Bloomberg:
European Central Bank President Jean- Claude Trichet indicated the bank is poised to cut interest rates for the first time in more than five years as the credit crunch hurts the economy and damps inflation. Investors are betting the ECB will lower borrowing costs as soon as next month after Trichet told a press conference in Frankfurt that policy makers discussed a rate reduction today. While leaving the benchmark at a seven-year high of 4.25 percent, Trichet said financial-market turmoil is damping economic growth and inflation risks ``have diminished.''
- The US dollar rose against the euro, approaching a one-year high, as the U.S. Senate began voting on a $700 billion bill that would allow the government to buy troubled assets from banks.
- Crude oil, gold and corn led commodities lower as the dollar reached a one-year high against the euro and on concern that consumption will drop because of slower economic growth. Energy, metals and grains have tumbled this week as the euro dropped against the U.S. currency amid signs that Europe's economy is slowing. The Reuters/Jefferies CRB Index of 19 commodities tumbled to the lowest in almost a year. The CRB fell as much as 13.44 to 329.80, the weakest since Oct. 11, 2007. The index has slumped 30 percent from a record on July 3. The euro dropped after European Central Bank President Jean- Claude Trichet indicated the bank is poised to cut interest rates for the first time in more than five years as the credit crunch hurts the economy and damps inflation. U.S. fuel consumption over the past four weeks averaged 19 million barrels a day, the lowest since October 2001, an Energy Department report showed yesterday. Crude-oil and gasoline inventories increased last week, the department said.
- Former Federal Reserve Chairman Alan Greenspan said financial markets and the economy will recover ``sooner rather than later'' from the worst turmoil in seven decades. ``Trust will eventually reemerge as investors dip hesitantly back into the marketplace,'' Greenspan said today in a speech at Georgetown University's law school in Washington. ``From that point, history tells us, financial and economic revival sets in. I suspect it will be sooner rather than later.'' ``We are living through the type of wrenching financial crisis that comes along only once in a century,'' Greenspan said today. ``Financial markets freeze up as an excess of fear displaces a protracted period of what some might call irrational exuberance. Eventually the market freeze will thaw as frightened investors take tentative steps towards reengagement with risk.''
- U.K. house prices had the biggest annual drop since at least 1991 in September as the financial crisis intensified, Nationwide Building Society said. The average cost of a home plunged 12.4 percent from a year earlier to 161,797 pounds ($287,658), the largest decline since the survey started 17 years ago, the Swindon, England-based mortgage lender said in an e-mailed statement today. Prices fell 1.7 percent from August, the 11th monthly drop.
- Crude-oil prices may fall as low as $50 a barrel next year, about half current levels, in the ``unlikely'' event of a global recession, weighing on shares of petroleum producers, Merrill Lynch & Co. said. Merrill cut its 2009 average price estimate for West Texas Intermediate, the U.S. benchmark oil grade, by 16 percent to $90, citing falling demand and the start of new fields in Organization of Petroleum Exporting Countries. U.S. oil use is declining faster than expected, while European consumption is falling ``rapidly,'' and OPEC production capacity is ``just about to soar,'' Merrill said. ``Notionally it is conceivable that in a worst-case scenario global oil demand actually contracts in the near-term as it did back in the 1980s post the Iranian Revolution.'' Oil demand growth in China and India, the world's fastest- expanding major economies, may slow down in 2009, Merrill said. A ``string'' of fields in Saudi Arabia, Qatar and elsewhere within OPEC is set to increase capacity within the exporting group by about 3 million barrels a day in the next 18 months.
- Bayerische Motoren Werke AG, Ford Motor Co. and France's Renault SA said a slump in car sales may be more prolonged than manufacturers have anticipated. Auto markets won't recover until at least the middle of next year, BMW Chief Executive Officer Norbert Reithofer said today at the Paris Motor Show. The world's largest luxury-car maker may deepen production cuts if people continue to delay purchases. Ford CEO Alan Mulally said a recovery won't begin before 2010 and Renault boss Carlos Ghosn said the slowdown may last two years.
- Russia will hold its largest air force exercises since the 1991 collapse of the Soviet Union next week, while a naval convoy on its way to Venezuela stages a show of strength in the Mediterranean.
- UBS AG, the largest Swiss bank, will close its energy and soft-commodity trading operations as part of an effort to cut costs.
Wall Street Journal:
- In the third quarter, global deal volume in dollar terms rose 1% to $968 billion from a year earlier. The U.S. was particularly strong, jumping 27% to $368.2 billion.
Interfax:
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The Economic Times:
- For many companies, this could turn out to be the longest weekend of their life. To tide over the next five days — after which they hope the cash crunch could ease a little — several non-banking financial companies (NBFCs) have borrowed at rates the Mumbai money market has never seen before. Desperation has driven these firms to raise money at an unbelievable 1,000-1,800 basis points (bps) above Mibor (Mumbai inter-bank offer rate) — the benchmark rate for overnight lending, which is fixed by polling call money rates from leading banks and bond houses. On Wednesday, Mibor was quoting at 17%. This means an interest cost of 27-35% for the borrowers. “There have been some deals at even 2,000 bps over Mibor... I have not heard of such rates,” said a dealer with a large institution.
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