Deutsche Bank

• Scope of Sandy's devastation widens, death toll spirals (Reuters)
• On Staten Island, cries for help replaced by a loss for words (Reuters)
• China responds to Japan’s provocation (FT)
• Japan governments open to compromise to avoid “fiscal cliff” (Reuters)
• It's Global Warming, Stupid (Businessweek)
• Sharps says there is "Material Doubt" about its ability to survive (Bloomberg)
• Thomson Reuters operating profit slips, trading faces pressure (Reuters)
• Germany's Schaeuble says debt reduction is global task (Reuters)
• The Luxury Repo Men (Businessweek)
• Deutsche Bank Faces Top Surcharge as FSB Shuffles Tiers (Bloomberg)
• Storm over ‘Lagarde list’ intensifies (FT)
• Greek, European Officials Dispute Budget Reprieve (WSJ)
• Rivals part ways over economy (FT)

It just is not Barclays' year. After being exposed (so far the only one) as a ringleader in a massive LIBOR-rigging scandal which cost Bob Diamond his job, yesterday the British bank added insult to injury, after the Federal Energy Regulatory Commission (FERC) fined it $470 million - the largest penalty ever levied by the energy regulator, and even larger than the bank's LIBOR fine - for getting caught doing what Enron got caught doing about a decade ago: manipulating California's electricity markets. Although while the former ended up being the biggest corporate bankruptcy at the time, led to the end of one of the nation's largest auditors and sparked a scandal so great it was all corporate America spoke for about for the next year, this time the news has come and gone, and nobody cares. Perhaps this is to be expected: in a time when none other than the central bank intervenes each and every day in every single market to preserve the "wealth effect", habituation to epic corporate manipulation of every imaginable kind is perfectly normal.

It was a week ago when we first observed that the defense of 1400 in the ES at all costs must go on, or else the only thing that is keeping the market propped up - psychology (now with the AAPL euphoria long gone), would be gone as would all support. But once again, the overnight session has proven that, with a little help from its central banking friends, 1400 (and 1.2900 in the EURUSD) can be defended. This was in danger of being breached until China reported two PMI numbers: an official one which printed at 50.2, or modest expansion, and up from 49.8, magically right on top of expectations of 50.2, and the HSBC PMI, which also rose to 49.5, from 47.9: the 12th straight contraction print, but the highest number in 8 months. The market spin is naturally that this is an indication of a rebounding China. Sadly, just like in the US, this is merely pre-party congress data manipulation. The only thing that does matter out of China: whether or not the country will actually ease as opposed to doing day to day reverse repo injections. Without the former, the Chinese economy will not rebound, and will not lead to an improvement in corporate outlook for US tech stocks, period, the end.

• In Darkened NYC, Safety On The List Of Concerns (AP)
• New York Subway System Faces Weeks to Recover From Storm (Bloomberg) ... as we said
• Power Outages May Last More Than a Week (WSJ)... same
• U.S. stock markets to reopen on Wednesday after storm (Reuters)
• Questions Cloud Market Reopening (WSJ)
• Apple revolution shows signs of reboot (FT)
• Euro Chiefs Set to Grant Greece Extension Amid Squabbles (Bloomberg)
• Italy Bank Poll Casts Shadow Over Savings (WSJ)
• Shocked UBS staff take to Twitter (FT)
• Corporate China hit by unpaid bills (FT)
• Panasonic Posts Loss of Nearly $9 Billion (WSJ)
• BoJ independence called into question (FT)
• Barclays hit by fresh U.S. investigations (Reuters)
• Adoboli’s Girlfriend Said Confess, Co-Worker Said to Run (Bloomberg)

It is cloudy out there as Sandy enters the mid-Atlantic region, although for all the pre-apocalypse preparations in New York, the Frankenstorm may just be yet another dud now that its landfall is expected to come sufficiently south of NYC to make the latest round of Zone 1 evacuations about overblown as last year's Irene hysteria (of course it will be a gift from god for each and every S&P company as it will provide a perfect excuse for everyone to miss revenues and earnings in Q4). That said, Wall Street is effectively closed today for carbon-based lifeforms if not for electron ones, and a quick look at the futures bottom line, which will be open until 9:15 am Eastern, shows a lot of red, with ES down nearly 10 ticks (Shanghai down again as the same old realization seeps day after day - no major easing from the PBOC means Bernanke and company is on their own) as the Friday overnight summary is back on again: Johnny 5 must defend 1400 in ES and 1.2900 in EURUSD at all costs for just two more hours.

• Greece Faces Need for Additional Assistance: €30 billion (WSJ)
• Greeks fail to agree on bailout terms (FT)
• The report that got the NYT banned on the Chinese interweb: Billions in Hidden Riches for Family of Chinese Leader (NYT)
• Bo Xilai: China parliament expels disgraced politician (BBC)
• Japan Adds Stimulus Amid Threat of Bond-Sale Disruption... $9.4 billion (Bloomberg)
• Hubbard Said to Prefer Treasury Chief to Fed If Romney Wins (Bloomberg)
• 9 More Banks Subpoenaed Over Libor (WSJ)
• Romney raises $112m in 17 days (FT)
• Amid Cutbacks, Greek Doctors Offer Message to Poor: You Are Not Alone (NYT)... no, we are all broke
• Muni Downgrades Top 2011 Total on Weak Economy: Moody’s (Bloomberg)
• Ireland urges ECB to commit to bond-buying (FT)
• Cameron and Clegg unite in EU demands (FT)

There have been no major overnight events or surprises, with Europe continuing a war of semantics whether the Spanish bailout is a bailout, and attempting to avoid it as long as possible while reaping the benefits of Spanish bonds which are trading at post-bailout levels for a 3rd months now, as well as whether Greece will receive more Troika money (the WSJ reported that Greece requires €30 billion through 2016 to close its funding gap: a number which will eventually double, then triple), and yet as of moments ago the EURUSD slipped under the psychological 1.2900 support, which also means that 1400 on the SPX cash is in play. Italy did not help after business confidence declined from 88.3 to 87.6 on expectations of a rise to 88.7 What news there has been is largely the realization that reality is here to stay, following misses and guides lower from Amazon and Apple, and no matter what some low-volume algo tries to represent by buying the stock in the after hours session, profitability and cash flow creation for both companies will be lower going forward. In terms of newsflow, the NYT released a report last night that China's Premier may have been hiding billions in "related-party" transactions - imagine that, and one which promptly got the NYT blocked from China's internet. Obviously this is a touchy topic for China days ahead of its internal party vote, and one which will hardly score the US brownie points with the domestic administration. Concurrently, Japan announced a new fiscal "stimulus" for a whopping ... $9.4 billion. That is roughly the amount of money needed to evade deflation for 2-3 hours. More apropos, Bild reports what Bloomberg noted earlier, namely that Merkel has no majority for reported Greek aid, further blowing up the hole that Greek finmin Stournaras dug himself in with his lies earlier this week. So while everyone is once again on edge, with the Shanghai composite sliding 1.7%, and key technical levels either breached or in play, today's session promises to be quite interesting.

• Japan grapples with own fiscal cliff (Bloomberg)
• Japan Protests After Four Chinese Vessels Enter Disputed Waters (Bloomberg)
• Asian Stocks Rise as Exporters Gain on China, U.S. Data (Bloomberg)
• An obsolete Hilsenrath speaks: Fed Keeps Rates Low, Says Growth Is Moderate (WSJ)
• ECB Said to Push Spain’s Bankia to Swap Junior Debt for Shares (Bloomberg)
• Spain’s Bad Bank Seen as Too Big to Work (Bloomberg)
• China postpones Japan anniversary events (China Daily)
• Carney Says Rate Increase ‘Less Imminent’ on Economy Risk (Bloomberg)
• Credit Suisse to Cut More Costs as Quarterly Profit Falls (Bloomberg)
• Obama offers a glimpse of his second-term priorities (Reuters)
• Draghi defends bond-buying programme (FT)

• China May Forgo Easing as Economy Rebounds, Survey Shows (Bloomberg)... or as food and house inflation has never gone away
• China Edges Out U.S. as Top Foreign-Investment Draw Amid World Decline (WSJ)
• Fed to keep buying bonds despite firmer U.S. growth (Reuters)
• Bernanke Seen Attacking Jobless Rate With QE Until His Term Ends (Bloomberg)
• Mortgage applications plunge 12%, down for third week in a row (Dow Jones)
• Exchanges Retreat on Trading Tools - Fund Managers, Regulators Say Certain Orders Are Risky, Aid High-Speed Firms (WSJ)
• Europe Bank Chief to Defend Bond-Buying Plan (WSJ)
• Japan, China Envoys Met Last Week for Talks on Island Feud (Bloomberg)
• Goldman’s Pill Says ‘Guerrilla’ ECB to Impose Losses on Skeptics (BBG)
• Chance rise of an Obama defeat (FT)
• King Says BOE Is Ready to Add to QE If U.K. Recovery Fades (Bloomberg)
• Rajoy Sees Case for Slowing Spain’s Austerity as Economy Shrinks (BusinessWeek)
• Hong Kong Intervenes to Defend Peg as Upper Limit Tested (Bloomberg)

There were two major datapoints overnight: the first one came out early in the session, when the Chinese Flash HSBC PMI (not the official one), printed in contraction territory for a 12th consecutive month but jumped sufficiently to 3 month highs to give the algobots hope that China may be turning (it isn't: China, like the US has a major political event early November and all its data is more manipulated than ever). Regardless, this sent future rising to session highs until virtually yesterday's entire gap down was eliminated. The euphoria continued until several hours later we got composite European (as well as the most important German PMI data, and to far less relevant extent France, which always has been the dynamo in European economic growth), manufacturing and services PMI, both of which missed expectations or declined substantially, reaffirming that the German economy is getting dragged down more and more into recession even as continues funding the rescue of the periphery. As the chart from Markit below shows, German PMI is hinting at a solidly negative German GDP print, further confirmed by the German IFO business print which came at 100, a drop from 101.4 and below expectations of 101.6. Other secondary macroeconomic data was just as bad, which explains why futures are now well on their way to dropping back to their lows. Finally, today we get the FOMC statement, which will be much ado about nothing, and will merely serve as an appetizer to the December FOMC meeting, when Goldman (and Zero Hedge) now expected the Fed to expand unsterilized monthly monetization to increase from $40 billion to $85 billion (more on the shortly). Yet perhaps the biggest shift in mood has been coming out of our old friend Greece, where Troika negotiations, largely under the radar, are progressing from bad to worse, where the bond buyback plan was scuttled last night (as ZH reported sending Greek bonds 70 bps wider on the day and rising), and where the probability of another flash election, which can crash the precarious European balance in an instant, is rising with each passing day.

Sometimes you just have to laugh; or else committing harakiri comes dangerously close to mind. Japan's increasingly terrifying fiscal situation combined with a central bank that is rapidly becoming the laughing stock of the world (though all the other central banks are merely mimicking its actions) is becoming so self-referential (with its almost total domestic ownership of government debt), so short-termist (with its dramatically high short-term funding requirements constantly rolling), and demographically challenged (with its elderly almost entirely reliant upon government transfer payments) that it is hard to comprehend how much longer this farce can carry on. We have previously discussed Japan's WTF charts, but the following collection from Deutsche Bank's Torsten Slok must be seen to be believed. For now - the problem in a nutshell is government-debt per working-age person in Japan will be $140,000 in 2016 - almost triple the rest of the G7.

• Dead Heat for Romney, Obama (WSJ)
• The Cheerful Billionaire Who Thinks Obama's a Socialist (Businessweek)
• "Get to work, Mr. Japanese Chairman": Japan Exports Tumble 10% as Maehara Presses BOJ to Ease (Bloomberg)
• Chinese Investors Fear Chill in Canada (WSJ)
• Rosneft Buys BP’s TNK-BP Stake for $26 Billion in Cash, Shares (Bloomberg)
• Hong Kong Defends Its Currency Peg for First Time Since 2009 (Bloomberg)
• Democrats threaten payroll tax cut consensus (FT)
• Spain's Rajoy gets mixed message in regional votes (Reuters)
• Merkel to warn UK on Europe budget veto (FT)
• Netanyahu says doesn't know of any U.S.-Iran talks (Reuters)... neither does Iran, so near certainty
• Der Kurrency Tsar: ECB’s Knot Backs Schaeuble Call for Stronger EU Budget Power (Bloomberg)
• Fannie Mae Limiting Loans Helps JPMorgan Mortgage Profits (Bloomberg)

While as Bloomberg reports the EPS beat to miss ratio so far is 68%:32%, the scariest statistic of the day goes to Deutsche Bank who said that "The beat-to-miss ratio... is running 41%:59% for revenue." This means nearly 50% more misses than beats in the earnings season so far. DB continues: "Recall that Q2 was also one where we saw better EPS beat but weaker revenue performance so it seems that companies have been eking out earnings by squeezing costs and wages."  Now as every entry level analysts, Treasurer and CFO knows, there are 1001 ways to boost ESP cut corporate overhead (and those exclude accounting gimmicks, ahem all banks and GE), chief among them of course is laying people off and replacing them with part-timers and temps (something that has been going on in the US for 3 years now as we first showed in 2010), there is precisely zero way to hide the fact that there is simply less demand for products and services at the very top level in a world in which 2% growth, formerly known as stall speed, is the New Killing it, and in which real disposable income just turned negative once again, not to mention the endless collapse in average hourly earnings.

• Debt Fuels a Dividend Boom - Firms Collect Payouts, and Investors Get Yield; 'Reminiscent of the Bubble Era' (WSJ)
• Black Monday Echoes With Computers Failing to Restore Confidence (BBG)
• Poll: Obama Leads in Wisconsin, Iowa (WSJ)
• Gold Imports by India Seen Climbing First Time in Six Quarters (BBG)
• Europe pushes ahead towards ECB bank supervision (Reuters)
• ... And fails: Summit fails to agree timetable for aid to failing lenders (FT)
• Toyota Prius Dominates California as State’s No. 1 Model (BBG)
• Italy raises €18bn in huge bond sale (FT)
• Diplomacy inbox fills up as U.N. awaits U.S. presidential vote (Reuters)
• Goldman braced for more revelations (FT)
• China power brokers agree preferred leadership team (Reuters)
• EU, Japan Warn Against New US Swaps Rules (WSJ)
• Why VaR is the most meaningless contraption ever: Morgan Stanley shows the ‘flaky’ side of model (FT)
• Made in France Trumps Consumer Choice in Hollande Jobs Quest (BBG)
• North Korea threatens South over propaganda balloons (Reuters)

• Germany will pay Greek aid (Spiegel)
• Spain Banks Face More Pain as Worst-Case Scenario Turns Real (Bloomberg)
• China’s Growth Continues to Slow (WSJ)
• Executives Lack Confidence in U.S. Competitiveness (WSJ)
• Poor Market Conditions will See 180 Solar Manufacturers Fail by 2015 (OilPrice)
• Wen upbeat on China’s economy (FT)
• Gold remains popular, despite the doubts of economists (Economist)
• Armstrong Stands to Lose $30 Million as Sponsors Flee (Bloomberg)
• IMF urges aid for Italy, Spain but Rome baulking (Reuters)
• EU Summit Highlights Financial Divide (WSJ)
• FOMC Straying on Price Target, Former Fed Officials Say (Bloomberg)
• Putin defiant over weapons sales (FT)