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 Good morning. Here's what you need to know. - Asian markets were mixed. Japan's Nikkei was down 0.16%; Korea's KOSPI down 0.39%; and Hong Kong's Hang Seng up 1.67%. European markets were also mixed, as are U.S. futures. After a big middle of the week, global markets have basically calmed down.
- The Reserve Bank of India (RBI), led by its new chief Raghuram Rajan, unexpectedly decided to raise interest rates from 7.25% to 7.5% at the new governor's first policy meeting. Indian markets tumbled as a result and the rupee fell. "Bringing down inflation to more tolerable levels warrants raising the repo rate by 25 basis points immediately," Rajan said in a statement.
- With the taper decision behind us, what's left to worry about? BTIG's Dan Greenhaus answers: the upcoming debt ceiling debate. "To be sure, when we discussed the debt ceiling back in 2011, many investors said they can’t control such an outcome so they have to plow ahead, letting the chips fall where they may. Those chips did fall..down nearly 20%. The same sort of rationale is being applied today, at least in our conversations. We agree; the typical investor should take no heed of these matters. However when the question is 'what can stop this train,' the answer these days is usually 'dopes in Washington,'" he wrote.
- The story this summer has been how emerging markets have seen monster outflows. But after the Fed's "no taper" decision, that trend could reverse. "Treasuries and equities stalled yesterday and the dollar found its feet. The first phase of the no-taper rally has passed," wrote SocGen currency strategist Kit Juckes. "The next phase is that we will see huge inflows into EM assets as investors take advantage of better yields and less expensive currencies."
- The Japanese government will offer more than $14.1 billion in corporate tax cuts in a new economic stimulus package meant to mitigate the economic blow from a planned hike in the sales tax, the Nikkei newspaper reports. "Some of [Prime Minister] Abe's senior ministers have openly cautioned that the tax hike could derail the escape from deflation," reports Reuters' Stanley White. "The corporate tax cuts are expected to buffer the economy from such risks and ensure Abe's cocktail of aggressive fiscal and monetary stimulus puts growth on a sustainable footing over the long-term."
- The iPhone 5S and 5C are available for purchase this morning, and Wall Street analysts are expecting between 5 million and 7.75 million units to sell over the weekend. "Anything less than 5 million would be a clear negative and anything over 6 could be a significant catalyst for the stock," wrote Brian Blair and Wedge Partners. Last year, Apple sold 5 million phones over its launch weekend.
- The Obama administration will seek to implement tougher requirements for new coal-fired power plants, reports the AP's Dina Cappiello. The new rules would "force the government to limit emissions from the existing power plant fleet," which currently creates a third of U.S. greenhouse gas emissions.
- Not much happening on the economic data front today, but at 10:00 A.M. we'll get Eurozone consumer confidence. Analysts are expecting a headline indicator of -14.5, slightly better than the last print of -15.6. Still, any reading below zero means European consumers generally have a pessimistic outlook on the job market and economy.
- Yesterday, two major investors weighed in on the state of the U.S. economy. First, Warren Buffett told students at Georgetown,“The Fed is the greatest hedge fund in history." The central bank has been able to profit from bond purchases while amassing a huge balance sheet, generating revenues of "$80 billion or $90 billion a year probably" for the U.S. government. Another billionaire, hedge funder Carl Icahn, went on CNBC: "I think right now the market is giving you a false picture. I don't think a lot of companies are doing that well. They're taking advantage of low interest rates."
- Outgoing Microsoft chief Steve Ballmer made a plea to investors to support his new vision for a unified services and devices company. "If there's one thing I regret, there was a period in the early 2000s when we were so focused on what we had to do around Windows that we weren't able to redeploy talent to the new device form factor called the phone," Ballmer said in the presentation.
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