Today's Headlines

Bloomberg:

• Trichet Says It's Up to Leaders to Resolve Debt Crisis at Brussels Summit. European Central Bank President Jean-Claude Trichet said it’s now up to governments to solve Europe’s debt crisis as leaders get ready for a summit in Brussels in 10 days. “It’s our duty to tell governments and other institutions what we see, but up to them to take the appropriate decisions,” Trichet, 68, said in an interview with Bloomberg Television in London today. “I’m certainly not underestimating the difficulty of their task.”
• German Banks Said to Prepare for Up to 60% Loss on Greek Debt. German banks are preparing for losses of as much as 60 percent on their Greek government debt holdings as European officials push for more private-investor involvement in a rescue of the debt-stricken country, said three people with knowledge of the matter. The country’s banks held a conference call this week and participants discussed the potential for losses on Greek bonds of between 50 percent and 60 percent, though no final figure has been set, according to the people, who declined to be identified because the talks are private.
• Sovereign, Corporate Credit-Default Swap Indexes Rise in Europe. The cost of insuring against default on European sovereign and corporate debt rose, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments climbed 10 basis points to 330 at 3 p.m. in London. An increase signals deterioration in perceptions of credit quality. The Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings jumped 20 basis points to 762, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose six basis points to 178.5. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers climbed 13.5 basis points to 245.5 and the subordinated index rose 12 basis points to 480.
• Spain Presses EU to Avoid Tougher Bank Stress Tests, Pais Says. Spain, with support from Germany and France, is pressing the European Commission not to impose tougher stress tests on European banks, El Pais reported, citing Spanish officials without naming them. As many as 14 Spanish lenders would fail a test under new criteria the European Banking Authority is proposing which require a 7 percent tier 1 capital ratio with the European economy in recession and the value of sovereign debt holdings written down, the newspaper reported. The EBA may even boost the capital requirement to 9 percent, El Pais added. That would see the majority of Spain’s banks failed, it said.
• Ackermann Says Higher Capital Won't Master Sovereign Crisis. Deutsche Bank AG (DBK) Chief Executive Officer Josef Ackermann said he doubts forcing European lenders to boost their capital levels will master the sovereign debt crisis. “The injection of capital would not address the actual problem,” Ackermann said, according to the copy of a speech given at a conference in Berlin today. “It is not the capital funding of banks that is the problem, but rather the fact that government bonds have lost their status as risk-free assets.”
• Carrefour Falls Most Since August After Cutting Forecast Again. Carrefour SA, the world’s second- largest retailer, fell the most in almost two months in Paris trading after lowering its 2011 profit forecast for the second time in three months amid a slump in Europe. The stock fell as much as 5.9 percent, the steepest intraday drop since Aug. 18. So-called current operating income will decline 15 percent to 20 percent this year, the Boulogne- Billancourt, France-based company said today, having in August forecast a retreat of 15 percent.
• IMF Says Europe Crisis Escalation Poses Severe Risk to Asia. An escalation in Europe’s debt crisis may trigger a selloff in Asian assets, force foreign banks to cut lending to the region and disrupt its currency markets, the International Monetary Fund said. Asia’s growth has slowed since the second quarter of 2011, the fund said in a report today, cutting its forecast for this year’s expansion to 6.3 percent from an April estimate of 6.8 percent. Inflationary pressures across the region are still “elevated” and financial conditions remain accommodative in most of Asia, the IMF said. “An escalation of euro area financial turbulence and a renewed slowdown in the U.S. could have severe macroeconomic and financial spillovers to Asia,” it said. “Since 2009, investors from advanced economies have built up substantial positions in Asian markets. A sudden liquidation of these positions could trigger a loss of confidence, and contagion could spread from bond and equity markets to currency and other markets.” The risk of another global recession has prompted Asian officials from China to Indonesia to shield growth by boosting fiscal measures or easing borrowing costs. The MSCI Asia Pacific Index of stocks slumped 16 percent last quarter, the biggest drop since 2008, and the IMF said today the “panic selloffs” in the region show there is “no place to hide” when advanced nations are in turmoil. Foreign banks may sell Asian assets, cut credit lines to the region and avoid rolling over maturing loans if they face large losses in their home markets, the IMF said. “Such cutbacks could have a sizable impact in Asian economies that have large exposures to European and U.S. banks,” the fund said. “Contagion could also occur through Asian currency markets, as long and carry-trade positions are unwound. A loss of liquidity in cross-currency swap markets --as in 2008 -- could be particularly disruptive and spill over to bank funding, as many banks rely on this market to fund dollar assets or to meet regulatory currency matching requirements, notably in Korea and Japan.” “In economies where such overheating pressures remain high, inflation remains above target, and inflation expectations have continued to rise, such as in China, India, and Korea, the current pace of monetary tightening remains appropriate,” the fund said.
• German Inflation Accelerated More Than Initially Estimated, Led by Energy. Inflation in Germany, Europe’s largest economy, accelerated more than initially estimated to the fastest in three years in September, led by energy costs. The inflation rate, calculated using a harmonized European Union method, rose to 2.9 percent from 2.5 percent in August, the Federal Statistics Office in Wiesbaden said today. It had previously reported an inflation rate of 2.8 percent. In the month, prices rose 0.2 percent.
• French Socialist Finalists Seek Greater State Control of Banks. The two finalists in the battle for the Socialist Party’s nomination in the French presidential vote said the state must take greater control of banks and called for increased regulation of global financial transactions.
• Earnings from Very Large Crude Carriers, or VLCCs, were the worst for a third quarter in at least 20 years, Clarkson Capital Markets analyst Michael Pak said in a report today.
• Crude Oil Futures Fall for Second Day as Equities Drop and Supplies Grow. Oil dropped for a second day in New York as U.S. equities declined on a decrease in JPMorgan Chase & Co.’s earnings and after U.S. crude supplies increased more than forecast in a government report. Futures declined as much as 2.8 percent as the Standard & Poor’s 500 Index halted its biggest gain over seven days since 2009. Oil stockpiles rose 1.34 million barrels, or 0.4 percent, to 337.6 million and gasoline inventories unexpectedly dropped as the refinery utilization rate fell the most since February. Crude for November delivery declined $2.16, or 2.5 percent, to $83.41 a barrel at 12:33 p.m. on the New York Mercantile Exchange. Prices are down 8.7 percent this year. Refineries ran at 84.2 percent of capacity last week, down from 87.7 percent the previous week. Total products supplied, a measure of consumption, fell 1.9 percent to 18.7 million barrels a day last week, the lowest level since the seven days ended July 22, the department said. Gasoline demand increased 0.6 percent, the report showed. Earlier, prices fell after the American Petroleum Institute said yesterday that U.S. gasoline demand slid the most in more than five years and as China’s net crude imports declined to the third-lowest level this year, the customs bureau said today. Implied gasoline demand in the U.S., the world’s biggest oil consumer, dropped 10.5 percent in the week to Oct. 7, the API report showed. That’s the biggest decline since March 2006.
• China Sees 'Severe' Challenges as Export Growth Moderates. China’s exports rose the least in seven months and the customs bureau warned of “severe” challenges as the global economic outlook dims, giving Premier Wen Jiabao’s government less incentive to let the yuan rise.
• House Dems Ask DOJ to Probe Debit Fees. Five House Democrats asked Attorney General Eric Holder to investigate whether U.S. banks and their trade groups colluded on decisions to impose new fees in response to caps on what they can charge for using debit cards.
• Initial Jobless Claims in U.S. Fell to 404,000. The number of Americans filing claims for jobless benefits was little changed last week, showing the labor market is making scant progress. Applications for unemployment insurance payments decreased 1,000 in the week ended Oct. 8 to 404,000, Labor Department figures showed today. Economists forecast 405,000 claims, according to the median estimate in a Bloomberg News survey. The four-week moving average, a less-volatile measure, fell to a two-month low of 408,000 from 415,000. Those who’ve used up their traditional benefits and are now collecting emergency and extended payments increased by about 2,300 to 3.55 million in the week ended Sept. 24. The unemployment rate among people eligible for benefits fell to 2.9 percent in the week ended Oct. 1 from 3 percent, today’s report showed. Thirty states and territories reported an increase in claims, while 23 had a decrease.
• Consumer Comfort Hovered Near Low Last Week. Consumer confidence hovered last week near a record low as Americans turned more pessimistic about the state of the U.S. economy. The Bloomberg Consumer Comfort Index fell to minus 50.8 in the week ended Oct. 9 from 50.2 the prior period. It was the fourth consecutive reading lower than minus 50, something that has happened just three previous times in its 26-year history. The index was minus 54 in November 2008, the lowest level since records began in 1985. The gauge has seen four-week stretches of readings lower than minus 50 just once in late 2008 and twice in 2009. Sentiment among respondents who own their homes and among registered independents dropped last week to the lowest level in data going back to 1990. Confidence for households earning more than $50,000 a year fell to the second-lowest in the data.
• JPMorgan's(JPM) Earnings Decline on Investment-Banking Slump. JPMorgan Chase & Co., the second- largest U.S. bank, reported an approximately 33 percent profit decline excluding a $1.9 billion accounting benefit amid a slump in investment banking and trading. Third-quarter earnings fell to about $3.1 billion, or 73 cents a share, not including the 29-cent accounting gain, from $4.71 billion on the same basis a year earlier. Net income was $4.26 billion, or $1.02 a share, compared with the average per- share estimate for adjusted earnings of 92 cents in a survey of 30 analysts by Bloomberg, the New York-based company said today.
• House's Frank Asks Supercommittee to Impose Fee on Biggest Banks. U.S. Representative Barney Frank, the top Democrat on the House Financial Services Committee, asked Congress’s debt-reduction supercommittee to impose a fee on the biggest banks and hedge funds to help pay down the federal deficit. Frank made the request in an Oct. 12 letter to Senator Patty Murray and Representative Jeb Hensarling, co-chairmen of the Joint Select Committee on Deficit Reduction.
• Tanning Tax Income Pales Compared With Estimate, Audit Finds. Revenue from a 10 percent excise tax on indoor tanning services mandated by the 2010 health-care overhaul law is falling short of projections, a government watchdog reported Thursday. The tax brought in $17.8 million in the last quarter of the 2010 fiscal year and $36.6 million in the first half of fiscal 2011, according to the report by the Treasury Department’s inspector general for tax administration. The tanning levy was projected to generate $2.7 billion over 10 years, including $200 million for fiscal 2011, according to the congressional Joint Committee on Taxation.

Wall Street Journal:

• Copper Falls on China, EU Worries. Copper futures slipped, under pressure from worry about Europe's debt crisis and a set of mixed Chinese trade data that suggested the world's top copper consumer continues to face economic headwinds. Copper for October delivery was down 10.2 cents, or 3%, at $3.2885 a pound in midday trade on the Comex division of the New York Mercantile Exchange. Copper was under pressure as European and U.S. equity markets were mostly lower, reflecting concern about the euro zone's fight to stave off a credit crunch. The growth-sensitive metal has taken cues from shifting sentiment about the currency union recently, as further weakness in the continent's financial system may rattle the industrial economy and sap demand for metals.
• Rajaratnam Gets Longest Insider Sentence. Raj Rajaratnam, the face of the biggest trading scandal in a generation, was sentenced to 11 years in prison on Thursday, the longest-ever term handed down for an insider case. "His crimes and the scope of his crimes reflect a virus in our business culture that needs to be eradicated," U.S. District Judge Richard Holwell said in imposing the sentence. Judge Holwell also ordered Mr. Rajaratnam to pay a $10 million fine and to forfeit $53.8 million.
• U.S. Incomes Seen Stagnant Through 2021. Americans' incomes have dropped since 2000 and they aren't expected to make up the lost ground before 2021, according to economists in the latest Wall Street Journal forecasting survey.

CNBC.com:

• Who's Behind the Wall Street Protests? Anti-Wall Street protesters say the rich are getting richer while average Americans suffer, but the group that started it all may have benefited indirectly from the largesse of one of the world's richest men. There has been much speculation over who is financing the disparate protest, which has spread to cities across America and lasted nearly four weeks. One name that keeps coming up is investor George Soros, who in September debuted in the top 10 list of wealthiest Americans. Conservative critics contend the movement is a Trojan horse for a secret Soros agenda. Soros and the protesters deny any connection. But Reuters did find indirect financial links between Soros and Adbusters, an anti-capitalist group in Canada which started the protests with an inventive marketing campaign aimed at sparking an Arab Spring type uprising against Wall Street. Moreover, Soros and the protesters share some ideological ground. Soros, 81, is No. 7 on the Forbes 400 list with a fortune of $22 billion, which has ballooned in recent years as he deftly responded to financial market turmoil. According to disclosure documents from 2007-2009, Soros' Open Society gave grants of $3.5 million to the Tides Center, a San Francisco-based group that acts almost like a clearing house for other donors, directing their contributions to liberal non-profit groups. Among others the Tides Center has partnered with are the Ford Foundation and the Gates Foundation. Disclosure documents also show Tides, which declined comment, gave Adbusters grants of $185,000 from 2001-2010, including nearly $26,000 between 2007-2009. Adbusters, whose magazine has a circulation of 120,000 and which is known for its spoofs of popular advertisements, came up with the Occupy Wall Street idea after Arab Spring protests toppled governments in Egypt, Libya and Tunisia, said Kalle Lasn, 69, Adbusters co-founder. "It came out of these brainstorming sessions we have at Adbusters," Lasn told Reuters, adding they began promoting it online on July 13. "We were inspired by what happened in Tunisia and Egypt and we had this feeling that America was ripe for a Tahrir moment." "We felt there was a real rage building up in America, and we thought that we would like to create a spark which would give expression for this rage."

Business Insider:

• Anonymous Calls On Occupy Wall Street To Form A New Political Party. Anonymous central just posted a notice on its website calling for the Occupy Wall Street Movement to avoid a full blown revolution and put its weight behind forming a new political party.
• Goldman(GS): These Are The Highest Quality Stocks In The World.

Zero Hedge:

• Credit Suisse Buries European Banks, Sees Deutsche Bank And 65 Other Bank Failing Latest Stress Test, €400 Billion Capital Shortfall.

New York Times:

• As China's Economy Cools, Loan Sharks Come Knocking. As China’s economy has begun to slow slightly, more and more entrepreneurs are finding themselves in Mr. Sun’s straits — unable to meet debt payments on which interest rates often run as high as 70 percent in this nation’s thriving unregulated, underground loan system. Such illegal lending amounts to about $630 billion a year, or the equivalent of about 10 percent of China’s gross domestic product, according to estimates by the investment bank UBS.

Wall St. Cheat Sheet:

• AAII Sentiment Survey: Is Optimism Returning? Bullish sentiment, expectations that stock prices will rise over the next six months, increased 4.5 percentage points to 39.8%. This is the highest level of optimism since July 21, 2011. It also ends a streak of 11 weeks when bullish sentiment was below its historical average of 39%. Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 9.4 percentage points to 36.4%. This is a six-week low for pessimism. It is also only the third time in the past 11 weeks that bearish sentiment has been below 40%.
  

Seeking Alpha:

• China Is In Credit Market Crosshairs. Which country saw the cost of insuring its sovereign debt against default rise more in the third quarter, Spain - the country that puts the S in PIIGS - or rising economic titan China? The answer is China, as concern grows in credit markets about the outlook for the country's economy. China's five-year sovereign credit default swap was among the 10 worst performing sovereign CDS in the world in the third quarter. The cost of insuring a Chinese five-year bond against default rose 136 per cent, according to a third-quarter roundup by debt market research firm Markit.

Gallup:

• Obama Job Approval: 53% Disapprove, 40% Approve. (graph)

Reuters:

• Commodity Sell-Off Hits Star Hedgies' Track Records. A sharp sell-off in commodity markets in the past few weeks is wreaking havoc with the track records of some of the biggest-name funds in the sector, many of which now languish near the bottom of the $2 trillion industry's performance tables. Funds like Mike Coleman's Merchant Commodity fund and Willem Kooyker's Blenheim Capital sit on hefty double-digit losses for the year after investors worried about global economic growth recently dumped gold, copper and cocoa for less risky assets. The Reuters-Jefferies CRB index of 19 commodities <.CRB> shed 13 percent during September, a drop which has echoes of May when many star managers betting on rising prices were caught on the hop by a quick sell-off. The size of the September hit, on top of losses suffered earlier this year, means many managers who enjoyed bumper profits from the long commodity bull run now face the likelihood of a down year. The average hedge fund investing in the Energy and Basic Materials sectors has slid 15.5 percent this year to end-September, making it the worst-performing strategy as measured by Hedge Fund Research's HFRI index.
• China Regulator Looks to Tighten Grip on Microblogs. A Chinese Internet regulator on Thursday called for stricter policing of the nation's microblogs while also encouraging officials to use them to engage with citizens, state news agency Xinhua reported. China's microbloggers showed their potency in a string of recent official scandals, particularly an online uproar in the wake of a high-speed bullet train crash in July that killed 40 people. Microbloggers led the charge in challenging rail officials' evasive accounts of the disaster. Chinese state media have demanded that Internet companies, regulators and police do more to cleanse websites of "toxic rumors". China currently heavily filters the Internet, and blocks popular foreign sites such as Facebook, YouTube and Twitter. The Xinhau report said people who spread "fabricated rumors," pornography, and who "pollute the Internet environment," must be investigated according to the law. "Make microblogs a new platform that is positive and healthy and for expressing oneself in a civilized and rational way," it said, adding that influential bloggers should develop a stronger "sense of social responsibility." The State Internet Information Office is a newly formed agency intended to strengthen government regulation of Internet content, which is also monitored by several other, sometimes rival agencies.
• Apple's(AAPL) New iPhone Features Qualcomm(QCOM) Chip. Apple Inc's fifth-generation iPhone uses a wireless chipset from Qualcomm Inc as well as silicon from smaller chipmakers, according to repair and parts specialist iFixit, which cracked the device open on Thursday.
• Issuance Rumors Fuel China Bank Funding Concerns.
  

Financial Times:

• German Banks Attack Recapitalisation Plan. Germany’s entire banking industry has joined forces to resist any compulsory recapitalisation of banks, urging Berlin to resist European moves to impose higher capital requirements across the board. In a furious letter to Wolfgang Schäuble, German finance minister, the country’s five banking associations are demanding that any risk assessment of European banks should be based on the current concept of capital requirements, and should not anticipate the Basel-III rules that are only supposed to come into effect from 2019.

Telegraph:

• Europe's Grand Plan Risks Slow Death by a Thousand Cuts. Is Europe's planned programme of banking recapitalisations going to work? It depends how it is done, but the omens aren't good. The message from bankers at the Association for Financial Markets in Europe (AFME) annual dinner in London this week was a concerning one.

Sky News:

• Exclusive: Fitch Poised to Slash UK Bank Ratings. The credit ratings agency Fitch is poised to deliver further grim news for Britain’s banks by warning of a sector-wide downgrade later today, I can exclusively reveal. Fitch is understood to have told the country’s major high street lenders to expect a statement about the review for downgrade after the stock market closes today. It’s possible that the statement will be brought forward now that I have disclosed the development. The review will include our giant banks such as Barclays, Lloyds Banking Group and Royal Bank of Scotland (RBS).

21st Century Business Herald:

• Wenzhou SME Crisis Escalates, 40% May Halt Production. Local media are reporting that 40% of small and medium-sized enterprises (SMEs) in Wenzhou, Zhejiang province, may halt production by the end of 2011 as they remain hesitant to accept new orders, reports 163.com. According to some of these SMEs, the issues faced by them include renminbi appreciation, increased operation cost, weak earnings, higher returns from investments and capital going to the underground banking sector. Some of the smaller companies are thinking of switching into other businesses, and are hoping for consistent government policies to ensure the success of the switch. The difficulties in operating their businesses had allegedly led to Hu Fulin, the founder and chairman of Zhejiang Xintai Group, a major maker of eye glasses, fleeing the city late last month to avoid having to pay the high-interest loans obtained from the illegal lending market. Hu had since returned to the city. Three to 5 major makers of eye glasses are currently negotiating to restructure Zhejiang Xintai Group. Finding a way to restructure the loans taken by the owners of the SMEs has become the main focus, said Zhou Dewen, the head of Wenzhou's SME Development and Promotion Association. According to investigations by journalists, Wenzhou companies are experiencing greater difficulties than during the time of the financial crisis, and some of them are not willing to accept new orders. Labor costs had risen 20% year-on-year in 2011, and the continued renminbi appreciation had squeezed the company's profits as it exports 95% of its products, added Zhong. According to Zhong, the industry's profit margin had fallen from 30-50% previously to between 3% and 8% at present. Zhou said the majority of SMEs in traditional industries are suffering from low profitability. According to the Wenzhou Economic and Trade Commission, 35 export-oriented companies had posted a 30% year-on-year drop in net profits in the first quarter of 2011. Twenty percent of the SMEs in Wenzhou had already stopped, or are planning to halt production, and the percentage is projected to hit 30-40% by the end of 2011 should the government not step in to help, added Zhou. The tight monetary policy had led to some of the SME owners resorting to borrowing from illegal money lenders where the annualized interest rates are up to 50%. The profits earned by the SMEs are not enough to even repay the interests of the loans, according to the report.

Bear Radar

Style Underperformer:

• Small-Cap Value (-1.25%)

Sector Underperformers:

• 1) Banks -3.13% 2) Education -2.41% 3) Gold & Silver -1.90%

Stocks Falling on Unusual Volume:

• JPM, BCS, CBSH, NFX, SNP, INCY, GMCR, WYNN, PLCE, HTWR, FAST, ADTN, CYOU, ASNA, OYOG, PTEN, TPCG, SNH, SWY, ADS, TAC, FE, HBI, KBE, AT, THG and LNN
  

Stocks With Unusual Put Option Activity:

• 1) PHM 2) S 3) EWW 4) TXT 5) NBR
  

Stocks With Most Negative News Mentions:

• 1) ADS 2) LM 3) GR 4) ALTR 5) BAC
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth (-.59%)

Sector Outperformers:

• 1) Restaurants +1.09% 2) Biotech +.38% 3) Internet +.07%

Stocks Rising on Unusual Volume:

• VRTX, FCS, RMBS, AKAM, ONXX, SINA, RES and SBH
  

Stocks With Unusual Call Option Activity:

• 1) SVU 2) IVN 3) ANF 4) SWY 5) LNKD
  

Stocks With Most Positive News Mentions:

• 1) ALB 2) ADTN 3) ONXX 4) WSM 5) DKS
  

Charts:

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

Thursday Watch

Evening Headlines

Bloomberg:

• European Banking Risks Are 'Rapidly' Growing, Swedish FSA's Andersson Says. Risks to Europe’s bank industry are “rapidly” mounting as the fallout of Greece’s debt crisis engulfs the whole region, said Martin Andersson, director- general of Sweden’s Financial Supervisory Authority. “We don’t see any positive signs,” Andersson said in an interview in Stockholm yesterday. “Things are getting worse and, of course, then you’re more concerned about liquidity and solvency.” Europe’s debt crisis has reached “a systemic dimension” and needs to be tackled “decisively,” European Central Bank President Jean-Claude Trichet told lawmakers in Brussels this week. Policy makers are debating how to recapitalize the region’s troubled banks as the sovereign debt crisis threatens to wreak havoc on balance sheets, undermining any recovery prospects. “We might end up in a situation similar to what happened in 2008” following the collapse of Lehman Brothers Holdings Inc. (LEHMQ), Andersson said. “And then of course there will be problems with liquidity.” In Sweden, banks need to reduce their reliance on dollar funding, the central bank and Finance Minister Anders Borg have warned. Swedish banks’ efforts to boost capital since 2008 are encouraging, though higher buffers are needed to compensate for dollar funding risks, Andersson said. “The banks now have a better liquidity management,” he said. “They are much more prepared for this uncertainty that’s in the market right now and potentially much worse turbulence.”
• Libor Diverges Most Since 2009 as Europe Leads: Credit Markets. Rates at which the world's banks say they can borrow from each other in dollars are diverging by the most in more than two years, a sign European leaders are still struggling to contain the region's debt crisis. The gap between the highest and lowest reported fixings by 19 contributing banks contributing to the three-month London interbank offered rate reached 18.5 basis points yesterday, the widest since September 2009.
• Swaps Registrants Would Have to Vouch for Capability in SEC Rule. Securities-based swap dealers and large swap participants would need to have senior officers certify their ability to participate in the $601 trillion market under registration rules proposed by the U.S. Securities and Exchange Commission. SEC commissioners voted 3-1 yesterday to seek comment on a Dodd-Frank Act rule that calls on firms to certify operational and compliance capabilities and ensure trades aren’t conducted by people who are “statutorily disqualified.”
• China Inflation Proves 'Stubborn' on Way Down. China's inflation, which has exceeded the government's target each month this year, is moderating more slowly than expected as food prices remain high in the biggest pork-consuming nation, according to Citigroup Inc. "Inflation has peaked in July but will cool at a slower pace than we previously estimated because food inflation remains stubborn and may ease very slowing," said Ding Shuang, a Hong Kong-based economist at Citigroup. Elevated prices may encourage officials to keep benchmark interest rates at the highest in about three years after three increases this year. September's inflation may have been pushed up by holiday spending on food and a jump in vegetable prices.
• Oil Declines a Second Day on Outlook for Fuel Demand; Brent Spread Widens. Oil dropped for a second day in New York as investors speculated that fuel consumption will falter on signs of a weakening global economy. Brent’s premium to U.S. prices widened. Futures slipped as much as 1.1 percent after American Petroleum Institute data showed U.S. implied gasoline demand fell the most in more than five years. Reports today may Chinese exports and imports slowed, while U.S. jobless claims rose. Brent oil in London was at the highest premium to New York crude in five weeks. “The economy is showing moderate, sub-trend growth,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “There’s an expectation that the rate of Chinese export growth is declining, reflecting weaker demand internationally. The market will also be focusing closely on the import side of things to get a bearing on Chinese domestic demand.” Crude for November delivery dropped as much as 93 cents to $84.64 a barrel in electronic trading on the New York Mercantile Exchange and was at $85.02 at 12:12 p.m. Sydney time. Implied gasoline demand in the U.S., the world’s biggest oil user, dropped 10.5 percent in the week ended Oct. 7, the API report showed. This is the biggest decline since March 2006. The International Energy Agency yesterday cut its 2012 demand estimate for oil by 210,000 barrels a day and said Libyan output will rebound to 50 percent more than earlier forecast. The North African nation may pump about 600,000 barrels a day of crude oil by the end of the year, up from an earlier estimate of as much as 400,000 barrels, according to the IEA.
• Fisher Says Fed Has 'Done Everything It Can' to Boost Jobs. Federal Reserve Bank of Dallas President Richard Fisher said that while too many Americans remain unable to find jobs, central bankers have done as much as possible to shore up the labor market without sparking inflation. “There are limits to what a central bank can do,” Fisher said during a speech today in Abilene, Texas. “We can provide fuel, but we cannot provide incentives for those who create jobs” to “step on the gas pedal.” The U.S. is struggling with stubborn unemployment even as the central bank “may have overfilled the tank” by providing too much liquidity to the economy, the Dallas Fed chief said. The so-called Operation Twist is not an “effective way” to deal with the economy right now and fiscal authorities, not the central bank, “are the problem,” Fisher said in response to audience questions after his speech. He called lawmakers’ attitude toward U.S. fiscal issues “disgraceful,” and said further monetary accommodation would only encourage Congress to do less.
• U.S. Takes Case Against Iran to UN After Saudi Murder Plot. The Obama administration today gave United Nations diplomats detailed intelligence to support charges that Iran plotted to assassinate Saudi Arabia’s ambassador to the United States. In a possible prelude to a bid for tighter sanctions, U.S. Ambassador to the UN Susan Rice, flanked by officials from the FBI, the CIA and the Justice and State Departments, briefed Security Council members on the evidence. Colombia’s Nestor Osorio said Rice and her Saudi counterpart provided “much more information” about how U.S. law enforcement and intelligence foiled the plot than has been reported in the media.
• Egypt Violence Piles Pressure on Army to Hand Over Power Faster. Egypt’s worst violence since the popular revolt that toppled President Hosni Mubarak in February adds to pressure on the army to speed up the transfer of power to an elected government. Clashes between protesters, mostly Coptic Christians, and security forces in Cairo this week left at least 25 people dead and fueled calls for the ruling generals to change a timeline that may allow them to stay in power until 2013. The violence rocked the government, with Finance Minister Hazem El Beblawi handing in a resignation that was rejected by the army council.
• Hong Kong Inflation Better Than Change to Peg, Greenwood Says. Hong Kong must bear the pain of inflation to maintain the dollar peg because the Chinese city may be worse off with the alternatives, according to John Greenwood, architect of the city’s fixed-exchange-rate system. Hong Kong’s consumer prices excluding distortions from government subsidies rose 6.3 percent in August from a year earlier, the highest rate since the global financial crisis in 2008. Accelerating inflation has highlighted limits on monetary policy in the city, where official interest rates move in sync with those of the U.S. Federal Reserve. “Although inflation is unpleasant, undesirable, it is a lesser cost than having a fluctuating currency such as we had in 1983,” Greenwood, chief economist at Invesco Asset Management, said in an interview in Hong Kong yesterday. “We would be jeopardizing, potentially, a lot of the capital market activities if we have to move to a more volatile currency system.”
• Google(GOOG) Said Not to Plan Acquisition of Akamai(AKAM). Google Inc. (GOOG) isn’t planning to acquire Akamai Technologies Inc. (AKAM), two people familiar with the matter said, countering a report in Business Insider that fueled speculation a takeover may be imminent. The story, which sparked an after-hours surge of as much as 17 percent in Akamai stock, is baseless, said the people, who asked not to be identified. Several people in the advertising technology industry “think Google is about to buy Akamai,” Business Insider reported earlier today. “It’s mostly just a rumor,” according to the report.
• China Offers Loan, Tax Help to Small Companies as Wenzhou Risks Spreading. China announced a package of measures to help small companies, including tax breaks and easier access to bank loans, after the collapse of manufacturers in Wenzhou city highlighted growing risks to the economy. The government will provide financial support and preferential tax policies for small companies, the State Council said in a statement yesterday, after a meeting at which Premier Wen Jiabao presided. The government will be more tolerant of bad loan ratios for small-company loans, the Cabinet said.
• Sony(SNE) Recalls 1.6 Million Bravia TV Sets Because of Fire Risk.
• S. Korea Raises Combat Readiness Near Sea Border, Yonhap Says. South Korea’s military increased combat readiness after spotting unusual military movement by North Korean forces along the western sea border, Yonhap News said, citing a South Korean government official it didn’t identify. South Korea recently detected the relocation of a North Korean ground-to-air missile to the north of Baengnyeong Island near its disputed western sea border, according to Yonhap. North Korea also moved the missile’s mobile launch pad to a base near the sea border and recently fired several missiles off the coast, it said.

Wall Street Journal:

• Herman Cain Vaults to Lead in Latest Poll. Former restaurant-industry executive Herman Cain has catapulted to the lead in the race for the Republican presidential nomination, a new Wall Street Journal/NBC News poll finds. Drawn by Mr. Cain's blunt, folksy style in recent debates, 27% of Republican primary voters picked him as their first choice for the nomination, a jump of 22 percentage points from six weeks ago.
  
• John Malone Now Biggest Landowner in the U.S. Ted Turner has lost his crown. According to the newly released 2011 Land Report 100, which ranks the top land barons, John Malone is now America’s biggest individual landowner. The 70-year-old cable pioneer and chairman of Liberty Media now owns 2.2 million acres, after purchasing more than 1 million acres of timberland in Maine and New Hampshire earlier this year.
• Apple(AAPL), Hollywood in Talks to Allow Movies on iPhones, iPads. Apple Inc. is negotiating with Hollywood studios for deals that would let people who buy movies from the iTunes Store watch streaming versions of those movies on Apple devices such as iPads or iPhones without manually transferring them, according to people familiar with the matter.
  
• Congress Approves Trade Pacts. Congress passed free-trade agreements Wednesday with South Korea, Colombia and Panama, ending negotiations so nettlesome they likely spell the end of progress on such pacts until after the 2012 election. The House passed all three deals Wednesday evening, and the Senate followed suit. The deals are expected to generate $13 billion in new exports—$11 billion to South Korea—chiefly farm products. As well, they lift a host of non-tariff barriers, including over U.S. professional services.
• France Says It Won't Tap EU to Help Its Banks. The French government is standing by to help recapitalize the country's banks should that become necessary, and won't tap a European rescue fund for that purpose, said a government spokeswoman. Speaking after the weekly cabinet meeting, Valerie Pecresse said that once the expanded European Financial Stability Facility is approved, it "will be able to lend to certain countries that need to recapitalize their banking system, but France won't make use of the EFSF."

MarketWatch:

• China Sees Wenzhou Lending Crisis Snowball. Chinese city plays risky game of high-interest private lending. Dubbed the nation’s capital of private financing, the city of Wenzhou offers a textbook example of how non-bank lending has fueled private-sector prosperity — and risk-taking — in China. A recent central bank survey said about 60% of all local businesses and the vast majority of households are interconnected through the city’s private-lending system. It’s a tight financial network that interweaves lenders and borrowers collectively, often to their mutual benefit and sometimes to their terrible loss. If only a few debt-ridden companies collapse because they can’t afford to repay the high-rate, short-term loans they’ve gotten from private lenders in the network, the ensuing financial trouble can ripple through the entire credit-connected community, exempting few from turmoil. Since early this year, according to the Wenzhou Public Security Bureau, some major Wenzhou-area private-company owners have fled creditors to avoid repaying loans. In each of these cases, though, the system survived relatively unscathed, and community deal-making continued. Yet a serious domino effect of financial trouble started to endanger the entire system in July, after a well-known entrepreneur named Wang Xiaodong disappeared.

Business Insider:

• Some People In China Are Absolutely LOVING Occupy Wall Street. In China, they're calling Occupy Wall Street the "Great Wall Street Revolution," according to Asia Times Online. And by "they" we mean China's New-leftists, a group of people who are upset with the country's capitalist reforms and wish to return to the time of Mao. In the past few days, they've held protests in Luoyang and Zhengzhou (in Henan province) to show their support for the Americans who, they hope, will bring down capitalism once and for all.
• These Funds Are So Bad That Employees Are Suing For Having To Invest In Them.
  

Zero Hedge:

• Chinese Copper Inventories Revealed To Be Double Estimated.
• Market Slumps After European Banks Admit They Can't/Won't Raise Capital; Will Proceed With Asset Liquidations Instead.

CNBC:

• China Trade Surplus Narrows in Face of Global Woes. China's trade surplus narrowed in September for a second month in a row as growth of exports and imports both fell below forecasts, reflecting global economic weakness and offering Beijing ammunition to resist U.S. pressure on the yuan. Exports increased 17.1 percent last month from a year ago, slowing from a 24.5 percent gain in August, and imports increased 20.9 percent, compared with August's 30.2 percent rise, the customs office said on Thursday. That created a trade surplus of $14.5 billion in September, compared with $17.8 billion in August and $31.5 billion in July. The rolling 12-month trade surplus reached $180.3 billion in September, dipping from $182.7 billion in August. "Export growth in September was much lower than market expectations, showing the sputtering external economy, and we expect the slowing export trend to continue in the coming months," said Wang Hu, an analyst for Guotai Junan Securities in Shanghai. Economists had expected Chinese exports to grow 20.7 percent in September and imports to rise 24.5 percent, bringing the monthly surplus to $16.3 billion. In month-on-month terms, exports fell in September after calendar adjustment by 2.1 percent, versus a decline of 3.3 percent in August and a rise of 5.4 percent in July. That suggested the world's No. 2 economy is feeling the pinch of Europe's worsening debt crisis and slowing growth in the United States.
  

IBD:

• Cerner(CERN) Helps Medical Records Go Electronic.

Financial Times:

• Insurance Plan to Boost Rescue Fund's Reach. European policymakers are moving towards a plan that would enable the eurozone’s €440bn rescue fund to insure investors against some losses on government bonds, arguing it presents the fewest legal and political hurdles to quickly increasing the fund’s firepower.

Telegraph:

• Mario Draghi Fears Italian Debt Spiral. Italy risks a debt spiral without "drastic" steps to cut spending and restore confidence in public finances, the country's central bank governor has warned.
• Even a Slovak 'Yes' Will Make No Difference. He also touched on the most neuralgic issue, reminding everybody that the EFSF is "mainly for saving foreign banks". These are French, German, British, Dutch, and Belgian banks, of course. Mr Sulik is right. The EU-IMF rescue loans have not helped Greece pull out of its downward spiral. They have pushed the country further into bankruptcy. Greek public debt will rise from around 120pc of GDP to 160pc under the rescue programme, and the IMF is pencilling in figures above 180pc. The rescue loans have rotated into the hands of creditor banks, life insurers, pension funds, and even a few hedge funds. ECB bond purchases have allowed to investors to dump their holdings at reduced loss, shifting the risk to EMU taxpayers. It is a racket for financial elites. A pickpocketing of taxpayers, including poor Slovak taxpayers. "I’d rather be a pariah in Brussels than have to feel ashamed before my children," he said. Bravo.

Leipziger Volkszeitung:

• The German finance ministry is assessing the potential impact of losses of up to 50% on Greek bonds, citing government sources. The assessment, which is being coordinated with France, is taking longer than expected and has resulted in a European Union meeting scheduled for Oct. 17 being moved to Oct. 18.

South China Morning Post:

• Top shippers poised to see US$600m loss. Analyst says deficit is likely on fall in demand and freight rates on routes from Asia to North America.

China Securities Journal:

• The room for yuan appreciation in the future may not be "too large" as the currency's exchange rate is gradually moving to a balanced and reasonable level, the China Securities Journal says in a front-page editorial.

Evening Recommendations
Barclays Capital:

• Rated (OC) Overweight, target $37.
• Rated (PHM) Overweight, target $8.
• Rated (IFSIA) Overweight, target $18.
• Rated (LEN) Overweight, target $20.
• Rated (TOL) Overweight, target $21.
• Rated (AWI) Overweight, target $50.
  

Night Trading

• Asian equity indices are -.50% to +1.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 211.0 -10.25 basis points.
  
• Asia Pacific Sovereign CDS Index 159.50 -.5 basis point.
• FTSE-100 futures -.32%.
  
• S&P 500 futures +.03%.
  
• NASDAQ 100 futures +.09%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (FCS)/.32
• (LNN)/.61
• (JPM)/.92
• (FAST)/.33
• (CBSH)/.77
• (GOOG)/8.77
• (VMI)/1.53
• (SWY)/.35
  

Economic Releases
8:30 am EST

• The Trade deficit for August is estimated to widen to -$45.8B versus -$44.8B in July.
• Initial Jobless Claims are estimated to rise to 405K versus 401K the prior week.
• Continuing Claims are estimated to rise to 3710K versus 3700K prior.

11:00 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +800,000 barrels versus a -4,679,000 barrel decline the prior week. Distillate supplies are estimated to fall by -500,000 barrels versus a -744,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +250,000 barrels versus a -1,137,000 barrel decline the prior week. Finally, Refinery Utilization is expected to fall -.78% versus a -.10% decline the prior week.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Kocherlakota speaking, 30-Year Treasury Bond Auction, weekly Bloomberg Consumer Comfort Index, (GPS) investor meeting, (MJN) investor day, (RIGL) investor day and the (PETM) analyst day could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Higher into Final Hour on Less Eurozone Debt Angst, Less Financial Sector Pessimism, Short-Covering, Diminishing Global Growth Fears

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 30.63 -6.79%
  
• ISE Sentiment Index 97.0 -24.22%
  
• Total Put/Call 1.24 -12.06%
  
• NYSE Arms .63 -33.64%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 129.43 -4.11%
  
• European Financial Sector CDS Index 218.08 -4.35%
  
• Western Europe Sovereign Debt CDS Index 335.33 -1.01%
  
• Emerging Market CDS Index 304.98 -7.66%
  
• 2-Year Swap Spread 37.0 -1 bp
  
• TED Spread 39.0 -1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .01% +1 bp
  
• Yield Curve 193.0 +8 bps
  
• China Import Iron Ore Spot $162.0/Metric Tonne -1.46%
  
• Citi US Economic Surprise Index -1.50 +1.0 point
  
• 10-Year TIPS Spread 1.99 +3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +125 open in Japan
• DAX Futures: Indicating +14 open in Germany

Portfolio:

• Higher: On gains in my Tech, Retail and Medical sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added them back
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish, as the S&P 500 trades back to the high-end of its range over the last 2 months on less Eurozone debt angst, less financial sector pessimism, short-covering and diminishing global growth fears. On the positive side, Alt Energy, Oil Tanker, Paper, Bank, I-Banking, Hospital, Insurance, Construction, REIT, Education and Airline shares are especially strong, rising more than +2.0%. Cyclical and Small-cap shares have outperformed throughout the day again. As well, (XLF) is trading relatively well. Copper is rising +2.21% and the UBS-Bloomberg Ag Spot Index is falling -.6%. The 10-Year Yield is rising +6 bps to 2.21%. The Russia sovereign cds is falling -8.6% to 246.33 bps, the UK sovereign cds is falling -3.24% to 84.33 bps and the Brazil sovereign cds is plunging -11.46% to 154.45 bps. Major Asian and European equity indices rallied 1-3% today. On the negative side, Computer, Utility, Disk Drive, Networking, Biotech and Restaurant shares are flat-to-lower on the day. (XLK) has lagged throughout the day. Lumber is falling -3.2% and Gold is rising +.88%. Rice is still close to its multi-year high, rising +29.5% in about 13 weeks. The Spain sovereign cds is rising +1.29% to 356.17 bps, the Portugal sovereign cds is gaining +.69% to 1,096.77 bps, the Ireland sovereign cds is gaining +2.16% to 710.0 bps, the Japan sovereign cds is gaining +3.37% to 115.68 bps and the China sovereign cds is soaring +15.3% to 166.10 bps. The Libor-OIS Spread is +1 bp to 32.0 bps, which is the highest since July 2010. As well, the TED and 2-Year swap spreads are still very close to their recent highs, which is also noteworthy considering the recent strong equity advance. The Western Europe Sovereign CDS Index, the European Financial Sector CDS Index and the Asia-Pacific Sovereign CDS Index are still near their records and trending higher despite the recent pullbacks. The Nikkei fell -.4% overnight, despite gains in the rest of Asia, and is -14.6% lower ytd. As well, Russian equities sat out today's advance and are down -20.3% ytd. Many of the most economically sensitive multi-national stocks have soared over the last week, despite (AA)'s cautionary comments on the state of demand in Europe, and are now very overbought technically. As well, the S&P 500 is now at the top end of its range over the last 2 months. I suspect stocks will, at best, thrash around current levels over the near-term unless earnings outlooks are stronger than I expect over the coming days. I expect US stocks to trade mixed-to-lower into the close from current levels on profit-taking, more shorting, technical selling and global debt angst.

Today's Headlines

Bloomberg:

• Euro Strengthens to Three-Week High as Barroso Seeks Coordinated Debt Plan. The euro rose to three-week highs against the dollar and yen as European Commission President Jose Barroso called for a “coordinated approach” to recapitalize the region’s banks. The 17-nation currency extended gains after policy makers in Slovakia, the only nation yet to approve a retooled bailout fund, reached an agreement on another vote to ratify the plan. “The market has priced in a lot of the good news from the constructive proposals,” said Aroop Chatterjee, a currency strategist at Barclays Plc in New York. “The question remains whether actions will meet expectations. If the euro hovers around here, there will be less urgency from European politicians.”
• Sovereign, Corporate Credit-Default Swap Indexes Fall in Europe. The cost of insuring against default on European sovereign and corporate debt fell, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments declined five basis points to 320 at 3:30 p.m. in London. A decrease signals improvement in perceptions of credit quality. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings decreased 23 basis points to 746, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell 5.5 basis points to 173.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers decreased eight basis points to 233 and the subordinated index declined 16 to 468.
  
• Hungary's IMF Need May Hinge on Euro Crisis, Jarai Tells TV2. The outcome of the euro crisis may determine whether Hungary will need to resort to another International Monetary Fund loan, said Zsigmond Jarai, a former central bank president and head of the state Fiscal Council. “Nothing is unimaginable on this front and it depends on what happens in the world economy,” Jarai told TV2 late yesterday, according to a video posted on the commercial station’s website. “It’s unforeseeable what will happen in the world economy, and only that could push Hungary into a situation where the financing of the state debt becomes uncertain.” Hungary may be “part of a group of countries” whose economies would be most affected by a potential Greek default, said Jarai, who is an ally and former finance minister of Prime Minister Viktor Orban.
• EU Needs Treaty Change for Euro, Westerwelle Tells Tagespiegel. European Union governments must change the treaties governing the bloc to restore its financial stability, German Foreign Minister Guido Westerwelle said in a commentary published in the Tagesspiegel newspaper. Deficit controls at EU level must be strengthened and the union must be given the power to intervene in the budgets of countries that “stray from the path of fiscal virtue,” Westerwelle said, according to an e-mailed advance copy of his opinion piece. Article 126 of the EU treaty, which determines deficit procedures against overspending members, should be altered, a move that could be accomplished within a year, Westerwelle said.
• Default Swaps on Greece's Debt May Pay Out If Losses Exceed 21% Threshold. Credit-default swaps insuring Greek government debt may pay out should proposals to increase losses on the bonds exceed the 21 percent already agreed, according to analysts. Deeper cuts would likely have to be imposed on bondholders, triggering a credit event on the swaps contracts, analysts at Barclays Capital, Evolution Securities Ltd. and Credit Agricole SA said.
• Some Federal Reserve Officials Sought to Retail Option of QE3, Minutes Say. The Federal Reserve said some officials last month wanted to keep further asset purchases as an option to boost the economy as policy makers saw “considerable uncertainty” that U.S. growth will pick up. Most participants favored giving additional information on the central bank’s goals and how they influence the Fed’s decisions, and most “saw advantages” in tying the Fed’s near- zero interest rates to more-specific developments in the economy, the Fed said in minutes of the Sept. 20-21 session, released today in Washington. Such changes may be expressed in ways other than the post-meeting statement, the Fed said.
• Job Openings Fell in August, Hiring Climbed. Job openings in the U.S. fell in August for the first time in four months, signaling a sustained labor market recovery will take time to unfold. The number of positions waiting to be filled dropped by 157,000 to 3.06 million, according to Labor Department figures issued today in Washington. Hiring increased by 38,000 to 4.01 million. Payrolls climbed by 103,000 workers in September, a better- than-forecast outcome that included 45,000 returning Verizon Communications Inc. strikers. With unemployment hovering above 9 percent, the economy slowing and concerns of a European default mounting, employers may be slow to further boost hiring. “Companies don’t want to risk making additional hires with the outlook so uncertain,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report. “Corporations are playing it very close to the vest and keeping payrolls lean.” Job openings decreased 4.9 percent in August from a revised 3.21 million in July that were smaller than initially reported, the data showed. The drop in vacancies was led by trade, transportation and utilities.
• Ex-Goldman(GS) Traders' Hedge Fund Shuts as Macro Strategy Falters. Global Trading Strategies, a Sydney- based hedge fund founded by three former Goldman Sachs JBWere Pty. traders, has returned investors their money after its strategy of betting on global economic trends faltered. The fund, which peaked at $1.2 billion in 2008 after starting in 2005, finished trading July 31 after more than a year of negative returns, Chief Operating Officer Murray Chatfield said in a telephone interview yesterday.
• Harrisburg Files for Bankruptcy on Debt. Harrisburg, Pennsylvania, facing a state takeover of its finances, filed for bankruptcy protection after failing to pay the debt on a trash-to-energy incinerator. The council made its 4-3 decision against the advice of a city attorney who said the panel did not follow proper procedure. It’s the ninth bankruptcy filing this year by a municipal-bond issuer, and the first by a U.S. state capital since 1980 when the municipal bankruptcy laws were overhauled, said James Spiotto, a partner at Chapman & Cutler in Chicago who tracks such cases.
• Obama Watchdog Said to Have Known About Bank Debit Fee Plan. The Obama administration’s new consumer watchdog knew about Bank of America Corp. (BAC)’s plan to impose a $5 monthly debit-card fee at least two weeks before the firm’s announcement ignited a public firestorm, said people briefed on the discussions. The lender met with Consumer Financial Protection Bureau officials on Sept. 16 to inform them of the fee, Susan Faulkner, head of consumer banking products, told employees yesterday at a gathering in Delaware, said two people who attended. They asked for anonymity because the event was private. Faulkner said the regulator didn’t oppose the fee, according to one of the people.
• RIM(RIMM) Races 'Against Clock' as BlackBerry Disruption Spreads. Research In Motion Ltd. (RIM)’s BlackBerry service was disrupted for some users in North America, as a snag that is halting messaging for a third day across Europe, the Middle East and Africa spread to its largest market. Subscribers in the Americas may experience “intermittent service delays,” RIM said on its website today. The company said it is working to resolve the issue and apologized to users.

Wall Street Journal:

• At Ports, a Sobering Omen for Holiday Sales. Key parts of the U.S. supply chain have some troubling news: The traditional holiday peak in shipping volumes has disappeared.
  

CNBC.com:

• Wal-Mart(WMT) Poised to End Nine Quarters of Sales Declines.

Business Insider:

• Guess Who REALLY Planned The Occupy Wall Street Millionaire March.
• The 15 Most Offensive PETA Advertisements. (pics)
  

Zero Hedge:

• Put A Fork In It: Greece Effectively Shuts Down As Finance Ministry To Begin 9 Day Strike.
• Credit Suisse Buries China's Banks.
• Banks, Credit Events, And Sovereign CDS.
  

Apple Insider:

• Apple(AAPL) Rumored to Counter Amazon(AMZN) Kindle Fire with 'iPad mini' in 2012.

Rasmussen Reports:

• 16% Say U.S. Heading In Right Direction.

Reuters:

• Bank Sovereign Debt to Be Marked Down in Tests - EU. The sovereign debt of banks is likely to be marked down to its market value in an ongoing assessment of bank strength by the European Banking Authority, an EU source said on Wednesday. The banking authority is also likely to apply a hurdle of a core Tier 1 capital ratio of 9 percent when deciding whether banks need more capital, the source said.
• German Banks Say EU Proposals for Banks Unsuitable. Earlier on Wednesday the EU Commission's President Jose Manuel Barroso called for "a fully coordinated approach to strengthen Europe's banks", based on a stricter assessment of bank health using a "temporary significantly higher capital ratio of highest quality capital". German Banking Association BdB on Wednesday said proposals from the president of the European Commission to accelerate capital raising at European banks are unsuited for addressing the causes of the sovereign debt crisis. The BdB said the proposals are unsuited because they fail to address the causes of the sovereign debt crisis. Banks have already used the past months to strengten capital, the BdB said in a statement. Efforts to consider banning dividend payouts as a way to accelerate capital accumulation could hinder efforts to raise capital on the market, the BdB said.

Les Echos:

• French Prime Minister Francois Fillon is seeking to increase the country's supplementary tax on high earners. The extra tax will be increased to 3% for households with individuals earning 250,000 euros each year, and 4% for households where the individuals earn at least 500,000 euros each year.

Arab News:

• Saudi Arabia wants to strengthen its political and economic ties with China, citing the kingdom's Deputy Foreign Minister Prince Abdul Aziz bin Abdullah.