Good morning New York,
Cardiff took a shot at explaining the EM flow turnaround and, ultimately, the point is simply that for now, there is no good response to the issue of how smaller, relatively-open economies can optimally defend themselves against the externally-driven sloshing of capital flowing in and out.
NEWS
Japan's huge public pension funds have been urged bya government-appointed panel to overhaul their investment strategies, gradually replacing bonds with stocks and other risky assets to support prime minister Shinzo Abe's effort to bring an end to almost two decades of deflation. The funds' bond-heavy portfolios have long been an important prop for Japan's Y840tn ($8.4tn) government bond market, with interest rates held low in spite of the biggest budget deficits in the world. (Financial Times)
Jacek Rostowski, Poland's long-serving finance minister who guided his country through two waves of economic crisis, was replaced on Wednesday morning by economist Mateusz Szczurek in a cabinet reshuffle announced by premier Donald Tusk. (FastFT)
"Currency dealers in London gave information about client orders to day traders who then made bets on their behalf, sidestepping restrictions on personal trading, three people with knowledge of the practice said. Bank employees used their mobile phones and instant-messages to transmit details of impending orders to individuals working from rented trading desks in offices on the outskirts of the U.K. capital, according to three traders who said they had witnessed the practice over a period of years." (Bloomberg)
The ECB "should not signal any further easing of its monetary policy for now as it has only just cut interest rates, Bundesbank Chief Jens Weidmann said in a newspaper interview published on Wednesday." (Reuters)
JPMorgan agrees $13bn settlement over mortgage securities: JPMorgan Chase agreed on Tuesday to pay $13bn in fines and consumer relief in a landmark settlement with the US Department of Justice and state authorities, admitting that it mis-sold mortgage securities in the lead-up to the financial crisis. Roughly $4bn of the pact will be in the form of consumer relief to help struggling homeowners. The rest will be divided between the DoJ, attorneys-general from states including New York and California, the National Credit Union Administration and the Federal Housing Finance Authority. (Financial Times)
"A surge in car shipments spurred Japanese exports to their biggest annual increase in three years in October… The 18.6 percent increase in exports in the year to October blew past the median market forecast for a 16.5 percent rise and accelerated from a 11.5 percent gain in September, data by the Ministry of Finance showed on Wednesday." Japan also logged a record October trade deficit on the back of fuel purchases. (Reuters)
Devon Energy is close to buying GeoSouthern Energy in a $6bn deal that will accelerate the US group's shift away from gas and into more lucrative oil production and afford significant exposure to the Eagle Ford shale formation in south Texas, one of the heartlands of the US oil boom of the past four years. (Financial Times)
Johnson & Johnson has agreed to pay $2.5bn to settle claims from 8,000 US patients who used artificial hips made by its medical devices subsidiary DuPuy Orthopaedics. (Financial Times)
Yahoo said it increased its authorization to buy back shares by $5 billion. (WSJ)
ThyssenKrupp is in exclusive talks to sell a steel plant in Alabama to a consortium led by ArcelorMittal after 18 months of laborious negotiations that have held back the German conglomerate's restructuring and recovery. ThyssenKrupp declined to identify the potential buyer. A person close to the talks said ArcelorMittal had formed a consortium with Japan's Nippon Steel to buy the plant. (Financial Times) (WSJ)
"Barclays is exploring options for its index business after equity index provider MSCI Inc approached the British bank recently about buying the unit, according to several people familiar with the situation." (Reuters)
Gary Locke, US ambassador to China, will step down early in 2014 and return to Seattle to rejoin his wife and children, who left Beijing earlier this year. People who said they had spoken to the Lockes about their decision said one factor was concern over shocking levels of air pollution in the Chinese capital that have already driven many expatriates and diplomats away. (Financial Times)
Markets: Risk assets have run out of steam as traders mark time ahead of the publication of the latest Federal Reserve minutes. Emerging market currencies and bonds are softer, and most global equities are lower, as the rally that had been spurred last week by dovish statements from Fed vice-chair Janet Yellen loses momentum. Focus is once again on the US central bank, with traders taking this afternoon's publication of minutes of its October meeting as an excuse to take risk off the table writes the FT's Global Markets Jack Farchy in London and Patrick McGee.
