Bear Radar

Style Underperformer:

• Mid-Cap Growth (-2.53%)

Sector Underperformers:

• 1) Education -4.20% 2) Internet -3.01% 3) Restaurants -2.73%

Stocks Falling on Unusual Volume:

• YOKU, IPGP, BIDU, CEVA, TIF, FDO, VRUS, FMCN, SINA, YNDX, INSU, SOHU, WYNN, AWAY, NFLX, NUVA, SPRD, FOSL, JOBS, SNDA, SFLY, PCLN, LQDT, BMRN, ZOLL, DVA, EW, EDU, CRR, MOS, SFY and NUVA
  

Stocks With Unusual Put Option Activity:

• 1) TIF 2) CTRP 3) FMCN 4) IP 5) CMA
  

Stocks With Most Negative News Mentions:

• 1) AMD 2) MU 3) SINA 4) AZO 5) RIMM
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume
  

Bull Radar

Style Outperformer:

• Small-Cap Value (+1.67%)

Sector Outperformers:

• 1) Insurance +2.49% 2) Banks +2.45% 3) Homebuilders +1.59%

Stocks Rising on Unusual Volume:

• RNOW, DB, HGIC, THO, ATE and CNP
  

Stocks With Unusual Call Option Activity:

• 1) AMD 2) DG 3) KGC 4) WNR 5) UCO
  

Stocks With Most Positive News Mentions:

• 1) RAD 2) ATU 3) UNG 4) BIDU 5) RL
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume
  

Thursday Watch

Evening Headlines

Bloomberg:

• Germany to Vote on Euro Rescue Fund, Set Stage for Next Steps. German lawmakers are set to back an expansion of the euro-area rescue fund’s firepower as European officials turn to look at what next steps may be needed to stem the debt crisis. The plan before the lower house in Berlin today would allow the fund to buy bonds of distressed states and offer emergency loans to governments, raising Germany’s guarantees to 211 billion euros ($287 billion) from 123 billion euros. The main opposition Social Democrats and Greens have said they will vote with Chancellor Angela Merkel’s government, assuring passage. Lawmakers vote from about 11 a.m. Berlin time as government officials weigh further measures to bolster Greece and stem investor concern that helped end the biggest three-day rally in 16 months for European stocks yesterday. Options include seeking further writedowns on Greek sovereign bonds, adding yet more firepower to the rescue fund and a “plan B” for banks. “The German parliament is voting for too little, too late,” Fredrik Erixon, head of the European Centre for International Political Economy in Brussels, said by phone. “Merkel can’t possibly believe this is the final point in a rescue package that will calm global markets and lead us out of the crisis.”
  
• Ernst & Young Says Greek Default Inevitable as Risk of Recession Rises. A Greek default is inevitable and there is 35 percent chance of the euro-area economy slipping back into recession, Ernst & Young said. “The euro zone sovereign-debt crisis shows no sign of abating,” E&Y said in an e-mailed report in London today. “A default on Greek government debt now seems unavoidable. The key question is when this default will occur and how it will be managed.” European leaders have struggled to allay investor concerns that a potential debt restructuring in Greece will plunge the region’s economy into a recession. Greek bonds have tumbled and insurance against default has soared as markets put the probability of insolvency at more than 90 percent. Former European Central Bank chief economist Otmar Issing told Germany’s Stern magazine that the country “won’t get back on its feet without a drastic debt restructuring.” Experts from the European Commission, the European Central Bank and International Monetary Fund will return to Athens today as officials try to put in place a package of measures that will ring-fence Greece and prevent the turmoil from spreading to countries such as Italy and Spain. “Authorities have been slow in trying to tackle the problems facing Greece, Ireland and Portugal,” E&Y said. “It was hoped that the rescue package for Greece announced in July would bring to an end the long period of indecision and uncertainty.”
• Euro is 'Burning Building,' EU Has Too Much Power, Hague Tells Spectator. U.K. Foreign Secretary William Hague said his 1998 comment that the euro area was “a burning building with no exits” has been proved right and that member countries will have to live with the consequences for decades. Hague first described the euro in those terms when he was leading the Conservative Party in opposition and Prime Minister Tony Blair favored joining the single currency. In a 1998 speech in Fontainebleau, near Paris, Hague warned that the single currency could damage the stability of Europe by tying together economies that were too different.
• Euro Area's Rescue Options Are Shrinking Fast: Anil K Kashyap.
  
• EU Governments Said to Be Close to Deal on OTC Derivatives Law. European Union governments are close to a deal on rules for trading of over-the-counter derivatives in the region following a negotiation meeting yesterday, said two people familiar with the discussions.
• Sony(SNE) Says It Expects 'Huge Impact' on Earnings From Euro Slump. Sony Corp., Japan’s largest exporter of consumer electronics, said it expects a “huge impact” on earnings from the weaker euro, underscoring the company’s vulnerability to the European debt crisis. While the company hedged risks against the U.S. currency by hiring Asian contract manufacturers that settle orders in dollars, Sony can’t use that tactic with the euro, Hiroshi Kurihara, corporate treasurer at Sony, said in an interview in Tokyo yesterday. The electronics maker also doesn’t purchase many components from the region, limiting its ability to benefit from a weaker European currency, he said. “There is a huge impact on our earnings,” he said. “There are no countermeasures that we can take for the moment.”
• China Stocks Sink to 14-Month Low as Investors Predict Slowdown. China’s stocks fell, sending the benchmark index to a 14-month low, on concern economic growth will slow as the government maintains measures to curb inflation and demand for exports falters in Europe and the U.S. PetroChina Co. and Jiangxi Copper Co. paced declines by commodity producers after oil and metal prices dropped. China Vanke Co. and Gemdale Corp. retreated among developers after Vice Premier Li Keqiang said the top priority will continue to be stabilizing prices. Most global investors predict Chinese growth will slow to less than 5 percent by 2016, a Bloomberg poll showed. “The European debt problem will remain hanging over the market as there’s no possibility of solving it in the near future,” said Zhang Ling, general manager at Shanghai River Fund Management Co. “That’ll continue to bring turmoil to global financial markets as the appetite for risky assets is falling.” The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, dropped 13.11 points, or 0.6 percent, to 2,378.95 at 9:36 a.m. local time, set for its lowest close since July 5, 2010.
• Solar-Panel Makers Said to Plan China Trade Complaint. Solar manufacturers including the U.S. unit of SolarWorld AG (SWV) are preparing a trade complaint against imports from China, as they seek help from President Barack Obama to counter subsidies to their competitors, according to people familiar with the matter. The case, which would be filed at the Department of Commerce and the U.S. International Trade Commission in Washington, would be one of the largest targeting China, with political implications as both nations race to develop clean- energy technologies. The companies argue that China’s subsidies to solar companies violate global trade rules and provide those manufacturers with an unfair advantage, according to the people, who spoke on condition of anonymity because no complaint has yet been filed.
• Morgan Stanley Cuts 2012 Brent Forecast to $100 from $130. Morgan Stanley said Brent oil will average $100 next year, down from a previous projection of $130, because of increasing supply and a weaker demand outlook. Production capacity in the Organization of Petroleum Exporting Countries will climb almost 800,000 barrels a day in 2012, led by the return of Libyan fields, Morgan Stanley analysts led by New York-based Hussein Allidina said in a report today. Non-OPEC output will rise 225,000 barrels. Slowing global economic growth will result in reducing demand growth, the analysts said. Consumption will advance 600,000 barrels a day in 2012, down from a 950,000 gain this year and 2.7 million barrel advance in 2010. Brent oil for November settlement fell $3.33, or 3.1 percent, to end the session at $103.81 a barrel on the London- based ICE Futures Europe exchange today.
• AMD(AMD) Cuts Q3 Sales Forecast; Shares Slump. Advanced Micro Devices Inc. (AMD), the second-largest maker of processors for personal computers, cut its forecasts for third-quarter sales and profitability, citing manufacturing glitches. Shares dropped as much as 11 percent.
• Commodities Head for Biggest Quarterly Drop Since 2008 on Economy's Woes. Commodities fell, heading for the biggest quarterly slump since 2008, as Europe’s sovereign-debt crisis threatened to derail the global economy, slashing raw- material demand. The Standard & Poor’s GSCI index of 24 raw materials slid 2.7 percent to settle at 603.55 at 3:46 p.m. New York time. Since June 30, the gauge has slumped 9.8 percent, the most since the last quarter of 2008 during the most-severe recession since the 1930s. Copper closed at the lowest price in 13 months, and crude oil fell almost 4 percent.

Wall Street Journal:

• H-P(HPQ) Banker In Defense Move. Hewlett-Packard Co. has hired Goldman Sachs Group Inc. to help the company defend itself against possible activist investors who could push for change at H-P, people familiar with the matter said.
• Private Equity Bribery Risk Grows As Tax Shelters Clamp Down. The private equity industry will be at a higher risk of violating foreign bribery laws as a result of money barred from tax shelters, according to one expert. The world of capital flight has shrunk, as countries like Switzerland try to shed the image of being havens for tax evaders and heads of state to park stolen assets, said Daniel Karson, the Americas chairman of Kroll, who spoke on a panel at the Dow Jones Private Equity Analyst Conference in New York. The possibility of such assets ending up in private equity funds represents an “added peril” to private equity, he said. With many firms now in the market hunting down new backers for new funds, there’s also a risk of violating anti-bribery laws by inadvertently taking capital from a government-connected source, said both Karson and James Gaven, senior compliance counsel for Welsh Carson Anderson & Stowe. As a firm grows and raises money globally, it may need to deal with placement agents in new markets, exposing it to another risk if those agents have government connections, Gaven said. Private equity firms are among financial firms reportedly being examined by the U.S. Justice Department over dealings with employees of sovereign-wealth funds.
• Health Law Heads to Justices. The Obama administration asked the Supreme Court to decide the fate of its health-care overhaul, setting the stage for arguments at the high court and a likely ruling in the thick of the 2012 presidential campaign.
• Copper Fall Hints At Broader Pains. In little more than a month, copper has careened into a bear market, catching commodities traders off guard and triggering alarm bells across financial markets. Copper prices have plunged 23% this month—a decline of 20% or more is commonly considered a bear market.
• 'Earned American Exceptionalism'. Christie's critique of the Obama era.

Business Insider:

• Herman Cain Vaults To Top-Tier: Romney and Perry Lead - But Not By Much.
• Two Top Italian Bank Execs Sound Terrified Of EuroCrisis Contagion.
• Why China Just Can't Stimulus Its Economy Like It Used To.
  

Zero Hedge:

• Deputy PM Says Tax Limits of Greek Society Exhausted. As G-Pap goes from meeting to meeting with his hand held out making promises to asset strip and tax his country into oblivion, AP is reporting that Deputy PM Theodore Pangalos that the country's tax-ability is exhausted (and has exhausted for some time). It is truly astounding that this farce has gone on for so long even as it appears (from the riots/strikes/press) that everyone (serfs and lords alike now) sees through the plans.
• "A Panorama Of The European Debt System" - The Definitive Primer Of The Eurozone.

CNBC:

• Greece Faces Auditor Verdict, Fresh Aid at Stake. International auditors return to Athens on Thursday to deliver a verdict on whether Greece's tougher austerity measures qualify for aid to avert a default that would plunge the country into bankruptcy.
• Bernanke Tells US to Learn From Emerging Economies. The U.S. can learn how to boost long-run growth from successful emerging economies, U.S. Federal Reserve chairman Ben Bernanke said in a speech on Wednesday that will delight developing countries more used to admonishment than admiration from Washington.
• Equity Rout May Force Shift in SWF Strategy. Sovereign wealth funds may be shifting towards alternative investments such as infrastructure and property as they reconsider their investment strategies after a decade of equity underperformance against low-yielding fixed income.

LA Times:

• New York Fed to Monitor Facebook and Twitter. The Federal Reserve Bank of New York wants to see what's being said about it on social networks. But critics say it wants to keep tabs on them.

Women's Wear Daily:

• China's Cotton Subsidies Reached $7.9 Billion in 2010. China’s support to its cotton producers reached $7.9 billion in 2010, surpassing by a wide margin the levels provided by the other major cotton nations.

AppleInsider:

• Roughly 40% of Mobile Users in North America and UK Plan to Buy the iPhone 5.

cnet:

• E-Voting Machines Vulnerable to Remote Vote Changing. U.S. government researchers are warning that someone could sneak an inexpensive piece of electronics into e-voting machines like those to be used in the next national election and then remotely change votes after they have been cast. The Vulnerability Assessment Team at Argonne Laboratory, which is a division of the Department of Energy, discovered this summer that Diebold touch-screen e-voting machines could be hijacked remotely, according to team leader Roger Johnston. Salon reported on it today, noting that as many as a quarter of American voters are expected to be using machines that are vulnerable to such attacks in the 2012 election.

Baltimore Sun:

• Exclusive: CFTC Lacks Votes on Position-Limit Plan. The U.S. futures regulator delayed a final vote on controversial measures to crack down on excessive speculation in commodity markets because it lacks the three votes needed for approval, sources familiar with the situation told Reuters on Wednesday. The U.S. Commodity Futures Trading Commission announced on Tuesday it was delaying by another two weeks to October 18 its meeting to consider the long-awaited rule on position limits. It was the second time a vote had been postponed.

Boston Globe:

• Federal Agents Charge Ashland Man With Targeting Pentagon, Capitol With Aerial Explosives. Federal authorities today arrested and charged a 26-year-old Ashland man with plotting to damage the Pentagon and US Capitol with a remote-controlled aircraft filled with C-4 plastic explosives. Rezwan Ferdaus, a US citizen, was also charged with attempting to provide material support and resources to a foreign terrorist organization, specifically to al-Qaida, in order to carry out attacks on US soldiers stationed overseas, the US attorney’s office said in a statement.

Gallup:

• Obama Job Approval: 40% Approve, 51% Disapprove. (graph)

Reuters:

• Worthington(WOR) Q1 Lags Street View. Worthington Industries Inc's first-quarter profit lagged analysts' estimates, hurt by raw material costs that outpaced selling prices. "The stalled economy, and the uncertainty surrounding it, has hindered a quicker and more robust recovery which has an impact on our customers," Chief Executive John McConnell said in a statement.

Financial Times:

• Greece Creditors in Bail-Out Backlash. Greece’s private creditors have reacted angrily to suggestions that some eurozone countries want bondholders to suffer bigger losses than those agreed in the second bail-out of Athens. Banks and other bondholders are resisting the idea by lobbying countries such as Germany and the Netherlands, where hardliners are pushing for private creditors to write down more than the current 21 per cent agreed in July’s €109bn Greek rescue, according to people close to the deal.
• SEC Probes Banks Over Mortgage Loans. The Securities and Exchange Commission is investigating Royal Bank of Scotland, Credit Suisse and other financial institutions for their handling of problem mortgage loans, according to public disclosures and people familiar with the matter. The SEC is examining whether banks misled shareholders about the number of loans they might be forced to buy back because of early defaults – known as loan repurchase requests – and set aside sufficient reserves to fund those purchases or handle related litigation, people familiar with the matter said.

Telegraph:

• Debt Crunch Threatens China and Emerging Markets. Europe's banking woes have begun to set off a funding crunch in the emerging markets of Asia, Latin America, and Eastern Europe, leaving them nakedly exposed as the rich world slides into a double-dip downturn. Contagion has spread to Chinese "Dim Sum" bonds issued in yuan on the offshore market in Hong Kong, where companies linked to China's property market and building sectors have taken a beating. Yields on Dim Sum bonds jumped by 105 basis points to 5.85pc in August, the worst month since the instruments were created.
• Debt Crisis: Live.
  

The Independent:

• Syria Slips Towards Civil War as Sanctions Bid Fails. UN resolution diluted after veto threat from China and Russia. Fears are mounting that Syria may be on the verge of civil war as reports emerged yesterday that hundreds of army deserters were battling Bashar al-Assad's forces in the first major confrontation against the regime.

AFP:

• Muslim Brotherhood-Led Bloc Threatens Egypt Vote Boycott. Egypt's first democratic elections since the overthrow of Hosni Mubarak have been called into question after an electoral coalition led by the Muslim Brotherhood threatened a boycott. The coalition said in a statement it would not take part in November's legislative elections if a controversial article in the new electoral law was not amended. The bloc objected to Article Five of the electoral law, which bans political parties from running in a third of the seats in parliament, which are reserved for independent candidates. "We refuse to take part in elections if Article Five of the electoral law is not cancelled," said the statement, issued late Wednesday.

Macro Business:

• CDS Signaling Trouble for Chinese Banks. (graph) There is a widespread belief that Chinese banks are a safe investment because they can’t possibly go bankrupt. After all, the government will be there to back-stop. I don’t disagree with the judgment, but have often joked that we will probably see an outcome similar to RBS, with Chinese banks still around but equity holders wiped out. Credit markets are also now showing distrust in Chinese banks. Credit default swaps spreads for Bank of China and China Development Bank have surged according to Société Générale, and they are rising at much faster rates than the rest of Asia ex. Japan:

Sydney Morning Herald:

• Suburbs in 'Ring of Fire' Feeling the Heat. Sydney is surrounded by the mortgage belt equivalent of a ring of fire, as what seems to be Australia's own version of the euphemistically named sub-prime lending crisis emerges in specific regions. An analysis of mortgage-backed securities by Moody's Investor Services indicates a dramatic shift in the number of regions in Australia where people are struggling to keep up with their home loan payments. Although Moody's data only covers about 10 per cent of the total $1.1 trillion mortgage market, the ratings agency reckons that is a more than solid sample of trends around the country. Scratch beneath the surface data on the ''delinquencies'' - where borrowers are more than 30 days behind in their repayments - and some ugly trends emerge.

Evening Recommendations
CSFB:

• Upgraded (OKS) to Outperform, target raised to $54.

Night Trading

• Asian equity indices are -1.25% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 239.0 +12.5 basis points.
  
• Asia Pacific Sovereign CDS Index 157.50 -3.5 basis points.
• FTSE-100 futures -1.41%.
  
• S&P 500 futures -.24%.
  
• NASDAQ 100 futures -.16%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (MU)/.02

Economic Releases
8:30 am EST

• Final 2Q GDP is estimated to rise +1.2% versus a prior estimate of a +1.0% gain.
• Final 2Q Personal Consumption is estimated to rise +.4% versus a prior estimate of a +.4% gain.
• Final 2Q GDP Price Index is estimated to rise +2.4% versus a prior estimate of a +2.4% gain.
• Final 2Q Core PCE is estimated to rise +2.2% versus a prior estimate of a +2.2% gain.
• Initial Jobless Claims for last week are estimated to fall to 420K versus 423K the prior week.
• Continuing Claims are estimated to fall to 3730K versus 3727K prior.
  

10:00 am EST

• Pending Home Sales for August are estimated to fall -2.0% versus a -1.3% decline in July.

11:00 am EST

• The Kansas City Fed Manufacturing Activity Index for September is estimated at 3.0 versus a reading of 3.0 in August.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Lockhart speaking, Fed's Rosengren speaking, Fed's Plosser speaking, German Parliament's EFSF vote, 7-Year Treasury Note Auction, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and financial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Dropping into Final Hour on Rising Eurozone Debt Angst, Global Growth Worries, Rising Financial Sector Pessimism, Technical Selling

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Around Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 39.53 +4.96%
  
• ISE Sentiment Index 53.0 -20.90%
  
• Total Put/Call 1.37 +22.32%
  
• NYSE Arms .46 +46.01%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 137.78 +3.43%
  
• European Financial Sector CDS Index 246.17 +1.98%
  
• Western Europe Sovereign Debt CDS Index 340.83 +.45%
  
• Emerging Market CDS Index 351.60 +2.67%
  
• 2-Year Swap Spread 30.0 +1 bp
  
• TED Spread 36.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.
  
• Yield Curve 175.0 unch.
  
• China Import Iron Ore Spot $172.60/Metric Tonne unch.
  
• Citi US Economic Surprise Index -42.0 -.2 point
  
• 10-Year TIPS Spread 1.87 -3 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating -51 open in Japan
• DAX Futures: Indicating -61 open in Germany

Portfolio:

• Slightly Higher: On gains in my Technology/Retail sector longs, Emerging Markets shorts and Index hedges
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and then covered them
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is bearish, as the S&P 500 rolls over at its downward-sloping 50-day moving average again on rising Eurozone debt angst, rising financial sector pessimism, global growth worries, profit-taking, technical selling and more shorting. On the positive side, Computer Service, Telecom and Retail shares are rising on the day. Oil is falling -3.2%, gold is down -2.8% and the UBS-Bloomberg Ag Spot Index is falling -2.25%. The 10-year yield is rising +4 bps to 2.0%. The Ireland sovereign cds is falling -3.98% to 715.33 bps and the Israel sovereign cds is falling -3.47% to 193.17 bps. On the negative side, Coal, Alt Energy, Oil Tanker, Oil Service, Steel, Paper, Networking, HMO, Construction and Road & Rail shares are under significant pressure, falling more than 3.0%. Cyclicals and small-caps are substantially underperforming. (XLF) has also been relatively weak throughout the day. Lumber is falling -1.4% and copper is plunging -7.6%. Rice is still close to its multi-year high, rising +28.0% in about 12 weeks. The average US price for a gallon of gas is -.01/gallon today to $3.47/gallon. It is up .33/gallon in about 7 months. The Germany sovereign cds is gaining +4.0% to 104.0 bps, the France sovereign cds is rising +4.8% to 178.33 bps, the Italy sovereign cds is rising +3.06% to 459.50 bps, the China sovereign cds is rising +4.85% to 164.86 bps and the UK sovereign cds is rising 4.33% to 90.17 bps. The Western Europe Sovereign CDS Index and the European Financial Sector CDS Index are still near their records. The FRA/OIS spread is rising another +2.99 bps to 45.59 bps. The China sovereign cds is still right near the highest level since April 2009. The China Development Bank Corp cds is rising another +.5% to 333.32 bps, which is the highest since March 2009. As well, the China Blended Corporate Spread Index, which has been moving higher in a parabolic fashion, is jumping back near its recent multi-year high, rising +23.0 bps to 818.0 bps. The Shanghai Composite, which continues to trade very poorly, fell another -.95% overnight, leaving it down -14.8% ytd at the lowest level since July 2010. Various global credit angst gauges continue to trend higher, which remains a large negative. I cautioned a few months ago that Asia was becoming a bigger problem than most investors perceived and today fear's over hard-landings in the region are intensifying. As well, it appears as though Germany is realizing the massive long-term damage that the recent suggested leveraged debt "solution" would do to their country, which once again leaves the problem in limbo. I expect US stocks to trade modestly lower into the close from current levels on profit-taking, rising Eurozone debt fears, rising financial sector pessimism, more shorting and global growth concerns.

Today's Headlines

Bloomberg:

• EU Split Over Push for Bigger Bank Haircuts. The European Commission is resisting a push to impose bigger writedowns on banks’ holdings of Greek government debt than those agreed at a July 21 summit, a European official said. The commission, the European Union’s executive body, opposes ideas that are being floated by some government officials to get banks to accept bigger so-called haircuts and doesn’t want to have talks about any such attempt, the official said on condition of anonymity because the deliberations are private. Germany and the Netherlands are leading a drive by as many as seven euro-area countries for more private-sector involvement in the second Greek package, the Financial Times reported today. The German Finance Ministry said that it wasn’t “putting pressure on anybody” over haircuts after Chancellor Angela Merkel signaled in an interview with Greek television broadcast today that policy makers may review Greece’s second bailout depending on the results of an international progress report. “We must now await what the troika, that is the expert mission, finds out and tells us: do we need to renegotiate or don’t we need to renegotiate?” Merkel said in the interview with Greek NET television, according to a transcript.
• LBO-Burdened European Firms Face $272 Billion of Refinancings, Fitch Says. European companies acquired by private-equity firms will struggle to refinance more than 200 billion euros ($272 billion) of leveraged buyout debt as investors eschew risky securities, Fitch Ratings said. “A raft of lower-rated issuers still must find ways to address looming refinancings in 2013 and 2014,” according to the report by Edward Eyerman, the London-based head of European leveraged finance at Fitch Ratings. The deepening sovereign crisis in Europe is closing avenues for the most vulnerable borrowers to replace maturing debt after a record 36.8 billion euros of sales in the first half, Fitch said. Sales of high-yield bonds have dried up as concern that Greece will default prompts investors to favor larger, less- indebted companies that can withstand a slowing economy. “Prolonged uncertainty over refinancing and the macroeconomic outlook will keep many of these companies in operational limbo, potentially threatening their competitiveness,” according to Eyerman.
• EU Proposes $78 Billion-a-Year Financial Transaction Tax to Start in 2014. The European Union proposed a financial-transactions tax that would take effect in 2014 and raise about 57 billion euros ($78 billion) a year, prompting renewed opposition from the U.K. The proposal would apply a tax of 0.1 percent on trading of stocks and bonds, with a 0.01 percent rate for derivatives contracts, the European Commission, the EU executive, said today in Brussels. Those minimum rates would apply throughout the 27- nation bloc. The measure would deliver “a fair contribution from the financial sector,” EU Tax Commissioner Algirdas Semeta said. European governments are split over the merits of a transactions tax, while British banks warn that an EU-only measure would drive business to other regions.
• China Sovereign Bond Risk Jumps to Highest Since March 2009. The cost of protecting China’s sovereign debt from default jumped to the highest level since March 2009, according to data provider CMA. Credit-default swap contracts on China surged 16 basis points to 170, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in privately negotiated markets. “Everyone is getting more concerned about risks accumulating domestically,” said Ju Wang, a fixed-income strategist at Barclays Capital in Singapore. “Eventually in China, the burden in the banking sector will have to be reflected in the sovereign balance sheet.” China will permit local governments to sell bonds in a pilot program in the fourth quarter, the official Xinhua News agency said today, citing a person it didn’t identify. Local government debt grew to 10.7 trillion yuan, some 27 percent of the country’s gross domestic product, as of the end of 2010, according to a national audit released on June 27. Developers in China face an “increasingly severe” credit outlook, which may force them to cut prices, Standard & Poor’s said in a Sept. 27 report.
• Solyndra's $733M Plant Had Robots, Spa Showers. The glass-and-metal building that Solyndra LLC began erecting alongside Interstate 880 in Fremont, California, in September 2009 was something the Silicon Valley area hadn’t seen in years: a new factory. It wasn’t just any factory. When it was completed at an estimated cost of $733 million, including proceeds from a $535 million U.S. loan guarantee, it covered 300,000 square feet, the equivalent of five football fields. It had robots that whistled Disney tunes, spa-like showers with liquid-crystal displays of the water temperature, and glass-walled conference rooms. “The new building is like the Taj Mahal,” John Pierce, 54, a San Jose resident who worked as a facilities manager at Solyndra, said in an interview. The building, designed to make far more solar panels than Solyndra got orders for, is now shuttered, and U.S. taxpayers may be stuck with it. Solyndra filed for bankruptcy protection on Sept. 6, leaving in its wake investigations by Congress and the Federal Bureau of Investigation and a Republican-fueled political embarrassment for the Obama administration, which issued the loan guarantee. About 1,100 workers lost their jobs. Amid the still-unfolding postmortems, the factory stands as emblematic of money misspent and the Field of Dreams ethos that seemed to drive the venture, said Ramesh Misra, a solar-industry analyst in Los Angeles for Brigantine Advisors.
• Demand for U.S. Capital Goods Climbs. Orders for U.S. capital goods climbed in August by the most in three months, a sign business investment continues to support the recovery. Bookings for goods like computers and communications gear, excluding military hardware and aircraft, climbed 1.1 percent, the most since May, a Commerce Department report showed today in Washington. Demand for all durable goods dropped 0.1 percent, less than forecast.
• Crude Oil Set For Second Straight Quarterly Decline on Europe Debt Crisis. Crude oil fell in New York, heading for the biggest quarterly drop since 2008, on concern that Europe’s debt crisis will linger and on rising U.S. supplies. Futures dropped as much as 2.5 percent as German Chancellor Angela Merkel signaled policy makers may review Greece’s second bailout after inspectors rule on whether the country is meeting the terms of its current package. U.S. crude oil stockpiles climbed 1.92 million barrels to 341 million last week, the Energy Department said today. “A build of nearly 2 million barrels is by no means bullish but the main driver of this market remains the crisis in Europe,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. “How the crisis develops and what it means for the U.S. dollar will continue to be our focus until the situation is resolved.” Crude oil for November delivery declined $2.02, or 2.4 percent, to $82.43 a barrel at 12:53 p.m. on the New York Mercantile Exchange. Oil is down 7.2 percent this month and 9.8 percent this year. Prices have dropped 14 percent since the end of June, the biggest quarterly loss since the last three months of 2008.
• Gundlach's DoubleLine Has Zero Euro Exposure as Losses Loom. Jeffrey Gundlach’s DoubleLine Capital LP is invested only in U.S. dollar-denominated assets to avoid losses stemming from Europe’s sovereign debt crisis. “All of our international exposure is in dollars,” Gundlach, the founder and head of Los Angeles-based DoubleLine, said at a panel in New York today. “There’s a big loss in Europe and all we want to do as investors is make sure as best we can that we’re not the ones taking the loss. How do you do it? No investments in Europe.” That includes avoiding investments in U.S. banks, he said. DoubleLine has attracted $17 billion since its December 2009 inception.
• Spain, Italy Extend Bans on Shorting Bank Shares. Italian and Spanish financial market regulators extended temporary bans on short selling of financial shares that were introduced last month in a bid to stem market volatility. The European Securities and Markets Authority announced the extension by the two countries in an e-mailed statement. The Spanish ban will remain “until the market conditions allow it” to be lifted, the country’s financial regulator said in an e- mailed statement. Italy’s restriction, and another enacted by France in August, will both last until Nov. 11. The Bloomberg Europe Banks and Financial Services Index has fallen 10 percent since the ban first took effect on Aug. 12. Societe Generale SA has dropped 18.5 percent and Unicredit SpA has fallen 26.6 percent during the period. The initial bans by France, Spain and Italy lasted 15 days. A similar rule introduced the same day in Belgium is indefinite.
• Fed's Hoenig Says Operation Twist Risks Creating 'Imbalances' in Economy. Federal Reserve Bank of Kansas City President Thomas Hoenig said the Fed’s plan to push down long- term interest rates may lead to unintended consequences and policy makers risk creating “imbalances” in the economy. “I have real concerns about trying to fine-tune and micro- manage the economy when monetary policy is a blunt tool,” he said today in an interview with Bloomberg Radio’s “The Hays Advantage” with Kathleen Hays. Efforts to “redefine yield curves” may “introduce new complexities and risk new unintended consequences,” he said. “We risk further imbalances,” said Hoenig, 65, who doesn’t vote on the FOMC this year. “We ought to be very, very humble in our expectations of what we can do with this instrument we call monetary policy.”
• Emerging-Nation Bond Rout Reduces Sales by 72%: Credit Markets. Emerging-market companies are selling the fewest bonds in 2 1/2 years as investors drive borrowing costs higher amid a global economic slowdown. Borrowers in developing nations issued $16 billion of fixed-income securities since the end of June, a 72 percent decrease from $58 billion in the previous quarter and the least since the first three months of 2009, according to data compiled by Bloomberg. Prices of emerging-market corporate notes are down 4.7 percent, the biggest drop since the 20 percent rout after Lehman Brothers Holdings Inc. collapsed in September 2008, JPMorgan Chase & Co.'s Composite Corporate EMBI Index shows. "For emerging-market borrowers, access to international markets is hugely important because they aren't able to fund on domestic markets in the scale they want," said Stuart Culverhouse, the chief economist of broker Exotix Ltd. in London. "There's been a massive retreat from risk."

Wall Street Journal:

• Chinese Property Mogul Sings Blues. Over the past few weeks, observers of China’s real estate industry have been treated to songs of woe from analysts, regulators, and Standard & Poor’s rating agency. But the tune carries further when a Chinese real-estate rock star is singing the blues. Zhang Xin, the chief executive officer of Soho China Ltd., said Wednesday that in her 17 years in the residential property business she hasn’t faced such a tough market. “This by far the most challenging year in terms of what you can sell,” Ms. Zhang told the Foreign Correspondents Club Shanghai. Referring to the higher ends of the market, where Soho focuses, she said, “you’re seeing no transactions on the residential side.”
• China Opposes EU Aviation Emissions Plan. China opposes the EU's plan to include airlines in its system to limit greenhouse-gas emissions, Chinese Foreign Ministry spokesman Hong Lei said Wednesday. "China appreciates the EU's efforts to reduce emissions but we oppose their forced implementation of unilateral legislation on aviation emissions," Mr. Hong said at a regular news briefing.
• Amazon(AMZN) Losing $50 Per Kindle Fire? With its new Kindle Fire tablet, Amazon is clearly undercutting Apple’s iPad on price. At just $199, the Fire costs less than half of Apple’s entry-level iPad. An appealing price point, but one that requires Amazon to eat a few dollars on each sale. According to Piper Jaffray analyst Gene Munster, “Amazon is likely losing about $50 per Kindle Fire.”
• Every Job Requires an Entrepreneur. Someone took risks to start every business—whether Ford, Google or your local dry cleaner.
  

MarketWatch:

• Hedge Funds Face New Round of Redemptions. The hedge fund industry is braced for a new round of redemptions after two months of poor performance and growing investor desire to move money into cash. The world's largest listed hedge-fund manager, Man Group PLC , stoked fears of another industry meltdown Wednesday when it reported a net $2.6 billion was pulled from its funds between June 30 and Sept. 26. It lost a further $1.5 billion from fund losses and $1.9 billion from the effect of a stronger U.S. dollar when accounting for euro- and Australian dollar-denominated funds. Its GLG unit, acquired last year, posted particularly large outflows. Man Group shares fell as much as 25% in London.

CNBC.com:

• 10 Reasons The Euro Zone Rescue Fund Could Fail.
• Citi(C) to Weigh Cost Cuts Amid Signs of Slowdown.
  

Business Insider

• High Frequency Trading And The Threat Of A Currency Flash Crash.
• Here's Everything You Need to Know About All The Occupy Wall Street Protests Springing Up Around The Country.
• 17 Ways American Families Are Getting Pulverized By This Economy.
• New York State Laying Off 3,500 After Union Rejects Concessions.
  

Zero Hedge:

• Here Comes The "China Hard Landing" - Full Bank of America(BAC) Presentation Slides.

Reuters:

• Portugal PM Says Country Vulnerable if Euro Zone Default. Portugal's Prime Minister Pedro Passos Coelho said on Wednesday his country would be vulnerable if any country in the euro zone were to default on its debts. "I don't want any country to default but if this were to happen, it is evident...we would be vulnerable to an accident of this nature," Passos Coelho told parliament when asked if Portugal would consider asking for a second bailout. "If that were to happen, we cannot exclude that Portugal's assistance plan would have to be reinforced."
• UniCredit Exec Says Euro "Practically Dead". The euro is dead and cannot be saved, while Greece will inevitably default, Attila Szalay-Berzeviczy, Head of Global Securities Services at UniCredit Group wrote in an article on a Hungarian website on Wednesday. Szalay-Berzeviczy signed the article as former head of the Budapest Stock Exchange. "The common currency of Europe is practically dead," he said in a long article posted on news website Index.hu.
  
• German Inflation Hits Surprise 3-Year High in September. Annual consumer price inflation rose to 2.6 percent from 2.4 percent in August -- a jump above expectations for it to hold steady, Wednesday's preliminary statistics office data showed.

Telegraph:

• Spain's Troubles Mount as Santander's Debts Grow. (video)
• Debt Crisis: Live.
  

Sueddeutsche Zeitung:

• Germany's Christian Social Union head Horst Seehofer said extending the aid package for Europe's indebted nations is putting Germany's credit rating at risk, citing an interview. A downgrade of Germany's credit rating would have negative consequences for jobs and economic growth, Seehofer said. The rescue fund shouldn't be increased, he said.

Handelsblatt:

• Austrian Finance Minister Maria Fekter said she's against a Greek default because it would cost her country's taxpayers about $6.8 billion.

Caixin:

• China's passenger car sales, excluding minivans, may fall in the fourth quarter as the country plans to raise the threshold in October for vehicles qualifying for a energy-saving subsidy, citing China's Passenger Car Association secretary-general Rao Da.

CCTV:

• China's top priority will continue to be stabilizing prices, citing Vice Premier Li Keqiang.

Bear Radar

Style Underperformer:

• Small-Cap Growth (-2.39%)

Sector Underperformers:

• 1) Coal -6.71% 2) Steel -4.01% 3) Oil Service -3.22%

Stocks Falling on Unusual Volume:

• CLF, BKS, MXWL, MRCY, IOC, CRZO, FSLR, FCX, SU, AVGO, SMSC, YNDX, PRGS, DMND, OPTR, NWPX, HMIN, HGIC, KIOR, UMBF, SGNT, FMCN, PENN, SOHU, COLB, SINA, AWAY, VB, GLP, SGA, CFX, DRI and RLD
  

Stocks With Unusual Put Option Activity:

• 1) DBC 2) EWH 3) MXIM 4) CDE 5) EWT
  

Stocks With Most Negative News Mentions:

• 1) RL 2) TK 3) MA 4) COP 5) FWLT
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume