Bloomberg:
- The Threat of ‘Abegeddon’ From Taxes in Japan. Posterity is watching carefully as Shinzo Abe goes ahead with a sales-tax increase aimed at getting a handle on Japan’s huge debt burden, the world’s largest. Unfortunately history may judge him no better than Ryutaro Hashimoto, the last Japanese prime minister to kill an economic recovery with ill-timed fiscal tightening.
- ADB Cuts Developing Asia Forecasts as Fed Taper Adds Pressure. A slowdown in China and India is reverberating across the region with the Asian Development Bank forecasting easing expansion this year, putting pressure on policy makers to take steps to bolster their economies. Developing Asia, which excludes Japan, will probably grow 6 percent in 2013 and 6.2 percent next year, the Manila-based lender said in a report today. In July, it had forecast expansion of 6.3 percent this year and 6.4 percent in 2014. Slowing growth in two of Asia’s biggest economies is compounded by concern that the Federal Reserve’s impending reduction of its record stimulus will drive investors away from emerging nations and spur volatility in financial markets.
- Asia Stocks Outside Japan Rise as Market Weighs Shutdown. Asian stocks outside Japan rose as investors speculated economic effects would be limited from the first partial U.S. government shutdown in 17 years. Japanese shares fell. Samsung Electronics Co. gained 2.4 percent in Seoul after the consumer-electronics maker said third-quarter earnings will improve at its mobile unit. Paladin Energy Ltd. soared 8.3 percent in Sydney after the uranium explorer reported it is cutting costs. Nissan Motor Co., a Japanese carmaker that gets about 80 percent of its revenue outside Japan, dropped 1 percent as the yen gained. The MSCI Asia Pacific excluding Japan Index gained 0.3 percent to 462.26 as of 11:54 a.m. in Tokyo.
- Rubber Reaches 7-Week Low as U.S. Auto Data Raise Demand Concern. Rubber extended losses for a fourth day to the lowest level in seven weeks after data showed U.S. auto sales fell for the first time in 27 months, raising concern that demand may weaken for the commodity used in tires. The contract for March delivery on the Tokyo Commodity Exchange lost as much as 1.7 percent to 256.4 yen a kilogram ($2,619 a metric ton), the lowest level since Aug. 9. Futures traded at 257.2 yen at 10:28 a.m., extending this year’s losses to 15 percent for a most-active contract.
- Coal to Surpass Gas in Southeast Asia Power-Use Boom, IEA Says. Coal will replace natural gas as the dominant fuel for producing electricity in Southeast Asia as the region almost doubles its energy consumption in the next two decades, according to the International Energy Agency. The 10 members of ASEAN, with energy demand growing at more than twice the global average, will get 49 percent of their power from coal by 2035, up from 31 percent in 2011, the IEA said today in its Southeast Asia Energy Outlook. The share from gas will drop to 28 percent from 44 percent.
- Maersk Four Rate Rises Fail to Spread as Demand Falls: Freight. Global container-shipping operators’ efforts to boost freight rates this year are failing to bring results because of overcapacity and weak demand. That may undermine the recent rise in container-shipping stocks after second-quarter industry results were better than expected, according to Robin Byde, an analyst at Cantor Fitzgerald Europe in London. The industry’s traditional peak season in the third quarter probably will disappoint, he added.
- Draghi Seen Putting Words Before Action on ECB Policy. Mario Draghi is likely to rely on the power of his voice rather than new policies to steer Europe’s banks through the early stages of an economic recovery. The ECB president will hold off from pumping more cash into the currency bloc’s financial system as long as the threat of action keeps market interest rates under control, according to economists from Berenberg Bank to Nomura International Plc. While Draghi put investors on notice last week that a long-term refinancing operation is possible, other policy makers have played down the likelihood of that for now.
- Samaras Cautions Europeans Against Procrastinating on Greek Debt. Greek Prime Minister Antonis Samaras said the European nations that are financing Greece’s bailout should not wait too long before helping the country address its debt burden. Citing a pledge made in November by euro-area nations to consider further assistance to lower Greece’s debt, Samaras said his country is on track to meet the main condition, an annual budget surplus before interest payments, or primary surplus.
- Capital Digs In for Long Haul. Congress, Obama Prepare for Siege Over Shutdown, Then Debt Ceiling. Lawmakers and the White House dug in Tuesday for a long fight as the first federal government shutdown in nearly two decades showed no signs of breaking, increasing the likelihood it will become entangled in an even larger battle over the Treasury's ability to pay the government's bills. The two parties held no negotiations to resolve the impasse, instead trading blame. Republicans criticized Senate Democrats as being unwilling to negotiate an end to the standoff that forced federal agencies to curtail a range of activities and begin the furlough of more than 800,000 workers.
- New York Plans Action on Alleged Mortgage Violations. New York's top prosecutor plans to announce on Wednesday both an agreement with Bank of America Corp. and a lawsuit against Wells Fargo & Co. over alleged violations of a $25 billion mortgage settlement reached last year.
- Weak Trading, Mortgage Slump, Legal Costs to Cut Results at Banks. Analysts Rush to Reduce Estimates. New troubles are piling up for U.S. banks as they prepare to release third-quarter results amid warnings of weak trading revenue, a sharp decline in mortgage-refinancing activity and rising legal costs. Analysts are scrambling to ratchet down earnings estimates ahead of the reports. J.P. Morgan Chase JPM +0.52% & Co. and Wells Fargo WFC +0.41% & Co. are slated to post results on Oct. 11, with Citigroup Inc., C +0.19% Bank of America Corp., BAC +0.72% Morgan Stanley MS +0.71% and Goldman Sachs Group Inc. GS +0.50% due to weigh in the following week.
- Fred Barnes: The President's Shutdown. Where leadership is needed, Obama stays on the sidelines—except when he's attacking Republicans.
- Physicians prepare to deal with increased demand, strain on practices under ObamaCare. As enrollment in ObamaCare begins, physicians throughout the country are preparing to deal with an influx of newly insured patients – as well as the increased financial demands this will place on their practices. While it will take a few years for doctors to fully determine how they will be affected by ObamaCare, some physicians are already anticipating the need to make major changes to the way they run their practices.
- Power companies look at charging customers for solar energy. Utilities in a few solar-friendly states are looking for ways to charge their solar customers for energy, a story by the Associated Press said. That includes creating extra fees for solar customers, or attempting to roll back or end programs that allow solar customers to trade the solar power they generate on sunny days for grid power the rest of the time.
Zero Hedge:
- Trade Of The Decade: Short 'Trust'. (graph)
- MORGAN STANLEY(MS) ECONOMIST: I Worry About A 1913 Scenario With Dire Consequences For The Global Economy. One unintended consequence of QE and ZIRP was a rush of liquidity into emerging markets, which offered a seemingly successful growth model and thus higher expected returns. Five years on, the EM growth model looks severely challenged, as Manoj Pradhan and I already pointed out more than a year ago.
- The Depressing Reality Of Spain's Youth Unemployment Crisis Brought To Life By A Grim Facebook Post.
- Electric vehicle sales slow in September. Electric vehicle sales lagged in September after a very strong August that was fueled by new discounts. General Motors Co. said sales of its plug-in hybrid electric Chevrolet Volt fell 38 percent to 1,766 in September, down from 2,851 in September 2012. But in August, GM sold 3,351 Volts after announcing a hefty price cut. GM slashed the base price of its plug-in hybrid by $5,000, from $39,995 to $34,995, making it the latest automaker to lower prices of electric vehicles in the face of lagging consumer demand. For the first nine months of the year, Volt sales are up just 2.5 percent to 16,760.
- JC Penney(JCP) is sued over share sale, stock plunge. A JC Penney Co shareholder on Tuesday sued the struggling retailer over its surprise decision to issue more than $810 million of stock to shore up liquidity, which led to a steep drop in its share price.
- Detroit defaults on more than $600 mln of 'unsecured' GO bonds. Detroit on Tuesday defaulted on more than $600 million of general obligation bonds deemed unsecured by the city's emergency manager, a city spokesman said.
- 'The system is down': Obamacare glitches go public, reasons unclear. Blank boxes where security questions are supposed to appear. Pleas to "be patient." Error messages galore. Notices that "the system is busy right now." Web pages timing out before they load. Garbled lines of text riddled with stray question marks. Technology experts and government officials were stumped about the reasons for the computer glitches plaguing the Obama administration's launch of new health insurance exchanges.
- Toyota Plans Lower Japan Output on Sales Tax. Co. forecasts domestic production of 3m vehicles next year, 350,000 fewer than planned 2013 production, anticipating impact of sales tax increase. Co. has informed suppliers.
- None of note
- Asian equity indices are -.50% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 150.0 -6.5 basis point.
- Asia Pacific Sovereign CDS Index 118.75 -4.25 basis points.
- FTSE-100 futures -.08%.
- S&P 500 futures -.15%.
- NASDAQ 100 futures -.12%.
Earnings of Note
Company/Estimate
- (MON)/-.43
8:15 am EST
- The ADP Employment Change for September is estimated to rise to 180K versus 176K in August.
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,500,000 barrels versus a +2,635,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -700,000 barrels versus a +217,000 barrel gain the prior week. Distillate inventories are estimated to fall by -1,000,000 barrels versus a -234,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.95% versus a -2.2% decline the prior week.
- None of note
- The Fed's Bernanke speaking, Fed's Rosengren speaking, ECB rate decision, China Non-Manufacturing PMI, weekly MBA mortgage applications report, ISM New York for Sept., (ADSK) investor day, (CXW) analyst day and the (PLL) investor day could also impact trading today.
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