Evening Headlines
Bloomberg:
- Ireland May Have Just One Month to Stave Off Bailout Danger: Euro Credit. Irish Finance Minister Brian Lenihan may have just one month to stave off an international bailout. The extra yield that investors demand to hold Irish 10-year bonds over German bunds surged to a record yesterday as Lenihan tries to put together a 2011 budget by Dec. 7 that convinces investors he can get the country’s finances in order. “The behavior of international bond markets suggests the government’s various announcements haven’t convinced markets that we are on a credible, stable path,” said Karl Whelan, an economics professor at University College Dublin and a former economist at the Federal Reserve.
- VIX Rises for Sixth Day in Longest Streak of Gains Since 2008. The benchmark measure of U.S. options rose for the sixth straight day, the longest streak since January 2008, as investors prepared for bigger share-price swings before congressional elections and the Federal Reserve’s decision on economic stimulus in the next two days. The Chicago Board Options Exchange Volatility Index gained 3 percent to 21.83 at 4:14 p.m. in New York, bringing its six- day advance to 16 percent.
- Google(GOOG) Sues Interior Department Over Microsoft(MSFT) Bid Requirement. Google Inc., owner of the world’s most popular search engine, sued the U.S. Interior Department, claiming it didn’t provide a “full and open” competition for a messaging-service contract.
- New York State Budget Has $315 Million Deficit After 3 Months, Report Says. New York state’s budget, completed in early August, is running a $315 million deficit because tax revenue hasn’t increased as much as projected, the Division of Budget said. Tax collections for this year are now forecast at $61.4 billion, down $343 million from August estimates, the division said in a report. The budget for the current year, including federal aid, is now estimated at $135.3 billion. For fiscal 2012, which begins April 1, the state faces a deficit of $9 billion, up from $8.2 billion previously estimated, according to the report.
- Australia Unexpectedly Raises Rates; Currency Jumps. The Reserve Bank of Australia unexpectedly increased its benchmark interest rate on concern stronger growth will cause inflation to accelerate, driving the nation’s currency toward parity with the U.S. dollar.
- Opinions Are Split on Fed Policy Move. The Federal Reserve's move to print money to begin a new round of bond-buying, expected to be announced Wednesday, is aimed at lowering long-term interest rates to give the economy a lift. But inside and outside the Fed, there is an unusual divergence of opinions on how much good it will do—if any. Proponents say buying hundreds of billions of dollars more in Treasury bonds will provide only modest support for the economy. Foes warn that it could backfire by pushing up commodity prices, sowing seeds of unwelcome inflation in the future, or by undermining confidence in the Fed's ability to manage—and eventually reduce—its holdings.
- Greek Opposition Leader: Government Destabilizing Economy. Antonis Samaras, the Greek conservative main opposition leader, said Monday the socialist government's talk of early elections is destabilizing the economy and raising borrowing costs for the country.
- Tax Cuts to Dominate Lame-Duck Congress. The White House and Capitol Hill are preparing for post-election chaos over a host of unresolved economic issues, from taxes to jobless benefits, potentially prolonging what has been a lengthy period of uncertainty for taxpayers and businesses.
- Pressure Builds on Obama to Shake Up Inner Circle. Some high-level Democrats are calling for President Barack Obama to remake his inner circle or even fire top advisers in response to what many party strategists expect to be a decisive defeat on Tuesday. Tensions have come to the surface after meetings over the past few weeks in which Obama senior adviser David Axelrod discussed communications strategy with senior Democratic strategists and party officials. Some Democrats were so unhappy with the White House meetings, they started their own.
- A Hedge-Fund Manager's New Groove. A former hedge-fund manager who made a fortune shorting stocks has switched to the long side, and is raking in money in the process. William von Mueffling surprised clients and competitors last June by announcing he would close his hedge funds and return $3.5 billion to investors. His firm, Cantillon Capital Management of New York, kept managing $1 billion in long-only assets, typically considered the unsexy piece of the business. Now, the 42-year-old stock picker controls more money than he did before he closed his hedge funds.
- Toyota China Sales Down for First Time in 18 Months. Toyota Motor's sales in China fell 6 percent in October to 61,600 vehicles, marking the first year-on-year decline in 18 months, the Nikkei business daily reported on Tuesday, citing the company's local arm. The paper said Toyota cars were losing popularity while deteriorating Sino-Japanese relations also may have hit its sales.
- Bill Gross Warns That QE Could Crush the Dollar Another 20%, And Tells Investors to Look Abroad for Returns. According to Tweets from Reuters Jennifer Ablan, Gross predicts that QE could lead to another 20% decline in the dollar, and he's telling investors to look abroad for better returns. Last week, he described the Fed as using Ponzi economics, so he's definitely sounding very negative, and very anti-Fed these days, in manner that's not common for him.
- Charlie Gasparino: Wall Street is Terrified of the Tea Party. In an op-ed for WSJ, Charlie Gasparino predicts that by 2012 Wall Street will be out of love with the GOP, and will be heavily supporting Obama. A key reason: Bankers are terrified of Tea Partiers, who have made killing bailout a key part of their plank.
- Greek Deputy PM Makes a Huge Gaffe, And Accidentally Reveals The Country's Debt Plans. Classic gaffe here by the Greek Deputy PM Theodoros Pangalos. According to Greek newspaper Kathemirini, Pangalos said in an interview Sunday: “Debts exist to be restructured... We may pursue it ourselves or the option may be offered to us and it could be in our interest to turn it down.” This is in radical contravention to the official party line out of Greece, which is that restructuring would be a disaster.
- Top 25 Most Shorted NYSE Stocks as of October 15.
- Treasury Anticipates $700 Billion Gross Borrowing Need by End of March 2011, To Bust Debt Ceiling in Q1.
- 'Don't Ask' Policy Kept in Place. The Ninth Circuit ruling means “don’t ask, don’t tell” is likely to remain in place for the months or years it could take to decide an appeal, unless President Barack Obama manages to persuade Congress to repeal the statute, which was put on the books in 1993.
- Behind the Clinton-Meek Intervention. Bill Clinton’s recent attempts to suggest struggling Democrat Kendrick Meek should opt out of the Florida Senate race rocketed through the Sunshine State when news of the discussions involving Meek and independent candidate Charlie Crist came to light last week. But Clinton’s intervention was only the culmination of a long, delicate, and occasionally testy string of stop-and-start talks that began months ago involving the Florida candidates, the former president, and political aides in the Obama White House, who sought Clinton's intervention as long ago as early spring.
- Debt Costs Jump for Dublin and Lisbon. Borrowing costs for Ireland and Portugal shot up as investors took fright at European proposals to force them to take a greater share of losses in future state bail-outs. The moves in the bond markets on Monday follow agreement at last week’s European Union summit on a Franco-German proposal on a mechanism to resolve future Greek-style sovereign debt crises. Ireland saw the premium it pays over German benchmark interest rates rise to 4.67 percentage points, while the yield on its 10-year bonds reached 7.14 per cent, up 0.22 percentage points. Both the premium and the yield set new records since the introduction of the euro. Meanwhile, Portugal’s yield rose 0.16 percentage points to 6.11 per cent, while Greece and Spain saw smaller rises and European banking shares fell sharply in a broadly flat market. “People do seem shocked about the idea of a future eurozone debt restructuring – but this should not have been a surprise unless you really believed that the German taxpayer would always underwrite everything,” said Erik Nielsen, Goldman Sachs European economist. The rise in the yields of the so-called peripheral nations in the eurozone appears to fulfil the forecast of Jean-Claude Trichet, European Central Bank president, who warned European heads of state last week that the proposed rescue system would increase borrowing costs. Gary Jenkins, head of fixed income at Evolution Securities, said the danger was that by talking about debt restructuring “it could become a self-fulfilling prophecy”. Markets are particularly worried that borrowing costs for Ireland and Portugal could become so high that they are forced to tap the eurozone’s bail-out fund, a potentially destabilising move. Exacerbating the discord among Europe’s leaders, a top ECB official on Monday sharply criticised Germany’s plan to allow a debt rescheduling by a member state. “Calling for an orderly debt restructuring mechanism sounds nice and is costless. Designing and implementing it is somewhat different,” Lorenzo Bini Smaghi, an ECB executive board member, said in a speech in Abu Dhabi.
- Investment Canada Gives Potash(POT) Takeover Tentative Nod. Investment Canada has given a tentative go-ahead to BHP’s controversial takeover of Potash Corp. of Saskatchewan. Conservative insiders say the departmental recommendation sent to the Prime Minister’s desk is a yellow light — strings are attached — to the government’s approval of the $40-billion hostile takeover of the world’s largest potash mining operation by an Australian corporation.
- Top Chinese Political Advisor Pledges Support to Syria, Arab Nations. Top Chinese political advisor Jia Qinglin visited the Golan Heights on Monday, pledging support for Syria's efforts to resume the exercise of sovereignty over the mountainous region partially occupied by Israel. "China unswervingly supports the just cause of the Syrian government and people to safeguard their national sovereignty and territorial integrity, backs Syria to resume the exercise of sovereignty there, and supports Syria's long-time efforts for peace in the Middle East," said Jia after visiting the ruins of Quneitra city, the Syrian headquarters for the heights.
- China may change money policy to 'stable' from 'moderately loose'.
- China may cut its M2 money supply target to 15% or 16% next year, from 17%.
- China needs to stabilize overseas demand as it focuses on expanding domestic consumption because overseas demand remain "critical" for economic development and for employment, Xie Fuzhan, head of the State Council's research office, wrote.
Citigroup:
- Upgraded (SKH) to Buy, boosted target to $7.
- Reiterated Overweight on (AAPL), target $375.
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 104.0 -3.0 basis points.
- Asia Pacific Sovereign CDS Index 97.50 -2.75 basis points.
- S&P 500 futures +.01%
- NASDAQ 100 futures +.07%.
Earnings of Note
Company/Estimate
- (NYX)/.42
- (OSG)/-1.22
- (ENR)/.95
- (PFE)/.51
- (MA)/3.54
- (EMR)/.78
- (JOE)/-.09
- (EXPD)/.42
- (NEM)/.95
- (RDC)/.51
- (ADM)/.75
- (CKP)/.29
- (MLM)/1.16
- (DIN)/.67
- (ABC)/.48
- (COCO)/.39
- (CLX)/1.13
- (DTG)/1.48
- (MHS)/.88
- (MRO)/.95
- (K)/.90
- (CAM)/.61
- (WYNN)/.40
- (CQB)/.27
- (SFSF)/.00
- (MYGN)/.23
- (DISCA)/.43
- (PBI)/.52
- (ERTS)/-.11
- (OPEN)/.15
- (CECO)/.64
- (AMSC)/.28
- None of note
- None of note
- The weekly retail sales reports, weekly ABC consumer confidence report, Oppenheimer Healthcare Conference, (INFY) analyst meeting, (INFA) financial analyst meeting and the (WHR) investor day could also impact trading today.
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