Market Snapshot

Asia: Japan -0.9% to 18777. Hong Kong +0.1% to 23143. China +0.1% to 3434. India -0.4% to 27253.
Europe: London -0.3%. Paris -0.3%. Frankfurt -0.2%.
Futures: Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude -0.9% to $43.59. Gold -0.1% to $1165.40.
Ten-year Treasury Yield flat at 2.05%

Economic News

FOMC meeting begins
8:30 Durable Goods
8:55 Redbook Chain Store Sales
9:00 S&P Case-Shiller Home Price Index
9:45 PMI Services Index Flash
10:00 Richmond Fed Mfg.
10:00 Consumer Confidence


The Federal Reserve policy-making committee convenes in Washington today and tomorrow, where it’s expected to keep benchmark interest rates near zero. The real question is whether the Fed will raise rates at its next gathering in December. Officials may provide some hints to that answer in tomorrow’s post-meeting statement by signaling a change in stance to recent soft U.S. economic data and events in the global markets.

Two U.S. data reports this morning should also give some sense of the American economy’s momentum for the fall, especially given headwinds from Asia and recent wobbles on Wall Street. First will be government data on durable goods orders for September, followed by a report on October’s consumer confidence from the Conference Board. Traders are also eyeing upcoming earnings reports from several heavy hitters, including Ford (F), Alibaba (BABA), Apple (AAPL) and Twitter (TWTR).

The White House and congressional leaders have reached a tentative deal on a two-year budget plan that would suspend the debt limit through mid-March 2017 and boost spending by $80B through September 2017. Those increases would be offset by cuts in spending on Medicare and Social Security disability benefits, and savings and revenue from other programs. The agreement could be voted on by the House as soon as tomorrow.

Meanwhile, 62 Republicans have joined 184 Democrats to pass a “discharge petition” to renew the Export-Import Bank’s charter, bypassing Financial Services Committee Chairman Jeb Hensarling, who has fought to close the trade lending agency. Monday’s vote means that, bar any other last-minute obstacles, a vote on reauthorizing the bank should pass the House shortly. The bill would then go to the Senate, where it awaits an uncertain fate.

U.K. economic growth experienced a slowdown in the third quarter of 2015, hit by shrinking construction and manufacturing activity. Gross domestic product expanded 0.5% from the previous period, when it grew 0.7%, a sign that Britain may be falling prey to global headwinds. The figure also suggests that “policymakers will want more time to assess the extent of the slowdown…effectively postponing any rate hikes until next year,” said Chris Williamson, chief economist at Markit.

Indonesian President Joko Widodo said his country plans to join the Trans-Pacific Partnership – that the U.S. has forged with 11 other countries – following yesterday’s meeting with President Obama. “We are the largest economy in Southeast Asia,” Widodo said through a translator. “And Indonesia intends to join the TPP.” Negotiators completed the deal earlier this month, capping a years-long process to create a regional trade bloc covering 40% of the global economy.


Wal-Mart has applied to the FAA for permission to test drones for home delivery, curbside pickup and checking warehouse inventories, a sign it seeks to compete with Amazon (AMZN) in using drones to fill and deliver online orders. “There is a Walmart (WMT) within five miles of 70% of the U.S. population, which creates some unique and interesting possibilities for serving customers with drones,” a company spokesperson said.

Railroads are amplifying warnings that the U.S. transportation network could grind to a halt at the start of the new year if Congress makes them stick to a year-end deadline to install a new safety system called “positive train control” – rail’s version of air traffic control. The railroads appear likely to get their wish. Late Friday, lawmakers tacked a three year extension on to a transportation funding bill, which is widely expected to pass both houses this week.

BP’s earnings in the third quarter nearly halved compared with a year earlier, as low crude prices and charges related to its 2010 Gulf of Mexico spill weighed on its financial performance. Replacement cost profit, a number analogous to the net income that U.S. oil companies report, was $1.2B vs. $2.4B a year ago. However, BP (BP) laid out a strategy to manage the lower oil price environment, planning for an around $60/bbl price for Brent crude until at least 2017 and scheduling $3B-5B worth of asset sales next year. BP +2.5% premarket.

Novartis has agreed to pay $390M to resolve a lawsuit claiming the company paid kickbacks to increase sales of several prescription medicines including Myfortic, Exjade, Tasigna, Gleevec and TOBI. The settlement digs heavily into the drugmaker’s third quarter profit. Today, Novartis (NVS) reported that Q3 net income fell 42% to $1.81B (while core net income, which strips out one-time events such as settlements, fell 2% to $3.06B).

The results are in: The NFL’s streaming experiment with Yahoo (YHOO) on Sunday drew far fewer viewers than a typical top-rated national broadcast. The Web portal attracted 15.2M unique viewers in a game between the Jaguars and Bills, although the matchup was broadcast on television in the teams’ local markets, which might have limited Yahoo viewership. By comparison, NBC’s Sunday Night Football program averaged 24.1M viewers through its first seven telecasts this season.

JPMorgan is bowing to shareholders on a request to disclose more information when it claws back money from top executives. The bank will now make a public disclosure any time it retrieves compensation from any member of the company’s operating committee. JPMorgan (JPM) is also preparing an amendment to grant groups of up to 20 shareholders the right to nominate their own candidates, a change known as “proxy access” that has become a popular reform at many companies this year.

Meanwhile, Chase is launching its own competitor to Apple Pay (AAPL) that will allow consumers to pay retailers using their smartphones in stores, and it has already won the endorsement of a major group of companies. For merchants, it’s promising fixed pricing and no additional fees for network, processing or fraud liability, and will work not via NFP (tap-and-pay) but by using existing gift-card scanners. Chase Pay (JPM) will be available mid-2016 across 94M credit, debit and prepaid card accounts.

Volkswagen is coming under scrutiny from yet another U.S. regulator after the Federal Trade Commission said it was investigating possible deceptive marketing by the carmaker. The FTC polices laws that prohibit deceptive acts or practices by companies, and has the power to levy substantial fines on groups found guilty of wrongdoing. German Transport Minister Alexander Dobrindt has also invited U.S. experts to Germany to observe checks being conducted on vehicles as a result of Volkswagen’s (VLKAY) emissions-rigging scandal.

It’s not just Walt Disney that could get a lift from a strong Star Wars performance, but the entertainment sector at large could benefit as well, announces research firm FBR & Co. The statement came from notes where analyst Barton Crockett reiterated an Outperform rating on both Disney (NYSE:DIS) and Time Warner (TWX). Early indicators (likely including ticket presales) support the case that Star Wars: The Force Awakens could become the biggest film ever, he says, and Q3 licensed product sales were well above expectations.

The clock is ticking for AB InBev (BUD) and SABMiller (SBMRY) to complete discussions for a potential $104B merger. Under British takeover rules, the brewing giants have until today to finalize their “agreement in principle” struck last month. If they’re not yet able to complete the deal, it’s possible SABMiller will seek permission from British regulators to extend the deadline again.

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