- Putin Says Not 100% Certain Assad Will Give Up Weapons. Russian President Vladimir Putin said he isn’t “100 percent” certain that Syrian President Bashar al-Assad will fulfill his commitment to give up chemical weapons. Putin’s comments today may indicate that Russia, Syria’s arms provider and ally, harbors doubts about Assad’s reliability, though less so than the U.S., which has demanded a quick and intrusive process to prevent the use of Syria’s chemical arsenal and to test whether the Syrian leader will give it up.
- Lagarde Sees Subdued Global Growth as IMF Reviews Forecasts. The International Monetary Fund sees continued sluggish global growth as it reviews its forecasts, Managing Director Christine Lagarde said. “The IMF will release its updated forecasts in a few weeks,” Lagarde said in a speech to the U.S. Chamber of Commerce, according to her prepared remarks. “For now, let me say that while we are seeing some signs of recovery, global growth remains subdued.” The fund will release its new predictions Oct. 8, three months after cutting its global forecasts to 3.1 percent this year and 3.8 percent in 2014.
- Adidas Cuts 2013 Earnings Forecast as Euro Gains on Yen to Real. Adidas AG (ADS), the world’s second-largest maker of sporting goods, cut its 2013 earnings forecast because several currencies weakened against the euro. Net income this year will be between 820 million euros ($1.1 billion) and 850 million euros, the Herzogenaurach, Germany-based company said in a statement today. Adidas had previously forecast net income of 890 million euros to 920 million euros. Adidas also cut its operating margin forecast to about 8.5 percent from a previous forecast of 9 percent. “The further weakening of several currencies versus the euro throughout August and September such as the Russian rouble, Japanese yen, Brazilian real, Argentine peso, Turkish lira and Australian dollar have intensified the negative currency translation headwinds already highlighted,” Adidas said today.
- Europe Stocks Rise to Five-Year High as Fed Resists Taper. European stocks rose to the highest level in more than five years as the Federal Reserve unexpectedly decided against slowing the pace of its monthly bond purchases. UniCredit SpA and Standard Chartered Plc climbed more than 2 percent each as a gauge of lenders advanced. Randgold Resources Ltd. and Polymetal International Plc jumped at least 7 percent as the price of gold rallied. Cie. Financiere Richemont SA (CFR) and Swatch Group AG added more than 1 percent as a report showed Swiss watch exports increased last month. The Stoxx Europe 600 Index gained 0.6 percent to 315.05, the highest level since June 2008, at the close of trading, after earlier surging as much as 1.2 percent.
- Oil Falls Fourth Time in Five Days as Libya Output Rises. WTI for October delivery, which expires tomorrow, slid $1.53, or 1.4 percent, to $106.54 a barrel at 2:18 p.m. on the New York Mercantile Exchange. It surged 2.5 percent yesterday, the biggest increase since Aug. 27. The volume of all futures traded was 1.6 percent below the 100-day average. The more active November contract was down $1.21 at $106.07.
- Gold Rises to One-Week High as Fed Maintains Monetary Stimulus. Gold for immediate delivery rose 0.3 percent to $1,368.01 an ounce at 5:12 p.m. in London, after reaching $1,375.81, the highest since Sept. 10. Yesterday’s 4.1 percent jump was the biggest since June 1, 2012.
- Recovery Disconnects Most in U.S. From Prosperity, Census Shows. More Americans continued to take on roommates or boarders than before the recession, women had fewer children, and people were still flocking to college or graduate school as a way to postpone their entry into the job market. Those are just some measures of a tepid U.S. economy recorded last year in new Census Bureau reports that offer a portrait of a nation struggling to fully rebound from the worst downturn since the Great Depression. The data show a geographically uneven recovery in which the middle class is slipping and, on the basis of median household income, no better off than it was in 1989. Unless there’s significant progress in the next few years, that reversal could be a watershed in American history.
- Americans’ Views on U.S. Economic Outlook Drop to One-Year Low. Consumers views of the U.S. economic outlook deteriorated in September to the weakest level in a year as higher borrowing rates started to chip away at progress in the housing market. The gap between positive and negative expectations widened to minus 9, the lowest since August 2012, from minus 5 in the prior two months, according to results of the Bloomberg Consumer Comfort Index. The weekly confidence measure rose to a one-month high of minus 29.4 from minus 32.1.
- McCain tells Russian people 'Putin rules for himself' in Pravda op-ed. Senate Republican John McCain, one of the most vocal advocates for American military intervention in the crisis in Syria, is firing back after Russian President Vladimir Putin’s op-ed in the New York Times last week, in which the Russian chastised Americans for considering a military strike in Syria and slammed the notion of American exceptionalism. In an op-ed submitted to the Russian newspaper Pravda, McCain tells the Russian people that Putin "rules for himself, not you." The piece was posted on the paper's website, Pravda.ru, shortly before 10 a.m. Thursday, Moscow time.
- Rules that could 'kill'? Safety, cost concerns over EPA's new coal regs. New clean-energy rules pushed through by the Obama administration are raising concerns that they could cripple the coal industry -- and may require power plants to use technology so risky that even the president's former top energy official once warned it could "kill." The EPA, by Friday, is expected to release a new proposal to set the first-ever carbon dioxide limits for new power plants.
- EU to change how it calculates deficit figures, possibly easing pressure for austerity. European Union finance officials have reached a preliminary agreement to change the way the bloc determines some deficit figures, which might lessen the pressure for austerity measures in crisis-hit economies. An EU official said Thursday the change to the calculation of the structural deficit would have "very significant" positive consequences for Spain because of its labor market structure, and somewhat less so for Ireland, Greece and Portugal.
- Postmaster says USPS may need emergency rate hike. The Postal Service may need an emergency rate increase to stay afloat. That's according to Postmaster General Patrick Donahoe, who's testifying before a Senate committee. Donahue says the agency's cash balance next month likely will cover only five days of its average daily expenses.
- Home sales 'last hurrah' for next 12 months. (video) Realtors were uncharacteristically pessimistic in their predictions for sales this fall.
- The Fed's Reflexive Catch 22 In One Sentence. Another theme arising from their decision to hold fire was their worry that financial conditions had tightened over the past few weeks. If this is the case then the path of tapering is going to be tough because every time the market thinks they are going to taper, yields will likely rise and conditions will tighten.
Real Clear Politics:
Reuters:
- JD Power-LMC Automotive say brisk US auto sales pace slowing. JD Power and LMC Automotive said "the new vehicle sales pace in September has slowed from its sprint in recent months," and sees the month's annualized selling rate at 15.2 million vehicles, the two consultancies reported on Thursday.
- Bubblecovery. A bubblecovery is a term coined by financial blogger Jesse Colombo to describe what he calls a bubble-driven economic recovery spurred by cheap credit. He says the cheap credit has a tendency to flow into temporary growth-generating speculative endeavours. Jesse Colombo believes the world is gripped in a new bubblecovery being driven by what he calls the CCC Aches – which stands for China, Commodities, Canada, Australia, College (US higher education loans), Healthcare (US healthcare costs), Emerging markets and Social media.
- Fed's shock taper decision 'damages credibility'. The US Federal Reserve has damaged its credibility and sown confusion about central banks’ communication strategies by surprising markets with the decision to keep quantitative easing on hold, economists and traders have warned.
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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- France Set to Announce New Carbon Tax at Conference. The tax is expected to bring in EU400-500m for the government in 2014, rising to EU2.5b in 2015 and EU 4b in 2016. French President Francois Hollande and Prime Minister Jean-Marc Ayrault will announce the tax at an environmental conference that starts in Paris tomorrow.
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