Stocks Slightly Lower into Final Hour on Earnings Outlook Fears, Rising US High-Yield Debt Angst, Oil Decline, Healthcare/Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Slightly Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 17.09 +1.42%

• Euro/Yen Carry Return Index 137.77 +.11%

• Emerging Markets Currency Volatility(VXY) 10.33 -1.62%

• S&P 500 Implied Correlation 56.45 +3.11%

• ISE Sentiment Index 96.0 +3.23%

• Total Put/Call .89 -11.0%

• NYSE Arms 1.11 +197.94% 

Credit Investor Angst:

• North American Investment Grade CDS Index 84.20 +2.59%

• America Energy Sector High-Yield CDS Index 1,252.0 +.95%

• European Financial Sector CDS Index 70.50 +1.92%

• Western Europe Sovereign Debt CDS Index 19.36 -3.01%

• Asia Pacific Sovereign Debt CDS Index 67.44 -.80%

• Emerging Market CDS Index 314.94 -.61%
  

• iBoxx Offshore RMB China Corporate High Yield Index 124.0 +.02%

• 2-Year Swap Spread 5.75 -2.25 basis points

• TED Spread 24.5 +1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -44.25 +.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 71.07 +.68%
• 3-Month T-Bill Yield .09% -3.0 basis points

• Yield Curve 135.0 -4.0 basis points

• China Import Iron Ore Spot $45.44/Metric Tonne -1.96%

• Citi US Economic Surprise Index -8.6 +.4 point

• Citi Eurozone Economic Surprise Index 24.6 -.4 points

• Citi Emerging Markets Economic Surprise Index 0.0 -1.4 points

• 10-Year TIPS Spread 1.61 +2.0 basis points
• # of Months to 1st Fed Rate Hike(Morgan Stanley) 2.70 -.22

Overseas Futures:

• Nikkei 225 Futures: Indicating +8 open in Japan 
• China A50 Futures: Indicating -50 open in China

• DAX Futures: Indicating -12 open in Germany

Portfolio: 

• Lower: On losses in my medical/biotech/retail sector longs and emerging market shorts

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 25% Net Long

Today's Headlines

Bloomberg:

• Why ISIS Has All the Money It Needs. Weeks before the attacks that killed 129 people in Paris, U.S. warplanes resumed sorties above Syria and Iraq, targeting anew oil fields and other parts of a vast petroleum infrastructure that fuels—and funds—Islamic State, one of the richest terrorist armies the world has known. These airstrikes were launched not because U.S. officials were prescient. They came after the Obama administration found and quietly fixed a colossal miscalculation. U.S. intelligence had grossly overestimated the damage they’d inflicted during airstrikes on the militants’ oil production apparatus last year, while underestimating Islamic State’s oil revenue by $400 million. According to U.S. Department of the Treasury officials and data they released in the wake of the Paris mayhem, the terrorist group is actually taking in $500 million from oil a year. What’s more, just a few hours before the first Islamic State suicide bomber blew himself up outside the Stade de France on Nov. 13, U.S. Army Colonel Steve Warren conceded at a press briefing that some American airstrikes disrupted IS oil operations for no more than a day or two.
• More Terrorism `Likely' in Europe, Police Agency Director Says. Islamic State has built a “serious capability” to inflict terror and is bent on staging more attacks in Europe, possibly at several places simultaneously, the head of Europol said. After the Paris atrocities, it is reasonable to assume “without any recourse to exaggeration, that further attacks are likely,” Rob Wainwright, director of the European Union’s crime-fighting agency, said on Thursday in Brussels. He called Paris the first European instance of shootings and suicide bombings at several venues, similar to the four-day Mumbai rampage of 2008 at sites including a luxury hotel and Jewish community center.
• France Weighs Threat to Biggest Diplomatic Event Since 1948. As the police work to uncover the terrorist network that murdered 129 people in Paris, the French government is turning its attention toward how to maintain security at its biggest diplomatic gathering since 1948. Foreign Minister Laurent Fabius, who will preside over a two-week United Nations summit on global warming, told France Inter radio on Thursday that the country’s forces couldn’t guarantee the security of public demonstrations.
• Refugee Crisis Hits Sweden's Rich-Poor Divide Fueling Pay Debate. Sweden’s plan to absorb hundreds of thousands of Middle Eastern refugees looks set to widen the pay gap in one of the world’s most equal societies. Decades-old practices that have propped up wages and restricted hiring have so far stopped unskilled immigrants from joining the workforce. But with some 350,000 asylum seekers, mostly from Syria and Afghanistan, set to arrive in Sweden by the end of next year, keeping all those people on state handouts rather than letting them do low-paid jobs looks untenable.
• Spanish Bonds Increasingly at Risk as Catalonia Shapes Election. The risk of a political stalemate will drag down Spanish bonds as the country heads into an election with its biggest economic region agitating for independence, according to a poll of banks active in the debt market. Investors should apply a premium of 25 basis points to the nation’s bonds to account for the risk of a multi-party backed government after next month’s vote, based on the median estimate in a Bloomberg survey of 18 economists conducted between Nov. 6 and Nov. 13. Ten of the analysts said Catalonia’s move to set up a separate state are adding to the pressure on Spanish debt. With opinion polls showing Prime Minister Mariano Rajoy’s People’s Party may lose about a third of its seats on Dec. 20 while remaining the largest parliamentary group, the risk of legislative gridlock is mounting as Catalan separatists grow bolder. Their battle with officials in Madrid reached new levels of antipathy last week when regional lawmakers in Barcelona declared the start of the secession process.
• U.K. Manufacturers Offer Downbeat Outlook for Industry. U.K. manufacturers are feeling grim about the outlook for their business. For the first time in three years, factory executives expect output to drop over the coming three months, according to a monthly survey by the Confederation of British Industry published on Thursday. The report also showed continued weakness in foreign demand, with a gauge of export orders slipping to the lowest since early 2013. Exports have been called the “weak link” in the economy by the London-based lobby group as softer global demand drags on U.K. output. Cooling factory activity and easing overseas sales may undermine hopes of Bank of England officials that growth can become more balanced and less dependent on domestic consumer spending.
• China Has a $1.2 Trillion Ponzi Finance Problem. Chinese borrowers are taking on record amounts of debt to repay interest on their existing obligations, raising the risk of defaults and adding pressure on policy makers to keep financing costs low. The amount of loans, bonds and shadow finance arranged to cover interest payments will probably rise 5 percent this year to a record 7.6 trillion yuan ($1.2 trillion), according to Beijing-based Hua Chuang Securities Co., whose lead fixed-income analyst was top-ranked by China’s New Fortune magazine in 2012 and 2013. Dubbed “Ponzi finance” by Hyman Minsky, the use of borrowed funds to repay interest was seen by the late U.S. economist as an unsustainable form of credit growth that could precipitate financial crises.
• A Hard Landing in China Could 'Shake the World'. "A slowing China redistributes global economic activity through the commodity channel as much as dampening it". China's slowdown is already playing out across the world, dragging down commodity prices and weighing on trade partners. And that's while the economy is still growing at about 7 percent. So imagine what happens in a hard-landing scenario. The crew at Oxford Economics have done just that in a new report that makes stark reading for anyone with a stake in the global economy. China's economic boom of the past 30 years means it now accounts for 11 percent of world GDP and around 10 percent of world trade. For resources, it's an even bigger player, accounting for 11 percent of world oil demand and 40 to 70 percent of demand for other key commodities,  according to the Oxford Economics research. Its financial system is massive, with its broad money supply now larger than the U.S.'s and amounting to over 20 percent of the world's. So were China to sneeze, the world may well catch a cold.  
• How Chinese Slowdown Turned Rolls-Royce's Slump Into a Crisis. Rolls-Royce Holdings Plc’s revelation last week that a 350 million-pound ($533 million) earnings hit expected next year is in large part due to lower deployment of older wide-body planes surprised investors who had believed cheap oil would make such aircraft more popular. The reality, Chief Executive Officer Warren East said in an interview, is that models such as Airbus Group SE’s out-of-production A340 and older Boeing Co. 777s remain out of favor even with cheap fuel, as airlines add vast numbers of new jets in an Asian market feeling the strain of China’s economic slowdown. That’s weighing on maintenance revenue at London-based Rolls, which gets the bulk of income from overhaul work calculated according to hours flown.
• Brazil's Inflation Surpasses 10% for First Time in 12 Years. Brazil’s inflation exceeded 10 percent for the first time in 12 years, complicating President Dilma Rousseff’s efforts to revive an economy that is also battling higher-than-forecast unemployment. Consumer prices rose 0.85 percent from Oct. 15 to Nov. 12, pushing the 12-month inflation rate to 10.28 percent, the national statistics agency said Thursday. The monthly gain, the fastest since mid-June, compares with the median estimate of 0.86 percent in a Bloomberg survey of 44 analysts. As consumer prices in Latin America’s biggest economy continue to accelerate, Brazil’s central bank has delayed its plan of slowing inflation to its 4.5 percent target to 2017 from 2016. The bank has signaled it will keep rates on hold for a third consecutive meeting next week as it is caught between higher living costs and the deepest recession in 25 years.
• Petrobras's(PBR) Dangerous Debt Math: $24 Billion Owed in 24 Months. The debt clock is ticking down at Brazil’s troubled oil giant, Petrobras. Next up: $24 billion of repayments over 24 months. That’s a towering hurdle for a company that hasn’t generated free cash flow for eight years and whose borrowing rates are soaring. Annual debt servicing costs have doubled to 20.3 billion reais ($5.4 billion) in the past three years.
• Swiss Watch Exports Fall Most in Six Years on Hong Kong Drop. Swiss watch exports had their biggest decline in six years in October, led by a 39 percent slump in shipments to Hong Kong, the industry’s largest market. Shipments declined 12 percent to 2 billion Swiss francs ($2 billion), the Swiss customs office said in a statement Thursday. Adjusted for fewer working days, the drop was 7.6 percent. Exports to the U.S. dropped 12 percent. “2015 has been one to forget for the watchmakers,” said Jon Cox, an analyst
  at Kepler Cheuvreux in Zurich. 
• Top Goldman Trades See Dollar Rising With Inflation Outlook. In Goldman Sachs Group Inc.’s vision of 2016, the dollar climbs, U.S. inflation expectations pick up and the currencies of Mexico and Russia advance. The U.S. investment bank recommended buying the greenback against the euro and yen when it published its top trades for next year on Thursday. 
• European Stocks Climb to 3-Month High After Dovish Fed Minutes. (video) European stocks rose for the third time in four days, as minutes from the Federal Reserve’s last meeting reassured investors the world’s biggest economy can withstand higher borrowing costs. Optimism about global growth sent the Stoxx Europe 600 Index to its highest level in three months. The benchmark gauge added 0.4 percent at the close of trading. It pared an advance of as much as 1.2 percent after commodity producers gave up some gains. 
• Iron Ore Bludgeoned to Record Low in Asia on China Steel Concern. Iron ore contracts in Asia slumped to records amid speculation that mills in China are reining in steel production as they battle losses, slumping prices and tighter credit, hurting demand for the raw material that’s mainly shipped from Australia and Brazil. Futures sank 1.8 percent to 331 yuan ($51.89) a metric ton on the Dalian Commodity Exchange, the lowest close since trading started in October 2013, while the SGX AsiaClear contract in Singapore fell to a fresh low. Losses on markets in Asia can signal declines in the Metal Bulletin Ltd. price for 62 percent content spot ore in Qingdao, which is updated once a day. That was at $46.35 a dry ton on Wednesday from $45.58 a day earlier, a four-month low.
• Citigroup(C) Says Commodity Markets Yet to Price In Rate Hike. Think the global commodity markets have fully priced in prospects for higher U.S. interest rates this year? Think again, says Citigroup Inc., which says keep an eye out for payrolls numbers due next month and prospects for an even stronger dollar. “We’re fast approaching December: we very much expect the first rate hike to take place at that point,” Ivan Szpakowski, a commodities strategist at Citigroup, told a conference in Shanghai in Thursday. “We think the market is already pricing that to some degree for sure. It’s pricing it in also to a degree. But not the full extent, not to 100 percent.”
• Baltic Dry Shipping Index Drops to All-Time Low. The cost of shipping commodities fell to a record, amid signs that Chinese demand growth for iron ore and coal is slowing, hurting the industry’s biggest source of cargoes. The Baltic Dry Index, a measure of shipping rates for everything from coal to ore to grains, fell to 504 points on Thursday, the lowest data from the London-based Baltic Exchange going back to 1985. Among the causes of shipowners’ pain is slowing economic growth in China, which is translating into weakening demand for imported iron ore that’s used to make the steel. “The main issue is the lack of demand for iron ore from China,” Eirik Haavaldsen, a shipping analyst at Pareto Securities AS in Oslo, said by phone. “This market is looking like a disaster and the rates are a reflection of that. It is looking scary for the market and it doesn’t look like there is going to be any life in the market in the near term.” 
• Chesapeake Energy(CHK) Bonds Plunge to the Lowest Ever as Oil Falls. Debt of Chesapeake Energy Corp. tumbled to a record low on Thursday as the price of oil plunged. Nine of the energy producer’s unsecured notes plummeted, some losing more than 12 cents on the dollar, as it was the most actively traded company in the junk-debt market. Credit-default swaps, which are used by investors to protect against defaults, rose to the highest ever.
• Americans' Outlook for Economy Holds Close to a 13-Month Low. One in five Americans in November said the economy is improving, matching the smallest share in two years and keeping a monthly gauge of expectations close to a 13-month low. The measure tracking the economic outlook was little changed at 42.5 last month after October reading of 42, which was the lowest since September 2014, data from the Bloomberg Consumer Comfort Index showed Thursday. While 20 percent of respondents said the economy was getting better, 45 percent viewed it as staying the same, the largest share since February 2012.
• Large Cap Bias Masks Worst Year for Retail Stocks Since '08. Retail stocks are up. Or are they down? Depends where you look. While the Standard & Poor’s 500 Retailing Industry Index has gained 23 percent this year, making it the best performing of 24 industries in the benchmark gauge, Amazon.com Inc. has overshadowed broader weakness. But investors can’t trade that group without shelling out fees to recreate it. Instead, the most-actively traded exchange-traded fund of retail stocks paints a different picture. The SPDR S&P Retail ETF, which is based on an equal-weighted index, has tumbled almost 9.2 percent in 2015 and is on track for its worst year since 2008.
• Best Buy(BBY) Tumbles After Predicting Slow Holiday Season Sales. Best Buy Co. shares fell as much as 8.6 percent after the retailer’s sales missed estimates, raising doubts about its turnaround bid and the health of the broader electronics industry. Revenue slid 2.4 percent to $8.82 billion in the quarter that ended Oct. 31, the Richfield, Minnesota-based company said in a statement Thursday. Analysts had estimated $8.83 billion. For the current quarter, Best Buy expects revenue to decline at a low single-digit percentage rate, hurt in part by the closings of Canadian stores. The company sees U.S. consumer-electronics demand continuing to weaken, stoking fears about a category that used to be a solid performer during the holidays. Both Target Corp. and Wal-Mart Stores Inc. also reported disappointing sales of gadgets and other technology earlier this week. Demand for tablets -- a hot product in past years -- has been particularly weak. “From an industry standpoint, there was a significant decline in that,” Best Buy Chief Executive Officer Hubert Joly said on a conference call. 
• What Are the Concerns in the Credit Markets? (video)
• Central Banks Fight to Ensure Crisis Tools Become the Norm. Unconventional tools deployed by central bankers from Frankfurt to Washington to mitigate the economic fallout of the financial crisis may be conventional when the time comes to combat the next downturn. The Federal Open Market Committee is already discussing the issue while other central bankers and economists in developed nations debate whether to holster emergency policies -- bond buying, targeted credit programs and negative interest rates -- or make them part of their everyday armories.

 Fox News:

• Fed's Lockhart Supports Raising Rates 'Soon'.

CNBC:

• Cramer: UnitedHealth(UNH) move 'very damning' for ACA. (video)

Forbes:

• United's(UNH) Warning Shows How Medicaid Is Taking Over Obamacare. One of the untold elements of the rapid decay underway in the Obamacare exchanges is the massive shift toward the Medicaid managed care companies, and away from the traditional commercial insurers like United and Aetna.

Zero Hedge:

• "Devastated" Trader Crushed By Soaring Biotech, Starts Online Begging Campaign To Fund $106,000 Margin Call.
• House Approves Tougher Refugee Screening Bill As Majority Of Americans Oppose Obama's Syrian Resettlement Plan.
• The Fed Has Made A "Policy Mistake" And The Inevtiable Result Will Be A Recession, BNP Warns.
• Permabulls Whistling Past The Grave. (graph)
• Swap Spreads Just Hit A New Record Negative Low: Goldman's Explanation Why. (graph)
• House Passes Fed Transparency Bill; Obama Will Veto.
• "This Isn't Going To End Well" - Junk Bonds Under Pressure. (graph)
• For Caterpillar The Depression Has Never Been Worse... But It Has A Cunning Plan How To Deal With It. (graph)
• The Fed-Induced Farce. (graph)
• Consumer Sentiment Decouples From Stocks As Black Americans' Comfort Nears 2015 Lows. (graph)
• If The Economy Is Fine, Why Are So Many Hedge Funds, Energy Companies And Large Retailers Imploding? (graph)
• WTI Tumbles Back Below $40, Goldman Warns Risk Of "Sharp Leg Lower". (graph)
• Philly Fed Creeps Back Into Positive Despite Collapse In Prices Paid, Workweek. (graph)

Business Insider: 

• Democrats just delivered a stunning blow to Obama's Syrian refugee plan.
• GUNDLACH: This chart is one of 'the scariest indicators in the world'. (graph)

Financial Times: 

• Fed futures remain reluctant on US rates. Futures still pricing in just a 66% probability of a hike. The general consensus among analysts and investors after the latest Federal Reserve minutes is that a rate rise on December 16 is, all things remaining equal, even more likely. Yet, the federal funds futures markets appear reluctant to reflect this growing certainty: by mid-session on Thursday they were still pricing in just a 66 per cent probability of a hike.

sky NEWS: 

• IS Sets Up 'Chemical Weapons Research Unit'. (video) It would only take "a few competent scientists" to develop hazardous chemical weapons, a former US intelligence official warns.

Corriere della Sera:

• FBI Warns Italy on Terrorism Threats. FBI warned Italy about terrorism threats, saying that it received information about plans for attacks in Rome and other cities.

news.com.au:

• Islamic State operates a 24-hour help desk to train terrorists. IT HAS Facebook pages, Twitter accounts, online magazines and even an app, now it has emerged IS have another tool to assist in its global campaign of terror — a 24-hour help desk. As France and its allies try to piece together how eight jihadists managed to launch the orchestrated attacks on Paris last week, it now appears the militant group has a around-the-clock propaganda hotline. And its main purpose — to train terrorists.

Bear Radar

Style Underperformer:

• Small-Cap Growth -.67%

Sector Underperformers: 

• 1) Hospitals -6.69% 2) HMOs -5.71% 3) Oil Service -2.15%

Stocks Declining on Unusual Volume: 

• IRS, VLP, KIRK, CRESY, UVE, GEOS, BBY, BFAM, UNH, AET, JKS, AON, EQIX, ALOG, PFE, INGN, COLM, EVHC, AGN, HCA, NHTC, ANTM, VRTS, LPNT, THC, ZAYO and HI

Stocks With Unusual Put Option Activity: 

• 1) MBI 2) EWJ 3) ZTS 4) EWA 5) UNH

Stocks With Most Negative News Mentions: 

• 1) EAT 2) CAT 3) COLM 4) PTCT 5) UNP

Charts: 

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.05%

Sector Outperformers: 

• 1) Gold & Silver +2.23% 2) Airlines +1.89% 3) Software +1.12%

Stocks Rising on Unusual Volume: 

• KBIO, GMCR, VLRS, OLED, CTRP, TUMI, CRM, SJM, VRX, BLDR, BRC, FRGI, DWRE and WEN

Stocks With Unusual Call Option Activity: 

• 1) FL 2) NCR 3) A 4) NFX 5) BBY

Stocks With Most Positive News Mentions: 

• 1) CTRP 2) CRM 3) WEN 4) INTC 5) JBLU

Charts: 

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -.4% Above 100-Day Average
• 4 Sectors Rising, 6 Sectors Declining
• 46.9% of Issues Advancing, 49.9% Declining
• 43 New 52-Week Highs, 50 New Lows
• 34.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 42.9
• Vix 17.0
• Total Put/Call .79
• TRIN/Arms 1.28

Thursday Watch

Evening Headlines
Bloomberg:

• Police Don't Yet Know If Ringleader Killed in Paris Terror Raid. The raid on a hideout near Paris on Wednesday was so violent that police fired 5,000 rounds and aren’t even sure how many militants died in explosions that left the building unsteady. What’s more, they don’t know if the presumed ringleader of the Paris attacks is among those killed. The predawn raid was ordered after witnesses, telephone surveillance and a text message found on a discarded mobile phone suggested the presence of Abdelhamid Abaaoud, the suspected Belgian architect of last Friday’s murders in Paris that took the lives of 129 people in a series of coordinated assaults at a sports stadium, a concert hall, and restaurants and bars. Seven men and one women were arrested in the raid, and police are still working to identify them, Paris prosecutor Francois Molins said in a news conference in the French capital. At least two of the extremists died in the assault and investigators are still studying remains to establish if more were killed. Five policemen were wounded. Neither Abaaoud nor Salah Abdeslam, a suspect in the killings, were among those arrested, Molins said. The prosecutor, however, said it was too early to say if they were among those slain.
• China Developers Back Out of Beijing Land Purchase as Costs Rise. China Resources Land Ltd. and China Merchants Land Ltd. backed out of purchasing a plot in Beijing they won at auction after the final price exceeded their budgets, underscoring rising pressure Chinese developers face from surging land costs. The developers will not buy the site in Beijing’s suburban Fengtai district they won in the auction with co-bidder Shenzhen Overseas Chinese Town Co. on Nov. 2, said a Hong Kong-based investor relations officer with China Resources who asked not to be named, citing company policy. The final price for the site “substantially exceeded” China Resources’s budget, the officer added, declining to give the agreed per-square-meter maximum the developer was prepared to pay. Shenzhen Overseas was bidding at the auction on behalf of the other two developers. The investor relations department of China Merchants and the public relations department of Shenzhen Overseas declined to comment.  
• No Sign China Has Stopped Hacking U.S. Companies, Official Says. The Chinese government hasn’t stopped hacking American companies to steal industrial trade secrets, despite pledges to do so, the top U.S. national counterintelligence official said. "We haven’t seen any indication in the private sector that anything has changed," said William Evanina, who works under U.S. National Intelligence Director James Clapper, told reporters Wednesday. "We are skeptical at best in the intelligence community that they would be able to do that," Evanina said. "It would be turning off a big faucet in China."
• Morgan Stanley Sees Euro Falling to Dollar Parity. (video)
• Euro Parity Flagged by Invesco on View for December Fed Liftoff. The Federal Reserve is certain to raise interest rates in December, lifting the dollar toward parity with the euro, according to Invesco Ltd. Dollar strength will come largely against emerging Asian currencies rather than its developed-market peers, with the yen particularly resilient as the Fed keeps the pace of tightening slow, the Atlanta-based manager of about $790 billion in assets said.
• Asian Stocks Rise on Fed Minutes as Investors Await BOJ Decision. Asian stocks rose, following a rally in U.S. shares, after minutes from the most recent Federal Reserve meeting showed policy makers’ faith in the world’s biggest economy, with officials saying the pace of any rate increases will be gradual. The MSCI Asia Pacific Index advanced 0.7 percent to 132.47 as of 9:02 a.m. in Tokyo.  
• Copper May Drop to $3,800 in `16 on Bleak Outlook, Meir Says. Copper could slump to a $3,800 a metric ton next year, hitting fresh six-year lows, and forcing “shell-shocked” producers to make much deeper output cuts as demand growth stalls in China, according to Ed Meir, an analyst at INTL FCStone Inc. Demand in the world’s biggest consumer won’t grow next year, Meir said in an interview Wednesday at an industry conference in Shanghai. “It’s grim-to-bleak, so the onus is on the supply side. The market needs to transition to a lower price point to force more cuts.”A fall to $3,800 would be about an 18 percent drop from current prices, extending declines as investors fret over faltering Chinese demand and a stronger dollar.   
• Fed Minutes Make a December Liftoff Look More Likely. The hawks are in and the doves are out. At least for the moment. Warning about risks to the labor market, skeptical about the eventual rise of inflation and nervous about global growth, Federal Reserve policy makers who are keen to delay an interest rate hike found themselves out of step with a majority of their colleagues at the Oct. 27-28 meeting of the Federal Open Market Committee, minutes released Wednesday in Washington showed. “The doves lost,” said Diane Swonk, chief economist at Mesirow Financial Holdings Inc. in Chicago. And that defeat came, she added, before the release of a better-than-expected October jobs report that provided more evidence of an economy on solid ground.
• Allergan(AGN) Drops as Treasury Plans to Deter Inversion Deals. Allergan Plc, the Ireland-based drugmaker in talks to be taken over by Pfizer Inc., dropped in late trading on plans by the U.S. Treasury Department to deter companies from doing deals to move their headquarters abroad for tax purposes. Shares of Allergan slid 4.4 percent to $297 in extended trading. The company’s potential deal with New York-based Pfizer is predicated, in part, on giving the larger drugmaker a way to reduce its tax rate by becoming nominally Irish. Allergan’s principal executive offices are in New Jersey. 
• Pfizer(PFE) Said Near Agreement to Buy Allergan(AGN) in Biggest Deal. Pfizer Inc. is in advanced talks to buy Botox maker Allergan Plc for as much as $380 per share, according to people familiar with the matter. The companies are aiming to announce a deal as soon as Monday, the people said, asking not to be identified because the discussions are private. The price being discussed is $370 to $380 per share, two of the people said. However, the U.S. Treasury Department’s letter on tax inversion deals, released on Wednesday, could delay the final agreement and change the terms of any transaction, another person said.

Wall Street Journal:

• Paris Attack: Latest Updates.
• Fed Tipping Toward December Rate Hike, Minutes Show by Jon Hilsenrath. Most officials see economic conditions as possibly warranting liftoff on rates at next meeting. Federal Reserve officials meeting last month anticipated it “could well be” time to raise short-term interest rates at a December policy meeting after keeping them pinned near zero for seven years. Fed officials thus decided to change the wording of their Oct. 28 policy statement to ensure their options were open for a move in December, according to minutes of the...
• Rising Rates Pose Challenge to Health Law. Higher-cost premiums for 2016 threaten the appeal of the program for the healthy customers it needs.
• Japanese Deflation Threat Hangs Over China. Political pressure on China not to devalue the yuan could be adding to deflationary pressure, as it once did to Japan.
• When the College Madness Came to My Campus. The student protests are about power. And now that leftists have it, what good to them is free speech?
• Mistrusting Obama on ISIS—and Refugees. The president’s refusal to admit a policy error in Syria stirs uneasiness about how he is handling the humanitarian crisis. You must understand: President Obama is accustomed to kid-glove treatment from most of the media most of the time. So when he was asked repeatedly at a Monday news conference in Turkey why he continues to insist that he never underestimated Islamic State (ISIS), and that his strategy against the terrorist outfit is working, it follows that he would become a little touchy.

Fox News: 

• Obama threatens to veto House GOP bill on Syrian refugee screening. (video) President Obama threatened late Wednesday to veto legislation aimed at improving screening for Syrian refugees, potentially putting the White House and Congress on a collision course in a matter of days. The veto threat came as the House was preparing the bill -- which sets high hurdles for refugee admission including FBI background checks and sign-offs by top officials -- for floor action as early as Thursday. In a committee meeting, Rep. Pete Sessions, R-Texas, accused the president of confusing the public about the intentions of the legislation.

MarketWatch.com: 

• Tinder CEO says nine things CEOs aren’t supposed to say.

CNBC:

• Fed to markets: Rate hike coming your way. (video)
• Fed speakers up next after minutes confirm hiking message. (video)

Zero Hedge:

• Did Goldman Sachs Just Find The Smoking Gun In Today's FOMC Minutes? (graph)
• European Union Challenged From Right And Left, "Maybe Too Much To Endure".
• "We Should All Be Afraid" Of The 'Brutal' Commodity & Credit Volatility. (graph)
• It Will SUNE Be Over!! (graph)
• Texan Turmoil - Visualizing The Growing (& Shrinking) Local Economies Across America. (map)
• RBS Lays Out 10 Key Points For 2016, Warns "Political Risk" Will "Break" QE-Infinity Equilibrium.
• The 1% Is Rolling Over.
• Brazil GDP In "Free Fall Mode", Get Ready For "Terrible" Q3 Print, Analysts Warn. (graph)
• These Are The 7 "Risks" That Bulls Are Banking On Not Happening.
• The Crackdown Begins: Europe Just Passed "Strict Controls To Make It Difficult To Acquire Firearms".
• "Buy The Terror Attack Dip" Continues: Dow Recovers Post-FOMC Losses As Crude Bounces Back. (graph)

Business Insider: 

• Caterpillar(CAT) just said something chilling about China. Now Caterpillar threw in the towel on its formerly most promising market, China. Not for the current year, or even next year – those are already toast. But for future years. And for the entire industry.
• Square is about to set its IPO price, and it will reportedly be even lower than expected.
• Keurig Green Mountain(GMCR) is exploding.
• China's middle class isn't what we thought it was.
• Death and damages due to terrorism have never been higher.
• Suicide bombers have killed 14 and wounded 100 others in Nigeria's second bombing in two days.
• Airline stocks could be in for a massive sell-off.
• Salesforce(CRM) hits an all time high on earnings beat.
• Japanese exports are falling again thanks in part to China. The government reported that exports to the US increased 6.3% from October 2014. However, those to China slid by 3.6%, a slightly steeper pace than that seen in the year to September.

@Breaking911:

• Dramatic Video Shows Gunman Open Fire at Paris Restaurant. (video)

PIX 11:

• ISIS New York video: Terror group releases warning of Times Square attack. (video) Terror group ISIS released a propaganda video Wednesday that makes threats against New York. The video shows several scenes in Manhattan including Times Square, a Gap in Herald Square, T.G.I. Friday's and yellow taxi cabs on city streets. The new video also features footage from a previously released video mentioning a New York attack.

Reuters: 

• Sluggish economies weaken business jet sales. Weakening or sluggish economies around the globe are taking a toll on business aircraft sales and prices, forestalling an incipient recovery that had raised the hopes of plane makers and suppliers.
• Ackman's Pershing Square Holdings off 24.5 pct YTD. Billionaire hedge fund manager William Ackman's Pershing Square Holdings portfolio has lost 24.5 percent this year, extending its fall this week as its biggest holding, Valeant Pharmaceuticals, declined further, the company said on its website.

Telegraph: 

• Finland's depression is the final indictment of Europe's monetary union. Finland has lost a quarter of its industry since 2008 even though it is the poster-child of EMU competitiveness.

Evening Recommendations 

• None of note

Night Trading 

• Asian equity indices are +.25% to +1.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 126.5 -1.25 basis points.
• Asia Pacific Sovereign CDS Index 68.0 -2.0 basis points.
• Bloomberg Emerging Markets Currency Index 70.73 +.19%.
• S&P 500 futures +.12%.
• NASDAQ 100 futures +.11%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

• (WMS)/.35
• (BBY)/.35
• (BKE)/.79
• (SJM)/1.51
• (JKS)/.81
• (PERY)/.04
• (SHLD)/-2.84
• (SSI)/-.19
• (SMRT)/-.07
• (CRMT)/.70
• (ADSK)/.08
• (GPS)/.63
• (INTU)/-.04
• (ROST)/.50
• (SPLK)/.02
• (TFM)/.22
• (WSM)/.72
• (WDAY)/-.04
• (ZOES)/.03 

Economic Releases
8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 270K versus 276K the prior week.
• Continuing Claims are estimated to fall to 2169K versus 2174K prior.    
• Philly Fed Business Outlook for November is estimated to rise to -.3 versus -4.5 in October. 

10:00 am EST

• Leading Index for October is estimated to rise +.5% versus a -.2% decline in September.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Fischer speaking, Fed's Lockhart speaking, UK retail sales report, Bloomberg Economic Expectations Index for November, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, (RF) investor day, (INTC) investor meeting, (CAH) analyst day and the (ROK) investor meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology 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 50% net long heading into the day.