Federal Reserve Chair Janet Yellen said that lower-than-expected inflation is not expected to last, and that further interest rate increases are likely to be appropriate. "My best guess is that these soft readings will not persist," Yellen said, adding that the "recent softness seems to have been exaggerated by what look like one-off reductions in some categories of prices, especially a large decline in quality-adjusted prices for wireless telephone services."
In regulatory news, U.S. financial institutions with a large presence in Europe and decades-long auditor relationships — such as Citigroup Inc., Wells Fargo & Co., Goldman Sachs Group Inc. and Morgan Stanley — will have to change their auditor arrangements to comply with Europe's audit rotation rules, the Financial Times reports. The rules, which took effect in 2016, require listed companies in Europe to appoint a new auditor at least every 20 years and to tender contracts every decade. PricewaterhouseCoopers has been Goldman Sachs' auditor since 1926; KPMG has been with Wells Fargo for 86 years, and with Citi for 48 years; and Deloitte has been Morgan Stanley's auditor for 20 years, according to the FT.
In other banking news, U.S. banks such as Citi and Wells Fargo are putting up additional measures to protect consumers from identity fraud and are taking more interest in alternative authentication technology, following the massive data breach at credit reporting agency Equifax Inc., the Financial Times reports.
And the Office of the State Bank Commissioner of Kansas shuttered Farmers and Merchants State Bank of Argonia. The FDIC, which was appointed as receiver in the failure estimated to cost the deposit insurance fund $2.6 million, inked a purchase and assumption agreement with Conway Springs, Kan.-based Conway Bank to assume all the deposits of the failed bank.
On bitcoin, JPMorgan Chase & Co. Chairman, President and CEO Jamie Dimon — who in September called the cryptocurrency a fraud — further criticized it at a conference in Washington on Friday, saying that bitcoin is only valuable to criminals, the Financial Times reports. "But what is the use case for bitcoin? You're in Venezuela, North Korea, you're a criminal. Great product!" Dimon said. At the same event, BlackRock Inc. Chairman and CEO Larry Fink said that the price of the virtual currency "just shows how much demand for money laundering there is in the world."
In exchange news, Chinese investors Chongqing Jintian Industrial Co. Ltd. and Chongqing Longshang Decoration Co. Ltd. have reportedly dropped out of an investor group's bid to acquire Chicago Stock Exchange Inc. due to the bid's political controversy and regulatory scrutiny, sources told The Wall Street Journal.
U.S. private equity firm J.C. Flowers & Co. LLC will make a bid to purchase troubled German shipping lender HSH Nordbank AG, sources for the FT say.
Blackstone Group LP is aiming to attract retail investors with $1 million to $5 million in assets by offering direct access to new products, the WSJ reports. The effort could boost management fees as well as help spur the company's stock, the report adds.
And, Charles Schwab Corp. is set to report its quarterly results before markets open today.
In other parts of the world
Asia Pacific: HK drops suit against UBS, StanChart; Australia to conduct banking stress test
Europe: Aldermore in M&A talks with FirstRand; Austria set to have new chancellor
Middle East & Africa: FirstRand tables £1.08B offer for Aldermore; foreign banks eye Saudi expansion
The day ahead
Early morning futures indicators pointed to a higher opening for the U.S. market.
In Asia, the Hang Seng was up 0.76% to 28692.80. The Nikkei 225 added 0.47% to 21,255.56.
In Europe as of midday, the FTSE 100 was up 0.06% to 7,540.06, and the Euronext 100 was up 0.06% to 1,048.84.
On the macro front
The Empire State manufacturing survey and the Treasury budget report are due out today.
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