Evening Headlines
Bloomberg:
- ECB Withholding Secret Greek Swaps File Keeps Taxpayers in Dark.
The European Central Bank’s court victory allowing it to withhold files
showing how Greece used derivatives to hide its debt leaves one of the
region’s most powerful institutions free from public scrutiny as it
assumes even more regulatory power. The European Union’s General Court
in Luxembourg ruled yesterday that the central bank was right to keep
secret documents that would reveal how much the ECB knew about the true
state of Greece’s accounts before the country needed a 240 billion-euro
($311 billion) taxpayer-funded rescue. The case brought by Bloomberg
News, the first legal challenge to a refusal by the ECB to make public
details of its decision-making process, comes a month before the central
bank is due to take responsibility for supervising all of the euro-
area’s banks. The central bank already sets narrower limits on its
disclosures than its U.S. equivalent, the Federal Reserve. The court’s
decision shows the ECB has too broad a discretion to reject requests for
disclosure, academics and lawyers said. “It’s a very disturbing
ruling,” said Olivier Hoedeman of Corporate Europe Observatory, a
Brussels-based research group
that challenges lobbying powers in the EU and campaigns for the
accountability of EU bodies. “It is such a sweeping, blanket
statement that it undermines the right to know.”
- Germany Seen Recession-Bound in Poll Showing Euro Crisis Deepens. Germany, Europe’s largest economy,
will be tipped into recession as the sovereign debt crisis
roiling its neighbors extends into the new year, according to
the latest Bloomberg Global Poll. Even as European leaders laud their latest fix for Greece’s
debt woes, 53 percent of 862 investors, analysts and traders who
are Bloomberg subscribers said this week they think Germany’s
economy will drop into a recession for the first time in more
than three years. Sixty-four percent expect Europe’s debt
turmoil to deepen again despite recent signs of calming in its
financial markets. “Germany is starting to feel some pressure as sentiment in
the euro-zone weighs on its economy,” said Chanoine Webb, a
poll participant and global investment analyst at Close Brothers
Asset Management Ltd. in London. “It won’t be able to decouple
for much longer.”
- Aluminum
Demand Growth in China Seen Least in More Than 10 Years. Aluminum
consumption in China, the biggest user, expanded at the slowest rate in a
decade as economic growth decelerated, said an industry official.
Demand gained 5.8% in the first nine months to 14.4 million metric tons
from a year earlier, said Wen Xianjun, vice chairman of the China
Nonferrous Metals Industry Association. The pace is 5 percentage points
lower than the same period in 2011 and the least since at least 2000,
Wen said in an interview in Chongqing today. "Given the challenges in
the global economy and downward pressure in domestic economy, the
condition of China's aluminum industry is worsening," Yang Yunbo,
director of the association's light metals department, said at a forum
in Chongqing today. "Looking forward, we're not optimistic." China is
expected to add 1.5 million tons of production capacity this year,
according to the group. Output in China Gansu, Ningxia, and Xinjiang
regions climbed 55%, 37% and 198% in the first nine months, Wen said.
Output rose to a record 1.75 million tons in August and gained 11% from a
year ago to 16.5 million tons from January to October, according to the
National Bureau of Statistics.
- Cliff-Skeptics in Both Parties Deepen Fiscal Challenges.
President Barack Obama says going over the fiscal cliff by missing the
deadline for a deficit reduction deal by year’s end would be a “rude
shock” for Americans. Republican House Speaker John Boehner says it
would be a “fiasco.” Yet a small and potentially influential group of
lawmakers in both parties is emerging as fiscal-cliff skeptics, willing
-- and some even arguing -- to take the dive. Their attitude may
make striking a compromise a messy and drawn-out process. Allowing the more than $600 billion mix of tax increases
and automatic spending cuts to begin in January if no deal is
reached isn’t their first choice, these lawmakers said, yet it’s
a better alternative than a compromise that violates their
principles.
- North Korea Seen Preparing Rocket Launch as Soon as Next Week. North Korea has moved two sections
of a long-range rocket to a launch site in preparation for a
firing that may come as soon as next week, according to a U.S.
university monitoring project on the totalitarian state.
- LDP Seen Winning Japan Vote That Risks Policy Gridlock. Three years after its half-century
rule of Japan ended, the Liberal Democratic Party is poised to
regain power. Even so, a splintered political landscape risks
the same gridlock that has led to six leaders in as many years. Polls show that while the LDP will get the most seats in
the Dec. 16 election in the Diet’s lower house, other parties
may limit its victory.
Wall Street Journal:
- Obama's Cliff Offer Spurned. GOP Criticizes Proposal for Tax, Spending Increases With Limited Entitlement Cuts. Obama made an opening bid that calls for a $1.6 trillion tax increase, a
$50 billion economic-stimulus program and new power to raise the
federal debt limit, a broad set of demands Republicans viewed as a step
back in talks.
- The Fiscal Cliff: Live Stream.
- Egypt Adds Islamic Influence to Constitution.
- In the End, Greek Crisis Will Hit Taxpayers. Sovereign-debt crises always spark struggles between creditors and debtors over who should suffer losses. Since the Greek crisis exploded nearly three years ago, those fights
have played out in euro-zone summits and finance ministers' meetings and
have been covered feverishly by the global media. Because of the large
number of parties with stakes in the outcome—Greece and 16 other members
of the euro zone, the European institutions and the International
Monetary Fund—they have been even more complicated than usual.
Despite the complications, this week's
deal on Greece's debt points to an (almost) iron rule of sovereign-debt
crises: Significant losses fall on taxpayers in creditor countries
because debt originally extended by private creditors, one way or
another, ends up on the balance sheet of the public sector.
- BlackRock(BLK), Rialto Dump Some of Their 'Skin' in CMBS Game.
- Alleged Insider Group Includes TheStreet.com Editor.
When Michael Baron's buddies passed on a hot stock
tip at a basketball game last year, the senior editor for financial-news
website TheStreet.com TST gave it little thought. A year later, the
Federal Bureau of Investigation came knocking and told him
something he never expected to hear, says a person familiar with his
thinking:
He had been tied to a sophisticated insider-trading ring.
- Recession Big Factor as Birthrate Falls.
- Obama's Real Fiscal Problem. President Obama is by all accounts more confident than ever since his
re-election, telling everyone he sees that he's certain he can pound
Republicans enough to get his way on taxes and spending. And if he
can't, well, then he can always go over the fiscal cliff and blame
Republicans next year for whatever happens to the economy.
And maybe he's right. If nothing else, he's been expert at dodging
responsibility. The line he's taking so far in budget negotiations could
hardly be tougher.
Fox News:
- UN General Assembly votes in favor of Palestinian statehood. The
U.N. General Assembly voted Thursday in favor of Palestinian statehood,
after the Palestinians asked it to recognize a non-member state of
Palestine in the Israeli-occupied West Bank and east Jerusalem, and the
Hamas-ruled Gaza Strip. The resolution upgrading the Palestinians'
status to a nonmember observer state at the United Nations was approved
by a more than two-thirds majority of the 193-member world body -- a
vote of 138 to 9, with the U.S. and Israel among those who opposed.
There were 41 abstentions.
MarketWatch.com:
- Obama wants dividends taxed as income: NYT. According to House Republicans, Treasury Secretary Tim Geithner
presented a plan that included taxing dividends as income, The New York
Times reported. The New York Times also reported that the White House
plan included a 45% estate tax on inheritances over $3.5 million.
Zero Hedge:
Business Insider:
The Blaze:
Reuters:
- Yum(YUM) says key 4th-qtr sales in China to fall. Yum Brands Inc said on Thursday that it expects a decline in fourth-quarter sales at established
restaurants in China, where a cooling economy is making it difficult to
exceed the 21 percent gain it had there a year earlier. Yum, which
saw more than half its total revenue and operating profit for the third
quarter of 2012 come from China, said fourth-quarter same-restaurant
sales there are expected to be down 4 percent. Yum shares fell 7 percent
to $69.25 in extended trading. Stock in Yum is widely viewed as a way for U.S. investors to bet on what is still the world's fastest-growing major economy. The last time Yum reported a decline in same-restaurant
sales for China appears to have been in the fourth quarter of
2009, when those sales fell 3 percent in mainland China,
according to Yum's financial reports.
- Israel’s Iron Dome Did ‘Remarkably Well,’ Panetta Says. Defense Secretary Leon Panetta said
Iron Dome, the U.S.-funded Israeli missile defense system,
performed “remarkably well” in defending Israel against Hamas
rockets. Panetta said yesterday the system intercepted about 400
rockets fired at Israel, or about 85 percent of those targeted
by its radar and battle-management system as heading toward
populated areas.
- Investors swarm into stock ETFs amid "fiscal cliff" hopes-Lipper.
- Japan Nov manufacturing PMI edges down to 46.5. Japanese manufacturing activity
contracted in November at the fastest pace in 19 months, a
survey showed on Friday, as falling exports, weak domestic
demand and declining capital expenditure push the world's
third-largest economy towards recession. The Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally
adjusted 46.5 in November from 46.9 in October. It remained below the 50
threshold that separates contraction from expansion for a sixth
straight month.
- US oil imports in Sept down from year ago-EIA.
Telegraph:
Bild:
- Bundestag lawyers doubt legality of ECB interest waiver, citing a report by Bundestag legal advisers and Bernd Riexinger, head of Germany's Left
Party. The ECB will present a plan to waive interest on government
bonds it holds. The loss to German taxpayers would amount to EU2.5B. Riexinger told the newspaper "cancelling interest means cancelling debt" and says he doubts the proposal will withstand judicial review.
South China Morning Post:
- Hong Kong Housing Official Says Home Prices May Fall 20%. Prices of apartments in the city will drop on the latest govt measures, which will curb investment demand, citing Stanley Wong, chairman of the Housing Authority's subsidized housing committee. Wong didn't provide a timetable for the decline in prices.
China Daily:
- China's development faces more risks from increasing "unstable and uncertain factors" to world economic growth, Zhong Sheng said in a commentary.
Financial News:
- China's
financial innovation may cause more "bubbles" and "excess speculation"
in the financial market, and bring more risks, Financial News said in a
front-page commentary.
Netease:
- Yichang Three Gorges Quantong Coated and Galvanized Plate Co., the second largest private company in China's central province of Hubei, may default on about 7b yuan
of debt from more than 10 banks including China Construction Bank,
Hankou Bank, Citic Bank, Citic Trust, Guangxi Beibu Gulf Bank and China Minsheng Bank, citing an official from the company.
Evening Recommendations
Night Trading
- Asian equity indices are unch. to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 111.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 82.75 -1.0 basis point.
- FTSE-100 futures -.17%.
- S&P 500 futures -.18%.
- NASDAQ 100 futures -.07%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Personal Income for October is estimated to rise +.2% versus a +.4% gain in September.
- Personal Spending for October is estimated unch. versus a +.8% gain in September.
- PCE Core for October is estimated to rise +.2% versus a +.1% gain in September.
9:00 am EST
- NAPM-Milwaukee for November is estimated to rise to 47.0 versus 43.3 in October.
9:45 am EST
- Chicago Purchasing Manager for November is estimated to rise to 50.5 versus 49.9 in October.
Upcoming Splits
Other Potential Market Movers
- The Fed's Stein speaking, Fed's Kocherlakota speaking, China Manufacturing PMI and the Canadian gdp report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.
Broad Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Volume: Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- VIX 15.09 -2.71%
- ISE Sentiment Index 120.0 -9.8%
- Total Put/Call .98 +18.07%
- NYSE Arms .72 +35.28%
Credit Investor Angst:
- North American Investment Grade CDS Index 99.83 -1.11%
- European Financial Sector CDS Index 160.15 -2.51%
- Western Europe Sovereign Debt CDS Index 105.99 bps -3.63%
- Emerging Market CDS Index 236.32 bps -6.6%
- 2-Year Swap Spread 12.0 unch.
- TED Spread 23.0 +1.0 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -24.75 +3.0 basis points
Economic Gauges:
- 3-Month T-Bill Yield .08% -1 basis point
- Yield Curve 136.0 unch.
- China Import Iron Ore Spot $116.90/Metric Tonne -.85%
- Citi US Economic Surprise Index 43.90 -3.1 points
- 10-Year TIPS Spread 2.40 +1 basis point
Overseas Futures:
- Nikkei Futures: Indicating +55 open in Japan
- DAX Futures: Indicating -7 open in Germany
Portfolio:
- Slightly Higher: On gains in my Tech and Biotech sector longs
- Disclosed Trades: None
- Market Exposure: 50% Net Long
Bloomberg:
- Boehner Urges Obama to ‘Get Serious’ About Cliff Talks. House
Speaker John Boehner said President Barack Obama must “get serious”
about the fiscal cliff while the speaker remains “hopeful” about talks
aimed at averting more than $600 billion in spending cuts and tax
increases. Boehner, an Ohio Republican, told reporters today in
Washington that there has been no substantial progress in talks between
the White
House and congressional leaders in the past few weeks. “This is a moment
for adult leadership,” he said. “Despite the claims that the
president supports a balanced approach, the Democrats have yet to get
serious about real spending cuts,” Boehner said. Unless there is a
“serious” discussion of spending cuts, “there is a real danger of going
off the fiscal cliff,” he said.
- Finland Rejects Speculation of New Aid to Greece. Speculation
on whether Greece needs another bailout is premature and Europe needs
to wait and see whether measures agreed to date help the nation regain
control of its debt, Finland’s Prime Minister Jyrki Katainen said. “The decisions taken now are the correct ones to support
Greece in its extremely difficult situation,” Katainen said in
an interview in Helsinki today. “We are committed to the deal
by the finance ministers. There’s no point in conjecturing on
what that might mean in the future.”
- Spain Cash-Starved States Nudge Rajoy Toward Rescue: Euro Credit.
Spain’s regions are adding to
pressure on Prime Minister Mariano Rajoy to seek a European bailout as
the funding needs of the country’s cash-strapped states swamp government
expectations. Nine of the 17 states have already requested support
worth 93 percent of Spain’s 18 billion-euro ($23 billion) regional
rescue fund, known as FLA. While the 10-year Spanish bond yield has
fallen 251 basis points from a euro-era record of 7.75 percent on July
25, most of the states remain shut out of
markets, forcing the government to weigh the cost of extending
the rescue facility for another year.
- German Unemployment Rose for an Eighth Month in November. German
unemployment climbed for an eighth straight month in November as
Europe’s debt crisis curbed company investment and economic growth.
The number of people without a job increased a seasonally adjusted 5,000
to 2.94 million, the Federal Labor Agency in Nuremberg said today.
Economists forecast a gain of 16,000, the median of 37 estimates in a
Bloomberg News survey shows.
- King Signals U.K. Banks Need More Capital Against Losses. Bank of England Governor Mervyn King
signaled U.K. banks may need to build up the capital they hold
against potential losses, and asked regulators to report back by
March on how lenders will comply.
- China Stocks Drop for Fourth Day as Brokerages Fall. Sinolink Securities Co. plunged by the 10 percent daily
limit and Citic Securities Co., the nation’s largest brokerage
by value, headed for its biggest loss in three months. The
regulator is talking with brokerages about cutting commissions
on transactions by 20 percent, the 21st Century Business Herald
reported. Liquor maker Luzhou Laojiao Co. led gains by consumer
staples companies, the worst performers this month. The Shanghai Composite Index (SHCOMP) dropped 0.5 percent to
1,963.49 at the close, erasing a gain of as much as 0.4 percent. “Volumes have been very weak in the market and the
brokerages get hit the most because this means business will
suffer,” said Deng Wenyuan, an analyst at Soochow Securities
Co., by phone today in Suzhou. “There’s little confidence in
the market.”
- China’s Push for Stability Undermines Law, Sociologist Says. The Chinese government’s emphasis on
maintaining stability has undermined rule of law in the country,
leading local officials to “do evil,” Tsinghua University
Professor Sun Liping said at a conference in Beijing today. China has been moving away from the rule of law in the last
couple of years as local officials push to enforce limits on
childbirth and reach tax collection quotas, Sun, 57, one of the
country’s best-known social scientists, told the Caijing Annual
Conference in Beijing. The attitude of local officials on the government’s one-
child policy is “I just don’t want to see newborn babies, and I
don’t care whatever you do to ensure the baby is not
delivered,” Sun said.
- U.S. Retailers’ Sales Miss Estimates After Sandy. U.S. retailers posted November
same-store sales that trailed analysts’ estimates as superstorm
Sandy depressed traffic early in the month, overwhelming gains
from the start of holiday shopping. Sales at Macy’s Inc.
(M), the second-biggest U.S. department- store company, fell 0.7
percent, compared with the average projection for a 2.5 percent gain
from analysts surveyed by researcher Retail Metrics Inc. Target Corp.
(TGT), the second-largest
U.S. discount chain, posted a 1 percent decline in same-store
sales, missing the estimate for a 2.1 percent increase. Same-store sales for the more than 20 companies tracked by
Swampscott, Massachusetts-based Retail Metrics rose 1.6 percent,
excluding drugstores, trailing the estimate for a 3.5 percent
gain, the firm said today.
- Tiffany(TIF) Cuts Full-Year Profit Forecast, Earnings Missed. Tiffany & Co., the world’s second- largest luxury jewelry retailer, cut its annual
profit forecast for the third time this year after higher diamond costs
ate into margins and customers curbed spending in weak economies.
Tiffany’s gross margin, a key measure of profitability, shrank more than
analysts anticipated last quarter as precious- metals costs also
increased. Sales, which also trailed the average projection, were
“weak,” said Liz Dunn, an analyst with Macquarie Group Ltd. in New York,
who rates the shares neutral, the equivalent of hold. The shares
dropped 7.9 percent to $58.72 at 9:34 a.m. in New York, the biggest
intraday decline since May 24.
- Jobless Claims in U.S. Decrease as Sandy Effect Dissipates. Applications for jobless benefits decreased by 23,000 to 393,000 in the week ended Nov. 24, Labor
Department figures showed today. Economists forecast 390,000 claims,
according to the median estimate in a Bloomberg survey.
- Pending Sales of Existing U.S. Homes Rose 5.2% in October.
The index of pending home resales climbed 5.2 percent, exceeding the
highest estimate in a Bloomberg survey of economists, to 104.8 after a
revised 0.4 percent gain in
September, figures from the National Association of Realtors
showed today in Washington. The median forecast in the Bloomberg
survey called for a 1 percent gain.
- Student Loans Go Unpaid, Burden U.S. Economy: Chart of the Day.
Wall Street Journal:
CNBC:
Business Insider:
Seeking Alpha:
Reuters:
- Fed's Fisher presses for clearer fiscal outlook. Fisher
said that a temporary fix would not help employment. Fisher said the
Fed would tighten monetary policy when needed but "we are not there
yet". Fisher, who is a critic of easy Fed policy, also said he
would like the central bank to define how far it is willing to go with
its monetary stimulus. "I personally advocate that we do it sooner,"
he said. Asked when the United States would see a substantial
improvement in employment, Fisher said: "Only when we will get clear
signals from the fiscal authorities." "You can't expect somebody to hire
somebody ... until you have confidence you will get a return on the
cost." "From a monetary standpoint, we have given the fuel ...
now it's up to the private sector to engage. And it won't happen until
we get clarity on the fiscal side."
- Egypt opposition says wider strikes possible against Mursi. An alliance of Egyptian opposition
groups pledged on Thursday to keep up protests against President
Mohammed Mursi and said broader civil disobedience was possible
to fight what it described as an attempt to "kidnap Egypt from
its people".
- U.S. gives Iran until March to cooperate with IAEA. The United States set a March
deadline on Thursday for Iran to start cooperating in substance
with a U.N. nuclear agency investigation, warning Tehran the
issue may otherwise be referred to the U.N. Security Council.
- Windows PC retail sales fall after Windows 8 - NPD.
Consumer sales of Windows-powered personal computers fell 21 percent
overall last month, according to a leading retail research firm,
indicating a lackluster debut for Microsoft Corp's Windows 8 operating
system, which many in the industry had hoped would revive slack PC
sales. Since the launch of Windows 8 on Oct. 26, Windows laptop
sales are down 24 percent, while desktop sales are down 9
percent compared with the same period last year, said NPD Group,
which tracks computer sales weekly using data supplied by
retailers.
- Year-end US fiscal deal must include debt limit hike-Reid. An increase in the U.S. debt
limit must be part of any deal to resolve the looming "fiscal
cliff" of year-end tax hikes and spending cuts, Senate Majority
Leader Harry Reid said on Thursday.
Telegraph:
Die Welt:
- Ifo's Sinn Doubt Euro Crisis States More Competitive. Ifo economic institute President Hans-Werner Sinn questions the view of the EU Commission that crisis-struck states in the euro area are becoming more competitive, citing an interview.
Epikaira:
- The main opposition Syriza party, which opposes Greek loan accord, has 31.5% support among likely voters, a poll by VPRC showed. Greek PM Samaras's New Democracy party would get 26.5% if elections held now. Nationalist Golden Dawn Party would have 12.5% support. 85% are dissatisfied with the way the govt is handling the country's problems.
Style Underperformer:
Sector Underperformers:
- 1) Retail -1.75% 2) Coal -.40% 3) I-Banking -.23%
Stocks Faling on Unusual Volume:
- KSS, TIF, SHLD, EGO, UPL, SBNY, HITK, LQDT, GNRC, USNA, BKS, LZB, HLF, OMI, VCRA, RUE, AAP, INGR, DVA, TFM, CBRL, ARO, OMG, PIR, TGT, LPL, CREE, PLL, M and TKR
Stocks With Unusual Put Option Activity:
- 1) TIF 2) KSS 3) GES 4) TGT 5) INTC
Stocks With Most Negative News Mentions:
- 1) AKAM 2) CREE 3) OMG 4) GS 5) XOM
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Steel +1.72% 2) Networking +1.09% 3) Biotech +1.08%
Stocks Rising on Unusual Volume:
- MMR, HDB, YPF, EXPR, MBT, BLOX, SMTC, RIMM, IBN and REGN
Stocks With Unusual Call Option Activity:
- 1) TIF 2) LCC 3) OVTI 4) LNG 5) UUP
Stocks With Most Positive News Mentions:
- 1) SMRT 2) KR 3) OCR 4) VMW 5) ROST
Charts:
Evening Headlines
Bloomberg:
- Rutte Sees Possible Extra Steps to Keep Greece on Track. Dutch
Prime Minister Mark Rutte said Greece may need more financial help to
stay in the euro, retreating from a hard line that included a
willingness to consider the country’s exit from the currency bloc.
Echoing his German allies, Rutte declined to speculate on Greece leaving
the 17-nation euro. “Wolfgang Schaeuble, the German finance minister,
is entirely right that you have to take a view on the situation of
Greece every couple of years again, whether we are on track and whether
extra steps have to be taken,” Rutte said in an interview yesterday in
The Hague. Rutte said he opposed granting concessions to Ireland and
Portugal that euro-area finance ministers this week agreed to give the
government in Athens to keep it solvent. He declined to comment on a
potential aid request by Spain and ruled out
writing off European taxpayers’ loans to Greece. “I absolutely believe that investors understand that
Greece is a particularly difficult case,” said Rutte, who spoke
in English. “I understand Ireland and Portugal are looking with
keen interest at the Greek package and what that might mean for
their countries.”
- Japan’s Retail Sales Fall in October as Car, TV Sales Fall. Japan’s
retail sales fell in October by the most in 11 months as consumers
purchased fewer cars and televisions, adding pressure on the government
to stimulate an economy that may be entering a recession. Sales fell 1.2
percent from a year earlier, the Trade Ministry said in Tokyo today,
after a 0.4 percent advance in September. The median estimate of 10
economists surveyed by Bloomberg News was for a 0.8 percent decline.
- Korea Manufacturer Confidence Falls to Lowest in 3 Years. South Korean manufacturers’
confidence fell to the lowest level in more than three years as
gains in the won threaten to slow a rebound in exports and the
country prepares to vote for a new president next month. An index
measuring expectations for December fell to 67 from 70 for November, the
lowest since April 2009, the Bank of Korea said in a statement in Seoul
today. A reading below 100
indicates that pessimists outnumber optimists.
- CFTC Said to Give Swaps Dealers 3-Month Clearing Time Delay.
The Commodity Futures Trading Commission granted JPMorgan Chase &
Co., Barclays Plc and six other lenders a three-month delay to meet
swaps-clearing rules, according to a person with knowledge of the
decision.
- Unaffordable Cost Seen for Some Under Affordable Care Act.
To Megan Hildebrandt, President Barack Obama’s Affordable Care Act
means she can no longer be denied health insurance because of her
lymphatic cancer. There’s a big catch: Coverage for the 28-year-old
artist and many other Americans without insurance will come at a
potentially unaffordable cost.
- Rio Tinto(RIO) Targets $5 Billion Spending Cuts, Production Boost. Rio Tinto Group, the world’s second-
largest mining company, said it’s targeting savings of $5
billion by the end of 2014, while simultaneously boosting
production at its iron ore, copper and alumina units. “We are taking further tough action to roll back the
unsustainable cost increases of the past few years,” Tom Albanese, chief executive officer of the London-based company,
said today in a statement. “Our two most challenged businesses
are aluminum and coal, and in particular Australian coal,” he
later told reporters in Sydney.
- China, EU Comments Show Reduced Scope of UN Climate Talks. China teamed with the European Union and envoys from the
bloc of 48 Least Developed Countries to dial back expectations for
United Nations climate talks, indicating that there probably aren’t any
new promises for aid or cuts in greenhouse gases on the horizon. China
ruled out the idea of capping growth in fossil-fuel emissions from
developing nations before 2020, while EU Climate Commissioner Connie
Hedegaard said she can’t provide specific details about how the bloc’s
27 countries plan to meet meet commitments for boosting aid to poorer
nations.
Wall Street Journal:
- Fiscal Cliff: Live Stream.
- Palestinian Vote in U.N. Seen Buoying Fatah. The United Nations General Assembly is expected to recognize the
Palestinian territories as a nonmember state in a vote Thursday, giving
President Mahmoud Abbas and his Fatah party a rare diplomatic victory
after being sidelined by the recent conflict in the Gaza Strip.
- For Small Firms, Election Results Dampen Optimism. The results of the presidential election dampened the spirits of many
small-business owners who now worry that forthcoming federal policies,
including potentially higher taxes and health-care reform, could stunt
growth and hiring at their firms. A November survey from Vistage International Inc. and The Wall Street
Journal found a significant drop in optimism compared with the months
leading up to the election, as respondents anticipated a worsening
economy in 2013. The survey's overall confidence index, based on responses of 740
small-business owners, fell to 83.9 from 95.3 in October. That is the
lowest in the survey's six-month history. Specifically, the survey's index of expected economic conditions fell
to 77 from 105, a result of 43% of the respondents anticipating worse
U.S. conditions in the next 12 months. That is nearly twice as many as
October's 23%. The index of business profits also fell to 122 from 135
as only 43% of owners anticipate higher profits in the coming year, down
from 50% last month.
- Heart Gadgets Test Privacy-Law Limits. The small box inside Amanda Hubbard's chest beams all kinds of data
about her faulty heart to the company that makes her defibrillator
implant.
Ms. Hubbard herself, however, can't
easily get that information unless she requests summaries from her
doctor—whom she rarely sees since losing her insurance. In short, the
data gathered by the Medtronic Inc.
implant isn't readily accessible to the person whose heartbeat it tracks. "This is my health information," said Ms. Hubbard, 36 years old. "They are collecting it from my chest."
- Henninger: The Racializing of American Politics. Even the exit polls now force people to put themselves in a racial category.
Fox News:
- Debt ceiling looms, as bill for Sandy mounts.
While lawmakers scramble to avoid a catastrophic budget meltdown known
as the "fiscal cliff," the nation also is fast approaching its borrowing
limit -- and expenses like the nearly $100 billion tab for superstorm
Sandy damage are only pushing the nation further into a rising sea of
red ink.
CNBC:
- Herbert Hoover Obama? Obama never mentioned spending cuts. Never. Not once. Yet Boehner has
argued that the Republican revenue concession depends on some
entitlement cuts as well as other spending reductions that would make up
the trillion dollars or so in the across-the-board sequestration plan
that appears to have been junked by both parties. Republicans should not sign a tax deal that doesn’t have a sizeable spending component.
Zero Hedge:
Business Insider:
NY Times:
- Medicare Is Faulted on Shift to Electronic Records. The conversion to electronic medical records — a critical piece of the Obama administration’s plan for health care reform — is “vulnerable” to fraud and abuse because of the failure of Medicare officials to develop appropriate safeguards, according to a sharply critical report to be issued Thursday by federal investigators.
Reuters:
- Moody's cuts Detroit debt ratings deeper into junk. Moody's Investors Service lowered
Detroit's debt ratings deeper into junk territory on Wednesday
and warned there was a higher risk the cash-strapped city could
default on bonds or file for bankruptcy. The credit rating agency, which placed Detroit on review for
possible downgrades in June, assigned a negative outlook to the
lowered ratings, citing "the rising possibility that the city
could file for bankruptcy or default on an obligation over the
next 12 to 24 months."
- Wells Fargo(WFC) says it won't face SEC action on mortgages. U.S. securities regulators have dropped
an inquiry into Wells Fargo & Co mortgage securities
offerings, the bank said in a securities filing on Wednesday.
- American Eagle(AEO) sees strong holidays, Aeropostale(ARO) wary. Teen clothing retailer American Eagle Outfitters
Inc said it got off to a strong start fo the holiday selling season and
raised its earnings forecast for the year, while Aeropostale Inc's forecast showed it expects a tougher season than its rival.
Financial Times:
- Dismal year for quantitative hedge funds.
BlueTrend, the $11bn Geneva-based fund run by Leda Braga, dropped 5.3
per cent in October, bringing year-to-date losses to 3.1 per cent, an
investor in the fund said. Winton Capital, the world’s largest quant
fund, with $26bn under management, has seen its flagship futures fund
drop 5.65 per cent in the year to November 27. Aspect Capital, another
large London-based quant fund, is down 11.7 per cent in the year to
November 21. AHL, the $16bn flagship fund of the Man Group has fared
better, though is still on course to lose money – the fund was down 2.8
per cent as of November 19.
Sueddeutsche Zeitung:
- Banks to contribute to Greek financial rescue less than previously believed. Central banks set to transfer revenue of about EU10b from Greek government bonds they hold minus costs of EU1b-EU2b. May result in additional costs to Germany Finance Ministry budget of as much as EU500m.
Euro-zone central banks bought Greek bonds with nominal value of EU50b.
Euro-zone finance ministers pledged the full EU10b in revenue to Greece, but now need to make up the different from national budgets. German Finance Minister Schaeuble had promised about EU2.7b over several years, but may get only EU2.2b from Bundesbank.
CTVNews:
- Canada to oppose Palestinian statehood bid at UN. Prime
Minister Stephen Harper said Canada will vote against the bid of the
Palestinian Authority to raise its status at the United Nations.
While Harper said he favours a two-state solution in the Middle East,
his government wants to see Israel and the Palestine Authority return to
the bargaining table before supporting Palestine’s statehood.
Evening Recommendations
Night Trading
- Asian equity indices are +.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 112.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 83.75 +.5 basis point.
- FTSE-100 futures +.53%.
- S&P 500 futures +.36%.
- NASDAQ 100 futures +.45%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (KR)/.42
- (TIF)/.63
- (CBRL)/1.06
- (BKS)/-.04
- (OVTI)/.31
- (ULTA)/.56
- (JCG)/.74
Economic Releases
8:30 am EST
- 3Q GDP is estimated to rise +2.8% versus a prior estimate of a +2.0% gain.
- 3Q Personal Consumption is estimated to rise +1.9% versus a prior estimate of a +2.0% gain.
- 3Q GDP Price Index is estimated to rise +2.8% versus a prior estimate of a +2.8% gain.
- 3Q Core PCE is estimated to rise +1.3% versus a prior estimate of a +1.3% gain.
- Initial Jobless Claims are estimated to fall to 390K versus 410K the prior week.
- Continuing Claims are estimated to fall to 3325K versus 3337K prior.
10:00 am EST
- Pending Home Sales for October are estimated to rise +1.0% versus a +.3% gain in September.
11:00 am EST
- The Kansas City Fed Manufacturing Activity Index for November is estimated to rise to -1.0 versus -4.0 in October.
Upcoming Splits
Other Potential Market Movers
- The Fed's Fisher speaking, Germany unemployment rate, Italy 10Y auction, 7Y T-Note auction, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index and the (CPLA) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and technology 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.
