Bloomberg:
- Spending by U.S. consumers fell in September for the first time in five months after the government’s auto-rebate program expired. The 0.5 percent decrease in purchases matched the median estimate of economists surveyed by Bloomberg News and followed a 1.4 percent jump in the prior month, Commerce Department figures showed today in Washington. Incomes were unchanged, while the savings rate climbed. Stagnant wages and concern over mounting unemployment are causing confidence to wane, raising the risk that consumers will retrench in coming months as government assistance programs run out. The report also showed inflation was lower than the Federal Reserve’s long-term projection, indicating the policy makers can keep rates low.
- Goldman-McKinsey-Galleon Ties, CDR Bids: Compliance. Raj Rajaratnam, the billionaire hedge-fund manager accused of insider trading, started an investment firm in 2006 with partners including Rajat Gupta, former head of McKinsey & Co., and Mark Schwartz, ex-chairman of Goldman Sachs Group Inc.’s Asia business, Miles Weiss and Joshua Gallu report. Rajaratnam’s role at Taj Capital, formed to manage hedge funds and private equity focused on South Asia, illustrates the breadth of his global business connections as he ran New York- based Galleon Group LLC.
- Crude oil fell more than $1 a barrel after U.S. consumer spending dropped for the first time in five months, increasing skepticism that economic growth will strengthen. Crude oil may fall next week on speculation the dollar will rebound against the euro and equities may pull back, according to a Bloomberg News survey. Fifteen of 34 analysts and traders, or 44 percent, said futures will drop through Nov. 6. Ten respondents, or 29 percent, predicted the market will rise and nine forecast prices will be little changed.
- Cuts to Health Accounts May Force Patients to Expedite Care. The legislation unveiled in the House yesterday would set for the first time a $2,500 cap on contributions to Flexible Spending Accounts, a benefit offered by employers that allows workers to pay some medical expenses with pretax dollars. Employers currently set their own limits, generally $3,000 to $5,000. The proposal is similar to one adopted by the Senate Finance Committee. An average worker could lose about $625 in tax savings by failing to take the full amount before the limits are set. The “open enrollment” benefit-selection period now under way at 95 percent of employers may be the last opportunity to claim a higher amount. “If you’re a parent and your kid needs braces in the next year or two, you may want to expedite that,” said Joe Jackson, chief executive officer of WageWorks Inc., a San Mateo, California, company that administers 1.5 million flexible spending accounts for some 2,800 employers.
- The Bank of Japan said deflation will linger for a third year, indicating the central bank is unlikely to raise interest rates from near zero. Consumer prices excluding fresh food, the bank’s preferred gauge of inflation, will tumble 0.4 percent in the year starting April 1, 2011, while economic growth will accelerate to 2.1 percent, the central bank’s policy board members said in their semiannual outlook in Tokyo today. Core prices will fall 1.5 percent in the year ending March 2010 and slide 0.8 percent in the following 12 months, they said.
- Panasonic Raises Full-Year Operating Profit Forecast 60%. Panasonic Corp., the world’s largest maker of plasma televisions, raised its full-year earnings forecasts. Operating profit for the year ending March 31 will probably be 120 billion yen ($1.3 billion), compared with an earlier projection of 75 billion yen, the Osaka-based company said in a statement today.
- Ford Motor Co.(F) hourly employees at three more factories rejected union contract concessions, dimming the automaker’s prospects for winning the givebacks granted to U.S. competitors. “This never happens. It’s a vote of no confidence in the bargaining committee and a vote of no confidence in Ford,” said Gary Chaison, a labor professor at Clark University in Worcester, Massachusetts. “To reject a collective agreement at a time of economic difficulty is really a sign of desperation and anger.”
- Americans are using less water than they did when consumption peaked in 1980, even as the population has increased, thanks to more efficient power plants and irrigation techniques, the U.S. Geological Survey said. The U.S. consumed 410 billion gallons of water a day in 2005, the last year for which data is available, a 5 percent decline from 1980, according to a report released yesterday. The U.S. population grew 31 percent in that time, the USGS said.
- Boeing Co.(BA) “blew a wonderful opportunity” for a no-strike guarantee of more than 10 years when it chose South Carolina over its Washington manufacturing hub for a new Dreamliner assembly line, the lead negotiator for the machinists union said. The union was willing to extend its current four-year contract by another eight years, ensuring no strikes through at least 2020, to secure the 787 work, Rich Michalski said. Instead, Boeing shut down talks two days before its Oct. 26 board meeting and announced Oct. 28 that it would open a plant in the southeastern U.S. state, the first time it’s built a commercial-aircraft assembly line outside the Seattle area. “They won’t ever get us to commit like that again,” Michalski said in an interview last night. “That’s over.”
- Amgen Inc.(AMGN), the world’s largest biotechnology company, was sued by New York and 14 other states following an investigation into a nationwide kickback scheme to boost drug sales, New York Attorney General Andrew Cuomo said.
Wall Street Journal:
- More states lowered their standards for academic proficiency in recent years than raised them, and nearly all used exams that fell short of federal testing benchmarks, according to a new study. The research, issued by the U.S. Department of Education, called into question the rigor of tests that states select to comply with student-improvement mandates of the federal No Child Left Behind law. It also cast doubt on claims of educational progress made by many states.
- Intel Corp.(INTC) Chief Financial Officer Stacy Smith said evidence is beginning to emerge that corporations are returning to technology spending, although such spending is driven more by the savings offered than by any spending increases.
- China is planning to impose antidumping tariffs on imports from the U.S., Europe and other countries of a chemical used to make nylon, a person familiar with the situation said Friday, in the latest sign of trade tension amid the global economic slump. China's Ministry of Commerce is expected to announce soon a final ruling on an investigation into imports of the chemical, adipic acid. The ruling, to take effect Monday, will say that foreign companies are guilty of dumping the organic compound -- or selling it below market prices -- in China and will order antidumping duties of 5% to 35% for five years, the knowledgeable person said. "Our sales guys are picking up more interest at corporations," Mr. Smith said in an interview Thursday.
- Cisco Systems Inc. (CSCO), EMC Corp. (EMC) and VMWare Inc. (VMW) are planning to unveil early next week the formation of a joint venture to sell a new integrated data center product, part of a broader trend by technology companies to offer end-to-end IT infrastructure.
MarketWatch.com:
- The stock market is certainly showing that it has faith in itself: It roared back during Thursday's sessions with a 200-point gain in the Dow Jones Industrial Average. But the market has little company: Few of the stock market timers tracked by the Hulbert Financial Digest are themselves showing much faith in the rally continuing. Though that may strike you as surprising, it is precisely what contrarian theory would suggest: The bull market is climbing a wall of worry. Consider the average recommended stock market exposure among a subset of the shortest-term stock market timers. As of Thursday night, this average was just 19.4%, which means that these timers on average are recommending that their clients have more than 80% of their equity portfolios out of the market. This statistic alone suggests that there is plenty of skepticism out there towards this rally. But there's more.
CNBC:
- Citigroup(C) may have to write down about $10 billion in deferred tax assets in the fourth-quarter, according to CLSA banking analyst Michael Mayo, sending the shares down over 5 percent.
NYPost:
- Aiming to dramatically slash costs, Time Inc. will lay off roughly 540 employees starting next week, company insiders say. The cuts will be staggered over two weeks and wrap up right before Thanksgiving so that the magazine publisher can take a charge against earnings in the fourth quarter. Layoffs are expected to be 6 percent of the workforce, which is now estimated to have shrunk to 9,000 employees worldwide. But even that number is not finalized and could end up bigger. Last year, the company cut 600 people (or 6 percent) from its 10,000 employees and took a charge against earnings of $176 million.
- US lawmakers and financial regulators split yesterday on key portions of the Obama administration's proposal to monitor and avert crises, highlighting the thorny issues that could slow progress on regulatory overhaul efforts. A draft proposal to deal with "too big to fail" firms unveiled by the Treasury Department and Rep. Barney Frank (D-Mass.) received a sharp response at the Capitol Hill hearing. The Federal Reserve gave the measure a vote of confidence, but Sheila Bair's Federal Deposit Insurance Corp. and lawmakers on both sides of the aisle on the House Financial Services Committee expressed unease or outright opposition to the proposed changes. Treasury Secretary Tim Geithner pushed back at claims that the new plan would create a permanent version of the $700 billion Troubled Asset Relief Program.
Washington Times
- VIP Democratic donors have big federal interests. UBS chief has Obama access. When UBS Americas CEO Robert Wolf stepped out on the golf links at Martha's Vineyard this past summer as part of President Obama's foursome, his firm had plenty to celebrate. A few days earlier, the Swiss parent of his company had resolved a long-running dispute with the IRS over undeclared offshore accounts. The sticky legal case was one of several matters involving the financial giant where huge sums of money could hinge on the action taken by the federal government. But as they strolled the fairways, the topic never came up. Mr. Wolf, like many of the influential Americans who raised more than $500,000 to help get Mr. Obama elected in 2008, has adamantly maintained that he has never let the interests of his company creep into his relationship with the president.
Business Insider:
- Apparently there's a loophole in the law that allows barred foreign citizens to enter the United States. They just need to have a meeting with Goldman Sachs (GS). At least that's our interpretation of this story.
Absolute Return+Alpha:
Rassmussen:
- Republican Chris Christie continues to hold a three-point advantage over incumbent Democrat Jon Corzine in New Jersey's down-to-the-wire race for governor. The latest Rasmussen Reports telephone survey in the state, conducted Thursday night, shows Christie with 46% of the vote and Corzine with 43%.
Politico:
- For the past few days, the story line on the House health care bill has been simple: Nancy Pelosi couldn’t deliver for the liberals. Not enough votes for the “robust” public option. That’s true — as far as the public option goes. But in reality, the bill she unveiled Thursday includes big pieces of what the most liberal members of her party wanted — most likely setting up a serious battle when negotiators try to merge it with the far more moderate Senate legislation.
AP:
Reuters:
- Defaults by small and medium-sized U.S. businesses on the loans, leases and lines of credit they use to finance capital equipment investment rose in September as lenders remained reluctant to extend fresh financing, PayNet Inc reported on Friday. But accounts in moderate and severe delinquency decreased during the month, a potentially encouraging sign that some businesses borrowers are finding it easier to meet their obligations. Accounts in moderate delinquency, or those behind by 30 days or more, fell to 4.22 in September from 4.35 percent in August, according to PayNet, which provides risk-management tools to the commercial lending industry. That is the lowest level since January.
- A weekly measure of future U.S. economic growth rose in the latest week while its yearly growth rate edged lower, indicating that the economic recovery, while easing, is still poised to strengthen in the near term, a research group said on Friday. The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index ticked up to 128.4 in the week to Oct. 23 from 127.9 the
previous week. The index's yearly growth rate fell to 26.9 percent from 27.2 percent last week. ECRI has recently reported annualized economic growth at all-time highs. "Despite coming off its early-October record high, WLI growth remains robust, suggesting that the U.S. economic recovery will continue to gather strength in the coming months," said ECRI Managing Director Lakshman Achuthan.
Financial Times:
The Telegraph:
- Goldman Sachs(GS) has distanced itself from any suggestion of wrongdoing in the insider trading scandal surrounding the Galleon hedge fund. The US investment bank was a leading prime broker to Galleon but on Thursday denied playing any part in passing on insider information to the hedge fund. The denial follows reports suggesting that Galleon paid hundreds of millions of dollars a year to major banks for access to information the general public did not receive. Galleon - headed by Raj Rajaratnam, who has been indicted on alleged insider trading charges – was reported to have received regular hints or market colorr. Lucas van Praag, head of public relations at Goldman, said: "Any suggestion that we provided inside information to Galleon is completely untrue." However, Morgan Stanley is understood to feel that no direct allegations were made against it. Former analyst Henry Blodget's Business Insider website said the allegations were "so explosive that both firms are going to have to start talking."
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