In Between Days: G20, Google and China

Tomorrow’s Tape (WSJ)

Economics:

  • 8:30 a.m. ET: Retail sales data for September are due. Economists think the life’s blood of our economy rose 0.5%, after being UNCH in August.
  • 8:30 a.m.: We also get import and export prices for September. Import prices fell, and export prices rose, according to economist estimates that very few people will care about.
  • 9:55 a.m.: The University of Michigan’s consumer sentiment index for October is due. Consumer moods are expected to brighten from “despondent” to “slightly less despondent” (although this doesn’t matter much for spending, anyway).
  • 10:00 a.m.: Business inventory data for August are due. A GDP input, but few will care about this, either.

Earnings:

  • Mattel

FedSpeak, Etc.:

  • G20 finance ministers meet in Paris to eat some snails and talk some crisis.

Reuters

G20 finance chiefs and central bank heads from the world’s biggest economies meet in Paris on Friday needing to find a solution to a deepening euro zone debt crisis that has fanned fears of a global recession.

Underlining the challenge for European policymakers, Standard and Poor’s cut Spain’s long-term credit rating, citing the country’s high unemployment, tightening credit and high private sector debt.

“This meeting takes place in a context where the absolute priority for the success of the G20 is to find the elements for the stability of the euro zone,” a source at the French finance ministry said.

French and German officials are battling to flesh out the bones of a crisis resolution plan in time for a European Union summit on October 23.

NYT

BRUSSELS — Europe’s banks face a deadline of three to six months to strengthen their balance sheets and to compensate for the decline in value of Greek and other south European sovereign debt, European officials said Thursday.

With European leaders under pressure to produce a major package of measures to tackle the debt crisis within weeks, banking supervisors are preparing a proposal that will place substantial new demands on European banks.

Europe’s leaders were given a boost Thursday when Slovakia’s Parliament reversed course and ratified a plan to bolster the euro zone’s rescue fund, becoming the 17th and final country to do so.

But, when European leaders meet in Brussels on Oct. 23, they will confront a series of complex decisions, including how much to increase the contribution of private investors to a Greek bailout. One leading banker confirmed Thursday that those discussions were already under way.

On Wednesday, the president of the European Commission, José Manuel Barroso, called for a comprehensive program of banking recapitalization and, the day before, the French foreign minister, Alain Juppé, said that French banks would be asked to build up capital buffers equivalent to 9 percent of their assets.

The European Banking Authority, which coordinates the work of supervisors in Europe, is reviewing the results of stress tests conducted in July.

Unlike that exercise, the new review takes into account the current market value of Greek and other sovereign debt, according to European officials who spoke on condition of anonymity because the tests are confidential.

FT

Standard & Poor’s has downgraded Spain’s sovereign debt rating, citing slowing growth and a weakening financial system.

In an announcement late on Thursday, the rating agency knocked Spain’s rating down one notch from double A, where it has been since last April, to double A minus. It also kept the country’s rating on a negative outlook.

Reuters

Google Inc’s results trounced Wall Street expectations with the help of strong advertising sales and deft cost controls, driving its shares roughly 6 percent higher.

The Internet search and advertising leader, benefiting from a growing online ad market and sharper research focus, increased its profit by 26 percent and revenue by 37 percent in the third quarter.

A darkening economic outlook — particularly in Europe, had stoked worries about advertising growth. But Google’s revenue and paid-clicks performance boded well for the fourth quarter, analysts said.

CNBC

China’s annual consumer inflation dipped to 6.1 percent in September, sparing policymakers a jump in price pressures while they fret about slower growth, although stubborn food price rises showed Beijing’s fight against inflation is not over.


The slight slowdown in inflation was right in line with a poll of economists’ forecasts. Food prices rose 13.4 percent in the year to September, and non-food prices rose 2.9 percent, the data showed.

With inflation still close to the three-year peak of 6.5 percent hit in July, few analysts believe China will soon ease policy, barring a marked deterioration in Europe’s debt woes.

“This confirms that inflation peaked in July,” said Chi Sun, an economist with Nomura in Hong Kong.

“Policy will be on hold. We think inflation will slow down gradually in the coming months.”

The consumer price index rose 0.5 percent in September from the previous month, after a 0.3 percent rise in August. Measured month-on-month, food prices rose 1.1 percent, while non-food prices were up 0.2 percent.

China’s producer price index in September came in below market expectations with a 6.5 percent rise from a year ago, compared with August’s 7.3 percent.

Economists polled by Reuters had forecast a 6.1 percent rise in the consumer price index and an increase of 6.8 percent in producer price index.

 

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