Bloomberg:
- Euro-Area Bailout Fund Faces Challenge at EU’s Highest Court. The euro area’s 500 billion-euro ($652 billion) bailout fund faces another test as the European Union’s highest court weighs claims that the firewall violates EU law and should be banned in its current form. A complaint by Thomas Pringle, an independent member of the Irish parliament, has reached the Luxembourg-based EU Court of Justice, which has the power to topple the European Stability Mechanism, or ESM. A hearing is scheduled for today, with a ruling possible as soon as the end of the year under a fast- track procedure. The EU court case follows a separate decision last month by Germany’s Federal Constitutional Court in Karlsruhe not to block the ESM. The German ruling handed a victory to Chancellor Angela Merkel, who championed the bailout facility as vital to save the euro area from a fiscal meltdown as it lurches between crises.
- Moody’s Cuts Ratings on Catalonia, Four Other Spanish Regions. Moody’s Investors Service, a week after deciding against cutting Spain’s credit-rating to below investment grade, lowered Catalonia and four other Spanish regions. Catalonia, which will hold an early election on Nov. 25 focused on whether to seek independence for the region that accounts for a fifth of Spain’s economy, was reduced two steps to Ba3 from Ba1, the ratings firm said in a statement dated yesterday. Extremadura was lowered to Ba1 from Baa3, Andalucia was slashed to Ba2 from Baa3, and Castilla-La Mancha was cut to Ba3 from Ba2 and Murcia dropped to Ba3 from Ba1. Moody’s decision to cut the regions was “driven by the deterioration in their liquidity positions, as evidenced by their very limited cash reserves as of September 2012 and their significant reliance on short-term credit lines to fund operating needs,” the ratings firm said. Moody’s also said that Catalonia, Andalucia and Murcia “face large debt redemptions” this quarter when retail bonds issued in 2011 are due to mature. The ratings of Basque Country, Diputacion Foral de Bizkaia, Madrid, Castilla y Leon, Galicia, Valencia and four government-related entities in Valencia were all left unchanged.
- China’s Factories Losing Pricing Power in Earnings Threat. Chinese factories are losing pricing power in the worst wholesale-cost deflation since 2009, signaling corporate earnings may deteriorate further and putting a damper on global inflation pressures. Steelmaker China Oriental Group Co. (581) says falling prices are wiping out profits, while Yunnan Copper Industry Co. (000878) cited the declines for a third-quarter loss. The producer price index (SHCOMP) fell 3.6 percent in September from a year earlier and may stay negative until the second half of 2013 without large stimulus, according to Mizuho Securities Asia Ltd.
- China’s Stocks Fall Most in Almost Two Weeks on Economic Outlook. China’s stocks fell, dragging the benchmark index down by the most in almost two weeks, on concern the nation’s economic and earnings outlook is worsening before a report on manufacturing scheduled for tomorrow. Gauges of health-care and consumer staple companies, the biggest gainers this year, led declines among industry groups in the CSI 300 (SHSZ300) Index. Shenzhen Hongtao Decoration Co. (002325) tumbled 10 percent after the company cut its earnings forecast. Shanxi Coking Co., the largest publicly traded coke producer in China, slid 1.2 percent after reporting lower third-quarter profit. Foreign buyers attending the Canton trade fair declined 11.4 percent from the spring session, the China Daily reported, while Citigroup Inc. cut its 2012 economic growth estimates for China. The Shanghai Composite Index (SHCOMP) fell 0.6percent to 2,119.65 at the 11:30 a.m. local-time break, heading for its biggest loss since Oct. 11.
- China Bans Foreign Ships From Rivers as Local Operators Struggle. China will ban foreign vessels from sailing on domestic waterways including the Yangtze River, the world’s busiest for freight, as local operators struggle to make money amid a global shipping glut. Overseas investors will also be barred from engaging in river shipping, including through the use of Chinese vessels, according to a statement posted on the government’s website yesterday. The ban, which comes into effect Jan. 1, doesn’t apply to vessels registered in Hong Kong, Macau and Taiwan. The new rules are designed to help promote a “healthy” domestic shipping sector and to ensure safety standards, according to the statement. The government also this month announced tax and financial support for local shipping companies after China Cosco Holdings Co. (1919) and China Shipping Container Lines Co., the nation’s largest listed operators, both posted wider first-half losses.
- Texas Instruments(TXN) Forecasts Earnings Below Estimates. Texas Instruments Inc., the largest maker of analog chips, forecast fourth-quarter profit that fell short of most analysts’ estimates, as chip resellers cut inventory on concern that economic growth will remain weak. Net income will be 23 cents to 31 cents a share on revenue of $2.83 billion to $3.07 billion, the Dallas-based company said today in a statement. The forecast includes a 6-cent restructuring and acquisition charge. Analysts on average had predicted earnings of 37 cents on sales of $3.22 billion in the current period, according to data compiled by Bloomberg. Texas Instruments has thousands of customers ranging from home-appliance providers to manufacturers of space hardware, making its earnings an indicator of economic demand. Concern that global growth will remain sluggish has led distributors to reduce orders to bring down inventory levels. “The fourth quarter is going to be a tough quarter, like last year,” said Tore Svanberg, an analyst at Stifel Nicolaus & Co. “Customers are basically delaying and waiting.” Texas Instruments shares fell to $27.71 in extended trading following the announcement.
- Why Obama Doesn’t Deserve Another Term. It’s remarkable to watch a president run for re-election without discussing either his plans for the future or the main elements of his record. The stimulus and the health-care bill are two of Obama’s most consequential policies, and the U.S. could be paying for them for a very long time. They are only footnotes to Obama’s campaign. They ought to be his political epitaph.
- Rivals Duel in Final Face-Off. Messrs. Obama and Romney laid out their views of America's role in the world at a critical moment in the deadlocked presidential race, with many voters taking a last look at them before Election Day just two weeks away.
- Election 2012: Live Coverage.
- Northern European Investors Steer Clear of Needy South. Risto Murto, the chief investment officer of Varma Mutual Pension Insurance Co., is pleased that the European Central Bank now says it is ready to fight the euro crisis by buying government bonds of troubled countries like Spain. But not so pleased he will join in. And that means Europe's leaders may have more work to do. Varma is Finland's largest investor. It manages €34 billion ($44 billion) and is responsible for the retirement savings of around 870,000 Finns.
- Low Rates Pummel Banks. Borrowers Benefit, but Industry Lending Profits Hit Lowest Level in Three Years.
- Regulators Clash Over Volcker Definitions. A rift has emerged among regulators responsible for crafting the so-called Volcker rule, one of the most complex and contentious regulations of the landmark Dodd-Frank financial overhaul. The dispute, between U.S. banking regulators and the Securities and Exchange Commission, casts doubt on whether regulators will finish drafting the rule by the end of the year and raises the unattractive possibility that the agencies will issue conflicting standards.
- Banks Opt Out in Swap Row. Singapore's DBS, Sweden's Nordea Won't Register to Trade With U.S. Firms. Two large banks in Asia and Europe said they won't register with U.S. regulators to trade complex derivatives with U.S.-based financial companies, amid controversy over a proposed rule tied to the Dodd-Frank markets overhaul. Non-U.S. banks have been complaining for months about regulations that would force banks to register with U.S. regulators if they trade a set amount of swaps, a type of privately negotiated derivative, with U.S. banks or for U.S. clients.
- Jack Keane: Al Qaeda Is Making a Comeback. Across the Middle East and South Asia, the group isn't dead or dying but on the rise.
- Earnings Cliff Ahead? Profit Outlooks Are 90% Negative. Earnings conference calls are beginning to resemble crisis hotlines as corporate executives slash profit forecasts because of fears of higher taxes, a recession in Europe and slowing economy in China.
- Yahoo(YHOO) Earnings, Revenue Beat Wall Street's Expectations.
- China’s Doldrums Put Pressure on US Exporters. Cummins(CMI), the big Indiana engine maker, lowered its revenue forecast earlier this month and said it would eliminate 1,000 to 1,500 jobs by the end of the year, citing weak demand from China as a major reason. Schnitzer Steel Industries, a Portland, Ore., firm that is one of the nation’s biggest metal recyclers, is cutting 300 jobs, or 7 percent of its work force, as scrap exports to China plunge. And on Monday, Caterpillar(CAT) reported lower sales in China and cut its global outlook for 2012.
- Japanese Government Demands BOJ Do QE 9 One Month After Failed QE 8.
- BBBeauty Is Certainly In The Eye Of The BBBeholder.
- Analyst: China Is Seeing A 'Remarkable Deepening Of Mistrust Over US Intentions'.
- Here's What's Going On In Mali, The Wildcard Failed State Mitt Romney Is Making A Centerpiece Of The Debate.
- Iranian Cash Is Flooding Into Istanbul.
- Egyptian President Says 'Amen' To Prayer About Destroying The Jews.
- Japan justice minister resigns, blow to PM Noda. Japan's justice minister quit on Tuesday due to ill health, and amid calls for his resignation over past ties to an organized crime syndicate, dealing another blow to unpopular Prime Minister Yoshihiko Noda. Keishu Tanaka, 74, became justice minister only three weeks ago in a cabinet reshuffle on Oct. 1, and his resignation is the second by a minister since Noda took office September 2011, reflecting Noda's weak grip on the government.
- Barney Frank cries foul in government's lawsuit against JPMorgan(JPM). Democratic Congressman Barney Frank defended the largest U.S. bank on Monday, saying in a statement that the government was wrong to go after JPMorgan Chase & Co for the alleged misdeeds of Bear Stearns. Frank, who served as chairman of the House Financial Services Committee during the Bear Stearns acquisition, said federal and state officials should reconsider holding financial firms liable for the wrongdoing of institutions they absorbed at the government's urging.
- Recovery at risk from zombie businesses. A growing army of “zombie” businesses is “choking” the economic recovery, an insolvency firm has warned.
- Japan to join currency wars as exports slump. Japan is poised to join the world's "currency wars" as it battles a triple crisis of crashing exports, recession and a suffocatingly-strong yen.
- Foreign buyers attending China's biannual Canton trade fair declined by -11.4% from the spring session during the first four days, citing statistics from the event organizers. Transaction values for machinery and electronics goods fell -23.1% with Europe.
- A cap on profits of property sales in China's northern Shaanxi province may spur false accounting by developers, citing an official from a state-owned developer. The policy is "unscientific" and bad for mid-to-high-end projects, a second developer said.
- China's property market sales are expected to rise in October from the same period last year, citing brokerage estimates. Property sales in the second half may be higher than the first half, citing Zhang Dawei, a researcher at Centaline Property Agency Ltd.
- None of note
- Asian equity indices are -.50% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 116.0 +.5 basis point.
- Asia Pacific Sovereign CDS Index 94.0 +1.25 basis points.
- FTSE-100 futures +.23%.
- S&P 500 futures -.10%.
- NASDAQ 100 futures -.07%.
Earnings of Note
Company/Estimate
- (BEAV)/.70
- (R)/1.17
- (AKS)/-.37
- (ARG)/1.06
- (UTX)/1.19
- (LXK)/.81
- (WHR)/1.60
- (DD)/.46
- (CIT)/-1.22
- (COH)/.75
- (HOG)/.58
- (WAT)/1.18
- (RF)/.21
- (MMM)/1.65
- (UPS)/1.06
- (ITW)/1.06
- (BCR)/1.63
- (TPX)/.69
- (BRCM)/.77
- (NFLX)/.05
- (GILD)/.94
- (ALTR)/.46
- (CHRW)/.73
- (CYMI)/.07
- (VMW)/.63
- (AFL)/1.66
- (BXP)/1.16
- (JNPR)/.17
- (NSC)/1.23
- (PNRA)/1.19
- (ILMN)/.39
- (FB)/.11
- (AMGN)/1.47
- (BWLD)/.61
10:00 am EST
- The Richmond Fed Manufacturing Index for October is estimated to rise to 5.0 versus 4.0 in September.
- None of note
- The US Presidential Debate, Eurozone consumer confidence data, Spain T-Bill auction, China HSBC Manufacturing PMI, 2Y T-Note auction, weekly retail sales reports and Apple's iPad Mini introduction could also impact trading today.
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