Bloomberg:
- China Scraps Overseas Debt Quotas as Capital Outflows Worsen. China removed quotas for companies to raise funds in the overseas bond and loan markets, as it tries to staunch capital outflows spurred by a currency devaluation. The National Development and Reform Commission, China’s top planning agency, will remove quota approval processes for foreign currency or yuan notes and loans with a term of more than one year, according to a statement on its website Wednesday. Companies are only required to register with the regulator, the statement said. Previously, the NDRC reviewed each firm’s application for foreign borrowing, according to Moody’s Investors Service.
- JPMorgan Stops China Synthetic Shorts After Regulatory Crackdown. Some banks are scaling back offerings that enable clients to indirectly wager against Chinese stocks through Hong Kong’s stock exchange link with Shanghai, as China’s regulators clamp down on practices such as short-selling. JPMorgan Chase & Co. stopped offering so-called synthetic shorts on shares under the Shanghai Connect arrangement, according to an e-mail from its prime brokerage unit to clients including hedge funds this week. Credit Suisse Group AG also cut back on products that enable synthetic short-selling of Shanghai Connect stocks, said two people with knowledge of the matter who spoke on condition of anonymity.
- Japan Rating Cut by S&P as Abe Falls Short of Early Promise. Standard & Poor’s cut Japan’s long-term credit rating one level to A+, saying it sees little chance of the Abe government’s strategy turning around the poor outlook for economic growth and inflation over the next few years. The move comes just a day after the Bank of Japan refrained from boosting record asset purchases, betting there will be a resumption in growth and inflation. That’s left the onus on Prime Minister Shinzo Abe and his Cabinet to consider a fiscal stimulus package to boost what evidence indicates is a lackluster recovery in the second half of the year so far. “We believe that the government’s economic revival strategy -- dubbed "Abenomics" -- will not be able to reverse this deterioration in the next two to three years,” S&P said in a statement. “Economic support for Japan’s sovereign creditworthiness has continued to weaken.”
- OECD Issues Warning to Fed on Pace of Future Rate Increases. The Organisation for Economic Cooperation and Development said the Federal Reserve would be right to begin raising interest rates this week while warning that uncertainty about the path of tightening poses a greater threat to the economy. Fed policy makers led by Chair Janet Yellen begin their two-day meeting on Wednesday with economists divided over whether the gathering will conclude with the first U.S. rate increase in almost a decade.
- Europe Stocks Rise Before Fed Decision; SABMiller, AB InBev Gain. SABMiller Plc led European shares higher, while investors count down to the Federal Reserve’s interest rate decision due tomorrow. SABMiller soared 20 percent after saying that Anheuser-Busch InBev NV intends to make a takeover proposal. The Belgian brewer jumped 6.4 percent. Richemont gained 6.6 percent after the world’s biggest jewelry maker said five-month sales accelerated amid higher demand in Japan and Europe. Hermes International SCA added 3.8 percent. Inditex SA rose 5.9 percent after the owner of Zara reported a 26 percent surge in profit. The Stoxx Europe 600 Index climbed 1.5 percent to 361.87 at the close of trading.
- Grain Prices to Weaken on Less Severe El Nino Weather, Olam Says. Olam International Ltd., one of the world’s largest food commodities traders, expects grain and oilseed prices to weaken further because the El Nino weather phenomenon will be less harmful to harvests than feared. "We are bearish," Olam Chief Executive Officer Sunny Verghese said in an interview in London on Tuesday. "El Nino will not be as severe" as many in the agricultural commodities market expect, he added.
- Goldman(GS) Warns Markets Unprepared for Fed as Treasuries Seesaw. Goldman Sachs Group Inc. says financial markets are vulnerable because nobody can agree on what the Federal Reserve will do. Treasuries whipped around amid the debate. Treasuries rose Wednesday, rebounding from a selloff a day earlier when retail-sales data increased speculation the Fed would raise interest rates this week. Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said U.S. economic data don’t support the case for higher interest rates, a day after Jan Hatzius, the bank’s chief economist, said policy makers lack consensus and probably won’t act this month amid concern that markets may not be prepared. “I wouldn’t do it unless I was compelled,” Blankfein said Wednesday at a breakfast in New York sponsored by the Wall Street Journal. The Fed’s end of quantitative easing and higher taxes have acted as a brake on the economy and a form of tightening, he said. Futures show there’s a 28 percent chance of the Fed raising rates Thursday, according to data compiled by Bloomberg.
- QE's Cost: Fed Exit May Hit Economy Faster Than in Past Cycles. The Federal Reserve will have to confront the costs of its massive balance-sheet expansion when policy makers raise interest rates. The U.S. central bank’s exit strategy from unprecedented stimulus looks set to send big ripples through the financial system once it begins. These could hit the economy faster than they did in past tightening cycles, as rate rises radiate through a banking system constrained by new regulations and flooded with cash created by the Fed’s bond-buying program. The question is what that means for the economy and how it alters Fed Chair Janet Yellen’s calculus over the pace of tightening. Understanding the plumbing of the new financial landscape will be vital for policy makers trying to fine-tune the economy and investors navigating turbulent markets.
- Watch for Junk-Bond Air Pockets as Sprint Spirals Downward. Sprint Corp. is a cautionary tale for investors who think they’re immune to carnage in the $1.3 trillion junk-bond market as long as they steer clear of energy debt. Moody’s Investors Service on Tuesday downgraded the wireless company, which has more than $30 billion of debt outstanding, as it struggles to compete with better capitalized competitors such as AT&T Inc. and T-Mobile USA. Much of the company’s debt was downgraded several steps to Caa1, which is considered close to default. The market response was fierce. Sprint’s $2.5 billion of bonds maturing in 2028 plunged as low as 80.8 cents on the dollar from 88.4 cents on Monday. Its $4.2 billion of notes maturing in 2023 fell as low as 90.1 cents from 98.6 cents two days earlier.
- FedEx(FDX) Trims 2016 Forecast as First-Quarter Earnings Fall Short. FedEx Corp., considered a bellwether for the U.S. economy because of the range of products it moves, cut its full-year profit forecast just three months into the company’s new fiscal year. The company cited softer demand for some shipments that crisscross the U.S. by truck and higher costs in its Ground unit. Earnings will be $10.40 to $10.90 per share before some costs, short of the company’s previous projection of $10.60 to $11.10. Profit for the quarter ended Aug. 31 was $2.42 a share, FedEx said Wednesday. That trailed the $2.45-a-share average of 25 estimates compiled by Bloomberg.
- GOP Candidates Must Win Over Dissatisfied Voters. Whether or not Donald Trump remains the frontrunner for the GOP presidential nomination, his supporters will be a potent political force that other candidates must confront.
CNBC:
- The only certainty is more Fed uncertainty. (video) Whatever the Federal Reserve does Thursday, it won't end "uncertainty."
- How will newbie fund managers handle their first Fed hike? The last time the Fed raised interest rates was in 2006. There was no Twitter. There were no iPhones. The world has changed a lot since then, and almost 10 years later, we may be close to seeing another rate hike by the Fed, if not Thursday, then at some point in the next few weeks or months. But there are so many financial professionals now who have no experience with this. To be specific, that number is 13.9 percent, according to data from eVestment.
Zero Hedge:
- Obama's Recovery In Just 9 Charts. (graph)
- RANsquawk PREVIEW: FOMC Monetary Policy Meeting Decisions & Projections - 17th September 2015. (video)
USA Today:
- GOP debate looks to be outsiders vs. insiders battle. Republican presidential hopefuls are preparing for their second televised debate later tonight at the Ronald Reagan Library in California, as polls show Donald Trump as the party's front-runner. Bloomberg's Phil Mattingly previews the de Bloomberg.
Reuters:
- Citigroup(C) CFO expects 5 percent decline in third-quarter markets revenue. Citigroup Inc (C.N) expects its third-quarter markets revenue to fall by about 5 percentfrom a year earlier, Chief Financial Officer John Gerspach said on Wednesday.
Telegraph:
- Claims Brexit would be disastrous for trade are 'highly misleading'. The UK's exporters could be "relatively unaffected" by a withdrawal from the EU, according to a new report.
- Debt storm looms as US walks tightrope of higher rates. 'Major uncertainties' including a hard landing in China and threat of rapid US rate rises pose serious risks to global growth, says OECD.
- Japan's credit rating cut as S&P deals blow to Abenomics' credibility. Leading credit ratings agency Standard & Poor's has raised doubts over the prospects of Japan's attempts to revive its economy.