Bloomberg:
- IMF Warns of Growing Emerging-Market Risks as Fed Nears Liftoff. The IMF warned officials to protect their financial systems from possible instability as the U.S. Federal Reserve prepares to raise interest rates, saying shocks or policy missteps risk derailing the global economy and triggering equity market sell-offs. High debt levels at banks and other companies have left developing economies susceptible to financial stress and capital outflows, just as the Fed prepares to raise interest rates for the first time since 2006, the International Monetary Fund said Wednesday in its Global Financial Stability Report. "Emerging markets face substantial challenges in adjusting to the new global market realities from a position of higher vulnerability," the fund said, describing the preconditions for a Fed rate rise as “nearly in place.”
- Man Who Called China's Boom and Bust Says Use This Rally to Sell. Volatility in the world’s wildest stock market is finally receding. If that’s one argument for buying Chinese shares, Bocom International Holdings Co.’s Hao Hong has a long list of reasons why you shouldn’t. For one, the Shanghai Composite Index’s valuation is above its long-term average, even after a 41 percent drop in the benchmark gauge since mid-June. Government efforts to bolster the yuan will drain market liquidity, Hong says, and plummeting equity volumes suggest investors lack faith in a rebound. He rejects the notion that targeted economic stimulus is enough to revive the bull market. After distinguishing himself as one of the few forecasters to predict both the start and peak of China’s equity boom, Hong is once again breaking ranks with peers as mainland markets resume trading after a week-long holiday. He says the Shanghai Composite needs to fall 18 percent to 2,500 before it’s cheap enough to buy, while the average estimate from eight other strategists compiled by Bloomberg implies a 12 percent rally by year-end.
- Summers: Should Be Less Confident on China Numbers. (video)
- China Has No Good Plan to Deal With Its Achilles Heel. The SOElephant in the room. "What's in your head, in your head? Zombie, zombie, zombie," the Cranberries once crooned. A similar question might be asked of Chinese policy makers. Beijing has yet to put together a credible response as to what should be done with zombie companies, the huge swath of unprofitable state-owned enterprises surviving on the good will of the Chinese government. Until it does, private companies in the world's second-largest economy will continue to fight an uphill battle for growth, and China's reform efforts will share a key characteristic with the mythical creature in question: not dead, but not really alive. With China's fifth plenum just around the corner, we might get some details on the subject soon. Early signs suggest that the manner in which China's government plans to deal with what many economists judge to be its overarching economic impediment do not offer much reason to assume that policymakers' resolve for reforms has remained steadfast in the face of financial market volatility.
- Best Forecasters of World's Worst Currency See More Brazil Pain. Brazil’s real is the worst-performing major currency this year. Ask the top-ranked forecasters and they’ll say it’s set for more losses. The three most accurate currency analysts see the real trading at an average of 4.1 per dollar by year-end, data compiled by Bloomberg show. To get there, the real would have to slide another 6 percent, adding to its 31 percent drop this year.
- Brazil's September Inflation Accelerates More Than Forecast. Brazil’s consumer prices in September rose more than economists forecast, as traders wager the central bank won’t be able to avoid raising borrowing costs again to tame above-target inflation. Monthly inflation as measured by the benchmark IPCA index accelerated to 0.54 percent from 0.22 percent in August, the national statistics agency said in Rio de Janeiro. That was faster than the median 0.52 percent estimate from 40 economists surveyed by Bloomberg. Inflation in the 12 months through September slowed to 9.49 percent from 9.53 percent a month earlier.
- German Industrial Output Unexpectedly Falls as Risks Emerge. German industrial production unexpectedly declined in August, signaling that Europe’s largest economy is vulnerable to risks including weaker growth in emerging markets. Output, adjusted for seasonal swings and inflation, fell 1.2 percent in August after a revised increase of 1.2 percent in July, data from the Economy Ministry in Berlin showed on Wednesday. The reading, which tends to be volatile, compares with a median estimate for a 0.2 percent gain in a Bloomberg survey of economists. In Spain, industrial production slumped 1.4 percent, marking the biggest decline in more than two years.
- Banks' Glencore Exposure Is a $100 Billion `Gorilla,' BofA Says. Global financial firms’ estimated $100 billion or more exposure to Glencore Plc may draw more scrutiny as regulatory stress tests approach after the commodity giant’s stock plunge this year, according to Bank of America Corp. Bank shareholders and regulators may be concerned that Glencore’s debt and trade finance deals, of which a “significant majority” are unsecured, will reveal higher-than-expected risk and require more capital once the lenders are put through U.S. and U.K. stress tests, BofA analysts said Wednesday. Adding an estimated $50 billion of committed lines to the company’s own reported gross debt, the analysts say financial firms’ exposure may be three times larger than Glencore’s reported adjusted net debt of less than $30 billion.
- The Strong U.S. Dollar’s Impact on Earnings. (video)
- Europe Stock Rally Fizzles in Final Hour as Oil Shares Pare Gain. A rally in European stocks ran out of steam after data showing an increase in U.S. crude stockpiles trimmed an intraday advance in oil producers. While a surge in energy shares propped up the Stoxx Europe 600 Index for most of the day, the broader benchmark gave up almost all of its gains in the final hour of trading as advances in Total SA and Royal Dutch Shell Plc diminished. The Stoxx 600 rose 0.1 percent at the close of trading, after climbing as much as 1.2 percent. Health-care shares fell the most among Stoxx 600 groups today.
- Oil Drillers Hunker Down for More Pain One Year Into Bear Market. A year after oil sank into a bear market, the industry is still hunkering down for a long period of low prices, with Europe’s biggest producer seeing only the first glimpses of a recovery. In the past five months, U.S. production sank by 590,000 barrels a day, or more than 6 percent. The bad news: Drillers are cutting costs with a speed and brutality not seen in decades, enabling many oil producers to maintain output even as prices remain low. Goldman Sachs Group Inc. sees crude falling a further $10 a barrel as storage tanks fill up in the coming months. Royal Dutch Shell Plc is planning for a long stretch of low prices, Chief Executive Officer Ben Van Beurden said at the Oil & Money conference in London. While he sees “the first mixed signs for recovery,” the resilience of the U.S. shale industry and ample stockpiles suggest it’ll take more time to rebalance demand and supply, the CEO said.
- Bond Traders Win Over Economists as Fed Calls Pushed Out to 2016. When it comes to timing the Federal Reserve’s first interest-rate increase since 2006, economists are beginning to see things the way bond traders do. Deutsche Bank AG and BNP Paribas SA have pushed back their forecasts for the policy-rate move until March, matching levels projected by interest-rate swaps. Treasuries have returned 2.2 percent since midyear amid a slowdown in the economy and inflation. The Fed has kept its target for the benchmark federal funds rate near zero since 2008.
- Monsanto(MON) to Cut 12% of Workforce as It Forecasts Profit Drop. Monsanto Co. said it will eliminate 2,600 jobs as part of a cost-savings plan, joining a growing list of major corporations struggling to contain the damage from the decline in world commodities prices. The St. Louis-based agricultural giant announced the reductions -- the equivalent of 12 percent of its workforce -- as it reported a loss of 19 cents a share in the fiscal fourth quarter and warned profit would remain weak through 2016. “It seems surprising that they are still confident of reaching the 2019 goal given the environment they are facing for 2016,” Chris Shaw, a New York-based analyst at Monness Crespi Hardt & Co. who rates the shares neutral, said in a telephone interview.
- GoPro(GPRO) Tumbles to Low Since IPO After Morgan Stanley Cuts Target.
Zero Hedge:
- As A Shocking $100 Billion In Glencore Debt Emerges, The Next Lehman Has Arrived.
- Total Collapse In Interest For Oil Assets: Brazil Oil Auction Is Near Complete Failure.
- Faith In Central Banks Dwindles.
- Mortgage Applications Soar 25% (Ahead Of Regulatory Regime Change). (graph)
- Is The Market Being Deceived About The Pace Of Capital Outflows From China?
- Crude Plunges After Bigger-Than-Expected Inventory Build & Production Surge. (graph)
- When Buybacks Fail... (graph)
- What Happens To Our Economy As Millions Of People Lose The Habits Of Hard Work?
- Technically Speaking: The Real Correction Is Still Coming. (graph)
CNN:
- Clinton dismisses reinstating Glass-Steagall. Hillary Clinton on Tuesday dismissed the idea of reinstating a Depression-era banking law that has found champions in two of her Democratic opponents, setting up what will likely be a flashpoint in next week's Democratic primary debate. Asked by a voter in Iowa about reinstating the Glass-Steagall Act, a law that separated commercial and investment banks until its repeal under President Bill Clinton, Hillary Clinton said that her Wall Street plan -- which will be unveiled next week -- would be "more comprehensive" than reinstating the law. "The big banks are not the only thing we have to worry about," Clinton said at the RiverCenter here. "I've studied this real closely and what I am proposing is we go after the risk, and if they are too big to manage, that is a risk and they should not continue. If they are so big that they are causing disruptions on the marketplace, that's a risk."
AP:
- Syrian rebels face a new reality amid Russian air campaign. The U.S.-backed rebel group Tajammu Alezzah has been fighting the Syrian military outside the city of Hama for months, but a new player has joined the fray: Russian warplanes, which have repeatedly hit their front-line positions, followed by airstrikes from government planes. The Russian airstrikes, more powerful than those by the Syrian military, have hit along several key fronts, even attacking rebel bases along the border with Turkey. That's an area the opposition had considered to be relatively safe because Syria's air force has avoided it. Many warn that the Russian intervention will only strengthen extremists like the Islamic State and al-Qaida's branch in Syria by rallying people to their side, while the already beleaguered moderate forces are weakened further. An Islamic State operative denied there were any Russian hits on his group's locations. "We benefit from this war and these (rival) coalitions,' he said in a conversation via Skype, speaking on condition of anonymity because he is not authorized to talk on the group's behalf.
Telegraph:
- $3 trillion corporate credit crunch looms as debtors face day of reckoning, says IMF. A poisonous "triad" of global risks is pushing the world to the brink of a new financial crisis, says stark IMF report.