Stocks Finish Substantially Higher on Central Bank Hopes, Buyout Speculation, Short-Covering, Biotech/Financial Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Slightly Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 17.09 -9.29%

• Euro/Yen Carry Return Index 137.48 +.17%

• Emerging Markets Currency Volatility(VXY) 10.47 -.66%

• S&P 500 Implied Correlation 54.87 -3.19%

• ISE Sentiment Index 95.0 +6.74%

• Total Put/Call 1.0 +13.64%

• NYSE Arms .38 -68.26% 

Credit Investor Angst:

• North American Investment Grade CDS Index 81.90 -1.34%

• America Energy Sector High-Yield CDS Index 1,242.0 +.69%

• European Financial Sector CDS Index 69.17 -1.54%

• Western Europe Sovereign Debt CDS Index 19.96 -.80%

• Asia Pacific Sovereign Debt CDS Index 68.13 -2.63%

• Emerging Market CDS Index 317.35 -1.92%
  

• iBoxx Offshore RMB China Corporate High Yield Index 123.98 +.12%

• 2-Year Swap Spread 8.0 -1.25 basis points

• TED Spread 23.25 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -44.75 -2.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 70.59 +.09%
• 3-Month T-Bill Yield .12% unch.

• Yield Curve 139.0 -3.0 basis points

• China Import Iron Ore Spot $46.35/Metric Tonne +1.69%

• Citi US Economic Surprise Index -9.0 -6.2 points

• Citi Eurozone Economic Surprise Index 25.0 -1.5 points

• Citi Emerging Markets Economic Surprise Index 1.4 +.4 point

• 10-Year TIPS Spread 1.59 +3.0 basis points
• # of Months to 1st Fed Rate Hike(Morgan Stanley) 2.92 +.13

Overseas Futures:

• Nikkei 225 Futures: Indicating +326 open in Japan 
• China A50 Futures: Indicating -50 open in China

• DAX Futures: Indicating +78 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg: 

• Terrorists Likely Planned Another Attack, Paris Prosecutor Says. Terrorists had likely planned another attack, Paris prosecutor Francois Molins said, citing findings from a predawn police raid in a Paris suburb that led to the deaths of at least two extremists and seven arrests. In the seven-hour assault that began at 4:30 a.m., one young woman blew herself up, and another extremist was killed by bullets and hand grenades, he said at a press conference in Paris Wednesday. Phone taps, surveillance and witness accounts had led investigators to conclude that Abdelhamid Abaaoud, the suspected ringleader of Friday’s terrorist attacks, might be holed up in Saint Denis, the very suburb where the night’s violence began outside the Stade de France. Molins said Abbaoud was not among those arrested. Neither was Abdeslam Salah, one of the eight suspected perpetrators of the attacks in the Paris area. Last week’s attacks killed 129 people and left more than 300 injured.
• France Intensifies Assault on Islamic State at Home and Abroad. (video) France escalated its retaliation against Islamic State both at home and on the global stage. A predawn police raid on a pedestrian street in a Paris suburb led to the deaths of two extremists and seven arrests, while a French aircraft carrier headed to the eastern Mediterranean to intensify the bombardment of the terror group’s positions in Syria. “We must annihilate an army that threatens the whole world,” President Francois Hollande said after SWAT teams stormed what authorities believed was the hideout of the architect of last week’s violence that claimed 129 lives. Hollande tracked the operation from his office at the Elysee Palace as the focus swung back to the streets of the capital region from the global stage. Russia and France, long at loggerheads over their approach to the war in Syria, took steps toward a united military front against Islamic State in response to the massacre in Paris and a downed plane in Egypt.
• Bloomberg Poll: Most Americans Oppose Syrian Refugee Resettlement. Americans agree with Republican presidential candidates on refugees, but are divided on whether to send U.S. troops to Iraq and Syria to fight the Islamic State, according to the poll. Fifty-three percent of U.S. adults in the survey, conducted in the days immediately following the attacks, say the nation should not continue a program to resettle up to 10,000 Syrian refugees. Just 28 percent would keep the program with the screening process as it now exists, while 11 percent said they would favor a limited program to accept only Syrian Christians while excluding Muslims. More broadly, terrorism and the Islamic State group surged to the top of Americans’ concerns immediately following the deadly attacks, even as Republicans and Democrats remain divided over how best to address threats. The percentage of those rating terrorism or the Islamic State as top concerns has nearly doubled since the poll last was taken in September. At the same time, those who think the U.S. is on the right track, fell to 23 percent, the lowest rating in more than three years.  Obama’s disapproval rating rose to 51 percent, up four percentage points since September.
• China's Economy Faces Considerable Downward Pressure, Xi Says. (video) Chinese President Xi Jinping acknowledged downside risks to growth while assuring fellow leaders that Asia’s biggest economy is resilient and will remain on the path of reform. China is working to overcome the challenges of slowing global growth this year by advancing reforms and won’t change its policy on foreign investment, Xi said at the Asia-Pacific Economic Cooperation chief executives summit in Manila on Wednesday. “In general, China’s positive economic fundamentals and long-term trajectory remain unchanged,” Xi said, taking the stage after U.S. President Barack Obama. “On the other hand, China’s economy is still coping with the complicated internal and external environment, considerable downward pressure and the temporary pain of deep reforms.”  
• The $152-billion bill Canadian banks — and consumers — will have to pay for a crisis they avoided. Canadian banks are starting to get their share of the bill for global regulations designed to prevent a repeat of the taxpayer funded bailouts of the 2008 financial crisis. Over the next five years the nation’s six-largest banks will need to convert $152 billion of capital into securities that can be used as a shock absorber during a crisis, according to estimates from Royal Bank of Canada. That pales in comparison with the $1.2 trillion tab the world’s biggest lenders face, but the Canadians are unusual in that they never needed rescuing in the first place. 
• Europe Stocks Little Changed With CAC 40 Falling After Shootout. European stocks were little changed as investors assessed value after the strongest rally in six weeks, while France’s CAC 40 Index retreated after a police gun battle with suspects linked to the Paris terror attack. Air Liquide SA slid the most on the French equity gauge, falling 7.4 percent after agreeing to purchase U.S. rival Airgas Inc. The CAC 40, which jumped the most in six weeks yesterday, retreated 0.6 percent at the close of trading in Paris after the shootout left at least two people dead. L’Oreal SA slid 1.7 percent and LVMH lost 1.1 percent in France. The Stoxx Europe 600 Index fell 0.1 percent to 379.33, paring earlier losses of as much as 0.8 percent.
• Glencore's Debt Problems Worsen on Copper Prices. (video) 
• Codelco Says It Won't Cut Copper Production as Prices Slump. The head of the world’s biggest copper miner said he would rather rein in costs than curb output to navigate a slump in prices that are hitting fresh six-year lows almost daily. Chile’s Codelco this week slashed the premium it charges Chinese buyers by 26 percent, the most since the global financial crisis, as it seeks to sustain sales to the world’s largest consumer amid weakening demand.
• Bloomberg current implied probability for Dec. 16 Fed 25 basis point rate hike at 66% versus 68% prior to FOMC minutes release today.
• Fed Inserted Language to Stress Potential for December Liftoff. (video) Federal Reserve policy makers inserted language into their October statement to stress that “it may well become appropriate” to raise the benchmark lending rate in December and largely agreed that the pace of increases would be gradual, minutes of the meeting showed. “Members emphasized that this change was intended to convey the sense that, while no decision had been made, it may well become appropriate to initiate the normalization process at the next meeting,” said minutes of the FOMC’s Oct. 27-28 meeting, released Wednesday in Washington. A majority of Fed officials have signaled they expect to raise interest rates this year for the first time since 2006. That message was underscored when policy makers inserted a reference to the “next meeting” on Dec. 15-16 in their October statement, in connection with their assessment on when to act. 
• Blackstone's(BX) James Says U.S. May Enter Recession in 2017. The U.S. may enter a recession within two years as economic growth faces headwinds, Blackstone Group LP President Tony James said. “It wouldn’t surprise me if we had one in 2017,” James said Wednesday at Bank of America Corp.’s banking and financial services conference in New York. “I’m turning more pessimistic now. There are a lot of headwinds facing us right now.”
• Target(TGT), Wal-Mart(WMT) See Online Sales Growth Slow in Ominous Sign. (video)
  Target Corp. and Wal-Mart Stores Inc. both saw a big slowdown in online sales growth last quarter, fueling concern that the brick-and-mortar chains aren’t transitioning fast enough to e-commerce. Target’s Internet sales grew 20 percent third quarter, missing the 30 percent gain it expected, the retailer said on Wednesday. The previous day, Wal-Mart posted quarterly e-commerce growth of 10 percent, compared with 16 percent in the second quarter and 21 percent a year earlier. The deceleration underscores the challenge of competing with Amazon.com Inc., the world’s largest Internet retailer. Wal-Mart is spending as much as $1.5 billion this year to improve its e-commerce operations, and investors expect to see a big bump in sales. Target also has stepped up its online investments.
• Carlyle's Unwanted Debt Exposes Growing Problem on Wall Street. Investors who piled into anything and everything in the junk-debt market in recent years have begun to run in the other direction at the first sign of trouble. The turnabout has caught Wall Street’s biggest banks off guard and is increasingly leaving them on the hook for funding takeovers that investors want little part of. On Tuesday, Bank of America Corp. and Morgan Stanley were forced to shelve the debt package backing the year’s largest leveraged buyout -- $5.5 billion meant to fund Carlyle Group LP’s purchase of Veritas, Symantec Corp.’s data-storage business, according to two people familiar with the matter. “It’s very much a whipsaw market,” said Martin Fridson, chief investment officer at Lehmann Livian Fridson Advisors LLC. “Outside of a recessionary period, this has been pretty brutal.”
• BlackRock(BLK) Winding Down Global Macro Hedge Fund After Losses. BlackRock Inc., the world’s largest asset manager, is winding down a global macro hedge fund after losses and investor redemptions eroded assets. BlackRock Global Ascent lost 9.4 percent this year, according to an October investor document, on track for its worst year since inception in 2003. The fund, which had $4.6 billion in assets just two years ago, has shrunk to less than $1 billion as of Nov. 1, said a person familiar with the matter, who asked not to be named because the information is private.

Zero Hedge:

• Terrorists Planned Thursday Attack On Paris Mall; "Mastermind" Killed In Raid, WaPo Says.
• "If You Get Enquiries Just Obfuscate And Stonewall" - How Barclays Rigged The FX Market For Seven Years.
• America Is Charlie Sheen: CDC "Alarmed" At 20 Million New STD Cases Spike.
• Obama "Lives In A Fantasy Land," Chris Christie Rages John Kerry Should "Get Some Sleep & Shut Up". (video)
• Fed's Lacker Admits Fed Is "Market" Data-Dependent. (graph)
• Fed's Dudley Admits Fed 'Liftoff' Is All About Inspiring Confidence (Not Data). (graph)
• US May Bring Criminal Charges Against JP Morgan, RBS Executives, Prosecutors Pretend.
• The Poisonous Cocktail Of Main Street Woes And Federal Reserve Liftoff.
• Major Market Index Fails Key Test. (graph)
• Housing Starts Plunge To 7-Month Lows As Rental Units Tumble. (graph)

Mashable:

• ISIS magazine: 'Nightmare in France has only begun'. The Islamic State published a new edition of its propaganda magazine Wednesday, calling last week's attacks in Paris and the bombing of a Russian passenger jet earlier this month "revenge" for French and Russian military actions in Iraq and Syria.

Daily Mail:

• We did it and this is how: ISIS boasts of bringing down Russian passenger jet by releasing picture of crude bomb they claim was used to kill 224 people. (pic)

Xinhua:

• China Energy Consumption to Grow ~3% y/y Over 5 Years. Energy consumption will expand approximately 3% annual over the next five years, slowing down from an avg growth of 4.3% during 2010-2014, citing Zhang Yuqing, deputy director of the National Energy Administration at a recent conference on clean energy development.

Bear Radar

Style Outperformer:

• Large-Cap Value +.53%

Sector Outperformers: 

• 1) Oil Tankers -1.68% 2) Utilities -.43% 3) Energy -.22%

Stocks Rising on Unusual Volume: 

• RMAX, TGT, SYT, CTXS, QCOM, GNC, EHIC, ASPS, NHTC, KLXI, SMCI, LBTYK, IACI, GPRO, PAGP, SU, FNHC, GLOB, MAR, PTR, SM, WMS, TMUS, INGN, OSIR, PRTY and CTXS

Stocks With Unusual Call Option Activity: 

• 1) MAR 2) EWJ 3) TIF 4) SUNE 5) CRM

Stocks With Most Positive News Mentions: 

• 1) GPRO 2) DSX 3) QCOM 4) SHLD 5) WYNN

Charts: 

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.81%

Sector Outperformers: 

• 1) Steel +2.13% 2) Road & Rail +2.12% 3) Biotech +1.53%

Stocks Rising on Unusual Volume: 

• FCS, UVE, VIPS, NSC, ADPT, JACK, TSEM, ARMK, CP, TASR, PRAA and KITE

Stocks With Unusual Call Option Activity: 

• 1) NMBL 2) SRPT 3) EUO 4) SLCA 5) HPE

Stocks With Most Positive News Mentions: 

• 1) TASR 2) CA 3) JCI 4) CAG 5) TWTR

Charts: 

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +3.1% Above 100-Day Average
• 8 Sectors Rising, 2 Sectors Declining
• 64.9% of Issues Advancing, 31.8% Declining
• 18 New 52-Week Highs, 65 New Lows
• 31.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.9
• Vix 18.4
• Total Put/Call 1.33
• TRIN/Arms .63

Wednesday Watch

Evening Headlines
Bloomberg:

• John Kerry Draws Fire for Saying Charlie Hebdo Attack Had `Rationale'. U.S. Secretary of State John Kerry said last week’s terror attacks in Paris lacked the "rationale" of the assault earlier this year on the staff of the satirical French newspaper Charlie Hebdo, comments that drew immediate criticism from conservatives. “There’s something different about what happened from Charlie Hebdo, and I think everybody would feel that," Kerry told embassy staff and their families Tuesday in Paris, according to a transcript posted by the State Department. "There was a sort of particularized focus and perhaps even a legitimacy in terms of — not a legitimacy, but a rationale that you could attach yourself to somehow and say, OK, they’re really angry because of this and that.” Al-Qaeda’s affiliate in Yemen claimed credit for the January attack on Charlie Hebdo, which left 12 staff members dead. The terror group said it was in retaliation for the magazine’s decision to publish cartoons of the Prophet Muhammad, among other justifications. Visual depictions of Muhammad are seen as by many Muslims as sacrilegious.
• Schumer Joins Republicans Questioning Obama's Refugee Plan. The Obama administration stepped up its assurances that it can keep terrorists from mixing with incoming Syrian refugees as a top Senate Democrat voiced reservations about a resettlement program already under fire from Republicans. New York Senator Chuck Schumer, who will take over as the Democratic leader in the chamber in 2017, said “a pause may be necessary” on the entry of Syrians fleeing civil war. House Speaker Paul Ryan of Wisconsin and Senate Majority Leader Mitch McConnell of Kentucky, both Republicans, earlier called on the administration to put those plans on hold. 
• Fear Spreads as China's Finance Firms Face Arrests. The high-drama highway arrest of a prominent hedge fund manager. Seizures of computers and phones at Chinese mutual funds. The investigations of the president of Citic Securities Co. and at least six other employees. Now, add the probe of China’s former gatekeeper of the IPO process himself. The arrests or investigations targeting the finance industry in the aftermath of China’s summer market crash have intensified in recent weeks, creating a climate of fear among China’s finance firms and chilling their investment strategies. At least 16 people have been arrested, are being investigated or have been taken away from their job duties to assist authorities, according to statements and announcements compiled by Bloomberg News.  
• China Home-Price Recovery Slows in October Amid Supply Glut. China’s home-price recovery slowed in October, as a supply glut in less prosperous cities challenges the authorities’ efforts to revive the residential market with interest-rate cuts and easing of mortgage restrictions. New-home prices increased in 27 cities, compared with 39 in September, the National Bureau of Statistics said Wednesday. Prices dropped in 33 cities, compared with 21 in September and were unchanged in 10.The number of unsold new homes nationwide increased 14 percent to 437 million square meters (4.7 billion square feet) as of Oct. 31 as the pace of home sales slowed, the statistics bureau said earlier this month.
• Hedge Fund Gaining 138% Says China Short Targets Easier to Spot. Hao Capital Management, whose Greater China-focused hedge fund returned 138 percent this year, said it is easier to identify targets to wager against among yuan-denominated China stocks than to spot those with the potential to rise. Many of the nation’s industries are plagued by overcapacity, which will lead to slower cash flow growth for companies with A shares listed in China, the manager of the $268 million hedge fund wrote in its October newsletter to investors. The hedge fund, which bets on rising and falling stocks and didn’t mention any specific industries or shares, wrote that companies with strong cash flows are unlikely to see valuations drop to lows seen in previous years.
• China IMF Victory to Sap Central Bank Appetite for Aussie Debt. China is about to deal another blow to Australian bonds as the yuan’s ascent into the International Monetary Fund’s reserves diverts investments from Aussie-dollar assets. The IMF signaled it will include the yuan as the fifth currency in its Special Drawing Rights basket this month, a stamp of approval for China’s progress in internationalizing the currency. Standard Chartered Plc estimates up to $1.1 trillion will enter the nation in the next five years due to the endorsement. One casualty of such diversification will be the Australian dollar, according to Credit Suisse Group AG, BNP Paribas SA and Mizuho Bank Ltd.
• Macau Chief Sees Casino Revenue Slumping More Next Year. Macau’s chief executive forecasts casino revenue to come in at 200 billion patacas ($25 billion) next year, the lowest since 2010 and a further decline from what analysts estimate for the whole of 2015. Casino shares fell.
• What Are 2016’s Downside Risks to EM Growth? (video)
• Are Investors Losing Faith in Policymakers? (video)
• Asian Stocks Rise on Japan as Investors Await Fed Minutes, BOJ. Asian stocks rose, boosted by gains in Japanese shares as the yen held losses before a Bank of Japan policy meeting. Investors awaited minutes from the Federal Reserve after U.S. inflation data bolstered the case for higher interest rates. The MSCI Asia Pacific Index gained 0.3 percent to 132.26 as of 9:04 a.m. in Tokyo.  
• China Steel Output to Plunge 23 Million Tons in 2016, CISA Says. Crude steel production in China will shrink by an estimated 23 million metric tons next year as a downturn in local demand deepens and mills encounter increasing opposition to exports, according to the China Iron & Steel Association. Output in the world’s largest producer may drop to about 783 million tons from 806 million tons in 2015, a decline of 2.9 percent, according to Deputy Secretary General Li Xinchuang. Local demand would slump to about 654 million tons in 2016 from 668 million tons this year, Li said in an interview in Shanghai on Wednesday.
• Zinc Slumps to Six-Year Low as Metals Tumble on China, Dollar. Zinc dropped to the lowest since July 2009 as industrial metals retreated on concerns over faltering Chinese demand and the dollar traded near its strongest in more than a decade. Lead fell to the lowest since 2010. Zinc used to galvanize steel lost as much as 1.5 percent to $1,525 a metric ton on the London Metal Exchange and traded at $1,526.50 by 9:37 a.m in Hong Kong. Lead sank as much as 1.4 percent to $1,572 a ton. Copper and aluminum declined, while nickel rose.

Wall Street Journal:

• Paris Attacks: Latest Updates. 
• Paris Attacks Fuel Debate Over Spying. Growing belief that terrorists behind assaults used encrypted communications prompts re-examination of U.S. policy on surveillance. 
  
• Hillary Clinton Faces Foreign-Policy Challenges. Former secretary of state uniquely tethered to President Obama’s record in the Middle East. When Hillary Clinton jumped in the 2016 presidential race, her advisers believed she had at least one clear advantage over her rivals: The foreign-policy credentials that burnished her campaign to become commander in chief.
• House Speaker Ryan Warns of Budget, Guantanamo Bay Confrontations With White House. New leader doesn’t rule out government shutdown when funding expires Dec. 11. Spending legislation needed to avoid a government shutdown in December must include Republican policy measures in order to pass Congress, House Speaker Paul Ryan (R., Wis.) said Tuesday.
• Regulators Look Into Mutual Funds’ Procedures for Valuing Startups. SEC increases focus on private-company valuations as part of regular fund-firm reviews. Federal securities regulators are looking more closely at whether U.S. mutual funds have proper procedures in place to accurately price shares of private technology companies amid signs the tech boom is wavering, according to people familiar with the matter.
• Dollar’s Revival Poses New Threat to Commodities. Expectations of Fed rate increase have sparked a revival in dollar. 
• Louisiana Gov. Bobby Jindal Suspends GOP Presidential Campaign.
• President Guantanamo. Obama may move to shut the prison down in violation of the law. President Obama rode into the White House vilifying George W. Bush’s “unchecked presidential power” and “ignoring the law when it is inconvenient,” as he put it in 2007. Yet now Mr. Obama is poised to exceed any executive action his predecessor so much as contemplated as he may shut down Guantanamo Bay in defiance of inconvenient laws he signed.

Fox News:

• France, Russia pummel ISIS stronghold as critics blast US rules of engagement. (video) In the wake of Friday's deadly terror attack in Paris and the confirmed bombing of a Russian airliner, Russia and France are pounding the Islamic State's Syrian stronghold of Raqqa as, while the number of U.S. airstrikes against ISIS still dwarves all others combined, America appears to be in a slap fight while others are punching hard, say military experts.

MarketWatch.com:

• Canadian Pacific(CP) bids for Norfolk Southern(NSC) but does not reveal offer price.

CNBC:

• Fed may send a big message to markets. Minutes from the Fed's last meeting could be a big deal for markets Wednesday, showing the central bank is finally ready to raise rates next month — barring any negative surprises in the economy. "Hopefully, they'll make their intentions to raise rates a lot clearer in the new set of minutes," said Jack Ablin, CIO of BMO Private Bank.

Zero Hedge:

• Hannover Police Warn "Find Safety, Don't Stay In Groups" After Explosives Allegedly Discovered, Football Game Evacuated.
• The Fed's Failed Communication Strategy - More Than Half Of FedSpeak Is "Not Useful". (graph)
• Baltic Dry Index Crashes Near Record Low. (graph)
• Crude Jumps After API Reports Modest Inventory Draw (First In 8 Weeks) Despite Another Big Build At Cushing. (graph)
• Ted Cruz Prepares Refugee-Rejection Bill, Slams Obama's Plan As "Nothing Short Of Lunacy".
• China Has "Right" To "Seize" Neighboring Islands, Official Says.
• BofA Is A "Seller Of Risk" As Everyone Is Long The Dollar, US Stocks Never More Overvalued. (graph)
• One Terror Attack Too Many? Equity Exuberance Fizzles On Late German Bomb Scare. (graph)

Business Insider:

• Everyone on Wall Street is talking about this dark new China report. "Many analysts once forecast a soft landing for the economy after more than 35 years of breakneck growth, but that landing point is still not in sight," the report said. It continued: "While we believe the government will pull enough policy levers to prevent full-blown economic crisis, the danger remains that China is facing a protracted period of declining growth." The report predicts 4.5% gross domestic product growth on average between 2015 and 2020, and 3.6% on average from 2015 to 2020 if the government is able to stave off disaster through policy mechanisms. Here is the killer line: China's productivity crisis — the result of both institutional deficiencies and a maturing economy — remains unaddressed. For these reasons, we believe China is facing a protracted period of declining growth that will be much longer and deeper than analysts may have predicted.
• GUNDLACH: This could be 'the beginning of something big'. (graph)
• Famous Harvard professor rips into 'tyrannical' student protesters, saying they want 'superficial diversity'. High-profile incidents of racial discrimination at the University of Missouri have spurred students across the US to protest racism on their own campuses. And while many civil libertarians have lauded their actions, Alan Dershowitz, a prominent Harvard Law School professor, has ripped into these students for what he argues are hypocritical demands. "The last thing these students want is diversity," Dershowitz told Business Insider. "They may want superficial diversity, because for them diversity is a code word for 'more of us.' They don't want more conservatives, they don't want more white students, they don't want more heterosexuals."
• The STD epidemic in the US is getting worse.
• ISIS pulled off two of its most alarming attacks in the space of less than a month.
• Over 1,200 Europeans who joined Islamic extremists have returned to Europe.
• GUNDLACH: How can oil go higher with this fact in play? (graph)
• GOLDMAN SACHS(GS) CFO: None of us have 'really' been stress-tested.

Daily Caller:

• Paris Merely A ‘Test,’ Says US Counter-Terrorism Expert. A former FBI counter terrorism expert claims the bloody Nov. 13 Paris attack wasn’t a full-fledged assault, but a cold-blooded ISIS “test” to assess its ability to launch small, randomized attacks in a major Western city.

Reuters:

• Hedge fund Achievement Asset to shut down after energy losses. Hedge fund Achievement Asset Management is shutting its doors after suffering losses on energy market bets this year, becoming the latest investment firm to return capital to clients in a year many managers have struggled to make money. The Chicago-based firm, run by Joseph Scoby, plans to return $875 million to clients by the end of the year, according to published reports in Crain's Chicago Business and the Wall Street Journal. At its peak in 2014 the firm oversaw roughly $2 billion in assets but investors had been pulling money out as returns sagged. The fund lost roughly 7 percent this year as its bets on corporate bonds soured, Crain's reported.
• Fed's Tarullo says 'shadow' banks need activity-by-activity regulation. The United States is in a "grace period" of lowered financial risk but should address the potential for increased problems to develop in the financial system's non-bank sector, Federal Reserve Governor Daniel Tarullo said on Tuesday. Tarullo said the "shadow" banking sector is too diverse and in many cases helpful to put under the same sort of blanket regulations banks face on things like the capital and liquidity they are required to maintain. 

Evening Recommendations 

• None of note

Night Trading 

• Asian equity indices are -.50% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 127.75 -1.75 basis points.
• Asia Pacific Sovereign CDS Index 70.0 -.5 basis point.
• Bloomberg Emerging Markets Currency Index 70.46 -.09%.
• S&P 500 futures +.05%.
• NASDAQ 100 futures +.07%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

• (LOW)/.79
• (SPLS)/.35
• (TGT)/.86
• (CTRP)/.25
• (HI)/.55
• (GMCR)/.71
• (LB)/.52
• (NTAP)/.56
• (CRM)/.19
• (SINA)/.21
• (WB)/.06 

Economic Releases
8:30 am EST

• Housing Starts for October are estimated to fall to 1160K versus 1206K in September.
• Building Permits for October are estimated to rise to 1147K versus 1103K in September.   

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,268,180 barrels versus a +4,224,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -972,730 barrels versus a -2,102,000 barrel decline the prior week. Distillate supplies are estimated to fall by -450,00 barrels versus a +352,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.61% versus a +.8% gain prior.
  

2:00 pm EST

• Release of US Fed Minutes from Oct. 27-28 FOMC Meeting.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Feds Dudley speaking, Fed's Kaplan speaking, BofJ rate decision, weekly MBA mortgage applications report, Jefferies Healthcare Conference, Barclays Automotive Conference, (SGI) analyst day, (CA) analyst day, (LGND) analyst day, (OC) investor day, (QCOM) analyst meeting and the (VRX) investor conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and consumer 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.