Bloomberg:
- EU Said to Doubt Viability of Spain’s 2013 Deficit-Cut Target.
Spain was told by Europe’s economic overseers that its 2013 plan to cut
the deficit to 4.5 percent of gross domestic product relies on
excessively optimistic assumptions, two people familiar with the issue
said. Olli Rehn, the European commissioner in charge of policing budget
rules, delivered the preliminary assessment to Spanish Economy Minister
Luis de Guindos at a meeting in Madrid on Oct. 1, said the people, who
declined to be named because the talks weren’t public. Spain’s
2013 budget assumes the economy will shrink 0.5 percent, less than the
1.3 percent contraction predicted by 21 analysts surveyed by Bloomberg.
Spanish central bank chief Luis Maria Linde also questioned the
government’s math today, calling it “optimistic.” Weaker economic
performance would widen the deficit, forecast at 6.3 percent of GDP in
2012, forcing the government to impose more austerity or plead for a
looser target.
- Spanish Bonds Fall Second Day as Nation Resists Seeking Bailout. Spain’s
government bonds fell for a second day as the nation resists seeking a
bailout and European Central Bank President Mario Draghi said the
country still faces significant challenges. Spanish securities
declined after the country sold 3.99 billion euros ($5.17 billion) of
two-, three- and five-year notes, while holding back from seeking
financial aid that would trigger ECB purchases of its debt. German
two-year notes fell after Draghi said policy makers didn’t discuss an
interest-rate cut at their policy meeting today, where they kept the
refinancing rate at a record-low 0.75 percent. Top-rated Finnish bonds
also slipped as the ECB chief said the euro is “irreversible.” “The
market wants to see a request for aid and this is pressuring Spanish
bonds,” said Alessandro Giansanti, a senior strategist at ING Groep NV
in Amsterdam. “The auction went quite well in terms of the demand
because the bonds were sold in the area where the ECB may buy, if Spain
asks for help.” Spanish two-year yields climbed six basis points, or
0.06 percentage points, to 3.29 percent at 4:25 p.m. London time. The
4.75 percent security due July 2014 fell 0.115, or 1.15 euros
per 1,000-euro face amount, to 102.515. The 10-year yield rose
nine basis points to 5.90 percent.
- Orphanides Says ECB Would Struggle to End Government-Bond Buying.
Former European Central Bank Governing Council member Athanasios
Orphanides said the central bank would face fierce political opposition
on any decision to stop purchasing government bonds if a government fell
behind on conditionality. “The real concern for the ECB is not how to kickstart the program, it’s the exit,”
Orphanides, who now teaches at the MIT Sloan School of Management in
Cambridge, Massachusetts, said in a telephone interview. If an agreement is reached “with a
government and it reneges on it in six months time, the ECB will
face tremendous pressure not to stop its bond purchases,” he
said.
- IMF Won’t Disburse Greek Loan If Debt Not Sustainable. The
International Monetary Fund won’t disburse its share of the Greek
bailout if the country’s debt is not deemed sustainable or if other
creditors don’t pledge to fill a financing gap in the aid package, a
fund spokesman said. IMF Managing Director Christine Lagarde last week warned that the level of Greek debt would have “to be addressed,”
pushing European policy makers to consider writing off some of
the aid to the country. While the fund is sticking to a target
of 120 percent of gross domestic product by 2020, the Greek
government forecast this week that public debt will climb to
179.3 percent of GDP in 2013.
- China Shoppers Curb Luxury Spending in Hong Kong.
Shoppers from China’s mainland curbed spending at Hong Kong luxury
stores during the Golden Week holiday, reflecting growing pressure on
the city’s economy from faltering tourist demand. Purchase of luxury
goods by mainland visitors in Hong Kong is set to fall at least 10
percent from a year ago during this week’s holiday, said Joseph Tung,
executive director of the Travel Industry Council. Lower spending in
Hong Kong hurts consumer companies from U.K.’s Burberry Group Plc.
(BRBY) to luxury watchseller Hengdeli Holdings Ltd. (3389) that have
invested in stores to profit from Chinese visitors to the city. The weaker retail sales add to the risk of a recession in Hong Kong, where the economy shrank 0.1 percent in the second quarter from the previous three months on
declining exports.
- Fed Saw Manageable Risks of New Bond Buying, Minutes Show. Federal Reserve policy makers said they could change the size of the
central bank’s monthly asset purchases to reduce the risks associated
with the program, such as disrupting financial markets and spurring
inflation.
- Initial Jobless Claims Rise. The number of Americans filing first- time claims for unemployment
insurance payments rose last week, highlighting an uneven improvement in the labor market. Applications for jobless benefits increased 4,000 to 367,000 in the week ended Sept. 29, Labor Department
figures showed today. Economists forecast 370,000 claims, according to
the median estimate in a Bloomberg survey.
- US
Unemployment Drop Masking Labor Market Weakness: Chart of the Day.
While unemployment has fallen to 8.l1% from 10% in 2009, the percentage
of people working, know as the employment-population ratio, has remained
near its lows of the recession, suggesting limited progress toward a
recovery in jobs.
- Food Prices Jump to Six-Month High as Dairy Costs Rise.
World food prices rose in September to the highest in six months as
dairy and meat producers passed on higher feed costs to consumers, the
United Nations’ Food & Agriculture Organization said. An index of 55 food items tracked by the FAO rose to 215.8
points from a restated 212.8 points in August, the Rome-based
agency reported on its website today. Dairy costs jumped the
most in more than two years. Livestock breeders and dairy farmers are passing on the
higher cost of feed, after grain prices jumped in June and July,
according to Abdolreza Abbassian, an economist at the FAO in the
Italian capital.
- California Gas Stations Begin to Shut on Record-High Spot Prices. Gasoline
station owners in the Los Angeles area including Costco Wholesale Corp.
(COST) are beginning to shut pumps because of supply shortages that
have driven wholesale fuel prices to record highs. Costco’s
outlet in Simi Valley, 40 miles (64 kilometers) northwest of Los
Angeles, ran out of regular gasoline yesterday and was selling premium
fuel at the price of regular, Jeff Cole, Costco’s vice president of
gasoline, said by telephone. The company hasn’t been able to find enough
unbranded summer-grade gasoline to keep its stations supplied, he said.
The gasoline shortage “feels like a hurricane to me, but it’s the West
Coast,” Cole said yesterday. “We’re obviously extremely disheartened
that we are unable to do this, and we’re pulling fuel from all corners
of California to fix this.”
- Oil Rises on Euro Strength. Crude for November delivery gained $1.55, or 1.8 percent,
to $89.69 a barrel at 11:46 a.m. on the New York Mercantile
Exchange. Brent oil for November settlement advanced $1.91, or 1.8
percent, to $110.08 a barrel on the London-based ICE Futures
Europe exchange.
- Gold Jumps to Highest Since November on ECB’s Bond Plan. Gold futures jumped to the highest in
almost 11 months as the European Central Bank said it is ready to start buying government bonds, boosting demand for the
precious metal as a store of value. Gold futures for December delivery climbed 0.5 percent to
$1,788.60 an ounce at 9:44 a.m. on the Comex in New York.
Earlier, the price reached $1,797.20, the highest for a most-
active contract since Nov. 14.
- Cantor Cut to Junk by Moody’s on Capital Markets Pressure.
Cantor Fitzgerald LP, the investment bank planning to add 800 people in
coming years, was cut to junk by Moody’s Investors Service on weakened
profitability. The credit grade was lowered to Ba1 as the ratings firm
expects “the capital markets operating environment to be
challenging for all participants for the medium term,” Moody’s
said today in a statement on the New York-based firm.
Wall Street Journal:
- Political Wisdom: A Big Night for Romney.
- Romney Plans Foreign-Policy Speech at VMI.
- Web Profiles Haunt Students. A growing number of top-ranked U.S. colleges say they are finding
objectionable material online that hurts the chances of prospective
freshmen.
- Reports Show Small Businesses Are Reluctant to Hire. Small businesses cut back on hiring over the summer and
small-to-medium sized firms have lowered their staffing plans for the
future, according to two reports released Thursday. The National Federation of Independent Business, a
small-business trade group, said the net change in employment per firm
over the three months ended in September was -0.23, worse than the July
and August readings. The negative result indicates slightly more firms cut workers than the share of firms who added staff. The outlook for hiring among smaller firms is also very muted. A
survey of companies with annual revenues between $100,000 to $250
million, done by PNC Financial Services Group, shows
23% of companies expect to add new employees over the next six months,
down from the 28% saying that in the spring survey. Worries about the economy’s future helps to explain some of the
reluctance toward future hiring. The PNC survey found 57% of business
owners or senior managers are pessimistic about the national economy’s
path over the next six months, up sharply from 43% saying that in the
spring.
- Henninger: The Romney Reboot Arrives. In a role reversal, Mitt Romney went on offense and put Barack Obama on defense for 90 minutes.
MarketWatch.com:
- Retailers’ September sales raise holidays concern.
Industry watchers say retailers selling basics may be safer bet. U.S.
retailers’ September comparable store sales slowed from the summer
trend, heightening the stakes for how the upcoming holiday season will
play out.
Overall, the September sales results
released Thursday edged up 0.8%,
short of the 1.6% average estimate of analysts surveyed by Thomson
Reuters. About 53% of the retailers reporting sales missed Wall Street’s
expectations.
CNBC:
- 'Discouraged' Workers Face Tough Road Back to Employment. Carver doubts she'll ever land full-time work and now focuses on just making enough money to pay the bills. Millions
of other Americans have come to the same conclusion as the worst
economic recovery since World War II has left them sidelined and unable
to replace the job they lost to the Great Recession. Many
have given up altogether, left behind by the economy and left out of
the government’s employment statistics. In fact, so many people have
given up looking for work that the official jobless rate fell to 8.1
percent last month from 8.3 percent, even though the economy is not
adding nearly enough jobs to absorb the growth in working-age
population.
- Planned Layoffs Up in September: Challenger. The number of planned layoffs at U.S. firms in September rose 4.9 percent. Employers announced planned job cuts of 33,816 last month, up from
32,239 in August, according to the report from consultants Challenger,
Gray & Christmas, Inc.
- A Huge Victory for a Principled Mitt Romney.
Mitt Romney politely cleaned Barack Obama’s clock tonight. A lethargic
and at times tired looking President Obama was out-hustled, out-facted,
out-energized, and out-informed by Former Governor Mitt Romney. Completely unlike Romney’s convention speech, tonight he focused on
strong economic issues, developed his philosophy of limited government,
and convinced me beyond a shadow of a doubt that he is in fact a
pro-growth tax reformer who wants to lower the rate, and broaden the
base in a revenue-neutral fashion that will actually create jobs and
spur the economy.
- Romney's Strong Debate Showing Puts Europe on Edge. President Barack Obama's lackluster performance in the first debate
provoked uneasiness in European capitals on Thursday, where hopes are
mostly, if unofficially, pinned on his securing a second term. In Europe, where leaders and finance officials
have worked closely with the Obama administration over the past 2½ years trying to resolve the euro area debt crisis, there was particular consternation at Romney's singling out of deficit-ridden Spain as a poorly administered economy. "Romney is making analogies that aren't based on reality," Foreign Affairs
Minister Jose Manuel Garcia-Margallo told reporters after a meeting of
his center-right party. Leading
Spanish daily El Pais highlighted the fact that Spain was the only
European country mentioned, and contrasted Romney's negative depiction
of it with Obama's praise for Spain's renewable energy policies during
the 2008 campaign. "Spain has never been mentioned in a
presidential debate as a symbol of failure," the left-leaning newspaper
lamented. "What happened last night makes history. And not in a good
way." Political
commentators in France and Germany registered surprise at Obama's
underwhelming performance, saying the election could be much tighter as a
result. "Obama
showed a lack of desire to be president, which could put him on shaky
ground as a presidential candidate," said liberal German news magazine
Der Spiegel. "It's now clear that to get back into the White House the U.S. president needs running shoes, not flip-flops." France's
Le Monde appeared equally surprised by Obama's sub-par performance.
"Where did the favorite go?" it asked on its front page, with a headline
below saying: "Obama fails his first televised debate against an
incisive Romney."
Zero Hedge:
Business Insider:
St. Louis Fed:
Reuters:
- Informatica(INFA) profit warning hits tech sector shares. Software
maker Informatica Corp (INFA.O) rattled investors with a warning on
Thursday about worsening business conditions in Europe, sending its
shares down over 25 percent and weighing on other U.S. tech stocks.
Informatica's software, which helps companies pull together data so they
can analyze business trends, is used alongside that made by bigger
software companies so its weakness often drags down peers. But analysts
said Informatica's problems may be company specific, citing an internal
sales reorganization, and said overall tech spending would likely be
stable. Nevertheless, the warning hit shares in other software firms,
particularly Qlik Technologies (QLIK.O), which was down 8.7 percent in
late morning trade on Nasdaq. Qlik generates almost 60 percent of its
revenue in Europe. Other such as Teradata Corp (TDC.N) dropped 3.4
percent, Tibco Software (TIBX.O) fell 1 percent, Citrix Systems (CTXS.O)
was down 0.9 percent while Red Hat Inc (RHT.N) and VMware Inc (VMW.N)
lost 0.7 percent and 0.5 percent respectively. Smaller software
companies have taken a hit in the last few months as customers
scrutinize deals more closely, signaling a pullback in tech spending.
- Factory orders post largest fall since recession. Demand for U.S. factory goods in August fell by the most since January
2009, but the second straight month of gains in orders outside
transportation hinted at a less rapid loss of momentum in manufacturing
activity. The Commerce Department said new orders
for manufactured goods tumbled 5.2 percent - the biggest drop since the
recession - dragged down by a slump in demand for transportation
equipment that was telegraphed in last week's report on orders for
long-lasting manufactured goods.
- Russia proposes diluted UN text on Syria attack in Turkey. Russia on Thursday blocked
adoption of a draft U.N. statement condemning a deadly Syrian
mortar attack on a Turkish town and proposed a weaker text
calling for "restraint" on the border, without referring to
breaches of international law. Western diplomats complained that Russia's proposed Security
Council statement, if accepted by the 15-members, would weaken
the message to an unacceptable degree. Negotiations on the
non-binding statement were continuing, they said.
- US authorities charge 91 in $430 mln Medicare fraud. Ninety-one people including
doctors, nurses and other medical professionals have been
charged with committing $430 million in Medicare fraud in seven
U.S. cities, authorities said on Thursday. An investigation coordinated by the U.S. Justice Department
and the Department of Health and Human Services uprooted alleged
false billing schemes involving $230 million in home health
services, over $100 million in mental health services and $49
million from ambulance transportation. Charges range from healthcare fraud and conspiracy to wire
fraud, kickback violations, identity theft and money laundering.
- Fitch: Brazilian banks face volatility, uncertainty, economic slowdown.
Telegraph:
Handelsblatt:
- European
parliament lawmakers from Germany's Christian Democratic Union and
Christian Social Union want euro-area countries to be able to leave the
common currency temporarily if they can't reduce debt levels, citing a
paper drafted by the politicians. The 42 lawmakers said
the euro area needs a process for states to declare insolvency in an
orderly fashion and the common currency won't break up if that happens.
The declaration marks a break with Germany's CDU Chancellor Angela
Merkel, who wants to keep Greece in the euro. The lawmakers want ECB
bond-buying to be limited in its duration and volume, on the ground that
it could stoke inflation in the "mid-term".
Focus:
-
Bavaria's
Soeder Says ECB Bond Buying Is No Cure. The ECB weakens concept of ESM,
fiscal pact, Markus Soeder, Germany's Bavarian state finance minister.
ECB president Draghi generates mistrust regarding currency stability, he
said. The ECB is not allowed to play active political role in saving
the euro. If Germany has to pay for debtor nations, German citizens must
agree in referendum, Soeder said.
IMK Economic Institute:
- ECB Bond-Buying Conditionality May Damp Region's Recovery: IMK. The
conditionality under which the ECB would agree to buy troubled euro
member states' bonds may damp the area's economy recovery, Germany's
labor union-affiliated IMK economic institute says. The Euro's decline
against he dollar, and German consumer spending help bolster the
region's economy, IMK said. The Euro region economy will shrink -.5% in
2012 and -.7% in 2013, IMK said.
El Pais:
- Catalan
President Artur Mas said the budget-deficit targets set for Spanish
regions next year are "unreal" and likely won't be met. Mas called for
the central government to deliver larger share of austerity measures.
"The current distribution of the deficit is unreal and very dangerous
because it could destabilize social cohesion," he said. Mas's comments
break the agreement Prime Minister Mariano Rajoy brokered with regional
leaders Oct. 2.
Style Underperformer:
Sector Underperformer:
- 1) Hospitals -.63% 2) Networking -.61% 3) Gaming -.40%
Stocks Faling on Unusual Volume:
- INFA,
QLIK, MPEL, MXWL, THC, LPNT, ASIA, NTAP, UAL, NUVA, BWP, STWD, HMSY,
SRPT, GMED, OPTR, MSCI, ISCA, BAH, TDC, MAKO, ICFI, ENDP, MCRS, KSS,
TMH, ROST, BPL, ELLI, ENS, AVY and MANT
Stocks With Unusual Put Option Activity:
- 1) EWA 2) MBI 3) MRO 4) MAR 5) KBE
Stocks With Most Negative News Mentions:
- 1) NUVA 2) APA 3) YUM 4) TSLA 5) RKT
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Coal +4.79% 2) Gold & Silver +2.15% 3) Banks +1.68%
Stocks Rising on Unusual Volume:
- TTWO, MFRM, OCN, NFLX and BKS
Stocks With Unusual Call Option Activity:
- 1) PCS 2) TJX 3) RENN 4) MDRX 5) VWO
Stocks With Most Positive News Mentions:
- 1) COST 2) ROST 3) TJX 4) CRM 5)PCS
Charts:
Evening Headlines
Bloomberg:
- Romney in Debate Says Obama Favors ‘Trickle-Down Government’. Republican presidential nominee Mitt Romney said President Barack Obama favors a form of “trickle-
down government” that will result in more taxes and
regulations, as the two met in their first debate in the race
for the White House. “That’s not the right answer for America,” Romney, 65,
said tonight at the University of Denver.
- Draghi Stares at Spain as Bond Brinkmanship Keeps ECB Waiting. Mario
Draghi is waiting for Spain to get back to him on whether his plan to
save the euro is needed. One month after the European Central Bank
president unveiled an unprecedented bond purchase program to rescue
Europe’s embattled southern fringe, Spanish Prime Minister Mariano Rajoy
is showing reluctance to ask for the aid he pushed for with Italy on
concern about the terms attached to it. As ECB
policy makers meet in Slovenia today, Spanish 2-year note yields are
more than 50 basis points higher than the five-month low touched on
Sept. 7, the day following their last decision. “We’re back at this
game of brinkmanship between the ECB and governments again, and it’s a
case of who makes some concessions first,” said Nick Matthews,
senior European economist at Nomura International Plc in London. “The
markets will continue to play a significant role here and Draghi needs
them to turn up the pressure.” Spain will face a test of that pressure today as it sells
as much as 4 billion euros ($5.2 billion) of bonds after Finance
Minister Luis De Guindos said that officials are still
considering whether they actually need ECB help.
- Spain
Off Balance-Sheet Debt Worsens Rajoy's Battle: Euro Credit. Liabilities
that the Spanish government has held off its balance sheet are winding
up on the taxpayers' tab , threatening Prime Minister Mariano Rajoy's
efforts to haul the economy out of a five-year slump. Government debt
will leap 17 percentage points to 85% of gdp this year as the state
absorbs the cost of bailing out banks, the power system and public
contractors.
- France’s LBO Firms Predict ‘Death’ From Hollande’s 75% Carry Tax. French private-equity fund managers
are predicting their own exile if lawmakers back President
Francois Hollande’s proposed tax increases on the profit the
industry makes from investments. Hollande, who released his first
annual budget on Sept. 28,
plans to tax fund managers’ share of the profit from their
investments, known as carried interest, at a rate of as much as
75 percent, part of a wider effort to increase taxes on the wealthy and
narrow the country’s deficit. France also plans to as much as double
taxes on capital gains and restrict the amount
of debt interest payments a company can deduct from its taxable
income, a measure that will reduce returns on leveraged buyouts.
Lower levies in the U.K. will lure professionals across the
English Channel from where they can still try to buy French
companies, Parisian dealmakers say.
- European Banks Told to Hold On to $258 Billion of Fresh Capital.
The European Union’s top banking regulator told the bloc’s lenders to
hold on to more than 200 billion euros ($258 billion) in capital raised
to pave the way for tougher global standards. The 27 banks that were
required by the European Banking Authority to submit plans for their
capital raising attained a total of 116 billion euros, the London-based
EBA said yesterday.
Including aid to Greek and Spanish banks, European lenders
increased their capital reserves by more than 200 billion euros
since 2011, according to an EBA report published on its website.
- No
Use in Competitive QE, Intervention, Japan's Sakakibara Says. Japan and
other advanced economies are reaching the limit of what they can do to
stimulate growth through monetary easing, said Eisuke Sakakibara, a
former Ministry of Financial officials.
- India Slowdown Thwarts Carmakers’ Sales Search Beyond U.S. With sales crashing in Europe and
slowing in China, carmakers are looking for signs of growth
beyond the U.S. market. In India, it’s not looking good. The holiday season, just under way there, typically
accounts for about a quarter of new auto purchases. This year,
the market is uncharacteristically moribund as the economy is
projected to grow at its slowest pace in a decade. That’s
especially tough for Hyundai Motor Co. (005380) and Tata Motors Ltd. (TTMT), the
second- and third-biggest carmakers by volume in India. “Everyone is counting on India to deliver future growth,”
said Deepesh Rathore, the New Delhi-based India managing
director of IHS Automotive, an industry-research company. “The
festive season is a trigger for sales in the second half.”
- Applied Materials(AMAT) to Cut Up to 9 Percent of Staff Amid Slump. Applied Materials Inc. (AMAT), the largest producer of chipmaking equipment, plans to eliminate as much as
9 percent of its workforce as lackluster personal-computer
demand leads customers to slow orders for manufacturing tools. The company will cut 900 to 1,300 jobs, resulting in pretax
costs of $180 million to $230 million, through a voluntary
retirement program and other actions. The restructuring will
save $140 million to $190 million a year, Santa Clara,
California-based Applied Materials said in a statement today.
- Chemical
Bond Risk at Record on China Slowdown: Japan Credit. The bond risk of
Japanese manufacturers that rely on China as a market for chemicals used
in plastics, resins and adhesives jumped to records on faltering
domestic output and signs of continued cooling in the world's
second-biggest economy. Credit-default swaps on Mitsui Chemicals Inc.
increased 183 basis points last quarter, reaching a record of 390 on
Sept. 26, CMA data show. Contracts on Sumitomo Chemical Co., Japan's
second-largest maker of the products, climbed 161 in the period,
reaching their highest level ever at 284 on the same day.
- Precious
Metals Are 'Standout Exposures', Morgan Stanley Says. Gold, silver and
platinum are "standout exposures" in current environment, bank says.
Precious metals to provide absolute positive performance. Silver to
provide relative outperformance. Aluminum, nickel, lead, zinc in
oversupply, vulnerable to renewed growth concerns.
Wall Street Journal:
- Candidates Spar Over Taxes. Obama, Romney Lay Out Differing Views of Government, Regulation, Deficit Cuts. Cutting to the heart of their differences, President Barack Obama and
Republican Mitt Romney laid out contrasting visions for the federal
government in their first debate in Denver, sparring over tax-cut
proposals, regulations and deficit-reduction plans. Mr. Romney cast Mr. Obama as a champion of big government and spending
who would raise taxes on job-creating small businesses, calling his
approach "trickle-down government."
- Small Businesses Fear Fiscal Cliff Awaits at Year-End. Many small-business executives said they have little confidence that
lawmakers and the president will be able to avoid a fiscal cliff by
December 31. A survey of 833 business owners released Wednesday found
that 47% of
small-business owners and chief executives said they don't expect the
country will avoid the tax increases and deep spending cuts that are set
to take effect at year-end unless Congress and President Barack Obama
agree on a new deficit-reduction plan. In comparison, 38% of respondents
said they thought lawmakers would be able to reach an agreement.
Another 14% weren't sure.
- Henninger: 2012's Sure Losers—Young People. Hi, I'm Marty and I'll be your waiter for the next 40 years.
- Can We Believe the Presidential Polls? Last week's CBS/New York Times poll had Obama ahead by nine points in Florida. That's not very likely.
MarketWatch.com:
CNBC:
Zero Hedge:
Business Insider:
Forbes:
CNN:
- CNN Poll: Romney wins debate by big margin. Sixty-seven percent of registered voters who watched the debate said GOP
nominee Mitt Romney won the debate, while 25% said President Barack
Obama came out as the winner, according to a CNN/ORC International Poll
released late Wednesday night.
Reuters:
- Tennessee fungal meningitis outbreak spreads to other states. State and federal
health officials said on Wednesday that they expected more cases to be
reported in a deadly outbreak of fungal meningitis they believe is
linked to steroid injections given for pain at two clinics in Tennessee. So far two people have died and
18 others have been sickened in Tennessee from meningitis linked to the
outbreak. Four other states have reported cases, with a total of 26
illnesses and four deaths, said Centers for Disease Control and
Prevention spokesman Curtis Allen. In
addition to the 18 who are sick in Tennessee, one case has been
reported in North Carolina, two in Florida, three in Virginia and two in
Maryland. The other deaths include one each in Virginia and in
Maryland, Allen said.
- U.S. strip mall recovery stalls in the third quarter. The nascent recovery at U.S.
strip malls stalled in the third quarter as retail sales
struggled. But large regional malls continued to rebound, driven
by top-quality malls with high-end department and specialty
stores, real estate research firm Reis Inc said Thursday. The retail real estate sector has been among the hardest hit
in commercial property. At the mercy of consumer spending, the
sector has reflected the diverse pressures and changes since the
housing crisis began in 2007.
- Island plans by Tokyo's nationalist governor may stoke fresh China tensions. Tokyo
Governor Shintaro Ishihara, a fiery nationalist whose failed bid to buy
a group of disputed islands ignited a crisis with China, is pushing
ahead with a plan to build structures there to hammer home Japan's claim, officials involved told Reuters. Although such a move is not imminent, it would be certain to
strain Japan's already shaky relations with China and could
prompt a rebuke from the Obama administration, which has urged
both sides to ease tensions by setting aside the dispute. Ishihara's gambit appears aimed at forcing a new showdown in
the island dispute with China.
- Morgan Stanley(MS) in talks to sell majority of commodity business - FT. Morgan Stanley is in talks to sell
a majority stake in its commodities business to the Qatar
Investment Authority, the Financial Times said, quoting people
familiar with the deal.
- World Bank lowers Latin American growth forecast to 3 pct. Economic growth in Latin
America will be lower than previously estimated due to the
continuing worldwide slowdown, the World Bank said in a report
on Wednesday. It forecast growth at 3 percent this year, below its
previous projection of 3.5 to 4 percent.
Telegraph:
Ming Pao Daily:
- Hong
Kong's number of visitors from mainland China fell 10% from a year
earlier to 456,000 in the first four days of the week-long Golden Week
holidays, citing figures from the city's Immigration Department. Michael
Tien, founder of clothing retailer G2000 Group, said sales from
mainland China visitors dropped 30% in the first two days of the
holiday, according to the report.
Wen Wei Po:
- Mainland
China Buyers of Hong Kong Homes Fall 20%. Buyers from China account for
10-20% of property in Hong Kong at present, compared with more than 30%
previously, citing Fung Lam, Centaline's associate director of project
development and investment. Interest from mainland buyers has declined
because of rising prices, a slowing Chinese economy and a booming
property market in Shenzhen, Lam said.
Evening Recommendations
Piper Jaffray:
- Rated (QDEL) Overweight, target $26.
Night Trading
- Asian equity indices are -.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 132.0 -1.5 basis points.
- Asia Pacific Sovereign CDS Index 114.25 -2.5 basis points.
- FTSE-100 futures +.23%.
- S&P 500 futures +.44%.
- NASDAQ 100 futures +.51%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Initial Jobless Claims are estimated to rise to 370K versus 359K the prior week.
- Continuing Claims are estimated to rise to 3275K versus 3271K prior.
10:00 am EST
- Factory Orders for August are estimated to fall -5.9% versus a +2.8% gain in July.
2:00 pm EST
Upcoming Splits
Other Potential Market Movers
- The
ECB rate decision, BoE rate decision, ECB's Draghi speaking, Fed's
Bullard speaking, Challenger Jobs Cuts report for September, RBC
Consumer Outlook Index for October, weekly Bloomberg Consumer Comfort
Index, weekly EIA natural gas inventory report and the (ORCL) analyst
meeting could also impact trading today.
BOTTOM LINE: Asian
indices are mostly higher, boosted by automaker and financial shares
in the region. I expect US stocks to open modestly higher and to
weaken into the afternoon, finishing mixed. The Portfolio is 50%
net long heading into the day.
Broad Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Mixed
- Volume: Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- VIX 15.53 -1.15%
- ISE Sentiment Index 115.0 -24.68%
- Total Put/Call .94 +30.56%
- NYSE Arms .91 -21.56%
Credit Investor Angst:
- North American Investment Grade CDS Index 96.55 bps -1.8%
- European Financial Sector CDS Index 187.23 bps -4.09%
- Western Europe Sovereign Debt CDS Index 144.17 bps -.80%
- Emerging Market CDS Index 216.31 bps -.85%
- 2-Year Swap Spread 13.50 -.75 basis point
- TED Spread 26.5 -.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -26.0 +.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .09% unch.
- Yield Curve 138.0 unch.
- China Import Iron Ore Spot $104.20/Metric Tonne unch.
- Citi US Economic Surprise Index 17.40 +6.5 points
- 10-Year TIPS Spread 2.47 -1 basis point
Overseas Futures:
- Nikkei Futures: Indicating +43 open in Japan
- DAX Futures: Indicating -10 open in Germany
Portfolio:
- Higher: On gains in my Biotech/Medical/Retail/Tech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and covered some of my (EEM) short, then added them back
- Market Exposure: 50% Net Long
Bloomberg:
- Global Services Weaken as Europe Slides Into Recession: Economy. Services
industries from Asia to Europe cooled last month after the euro-area
debt crisis pulled economies including Spain and Italy into recession
and damped global growth prospects. The purchasing managers’ index
fell to 53.7 in September from 56.3 in August, the National Bureau of
Statistics and China Federation of Logistics and Purchasing in Beijing
said today. That’s the lowest since at least March 2011. In the
euro-area, a gauge slipped to 46.1 last month from 47.2 and a U.K.
measure also fell. Readings below 50 indicate contraction.
- BNP Is Coming Under Pressure With SocGen to Isolate Risk. French lenders’ trading assets have
grown to almost match the size of the nation’s economy, making them vulnerable to government efforts to wall off banking risk.
Investment-banking units of BNP Paribas SA (BNP), Societe Generale SA,
Credit Agricole SA (ACA) and Natixis (KN) SA have 2.05 trillion euros
($2.64 trillion) in trading assets, including bonds, equities and
derivatives, data compiled from the banks show. That’s a 21 percent jump
in the 12 months to June and a two-year high, just shy of France’s
$2.77 trillion gross domestic product.
- U.S. States Teetering on Brink of Fiscal Cliff, Ganeriwala Says. The possibility of automatic federal budget cuts threatens U.S. states’ well-being, even as their revenue recovers,
said Manju Ganeriwala, the incoming president of the National
Association of State Treasurers. “We’re approaching the cliff,
and hopefully it’s a climbing down and not just jumping from the cliff,”
Ganeriwala, Virginia’s treasurer, said today at the State &
Municipal Finance Conference hosted by Bloomberg Link in New York.
- Oil Falls to Four-Day Low as U.S. Supply Increases, China Slows.
Oil fell to its lowest in four days
after U.S. crude stockpiles climbed for a fourth week and a measure of
China’s economy declined, signaling fuel demand may be faltering in the
world’s biggest users of the commodity. Brent oil for November settlement on the London-based ICE
Futures Europe exchange dropped $1.28, or 1.2 percent, to
$110.29 a barrel.
- BlackRock(BLK) Leads Firms Poised to Win From Hedge Fund Ads. The firms most likely to benefit
first from new rules that would allow hedge funds to conduct
wide advertising campaigns aren’t hedge funds.
- Hewlett-Packard(HPQ) Plunges as Whitman Projects Profit Drop. Hewlett-Packard
Co. (HPQ) Chief Executive Officer Meg Whitman forecast fiscal 2013
profit that missed estimates and said a turnaround at the computer maker
won’t
happen any time soon, sending shares to a more than nine-
year low. “The recent financial performance of HP has not been
good,” Whitman said at a meeting with financial analysts today.
“The single biggest challenge facing Hewlett-Packard has been
the multiple changes in CEOs,” she said. “It’s going to take
longer to right this ship than any of us would like.”
Wall Street Journal:
- Obama, Romney Look to Win Over the Undecided. After jousting from afar for months, Barack Obama and Mitt Romney
will meet Wednesday night in one of their last best chances to sway
undecided voters and solidify support among the party faithful. For 90 minutes beginning at 9 p.m. EDT, the presidential candidates
will share a stage at the University of Denver, laying out their ideas
about domestic issues. The first of three televised presidential debates
will heavily emphasize the economy, with both men trying to persuade
voters that they understand their struggles and can improve the economic
landscape in the next four years.
- Apple(AAPL) Suppliers Now Mass-Producing Tablets Smaller Than Existing iPad -Sources.
- Tensions Rise as Syrian Shells Land in Turkey.
Syrian mortar rounds landed in a Turkish border town on Wednesday,
killing five people and wounding at least a dozen, opening a potentially
dangerous new phase along the neighbors' increasingly tense shared
border. Three Syrian shells fell on Akcakale, a Turkish town in
the southern province of Sanliurfa, shortly after 3:30 p.m. local time,
sending residents scattering to find cover, said Abdulhakim Ayhan, the
town's mayor.
- Dozens Killed in Syrian Suicide Blasts.
Dozens of people were killed and wounded, many of them government
soldiers, in multiple car bombings in the northern Syrian city of
Aleppo. The attacks bore the hallmarks of al Qaeda-inspired or
-linked jihadists, signaling a bloodier phase in the conflict in the
city, where opposition rebels have been deadlocked in battle with the
regime for nearly three months.
MarketWatch.com:
CNBC:
- California Cities in 'Conga Line' For Fiscal Trouble. Then
came Stockton. Mammoth Lakes. San Bernardino. Which California city
will go bankrupt next? "There's a lot of them lined up in the conga
line," said Marilyn Cohen, CEO of Envision Capital Management. Up
next could be the city of Atwater, where civic leaders will vote
Wednesday night on declaring a fiscal emergency. They may even lay off a
quarter of the town’s 90-person workforce.
- Fed Easing Has Little Impact So Far: Out of Bullets? "We've been range-bound as everyone digests the information," said
Robert Laura, president of Synergos Financial Group in Brighton, Mich.
"There's nothing that's going to take us any higher. The headwinds out
there are too large for QE to overcome."
- There's Too Much Debt, Here's What to Do: Kyle Bass. Kyle Bass, who famously made a fortune shorting the subprime market
before the housing market collapse, is worried that there's too much
debt in the world. “We’ve never been here before,” said Bass,
founder of hedge fund Hayman Capital, in an interview Wednesday on
CNBC'S “Squawk on the Street.” “It has been the largest peacetime
accumulation of debt in history.” And that makes investment decisions
extremely difficult, Bass said.
Zero Hedge:
Business Insider:
WeKnowMemes:
Reuters:
Telegraph:
