Today's Headlines

Bloomberg: 

• Spanish Bonds Slump as Marchers Plan Further Protests. Spanish bond yields climbed the most this month as a second night of violent protests loomed amid sparring over the police response to clashes in Madrid. Spain’s 10-year benchmark yield rose above 6 percent, approaching the levels seen before European Central Bank President Mario Draghi offered to buy struggling nations’ debt. Prime Minister Mariano Rajoy told the Wall Street Journal in comments confirmed by his office that he would “100 percent” seek a rescue if borrowing costs stayed “too high.” “The negative newsflow on Spain is gaining momentum,” said Michael Leister, a fixed-income strategist at Commerzbank AG in London. “The protests will definitely add to the pressure, but negative news regarding the regions pose a bigger risk.” The slump in Spanish bonds sent the yield to 6.06 percent, up 32 basis points, at 5:55 p.m. in Madrid. The benchmark Ibex stock index slid 3.9 percent. 
• Rajoy Bets Italian Woes May Ease Spain Rescue Terms: Euro Credit. Spanish Prime Minister Mariano Rajoy may be delaying a bailout request on a bet that renewed market tension will also force Italy to seek aid, strengthening his bargaining power and giving political cover. Spain will have more leverage if it can fend off a rescue until Italy joins it in needing ECB help to bring down the cost of servicing its debt, said Raphael Gallardo, head of macroeconomics at Rothschild Asset Management in Paris.
• Greek Protests in Athens End After Police Use Tear Gas. Protests in Athens ended today after police fired tear gas in response to fire-bombs thrown by demonstrators during a strike over wage cuts and austerity that Prime Minister Antonis Samaras said are vital to keep the euro. Demonstrators earlier filled central Syntagma Square in Athens, opposite the Parliament House, shouting slogans such as “struggle, clash, overturn: history gets written by those who disobey.” Police spokesman Takis Papapetropoulos estimated the crowd at 35,000 people. Police said 105 people were detained, 21 were arrested and 8 officers were injured. Schools, hospitals, ferries and government services shut down in the first walkout since February. Shops closed from 3 p.m. today to let staff take part in demonstrations. Public transport operated to allow protesters to attend rallies in Athens city center. A three-hour walkout by air traffic controllers disrupted flights around the country.
• Credit Risk Surges as Catalan Concern Adds to Spanish Bank Woes. Credit-default swaps on sovereign and corporate debt rose on concern Spain faces a constitutional crisis after its richest region called early elections and that recapitalization of the nation's banks faces new hurdles. The Markit iTraxx SovX Western Europe Index rose 12 basis points to 150 with contracts on Spain climbing 30 basis points to 400 at 2:53 pm in London, the biggest rise in almost three weeks. The Markit iTraxx Financial Index linked to the senior debt of 25 banks and insurers rose 11 basis points to 205. 
• European Stocks Drop Most Since July Before Spain Budget. European stocks slid the most in two months as Spain prepared to present its budget and Federal Reserve Bank of Philadelphia President Charles Plosser said the third round of bond buying may fail to stimulate growth. Acciona SA (ANA) sank 9.9 percent, leading Spanish builders lower a day before the government presents its budget for next year. Banco Santander SA (SAN), Spain’s largest lender, retreated 4.5 percent. Anglo American Plc (AAL) lost 3.7 percent after saying that it plans to reduce its production of coal. The Stoxx Europe 600 Index plunged 1.8 percent to 270.72 at the close, its largest drop since July 23.
• China’s Stocks Fall to 2009 Low on Concern About Economy, Profit. China’s stocks fell, with the Shanghai Composite Index briefly sliding below the 2,000 level for the first time in three years, on concern the deepening economic slowdown is hurting corporate profits. The Shanghai Composite dropped 1.2 percent to 2,004.17 at the close, after slumping to as low as 1,999.48 in the last five minutes of trading. The benchmark gauge has lost 9.9 percent this quarter, the most in a year, and is the worst performer among global markets after Cyprus.
• Foxconn Workers Labor Under Police Watch After Riot Shuts Plant. Security teams wearing riot helmets and wielding plastic shields marched around a Foxconn Technology Group factory in a show of force after a fight involving 2,000 workers prompted the company to suspend production there. The campus used by 79,000 workers in Taiyuan, in northern Shanxi province, showed the damage caused by a Sept. 23 clash between laborers from different provinces that left more than 40 people hospitalized. Windows in a bath house, supermarket, arcade and parked cars were shattered as investigators tried to determine how a fight in a dormitory escalated into a riot quelled by hundreds of security guards and police.
• U.S. Grads Work As Waiters While Italy’s Remain Jobless. 
• Fed’s Evans Calls for More Easing, Warns of ‘Lost Decade’. Federal Reserve Bank of Chicago President Charles Evans said policy makers must not be passive in the face of high U.S. unemployment, firing back at critics of the Fed’s decision this month to step up record stimulus. “We cannot be complacent and assume that the economy is not being damaged if no action is taken,” Evans said today in the text of remarks prepared for delivery in Hammond, Indiana. “If we continue to take only modest, cautious, safe policy actions, we risk suffering a lost decade similar to that which Japan experienced in the 1990s.”

Wall St. Journal: 

• Carney: Obama Does View Libya Attack as ‘Terrorist Attack’. The White House fielded questions Wednesday about why President Barack Obama has not gone as far as members of his administration — including his top spokesman — in labeling the violence in Libya that killed four Americans a terrorist attack. 
• Israel Must Be 'Eliminated'. Netanyahu has to take Iran's words seriously. Why doesn't Obama? 
• Factory Riot Spotlights Breaking Point in China. The pressures threatening China's status as the world's factory floor have been laid bare by a riot this week at a factory that makes parts for Apple Inc. and other electronics companies, a clash that workers said was sparked by onerous security and repressive living conditions. The consequences of a riot that erupted on Sunday in the Hon Hai Precision Industry Co.'s plant go far beyond the security of Apple's supply chain, which relies on armies of industrious and docile Chinese workers. The riot raises questions about the sustainability of China's vaunted manufacturing machine.

MarketWatch.com: 

• The emerging headache of QE3: Andy Xie.

CNBC: 

• Fed Virtually Funding the Entire US Deficit: Lindsey. The latest round of extraordinary Federal Reserve stimulus is risky and leaves little room to maneuver should another crisis hit, economist Lawrence Lindsey told CNBC’s “Squawk Box” on Wednesday. Lindsey said that with the Fed purchasing at least $40 billion a month in mortgage debt through QE3, “they are buying the entire deficit.”

Zero Hedge:

• California Screaming as 4th Muni Bankruptcy Looms in Atwater. 
• Less Than Expected 31,000 New Homes Sold In August; Dent "Recovery" Meme. (graph) 
• When Spain Unveils Its New Budget Tomorrow, You'll Understand Why The Catalan Separatist Movement Is So Explosive.
• Meanwhile, At The Greece 'Mass Strike' Protest-Cam. (video)
• Spanish 10Y Bond Yield Breaches 6% - Highest In 3 Weeks As Nothing Still Fixed. (graphs)
• Next Steps For Spain.

Business Insider:

• Chinese Hospitals Are Sending Japanese-Made Medicine Back.
• Ahmadinejad Calls For A 'New World Order' In United Nations Speech.
• Egyptian Journalist Arrested For Defacing Anti-Muslim Poster In New York Subway.
• Photos Of The Giant Protests Rocking Greece And Spain.
• Bloomberg's Guide To The Fiscal Cliff Is Best We've Seen.
• The Eurozone Con Game Just Keeps Cracking.
• The Chinese Stock Market Sank To A New 3-Year Low. (graph)
• The World's Largest Oil Trader Is Ignoring Sanctions And Trading With Iran.

CNN:

• Risky Loans Are Back.

RasmussenReports:  

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows both President Obama and Mitt Romney attracting support from 46% of voters nationwide. Three percent (3%) prefer some other candidate, and five percent (5%) are undecided.

Reuters:

• CEO confidence tumbles to three-year low: Roundtable. U.S. chief executives' view of the economy deteriorated sharply in the third quarter and is now as bleak as it was in the immediate aftermath of the last recession, with more planning to cut jobs over the next six months, according to a survey released by the Business Roundtable on Wednesday. The group's CEO Economic Outlook Index tumbled to 66 in the third quarter from 89.1 in the second, in the sharpest drop recorded in the survey's decade-long history. Confidence fell to its lowest point since the third quarter of 2009. Thirty-four percent of U.S. CEOs expect to cut jobs in the United States over the next six months, up from 20 percent a quarter ago, while 30 percent plan to raise capital spending, down from 43 percent. Fifty-eight percent expect their sales to rise over that time period, down from the previous survey's 75 percent.
• Austerity-hit Italians avoid shops, sales drop. Italian retail sales fell for the fourth month running in July, data showed on Wednesday, highlighting how austerity measures and unemployment are discouraging shoppers and deepening a year-long recession. Sales dropped 3.2 percent in July compared to the same month last year, National statistics office ISTAT said, for their steepest fall since a 6.8 percent drop in April, the largest decline since the current data series began in January 2001. With Italians buckling under the impact of a severe recession, tax hikes, falling disposable incomes and rising unemployment, the prospects for a rebound in consumer spending are looking increasingly bleak. Retail lobby Confcommercio said this week that consumer spending is set this year for its biggest post-World War Two decline, and data from ISTAT shows consumer morale has only recovered slightly from a historic low hit in June. 
• Copper slides on renewed European debt worries. 
• Shanghai rebar falls, pressure on iron ore as restocking stalls.  
• U.S. recession signal from the Philly Fed. (graph) Tom Porcelli, economist at RBC Capital, says he’s concerned about a new trough from a little-watched Philadelphia Fed survey of coincident indicators. 
• French joblessness tops 3 mln for first time in 13 yrs. The number of unemployed in France topped the 3 million mark in August for the first time in 13 years, official figures showed on Wednesday, adding to President Francois Hollande's woes as he seeks to revive a stalled economy and his tumbling poll ratings. Marking its 16th consecutive monthly rise, the number of registered jobseekers in mainland France increased by 23,900 last month to 3,011,000, Labour Ministry data showed. That was a 9 percent increase year-on-year and the highest figure since June 1999.

Telegraph: 

• Spanish GDP falling at 'significant pace'. Spain's recession is deepening with economic output sliding at a "significant pace" in the third quarter of this year, the Bank of Spain warned on Wednesday.  
• ECB will not fill Greek budget gaps, says Bundesbank president. The European Central Bank will not fill potential financing gaps in Greece's budget, Governing Council member Jens Weidmann said on Wednesday.
• Greece austerity strike and protests: in pictures.

Sueddeutsche Zeitung:

• Slovakia won't agree to give Greece "more money, more time," Prime Minister Robert Fico said. Euro countries can only get money from bailout funds if they meet conditions, he said.