- Fed's Updated Model of Economy Suggests It's Time to Raise Rates. The Federal Reserve Board released an updated version of its large-scale model on the U.S. economy that may hold clues into why policy makers pivoted at their meeting earlier this week toward a December interest-rate increase. The revised inputs and calculations on Friday suggest the economy will use up resource slack by the first quarter of 2016, according to an analysis by Barclays Plc, and that also indicates Fed staff lowered their near-term estimate for how fast the economy can grow without producing inflation -- a concept known as potential growth. “The output gap appears closed,” said Michael Gapen, chief U.S. economist at Barclays’s investment-banking unit in New York. “This means further progress would lead to resource scarcity and potential upward pressure on inflation in the medium term.” Gapen said that may explain why U.S. central bankers signaled this week that they will consider the first interest-rate increase since 2006 at their next meeting, on Dec. 15-16.
- Orban Accuses Soros of Stoking Refugee Wave to Weaken Europe. Hungarian Prime Minister Viktor Orban accused billionaire investor George Soros of being a prominent member of a circle of "activists" trying to undermine European nations by supporting refugees heading to the continent from the Middle East and beyond. "His name is perhaps the strongest example of those who support anything that weakens nation states, they support everything that changes the traditional European lifestyle," Orban said in an interview on public radio Kossuth. "These activists who support immigrants inadvertently become part of this international human-smuggling network."
- Puerto Rican Govt Could Run Out of Cash Nov. 15, Report Says. The Puerto Rican government could run out of cash as soon as Nov. 15, forcing it to order a partial shutdown or reduce working hours for public employees, the island’s budget director told a local newspaper. Luis Cruz Batista, executive director of the Office of Management and Budget, said the government is monitoring cash flow and has $150 million in reserves to fund essential services, including schools, police and health care, even if other agencies are reduced or temporarily shuttered.
- Bearish Gas Bets Surge to Record in Ugliest October Since 2008. Hedge funds raised bearish bets on U.S. natural gas to an all-time high just before prices capped their worst performance for the month of October since 2008 on the outlook for record stockpiles. Money managers increased their net-short position in gas contracts by 2.4 percent to 155,589 in the week ended Oct. 27, according to the U.S. Commodity Futures Trading Commission. Long-only bets declined for the fifth consecutive week. Gas futures that have historically rallied in October ahead of the winter heating season instead slid 8 percent on forecasts for mild weather and an expanding supply glut.
- U.S. Banks to Face $120 Billion Shortfall in Fed Crisis Plan. The largest U.S. banks would face a $120 billion total shortfall of long-term debt under a Federal Reserve proposal aimed at ensuring their failure wouldn’t hurt the broader financial system. Banks such as Wells Fargo & Co. and JPMorgan Chase & Co. will be required to hold enough debt that could be converted into equity if they were to falter, according to a Fed rule that was approved by a unanimous vote on Friday. The Fed’s proposal, which applies to eight of the biggest U.S. banks, requires debt and a capital cushion equal to at least 16 percent of risk-weighted assets by 2019 and 18 percent by 2022. “Big banks have issued a lot of debt under current rates that, when re-issued to comply with TLAC and meet market demands, will cost considerably more,” Petrou said. The Fed has kept interest rates near zero since 2008, though Fed officials have indicated they may raise rates in December.
- FDA Says Chinese Pfizer(PFE) Plant Hid Failures, Used Old Ingredients. A Pfizer Inc. plant in China that was being inspected by Food and Drug Administration regulators in order to ship drugs to the U.S. kept a second set of quality and manufacturing records that didn’t match official ones, according to an FDA review of the facility. During an April inspection of Pfizer’s plant in the northern Chinese city of Dalian, FDA inspectors said in their report that employees hid quality failures, used expired manufacturing materials or ones that hadn’t been recently checked, and retested failing products until they passed.
- Valeant Hits 2-Year Low as Ackman Ignored; Citron Plans Report. (video) Valeant Pharmaceuticals International Inc. tumbled to a two-year low, closing out its worst month ever, after billionaire shareholder William Ackman failed to persuade investors the stock was undervalued and short-seller Citron Research hinted at fresh allegations of wrongdoing.
- Paul Singer Backs Marco Rubio. Billionaire rejects last-minute pleas by Jeb Bush campaign to hold off his decision. Marco Rubio's highly-touted debate performance on Wednesday has already yielded significant a tangible benefit: The Republican presidential candidate has snagged the support of mega-donor Paul Singer, in a move that will be widely seen in the political world as a blow to struggling rival Jeb Bush.
- Russian Plane Crashes in Egypt’s Sinai Peninsula Killing 224 People. Kogalymavia flight was en route to St. Petersburg from Sharm El Sheikh. A Russian passenger jet crashed in Egypt’s Sinai Peninsula, killing all 224 people on board, after losing contact with aviation authorities on Saturday. Egyptian officials said the Airbus A321 jetliner, which was operated by Russian carrier Kogalymavia, was flying to St. Petersburg from Sharm El Sheikh, a resort town popular with Russian tourists, when it disappeared from radar screens.
- Marco Rubio Moves to Seize the Moment. GOP presidential hopeful tries to extend the momentum from his debate performance.
- No Survivors After Russian Airplane With 224 On Board Crashes In Egypt's Sinai, ISIS Claims Responsibility.
- Dear Janet, Seriously!! (graph)
- How We Got Here: The Fed Warned Itself In 1979, Then Spent Four Decades Intentionally Avoiding The Topic.
- A massive Chinese industry is flashing warning signs that the world cannot ignore. China's steel industry, the world's biggest, is in crisis. The disaster is the result of a combination of factors, including a slowing Chinese economy, falling commodity prices, and an industry loaded with debt.
- Report: CNBC producers were told to move on after disastrous debate. After a broadly criticized Republican presidential debate the night before, CNBC staffers were told on Thursday to move on from coverage of event, according to a report Friday from a competing news channel. In a post-mortem from CNN media reporter Brian Stelter, unnamed CNBC staffers said they were "shell shocked" after the debate, which caught nearly universal ire for the moderators' lack of preparedness and "bias."
Il Sole 24 Ore:
- Draghi: 'Open Question' Whether Further Stimulus Is Necessary. ECB President Mario Draghi says further stimulus still an "open question," according to interview.