Today's Headlines

Bloomberg: 

• ECB Cuts Inflation Forecast as Draghi Pledges Low Rates. European Central Bank President Mario Draghi re-affirmed that interest rates will stay low for the foreseeable future, after officials cut their inflation forecast for next year. “We may experience a prolonged period of low inflation,” Draghi said at a news conference in Frankfurt today, echoing language he used last month after the ECB unexpectedly cut interest rates. Today, the ECB kept its main rates unchanged.

• Draghi Hints Any New LTRO-Style Operations Will Be Conditional. European Central Bank President Mario Draghi said any new long-term refinancing operations will be targeted at the economy to prevent banks from exploiting such measures to enhance their balance sheets. “If we do operations similar to LTRO, we want to make sure this is being used for the economy,” Draghi said today after the ECB kept interest rates unchanged at a record low. “And we want to make sure that this operation is not going to be used for subsidizing capital formation by the banking system under these carry trade operations.” 

• Deutsche Bank(DB) Cuts 200 as Commodities Jobs Fall to 2009 Low. Deutsche Bank AG, Europe’s biggest investment bank, will cut about 200 jobs in commodities as it shrinks its trading business at a time when headcount at commodities units at the top 10 banks is already at the lowest since 2009 amid tighter regulations and sliding revenue.

• Russian Inflation Jump to Three-Month High Exceeds Estimates. Consumer prices rose 6.5 percent from a year earlier after a 6.3 percent increase in October, the Federal Statistics Service in Moscow said today in a statement. Economists predicted an increase of 6.4 percent, according to the median of 19 estimates in a Bloomberg survey. The rate has held above the target range of 5 percent to 6 percent for 15 months. 

• European Stocks Post Longest Losing Streak in Five Months. European stocks slid, posting their longest losing streak in five months, as European Central Bank President Mario Draghi said that financial-market developments and low domestic demand may hurt the euro area’s economy. FLSmidth (FLS)& Co. A/S retreated 1.9 percent as the Danish mining-equipment maker cut its earnings margin forecast. Vienna Insurance Group AG (VIG) declined 5.2 percent as an unidentified investor sold 2.29 million shares in the company. AZ Electronic Materials SA surged the most since its initial public offering in October 2010 after Merck KGaA agreed to buy the company for about 1.6 billion pounds ($2.6 billion). Merck rose 4.9 percent. The Stoxx Europe 600 Index lost 0.9 percent to 314.41 at the close of trading in London.

• Gold Declines Third Time in Four Days on Fed Taper Speculation. Gold futures for February delivery slid 1.4 percent to $1,230.30 an ounce at 12:17 p.m. on the Comex in New York. Earlier, prices fell as much as 2.5 percent.

• Keynesians Revive a Depression Idea by Caroline Baum. The “it” is secular stagnation, which seems to be the New New Thing or the new new normal: a way to describe the persistent state of subpar economic growth plaguing developed nations. Think of it as Japan’s lost decade gone global.

• Budget Talks Target One Year Deal as Lawmakers Protest. U.S. budget negotiators are narrowing a possible deal to ease automatic spending cuts to just one year amid objections from affected groups and lawmakers in both parties, said people familiar with the talks. A compromise being crafted by the two leaders of a 29-member panel is drawing protests from Democrats and groups including federal employees, who could contribute more to their pensions under the proposal, and airlines, which could face higher fees. Some Republicans are concerned a bipartisan deal will replace spending cuts set in law with promises of future savings that might not be realized.

Wall Street Journal: 

• Fed's Fisher Says Unemployment Rate Still Not Good Enough. U.S. Economic Growth Just 'Modest to Moderate'. Asked whether the stock-market highs were sustainable given the chance that the Fed will change policy, Mr. Fisher said they may not be. He pointed to the stock market's reaction to fears of possible Fed tapering during the summer as evidence of the influence of Fed policy on the markets and economy. "We had a discussion about whether" to dial back purchases of Treasurys and it "sent a shiver up the spine of the economy," Mr. Fisher said. "That tells me people are way too dependent on the Federal Reserve," Mr. Fisher said. "One has to take into account whether on a nominal basis or a inflation-adjusted basis, we're a few points off all-time highs" on the stock market, Mr. Fisher said. "I believe markets are manic-depressive mechanisms…they overshoot on both sides," he said. "We're at least a standard deviation above the norm on an inflation-adjusted basis. Is that sustainable? You know your math; it's rarely sustainable."

• Edward Lampert's Hedge Fund Shrinks as Investors Pull Money. Clients of Goldman Sachs Make Redemption Requests. Clients of Goldman Sachs Group Inc. who invested about $3.5 billion in Edward Lampert's hedge fund through a 2007 deal have asked for their money back, according to people with knowledge of the matter. The redemption requests were submitted last year in advance of the expiration of the five-year lockup of the investors' money. 

• Biden Criticizes China on Media, Human Rights. Pushes for Better Treatment of U.S. Journalists, an Even Playing Field for Businesses.

Barron's:

• 30-Yr Mortgage Rate Hits 10-Week High 4.46%. With Treasury yields creeping higher lately, mortgage rates rose in the latest week as well, with the average 30-year fixed-rate mortgage rate jumping to 4.46% – the highest reading since the week ending Sept. 19 – from 4.29% a week earlier, according to Freddie Mac’s (FMCC) latest Primary Mortgage Market Survey. A year ago that rate stood at 3.34%, just off its all-time low 3.31%.

Fox News:

• NSA reportedly collects 5 billion cell phone location records a day. The NSA collects nearly 5 billion records a day on the locations of cell phones overseas to create a huge database that stores information from hundreds of millions of devices, including those belonging to some Americans abroad, the Washington Post reported Wednesday.

MarketWatch:

• Fed's Lockhart: Taper on table in December.

CNBC:

• Wall Street: The day of reckoning nears.

Zero Hedge:

• David Tepper Follows Baupost In Returning Excess Cash To Investors.  

• As Fast Food Workers Go On Strike In 100 Cities, Applebees Unveils The "Waiter Terminator".

• Volcker Rule To Scrap "Portfolio Hedging", Would Make Trillions In Excess Deposits Inert.

• Q3 GDP Soars To 3.6% On Massive Inventory Accumulation; Consumption Contribution Lowest Since 2009. (graph)

• Initial Claims Tumble To 298K As BLS Warns Of "Holiday Volatility". (graph)

• France Unemployment Surges To 16 Year High. (graph)

• New Orders Drop Most Since July Led By Plunge In Defense. (graph)

• Hacker Finds Way To "Skyjack" And Zombify Drones.

Business Insider: 

• The New York Times And Bloomberg Face Banishment From China.

• Beheadings And Spies Help Al Qaeda Gain Ground In Syria.

• Why Corruption In Spain Is Soaring.

• Here's The Other Huge Problem With The Obamacare Website That The Obama Administration Doesn't Want To Talk About.

• BITCOIN CRASHES AFTER WARNING FROM CHINA.

Real Clear Politics:

• Obamacare's Next Problem: Doc Shock. Meet Chico, Calif., attorney Kenneth Turner. His wife found out that she has breast cancer two days before they received their cancellation notice. She's scheduled for surgery Dec. 20 and will hear the prognosis Dec. 30. Two days later, she loses the doctor who will have operated on her, as well as other doctors she has seen for decades.

Reuters:

• Latin America poverty decline slowing as economies cool - U.N. Weaker macroeconomic performance and rising food costs have put the brakes on the rate of poverty decrease in Latin America, the United Nations' economic body for the region said on Thursday. An annual survey by the Economic Commission for Latin America and the Caribbean shows 27.9 percent of Latin Americans live in poverty, while 11.5 percent are in extreme poverty. The number of poor - about 164 million - has remained stable compared to 2012, falling slightly in percentage terms. The numbers in extreme poverty rose slightly to 68 million.

• Bargain-hunting dents U.S. retailers' November sales. Several major U.S. retailers posted disappointing sales for November after shoppers remained cautious about spending, the latest sign that the holiday season is shaping up to be the toughest in years. Some companies that reported sales gains had to offer more bargains to attract shoppers. The need to keep discounting, which stems from sagging consumer confidence and shoppers trained to wait for bargains, will persist through the remainder of the season, said Edward Jones analyst Brian Yarbrough.

• TREASURIES-Yields at three-month highs on tapering speculation.

• METALS -Nickel, tin up on Indonesia ban, copper down on Fed fears. Nickel and tin rose on Thursday after Indonesia reiterated it would impose an export ban on ore, while copper dipped on worries the Federal Reserve could curtail monetary stimulus following strong U.S. economic data. Copper was last bid at $7,068, down 0.4 percent, after failing to trade in closing open outcry activity. It reached a nine-day high in the previous session. 

• Fed should define a clear path to end of QE3: Fisher. The Federal Reserve should lay out a clear plan for the end of its current round of quantitative easing, a top Fed official who has never supported the bond-buying program said on Thursday. "We should define a very clear path," Dallas Federal Reserve Bank President Richard Fisher told reporters after a talk here, reducing the Fed's $85 billion-a-month bond buying program by a set amount until it reaches zero.

Echoing fears that European policymakers remain in a state of cognitive dissonance – recognizing the need for root-and-branch overhaul of peripheral banks, but backtracking on joint liability plans – Christopher Flowers, the legendary FIG investor who now runs the £2.3 billion ($3.5 billion) private equity group JC Flowers, sounded the alarm over the negative sovereign-bank feedback loop. In a shot across the bows of market bulls, who cite the return of capital flows to weaker eurozone states, Flowers issued a stark warning: "There is a scenario where we have a Lehman-type event: we wake up some Thursday and a big country is in trouble. "And the ECB will have to decide to support banks x, y, z. And then the ECB will, in fact, decide to own bank x, y, z.


While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3211790/CurrentIssue/88924/Restructuring-Flowers-slams-Europe-over-inaction.html?copyrightInfo=true

Japan Times:

• Japan-ASEAN draft implies China’s new ADIZ is a security threat. Japan and the Association of Southeast Asian Nations will express their concern in a joint statement that any abuse of power in international civil aviation could pose a security “threat,” a Japan-ASEAN diplomatic source said Thursday, in an implicit reference to China’s new air defense zone.

Bear Radar

Style Underperformer:

• Large-Cap Value -.52%

Sector Underperformers:

• 1) Education -1.66% 2) Software -1.43% 3) HMOs -1.11%

Stocks Falling on Unusual Volume:

• SP, ECOL, TITN, EPB, CEQP, FRAN, PFPT, MSFT, BOBE, KR, BIG, EA, CUK, ELGX, QLTY, ADBE, BWP, OMED, PHI, MDP, MBT, SJM, THRX, SFUN and NCR

Stocks With Unusual Put Option Activity:

• 1) IEF 2) FNSR 3) MSFT 4) PAYX 5) PHM
  

Stocks With Most Negative News Mentions:

• 1) TITN 2) LB 3) KR 4) TD 5) EOG
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Mid-Cap Growth -.03%

Sector Outperformers:

• 1) Steel +2.02% 2) Gaming +.82% 3) Papers +.53%
  

Stocks Rising on Unusual Volume:

• PBYI, MEI, CONN, MFRM, GGP, DG, KFY, ARRS, AWAY, MKTG, LNG and SCTY

Stocks With Unusual Call Option Activity:

• 1) CONN 2) DG 3) CNP 4) BRCM 5) T

Stocks With Most Positive News Mentions:

• 1) TWTR 2) OCR 3) LNKD 4) YHOO 5) T
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Thursday Watch

Evening Headlines 
Bloomberg: 

• China Risks Cooler South Korea Ties With Air Defense Zone. China’s overlap of its new air zone with that of South Korea in the East China Sea has complicated its efforts to forge closer ties with President Park Geun Hye and gives her an incentive to further strengthen relations with the U.S. Park will tomorrow meet Vice President Joseph Biden, who has called on South Korea and Japan to stand with the U.S. in the face of China’s assertion of its military muscle. Park and her top defense officials were hosting Chinese state councilor Yang Jiechi less than three weeks ago as part of her effort to boost trade and secure China’s help in containing North Korea. 

• China Swap Rate Rises for Fifth Day After PBOC Doesn’t Add Funds. China’s one-year interest rate swaps rose for a fifth day as the central bank refrained from adding funds to the interbank market. The People’s Bank of China didn’t inject money by selling 14-day reverse-repurchase agreements today, according to two traders at primary dealers required to bid at the auctions. The monetary authority auctioned the contracts on Nov. 21 and Nov. 28, after a two-week halt. The PBOC drained a net 47 billion yuan ($7.7 billion) this week, after injecting 17 billion yuan last week, according to data compiled by Bloomberg. The cost of interest-rate swaps, the fixed payment needed to receive the floating seven-day repo rate, rose one basis point, or 0.01 percentage point, to 4.7 percent as of 10:15 a.m. in Shanghai, according to data compiled by Bloomberg. That matched yesterday’s intra-day peak, which was the highest level since June 21.

• Thailand Resilience Eroding as Protests Sap Confidence: Economy. Thailand’s economy has withstood coups and regime-changing protests for decades, luring manufacturers including Toyota Motor Corp. even when turmoil dented stocks and the baht. This time may be tougher. 

• Most Asian Stocks Drop After U.S. Data; Aussie Bonds Fall. Most Asian stocks fell, while Australian bond yields climbed to a two-year high and gold retreated. Indian equities rallied with the rupee as votes were counted for state elections. Almost two shares dropped for each that gained on the MSCI Asia Pacific Index, which was little changed at 1:03 p.m. in Tokyo.

• Copper Falls Amid Speculation Fed May Taper Monetary Stimulus. Copper fell after the biggest daily gain yesterday in 11 weeks as traders turned their attention to the likelihood of stimulus cuts by the Federal Reserve. Metal for delivery in three months on the London Metal Exchange fell as much as 0.4 percent to $7,065 a metric ton and traded at $7,066 at 10:49 a.m. in Tokyo. 

• Rebar Falls From 7-Week High on Ore Inventory, Freezing Weather. Steel reinforcement-bar futures in Shanghai fell with iron ore as inventory of the raw material in China surged and freezing temperatures slowed construction projects. Rebar for May delivery, the most-active contract on the Shanghai Futures Exchange, fell as much as 0.3 percent to 3,701 yuan ($608) a metric ton, and traded 3,703 yuan at 10:40 a.m. local time.

• Currency Volatility Climbs to 8-Week High Before U.S. Data, ECB. “After what has been a relative dearth of U.S. data, markets have swung back to focusing on the U.S.,” said Callum Henderson, the Singapore-based global head of currency research at Standard Chartered Plc. “I would think we’re going to see more choppy price action from now until year end.” JPMorgan’s Global FX Volatility Index was at 8.8 percent, headed for the highest close since Oct. 9.

• Treasury Yields Climb to 11-Week High as ADP Spurs Jobs Optimism. Treasuries slid, pushing 10-year yields to the highest level since September, as industry data showed job growth accelerated more than forecast, adding to bets the Federal Reserve may reduce bond purchases this month. The difference in yields on two- and 10-year notes approached the widest level since July 2011.

• Spain Credit Falls to ’05 Shadow After Price Collapse: Mortgages. Spanish property broker Donpiso pledges on its website it can sell homes within 60 days. That’s possible, said Juan Luis Nolasco, who runs one of the firm’s Madrid branches, only if owners are realistic about prices and the difficulties buyers face getting mortgages after six years of falling values. “A lot of sellers are still living in the land of Peter Pan,” Nolasco said, referring to the fictional Neverland. “The biggest problem is lack of access to financing for buyers.” Currently, it can take about six months to sell a property, he said. Buying a home hasn’t gotten any easier for Spaniards, even after home prices tumbled as much as 40 percent. Rising borrowing costs, currently more than one-and-a-half times the cost in Germany, the end of mortgage tax breaks, and shrinking disposable incomes are making it increasingly difficult for Spanish families to own their own home. Fewer than 15,000 mortgages were granted in September compared with about 129,000 at the September 2005 peak, according to the National Statistics Institute. 

• Rajoy to Rescue Highway Billionaires Who Bet on Boom. Spanish taxpayers have bailed out banks and power companies. Next up are highway operators and their billionaire owners.

• Job Cuts Loom at European Banks as Stagnant Economy Pinches Fees. European banks, which eliminated more than 140,000 jobs in two years, are poised to keep shrinking. Lenders in the region probably will cut at least 5 percent of trading and advisory staff next year, according to a survey of three London-based investment-bank recruiters, and the reductions could reach 15 percent, two of them said. That would be twice the 7 percent shrinkage across the industry since 2011.

• RBS and S&P Sued by European CPDO Investors in Class Action. Royal Bank of Scotland Group Plc (RBS) and Standard & Poor’s were sued in the Netherlands by 16 investors over a complex derivative product that fell in value by as much as 90 percent during the financial crisis. The class-action lawsuit relates to so-called constant-proportion debt obligations created by RBS’s ABN Amro unit and rated AAA by McGraw Hill Financial Inc.’s S&P, according to Bentham IMF Ltd. (IMF), the company which is funding the case. The investors are seeking about $250 million.

Wall Street Journal: 

• Volcker Rule Won't Allow Banks to Use 'Portfolio Hedging". In a defeat for Wall Street, the "Volcker rule" won't allow banks to enter trades designed to protect against losses held in a broad portfolio of assets, according to people familiar with the rule. The practice, known as portfolio hedging, has become a focal point of regulators drafting the rule, a controversial plank of the 2010 Dodd-Frank financial law that seeks to prevent banks from putting their own capital at risk in pursuit of trading profits.  

• Apple(AAPL), China Mobile Sign Deal to Offer iPhone. Tie-Up Would Give Apple Access to 700 Million Subscribers. China Mobile Ltd. has signed a long-awaited deal with Apple Inc. to offer iPhones on its network, a person familiar with the situation said, an arrangement that would give the U.S. technology giant a big boost in the world's largest mobile market. The rollout of iPhones on the world's largest mobile carrier by users, with over 700 million subscribers, is expected to start later this month, around the time of a Dec. 18 China Mobile conference in Guangzhou, according to two people familiar with the carrier's plans. China Mobile is one of the world's last major carriers that doesn't offer the iPhone. At the Dec. 18 event, China Mobile plans to unveil a brand for its fourth-generation, or 4G, network. China Mobile executives have said they would only begin to sell the iPhone after introducing 4G services. China's Ministry of Industry and Information Technology said Wednesday it gave licenses to China Mobile and its smaller rivals to operate the higher-speed mobile networks, clearing one of the last hurdles.

• Medicaid Is Latest Health-Site Victim. States are warning that they may not process Medicaid enrollments from people who have signed up for the health program through the troubled HealthCare.gov site, raising the prospect that several hundred thousand low-income people who thought they had obtained insurance actually may not have it. The federal health-insurance site, which serves residents in 36 states, is designed to sell policies from private insurers. But some people who apply for coverage through the site discover they are eligible instead for Medicaid, the joint federal-state health-insurance program for the poor and disabled.

• Jihadists Returning Home to Europe from Syria Pose New Terror Threat. Series of Arrests Heighten Fears, Problem Expected to Grow as Conflict Drags On. Scores of jihadist fighters from Europe who streamed to Syria to join Islamic extremist rebels have begun returning home, where some are suspected of plotting terror attacks, according to U.S. and European intelligence and security officials. Authorities in the U.K. and France recently made several terror-related arrests of individuals suspected of links to Syria. "They're real committed jihadists," a senior U.S. intelligence official said. "The concern is that we're at the very early stages of this." 

• Drug-Cost Surprises Lurk Inside New Health Plans. Americans with chronic illnesses—who are expected to be among the biggest beneficiaries of the health law—face widely varying out-of-pocket drug costs that could be obscured on the new insurance exchanges. Under the law, patients can't be denied coverage due to existing conditions or charged higher rates than healthier peers. The law also sets an annual out-of-pocket maximum of up to $6,350 for individuals and $12,700 for families, after which insurers pay the full tab.

• Moving Crude by Railcar Stalls on the Track. Heightened Safety Concerns, Slow Permit Approval Hinder Some Firms' Efforts.

• The War of the Wages. Obama moves left on the economy to change the subject from ObamaCare. 

Barron's: 

• Synopsys(SNPS Falls 4%: FYQ4 Rev Misses; Q1, Year Views Miss. Semiconductor design software vendor Synopsys (SNPS) this afternoon reported fiscal Q4 revenue that missed analysts’ estimates, delivered earnings per share better than expected, and forecast this quarter’s results below consensus.

Fox News: 

• Reid exempts some staff from having to buy insurance on ObamaCare exchange. Senate Majority Leader Harry Reid is allowing some staffers to keep their health insurance instead of making them buy it through an ObamaCare exchange, although he was one of the strongest Capitol Hill supporters of the 2010 law. The Nevada Democrat is exercising his discretion under the president’s signature law to designate which staffers can keep their federal insurance plan and which must now purchase a policy through the District of Columbia’s health-care exchange. However, he purportedly is the only top congressional leader to exercise that option, which resulted in sharp criticism Wednesday from Texas Republican Sen. Ted Cruz, perhaps the staunchest ObamaCare opponent on the Hill.

CNBC: 

• $15 minimum wage means layoffs: White Castle exec. (video)

• Christmas taper talk picking up steam. Even with spotty economic data, the unofficial odds are rising that the Fed will announce plans at its December meeting to taper its bond-buying program.

Zero Hedge: 

• Another Hedge Fund Legend Returns Cash To Investors Due To "Lack Of Investment Opportunities".

• Inflation Since 2000 Is "Not Contained". (graph)

• The Fed & 2013's Wall Of Worry. (graph)

• Wages Relative To Profits Drop To All Time Low. (graph)

• This Is How The NSA Is Tracking You This Instant.

• Jim Rogers Cautions "Be Prepared, Be Worried, And Be Careful... This Is Going To End Badly".

• Looming U.S. Retail Implosion: DeGrowth 2014.

ValueWalk:

• Alan Greenspan On Gold And Bitcoin ‘Bubble’ [TRANSCRIPT].

Business Insider: 

• Martin Bashir Resigns From MSNBC After Horrible Sarah Palin Comment.

• Mexican Police Find Stolen Truck Carrying Radioactive Material That Could Have Made A 'Dirty Bomb'.

• Cloud Computing Guru Marc Benioff Offered To Fix Healthcare.gov For Free And The White House Said No.

• ANALYST: 'Stocks Look More Vulnerable Than Ever'. (graph)

• First Large-Scale Trial Of Driverless Cars To Begin On Public Roads.

Reuters: 

• U.S. House passes bill to exempt private equity funds from rules. The U.S. House of Representatives passed a bill on Wednesday that would largely spare private equity fund advisers from federal regulations enacted after the 2007-2009 financial crisis. The bill would exempt many private equity fund advisers from a provision in the 2010 Dodd-Frank Wall Street Reform law which required advisers with more than $150 million in assets under management to register with the U.S. Securities and Exchange Commission.

• Aeropostale's(ARO) holiday quarter forecast disappoints. Apparel retailer Aeropostale Inc forecast a much bigger-than-expected loss for the holiday shopping quarter as it struggles to keep up with the tastes of young shoppers, sending its shares down 4 percent in extended trading. Aeropostale, under pressure from some investors to sell itself, also reported its fourth straight quarterly loss.

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:

• Brazil trade growth poor in spite of weak currency. Brazilian trade has grown much less than expected this year in spite of a sharp weakening of the local currency against the dollar, highlighting the country’s declining competitiveness. Brazilian container traffic is forecast to rise 4 per cent in 2013 compared with earlier expectations of 6-7 per cent, according to the world’s largest shipping company by volume, Maersk Line.

• Iran threatens to trigger oil price war. Tension between Iran and Saudi Arabia over Tehran’s plans to raise oil output spilled into the open on Wednesday as Opec rolled over its production target in the belief a wall of supply will fail to materialise next year. The oil producers’ cartel controls around a third of the global oil market and, as the only source of spare capacity, exerts a big influence over prices.

Nikkei:

• Japan May Cut Tax Exemption for Workers on Over 10m Yen. Japan's govt and ruling coalition are considering reducing income tax exemption on company workers with annual salary of more than 10m yen. Change may be included in 2014 tax system plan to be compiled this month. Change would mean additional 70,000 - 110,000 yen in annual taxes for worker on 15m yen salary.

China Business News:

• Shanghai Warns on Commercial Property Financing Risks. China Banking Regulatory Commission's Shanghai branch asks banks to pay "high attention" to risks of financing to the city's commercial real estate, citing a notice issued by the regulator. The regulator says Shanghai commercial property prices rose "too fast" and the potential risks are "way larger" than those in residential property sector, according to the report. Banks in Shanghai have issued over 70b yuan outstanding loans to 149 city complexes as of September, 30-40% higher than the same period last year, the report cites regulator's survey as saying.

Evening Recommendations
Deutsche Bank:

• Downgraded (MS) to Hold.

• Downgraded (C) to Hold. 

Night Trading

• Asian equity indices are -1.0% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 135.50 +.5 basis point.

• Asia Pacific Sovereign CDS Index 111.0 +.75 basis point. 

• FTSE-100 futures -.15%.

• S&P 500 futures -.03%.

• NASDAQ 100 futures -.02%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DG)/.70

• (KR)/.53

• (JOSB)/.50

• (TTC)/.03

• (COO)/1.80

• (ULTA)/.74

• (FNSR)/.39

• (ZUMZ)/.46

• (TITN)/.48

Economic Releases
8:30 am EST

• Initial Jobless Claims are estimated to rise to 322K versus 316K the prior week.

• Continuing Claims are estimated to rise to 2800K versus 2776K prior.

• 3Q GDP is estimated to rise 3.1% versus a prior estimate of a +2.8% gain.

• 3Q Personal Consumption is estimated to rise +1.5% versus a prior estimate of a +1.5% gain.

• 3Q GDP Price Index is estimated to rise +1.9% versus a prior estimate of a +1.9% gain.

• 3Q Core PCE is estimated to rise +1.4% versus a prior estimate of a +1.4% gain.
  

10:00 am EST

• Factor Orders for October are estimated to fall -1.0% versus a +1.7% gain in September.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Fisher speaking, Fed's Lockhart speaking, ECB's Draghi speaking, BoE rate decision, ECB rate decision, Challenger Job Cuts report for November, RBC Consumer Outlook Index for December, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index and the (HSP) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and industrial 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 Reversing Lower into Afternoon on Fed Taper Worries, Rising Eurozone/Emerging Markets Debt Angst, Rising Yen, Transport/Homebuilding Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.58 +.27%

• Euro/Yen Carry Return Index 144.69 -.41%

• Emerging Markets Currency Volatility(VXY) 9.13 +1.0%

• S&P 500 Implied Correlation 54.79 +.16%

• ISE Sentiment Index 117.0 +42.68%

• Total Put/Call .85 -1.16%

• NYSE Arms .64 -48.41% 

Credit Investor Angst:

• North American Investment Grade CDS Index 71.19 +1.23%

• European Financial Sector CDS Index 99.54 +1.10%

• Western Europe Sovereign Debt CDS Index 61.63 +2.73%

• Emerging Market CDS Index 303.82 +.59%

• 2-Year Swap Spread 9.75 unch.

• TED Spread 19.0 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -2.75 unch.

Economic Gauges:

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

• Yield Curve 255.0 +5 basis points

• China Import Iron Ore Spot $139.70/Metric Tonne +1.09%
  

• Citi US Economic Surprise Index 5.30 +.2 point

• Citi Emerging Markets Economic Surprise Index -12.20 -.6 point

• 10-Year TIPS Spread 2.13 -1 basis point

Overseas Futures:

• Nikkei Futures: Indicating -85 open in Japan

• DAX Futures: Indicating -17 open in Germany

Portfolio: 

• Higher: On gains in my index hedges and emerging markets shorts

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back

• Market Exposure: 25% Net Long

Today's Headlines

Bloomberg:

• Euro-Area Economic Growth Slows as Exports, Consumption Cool. The euro area’s nascent recovery from a record-long recession nearly stalled in the third quarter as exports and household consumption cooled. Gross domestic product rose 0.1 percent after a 0.3 percent gain in the previous three months, the European Union’s statistics office in Luxembourg said today. That’s in line with Eurostat’s initial estimate. From a year earlier, the economy contracted 0.4 percent. “There’s no sign in the incoming data that growth is accelerating in the fourth quarter,” said Elga Bartsch, chief European economist at Morgan Stanley & Co. in London. “We are concerned Europe will lack an engine of growth; we are worried about the core -- France, the Netherlands and Germany.” 

• European Stocks Decline. European stocks declined for a fourth day, their longest losing streak in more than five months, as better-than-expected U.S. jobs data fueled concern the Federal Reserve will pare stimulus measures sooner than forecast. Elekta AB dropped 5.4 percent after posting quarterly profit that missed forecasts. Standard Chartered (STAN) Plc slid 6.5 percent, leading European banks lower. PSA Peugeot Citroen advanced 5.3 percent as Goldman Sachs Group Inc. added the shares to its conviction-buy list. The Stoxx Europe 600 Index slid 0.6 percent to 317.24 at the close of trading, after earlier losing as much as 1.1 percent. The benchmark fell 1.5 percent yesterday as investors weighed valuations before U.S. jobs data this week.

• Treasury Yields Climb to Highest Since September on Job Growth. Treasuries fell, pushing 10-year yields (USGG10YR) to the highest in more than two months, as an industry report showed job growth quickened more than forecast, adding to bets the Federal Reserve may advocate slowing bond purchases at this month’s policy meeting. 

• Dollar Index Rises to Almost 11-Week High on Fed Tapering View. The Bloomberg U.S. Dollar Index, which tracks the U.S. currency against 10 major counterparts, gained 0.2 percent to 1,023.11 at 11:48 a.m. in New York after rising to 1,025.36 yesterday, the highest level since Sept. 13. 

• Iran Plans to Meet Foreign Oil Companies to Seek Investment. Iran plans to meet with international oil companies as soon as March to try to entice investors to its energy industry once world powers lift sanctions, the Persian Gulf state’s oil minister said. Iran, once OPEC’s second-largest producer, is talking with European companies about future projects, Bijan Namdar Zanganeh told reporters today in Vienna. The minister said he hopes Exxon Mobil Corp. (XOM), Royal Dutch Shell (RDSA) Plc, BP (BP/) Plc, Eni SpA and Statoil ASA (STL) will invest in the country. Iranian officials will meet with international companies in London in March, he said, declining to identify them. 

• Gold Rebounds From Five-Month Low as Commodity Prices Advance. Gold futures for February delivery rose 0.5 percent to $1,227.10 an ounce at 11:53 a.m. on the Comex in New York. Prices earlier reached $1,210.80, the lowest since July 5. Gold’s 14-day relative-strength index fell to near 32 today. A reading below 30 signals to some analysts who study historical patterns that the price may be set to rebound.

• WTI Crude Gains as Supplies Tumble First Time in 11 Weeks. WTI crude for January delivery increased 82 cents, or 0.9 percent, to $96.86 a barrel at 11:42 a.m. on the New York Mercantile Exchange. The contract traded at $96.95 before the release of the report at 10:30 a.m. in Washington. Futures touched $97.53, the highest level since Oct. 30. The volume of all futures traded was 65 percent more than the 100-day average.

• Youth Break With President on Obamacare Support in Poll. The nation’s youth, a group that twice rallied behind President Barack Obama at the ballot box, is failing to support his signature domestic achievement. More than half of those 18 to 29 years old say they disapprove of Obamacare and expect it will increase their health-care costs, and 4 in 10 say they anticipate the quality of their coverage will get worse because of it, a survey by Harvard University’s Institute of Politics shows. In a finding perhaps more troubling for the White House, almost half in that age group, the so-called millennials, say they’re unlikely to enroll in insurance through a government exchange, even if eligible. That could put at risk the economics of the Patient Protection and Affordable Care Act, which needs young, healthy people to enroll in large numbers to offset the costs of caring for older, sicker Americans. “The reasons for the current lack of support among millennials for the Affordable Care Act are many,” the survey’s findings said.

Fox News:

• Iran enrichment capacity expanded dramatically on Obama's watch. Before he paused to allow reporters to ask questions about the nuclear deal with Iran that he had just announced in Geneva, Secretary of State John Kerry seemed to anticipate one line of criticism about the accord -- that it effectively cedes to the Islamic regime the right to enrich uranium, despite half a dozen U.N. Security Council resolutions declaring the activity illegal. And he moved, preemptively, to address it.

MarketWatch:

• Germany’s economy isn’t as strong as Europe believes. Commentary: Euro zone shouldn’t expect Germany to lead recovery.

CNBC:

• Detroit's next bankruptcy battle: Who foots the bill? (video)

Zero Hedge:

• Europe Fines 8 Banks €1.7 Billion For Rate Rigging In Largest Ever Cartel Penalty In History.

• ADP Soars To 215K Smashing Expectations, Prior Months Revised Higher Reviving Tapering Fears. (graph)

• US Retailer Hell In One Chart.

• Is Bob Shiller Right? Mortgage Applications Collapse Back To 5 Year Lows. (graph)

• ISM Services Miss (Lowest Since June) As Employment Plunges To 6-Month Lows. (graph)

• October New Home Sales Surge By Most Since 1980 As Median Price Drops To One Year Low. (graph)

• Stocks Displeased As Obama's Anti-Inequality Rant Brings Up End Of QE Concerns. (graph)

Business Insider:

• A Period Of Bitterly Cold Temperatures Not Seen In A Decade Is About To Hit Parts Of The US.

• HUGH HENDRY: Bitcoin Could Go To $1 Million And I Wish I Could Own It.

• Jim Chanos Is Shorting The Company Behind The Healthcare.gov Debacle.

• Obama's Approval Rating Dipped Into Dangerously Low Territory Yesterday.

• US Oil Imports Are Down 11% From Last Year.

CNN: 

• Average student loan debt: $29,400. Student loan debt continues to pile up on America's college graduates, topping an average $29,000 per student last year. The average debt load for the class of 2012 was $29,400 -- up more than 10% from the previous year, according to a report released Wednesday by the Institute for College Access & Success' Project on Student Debt.

Chicago Tribune:

• Deere(DE) expands share buyback plan by $8 billion.

Reuters:

• S&P Sees More Sovereign Downgrades Than Upgrades in '14. Sovereign rating downgrades may outnumber upgrades in 2014, citing S&P head of sovereign ratings for EMEA, Moritz Kraemer. 

• Libyan assembly votes to follow Islamic law. Libya's national assembly voted on Wednesday to make sharia, Islamic law, the basis of all legislation and for state institutions in a decision that may impact banking, criminal and financial laws. 

• Russia faces budget shortfalls, risks erasing oil savings - document. Russia will face huge fiscal shortfalls in the next two decades unless it cuts spending, and it could wipe out its oil savings in as little as three years, according to sources and a strategy document obtained by Reuters. Russia's funding gap could reach $300 billion between 2017-20, the Finance Ministry's budget strategy to 2030 shows. That is three times the current value of the Reserve Fund, a rainy-day fund of windfall energy revenues.

• California unions brace for showdown over pension reform. For California's public-sector unions, San Jose Mayor Chuck Reed's proposed statewide ballot measure for pension reform is a call to arms - and they're bringing out the big guns. 

• U.S. car buyers borrow more as rates fall and standards loosen. U.S. consumers buyers are taking out bigger car loans with longer pay-back periods as lenders offer lower interest rates and accept borrowers with weaker credit ratings, a report released on Wednesday showed. 

• Exclusive: U.S. plans new bank fraud cases in early 2014 - attorney general. The U.S. Justice Department plans to bring civil mortgage fraud cases against several financial institutions early in 2014, using as a template the case that ended last month in JPMorgan Chase & Co's (JPM.N) $13 billion settlement, U.S. Attorney General Eric Holder said on Wednesday. In an interview with Reuters, Holder would not say which companies or how many could face lawsuits but said the Justice Department was in contact with them and it was hard to say whether the talks would lead to settlements.

UPI:

• Markit warns France may slide back into recession. France, with Europe's second largest economy, is in danger of sliding back into recession, Markit Economics chief economist said Wednesday. While the composite index for businesses in the eurozone showed growth for the fifth consecutive month in November, the indexes for France and Italy showed continued contraction, the research firm reported. In France, the business index came to 48, putting the contraction there at a faster pace than Italy, where the index that uses 50 as a break-even point, came in at 48.8 for the month.

Financial Times:

• Visits to porn sites tracked by hundreds of companies.

BBC:

• Stolen Facebook(FB) and Yahoo(YHOO) passwords dumped online. More than two million stolen passwords used for sites such as Facebook, Google and Yahoo and other web services have been posted online.

Xinhua:

• Xi stresses adherence to Marxist philosophy. General Secretary of the Communist Party of China (CPC) Central Committee Xi Jinping has urged all Party members to learn Marxist philosophy to better understand the country's situation and help push forward all types work. Xi made the remarks on Tuesday at a group study of the Political Bureau of the CPC Central Committee, China's top leadership, on the basic theory and methodology of Karl Marx's historical materialism, according to a statement released on Wednesday. Historical materialism is a methodological approach to the study of society, economics and history. When presiding over the group study, Xi said Marxist philosophy, which has revealed the general rule of human society development, still has strong vitality and serves as powerful arms of thought for guiding communists to make progress.