“U.S. Treasury Secretary Timothy Geithner said Thursday that financial reforms and other actions in response to the global crisis are yielding results, helping the U.S. economy to grow at a pace better than there was reason to expect.

Speaking at a financial conference in Tokyo on Thursday, Geithner said the Obama administration would strive to resolve by the end of the year the impasse with the Congress that threatens to impose a so-called fiscal cliff of tax increases and deep spending cuts if the two sides do not reach agreement.

The U.S. has been relatively successful in managing to clean up the mess left by the 2008 financial crisis while not starving the economy of credit, Geithner said. Growth has dragged, though, due to the European crisis and severe drought across the U.S.”

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“While most attention has focused on the No. 2 U.S. bank’s $35 billion in mortgage losses stemming from settlements and repurchases of soured home loans, information the bank provided to the Federal Reserve in 2008 and recent company reports show the mortgage mess could undermine efforts to improve profits for some time to come.

Bank of America now employs some 42,000 people – or nearly 1 in 6 of its 275,000 employees – in Legacy Asset Servicing, the unit that services problem mortgages. Operating costs in the mortgage servicing business reached $2.7 billion in the second quarter, up 29 percent from a year ago, as the bank added 7,000 workers to handle foreclosure reviews and loan modifications required under government settlements.

The bank has also had as many as 16,000 additional contractors working in the unit, according to company reports.”

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“BP (NYSE:BP) and the Justice Department are nearing a deal to resolve the company’s civil and criminal liabilities from the 2010 Deepwater Horizon spill, reported the Wall Street Journal. The two sides remain about $6 billion apart for a final number with BP worried that if the figure is too large, it could suggest negligence and encourage plaintiffs with lawsuits to ask for greater damages.

Sprint’s (NYSE:S) shares jumped 23 percent in pre-market trading on a report that Japan’s Softbank is considering a two-thirds stake in the company for approximately $13 billion. Softbank responded it is “checking the facts of the Nikkei report.”

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PC shipments dropped 8.3 percent in the third quarter vs. the second quarter’s -0.1 percent, according to Gartner, Inc. From tablet sales, the firm sees weak back-to-school sales and cautious retailer orders. It also said that Lenovo (LNVGY.PK) surpassed Hewlett-Packard(NYSE:HPQ) to sit as the world’s leading PC OEM. Gartner also estimated that industry shipments dropped 8.6 percent.

Bank of America (NYSE:BAC) CEO Brian Moynihan has repeated there will be large headcount cuts at the company, reported Bloomberg, and said, “It’s really based on demand.” After citing the bank’s flat revenues with the flat yield curve and flat economy, he said, “When Italk to our clients…they don’t expect to hire a lot more people.”

General Motors (NYSE:GM) will introduce 13 new Chevrolet brand models in 2013, including updated versions of its Silverado pickup, Tahoe SUV and Spark electric vehicle. After years of no interest, the company said younger buyers are now considering buying Chevrolet vehicles.”

“Oct. 11 (Bloomberg) –International Monetary Fund Managing Director Christine Lagarde said Greece should get two years to meet fiscal targets and suggested debt reductions are needed before a 130 billion-euro ($167 billion) bailout can proceed.

“It’s sometimes better to have a bit more time,” Lagarde said today at a press conference in Tokyo marking the start of the fund’s annual meeting. “This is what we advocated for Portugal, this is what we advocated for Spain and this is what we are advocating for Greece.’ ”

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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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“The Standard & Poor’s 500 Index has a strong chance to reach 1,500 soon, says Jim Paulsen, chief investment strategist at Wells Capital Management.

That would represent a 4 percent increase from Tuesday’s close of 1,441.

“I look at two big catalysts here going into next year,” he tells CNBC. “One of them is, we’ve got to get the emerging-world economic recovery going again.”

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“The current models for determining U.S. unemployment are so flawed, and have been so manipulated by politicians of both parties over the decades, that some key indicators are “absolutely bogus” and no longer reflect the economic realities of ordinary Americans, according to private-sector economic analyst Walter J. “John” Williams.”

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David Siegel of Westgate Resorts will not be able to afford new taxes. One has to ask how many companies face this dilemma ?

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Gapping up

TRLG +20.9%, ODP +8.2%, GEVO +8%, AUQ +7.5%, MG +4.8%, GLUU +3.3%, YUM +2.1%

Gapping down

FOE -8.5%, CWH -7.9%, ESE -6.1%, CMI -4.5%, LXP -4.2%, HRB -3.5%, NAV -3%, MNST -2.7%, MRC -2.2%, PCAR -1.4%, AA -1.4%, CVX -1.3%, CAT -1.2%, RDS.A -1%

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Traders are betting differently….

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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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Gapping up 

RSH +15.4%, QCOR +4.7%, RIO +1.9%, LLY +1.4%, TRN +1.6%,  UNH +0.7%,

NOK +3.7%,  STM +4.7%, SPB +6.9%,

Gapping down 

EW -15.8%, ANGO -6.4%, NFLX -3.9%, ZNGA -2.1%, MDT -1.4%, DELL -0.5%,

JNJ -1.5%, BIDU -3.8%, LXK -1%,  NFLX -4%

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“Copper consumption in China will contract this year for the first time since 2008 as demand falters and inventories climb in the largest user, before rebounding in 2013, according to Simon Hunt Strategic Services.

Consumption will drop about 8.5 percent to 5.6 million metric tons in 2012, said Simon Hunt, chief executive officer of the Weybridge, Surrey-based consultancy, which compiles analysis for users and fabricators. Next year, usage may grow 5.6 percent to 5.9 million tons, Hunt said in an interview in Singapore after visiting China for two weeks last month.

Hunt’s assessment adds to signs that China’s slowdown is hurting demand for commodities. Copper, used in wires and cables, helps set the pace for other base metals and the drop in China’s consumption may hurt prices and cut profits at mining companies including Freeport-McMoRan Copper & Gold Inc. (FCX) Copper rose 6.8 percent last quarter as central banks in the U.S., China, Japan and Europe expanded stimulus to try to revive economic growth.”

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Bonds look very, very, expensive compared to stocks when focusing on their ability to generate income. Large Cap Stocks (the S&P 500) are  now paying a higher dividend yield than the 10-year treasury. This is very unusual. Since 1990, the treasury note / S&P 500 Dividend yield ratio has averaged 2.4. As stocks have a track record of dividend growth and a treasury bond has a fixed coupon payment, it makes sense that stocks should generate less income than bonds. However, something right now is not right!

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“Amid rosy scenarios, serious signs of trouble are developing on AAPL charts. There is also a major fundamental factor that indicates a much more bumpy road ahead.

Charts reflect buy and sell orders coming to the exchange from all market participants: big money and little money, insiders and outsiders, investors and traders. Their orders are behind ticks, which coalesce into patterns reflecting the sum total of current actionable knowledge about a stock.

Some patterns are noisy and have little value, while others have a good record of showing how a stock is likely to move in the near future. To help you review these patterns on AAPL AAPL -1.95%  charts, please click on any chart below to see it in full size and color.”

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