Today's Headlines

Bloomberg:

• Europe August Car Sales Drop as Demand Lowest on Record. European car sales fell in August, bringing deliveries this year to the lowest since records began in 1990, as record joblessness in the euro region hurt deliveries at Volkswagen AG (VOW), PSA Peugeot Citroen (UG) and Fiat SpA. (F). Registrations dropped 4.9 percent to 686,957 vehicles from 722,458 cars a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. Eight-month sales declined 5.2 percent to 8.14 million autos. “We’re still in red territory,” Florent Couvreur, a Paris-based analyst at CM-CIC Securities, said by phone. “When people say we’ve reached the bottom, I say, ‘watch out,’ because the market is still decreasing. The drop is a little less steep, but we’re still falling because of the bad macroeconomic environment.” 

• Prada Weighed Down by Euro Strength as Earnings Miss Estimates. Prada SpA (PRP), the Italian owner of the Miu Miu and Church’s luxury brands, said the euro’s strength will weigh more heavily on full-year earnings than some analysts anticipate after first-half profit missed estimates. The currency’s appreciation against the yen and the dollar “may be possibly not fully considered in some of the forecasts that we have seen coming from the market at the moment,” Chief Financial Officer Donatello Galli said on a conference call. 

• Merkel Says German Election Is Decision Time for Euro’s Future. Chancellor Angela Merkel said that Germany’s election in five days will be a referendum on the euro’s future stability, as she appealed to voters to reward her handling of the debt crisis with a third term. Merkel, speaking at a rally of her Christian Democratic Union party in the eastern city of Magdeburg, cast the national vote on Sept. 22 as a decision between her policy of conditional bailouts for weaker euro countries and what she portrayed as plans by Germany’s opposition to pool the currency bloc’s debt.

• European Stocks Retreat From a Five-Year High on Lloyds. European stocks declined from a five-year high as investors sold holdings in companies from Lloyds Banking Group Plc (LLOY) to Continental AG. Lloyds dropped 3.5 percent after the U.K. government sold a 3.2 billion-pound ($5.1 billion) stake in the lender. Continental and Galp Energia SGPS SA fell at least 2.5 percent as investors sold shares in the companies. Total SA (FP) retreated 1.3 percent following a report that Groupe Bruxelles Lambert SA may dispose of its 4 percent stake in the French oil producer. The Stoxx Europe 600 Index slipped 0.5 percent to 311.95 at the close in London.

• China Developer’s 20% Loan After Bank Rebuff Signals Risk. China property developer Zhang Fuguo was rejected by banks for a loan to help keep building two office towers in the central city of Zhengzhou. So he turned to a manufacturer of water and gas meters. The 50 million yuan ($8.2 million) loan last month at a 20 percent interest rate will help Zhang pay workers and buy materials and was like “delivering coal on a snowy day,” he said. It was less so for one board member at lender Henan Suntront Technology Co. (300259), who abstained from approval on concern that Zhang’s company would fail to repay the debt. So-called entrusted loans, in which banks are “entrusted” with funds as middlemen between companies, increasingly grease the wheels of China’s economy, withstanding a crackdown on shadow banking this year and rising to a record 293.8 billion yuan in August. The increase was part of a surge in non-bank credit that may add to default risks threatening Premier Li Keqiang’s efforts to sustain 7 percent expansion this decade. 

• China Stocks Fall Most Since July as FDI Slows. The Shanghai Composite Index (SHCOMP) fell 2.1 percent to 2,185.56 at the close, the most since July 8. A report showed foreign-direct investment grew 0.6 percent last month, compared with the Bloomberg estimate of 12.5 percent growth. 

• Crude Falls for Third Day as Syria Risk Wanes. WTI for October delivery declined $1.42, or 1.3 percent, to $105.17 a barrel at 2:22 p.m. on the New York Mercantile Exchange. The volume of all futures traded was 22 percent above the 100-day average. Brent for November settlement slid $1.92, or 1.7 percent, to $108.15 a barrel on the London-based ICE Futures Europe exchange.

• Obamacare Blamed by Seniors for Higher Costs, Medicare Changes. More than half of senior citizens surveyed mistakenly attributed rising costs of their medicines to Obamacare, a misunderstanding that is contributing to the law’s unpopularity as a major provision goes into effect.

• Former NYSE CEO Thain Says Stock Dark Pools Should Be Closed. CIT Group Inc. (CIT) Chief Executive Officer John Thain, the former head of the New York Stock Exchange, said there’s too much fragmentation and insufficient transparency in the stock market. “Dark pools” that allow for trading of stocks outside of exchanges should be eliminated, Thain, 58, said in an interview with Erik Schatzker and Stephanie Ruhle on Bloomberg Television’s “Market Makers.” “The biggest problem is the fragmentation, you can trade stocks in 50 different places.”

• Mass Shootings Fuel Fear, Account for Fraction of Murders. The mass slaughters listed in the report caused the deaths of 547 people. Over the same three decades through 2012, that’s less than a tenth of 1 percent of the 559,347 people the Federal Bureau of Investigation estimates were murdered in America.

• AT&T(T) Said to Seek Sale of Cell Towers Valued at $5 Billion.

Wall Street Journal:

• Carrier Sources Say iPhone 5S(AAPL) Inventory on Friday to be “Grotesquely” Low. If you are hoping to get an iPhone 5S on Friday, be prepared to have to work for it. Sources at multiple U.S. carriers say that the inventory of the new phone is significantly less than expected.

• Futures Regulator Pursues J.P. Morgan Over 'Whale' Trades. CFTC Probes Whether Large Position Distorted Prices as Other Agencies Near Settlement With Bank.

• Microsoft(MSFT) Boosts Dividend by 22%, Sets $40 Billion Buyback. Analysts Had Hinted Dividend Increase Above 15% Might Indicate Response to Investor Pressure.

Fox News:

• Warren Buffett: Scrap ObamaCare and Start Over. You know things are bad for President Obama when even Warren Buffett has soured on Obamacare and says that "we need something else." Money Morning writes: "Healthcare costs in the United States are like a tapeworm eating at our economic body. "Those words come from famed investor Warren Buffett, who said he would scrap Obamacare and start all over. "'We have a health system that, in terms of costs, is really out of control,' he added. 'And if you take this line and you project what has been happening into the future, we will get less and less competitive. So we need something else.' "Buffett insists that without changes to Obamacare average citizens will suffer. "'What we have now is untenable over time,' said Buffett, an early supporter of President Obama. 'That kind of a cost compared to the rest of the world is really like a tapeworm eating, you know, at our economic body.'

• Navy gunman had federal clearance despite disturbing history. Aaron Alexis, the Navy veteran who gunned down 12 people at a Washington military facility Monday, had his federal security clearance renewed just two months before his rampage, despite a disturbing history of psychological problems and violent behavior involving guns.

CNBC:

• 'Out of control' Fed should be abolished: McNealy. (video) The Federal Reserve has become a "marketing department" for the government and "shouldn't be in any business at all," Scott McNealy, co-founder of SunMicrosystems and Harvard-trained economist, told CNBC on Tuesday.

• Can the mortgage market crash again? During the height of the housing boom, in 2006 and 2007, one of the fundamental tenets of home mortgage lending flew out the window: the borrower's ability to repay the loan. A broad swath of lenders simply took it out of the equation, figuring that since home prices were rising so fast, borrowers could simply sell their way out of any trouble.

• Defeat of Larry Summers could lead to a government shutdown.

Zero Hedge: 

• Holiday-Shopping Season Forecast To Be Worst Since 2009.

• Homebuilder Sentiment Misses By Most Since April. (graph)

• What Is The FOMC Watching?

• Spot The Cyclical Recovery (In Poverty Rates And Income...). (graph)

• Brazil Bails On US State Visit Over Illegal Spying; Demands "Full Public Apology".

• What Happened The Last Time Equity And Bond Risk Decoupled? (graph)

• Hilsenrath Highlights The Fed's Taper Trilemma.

Business Insider:

• Aerial Photos Show Colorado's Astonishing Transformation After Flooding.

• JIM ROGERS: 'Bernanke Is Going To Go Down In History As An Absolute Disaster'.

U.S. Census Bureau:

• Income, Poverty and Health Insurance Coverage in the United States: 2012. A comparison of real household income over the past five years shows an 8.3 percent decline since 2007, the year before the nation entered an economic recession.

Reuters:

• Navigating the financial labyrinth of Germany's Landesbanken. To the casual observer, the Landesbanken's results for the first half of this year might suggest Germany's publicly-owned regional banks are in good financial health. But the headline numbers belie a more complex reality.

• Iron ore at one-week trough, buyers scarce ahead of China holiday.

• Italy likely to raise VAT sales tax in October-government source. Italy is "highly likely" to raise value-added tax (VAT) in October, a government source said on Tuesday, after initially delaying the hike due to political tensions. 

• U.S. SEC charges 23 firms in short-sale crackdown; 22 settle. Twenty-two investment firms will collectively pay more than $14.4 million in sanctions to settle civil charges in connection with a broad crackdown by federal regulators into illegal short-selling practices, the U.S. Securities and Exchange Commission said on Tuesday.

• Leading U.S. House Democrat Sees Tough Fight Over Government Shutdown.

Echoing fears that European policymakers remain in a state of cognitive dissonance – recognizing the need for root-and-branch overhaul of peripheral banks, but backtracking on joint liability plans – Christopher Flowers, the legendary FIG investor who now runs the £2.3 billion ($3.5 billion) private equity group JC Flowers, sounded the alarm over the negative sovereign-bank feedback loop. In a shot across the bows of market bulls, who cite the return of capital flows to weaker eurozone states, Flowers issued a stark warning: "There is a scenario where we have a Lehman-type event: we wake up some Thursday and a big country is in trouble. "And the ECB will have to decide to support banks x, y, z. And then the ECB will, in fact, decide to own bank x, y, z.


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Corriere:

• Berlusconi to Relaunch Party With Video Message Today. Video message today to include launch of reformed Forza Italia party. Berlusconi to declare he's "staying on the field, not giving up".