Bloomberg:
- Spain’s Bad Bank Seen as Too Big to Work: Mortgages. Spain’s efforts to sell as much as 90 billion euros ($117 billion) of toxic property assets it uses to create a bad bank from lenders that take state aid will be constrained by the size and inability to provide credit to potential buyers, adding to the risk of taxpayer losses. “When managing tens of thousands of assets scattered across the whole of Spain, big is not beautiful, it’s sheer chaos,” said Mikel Echavarren, chairman of Irea, a Madrid-based financial adviser. A large, “clumsy” bad bank will be at a “tremendous” disadvantage and will generate losses that Spaniards will have to foot the bill for.
- Spain Rally at Risk as Pioneer Sells on Aid Delay: Euro Credit. The rally that sent Spanish 10-year government bond yields to a six-month low is at risk after Pioneer Investments and ING Groep NV suggested selling the securities as the nation resists asking for a sovereign bailout. "It was a good time to sell," said Cosimo Marasciulo, who helps oversee $200 billion as head of government bonds and currencies at Pioneer in Dublin. "From a risk-reward point of view, we are happy to take some profits. We don't see the government in any rush."
- Daimler Scraps 2013 Targets After Cutting Forecast. Daimler AG (DAI), the world’s third- biggest maker of luxury vehicles, lowered its 2012 forecast and scrapped profit targets for next year amid declining demand in Europe and increased competition in China. The parent of Mercedes-Benz forecast full-year earnings before interest and taxes will fall 11 percent to 8 billion euros ($10.4 billion), after a previous target of matching last year’s 9 billion euros. The Stuttgart, Germany-based automaker also said late yesterday it will no longer reach 2013 operating margin goals because of toughening market conditions.
- France’s Quiet Bank Rescues Top EU60 Billion With Peugeot Aid. France’s aid to PSA Peugeot Citroen SA (UG)’s troubled finance arm brings the state’s backing for the nation’s banks to more than 60 billion euros ($78 billion). The government yesterday said it will guarantee 7 billion euros in new bonds by Banque PSA Finance, the consumer-finance unit of Europe’s second-largest carmaker. The aid comes on top of support for Dexia SA (DEXB), the French-Belgian municipal lender, and for home-loans company Credit Immobilier de France. “These bank rescues on the quiet should be getting more critical market attention,” said Bill Blain, a strategist at Mint Partners Ltd. in London. “We don’t know what’s next, but it certainly demonstrates that some of the specialized financial institutions remain very, very weak.”
- Firings Reach Highest Since 2010 as Ford(F) to Dow(DOW) Face Sales Slump. Ford Motor Co. (F) and Dow Chemical Co. (DOW) joined a growing number of companies firing thousands of workers as sluggish U.S. growth and Europe’s deepening recession lead to a persisting slump in sales. North American companies have announced plans to eliminate 62,600 positions at home and abroad since Sept. 1, the biggest two-month drop since the start of 2010, according to data compiled by Bloomberg. Firings total 158,100 so far this year, more than the 129,000 job cuts in the same period in 2011. “Companies are saying, ‘Let’s not build up inventories, let’s be lean and mean until we know until we have a better idea of what 2013 is going to look like,’” said Janna Sampson, who helps manage more than $3 billion for Oakbrook Investments in Lisle, Illinois. “There is a fear now as companies see that the economic recovery is not picking up.” So far, out of 204 S&P 500 companies that have released third-quarter earnings, 120 have reported sales that trailed analysts’ estimates, according to data compiled by Bloomberg.
- Japan Protests After Four Chinese Vessels Enter Disputed Waters. Japan issued a protest after four Chinese patrol boats entered East China Sea waters near islands at the center of a territorial dispute that has worsened ties between Asia’s two biggest economies. Chief Cabinet Secretary Osamu Fujimura confirmed that the vessels entered waters administered by Japan this morning. He told reporters in Tokyo that repeated incursions by Chinese boats are regrettable and the vice foreign minister had asked China’s government that they be withdrawn.
- Hubbard: Good Chance Obama Puts U.S. Over Fiscal Cliff. The U.S. economy stands a good chance of facing legislated tax increases and spending cuts if President Barack Obama is re-elected next month, Glenn Hubbard, a senior economic adviser to Mitt Romney, said today. “There is a good chance, if the president wins, we go over the cliff,” said Hubbard, who serves as dean of Columbia Business School.
- China’s Stocks Fall to One-Week Low; Coal, Drug Shares Decline. China’s stocks fell, driving the benchmark index down to its lowest level in a week, after a leading index for the nation’s economy rose at a slower pace in September and earnings for resource producers declined. Guizhou Panjiang Refined Coal Co. and Jiangsu Yueda Investment Co. (600805), which makes cars with Kia Motors Corp., declined at least 1.9 percent after reporting lower profits. Shanghai Fosun Pharmaceutical (Group) Co. led a gauge of health-care stocks, this year’s biggest gainer, to the second-biggest decline among industry groups.
- Wynn Macau Profit Declines as High Rollers Cut Back. Wynn Macau Ltd., a unit of billionaire Steve Wynn’s Las Vegas-based casino operator, reported a 3.1 percent drop in third-quarter profit as high rollers spent less. Net income fell to $203.3 million from $209.9 million a year earlier, Wynn Macau said in a statement to the Hong Kong stock exchange today. The company’s casino revenue dropped 4 percent to $857.3 million. The revenue decline reflects slowing growth in the world’s largest gambling hub, where high rollers, or VIP bettors, from China’s mainland have cut back. Still, VIP table game wins as a percentage of turnover was 3.08 percent, exceeding the company’s expected range and that recorded in the third quarter of 2011, Wynn Macau said.
- Best Buy(BBY) Says Third-Quarter Profit Will Fall ‘Significantly’. Best Buy Co. said fiscal third- quarter profit will be “significantly” below last year’s results as sales at established stores continue to decline. Best Buy fell 3 percent to $16.41 at 4:44 p.m. in New York.
- Cliffs(CLF) Misses Profit Estimate After Iron-Ore Prices Decline. Cliffs Natural Resources Inc., the largest U.S. iron-ore producer, reported third-quarter results that missed analysts’ estimates as the price of the steelmaking raw-material dropped. Net income fell 86 percent to $85.1 million, or 59 cents a share, from $601.2 million, or $4.15, a year earlier, the Cleveland-based company said today in a statement. Profit from continuing operations was 61 cents a share, missing the $1.02 average of 21 estimates compiled by Bloomberg. Sales dropped 30 percent to $1.45 billion. The price of seaborne iron ore fell 36 percent to an average $112 a metric ton in the quarter, compared with $176 a year earlier, according to Steel Business Briefing data compiled by Bloomberg. Cliffs decreased its outlook for the spot price of iron ore this year by 12 percent to $128 a ton from a July forecast of $145 a ton. Cliffs fell 6.9 percent to $39.76 at 6:29 p.m. after the close of regular trading in New York.
- An Obama Re-Election Nightmare by Caroline Baum. It is April 2015. The cherry blossoms are in full bloom in the nation’s capital, yet the colorful display can’t dispel the cloud hanging over the city and the country. The skies are gray. The mood is gray. Even President Barack Obama is gray as he looks forward to the end of his second term.
- Obama Slanders the 1920s to Justify His Failures by Amity Shlaes.
- U.S. Firms Get Dinged in Europe.
- Gupta Gets Two Years for Leaking Inside Tips. Former Goldman Sachs Group Inc. director Rajat Gupta was sentenced to two years in federal prison for leaking corporate secrets about the bank to a hedge fund at the height of the financial crisis.
- China Banks Hurt By Weak Economy. China's major banks are expected to report significantly slower third-quarter profit growth in coming days, as a weakened economy reduced business appetite for borrowing and prompted lenders to set aside more provisions for potential bad loans. The going could get tougher in coming quarters if economic growth rates don't improve. Beijing's recent moves to allow some loosening of interest-rate controls, letting banks price loans more cheaply, could start having a more pronounced impact on lenders' already-shrinking interest margins.
- The President Sends His Non-Regrets. A revealing interview about his priorities in 2009—and 2013. President Obama doesn't give many interviews these days outside Comedy Central, so it caused a stir Wednesday when editors at the Des Moines Register managed to pin him down and even elicit some news. Specifically, Mr. Obama said he wants to pursue immigration reform in a second term, as well as a budget "grand bargain" with Republicans that includes tax reform. This will come as a surprise to voters reading the President's just-released 20-page brochure on his second-term agenda, which makes little or no mention of these priorities. Perhaps that's why the White House first demanded that the interview be off the record, making the transcript public only after the Register editor objected in a public blog post. But the larger reason to be skeptical concerns Mr. Obama's answer to another Register question: Whether he regrets pursuing ObamaCare and other liberal social priorities in his first two years rather than focusing on the economy. "Absolutely not," Mr. Obama told the Iowa journalists.
- The Germans Are Coming for Their Gold. A German federal court has said that country’s central bank should conduct annual audits and physically inspect its gold reserves worldwide, including gold in the custody of the Federal Reserve Bank of New York. In addition to the FRBNY, Bundesbank gold is stored in London, Paris and Frankfurt.
- Why CEOs Are on the 'Fiscal Cliff' Warpath. More and more CEOs are getting restless and starting to beat the drum about Congress dragging its feet on the nation’s looming budget problem.
- Credit Risk Appetite On Cusp Of 'Euphoria'. (graph)
- Secession Fever Sweeping Europe Meaningless Without Debt Repudiation.
- On That 'China Is At 52-Week Highs' Meme. (graph)
- Chart Of The Day: 55 And Under? No Job For You.
- New Home Sales - Not As Strong As Headlines Suggest.
- MORGAN STANLEY(MS): Here's The Chart That Shows Why Stocks Are Suddenly In A Bunch Of Trouble.
- Bulk Food Supplier Reveals How Much More Restaurants Are Paying For Food.
- Meredith Whitney On The 'Endless Beat-Down' Wall Street Faces.
- E-mails: White House knew of extremist claims in Benghazi attack. Two hours after first being notified of an attack on the U.S. diplomatic mission in Benghazi, Libya, a government e-mail to the White House, the State Department and the FBI said an Islamist group had claimed credit, according to a copy obtained by CNN. An initial e-mail was sent while the attack was still underway, and another that arrived two hours later -- sent from a State Department address to various government agencies including the executive office of the president -- identified Ansar al-Sharia as claiming responsibility for the attack on its Facebook page and on Twitter.
- F5 Networks(FFIV) sees weakness spilling into 2013. Network gear maker F5 Networks Inc forecast a weak first-quarter as its large U.S. enterprise and telecoms customers reduced spending, sending its shares down as much as 12 percent in trading after the bell. F5 expects first-quarter earnings to be between $1.14 and $1.16 per share, before items, on revenue of $363 million to $370 million. Analysts were expecting earnings of $1.20 per share on revenue of $373.5 million, according to Thomson Reuters I/B/E/S. The company said on a conference call that macroeconomic uncertainty led many of its larger customers to slow down or reduce spending. Network equipment makers have been hit as telecom service providers -- their biggest customers -- cut spending due to a faltering U.S. recovery and weakness in Europe. Rival Juniper Networks Inc forecast current-quarter results below expectations on Tuesday, citing cautious customer spend.
- California school districts risk downgrades-Moody's. Moody's Investors Service said on Wednesday that it would place California school districts with weak liquidity on review for possible downgrades if the state's voters reject two November ballot measures that propose tax increases to raise money for education spending.
- Akamai(AKAM) beats estimates on cloud computing demand, shares rise. Akamai Technologies Inc beat Wall Street expectations as the internet content delivery company reported higher revenue in its cloud computing and media delivery segments. Shares of the company, which helps firms deliver content faster by avoiding congestion on the Web, were up 5.5 percent in after-market trade.
- The German govt is asking Greece to agree to hire external experts to help collect taxes, fight corruption, sell assets in exchange for a bailout with 2 more years of EU aid, citing a copy of the plan. France and the European Commission support the plan, while the IMF is said to be skeptical. The plan also calls for automatic, across-the-board spending cuts if Greece misses the bailout's revised deficit targets.
- Foreign firms face tax crackdown in UK and Europe. Foreign companies face a tax crackdown as David Cameron demanded an investigation into claims of large-scale avoidance while Brussels moved to close European VAT loop-holes enjoyed by Amazon(AMZN), Skype and Netflix(NFLX).
- China needs to overcome "reform fatigue," according to an unidentified commentary in the newspaper. Reform in China is at a critical stage and if the nation doesn't do a good job, it will face great difficulties that set back its modernization, the commentary said.
- None of note
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 123.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 96.0 +.75 basis point.
- FTSE-100 futures -.31%.
- S&P 500 futures +.21%.
- NASDAQ 100 futures +.36%.
Earnings of Note
Company/Estimate
- (ESI)/1.78
- (CRI)/.89
- (AN)/.66
- (PG)/.96
- (PCP)/2.34
- (PHM)/1.20
- (BG)/2.16
- (DBD)/.39
- (IP)/.77
- (HSY)/.87
- (MCK)/1.78
- (RCL)/1.46
- (SPG)/1.92
- (BIIB)/1.59
- (OXY)/1.62
- (CELG)/1.27
- (SHW)/2.20
- (HOT)/.53
- (AET)/1.33
- (CL)/1.38
- (ZMH)/1.13
- (CME)/.69
- (RTN)/1.127
- (UA)/.52
- (COP)/1.19
- (MXIM)/.44
- (KLAC)/.88
- (CA)/.59
- (AMZN)/-.08
- (CERN)/.59
- (DECK)/1.04
- (DV)/.30
- (CB)/1.50
- (APKT)/.07
- (EXPE)/1.26
- (BYI)/.71
- (AAPL)/8.73
- (SCHN)/.00
8:30 am EST
- The Chicago Fed Nat Activity Index for September is estimated to rise to -.2 versus -.87 in August.
- Durable Goods Orders for September are estimated to rise +7.5% versus a -13.2% decline in August.
- Durables Ex Transports for September are estimated to rise +.9% versus a -1.6% decline in August.
- Cap Goods Orders Non-Defense Ex Air for September are estimated to rise +.8% versus a +1.1% rise in August.
- Initial Jobless Claims are estimated to fall to 370K versus 388K the prior week.
- Continuing Claims are estimated to rise to 3260K versus 3252K prior.
- Pending Home Sales for September are estimated to rise +2.5% versus a -2.6% decline in August.
- Kansas City Fed Manufacturing Activity for October is estimated to rise to 5.0 versus 2.0 in September.
- None of note
- The 7Y T-Note auction, South Korean GDP report, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory data could also impact trading today.
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