APSenate Minority Leader Mitch McConnell and Majority Leader Harry Reid
Good morning! Here’s what you need to know.
- Markets were mostly down worldwide, with Australia’s S&P/ASX 200 falling most to -0.44%. Korea’s Kospi declined -0.23%. Germany’s DAX was off -0.20%. U.S. S&P futures were off -0.71%.
- Day 12 of the government shutdown begins today as negotiations to end the impasse went nowhere over the weekend. Things are worse than they were Friday. The Senate is stalled, though still negotiating today. Meanwhile, Politico’s Jake Sherman and John Bresnahan describe a situation where it’s become harder to pass a debt ceiling increase, because the House may make it contingent on items anathema to the Senate: “Attaching the so-called Vitter amendment to the debt-limit increase is one option, according to House GOP sources. That provision would end health-insurance subsidies for members of Congress, their aides and other federal government employees. Another option is delaying or repealing the medical device tax. Reid and Senate Democrats have opposed both proposals so far, but with the debt limit clock ticking, House Republicans may have more leverage now.”
- Goldman Sachs thinks the shutdown will have shaved 0.5% off GDP, which would knock their Q4 growth estimate down to 2.0%. Cullen Roche puts this in context :”This isn’t a huge deal yet and I presume the Goldman estimate doesn’t account for potential back pay which most furloughed employees should get, but as this drags on longer and longer it will start to have a real meaningful impact on confidence and growth.”
- Chicago’s Eugene Fama and Lars Hansen and Yale’s Robert Shiller won the Nobel Prize in economics “for their empirical analysis of asset prices.” Their citation begins, “There is no way to predict the price of stocks and bonds over the next few days or weeks. But it is quite possible to foresee the broad course of these prices over longer periods, such as the next three to five years. These findings, which might seem both surprising and contradictory, were made and analysed by this year’s Laureates.”
- Chinese export data for September unexpectedly fell 0.3% in September, which Reuters says signaled “flagging global demand.” But our Mamta Badkar pointed out some extenuating circumstancessuggesting this may have been a one off, including the fact that data in August 2012 was one of the last months showing truly weak macro conditions, meaning this month’s figure was inevitably going to be overshadowed by last month’s.
- Meanwhile, China itself seems to be doing alright as consumer prices for September climbed 3.1% YOY, beating expectations of 2.8% and surpassing August’s 2.6% figure.
- India’s Sensex stock index as it its highest point since mid-September. The FT explains why: “The decline in the Indian currency is lifting valuations of big companies that make a substantial proportion of their earnings in US dollars. Instead of panicking about the ongoing US government shut-down and prospect of a debt default, or fretting about inflation data out later today that is expected to show consumer prices jumped circa 9.5 per cent, Indian investors are bidding up shares of firms that do big business abroad.”
- Singapore’s economy shrank 1% in Q3. That beat expectations of -5%, and the FT notes they are also suffering from a property bubble and rising inflation. Still, many say the Asian city-state is a bellwether for the global economy.
- The Eurozone recovery looks real. Industrial production for August climbed 1% MUM, beating expectations of 0.8% and matching July’s revised figure. August data also fell less than expected YOY at -2.1%.
- When the sale of the Boston Globe is completed this month, the New York Times Company will officially be one-quarter the size it was a decade ago. The paper’s own Christine Haughney describes the transition: “The bigger shift for The Times has been from a news organisation that survived primarily on advertising — it generated $US900 million in ad revenue last year, compared with $US2 billion in 2002 — to one relying on circulation and consumer products. Many of the company’s major initiatives involve shifting from a reliance on advertising, which for so long was its lifeblood. The company has announced plans to introduce new subscription products, attract paying international readers and expand into video.”