Today's Headlines

Bloomberg:

• Germany Shoots Down 'Dreams' of Swift Crisis Fix. Germany said European Union leaders won’t provide the complete fix to the euro-area debt crisis that global policy makers are pushing for at an Oct. 23 summit. German Chancellor Angela Merkel has made it clear that “dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled,” Steffen Seibert, Merkel’s chief spokesman, said at a briefing in Berlin today. The search for an end to the crisis “surely extends well into next year.” Group of 20 finance ministers and central bankers concluded weekend talks in Paris endorsing parts of Europe’s emerging plan to avoid a Greek default, bolster banks and curb contagion. Providing a week to act, they set the Oct. 23 meeting of European leaders in Brussels as the deadline. On the summit agenda is how any recapitalization of Europe’s banks “might be carried out in a coordinated way” and how to make the European Financial Stability Facility, the EU’s rescue fund for indebted states, as effective as possible, Seibert said. The leaders will also discuss aid for Greece and ways to tighten economic and financial policy, he said. The euro retreated as much as 1 percent to $1.3739 from a one-month high against the dollar after Seibert’s comments. The currency last week had its biggest gain in more than two years on speculation that policy makers were moving closer to stemming the crisis. German 10-year bonds rallied and the Stoxx Europe 600 Index reversed an advance of as much as 1.5 percent and was down 1.4 percent at 4.45 p.m. in Frankfurt.
• German Ministry Open to Discuss Separation of Investment Banking. Proposals to separate investment and retail banking are “interesting approaches” for international talks about financial-market regulation, German Finance Ministry spokesman Johannes Blankenheim said. “These ideas, these suggestions should be discussed intensively at the international level, especially to solve open questions such as the definition of the retail and investment business and the repercussions on the real economy,” Blankenheim said when asked by reporters today in Berlin about demands by Germany’s opposition Social Democratic Party to impose a separation.
• BOE New Stimulus May Not Be Enough as U.K. Outlook Worsens, ITEM Club Says. Ernst & Young LLP’s ITEM Club cut its U.K. growth forecast and said the Bank of England should lower its key interest rate as its new stimulus earlier this month is unlikely to be enough to revive economic growth. Gross domestic product will increase 0.9 percent in 2011 and 1.5 percent in 2012, compared with July projections of 1.4 percent and 2.2 percent respectively, the research group said in an e-mailed report in London today.
• U.S. Banks Fall as Wells(WFC), Citi(C) Revenue Slump. U.S. banks fell after Citigroup Inc. (C) and Wells Fargo & Co. (WFC), the nation’s third- and fourth-largest lenders, said quarterly revenue dropped amid economic weakness and market turmoil linked to Europe. Wells Fargo slid 7.3 percent, the most since Aug. 10, to $24.72 at 12:49 p.m. in New York trading, leading a 3 percent decline in the 24-company KBW Bank Index. (BKX) Citigroup slipped 1.3 percent to $28.02.
• U.S. Bank Credit Risk Increases as Wells Fargo(WFC) Revenues Decline. The cost to protect U.S. bank debt climbed after third-quarter revenue at Wells Fargo & Co. (WFC), the largest U.S. home lender, declined. Credit-default swaps on Wells Fargo, based in San Francisco, added 7 basis points to 152 basis points at 11 a.m. in New York, according to data provider CMA. Those tied to Goldman Sachs Group Inc. (GS) climbed 22.5 basis points to 361. A benchmark gauge of U.S. corporate credit risk also rose after a German government spokesman damped expectations for a swift resolution to the region’s debt crisis. Credit swaps on General Electric Co. (GE)’s finance arm General Electric Capital Corp. increased 17 basis points to 287. Contracts linked to Morgan Stanley, which pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt, added 21 basis points to 412, and those tied to Bank of America Corp. (BAC) increased 18.5 to 383.5, according to CMA. The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, gained 3.4 basis points to a mid- price of 133.4 basis points as of 11:19 a.m. in New York, according to index administrator Markit Group Ltd.
• EU Said to Be Close to Deal for Curbs on Naked Sovereign CDS. The European Union is close to an agreement to insert an optional ban on naked credit-default swaps on sovereign debt into a draft law on short selling, under plans to be discussed by government officials and lawmakers tomorrow, according to two people familiar with the talks.
• U.S. Industrial Production Barely Increases. Industrial production in the U.S. advanced in September on growing demand for automobiles and computers after stalling the prior month, a sign manufacturers are contributing to growth. Output at factories, mines and utilities increased 0.2 percent, in line with the median estimate in a Bloomberg News survey, after being little changed in August, figures from the Federal Reserve showed today. Factory production, which makes up 75 percent of the total, climbed for a third month. Capacity utilization, which measures the amount of a plant that is in use, increased to 77.4 percent from 77.3 percent in August. The gauge compares with the average of 79.5 percent over the past 20 years.
• Manufacturing in New York Region Shrinks More Than Economists Forecast. Manufacturing in the New York region contracted in October at a faster pace than forecast, reflecting a lack of confidence in the U.S. recovery that failed to be confirmed by measures of orders and sales. The Federal Reserve Bank of New York’s general economic index rose to minus 8.5 from minus 8.8 in September. Economists projected an improvement to minus 4, based on the median of 53 forecasts in a Bloomberg News survey.
• Oil Slips From One-Month High as Germany Cools Optimism on Europe Rescue. Crude oil slipped from the highest level in a month after Germany said European Union leaders won’t provide a complete fix to the region’s debt crisis, damping hopes for a quick rescue plan. Oil fell as much as 1.1 percent after climbing above $88 a barrel as Chancellor Angela Merkel said expectations that rescue plans to be announced at an Oct. 23 summit will speedily address Europe’s problems were “dreams.” Prices also weakened as data showed manufacturing in the New York region contracted in October at a faster pace than forecast. “People started to accept that Europe is going to take awhile to recover and there is no quick fix,” said Carl Larry, director of energy derivatives and research with Blue Ocean Brokerage LLC in New York. Crude for November delivery fell 46 cents, or 0.5 percent, to $86.34 a barrel at 11:20 a.m. on the New York Mercantile Exchange. Earlier it gained as much as 1.6 percent to $88.18 a barrel, the highest since Sept. 16, on forecasts that China may say tomorrow its economy grew more than 9 percent last quarter. Brent oil for December settlement fell $1.33, or 1.2 percent, to $110.90 a barrel on the London-based ICE Futures Europe exchange.

Wall Street Journal:

• Chinese Company Scandals Are Spurring Due Diligence In Hong Kong - Hong Kong Exchange Exec.
• Tokyo Lowers Assessment of Economy. The Japanese government lowered its assessment of the economy in October, saying in its monthly economic report that the recovery from the March disaster is losing steam, as the global slowdown drags on exports and production while the strong yen and energy constraints continue to cloud the outlook. "The Japanese economy is still picking up, although the pace of recovery is decelerating, as difficulties due to the Great East Japan Earthquake persist," the cabinet office said in the report, released Monday. The government curbed its view of exports, industrial production and personal consumption, and said the adverse effects of deflation still threaten the economy. It also reiterated concerns about the strong yen, which makes imports less expensive but is negative overall for the export-driven economy.
• Bearish Bets Fall at NYSE, Nasdaq. Short-selling declined at the New York Stock Exchange and the Nasdaq Stock Market during the second half of September. In the exchanges' latest twice-a-month statistics, this time for the period ended Sept. 30, the number of short-selling positions at the NYSE not yet closed out, known as short interest, decreased 4.62%. The positions stood at 14,946,055,365 shares from a revised 15,669,413,241 shares in the period ended Sept. 15.
  

CNBC.com:

• Bank Fees Push Consumers to Put Money Elsewhere.

Business Insider:

• Hedge Fund Manager Gets All Fired Up Over The Likelihood People Who Bet On A Greek Default Will Not Get Paid.
• Obama: Congress Is Apparently Too Stupid To Understand My Jobs Bill, So We're Going To Simplify It For Them. President Barack Obama took a shot at Congress on Monday, saying they might have had difficulty wrapping their heads around his 200-page jobs bill. "We're going to break up my jobs bill. Maybe they [Congress] couldn't understand it all at once," he said in Asheville, North Carolina — the first stop of his three-day bus tour promoting the American Jobs Act.
• SocGen Strategist Has A Near Fit On Bloomberg TV: 'The Financial Blogosphere Is Really, Really Out Of Control'. (video)
• Now The Nazi and Communist Parties Are Throwing Their Support Behind 'Occupy Wall Street'.
  

Zero Hedge:

• Mall Vacancies Hit Record High. (graph)
• Waffle-Bund Spread Hits All-Time High. (graph)
  

NY Post:

• New York's Marxist Epicenter by Charles Gasparino.

New York Times:

• New Test for Down Syndrome Raises Hopes and Questions.

TickerSense:

• Blogger Sentiment Poll: Bullish 54.84%, Bearish 22.58%.

Rasmussen Reports:

• 2012 Presidential Matchup: Cain 43%, Obama 41%.

Reuters:

• Germany's Schaeuble Warns Summit Won't Bury Euro Crisis. Expectations of the October 23 summit have steadily built up since Chancellor Angela Merkel and France's Nicolas Sarkozy promised in bilateral talks on October 9 to unveil a comprehensive new euro zone crisis package, including an agreement on how to recapitalize Europe's banks. German Finance Minister Wolfgang Schaeuble warned on Monday against unrealistic expectations that this weekend's European Union summit can come up with a "definitive solution" to the euro zone's sovereign debt crisis. "We won't have a definitive solution this weekend," the German minister told reporters in Duesseldorf. But Schaeuble's comments that the summit would not draw a line under the crisis once and for all -- remarks echoed by an aide to Merkel -- put paid to a euro rally against the U.S. dollar and brought German Bund futures back from early losses. "The chancellor has pointed out that the dreams building up that this package will mean everything will be solved and over by Monday cannot be fulfilled," said Merkel's spokesman Steffen Seibert.
• ECB Has Reached Limits of Crisis Response - Stark. Heaping more responsibility on the European Central Bank to help solve the euro zone debt crisis would overburden it, ECB policymaker Juergen Stark said on Monday, putting the onus on the bloc's governments to act. Stark's comments echoed remarks last week from outgoing ECB President Jean-Claude Trichet, who said the bank had done "all it could" to fight the crisis.

Telegraph:

• Debt Crisis: Live.

Der Spiegel:

• The Next Domino? Top Economists Warn of France Downgrade. Top German economists are warning that France's AAA rating could be in danger should additional measures become necessary to prop up indebted euro-zone members or to save ailing banks. With debt relief for Greece under discussion, it may be a question of when, not if.
• Europe's Politicians Side With Protesters. Hundreds of thousands took to the streets in Europe and around the world this weekend to protest against the global banking system. Politicians in Europe, engaged in their own dispute with the banks, stood firmly on the side of the demonstrators.
• Europe Deeply Divided Ahead of Make-or-Make Summit. The head of Deutsche Bank is raging against politicians, Berlin is raging against Paris and the north is raging against the south. The world expects the upcoming euro summit to produce decisive results, but the Europeans remain split. Will German Chancellor Angela Merkel finally take the lead?

Helsingin Sanomat:

• The haircut investors will take as part of the second Greek bailout will be bigger than earlier agreed, Finland's Finance Minister Jutta Urpilainen said. "We're talking about a bigger cut" than the 21% agreed in July, Urpilainen said.

Jornal de Negocios:

• The Portuguese government forecasts the economy will contract more than previously estimated next year. The government's 2012 budget proposal forecasts gross domestic product will contract between 2.5% and 3% next year.

Shanghai Daily:

• Shanghai's Growth in Trade Slows Sharply. SHANGHAI'S growth in trade weakened sharply in September due to a stronger yuan, a moderating local economy and stubbornly high inflation, the Shanghai Statistics Bureau said yesterday. The city's exports expanded 11.1 percent from a year earlier to US$17.8 billion last month, while imports rose 18.7 percent on an annual basis to US$20.1 billion. But both figures slowed from August when exports jumped 21.7 percent and imports surged 27.1 percent. Yan Jun, a spokesman for the bureau, said the weaker-than-expected growth mirrored a larger trend of a slower pace of expansion for China's trade. "Shrinking external demand, uncertainties about the direction of the Chinese currency, together with a moderating economy in the city, may lead to slower trade growth in the months to come," Yan said. Shanghai's trade with the United States and the European Union, two regions hard hit by economic crises, grew by single digit last month, a sharp drop from the average growth rate of 15 percent previously.
  

Legal Evening News:

• Banks in 14 Chinese cities including Shanghai and Guangzhou increased interest rates on mortgages for first homes by as much as 50%. In Changchun in the northeast, some banks increased mortgage rates to 10.58%, 50% more than the central bank's benchmark lending rate.