Bull Radar

Style Outperformer:

• Mid-Cap Growth +.16%

Sector Outperformers:

• 1) Gold & Silver +1.18% 2) REITs +.28% 3) Defense +.23%
  

Stocks Rising on Unusual Volume:

• ICLD, TROX, CNC, ADBE, YRCW, NLSN, EA, CMLP and TROX

Stocks With Unusual Call Option Activity:

• 1) ADBE 2) APC 3) CYTR 4) RH 5) RGLD

Stocks With Most Positive News Mentions:

• 1) OPEN 2) QCOM 3) HON 4) ADBE 5) AAPL
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Friday Watch

Evening Headlines 
Bloomberg: 

• Aussie Dollar’s Longest Drop in 28 Years Driven by RBA Jawboning. The Australian dollar headed for its longest stretch of weekly losses since 1985, as the central bank head intensified his efforts to talk down the world’s fifth-most traded currency. Governor Glenn Stevens signaled a weaker Aussie is preferable over lower interest rates to help spur the nation’s slowing economy. The Aussie touched a more-than-three month low of 89.14 U.S. cents after Stevens said a level of 85 U.S. cents “would be closer to the mark than 95 cents,” in an interview published in the Australian Financial Review today. The governor last month put markets on notice, saying, while the benefits of intervention haven’t “so far” outweighed the costs, it “doesn’t mean we will always eschew” currency sales. 

• China Mobile Gives $919 Discount on Samsung and Sony 4G Handsets. China Mobile Ltd. (941) is offering early adopters of its new fourth-generation wireless service discounts of as much as $919 on eight smartphones from Samsung Electronics Co. (005930), Sony Corp. (6758), HTC Corp. (2498) and five local vendors. In a marketing blitz on billboards at bus stops and subway stations across Beijing, the Samsung, Sony and HTC devices are all prominently featured. Domestic vendors in China Mobile’s first wave of 4G handsets include ZTE Corp. (763), Huawei Technologies Co., and the Coolpad brand of China Wireless Technologies Ltd. 

• Yen Weakens to Five-Year Low as Most Asian Stocks Advance. The yen slumped to a five-year low while most Asian stocks rose as investors weighed prospects the Federal Reserve will reduce stimulus next week. Metals declined. The yen weakened 0.4 percent to 103.83 per dollar as of 1:45 p.m. in Tokyo and earlier touched 103.87, the lowest level since October 2008. The MSCI Asia Pacific Index of regional equities was little changed, after sliding as much as 0.7 percent to a three-month low.

• Copper Falls on Record China Output, Fed Tapering Speculation. Copper dropped for the first time in six days, paring a weekly gain, as record output in China spurred oversupply concerns and amid speculation on the timing of stimulus cuts by the U.S. Federal Reserve. The contract for delivery in three months on the London Metal Exchange fell as much as 0.4 percent to $7,195 a metric ton and traded at 7,209.50 at 9:59 a.m. in Shanghai. Today’s loss reduced this week’s gain to 1.2 percent. The metal is down 9.1 percent this year. 

• Rebar Set for First Weekly Loss in Four as Production Costs Fall. Steel reinforcement-bar futures in Shanghai headed for the first weekly loss in four, as steel production costs declined on lower prices of raw materials. Rebar for May delivery, the most-active contract on the Shanghai Futures Exchange, fell by as much as 1.2 percent to 3,684 yuan ($607) a metric ton, before trading at 3,690 yuan at 10:15 a.m. local time. The contract lost 0.3 percent this week.

• U.K. Housing Market Seen at Risk of Overheating. Bank of England Governor Mark Carney may be struggling to prevent Britain’s housing market from reaching what he calls “warp speed.” About two-thirds of 27 economists in a Bloomberg News survey said property in the U.K. is at risk of overheating. The survey, published today, also showed that the outlook for the economy has improved, with forecasts for growth this quarter raised to 0.7 percent from 0.6 percent last month. 

• Traders Losing $1 Million Build EU Case for Bitcoin Regulation. Trading Bitcoins could bleed you dry, the European Union’s top banking regulator said as it weighs whether to regulate virtual currencies. 

• Keystone Backed in Poll by 56% of Americans as Energy Security. More Americans view the Keystone XL oil pipeline as a benefit to U.S. energy security than as an environmental risk, even as they say Canada should do more to reduce greenhouse gases in exchange for approval of the project. A Bloomberg National Poll shows support for the $5.4 billion link between Alberta’s oil sands and U.S. Gulf Coast refineries remains strong, with 56 percent of respondents viewing it as a chance to reduce dependence on oil imports from less reliable trading partners. That compares with the 35 percent who say they see it more as a potential source of damaging oil spills and harmful greenhouse gas emissions.

• Cisco(CSCO) Cuts Sales Forecast as Emerging Market Sales Stall. Cisco Systems Inc. (CSCO), the biggest maker of computer-networking equipment, reduced its revenue forecast for the next three to five years amid weaker demand from emerging markets and telecommunications-service providers. The company expects average sales growth of 3 percent to 6 percent in the coming years, Chief Financial Officer Frank Calderoni said today at a meeting with analysts in New York. That’s lower than an earlier projection for sales to rise 5 percent to 7 percent, which the company repeated last month. Cisco is facing reduced spending by phone companies and corporations, as well as slower economic expansion in Europe, Asia and emerging countries.

• Google(GOOG) Said to Mull Designing Chips in Threat to Intel(INTC). Google Inc. (GOOG) is considering designing its own server processors using technology from ARM Holdings Plc (ARM), said a person with knowledge of the matter, a move that could threaten Intel Corp. (INTC)’s market dominance. 

• Anadarko’s(APC) Kerr-McGee Held Liable by Judge in Tronox Spinoff. Anadarko Petroleum Corp. and its Kerr-McGee unit acted improperly in the 2005 spinoff of Tronox Inc. and may have to pay as much as $14 billion related to environmental cleanup and health claims, a judge ruled. Anadarko shares plunged on the decision, in which the judge weighed how much money can be recovered from a successor to a polluting company, even after bankruptcy has ostensibly cleaned the slate of obligations.

Wall Street Journal: 

• In China, Western Companies Cut Jobs as Growth Ebbs. Recruiting and Consulting Firms Feel Squeeze From Pullbacks. After years of rapid expansion in China, some Western companies are shedding jobs as the world's second-largest economy grows at its lowest rate in more than 20 years. Hewlett-Packard Co. says it is laying off a small percentage of its workforce in China, which the company calls one of its most important markets. Johnson & Johnson is cutting its pharmaceutical sales force by an undisclosed amount, people close to the company say.

• IRS Targeting: Round Two. The first time around, targeting conservatives was a secret. Now, not so much. President Obama keeps claiming that he had no knowledge of the Internal Revenue Service's abusive muzzling of conservative groups. That line is hard to swallow given that his Treasury and IRS are back at it—this time in broad daylight.

Barron's: 

• Restoration Hardware(RH) Plunges 13% in After Hours as Co-CEO Exit Trumps Earnings Beat.

Fox News:

• House overwhelmingly approves two-year budget plan on a bipartisan vote. The House approved a two-year spending plan on Thursday evening, in a strong bipartisan vote that underscored the desire by many lawmakers to avoid a repeat of the October budget showdown. The bill was approved 332-94, over the objections of conservatives concerned it would increase spending in the short-term and liberals concerned it would not extend long-term jobless aid.

 CNBC:

• Going, going ... a number of tax deductions set to expire. Ready for year-end tax planning? In between holiday parties and last-minute shopping, it's worth making sure that you are minimizing your 2013 tax bill. It's almost always wise to maximize your deductions, prune losers from your portfolio and fill your retirement accounts as much as the rules allow. 

• As wealthy cinch the purse, holiday spending slides: Survey. The survey of 800 people nationwide (with a margin of error of 3.5 percent) predicts a sharp, 9.4 percent drop in holiday spending this year compared with actual outlays a year ago as measured by the National Retail Federation. Americans plan to spend just $681 this holiday season, about on par with 2009, when the nation was clawing its way out of a deep financial crisis.

Zero Hedge: 

• Charts Of The Day: Good, Bad, & Ugly.

• How The "QE Economy" Works (And Why It Doesn't) In One Giant Flowchart.

• "Despicable Human Scum" Uncle Of Kim Jong-Un Executed For "Attempting To Overthrow The State".

• "It's Not Too Late To Change Our Future, But Eventually It Will Be". (graph)

• "Defying Gravity" - Counting Down To Japan's D-Day In Two Charts.

• If You Don’t Trust the Fed, Here’s An Inside View That Confirms Your Worst Suspicions.

• The IMF Wants You To Pay 71% Income Tax.

Business Insider: 

• Harry Reid Vows To Confirm 'Every One' Of Obama's Nominees, And The GOP Can't Do Anything To Stop Him. 

• Obama's Big Lie About ObamaCare is Politifact's 'Lie Of The Year'. President Obama's repeated insistence that people could keep their healthcare plans once Obamacare kicked in was named Politifact's "Lie of the Year".

• 15 People Going To A Wedding In Yemen Killed By US Drone Strike.

• Identity Theft Now Costs Far More Than All Other Property Crimes COMBINED.

Washington Post: 

• U.S. may be open to Islamists joining Syrian rebel coalition. The Obama administration is willing to consider supporting an expanded Syrian rebel coalition that would include Islamist groups, provided the groups are not allied with al-Qaeda and agree to support upcoming peace talks in Geneva, a senior U.S. official said Thursday. In addition, the official said, the Americans would like the Islamic Front groups to return U.S. vehicles, communications gear and other non-lethal equipment they seized last weekend from warehouses at the Syria-Turkey border.

LA Times:

• Many who enrolled in health plans still await confirmation. Anxiety grows as health plan delays could leave some customers without a policy by Jan. 1. Thousands of Californians have overcome long waits and website glitches to sign up for Obamacare insurance, but now enrollment snags may prevent some of them from actually having coverage starting Jan. 1.

Reuters: 

• United Technologies(UTX) gives muted view for 2014. United Technologies Corp, the world's largest maker of elevators and air conditioners, on Thursday projected earnings to rise 7 percent to 11 percent next year, barely meeting analysts' targets, and gave a revenue view that fell short of Wall Street expectations. 

• China official says has "substantial" evidence in Qualcomm antitrust case - media. China's top economic planning agency has "substantial evidence" against chipmaker Qualcomm Inc in an antitrust probe, state media on Thursday quoted a senior official at the price regulator as saying. 

• U.S.-based stock mutual funds post $6.5 bln outflow, biggest of year -Lipper.

• Adobe's(ADBE) Creative Cloud subscriber growth impresses investors. Adobe Systems Inc, the maker of Photoshop and Acrobat software, forecast current-quarter results below analysts' estimates but reported a 22 percent jump in the number of subscribers to its Creative Cloud suite from the preceding quarter. The company's shares rose about 8 percent after initially falling 5 percent in extended trading.

Economic Information Daily:

• China may keep a "proactive" fiscal policy and "prudent" monetary policy next year and rely on "fine-tuning," citing Gao Peiyong, head of the National Academy of Economic Strategy under the Chinese Academy of Social Sciences.

China Securities Journal:

• PBOC Official Warns on 'Keynesian Stimulus'. Governments shouldn't overuse "Keynesian stimulus" measures to deal with the global deleveraging, Yao Yudong, an official with the Monetary Policy Department of the People's Bank of China wrote.

Evening Recommendations

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 130.0 +1.0 basis point.

• Asia Pacific Sovereign CDS Index 101.50 -1.5 basis points. 

• FTSE-100 futures +.13%.

• S&P 500 futures +.23%.

• NASDAQ 100 futures +.26%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note

Economic Releases
 8:30 am EST

• The Producer Price Index for November is estimated unch. versus a -.2% decline in October. 

• The PPI Ex Food and Energy for November is estimated to rise +.1% versus a +.2% gain in October.

Upcoming Splits

• None of note

Other Potential Market Movers

• The China FDI report, (SMG) Investor Day, (LSTR) Mid-Quarter Update and the (CNC) Investor Meeting could also impact trading today.

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

Stocks Lower into Final Hour on Fed Taper Fears, Earnings Worries, Rising Long-Term Rates, Tech/Retail Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 15.41 -.06%

• Euro/Yen Carry Return Index 148.07 +.55%

• Emerging Markets Currency Volatility(VXY) 9.14 +.77%

• S&P 500 Implied Correlation 51.94 -1.22%

• ISE Sentiment Index 146.0 +5.04%

• Total Put/Call .69 -28.12%

• NYSE Arms .74 -50.53% 

Credit Investor Angst:

• North American Investment Grade CDS Index 69.97 -.40%

• European Financial Sector CDS Index 98.21 +3.24%

• Western Europe Sovereign Debt CDS Index 56.17 +.31%

• Emerging Market CDS Index 275.91 -2.39%

• 2-Year Swap Spread 10.0 unch.

• TED Spread 17.75 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap .75 +.25 basis point

Economic Gauges:

• 3-Month T-Bill Yield .07% unch.

• Yield Curve 256.0 +3.0 basis points

• China Import Iron Ore Spot $137.90/Metric Tonne -.86%
  

• Citi US Economic Surprise Index 31.70 -2.4 points

• Citi Emerging Markets Economic Surprise Index -15.10 -1.2 points

• 10-Year TIPS Spread 2.14 unch.

Overseas Futures:

• Nikkei Futures: Indicating +280 open in Japan

• DAX Futures: Indicating -3 open in Germany

Portfolio: 

• Slightly Lower: On losses in my retail  sector longs and index hedges

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

• Market Exposure: 25% Net Long

Today's Headlines

Bloomberg: 

• Peugeot Plunges After Announcing $1.5 Billion Currency Hit. PSA Peugeot Citroen fell as much as 11 percent after saying 2013 profit will take a 1.1 billion-euro ($1.5 billion) hit from currency swings and savings from a General Motors Co. alliance will be less than planned. The partnership’s annual cost reductions will only reach $1.2 billion in 2018, 40 percent less than originally announced and two years later than targeted, they said. The two dropped plans to cooperate on subcompact vehicles.

• Putin Says Russia’s Economic Slowdown Caused by Domestic Factors. Russian President Vladimir Putin said that his country’s economic slowdown is being caused by domestic reasons rather than a spillover from a global downturn. “Of course we are experiencing the consequences of the global crisis, but we have to say openly: the main reasons for the slowdown aren’t external but domestic,” Putin said today in Moscow in his annual state of the nation speech.

• European Bonds Fall on Praet Comments Amid Fed Taper Speculation. European government bonds fell, led by Spain and Italy, after European Central Bank policy maker Peter Praet said the region’s banks may reduce purchases of sovereign debt to lower their risk profile. Spanish five-year yields climbed the most in five weeks.

• European Stocks Fall Amid U.S. Sales, Job-Claims Reports. European stocks fell to a two-month low as investors weighed U.S. retail-sales and jobless-claims data to gauge whether the Federal Reserve will decide next week to pare stimulus. John Wood Group Plc plunged the most since July 2011 after saying 2014 earnings before interest, taxes and amortization at its engineering unit may drop by about 15 percent. PSA Peugeot Citroen tumbled 7.6 percent after disclosing a charge of about 1.1 billion euros ($1.5 billion) in its auto operations and cutting its savings estimate from a partnership with General Motors Co. Ziggo NV surged to a record after Liberty Global Plc revived talks to acquire the company. The Stoxx Europe 600 Index dropped 1 percent to 310.24 at the close, for its lowest level since Oct. 9.

• Treasury Five-Year Yields Climb as Retail Sales Exceed Estimates. U.S. five-year note yields reached the highest level in almost three months as Treasures declined after data showed retail sales rose more than forecast in November, adding to bets the Federal Reserve will soon reduce bond buying amid an improving economy.

• Aluminum Leads Drop in Metals on U.S. Budget, Stimulus Outlook. Aluminum prices in London fell for the first time in a week, pacing losses among industrial metals, amid prospects for a U.S. budget accord and speculation that the Federal Reserve will scale back monetary stimulus. “That’s a very big deal for base metals because these markets have been inflated artificially by the Fed printing money,” Fain Shaffer, the president of Infinity Trading Corp. in Indianapolis, said in a telephone interview. Aluminum for delivery in three months dropped 1.4 percent to $1,791 a metric ton at 5:51 p.m. on the London Metal Exchange. The price rose in the previous four sessions, the longest rally in 10 weeks. Tin, lead and nickel also dropped.

• Gold Falls Most in 10 Weeks on Fed Stimulus Outlook; Silver Sags. Gold capped the biggest drop in 10 weeks in New York amid concern that the Federal Reserve will reduce its bond buying as U.S. lawmakers reached a budget agreement. Silver and palladium also tumbled. A two-year U.S. budget accord is on track to win passage in Congress. American retail sales in November climbed 0.7 percent in November, the most since June, government figures showed today. The Fed may begin cutting stimulus at its Dec. 17-18 meeting, according to 34 percent of economists surveyed Dec. 6 by Bloomberg, up from 17 percent on Nov. 8.

• VIX Trader Buys $5.1 Million in Call Options to Bet on 50% Rally. An investor bought $5.12 million in call options that will be profitable if the Chicago Board Options Exchange Volatility Index (VIX) jumps at least 50 percent in the next four months. The trader purchased 40,000 April calls on the VIX with a strike price of 22 for $1.28 each, according to Trade Alert LLC. The bullish volatility bet was the biggest single block of options to change hands on U.S. exchanges, the research firm said. It accounted for about 9 percent of VIX trading, data compiled by Bloomberg show.

• BlackRock’s(BLK) Fink Says Limits on Bank Leverage May Go Too Far. BlackRock Inc. (BLK:US) Chief Executive Officer Laurence D. Fink said limits on risk-taking by banks may go too far and undermine efforts by the Federal Reserve to boost the economy. “I am alarmed right now it may have unintended consequences,” Fink said today during a webcast organized by BlackRock. “There’s a possibility we’re going to be going too far with leverage ratios.”

Wall Street Journal: 

• House Budget Vote Nears as Tensions Rise. Move Comes as Boehner Escalates Attack on Conservative Groups. The House was set to vote later Thursday on a two-year budget deal, as opposition in both parties appeared to fall short of threatening passage and Speaker John Boehner doubled down on his criticism of outside conservative groups.

• Mexico Congress Passes Historic Energy Bill. Mexico's Congress voted amid fistfights and shouts of "treason" to end the 75-year monopoly of the state-owned oil firm Petróleos Mexicanos. The landmark bill aims to open the door for foreign oil giants to return to one of the world's biggest energy markets for the first time since 1938.

• EU Plan Has Creditors Taking Bigger Hit for Failed Banks. Deal Reached That Aims to Reduce Cost to Taxpayers in Case of a Bailout. The European Union has agreed on a plan that aims to slash the costs to taxpayers of bank bailouts by putting bondholders—and in extreme cases, depositors—on the line when banks fail.

CNBC:

• Dems only 'going to ask for more': GOP's Huelskamp. (video)

• How unemployment benefits destroy jobs. 

• Oklahoma's big bet on commercial drones. Oklahoma is positioning itself as one of the future hubs of the budding U.S. commercial drone industry.

• More borrowers will struggle to pay off home equity loans.

ZeroHedge:

• "Something Has Changed" In Overnight Trading As Futures No Longer Track EURJPY Ramps.

• Initial Claims Spike Most Since Sandy To Worst In 9 Months. (graph)

• November Retail Sales Beat Modest Expectations Despite Another Decline In Clothing Sales. (graph)

• South Carolina Is About To Pass A Bill To Nullify Obamacare.

• World's Largest Hedge Fund Uses Twitter For Real-Time Economic Modeling.

• Citi Unveils The 12 Charts Of Christmas.

Chicago Tribune:

• Carriers, FCC near deal to make it easier to unlock cell phones. U.S. wireless carriers are hammering out the final details of a deal with the Federal Communications Commission to adopt new policies to make it easier for consumers to "unlock" their mobile phones for use on a competitor's network. The agreement, expected soon, would ensure that providers notify customers about the eligibility of their  unlocking -- by text message, for example -- and could also cover some pre-paid phones, industry sources say. The deal would also require carriers to process or deny unlocking requests within two business days, according to FCC's earlier guidance.

engadget:

• Google(GOOG) brings flight, hotel and restaurant reservations to Maps for iOS. Search for your restaurant, departing airport or hotel, and the application will auto-populate with your plans -- so long as the confirmations were sent to your linked Gmail account.

Reuters: 

• Cisco(CSCO) cuts long-term revenue growth target to 3-6 pct. Cisco Systems Inc on Thursday cut its longer-term revenue growth target to a range of 3 percent to 6 percent per year from its previous range of 5 percent to 7 percent. Chief Financial Officer Frank Calderoni cited macro-economic pressure in emerging markets, conservative customer budgets and service provider market dynamics for the change.

• Aetna(AET) will not reinstate individual insurance plans -CEO. Aetna Inc's CEO said on Thursday that the time frame is too short for the U.S. health insurer to go through the regulatory processes it needs to reinstate or extend canceled health plans and that it will not be doing so. 

• Lululemon(LULU) warns on fourth-quarter sales, cuts outlook, sending shares lower. Lululemon Athletica Inc warned on Thursday that fewer customers visiting its stores and ongoing supply chain issues are hitting sales in the crucial fourth quarter, news that sent shares of the trendy Canadian yogawear chain tumbling.

Financial Times:

• Hedge funds drop fees to win big investors.

• German probe into gold and silver market rigging. Germany’s financial regulator has demanded documents from Deutsche Bank(DB) as part of an investigation into potential manipulation of gold and silver prices. The probe from the German watchdog comes as regulators around the world step up their scrutiny of benchmarks after the recent Libor interbank lending scandal led to hefty fines for banks.

Telegraph:

• Dismantle the euro, says Nobel-winning economist who once backed currency union. A leading economist who once argued for the creation of the euro now claims the single currency should be abandoned as it is fuelling unemployment and dividing Europe. 

• Surprise fall in eurozone industrial output. Worst industrial output figures since height of eurozone crisis show economy is struggling to regain momentum.

Digitimes:

• AMD(AMD) slashes desktop CPU prices. AMD has implemented comprehensive price cuts for its desktop processors, including FM2 socket A4 5300/4000 CPUs, sold in China and North America to counter Intel's(INTC) reduced-priced Pentium and Celeron models, according to industry sources. The price cuts, which range up to 30% for some models, are also being implemented to usher in AMD's next-generation Kaveri APUs slated for release in January 2014, the sources indicated.

Bear Radar

Style Underperformer:

• Large-Cap Value -.35%

Sector Underperformers:

• 1) Networking -1.84% 2) Coal -1.38% 3) Hospitals -1.21%

Stocks Falling on Unusual Volume:

• TAM, PF, SEAS, LULU, AFSI, PUK, ATHN, CIEN, DAR, AWAY, MORN, PDH, SUNE, BTI, POST, GWW, NDSN, COO, BPI, TECD, SYY, DGX, BNNY, ASML, MGA, NRF, BNNY, HMSY and PRGS

Stocks With Unusual Put Option Activity:

• 1) BSX 2) CIEN 3) JDSU 4) RHT 5) TRLA
  

Stocks With Most Negative News Mentions:

• 1) WYNN 2) TER 3) IWM 4) FIO 5) ORCL
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value +.16%

Sector Outperformers:

• 1) Airlines +1.29% 2) Biotech +1.19% 3) Oil Service +.65%
  

Stocks Rising on Unusual Volume:

• UNS, SRPT, EJ, XLS, ZLC, LUV and FB

Stocks With Unusual Call Option Activity:

• 1) BSX 2) SUNE 3) BEAM 4) WMB 5) CIEN

Stocks With Most Positive News Mentions:

• 1) LULU 2) HOV 3) WMT 4) BX 5) YHOO
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume