Here is what you need to know.
The Fed could still hike rates this year. To no one’s surprise, the Federal Open Market Committee held its fed funds rate at less than 0.25% at Wednesday’s meeting. However, the Committee noted, “In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress — both realised and expected — toward its objectives of maximum employment and 2 per cent inflation.” This caused traders to at least think about the possibility the Fed will raise rates in December. Currently, the market is pricing in a 46% chance of a December rate hike, up from 34.7% before Wednesday’s meeting.
China is getting rid of its one-child policy. The policy, which began in 1978, is being abandoned as China looks for ways to solve its demographics problem, a large ageing population. The one-child policy had been relaxed in recent years as couples were allowed to have two children if both spouses were only children. Couples will now be allowed to have two children.
The House of Representatives passed the budget deal. In a closing act for House speaker John Boehner, the US House of Representatives passed its budget deal by a vote of 266 to 167. Only 79 of 246 Republicans voted in favour of the deal. The bill suspends the debt ceiling until March 2017, in addition to setting spending levels for the next two years. Republican presidential candidate and Kentucky Senator Rand Paul says he will filibuster the bill on the Senate floor on Thursday.
A mega deal in the pharma industry is in the works. Pfizer has approached Allergan to discuss a mega-merger in the pharmaceutical industry, according to both the Wall Street Journal and Financial Times. Such a merger would create a $US330 billion behemoth, making it the largest healthcare group. The takeover attempt comes about a year after Pfizer failed in its bid to acquire AstraZeneca. Neither Pfizer nor Allergan would comment on the reports.
Deutsche Bank announced a huge loss. Deutsche Bank announced a third quarter loss of $US6.6 billion (€6 billion), including a $US1.32 billion (€1.2 billion) litigation charge. Revenue fell 7% versus last year to $US8 billion (€7.3 billion), largely a result of the the bank’s stake in China’s Hua Xia Bank. The company says it will cut 30,000 jobs globally over the next two years.
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Barclays has a new CEO. Hedge funder Jes Staley of Blue Mountain Capital has been named chief executive officer at Barclays. According to a regulatory filing, Staley will begin on December 1, and earn an annual salary of $US1.83 million (£1.2 million) and an extra $US1.76 million (£1.15 million) in stock in addition to a cash allowance of 33% of his salary, known as role-based pay. “In Jes Staley we believe we have an executive with the appropriate leadership talent and wide-ranging experience to deliver shareholder value and to take the Group forward strategically,” Barclays Chairman John McFarlane said in a statement.
GoPro is crashing after a dismal quarter. The digital-camera maker announced adjusted earnings of $US0.25 per share, which was below the Bloomberg consensus estimate of $US0.29. Revenue surged 43% compared to last year to $US400.3 million, but that missed the $US433.6 million that was expected. Forward guidance was especially terrible with company seeing Q4 earnings of $US0.35 to $US0.45 per share, about half of the $US0.82 that analysts were anticipating. “I am proud of our year-to-date accomplishments in which we posted strong financial results and expanded our portfolio of products, however our business in the third quarter was clearly more difficult than anticipated,” CEO Nicholas Woodman said in the earnings statement.
Stock markets around the world are mixed. China’s Shanghai Composite (+0.4%) outperformed in Asia and Britain’s FTSE (-0.9%) leads the way lower in Europe. S&P 500 futures are lower by 8.25 points at 2076.25.
US economic data picks up. Initial and continuing claims and advanced GDP are scheduled to be released at 8:30 a.m. ET before pending home sales crosses the wires at 10 a.m. ET. Natural gas inventories are due out at 10:30 a.m. ET. Treasury will auction $US29 billion 7-year notes at 1 p.m. ET. The US 10-year yield is down 1 basis point at 2.09%.
There are a ton of earnings reports. Aetna, AmerisourceBergen, CME Group, ConocoPhillips, Johnson Controls, MasterCard, MGM Resorts, Potash, Royal Dutch Shell and Sony are among the names reporting ahead of the opening bell. Baidu, Banco Santander, First Solar, LinkedIn and Starbucks highlight the companies reporting after markets close.
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