Today's Headlines

Bloomberg:

• Cowen Says Ireland 'Cooperating' With EU as Debt Crisis Threatens Region. Irish Prime Minister Brian Cowen said he is working with fellow European leaders as his nation’s sovereign debt crisis threatens the stability of European markets. While reiterating that his debt-strapped country has not sought to tap an EU rescue fund, Cowen told reporters today that “there are issues affecting the wider euro area of which we are a member” and that he and his counterparts were working to “ensure that the bond markets respond positively to the euro.” Irish bonds rose from a record low today, gaining for the first time in 14 days as traders bet a bailout was near. European governments sought to calm investor concerns, saying they won’t be forced to share the cost of a rescue.
• Credit-Default Swaps Rise on Ireland Debt, China Rate Concerns. The cost of protecting bonds from default in the U.S. rose today as the index was poised for its biggest weekly gain since July. The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, increased 1.3 basis points today to a mid-price of 91.8 as of 8:27 a.m. in New York, according to index administrator Markit Group Ltd. The index, which typically rises as investor confidence deteriorates and falls as it improves, has increased 6.2 basis points this week amid concern over Ireland’s debt, the largest gain since the week ended July 2, Markit data show.
• China Stocks Plunge Most Since August 2009 on Concern Over Rate Increase. China’s stocks tumbled the most since August 2009, as investors speculated policy makers may raise interest rates for the second time in two months as early as today to curb inflation. Bank of China Ltd. slid the most in five months and China Vanke Co., the nation’s largest developer, plunged more than 7 percent after a report yesterday showed consumer prices rose at the fastest pace in two years. Jiangxi Copper Co. and Aluminum Corp. of China Ltd. tumbled more than 8 percent as commodities futures plunged in China on concern that slowing economic growth may curtail demand. “We know there’ll be more tightening given how inflation has accelerated and home prices haven’t come down,” said Mark Tan, who helps oversee $12 billion at UOB Asset Management Ltd. The Shanghai Composite Index dropped 162.31, or 5.2 percent, to 2,985.44 at the close, the most since Aug. 31, 2009. The index slumped 6.7 percent that day, entering a so-called bear market on concern a slowdown in lending growth would derail a recovery in the economy. The CSI 300 Index dived 6.2 percent to 3,291.83 today. The MSCI Asia Pacific Index lost 1.5 percent, while copper prices fell by the daily limit in Shanghai.
• China's Faster Inflation Fuels Speculation Rate-Rise Near. China’s central bank may raise interest rates within weeks after inflation accelerated to the fastest pace in 25 months in October, a Bloomberg News survey of economists showed. The benchmark one-year lending rate will rise to 5.81 percent by year-end from 5.56 percent, according to the median forecast of 11 analysts polled after yesterday’s price data. The deposit rate may climb to 2.75 percent from 2.5 percent, the survey showed.
• Commodities Worldwide Slide on China Rate Rise Concern; Copper, Oil Drop. Commodities tumbled today, with copper falling from a record and oil slipping from a two-year high on speculation China may attempt to rein in inflation by raising interest rates, curbing demand in the biggest consumer of metals and energy. Cotton, zinc and soybeans also slid. Copper for three-month delivery on the London Metal Exchange fell as much as 2.9 percent to $8,575 a metric ton, and traded at $8,650 by 11:51 a.m. local time. The contract, which reached a record $8,966 a ton yesterday, is little changed this week. Oil futures fell $1.79, or 2 percent, and were set for a weekly drop of 1 percent. “Commodities have moved sharply into reverse as markets fear further tightening from China following yesterday’s elevated inflation print and expectation that inflation will continue to escalate,” Edel Tully, an analyst at UBS AG in London, said in a report. “There’s talk of an interest-rate hike over the weekend,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “It’s quite possible given how inflation has accelerated.” “The government already sold stockpiles of cotton, sugar, aluminum and zinc, and there’s speculation that it may do more to suppress prices and contain inflation,” BOC’s Tian said. “There’s also market speculation that the government may sell additional sugar stockpiles, as well as soybean stockpiles.”
• Taleb Says Bernanke Doesn't Understand Risk of QE2: Video.
• The Baltic Dry Index, a measure of commodity-shipping costs, fell for a fourth week on an oversupply of vessels used to haul iron ore for making steel. The gauge slid 7.3% this week, the most in seven weeks. Today it lost 2.2%. Daily rents for capesize vessels that primarily haul iron ore fell 3.2% to $34,500, rounding out a weekly slide of 13%. "There's less activity in the Atlantic" and more ships are sailing empty before picking up cargoes in December, said Erik Nikolai, an Oslo-based analyst with Arctic Securities ASA.
• India's Industrial Output Growth Unexpectedly Slows to Least in 16 Months. India’s industrial production growth unexpectedly slowed to a 16-month low in September, signaling consumer demand is waning after Asia’s fastest round of monetary policy tightening this year. Stocks and bond yields fell. Output at factories, utilities and mines rose 4.4 percent after a revised 6.9 percent increase in August, the statistics office said in a statement in New Delhi today. The median estimate of 27 economists in a Bloomberg News survey was for a 6.4 percent gain.
• South Korean 'No Deal' May Damp U.S. Trade Accords Prospects. Before heading to Seoul, U.S. Trade Representative Ron Kirk was warned by Senator Max Baucus that “no deal is better than a bad deal” when it came to negotiating changes in a free-trade agreement with South Korea. The announcement by the U.S. and Korean presidents yesterday that they failed to agree on changes to beef and auto provisions may make “no deal” the reality for U.S. trade accords across Asia and the world. “It’s very disappointing: If they can’t deliver under these circumstances, you have to wonder,” former U.S. Trade Representative Susan Schwab said in a Bloomberg Radio interview yesterday. “If you can’t re-close a deal when both leaders say they want it done by a certain time, then you have got some serious problems.”
• U.S. Postal Service Says Loss Widened to $8.5 Billion in 2010. The U.S. Postal Service said its loss widened to a record $8.5 billion in the year ended Sept. 30, exceeding its forecast, as the volume of mail declined. Revenue fell 1.5 percent to $67.1 billion for the year and mail volume dropped 3.5 percent, according to a presentation to the service’s board today at a meeting in Washington. The loss in the previous fiscal year was $3.8 billion, the service said. The Postal Service, which forecast a $7 billion loss, said almost two thirds of the deficit, or $5.5 billion, covered health-benefit costs for future retirees. An additional $2.5 billion covered adjustments to workers’ compensation liabilities for interest rate changes. The loss for 2011 will be $6.4 billion, Chief Financial Officer Joseph Corbett said today.
• Fed Begins Buying Treasuries in Second Round of Central Bank Credit Easing. The Federal Reserve began buying Treasuries as part of a second round of unconventional monetary easing to reduce unemployment and avert deflation.

Wall Street Journal:

• J&J(JNJ) Will Unveil New Drug Results. Johnson & Johnson sat out the blockbuster heart-drug era when cholesterol-lowering statins and blood-pressure pills fueled years of double-digit earnings growth in the pharmaceutical industry. Now, though, the company may be close to making a play in an emerging class of blood-thinning medicines that some analysts believe could become a $20 billion annual global market by the end of the decade.
• Greece Plans New Austerity Measures. Greece is set to announce a new series of austerity measures next week as it scrambles to collect up to €4.5 billion ($6.15 billion) needed to meet its 2011 budget-deficit goal, two senior government officials said Friday. The extra measures will mostly focus on spending cuts in the public sector, but may also include more indirect taxes, the officials said.
• Ireland: EU Aid Wouldn't Make Sense. Ireland's finance minister said Friday that the country hasn't applied for European financial aid, a step he said "doesn't to me make any sense." He also said that the government's austerity budget would be passed when it is presented in early December.
• China's SAIC Finalizing Plans to Buy GM Stake. China's biggest auto maker is close to finalizing a plan to buy a stake in General Motors Co., which is preparing for an initial public offering next week, according to people familiar with the discussions. SAIC Motor Corp., which has built cars with GM in China since the 1990s, is among foreign entities who will become part-owners of GM when the auto maker returns to the public markets, these people said.
• Top Earners May Face Big Hit. A presidential panel's draft overhaul of the tax system could hit higher earners hard, largely by wiping out deductions and investment breaks that tend to especially benefit those who make enough money to itemize their taxes.

CNBC:

• No Inflation? Grocery Stores, Gas Prices Tell Different Story.

Business Insider:

• Schwarzenegger Already Forced to Call Emergency Budget Session, And California Muni Funds Dive. What, you thought when California got its budget called, that that had actually solved anything? Ha. They just kicked the can down the road: barely.
• A Quick Reminder of Why Commodity Prices Could Collapse In An Instant. (graph) What makes commodities particularly vulnerable right now is that net speculative long positions are near all-time highs right now across the board. That trade is very crowded, and thus revere-prone.
• 12 Ridiculous Government Regulations That Are Almost Too Bizarre To Believe.
  

Zero Hedge:

• Goldman(GS) Boosts China 2011 CPI Expectations from 1.3% to 4.3%, Sees Many Upcoming Hikes as Fed Inflation Exports Go Ballistic.

Washington Post:

• Foreclosure Mess Prompts Growing Number of Public Officials to Slow Down Process. One month ago, the city of Chicago and the surrounding suburbs of Cook County became a foreclosure-free zone. It wasn't the banks or judges that instituted the moratorium, because they were still moving cases forward at a rapid clip. The holdup was elsewhere: at the sheriff's office. Sheriff Thomas J. Dart, whose office is responsible for physically evicting delinquent homeowners, announced Oct. 19 that his deputies would "no longer be doing the banks' work for them anymore."

Reuters:

• DR Horton(DHI) New Home Orders Fall More Than 20%. D.R. Horton Inc, the biggest U.S. homebuilder, said 2011 would be another tough year for its battered industry, with no hope for a boost from the spring selling season, sending its shares down as much as 5 percent. The company said it would sell fewer homes in 2011 than it did in 2010 as new home orders fell 20.5 percent to 3,979 homes in its fourth quarter.
• US Economic Growth Gauge Rises to 24-Week High- ECRI.
• US Commercial Paper Market Falls for 2nd Week.
  

Expansion:

• Spain's Treasury has asked the European Commission for a six-month extension for banks to be able to sell bonds guaranteed by the Spanish state.

The Globe and Mail:

• Speculators Driving Up Coffee Prices, Starbucks(SBUX) Laments. “It is quite unfortunate that we are witness to record-high coffee prices, the highest level in almost 15 years, and there is zero, let me repeat, zero shortage of coffee and there is no demand problem,” Mr. Schultz told the Reuters news agency. “The situation is, the financial speculators have driven the commodity market to record highs and coffee is one of them,” he said.