Bloomberg:
- Central Banks Push Dollar Cost to August Lows. Policy makers’ decision to offer unlimited dollar loans pushed the cost for European banks to fund in the U.S. currency back to levels at the end of August, indicating markets view the measures as a short-term fix. “This has done a trick,” said John Raymond, an analyst at CreditSights Inc. in London. “Whether it’s done the trick is another matter. The underlying issue of Greece is still there.” The cost of converting euro payments into dollars, measured by the three-month cross-currency basis swap, plunged 16.8 basis points to 81.9 below the euro interbank offered rate in London. That’s after the European Central Bank and peers in the U.K., Switzerland, Japan and the U.S. said they’ll provide unlimited three-month money to lenders in three tenders starting October.
- Bond Risk Falls in Europe as ECB, Fed Coordinate on Bank Loans. The cost of insuring European sovereign and corporate debt extended declines after the European Central Bank said it will lend dollars to euro-area banks and as the prospect of default by Greece receded. The Markit iTraxx SovX Western Europe Index of swaps tied to 15 governments dropped 16 basis points to 327 as of 4:25 p.m. in London, the lowest since Sept. 9 and signaling an improvement in perceptions of credit quality. Swaps on France fell 11 basis points to 170, contracts on Italy dropped 21 basis points to 450 and Spain fell 20 basis points to 372, CMA prices show. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell 10.25 basis points to 173.75. The Markit iTraxx Financial Index of swaps on the senior debt of 25 banks and insurers dropped 24 basis points to 261, the lowest since Sept. 8, while the subordinated index was down 45.5 basis points at 472. Contracts on UBS AG fell, reversing an earlier increase when Switzerland's biggest bank said it may post a third-quarter loss after unauthorized trading at its investment bank cost it about $2 billion. Contracts insuring the lender's senior bonds fell 12 basis points to 198, while those on its subordinated notes dropped 15 basis points to 322, according to CMA. The Markit iTraxx Crossover Index of 40 companies with mostly high-yield credit ratings decreased 27 basis points to 714, according to JPMorgan Chase & Co. at 5 p.m. in London.
- Euribor-OIS Spread Falls for Third Day Amid Backing for Greece. A gauge of banks’ reluctance to lend to each other in Europe fell for a third day after Germany and France insisted they saw a future for Greece as part of the euro region. The Euribor-OIS spread, the difference between the three- month euro interbank offered rate and overnight index swaps, was at 77.2 basis points as of 11:17 a.m. in London, down from 79.6 yesterday and 84.6 on Sept. 12, which was the highest level since March 2009.
- Consumer Prices, Jobless Claims Exceed Forecasts. The cost of living in the U.S. climbed more than forecast and unemployment claims rose, battering the confidence of Americans squeezed by stagnant wages and higher prices of food, housing and energy. The consumer-price index increased 0.4 percent in August, and jobless claims climbed by 11,000 to 428,000 in the week ended Sept. 10, Labor Department figures showed today in Washington. The Bloomberg Consumer Comfort Index held last week at the second-lowest level of 2011 as the most households in three years said it was a bad time to spend. Today’s report showed inflation-adjusted hourly wages fell 0.6 percent in August, the most since July 2008, and were down 1.9 percent from the same month a year ago.
- Gold Slumps on Signs Europe Cash Infusion May Ease Sovereign-Debt Crisis. Gold dropped to a two-week low on signs that European banks will have enough cash through yearend, easing concern that the region’s debt crisis will worsen and eroding demand for the metal as an alternative asset. “This is an initial knee-jerk reaction after ECB’s statement as people are viewing it positive for the European economy,” Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago, said in a telephone interview. “The ECB has managed to find a band-aid for now.” Gold futures for December delivery fell $39.90, or 2.2 percent, to $1,786.60 an ounce at 10:01 a.m. on the Comex in New York, after touching $1,779.70, the lowest since Aug. 29. Before today, the precious metal climbed 29 percent this year, reaching a record $1,923.70 on Sept. 6.
- Commodity Derivatives May Need More Regulation, IOSCO Says. Global regulators may need to tighten their rulebooks for commodity derivatives markets to ensure they operate transparently and free from abuse, the International Organization of Securities Commissions said. IOSCO recommended supervisors use position limits, publication of open contracts and reporting of over-the-counter derivatives to tame commodity markets that operate in “disorderly conditions,” according to an e-mailed statement. The principles “help to ensure that the physical commodity derivatives markets serve their fundamental price discovery and hedging functions, while operating free from manipulation and abusive trading schemes,” Masamichi Kono, chairman of IOSCO’s technical committee, said.
- Boehner Asks Panel to Reject Tax Rate Hikes. House Speaker John Boehner called on the congressional debt-reduction supercommittee to lay the foundation for a tax-code overhaul that would reject rate increases and curb some tax breaks.
- Morgan Stanley(MS) Names Gorman Chairman. Morgan Stanley, the sixth-biggest U.S. bank by assets, said Chief Executive Officer James Gorman will take the additional job of chairman of the board on Jan. 1 as John Mack steps down.
- iPhone 5 Rush Orders Seen to Benefit Broadcom(BRCM). Broadcom Corp. (BRCM) stands out as one of the biggest beneficiaries from orders from Apple Inc. (AAPL), whose need for parts that go into iPhones and iPads represents a bright spot for a semiconductor industry plagued by weak demand.
- GOP Uses Solyndra to Bash Obma's Jobs Plan. House Republicans used a hearing on Solyndra LLC’s slide into bankruptcy to attack the Obama administration’s stimulus plans, past and proposed, showing the issue may linger as a political liability for the White House.The Fremont, California, solar-panel maker won a $535 million federal loan guarantee in September 2009, the first awarded by the Energy Department, using funds from that year’s stimulus package. The company filed for bankruptcy protection on Sept. 6, and the FBI raided its offices two days later. Republicans released a report at a House Energy and Commerce Committee panel hearing yesterday that they said showed White House officials sought to rush a decision on the loan award, and that Energy Department officials failed to see signs of the rising risks in supporting the company. Solyndra is a “poster child” of the first stimulus and a reason to oppose Obama’s proposed $447 billion package intended to create jobs, Representative Steve Scalise, a Louisiana Republican, said at the hearing.
CNBC.com:
Zero Hedge:
- Geithner Is Likely to Suggest Europe Leverage Bailout Fund. Treasury Secretary Timothy Geithner is likely to suggest to European finance ministers on Friday that they leverage their bailout fund along the lines of the U.S. TALF program, EU officials said.
Zero Hedge:
- SocGen Redux - ETF Trader at Center of UBS(UBS) Rogue Trade.
- U.S. Misery Index at Fresh 28-Year High. (graph)
- EU Debt Woes Raising Risk to Commodities Outlook - Goldman(GS). Debt problems in the European Union are raising the risk to a bullish view for commodities, but a deeper recessionary event would be required to derail the outlook, Goldman Sachs analysts said on Thursday.
- Does The Euro Have a Future? by George Soros.
- China Risks Hard Landing as Global Woes Spread. China's carefully-managed soft landing is turning harder by the day, threatening to deflate the torrid credit bubble of the past three years.
- Europe's rescue fund would have to be used to bail out banks facing losses on Greek sovereign bonds if the country defaults, citing people in Germany's governing coalition. The comments show that European policy makers are considering the possibility of a Greek default.
- Greece won't be able to avoid a sovereign default even with an expanded European bailout fund, citing an analysis from the Kiel, Germany-based IfW Institute. The government in Athens would have to generate surpluses that have been historically impossible in order to remain solvent, citing the researchers. Greece's fiscal problems won't be manageable without a "significant" debt restructuring, the research paper said.
- German Chancellor Angela Merkel was urged by Wolfgang Franz, the head of her council of economic advisers, to oppose secondary-market bond purchases by Europe's overhauled rescue fund, citing an interview with Franz. Joint debt issuance by euro-area countries, known as euro bonds, is illegal after a ruling this month by Germany's Federal Constitutional Court, Franz said.
- Norway's Foreign Minister Jonas Gahr Stoere said it wasn't immediately apparent that the euro would survive the current crisis, citing the minister. The euro zone requires greater integration to succeed with a common currency system, which may not be achievable in today's Europe, Stoere said. The minister said he wasn't convinced the EU would be able to cope with the debt crisis, as it lacked the instruments required to respond to the challenges.
- Jean-Pierre Roth, the former president of the Swiss National Bank, said he's "very pessimistic" about Europe's economy as governments struggle to contain the region's debt crisis. Historians will judge this period as a "total failure" of European leadership, Roth said.
- The wealth tax that Spain's government plans to re-introduce tomorrow will affect 150,000 people and raise 1 billion euros, citing a Public Works Minister Jose Blanco, who is also the government's spokesman.
- Chinese State Media Use 9/11 Anniversary for Anti-American Reports. While the 10th anniversary of 9/11 was a solemn occasion in the U.S., and a chance to remember America’s values of freedom and democracy, for Chinese state media it was a chance to go on the offensive.
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