Today's Headlines

Bloomberg:

- Spending by U.S. consumers climbed in August by the most since 2001, indicating the biggest part of the economy is starting to rebound from its worst slump in almost three decades. The 1.3 percent increase in purchases was larger than forecast and followed a 0.3 percent gain in the prior month that was bigger than previously estimated, Commerce Department figures showed today in Washington. Incomes climbed 0.2 percent for a second month and inflation decelerated. “This is not just a cash-for-clunkers story, spending is back in other areas as well,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, who correctly forecast the gain in spending. “It looks to be a slow and steady recovery.

- The number of contracts to buy previously owned homes in the U.S. increased more than forecast in August, reinforcing signs of a rebound in housing, industry figures showed today. The index of signed purchase agreements, or pending home sales, rose 6.4 percent after a 3.2 percent gain in July, the National Association of Realtors announced in Washington. The gain was the seventh in a row. Compared with a year earlier, pending sales rose 12.4 percent. “We are in a recovery,” said Gary Thayer, macro strategist at Wells Fargo Advisors LLC in St. Louis, before today’s report. “There were a lot of people who were on the fence. Prices are firming up and people are getting back into the market.”

- The Senate Finance Committee narrowly defeated a Republican attempt to exempt most Americans from tax increases to pay for the U.S. health-care overhaul, underscoring the friction over how to fund the legislation. The panel voted 12-11 to reject what Chairman Max Baucus warned was a “killer amendment” by Idaho Republican Mike Crapo to shield households earning less than $250,000 from at least three levies contained in the bill, including a penalty for people who fail to obtain insurance. “There are going to be a lot of people whose taxes are increased by this legislation,” said Crapo. He said the bill’s price tag -- an estimated $900 billion over 10 years -- should be reduced instead.

- Manufacturing in the U.S. expanded less than anticipated by economists and more Americans filed claims for unemployment benefits, pointing to a recovery that will be slow to generate jobs.

- New greenhouse gas regulations from the Environmental Protection Agency threaten to halt U.S. refinery upgrades and expansions, which could boost gasoline imports, an oil industry representative said. “Any time you increase capacity, or if you want to upgrade your refinery to use a wider range of crude oils, you could trigger these new regulations,” Charles Drevna, president of the National Petrochemical and Refiners Association, said in a phone interview.

- Natural gas stockpiles in the U.S. rose to a record 3.589 trillion cubic feet as the worst recession since the 1930s curbed demand from chemical plants, carmakers and manufacturers across the country. Inventories last week topped the prior record of 3.545 trillion set in November 2007, the Energy Department said today. With another month to go before supplies begin to drop as households and offices burn the fuel for heating, stockpiles may push the limits of U.S. storage capacity for the first time. As demand dropped during the recession, output increased from new fields in Texas, Oklahoma and Louisiana. Gas production this year will average 59.1 billion cubic feet a day, up from 58.59 billion in 2008, the department’s Energy Information Administration said in its monthly Short-Term Energy Outlook on Sept. 9. The Energy Department also predicted that consumption by industrial users, including factories, steel mills and chemical plants, will fall 9.8 percent in 2009. Gas supplies this fall may approach peak U.S. storage capacity of 3.899 trillion cubic feet, according to Energy Department estimates. “The record is sobering for the bulls,” said Phil Flynn, vice president of research at PFGBest, a Chicago-based brokerage. “The focus is going to be injections, which will show a record high, and that will bring some pressure on prices.”

- Copper prices slid the most in a week as the dollar strengthened, damping demand for the metal from buyers holding other currencies, and China’s factory output grew less than forecast. The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, jumped as much as 0.8 percent. In China, the world’s largest copper consumer, the Purchasing Managers’ Index rose less than economists estimated, according to a report from the Federation of Logistics and Purchasing in Beijing.

- Former Federal Reserve Chairman Alan Greenspan said the U.S. will have to both tighten credit and raise taxes as the economy pulls out of the worst recession since the 1930s. “The presumption that we’re going to be able to resolve this without significant increases in taxes is unrealistic,” Greenspan, 83, said in an interview with Bloomberg Television yesterday. The budget deficit this year is forecast to widen to $1.6 trillion, boosted in part by President Barack Obama’s $787 billion stimulus package. Between 2010 and 2019, deficits will total $7.1 trillion, according to the Congressional Budget Office. Greenspan said that the odds are growing that the U.S. will have to enact some form of consumption tax to help reduce the federal budget deficit. Obama has pledged to bring down the deficit without raising taxes on middle-income Americans. The CBO estimates that this year’s budget shortfall will equal 11.2 percent of the economy, the most since World War II. Greenspan said he is “quite impressed” by Obama and called him “a very intelligent man.” “But I don’t think he is sufficiently in control of a very serious budget problem,” the former Fed chief said.

- Investors should buy 10-year Treasury notes before tomorrow’s payroll data after the yield broke out of a trading range and a momentum indicator signaled it has further to rally, according to RBC Capital Markets.

- Europe’s unemployment rate rose to the highest in more than 10 years in August as companies continued to cut jobs even as the region’s largest economies emerged from recession. Unemployment in the 16-member euro region increased to 9.6 percent from 9.5 percent in July, the European Union statistics office in Luxembourg said today.

- The military situation in Afghanistan is “in some ways deteriorating,” and requires quick action from the U.S. and NATO to combat insurgents, said U.S. General Stanley McChrystal. Coalition forces must “gain the initiative” and change their mindset, McChrystal, the top U.S. and NATO commander in Afghanistan, said today in a speech at the International Institute of Strategic Studies in London.

- General Motors Co., Toyota Motor Corp. and Ford Motor Co. said sales fell in September as waning demand after the “cash for clunkers” rebates may have cut industry deliveries to the second-slowest rate this year. GM deliveries tumbled 45 percent, while Toyota dropped 13 percent, both worse than analysts had estimated. Ford slid 5.1 percent, and Chrysler Group LLC, Honda Motor Co. and Nissan Motor Co. also posted declines. “We knew sales would slow down significantly after the cash for clunkers surge,” said Stephen Spivey, senior auto analyst at Frost & Sullivan in San Antonio. “October will tell you what kind of rebound comes off that dip.”

Wall Street Journal:

- Banks in the European Union could face losses of almost €400 billion this year and next year if the economy deteriorates sharply, the bloc's finance ministers and central bankers said in a draft statement obtained by Dow Jones Newswires. The statement details some of the results from recent stress tests conducted on 22 of the bloc's largest banks.

- The chairman of the Senate Finance Committee said Thursday that he wanted to complete work on a sweeping health-care bill by nightfall, opening the way for Democratic leaders to bring the historic legislation to the floors of both the House and Senate as early as mid-October.

NY Times:

- Hedge funds, trying to separate themselves from the big Wall Street banks, are stepping up their efforts to head off new regulation from Washington. Representatives of the industry’s main lobbying group met on Wednesday with the Treasury secretary, Timothy F. Geithner; Ben S. Bernanke, the chairman of the Federal Reserve; and Mary L. Schapiro, chairwoman of the Securities and Exchange Commission, to lay out their views of President Obama’s sweeping package of reforms to the nation’s financial regulatory system, The New York Times’s Zachery Kouwe reported. Of particular interest to the group, the Managed Funds Association, is the possibility that Congress will deem some hedge funds as systemically important to the financial system and subject them to onerous regulation and reporting requirements. The group has been focused for months on persuading lawmakers that, unlike big banks, hedge funds do not pose a systemic risk to the economy. Hedge funds have also been engaged in heading off restrictions on trading credit-default swaps and betting on the decline in a company’s stock price.As part of its push in Washington, the association is expected to elect Darcy Bradbury, a former assistant Treasury secretary and a senior vice president for the D.E. Shaw group, to lead the effort. She will succeed Eric Vincent, who is credited with turning the once-sleepy organization into a powerful lobbying group.

- The chairman of the Federal Reserve, Ben S. Bernanke, told skeptical lawmakers on Thursday that the Fed should be put in charge of regulating the nation’s biggest financial institutions. But in a nod to critics who have expressed alarm about the Fed’s immense power during the financial crisis, Mr. Bernanke said responsibility for monitoring broader risks in the financial system should go to a council of regulators, The New York Times’s Edmund Andrews writes.

Business Week:

- Sometimes in Hollywood, misery loves company. And, while three film studios are locked in a legal tussle with video vending machine operator RedBox and its $1 rentals, another company that’s feeling Hollywood’s the less than warm embrace these days is online DVD rental powerhouse Netflix (NFLX). At least three studios – which I’m told are Warner Brothers (TWX), Fox (NWS) and Universal (GE) — are trying to arm-wrestle a better deal out of the Los Gatos, Calif. company, whose nearly 12 million subscribers are expected to generate about $1.7 billion in DVD rentals this year.

Nasdaq:

- House Speaker Nancy Pelosi, D-Calif., said Thursday the House won't vote on a health overhaul bill that doesn't include a public option.

US News:

- 10 Hard-Hit Housing Markets That Are Ready to Rebound.

Rassmussen:

- Forty-three percent (43%) of Americans say it’s a bad idea for President Obama to go overseas at this time to help Chicago make its final presentation to the International Olympic Committee. But 36% disagree and think it’s a good move on the president’s part.

Politico:

- Senate Majority Leader Harry Reid is putting pressure on the Obama administration to complete its review of the ...... "Don't ask, don't tell" policy governing gays in the military. In a letter sent to President Barack Obama last week, Reid argued that changing the policy was a national security issue and called on the White House to move quickly.

The Boy Genius Report:

- One of our ninjas just blessed us with a product inventory shot from Best Buy. It shows that Best Buy locations will be getting BlackBerry Storm 2 dummy units starting October 25th. Why is that important? Well, as it was explained to us, actual retail units start to come in a little bit before or a little bit after those dummy models hit.

Google Blog:

- In May, we launched Search Options, a side panel that lets you filter, refine and generate different views of your search results. We've received lots of positive feedback, and we're seeing more and more people using Search Options every day. Today, we're announcing nine new Search Options tools: past hour, specific date range, more shopping sites, fewer shopping sites, visited pages, not yet visited, books, blogs and news. These features have been rolling out gradually and will be available globally in English by the end of the day.

USA Today:

- The Transportation Security Administration plans to install 150 security machines at airport checkpoints that enable screeners to see under passengers' clothes. The installation will vastly expand the use of the controversial body scanners, which can reveal hidden bombs and knives. But the devices have been labeled as intrusive by some lawmakers.

- There is another demand in the House of Representatives for an apology, but this time it is coming from the Republicans. The outrage comes after Rep. Alan Grayson, D-Fla., made a short speech on the House floor last night slamming the Republicans' health care plan. Grayson, a freshman congressman, said, “If you get sick, America, the Republican health care plan is this: Die quickly. That’s right. The Republicans want you to die quickly if you get sick.”

Reuters:
- A Massachusetts court ruled on Wednesday that hedge fund manager Phillip Goldstein's right to free speech was not violated by an order to let only qualified investors view his firm's website. Goldstein, who runs Bulldog Investors and is best-known for successfully curbing the reach of financial regulators into the $1.4 trillion hedge fund industry, took the case to court after Massachusetts' top financial regulator ordered him to stop allowing unqualified investors to look at his portfolios. "This ruling is wrong and we are going to appeal it," Goldstein said. "Apparently if you live in Massachusetts you have to be rich to read truthful material on a hedge fund website," he added.

- The number of civilians killed in Iraq in September fell to 125, the lowest level since the 2003 U.S. liberation, according to figures from Iraq's Health Ministry released on Thursday.

- CIT Group Inc (CIT) is planning to get a debtor-in-possession loan of $5 billion to $7 billion if its planned debt exchange offer fails and it files for prepackaged bankruptcy, sources familiar with the matter said on Thursday.

- Cisco has agreed to buy Norwegian videoconferencing company Tandberg for $3 billion in cash, its latest big bet that video will drive demand for its core data transmission gear. The acquisition will fill the wide gap between Cisco's high-end TelePresence video meeting service for executives and its WebEx tool used by millions of office workers for online meetings, and could bring videoconferencing to a mass market.

TimesOnline:

- Amazon(AMZN) will finally launch its Kindle e-Book reader in the UK, possibly as early as this month. The leading publishing trade magazine, The Bookseller, has reported that the much-anticipated device will hit British shelves as early as October, with an announcement expected as early as next week.

O Estado de S.Paulo:

- The rally in Brazilian stocks may turn into a bubble, said Arminio Fraga, the chairman of BM&F Bovespa SA and a former central banker.

DigiTimes:

- SanDisk(SNDK) is reportedly seeking additional supplies of NAND flash controller chips and support for backend packaging capacity from Taiwan makers for the production of microSD cards, according to industry sources. SanDisk has secured sufficient supply of NAND flash via its Toshiba partnership although many other card manufacturers have been hit by a chip shortage, the sources said. Despite the sufficient NAND flash supply, SanDisk's shipments of microSD cards are still being interrupted by a controller shortage and tight capacity at its microSD card packaging partner Siliconware Precision Industries (SPIL), the sources said.

- E-book reader shipments were around 1.1 million units in 2008 and the volume is expected to surpass three million units in 2009, according to industry sources citing figures from independent research firms.