Quick Overview

• U.S. factory orders in September rose 2.1%, the third consecutive monthly increase.

• The Fed will buy an additional $600 billion of Treasuries through June

Aussie dollar breaks the buck as Australia, India fight Fed with 'quantitative tightening'
Australia's reserve bank said the "the economy is now subject to a large expansionary shock from the high terms of trade and has relatively modest amounts of spare capacity. The risk of inflation rising again over the medium term remains".

Quick Overview

• India boosted interest rates by a quarter-point to 6.25.

• Australia’s central bank surprises the market with a 0.25 interest rate increase.

• The Institute for Supply Management’s factory index increased to 56.9 from 54.4

• Total volume of China's foreign trade is expected to hit 2.8 trillion U.S. dollars for the whole year of 2010, up 25 % YoY, the Ministry of Commerce said.

• China’s purchasing managers’ index rose to 54.7 from 53.8 in September, beating expectations.

• Moody’s' said Greece, Portugal and Ireland are likely to avoid sovereign bond defaults due to strong domestic demand from local banks and pension funds

• The Economic Times reported that India may resume sugar exports next month and the government is expected to accelerate applications from mills for shipment of about 500,000 metric tons

No update today

Quick Overview

• U.S. Durable goods rose by 3.3% in September to $199.2 billion.

• U.S new home sales rose 6.6% in September to a seasonally adjusted annual rate of 307,000 units. The median sales price for those homes was $223,800, while the average sales price was $257,500.

• U.S. Initial jobless claims decreased by 21,000 to 434,000 in the week ended Oct. 23, the lowest since early July.

• YoY industrial profits in 24 Chinese provinces and regions rose 53.5% in the January-September period.

• Eurozone economic confidence continued to rise in October, the ESI for the 16-nation bloc increased by 2 points to 104.1. And for the 27-member European bloc, the ESI also rose to 104.1 points, up by 1 point.

• The German unemployment rate fell by 7.5% YoY, staying at about 2.9 million, the lowest level since 1992.

• About 2.5 % of Thailand’s cane-growing area has been damaged in the country’s worst flooding in five decades, said the secretary-general of the Office of the Cane and Sugar Board.

• India's sugar output is expected to jump by nearly a half in the new 2010-2011 season from October, with a bigger cane crop and improved yields after late rains, the chief of Sucden India said.

No update today

QuickOverview

• Home prices in 20 U.S. cities rose at a slower pace than forecast in August from a year earlier, reflecting slumping sales as the effects of a tax credit waned. The S&P/Case-Shiller index of property values increased 1.7% from August 2009.

• The Conference Board’s confidence index rose to 50.2 from a revised 48.6 in September

• U.K. third-quarter GDP grew 0.8% QoQ and 2.8% YoY, possibly easing pressure on the Bank of England to stimulate the economy with more quantitative easing.

• Russian Federal State Statistics Service, or Rosstat, said on Tuesday food prices in the country rose 9.2% in the period of January to September, 6 times the 1.5% seen in the EU.

• Record sugar prices on Brazil's local market could induce mills to buy back more sugar from exporters to be sold locally. "As long as local prices are higher than those abroad, it is quite natural that this will continue happening," said Arnaldo Correa, director at Archer Consulting.

• The worst flooding for decades in Thailand has swamped thousands of acres of farmland. Thailand is the world's biggest rice exporter, the top rubber exporter and the second-biggest sugar exporter.

• USDA crop condition report for wheat, the first of the season, placed 47% of the crop in good/excellent condition -- the worst start in fifteen years.
  
  
  
  

Toxic Brew Most of these bodies call themselves “free market thinktanks”, but their trick, as (Astro)Turf Wars points out, is to conflate crony capitalism with free enterprise, and free enterprise with personal liberty.

The WikiLeaks Iraq Logs
A Protocol of Barbarity The online whistleblower platform WikiLeaks is posting close to 400,000 US military reports from the Iraq war on the Web. The logs show in detail how brutally the war was waged and the helplessness with which the United States acted. By SPIEGEL Staff

Quick Overview

• The Treasury Department sold $10 billion in 5-year Treasury Inflation Protected Securities on Monday at a yield of negative -0.55%, the first time the yield on the maturity has come in below zero.

• Czarnikow expects Sugar consumption to rise 50% over next 20 years

• The National Association of Realtors said US existing home sales rose 10% to a seasonally adjusted annual rate of 4.53 million, from a downwardly revised 4.12 million in August.

• (Telegraph) In an article published in Angelaki: Journal of the Theoretical Humanities, Dr Crosthwaite says that the willingness of banks to deal in subprime loans and related derivatives, which were bound to result in disastrous losses, can only be understood if the bankers unconsciously desired the destruction of their own institutions.. Dr Crosthwaite argues that such catastrophic losses can be sources of masochistic pleasure for those who experience them.

• Chinese imports of Australian ore reached 26 million tonnes in September, up 34 % MoM.

• U.S. scientists said Monday that large amounts of oil have accumulated on the Gulf of Mexico seafloor, contradicting earlier statements by federal officials that the oil leaking from BP's damaged underwater well had largely gone.

• MoM Industrial new orders in the euro zone rose by 5.3% in August

• WTO says U.S. ban on China poultry products illegal

• (Bloomberg) -- Thailand’s government halted sales of rice from state stockpiles because of concern that floods will damage crops and reduce production of the grain

German boom creates ECB policy nightmare as south lags
"Germany is recovering brilliantly," said S&P's Jean-Michel Six. "Its products are not price-sensitive to the exchange rate. It is entering a virtuous circle where exports lead to capital spending, leading in turn to consumption after years of quasi death."

Quick Overview

• Bloomberg / Businessweek 10/31/2010: The top 20% richest Americans own 84% of the nation’s total wealth. The poorest 20% own 0.1%

• (FT) Finance ministers, meeting this weekend in the South Korean city of Gyeongju, agreed for a policy framework to contain large current account surpluses and deficits, but a proposal to set specific targets ran into opposition.

• (FT) Overlay Asset Management, a $20bn foreign exchange manager, is launching a currency basket it claims represents a "virtual world reserve currency".

• (Reuters) - Britain's finance minister George Osborne is unnecessarily risking the economic recovery with his deep spending cuts; the country's new Nobel Prize winning economist was quoted as saying on Saturday.

• WikiLeaks said on Saturday its release of nearly 400,000 classified U.S. files on the Iraq war showed 15,000 more Iraqi civilians died than previously thought.

• Google said its "Street View" cars around the world "accidentally" collected more personal data than previously disclosed, and that it was changing its privacy practices.

• (Reuters) Israel cannot use the Biblical concept of a promised land or a chosen people to justify new settlements in Jerusalem or territorial claims, a Vatican synod on the Middle East said on Saturday.

• QoQ Australian producer prices rose 1.3% in Q3 of 2010 and rose 2.2% YoY
  
• Japan’s exports climbed 14.4% YoY
  
  
• Russia extended its ban on grain exports to July 1
  
  

The Next Idiot Might Be You More than one hundred fifty years ago, two candidates for state senate conducted a series of seven debates, vying for control of the Illinois state legislature. The main issue was slavery. The first candidate had 60 minutes to speak. The second, then had 90 minutes to both deliver his own speech and rebuttal. Then 30 minutes were offered to the first speaker. One was Abraham Lincoln. The other, Stephen Douglas. Which of our national politicians, or talk show hosts, is up to that exercise? Sixty minutes on the mortgage crisis, Wall Street, and the economy.

Today, rigorous debates mostly take place in a side-current of high school and college extra-curricular activities. It is not exactly a lost art. A fair percentage of the million plus attorneys in the U.S. learned the skill of debate at some point in their training. Think about the intellectual qualifications to organize a thirty minute rebuttal; thoughtfulness, mastery of complex subjects, the ability to communicate and to build a line of logic that is understandable. Imagine giving Sarah Palin that challenge.

Quick Overview

• U.S. Initial jobless claims fell by 23,000 to 452,000 in the week ended Oct. 15

• Russia to privatize 900 state enterprises by 2015

• IMF Director for Asia Pacific Region Anoop Singh said Asia remains firmly in the lead of the global economic recovery and strong growth in the region is set to continue.

• The German government raised 2010 economic growth estimate to 3.4 % from April's 1.4 %

• Chinese officials said China processed 8.49 million barrels of crude oil per day in September, 6.6% more than last year and its second highest level ever.
• China’s Q3 GDP rose 9.6% YoY
• China’s Sept. CPI rose 3.6 % YoY
• China’s Sept. industry output rose 13.3% YoY
• Rice supply concerns underpin gains as Typhoon Megi approaches coastal China crop areas.

• US crude inventories rose by 700,000 bbl to 361.2 million bbl
• Gasoline stocks rose 1.2 million bbl to 219.3 million bbl
• Distillate fuel inventories fell 2.2 million bbl to 170.1 million bbl

No update today

Quick Overview

• Bank of China lifts deposit rates a quarter of a percentage point.

• (Bloomberg) Silver exports from China, the world’s largest, may drop about 40 percent this year as domestic demand from industry and investors climbs, according to Beijing Antaike Information Development Co.

• U.S. housing starts rose by 0.3% in September

• (Bloomberg) Commodities will rally if the U.S. Federal Reserve eases monetary policy next month, according to UBS AG, which describes a likely second round of quantitative easing as a “game changer” for copper, gold and palladium

• Treasury Secretary Timothy Geithner vowed on Monday that the United States would not devalue the dollar for export advantage. (No kidding)

• Basel III is “strengthening” bank capital requirements, by increasing the minimum common equity requirement to a total of 7% from the current 2.5%. (WOW)

• (Bloomberg)Wall Street bailout returns 8.2% profit beating treasury bonds
  
  

Quick Overview

• Brazil's sugar output for the 2010-2011 crop season is expected to reach 40.5 million metric tons, said F.O. Licht on Monday.

• The Philippines may lose 600,000 metric tons of its rice crops because of Typhoon Megi

• Rice production in Australia may quadruple next harvest as heavier-than-usual rainfall boosts water supplies following a decade of drought.

• (Bloomberg) -- Confidence among U.S. homebuilders rose in October to the highest level in four months, a sign residential construction is stabilizing at depressed levels.

• The cost of living in New Zealand rose 1.1% in Q3

• Grain-hauling ships have been blocked since Oct. 16 at ports in Ukraine, the world’s largest exporter of barley.

• Citigroup, the US bank part-owned by the American taxpayer, posted better-than-expected third-quarter net profits of $2.2bn.

• China must make a "major breakthrough" to restructure and rebalance its economy, the Communist party said in a five-year plan.

• (Spiegel) The world is gathered in Japan this week in an effort to put an end to the extinction of plant and animal species across the globe. But while everyone agrees that biodiversity is important, the conference may fail anyway -- partially because the Americans don't seem interested.Industrial

• Industrial Production in the U.S.  fell 0.2 %

Quick Overview

• Elwyn Taylor on Twitter: Omen? La Niña development to date is most like 1973, the next year (1974) was not good for US corn.

• Typhoon Megi gathered strength as it barreled towards the northern Philippines on Monday, with authorities evacuating thousands of villagers to safer ground hours before it was to hit land. State weather forecasters said Megi has developed into a super typhoon and was expected to slam into the extreme northern Philippines by Monday and then cut westwards towards the South China Sea.

• (WSJ) Zambian locals rioted and blocked a road leading to Chinese-owned Collum Coal Mine Ltd. on Saturday to protest the shooting of at least 11 miners, allegedly by Chinese supervisors during a protest over low wages, police officials said Sunday.

• (Bloomberg) -- The Bank of England will increase its emergency bond-purchase plan by 100 billion pounds ($160 billion) to aid the economy as the government cuts spending, the Centre for Economics and Business Research said.

• (Bloomberg) -- China’s medium and heavy rare earths reserves may last 15 years to 20 years at the current rate of production

• (FT) Charles Evans, president of the Chicago Fed, said that “in my opinion, much more policy accommodation is appropriate today” because “the US economy is best described as being in a bona fide liquidity trap”, a point where ultra-low interest rates and high savings rates conspire to make monetary policy ineffective.

The Subprime Debacle: Act 2" But once mortgage loan securitization happened, things got sloppy...they got sloppy by the very nature of mortgage-backed securities.
"The whole purpose of MBSs was for different investors to have their different risk appetites satiated with different bonds. Some bond customers wanted super-safe bonds with low returns, some others wanted riskier bonds with correspondingly higher rates of return.
"Therefore, as everyone knows, the loans were 'bundled' into REMICs (Real-Estate Mortgage Investment Conduits, a special vehicle designed to hold the loans for tax purposes), and then "sliced & diced"...split up and put into tranches, according to their likelihood of default, their interest rates, and other characteristics.
"This slicing and dicing created 'senior tranches,' where the loans would likely be paid in full, if the past history of mortgage loan statistics was to be believed. And it also created 'junior tranches,' where the loans might well default, again according to past history and statistics. (A whole range of tranches was created, of course, but for the purposes of this discussion we can ignore all those countless other variations.)
"These various tranches were sold to different investors, according to their risk appetite. That's why some of the MBS bonds were rated as safe as Treasury bonds, and others were rated by the ratings agencies as risky as junk bonds.
"But here's the key issue: When an MBS was first created, all the mortgages were pristine...none had defaulted yet, because they were all brand-new loans. Statistically, some would default and some others would be paid back in full...but which ones specifically would default? No one knew, of course. If I toss a coin 1,000 times, statistically, 500 tosses the coin will land heads...but what will the result be of, say, the 723rd toss? No one knows.

Quick Overview

• The Fed’s Bernanke is a step closer to adopting a formal inflation target saying that most of the body’s officials think that price rises should be “2 % or a bit below”.

• U.S. Consumer sentiment index fell to 67.9

• Czech PPI rose to 2.4% YoY

• The U.S. federal government spent $1.294 trillion more than it collected in the fiscal year that ended Sept. 30. The deficit amounted to 8.9% of GDP. That's down from fiscal 2009, when the deficit of $1.416 trillion was 10.0% of GDP.

• Annual inflation in the Eurozone rose to 1.8% in September

• U.S. retail sales rose a stronger-than-expected 0.6% in September, lifted by big-ticket items including autos, electronics and appliances