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What to watch for today
Will the Fed pat itself on the back? Policymakers at the US Federal Reserve aren’t likely to shift their “low-for-long” course when they meet this afternoon to discuss interest rates. But Fed watchers will parse their policy statement regardless, looking for clues on how the bank assesses a recent resurgence in US housing markets, which many ascribe to the quantitative easing (QE3) the Fed announced a month ago.
Ex-Goldman board member Rajat Gupta awaits sentencing. He was convicted last June of leaking some of the bank’s secrets to hedge fund manager Raj Rajatnaram. Gupta, who also ran consulting firm McKinsey from 1994-2003, will be sentenced for insider trading in Manhattan today. This has not been a good month for Goldman. Its former salesman Greg Smith has written a book that is not terribly flattering about the bank, following the scandal he sparked that became known as “Muppetgate.”
More earnings. When Boeing reports on this past quarter today, investors will be mindful of its seven-year backlog in jet orders, and whether it has made progress in translating that high demand for its planes into profits. Zynga, AT&T, Delta Airlines, and Kimberly-Clark also report today, providing a cross-sector snapshot of the economy’s health.
Further analysis of the iPad mini, and early hands-on reviews. Apple disappointed investors yesterday when it unveiled a relatively high $329 starting price for its new smaller tablet. But early reviews by those who played with it at Apple’s event are generally positive. And the iPad mini’s unveiling moved at least one tech writer to declare Apple a better company under Steve Jobs’ successor Tim Cook.
While you were sleeping
German business leaders turned glum. Confidence unexpectedly fell to the lowest level in more than 2 1/2 years, due to the European debt crisis. This does not bode well for struggling countries such as Spain and Greece that are relying on Germany to support them.
European consumer brands felt pain. Volkswagen reported a 1.6% drop in nine-month operating income due to weakening demand. Heineken’s third quarter sales missed analysts’ forecasts. And Volvo’s third quarter sales and profits also declined. The Swedish carmaker blamed weak demand practically everywhere in the world.
China’s manufacturing growth shrank for the 12th month in a row in October. HSBC’s latest flash PMI survey stayed below the 50 point level that separates expansion from contraction. But the 49.1 reading was a three-month high. Beijing unveiled a new stimulus plan in late August that has boosted business. Such pro-growth policies could produce a fresh glut of money-losing airports and other projects. As independent economist Andy Xie points out near the end of this long essay, China’s government investment becomes less efficient over time because “of increasing waste and gray income” (the latter term means kickbacks to officials who award projects).
Visiting Australia became even more expensive. An average night’s stay in Sydney or Perth already costs around AUS$400 ($412.) Data released today showed Australian core consumer prices increased more than economists had forecast in the last quarter, and the Australian dollar surged on the back of the inflation data. That at least is good news for Australians holidaying abroad, and hotel owners in Phuket and Bali.
Japanese factories in China said: “get us out of here.” Due to the ongoing spat between the two East Asian neighbors over some uninhabited islands in the East China Sea, which has led to violent anti-Japanese protests across China, almost one-quarter of Japanese manufacturers are “rethinking their investment plans” in the country they have used as a workshop for decades, Reuters reports. The convenience of manufacturing in China has been fading due to rising wages.
Quartz obsession interlude
Simone Foxman on one impact of low interest rates: “Companies aren’t investing the money they can (thanks to QE) borrow cheaply in expanding their workforces or increasing production. They’re using it to buy back their own shares.” Read more here.
Matters of debate
Retired people should work for their pensions. That is according to Britain’s Lord Bichard, a former benefits chief. His idea does not sound a lot like retirement. But what he suggests is that older people could care for the “very old” and provide other community services on a part-time basis to ease the burden on the state.
People born in June and July don’t make the CEO cut. A recent study finds that executives born in March and April have a better shot at becoming chief executive of a US company.
The BRICS are broken. “The notion of wide-ranging convergence between the developing and the developed worlds is a myth,” writes Morgan Stanley emerging markets head Ruchir Sharma.
Should “Super” Mario Draghi carry on pushing his debt recovery plan? More austerity could increase fiscal discipline, or just prolong recessions.
Your company too can avoid paying UK taxes. Just follow these simple guidelines and you can join the ranks of eBay, Starbucks, IKEA, Apple, and Google.
Half of the world says blue is its favorite color. That makes blue at least three times more popular than second-placed purple or green.
Two cash-strapped Greek soccer teams have taken on new sponsors to survive the economic crisis: a brothel and a funeral home. Their new uniforms are, respectively, pink and red, and black with a big white cross.
A US couple discovered that the 33-pound rock that they’ve been using as a doorstop is actually a 4.5 billion-year-old meteorite. At auction, such rocks can sell for as much as $380,000.
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