“Don’t Fight the Fed” — Unknown

1. Fed Reveals its plan to start small steps to unwind stimulus — the Central Bank will reduce its big monthly bond buys by $10 bil starting in January 2014. The policy makers will consider increasing that pace if employment and inflation targets are reached quickly. However, interest rates will remain at or near zero for an extended time, likely into 2015 and after bond buys go to zero.
2. Facebook set to launch video ads — Facebook (FB) announced the launch of video advertisements and will start introducing them into users’ newsfeeds. It’s not clear how much the commercials will cost, although a figure of $2M a day to reach all Facebook members aged 18-54 has been bandied about.
3. Senate passes budget bill — President Obama set to sign a two-year $1.01T budget bill into law after the Senate passed the legislation yesterday by 64-36. However, the Senate and House Appropriations committees are negotiating about how to spend the money. The major sticking point will be the funding for Obamacare.
4. China (FXI) acts to avert credit crunch — The People’s Bank of China has made an emergency injection of liquidity into the country’s financial system after money market rates started to spike. Market rates rose because banks need it for year-end regulatory requirements. The seven-day repo rate climbed 72 bps to 7.02% after jumping 153 bps late last week.
5. S&P downgrades EU’s AAA credit rating — Standard & Poor’s cut its long-term credit rating on the European Union to AA+ from AAA, citing concerns about budget talks as reason for the move. “In our view, EU budgetary negotiations have become more contentious, signaling what we consider to be rising risks to the support of the EU from some member states,” said S&P in a statement.
6. Mining equipment makers set to capitalize on Aussie project. Caterpillar (CAT), Joy Global (JOY) and other U.S. mining equipment manufacturers may reap over $500M in fresh sales after the Export-Import Bank approved nearly $700M in government-backed financing for the A$10B Roy Hill iron ore mining project in Australia. The decision marks a victory for the struggling companies, whose sales have plunged during the past year, and a defeat for miners such as Cliffs Natural Resources (CLF), which had argued the loan would hurt their interests.

The week ahead — Economic data from Econoday.com: