Bloomberg:
- Gulf Widens Between Fed Forecasts and Signal From Futures Market (graph) The bond market’s doubts about the Federal Reserve’s projections for interest rates are only growing. After Friday’s weaker-than-forecast U.S. September jobs report, traders are betting the Fed will wait until at least March before lifting its benchmark rate from near zero. What’s more, they don’t fully price in another hike until early 2017. That contrasts with the central bank’s forecast, published just over two weeks ago, that the target would reach 1.375 percent by the end of 2016.
- Credit Investors Bolt Party as Economy Fears Trump Low Rates. Debt investors are a nervous lot these days, and new signs that global turmoil is weighing on the U.S. economic outlook are only adding to their angst. Measures of corporate credit risk spiked immediately after a Labor Department report showed that payrolls rose less than projected last month, wages stagnated and the jobless rate was unchanged. Investors are now demanding more than they have in three years to own junk bonds, which are on track to cap off their worst week this year. Frustration is growing that even after seven years of easy-money policies, economic growth remains sluggish. While the Federal Reserve is signaling that it’s in no hurry to normalize interest rates, investors are increasingly worried about what the data will mean for earnings at companies that have sold $9.3 trillion of corporate bonds since the start of 2009. “At some point the financial markets say, ‘Enough about monetary stimulus, we need real growth,’” said Jack McIntyre, who helps oversee $54 billion at Brandywine Global Investment Management LLC in Philadelphia. “Bad things happen in a low-growth environment. There’s more risk, more potholes.”
- Exxon(XOM), Chevron(CVX) Outlooks Revised Lower by S&P in Oil Slump. Exxon Mobil Corp. and Chevron Corp. were among several U.S. oil and natural gas producers that had their outlooks or ratings cut by Standard & Poor’s as the industry suffers from weak crude prices, hurting their cash flow and liquidity. S&P cut ratings for Chesapeake Energy Corp.(CHK), Denbury Resources(DNR) and Whiting Petroleum Corp.(WLL), while giving Exxon and Chevron "negative" outlooks, the ratings agency said today in a statement. Exxon “has substantially more debt than during the last cyclical commodity price trough in 2009, while upstream production and costs are at similar levels,” S&P analysts Thomas Watters and Carin Dehne-Kiley said. “Most rating actions reflect lower credit-protection measures, negative cash flow, and uncertainty about liquidity over the next 12 months,” S&P said in the statement.
- Oil Bulls Lose Faith in Recovery as Russia Adds to Global Glut. Hedge funds trimmed bullish oil bets for the first time in six weeks, losing faith in a swift recovery as Russia boosted output to the highest since the Soviet Union collapsed. Speculators reduced their net-long position in West Texas Intermediate crude by 9.1 percent in the week ended Sept. 29, according to data from the Commodity Futures Trading Commission. Longs dropped from a 12-week high while shorts increased. U.S. crude output is down 514,000 barrels a day from a four-decade high reached in June, Energy Information Administration data show. The number of rigs targeting oil in the U.S. dropped to a five year low, Baker Hughes Inc. said Oct. 2. WTI traded in the tightest range since June last month as China’s slowing economy and the highest Russian output in two decades signaled the global glut will linger. "The U.S. producers are the only ones doing their part to reduce the global glut," John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by phone. "Other countries, such as Russia, are pumping at full tilt. The cutbacks by shale producers here aren’t going to have much impact, especially given the slowing global economy."
- Oil Bust Hits the Sand Industry. (video)
- Cameron Adds to Criticism of Russian Airstrikes in Syria. Moscow’s intervention is helping the ‘butcher’ President Assad, says U.K. Prime Minister. U.K. Prime Minister David Cameron added his voice on Saturday to criticism of Russia’s military action in Syria, as Russian warplanes continued to carry out airstrikes in the war-torn country.
- Iran Expands Role in Syria in Conjunction With Russia’s Airstrikes. Decision said to have been made to add fighters through local and foreign proxies. Iran is expanding its already sizable role in Syria’s multisided war in the wake of Russia’s airstrikes, despite the risk of antagonizing the U.S. and its Persian Gulf allies who want to push aside President Bashar al-Assad.
- The Big Jobs Miss. The hiring slowdown has now stretched into three months. The labor market is supposed to be the strong point of this underwhelming U.S. economic recovery, so Friday’s weak jobs report for September came as a jolt to investors and perhaps to the Federal Reserve. The question is whether this is another slow patch of the kind we’ve seen so often during this expansion, or a signal of something worse.
Barron's:
- Had bullish comments on (THC), (RL) and (FLWS).
- Had bearish comments on (TSRA).
MarketWatch.com:
- Oil’s slump played havoc in U.S. junk-bond market in September. One measure of stress is at five-year high, and default rate is rising.
Fox News:
- US officials investigate airstrike in Afghanistan that killed at least 19 at Doctors Without Borders hospital. (video) U.S. officials have launched an investigation after 12 local staff members of Doctors Without Borders and at least seven patients, three of them children, were killed after an explosion near their hospital in the northern Afghan city of Kunduz that may have been caused by a nearby airstrike. In a statement, the international charity said the "sustained bombing" took place Saturday at 2:10 a.m local time. Afghan forces backed by U.S. airstrikes have been fighting to dislodge Taliban insurgents who overran Kunduz on Monday. At least 37 other people were seriously injured--19 staff members and 18 patients and caretakers, the organization said. Dozens were missing, raising concerns the death toll could rise. A senior defense official told Fox News on Saturday that the Taliban have been in control of the area around the hospital since Monday, guarding the building and drawing U.S. special operations forces into a firefight in the area. U.S. forces called in the airstrike because they were under fire and needed cover, the official said. Taliban fighters were among those being treated at the hospital, a defense official told Fox News.
Zero Hedge:
- The Largest US Foreign Policy Blunder Since Vietnam Is Complete: Iran Readies Massive Syrian Ground Invasion. It would be difficult to overstate the significance of what appears to be going on here. This is nothing short of a Middle Eastern coup, as Iran looks to displace Saudi Arabia as the regional power broker and as Russia looks to supplant the US as the superpower puppet master.
- US Foreign Policy Explained. (cartoon)
Business Insider:
- GUNDLACH: 'There's going to be another wave down'. DoubleLine Capital cofounder Jeffrey Gundlach, widely followed for his investment calls, warned after a weak nonfarm payrolls report Friday that the US equity market as well as other risk markets, including high-yield "junk" bonds, face another round of selling pressure. "The reason the markets aren't going lower is people are holding and hoping," Gundlach told Reuters in a telephone interview. "The market bottoms out when people are selling and sold out — not when they are holding and hoping. I don't think you've seen real selling in risk assets broadly. Markets need buying to go up and they need volume to go up. They can fall just on gravity."
Reuters:
- Global commodity price slump sends ripples around the world. In the boom times when the price of gold was soaring, Ebenezer Sam-Onuawonto had a dream job and a dollar salary many times the national average in this mining town in southwestern Ghana. When the price fell, he lost his job as human resources chief at a mining company that closed its local operations and could only find work in a construction firm in another city, far from the house he built in Tarkwa for his wife and six children. "I hardly see my kids now," said Sam-Onuawonto, his life changed as a result of a slump in global commodity prices whose impact is being felt around the world on currencies, companies, consumers, national economies and - potentially - governments.
- U.S. a long way from 'macroprudential' safeguards -Fed's Dudley. The United States is a long way from putting in place rules that will protect the financial system and the economy from broad risks, due in part to regulatory structure and to the difficulties of predicting the next crisis, a top Federal Reserve official said on Saturday.
Telegraph:
- Central banks and credit bubbles are to blame for the death of the Glencore dream. Glencore rode a wave of cheap central bank money, and with the Chinese slowdown, is now paying the price.
