Markets: After minutes from the US Federal Reserve suggested a scaling back of its stimulus programme was likely in the "coming months", most Asian indices fell back, although Japanese stocks rose to a six-month high. (Financial Times)
Fed minutes:The central bank offered no new hints on when it could "taper", reiterating that it was still expecting such a move "in coming months", but the discussion of alternatives at the rate-setting Federal Open Market Committee suggests it is keen to slow its buying. Cutting the extra interest on reserves banks hold with the Fed would drive down already low overnight interest rates even further, probably to just a few basis points, hurting bank profits but adding extra stimulus to the economy. Most officials on the FOMC thought such a move "could be worth considering at some stage"(Financial Times) (Alphaville)
US budget talks generate cautious optimism: A 29-member budget conference committee including both Democrats and Republicans has been in negotiations since late October, and appears to have experienced a breakthrough in recent days. According to people close to the talks, the contours of a deal are coming together to replace some sequestration cuts with a mix of spending cuts and new revenues derived from higher government fees. The deal would set spending levels for one or two years, but ensure that the US government would not be shut down on January 15. (Financial Times)
The White House came out against a proposal by a group of hedge funds to take over and recapitalise the core operations of Fannie Mae and Freddie Mac, the US mortgage finance giants, saying it risked creating two new "too big to fail" institutions. (Financial Times)
Top 13 investment banks' profitability comes under fire: The world's 13 biggest investment banks are less efficient and less profitable than the next 200 – and the situation is set to worsen dramatically over the next five years, according to a new report. (Financial Times)
A complex FX bet on the value of the dollar versus the Japanese yen "backfired on Goldman Sachs during the third quarter, people familiar with the matter said. The previously undisclosed trading mishap played a part in a revenue slump that prompted senior executives to defend the firm's trading strategy... It isn't clear how large the trade was or how long it was in place." (WSJ)
UK's George Osborne pressed Brussels last year to spare the Co-operative Bank from tougher rules applied to big listed banks, a revelation which complicates Conservative attempts to drag Ed Miliband into the scandal engulfing the bank and its former chairman. (Financial Times)
Health spending suffers since global financial crisis: The latest annual health sector report from the OECD shows average spending across its 34 members grew by 0.2 per cent in 2009-11, compared with more than 4 per cent annually in the years before 2008. It fell by up to 11.1 per cent in Greece and 6.6 per cent in Ireland. (Financial Times)
'Blunt' head of China's biggest bank has warned that bad loans will inevitably rise and weaker lenders will be wiped out as the government relaxes its grip on the economy. But Jiang Jianqing, chairman of Industrial and Commercial Bank of China, the country's largest lender by assets, also hit back at those foreign critics who have raised questions about the resilience of China's banks after the lending spree that powered the country through the 2008 global financial crisis. (Financial Times)
Bumi's attempt to revamp its ownership and end boardroom conflicts ran into fresh problems when the coalminer's chairman missed a deadline to show he had lined up financing for a key part of the restructuring deal. The UK-listed group said it had not received the financing agreements needed from a vehicle of Samin Tan. He has said he wants to increase his stake in the company by buying out Indonesia's Bakrie Group, one of Bumi's founders, for $223m. (Financial Times)
Philip Morris "said it would enter the fast-growing market for electronic cigarettes next year and accelerate plans for other alternative products amid shrinking sales for traditional smokes. [On Wednesday PM] trimmed profit expectations for 2014, warning international cigarette volumes could decline 3% for a second-straight year and that it would increase spending on products other than cigarettes by $100 million." (WSJ)
COMMENTS & CURIOS
Xi Jinping is now the world's most powerful leader, or at least he would be if he had time to look abroad (Financial Times)
Accurate economic forecasts suit Osborne – for once (Financial Times)
Russia cannot replace America in the Middle East (Financial Times)
Sony's probable status quo (Financial Times Lex)
Pan-Asian history textbooks struggle to find common language (Financial Times)
How does one distinguish between illegal insider tips and accurate predictions, send answers to SEC (WSJ)
The overselling of behavioral economics (Reuters)
Brazen Bakken drillers (Reuters)
Raw sewage and anger flood Gaza's streets as electricity runs low (NYT)
OVERNIGHT MARKETS
Asian markets
Nikkei 225 up +259.49 (+1.72%) at 15,336
Topix up +10.39 (+0.84%) at 1,244
Hang Seng down -169.41 (-0.71%) at 23,531
US markets
S&P 500 down -6.50 (-0.36%) at 1,781
DJIA down -66.21 (-0.41%) at 15,901
Nasdaq down -10.28 (-0.26%) at 3,921
European markets
Eurofirst 300 up +1.56 (+0.12%) at 1,297
FTSE100 down -16.93 (-0.25%) at 6,681
CAC 40 down -3.92 (-0.09%) at 4,268
Dax up +8.78 (+0.10%) at 9,202
Currencies
€/$ 1.34 (1.34)
$/¥ 100.45 (100.02)
£/$ 1.61 (1.61)
€/£ 0.8343 (0.8343)
Commodities ($)
Brent Crude (ICE) down -0.31 at 107.75
Light Crude (Nymex) down -0.25 at 93.60
100 Oz Gold (Comex) down -11.20 at 1,247
Copper (Comex) at 3.16
10-year government bond yields (%)
US 2.80%
UK 2.75%
Germany 1.72%
CDS (closing levels)
Markit iTraxx SovX Western Europe +0.26bps at 64.66bp
Markit iTraxx Europe -1.11bps at 81.54bp
Markit iTraxx Xover -6.04bps at 330.98bp
Sources: FT, Bloomberg, Markit
