Bloomberg:
- Draghi Takes Pitch Into Lion’s Den as German Faith in ECB Wavers. Mario Draghi is taking his sales pitch into the lion’s den. By appearing before a joint session of three committees of the German parliament in Berlin today, the European Central Bank president is seeking popular support in Europe’s largest economy for his plan to purchase government bonds to stem the debt crisis. While Draghi says his so-called Outright Monetary Transactions are required for price stability, some German policy makers say they are an affront to the monetary orthodoxy upon which the ECB was founded. “Draghi is on a mission to smooth concern that OMT won’t send inflation skyrocketing or lumber German taxpayers with liabilities they can’t pay,” said Frank Schaeffler, finance spokesman for the Free Democrats, who are in coalition with Chancellor Angela Merkel’s Christian Democrats. “Many lawmakers -- even if they don’t admit it -- have grown suspicious of the ECB and its head, once dubbed the most German of non-German central bankers.” While the announcement of Draghi’s yet-to-be-deployed bond- buying program has calmed financial markets, Germany’s revered Bundesbank has openly opposed the plan, fanning concerns among politicians and the public. Some 42 percent of respondents to a Stern survey published Sept. 6 said they had little or no trust in the ECB president, compared with just 18 percent who judged him favorably.
- Giant Taj Mahal Can’t Hide Weakness of Dubai’s Property Market. Dubai proclaimed its real estate comeback in the only style it knows: grandiose. A replica of the Taj Mahal about four times bigger than the original, a skyscraper with nine swimming pools and a mile-long canal winding its way around office buildings are among the high-profile projects unveiled in the past few weeks. The plans had been on hold since the financial crisis brought the emirate’s property boom to a halt in 2008. The eye-catching developments may be creating a buzz. In reality, few areas of Dubai are showing signs of recovering from a slump that caused property values across the emirate to fall by as much as 65 percent. About a quarter of Dubai’s residential properties are empty and an additional 25,000 are due to be completed next year as developers fulfill contracts awarded before the crash, Jones Lang LaSalle Inc. estimates.
- Pimco Prepared to Reduce Emerging-Market Corporate Debt on China. Pacific Investment Management Co., manager of the world’s biggest mutual fund, is prepared to cut its holdings of emerging-market corporate debt next year on concern a flood of new sales and further economic slowdown in China will put an end to a 12-month rally in the securities. The plunge in yields to a record 4.73 percent since the Federal Reserve unveiled a third round of asset purchases known as quantitative easing in September means some corporate bond prices don’t accurately reflect the chances of further economic deterioration in Asia or Europe, said Brigitte Posch, who helps manage about $92 billion in emerging-market corporate bonds for Newport Beach, California-based Pimco. “The rally will probably continue until the end of the year, but the market is starting to get weaker,” Posch said in an interview in Rio de Janeiro on Oct. 22. “At the beginning of next year, depending where the credit spreads are, I will probably be increasing my underweights. If we have two more months of this type of rally, I’d rather be more defensive.”
- Netflix(NFLX) 1.16 Million Customer Signups Miss Analyst Estimates. Netflix Inc., the world’s largest online video service, reported new customer signups that missed analysts’ projections, a shortfall that forces the company to cut its U.S. growth outlook for the year. The shares fell. Netflix added 1.16 million U.S. streaming subscribers in the third quarter, the Los Gatos, California-based company said today in a statement on its website. Analysts predicted 1.43 million, the average of 10 estimates in a Bloomberg survey. Netflix tumbled almost 19 percent to $55.58 in extended trading after the report.
- Facebook(FB) Sales Top Estimates as Companies Warm to Mobile Ads. Facebook Inc., owner of the biggest social network, posted sales that topped analysts’ estimates, a sign of early success in a push to make more money from advertisements aimed at users of handheld electronics.
- Tempur-Pedic(TPX) shares plunge after-hours on loss. Tempur-Pedic International Inc.'s shares plunged more than 18 percent in after-hours trading Tuesday after the specialty mattress maker posted a third-quarter loss, reported a decline in mattress sales and cut its full-year outlook.The company said tough competition continued to weigh on its business in North America and the weak economy softened demand in Europe.
- Dow Chemical(DOW) to Eliminate 2,400 Jobs and Close Factories. Dow Chemical Co., the largest U.S. chemical maker by sales, will cut about 2,400 jobs and shut 20 manufacturing plants to reduce annual costs by $500 million in the face of slow global economic growth.
- Mortgage Lenders See Tighter Credit Under New U.S. Rules. Mortgage bankers and Realtors are warning that it could become even harder for borrowers to qualify for a home loan early next year as the industry faces a barrage of new rules. Regulators are preparing to release the language of two rules taking effect in January to set standards for non-abusive lending and require banks to hold a slice of risky mortgages on their books. In addition, U.S. banking overseers must also complete new capital standards mandated in the international Basel III accords next year. The housing rules, coming almost simultaneously, may overlap or conflict, creating what National Association of Realtors President Maurice “Moe” Veissi called a “perfect storm” of regulation. “There’s this intersection of policies that are absolutely not being considered by this massive array of institutions, all involved in deciding the future of homeownership and rental opportunity,” David Stevens, president of the Mortgage Bankers Association, said in an Oct. 22 speech at the association’s annual conference in Chicago.
- Candidates Battle to Lock Up Key States. Backed by a ramp-up in TV ad purchases, Mitt Romney will spend much of the final two weeks of the campaign presenting himself as a bipartisan bridge-builder, aides said.
- Cheap Natural Gas Gives New Hope to the Rust Belt. Three decades after being devastated by the closing of steel mills, this gritty river valley is hoping its revival will come from cheap natural gas. The hope doesn't rest on drilling rigs, but on a multibillion-dollar chemical plant that Royal Dutch Shell PLC is considering building here because of a flood of domestically produced natural gas. Community leaders are touting the plant as the first step toward reviving a manufacturing industry many thought was gone for good.
- Weak Earnings Spark Selloff. U.S. Stocks Lose $500 Billion in Three Days, as Fed's Impact Appears to Fade. In just a few days, American corporations have doused months of euphoria for stock investors.
- Syrian Warplanes Strike Rebel-Held Town in North. Syrian warplanes on Tuesday struck a strategic rebel-held town in the country's north in an attempt to reopen a key supply route, activists said, as a U.N.-proposed cease-fire meant to start this week appeared increasingly unlikely to take hold. The U.N.-Arab League envoy to Syria has suggested that both sides in Syria's 19-month-old conflict lay down their arms during Eid al-Adha, a four-day Muslim holiday that begins Friday. However, neither Syrian President Bashar al-Assad nor rebels fighting to topple him have committed to a truce, and international envoy Lakhdar Brahimi hasn't said how such a truce would be monitored.
- Fear Trails a Test of Afghan Pullout. Taliban checkpoints have mushroomed on the main roads leading here as the insurgency spreads into Bamiyan—the province selected last year to kick off the U.S.-led coalition's handover to Afghan security control because it was deemed the country's safest. With insurgents and bandits openly roaming Bamiyan's remote districts and the Taliban blowing up food and fuel trucks on the road to Kabul, many residents here increasingly fear they will be overrun once the last coalition base in the province closes in April. "Right over these mountains, they are waiting to launch rockets at us as soon as the foreign forces leave," said Ali Hekmat, dean of Bamiyan University's Education Department, pointing at the pink-hued cliffs ringing the provincial capital. "It is very easy to destabilize this province."
- Hedge Funds Belt Few Home Runs. They are the few. The proud. The hedge-fund managers making a killing this year. David Tepper's firm was up about 25% through Friday, partly from a bet Europe will avoid a meltdown. Steve Mandel's firm gained nearly as much from soaring consumer and technology stocks. Pine River Capital Management rose 30% thanks in part to subprime mortgages, as did Josh Birnbaum's Tilden Park. And the Barnegat Fund has climbed over 39% with a debt strategy that the manager concedes isn't for the faint of heart.
- J.P. Morgan(JPM) Gets Stung by China Downturn. Fund Run by Bank Loses High-End Residential Tower to Foreclosure as Rules on Property Purchases Hit Luxury Market. A luxury apartment building that is one of the most visible casualties of China's high-end property bust is up for auction in the northeast city of Dalian, after a bank foreclosed on the property.
- A Second First Term. Meet Obama's new agenda, same as the old agenda, only less.
- Merkollande Becomes Merde. European Discord Mounts – The Fraying Franco-German Alliance.
- Greece Kills Bond Buyback Proposal.
- On Iranian Sanctions And Chinese Energy Needs.
- A Mushroom Cloudy Future: In 2016 Japan, Net Debt Per Capita Will Be $140,000.
- China Flash Manufacturing PMI Posts Modest Improvement Even As It Contracts For 12 Months In A Row.
- Uh Oh, Microsoft's(MSFT) Surface Tablet Is Getting Some Awful Reviews.
- Gen X Has Been Absolutely Clobbered By The Recession.
- Keeping Capital Gains Taxes Low Actually Helps Growth.
- Japan Pulls Back From 'World's Factory' As China Tensions Simmer.
- DYLAN GRICE: Greek Austerity Is Reopening Deep Social Wounds And Could Lead To Civil War.
Washington Post:
- ‘Fiscal cliff’ warning: Senators urge financial industry not to sit on sidelines. Two key senators told the financial community on Tuesday that the industry’s engagement is critical if the country is to avoid the “fiscal cliff,” a series of automatic tax hikes and spending cuts that are scheduled to take effect in January. Sens. Mark R. Warner (D-Va.) and Saxby Chambliss (R-Ga.), both central players in a bipartisan effort to avert the cliff, said the industry cannot sit back as it did last year when an ugly political battle unfolded over raising the federal debt limit.
- Buffalo Wild Wings(BWLD) profit misses; sees comp sales slowing. Buffalo Wild Wings Inc's profit missed analyst estimates as high costs pinched, and the casual dining chain disclosed slowing comparable sales in the beginning of the fourth quarter, sending its shares down 11 percent after market.
- Debt crisis: Europe ratchets up grip on Madrid. The EU-IMF Troika in charge of Spain's €60bn (£48bn) bank rescue is to demand much tougher action by the country's authorities to clean up toxic debts, risking a clash that could deter Madrid from requesting a full sovereign bail-out.
- Rising production costs in China and U.S. plans to bolster its manufacturing sector will contribute to a trend of long-term capital outflows, Zhang Monan, a researcher with the State Information Center, writes in a commentary published today. Foreign capital likely to move to other lower-cost nations as the cost of production rises in China, Zhang writes.
- China's northern province of Shaanxi will select some areas for a trial of a profit margin cap on property project sales at about 10%, citing Zhang Jigang, head of the property market supervision bureau under the provincial government constitution department.
- None of note
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 122.0 +6.0 basis points.
- Asia Pacific Sovereign CDS Index 95.25 +1.25 basis points.
- FTSE-100 futures +.29%.
- S&P 500 futures +.53%.
- NASDAQ 100 futures +.46%.
Earnings of Note
Company/Estimate
- (KMB)/1.32
- (LMT)/1.85
- (OC)/.33
- (PX)/1.39
- (TMO)/1.16
- (GRA)/1.00
- (WYN)/1.10
- (ALXN)/.47
- (LLY)/.84
- (GD)/1.78
- (NOC)/1.69
- (TUP)/.90
- (EMC)/.42
- (BA)/1.12
- (IACI)/.66
- (BMY)/.42
- (DAL)/.91
- (DPS)/.77
- (T)/.60
- (AVY)/.45
- (AKAM)/.41
- (CCI)/.16
- (AVB)/1.40
- (SYMC)/.37
- (CLF)/1.06
- (EQR)/.72
- (SLG)/1.12
- (TSCO)/.67
- (CTXS)/.65
- (FFIV)/1.18
- (OI)/.67
- (WYNN)/1.34
- (RYL)/.17
- (EAT)/.38
- (BNNY)/.25
- (ATI)/.39
- (LCC)/.92
- (CAKE)/.49
- (JNY)/.33
8:58 am EST
- The Markit US PMI Preliminary reading for October is estimated to rise to 51.5 versus 51.1 in September.
- New Home Sales for September is estimated to rise to 385K versus 373K in August.
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,800,000 barrels versus a +2,860,000 barrel gain the prior week. Distillate inventories are estimated to fall by -1,200,000 barrels versus a -2,218,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +500,000 barrels versus a +1,720,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.5% versus a +.7% gain the prior week.
- The FOMC is expected to leave the benchmark fed funds rate at .25%.
- None of note
- The Eurozone Manufacturing PMI, German Business Expectations, ECB's Draghi meeting with German Parliament, 5Y T-Note auction and the weekly MBA mortgage applications report could also impact trading today.