- Berlusconi Yields Climb Amid Threat of Early Italian Election: Euro Credit. Investors are driving up Italy’s borrowing costs as Prime Minister Silvio Berlusconi struggles to retain enough support to prevent early elections in Europe’s most-indebted nation. The extra yield that investors demand to hold 10-year Italian debt rather than German bunds exceeded 163 basis points yesterday to hover at the highest level in a month. The premium is rising as the government prepares to sell as much as 9.5 billion euros ($12.8 billion) of bonds today and tomorrow.
- Yuan Legislation in U.S. Congress My Prompt Retaliation, Businesses Say. U.S. legislation pressing China to raise the value of its currency may boomerang by prompting retaliation against American businesses operating there, representatives of those companies said. “This step would make it harder for us to export to China, not easier,” Timothy Stratford, a partner in Beijing at Covington & Burling LLP and a former U.S. trade official, said at a briefing today in Washington. The House of Representatives is set to consider legislation this week that would let companies petition for higher duties on imports from China to compensate for the effect of a weak currency.
- Takefuji Said to File for Bankruptcy Today Amid Rising Interest Refunds. Takefuji Corp., a Japanese consumer lender, will file for bankruptcy protection today because of rising refunds to borrowers for overcharged interest, according to a person with direct knowledge of the matter.
- October is likely to be "peculiarly dangerous" for Chinese stocks, already Asia's biggest loser in 2010, as the supply of new shares soars in the month that's historically been the worst for the nation's equities, according to China International Capital Corp. The median return in October for China's benchmark during the period has been negative 4.5%, with declines 67% of the time, according to Hao Hong, a global strategist at CICC. This October "will also see a substantial amount of restricted stock starting to become tradable," Hong said. Shares worth $112 billion will become eligible for trading on the Shanghai market next month, he said.
- U.S. Gasoline Supplies Increase in Survey as Demand Falls: Energy Markets. U.S. gasoline inventories probably rose to the highest level in six months as demand slipped with the end of the summer driving season and economic growth slowed, a Bloomberg News survey showed. An increase in first-time claims for jobless benefits in mid-September points to reduced gasoline demand and lower pump prices. Consumption dropped 1.9 percent in the week ended Sept. 17, the smallest level since February. Regular gasoline, averaged nationwide, declined for a tenth straight day to $2.694 a gallon on Sept. 26, the AAA said on its website. “We’ve seen a recent major decline in gasoline demand,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut. “Normally demand drops at this time of year along with refinery utilization rates. We’ve yet to see refiners cut back.” Gasoline output has outpaced demand during the past three weeks, according to the department. Refineries produced 9.02 million barrels a day of gasoline compared with demand of 8.85 million. Supplies of the fuel in the week ended Sept. 17 were 15 percent higher than the five-year average for the period, the department said. U.S. fuel demand will drop 9 percent to average 18.93 million barrels a day this year, from a record 20.8 million in 2005, the Energy Department said on Sept. 8.
- California May Seek $5 Billion From Wall Street, Lockyer Says. California is lining up a short- term loan of more than $5 billion from a group of Wall Street banks to tide the state over with enough cash after a record- long budget impasse, Treasurer Bill Lockyer said. The state may borrow the money from Bank of America Merrill Lynch, JPMorgan Chase & Co., Goldman Sachs Group Inc. and RBC Capital Markets once a budget is enacted and would repay the funds with an estimated $10 billion of notes it will sell in October or November, Lockyer said today in New York.
- Mexican Mayor Becomes 11th City Chief Killed in 2010 as Drug Deaths Surge. An interim mayor of the Mexican town of Tancitaro in Michoacan state became the country’s 11th city chief killed this year, and may have been stoned to death. State officials were conducting an autopsy to confirm the cause of death after Gustavo Sanchez’s corpse was found on a road in the Michoacan city of Uruapan, said an official at the state attorney general’s office who can’t be identified because of the agency’s policies. He said there were signs the victim may have been killed with rocks.
- Commodity Volatility May Gain Amid Recovery Concerns, SocGen's Godin Says. Commodity prices, which have surged to the highest level since January, may see greater volatility as investors react to threats to the global economic recovery, according to Societe Generale SA. “We’re not completely out of the crisis,” Olivier Godin, the bank’s head of commodities derivatives in Asia, said in an interview from Hong Kong. “There might be some bumps along the way, and that’s going to affect our markets.”
- Chavez May Strengthen Grip on Venezuela Economy as Foes Gain Ground. Venezuelan President Hugo Chavez suffered his worst setback at the ballot box since taking office in 1999, losing his two-thirds majority in congress as support for his rule wanes before 2012 presidential election.
- Kim Jong Il's Son Appointed General Before North Korea Meeting. Kim Jong Il’s youngest son was named a general, signaling the start of a possible power transfer in North Korea to a man said to be in his late 20s who has never previously been mentioned in public.
- J.P. Morgan(JPM) Targets FDIC Funds for WaMu Claims. J.P. Morgan Chase & Co. is putting federal regulators on notice that it may go after the very funds it used to buy Washington Mutual Inc.'s banking assets—and then some. In a series of previously undisclosed letters sent to the Federal Deposit Insurance Corp., the nation's second-largest bank by assets warned it could seek billions in legal protection from the FDIC receivership that liquidated the Seattle-based thrift two years ago, people familiar with the situation said.
- Fed Weighs Different Approach If It Revives Bond Purchases. Federal Reserve officials are considering new tactics if they resume purchases of long-term U.S. Treasury securities to bolster a disappointingly slow recovery. Rather than announcing massive bond purchases with a finite end, as they did in 2009 to shock the U.S. financial system back to life, Fed officials are weighing a more open-ended, smaller-scale program that they could adjust as the recovery unfolds. The Fed hasn't yet decided to step up its bond purchases, let alone agree on an approach.
- Drones Target Terror Plot. CIA Strikes Intensify in Pakistan Amid Heightened Threats in Europe.
- Local Taxes Sway Races. A recent rise in state and local taxes is roiling voters in an already tumultuous year, complicating the debate over whether to extend Bush-era tax cuts and upending some campaigns. As Washington is consumed with the debate over whether to extend Bush-era tax cuts beyond the end of the year, voters in many parts of the country are focused on state tax increases already hitting them.
- ObamaCare's Hotel California. The state moves to impose price controls you can never leave. California, the novelist Wallace Stegner famously wrote, is like the rest of America, only more so—meaning that wherever the country is headed, the Golden State is probably there already. So the state's ObamaCare advance planning deserves closer scrutiny, given that it mirrors the regulatory and ideological model that the White House favors for everyone else.
- Pimco's Hodge: Global Deflation Now Bigger Risk Thank Inflation.
- BlackBerry PlayBook, RIM's(RIMM) iPad Clone, Coming In Early 2011.
- GE(GE) Just Made Its Last Conventional Light Bulb in the US - Another 200 Employees Out of Work. Speaking of the de-industrialization of America, Tim Carney was on hand for the production of GE's last-ever incandescent lightbulb in the United States. The shutdown of a plant in Winchester, VA will result in the layoffs of 200 workers. It's yet another example of a company shifting manufacturing jobs overseas, but there's a twist, because GE is supporting the environmental regulations that are driving incandescent lightbulbs to the deadpool.
- Bullard Confirms Quantitative Easing Over $1 Trillion Would Result in Outright Debt Monetization, While Geithner Said Would Never Be Allowed.
- Where Are All the Prosecutions From the Crisis? At a hearing before the Senate Judiciary Committee last week, Senator Ted Kaufman of Delaware summed up the frustration on Capitol Hill with the lack of any identifiable villains for the financial troubles of the last two years. “We have seen very little in the way of senior officer or boardroom-level prosecutions of the people on Wall Street who brought this country to the brink of financial ruin,” Mr. Kaufman said. “Why is that?”
- India's Spy Plan Said to Deter Business.
- Jabil(JBL) Q4 Revenue Lags Street, Sees Q1 Revenue Below Market. Technology distributor Jabil Circuit Inc's (JBL) quarterly revenue missed Wall Street expectations, and the company forecast first-quarter 2011 sales below estimates, sending its shares down 2 percent in extended trade.
- Progress Energy(PGN) Trading Halt Sparks Questions. Shares of Progress Energy Inc were halted briefly on Monday on the New York Stock Exchange after trading triggered a circuit breaker, although more than 100 trades took place after the stock had moved enough to trigger a halt. Nearly 60 erroneous trades have been canceled, according to a Nasdaq representative.
- U.S. Set to Propose New Auto Fuel, Emissions Rules. The Obama administration this week will propose new fuel efficiency and emissions requirements for cars and light trucks for model years 2017 and beyond.
- U.S. Bank Regulators Delay 'Too Big Fail' Reform. U.S. banking regulators on Monday put off proposing how the government would use its new authority to dismantle large, collapsing financial companies, saying they need more time for industry and other regulators to weigh in.
- Paychex Q1 Profit Beats Street View. Payroll processor Paychex Inc (PAYX) reported a quarterly profit above market view, helped by an increase in revenue from its human resources services segment.
- Mexico Hedges Against Fall in Oil Prices. Mexico is hedging its oil exports for 2011 at about $65 to $70 a barrel as it takes a cautious view on the global economic recovery, citing bankers, traders and brokers. Based on current market rates, Mexico is paying a premium between $5 and $6 a barrel for the put options, placing the program's cost at about $1 billion, citing bankers.
- Americans! Don't Copy Europe! The policies his administration is pursuing amount to comprehensive Europeanisation: European carbon taxes, European foreign policy, European healthcare, European daycare, European disarmament, European industrial intervention and, inevitably, European unemployment rates.
- Relevant Chinese government departments may jointly sign off on trials for a property tax. The trials may be announced publicly soon.
- Downgraded (HSP) to Sell, target $52.
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 127.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 113.0 -2.5 basis points.
- S&P 500 futures +.14%.
- NASDAQ 100 futures +.17%.
Earnings of Note
10:00 am EST
- Consumer Confidence for September is estimated to fall to 52.1 versus a reading of 53.5 in August.
- None of note
- The S&P/CaseShiller Home Price Index, weekly retail sales reports, Richmond Fed Manufacturing Index for September, ABC Consumer Confidence reading, Fed's Warsh speaking, Fed's Lockhart speaking, $35 Billion 5-Year Treasury Notes Auction, (BAM) Investor Day, BofA Merrill Power/Gas Conference, JMP Securities Healthcare Conference, DA Davidson Construction Conference and the (HPQ) analyst meeting could also impact trading today.