Good morning New York,
FT ALPHAVILLE
This is your euro on AQR: David notes that EMU-based banks are preparing for the Asset Quality Review, which will reference year-end balance sheets. This gives equity weak banks a high incentive to reduce the asset side of their balance sheets.
NEWS
UK economy grows by 0.8% in third quarter: The British economy grew by 0.8 per cent in the three months to September, in line with expectations, providing robust evidence that the recovery is gathering speed. Gross domestic product had grown by 0.7 per cent in the second quarter, having struggled to enjoy a sustained pick up from the bust which followed the 2008 financial crisis. Output in the third quarter was 1.5 per cent larger than last year, but still 2.5 per cent below where it was before the financial crisis struck. (Financial Times)
Carney tears up the rule book on bank help: Mark Carney, the new governor of the Bank of England, on Thursday announced a sweeping overhaul of the way the central bank deals with lenders in financial difficulties, bringing it in line with the Federal Reserve and the ECB. The BoE will offer money for longer periods, accept a wider range of collateral, including "any asset of which we are capable of assessing the risks", and lower the cost of using the bank's facilities. (Financial Times)
Japanese inflation nears 5-year high: The core consumer price index, which excludes relatively volatile prices for fresh food, rose 0.7 per cent compared with a year earlier. That was only slightly slower than the rate of 0.8 per cent in August, when inflation reached its highest level since late 2008. (Financial Times)
China rejects Bo Xilai appeal: "The ruling on Friday by the Higher People's Court in the eastern province of Shandong is supposed to be the formal conclusion of the courtroom drama surrounding the murder of a British businessman by Mr. Bo's wife in November 2011. The court "rejected the appeal and upheld the first instance judgment of life imprisonment," the state-run Xinhua news agency said…" (WSJ)
China will introduce a new benchmark lending rate, one set by market participants in a reform that the central bank says is an important step towards liberalising interest rates. Under China's "loan prime rate" (LPR), nine of the country's biggest banks will every day report the lending rates they are offering to their best clients (presumably, major state-owned enterprises). (FastFT)
Twitter says IPO may value it at $11.1bn: Twitter struck a cautious stance in setting a price range of between $17 and $20 a share for its IPO next month — it will be valued at up to $13.9bn on a diluted basis, including restricted stock units and options. This is less than the $15bn which had been widely expected. (Financial Times) (WSJ)
Amazon payed for keeping up sales momentum, beating analyst expectations with a 24 per cent year-on-year rise in global revenue to $17.1bn in the quarter to the end of September, including a 31 per cent increase in sales in North America, and brushing off a net loss of $41m. (Financial Times)
Electric car manufacturer Tesla has a higher market capitalisation than it "deserves", its chief executive said. Tesla, which expects to sell just 21,000 cars this year, is worth about $22bn, roughly half the value of Ford and a third of the value of General Motors, which sold more than 9m vehicles last year. (Financial Times)
Markets: European bourses and US index futures were struggling for traction after a soft session in Asia, which was buffeted by dollar weakness and wariness regarding China's interbank liquidity. Risk appetite was reduced, with the softer dollar not helping industrial commodities as easing Treasury yields pointed to concerns over economic growth prospects, and thus continued Federal Reserve stimulus. The dollar index was down 0.1 per cent to a near nine-month trough of 79.10. Copper was retreating 0.7 per cent to $3.24 a pound and Brent crude was slipping $0.21 to $106.78 a barrel. US 10-year borrowing costs were dipping 1 basis point to 2.51 per cent. The Stoxx 600 was sporting a 0.3 per cent loss as the S&P 500 future suggested Wall Street's benchmark will ease just 3 points to 1,749, leaving it only 6 points shy of Tuesday's record close. Well-received results from Microsoft after Thursday's closing bell provided some support for bullish sentiment. The main source of trader caution was Asia, where the regional index was down 0.9 per cent as concerns of a liquidity squeeze in China continued to weigh on some markets. (Financial Times)
