● Growth worries grip stocks, oil | Reuters
European stock markets fell for a second day on Wednesday, pushing world share indexes back towards their lowest in six months as concern mounts over the strength of global economic growth.
● Fed’s Dudley Says Bets on Mid-2015 Rate Hike Reasonable | Wall St Journal
Federal Reserve Bank of New York President William Dudley said Tuesday the U.S. central bank can likely hold off on raising short-term interest rates until 2015 given the expected path of the economy.
● Global Growth Disappoints, Recovery Pace Uneven & Country-Specific | IMF
The IMF forecasts global growth to average 3.3 percent in 2014―unchanged from 2013―and to rise to 3.8 percent in 2015.
● US job openings at 13-year high in August | US Labor Dept
There were 4.8 million job openings on the last business day of August, up from 4.6 million in July, the US Bureau of Labor Statistics reported today.
● US Consumer credit growth decelerates to 9-mo low in Aug | Federal Reserve
In August, consumer credit increased at a seasonally adjusted annual rate of 5%.
● Bundesbank’s Weidmann Criticizes ECB’s Stimulus | Wall St Journal
German Bundesbank President Jens Weidmann criticized the European Central Bank’s decision to buy private-sector bonds and chastised France for budgetary laxness, taking a hard line against new stimulus just before high-level International Monetary Fund meetings.

It’s a perfect score for Germany’s economic reports so far this week—perfectly negative. In two days we’ve seen two macro updates for Europe’s biggest economy and in both cases the numbers were deeply disappointing. Yesterday we learned that new manufacturing orders suffered a substantially larger-than-expected decline in August, followed by today’s news that industrial output plunged 4% during that month. On a year-over-year basis, industrial activity in Germany has crumbled by 3%. It’s been clear for the past month or so that the country’s expansion was slowing, but the latest figures suggest that the deceleration is much worse than assumed.
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● German Industrial Output Drops Most Since 2009 in August | Bloomberg
German industrial production fell more than economists forecast in August in the latest sign that the outlook for Europe’s largest economy is deteriorating.
●Islamic State moves into south west of Syrian Kurdish town | Reuters
Islamic State fighters advanced into the south west of the Syrian Kurdish town of Kobani overnight, a monitoring group said on Tuesday, taking several buildings to gain attacking positions from two sides of the city.
● Has the West entered secular stagnation? | Vox
Among respondents to the latest monthly survey of the Centre for Macroeconomics, reported in this column, three out of four think not – though, on balance, they feel that policy ought to be more expansionary anyway.
● France cautions Germany not to push Europe too far on austerity | Telegraph
France has denounced the eurozone’s austerity regime as deeply misguided and issued a blunt warning to Germany and the EU institutions that demands for further belt-tightening may set off a political backlash, endangering European stability.
● Volatility returning to currency markets | Sober Look
Today the dollar gave up much of its Friday’s gains that were driven by stronger than expected US employment situation report. We haven’t seen such volatility in currency markets in some time. What happened?
● What do the protests in Hong Kong mean for global firms? | Fortune
The foreign business community is worried about the impact of a violent crackdown on protestors by Hong Kong’s police or, even worse, an order from Beijing to deploy Peoples Liberation Army troops.
● Big Banks Face Another Round of U.S. Charges | NY Times
With evidence mounting that a number of foreign and American banks colluded to alter the price of foreign currencies, the largest and least regulated financial market, prosecutors are aiming to file charges against at least one bank by the end of the year, according to interviews with lawyers briefed on the matter.

The expected risk premium for the Global Market Index (GMI) dipped moderately in September vs. the previous month. GMI, an unmanaged, market-value weighted mix of the major asset classes, is currently projected to earn an annualized 4.3% over the “risk-free” rate for the long term (for details on the methodology, see summary below). Today’s forecast is below last month’s 4.7% estimate.
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● German Factories See Sharp Drop in Orders | Wall Street Journal
German factory orders tanked in August, signaling that the rest of the year will feature weak economic output or even stagnation, experts said.
● Eurozone Sentix investor confidence at 17-mo. low | Investing.com
Investor confidence in the euro zone for October deteriorated to the lowest level in 17 months, underlining concerns over the outlook for the region’s economy.
● Surging dollar may be triple whammy for U.S. earnings | Reuters
The suddenly unstoppable U.S. dollar is posing a triple threat to American companies’ profits: driving up the costs of doing business overseas, suppressing the value of non-U.S. sales and, perhaps most worryingly, signaling weak international demand.
● World on brink of an oil price war | New Zealand Herald
A sudden slump in the price of crude has exposed deep divisions within the Organisation of Petroleum Exporting Countries (Opec) ahead of its final scheduled meeting of the year next month to decide on how much oil to pump.
● The Collapse of the Russian Ruble | Econospeak
There has been little attention to this in the western media, but the Russian ruble has suffered a major decline in the last few months.

● The Euro Trap: On Bursting Bubbles, Budgets, and Beliefs
By Hans-Werner Sinn
Summary via publisher (Oxford University Press)
This book offers a critical assessment of the history of the euro, its crisis, and the rescue measures taken by the European Central Bank and the community of states. The euro induced huge capital flows from the northern to the southern countries of the Eurozone that triggered an inflationary credit bubble in the latter, deprived them of their competitiveness, and made them vulnerable to the financial crisis that spilled over from the US in 2007 and 2008. As private capital shied away from the southern countries, the ECB helped out by providing credit from the local money-printing presses. The ECB became heavily exposed to investment risks in the process, and subsequently had to be bailed out by intergovernmental rescue operations that provided replacement credit for the ECB credit, which itself had replaced the dwindling private credit. The interventions stretched the legal strictures stipulated by the Maastricht Treaty which, in the absence of a European federal state, had granted the ECB a very limited mandate. These interventions created a path dependency that effectively made parliaments vicarious agents of the ECB’s Governing Council.
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Growth in private-sector payrolls rebounded strongly in September, according to today’s update from the US Labor Department. The revival isn’t particularly surprising (the crowd was expecting a sizable improvement), although the sharply higher gain is reassuring after August’s weak advance. Indeed, the companies added 236,000 jobs last month, a sizable improvement over August’s revised increase of 175,000 (initially reported as a mere 134,000 gain). It’s unclear if today’s print is a sign of stronger growth to come vs. a one-time payback after an unusually soft month. Only time will tell. Meanwhile, the numbers du jour look quite good.
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The US stock market has taken a hit lately, presumably because various geopolitical and macro risks around the world are starting to resonate with formerly complacent investors who have been inclined to drive American equities higher in recent history no matter the headlines du jour. But to the extent that the worries are focused on the US economy, the worst fears still look overblown. Or so this week’s updates on the labor market suggest, including today’s encouraging numbers on initial jobless claims for the week through September 27.
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Private nonfarm payrolls in the US are projected to increase 208,000 (seasonally adjusted) in tomorrow’s September update from the Labor Department, according to The Capital Spectator’s median econometric point forecast. The prediction reflects a sharply higher gain vs. the previously reported increase of 134,000 for August.
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Private-sector employment continued to rise at a moderate pace in September, according to this morning’s ADP Employment Report. Last month’s 213,000 increase in jobs (seasonally adjusted) was slightly higher than the consensus forecast, but generally in line with the pace of growth in recent months. In fact, once you consider the year-over-year trend—payrolls advanced 2.2% last month vs. the year-earlier level—today’s release looks a lot like the August report. In other words, the economy continues to create jobs at a steady rate in the low-2% range.
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