a 30-mph zone along a tight curve and that there was no apparent problem with its brakes.

• A Profitable Trade: Illicitly Shipping BMWs to China. Lucrative Re-Sales of Luxury Cars Targeted by Federal U.S. Investigators. In the U.S., the sticker price for a BMW X5 sport-utility vehicle is just over $56,000. In China, BMW advertises the same car for nearly three times that, creating an opening for arbitragers to buy the vehicles in the U.S. and ship them to China for a quick profit.

• Twitter(TWTR) Feels a Chill After Hot Debut. Research Reports Are Out; Analysts Don't Expect Share Price to Rise Much.

• Easy Credit Puts Car Sellers in Driver's Seat. Credit conditions keep getting looser. An average credit score for new car loans calculated by Experian Automotive was 753 points as of the third quarter, down 22 points over the prior four years and only four points above the easy-money days of late 2007. Overall auto-loan balances hit an all-time high last month at $783 billion, up 15% in a year. A record 84.5% of car buyers used a loan or lease in the second quarter. One sign of froth is a rebound in subprime lending and a spike in leases, a sometimes expensive way for borrowers to stretch affordability.

• Kissinger and Shultz: What a Final Iran Deal Must Do. A credible agreement must dismantle or mothball the key parts of Tehran's nuclear infrastructure. The interim nuclear deal with Iran has been described as the first step toward the elimination of Iran's ability to build a nuclear weapon. That hope resides, if at all, in the prospects of the next round of negotiations envisaged to produce a final outcome within six months. Standing by itself, the interim agreement leaves Iran, hopefully only temporarily, in the position of a nuclear threshold power—a country that can achieve a military nuclear capability within months of its choosing to do so. A final agreement leaving this threshold capacity unimpaired would institutionalize the Iranian nuclear threat, with profound consequences for global nonproliferation policy and the stability of the Middle East.

Fox News: 

• Fact Check: Is President Obama's latest health care promise true?

Zero Hedge: 

• Record Numbers Of Homeless Flood Massachusetts Even As State Shelters Overflowing.

• Welcome To The Riskless Market.

• Why Equity Bulls Are Hoping for Bad Macro News. (graph)

• Gold Drops Below Cash Cost, Approaches Marginal Production Costs.

• War On Democracy: Spain And Japan Move To Criminalize Protests.

• Venezuela Plunges Into Darkness As President Maduro Lays Out Socialist Vision On National TV.

• Birinyi, Sonders, & Rukeyser Celebrate The "Magical Stock Market Environment" In 1999. (video)

Business Insider:

• 'Quant' Hedge Funds: Computer Says No. IF SOMETHING has not worked for five years, most people would conclude that it was broken. Tell that to the geeks managing "quant" hedge funds, who craft elaborate algorithms to profit from market movements. Once money-spinners, their prized formulae have misfired since 2009, losing money in four of the past five years. Unless their results improve markedly, the giant funds will finish this year as the worst-performing of the most common hedge-fund strategies.

• The PC Market Has Shrunk By 10% Because People Don't Want New Ones.

• BRIAN BELSKI: 'We Enter 2014 Less Optimistic Than We Have In The Past Few Years'.

• Ukraine May Be Heading For A Currency Crisis.

• Amazon's(AMZN) Private Drone Deliveries Offer Up A Whole New Universe Of Surveillance.

• Apple(AAPL) Acquires A Social Media Analytics Company For ~$200 Million.

Washington Post:  

• For Democrats in 2014, the Web site is not the problem. Democrats are praying that this weekend’s relaunch of the Obamacare Web site will save them from an electoral bloodbath in 2014. Their hopes are misplaced. Here are five numbers that suggest that public anger over Obamacare will only grow as Election Day 2014 approaches:

Reuters:

• Islamists take Syrian Christian town, monastery: state media. Islamist fighters in Syria have taken over the ancient quarter of the Christian town of Maaloula and are holding several nuns in a monastery there, state news agency SANA said on Monday. Fighting for the town, about five km (three miles) from the main road linking Damascus to Homs, is part of a wider struggle between rebel fighters and President Bashar al-Assad's forces for control of the strategic central Syrian highway.'

• Biden: U.S. 'deeply concerned' about China air defense zone-media. The United States remains "deeply concerned" about China's establishment of an air defense zone in the East China Sea, U.S. Vice President Joe Biden, visiting Japan, was quoted by the Asahi Shimbun daily as saying. 

• Yum's(YUM) November KFC China sales flat, sees 2014 earnings rebound. Yum Brands Inc said November sales at established KFC restaurants in China, its top market, failed to grow despite a successful half-priced chicken promotion, and it forecast a return to earnings per share growth in 2014. 

• EMERGING MARKETS-Real sinks past 2.35/dlr, Mexico peso at 3-wk low.

• Chicago Fed suspends U.S. Midwest factory index for revamp.

• EMERGING MARKETS-Brazil's Bovespa plunges as oil producer Petrobras tanks.

• U.S. sends new submarine-hunting jets to Japan amid East Asia tension. The U.S. Navy's first two advanced P-8A Poseidon patrol aircraft have arrived in Japan, U.S. military officials said on Monday, helping to upgrade America's ability to hunt submarines and other vessels in seas close to China as tension in the region mounts.

Obama takes on coal with first-ever carbon limits
Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.99

Financial Times: 

• Obama administration tells China to scrap air defence zone procedures. The US called on China to rescind its controversial new air defence zone procedures on Monday because of the risk of accidents, as vice-president Joe Biden began a likely tense week of meetings with leaders in northeast Asia.

Nikkei:

• Japan LDP Tax Reform Plan to Forgo Tax Breaks for Capex. Japan's ruling Liberal Democratic Party plans to forgo giving breaks on fixed-asset levy for capital investment, citing the party's FY 2014 tax reform draft.

Evening Recommendations

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 132.0 +1.0 basis point.

• Asia Pacific Sovereign CDS Index 107.75 +1.25 basis points. 

• FTSE-100 futures -.26%.

• S&P 500 futures +.02%.

• NASDAQ 100 futures +.05%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BOBE)/.55

• (OVTI)/.43

• (UNFI)/.54

• (CTB)/.53

Economic Releases
10:00 am EST

• IBD/TIPP Economic Optimism for December is estimated to rise to 43.0 versus 41.4 in November.

Afternoon:

• Total Vehicle Sales for November are estimated to rise to 15.8M versus 15.15M in October.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Australia GDP report, UK Construction PMI, weekly retail sales reports, ISM New York for November, Citi Basic Materials Conference, UBS Emerging Markets Conference, Piper Jaffray Healthcare Conference, CS Industrials Conference and the FBR Investor Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Slightly Higher into Afternoon on Diminishing Global Growth Fears, Seasonality, Investor Performance Angst, Financial/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 13.83 +.95%

• Euro/Yen Carry Return Index 145.65 +.39%

• Emerging Markets Currency Volatility(VXY) 8.99 +1.81%

• S&P 500 Implied Correlation 53.54 -1.36%

• ISE Sentiment Index 153.0 -6.71%

• Total Put/Call .72 -11.11%

• NYSE Arms .66 -49.18% 

Credit Investor Angst:

• North American Investment Grade CDS Index 68.98 -.84%

• European Financial Sector CDS Index 95.15 -1.99%

• Western Europe Sovereign Debt CDS Index 60.0 unch.

• Emerging Market CDS Index 298.15 +1.69%

• 2-Year Swap Spread 9.5 +.25 basis point

• TED Spread 18.75 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -2.75 +.75 basis point

Economic Gauges:

• 3-Month T-Bill Yield .05% -1 basis point

• Yield Curve 251.0 +4 basis points

• China Import Iron Ore Spot $136.80/Metric Tonne +.29%
  

• Citi US Economic Surprise Index 8.0 +1.1 points

• Citi Emerging Markets Economic Surprise Index -15.50 -.5 point

• 10-Year TIPS Spread 2.16 unch.

Overseas Futures:

• Nikkei Futures: Indicating +190 open in Japan

• DAX Futures: Indicating +11 open in Germany

Portfolio: 

• Higher: On gains in my medical/biotech sector longs, index hedges and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.62%

Sector Underperformers:

• 1) Gold & Silver -3.52% 2) Steel -1.51% 3) Airlines -.77%

Stocks Falling on Unusual Volume:

• CIE, RFIL, NJ, DPM, DRTX, PBR, IMKTA, SHLO, ECOL, FONR, MMM, CVG, DEST, BWP, RNF, XL, NHI, LH, ENOC, MYGN, MEOH, COH, MTSC, GIII, OPEN and RNF

Stocks With Unusual Put Option Activity:

• 1) XME 2) CTSH 3) BX 4) KRE 5) FLR
  

Stocks With Most Negative News Mentions:

• 1) GRPN 2) TRLA 3) OPEN 4) MMM 5) PBR
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Mid-Cap Value +.27%

Sector Outperformers:

• 1) Hospitals +.83% 2) Oil Service +.65% 3) Banks +.62%
  

Stocks Rising on Unusual Volume:

• OLN, AXLL, ROC, FRX, RAX, GOGO, WPX, KERX and CAB

Stocks With Unusual Call Option Activity:

• 1) HOV 2) FTNT 3) FRX 4) GALE 5) S

Stocks With Most Positive News Mentions:

• 1) EBAY 2) SBUX 3) FRX 4) AAPL 5) DOW
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Monday Watch

Weekend Headlines 
Bloomberg: 

• Abe Support Falls Below 50% for First Time Amid Secrecy Drive. Prime Minister Shinzo Abe’s public support dropped below 50 percent for the first time amid a campaign to strengthen Japan’s secrecy laws, a decline that risks eroding his political capital to enact economic reforms. The cabinet’s approval rating fell to 49 percent, according to a Nov. 30 to Dec. 1 survey by the Asahi newspaper, down 4 percentage points from a month earlier. It showed 50 percent of those surveyed opposed a bill passed by the Diet’s lower house last week that boosts penalties for leaking confidential government information. The upper house may vote this week.

• China Sets IPO Reform Plan Signaling End of Freeze on Listings. China’s securities regulator issued a reform plan for initial public offerings, as the government prepares to lift a more than one-year freeze on new listings in the world’s second-biggest economy.

• Australian Banks’ Risky Loans Fueling House Price Gains. Australia’s biggest banks, whose lending standards helped the nation avoid a property crash during the global credit crisis, are raising concern with home loans helping to fuel record house prices. The proportion of mortgages that represented more than 80 percent of a home’s value -- the loan-to-value ratio -- rose in the third quarter to the highest since the second quarter of 2009, data from the banking regulator show. Mortgages in which borrowers pay only interest also increased to the highest in at least five years, according to the figures.

• S. Korea Exports Slow as Southeast Asia Demand Declines. South Korea’s exports slowed last month as demand from Southeast Asian nations fell and the won’s advance weighed on exporters’ price competitiveness. Overseas shipments rose 0.2 percent in November from a year earlier, down from a revised 7.2 percent gain the previous month, the Ministry of Trade, Industry and Energy said in an e-mailed statement today. The median estimate in a Bloomberg News survey of 12 economists was for a 3 percent increase.

• China Stocks Fall as Small-Caps Drop by Record on IPO Resumption. China’s stocks fell, dragged down by a record tumble in smaller-company shares, amid concern the government’s plan to restart initial public offerings will divert funds from existing equities. Software maker Neusoft Corp. dropped 8.5 percent as a gauge of technology companies dropped the most among industry groups. Leshi Internet Information & Technology Co. retreated the most in a month. Suning Commerce Group led declines for consumer companies, slumping 8.7 percent. Eight out of 10 industries in the CSI 300 Index slid at least 1.8 percent. Citic Securities Co. paced gains for brokerages after Goldman Sachs Group Inc. said financial companies will benefit from IPO reform. The Shanghai Composite Index (SHCOMP) fell 2.1 percent to 2,173.78 at 11:07 a.m., heading for the biggest loss since July. The ChiNext index of small-caps plunged 8.1 percent. 

• Worst Raw-Material Slump Since ’08 Seen Deepening: Commodities. The commodity slump that spurred bear markets in everything from gold to corn to sugar this year will deepen by the end of December as prices head for their first annual loss since 2008, if history is any guide. The Standard & Poor’s GSCI Spot Index of 24 raw materials fell in December 83 percent of the time since 1971 when the benchmark gauge was posting losses for the year through November, data compiled by Bloomberg show. The average December loss was 3.9 percent, which if it happened this time would mean a 7.8 percent drop for the year. 

• Rebar Rises as China Manufacturing Gauges Boosts Demand Outlook. Steel reinforcement-bar futures in Shanghai rose as Chinese manufacturing growth beat analysts estimates in November, boosting the demand outlook for the building material. Rebar for May delivery, the most-active contract on the Shanghai Futures Exchange, added as much as 0.7 percent to 3,695 yuan ($606) a metric ton before trading at 3,688 yuan at 10:14 a.m. local time. The contract closed on Nov. 29 at the highest in more than two weeks. 

• Aluminum Trades Near Four-Year Low as Global Stockpiles Climb. Aluminum fell, trading near a four-year low, as stockpiles in London and Shanghai increased, indicating global supply exceeded demand for the metal used in everything from beverage cans to airplanes. The contract for delivery in three months on the London Metal Exchange retreated as much as 0.5 percent to $1,747 a metric ton and traded at $1,749.75 by 10:45 a.m. in Tokyo. The metal fell 5.6 percent last month, touching $1,741.25 on Nov. 29, the lowest since July 2009. Today’s drop brought losses this year to 16 percent. Copper was little changed at $7,060 a ton.

• Shoppers Spent Less During Black Friday Weekend, NRF Says. The average U.S. shopper spent less during the Black Friday weekend than last year, according to a survey commissioned by the National Retail Federation. Consumers spent $407.02 on average, a 3.9 percent decline from $423.55 last year, Washington-based NRF said in an e-mailed statement. From Thanksgiving Day through planned trips today, the number of Americans who shopped at stores and websites rose 1.4 percent to 141 million for total spending of $57.4 billion, according to the survey of more than 4,400 people by Prosper Insights & Analytics. 

• Citigroup(C) to BofA(BAC) Spurn Treasuries to Hoard Cash on Taper Risk. Never before have America’s banks been so wary of risking their cash deposits on U.S. government debt. After holdings of U.S. debt surged to a record $1.89 trillion in 2012, lenders from Citigroup Inc. to Bank of America Corp. and Wells Fargo & Co. (WFC) are culling for the first time in six years and amassing dollars. Banks’ $1.8 trillion of the bonds now equal less than 70 percent of their cash, the least since the Federal Reserve began compiling the data in 1973.

• Metro-North Train Derails in NYC, Killing Four. New York’s Metro-North Railroad is shut down along the Hudson River after a train derailment caused the first passenger fatalities in the line’s 30-year history, renewing scrutiny of safety on one of the city’s major mass-transit arteries. Four people were killed and 63 injured in the accident today in the Riverdale section of the Bronx. Red and silver railcars flipped onto their sides, with the lead car coming to rest on the bank of the Harlem River. The crash marked the third time in a year that service to New York on the railroad, which provided 83 million rail rides in 2012, has been forced to shut down because of an accident.

Wall Street Journal:

• OPEC Rift Emerging Over Iraq Output, Possible Return of Iran. Some Members of the Cartel May Have to Decide to Cut Output in the First Half of Next Year. Tensions are emerging within the Organization of the Petroleum Exporting Countries over which member countries should trim oil production to make room for a resurgence in Iraqi exports and the possible return of more Iranian crude to world markets if sanctions are eased. There is no expectation of a decision to cut back at the OPEC cartel's meeting in Vienna on Wednesday. The group of 12 of the world's largest producers, though long riven by squabbling, has kept its overall production ceiling at 30 million barrels a day since December 2011. 

• Fed Eyes Financial System's Weak Link. Move to Rein In Short-Term-Funding Market Carries Risks of Its Own.

• Web Companies Embrace TV Ads. New Media Find the Reach of Television Commercials Hard to Resist.

• Franco's Legacy Rattles Spain. A series of headline-grabbing incidents in recent months has prompted soul-searching among Spaniards over dictator Francisco Franco's enduring legacy—and the disruptive potential for extremism to flare at a time of deep economic distress. Over the summer, several Spaniards posted pictures of themselves holding fascist flags or giving Nazi salutes on social-media sites. In September, a self-described fascist group assaulted a cultural center in Madrid representing Catalonia, a region that was repressed by Franco and is now home to a growing political movement seeking independence from Spain.

• Insurers Seek to Bypass Health Site. Administration Officials Acknowledged 'More Work to Be Done'. 

• ObamaCare Mission Accomplished. The system isn't working and the website isn't fixed. Great news: The White House says that Healthcare.gov and the 36 federally run insurance exchanges are finally good to go. The only thing missing from Sunday's relentlessly upbeat progress report was President Obama in front of a "Mission Accomplished" banner.

Fox News:

• US warns airlines to take precautions over disputed islands claimed by China. The State Department said Wednesday it is advising U.S. airlines to take necessary steps to operate safely in China's newly declared air defense zone in the East China Sea, a day after two American B-52 bombers flew through the contested airspace. State Department spokeswoman Jen Psaki told reporters at a daily press briefing that the U.S. is attempting to determine whether China's new air defense zone rule requiring foreign aircraft to identify themselves applies to commercial airlines, Reuters reported. "In the meantime, U.S. air carriers are being advised to take all steps they consider necessary to operate safely in the East China Sea region," Psaki said.

CNBC:

• Playing with fire? Margin debt most since crisis. As investors feel emboldened by the seemingly unstoppable stock market rally, they're borrowing money at record levels to keep things going.

• $3 trillion headache on the way for corporations.  Borrowing money at bargain basement interest rates may seem now like a nice way to pad profits and share prices, but it may not be as much fun in a few years. Companies face three consecutive years where more than $1 trillion each will come due in the form of maturing bond issues that have been used during the free-wheeling, zero-interest days courtesy of the Federal Reserve.

Zero Hedge:

• The Other America: "Taxpayers Are The Fools... Working Is Stupid". (audio)

• Late-Day Dump Not Enough To Spoil S&P 500's Best Run Since Jan 2004; Up 8 Weeks-In-A-Row. (graph)

• With A GAAP PE Of 19x, "Growth Is All That Matters Now". (graph)

• Iran's Rouhani: "We Are Not Dismantling Our Nuclear Facilities; Iran Will Maintain Its Uranium Enrichment Programme".

• Marc Faber: "We Are In A Gigantic Speculative Bubble". (video)

• Citi(C) "Skeptical Of The Sustainability Of This Uptrend". (graph)

• Visualizing Abenomics - Japan's Dangerous Experiment.

• When They Say The Global Economy Is Growing They Really Mean This... (graph)

• What Happens When This Chart Hits Zero? (graph) Dodos, Dinosaurs, and soon 'Bears"...

• A-Rod And Janet Yellen: What Valuation, Debt And The Fed Can Say About The Next Bear Market.

• Economic Prosperity Ahead Or A Train A Comin'.

• Russell Napier: "We Are On The Eve Of A Deflationary Shock ".

• Grant Williams On Flushing The Impurities Of QE From The System.

• Live Stream From Escalating Ukraine Protests As Hundreds Of Thousands Take To The Streets.

• Shiller Worried About "Boom In US Stocks... Bubbles Look Like This".

• CNN Tests "Fixed" Obamacare Website And... It Crashes. (video)

• Central Banker Admits Faith In "Monetary Policy 'Safeguard'" Leads To "Even Less Stable World".

• Thousands Of Companies All Around The World Are Revealing The State Of The Economy.

Business Insider:

• The Netherlands Loses Its Pristine AAA Rating.

• China Scrambles Jets After US And Japan Fly Over Contested Islands.

• Americans Fighting In Syria Are A Growing Security Risk.

• Americans Don't Trust Each Other Anymore.

• Shocking Images From The Passenger Train That Derailed In New York.

• Congressional Intelligence Chairs Shock CNN Anchor By Saying 'We're Not Safer' Today From Terror Threats.

• 30,000 Protestors Launch A 'People's Coup' On Thailand's Government.

• The Same People Who Brought Us The Great Financial Crisis Have Created A Dangerous New Paradigm.

New York Times:

• Turning to Public to Back Investigative Journalism. If you suspect your local town government is corrupt, would you pay a journalist to investigate? Uncoverage, a website that will be announced on Monday, will test whether the public cares enough about investigative journalism to pay for it. The site, to be at Uncoverage.com, will allow journalists and nonprofits to seek crowdsourced funding for both articles and topics like, for example, the Syrian war. Money for general topics will be split up among projects by the site’s editors.

Reuters: 

• Japan: no change to airlines' notification policy when flying in East China Sea zone. Japanese Chief Cabinet Secretary Yoshihide Suga said on Monday there was no change to Japan's policy of not notifying Chinese authorities when its commercial aircraft fly through China's new air defense identification zone. 

• Investors poured $31.6 bln into equity funds in Nov -TrimTabs. Investors poured $31.6 billion into all equity mutual funds and exchange-traded funds in November, favoring equities over bonds for a sixth straight month, data from TrimTabs Investment Research showed on Sunday.

USA Today:

• Amazon(AMZN) testing delivery by drone, CEO Bezos says. It would speed up delivery of online orders, but the technology is at least three or four years away.

AFP:

• Thousands Of Trucks Block French Motorways In Tax Protest. (pics) Thousands of trucks block major motorways across France in protest at a proposed 'ecotax' on heavy goods traffic.

Financial Times: 

• CMBS issuance at highest since before the crisis. Worldwide issuance of securities backed by revenues from commercial mortgages has nearly doubled this year to the highest levesince 2007 as US and European banks pile back into property lending. Issuance of commercial mortgage-backed securities has reached $92.9bn so far this year, up from $48.7bn in the same period in 2012, according to Dealogic, the data provider.

Die Welt:

• Germany's Gauweiler Says Euro Area Like Soviet States. Euro area is comparable to socialist states a quarter of a century ago, doubts it will last, Peter Gauweiler, vice-chairman of Merkel's CSU Bavarian sister party, says in an interview. "The more irreversible one considers a conglomerate, the faster it dissolves," Gauweiler said.

WirtschaftsWoche:

• Merkel Adviser Says German Minimum Wage Risks Jobs. Minimum wage of EU8.50/hr planned by new German govt coalition endangers a "six digit figure" of jobs, Christoph Schmidt, head of Angela Merkel's council of economic advisers said in an interview.

Yonhap News:

• S. Korea nears finalization of expanded air defense zone. South Korea has nearly finalized plans for a new air defense zone that includes an ocean research station built on an underwater reef and southern islands, Seoul's officials said Monday. The latest move comes after China last week declared an Air Defense Identification Zone (ADIZ) over the East China Sea and demanded all foreign aircraft passing through the zone to identify themselves to Chinese authorities. The area overlaps those of South Korea and Japan and has sharply raised tensions in Northeast Asia.

Yomiuri:

• U.S., Japan to Issue Statement Decrying China Air Zone. U.S. and Japan will issue a joint statement next week calling on China to retract its newly established air-defense zone. Statement calls the zone an extremely dangerous experiment that will unilaterally change the situation in the East China Sea.

China Securities Journal:

• NDRC Officials Say China Faces Price Pressures. China may face larger upward price pressure in 2014 compared to this year, according to an article by Xu Lianzhong and He Xiaoying, officials at the National Development and Reform Commission's price monitoring center. China can't relax on price controls next year. China should be cautious about using expansionary monetary tools to ensure the continuity of macroeconomic policies. China should expand property tax as soon as possible to curb property prices from rising too quickly, he said.

Weekend Recommendations

Barron's:

• Bullish commentary on (DAL), (GM), (HPQ), (OI), (PBI), (SWY), (CHS), (DRI), (ARCP), (BHI) and (COF).

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 131.0 -1.0 basis point.

• Asia Pacific Sovereign CDS Index 106.5 -.75 basis point.

• FTSE-100 futures -.25%.

• S&P 500 futures +.07%.

• NASDAQ 100 futures +.17%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (KKD)/.15

• (SCVL)/.52

• (THO)/.71

Economic Releases
8:58 am EST

• The Markit US PMI Final for November is estimated at 54.3 versus a prior estimate of 54.3.

10:00 am EST

• ISM Manufacturing for November is estimated to fall to 55.1 versus 56.4 in October.

• ISM Prices Paid for November is estimated to fall to 55.0 versus 55.5 in October.

• Construction Spending for October is estimated to rise +.4%.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Manufacturing PMI, Australia rate decision, China Non-Manufacturing PMI, Cowen Energy Conference and the CSFB Tech Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial 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 week.

Weekly Outlook

Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on rising long-term rates, profit-taking, technical selling, increasing emerging markets debt angst and more shorting. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.