Bloomberg:
- Draghi Says Next Move Not His as Spain Resists Bailout. European Central Bank President Mario Draghi signaled European governments can’t expect much more help from him until they make the next move. Draghi said nine times during a 54-minute press conference in Slovenia yesterday that the ECB won’t start intervening in bond markets until governments like Spain request a bailout and agree to conditions. He also ruled out allowing the ECB to take losses in any further Greek debt restructuring and damped speculation of another ECB interest-rate cut. “Draghi’s message to governments was that he’s not going to do any more for the time being,” said Jacques Cailloux, chief European economist at Nomura International Plc in London. “The ECB is ready, if needed, but their preference is probably not to have to intervene at all.”
- EU Doubts on Deficit Cutting May Hinder Spain’s Path to Bailout. European officials’ concern over’s Spain’s ability to reach its 2013 deficit-reduction target may obstruct Prime Minister Mariano Rajoy’s path toward a possible bailout. Olli Rehn, the European commissioner in charge of policing budget rules, told Spanish officials their plans to reduce the shortfall to 4.5 percent of gross domestic product next year are based on excessively optimistic assumptions about economic growth, two people familiar with the issue said. Central bank governor Luis Maria Linde, who met Rehn on his Oct. 1 visit to Madrid, echoed that view in comments to lawmakers yesterday. There’s “a potential slowdown in Spain’s application for a European program,” Thomas Costerg, an economist at Standard Chartered Bank in London, said yesterday by e-mail. “There is a rising fear that the 2013 budget and the stress tests may have been some sort of window dressing to get European assistance.”
- Spain Sees Divorce Driving Breakup of Towns as Recession Deepens. At 10 a.m. on a hot Friday, Antonio Rodriguez Alvarez and his brother, Francisco, sit outside a bar in Ecija, Spain, drinking an anise liquor with water. Unemployed laborers, they visit the job center daily at 9 a.m. in search of work. When there is none, they repair to the bar and worry. Antonio, 44, is divorced and living with his mother. He split with his wife partly because of constant fights about money and his lack of a job. He now weighs going to France, where he heard there is work picking fruit. His 22-year-old daughter is planning a move to the Canary Islands to work in the tourism industry. He said he doesn’t blame her. “Young people are leaving this town,” he said. “There’s no hope, no jobs. Days are long. You wake up, it’s the crisis. You go to bed, it’s the crisis. It’s always the same around here.”
- Bullard Says Investors Doubt Fed to Hold Inflation to 2%. Federal Reserve Bank of St. Louis President James Bullard said measures of inflation expectations indicate bond holders have doubts the central bank will hold price increases within its 2 percent goal. “Distant inflation expectations from the TIPS market seem to suggest that investors do not completely trust the Fed to deliver on its 2 percent inflation target,” Bullard said today in a speech in Memphis, Tennessee, referring to Treasury Inflation-Protected Securities. Bullard’s comments echoed Dallas Fed President Richard Fisher’s concern about rising expectations following the Federal Open Market Committee’s decision last month to start an asset purchase program. Policy makers said they could change the size of the central bank’s monthly asset purchases to reduce any risks from the program, including higher inflation or a disruption to financial markets, according to minutes of the Sept. 12-13 meeting released today. The five-year, five-year forward break-even rate, which projects the pace of price increases starting in 2017, rose to 2.88 percent on Sept. 14, the day after the FOMC announced a third round of quantitative easing. That was up half a percentage point from July 26. It dropped to 2.77 percent on Oct. 2. Bullard, who doesn’t vote on monetary policy this year, said inflation “is sometimes seen as a way to partially default on existing nominal debts,” and said that approach would hurt savers, mostly older U.S. households, in his prepared remarks to the Economic Club of Memphis. “A partial default today through higher inflation would be paid for via higher inflation premiums in future borrowing,” he said. “This type of policy would likely impair U.S. credit markets for many years.”
- Mazda China Sales Tumble to 19-Month Low on Anti-Japan Protests. Mazda Motor Corp. (7261)’s deliveries in China tumbled to the lowest in 19 months as anti-Japan protests flared in the world’s largest vehicle market, fueling concern larger automakers such as Toyota (7203) Motor Corp. will follow suit. Mazda saw deliveries in China drop 35 percent to 13,258 vehicles last month, the automaker said on its website yesterday. That’s the fewest deliveries since February 2011, meaning the company couldn’t even match its sales during the aftermath of last year’s earthquake-triggered tsunami in Japan and floods in Thailand.
- California Refiners Ration Gasoline as Prices Near Record. Exxon Mobil Corp. (XOM) and Valero Energy Corp. (VLO) are rationing fuel deliveries to customers in California as refinery outages cut into the state’s supplies, driving pump prices toward record highs. Valero halted spot sales of gasoline in Southern California and is allocating the rest of deliveries to customers. Exxon is also rationing fuel to customers at West Coast terminals. Retail prices in California jumped to $4.315 a gallon Oct. 3, according to AAA, the nation’s biggest motoring organization. The shortage caused Los Angeles-area gasoline station owners, including Costco Wholesale Corp., to run out of supplies, shut pumps and, in some cases, charge their highest prices ever. Spot gasoline in California, already home to some of the most expensive fuel in the nation because of state blending requirements, has surged $1 a gallon this week to a record. “We’re really sort of shell-shocked,” said Tom Robinson, president of Santa Clara, California-based Robinson Oil Corp., which operates 34 Rotten Robbie convenience stores. “If you’ve been in California long enough, you know how volatile our market can be. But to see prices go up $1 a gallon since Monday -- I’ve never seen that before.”
- Zynga(ZNGA) Cuts Bookings Forecast, Citing Diminished Game Demand. Zynga Inc. cut its forecast for full- year bookings, a predictor of sales, citing lower demand for Web games such as “The Ville” and delayed introduction of other titles. Shares tumbled as much as 22 percent. Bookings this year will be $1.085 billion to $1.1 billion, compared with an earlier forecast for $1.15 billion to $1.225 billion, San Francisco-based Zynga said today in a statement. The company also wrote down the value of its acquisition of OMGPop Inc., maker of the “Draw Something” game, and sliced its forecast for a closely watched measure of profitability.
- Gold Traders More Bullish as Holdings Reach Record: Commodities. Gold traders are the most bullish in three weeks as investors’ bullion holdings expanded to a record after central banks pledged to do more to spur economic growth. Twenty of 32 analysts surveyed by Bloomberg expect prices to rise next week, nine were bearish and three were neutral. Investors are holding the most metal ever through gold-backed exchange-traded products after buying 85.4 metric tons last month, the most since July 2011. Hedge funds’ bets on a rally are the biggest in seven months, U.S. Commodity Futures Trading Commission data show.
- FBI Team Reaches Libya Attack Site. Federal Bureau of Investigation agents visited the burned-out U.S. Consulate in Benghazi for the first time on Thursday, more than three weeks after Ambassador to Libya Christopher Stevens and three other Americans were killed in an attack there on Sept. 11. The agents collected evidence for about 12 hours with protection from U.S. military personnel and perimeter security from Libyan personnel, then left the city because of security concerns, officials said; the visit was kept secret to avoid any strike by militants while agents were there.
- Turkey Strikes Syria, Adds War Powers. Syria Accuses Neighbor of Fueling Conflict As Ankara Shells Positions for Second Day. Turkey attacked targets inside Syria for a second day Thursday and its parliament authorized military offensives into foreign countries, deepening the threat of sustained conflict along the neighbors' 565-mile common border. Syria, at the United Nations, castigated its neighbor for policies it said were fueling the conflict. Ankara's military and legislative moves came a day after Syrian shells landed in the Turkish border town of Akcakale, killing five people and spurring Turkish retaliatory strikes.
- Natural Gas Glut Pushes Exports.
- Investors Jump Off the 'Junk' Pile. The massive "junk"-bond boom is raising alarm bells among some large money managers, who warn the market is showing signs of overheating. So much money has flooded into the junk-bond market from yield-hungry investors that weaker and weaker companies are able to sell bonds, they say. Credit ratings of many borrowers are lower and debt levels are higher, making defaults more likely. And with yields near record lows, they add, investors aren't being compensated for that risk. Also worrying money managers is that some new sales have similar hallmarks to those that preceded the financial crisis in 2008.
- Foreign Firms Flood Into U.S. Debt Market. "Go Yankees" isn't just an October refrain in baseball. Foreign borrowers' U.S. dollar-denominated debt, or "Yankee bonds," are offering investors a chance to pick up higher yields and diversify their portfolios. Banks in Spain and France, plus corporate borrowers in Chile, Russia and the U.K., all brought bonds to market Thursday, selling at least $8.15 billion combined. The internationalization of the U.S. bond market means investors can diversify portfolios without having to take on much currency risk. And often, foreign companies offer higher yields than U.S. counterparts.
- Higgins and Heath: Informed Independents Cool to ObamaCare. Presenting facts about even popular aspects of the health-care law had a side effect: increasing support for Mitt Romney.
- The Obama Matrix. Romney's triumph came from exposing the President's campaign illusions.
- Exclusive: Credit Suisse probed by U.S. over mortgages - sources. U.S. federal and state authorities are investigating Credit Suisse AG over mortgage-backed securities packaged and sold by the bank, people familiar with the probe said on Thursday. The Justice Department and the New York Attorney General are among those probing Credit Suisse's actions, according to the sources, who spoke on condition of anonymity.
- Who Really Calls The Shots In Europe.
- Artemis Capital "Modern Financial Markets Are A Game Of Impossible Objects".
- Two Carrier Groups Are Now Operating In The China Sea.
- China Wants To Wean Itself Off The Dollar, But Risks Destroying Chinese Wealth.
- Obama Administration Offers To Bankroll Legal Fees For Defense Firms. The automatic defense cuts associated with the fiscal cliff, and the notifications that would be required if defense firms plan to lay off employees, has created an election concern for the Obama administration. So, the administration has decided to offer to bankroll the legal fees that these companies may incur if they opt not to notify employees 60 days prior to the layoffs, as the law stipulates.
- CHARTS: Social Media Analysis Reveals Just How Badly Mitt Romney Trounced Obama Last Night.
NY Times:
- Glut of Solar Panels Poses a New Threat to China. China in recent years established global dominance in renewable energy, its solar panel and wind turbine factories forcing many foreign rivals out of business and its policy makers hailed by environmentalists around the world as visionaries. But now China’s strategy is in disarray. Though worldwide demand for solar panels and wind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war.
LA Times:
CNN:- LAPD stance on illegal immigration puts Chief Beck in hot seat. Los Angeles Police Chief Charlie Beck stepped into the national immigration debate Thursday, announcing that hundreds of illegal immigrants arrested by his officers each year in low-level crimes would no longer be turned over to federal authorities for deportation. The new rules, which are expected to affect about 400 people arrested each year, mark a dramatic attempt by the nation's second-largest police department to distance itself from federal immigration policies that Beck says are unfair to undocumented immigrants suspected of committing petty offenses.
- Work from home soars 41% in 10 years. The number of Americans working from home has soared 41% in the last decade. About 13.4 million people currently work from home in the United States, according to a Census Bureau report out Thursday. That's about four million more Americans since 1999.
- Actress Daryl Hannah arrested in Keystone pipeline protest. Actress Daryl Hannah was arrested in Texas on Thursday after she stood in front of an earth-moving machine clearing ground for the construction of the controversial Keystone XL pipeline, her representative said. The protest took place outside Winnsboro, Texas, about 80 miles (130 km) east of Dallas, said Hannah's agent, Paul Bassis. Hannah, 51, a longtime environmental activist, was arrested last year outside the White House in another protest against the pipeline. The Keystone XL pipeline, a project of TransCanada Corp, would ship more than half a million barrels a day of oil sands-derived crude to the Texas Gulf Coast from Canada.
- Facebook(FB) IPO lawsuits to be heard in New York. Dozens of lawsuits against Facebook Inc , the NASDAQ exchange and various underwriters will be consolidated before a federal judge in New York, who must sort through the legal aftermath of Facebook's botched initial public offering.
- Obama-Romney debate draws 67.2 million TV viewers. More than 67 million Americans tuned in to Wednesday's first presidential debate between President Barack Obama and Mitt Romney, ranking the match-up among the top 10 of the past 30 years. Final Nielsen data on Thursday showed that 67.2 million people across 11 TV networks watched Obama and Romney go head to head on the economy - a 28 percent increase on the 52.4 million who saw the first 2008 debate between Obama and Republican John McCain.
- Morgan Stanley(MS) chief warns on Wall St pay. Morgan Stanley is preparing to wield its axe again with more job cuts and smaller bonuses planned for next year as the investment bank attempts to boost shareholder returns. In the latest sign of the pressure Wall Street is under to cut costs and address high pay levels, James Gorman, chief executive, said that staff and remuneration would have to be sacrificed as banks cope with lower profits.
- QE3 could lead to excessive risk taking, Fed minutes show. America could become addicted to loose monetary policy, with an extended period of QE3 leading to excessive risk-taking by some investors, policymakers at the Federal Reserve have warned.
- France's INSEE Sees No Pickup in Economy Through Year End. Institut de la Statistique et des Etudes Economiques said 2H growth will be +.2% GDP, down from +.4% forecast in June. INSEE forecasts unemployment will reach 10.2% by year end, 10.6% including overseas territories. French purchasing power will drop -.5%, the most since 1984, according to INSEE.
- Toyota Sept. China Sales Dropped 50% From Previous Month. China sales in September plunged 50% compared with August. Toyota plans to reduce China production this month. The co.'s August China sales declined 15% from a year earlier.
- None of note
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 129.50 -2.5 basis points.
- Asia Pacific Sovereign CDS Index 110.0 -4.25 basis points.
- FTSE-100 futures +.43%.
- S&P 500 futures +.10%.
- NASDAQ 100 futures +.14%.
Earnings of Note
Company/Estimate
- (STZ)/.54
8:30 am EST
- The Change in Non-farm Payrolls for September is estimated at 115K versus 96K in August.
- The Unemployment Rate for September is estimated to rise to 8.2% versus 8.1% in August.
- Average Hourly Earnings for September is estimated to rise +.2% versus unch. in August.
- Consumer Credit for August is estimated to rise to $7.250B versus -$3.276B in July.
- (VXX) 1-for-4
- The Fed's Duke speaking, Eurozone Factory Orders report and the BoJ rate decision could also impact trading today.
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