Good morning New York,
FT ALPHAVILLE
The Fed's options: Cardiff runs us through the Fed's real options for the December meeting and notes that even though markets are probabilistically favouring certain policy moves over others, it's unlikely that any announcement in particular will qualify as a surprise.
Secular stagnation and the bastardisation of Keynes: Izzy cites Bob McKee and David Roche on the point that classifying the current malaise as secular stagnation may be a bastardisation of Keynes' stagnation theory. Keynes' stagnation theory, they note, envisaged the euthanization of the rentier. What we've got now, however, is a system which is doing everything it can — notably, by blowing bubbles — to protect the rentier's faux capital rents.
NEWS
Lloyds fined £28m for 'serious failings' in sales practices: Lloyds Banking Group has been fined £28m for "serious failings" in its sales practices in the biggest ever UK regulatory penalty for conduct breaches in retail banking. The Financial Conduct Authority said that in the period under investigation – between January 2010 and March 2012 – it found "seriously flawed" processes for granting bonuses to sales staff. During the period, more than 1m products were sold to nearly 700,000 customers across the group's subsidiary brands, Lloyds TSB, Halifax and Bank of Scotland. (Financial Times)
US budget negotiators on Tuesday night struck a bipartisan deal to set spending levels until 2015, breaking the latest fiscal logjam in Congress and stopping a cycle of crisis-driven economic policy making in Washington. The agreement is small in size – worth $85bn – but may herald the return of an era in which Congress can perform basic functions without the political brinkmanship that has repeatedly threatened the US economic recovery in recent years. (Financial Times) (WSJ)
Volcker vote ushers in new world order for banks: The largest US banks were facing a new world order on Tuesday as regulators voted through the Volcker rule, which will make it harder for Wall Street to make risky gambles that could once again endanger the financial system. The rule dramatically curbs the way banks do business, banning them from making bets using their own accounts in what is known as proprietary trading, and also holding their chief executives more accountable. But it gives regulators a lot of room for interpretation. (Financial Times)
EU finance ministers on Wednesday framed the political bargain for the eurozone's next big step towards banking union, but put off the fight over the crucial details of sharing bank failure costs until next week. A marathon negotiating session in Brussels produced a draft compromise, broadly based on Germany's revised position, which sets out how eurozone countries cede power to a central bank resolution authority and establish a common funding network. (Financial Times)
"China has stripped dozens of powers away from central government ministries as it bids to cut red tape and prevent Beijing's army of bureaucrats from micromanaging the world's second-largest economy. China's cabinet, the State Council, announced on Tuesday that it was removing 82 powers from a number of central government ministries, including the powerful National Development and Reform Commission (NDRC) and the Ministry of Environmental Protection." (Reuters)
JPMorgan files patent for Bitcoin-style payment system: JPMorgan Chase has filed a US patent application for a computerised payment system that resembles some aspects of Bitcoin, the controversial virtual currency. Like Bitcoin, JPMorgan's proposed system would allow people to make anonymous, electronic payments over the internet, without having to reveal their name or account numbers or pay a fee, according to the patent application. (Financial Times)
RBS' Nathan Bostock to join Santander: The recently appointed finance director of Royal Bank of Scotland, is leaving after 10 weeks in the job for a new role with Santander, dealing a significant blow to the state-backed bank's attempts to clean up its business. Mr Bostock is to become deputy chief executive of Santander UK, a division of the Spanish bank, with a view to potentially replacing Ana Botin as chief executive, according to people close to the process. (Financial Times)
"Santander, Spain's largest bank, is to buy HSBC's 8 per cent stake in Bank of Shanghai, just as many international rivals are beginning to sell out of China." (Reuters)
BHP Billiton is to invest $4bn a year to step up output from its US shale reserves and expects the business to generate $3bn of cash annually by the end of the decade, helping the world's largest mining group by market capitalisation to justify expensive bets placed on the assets two years ago. BHP said US shale production would break even from 2016 and by the following year would reach 500,000 barrels per day, 70 per cent higher than today. (Financial Times)
First Group, the UK bus and rail group, is under attack from US activist: Sandell Asset Management, a hedge fund with a stake of about 3 per cent, has written to the FirstGroup board to urge it to consider the sale of Greyhound, the trans-American bus service, and its school bus division. FirstGroup acquired both businesses in a $3.6bn takeover of Laidlaw in 2007. (Financial Times)
General Motors has said it will pull out of manufacturing in Australia by four years' time, with the loss of 2900 jobs. The US car giant partly blamed the strong Australian dollar and high labour costs for its decision. (FastFT) Part of the general revival plan (Financial Times) with new CEO Mary Barra. (Reuters)
Cinda "raised HK$18.5 billion ($2.4 billion) in Hong Kong's biggest initial public offering in a year as it prepares to take on more distressed assets. The company sold 5.3 billion shares at HK$3.58 each, the top of the price range, Beijing-based Cinda said in a statement to the Hong Kong stock exchange today. The stock will start trading tomorrow, it said. The HK$18.5 billion is the company's net proceeds, according to the statement." (Bloomberg)
Markets: European stocks were steady but struggling for momentum after inheriting a soft session out of Asia, where Tokyo lost ground on further strength in the yen. The pervading tone was cautious, with the dollar index little changed, Treasury yields nudged fractionally higher and gold eased $5 to $1,255 an ounce. Moves in industrial commodities were conforming to the tentative mood; copper was up 0.2 per cent at $3.31 a pound and Brent crude was slipping just 12 cents to $109.26 a barrel. In stocks, the FTSE Eurofirst 300 reversed an initial dip to trade up 0.2 per cent after its Asia-Pacific peer lost 0.6 per cent. US index futures showed the S&P 500 opening barely moved from Tuesday's close of 1,803, leaving the Wall Street benchmark 5 points below Monday's record close. (Financial Times)
