‘Millions saw the apple fall, Newton was the only one who asked why?’ — Bernard Baruch

1. Jobs Report Keeps Fed on Hold for Now — WSJ, the slow jobs report makes it harder for the Federal Reserve to make decisions about its $85 billion monthly bond-buying programs. This assures that the Fed won’t act at its Oct. 29-30 policy meeting. The next jobs report, for October, could be skewed by the government shutdown, which disrupted the data collection process and which will include the effects of government workers on furlough. The Fed will have an additional jobs report to go on by its Dec. 17-18 meeting; the Bureau of Labor Statistics reports November jobs data on Dec. 6.
2. China major banks write off 22.1 billion yuan ($3.65 billion)debt — from Bloomberg, stated that China’s five major banks have written off 22.1 billion yuan ($3.65 billion) of debt in the first six months of the year that couldn’t be collected, compared to 7.65 billion yuan a year earlier. The move is more than likely a cleaning-up process ahead of what may be a fresh wave of defaults in the world’s second-largest economy.
3. ECB to stress test top eurozone banks — the European Central Bank plans to carry out comprehensive stress tests on 128 top eurozone banks over the next year as it aims to build confidence in the financial sector by improving transparency and implementing “corrective action” where needed.
4. Department of Justice probes nine banks on mortgage-backed securities(MBS) — FT, U.S. Department of Justice is probing at least 9-banks about their sales of mortgage-backed securities. The investigations, which span U.S. attorney’s offices from California to Massachusetts, include the largest banks that underwrote and sold residential mortgage-backed securities. They include Bank of America (BAC), Citigroup(C), Credit Suisse, Deutsche Bank(DB), Goldman Sachs(GS), Morgan Stanley(MS), Royal Bank of Scotland(RBS), (UBS) and Wells Fargo(WFC).
5. Countrywide (part of Bank of America) found guilty in U.S. mortgage suit — a federal jury has found Bank of America’s (BAC) Countrywide unit liable for defrauding Fannie Mae (OTC:FNMA) and Freddie Mac (OTC:FMCC) by selling them thousands of defective mortgages. The judge will determine the amount of the penalty – the U.S. has requested $848M, the gross loss to the GSEs as calculated by its expert witness.
6. Chinese shares fall as People Bank of China (PBOC) tightening continues — Chinese markets (FXI) continued to drop as short-term money market rates continued to rise after the Bank of China again refrained from injecting liquidity into the market. The overnight rate touched 7.5% at one point and the benchmark seven-day hit 6.94%.

The week ahead — Economic data from Econoday.com: