- Australia takes the lead. Australia (ETF: EWA) unexpectedly raised its interest rate target by 0.25 to 3.25%, making it the first G-20 country to begin unwinding monetary stimulus, sending the Aussie dollar up almost a full cent to $88.53 vs. the U.S. dollar. "The global economy is resuming growth," the central bank said in a statement. It predicted inflation would continue to moderate, "but now will probably not fall as far as earlier thought," and said the risk of a serious economic contraction has passed.
- Pay czar to shave salaries. Pay czar Ken Feinberg's first move to clamp down on pay at the seven firms he regulates (AIG (NYSE:AIG), Bank of America (NYSE:BAC), Citigroup (NYSE:C), GM, GMAC, Chrysler and Chrysler Financial) will reportedly be to clip top executives' take-home pay, shifting a portion of their compensation into stock with a several-year lockup. Bonuses at bailout-recipient firms are already restricted by Congress. The Fed, which plans to propose its own framework to regulate bankers' pay in order to limit risk-taking, is not expected to follow Feinberg's lead, but the government hopes his suggestions will be voluntarily adopted by other companies.
- Apartment glut hits 23-year high. U.S. apartment vacancies rose to 7.8%, a 23-year high, according to new data from real-estate research firm Reis. Rents, down a surprisingly mild 2.7% over the past year, fell by 0.3% in Q3. Reis expects Q4 - historically a weak season for rentals - may bring vacancies to new all-time highs. With unemployment at 9.8%, many would-be renters are doubling up or moving in with family and friends.
- AIG clinches $2.2B sale of Taiwan unit. Sources say AIG (AIG) has sold its Taiwan life insurance unit (Nan Shan) to Primus Financial Holdings for $2.2B, with a contract to be signed on Friday. Chinatrust, which had bid $2.4B, lost because it wanted a guarantee on pension funds. The winning bid exceeds market expectations, and the $2B target AIG set for Nan Shan.
- Stimulus without the label. Instead of a much-debated Stimulus 2.0, the Obama administration is considering broadening a mix of spending programs and tax cuts to prop up job markets while sidestepping the label. Incentives being discussed include increasing transportation spending, extending the new homebuyer tax credit, and fattening unemployment benefits. In a briefing yesterday, White House Press Secretary Robert Gibbs said there were no plans for another stimulus, but said the idea of "extensions" are "being bandied around in Congress."
- Retailers expect another red holiday season. U.S. holiday retail sales will likely fall 1%, an 'unprecedented' second straight year of contraction after a 3.4% decline last year, according a report today by top industry trade group National Retail Federation, though many were looking for an even glummer forecast. While signs of recovery have begun to emerge, uncertainties over job security and home values will keep shoppers focused on practical gifts and budget shopping, the group said.
- Citi to build investment adviser group. Citigroup (C) said Monday it will build its own retail investment advisory business, as it transfers control of Smith Barney to Morgan Stanley. The unit will initially employ 600 advisers, who will be paid by clients yearly and collect no commissions, and will also look to send clients to independent money managers in exchange for referral fees. Analysts say the strategy will be difficult to execute, given Citi's relatively small branch network and the smallish size of the proposed unit.
- Saab sale secures Sweden's blessings. Sweden said it will guarantee the 4.3 billion crown ($610M) loan GM has asked the European Investment Bank for to facilitate its sale of ailing car maker Saab to Koenigsegg. Now it's now up to the EIB to decide if it will lend Saab the money, and to the EU's antitrust division to decide whether the loan distorts competition.
- Regulating bloggers. New FTC guidelines will require bloggers to disclose any money or freebies they receive in exchange for writing product reviews, an attempt to bring mainstream media rules to the internet. A blogger or social-media user who endorses a product without disclosing his connection to the company will face an $11,000 per-post fine.
- ISM's Services Index rose to 50.9 in September, exceeding economist consensus of 50, and the highest since Oct. 2007, up from 48.4 in August. The business activity index jumped to 55.1 from 51.3; new orders went to 54.2 from 49.9; while ISM's prices paid index plunged to 44.3 from 63.1.
- The Conference Board's Employment Trends Index rose by 0.3% in September, its the first monthly increase since Jan. 2008. The index now stands at 88.5, down 15.6% from a year ago. The data suggest the decline in job losses will continue, notwithstanding Friday's NFP number, "but the road to recovery is definitely going to be bumpy and may last unusually long," the group said.
Earnings: Before Open
- Pepsi Bottling Group (PBG): FQ3 EPS of $1.06 beats by $0.01. Revenue of $3.63B (-4.7%) vs. $3.73B. Company says easing commodity costs and diminished foreign currency headwinds are driving sequential improvement in performance vs. H1. (PR)
Earnings: Monday After Close
- Mosaic Company (NYSE:MOS): FQ1 EPS of $0.23 misses by $0.12. Revenue of $1.46B (-66%) vs. $1.54B. Shares +0.8% AH. (PR)
- Robbins & Myers (NYSE:RBN): FQ4 EPS of $0.39 beats by $0.19. Revenue of $155M (-32%) vs. $137M. Sees Q1 EPS of $0.05-0.15 vs. $0.22 and full-year EPS of $0.80-1.00 vs. $1.19. Shares -7.1% AH. (PR)
- Team (NYSE:TISI): FQ1 EPS of $0.09 misses by $0.02. Revenue of $101M (-18%) vs. $104M. Shares -8.7% AH. (PR)
Overseas markets were broadly higher Tuesday after strong gains in Monday's U.S. stock markets. Futures have moved up in the overnight session.
- Asia: Nikkei +0.18% to 9,692. Hang Seng +1.87% to 20,812. BSE +0.55% to 16,959. Shanghai closed.
- Europe at midday: London +1.6%. Paris +1.4%. Frankfurt +1.6%.
- Futures: Dow +0.8% to 9619. S&P +0.9% at 1046. Nasdaq +0.8%. Crude +1.2% to $71.25. Gold +0.8% to $1,026.50. Treasurys are flat. Euro +0.5% vs. dollar. Yen +0.5%. Pound -0.2%.
Tuesday's Economic Calendar
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:30 Senate Banking Committee: Minimizing Potential Threats from Iran
10:00 House Financial Services Committee: Capital Markets Regulatory Reform
10:00 Results of $50B, 70-Day TAF Auction
1:00 PM Results of $39B, 3-Year Note Auction
3:00 PM Fed's Fisher speaks
5:00 PM ABC Consumer Confidence Index
9:45 PM Fed's Hoenig speaks
- Notable earnings before Tuesday's open: GIGM, PBG
- Notable earnings after Tuesday's close: YUM
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.