Updated throughout the day
September 16
Good evening,
The Federal Reserve began its two-day policy meeting on interest rates Wednesday. Everyone is wondering whether the Fed will raise interest rates for the first time in nine years. Over at Quartz, Matt Phillips asks a more basic question: Does the central bank have the firepower to make it happen? The world of finance has changed dramatically since the 2008 crisis — in part because of Fed moves. Many of its traditional tools are no longer likely pack the same wallop. What’s a central bank to do? U.S. stock futures were muted ahead of the rate decision, to be announced Thursday. Stocks rose Wednesday, riding off gains from energy. The Dow was up 0.8%, the Nasdaq gained 0.6%, and the S&P 500 rose 0.9%. Oil jumped more than 5%, closing above $47/barrel.
Here is what else you need to know:
Texas teen arrested for making a clock. Ahmed Mohamed, a 14-year-old high school student, found himself in handcuffs after bringing a digital clock that he’d made from a pencil case to school. The school and local police accused him of creating a hoax bomb. The police say Mohamed should have told them more than the fact that the item in question was just a clock. On the upside, the attention from the arrest got Mohamed an invitation to the White House from President Obama. CNN
GM close to settlement with Justice Department over faulty ignition switch. The Justice Department is expected announce a criminal settlement with General Motors this week that will likely force GM to pay millions in fines. GM is in trouble for failing to recall millions of cars with a defective ignition and then covering it up. Wall Street Journal
GOP debate, part deux. Carla Fiorina joins 10 male candidates who will hash out the key issue of the day: How in the world did Donald Trump become the No. 1 Republican candidate? Tune in at 8 p.m. ET
FedEx earnings disappoint as freight demand drops. The global carrier got hit by a slowdown in trade. FedEx lowered the outlook for the year, to $10.40 to $10.90/share for the year ending next May, down from previous guidance of $10.60 to $11.10/share. Also hurting profits: Higher costs on its relatively new ground delivery business. MarketWatch
Gold surges as consumer price index weakens. The metal is on pace for its biggest one-day gain in a month, up 1.5%. The consumer price index in August fell 0.1%, well short of the Fed’s target of annualized inflation of 2%. The news good convince the FOMC members who are meeting Wednesday and Thursday to think twice before raising interest rates. MarketWatch
No pay raises for middle income earners in 2014. The median household income was a smidgeon higher at$53,657 from 2013 when the number stood at $54,462, the U.S. Census Bureau reported. The number of Americans living at the poverty level was also unchanged at 14.8% at 46.7 million vs 46.3 million a year earlier. CNN Money
Hungary seals borders. Migrants, mostly from Syria, were redirected to Croatia on their trek to northern Europe. Croatia is promising assistance to the refugees to reach their final destinations. BBC
Hillary Clinton, comedienne. The former secretary of state will parry with Jimmy Fallon on The Tonight Show at 11:35 p.m. ET. Will she find anything funny in her campaign?
Drunk on beer merger, UK markets rally. SABMiller shares surged more than 20% after Anheuser-Busch InBev reported it is wooing its competitor. You don’t see that happen too often. European markets were up more broadly — allegedly because investors there believe the Fed will stand pat on interest rates. MarketWatch
Ground Hog Day alert: China markets rally in the afternoon. This time because stock investors/speculators are expecting the China Securities Regulatory Commission to clamp down on margin lending. The Shanghai benchmark was up almost 5% at market close, and the Shenzhen up 6.5% — the best performance in three weeks. Hong Kong’s Hang Seng index gained 2.38%. Other Asian markets also saw lift today, taking their cue from Wall Street, but the rally was tempered in the region as investors remained cautious ahead of the Federal Reserve interest rate hike:
Shares of Chinese brokerage Citic fall on police probe. Shares of China’s largest brokerage, state-owned Citic Securities, fell as much as 4% after it said three executives, including its president, were under police investigation. The executives are being investigated for suspected insider trading and “leaking inside” information. BBC
Macau’s Wynn Resorts loses 10% on reports of $258m casino heist The gambling giant took a pounding on the markets after it was found a large junket group operating out of its Macau casino may have lost as much as 2 billion Hong Kong dollars ($258 million). Barron’s
White House Confirms Chinese President’s first state visit. Chinese President Xi Jinping will make a state visit to the U.S. at the end of the month, the White House confirmed on Tuesday. The trip will be on September 25 and reciprocates President Barack Obama’s trip to Beijing last November.
Hewlett-Packard to cut up to 10% of workforce, 30,000 jobs. The move is part of an effort to split the company into two units. The cuts will come in Hewlett Packard Enterprise, which is splitting from the firm’s printer and personal computer business, and and are expected to save $2.7 billion in annual costs. The restructuring will cost $2.7 billion to implement. BBC
China puts up gas rigs in disputed in East China sea. Pictures of Chinese structures in the East China Sea have been captured by the Japanese government showing signs of natural gas production.The unilateral development in the contested area is likely to spark fresh row between the two countries. Nikkei
You won’t believe this:
Comedian lied about escaping during 9/11. Steve Rannazzisi, known for his role in “The League,” has admitted that he lied about narrowly escaping the World Trade Center on September 11, 2001. Rannazzisi had attributed he and his wife’s move to Los Angeles to pursue a career in entertainment to his close call and survival. Rannazzisi was working in New York City that day, but no where near the WTC, nor was he working for Merrill Lynch, as he had claimed. New York Times
Putin not feelin the love for Sir Elton. The Russian Premier is sending out a big fat raspberry to the UK pop legend after Sir Elton posted a Putin photo on Instagram with the comment: thanks “for reaching out and speaking via telephone with me today.” Putin says, nyet, the phone call never happened and not ever gonna happen.
Photo: Rachael Towne