Today's Headlines

Bloomberg: 

• Euro-Area Recession Deepens as Manufacturing Shrinks: Economy. Euro-area services and manufacturing output contracted more than economists forecast in October and German business confidence dropped to the lowest in more than 2 1/2 years as Europe’s recession deepened. A composite index based on a survey of euro-area purchasing managers in services and manufacturing fell to 45.8, the lowest in more than three years, from 46.1 in September, London-based Markit Economics said today. Economists had forecast a reading of 46.5, according to a Bloomberg News survey. A separate factory index in China rose. In Germany, the Ifo institute’s business climate index unexpectedly dropped to 100.0 from 101.4 in September.
• Draghi Defends Bond Purchases With Warning of Deflation. European Central Bank President Mario Draghi defended his plan to buy government bonds in the German parliament today with a warning about deflation risks. The ECB’s so-called Outright Monetary Transactions “will not lead to inflation,” Draghi told lawmakers in Berlin in a closed-door session, according to a text provided by the ECB. “In our assessment, the greater risk to price stability is currently falling prices in some euro-area countries,” he said. “In this sense, OMTs are not in contradiction to our mandate: in fact, they are essential for ensuring we can continue to achieve it.”
• German Ifo Business Confidence Unexpectedly Fell in October. German business confidence unexpectedly fell to the lowest in more than 2 1/2 years in October as the sovereign debt crisis damped growth in Europe’s largest economy. The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 100.0 from 101.4 in September. That’s the sixth straight decline and the lowest reading since February 2010. Economists predicted an increase to 101.6, according to the median of 39 forecasts in a Bloomberg News survey.
• Volvo Third-Quarter Profit Misses Estimates on Asia Sales. Volvo AB (VOLVB), the world’s second-largest truckmaker, reported third-quarter profit that missed analysts’ estimates as sales dropped in South America and Asia, and it incurred costs for shutting a production line. Volvo fell the most in 14 months in Stockholm trading after the Gothenburg, Sweden-based manufacturer said net income plunged 64 percent from a year earlier to 1.37 billion kronor ($206.3 million). Earnings were less than the 2.83 billion-krona average of 12 analyst estimates compiled by Bloomberg. Sales decreased 6.2 percent to 67.1 billion kronor. “This is a lousy result,” Mattias Eriksson, an equity strategist at Nordea Bank AB with a buy recommendation on Volvo, said by phone. “Both trucks and construction equipment performed worse than expected. The question is, how much of the problem is with the company and how much is with the market.”
• Fed Says Growth ‘Moderate’ While Maintaining Bond Buying. The Federal Reserve said the economy is still growing modestly and unemployment remains elevated as it maintains $40 billion in monthly purchases of mortgage-backed securities aimed at spurring the three-year expansion.“Growth in employment has been slow,” the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington. “Household spending has advanced a bit more quickly.” Fed Chairman Ben S. Bernanke is leading a third round of unprecedented bond-buying as he seeks to speed job creation for 12.1 million unemployed Americans. The FOMC, in its last scheduled meeting before the presidential election, repeated today that it would press on with the asset purchases until the labor market improves “substantially.” “Strains in global financial markets continue to pose significant downside risks,” the statement said. “Inflation recently picked up somewhat, reflecting higher energy prices.” It said longer-term inflation expectations have remained stable.
• Bank of America(BAC) Sued for $1 Billion by U.S. Over Mortgages. Bank of America Corp. sold defective residential mortgage loans to Fannie Mae and Freddie Mac that later defaulted, the U.S. government said in a $1 billion fraud lawsuit against the bank. The U.S. Justice Department filed a civil complaint today in Manhattan federal court, claiming that Countrywide Financial and its parent Bank of America generated and sold Fannie Mae and Freddie Mac thousands of defective mortgage loans. Bank of America acquired Countrywide in 2008.
• Netanyahu Says Israel May Broaden Response to Gaza Rocket Fire. Israeli Prime Minister Benjamin Netanyahu warned today that “much more extensive” military action is possible following rocket attacks from Palestinian militants in the Gaza Strip today and in the past week. Four Palestinians were killed in the past 24 hours by Israeli air strikes in Gaza, as more than 75 rockets were fired today at the south of Israel by militant groups from the Hamas- controlled territory. 

Wall Street Journal: 

• Consumer Agency Sets Sights on Debt Collectors. A U.S. consumer agency is planning to ring in the new year by examining the nation's largest debt collectors. On Jan. 2, the Consumer Financial Protection Bureau will move forward on plans to supervise 175 consumer debt-collection firms, beefing up scrutiny of the growing multibillion-dollar market a bit earlier than some industry officials expected.

MarketWatch.com:

• Bigger than Bernanke? Are today's problems bigger than Dr. Bernanke and the Federal Reserve?

Fox News:

• Weekly Home Purchase Applications Fall -8.3%. Applications for home mortgages fell sharply last week, registering the biggest percentage decline in a year as demand for both purchase loans and refinancings tumbled, data from an industry group showed on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell by 12 percent in the week ended October 19. The seasonally adjusted purchase index, which measures loan requests for home purchases, fell 8.3 percent over the previous week. Demand for purchase loans is a leading indicator of home sales. The MBA's seasonally adjusted refinance index fell 12.9 percent from the previous week to reach its lowest level since late August. The refinance share of total mortgage activity decreased to 81 percent of total applications from 82 percent the prior week.
• SEC Looking into Citi's(C) Disclosure of Pandit's Exit.

CNBC: 

• More Americans Walk Away from Their Mortgages.

Zero Hedge:

• Andalusia Seeks Greater Bailout From Spain, Says Amount For Regional Bailout Fund Was "Underestimated".  
• Full Mario Draghi Pro-Inflation Speech To Germany.  
• What Do CEOs Know That The Consumer Doesn't? (graph) 
• New Home Sales Highest Since April 2010... Until One Reads The Fine Print. 
• The World In Three Charts.  
• The 46 Million Foodstamp Man March - An Infographic.

Business Insider:

• Airlines Are Going To Start Tracking You And Deciding How Much You Should Pay For A Ticket. 
• In Preet Bharara's Suit Against BofA, He Reveals A Program Called 'The Hustle'. 
• GOLDMAN(GS): It Will Be 18 Months Before We Can 'Begin To Even Think' About An End To The Euro Crisis.

CBS:

• Norfolk Southern(NSC) shares fall -7.2%on lower earnings. Shares of Norfolk Southern Corp. hit a low for the year Wednesday after the railroad reported a 27 percent drop in third-quarter net income and an analyst downgraded the stock. The Norfolk, Va., company said late Tuesday that the main culprit in its falling profit and revenue last quarter was a steep drop in demand for coal, one of its biggest hauls.

Breitbart.com:

• White House Repeatedly Told Media 'No Evidence' Of Terror Attack In Libya.

RasmussenReports: 

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows Mitt Romney attracting support from 50% of voters nationwide, while President Obama earns the vote from 46%. Two percent (2%) prefers some other candidate, and two percent (2%) are undecided.

Reuters:

• White House told of militant claim two hours after Libya attack: emails. Officials at the White House and State Department were advised two hours after attackers assaulted the U.S. diplomatic mission in Benghazi, Libya, on September 11 that an Islamic militant group had claimed credit for the attack, official emails show. A third email, also marked SBU and sent at 6:07 p.m. Washington time, carried the subject line: "Update 2: Ansar al-Sharia Claims Responsibility for Benghazi Attack." The message reported: "Embassy Tripoli reports the group claimed responsibility on Facebook and Twitter and has called for an attack on Embassy Tripoli." While some information identifying recipients of this message was redacted from copies of the messages obtained by Reuters, a government source said that one of the addresses to which the message was sent was the White House Situation Room, the president's secure command post. Other addressees included intelligence and military units as well as one used by the FBI command center, the source said. 
• Greek coalition ally says he remains opposed to labour reforms. The leader of a junior partner in Greece's three-party coalition told Reuters on Wednesday that he remained opposed to labour reforms demanded by Greece's lenders, despite their latest concessions. "As things stand, my position remains unchanged," said Fotis Kouvelis, head of the small Democratic Left party. Kouvelis has blocked political agreement on a broad package of austerity cuts by refusing to back the reforms, saying that European Union and International Monetary Fund lenders must withdraw proposals that undermine labour rights.

Telegraph:

• This is an assault on living standards set to run and run. Close to the start of the economic crisis, someone I've always considered one of the City's more astute practitioners privately ventured what seemed a somewhat startling prediction – by the time it was all over, average living standards in Britain and many of other advanced economies would have fallen in real terms by 20pc or more.