Today's Headlines

Bloomberg:

• Fed Officials Were Prepared to Ease 'Before Long,' Minutes Say. Federal Reserve policy makers last month were prepared to ease monetary policy “before long” and focused on purchases of Treasury securities and boosting inflation expectations as ways to add stimulus. Policy makers “wanted to consider further the most effective framework for calibrating and communicating any additional steps to provide such stimulus,” the Fed said in minutes of the Sept. 21 session, released today in Washington. The Fed also said for the first time that it was considering targeting a path for the level of nominal gross domestic product as a way to increase price expectations. The report provides more clarity on the timing and components of potential easing actions without giving the amount of any additional asset purchases by the Fed. Since the meeting, weaker-than-forecast job growth in September and comments by policy makers, including New York Fed President William Dudley, have fueled speculation that the central bank will soon start a second wave of unconventional easing.
• S&P 500 Stocks With Highest P/Es Poised to Win, UBS's Golub Says. Investors should purchase stocks with the highest price-to-earnings ratios because their valuation premium to the cheapest shares is too low, according to Jonathan Golub at UBS AG. The gap between the Standard & Poor’s 500 Index industries with the highest and lowest P/Es narrowed to 3.6 last month from 9.6 in 2006, according to UBS, which used projected earnings for its valuations. The disparity suggests purchasing expensive stocks may boost returns during the next 12 to 24 months, the UBS strategist said. The three industries with the highest multiples in the S&P 500 are industrials, consumer discretionary and consumer staples, according to UBS. “This is akin to purchasing a Picasso when high-priced artwork is out of favor,” Golub, the New York-based chief U.S. market strategist, said in a telephone interview yesterday. “On a relative basis, cheap stocks are overvalued because they are much closer to the market average. It’s not that I want to overpay for companies, but rather traditionally high P/E stocks are cheaper than they should be.”
• Pfizer(PFE) Acquires Pain Drug Maker King(KG) for $3.6 Billion. Pfizer Inc. agreed to pay $3.6 billion in cash to buy King Pharmaceuticals Inc., expanding its range of pain treatments to include tamper-resistant medicines. Pfizer, the world’s largest drugmaker, will pay $14.25 a share, a premium of 40 percent over King’s closing share price yesterday, the New York-based company said today in a statement.
• Ex-Goldman Sachs(GS) Traders Raise $1.5 Billion for New Hedge Funds. Eric Mandelblatt expects to have raised at least $500 million when his Soroban Capital Partners LLC begins trading stocks next month, according to two people with direct knowledge of the New York-based hedge-fund firm. At least two other managers, Mark Carhart and Pierre-Henri Flamand, are slated to open in coming months with half a billion dollars or more each, said the people, who asked not to be named because the firms are private.
• Corn, Soybeans Rise for Fourth Session as Tighter U.S. Supply Spurs Demand. Corn and soybeans rose for the fourth straight session on speculation that processors will buy more inventory after the U.S. government said last week that production will be smaller than forecast in September.
• Obama Loses Support in Poll as Joblessness Prompts Growing U.S. Discontent. Hope has turned to doubt and disenchantment for almost half of President Barack Obama’s supporters. More than 4 of 10 likely voters who say they once considered themselves Obama backers now are either less supportive or say they no longer support him at all, according to a Bloomberg National Poll conducted Oct. 7-10. Three weeks before the Nov. 2 congressional elections that Republicans are trying to make a referendum on Obama, fewer than half of likely voters approve of the president’s job performance. Likely voters are more apt to say Obama’s policies have harmed rather than helped the economy. Among those who say they are most enthusiastic about voting this year, 6 of 10 say the Democrat has damaged the economy. “He’s made compromises that have hurt the middle class,” says poll respondent Alan Graham, 55, a surgeon in London, Kentucky, who supported Obama in 2008 and now is on the fence about the president.
• Philadelphia, Chicago and Boston Are University Study's Worst-Off Pensions. Philadelphia will run out of money by 2015 to pay pension obligations with existing assets, and Chicago and Boston by 2019, a study by economists at Northwestern University and the University of Rochester forecasts. The report, “The Crisis in Local Government Pensions in the United States,” warns that mounting liabilities threaten “the ability of state and local governments to operate.” The study examines 77 of the largest municipal defined pension plans, covering 2 million public employees and retirees, roughly two-thirds of the nation’s total. The estimated liability of all municipal retirement funds is $574 billion, according to economists Joshua Rauh of the Kellogg School of Management at Northwestern University and Robert Novy-Marx of the University of Rochester.
• India Industrial Production Growth Slows to 5.6%, Less Than Analysts' Estimates. India’s industrial production growth slowed to a 15-month low in August, adding to evidence that inflation and the impact of five interest-rate increases this year are prompting companies to curb output. Factory, utilities and mines output rose 5.6 percent from a year earlier after a revised 15.2 percent increase in July, the statistics office said in a statement in New Delhi today. The median estimate of 25 economists in a Bloomberg News survey was for a 9.5 percent gain in August.
• Further Fed Easing Could Alarm 'Bond Market Hawks,' Historian Meltzer Says. The Federal Reserve’s efforts to boost the economy by expanding its balance sheet probably won’t succeed while increasing the chances of higher long-term inflation, said Allan Meltzer, a historian of the central bank. “Sooner or later the bond market hawks are going to say, ‘How are they going to get rid of that $2 trillion of excess reserves?’ and the answer is they don’t know,” Meltzer, a professor at Carnegie Mellon University in Pittsburgh, said today in an interview on Bloomberg Television’s “In the Loop with Betty Liu.” “They can’t do much about the near term but they can do a lot about the longer term. But they ignore that,” said Meltzer, author of a history of the Fed. Meltzer said he opposes any move by the Fed to increase the amount of reserves in the banking system. “We don’t have a monetary problem, we have 1 trillion or more in excess reserves so it’s literally stupid to say we’re going to add another trillion to that,” Meltzer said last month.
• Weber Says ECB Should Phase Out Bond Purchases 'Now'. European Central Bank Governing Council member Axel Weber said the ECB should stop its bond- purchase program and signaled that it’s time for officials to show how they will withdraw other emergency measures. “As the risks associated with the Securities Markets Program outweigh its benefits, these securities purchases should now be phased out permanently,” Weber said, according to the text of a speech delivered in New York today. “As regards the two dimensions of exit consisting of phasing-out non-standard liquidity measures and normalizing our clearly expansionary monetary policy, there are risks both in exiting too early and in exiting too late,” Weber said. “I believe the latter are greater than the former.” Weber’s comments are the strongest so far from any of the ECB’s 22-member Governing Council advocating a withdrawal of emergency measures.
• GE(GE) Expands Solar Business as Immelt Seeks to Mirror Wind Growth. General Electric Co., which has become the world’s second-biggest wind turbine maker in less than a decade, is expanding production of two thin-film solar products to increase its renewable-energy business. GE will work with Japan’s Showa Shell Sekiyu KK’s Solar Frontier unit to make thin-film panels coated with a copper- indium-gallium-selenide compound, or CIGS, according to a statement today. GE’s PrimeStar Solar plant will make cadmium telluride-based thin film panels. Chief Executive Officer Jeffrey Immelt has spent more than $1 billion on research and development of renewable power since acquiring Enron Corp.’s wind division out of bankruptcy in 2002.
• Federal Reserve Sued by Minnesota Bank Over Limits on Credit Card Fees. TCF Financial Corp., a Minnesota bank, sued the Federal Reserve to block a U.S. law that limits the fees charged to retailers on debit-card transactions. The provision of the Dodd-Frank Act known as the Durbin Amendment puts the biggest U.S. banks at a competitive disadvantage as it forces them to provide debit-card services below cost and exempts smaller banks, the Wayzata-based company said in a lawsuit filed today in Sioux Falls, South Dakota, federal court. The law is akin to Congress telling Burger King “you can only charge for the hamburger and the bun,” TCF Chief Executive Officer William A. Cooper said in a telephone interview. “Ignore all the costs of the overhead and the cooks and the advertising and the interest expense.” The bank claims that the law unconstitutionally takes away its property in the form of legitimate fees and violates its constitutional right to equal protection by favoring smaller banks.
• Dell(DELL) CEO May Buy the PC Maker or Pay 'Huge' Special Dividend, Ainslie Says.
  

Wall Street Journal:

• Google's(GOOG) Share of US Search Advertising Market Up 2 Points in 3Q. Google Inc.'s (GOOG) share of the U.S. search advertising market grew more than two percentage points to 77.9% in the third quarter, making it the "early winner" as rivals Microsoft Corp. (MSFT) and Yahoo Inc. (YHOO) began to integrate their search operations, according to a report to be released on Tuesday.
• Reliance Communications, Tata Teleservices In Talks With Apple(AAPL) on CDMA iPhone - Sources. Two Indian telecom operators are in talks with Apple Inc. (AAPL) to launch an iPhone in India based on the code division multiple access technology in a bid to tap the growing smartphone market in one of the world's fastest-growing mobile markets, people familiar with the matter said.
• China Warns Governments About Support for Liu. China warned foreign politicians not to interfere in its internal affairs, as the U.S. urged Beijing to lift restrictions on the movements of the wife of Liu Xiaobo, the jailed Chinese dissident awarded the Nobel Peace Prize last week. Chinese authorities continued to prevent his wife, Liu Xia, from meeting friends and journalists Tuesday, and only allowed her to leave her apartment in Beijing with a police escort, according to a friend who spoke directly with her.

CNBC:

• Senior Citizens Brace for Social Security Freeze.
• Emerging Markets are 'Yesterday's Story': Bernstein. Investing in emerging markets has lost its appeal and investors should get behind the next growth area, Richard Bernstein, CEO of Richard Bernstein Advisors, told CNBC Tuesday. "People tend to chase yesterday's story," Bernstein said. "They're doing it now with emerging market stocks, rushing into emerging market stocks after they've been outperforming for twelve years. The question is what's the next story coming up?" Bernstein thinks the next big investment opportunity is small companies in the United States because they're "starved for capital."
• More Fed Easing is Unlikely to Help Economy: Hoenig. Kansas City Federal Reserve President Thomas Hoenig, who all year has steadfastly opposed the Fed's super-easy monetary policy, fleshed out his stance against further easing on Tuesday, saying it would do little to aid the recovery and could spark inflation.

Business Insider:

• California Stimulus Pays for $152 Million Rose Bowl Upgrade. The Pasadena City Council approved a $152 million renovation to the Rose Bowl Stadium on Monday, the AP reported. The 88-year-old stadium will get 2,000 more luxury seats, a new scoreboard, more bathrooms, and more concession stands.
  

MarketWatch.com:

• Apple(AAPL) Affirmed Overweight at Barclays Capital; Target $385.

New York Times:

• Investors Flock to Greek Bond Sale. With an austerity program well underway, Greece held a successful bond sale Tuesday amid a growing debate about whether the country should be given more time to repay the international bailout loans that saved it from bankruptcy.

TechCrunch:

• U.S. Online Advertising Rises 11.3% in First Half of 2010.

Washington Post:

• After Mortgage Meltdown, Barney Frank Gets Another Chance to Remake Housing Finance. Rep. Barney Frank, the disheveled, fast-talking Democrat from Massachusetts, had long been known more for his acerbic tongue than for the cause that has captivated him since he was a young aide in the Boston mayor's office. Frank had championed housing for America's poor for four decades, but he gained the chance to leave his biggest mark in 2007 when he became chairman of the House Financial Services Committee. He dreamed of tapping into the riches of Fannie Mae and Freddie Mac - at the time, both fabulously successful mortgage finance companies - to help pay for the construction of thousands of affordable apartments. It was too good to be true. Fannie and Freddie would soon melt down, requiring a federal bailout so far costing more than $160 billion. Frank's critics have alleged that his aspirations blinded him to the danger. Now Frank is poised to play a pivotal role on Capitol Hill as the Obama administration prepares to tackle the future of Fannie and Freddie and to overhaul how millions of Americans are housed.

NY Post:

• No Sale for NYC Tax. Retailers fear customers will flee. Is the other shoe about to drop? That's what some New York City retailers fear, as savvy consumers ratchet up spending online, because of the new sales tax and bargain-hunt in neighboring states for cheaper clothes and a pair of loafers. New York state, which lifted the sales tax exemption of 4.375 percent on clothing and shoes under $110 -- its plan is to raise $330 million this year to help balance the state budget -- is inadvertently encouraging online and out-of-state spending, brick-and-mortar retailers warn.
• First the Stimulus, Now the Hangover. Last week's dismal jobs figures tell us exactly what the President Obama's stimulus did: It temporarily saved jobs in state and local government -- thereby slowing our recovery. Friday's job scorecard for September -- the last before Election Day -- didn't carry even a hint of an imminent boom. Unemployment stayed at 9.6 percent, with private companies adding 64,000 jobs. And 64,000 jobs is nothing. The economy must create nearly five times that to keep up with population growth and replace 7.6 million jobs lost since 2007. Worse, the new hires were down a third from August -- and the positions were low-paying, in bars, restaurants and retail.

Pew Research:

• 36% - Tattooed Gen Nexters. Gen Nexters, Americans in the 18-25 age bracket, are not afraid to express themselves through their appearance and tattoos are the most popular form of self-expression -- more than one-in-three (36%) now has one. Tattoos, however, are at least as prevalent among the preceding generation of Gen Xers -- 40% of them have a tattoo. Other nontraditional appearance-altering practices are also prevalent among Gen Nexters: About half (54%) have done one or more of the following: gotten a tattoo, dyed their hair an untraditional color, or had a body piercing in a place other than their ear lobe.

Politico:

• President Obama to End Deep-Water-Drilling Ban.

Rasmussen Reports:

• Most Voters Fear Health Care Law Will Cause Some Companies to Drop Employee Coverage. Nearly three-out-of-four voters (73%) believe it is at least somewhat likely that the new health care law will cause some companies to drop health insurance coverage for their employees, including 47% who say it is Very Likely. A new Rasmussen Reports national telephone survey of Likely U.S. Voters finds that just 19% think that’s unlikely.

Reuters:

• Maverick's Ainslie Says Tech Stocks "Cheap". Technology stocks are at their cheapest in 20 years and the weaker dollar will likely benefit the entire sector, hedge fund industry pioneer Lee Ainslie said on Tuesday.

China Central Television:

• The China Banking Regulatory Commission's Shanghai branch will strictly check non-compliant lending and curb loans to property developers, citing Yan Qingmin, head of the regulator's Shanghai branch.