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 and European markets were up ahead of the announcement.
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.
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?
While you were sleeping
Novartis accused of bribery in China. Alcon, Novartis’s eye care unit, paid doctors “research fees” for nonexistent clinical trials, according to a Chinese newspaper.
Inditex beat expectations. The Zara owner said more store openings and expanded online efforts boosted net income by 0.7% to 951 million euros ($1.3 billion).
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.
“Auto-pilot” for Teslas. Elon Musk promised to launch cars that can drive themselves within the next three years.
French taxes are too high. François Hollande, who imposed a 75% millionaire tax when he became president, admitted that the government’s share of its citizens’ income has become “too much.”
Guns are not welcome in Starbucks. While firearms won’t be banned outright, CEO Howard Schultz said people bringing guns into cafes “have made our customers uncomfortable.”
An EU crackdown on rate-rigging. Lenders could be forced to pay as much 10% of their annual sales if they manipulate interest rates like LIBOR.
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.
Berlusconi’s revenge? The former Italian prime minister is reportedly considering running for election as a member of the European Parliament for Estonia, where Italian laws prohibiting him from running for office do not apply.
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.
The battle to grow the world’s hottest pepper. It’s a vicious contest with no clear winner.
Texas man has a literal “beer gut.” Doctors say the 61-year-old had too much brewer’s yeast in his stomach; when he ate starchy foods, he would essentially get drunk from beer brewed in his own belly.