Everyone is talking of corporations having a lot of cash on the books. Zero out the debt load and you have a wash. One must ask the question why is there so much cash on hand?

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More bad news for some homeowners….

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Further extrapolation of inflation data shows that the average run rate has risen significantly over the past 10 years. Headline numbers mean nothing tho the middle class family.

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“LONDON (Reuters) – New funds targeting debt issued by emerging market companies have helped push outstanding issuance past $1 trillion as investors chase high returns while sidestepping problems in developed economies.

Total volumes of debt issued by emerging companies are up tenfold since 2000 and the size of the market now rivals that for U.S. high-yield bonds. Investors are attracted by companies’ strong balance sheets and rising demand for consumer goods and financial services in most emerging economies.

Emerging corporate debt has also milked a general rush from ultra-low-yielding developed markets, with new funds springing up to service demand.

Of 87 emerging market bond funds launched in the past nine months, 33 are dedicated corporate debt funds, according to Lipper, a Thomson Reuters company. Another 17 have said they will invest in both corporate and sovereign instruments.”

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“TOKYO (Reuters) – The International Monetary Fund urged European policymakers to deepen the financial and fiscal ties within the euro area with some urgency to restore sagging confidence in the global financial system.

The IMF’s stark tone on the euro area debt crisis in its semi-annual checkup of the world’s financial health was in marked contrast to the mood in Europe, where a European Central Bank decision to buy bonds of countries that accept an assistance program has removed immediate concerns about the survival of the euro.

“Despite many important steps already taken by policymakers, this agenda remains critically incomplete, exposing the euro area to a downward spiral of capital flight, breakup fears and economic decline,” the IMF said in its Global Financial Stability Report (GFSR) released on Wednesday.”

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“The International Monetary Fund said European banks may need to sell as much as $4.5 trillion in assets through 2013 if policy makers fall short of pledges to stem the fiscal crisis, up 18 percent from its April estimate.

Failure to implement fiscal tightening or set up a single supervisory system in the timing agreed could force 58 European Union banks from UniCredit SpA (UCG) to Deutsche Bank AG (DBK) to shrink assets, the IMF wrote in its Global Financial Stability Report released today. That would hurt credit and crimp growth by 4 percentage points next year in Greece, Cyprus, Ireland, Italy, Portugal and Spain, Europe’s periphery.

“There is definitely a need for deleveraging in Europe,” said Michael Seufert, an analyst at Norddeutsche Landesbank in Hanover, Germany, with a “negative” rating on the European banking sector. “The danger is that this produced a downward spiral as the regulation gets stricter and stricter and the global economy cools, potentially meaning more writedowns for banks. States in the periphery are hit hardest.”

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A single mysterious computer program that placed orders — and then subsequently canceled them — made up 4 percent of all quote traffic in the U.S. stock market last week, according to the top tracker of high-frequency trading activity. The motive of the algorithm is still unclear.

The program placed orders in 25-millisecond bursts involving about 500 stocks, according to Nanex, a market data firm. The algorithm never executed a single trade, and it abruptly ended at about 10:30 a.m. Friday.

“Just goes to show you how just one person can have such an outsized impact on the market,” said Eric Hunsader, head of Nanex and the No. 1 detector of trading anomalies watching Wall Street today. “Exchanges are just not monitoring it.”

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Sometimes to make a correct assessment of reality one must pay close attention to what is being said about you or something. Here is some interesting commentary on derivatives and financial product design.

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“TOKYO (Reuters) – A polarized Washington that cannot find a way around the looming “fiscal cliff” is compounding economic uncertainty, freezing business investment and threatening growth, the IMF’s No. 2 official and its top-ranking American said on Monday.

In an interview with Reuters in Tokyo, IMF First Deputy Managing Director David Lipton said theUnited States needs to do more to show it is trying to address the expiring tax cuts and automatic spending reductions that will hit early next year unless Congress acts.

The looming fiscal tightening in the United States and the euro zone economic crisis are the two biggest risks facing the world economy, Lipton said. While most of the focus has been on Europe, Lipton stressed that the U.S. fiscal problems also posed a significant threat.

“We would like to see the United States lower the level of uncertainty by embracing more specifically the need to avoid the fiscal cliff and deal with the medium-term problems,” said Lipton, a former economic adviser to President Barack Obama.”

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(Reuters) – Options traders in the U.S. stock market are getting their bets in place in case the U.S. economy tumbles down the “fiscal cliff,” or worse, if the U.S. presidential election is so close that the result is disputed.

The stock market has been relatively calm in recent weeks in the face of uncertainty over the November 6 election and concerns that the economy could be pitched into a new recession because of substantial tax rises and government spending cuts – the so-called fiscal cliff – due to hit early next year unless Congress agrees to cancel or delay them.

Some option traders already are starting to build up protective positions on these big risks. In an environment of subdued volatility, the cost of doing so is relatively low, making it advantageous to take out insurance in case Washington remains gridlocked for an extended period after the election and the markets are roiled.

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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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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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“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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“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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“Bank of England officials voted to complete their latest round of stimulus amid intensifying dissent on inflation risks that threatens to cause a rift on future aid for the economy.

Governor Mervyn King’s nine-member Monetary Policy Committee left the bond-purchase targetat 375 billion pounds ($604 billion), as forecast by all 40 economists in a Bloomberg News survey. By next month’s meeting, they’ll have finished spending the 50 billion-pound round they started in July, forcing a decision on whether more stimulus is needed.”

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“The European Union’s top banking regulator told the bloc’s lenders to hold on to more than 200 billion euros ($258 billion) in capital raised to pave the way for tougher global standards.

The 27 banks that were required by the European Banking Authority to submit plans for their capital raising attained a total of 116 billion euros, the London-based EBA said yesterday. Including aid to Greek and Spanish banks, European lenders increased their capital reserves by more than 200 billion euros since 2011, according to an EBA report published on its website.”

“The European Central Bank kept interest rates on hold today as President Mario Draghi waits for Spain to decide if it needs his help.

Policy makers meeting in Ljubljana, Slovenia, left the benchmark rate at a historic low of 0.75 percent, as predicted by 48 of 52 economists in a Bloomberg News survey. Four forecast a cut to 0.5 percent. Draghi will brief reporters on the decision, taken at one of the ECB’s twice-yearly meetings outside Frankfurt, at 2:30 p.m.”

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“Poland’s central bank signaled it may cut borrowing costs next month if the economy slows further after unexpectedly leaving them at the highest level since 2009 for a fourth meeting.

The Narodowy Bank Polski kept the benchmark seven-day interest rate at 4.75 percent yesterday. Eight economists in a Bloomberg survey predicted no change, while 27 expected a 25 basis-point reduction that would have reversed a rate increase in May, the only one by a central bank in the European Union this year. The NBP last lowered the benchmark in June, 2009.”

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Are central banks setting investors up for a big fall ? Global PMIs suggest a serious slowdown, but due to central bank activity the markets are not signaling such an event. Buyer beware.

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Worried about the future ? Worried about the stock markets ? Here’s a look at some companies that should thrive no matter what.

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