Markets: Perceptions that the US Federal Reserve was less dovish than anticipated caused the S&P 500 to snap a four-day winning streak, losing half a per cent, and that weakness crossed the Pacific to Asian markets. (Financial Times) (Bloomberg)
The years of vast US budget deficits appeared to be at an end after the gap between revenues and spending fell to just 4.1 per cent of gross domestic product in the last fiscal year. According to the US Treasury, in the fiscal year ended September, the deficit was $680bn, compared with $1.09tn – or 6.8 per cent of GDP – the year before. The figure came in substantially below budget projections earlier this year. (Financial Times)
Fed stays the course on bond buying: The US Federal Reserve said the world's largest economy is still expanding at a moderate pace in a statement that suggests a slowing of asset purchases in December or January is still under consideration. The rate-setting Federal Open Market Committee made no changes to policy at its October meeting, keeping its asset purchases steady at $85bn a month, but the statement implied it did not see a lot of damage from a three-week government shutdown earlier this month. (Financial Times)
The US Treasury took an unusual swipe at Germany and blamed its large current account surplus for giving a deflationary bias to the euro area and the whole world economy. Although the Treasury has criticised German policy before, in its new semi-annual currency report it elevated the comments to a "key finding" alongside China's undervaluation of the renminbi and Japan's monetary stimulus. (Financial Times)
"Retailers and grocers are bracing for another drain on consumer spending when a temporary boost in food-stamp benefits expires Friday. The change will leave 48 million Americans with an estimated $16 billion less to spend over the next three years and comes just months after the expiration of a payroll tax cut knocked 2% off consumers' monthly paychecks. On the business side of the equation, the cuts will fall particularly hard on the grocers, discounters, dollar stores and gas stations that depend heavily on low-income shoppers." (WSJ)
Google on Wednesday declared that it was "outraged" by apparent US government attempts to siphon information about millions of its users from its network, as the latest revelations in the internet surveillance scandal left it struggling to reassure its global users about the security of their personal information. The claims, which included the accusation that Yahoo had also been targeted in the network break-in, were the latest to be based on documents provided by former NSA contractor Edward Snowden. (Financial Times)
"The Bank of Japan kept monetary policy steady on Thursday, encouraged by growing signs of its aggressive stimulus is working its way through broader sectors of the economy. As widely expected, the BOJ voted unanimously to maintain its pledge of increasing base money, or cash and deposits at the central bank, at an annual pace of 60 trillion yen to 70 trillion yen ($611 billion to $713 billion)." (Reuters)
"Japan's salaries extended the longest slide since 2010, even as Prime Minister Shinzo Abe urges companies to raise workers' wages as part of his bid to reflate the world's third-largest economy. Regular wages excluding overtime and bonuses fell 0.3 percent in September from a year earlier, marking a 16th straight month of decline, according to labor ministry data released today. Total cash earnings rose 0.1 percent." (Bloomberg)
Hundreds of thousands of businesses will be forced to reveal their ultimate owners under UK plans to remove the "cloak of secrecy" hiding corruption and tax evasion. On Thursday, David Cameron, prime minister, will announce a proposal for a public register of company ownership, in a move that will be warmly welcomed by campaigners but greeted warily by many lawyers and accountants. (Financial Times)
"JP Morgan has put its chief currency dealer in London, Richard Usher, on leave, a source familiar with the matter said on Wednesday, and Bloomberg reported Citigroup Inc had done the same with its chief dealer. This mirrors developments at Standard Chartered, which has also put one of its senior forex traders on leave, according to a source familiar with the matter. Matt Gardiner joined StanChart from Swiss bank UBS only last month." (Reuters)
Barclays said on Wednesday it had launched an internal investigation into its foreign exchange trading operations. Its admission, disclosed in its third-quarter results statement, came a day after European lenders UBSand Deutsche Bank said they had also been drawn into the probe into the $4tn-a-day foreign exchange trading market. (Financial Times)
Bank of America said on Wednesday it had nearly doubled to more than $5bn estimates of possible maximum litigation costs, as it faces potential penalties over allegations of mis-selling mortgage securities. BofA also said a US attorney's office had told the bank it planned to recommend that the Department of Justice file a civil action over mortgage securitisation. (Financial Times)
Brazilian tycoon Eike Batista triggered Latin America's biggest corporate default on Wednesday when he filed for bankruptcy protection for his oil exploration and production company OGX. The judicial reorganisation, which follows the collapse of voluntary talks with creditors over the company's $5bn in debts, is also expected to increase the chances that Brazil's oil regulator could confiscate OGX's remaining oil exploration blocks. (Financial Times) And what it means for Latin American debt markets. (Financial Times)
Facebook admits to losing young teen users: Shares in Facebook initially jumped as much as 14 per cent in after-hours trading on Wednesday after the company said mobile advertising accounted for almost half of the social network's ad revenue. But the stock rapidly lost all of its gains after the company said the number of teens on the site was stable but it saw a decrease among younger teen users, and warned that it would not be increasing adverts in the newsfeed at the same rate in the future. (Financial Times)
"US Airways Group and American Airlines are considering giving up takeoff and landing slots at Washington's Ronald Reagan National Airport to win regulator approval of their $11 billion merger, two people familiar with the matter said." (Reuters)
COMMENTS & CURIOS
High profits to keep equity bubble at bay (Financial Times - Davies)
End western deference to Saudi petrodollars (Financial Times)
Can the Indian government curb the country's insatiable appetite for gold? (Financial Times)
J.P. Morgan's latest, and perhaps most unusual, legal headache. (WSJ)
Italy: The nation that crushes its young (NYT)
OVERNIGHT MARKETS
Asian markets
Nikkei 225 down -51.30 (-0.35%) at 14,451
Topix down -3.56 (-0.30%) at 1,201
Hang Seng down -92.41 (-0.40%) at 23,212
US markets
S&P 500 down -8.64 (-0.49%) at 1,763
DJIA down -61.59 (-0.39%) at 15,619
Nasdaq down -21.72 (-0.55%) at 3,931
European markets
Eurofirst 300 down -0.49 (-0.04%) at 1,288
FTSE100 up +2.97 (+0.04%) at 6,778
CAC 40 down -3.98 (-0.09%) at 4,274
Dax down -11.77 (-0.13%) at 9,010
Currencies
€/$ 1.37 (1.37)
$/¥ 98.40 (98.49)
£/$ 1.60 (1.60)
Commodities ($)
Brent Crude (ICE) down -0.28 at 109.58
Light Crude (Nymex) down -0.29 at 96.48
100 Oz Gold (Comex) unchanged 0.00 at 1,349
Copper (Comex) down -0.02 at 3.30
10-year government bond yields (%)
US 2.54%
UK 2.61%
Germany 1.69%
CDS (closing levels)
Markit iTraxx SovX Western Europe +239.46bps at 309.98bp
Markit iTraxx Europe +1.25bps at 84.73bp
Markit iTraxx Xover +4.28bps at 344.48bp
Sources: FT, Bloomberg, Markit
