Emerging markets selling US debt, IMF warning and preventing armageddon

The daily briefing “FirstFT” from the Financial Times.

Deutsche Bank may pay no dividend at all this year after reporting exceptional costs of €7.6bn in the third quarter, Germany’s biggest bank warned on Wednesday night.

The hit, which pushed the bank to a far worse than expected net loss of €6.2bn for the quarter, will intensify pressure on new co-chief executive John Cryan to raise capital. (FT)

In the news

US to challenge China maritime claims The US is poised to sail warships close to China’s artificial islands in the South China Sea, to send a strong signal to Beijing that Washington does not recognise Chinese territorial claims over the area. The manoeuvres, which are expected to start over the next two weeks, are likely to raise tensions between the powers, and come as Washington and Beijing are at loggerheads over several issues, including US allegations that China is engaging in commercial cyber espionage. (FT)

EMs dumping US debt Central banks from China, Russia, Brazil and Taiwan are selling US government bonds at the fastest pace on record, in the latest sign of an emerging markets slowdown that is threatening to spill over into the US economy. It is the biggest shift in the $12.8tn Treasury market since the financial crisis. (WSJ)

Syrian rebels hit by cruise missiles Russia has dramatically escalated its military campaign in Syria by launching 26 long-range cruise missiles at rebel groups in the country. The use of the missiles – the first time Moscow has deployed such weapons in wartime – is likely to rattle Nato and its allies and reflects the Kremlin’s ability to project power far beyond its domestic sphere of influence. (FT)

When VW say nothing at all Volkswagen’s US chief executive knew about a potential problem with the company’s compliance with emissions tests as long as 18 months before the company informed regulators about the issue. The admission by Michael Horn is likely to raise questions about why VW did not act sooner to end its deception. (FT)

IMF warns of global financial instability The world risks sliding into a fresh economic crisisleading to global recession if governments and policymakers mishandle market stability risks, the fund said. Meanwhile, Indian central bank governor Raghuram Rajan urged the IMF — where he once served as chief economist — and the World Bank to reform to reflect the needs of emerging economies. (FT)

It’s a big day for

Central banks The Fed releases minutes from its September meeting, while the UK announces monetary policy, probably keeping its key interest rate at a record low 0.5 per cent. Meanwhile, the central bank governors of Mexico, Brazil, Colombia, Peru and Chile speak at a panel in Lima ahead of the IMF and World Bank annual meetings. (FT)

Food for thought

Global economy: the case for expansion The challenges facing the global economy today call for a clear commitment to the acceleration of growth as the main goal of macroeconomic policy, argues former US Treasury secretary Lawrence Summers. “Action cannot be confined to monetary policy”. (FT)

Resistance to fast fashion is futile It is no longer about quality: young shoppers have come to regard clothes as disposable and crave the rapid stock turnover at fashionable, cheap stores, such as H&M and Zara. It is a brave new world for retailers and American companies would be wise to learn from their European counterparts. (FT)

Preventing armageddon European and American space agencies have teamed up to study potentially hazardous near-Earth asteroids, and how best to deflect them. The project will involve an American spacecraft deliberately crashing into a nearby asteroid, while a European probe monitors the impact and sends data back to Earth on how much force would be needed to steer the space rock off course. (Quartz)

Woe betide colonial postboxes … They have become the latest target of the pro-Beijing establishment in Hong Kong. The authorities in the former British enclave have moved to stamp out the royal symbols on 59 remaining colonial postboxes in a decision that activists sayundermines the city’s autonomy. (FT)

Atomic weapons traffickers Nuclear smugglers are actively seeking extremist groups, including Isis, as buyers for radioactive material, according to an AP investigative report . Authorities have intercepted four attempts in the past five years, with the latest known case coming in February this year, “when a smuggler offered a huge cache of deadly caesium — enough to contaminate several city blocks”. (ABC)

Video of the day

After the fear, hope Capitulation occurs again and again in markets, as investors are overwhelmed by panic. James Mackintosh, investment editor, says signs are growing that sentiment may be turning over China, offering hope for commodities and the miners dependent on them. (FT)

This article is published in collaboration with FirstFT. Publication does not imply endorsement of views by the World Economic Forum.

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Image: A man rides an escalator near Shanghai Tower. REUTERS/Carlos Barria