Today's Headlines

Bloomberg:

• Initial Jobless Claims in U.S. Rose 13,000 Last Week to 462,000. The number of Americans filing first-time applications for unemployment benefits unexpectedly increased last week, indicating the U.S. job market is struggling to mend. Jobless claims rose by 13,000 to 462,000 in the week ended Oct. 9, Labor Department figures showed today in Washington. Persistent dismissals show it will take longer for employers to add enough workers to reduce unemployment that’s close to a 26-year high. The prospect of joblessness holding above 9 percent through next year is among the reasons Federal Reserve policy makers may ease monetary policy. The four-week moving average of claims, a less volatile measure, rose to 459,000 from 456,750. It was the first increase since the week ended Aug. 21.
  
• Mortgage Rate on 30-Year Loan Falls to Record 4.19%. U.S. mortgage rates fell for a third straight week to the lowest level on record, extending a slide in borrowing costs as housing demand slumps. Rates for 30-year fixed loans declined to 4.19 percent in the week ended today from 4.27 percent, Freddie Mac said in a statement. It is the lowest rate since the McLean, Virginia- based company began tracking the data in 1971. The average 15- year rate tumbled to 3.62 percent from 3.72 percent.
• Swaps Dealers May Create Credit Futures as Regulation Looms. Deutsche Bank AG(DB), Goldman Sachs Group Inc.(GS) and Morgan Stanley(MS) are talking to exchanges including CME Group Inc. to create futures contracts on credit-default swaps indexes, according to people familiar with the matter. The banks are coordinating with index owner Markit Group Ltd. to potentially offer exchange-traded futures linked to benchmarks that hedge funds and money managers use to speculate on corporate creditworthiness or to protect against losses, said the people, who asked not to be identified because the talks are private. Futures would open the $25 trillion credit derivatives market to small hedge funds, equity investors and other money managers that, unlike bigger firms such as Pacific Investment Management Co., don’t trade the contracts enough to justify the cost of negotiating two-party agreements with banks, the people said.
• Pimco Sells Treasuries on Prospect Fed Easing Round to Have Limited Impact. Pacific Investment Management Co., which runs the world’s biggest bond fund, said it sold Treasuries on expectations a second round of debt purchases by the Federal Reserve will have limited impact. “The market is very clearly anticipating that the Fed is going to act,” Douglas Hodge, chief operating officer, said in an interview at the World Knowledge Forum in Seoul today. “The challenge right now is the breadth of policy measures that can be taken by the U.S. is rather limited.”
• Commodities Advance to a Two-Year High on Investor Demand for Dollar Hedge. Commodities extended a rally to the highest in two years on speculation the declining U.S. dollar will boost investments in metals, energies and agriculture futures. The dollar fell 0.8 percent against a basket of six major currencies. The Standard & Poor’s GSCI Index of 24 raw materials rose as much as 1.1 percent to 577.9490, the highest level since Oct. 3, 2008. The currency has weakened on speculation that the U.S. Federal Reserve will ease monetary policy further in an effort to boost the country’s economy. “The sharply lower dollar today is supporting most of the commodity complex,” said Doug Whitehead, an analyst at Rabobank in London. “As a whole, the weaker dollar is encouraging investment into the commodities sphere on an inflation play, and that’s going to keep demand for commodities as an asset class strong.”
• EU Fails to Agree on Planned Regulation for Hedge Funds, Postpones Talks. The European Union canceled talks on regulation of hedge-fund and private-equity managers after governments clashed on the final shape of proposals. European nations disagree on the powers of the European Securities and Markets Authority to decide which hedge funds will be allowed to market to EU investors, Sharon Bowles, the European Parliament’s top financial lawmaker, said in a telephone interview.
• U.K. Government Will Scrap Some of 700 Agencies, Merge Others.
• Confidence Among U.S. CEOs Fell in October. Confidence among chief executive officers in the U.S. sank in October to the lowest level since May 2009, when the world’s largest economy was still in a recession, according to a survey from the Business Council. The Washington-based group’s sentiment gauge dropped to 51.2 this month from a two-year high of 66.6 in May, a report showed today. “The momentum in the U.S. and global economy evident in recent surveys has subsided,” Jamie Dimon, chief executive officer of JPMorgan Chase & Co. in New York and vice chairman of the Business Council, said in a statement. “Members sent a strong message about increasing government regulation and intervention,” and “the federal budget deficit remains a critical concern,” he said. The group’s gauge of expectations for the economy six months from now fell to 51.7, the lowest since February 2009, while the executives’ outlook for their own industry dropped to 54.6 from 66.4. The report said the council’s members “believe that deficit reduction is the most important fiscal policy priority and most disagree that a second economic stimulus is needed.” Increased government regulation and intervention in the U.S, presented a “high” or “very high” risk to the business climate for nearly nine out of 10 surveyed.

Wall Street Journal:

• Medicare Scheme Netted $35 Million, Officials Say. An Armenian-American crime ring defrauded Medicare of more than $35 million by using stolen doctor and patient identities and setting up dozens of phony clinics coast-to-coast, according to federal indictments unsealed Wednesday. Members of the group, based in New York and Los Angeles, were taken into custody as part of a nationwide Medicare fraud sweep that resulted in charges in California, Ohio, New Mexico and Georgia. Manhattan U.S. Attorney Preet Bharara said the case was among the largest-ever Medicare fraud enterprises. That is based on the more than $100 million in concocted bills authorities say participants submitted to Medicare beginning at least as early as 2006, though they obtained only $35.7 million in improper payments. It was the latest in a string of health-care fraud busts nationwide by the Department of Justice. In July, authorities announced charges against 94 people in separate schemes that allegedly involved $251 million in fraudulent billings.

Zero Hedge:

• St. Louis Fed Says QE2 Would Be Useless, And May Be Damaging.

Washington Post:

• Retail Group's Analysis Paints Dire Image of a Value-Added Tax. Piling a European-style sales tax on top of the existing U.S. tax structure would immediately destroy 850,000 jobs and damage retail spending for years to come, according to an economic analysis commissioned by the National Retail Federation, a leading trade group. The report studied the potential effect of a 10.3 percent value-added tax, or VAT, a form of sales tax applied at every stage of production. The tax is ubiquitous around the world, having been adopted in more than 130 countries. NRF president Matthew Shay said the study is intended to push back against what he views as a rising tide of interest in the VAT in Washington, where policymakers are eager to reduce record budget deficits. "Supporters claim a VAT is the solution to the nation's economic ills, but nothing could be further from the truth," said Shay, who represents an industry that has long opposed a value-added tax. "This report has found that a VAT would have negative economic consequences for most working Americans alive today."

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 27% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-five percent (45%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -18 (see trends).

Reuters:

• U.S. Banks Face $6-$10 Billion in Foreclosure Losses - FBR. The U.S. banking industry faces foreclosure-related losses of $6-$10 billion, but is prepared to "comfortably" absorb those losses, FBR Capital Markets said. "We would note this is an earnings issue and not a capital problem," analysts led by Paul Miller wrote in a note to clients. The analysts, however, said mortgage servicers may be in trouble as they have never been challenged by the judicial system as extensively as they are now.
• Verizon(VZ) to Join AT&T(T) in Selling Apple(AAPL) iPads. Verizon Wireless will join rival carrier AT&T Inc (T.N) in selling Apple Inc's (AAPL.O) iPad later this month as it moves closer to disrupting the exclusive relationship between the device maker and AT&T. Apple's surprise announcement on Thursday comes weeks ahead of the holiday shopping season, with the company positioning the iPad touchscreen tablet as a must-have device. There is speculation that Verizon, the No. 1 U.S. wireless carrier, will soon sell Apple's iPhone. AT&T has been the sole carrier for the phone in the United States.
• US Commercial Paper Market Expands for 4th Week.
  

London Evening Standard:

• Talk of Mega-Move by Oracle(ORCL) for EMC(EMC) Keeps US Buzzing.

AFP:

• US Trade Deficit Swells Amid Record China Gap. The US trade deficit ballooned in August as the gap with China hit a fresh record, official data showed Friday, suggesting further weakness in the economic recovery. The Commerce Department said the August trade deficit rose nearly nine percent from July to 46.3 billion dollars. That was far worse than economists predictions of a 44.5 billion dollar gap.

Financial Times Deutschland:

• German industrial companies are concerned that China may block their access to commodities such as rare earth metals, citing a document presented yesterday by a lobby group. China's export restrictions on rare earth metals are an "unfriendly act," German Economy Minister Rainer Bruederle said. A scarcity of metals such as tungsten and germanium is causing difficulties for sectors including wind turbine makers, makers of electronics and car companies.

Xinhua:

• Chinese Defense Minister Liang Guanglie praised his country's "traditional friendship" with North Korea and agreed to increased cooperation between their armed forces.
• Falling housing prices and the risk of loan defaults by local-government financing vehicles are Chinese bankers' top concerns, citing a survey by an industry association and PricewaterhouseCoopers.
  

China Business News:

• Chinese Banks won't make large-scale loans in the fourth quarter, citing Zhu Xiaohuang, China Construction Bank Corp.'s vice president.