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Out today: the FOMC announcement and possibly news of Blankfein's new No. 2s


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Out today: the FOMC announcement and possibly news of Blankfein's new No. 2s

The FOMC's final meeting for the year ends today, and it could come with news of another rate hike. The previous increase had been the first in the long road out of "lower for longer," in which the federal funds rate slid from 5.25% in June 2006 to the zero percent-to-0.25% range by the end of 2008. On Dec. 16, 2015, the FOMC finally raised the target by 25 basis points.

Click here for a list of banks and thrifts expecting big changes in net interest income, if a hike does occur.

It's close to official: Second-in-command at Goldman Sachs Group Inc. will be Harvey Schwartz and David Solomon, say sources for The Wall Street Journal. And reportedly succeeding Schwartz as CFO is Chief Information Officer R. Martin Chavez.

Elsewhere in banking news, PCSB Bank of Yorktown Heights, N.Y., is going public. The mutual-to-stock conversion, however, is still subject to depositor and regulatory approval.

In the Southeast, McLean-based Southern National Bancorp of Virginia Inc. will combine with Tappahannock-based Eastern Virginia Bankshares Inc., in a $178.3 million stock deal that will result in Southern National shareholders owning approximately 51.4% of the resulting entity. Said entity will retain the Southern National brand, but be helmed by Eastern Virginia CEO Joe Shearin. Southern National had $1.14 billion in assets as of Sept. 30; Eastern Virginia had $1.31 billion.

Out West, a November survey by LT Public Relations and DHM Research shows banks may be overworrying the potential customer backlash from servicing cannabis-related businesses. At least in Oregon, where recreational marijuana has been legal since July 2015, only 12% of survey respondents said ties with the marijuana industry would negatively impact the impression they have of their bank or credit union. For comparison, the survey results say 25% of respondents would form negative impressions if the institution had ties with the likes of Walmart and Costco, and 38% in the case of pharmaceutical companies. And, among respondents under the age of 35, 62% said connections with marijuana businesses would actually improve their impression.

Speaking of studies, three academics released a paper saying "hedge fund managers who own powerful sports cars take on more investment risk, [but that the risk] does not translate to higher returns. ... In addition, performance car owners are more likely to terminate their funds, engage in fraudulent behavior [and] load up on non-index stocks." The paper's authors concluded that "manager revealed preference in the automobile market captures the personality trait of sensation seeking, which in turn drives manager behavior in the investment arena."

The Department of Labor's fiduciary rule will hit more than just wealth managers handling retirement accounts. Rating agency Fitch notes it could have indirect effects on untargeted segments, such as insurers.

CFTC Commissioner J. Christopher Giancarlo continues his blockchain campaign in a CoinDesk op-ed. In the article, he emphasizes the importance of global collaboration and the creation of dedicated fintech teams at state, federal and foreign agencies to prevent regulatory death by a thousand cuts. Giancarlo is said to be likely to head the CFTC under a Trump administration.

On the subject of regulators, the board of the FDIC signed off on the agency's 2017 budget and headcount -- which are 2.4% and 2.6% lower, respectively, than they were for 2016.

The Federal Housing Finance Agency issued its final rule to implement Fannie Mae and Freddie Mac's duty to serve the manufactured housing, affordable housing preservation and rural housing markets. Evaluation of their progress will include quantitative and qualitative assessments and consideration of extra-credit eligible activities.

And reports by the U.S. Treasury's Office of Financial Research listed key threats to U.S. financial stability. They include potential spillovers from Europe, high levels of debt among nonfinancial U.S. firms and pressure on U.S. life insurance companies.

In other parts of the world

Asia-Pacific: China Minsheng eyes Novo Banco; Allianz closing Australia aviation insurance biz

Europe: Italian banking sector outlook revised; Old Mutual unit prices share sale

Middle East & Africa: Bleak outlook for Mozambique; Qatari fund eyes $10B investment in US

The day ahead

Early morning futures indicators pointed to a mixed opening for the U.S. market.

In Asia, the Hang Seng was up 0.04% to 22,456.62. The Nikkei 225 rose 0.02% to 19,253.61.

In Europe as of midday, the FTSE 100 dropped 0.13% to 6,959.43, and the Euronext 100 fell 0.55% to 916.61.

On the macro front

The producer price index for final demand, the retail sales report, the industrial production report, the business inventories report, the EIA petroleum status report, the FOMC meeting announcement and the FOMC forecasts are due out today. The Fed chair press conference will also be held today.

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