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 Good morning. Here's what you need to know. - Asian markets were all down in overnight trading. Japan's Nikkei fell 0.62%; Hong Kong's Hang Seng, 1.71%; and the Shanghai, 1.49%. Europe, on the other hand, was slightly up, but U.S. futures were pointing lower.
- In a rare moment of bipartisanship, Democrats and Republicans agreed on a budget last night, preventing a repeat of October's government shutdown with weeks to spare. The deal — reached by Sen. Patty Murray (D-Wash.) and Rep. Paul Ryan (R-Wis.) — was immediately hailed by both President Obama and Speaker Boehner. The Bipartisan Budget Act of 2013 "sets discretionary spending levels a little above $1 trillion for the next two years, while repealing and replacing some cuts of sequestration," our Brett LoGiurato explains. "In fiscal year 2014, spending is set at $1.012 trillion, which sits about halfway between the proposed levels of the House and Senate budgets. Current law under sequestration calls for caps of $967 billion." The deal still has to pass both chambers by January 15.
- It seems we have Obamacare to thank for saving the U.S. economy. As our Joe Weisenthal writes, "Because Obamacare has rolled out terribly, Obama's approval ratings are in the toilet. This is a very welcome turn of events for the Republican party, which just over a month ago was in the toilet itself approval-wise. Republicans now have a good hand to play going into next November, and the only way they could obviously screw it up is by doing something stupid like shutting down the government again. So it appears that Republicans are content now to just not rock the boat and get to the next election which they hope will be a big one for them thanks to Obamacare."
- This budget deal was timely, because at 2:00 p.m. ET the U.S. government will make its monthly budget statement. Economists expect the Treasury to report a budget deficit of $140 billion. Of course, a quiet trend this year has been that the deficit has been shrinking.
- German consumer price index (CPI) came in at 0.2% month-over-month and 1.3% year-over-year, meeting analyst expectations. The German economy has continued to outperform its European neighbors. Earlier this month, the country's manufacturing sector saw its strongest month since the summer of 2011.
- On the opposite end of the European spectrum, Greece reported an unemployment rate of 27.4%, up from 27.3% the previous two months. That rate is more than double the Eurozone average.
- A lucrative Bitcoin arbitrage opportunity in China has all but disappeared in recent days. "Traders could earn profits by buying bitcoins using dollars on a foreign exchange such as Mt. Gox, reselling them for yuan at the higher price on BTC China, the main local exchange, and finally converting the yuan back to dollars," reports Reuters' Gabriel Wildau. "In recent days, however, the spread between bitcoins as priced in yuan and those priced in dollars has disappeared" after the Chinese government released a statement forbidding local banks from dealing with the digital currency.
- Italian Prime Minister Enrico Letta asked parliament to support his government and back a spate of reforms he said would boost the country out of the economic doldrums. "He promised to rein in the deficit, cut Italy's towering public debt, the second highest in the euro zone as a proportion of the overall economy, lower taxes on families and companies, reduce unemployment and boost public investment," Reuters' James Mackenzie reported. "Privatizations would continue and the government would consider allowing employees to buy shares in the post office and other public companies, he said."
- Costco will report earnings earnings today. Market analysts expect the company to post an EPS of $1.02, up from $0.95 a year ago, and revenue of $25.34 billion on the quarter. Last fiscal year, Costco netted $2.3 billion on membership fees, making up about 75% of its operating income. That huge figure allows the retailer to charge less and tempt customers looking to save money.
- Government regulators approved the Volcker rule yesterday, a long-in-the-making measure that limits trading activity — specifically proprietary trading activity — at U.S. banks. Standard & Poor's estimates that the rule could shave off $10 billion in yearly pretax profit from the eight largest banks. At 953 pages, "Sure a lot of the Volcker rule is highly over-engineered checklists and admonitions that boil down to 'don't be dumb,' and sure there are good theoretical arguments against that sort of regulation, but I don't know, come on. You shouldn't be dumb," wrote Bloomberg's Matt Levine. "You could do a lot worse than a rule that requires you to think about what you're doing."
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