- U.S. Rating May Be Cut by Moody’s If Debt-to-GDP Not Reduced. The U.S. may lose its top credit rating from Moody’s Investors Service unless lawmakers are able to reduce the percentage of debt to gross domestic product during budget negotiations next year. Moody’s, which placed a negative outlook on the U.S.’s Aaa grade in August, said in a statement today that the rating would likely be cut to Aa1 if negotiations fail to produce such policies. Plans that produce a stabilization and then downward trend in the ratio over the medium term will likely lead to an affirmation of the rating. The U.S. is on course for a so-called fiscal cliff in which tax cuts enacted under President George W. Bush to expire at the end of this year and for more than $1 trillion of automatic spending reductions to take effect in January.
- ESM Ruling Won’t Be Delayed, Germany’s Top Court Says. Germany’s top constitutional court rejected a last-minute bid to delay a case over the European Stability Mechanism, clearing the way for a ruling on the 500 billion-euro ($640 billion) bailout plan tomorrow. The Federal Constitutional Court in Karlsruhe said today it would issue its ruling on the ESM as scheduled at 10 a.m. tomorrow, without further comment on the bid to delay the case by lawmaker Peter Gauweiler. He argued the court should delay the ruling after the European Central Bank pledged unlimited funds to buy government bonds.
- Deutsche Bank(DB) to Increase Job Cuts, Lower Pay to Reach Goal. Deutsche Bank AG (DBK), Europe’s biggest bank by assets, will cut jobs and review its pay practices to help boost profitability as capital requirements rise and Europe’s debt crisis drags on.
- Baltic Dry Index Falls for 10th Day as Ore-Carrier Rates Slide. The Baltic Dry Index fell for a 10th day as rates for the largest iron-ore carriers declined on a surplus of available ships. The index lost .6% to 662, according to Baltic Exchange data. "The oversupply of vessels is no longer just Capesizes, it's the entire market, putting great pressure on rates," Jeffrey Landsberg, president of Commodore Research & Consulting, a NY-based adviser to ship owners, said today.
- Trade Deficit in U.S. Widens as Exports Start to Wane: Economy. The U.S. trade deficit widened in July for the first time in four months as the global economic slowdown took a toll on American exports. The gap grew to $42 billion from a revised $41.9 billion in June, Commerce Department figures showed today in Washington. The deficit with China climbed to a record, and it was the widest in almost five years with the European Union. Another report showed job openings in July declined. A stagnant Europe and cooling emerging markets may further limit shipments from America’s shores, removing a source of strength for the three-year expansion. The figures coincide with a recent deceleration in U.S. manufacturing and indicate the economy will rely on consumer spending, business investment and housing to pick up the slack. “Global demand is weakening,” said Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities Inc. in New York. “The second-half outlook is going to depend a lot on the consumers, and that means more than ever we have to stay focused on the labor data and also the confidence numbers.”
- Burberry Rattles Luxury-Goods Sector as Revenue Growth Slows. Burberry Group Plc (BRBY), the U.K.’s largest luxury-goods maker, said full-year profit will disappoint after sales growth slowed globally, sending the shares down the most ever and rattling those of peers. “We know we are not alone in terms of what we’ve seen in the last couple of weeks,” Chief Financial Officer Stacey Cartwright said today in a phone interview, citing conversations with other luxury-goods makers. “Traffic is down.” Burberry fell as much as 20 percent, the steepest drop since the company’s 2002 initial public offering, while LVMH Moet Hennessy Louis Vuitton SA (MC), Cie. Financiere Richemont (CFR) SA and PPR SA also slumped. “I’m not necessarily convinced that it’s just Burberry specific,” John Guy, a consumer-goods analyst at Berenberg Bank in London, said in a phone interview. Few competitors have yet to report sales for the period, he said. “We would not be surprised if other luxury players are seeing similar trends” to Burberry, Kate Calvert, an analyst at Seymour Pierce in London, wrote today in a note, cutting her recommendation on the stock to hold from buy. In China, where a boom in demand for watches and jewelry has spurred sales gains for luxury-goods companies, revenue has slowed ahead of a once-a-decade leadership transition by the Communist Party later this year, Cartwright said. There has also been a slowdown in gift-giving, the executive said. Sales at stores open at least a year were unchanged in the 10 weeks ended Sept. 8, with a “deceleration in recent weeks,” Burberry said in today’s statement. “We started the quarter at low- to mid-single digits and we’ve ended up flat,” Cartwright said. “That says that the last couple of weeks have turned negative,” she said, calling the slowdown “broad-based in all of the regions.”
- Oil Rises for Fifth Day on Speculation of Fed Stimulus. Prices headed for the longest streak of gains since July before a two-day Fed meeting starting tomorrow. Oil also advanced as the dollar weakened against the euro after Moody’s Investors Service said it may lower the U.S. credit rating. “People are anticipating that there will be some stimulus plans” that should increase oil demand, said Chris Barber, a senior analyst at Energy Security Analysis Inc. in Wakefield, Massachusetts. “The Moody’s announcement points to a weaker dollar, which tends to raise commodity prices.” Crude for October delivery gained 22 cents to $96.76 a barrel at 1:09 p.m. on the New York Mercantile Exchange. The five-day increase would be the longest since July 19. Brent oil for October settlement slid 12 cents to $114.69 a barrel on the London-based ICE Futures Europe exchange.
- Gold Advances on Outlook for Further Stimulus From Fed. Gold rose for the third time in four sessions as prospects for more stimulus from the Federal Reserve spurred demand for the metal as a store of value. The policy-setting Federal Open Market Committee may consider asset purchases at its Sept. 12-13 meeting. Chairman Ben S. Bernanke signaled last month that a third round of so- called quantitative easing may be needed to reduce joblessness. Gold futures for December delivery climbed 0.4 percent to $1,738.40 an ounce at 9:32 a.m. on the Comex in New York. Bullion touched a six-month high on Sept. 7 after U.S. job growth in August trailed estimates, adding to speculation that the Fed will announce more stimulus measures this week.
- UBS Whistle-Blower Secures $104 Million Award From IRS. Bradley Birkenfeld, the former UBS AG (UBSN) banker who told the Internal Revenue Service how the bank helped thousands of Americans evade taxes, secured an IRS award of $104 million, an amount his lawyers said may be the largest ever for a U.S. whistle-blower. He pleaded guilty to conspiracy in 2008, a year after reporting the bank’s conduct to the Justice Department, U.S. Senate, IRS and Securities and Exchange Commission. He was released from prison Aug. 1. He began serving a 40-month sentence in January 2010 at Schuylkill Federal Correctional Institution in Minersville, Pennsylvania. He received good-time credit that reduced his term, according to his lawyers. After leaving prison, he moved to a halfway house in New Hampshire, Kohn said.
- ObamaCare Means IRS Quagmire, Former Commissioner Says. The U.S. health care law’s process for providing insurance subsidies to middle-income families will produce a “needless administrative and compliance quagmire,” a former Internal Revenue Service commissioner will tell a congressional committee today. The subsidies, structured as tax credits, are the main method in the 2010 law of helping Americans obtain health insurance. They will be delivered through exchanges -- government-run markets that will connect people with insurance and cover part of the cost through federal payments to insurers. The exchanges will be operated by states and the Department of Health and Human Services. Such exchanges “will be starting from scratch -- with no experienced workforce, no tested technology and no history of dealing properly with confidential taxpayer information,” former IRS Commissioner Fred Goldberg will say, according to his written testimony to a panel of the House Ways and Means Committee. “It’s a safe bet that they will not have anything like the resources they need to do the job the way it should be done,” he will say.
- Poll Shows Obama in Virtual Tie With Romney Among Likely Voters. The poll gave Obama 49 percent and Romney 48 percent among the likely voters, showing little movement from a survey taken before the party gatherings, which had Romney ahead by 2 points. Both of those results were within the margins of error for the surveys.
- China Sends Patrol to Islands at Center of Japan Dispute. China deployed patrol boats near a disputed island chain after Japan strengthened its assertion of control over them, escalating a standoff between the world’s second and third-largest economies.
- For 11th Anniversary, a Simpler Ceremony. New York marked the 11th anniversary of the Sept. 11, 2001, terrorist attacks Tuesday with a simpler ceremony than in years past, marking a shift in the way the city remembers the 2,977 people lost that day.
- Israeli Leader Ratchets Up Feud With U.S. Israel's prime minister expressed dissatisfaction with Washington's refusal to spell out what would provoke a U.S.-led military strike against Iranian nuclear facilities, escalating the open rift between the leadership in both countries.
- Schäuble Says Germany Is Fiscal Role Model. German Finance Minister Wolfgang Schäuble told the country's parliament that German economic growth is hampered by the global economic slowdown but there is little reason to worry. "We are, in all humility, a role model for many European countries," Mr. Schäuble said in the Bundestag Tuesday. "Growth and deficit reduction aren't mutually exclusive." The minister was driving home a strategy that Ms. Merkel's government has tried to force struggling European countries to follow. The minister said conservative fiscal and economic policy reform, rather than the European Central Bank's printing press, will lead Europe out of its massive fiscal crisis.
- Copper set to ‘drop sharply’ in wake of iron-ore slide: Capital Economics.
- Sept. 11: From typical market Tuesday to the unthinkable in a minute.
Real Clear Politics:
- Health Care Premiums Will Likely Soar in 2013. Rising Health-Care Premiums Hit Middle Class. U.S. health insurance premiums have climbed faster than wages and inflation this year, and look poised to accelerate in 2013, adding to voter concerns about soaring health-care costs ahead of November elections. A study released on Tuesday showed premiums for employer-sponsored health plans, which cover about 149 million Americans, grew a modest 4 percent to $15,745 in 2012. It was a substantially slower rate of growth than in past years, including 2011, when premiums jumped 9 percent. But the study's authors at the nonpartisan Kaiser Family Foundation and the Health Research and Educational Trust, said higher costs still took a bigger bite from the income of middle-class employees, whose wages advanced only 1.7 percent, as employers shifted more health-care costs to their workers. (Read more: Are You Better Off?) This year's 4 percent increase eclipsed a general inflation rate of 2.3 percent. Some employers told researchers that insurers plan to push premiums up another 7 percent in 2013, the study said.
- Washington May Assault NYC With An Expansion Of The Alternative Tax.
- How Barack Obama Made His Fortune.
- Morgan Stanley's Guide To The 'Twilight Zone' Of The Global Economy.
- The French Are Having Serious Regrets About Electing François Hollande.
- The Most Iconic September 11 Magazine Covers.
- QE In Perspective.
- No Dead Cat Bounce In Spanish Home Price Which Collapse 12% In August. (graph)
- Art Cashin Remembers 9/11.
- Chart Of The Day: Five Years Of Jobs Versus Entitlements.
- Cairo Protesters Scale U.S. Embassy Wall, Remove American Flag. (pic) The news agency's reporter also says that the protesters tried to raise a black flag carrying the slogan: "There is no god but Allah and Mohammad is his messenger." Reuters said about 2,000 protesters have gathered outside the embassy and about 20 have scaled the walls. The Associated Press says the protesters were largely ultra conservative Islamists. The dozens of protesters who climbed the embassy wall tried to tear the American flag apart after failing to burn it.
- Canada’s Housing Bubble Set to Burst. Canada’s housing bubble is about to burst, and when it does, hundreds of billions of dollars in equity will be wiped out, unemployment will spike, and the economy will sink into a protracted slump. We know this will happen, because the same scenario unfolded in the US, Japan, Ireland and Spain. Housing bubbles always end badly.
Real Clear Politics:
- Obama won't meet Netanyahu over Iran row -Israeli official. The White House has rejected a request by Prime Minister Benjamin Netanyahu to meet President Barack Obama in the United States this month, an Israeli official said on Tuesday, after a row erupted between the allies over Iran's nuclear programme. An Israeli official told Reuters on condition of anonymity that Netanyahu's aides had asked for a meeting when he visits the United Nations this month, and "the White House has got back to us and said it appears a meeting is not possible. It said that the president's schedule will not permit that".
- Canada's Flaherty cites U.S. fiscal woes as potential threat. Canadian Finance Minister Jim Flaherty said on Tuesday there is growing concern about the capacity of the United States to tighten its budget as needed while continuing to grow, and said this and the European debt crisis could seriously harm Canada. "While we are not currently facing the depths of the downturn of a few years ago, the global economy remains stubbornly fragile. Any potential offshore setbacks could generate serious adverse impacts on Canada," Flaherty said in a speech in St. John's, Newfoundland. "For example, growth in a number of emerging-market economies is slowing, and concerns are growing about the capacity of the U.S. to balance the necessary fiscal consolidation while sustaining economic growth," he said, adding that the most immediate threat is the banking crisis in Europe.
- The UK is already taxed to death - a levy on wealth would be the last straw. There was a time, not so long ago, when only cranks or embittered class warriors would have backed a wealth tax, an idea that has failed spectacularly in every country in which it has been tried. No longer.
- Only the German people can renounce their sovereignty. Germany's leaders do not have the constitutional authority to take such a step. They are trustees only. And finally, when asked if the judges would say yes because to act otherwise means the "death of the euro the next day", he replied: "The judges will guard the constitution, but will also calculate the consequences of their decision. But are we certain that the euro will collapse if determined efforts to stabilize the markets turns out not be viable? Sounds to me as if he rejects the premise.
- The so-called troika of inspectors from the euro area, ECB and IMF are questioning 5.6 billion euros of 11.6 billion euros of spending cuts proposed by the Greek government. About 2.5 billion euros of measures were rejected outright while the troika requested more information on an additional 3 billion euros of planned cuts for 2013 and 2014.
- Macau Sees Single-Digit Tourism Growth in 2012. The Macau Government Tourist Office director João Manuel Costa Antunes forecasts a single-digit growth rate for tourism arrivals this year. According to Portuguese-language newspaper Jornal Tribuna de Macau, Mr Antunes said again that the city would welcome a total of 30 million tourists in 2012. That would be up by 7 percent in comparison with last year’s record 28 million visitors. In 2011, tourism arrivals increased by 12.2 percent year-on-year. Previously, Mr Antunes had forecast that the number of tourist arrivals in 2012 would increase by at least 10 percent. From January to July, visitor arrivals totalled 16 million, up 1.4 percent year-on-year.