Evening Headlines
Bloomberg:
- Leveraged Loan Issuance Doubles on Narrower Spread to Junk: Credit Markets. Leveraged loan issuance is accelerating to the most in three years, enabling companies to slash borrowing costs, as the gap in yields between the debt and junk bonds hovers at about the narrowest in 10 months. Reynolds Group Holdings Inc. and Tomkins Plc boosted loans in the past month at the expense of secured junk bonds, according to data compiled by Bloomberg. High-yield bonds yield 0.8 percentage point more than leveraged loans, about the narrowest since December, and down from a gap of 1.65 in April.
- Baby Boomers Pushing Surge in Therapies to Sharpen Blurring Eyesight. The number of older Americans getting help for fading eyesight almost tripled by 2007 from a decade earlier as the nation aged and treatment improved with approaches such as Roche Holding AG’s Lucentis.
- GM Defends Volt While Critics Say It's Not a Real Electric Car. General Motors Co., the largest U.S. automaker, is disputing accusations that its low-emission Chevrolet Volt is a hybrid and not a true electric vehicle a month before the car goes on sale. Auto critics Edmunds.com, Motor Trend and Popular Mechanics have said that during heavy acceleration the Volt uses its gasoline engine to power an electric generator which helps turn the wheels, similar to how hybrids run.
- OPEC May Maintain Oil Output in Vienna on Uneven Economic Growth. OPEC may leave oil production quotas unchanged when it meets Oct. 14 in Vienna after Saudi Arabian Oil Minister Ali al-Naimi described the market as “very well- balanced” between the interests of consumers and producers. “Everyone is happy with the market,” al-Naimi said late yesterday when asked, as he arrived at his hotel, whether the Organization of Petroleum Exporting Countries should boost supplies this year. “Consumer, producer, everyone is happy.” Oil futures touched a five-month high of $84.43 a barrel last week in New York, well above the $70 to $80 price level that al-Naimi reiterated is “ideal.” Prices have settled above $80 for the past seven days, the longest stretch since August.
- Crude Oil Futures Decline in N.Y. as Dollar Strengthens Against Euro, Yen. Crude oil fell for a second day after the dollar rose against the euro and yen, reducing the appeal of commodities as an investment. “The dollar is so heavily sold at the moment, creating the opportunity for a bit of strength in the dollar and softness in oil,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said by phone. “You would be leaning toward a softer oil price this week.” “The market’s not that strongly supported by fundamentals, so people are watching things like the currency,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The dollar’s still low, but maybe people think we’re close to the bottom.” Total petroleum supplies in the U.S. were 1.14 billion barrels in the week ended Oct. 1, 5 million barrels below a record set in the week ended Sept. 17, according to figures from the Energy Department released last week. Fuel consumption dropped 6.4 percent to 18.5 million barrels a day in the week ended Oct. 1, the biggest weekly decline since Feb. 27, 2004, according to the department.
- Euro to Retreat to $1.35 as Fed Easing Snaps Momentum: Technical Analysis. The euro may retreat to $1.35 as a technical indicator suggests its 11 percent gain in the past month has been too rapid, according to Ueda Harlow Ltd. The shared currency’s 14-day relative strength index against the dollar has remained above 70 since Sept. 28, the longest stretch since March 2008 and exceeding the level some traders see as a sign an asset’s price is poise to change direction.
- China Bank-Ratio Rise May Signal Officials Divided on Policy, Goldman(GS) Says. Chinese policy makers may be divided over the pace of credit growth with inflation picking up even as there are “downside” risks to economic growth, according to Goldman Sachs Group Inc.
- States to Probe Mortgage Mess. Attorneys General Hope Lenders Will Re-Write Loans With Troubled Documents. A coalition of as many as 40 state attorneys general is expected Wednesday to announce an investigation into the mortgage-servicing industry, an effort some of them hope will pressure financial institutions to rewrite large numbers of troubled loans.
- Wall Street Pay: A Record $144 Billion. Financial Overhaul Has Affected Structure but Not Level; Revenue-to-Compensation Ratio Stays Flat. Pay on Wall Street is on pace to break a record high for a second consecutive year, according to a study conducted by The Wall Street Journal. About three dozen of the top publicly held securities and investment-services firms—which include banks, investment banks, hedge funds, money-management firms and securities exchanges—are set to pay $144 billion in compensation and benefits this year, a 4% increase from the $139 billion paid out in 2009, according to the survey. Compensation was expected to rise at 26 of the 35 firms.
- Vulture Funds Struggle. Funds that snap up the cheap debt of troubled companies—often referred to as vulture funds—expected to have a field day during a financial crisis that took down several banks and depressed asset prices. But now some private-equity managers are forecasting their demise, in part because banks have been able to resist the pressure to sell asset at fire-sale prices, thanks to government bailouts and a prolonged period of low interest rates.
- Wal-Mart(WMT) Lands Agreement to Sell iPad. Wal-Mart Stores Inc. said it will start selling Apple Inc.'s iPad on Friday at hundreds of stores throughout the U.S.
- Boehner's 'Plan B' for ObamaCare. Hearings can be used to sell market-friendly fixes.
- Business Backlash Grows. Rick Woldenberg runs an educational-products company from a suburban Chicago office stacked with brightly colored toys. He supported President Barack Obama in 2008. But he has turned on Democrats this year.
- Farm Belt Bounces Back. Major agricultural commodities continued their extended run-up in price, underscoring how much of America's farm belt is booming even as the overall economy continues to struggle.
- More Balk at Cost of Prescriptions. Growing numbers of Americans with health insurance are walking away from their prescriptions at the pharmacy counter, the latest indication that efforts to contain costs may be curbing health-care consumption. A review of insurance-claims data shows that so-called abandonment—when a patient refuses to purchase or pick up a prescription that was filled and packaged by a pharmacist—was up 55% in the second quarter of this year, compared with four years earlier. The phenomenon coincides with rising co-payments for many drugs and increasing enrollment in high-deductible insurance plans that require patients to pay hundreds or thousands of dollars out of pocket before insurance kicks in. Patients are deserting prescriptions for the most expensive drugs most often, according to the review by Wolters Kluwer Pharma Solutions, a health-care data company. For instance, nearly one in 10 new prescriptions for brand-name drugs were abandoned by people with commercial health plans in the quarter, up 88% from four years earlier, when the data were first tracked and before the recession began. Abandonment of generic drugs was higher, too, according to the data.
- New ETFs for Metals May Push Prices Higher. Metals markets are about to get some insatiable new customers with the launch of exchange-traded funds that will target industrial resources like copper, aluminum and tin. Like the $55 billion SPDR Gold Shares, these new funds will buy actual metal, creating a conundrum for markets where supplies are already struggling to meet the demands of China's booming economy.
- The 2010 Spending Record. In two years, a 21.4% increase. Perhaps you missed it, but then so did the Washington press corps. Late last week the Congressional Budget Office released its preliminary budget tallies for fiscal year 2010, and the news is that the U.S. government had another fabulous year—in spending your money.
- Goldman Sachs(GS) Raises 12-Month Gold Price Target to $1,650/oz.
- Short Interest Eased in Late September as US Stocks Rose. Bearish bets on major U.S. exchanges declined in the second half of September, suggesting investors abandoned positions as the market closed out its best month since April 2009. Short interest on the Nasdaq saw the bigger drop, falling 1.2 percent in the second half of September, the exchange said on Monday. Short bets on NYSE inched down just 0.04 percent.
- WHOA: FINRA Paid Mary Schapiro $9 Million in 2008. Some people think it's a good idea for regulatory officials to receive pay like the Wall Streeters they're supposed to reign in. Turns out at least one of them already has - Mary Schapiro, who's now the head of the SEC. In 2008, FINRA paid Schapiro almost $9 million.
American Spectator:
- California's Green Nightmare. It's hard to know where the fairy tale of "green jobs" first came from. It was probably a clever marketing scheme by radical environmentalists who realized that their anti-growth climate change agenda wasn't going to sell among the American electorate if workers realized how many jobs would be eviscerated by the new taxes and regulation. So, from somewhere out of Madison Avenue or K Street, the left devised the green jobs story line: we can impose a $1 trillion new tax on the U.S. economy over the next decade, and it will save jobs, as hundreds of thousands of Americans begin assembling windmills and solar paneling. If we want to see how green policies work in the real world, we don't have to look any further than America's left coast. California has become the poster child of green jobs.
- Not Many Early Bonuses for Wall St Banks - Experts. Large Wall Street banks are unlikely to accelerate bonus payouts, even if doling out bonuses in December would cut the tax bills of employees, compensation experts said. Paying out bonuses early would likely be a public relations disaster for a sector already blamed for the economic downturn, they said.
- Japan Kaieda: Rapid Yen Rise Undesirable for Economy. Japanese Economics Minister Banri Kaieda said on Tuesday that the yen's rapid rise is undesirable for achieving a self-sustainable recovery in the Japanese economy and beating deflation, and the government will take decisive action in the currency market if necessary. Kaieda also said that Japan gained a certain understanding at the latest Group of Seven meeting on its explanation of its currency intervention.
- Blow to Bank Crisis Plans. Regulators are struggling to create a global mechanism that could wind down a big financial institution without the disruption caused by Lehman Brothers’ collapse in 2008. The US is due on Tuesday to propose its own so-called “resolution” regime that would allow officials to stabilise a big, distressed bank, sell off assets over time and force creditors to take a discount on the value of their debt, without taxpayer money or market disruption. But policymakers attending meetings around the International Monetary Fund and Institute of International Finance criticised the US regime and cast doubt on whether anything but a modest set of principles could be agreed at the Group of 20 meeting in Seoul next month.
- Jobless America Threatens to Bring Us All Down With It. A depression may have been averted, but nothing has been fixed. This is the depressingly downbeat message that came across loud and clear from last weekend's annual meeting of the International Monetary Fund. The destructive trade and capital imbalances of the pre-crisis era are back, banking reform appears stuck in paralysing discord, public debt in many advanced economies remains firmly set on the road to ruin, and the spirit of international co-operation that saw nations come together to fight the crisis has largely disappeared. This was not where we were meant to be in tackling the underlying causes of the crisis and returning the world to sustainable growth. The US has no strategy for the jobless and no strategy for rolling back debt. Little wonder that a renewed sense of gloom has settled on international policy makers.
- China should set up a forward market for rare-earth elements to help boost prices, Guo Chaoxian, a researcher at the Institute of Industrial Economics of the Chinese Academy of Social Sciences, wrote. The government should also set up a mechanism to purchase and store rare-earth commodities to "strike a balance between demand and supply," Guo wrote. The Chinese government should encourage mergers of rare-earth companies with the goal of setting up an oligarchy of three to five "giant enterprises," Guo said.
- The China Insurance Regulatory Commission found "big" problems in the management of property insurers, citing an official from the regulator. Some property insurers faked business fees and didn't pay claims in time. Corruption and misuse of premiums was also discovered.
- Apple's(AAPL) iPad has received approval from Taiwan's National Communications Commission and will be available for sale as early as this month, citing an official at the commission.
Citigroup:
- Rated (APEI), (BPI), (CPLA), (DV) and (LOPE) Buy.
- Reiterated Buy on (NKE).
- Reiterated Buy on (BEN), boosted target to $143.
- Rated (CIEN) Outperform, target $20.
- Asian equity indices are -1.0% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 100.0 -4.0 basis points.
- Asia Pacific Sovereign CDS Index 94.25 -3.0 basis points.
- S&P 500 futures -.42%.
- NASDAQ 100 futures -.39%.
Earnings of Note
Company/Estimate
- (FAST)/.50
- (INTC)/.50
- (LLTC)/.60
- (CSX)/1.04
7:30 am EST
- The NFIB Small Business Optimism Index for September is estimated to rise to 89.6 versus 88.8 in August.
- Minutes of FOMC Meeting.
- None of note
- The Fed's Hoenig speaking, weekly retail sales report, ECB's Trichet speaking, $32 Billion 3-Year Treasury Notes Auction, IBD/TIPP Economic Optimism Index and the weekly ABC Consumer Confidence report could also impact trading today.
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