FOMC in focus. Markets are waiting on the FOMC statement due out later today, with investors expecting the Fed to unveil a modern-day Operation Twist, a program to buy longer-dated Treasurys. However, the GOP leadership delivered a letter to Bernanke urging him to back off any more easing moves, saying "we have serious concerns that further intervention by the Fed could exacerbate current problems or further harm the U.S. economy."
Japan's trade deficit widens. Japan's trade deficit gapped wider than expected in August, coming in at ¥775.3B ($10.1B) vs. July's ¥72.5B surplus, as growth in exports weakened. Exports rose 2.8% Y/Y and imports jumped 19.2%. Consensus estimates were for exports to rise 8.2%, and for a narrower trade deficit of ¥230B.
SABMiller nabs Foster's. SABMiller (OTCPK:SBMRF) is buying Australian brewer Foster's (OTC:FBRWF) for A$5.10, or A$9.9B ($10.2B), giving SABMiller a leading position in the "stable and profitable" Australian beer industry. Foster's had rejected SABMiller's A$4.90/share bid in June. As part of the transaction, Foster's will pay its shareholders a return of capital of A$0.30/share before the deal's closing.
Oracle ekes out earnings beat. Oracle (NASDAQ:ORCL) narrowly beat earnings expectations, reporting FQ1 EPS of $0.48 vs. the $0.47 consensus and in-line revenue of $8.4B. Looking ahead, the company expects FQ2 revenue of $8.99B-9.34B and EPS of $0.56-0.58, vs. consensus of $9.36B and $0.56. Oracle expects its struggling hardware business to be flat to down 5%, and claims the weakness is solely due to poor low-end server sales. On the whole, its steady outlook for the quarter helped ease investor concerns that the shaky economy would curb corporate technology spending. Shares rose 3.3% in AH trading.
IMF issues stark warning. In its latest World Economic Outlook report, the IMF downgraded its growth forecasts across the globe, particularly in the U.S. (from 2.5% to 1.5% in 2012) and the EU (from 1.7% to 1.1%). It also warned of "severe repercussions" to the global economy unless the eurozone strengthens its banking system and the U.S. straightens out its finances. While not a surprise, the reduced forecasts are still important for the role they'll play later this week when central bankers and finance ministers arrive in Washington for the IMF's annual meeting.
Greek talks make progress. Greece is making "good progress" in reform talks, the European Commission said yesterday after a two-hour meeting between Greece's finance minister and officials from the EC, ECB and IMF. Technical discussions will continue over the coming days.
United Tech nears Goodrich deal. Chatter continues to grow that United Technologies (NYSE:UTX) is in final negotiations for a blockbuster acquisition of aerospace firm Goodrich (NYSE:GR). Sources say the deal, of undetermined size, could be closed in the next couple of days. Deal rumors have pushed Goodrich's shares up 33% over the last five days.
Housing market pain. Economists expect home prices to drop 2.5% this year and rise only 1.1% annually through 2015. With prices down nearly 32% from their 2005 peak, economists are essentially forecasting a lost decade for the housing market with long-term repercussions for consumers and the broader economy. Yesterday morning, the Commerce Department released figures showing builders began work on a seasonally adjusted 571K homes last month, a 5% decline from July and less than half the 1.2M that's consistent with healthy housing markets.
Commodities face slowdown. In a turnaround from just weeks ago, the commodities market appears poised for a slowdown. Rio Tinto (NYSE:RIO) CEO Tom Albanese said markets are "somewhat weaker" and some customers are asking to delay shipments of metals as uncertainty elicits a wait-and-see approach. The IMF echoed Albanese's sentiment, downgrading its outlook for commodity prices from earlier this year.
BP still on the defensive. BP (NYSE:BP) fired back at Halliburton (NYSE:HAL) over the latter's lawsuit against it, denying claims it withheld information about a potentially dangerous condition in its Macondo oil well. In addition to Halliburton, BP is facing a legal action from Anadarko Petroleum (NYSE:APC), and from hundreds of other parties claiming economic loss and/or personal injury.
Gloomy outlook for Xmas sales. Early holiday retail forecasts point to soft sales gains. ShopperTrak sees national retail up just 3%, vs. last year's gain of 4.1% - essentially an inflation peg. And in a recent survey, 41% of consumers said they expect to spend less this year.
Asia: Japan +0.2%. Hong Kong -1%. China +2.7%. India -0.2%.
Europe at midday: London -0.1%. Paris -0.9%. Frankfurt -0.8%.
Futures at 7:00: S&P +0.14%. 10-yr -0.08%. Euro -0.31% vs. dollar. Crude -0.63% to $86.37. Gold +0.01% to $1807.05.