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, and may also lower the 7% unemployment threshold (paywall) at which it will stop asset purchases altogether. Asian markets were in standby mode as investors await the pivotal decision.
Cracks in the US housing recovery. Home construction starts are expected to have increased to an annualized pace of 920,000 in August, from July’s 896,000. Building permits, a gauge of future construction, are projected to decrease slightly.
Corporate earnings perk up. FedEx, the world’s largest air-cargo company, is expected to report modest earnings growth despite the sluggish economy and cost-cutting by customers. Cereal company General Mills will likely post higher revenues due to recent acquisitions. Inditex, which owns the Zara clothing stores, should benefit from improving economic sentiment in Europe (paywall).
Larry Ellison’s dilemma. Oracle’s quarterly earnings call takes place at the same time as a crucial America’s Cup sailing race, where the Ellison-backed team is defending its title. Will the world’s third-richest man dial in from San Francisco Bay?
France’s modest pension reforms. The cabinet will consider a draft law that avoids lifting the retirement age and plans for a larger-than-expected deficit this year. European leaders have criticized the reforms for not doing enough to boost France’s competitiveness, while French workers have protested its 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 US regulator 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.
Chinese real estate kept climbing. Average new home prices in China’s 70 major cities rose 8.3% year-on-year, including a 14.9% increase in Beijing and 15.4% increase in Shanghai.
Microsoft wooed shareholders with cash. 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.
“Auto-pilot” for Teslas. Elon Musk said the electric car company would launch cars that can drive themselves at least 90% of the time, within the next three years.
The IMF cautioned against rapid deficit-cutting. In a report on lessons of 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.”
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.
Acapulco was hit by massive floods. Some 40,000 visitors have been stranded in the popular Mexican beach resort, with floodwaters inundating roads and the airport. 55 people have been killed throughout the country after the most severe storms in years.
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
The US poverty rate is badly flawed. Alternative metrics that factor in benefits payments show the picture is less dire than it seems.
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 donated generously, embraced more risks than Western nations, and transferred skills more freely 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 is snitches. 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.