Today's Headlines

Bloomberg:

• EU Said to Doubt Viability of Spain’s 2013 Deficit-Cut Target. Spain was told by Europe’s economic overseers that its 2013 plan to cut the deficit to 4.5 percent of gross domestic product relies on excessively optimistic assumptions, two people familiar with the issue said. Olli Rehn, the European commissioner in charge of policing budget rules, delivered the preliminary assessment to Spanish Economy Minister Luis de Guindos at a meeting in Madrid on Oct. 1, said the people, who declined to be named because the talks weren’t public. Spain’s 2013 budget assumes the economy will shrink 0.5 percent, less than the 1.3 percent contraction predicted by 21 analysts surveyed by Bloomberg. Spanish central bank chief Luis Maria Linde also questioned the government’s math today, calling it “optimistic.” Weaker economic performance would widen the deficit, forecast at 6.3 percent of GDP in 2012, forcing the government to impose more austerity or plead for a looser target. 
• Spanish Bonds Fall Second Day as Nation Resists Seeking Bailout. Spain’s government bonds fell for a second day as the nation resists seeking a bailout and European Central Bank President Mario Draghi said the country still faces significant challenges. Spanish securities declined after the country sold 3.99 billion euros ($5.17 billion) of two-, three- and five-year notes, while holding back from seeking financial aid that would trigger ECB purchases of its debt. German two-year notes fell after Draghi said policy makers didn’t discuss an interest-rate cut at their policy meeting today, where they kept the refinancing rate at a record-low 0.75 percent. Top-rated Finnish bonds also slipped as the ECB chief said the euro is “irreversible.” “The market wants to see a request for aid and this is pressuring Spanish bonds,” said Alessandro Giansanti, a senior strategist at ING Groep NV in Amsterdam. “The auction went quite well in terms of the demand because the bonds were sold in the area where the ECB may buy, if Spain asks for help.” Spanish two-year yields climbed six basis points, or 0.06 percentage points, to 3.29 percent at 4:25 p.m. London time. The 4.75 percent security due July 2014 fell 0.115, or 1.15 euros per 1,000-euro face amount, to 102.515. The 10-year yield rose nine basis points to 5.90 percent.
• Orphanides Says ECB Would Struggle to End Government-Bond Buying. Former European Central Bank Governing Council member Athanasios Orphanides said the central bank would face fierce political opposition on any decision to stop purchasing government bonds if a government fell behind on conditionality. “The real concern for the ECB is not how to kickstart the program, it’s the exit,” Orphanides, who now teaches at the MIT Sloan School of Management in Cambridge, Massachusetts, said in a telephone interview. If an agreement is reached “with a government and it reneges on it in six months time, the ECB will face tremendous pressure not to stop its bond purchases,” he said.
• IMF Won’t Disburse Greek Loan If Debt Not Sustainable. The International Monetary Fund won’t disburse its share of the Greek bailout if the country’s debt is not deemed sustainable or if other creditors don’t pledge to fill a financing gap in the aid package, a fund spokesman said. IMF Managing Director Christine Lagarde last week warned that the level of Greek debt would have “to be addressed,” pushing European policy makers to consider writing off some of the aid to the country. While the fund is sticking to a target of 120 percent of gross domestic product by 2020, the Greek government forecast this week that public debt will climb to 179.3 percent of GDP in 2013.
• China Shoppers Curb Luxury Spending in Hong Kong. Shoppers from China’s mainland curbed spending at Hong Kong luxury stores during the Golden Week holiday, reflecting growing pressure on the city’s economy from faltering tourist demand. Purchase of luxury goods by mainland visitors in Hong Kong is set to fall at least 10 percent from a year ago during this week’s holiday, said Joseph Tung, executive director of the Travel Industry Council. Lower spending in Hong Kong hurts consumer companies from U.K.’s Burberry Group Plc. (BRBY) to luxury watchseller Hengdeli Holdings Ltd. (3389) that have invested in stores to profit from Chinese visitors to the city. The weaker retail sales add to the risk of a recession in Hong Kong, where the economy shrank 0.1 percent in the second quarter from the previous three months on declining exports.
• Fed Saw Manageable Risks of New Bond Buying, Minutes Show. Federal Reserve policy makers said they could change the size of the central bank’s monthly asset purchases to reduce the risks associated with the program, such as disrupting financial markets and spurring inflation.
• Initial Jobless Claims Rise. The number of Americans filing first- time claims for unemployment insurance payments rose last week, highlighting an uneven improvement in the labor market. Applications for jobless benefits increased 4,000 to 367,000 in the week ended Sept. 29, Labor Department figures showed today. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg survey. 
• US Unemployment Drop Masking Labor Market Weakness: Chart of the Day. While unemployment has fallen to 8.l1% from 10% in 2009, the percentage of people working, know as the employment-population ratio, has remained near its lows of the recession, suggesting limited progress toward a recovery in jobs.
• Food Prices Jump to Six-Month High as Dairy Costs Rise. World food prices rose in September to the highest in six months as dairy and meat producers passed on higher feed costs to consumers, the United Nations’ Food & Agriculture Organization said. An index of 55 food items tracked by the FAO rose to 215.8 points from a restated 212.8 points in August, the Rome-based agency reported on its website today. Dairy costs jumped the most in more than two years. Livestock breeders and dairy farmers are passing on the higher cost of feed, after grain prices jumped in June and July, according to Abdolreza Abbassian, an economist at the FAO in the Italian capital. 
• California Gas Stations Begin to Shut on Record-High Spot Prices. Gasoline station owners in the Los Angeles area including Costco Wholesale Corp. (COST) are beginning to shut pumps because of supply shortages that have driven wholesale fuel prices to record highs. Costco’s outlet in Simi Valley, 40 miles (64 kilometers) northwest of Los Angeles, ran out of regular gasoline yesterday and was selling premium fuel at the price of regular, Jeff Cole, Costco’s vice president of gasoline, said by telephone. The company hasn’t been able to find enough unbranded summer-grade gasoline to keep its stations supplied, he said. The gasoline shortage “feels like a hurricane to me, but it’s the West Coast,” Cole said yesterday. “We’re obviously extremely disheartened that we are unable to do this, and we’re pulling fuel from all corners of California to fix this.”
• Oil Rises on Euro Strength. Crude for November delivery gained $1.55, or 1.8 percent, to $89.69 a barrel at 11:46 a.m. on the New York Mercantile Exchange. Brent oil for November settlement advanced $1.91, or 1.8 percent, to $110.08 a barrel on the London-based ICE Futures Europe exchange.
• Gold Jumps to Highest Since November on ECB’s Bond Plan. Gold futures jumped to the highest in almost 11 months as the European Central Bank said it is ready to start buying government bonds, boosting demand for the precious metal as a store of value. Gold futures for December delivery climbed 0.5 percent to $1,788.60 an ounce at 9:44 a.m. on the Comex in New York. Earlier, the price reached $1,797.20, the highest for a most- active contract since Nov. 14.
• Cantor Cut to Junk by Moody’s on Capital Markets Pressure. Cantor Fitzgerald LP, the investment bank planning to add 800 people in coming years, was cut to junk by Moody’s Investors Service on weakened profitability. The credit grade was lowered to Ba1 as the ratings firm expects “the capital markets operating environment to be challenging for all participants for the medium term,” Moody’s said today in a statement on the New York-based firm.

Wall Street Journal: 

• Political Wisdom: A Big Night for Romney. 
• Romney Plans Foreign-Policy Speech at VMI. 
• Web Profiles Haunt Students. A growing number of top-ranked U.S. colleges say they are finding objectionable material online that hurts the chances of prospective freshmen.
• Reports Show Small Businesses Are Reluctant to Hire. Small businesses cut back on hiring over the summer and small-to-medium sized firms have lowered their staffing plans for the future, according to two reports released Thursday. The National Federation of Independent Business, a small-business trade group, said the net change in employment per firm over the three months ended in September was -0.23, worse than the July and August readings. The negative result indicates slightly more firms cut workers than the share of firms who added staff. The outlook for hiring among smaller firms is also very muted. A survey of companies with annual revenues between $100,000 to $250 million, done by PNC Financial Services Group, shows 23% of companies expect to add new employees over the next six months, down from the 28% saying that in the spring survey. Worries about the economy’s future helps to explain some of the reluctance toward future hiring. The PNC survey found 57% of business owners or senior managers are pessimistic about the national economy’s path over the next six months, up sharply from 43% saying that in the spring. 
• Henninger: The Romney Reboot Arrives. In a role reversal, Mitt Romney went on offense and put Barack Obama on defense for 90 minutes. 

MarketWatch.com: 

• Retailers’ September sales raise holidays concern. Industry watchers say retailers selling basics may be safer bet. U.S. retailers’ September comparable store sales slowed from the summer trend, heightening the stakes for how the upcoming holiday season will play out. Overall, the September sales results released Thursday edged up 0.8%, short of the 1.6% average estimate of analysts surveyed by Thomson Reuters. About 53% of the retailers reporting sales missed Wall Street’s expectations. 

CNBC: 

• 'Discouraged' Workers Face Tough Road Back to Employment. Carver doubts she'll ever land full-time work and now focuses on just making enough money to pay the bills. Millions of other Americans have come to the same conclusion as the worst economic recovery since World War II has left them sidelined and unable to replace the job they lost to the Great Recession. Many have given up altogether, left behind by the economy and left out of the government’s employment statistics. In fact, so many people have given up looking for work that the official jobless rate fell to 8.1 percent last month from 8.3 percent, even though the economy is not adding nearly enough jobs to absorb the growth in working-age population.   
• Planned Layoffs Up in September: Challenger. The number of planned layoffs at U.S. firms in September rose 4.9 percent. Employers announced planned job cuts of 33,816 last month, up from 32,239 in August, according to the report from consultants Challenger, Gray & Christmas, Inc.  
• A Huge Victory for a Principled Mitt Romney. Mitt Romney politely cleaned Barack Obama’s clock tonight. A lethargic and at times tired looking President Obama was out-hustled, out-facted, out-energized, and out-informed by Former Governor Mitt Romney. Completely unlike Romney’s convention speech, tonight he focused on strong economic issues, developed his philosophy of limited government, and convinced me beyond a shadow of a doubt that he is in fact a pro-growth tax reformer who wants to lower the rate, and broaden the base in a revenue-neutral fashion that will actually create jobs and spur the economy. 
• Romney's Strong Debate Showing Puts Europe on Edge. President Barack Obama's lackluster performance in the first debate provoked uneasiness in European capitals on Thursday, where hopes are mostly, if unofficially, pinned on his securing a second term. In Europe, where leaders and finance officials have worked closely with the Obama administration over the past 2½ years trying to resolve the euro area debt crisis, there was particular consternation at Romney's singling out of deficit-ridden Spain as a poorly administered economy. "Romney is making analogies that aren't based on reality," Foreign Affairs Minister Jose Manuel Garcia-Margallo told reporters after a meeting of his center-right party. Leading Spanish daily El Pais highlighted the fact that Spain was the only European country mentioned, and contrasted Romney's negative depiction of it with Obama's praise for Spain's renewable energy policies during the 2008 campaign. "Spain has never been mentioned in a presidential debate as a symbol of failure," the left-leaning newspaper lamented. "What happened last night makes history. And not in a good way." Political commentators in France and Germany registered surprise at Obama's underwhelming performance, saying the election could be much tighter as a result. "Obama showed a lack of desire to be president, which could put him on shaky ground as a presidential candidate," said liberal German news magazine Der Spiegel. "It's now clear that to get back into the White House the U.S. president needs running shoes, not flip-flops." France's Le Monde appeared equally surprised by Obama's sub-par performance. "Where did the favorite go?" it asked on its front page, with a headline below saying: "Obama fails his first televised debate against an incisive Romney."

Zero Hedge: 

• Chart Of The Day: The Rise Of Global Central Planning. 
• The 5 Most Ridiculous Charts In US Equity Markets.
• Goldman(GS): "Neither Democrats Nor Republicans Look Inclined To Budge On The Fiscal Cliff".
• More Credit Suisse Employees Learn They Are About To Be Laid Off Via Department Of Labor Website. 
• Uncle Sam's FICO Score.

Business Insider:

• Here's The Angry 'Class Warfare' Letter That Hedge Fund Manager Leon Cooperman Sent To Obama.  
• The Next Gigantic Housing Bubble That Everyone Expects To Burst. 

St. Louis Fed:

• Commercial Paper Outstanding. (graph)

Reuters:

• Informatica(INFA) profit warning hits tech sector shares. Software maker Informatica Corp (INFA.O) rattled investors with a warning on Thursday about worsening business conditions in Europe, sending its shares down over 25 percent and weighing on other U.S. tech stocks. Informatica's software, which helps companies pull together data so they can analyze business trends, is used alongside that made by bigger software companies so its weakness often drags down peers. But analysts said Informatica's problems may be company specific, citing an internal sales reorganization, and said overall tech spending would likely be stable. Nevertheless, the warning hit shares in other software firms, particularly Qlik Technologies (QLIK.O), which was down 8.7 percent in late morning trade on Nasdaq. Qlik generates almost 60 percent of its revenue in Europe. Other such as Teradata Corp (TDC.N) dropped 3.4 percent, Tibco Software (TIBX.O) fell 1 percent, Citrix Systems (CTXS.O) was down 0.9 percent while Red Hat Inc (RHT.N) and VMware Inc (VMW.N) lost 0.7 percent and 0.5 percent respectively. Smaller software companies have taken a hit in the last few months as customers scrutinize deals more closely, signaling a pullback in tech spending.  
• Factory orders post largest fall since recession. Demand for U.S. factory goods in August fell by the most since January 2009, but the second straight month of gains in orders outside transportation hinted at a less rapid loss of momentum in manufacturing activity. The Commerce Department said new orders for manufactured goods tumbled 5.2 percent - the biggest drop since the recession - dragged down by a slump in demand for transportation equipment that was telegraphed in last week's report on orders for long-lasting manufactured goods. 
• Russia proposes diluted UN text on Syria attack in Turkey. Russia on Thursday blocked adoption of a draft U.N. statement condemning a deadly Syrian mortar attack on a Turkish town and proposed a weaker text calling for "restraint" on the border, without referring to breaches of international law. Western diplomats complained that Russia's proposed Security Council statement, if accepted by the 15-members, would weaken the message to an unacceptable degree. Negotiations on the non-binding statement were continuing, they said. 
• US authorities charge 91 in $430 mln Medicare fraud. Ninety-one people including doctors, nurses and other medical professionals have been charged with committing $430 million in Medicare fraud in seven U.S. cities, authorities said on Thursday. An investigation coordinated by the U.S. Justice Department and the Department of Health and Human Services uprooted alleged false billing schemes involving $230 million in home health services, over $100 million in mental health services and $49 million from ambulance transportation. Charges range from healthcare fraud and conspiracy to wire fraud, kickback violations, identity theft and money laundering.
• Fitch: Brazilian banks face volatility, uncertainty, economic slowdown.

Telegraph: 

• QE3 could push gold up to $2,400/oz. 
• Gloom for UK construction as Hanson plans to cut capacity by 10pc. Job losses are set to be announced by a leading building products firm in response to the "dreadful" UK construction market.

Handelsblatt:

• European parliament lawmakers from Germany's Christian Democratic Union and Christian Social Union want euro-area countries to be able to leave the common currency temporarily if they can't reduce debt levels, citing a paper drafted by the politicians. The 42 lawmakers said the euro area needs a process for states to declare insolvency in an orderly fashion and the common currency won't break up if that happens. The declaration marks a break with Germany's CDU Chancellor Angela Merkel, who wants to keep Greece in the euro. The lawmakers want ECB bond-buying to be limited in its duration and volume, on the ground that it could stoke inflation in the "mid-term".

Focus:

• Bavaria's Soeder Says ECB Bond Buying Is No Cure. The ECB weakens concept of ESM, fiscal pact, Markus Soeder, Germany's Bavarian state finance minister. ECB president Draghi generates mistrust regarding currency stability, he said. The ECB is not allowed to play active political role in saving the euro. If Germany has to pay for debtor nations, German citizens must agree in referendum, Soeder said.
  

IMK Economic Institute:

• ECB Bond-Buying Conditionality May Damp Region's Recovery: IMK. The conditionality under which the ECB would agree to buy troubled euro member states' bonds may damp the area's economy recovery, Germany's labor union-affiliated IMK economic institute says. The Euro's decline against he dollar, and German consumer spending help bolster the region's economy, IMK said. The Euro region economy will shrink -.5% in 2012 and -.7% in 2013, IMK said.

El Pais:

• Catalan President Artur Mas said the budget-deficit targets set for Spanish regions next year are "unreal" and likely won't be met. Mas called for the central government to deliver larger share of austerity measures. "The current distribution of the deficit is unreal and very dangerous because it could destabilize social cohesion," he said. Mas's comments break the agreement Prime Minister Mariano Rajoy brokered with regional leaders Oct. 2.