Today's Headlines

Bloomberg:

• Oil prices may rise above $100 a barrel within the next year in the event of a second round of quantitative easing, or QE-2, Nomura International said.
• Manufacturing Growth in New York Area Tops Forecasts. Manufacturing in the New York region expanded in October at a faster pace than anticipated, signaling factories will keep driving the recovery in the world’s largest economy. The Federal Reserve Bank of New York’s general economic index rose to 15.7, the highest level in four months and more than twice the median forecast of economists surveyed by Bloomberg News. The Empire State gauge of new factory orders jumped to 12.9 this month from 4.3 in the prior month. A measure of shipments rose to 19.4 from minus 0.3. The index of inventories fell to minus 11.7, the lowest level since January, from 1.5. The employment measure increased to 21.7, from 14.9. Today’s report showed an index of prices paid climbed to 30 from 22.4, while prices received increased to 8.3 from 1.5. Factory executives in the New York Fed’s district were more optimistic about the future. The gauge measuring the outlook six months from now gained to 40 from 31.3.
• U.S. Michigan Consumer Sentiment Index Unexpectedly Declined in October. Confidence among U.S. consumers unexpectedly declined in October, with Americans more pessimistic about current economic conditions. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased to 67.9, the lowest since July, from 68.2 in September. Economists estimated an October reading of 68.9, according to the median forecast in a Bloomberg News survey. “What we’re seeing in the current conditions reading is concern over the stubbornly high unemployment rate and in the expectations reading, the hope that maybe the situation will improve after the election,” said Christopher Low, chief economist at FTN Financial in New York. Consumer expectations for six months from now, which more closely projects the direction of consumer spending, rose to 64.6 from 60.9, which was the lowest since March 2009, today’s report showed. The survey’s measure of current conditions, which reflects Americans’ perceptions of their financial situation and whether it is a good time to buy big-ticket items like cars, dropped to 73, the lowest since November, from 79.6 in the previous month. Consumers in today’s survey said they expect an inflation rate of 2.6 percent over the next 12 months, compared with 2.2 percent projected in September.
• Retail Sales in U.S. Climbed More Than Forecast. Retail sales in the U.S. climbed more than forecast in September, easing concern that unemployment stuck near a 26-year high will bring the recovery to a halt. Purchases rose 0.6 percent following a 0.7 percent gain in August that was larger than previously estimated, according to Commerce Department data issued today in Washington.
• GE(GE) Falls as Sales Miss Estimate on Equipment, Finance. General Electric Co. posted its second straight quarter of profit growth, driven by a rebound at its finance unit and improvement in health care, while sales declined on lower equipment shipments.
• ECB's Stark Says Purchases of Government Bonds Will Continue. European Central Bank Chief Economist Juergen Stark said that the bank will keep buying government bonds “as long as it’s necessary,” according to Germany’s Handelsblatt newspaper. He also warned that “individual banks or group of banks” shouldn’t rely too much on the ECB in refinancing their funding needs, Stark told the newspaper in an interview, according to a faxed release today.
• Ackman Makes Long Bet on Property Reversal With Howard Hughes. William Ackman is about to take a bet on two of the hardest-hit sectors of the economy: housing and commercial real estate development. Ackman, who runs hedge fund Pershing Square Capital Management LP, is one of the lead investors in a new company that Chicago-based General Growth Properties Inc. is spinning off as part of its bankruptcy reorganization. He also will be chairman of the new firm, a money-losing collection of partially built malls and housing developments.
• Chart of the Day: Fed, Japan Treasury Holdings Set to Surpass China. The Federal Reserve and Japanese investors are poised to pass China and become America’s largest creditors following efforts from U.S. policy makers and the Bank of Japan to stimulate growth.
• Kohn Sees Better Growth in 2011, Headwinds 'Abating'. Former Federal Reserve Vice Chairman Donald Kohn said impediments to economic growth are fading and the recovery should quicken next year. “A number of those headwinds are abating,” Kohn said today at a meeting of the Urban Land Institute in Washington. “We should see households spending” an increasing part of “their income instead of a decreasing part.”
• U.S. Posts Second-Largest Annual Budget Deficit on Record. The U.S. government posted its second straight annual budget deficit in excess of $1 trillion as lingering unemployment constrained tax revenue. The shortfall totaled $1.294 trillion in the fiscal year ended Sept. 30, second only to the $1.416 trillion deficit in 2009, the Treasury Department said today in Washington.

Wall Street Journal:

• Countrywide Co-Founder Settles With SEC. Former Countrywide Financial Corp. Chief Executive Angelo Mozilo agreed to pay $67.5 million in financial penalties to settle the Securities and Exchange Commission's high-profile civil fraud suit against him.

Bloomberg Businessweek:

• Citigroup(C), JPMorgan(JPM) 'Well Positioned' in Mortgages, Goldman(GS) Says. Citigroup Inc. and JPMorgan Chase & Co. are “well positioned” to manage through mortgage-related problems such as so-called put-backs from Fannie Mae, Freddie Mac and private investors, Goldman Sachs Group Inc. said. The total cost to the banking industry of having to buy back faulty mortgages from Fannie Mae, Freddie Mac and other government-sponsored entities could be between $29 billion and $44 billion, analysts led by Richard Ramsden in New York wrote in a note to investors today. The cost from private-label mortgage-backed securities put-backs could reach $34 billion, the analysts estimated.
• Bank of America(BAC) Says Added Foreclosure Costs 'Grossly Distorted'. Bank of America Corp.’s head of home lending said the added costs caused by delays in foreclosures have been “grossly distorted.” Reviews of foreclosures will delay fewer than 30,000 sales, said Barbara Desoer, president of Bank of America’s home lending and insurance unit. The Charlotte, North Carolina-based lender will rework 102,000 pending foreclosures in 23 states and stands by the accuracy of its procedures, she said.

Barron's:

• Apple(AAPL): Hudson Square Boosts Price Target to Street High $500. “With the launch of the iPhone, the App Store, the iPad, and the relaunch of Apple TV, we estimate Apple’s total addressable market for hardware, content, and services expanded from roughly $400 billion to $1.5 trillion,” he writes in a research note this morning. “Apple’s Mac share has doubled over the last five years and we believe could double again. In a little over 3 years Apple has captured less than 3% of the mobile phone market by units, but by revenue Apple holds a ~14% share. The iPad is off to a strong start, and the product greatly expands Apple’s addressable market for content distribution. While the new Apple TV and iAd are still in the very early stages, we believe the opportunity is very strong.

CNBC:

• US Ad Growth is Like 'Emerging Market': Sorrell. “The surprise to us in the first nine months of the year in our industry has been the strength of the US market, the US and Canada, but the US particularly so, and traditional media,” said Sorrell.
• Sorry Folks, The Put-Back Apocalypse Ain't Gonna Happen. You should probably be a buyer of Bank of America(BAC) right now.

New York Post:

• Investor Titans in St. Joe(STJ) Clash. Call it the clash of the financial titans. A tug-of-war has emerged between two high-profile investors: hedge-fund titan David Einhorn and famed mutual fund manager Bruce Berkowitz of Fairholme Capital Management.

CNNMoney:

• The Fed's Commodity Bubble. One major landmine is in Washington, DC: the Federal Reserve Board. The market has already begun to bake in expectations from a second round of quantitative easing, and an unlimited supply of money can dwarf the supply of some commodities. As a result, the Fed's policies are inciting increased speculative risk, thereby creating a commodity bubble. Just how much of a bubble? Consider the following:

Institutional Investor:

• Hedge Funds Short Obama. When he ran for president in 2008, Barack Obama enjoyed especially enthusiastic support from liberals, college kids and, surprisingly, many hedge fund managers. But as the country gears up for one of the most crucial — and cantankerous — midterm elections ever, several of the smart-money set who say they’re not beholden to any party have pledged allegiance to the GOP.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Friday shows that 27% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-six percent (46%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -19 (see trends).

Reuters:

• BAE Systems Could Go On Prowl as Defense Cuts Loom. BAE Systems Plc could be poised for a major buying spree in the U.S. defense sector as Europe's top defense contractor chases new growth in the face of looming spending cuts.
• U.S. Treasury Currency Report Now Expected in November. A U.S. Treasury Department report on the currency practices of China and other trading partners will most likely come out in November after a Group of 20 summit, a Senate aide said on Friday.

AP:

• Feds Oppose California Prop 19 to Legalize Marijuana. Attorney General Eric Holder says the federal government will enforce its marijuana laws in California even if voters next month make the state the first in the nation to legalize the drug. The Justice Department strongly opposes California's Proposition 19 and remains firmly committed to enforcing the federal Controlled Substances Act in all states, Holder wrote in a letter to former chiefs of the U.S. Drug Enforcement Administration.

Telegraph:

• Fed Chief Ben Bernanke Signals More Easing to Counter High Unemployment, Low Inflation.

Handelsblatt:

• European Central Bank Chief Economist Juergen Stark said it would be "fatal" if the world's currency areas were to engage in a "devaluation race," citing an interview. Competitive devaluations can lead to protectionism, one of the main causes of the world economic crisis during the 1930s.