Bloomberg:
- IMF Sees ‘Alarmingly High’ Risk of Deeper Global Slump. The International Monetary Fund cut its global growth forecasts as the euro area’s debt crisis intensifies and warned of even slower expansion unless officials in the U.S. and Europe address threats to their economies. The world economy will grow 3.3 percent this year, the slowest since the 2009 recession, and 3.6 percent next year, the IMF said today, compared with July predictions of 3.5 percent in 2012 and 3.9 percent in 2013. The Washington-based lender now sees “alarmingly high” risks of a steeper slowdown, with a one-in-six chance of growth slipping below 2 percent. “A key issue is whether the global economy is just hitting another bout of turbulence in what was always expected to be a slow and bumpy recovery or whether the current slowdown has a more lasting component,” the IMF said in its World Economic Outlook report. “The answer depends on whether European and U.S. policy makers deal proactively with their major short-term economic challenges.”
- Rajoy’s Deepening Budget Black Hole Outpaces Spain Deficit Cuts. The black hole in Spain’s budget has grown faster than Prime Minister Mariano Rajoy’s attempt to cut it, portending the same dynamic that has squeezed Greece. The harshest austerity since the return to democracy in 1978 has failed to contain the deficit as the economy sinks deeper into recession. The shortfall rose in the first half of the year, as it did in the previous 12 months. Even after a sales-tax increase and health-care cuts kick in this quarter, it may still approach last year’s 9.4 percent of gross domestic product, said Ignacio Conde-Ruiz, an economist at the independent Applied Economic Research Foundation in Madrid. The fiscal and political consequences of demanding austerity in a shrinking economy highlight the dilemma facing Rajoy. To trigger a European financial lifeline, he may have to impose yet more cuts, repeating the pattern seen in Greece, Portugal and Ireland. “There is no chance that Spain will hit its targets,” Megan Greene, director of European economics at Roubini Global Economics LLC, said in a telephone interview. “The deficit targets are economic suicide.”
- Spain Foreclosures Spread to Once Wealthy: Mortgages. Home foreclosures in Spain, which disproportionately affected lower-income immigrants after the real estate bubble burst, are spreading to formerly well-to-do families and businessmen as they run out of ways to pay mortgages in a deepening recession. Spanish business people, upper middle class families and their loan guarantors, typically parents of first-time buyers, now account for 60 percent of foreclosures in Madrid, according to AFES, an association that advises homeowners facing repossession. Three years ago, 80 percent of foreclosures were on the homes of immigrants, usually the first to lose jobs and fall behind on loan payments in a souring economy. They now comprise 40 percent of the total, according to AFES. “Repossessions are encroaching further into the city centers, like an overflowing river,” said Emilio Miravet, head of real estate finance at the Spanish property unit of advisory and investment firm Catella AB. “At the beginning of the crisis, it was homes in the periphery areas belonging to the less affluent that were being foreclosed upon.”
- Fiat to Cut Forecasts for European Auto Market, CEO Says. Fiat SpA (F) will cut its outlook for the European auto market when the company updates its five-year plan that runs through 2014, Chief Executive Officer Sergio Marchionne said. To assume that the Fiat’s outlook for Europe is going to be confirmed “is nonsense because the market won’t be there,” Marchionne told reporters yesterday in Columbus, Ohio. “We will be updating our forecasts for ’13 and ’14 as a consequence.”
- Depositors Fleeing Euro Get Negative Rates at State Street, BNY. State Street Corp. (STT) and Bank of New York Mellon Corp., two of the world’s biggest custody banks, will charge depositors to hold Danish kroner and Swiss francs as customers seek refuge from the crisis-stricken euro. “It does look customer-unfriendly, but since State Street’s mainly dealing with institutions I would think that people would be more understanding,” said Richard Herring, a professor of international banking at the University of Pennsylvania. “The overall problem is the distortions that are caused by the monetary policies that are being pursued in the major countries.”
- China’s Copper Consumption Set to Drop 8.5% in 2012, Hunt Says. Copper consumption in China will contract this year for the first time since 2008 as demand falters and inventories climb in the largest user, before rebounding in 2013, according to Simon Hunt Strategic Services. Consumption will decline about 8.5 percent to 5.6 million metric tons in 2012, said Simon Hunt, chief executive officer of the Weybridge, Surrey-based consultancy, which compiles research and analysis on the global market. Next year, usage may expand about 5.6 percent to 5.9 million tons, Hunt said in an interview in Singapore after visiting China for two weeks last month. Hunt’s assessment adds to signs that China’s slowdown is hurting demand for commodities. “The safety valve of exports has gone, the domestic economy is slowing down, they have a problem of surplus capacity and cash is extraordinarily tight,” said Hunt, who estimated total copper reserves in China at 3.5 million tons, including reported and unreported stockpiles. “There are no signals of a recovery in heavy industry and manufacturing.” “There’s huge amount of inventories of all types,” said Hunt, whose visit to China included one of the top five power- cable makers. “You walk round and trip over drums of cables.”
- India Growth to Drop to Decade Low Amid High Inflation, IMF Says. Indian growth may weaken to a decade- low this year after investment stalled, the International Monetary Fund said, as it called for interest rates to remain unchanged until the nation’s high inflation rate eases. Gross domestic product will rise 4.9 percent in 2012, less than a July forecast of 6.1 percent, the Washington-based lender said in its World Economic Outlook report today. The expansion will accelerate to 6 percent next year, it said, helped by improving overseas markets and a boost to confidence from a recent government policy revamp. “The outlook for India is unusually uncertain,” the IMF said. “Monetary policy should stay on hold until a sustained decrease in inflation materializes.” Indian inflation probably accelerated to 7.71 percent in September, a nine-month high, according to a Bloomberg News survey before a report due Oct. 15.
- N. Korea Says Its Rockets Capable of Hitting U.S. Continent. A North Korean military official said the totalitarian country has rockets capable of hitting the U.S. as well as American military bases in Japan and Guam. An unidentified National Defense Commission official made the statement in the state-run Korean Central News Agency in response to the U.S. this month agreeing to let South Korea extend the range of its ballistic missiles to 800 kilometers (497 miles) to protect against a possible attack from the North.
- Huawei Fires Back at the U.S. Chinese telecommunications giant Huawei Technologies Inc. lashed out Monday at a scathing congressional report, calling allegations that it may be spying on Americans and violating U.S. laws "little more than an exercise in China-bashing." Huawei and a second Chinese telecom, ZTE Corp., launched aggressive global campaigns to counter the conclusions of the House intelligence committee report, which warned U.S. companies against doing business with the two firms.
- Stress for Banks, As Tests Loom. U.S. banks and the Federal Reserve are battling over a new round of "stress tests" even before the annual exams get going later this fall. The clash centers on the math regulators are using to produce the results. Bankers want more detail on how the calculations are made, and the Fed thus far has resisted disclosing more than it has already.
- Iran Raises Rhetoric Against Israel. Iran accused Israel of launching cyberattacks on its oil facilities and derided the Jewish state's air defenses, although it didn't take responsibility for a drone that entered the Jewish state's airspace Saturday before Israel shot it down.
- Obama Is Urged to Get Tough. Supporters Disagree Over Debate Approach as Poll Finds Romney Taking the Lead.
- Romney's World. A contrast with Obama on the benefits of U.S. global leadership.
- 3 Charts You'll See This Earnings Season.
- Moody's Slaps ESM With Negative Outlook On Day Of Its Official Launch.
- Dutch Prepare To "Awaken Sleeping Giant" As GRExit Plans Resume.
- IMF Cuts Global Growth, Warns Central Banks, Whose Capital Is An "Arbitrary Number", Is Only Game In Town
- New York Times Staffers Walk Out In Protest. About 300 New York Times staffers have staged a walkout to protest management's position on contract negotiations. The staffers are calling the paper's demands "untenable and destructive" as the latest offer from Times negotiators "insisted on major cuts to our wages and benefits."
- A Second Greek Man On 'The Lagarde List' Has Been Found Dead.
- One Algorithm Made Up 4% Of All Trading Last Week, And No One Knows Where It Came From.
- Here's That Huge Der Spiegel Cover Article On 'The Inflation Monster'.
- GET READY: Greece Is Expected To Be Crazy On Tuesday.
- CBS' Lara Logan Slams US Government And Says The Taliban Is As Strong As Ever.
- See How Many Jobs The Obama Administration Thought The Stimulus Would Create, And What Really Happened. (graph)
- Fiscal cliff is 'ticking time bomb' for stocks. The race for the White House is on investors' minds, but who gains control of Congress will have an even bigger impact on the stock market.
- Romney 49%, Obama 45% Among Likely Voters. Romney’s Strong Debate Performance Erases Obama’s Lead. GOP Challenger Viewed as Candidate with New Ideas. By about three-to-one, voters say Romney did a better job than Obama in the Oct. 3 debate, and the Republican is now better regarded on most personal dimensions and on most issues than he was in September. Romney is seen as the candidate who has new ideas and is viewed as better able than Obama to improve the jobs situation and reduce the budget deficit. Fully 66% of registered voters say Romney did the better job in last Wednesday’s debate, compared with just 20% who say Obama did better.
- TEXT-Moody's cuts Cyprus government bond ratings to B3.
- Germany seeks breakthrough on Europe transactions tax. Germany and France will step up a diplomatic drive on Tuesday to convince more EU countries to join them in setting up a financial transactions tax, but they remain stubbornly short of the nine needed to push ahead with the plan.
- EXCLUSIVE-Intel's(INTC) McAfee security plans layoffs. Intel Corp's McAfee security division is planning to lay off a "small percentage" of its workforce of about 7,100 employees, a company spokesman said on Monday.
- Spain must strictly implement fiscal reforms - Juncker. Euro zone finance ministers met in Luxembourg on Monday to discuss Greece, Spain, Portugal and other issues related to the region's debt crisis.
- Europe and Britain sinking under weight of welfare costs. It’s not just that much welfare spending has become bloated, unfair and sometimes outright corrupt, it is also that it is no longer economically affordable.
- Japan Plans to Increase Remote Island Defenses. The nation's defense ministry is strengthening efforts to protect remote islands, citing a Defense Ministry official. U.S. and Japanese defense chiefs last month agreed to cooperate more in dealing with China.
- Buying, Holding China Stocks Not Top Choice. The strategy of buying and holding China's stocks isn't the top choice now as market trends aren't "clear," China Securities Journal published on its front page a commentary written by Wei Jing, a reporter at the newspaper.
- Downgraded (INTC) to Underperform, target $20.
- Asian equity indices are -.50% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 130.25 +.75 basis point.
- Asia Pacific Sovereign CDS Index 109.25 unch.
- FTSE-100 futures +.19%.
- S&P 500 futures +.19%.
- NASDAQ 100 futures +.19%.
Earnings of Note
Company/Estimate
- (CVX)/3.06
- (YUM)/.97
- (AA)/.00
7:30 am EST
- The NFIB Small Business Optimism Index for September is estimated to rise to 93.5 versus 92.9 in August.
- The IBD/TIPP Economic Optimism Index for October is estimated to fall to 50.0 versus 51.8 in September.
- None of note
- The Italian GDP report, Eurozone Finance Ministers meeting, ECB's Draghi speaking, weekly retail sales report, 3Y T-Note auction, Deutsche Bank Leveraged Finance Conference, (BAX) analyst day, (FDX) investors/lenders meeting, (FISV) investor conference and the (WOR) investor day could also impact trading today.
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