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Radioactive
water leaks at Fukushima as operator underestimates rainfall - (www.reuters.com) Highly
radioactive water overflowed barriers into Japan's Fukushima Daiichi nuclear power plant,
its operating utility said on Monday, after it underestimated how much rain
would fall at the plant and failed to pump it out quickly enough. The utility,
Tokyo Electric Power Co, also known as Tepco, has been battling to contain
radioactive water at the nuclear complex, which suffered meltdowns and hydrogen
explosions following a devastating earthquake and tsunami in March 2011. Dealing
with hundreds of tonnes of groundwater flowing through the wrecked nuclear
plant daily is a constant headache for the utility and for the government,
casting doubt on Prime Minister Shinzo Abe's promises that the Fukushima water
"situation is under control."
Where are the shoppers? Blame Congress - (www.cnbc.com) Although
the prolonged shutdown has ended, its effects continue to ripple through the
economy far beyond employee furloughs. Retail store traffic fell an average 7.3
percent each week of the shutdown compared with the same time period last year,
ShopperTrak reported Friday. The area around Washington faced an even more
drastic decline of 11.4 percent in the week of Oct. 6-12 versus the same week
last year, the analytics group found. "This time of year a certain number
of people really like the Halloween cards, and I found that was definitely cut
back," said Suprabha Beckjord, owner of a 30-year-old gift shop,
Transcendence-Perfection-Bliss, near the National Zoo.
Twice paid for no work likely for some
furloughed USAToday - (www.usatoday.com) Some
fortunate federal employees will likely get paid twice for not working this
month. Several states are expected to allow federal workers who collected
unemployment insurance during the government shutdown to keep both those
benefits and the back pay they're set to receive, according to the Labor
Department. Their decisions may add at least a few million dollars more to the
shutdown's still-untallied costs to taxpayers. Those include billions of
dollars in federal workers' lost productivity as well as lost fee income and
other revenue from government services and functions that weren't performed.
The shutdown's cost to the U.S. economy is even bigger -- as much as $24
billion in the October-December period, economists estimate, About 400,000
federal employees were furloughed during the 16-day shutdown. The legislation
that reopened the government last week provides retroactive pay for the
furloughed workers.
Families
with kids going homeless - (www.bloomberg.com) When
Montoria Freeland separated from her husband of 15 years in 2008, she left a
four-bedroom house and economic security. Before long, her pay and hours as a
pharmacy technician were cut and she found herself and her son facing
homelessness. Freeland lived with family for a time, she said, and four months
ago moved into transitional housing funded by the city government in Washington, D.C., while searching for work that pays more
than her $8.25-an-hour retail job. Having lost her oldest son in a 2000
homicide, Freeland said she insists on looking for housing in a safe
neighborhood for her surviving one, now 17. She found that’s available only at
an increasingly steep price.
“You’re trying to pay car insurance, rent,
electric, cable and if you’re using public transit, putting money on your card,
groceries,” said Freeland, who was accepted into a program that provides
temporary housing, financial planning and job-placement counseling. “It’s hard
to survive out here.”
More young people are out of school...and out
of work - (www.cnbc.com) Almost
6 million young people are neither in school nor working, according to a study
released Monday. That's almost 15 percent of those aged 16 to 24 who have
neither desk nor job, according to The Opportunity Nation coalition, which
wrote the report. Other studies have shown that idle young adults are missing
out on a window to build skills they will need later in life or use the
knowledge they acquired in college. Without those experiences, they are less
likely to command higher salaries and more likely to be an economic drain on
their communities. "This is not a group that we can write off. They just
need a chance," said Mark Edwards, executive director of the coalition of
businesses, advocacy groups, policy experts and nonprofit organizations
dedicated to increasing economic mobility. "The tendency is to see them as
lost souls and see them as unsavable. They are not."
Insight:
As Brazil's Batista falters, Rio dream does too - (www.reuters.com) Investors
who bet on Eike Batista have lost billions over the past year as the
Brazilian's ephemeral business empire imploded. But they haven't been
the only losers - the onetime Amazon gold trader and former speedboat racer's
hometown of Rio de Janeiro has also been shaken by his rapid decline. Beginning
in 2006, Batista floated a series of mining, energy and shipping companies
through share offers that by 2012 made him the world's seventh richest man,
valued by Forbes magazine at $30 billion. All the companies' names, including
that of his EBX conglomerate, ended in X, a letter he said symbolized the
multiplication of wealth. With the same verve he used to woo investors, Batista
also became the biggest booster of a hoped-for revival in Rio, the verdant,
seaside metropolis whose glorious past as Brazil's capital and cultural center
had in recent decades given way to crime, violence and the unfettered sprawl of
slums. At his peak, Eike, as the 56-year-old is known locally, bankrolled the
campaign that lured the 2016Olympics to Rio. He paid for police vehicles in
poor neighborhoods and partially decontaminated a popular local lagoon.
Treasury may have even less room for maneuver
in 2014 - (www.cnbc.com) Obama on Thursday signed into law a bill that
would suspend a $16.7 trillion cap on the national debt until early February,
when it will reset to whatever level the debt has reached. Absent a decision to
raise it again, the Treasury Department has tools to manage its cash a little
longer before it starts missing payments. The question is how long. This year,
the Treasury bumped up against the debt ceiling in May but was able keep under
it for another five months by doing things like stopping investments in some
pension funds for federal workers. These steps are known in Washington as the
Treasury's "extraordinary measures." They give the Treasury a buffer
against an economically damaging default. When the debt cap is reset next year,
several respected budget experts think the Obama administration might run out
of wiggle room by mid-March. "Extraordinary measures are unlikely to last
long," Shai Akabas and Brian Collins, analysts at the Bipartisan Policy
Center think tank in Washington, wrote in a report on Friday.
Boeing
Cuts 747 Production Again as Demand Wanes for Biggest Jet - (www.bloomberg.com) Boeing
Co. (BA) is slowing production of its
747-8 jumbo jet, the planemaker’s biggest model ever, for the second time this
year as demand continues to dwindle for four-engine aircraft. The new rate will
be 1.5 planes a month, a pace that will be maintained through 2015,
Chicago-based Boeing said yesterday in a statement. That’s a 14 percent drop
from the 1.75 rate announced in April and a 25 percent decline from production
at the start of 2013. While Boeing hasn’t yet netted any new sales for the
jumbo this year, it’s in “active” discussions with several customers and looking
forward to a 2014 rebound in the cargo market, which could spark interest in a
freighter version of the 747-8, Doug Alder, a Boeing spokesman, said in an
interview. Korean Air Lines Co. agreed to buy five of the passenger version in
June, though it never completed its order. “It’s not a surprise, in fact it’s
smart,” Howard Rubel,
a New York-based aerospace analyst with Jefferies Inc., said in a phone
interview. “It tightens up the market, doesn’t put airplanes out there that
can’t be sold.”
Illinois
Supreme Court strikes down 'Amazon tax' - (www.chicagotribune.com) Consumers
who live in sales-tax states, such as Illinois, owe state sales tax
on their Internet purchases, whether they
pay it during virtual checkout or when they file their state income tax
returns. But few pay unless tax is collected at checkout. That has the effect
of making online purchases cheaper than those at bricks-and-mortar retailers. In
March 2011, Illinois passed the Main Street Fairness Act, informally dubbed the
Amazon-tax law. It expanded the meaning of a merchant's physical presence to
include that of affiliate companies. To avoid having to collect sales tax upon
virtual checkout, some large Internet retailers, including Amazon.com, cut ties
with affiliates in Illinois, which one trade group said numbered about 9,000. After
the law passed, some prominent Illinois-based Internet businesses, such as CouponCabin.com and FatWallet.com,
fled to Indiana and Wisconsin rather than be cut off from commissions from
Amazon.com, Overstock.com and others.
Structured
Notes Tied to Credit Indexes Surge Amid Low Defaults - (www.bloomberg.com) Structured notes tied to credit-default swap
indexes are selling at a record pace as the corporate failure rate declines in
Europe. Nordea Bank AB, SEB AB and Societe Generale SA led $1.7 billion of issuance this year, a
35 percent increase from all of 2012, according to data compiled by Bloomberg.
Notes that speculate on the creditworthiness of the 50 junk-rated companies in
the Markit iTraxx Crossover Index accounted for 60 percent of the sales, the
data show. “These products now have a recent history of performing well with
very few credit events,” said Peter Frosell, head of investment products at
Nordea in Stockholm.
“They are lower risk than equities, and while the returns may not be as high as
with stocks, they are more than deposits and are less volatile.”
JPMorgan
Said to Have Reached $13 Billion U.S. Accord - (www.bloomberg.com)
So,
70,000 Furloughed Federal Workers Filed Unemployment Claims - (www.huffingtonpost.com) The
number of Americans filing new claims for unemployment benefits dropped from a
six-month high last week, but remained elevated as California continued to deal
with a backlog related to computer problems. Initial claims for state
unemployment benefits fell 15,000 to a seasonally adjusted 358,000, the Labor
Department said on Thursday. Economists polled by Reuters had expected
first-time applications to rise to 335,000 last week. A Labor Department
analyst said claims in California, which has experienced technical problems
during a conversion to a new computer system, remained at similar levels as in
the prior week. There had not been a perceptible increase in filings last week
from non-federal workers furloughed because of the just-ended government shutdown,
the analyst said.
Wells
Fargo cuts 925 more mortgage jobs - (finance.yahoo.com) Wells
Fargo & Co , the largest U.S. mortgage lender, is laying off 925
employees in its home loan unit as rising rates cut into demand for
refinancing. The San Francisco bank provided a 60-day notice on Wednesday to
the workers whose jobs will be eliminated nationwide, a spokesman said in a
statement. The bank will continue to evaluate its staff levels in response to
market conditions, the spokesman added. Wells Fargo's mortgage unit is in a
"transitional period" as higher interest rates in recent months have
made refinancing unappealing, chief financial officer Tim Sloan said on an
October 11 conference call with analysts. The bank made $80 billion in home
loans in the third quarter, down 42 percent from the same quarter last year and
the slowest quarter for home loans since the second quarter of 2011.
Shutdown deal averts catastrophe but leaves
economy in peril - (www.washingtonpost.com) The deal reached by Congress on Wednesday to end the government shutdown and
raise the debt ceiling averts a financial catastrophe but leaves the weakened
U.S. economy facing new threats. The agreement will send about 450,000 federal employees back to work and restart paychecks for the 1.3 million
employees who stayed on the job during the shutdown. Getting those salaries back
in circulation will help economic growth, particularly in the Washington area. More
important, the threat of a default on the national debt has been avoided, along
with the recession and financial crisis that may have accompanied a failure to
raise the borrowing limit. But while the bipartisan deal ends a period of
disruption that has slowed the economy — the shutdown removed more than $20
billion in direct government spending and related economic activity — it
creates new perils, setting up other economy-shaking deadlines in just a few
months.
Healthy Gen Yers won't buy Obamacare: Wilbur
Ross - (www.cnbc.com) A
cornerstone of Obamacare is getting enough healthy young people to
sign up and pay for insurance that they'll use less frequently than their older
and sick counterparts. Thus, making health insurance more affordable for
everyone. "I think that's a very doubtful assumption," private equity
billionaire Wilbur Ross told CNBC on Friday. "I think the healthy
young people are going to wait until they get sick, worry through the six
months" until the next open enrollment period and then sign up, he said on
"Squawk Box."
Obamacare does not exclude people with pre-existing conditions. Starting in
2014, most Americans will be required to have health insurance or face a tax
penalty. As has been widely reported, the online marketplaces—particularly Healthcare.gov run
by the federal government for 36 states not operating their own exchanges—have
been riddled with glitches since they opened for business on Oct. 1. So far,
that's led to only a fraction of people who've shopped for coverage to actually
enroll.
Vast majority of Obamacare
exchange visitors don't enroll - (www.cnbc.com) Obamacare
has a 99.6 percent rating—and not in a good way. A paltry 36,000 people managed
to enroll in the federal online health-insurance marketplace in its first,
software-glitch-ridden week of operation, a grim new analysis found Wednesday. That's
"far fewer than one percent of all visitors to HealthCare.gov" for the week ended Oct. 5, wrote Matt
Pace, managing director of research firm Millward Brown Digital, on a blog post
entitled "A Bleak First
Week."
In fact, the firm found 99.6 percent of HealthCare.gov's visitors left before
enrolling in coverage, a sobering statistic given the Obama administration's
goal of signing up 7 million people on new government-run
health exchanges by
2014.
realtors
desperately lobby for higher loan limits to support housing - (www.ochousingnews.com) Lower
limits on conforming loans guaranteed by the GSEs or the FHA will lower sales
volumes and prices in the price ranges no longer financeable with government
loans. Everyone who understands the relationship between easy-money financing
and aggregate house prices knows this, and those most interested in reflating
the housing bubble and maintaining sales volumes (realtors mostly) are doing
everything possible to make sure these conforming loan limits stay as high as
possible. Of course, this is contrary to the greater good and the stated goals
of the Obama administration that wants to reduce the footprint of government in
home finance, but realtors aren’t concerned with the greater good, they are
concerned about commission income. Watching the realtor lobby work is a lesson
in political influence in Washington. When the possibility of lower loan limits
was first announced, realtors began a public relations campaign to scare
everyone with fears of housing market Armageddon. Then, they followed with
letters to regulators urging bureaucrats to keep the realtor
commission subsidies in place. Finally, they organized their minions who they
control with their campaign contributions and had legislators write letters for
them also urging bureaucrats to keep the money flowing irrespective of the
taxpayer costs.
IBM’s
huge revenue miss worries Wall Street - (www.marketwatch.com) IBM
Corp.’s big miss of nearly $1 billion in third quarter revenue, combined with
its misses in the last few quarters, has got Wall Street nervous that the tech
giant is being too optimistic with its forecasts, especially for 2015. The
company blamed most of the revenue shortfall on a 40% drop in hardware sales in
China, as the country gets ready to implement a new economic plan in November. “There
simply has been a substantial impact of China’s economic reform plan, which
will be announced in November,” IBM Chief Financial Officer Mark Loughridge told
analysts. “But once that economic plan is announced and adds clarity to the
markets, we will see a recovery in the demand from state-owned enterprises in
the government sector.”
BOJ
to extend loan schemes to encourage bank lending: sources - (www.reuters.com) The
Bank of Japan is likely to extend three special loan
facilities that have provided more than $81 billion in lending over the past
three years to try to nudge Japan's risk-averse banks to
create more credit, sources said. An extension would signal the BOJ's
commitment to driving funds through the banking sector to borrowers, even as it
continues its unprecedented quantitative easing policy under Governor Haruhiko
Kuroda to try to revive an economy that
has suffered years of low-grade deflation and sluggish growth. The central
bank's policy board is expected to review the loan programs in November or
December before their expiry date of March 2014. Apart from extending them by
at least a year, the board might also combine the programs to simplify their
operations, people familiar with the matter said.
Franco-German
divisions cloud efforts to fix broken banks - (www.reuters.com) The euro zone wrestled on Monday with the question of
who should pay for a clean-up of bust banks,
as Franco-German divisions cast a cloud over efforts to seal a landmark reform
and draw a line under the region's financial crisis. As Spain and Ireland prepare
to end their reliance on international aid that shored up their banks,
finance ministers sought to devise a long-term action plan to deal with
problems likely to be uncovered in bank health checks next year. Issues
remained over how much the euro zone's rescue fund, the European Stability
Mechanism, will be able to help, as well as over how to build a single banking
framework for the bloc and resolve future problems together in a banking union.
Build
America Bonds Biggest Loser in Yield-Rise Bet: Muni Credit - (www.bloomberg.com) The
$188 billion market for Build America Bonds is set to trail the rest of
municipal debt for the first time as issuers face cuts to their federal
subsidies while investors bet interest rates will rise. The taxable debt
created under President Barack Obama’s 2009 stimulus plan has lost 6.1 percent this
year, compared with a 3.7 percent drop for the $3.7 trillion municipal market,
Bank of America Merrill Lynch data show. The bonds beat all local debt in the
first three full years of their existence as they drew buyers from across the
fixed-income universe. Build America proceeds funded infrastructure projects,
so the securities tend to have longer maturities. The duration has spurred
sharper declines this year compared with other munis, said Dan Close at Nuveen
Asset Management. Longer-dated yields have climbed since May on speculation a
growing economy will lead the Federal Reserve to curb its bond buying.
