For those of us of a certain vintage, today is the 22nd anniversary of Black Monday, when our first fling with computerised trading ended in tears! But that was then and the market has no memory, so fast forward to a week when approximately 25% of the S&P 500 rare slated to report. So far this season, top-line numbers have been encouraging risk appetite: Of the companies which have reported, two thirds are beating on revenues. Last quarter, only 40% of the S&P outperformed on revenues.

Stocks to watch this afternoon include publisher Gannett, who ESP beat the Street by 3c, Eaton Corp who beat estimates and raised guidance and fertilizer maker Potash on some chit chat from Bank of America that BHP Billiton may be interested in bidding at a 30% premium to the current share price. To the downside will be financial BB&T, who had a 2c miss and Amgen after US regulators delayed approval for an important new drug.

The big CNBC buzz today surrounds legendary investor Carl Icahn and his offer to underwrite a $6bn loan to much troubled commercial lender CIT. The stock is up 10%. Airlines may be active after JP Morgan made AirTran an “overweight”, upping price target to $11 from $9.50 while downgrading Southwest to “underweight” and slashing their price target to $6.50 from $11.50 (ouch)

But perhaps the important equity related news comes after the bell tonight when Apple ($1.42), Boston Scientific ($0.41) and Texas Instruments ($0.39) all report.

A Big Week For Chinese Data
Very important data including Q3 GDP, inflation and industrial production are due from China this week. The strong rebound in activity in emerging Asia attracted the market’s attention during the summer, as it focussed on the shape and pace of the nascent recovery. In July, preliminary estimates of Q2 GDP for Singapore and Korea (an annualised 20% for the former and 9.7% for the latter) showed that the region was in recovery mode and that growth dynamics were stronger than in the developed world, thanks to the resumption of the global trade cycle, strong policy support and much healthier internal demand.

China in particular came under intense scrutiny as its robust growth is considered an important element for the sustainability of the global recovery. For example, in late July, fears that authorities could put the brake on robust Chinese growth by imposing tighter bank lending saw the Chinese equity market fall by about 5%. In addition, weaker-than-expected industrial production data cast some doubt on the sustainability of the recovery, likely triggering the stock market correction in August, as well as influencing the perception of the recovery in developed markets.

On prices, CPI deflation should narrow further in September, although the focus should be on rising food prices, which are the largest driver of changes in the CPI. Food prices account for a large share of consumer spending and higher prices would be a drag on private consumption going forward, thus delaying rebalancing in the economy’s growth drivers.

As for industrial production, year-to growth should rise sharply, mainly because activity collapsed this time last year.

Today’s Market Moving Stories

• Willem Buiter has a long blog entry on the euro this morning, in which he said that the ECB is in danger of running a deflationary policy that could ultimately destroy its independence. If Mr Trichet was serious about a co-ordinated response to the dollar’s fall, then the ECB might be told that it need to cut interest rates, as no intervention policy would be credible for as long as the European refinance rate remains relatively high at 1%. He said the Americans will undoubtedly ask the ECB to cut rates by up to 100 basis points before agreeing to joint intervention.
• Note today, European Finance Ministers meet to discuss the impact of the recent euro appreciation on the economic upturn. Ministers will aim to seek common ground ahead of the G20 meeting in early November.
• In a nice bit of Anglo Saxon Europhobe bashing:“Time for the ECB to get serious about the overvalued euro”
• The weekend news was fairly bleak in the UK, with the latest FT manufacturing barometer showing that less than a third of companies thought an upturn had taken root in their sector. 40% felt that banks were still being restrictive about providing loan finance
• The Ernst and Young ITEM Club’s autumn forecast suggests that the UK will struggle to hit 1% growth in 2010. Peter Spencer, chief economist commented: “We have come a long way since this time last year … But with consumers repaying debt and fiscal policy inevitably tightening in the UK after the election, it is difficult to see any serious potential for a sustained recovery in domestic demand”.
• The CBI calls for the government to address the ‘ballooning’ deficit as research from the Centre for Policy Studies think tank purports that the true level of Government debt is equivalent to 157 % of GDP and nearly three times as large as the GBP 805 Bn reported by the ONS. The new study puts ‘the true size’ of the public sector’s net liabilities at GBP 2,200 Bn by claiming that the official numbers do not take into account the full cost of projects financed through the private finance initiative.

Not So Smart
Bloomberg reports that Harvard University’s failed bet that interest rates would rise cost the world’s richest school at least $500 million in payments to escape derivatives that backfired. Harvard paid $497.6 million to investment banks during the fiscal year ended June 30 to get out of $1.1 billion of interest-rate swaps intended to hedge variable-rate debt for capital projects, the school’s annual report said. The university in Cambridge, Massachusetts, said it also agreed to pay $425 million over 30 to 40 years to offset an additional $764 million in swaps.The transactions began losing value last year as central banks slashed benchmark lending rates, forcing the university to post collateral with lenders, said Daniel Shore, Harvard’s chief financial officer. Some agreements require that the parties post collateral if there are significant changes in interest rates.

Equity News

• Get on board, next stop for Google Inc. shares is $600 says UBS, Needham, Kaufman Brothers, and Credit Suisse. All four firms have raised their price targets on Google in the past two weeks from the $500 range to $600 and UBS says $635!
• Anadarko Petroleum , the second-biggest producer of natural gas in the U.S. and Tullow Oil may rise if the companies’ exploration off the coast of West Africa yields significant oil and gas production, Barron’s reported, citing analysts.
• Blackstone has received regulatory approval from the EU to buy ½ of British Land’s stake in London’s Broadgate office complex
• With oil back above $78 barrel producers found support this European morning with Royal Dutch Shell is up 2% while Technip added 3%. Food giant Nestle is up strongly (4%) on a “buy” recommendation from UBS and anyone taking a punt on William Hill’s was rewarded to the tune of almost 10% today as they produced better numbers than their arch rival Ladbrokes for the quarter

Mexican Stand-off for Citibank
Citi is facing increasing pressure in Mexico as the Mexican courts consider a proposal from opposition senators that Citi, being 34% govt owned, should not be able to control Banamex (Mexican law does not allow foreign governments to own Mexican banks). It sounds like there is political support for Citi to hold onto Banamex among the ruling elite but they are now going to be looking into this on a constitutional basis. Banamex makes roughly 25% of Citi’s bottom line, and while the loan book is one of the more vulnerable, Citi needs every revenue generating business it can lay its hands on right now.

Should The US Fed Increase Rates Now?
In an article that is getting a lot of attention today, Barron’s Andrew Bary argues the case for the Fed to normalise rates.

And Finally…
Stalker Financial Expert Offers Recession Tips Just For Woman He Follows.

Stalker Financial Expert Offers Recession Tips Just For Woman He Follows