5 things to start your day: Europe

Good morning. The Bank of Japan kept its rates unchanged. Traders now ponder how fast the Federal Reserve goes in this easing cycle. And Mer

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Good morning. The Bank of Japan kept its rates unchanged. Traders now ponder how fast the Federal Reserve goes in this easing cycle. And Mercedes slashes outlook. Here's what people are talking about.

BOJ stands pat

The Bank of Japan kept its policy settings steady Friday. The yen fluctuated after the decision before strengthening to a high for the day against the dollar. The BOJ signaled it sees no need to hurry with interest-rate hikes as it monitors financial markets after its July increase and hawkish views spooked investors. Today's data showed the nation's key inflation gauge accelerated in August for a fourth consecutive month. Now traders will turn to Governor Kazuo Ueda's press briefing later for clues on the policy path given the BOJ's outlier status as the only major central bank on an upward course. Stocks in Asia extended a rally in global equities amid rising hopes for a soft landing in the US economy.

Fed path forward

As the dust settles after the Fed's big rate cut, the focus is shifting to the pace of this easing cycle going forward. Former Treasury Secretary Lawrence Summers said inflation will probably prevent the Fed from reducing rates as much as expected in coming years. Summers, a Harvard University professor and paid contributor to Bloomberg TV, cautioned that investors are overestimating the amount of Fed easing to come. GIC Chief Investment Officer Jeffrey Jaensubhakij has warned that the market exuberance following the Fed rate cut could be short-lived amid the risk of rising inflation. And Republican presidential candidate Donald Trump said the rate reduction was a "political move" and that a smaller cut would have been preferable.

Warning signs

On the corporate side, there are some warning signs about the health of the global economy. In Europe, Mercedes-Benz Group cut its financial forecast for the year, citing a rapid deterioration of its business in China. The profit warning is the latest setback for a German industrial sector that has been reeling since Russia cut off cheap gas supplies. Over in the US, FedEx said its business would slow in the year ahead and reported a worse-than-expected quarterly profit. FedEx shares slid as much as 14% after the close of regular trading. Skechers U.S.A. also had a bad day after the footwear company said China sales are under pressure.

Buffett's pure profit

Warren Buffett's continued disposals of Bank of America Corp. shares have now covered the billionaire's investment cost. That leaves him with a more than $34 billion stake that's pure profit. In a round of transactions disclosed in a filing Thursday, Buffett's Berkshire Hathaway sold $896 million of the stock this week. That means total proceeds from share disposals since mid-July and dividends earned since 2011 have surpassed the $14.6 billion that the conglomerate spent to build its stake in the second-largest US bank. Bloomberg's calculations of Buffett's profits don't include the impact of taxes. Berkshire Hathaway didn't respond to a message seeking comment.

Confidence crashes

UK consumer confidence crashed in September by the most in two-and-a-half years amid dire warnings from the new Labour government about "tough decisions" that need to be taken to fix the public finances. The downturn may reignite scrutiny of what critics say is Prime Minister Keir Starmer's doom-mongering about the economy since Labour took office in July — widely seen as a prelude to tax rises. It may also increase pressure on the Bank of England to step up the pace of rate cuts. And read here for how all this is affecting small business owners and farmers in the country.

Coming up

Today's data highlights include euro-zone consumer confidence and Spain trade. Central bank speakers include ECB President Christine Lagarde and Philadelphia Fed President Patrick Harker.

What we've been reading

This is what's caught our eye over the past 24 hours. Germany investigates its own handling of Commerzbank stake sale French premier pitches new cabinet to overcome political impasse China weighs removing major homebuying curbs to boost demand Nike replaces CEO Donahoe with veteran executive in revival bid Hotels dangle ultra-exclusive F1 experiences to lure customers Apple iPhone hits stores without its highly awaited AI features A copper M&A frenzy masks big miners' hesitation to build

And finally, here's what Alyce is interested in this morning:

A buying frenzy pushed stocks to all-time highs Thursday. With the backdrop for risk taking bullish, macro forces supportive and a subset of investors still sidelined, stocks can extend the rally. The VIX index fell more than 10% to below 17 as the S&P 500 surged to a record in the wake of the Federal Reserve's half-point interest-rate cut Wednesday. With more rate cuts to come, a steeper yield curve that bodes well for a soft landing, disinflation, resilient growth and healthy corporate performance can all propel stocks higher. In the immediate aftermath of Wednesday's rate cut, investors piled into stock futures. Hedge funds bought in large size in stock futures during the Tokyo and London sessions on Thursday. That spilled over into the first hour of trading in New York with hedge funds again leading the demand. Similarly, in cash, hedge funds added exposure in favored long positions including Amazon, Meta, Microsoft and Google in early trading. Cash desks also reported leveraged money sought the liquid names in an effort to move further up the risk curve in the coming weeks as a broader swath of investors become more comfortable with the rally. Later, those same names were sold to buy in other areas, according to dealers that saw the flow. Buying by long-only investors remained limited, dealers said. When that demand emerges, it can support further gains. Volume in S&P 500 futures was about three times that of the 15-day moving average. In cash, S&P 500 volumes were more than 9% above the 10-day average. High volumes generally mean there is power behind the move -- adding an extra bullish element to the rally. Alyce Andres is a rates strategist for Bloomberg's Markets Live blog.

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