Bloomberg:
- Europe Starts $648 Billion Aid Fund, Rules Out Immediate Use. European governments set up a full-
time 500 billion-euro ($648 billion) fund to aid debt-swamped
countries and, not for the first time in the three-year crisis,
expressed confidence that the extra financial muscle won’t be
needed anytime soon. Finance ministers from the 17 euro countries declared the
European Stability Mechanism operational, while saying that Spain, its biggest potential near-term customer, isn’t on the
verge of tapping it. Decisions were also put off on Greece’s
next aid payment and on an assistance program for Cyprus.
- European Stocks Retreat Most This Month; Cookson Sinks. European
stocks dropped the most this month as the World Bank cut its East Asian
growth forecast and investors awaited a meeting of euro-area finance
ministers for signs on how they will tackle the debt crisis. Cookson
Group Plc (CKSN) sank 12 percent as the world’s biggest maker of
ceramic linings for metal smelters said annual results will miss its
forecasts. KBC Groep NV (KBC) retreated 5.2 percent as the bank’s
strategy update disappointed investors. Eurobank Ergasias SA advanced
5.1 percent after a takeover offer from National Bank of Greece SA.
(ETE). The Stoxx Europe 600 Index (SXXP) lost 1 percent to 271.43 at the close of trading, the largest decline since Sept. 28.
- Bearish
France Bets at 14-Month High to DAX on Budget: Options. Options traders
are sending the cost of protecting against a decline in French stocks
to the highest level in more than a year relative to German equities
after President Francois Hollande's first annual budget raised taxes on
big companies and the rich.
- Spending Cuts No Longer Yield Earnings Growth at U.S. Companies.
Profit gains earned through job cuts and factory closings in the
absence of a global economic recovery are starting to reach their limit.
Third-quarter profits and sales for the Standard & Poor’s 500
Index (SPX) probably fell in unison for the first time in three years,
according to analysts’ estimates compiled by Bloomberg. Per-share
earnings may have dropped 1.7 percent on average after they were little
changed in the second quarter. Sales may have slipped 0.6 percent,
the data show. While most companies plan to keep a lid on spending,
lower expenses aren’t leading to the same kinds of increases they
reported earlier this year. Hewlett-Packard Co., the world’s largest
personal-computer maker, already forecast full-year profit that trailed
analysts’ estimates, FedEx Corp. (FDX) cut its annual earnings forecast
and Intel Corp. (INTC) projected lower third- quarter sales, with all
three citing softening demand. “A lot of the earnings growth that
we’ve seen has been related to cost reductions,” said Peter Jankovskis,
co-chief investment officer for Oakbrook Investments in Lisle, Illinois,
which manages more than $3 billion. “Now many of those cost reduction
efforts have run their course. Without revenue growth, there is no room
for profit to expand further.”
- Hedge Funds Cutting Trading Budgets Amid Slump, Survey Finds. Hedge
funds are cutting trading costs amid a decline in volumes and muted
performance for the $2.1 trillion industry, a survey found.
Forty-four percent of hedge funds polled by Greenwich Associates said
they will spend less on their trading desks than in 2011, according to a
statement released by the Stamford, Connecticut-based company today.
About 40 percent of hedge funds
said their trading budgets would be unchanged this year, while
17 percent plan an increase, the survey found.
- Traders Eye Grain Prices Rebound as Supply Set to Tighten. Grain prices that tumbled in recent
weeks may rebound as demand stays robust while global stockpiles tighten after drought hurt crops from the U.S. to Russia.
- California Facing $5 Gasoline Stirs Brown to Relax Rules.
Gasoline closing in on a record $5 a gallon prompted Governor Jerry
Brown to direct California regulators to relax smog controls so oil
refineries could increase supplies of cheaper fuel. Regular gasoline in California surged to an average $4.668 a gallon, an all-time high and 22 percent more than the U.S.
average, according to data today from AAA, the nation’s largest
motoring organization. Some stations were charging as much as
$5.89 in the Big Sur area, according to GasBuddy.com.
- Romney Tied With Obama in 3-Day Post-Debate Poll. Republican Mitt Romney has pulled even with President Barack
Obama since their first presidential debate, overcoming a narrow
advantage Obama had held, according to Gallup’s daily tracking survey. In
the three days after the Obama-Romney debate on Oct. 3, Gallup found 47
percent of registered voters supporting the president and 47 percent
backing his Republican rival. In the three days before the Denver
debate, Obama held a 50-45- percentage-point advantage over Romney, the
polling found.
- UnitedHealth(UNH) to Buy Brazil Insurer Amil for $4.9 Billion. UnitedHealth Group Inc., the biggest
U.S. health insurance company, agreed to pay about $4.9 billion
to buy 90 percent of Amil Participacoes SA (AMIL3), a Brazil-based
insurer and hospital chain that gives the American company a
stake in the world’s second-biggest emerging economy.
- Lilly(LLY) Alzheimer’s Drug Slows Mental Decline, Study Finds. Eli Lilly & Co. (LLY)’s experimental
Alzheimer’s treatment slowed memory loss and cognitive decline
in early-stage patients by about 30 percent, offering the first
evidence that a medication may hamper the course of the ailment,
researchers said.
Wall Street Journal:
CNBC:
Zero Hedge:
Business Insider:
Bespoke:
NewsMax:
Reuters:
- Iran would need 2-4 months to amass bomb material - think tank. Iran would currently need at least
two to four months to produce enough weapons-grade uranium for
one nuclear bomb, and additional time to make the device itself,
a U.S. security institute said on Monday. Estimates of how quickly Iran could enrich its uranium to
the fissile level required for bombs are closely watched as they
may give an indication of how much time its foes believe they
have to prevent it obtaining nuclear weapons, if and when it
decided to do so.
- Turkish president says "worst case" unfolding in Syria. Turkish
President Abdullah Gul said on Monday the "worst-case scenarios" were
now playing out in Syria and Turkey would do everything necessary to
protect itself, as its army
fired back for a sixth day after a shell from Syria flew over the
border. Gul said the violence in Turkey's southern neighbour, where
a revolt against President Bashar al-Assad has evolved into a
civil war that threatens to draw in regional powers, could not
go on indefinitely and Assad's fall was inevitable. "The worst-case scenarios are taking place right now in
Syria ... Our government is in constant consultation with the
Turkish military. Whatever is needed is being done immediately
as you see, and it will continue to be done," Gul said.
- Copper falls to week-low on strong dollar, demand uncertainty.
Telegraph:
Frankfurter Allgemeine Zeitung:
- German
Chancellor Angela Merkel won't make any promises about supporting
additional financial aid for Greece when visiting the country tomorrow,
citing officials.
Nikkei:
- Suzuki
Sept. China Sales Plunge -44.5%. The decline accelerated in mid-Sept.
as anti-Japan protests grew, citing the co. The company still expects
-20.0% y/y declines in coming months.
Style Underperformer:
Sector Underperformer:
- 1) Homebuilders -1.71% 2) Oil Tankers -1.23% 3) Semis -1.13%
Stocks Faling on Unusual Volume:
- OZRK,
AAPL, AMCX, CLMT, BMA, SZYM, BT, AEG, GDOT, EZPW, PRGS, PHK, HPY, WPC,
IOSP, SHF, ACOR, SFUN, NBTB, AZN, JBL, SPH, BJRI, CTXS, IBB, NP, ASR,
XEC, MELI, SRPT and VHC
Stocks With Unusual Put Option Activity:
- 1) CNX 2) ARO 3) DELL 4) DIS 5) KMX
Stocks With Most Negative News Mentions:
- 1) SFY 2) ISIL 3) EMN 4) TGT 5) JCI
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Coal +2.69% 2) Steel +1.90% 3) Education +.90%
Stocks Rising on Unusual Volume:
- MPC, KMX, NFLX, QLIK and QCOR
Stocks With Unusual Call Option Activity:
- 1) MPC 2) SWY 3) QLIK 4) MDRX 5) CNX
Stocks With Most Positive News Mentions:
- 1) SAI 2) STZ 3) NFLX 4) AXP 5) ZNGA
Charts:
Weekend Headlines
Bloomberg:
- Europe Seeks to Contain Spanish Troubles as Finance Chiefs Meet. European
officials will move to
prevent Spain from dragging the single currency into a new round of
convulsions this week as a series of high-level meetings aim to ease the
three-year-old European debt crisis. European finance ministers
meet in Luxembourg today to discuss Spain’s overhaul effort and closer
banking cooperation, while on Oct. 10, Spanish Prime Minister Mariano
Rajoy travels for talks with French President Francois Hollande in
Paris. Germany’s Chancellor Angela Merkel tomorrow makes her first visit
to Greece since the crisis began in 2009. “It feels as if we are in
for a month or so of Spanish trouble,” Erik Nielsen, London-based chief
global economist at UniCredit SpA (UCG), wrote in a note yesterday.
Nielsen cited the risk that Spain will wait too long to request
financial assistance and that a rescue package will be badly designed.
- Merkel Arrival in Athens to Be Met by Anti-Austerity Protesters. Greek
protesters are gearing up for
German Chancellor Angela Merkel’s first visit to Athens since the
financial crisis began with plans for strikes, rallies and a petition
demanding reparations from the Nazi occupation. Greece’s need for bailouts and the German-led conditions
attached to the emergency loans have made Merkel the face of
austerity to Greeks. She has been depicted in the media wearing
jackboots and an SS uniform. While Greek Prime Minister Antonis Samaras called her visit tomorrow a “very positive
development,” opposition leaders intend a show of anger and
frustration after five years of recession.
- Cameron Says U.K. Rich Will Pay More Tax Without Mansion Levy. U.K. Prime Minister David Cameron
said his government will announce additional measures to
increase taxes on the rich, while ruling out a so-called mansion
tax wanted by his Liberal Democrat coalition partners. He said people who
save and buy large houses shouldn’t be hit “every year with a
massive great tax. That’s not going to happen.”
- Huawei, ZTE Provide Opening for China Spying, Report Says.
Huawei Technologies Co. and ZTE Corp. (000063), China’s two largest
phone-equipment makers, provide opportunities for Chinese intelligence
services to tamper with U.S. telecommunications networks for spying,
according to a congressional report to be released today. The House
intelligence committee report says the two companies failed to cooperate
with a yearlong investigation and to adequately explain their U.S.
business interests and relationship with the Chinese government,
according to a draft provided by the panel. “Based on available
classified and unclassified information, Huawei and ZTE cannot be
trusted to be free of foreign state influence and thus pose a security
threat to the United States and to our systems,” says the report, from the
committee’s chairman, Michigan Republican Mike Rogers, and its
top Democrat, Maryland Representative C.A. “Dutch” Ruppersberger.
- Chavez Declared Winner Over Capriles in Venezuelan Election. Venezuelan President Hugo Chavez was declared the winner in his closest election fight since taking
office 14 years ago, overcoming cancer surgeries to extend his
self-declared socialist revolution by six more years. With 90 percent of the votes counted, the 58-year-old former paratrooper
received 54 percent of the votes cast, the national electoral council
said tonight. Henrique Capriles Radonski, the former governor of Miranda
state, won 45 percent, the council said. Pre-election polls showed the
race tightening, with some showing Capriles ahead.
- China Home Prices Rise a 4th Month as Sales Rebound, SouFun Says.
China’s new home prices rose for a
fourth month as a rebound in property sales eased developers’
funding woes, according to SouFun Holdings Ltd. (SFUN) Prices in
September climbed 0.17 percent from August to 8,753 yuan ($1,393) per
square meter (10.76 square feet), the
country’s biggest real estate website owner said in an e-mailed
statement today, based on its survey of 100 cities. The city of
Kunshan in the eastern Jiangsu province had the biggest gain,
with prices rising 2 percent.
- Sun Hung Kai Says H.K. Builders Face China-Led Cost Pressure. Hong
Kong builders face increases of more than 10 percent a year in
construction costs because of competition for workers and materials from
projects in China, according to Sun Hung Kai (16) Properties Ltd., the
world’s biggest developer by value. “We’re seeing double-digit increases every year and we’ll
be seeing this for quite some time,” Victor Lui, deputy
managing director at Hong Kong-based Sun Hung Kai, said in an
interview. “There’re a lot of projects going on in mainland
China and we are competing with them for everything: materials,
workers, even architects, designers and surveyors.”
- Australian Banks Seeing ‘Relentless’ Increase in Costs, ANZ Says. Australian banks are seeing a
“relentless” increase in costs even as they shift their
reliance to deposits from wholesale funding, Australia and New
Zealand Banking Group Ltd. Chief Executive Officer Phil Chronican said. The cost of funding has “gone up and up, although it has
stabilized this year,” Chronican said in an interview on the
Inside Business program on the Australian Broadcasting Corp.
“We’re refinancing this year borrowings that were made three,
four and five years ago at materially lower costs.”
- Japan’s China Row May Spur GDP Fall This Quarter, JPMorgan Says. Japan’s
territorial spat with China may cause the Japanese economy to contract
this quarter and hasten a current account slide as exports decline and
Chinese tourism to Japan drops off, according to a JPMorgan report. The
dispute will knock 0.8 percentage point off Japan’s gross domestic
product in the October-December period, JPMorgan Securities Japan Co.
economists Masaaki Kanno and Masamichi Adachi wrote in an e-mailed note
yesterday. They now estimate
fourth-quarter GDP will contract 0.8 percent from the previous
quarter, compared with a previous estimate of no growth.
- World Bank Sees East Asia Growth Sliding to 11-Year Low on China. The World Bank said policy makers in Asia’s emerging
economies have room to ease monetary and fiscal policies as China’s
slowdown drags the region’s growth to an estimated 11-year low this
year. Growth in developing East Asia, which excludes Japan and
India, will probably ease to 7.2 percent from 8.3 percent in 2011, the
Washington-based lender said in a report today. That is the slowest pace
since 2001, according to World Bank data, and lower than a forecast in
May of 7.6 percent. The International Monetary Fund is set to
revise down its global outlook for this year tomorrow at an annual
meeting in Tokyo where officials will tackle a slowdown triggered by
Europe’s sovereign-debt crisis.
- A 'Flash Crash' Hits India, Markets Wary of Repeat. (video)
- Copper
Rally Is Overdone, Set to Move Lower, INTL FCStone sees copper falling
to around $8,050/t in next four weeks. Steel, iron ore are also
"vulnerable" as steelmills are not cutting back enough output, keeping
the market oversupplied, the co. said.
- Former SEC Watchdog Kotz Violated Ethics Rules, Review Finds. The former internal watchdog for the
U.S. Securities and Exchange Commission violated ethics rules by
overseeing investigations that touched on people with whom he
had “personal relationships,” an outside review found. H. David Kotz, who resigned as the agency’s inspector
general in January amid questions about his tactics and conduct,
shouldn’t have participated in a probe of the SEC’s office re-
organization because he engaged in “extensive” and
“flirtatious” communications with an employee associated with
the project, according to the review.
- Foxconn Labor Disputes Disrupt IPhone Output for 2nd Time. Foxconn Technology Group, the
assembler of Apple Inc.(AAPL) iPhones, had to stop production for the
second time in as many weeks after factory-line workers at one
of its plants protested against increased pressure.
Wall Street Journal:
Business Insider:
Zero Hedge:
CNBC:
- Europe’s Richer Regions Want Out. Catalonia may be the catalyst for a renewed wave of separatism in the
European Union, with Scotland and Flanders not far behind. The great
paradox of the European Union, which is built on the concept of shared
sovereignty, is that it lowers the stakes for regions to push for
independence. While a post-national European Union may be emerging out of the euro
zone crisis, with a drive for more fiscal union and more centralized
control over national budgets and banks, the crisis has accelerated
calls for independence from member countries’ richer regions, angry at
having to finance poorer neighbors.
- Deadly Meningitis Outbreak Increases to 91 Cases. U.S. health officials on Sunday reported an additional 27 cases in a
fungal meningitis outbreak linked to steroid injections that has killed
seven people and now affected 91 in nine states.
New York Times:
Citing U.S. Fears, Arab Allies Limit Syrian Rebel Aid. For months, Saudi Arabia and Qatar have been funneling money and small arms to Syria’s rebels but have refused to provide heavier weapons, like shoulder-fired
missiles, that could allow opposition fighters to bring down government
aircraft, take out armored vehicles and turn the war’s tide. While they have publicly called for arming the rebels, they have held
back, officials in both countries said, in part because they have been
discouraged by the United States, which fears the heavier weapons could
end up in the hands of terrorists. As a result, the rebels have just enough weapons to maintain a
stalemate, the war grinds on and more jihadist militants join the fray
every month.
Financial Times:
-
EU braced for budget fight with UK. Brussels
is bracing itself for a battle with David Cameron as fears grow that
the British prime minister will block a proposed €1tn seven-year
spending plan and push for a two-tier EU budget. Mr Cameron is understood to be interested in Brussel’s longer-term
plan of a separate spending programme for the eurozone, with UK and
European officials considering a compromise that would see the EU budget
split in two – marking a further acceleration towards a divided Europe.
Telegraph:
- IMF to cut growth forecast for UK in gloomy global outlook. The International Monetary Fund is expected to cut its growth forecast for the
UK next week, when it downgrades the outlook for the global economy.
- ECB board member shuts door on Greek pleas for leniency. Greece cannot have more time to repay its debt to the European Central Bank
because it would be illegal and "illogical", board member Joerg
Asmussen has said, as he shut the door on pleas for leniency from the bank.
- Spain's jobless flee to Argentina. Desperate Spaniards are fleeing in their thousands to set up new lives in
Argentina, preferring rampant inflation to the prospect of searching for a
job in a country with the highest unemployment rate in the industrialised
world.
Weslt am Sonntag:
- Greece
may miss its target of reducing debt to 120% of GDP in next eight
years, citing people familiar with Greek talks. Greece faces debt of
140% of GDP in 2020. The German government has ruled out a third rescue
package or cancellation of its share of debt.
- Greece
is sure to exit the euro, Ifo Institute for Economic Research President
Hans-Werner Sinn said. Economic problems to arise if Greece remains in
the euro are "simply not solvable," citing Sinn. A temporary Greek exit
is "better for the Greeks and better for us," he said.
El Pais:
- Spain
to Lend EU560m to Catalonia for Past Due Bills. Spain to make payment
to region on Tuesday, citing people in the Budget Ministry. Cash will be
used by Catalonia to pay down liabilities including EU387m of bills
past due dates to hospitals, schools.
- Canary
Islands Request EU757m From Spain Rescue Fund. Region will use loan to
repay debt, citing Javier Gonzalez, head of the Canary Islands finance
office.
La Figaro:
- The
French government is looking into ways to get companies such as Google
Inc.(GOOG), Microsoft(MSFT) and Apple Inc.(AAPL) to pay more taxes in
France on revenue they make in the country.
Nikkei:
- Japanese
Automakers to Cut Chinese Production. Japan's three largest automakers
plan to cut production to half of normal levels as workers return from
holidays this week. Steps will mean 30,000-40.000 fewer vehicles from
each maker over a month. Cuts expand on reductions made before last
week's holiday. Automakers to monitor anti-Japan protests in China.
- Asahi
Glass Halts Solar Output at Tennessee Plan. Inventory build up of glass
for solar cells leads co. to halt production, lay off half of 120
employees. Inventory at the Tennessee plant is about 4-5 months and co.
wants inventory at 2 months.
Yonhap News Agency:
- N. Korea's trade with China nearly tripled over past 5 years. North Korea's trade with China nearly tripled over the past five years,
South Korean government data showed Sunday, underscoring the isolated
North's growing economic reliance on its major ally. Trade
between North Korea and China stood at US$5.63 billion last year, up 284
percent from $1.98 billion in 2007, Seoul's unification ministry said
in a report to the National Assembly.
Vietnam News:
- Vietnam
Property Projects Delayed by Finance Problems. 900 of 1,108 property
projects in Ho Chi Minh City unfinished due to financial problems,
citing city's construction dept. figures.
Jerusleum Post:
Haaretz:
Weekend Recommendations
Barron's:
- Made positive comments on (BCO), (VIAB) and (JCI).
- Made negative comments on (SHF).
Night Trading
- Asian indices are -1.0% to -.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 129.50 unch.
- Asia Pacific Sovereign CDS Index 109.25 -.75 basis point.
- FTSE-100 futures -.50%.
- S&P 500 futures -.21%.
- NASDAQ 100 futures -.22%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
Upcoming Splits
Other Potential Market Movers
- The
EU Finance Ministers meeting, activation of Europe's ESM, Troika report
on Greece, Germany trade balance and the China HSBC Services PMI could
also impact trading today.
BOTTOM LINE: Asian
indices are lower, weighed down by technology and financial
shares in the region. I expect US stocks to open modestly lower and
to maintain losses into the afternoon. The Portfolio is 25% net
long heading into the week.
U.S. Week Ahead by MarketWatch (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.
BOTTOM LINE:
I expect US stocks to finish the week modestly lower on rising
global growth fears, Eurozone debt angst, US "fiscal cliff" concerns,
Mid-east unrest, rising US election uncertainty, high food/energy
prices, more shorting and earnings worries. My intermediate-term
trading indicators are giving neutral signals and the Portfolio is
25% net long heading into the week.
