Libor May Be Just the Tip of the Iceberg When it Comes to Manipulation

“Royal Bank of Scotland Group Plc (RBS) suspended a trader for trying to rig the Singaporedollar swap offer rate, indicating employees may have sought to manipulate more than just Libor, two people briefed on the matter said.

Senior trader Chong Wen Kuang was put on leave earlier this year for trying to rig the interest rate to benefit his trading position, said the people who asked not to be identified because the bank is probing his actions. He is the first RBS employee to be suspended or fired for attempting to rig a benchmark other than the London interbank offered rate, one of the people said.”

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“A possible bailout for Spain is not imminent, a European Union official said, as concerns grow over the country’s ability to reach its deficit-reduction targets.

There’s no guarantee that Prime Minister Mariano Rajoy will ask for aid from the EU rescue funds and he’s facing a challenge to deliver the budget-deficit cuts pledged, the aide, who asked not to be named, told reporters in Brussels today.

While European Central Bank President Mario Draghi said yesterday the ECB is ready to start buying bonds of sovereigns that qualify for aid, officials from Spain, Germany and now the EU have damped expectations of a rescue this week. Rajoy on Oct. 2 denied reports a rescue request would come this week. Economy Minister Luis de Guindos last night said no bailout was needed.

There’s “a potential slowdown in Spain’s application for a European program,” Thomas Costerg, an economist at Standard Chartered Bank in London, said yesterday by e-mail. “There is a rising fear that the 2013 budget and the stress tests may have been some sort of window dressing to get European assistance.””

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The French economy will fail to grow in the second half, extending stagnation to five quarters, national statistics office Insee predicted yesterday.

“Gross domestic product will be unchanged in the third and fourth quarters, with corporate investment, household spending and foreign trade all broadly flat, Insee said in a report. Government spending is preventing the nation from falling into recession.

The report, entitled “At a Standstill,” underlines the challenge to President Francois Hollande as he struggles both to contain the budget deficit and improve competitiveness in Europe’s second-largest economy. After two more quarters in which GDP has stalled, France will have posted five with no growth following two with expansions of 0.2 percent or less.”

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Good luck…..

“Italian Prime Minister Mario Monti’s Cabinet approved cuts to regional-government budgets aimed at curbing corruption and excessive spending, exemplified by accusations against a politician arrested this week.

“It’s important that we save something worth even more than money, the trust citizens have in their institutions,” Monti told reporters last night in Rome after a cabinet meeting. The government will give an estimate next week of the savings derived from the measures, Finance Minister Vittorio Grilli said.”

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“A Credit Suisse Group AG (CSGN) unit was accused in a lawsuit by a U.S. credit union regulator of selling faulty mortgage-backed securities to three credit unions, causing them to collapse.

Credit Suisse Securities misrepresented the securities’ risks, leading the credit unions to believe there was little chance of losing money when they bought $715 million worth of them, the National Credit Union Administration said in a complaint filed yesterday in federal court in Kansas City, Kansas.”

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“Russia’s central bank held back from raising interest rates after a surprise increase last month, a pause that may prove brief after inflation quickened past the target range to the fastest in 10 months.

Bank Rossii kept the refinancing rate at 8.25 percent at a meeting today after a quarter-point increase in September, the central bank in Moscow said in a statement on its website. The decision was forecast by 19 of 22 economists in a Bloomberg survey. The main short-term lending and deposit rates will remain at 5.5 percent and 4.25 percent.

While economists project the central bank will raise borrowing costs again before the end of this year, policy makers may delay further increases as they gauge the impact of higher rates on a slowing economy and the government steps up efforts to hold down grain prices. Russia is planning to start sales of wheat from state reserves, with export restrictions remaining in the government toolkit for fighting inflation.”

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“Australia’s dollar will rebound by year-end on demand for the world’s highest-yielding AAA assets even if the Reserve Bank cuts interest rates to a record, according to the currency’s most-accurate forecasters.

The so-called Aussie will climb to $1.05 by Dec. 31, from $1.0268 at 12:54 p.m. in Sydney, according to Credit Agricole CIB, which had the lowest margin of error for the past six quarters as tracked by Bloomberg Rankings. Second-rated National Australia Bank Ltd., which has the weakest end-2012 projections among the top five forecasters, sees the local dollar at parity by Dec. 31. The median prediction from 44 analysts surveyed by Bloomberg News is for $1.02.

“The attraction to the Aussie dollar as a reserve currency remains fairly strong,” said Mitul Kotecha, Hong Kong-based head of global foreign-exchange strategy at Credit Agricole. “Given that market expectations for rates are already pretty dovish, I don’t think we’re going to see too much more of a negative impact on the Aussie.”

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“The Bank of Japan (8301) held off from more easing after adding to stimulus last month, preserving its policy firepower despite increased political pressure and signs of an economic contraction.

The BOJ kept its asset-purchase fund, the main policy tool amid near-zero rates, at 55 trillion yen ($700 billion), the bank said in a statement in Tokyo today. The outcome was expected by all 20 economists surveyed by Bloomberg News.”

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“Shoppers from China’s mainland curbed spending at Hong Kong luxury stores during the Golden Week holiday, reflecting growing pressure on the city’s economy from faltering tourist demand.

Purchase of luxury goods by mainland visitors in Hong Kong is set to fall at least 10 percent from a year ago during this week’s holiday, said Joseph Tung, executive director of the Travel Industry Council. The decline comes even as the number of tourists coming from China increases.”

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World Markets

Currencies

Commodities

USD Libor

Euribor

Yields for Italy, Spain, France,  and Germany …

 

 

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Fascinating (and perhaps too clever) note from Citi’s FXguru Steven Englander commenting on tomorrow’s big Non-Farm Payrolls report. He has a very surprising argument for what would be the best outcome for markets

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President Obama reelection campaign, rattled by his Wednesday night debate performance, could be in for even worse news. According to knowlegable sources, a national magazine and a national web site are preparing a blockbuster donor scandal story.

Sources told Secrets that the Obama campaign has been trying to block the story. But a key source said it plans to publish the story Friday or, more likely, Monday.

Read the rest here.

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Not convinced that Mitt Romney’s victory has something to do with today’s rally?

Here’s a fun chart.

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Total N. American rail traffic came in at 717k card last week. The adjusted total of ~735k cars sets a new 4 year record for a single week in the series handily beating the 721k set during the same week last year.

Read the rest of the analysis and see the chart, here.

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EVERY four years, we poll the top American economists to get their views on the presidential election. This week’s print edition explains many of the results from our 2012 survey, which was conducted between September 18 and September 28. One particularly interesting set of results was generated when we asked economists why they thought the recovery had been so slow. This chart shows how various subpopulations rated the importance of six factors we chose:

Read the rest here.

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Two generations spar over the wreckage the baby boomers leave behind.

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Mitt Romney on Wednesday night turned in the finest debate performance of any candidate of either party in the 52 years since Richard Nixon faced John F. Kennedy, with the possible exception of Ronald Reagan’s demolition of Jimmy Carter in 1980.

But where Reagan won with style and quips – “There you go again” – and his closing line, “Are you better off now than you were four years ago?” Romney crushed Obama on both substance and style.

Mitt was like a contender so keyed up by his title shot that, between rounds, he could not sit on his stool, but stood in his corner to rush out and re-engage the champ the instant the bell sounded for the next round.

Obama was mauled, with facts, figures, anecdotes, arguments, jokes, quips. A smiling Romney was on offense all night. And the president’s performance seems inexplicable.

With the split screen showing his response to Romney’s swarm attacks, he appeared diffident, sullen, pouting, flustered, petulant.

Obama made no serious blunder. Yet, on the split screen, as Romney lectured him with a stern smile, Obama seemed a chastened schoolboy, head down, being instructed by a professor that if he did not get his grades up he would not be back next semester.

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Market 

European markets

[youtube://http://www.youtube.com/watch?v=fOEQTJV_3-w 450 300]

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If you care to know who won last night’s debate…well the cake goes to Romney. The question is will he keep the momentum going ?

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Gapping Up 

CLRX +52%, VRNG +3.3%, MAR +2.6%, CCL +2.3%, DEO +1.9%, TSLA +1.4%,

ASML +1.3%, MUR +1%, SLV +1%, FB +0.8% , ARMH +5.6%,

Gapping Down 

NUVA -14.2%, HMSY -8.2%, AVY -5.1%, GMED -4.6%, BWP -4.6%, FRO -2.1%, STWD -2%,

UPS -0.1%,  S -3.3%,  BAH -2.2%,

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