What to watch for today
Decision day at the Fed. The US central bank is expected to scale back its $85-billion-a-month asset-purchase program by around $10 billion. The Federal Reserve might also lower the unemployment threshold (paywall) at which it will stop asset purchases altogether; right now it’s at 7%.
Cracks in the US housing recovery. Home construction starts are expected to have increased to a 920,000 annualized pace in August, from July’s 896,000. But building permits, a gauge of future construction, may have fallen.
Corporate earnings perk up. FedEx, the world’s largest air-cargo company, is likely to report modest earnings growth despite the sluggish economy and cost-cutting by customers. Software giant Oracle too may report a better performance (paywall), while cereal company General Mills will see higher revenues driven by its recent acquisitions. Inditex, which owns the Zara clothing stores, should benefit from improving economic sentiment in Europe (paywall).
France’s modest pension reforms. The cabinet will be shown a draft law that avoids lifting the retirement age and plans for a larger-than-expected deficit this year. European leaders have criticized the reform for not doing enough to boost France’s competitiveness, while French workers have protested pro-business provisions.
While you were sleeping
No end to JP Morgan’s legal woes. A federal investigation into the bank’s $6 billion “London Whale” trading loss could lead to criminal charges. A regulator, the CFTC, is also investigating trades (paywall) made by the bank early last year. In a memo to staff, chief executive Jamie Dimon outlined a plan to simplify the bank and improve oversight.
Microsoft wooed shareholders. The software giant raised its dividend and announced a share repurchase program of up to $40 billion. Microsoft will hold an investor meeting on Thursday to discuss its strategy and its plans to replace CEO Steve Ballmer.
The IMF cautioned against rapid deficit-cutting. In a report that summarized the lessons from the financial crisis, the IMF said countries looking to get their finances in order should not aggressively cut budgets to satisfy investors as it could “dramatically impact economic activity.”
American incomes haven’t recovered from the crisis. Census bureau data showed the median income was $51,017 in 2012, about the same as in 2011 and down 8.3% from 2007. And there are 46.5 million Americans living in poverty, unchanged from the year before.
Dilma Rousseff snubbed Barack Obama. Brazil’s president called off a state visit to Washington next month in light of allegations that the US National Security Agency monitored her telephone and emails, and spied on the state oil company, Petrobras.
Quartz obsession interlude
Tim Fernholz on why Republican debt strategy in the US makes so little sense. “The good news is that debt will shrink and stabilize over the next decade, largely due to the improved economy and spending cuts passed in 2011, but also thanks to tax increases on the wealthy at the end of 2012. Perhaps, then, it’s time to overcome the fear that there’s some kind of immediate debt crisis. In fact, the reality is quite the opposite.” Read more here.
Matters of debate
Emerging nations face a bitter dilemma. If the Fed winds down its stimulus, emerging-market policymakers may have to soften domestic demand to tame trade deficits (paywall).
Turkey is poised to cash in on a stable Somalia. Turkey has been donating generously, been more open to risks than Western nations, and more willing to transfer skills than China.
Half of the world’s self-made women billionaires are from China. Their rags-to-riches stories are even more remarkable given China’s preference for boys.
France’s new weapon against tax-dodgers: other tax-dodgers. Tax evaders may get shorter sentences for ratting out other offenders.
The battle to grow the world’s hottest pepper. It’s a vicious contest with no clear winner.
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