Bloomberg:
- Greece Leads Drop in Sovereign Debt Risk as IMF May Extend Loan. Credit-default swaps on Greece fell to the lowest level in four months after the International Monetary Fund said it may be willing to extend bailout loans. Contracts on Greek bonds dropped 36 basis points to 695, according to data provider CMA. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments declined 3 basis points to 143, the lowest in six weeks. IMF managing director Dominique Strauss-Kahn said the $154 billion of aid to Greece could be extended beyond 2013 as long as European governments that took part in the bailout agree and the nation sticks to budget deficit cuts. Chancellor Angela Merkel’s administration opposes any move to grant Greece more time, the German Finance Ministry said today. Investors demand a yield premium of 729 basis points to lend to Greece for 10 years rather than Germany, the most of any country in the euro zone. That’s compared with 754 basis points on Friday and down from a euro-era record of 973 basis points on May 7. Credit-default swaps of other so-called peripheral euro- zone nations also fell. Portugal dropped 9 basis points to 387, while Spain was 7.5 basis points lower at 209, according to CMA. The cost of insuring against losses on corporate bonds also fell with the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings declining 8 basis points to 459, according to JPMorgan Chase & Co. in London. The Markit iTraxx Europe index of 125 companies with investment-grade ratings dropped 3 basis points to 98.75.
- Title Insurers Are in Talks on Creating Foreclosure Warranties, Group Says. Title insurers, banks and regulators are in talks to create warranties under which lenders assure they followed proper procedures before selling foreclosed homes, said Kurt Pfotenhauer, head of the insurers’ trade group. “Everyone sort of sees the same risks, and that’s the good part,” Pfotenhauer, chief executive officer of the American Land Title Association, said today in a telephone interview. “You just have to craft a solution that’s acceptable to all the parties, and we’re making progress.”
- Gymboree(GYMB) to Be Bought by Bain Capital for About $1.8 Billion. Gymboree Corp., the San Francisco- based children’s clothing retailer, agreed to be bought by Bain Capital LLC for about $1.8 billion, giving the buyout firm a business whose free cash flow has tripled since 2008. The acquisition price is $65.40 a share, the companies said today in a statement. That’s 57 percent more than Gymboree’s closing price on Sept. 30, when reports of a takeover surfaced. Gymboree may seek acquisition proposals from third parties through Nov. 20, according to the statement. The purchase is the largest leveraged buyout in the retail- apparel sector worldwide over the past three years by more than $1 billion.
- Commodities Rise to Highest Level in Two Years, Led by Agriculture Futures. Commodities rose to the highest in two years, led by agriculture futures, after a U.S. Department of Agriculture report last week showed corn production in the country would decline more than expected by analysts. The Standard & Poor’s GSCI Index of 24 raw materials rose as much as 1.3 percent to 571.4810, the highest level since Oct. 3, 2008. Corn futures gained as much as 8.5 percent and soybeans jumped to a 16-month high.
- CNOOC to Pay $1.08 Billion for Stake in Texas Shale Gas Project. Cnooc Ltd. will pay $1.08 billion for a one-third stake in Chesapeake Energy Corp.’s Eagle Ford shale project in Texas, in the biggest acquisition of a U.S. oil and gas asset by a Chinese company. Cnooc, listed in Hong Kong, plans to buy 33.3 percent of Chesapeake’s 600,000 oil and gas leasehold acres in Eagle Ford, the companies said in separate statements. Cnooc will also pay $1.08 billion of Chesapeake’s drilling costs in the basin, Chief Executive Officer Aubrey McClendon said in an interview. The sale gives Cnooc its first energy asset in the U.S., five years after it dropped an $18.5 billion bid for Unocal Corp. amid political opposition. China’s third-largest oil company has spent at least $3.8 billion on overseas acquisitions in the past year as the nation’s energy demand surges.
- Lower Temperatures Expected in U.S. East at End of October. The last two weeks of October may see temperatures in the eastern U.S. drop to below normal, forecasters said. The forecast for Oct. 18 to Oct. 24 calls for below-normal temperatures from Texas to Maine, according to the U.S. Climate Prediction Center in Camp Springs, Maryland. The cold snap may extend into November, said Jim Rouiller, senior energy meteorologist at Planalytics Inc. in Berwyn, Pennsylvania. “There is a chance of a major pattern change in the later half of the month,” Rouiller said. “The potential is there for a significant cold-weather event.”
Wall Street Journal:
CNBC:
- Fed Certain to Act in November In a Big Way: Survey. Following Friday’s disappointing jobs report, market participants are now virtually certain that the Federal Reserve will announce that it will resume buying assets at the conclusion of its November meeting and do so in a sizeable way, according to an exclusive CNBC Fed Survey. Nearly 93 percent of the 70 respondents, including economists, fund managers and traders, believe the Fed will boost the size of its portfolio, up from 69 percent in the survey two weeks ago. Of those who expect the Fed to move, 86 percent look for an announcement in November, up from 38 percent in the last survey. Market participants forecast that the Fed will announce plans to purchase $500 billion in assets at the conclusion of the upcoming meeting, the first time the question has been asked. Despite the $500 billion average, expectations for the November announcement span a range from $100 billion to as high as $1.5 trillion. But the larger numbers are outliers, with 83 percent of respondents saying they expect the Fed to announce incremental targets for its portfolio size on a monthly or quarterly basis, rather than a single, so-called “shock and awe” strategy as it did in 2009.
Zero Hedge:
New York Times:
- Paris Hints at Willingness to Bend on Hedge Fund Rules in Europe. The French economy minister, Christine Lagarde, has rebuffed U.S. criticism that demands for tough new European rules on hedge funds are protectionist, but she also has signaled her readiness to compromise on the issue of Europe-wide licensing, a letter showed.
- Economists Lower Already Bearish Outlook. The recovery is sputtering and the outlook for the rest of the year isn't looking much brighter, according to a new survey of leading economists. Economists surveyed by the National Association for Business Economics have cut their growth forecasts for both this year and next, the report released Monday showed. The panel of 46 economists expects gross domestic product, the broadest measure of the economy, to grow at a pace of 2.6% in both 2010 and 2011, down from the group's previous prediction of 3.2%. About 37% of survey respondents expect the recovery to remain "subpar as severe wealth losses and onerous debt burdens inhibit spending and lending."
- 55% Favor Repeal of Health Care Law. The majority of U.S. voters continue to favor repeal of the new national health care law but are slightly less emphatic about the impact the law will have on the country. A new Rasmussen Reports national telephone survey finds that 55% of Likely U.S. Voters at least somewhat favor repeal of the new health care law. Only 39% oppose repeal. These figures include 41% who Strongly Favor repeal and 32% who are Strongly Opposed.
- China has raised reserve requirements by 50 basis points for six large commercial banks. The increase, which takes the required reserve ratios to 17.5%, is a temporary measure and will be in place for two months.
- China Invites North Korea's New Leaders to Visit. Chinese President Hu Jintao has invited North Korea's aged ruler, Kim Jong-il, and his new leadership circle, including implicitly the son set to succeed him, to visit, Xinhua news agency said on Monday. Zhou stressed how much effort China has poured into shoring up ties with its much smaller neighbour while Kim crafts succession plans likely to give Kim Jong-un the top job. Beijing is the North's sole major economic and diplomatic backer. "This year has been one of high-points for Chinese-North Korean relations," Zhou told Kim on Monday, Xinhua reported. Zhou said Beijing wanted to work with Pyongyang to "scrupulously protect and constantly develop the friendship and cooperation between China and North Korea." In recent years, China has sought to strengthen relations and increased aid and investment to its poor neighbour, which it sees as a strategic buffer against the U.S. and its regional allies.
- Al Qaeda Offers to Free French if Burqa Ban Ended. Al Qaeda's north African arm wants a repeal of a ban on the Muslim face veil in France, the release of militants and 7 million euros to free hostages who include five French, Al Arabiya TV said on Monday. Al Qaeda in the Islamic Maghreb (AQIM) is holding seven foreigners in the Sahara desert after kidnapping them last month.
- France may consider scrapping its wealth tax together with a fiscal shield that limits the proportion of a person's income that can be paid in tax, citing remarks by President Nicolas Sarkozy.
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