Good morning! Here's what you need to know.
- Markets were higher in Asia, with Japan's Nikkei up most at 0.83%. European markets were lower across the board, with Germany's DAX leading all laggards at -0.71%. U.S. futures were pointing down. Gold was up.
- The government shutdown is over and the debt ceiling has been raised. The House of Representatives voted late Wednesday to pass the Senate's compromise bill 285-144, with 87 Republicans joining 198 Democrats. All 144 "no" votes were from Republicans. It was then signed by the President. The government got funded through Jan. 1, and the debt ceiling suspended through Feb. 7. Federal employees were expected to return to wrk this morning.
- Given the bill's limited time horizons, some are seeing only a narrow victory. For Citi's Tobias Levkovich, the deal amounts to a "non-decision": "Kicking the proverbial can down the street does not address the long-term fiscal imbalances. The twin decisions of a taper timing push out and the discord in Washington being swept under the rug until January and February roll in could keep P/E multiples more compressed as equity risk premiums stay elevated. Investors typically do not like uncertainty and it is hard to determine how these recent almost non-decisions can be seen as reinvigorating confidence aside from some relief that an imminent likely disaster has been avoided."
- China is also not buying that anything has changed. Its Dagong ratings agency downgraded U.S. credit to "A-" from "A" and left its outlook negative: "...the U.S. Federal Government can avoid the default crisis for the moment. However the fundamental situation that the debt growth rate significantly outpaces that of fiscal income and GDP remains unchanged. For a long time the U.S. government maintains its solvency by repaying its old debts through raising new debts, which constantly aggravates the vulnerability of the federal government's solvency. Hence the government is still approaching the verge of default crisis, a situation that cannot be substantially alleviated in the foreseeable future." China's foreign ministry also blasted Congress for having created an unnecessary hassle:"[America's founding fathers] would turn in their graves if they saw their design being kidnapped for political brinkmanship. Although they clearly knew the dire consequences of a default on the US economy and the rest of the world, the Democrats and Republicans played brinkmanship into the final moment for the sake of partisan interests."
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- It's not clear when the backlog of economic data caused by the shutdown will start rushing in. In any event we're still getting Philly Fed data for October at 10 am. Consensus is for a reading of 15.0 against 22.3 prior.
- S&P said the whole episode sliced 0.6% off U.S. GDP, or $24 billion dollars. "In the summer of 2011, as we approached the last debt ceiling standoff, consumer confidence plummeted and hit a 31-year low in August when the debt ceiling issue came to a head. Given that this round of debt-ceiling negotiations is occurring after two-plus weeks of a government shutdown, the total impact on the economy will likely be even more severe," the agency said.
- Goldman Sachs earnings of $2.88/share beat estimates of $2.47/share, but revenue of $6.72 billion missed and the stock is off more than -2% premarket. The bank said it would boost its quarterly dividend $0.05 to $0.55. Verizon beat estimates by $0.03/share. Chipotle ($2.78/share expected), and Sands ($0.75/share expected) also report earnings today. On Goldman, BI's Linette Lopez says investors were watching one thing: "The two businesses that have shown the most weakness for [banks so far] all of them have been mortgage origination and fixed-income trading (if they have both, if not either/or)."
- IBM shares fell more than -6% after hours yesterday after it announced Q3 revenue of $23.7 billion, missing expectations for $24.75 billion. Services revenue was particularly weak. Ebay stock fell more than -4% after hours after giving a weaker than expected Q4 outlook, specifically saying they were "cautious" on this holiday season.
- The Wall Street Journal's Dan Fitzpatrick is reporting regulators nudged Jamie Dimon out as chair of JPMorgan's banking unit: "The move, which happened July 1, didn't affect Mr. Dimon's status as chief executive or chairman of J.P. Morgan's parent company. The suggestion, this person said, came from the Office of the Comptroller of the Currency as a way to improve governance at the bank."
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- Samsung has submitted an offer for a five-year armistice on tablet and smartphone patent complaints against Apple, the FT reports. The Korean electronics giant suffered a defeat in August when the International Trade Commission ruled it had violated some of Apple's iPhone patents. The two sides will now have 12 months to negotiate terms.