Stocks Surging into Afternoon on Diminished Fed Taper Fears, Yen Weakness, Less Emerging Markets Debt Angst, Homebuilding/Financial Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 13.89 -7.89%

• Euro/Yen Carry Return Index 146.91 +1.28%

• Emerging Markets Currency Volatility(VXY) 9.20 unch.

• S&P 500 Implied Correlation 50.68 -3.89%

• ISE Sentiment Index 210.0 +61.54%

• Total Put/Call .90 +16.88%

• NYSE Arms .80 -26.70% 

Credit Investor Angst:

• North American Investment Grade CDS Index 69.30 -4.31%

• European Financial Sector CDS Index 100.84 -1.57%

• Western Europe Sovereign Debt CDS Index 64.0 +6.67%

• Emerging Market CDS Index 291.25 -2.68%

• 2-Year Swap Spread 8.75 -.25 basis point

• TED Spread 18.50 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap .75 +1.75 basis points

Economic Gauges:

• 3-Month T-Bill Yield .06% +1 basis point

• Yield Curve 256.0 -1 basis point

• China Import Iron Ore Spot $139.20/Metric Tonne -.22%
  

• Citi US Economic Surprise Index 32.50 +16.0 points

• Citi Emerging Markets Economic Surprise Index -13.70 +.1 point

• 10-Year TIPS Spread 2.12 -1 basis point

Overseas Futures:

• Nikkei Futures: Indicating +290 open in Japan

• DAX Futures: Indicating +5 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech/biotech/medical sector longs

• Disclosed Trades: Covered some of my (IWM), (QQQ) hedges and some of my (EEM) short

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth +.42%

Sector Underperformers:

• 1) Retail -.91% 2) Oil Tankers -.78% 3) Coal -.45%

Stocks Falling on Unusual Volume:

• GMLP, ULTA, RALY, NDLS, BIG, FIVE, SEAC, COO, PFPT, BKS, OSIS, BITA, UBNT, CEQP, AEO, NOG, IDT, FLT, NGL, YOKU, GTLS, GPS, BCO, FDO, CUB and FSS

Stocks With Unusual Put Option Activity:

• 1) FOX 2) BKS 3) AEO 4) ISRG 5) CHRW
  

Stocks With Most Negative News Mentions:

• 1) BKS 2) GPS 3) BG 4) LULU 5) FANG
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value +.98%

Sector Outperformers:

• 1) Homebuilders +2.16% 2) Computer Hardware +1.55% 3) Construction +1.23%
  

Stocks Rising on Unusual Volume:

• AGX, XXIA, ROC, CONN, LL, UIS, ANAC and EA

Stocks With Unusual Call Option Activity:

• 1) EPI 2) JDSU 3) DAN 4) KMX 5) SWHC

Stocks With Most Positive News Mentions:

• 1) SHLD 2) AAPL 3) NOC 4) INTC 5) LNKD
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Friday Watch

Evening Headlines 
Bloomberg: 

• Kuroda $235,000 Salary Highlights Goldman Concern. The central bank chief’s pay is about 24 million yen ($235,000) for the year ending March 31, down from an inflation-adjusted 39 million yen in fiscal 1998, based on a BOJ statement on Nov. 29. Swaps signal an average inflation rate of 1.2 percent over the coming five years, compared with 2.03 percent in the U.S. and 1.38 percent in the euro zone. Japan’s cost of living rose in October by the most in five years even as salaries extended declines from June 2012, threatening to derail Prime Minister Shinzo Abe’s efforts to sustain a recovery in the world’s third-largest economy.

• Japan Economy Chief Amari Faces Surgery With Reforms Undone. Japan’s economy chief will undergo surgery for cancer as soon as next week, casting a cloud over the future of a politician charged with crafting plans to revamp industrial regulation and liberalize trade rules. Akira Amari, 64, told reporters in Tokyo yesterday that he has been diagnosed with an early stage of tongue cancer, and submitted his resignation only to see Prime Minister Shinzo Abe reject it. Amari has served as Abe’s point man for the growth-strategy pillar of the government’s campaign to end two decades of economic stagnation. 

• China Reforms Seen Adding Less Than Half Point to Growth. China’s broadest economic reforms since the 1990s will add less than half a percentage point to annual growth this decade, a survey showed, underscoring the likelihood of a cut in the nation’s expansion target. Fourteen of 19 economists see policies from a Communist Party summit last month boosting gross domestic product either by a negligible amount or less than 0.5 percent a year compared with their previous outlook, according to the Bloomberg News survey.

• China Swap Rate Rises Most This Week Since June as Cash Drained. China’s interest-rate swaps rose the most since June this week as the central bank drained funds from the banking system, and on speculation the government will speed up the process of relaxing controls on borrowing costs. The People’s Bank of China withdrew a net 47 billion yuan ($7.7 billion) this week, after injecting 17 billion yuan last week. It suspended sales of 14-day reverse-repurchase agreements yesterday after conducting the operation for two weeks. The PBOC said in a Dec. 2 statement that financial institutions in a free trade zone in Shanghai will get priority in issuing large-denomination negotiable certificates of deposit. The one-year interest-rate swap, the fixed payment needed to receive the floating seven-day repo rate, climbed 26 basis points, or 0.26 percentage point, this week to 4.78 percent as of 10:36 a.m. in Shanghai, data compiled by Bloomberg show. That’s the biggest increase since June 21. It advanced one basis point today. The cost of the five-year swap rose to a record 4.94 percent.

• China’s Stocks Fall Most in Three Weeks as Coal Shares Decline. China’s stocks fell the most in three weeks, led by coal and financial shares, as money-market rates climbed before trade data. Environmental-protection stocks rose as record-high levels of pollution in Shanghai forced health warnings and cancelled flights. China Shenhua Energy Co., the biggest coal producer, slid the most in six weeks. Citic Securities Co. and Haitong Securities Co., the two largest brokerages, sank more than 3 percent after rallying earlier this week on regulators’ plan to resume initial public offerings. Fujian Longking Co., which makes pollution control equipment, rallied 2.1 percent. The Shanghai Composite Index (SHCOMP) slipped 0.6 percent to 2,233.30 at the 11:30 a.m. break, heading for the biggest loss since Nov. 13 and paring this week’s gain to 0.6 percent.

• Asian Stock Swing From Gains to Losses on Fed Stimulus. Asian stocks swung between gains and losses, with the regional benchmark index set for its biggest weekly drop since August, as improving U.S. economic data fueled speculation the Federal Reserve may bring forward stimulus cuts. Qantas Airways Ltd. dropped 1.2 percent, adding to yesterday’s 11 percent drop, after Standard & Poor’s cut its credit rating on Australia’s largest carrier to junk status. Nufarm Ltd. slid 1.1 percent in Sydney after Credit Suisse Group AG cut its rating on the supplier of farm chemicals. Advantest Corp. jumped 6.3 percent on a newspaper report that cost cuts by the Japanese maker of semiconductor equipment helped reduce its break-even point. The MSCI Asia Pacific Index added 0.1 percent to 139.69 as of 11 a.m. in Tokyo, after falling 0.1 percent.

• Rubber Pares Weekly Gain as Strong Yen, Tapering Bets Cut Appeal. Rubber pared a second weekly advance on speculation that improving U.S. economic data may bring forward stimulus cuts while a strengthening Japanese currency reduced the appeal of yen-based contracts. Futures for delivery in May on the Tokyo Commodity Exchange lost as much as 1.4 percent to 270.5 yen a kilogram ($2,656 a metric ton) before trading at 273.4 yen at 11:20 a.m. local time. 

• China Rebar Heads for Third Weekly Gain as Iron Ore Cost Rises. Steel reinforcement-bar futures in Shanghai headed for a third weekly advance after iron ore prices rallied to the highest in almost four months. Rebar for May delivery, the most-active contract on the Shanghai Futures Exchange, traded little changed at 3,691 yuan ($606) a metric ton at 10:41 a.m. local time.

• German Wage Accord Seen Risking Job Cuts That Foil Aims. Germany’s nationwide minimum wage to be introduced by Chancellor Angela Merkel’s third-term coalition risks killing jobs while failing to narrow income inequality, German economists say. The 8.50 euro ($11.55) per hour wage floor set in her governing pact with the Social Democrats “would not even out inequalities in the disposable incomes of private households or significantly reduce poverty,” according to the Berlin-based DIW economic institute. A potential increase in unemployment will depend on exceptions to the general rule, it said.

• Two Regional Fed Presidents Call for Timetable for Tapering QE. Two Federal Reserve regional bank presidents who have disagreed on the need for additional easing said any decision to taper bond buying should be accompanied by a limit on the size of the program or a timetable for ending it. “If and when the FOMC arrives at a decision to wind down asset purchases, it’s my view that it will be helpful to the transition process to provide as much certainty as possible about how this will be done,” said Atlanta Fed President Dennis Lockhart, referring to the Federal Open Market Committee, in a speech in Fort Lauderdale, Florida. He has backed record stimulus and won’t vote on policy until 2015. 

• Citi(C), Wells Fargo(WFC) Sued by L.A. for Discriminatory Lending. Citigroup Inc. and Wells Fargo & Co. were accused of discriminatory mortgage lending by the city of Los Angeles, which seeks damages for reduced property tax revenue and the costs of maintaining foreclosed properties. The city filed complaints against both banks today in federal court in Los Angeles. Citigroup and Wells Fargo have been engaged in discriminatory lending to minority borrowers since at least 2004, which placed the borrowers in loans they couldn’t afford and caused a high number of foreclosures in minority neighborhoods, Los Angeles said.

Wall Street Journal: 

• Nelson Mandela Dies at 95. Nelson Mandela, who rose from militant antiapartheid activist to become the unifying president of a democratic South Africa and a global symbol of racial reconciliation, died at his Johannesburg home following a lengthy stay at a Pretoria hospital, the government said Thursday. He was 95. In a state television address, President Jacob Zuma said Mr. Mandela had died that evening after a long illness. "Our nation has lost its greatest son. Our people have lost a father," said Mr. Zuma, dressed in a dark jacket and reading his statement in deep somber tones. "Although we knew that this day would come, nothing can diminish our sense of a profound and enduring loss."

• Nelson Mandela, Symbol of Racial Reconciliation: Streaming Coverage.

• SEC Official Sounds Alarm on Decline in ‘Material Weaknesses’. Public companies are disclosing fewer missteps in their internal controls over financial reporting. But it could be that they just aren't looking hard enough, a securities regulator said on Thursday.

• Volcker Rule to Require CEOs Guarantee Compliance. Decision Marks Latest Setback for Wall Street Firms. The Volcker rule will require bank executives to guarantee their firms are in compliance with the regulation, said people familiar with the rule, another setback for Wall Street firms that lobbied against such a requirement. The inclusion of so-called CEO attestation is intended to help increase accountability at firms by ensuring that top executives know what types of trades are occurring at their firms, these people said.

Barron's: 

• After the Bell: Cooper(COO), Ulta(ULTA), Big Lots(BIG) Plunge As Earnings Disappoint. 

MarketWatch.com:

• Goldman Sachs(GS) most affected by Volcker rule: analyst.

Zero Hedge: 

• Stocks Tank 5 Days-In-A-Row As 52-Week Lows Reach 3-Month High. (graph)

• Kyle Bass Warns When "Everyone Is 'Beggaring Thy Neighbor'... There Will Be Consequences".

• JCP Slides After Hours After Announcing An SEC Inquiry Into Its Follow On Equity Offering.

• Asymmetrical Bubbles.

• GMO's James Montier Skewers Bridgewater: Risk Parity = "Snake Oil In New Bottles".

Commentary:

• The Three Failed Promises of ObamaCare.

Passauer Neue Presse:

• Schaeuble Says Interest Rates Too Low for Germany. Interest rates are too low for Germany over the long term, citing German Finance Minister Wolfgang Schaeuble as saying in an interview. Sees too much liquidity in global markets.

Yonhap News:

• N. Korea seen expanding activity in Yongbyon nuclear site. North Korea seems to be notably expanding activities at its main nuclear complex in Yongbyon, a U.S. think tank said Thursday, based on analysis of new satellite imagery. The revelation adds to worries that the communist nation may be turning back to a provocation cycle after months of unanswered peace overtures towards Washington.

Kyodo:

• Japan DPJ Considers No-Confidence Motion Against Cabinet. The opposition Democratic Party of Japan is considering submitting a no-confidence motion against Prime Minister Shinzo Abe's Cabinet to the lower house of parliament.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.50% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 137.0 +2.5 basis points.

• Asia Pacific Sovereign CDS Index 110.0 -1.0 basis point. 

• FTSE-100 futures +.16%.

• S&P 500 futures +.21%.

• NASDAQ 100 futures +.14%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AEO)/.18

• (GCO)/1.38

Economic Releases
8:30 am EST

• The Change in Non-Farm Payrolls for November is estimated to drop to 185K versus 204K in October.

• The Unemployment Rate for November is estimated at 7.2% versus 7.3% in October.

• Average Hourly Earnings for November is estimated to rise +.2% versus a +.1% gain in October.

• Personal Income for October is estimated to rise +.3% versus a +.5% gain in September.

• Personal Spending for October is estimated to rise +.2% versus a +/2% gain in September.

• The PCE Core for October is estimated to rise +.1% versus a +.1% gain in September.

  9:55 am EST

• Preliminary Univ. of Mich. Consumer Confidence for December is estimated to rise to 76.0 versus 75.1 in November.

3:00 pm EST

• Consumer Credit for October is estimated at $14.55B versus $13.737B in September.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Evans speaking, Fed's Plosser speaking, German Factory Orders report, (ITW) annual meeting and the (ADT) investor day could also impact trading today.

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

Stocks Falling into Final Hour on Fed Taper Fears, Yen Strength, Profit-Taking, Financial/Healthcare 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) 15.30 +4.08%

• Euro/Yen Carry Return Index 145.07 unch.

• Emerging Markets Currency Volatility(VXY) 9.20 +.46%

• S&P 500 Implied Correlation 52.90 -2.74%

• ISE Sentiment Index 139.0 +15.83%

• Total Put/Call .77 -12.60%

• NYSE Arms 1.05 +74.74% 

Credit Investor Angst:

• North American Investment Grade CDS Index 72.10 +1.89%

• European Financial Sector CDS Index 102.62 +3.09%

• Western Europe Sovereign Debt CDS Index 60.0 -2.65%

• Emerging Market CDS Index 299.27 -1.98%

• 2-Year Swap Spread 9.0 -.75 basis point

• TED Spread 19.0 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -1.0 +1.75 basis points

Economic Gauges:

• 3-Month T-Bill Yield .05% unch.

• Yield Curve 257.0 +2 basis points

• China Import Iron Ore Spot $139.50/Metric Tonne -.14%
  

• Citi US Economic Surprise Index 16.50 +11.2 points

• Citi Emerging Markets Economic Surprise Index -13.80 -1.6 points

• 10-Year TIPS Spread 2.13 unch.

Overseas Futures:

• Nikkei Futures: Indicating -57 open in Japan

• DAX Futures: Indicating -3 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech sector longs and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long

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.