Quick Overview

• U.S. wholesale sales fell 1.0% in August -- inventories rose 0.8%.
  


• U.S. jobless claims fell 20,000 last week to 478,000.
  


• Australia's unemployment rate fell from 4.3% to 4.1% in September
  


• Japan's machinery orders fell 14.5% in August,
  


• GDP in the Euro area fell 0.2% in the second quarter.
  


• S&P put GM's credit on a negative watch list. GM dropped 31%, their lowest level since 1950 as it contends with a deteriorating global sales and deteriorating cash reserves.
  

Financial Crisis: Who is going to bail out the euro?
The US has guaranteed the $3.5 trillion money market funds. It has nationalised the $5.3 trillion pillars of the mortgage market, Fannie and Freddie. The Fed is accepting any junk as collateral at its lending window. This week it went the whole hog after panic hit the $1.6 trillion market for commercial paper. It is now offering loans without any security at all. The US government has become a bank. Yes, this is US socialism. What is the alternative

Attacking Cancer Stem Cells
A team of researchers at Harvard Medical School has now developed a new way to find drugs that selectively kill cancer stem cells or prevent them from dividing.

Quick Overview

• The U.S. Fed lowered rates from 2.00% to 1.50%.
  

• The ECB, Bank of England, Bank of Canada and Sweden each cut their benchmark rates by half a percentage point.
  The ECB's rate is now 3.75 %; Canada's 2.5%; the U.K.'s at 4.5%; and Sweden's rate at 4.25%.

• China cut its interest rate from 7.20% to 6.93%
  

• U.S. pending home sales rose 7.4% in August, more than expected.
  

• The U.S. DOE said:
  Supplies of crude oil rose 8.1 million barrels to 302.6 million barrels,
  Supplies of gasoline rose 7.2 million barrels
  Supplies of heating oil supplies were up 400,000 barrels.
  Refinery use rose from 72.3% to 80.9%
  Gasoline demand fell 5.3% YoY
  Distillate demand fell 8.3% YoY.
  
  

• (Bloomberg) Exports of palm oil from Indonesia, the largest producer, may decline by as much as 1.5 million metric tons a year after the nation made the use of renewable energy mandatory, a government official said.

ECB sees crisis of "enormous proportions" as Spain creates mortgage rescue fund
The result is a mish-mash of policies that have eroded the confidence of Asian and Mid-East investors, sending the euro into free-fall. Economists have begun to warn openly about the risks of an EMU break-up.

Quick Overview

• In its efforts to stem the financial crisis, the Federal Reserve and Treasury created a new lending facility to help backstop the commercial paper market.
  

• The EU's Central Bank, Bank of England, and the Swiss National Bank injected $70 billion to the banking system to keep the sector liquid.
  

• Iceland nationalized its second-largest bank and is negotiating a loan from Russia to shore up the nation's finances. Meanwhile Russia unveiled an aid package for its own banks.
  
  
• Australia reduced its interest rate from 7.0% to 6.0% -- more than expected.
  

• U.K.'s manufacturing output fell 0.4% in August.
  

• Japan left interest rate unchanged at 0.50%.
  

• The DOE said average household heating fuel costs this winter will be 15 percent higher than last year.

Quick Overview

• Germanys Merkel announced that all private deposits in German banks would from now on be guaranteed.
  
  

• The USDA said:
  14% of the corn crop was harvested, down from the five-year average of 30%.
  31% of the soybean crop was harvested, down from the five-year average of 41%.
  16% of the cotton crop was harvested, down from the five-year average of 24%.
  59% of the winter wheat crop was planted.
  

• Bank of America announced a dividend cut and a plan to sell $10 billion in stock to raise capital.

A lighter view of the Sub Prime Crisis

Germany takes hot seat as Europe falls into the abyss

Drastic rate cuts would be a good start. Central bankers still paralysed by a misplaced fear of inflation – whether in Europe, Britain, or the US – have become a public menace and should be held to severe account by our democracies. The imminent and massive danger is now self-feeding debt deflation.

Quick Overview

• U.S. Payrolls fell by 159,000, the biggest job loss in over five years. U.S. Jobless rate remained at 6.1%.

• Institute of Supply Managements' index of services fell from 50.6 to 50.2
  

• Retail sales volume in the Euro area rose 0.3%
  

• An index of services in the U.K. fell from 49.2 to 46.0 in September
  

• World airfreight traffic saw its third consecutive month of contraction with a 2.7% decline for August.

• Congress passed the $700 billion financial rescue

Investors start fresh gold rush
The investors’ response is a rush into physical gold not seen since the second oil crisis in 1979, bankers say. The shift into gold coins and bars is so extreme that it is causing shortages at refineries and mints around the world.

Quick Overview

• The U.S. Senate approved the $700 bailout plan.
  

• U.S. factory orders fell 4.0% in August, more than expected.
  

• The European Central Bank kept its interest rate unchanged at 4.25%. Trichet said policy makers “discussed” cutting interest rate.
  

• Producer prices in the Euro area fell 0.5% in August.
  

Financial Crisis: So much for tirades against American greed
We now know that it was French finance minister Christine Lagarde who begged Mr Paulson to save the US insurer AIG last week. AIG had written $300 billion in credit protection for European banks, admitting that it was for "regulatory capital relief rather than risk mitigation". In other words, it was underpinning a disguised extension of credit leverage. Its collapse would have set off a lending crunch across Europe as banking capital sank below water level.

Quick Overview

• The U.S. Senate set a vote for tonight on a $700 billion financial-rescue plan, along with raising the limit on federal deposit insurance to $250,000 from $100,000. Business and trade groups urged Washington to enact the plan, warning that inaction would have grim consequences
  

• The Institute of Supply Managements' index of manufacturing fell from 49.9 to 43.5, a lot weaker than expected.
  

• Unemployment for the Euro area rose from 7.4% to 7.5% in August.
  

• U.K.'s index of services rose 0.6% in July
  U.K.’s manufacturing fell from 45.3 to 41.0
  

• Japan's Cabinet agreed to a $17 billion stimulus package.
  

• Manufacturing in Australia improved from 47.0 to 47.2
  
  

• The U.S. Department of Energy said:
  Supplies of crude oil rose 4.3 million barrels to 294.5 million barrels,
  Supplies of gasoline rose 900,000 barrels
  Supplies of heating oil supplies rose 1.3 million barrels.
  Refinery use improved from 66.7% to 72.3%
  Gasoline demand fell 4.5% YoY
  Distillate demand fell 8.4% YoY.

• Sales of cars and light trucks fell 35% YoY at Ford, 32% at Toyota and 24% at Honda. GM's fell 16%, Nissan Motor fell 37 %.
  

Quick Overview

• According to Standard & Poor's/Case-Shiller index U.S. Home prices fell 0.9% in July, and down 16.3% YoY.
  

• The Conference Board said U.S. consumer confidence rose from 56.9 to 59.8 in September.
  

• The Chicago Purchasing Managers' index fell from 57.9 to 56.7 in September
  

• Canada’s GDP rose 0.7% in July and up 1.2% YoY.
  

• Japan’s unemployment rate rose from 4.0% to 4.2% in August.
  Japan’s industrial production fell 3.5% in August
  Japans household spending fell 4.0%
  

• U.K.'s GDP rose 1.5%
  

• Euro zone consumer prices rose 3.6%.
  
  

• The USDA said as of September 1st, stocks of:
  Corn totaled 1.624 billion bushels.
  Soybeans totaled 205 million bushels.
  Wheat totaled 1.857 billion bushels.
  

• Bush signed a spending bill that includes a $25 billion loan package for troubled automakers
  
  
  

Banking crash hits Europe as ECB loses traction
Data from the IMF shows that European banks hold 75pc as much exposure to toxic US housing debt as US banks themselves. Moreover they have mounting bad debts from the British, Spanish, French, Dutch, Scandinavian, and East European housing markets, where property bubbles reached even more extreme levels that in the US.

U.S. Stocks Plunge After House Votes Against Bailout Plan

'Unimaginable'

``They've got to come up with something or the damage is unimaginable,'' said Henry Herrmann, Overland Park, Kansas-based president and chief executive officer of Waddell & Reed Financial Inc., which manages $70 billion.

Quick Overview

• Sept. 29 (Bloomberg) -- The Federal Reserve increased the size of previously arranged currency swaps with foreign central banks to $620 billion from $290 billion to make more dollars available to banks worldwide.
  

• U.S. Consumer spending was unchanged in August.
  

• U.S. Personal incomes rose 0.5%.
  

• YoY Japan's retail sales rose 0.7% in August.

US Economy: Even Hank Paulson's bail-out plan cannot detox global banking
Hopes that the world can cruise happily on as the US buckles have been dashed by the violent downturn across Europe and Asia over the summer. The Baltic Dry Index measuring freight rates for ships has plummeted by two thirds since May. Japan’s economy is already contracting. China’s may be close behind: a third of all textile factories in Guangdong have closed this year. House prices are tumbling in Shenzen, Beijing, Shanghai.

While Rome burns
Sceptics on that point prefer to look at European banks’ leverage ratios, which measure the amount of capital banks hold relative to total assets. By some estimates, Deutsche Bank, Barclays and UBS have leverage ratios of 1.2%, 2.4% and 2.1% respectively, which would make broker-dealers weep with fear. Get the risk calculations wrong (it can happen) and the cushion of capital looks horribly thin.