• There is $1.0 billion to buy market on close as of 3:48 p.m. today.

• About income and inflation.

There is a lot of talk on CNBC about the notion that the improvement in employment will lead to rising wages and improved consumer spending.

But yesterday it was disclosed that unit labor costs dropped by 1% in the third quarter of 2014, compared to expectations of an increase of 0.3%.

Real compensation rose by only 0.2%.

Revised second-quarter 2014 unit labor costs were down by 3.7%, compared to the initial report of a 0.5% decline.

The Fed contends that inflation is too low and easy money should continue until inflation rises.

Maybe I am dense, but if the average Joe's income is stagnating, won't any inflation be debilitating to the consumer?

• To Miles Nadal.

MDC Partners' Miles Nadal is guest hosting the current hour on CNBC.

Miles very graciously sponsored my Book Launch Party in New York City two weeks ago.

A public thanks to my buddy/pal/friend.

• More on the folly of oil prices.

Yesterday, I wrote about the folly of predicting oil prices. While I have no idea how much or when the price of oil will rally, it is instructive to point out two things:

1. Oil has become very oversold in the past and has promptly rallied.
2. There have been other relationships regarding oil that EVERY "smart" energy strategist pointed out were going to stay that way forever. Case in point, in the summer of 2012, every crude oil strategist/analyst stated that the spread between WTI and Brent would remain wide for the next five to 10 years because of the oversupply of WTI. It then proceeded to go from a $25 spread to ZERO (!!!) in nine months. It didn't go to $20, it went to zero (see the chart below).

Oil Prices

Source: Bloomberg

View Chart »View in New Window »

So, recognize that while it's unlikely to change soon, oil could still have a big rally back up, and just because experts say it's going to $40, doesn't mean it will!

I am a buyer of Devon (DVN), Exxon Mobil (XOM) and Chevron (CVX) on a scale lower.

• Shorts and longs.

Today, I added small to my Index shorts and to Apple (AAPL).

I peeled off some of my longs: Citigroup (C), Potash (POT) and Radian Group (RDN).

I added to all 14 closed-end municipal bond funds.

And I took some small "shots" in large-cap energy.

• That was the market's reaction to a Bloomberg column.

The market, these days, is run predominantly by machines (and algorithms) and day traders.

That helps to explain the Pavlovian response to the aforementioned Bloomberg column.

I continue to fade this rally.

But via baby steps.

• From Bloomberg article.

 Here is the Bloomberg article that has reversed the equity markets:

European Central Bank Governing Council expects to consider proposal for broad-based asset program including sovereign debt next month, two euro-area central-bank officials familiar with deliberations said.

  * Package envisaged to include all kinds of bonds, no equities

  * Package hasn't been designed yet; no decision on implementation taken yet

  * Composition of package may be influenced by incoming data

  * Officials asked not to be identified because discussion is private

  * ECB spokesman declines to comment

This is what Peter Boockvar has to say about the article:

Bloomberg is reporting as new news that the "ECB Governing Council expects to consider proposal for broad based asset program (just bonds, not stocks) including sovereign debt next month, two euro area central bank officials familiar with deliberations said." Anyone listening to Draghi this morning knows this is nothing new and Bloomberg repeated what Draghi said, "package hasn't been designed yet; no decision on implementation taken yet...Composition of package may be influenced by incoming data." The euro is still up but came off its highs in response. While the Bloomberg headline made this out to be breaking news, it is nothing new as we know the ECB is looking at all things to increase the size of their balance sheet and Draghi said as such today. The question is if, timing, extent and how much support on the council does Draghi get because it won't come from the Germans.

• The market has reversed.

 The market has reversed on talk that the European Central Bank is said to be preparing a broad-based package for the January meeting.

• From Sir Arthur Cashin:

Buy the dippers nibble away - - helping to trim the losses.

Run rate at 12:30 projects to an NYSE final volume of 650/730 million shares.

• From Sir Arthur Cashin:

Brent dip below $70 led to CHV and XOM pulling more than thirty points out of Dow (now 23 points). Christmas consumer motto appears to be: "If it's got a battery ¿ buy it."  Apparel sales lag badly, dragging heavily on many retailers.

Draghi remains the Prince of Promise ¿ talk not action.

Going radio silent at 1:00 as Wonder Woman goes on special mission.

Bears push Hindenburg Omen but it has expired already.

Run rate shortly but slower than Wednesday.

• I've added some more.

I have added small to my Apple (AAPL) short in the morning ramp -- and my cost-basis on today's trades is $116.72.

My aggregate net exposure is back up to 20% with this morning's premarket shorts.

BlackRock Investment Quality Municipal Trust (BKN), the first closed-end municipal bond fund that I placed on my Best Ideas List in December 2013, has now gained 25% over the last 12 months. This proves, once again, that conservative investing can pay off.

On any measure -- relative to the S&P 500's 12% advance and certainly on a risk-adjusted basis -- this tortoise has triumphed over the hare.

The closed-end municipal bond sector remains my favorite asset class, and I expect further gains of between 5% and 15% in 2015.

• Peter Boockvar dishes.

The euro continues to move sharply higher after Draghi said that the hoped for increase in the ECB balance sheet was his 'intention' and not a 'target.' Thus, a 3T balance sheet is no layup. This wording also was not a unanimous decision on the part of the governing council as Draghi reveals some dissent (very likely from the Germans and a few others) on doing something more dramatic than buying corporate bonds. Draghi said the ECB had "very rich discussion" on "various options of QE." On the question of sovereign bond buying, the ECB of course did it a few yrs back but there are still major legal questions for the ECB on monetizing government borrowing.

• Through the end of the year.

Oil equities fail to follow through from recent strength this morning.

My guess is that these will be trading sardines for the rest of the year -- subject to tax-loss-related selling, the stocks will likely move randomly without any consistent trend in the weeks ahead. 

• Thanks to a Microsoft bump.

A brokerage upgrade of Microsoft's (MSFT) price target is holding up the Nasdaq this morning in the early going.

Doing little after my premarket trades.

• It's time for one of my often stupid and Ludacris Forecasts!

Today, Mr. Market will fall by more than 1%.

• Hope to see you there.

I wanted to again remind everyone -- particularly those in the South Florida area -- that I have a book signing in Palm Beach tonight at The Palm Beach Bookstore starting at 6 p.m. for my book, Doug Kass on the Market: A Life on the Street.

As I have mentioned, the book royalties will be going to research for a cure of two terrible diseases -- Rett Syndrome and PSC.  

In addition, I have decided to donate a portion of the royalties to the North Shore Animal League.  

If you read the book and like it, I would appreciate you writing a nice review on the Amazon page for the book (just scroll down to post). This will help the book sales -- and these charities.

Thanks to all for helping out these charities with the purchase of my book!

• Break in!

The European Central Bank (ECB) slashes eurozone growth forecasts: The 2015 figure is down to 1% from the 1.6% estimate seen in September, and 2016 is down to 1.5% from the prior expectation of 1.9%.

• A hatful of shorts.

I added (small) to my Apple (AAPL) short at $116.35, to my SPDR S&P 500 (SPY) short at $208 and to my PowerShares QQQ (QQQ) short at $105.5 in premarket trading.

Staying real and transparent.

• Some thoughts from Peter Boockvar.

Initial jobless claims were essentially in line at 297k vs 314k last week which was the first trip above 300k since early September. The 4 week average did rise to 299k from 294k as the 278k print at the end of October drops out of the average. Continuing claims, delayed by a week, did rise by 39k off the lowest since 2000. There was nothing unusual in the data and no obvious impact from the drop in oil prices, although its likely way too early for that. Bottom line, notwithstanding the upward trend in claims in November vs the 14 yr lows seen in October, the level of firing's still remains historically healthy and we'll very likely see another 200k+ monthly job gain tomorrow. The unemployment rate will also likely head towards the Fed's year end 2015 target much sooner than they anticipate (likely by early next year), thus also bringing forward the first rate hike well before many expect, we believe.

Draghi reiterates his confidence that the TLTRO lending program and asset purchases of ABS and covered bonds will move their balance sheet to the 3T euro level that it was at in early 2012. They will also reassess the progress in the early part of 2015 to see if this is working and will also analyze the drop in oil prices and its inflation outlook. He repeats again that they will act again 'if needed' and in a 'timely manner.' He also cut his GDP forecasts for the next few years. Bottom line, sovereign QE may still well come in 2015 but it also may not as the dissent by some powerful members within the ECB are likely vocal. What may come next instead first 'if needed' is the ECB buying corporate bonds. This would help increase the ECB balance sheet but there is certainly not a lack of demand from the investing world for high grade corporate bonds. As traders now have to wait and see, the euro is rising in response to Draghi's prepared comments. We await the Q&A.

• Thanks to Draghi.

More nonsense from the European Central Bank's (ECB) Mario Draghi. I have added to my index shorts -- in SPDR S&P 500 (SPY) and PowerSharesQQQ (QQQ) in premarket trading.

• I plan to more aggressively expand my short as we move into early 2015.

Given Apple's (AAPL) strong November-to-December share-price advance, and with the recent all-time high back in sight, the consensus view on Apple's shares is now almost universally bullish. But the areas of consensus are known to shift unbelievably quickly, as the bubbles of certainty are constantly exploding in the markets.

Recently, for the first time since my bearish call on Apple in September 2012, I adopted a negative view on Apple's shares.

I took a small short position in Apple, which I have traded around.

Apple is among the most widely held stocks, and among the most admired companies, so my call drew the criticism of many -- just as my September 2012 call did. (Note: My 2012 call was followed by a near-45% drop in Apple's share price in only a few months.)

The cornerstone of my bearish case is this: While the company's current product upgrade cycle -- in the iPhone -- is quite strong, but it likely represents the last important and needle-moving phone-upgrade cycle for some time.

Nearly 70% of Apple's sales and profit are iPhone-related. But the high-end smartphone market is mature, so future sales are replacement-dependent.

With fiscal 2015 (ending September) annual sales estimates are now in excess of $210 billion, Apple's past successes represent a headwind unto themselves: New and incremental products must be introduced in order to move the sales and profit needles.

At the same time, the absence of new product introductions could pressure the company's earnings and disappoint investors -- and I do not believe either the Apple Watch or Apple Pay will contribute enough to fill the late-2015-to-early 2016 gap. With Apple's shares now trading at almost 15x, as compared with 10x to 11x when the company's profit has been historically pressured, the shares could be peaking as an elongated and more lengthy replacement cycle develops in the absence of important new features.

In my recent thesis, I recognized that the risk to a short position was the likely strength of near-term sales momentum, both domestic and international, provided by the iPhone 6 and 6+. Accordingly, I have put on only a small short position in Apple, which I have traded around. This relatively small sizing has been a good thing, as both the strength of the market's recent advance and that of Apple shares have been surprising to me. As we approach the year-end mark, that strength may continue over the near term given the calendar, and in light of this stock's important weighting in many large hedge-fund portfolios.

However, as we move into early 2015, and as the strong near-term momentum of the current product-upgrade cycle likely peaks, I plan to more aggressively expand my Apple short.

Last evening, on Fast Money Sanford Bernstein's Toni Sacconaghi made a similar case to mine -- and a cautious one.

Let's go to the tape. 

• Watch out for lower profits.

One of my core market concerns is that the strength of the U.S. dollar will lower profit and export demand among S&P 500 companies.

In a thoughtful opening column, "Forget Currencies for Now," Jim "El Capitan" Cramer addresses this concern.

Regardless of how you weigh on this subject, Jim's post is a must-read. 

• Wal-Mart lowered.

UBS downgrades Wal-Mart (WMT) to Neutral. 

• Owing to a meeting.

I am at an early-morning research meeting, so there will be no Market Setup today.