10 things you need to know before the opening bell

Here is what you need to know.

Volkswagen cheated on US emissions. Shares of Volkswagen are down more than 20% after it was discovered the company designed software for diesel cars that intentionally gamed the system. Bloomberg reports, the automaker’s technology enacted pollution controls only while a vehicle was being tested for emissions. “I personally am deeply sorry that we have broken the trust of our customers and the public,” CEO Martin Winterkorn said in a statement. Volkswagen faces up to $US18 billion in fines.

Alexis Tsipras is Greece’s new prime minister. Greece’s left-wing Syriza party won the parliamentary election by a wider than expected margin. Syriza collected 35.5% of the vote, topping the 28.1% of the vote for the New Democracy party. The polls were projecting a neck and neck race. Business Insider’s Mike Bird notes the winner of the election receives a 50-seat bonus, meaning Syriza is just shy of an overall majority. Deutsche Bank says Tsipras will have his work cut out for him, needing to reform pensions and create a new collective wage bargaining framework. Greece’s 10-year yield is higher by 5 basis points at 7.96%.

France was downgraded at Moody’s. The credit agency lowered its rating on France one notch to Aa2 to Aa1. Moody’s stated, “French economic growth will remain low over the medium term, and the obstacle that this will pose for any material reversal in France’s elevated debt burden in the foreseeable future.” It continued, “The current economic recovery in France has already proven to be significantly slower — and Moody’s believes that it will remain so — compared with the recoveries observed over the past few decades.” The country’s outlook was upgraded to ‘stable’ from ‘negative.’ France’s 10-year yield is up 2 basis points at 1.05%.

SF’s Williams says Fed decision was a close. Speaking on Fox Sunday Morning Futures, San Francisco Fed President John Williams said last week’s rate decision was a “close call.” Williams noted the labour market is nearing full employment, but concerns of the global economy kept the US central bank on hold.

Richmond’s Lacker says the Fed should have hiked. Reuters reports, The lone dissenter of last week’s Federal Open Market Committee rate decision thinks the US economy is strong enough, and the Fed should have raised rates. “Such exceptionally low real interest rates are unlikely to be appropriate for an economy with persistently strong consumption growth and tightening labour markets,” Lacker said in a statement.

St. Louis’ Bullard says a few hikes doesn’t mean tight policy. According to Reuters, non-voting member James Bullard says he would have dissented along with Lacker at last week’s meeting. Bullard believes the FOMC might be paying too much attention to the volatility in equity markets and not enough attention to the labour market and inflation. A statement released by Bullard suggested low rates, “are unlikely to be appropriate for an economy with persistently strong consumption growth and tightening labour markets.”

Separatists are nearing a small majority in Catalonia. Reuters reports, three polls are showing the pro-independence party, Junts pel Si, winning between 63 and 67 seats, or about 41% of the September 27 Catalan parliamentary vote. Catalan President Artur Mas has said at least 68 votes are needed for a “road map” to secession from Spain within 18 months, according to Reuters. Spain’s 10-year yield is little changed at 1.95%.

Global stock markets trade mixed. China’s Shanghai Composite (+1.9%) was the lone gainer in Asia and France’s CAC (+0.7%) leads the way higher in Europe. S&P 500 futures are higher by 4.00 points at 1954.50.

US economic data is limited. Existing home sales will be released at 10 a.m. ET. The US 10-year yield is up 2 basis points at 2.15%.

Earnings reports are light. Lennar will report before markets open and Red Hat will release its quarterly results after markets close.

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