Bloomberg:
- Banks From Emerging Markets Threatened as Credit Boom Diminishes. The world’s largest emerging markets recovered quickly from the 2008 financial crisis because consumers and companies went on a borrowing binge. Now that credit spree is coming back to haunt banks in those countries. As economies cool, delinquent loans are rising from Turkey to South Africa. India is injecting money into state-run lenders facing a surge in soured debt, while Chinese banks have been told to increase provisions for the same reason. An outflow of funds from emerging markets earlier this year, sparked by speculation that the Federal Reserve would soon begin tapering its easy-credit policy, forced up interest rates in those countries and pushed down currencies. While the flight of capital halted after the Fed decided in September to continue its asset purchases, a reversal could threaten economies and banks in developing nations. “Credit growth in emerging markets has been phenomenal since 2008 because risk has been underpriced once again, thanks to zero percent interest rates in the developed world,” said Satyajit Das, author of a half dozen books on financial risk who is based in Sydney. “Many borrowers will struggle to repay the debt, and the money flows out of these markets will make the problems worse. We’re ripe for a new emerging-market crisis.” Even China, which doesn’t rely on inward cash flows to finance its economic expansion, faces a choice of restructuring its indebted and inefficient state-owned industries or allowing inflation to take hold, according to Das and other analysts. Like their Western counterparts, emerging-market governments probably will rescue failing banks if credit deteriorates, adding to those countries’ economic woes, Das said.
- Central Banks Risk Asset Bubbles in Battle With Deflation Danger. Central banks are finding it’s easier to push up stock and home prices than it is to prevent inflation from falling short of their targets. While declining costs for everything from gasoline to coffee can be good news for consumers, disinflation makes it harder for borrowers to pay off debts and businesses to boost profits. The greater danger comes when disinflation turns into deflation, which leads households to delay purchases in anticipation of even lower prices and companies to postpone investment and hiring as demand for their products dries up. “There is definitely a whiff of disinflation again taking hold globally,” Robert Sinche, global strategist at Pierpont Securities Holdings LLC in Stamford, Connecticut, said Nov. 5 on Bloomberg Radio’s “Bloomberg Surveillance.”
- Bank Indonesia Surprises on Rates in Step to Boost Rupiah Appeal. Indonesian raised interest rates to the highest level since 2009 to sustain overseas demand for the currency even as it risks hurting growth in Southeast Asia’s biggest economy.
- Rupiah Weakens as Rate Rise Signals No Current-Account Relief. Indonesia’s rupiah and stocks fell for a fourth day after yesterday’s surprise interest-rate rise fueled speculation current-account data today will show little improvement from the second quarter’s record deficit. The currency weakened 0.7 percent to 11,673 per dollar as of 9:36 a.m. in Jakarta, according to prices from local banks. That’s just shy of the four-year low of 11,680 on Sept. 30. The rupiah, Asia’s worst performing currency this year, has tumbled 6.4 percent since trading at a seven-week high on Oct. 25. The Jakarta Composite index of shares fell 1.1 percent, taking its decline this week to 3.2 percent.
- China’s Stocks Drop as Top Party Meeting Disappoints Investors. China’s stocks slumped for the first time in three days after a top-level Communist Party meeting disappointed investors looking for details on policy shifts to combat a slowdown in the world’s second-largest economy. China Petroleum & Chemical Corp. and China Shenhua Energy Co. led declines for energy producers. Ping An Bank Co. and China Minsheng Banking Corp. slid more than 1.5 percent. Anhui Conch Cement Co. rose 1.8 percent after its parent increased its stake. Aerosun Corp. and Beijing Aerospace Changfeng Co. both jumped 10 percent after the government said it will create a committee to improve national security strategy. The Shanghai Composite Index (SHCOMP) dropped 0.8 percent to 2,109.68 at the 11:30 a.m. local-time break, while the Hang Seng China Enterprises Index (HSCEI) of Hong Kong-traded Chinese shares slid 2 percent.
- Asia Stocks Drop on China Plenum Disappointment, Fed Bets. Asian stocks fell after China’s leaders failed to outline steps to curb state dominance of the economy and amid bets the Federal Reserve may start reducing U.S. stimulus next month. Banks slumped in Hong Kong after a communique at the end of China’s four-day plenum made scant mention of financial reforms. Tencent Holdings Ltd., China’s biggest Internet company, fell 2.7 percent after a news report quoted its chairman saying the company’s valuation is “scarily” high. Noble Group Ltd. lost 5.1 percent in Singapore after Asia’s largest commodity trader by sales said profit slumped. Pioneer Corp. surged 14 percent after the Japanese maker of car stereos reported an unexpected first-half operating profit. The MSCI Asia Pacific Index dropped 0.6 percent to 139.01 as of 12:16 p.m. in Tokyo, heading for its first decline in three days. All 10 industry groups on the measure fell.
- Rebar Swings as Investors Weigh Policy Shift, Weak Winter Demand. Steel reinforcement-bar futures in Shanghai swung between gains and losses as investors weighed positive long-term policy shifts in China against the short-term outlook for weaker demand in winter. Rebar for May delivery, the most-active contract on the Shanghai Futures Exchange, was 0.2 percent lower at 3,663 yuan ($601) a metric ton at 10:19 a.m. local time after earlier rising as much as 0.2 percent and falling 0.5 percent.
- Netanyahu Says Iran Stands to Gain Billions in Relief. Israeli Prime Minister Benjamin Netanyahu said Iran would reap billions of dollars under a deal to ease economic sanctions that negotiators almost reached at nuclear talks in Geneva last week. “It gives Iran a tremendous break, a hole -- not a tiny hole, but a big hole -- in sanctions,” Netanyahu said late yesterday in a speech to the Bloomberg Fuel Choices Summit in Tel Aviv. It would gain “several billion dollars’ worth that is augmented to much more.” Netanyahu has urged President Barack Obama and other world leaders to reject any deal with Iran that doesn’t dismantle its nuclear program, and opposed the accord that was offered to Iran by world powers in Geneva last week.
- Saudis Join China, Russia as UN Human Rights Council Members. China, Russia and Saudi Arabia were elected today to the United Nations Human Rights Council over protests by independent rights groups that the countries aren’t suited to serve on the world rights watchdog. The three countries have multiple outstanding requests from independent UN monitors to visit and investigate alleged rights abuses, according to New York-based Human Rights Watch. China and Russia each won 176 of 192 votes, exceeding France’s 174 votes and the U.K.’s 171. Saudi Arabia received 140 votes. The minimum required was 97. “We regret that some countries elected to the Human Rights Council have failed to show their commitment to the promotion and protection of human rights,” U.S. State Department spokeswoman Jen Psaki told reporters today.
- Gross Raises Government Debt Holdings in Flagship Fund. Pacific Investment Management Co.’s Bill Gross raised the percentage of Treasuries and other U.S. government-related debt in his flagship fund in October after the Federal Reserve unexpectedly maintained its bond purchases. The proportion of U.S. government and related debt in the $248 billion Total Return Fund climbed to 37 percent from 35 percent the prior month, data on Pimco’s website show. Mortgage debt fell to 34 percent from 35 percent in September. The Newport Beach, California-based company doesn’t comment directly on monthly changes in holdings or specific types of securities within a market sector.
- Obama to Nominate Massad as CFTC Chairman Gensler Successor. Timothy Massad, the Treasury Department official responsible for overseeing the U.S. rescue of banks and automakers after the credit crisis, will be nominated to head the country’s top derivatives regulator. President Barack Obama chose Massad, 57, to succeed Gary Gensler as chairman of the Commodity Futures Trading Commission, an agency with expansive new authority under the 2010 Dodd-Frank Act. His nomination requires Senate confirmation.
- China Deepens Xi's Powers With New Security Plan. China's Communist Party plans to establish a state security committee that has the potential to cement President Xi Jinping's hold on the military, domestic security and foreign policy and help establish him as the country's most individually powerful leader since Deng Xiaoping. The move is another step toward granting Mr. Xi a level of authority that eluded his two predecessors and reverses the trend toward a collective leadership since Deng, who launched China's market-oriented reforms in 1978 and commanded respect across the military and the government.
- Panel Unveils Shake-up in Strategy to Cut Heart Risk. Long-standing strategy jettisoned under new guidelines. The current strategy of reducing a person's heart-attack risk by lowering cholesterol to specific targets is being jettisoned under new clinical guidelines unveiled Tuesday that mark the biggest shift in cardiovascular-disease prevention in nearly three decades. The change could more than double the number of Americans who qualify for treatment with the cholesterol-cutting drugs known as statins.
- Finding Out Where Janet Yellen Stands by Kevin Warsh. Some subjects worth exploring at her confirmation hearing on Thursday.
- Small Business and ObamaCare. A new survey shows that employers will drop coverage and cut hours. One of President Obama's proudest boasts about the Affordable Care Act is that it helps small business. The White House website says the health law "makes it easier for businesses to find better coverage options" and "stops insurance companies from taking advantage of you, giving the consumer and business owner more control and making health-care coverage more affordable." Small businesses aren't buying it.
- Western-raised jihadists pouring into Syria could threaten US in future. Most of the more than 1,000 jihadists who have poured into Syria to fight alongside Al Qaeda carry passports from North America and Europe, raising the possibility that they could easily bring terror back to the west, according to a key lawmaker who receives regular briefings on the issue. The prospect is especially chilling given that Al Qaeda-linked fighters in Syria seem determined to use the embattled nation as a haven from which to launch future attacks beyond the region, according to Rep. Mike Rogers, R-Mich., who chairs the House Intelligence Committee.
- China non-performing loan ratio rises. Chinese banks' non-performing loan ratio rose slightly to 0.97% at the end of September from 0.96% a quarter earlier, the China Bank Regulatory Commission said on Wednesday. Non-performing loans totalled 563.6 billion yuan ($92.5 billion) at the end of third quarter, compared with CNY539.5 billion at the end of June, according to the banking regulator.
- Citadel's Ken Griffin: I would break up the big banks. (video) Ken Griffin, one of America's best-known hedge fund investors, has a radical idea: Break up big banks, and restore competition and transparency to the financial services industry. The head of Citadel Capital came out swinging at his own industry in a rare public interview at The New York Times' DealBook Conference on Tuesday. America's banks have become not just too big to fail, but too big to manage, Griffin told Andrew Ross Sorkin. The first wave of the wand would be to separate securities trading businesses from banking businesses, reducing the kind of systemic risk that led to the financial crisis.
Business Insider:
Washington Post:
- Troubled HealthCare.gov unlikely to work fully by end of November. Software problems with the federal online health insurance marketplace, especially in handling high volumes, are proving so stubborn that the system is unlikely to work fully by the end of the month as the White House has promised, according to an official with knowledge of the project.
- Yum(YUM) China sales down 5 percent in October. KFC and Pizza Hut parent Yum Brands Inc on Tuesday said October sales at established restaurants in China fell 5 percent, as it fights to recover from a chicken safety scare and bird flu outbreak in its top market.
- Brazil stocks drop as state-run firms sink. Brazilian stocks slipped for the third session in four on Tuesday, due mostly to a fall in shares of state-run companies Banco do Brasil and Petrobras. Mexico's IPC index edged lower, while Chile's bourse rose 0.11 percent. Brazil's benchmark Bovespa stock index fell 1.56 percent to 51,804.33, its lowest level since early September.
- Tesla(TSLA) car fires 'definitely' will not lead to recall: CEO. Tesla Motors Inc (TSLA.O) will not recall its Model S electric car despite three vehicle fires that raised safety questions and hurt the automaker's stock price, CEO Elon Musk said on Tuesday. "There's definitely not going to be a recall," Musk said during a New York Times DealBook conference televised on CNBC. "There's no reason for a recall, I believe."
Obama takes on coal with first-ever carbon limits
Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.99
Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.99
Financial Times:
- Healthcare companies say new ‘Obamacare’ fees should be dropped. Healthcare companies, including big US hospital chains and insurance groups, are seeking to overturn new fees which would cost them hundreds of billions of dollars amid concerns over the troubled rollout of “Obamacare”. The move has won some bipartisan support in the US Congress.
- Biggest banks face forex probe questions. The global probe into foreign exchange manipulation has widened to include 15 of the world’s biggest banks and some of the most actively traded currencies, as lenders scramble to help authorities in exchange for leniency.
Ming Pao:
Evening Recommendations- Tencent Chairman Sees Co. Valuation as 'Scarily' High. Tencent valuation will fall if co. doesn't keep up with trends and carefully watch its technology and internet business, citing Chairman Ma Huateng at a co. event.
- None of note
- Asian equity indices are -1.25% to -.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 139.0 +2.0 basis points.
- Asia Pacific Sovereign CDS Index 111.0 +1.25 basis points.
- FTSE-100 futures -.48%.
- S&P 500 futures -.34%.
- NASDAQ 100 futures -.44%.
Earnings of Note
Company/Estimate
- (M)/.39
- (NTAP)/.63
- (CSCO)/.50
- (RMAX)/.33
- (DDS)/1.05
- (XONE)/.01
2:00 am EST
- The Monthly Budget Deficit for October is estimated at -$102.0B versus -$120.0B in September.
- None of note
- The Fed's Bernanke speaking, Fed's Pianalto speaking, Fed's Lockhart speaking, 10Y T-Note auction, Japan GDP, BoE inflation report, weekly MBA mortgage applications report, Morgan Stanley Chemicals/Ag Conference, Goldman Sachs Industrials Conference and the JP Morgan Services Conference could also impact trading today.