Morning Agenda: Faith in U.S. Debt Is Rattled

The fiscal impasse in Congress has been testing investors’ confidence that the United States - considered the most reliable borrower in the world - will be able to pay back its debt on time, Nathaniel Popper reports in DealBook. Investors in recent days have shifted money out of the $1.7 trillion market for the short-term government debt known as Treasury bills. It now costs more for the United States to borrow money for a month than it does for the average highly rated American company to do so, Mr. Popper writes.

“These bills are like the center of gravity for the financial universe - they really are,” said Lee A. Sachs, a former Treasury official who now runs the lending firm Alliance Partners. “Defaulting on these would be like the laws of physics being repealed.”

But the most visible stock market is remaining relatively calm - making a crisis more likely, Jesse Eisinger of ProPublica writes in his column, The Trade. “Wall Street’s lack of worry reflects cynicism about Washington (who doesn’t feel that?) but also a deep misreading of how significant the ideological fissures are in the capital,” Mr. Eisinger writes. “Wall Street is misunderstanding the extremism of the House Tea Party Republicans who precipitated the government shutdown and debt ceiling crisis.”

As a result of the standoff, some influential business executives have come to a conclusion that recently would have been unthinkable: Their voices are carrying little weight with the House majority that their campaign contributions helped build, Eric Lipton, Nicholas Confessore and Nelson D. Schwartz report in The New York Times. “Their frustration has grown so intense in recent days that several trade association officials warned in interviews on Wednesday that they were considering helping wage primary campaigns against Republican lawmakers who had worked to engineer the political standoff in Washington.”

And yet, House Republicans began on Wednesday to consider a path out of the fiscal impasse that would raise the debt ceiling for a few weeks as they press for a broader deficit reduction deal, Jonathan Weisman reports in The Times. “That approach could possibly set aside the fight over the new health care law, which prompted the shutdown and which some Republicans will be reluctant to abandon.”

WHAT TO EXPECT FROM YELLEN AT THE FED  | Janet L. Yellen, President Obama’s nominee to succeed the Federal Reserve chairman, Ben S. Bernanke, at the end of January, has pressed for stronger measures to reduce unemployment as the central bank’s vice chair since 2010, Binyamin Appelbaum reports in The New York Times. “Ms. Yellen’s intellectual roots and leadership style both suggest that she would push somewhat more forcefully than Mr. Bernanke to extend the Fed’s stimulus campaign, according to a careful review of her career and interviews with more than two dozen colleagues and acquaintances.”

“She has expressed greater concern about the economic consequences of unemployment, a stronger conviction in the Fed’s ability to stimulate job growth and a greater willingness to tolerate a little more inflation in order to reduce unemployment more quickly. Until recently, her emphasis on unemployment would likely have disqualified her for the job, and it has already inspired opposition from some Senate Republicans and investors concerned that she would not be sufficiently vigilant in guarding against inflation,” Mr. Appelbaum reports.

“Ms. Yellen is also a more assertive leader than Mr. Bernanke and appears less averse to conflict. While both encourage open debate and seek to make decisions by consensus, Ms. Yellen has been a more vocal and persistent advocate for her own views. Mr. Bernanke has allowed Fed officials to air their views freely, while Ms. Yellen has expressed concern that the cacophony undermines the Fed’s effectiveness by sowing confusion about the direction of policy.”

ON THE AGENDA  |  Jacob J. Lew, the Treasury secretary, testifies on the debt limit before the Senate Finance Committee at 8 a.m. The European Central Bank publishes its monthly report. Safeway reports earnings after the market closes. Axel A. Weber, chairman of UBS, is on Bloomberg TV at 7:30 a.m. Barry Rosenstein, founder of Jana Partners, is on CNBC at 4:10 p.m.

WHITNEY’S NEXT ACT  | The analyst Meredith A. Whitney appears poised to leave the research and brokerage industry for an investment fund. The brokerage arm of the Meredith Whitney Advisory Group deregistered from the Financial Industry Regulatory Authority, the securities industry’s self-regulatory body, on Aug. 28, according to a filing, Michael J. de la Merced and Alexandra Stevenson report in DealBook. The firm’s most recent research report was published on its Web site on Sept. 19, Bloomberg News notes.

At the same time, Ms. Whitney seems to be moving on. She is the managing principal of Kenbelle Capital, a “long/short” fund, according to Finra records. The transition comes after a rocky period for Ms. Whitney, once a star analyst who shot to fame with her prediction in 2007 that Citigroup would be forced to cut its dividend.

Mergers & Acquisitions »

Chairman of Jarden in Talks to Buy Chemicals Maker  |  Martin E. Franklin, the executive chairman of the consumer products company Jarden, plans to use a “shell company he set up earlier this year to pay $1.8 billion for MacDermid Inc., a privately held specialty chemicals business based in Denver, according to people familiar with the matter,” The Wall Street Journal reports. WALL STREET JOURNAL

Men’s Wearhouse Rejects $2.3 Billion Offer by Jos. A. Bank  |  Men’s Wearhouse rejected an unsolicited $2.3 billion takeover bid by Jos. A. Bank Clothiers on Wednesday, calling the proposed deal “highly opportunistic” and likely to draw antitrust scrutiny. DealBook »

A Deal That Needs Some Special Tailoring  |  Investors seem to think there may be more than $85 million a year in potential savings or other sources of new profit in a merger of Jos. A. Bank and Men’s Wearhouse, Robert Cyran of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS

The Hurdles Ahead for a Cooper Tire Deal  |  Labor issues at Cooper Tire’s Chinese venture and in the United States are among the reasons Apollo Tyre may be having buyer’s remorse about its deal to buy Cooper Tire at $35 a share, Steven M. Davidoff writes in the Deal Professor column. But can Cooper force the deal to go through at that price? DealBook »

The Evolution of Verizon’s Higher Bid for Its Wireless Unit  |  Verizon Communications made an initial offer of $95 billion for Vodafone’s 45 percent stake in their enormous wireless joint venture. Over eight months, the company raised its offer by 37 percent, to $130 billion. DealBook »

Nestle Is Said to Seek Buyer for Jenny Craig  |  The Swiss food giant is said to be looking to sell its Jenny Craig brand, just seven years after spending $600 million to buy the weight-loss company from two private-equity firms. DealBook »

INVESTMENT BANKING »

Hong Kong Exchange Prepares for Possible U.S. Default  |  The Financial Times reports: “Hong Kong’s exchange has decided that some short-term U.S. Treasury bonds are more risky to hold as collateral, and has implemented extra financial buffers to protect against the possibility of a U.S. default.” FINANCIAL TIMES

JPMorgan Said to Seek Buyer for Physical Commodities Business  |  JPMorgan Chase has begun a process to sell its physical commodities business, “circulating offering documents to potential buyers and valuing the assets at $3.3 billion, according to a person familiar with the matter,” Reuters reports. REUTERS

Barclays Names Head of Americas Banking  |  The British bank Barclays promoted John Miller, its head of global financial sponsors and its global industrial group, to the new role of head of banking for the Americas, according to an internal memorandum. DealBook »

Barclays Treasurer to Depart  |  After 13 years at Barclays, Benoit de Vitry, the treasurer since 2011, plans to leave in December, Reuters reports. REUTERS

Jefferies Reports 18 Days of Trading Losses in Quarter  |  The Jefferies Group said that during the quarter that ended Aug. 31, its biggest daily trading loss was more than $10 million. BLOOMBERG NEWS

PRIVATE EQUITY »

Versace Said to Attract Interest of K.K.R. and Blackstone  |  The private equity firms K.K.R. and the Blackstone Group are among prospective buyers interested in a stake of up to 20 percent in the Italian fashion house Versace, The Wall Street Journal reports, citing unidentified people familiar with the matter. WALL STREET JOURNAL

K.K.R. to Buy 2 Industrial Equipment Servicers for $1 Billion  |  Kohlberg Kravis Roberts is acquiring two service providers for the industrial and energy sectors, the Crosby Group and Acco Material Handling Solutions, from Melrose Industries for about $1 billion. DealBook »

HEDGE FUNDS »

Activist Pushes for Split of Restaurant Operator  |  The hedge fund Barington Capital Group has taken a stake in Darden Restaurants, the owner of Olive Garden, Red Lobster and other restaurants, and is urging the company to break up, The Wall Street Journal reports, citing unidentified people familiar with the matter. WALL STREET JOURNAL

I.P.O./OFFERINGS »

Chrysler Chief’s Plea to Investors Ahead of I.P.O.: Stay Away  |  Sergio Marchionne, the chief executive of Chrysler, who is moving forward with an initial public offering only under pressure from a big shareholder, said he “did not believe investing via this partial I.P.O. would be the most attractive route for investors,” an analyst at Bernstein Research said, summarizing the remarks, according to Reuters. REUTERS

Weak Opening for Shares of SFX Entertainment  |  The company’s goal is to make money from the world of dance music, which has existed on the margins of the music industry for decades but has lately become its hottest genre. DealBook »

VENTURE CAPITAL »

An Inside Look at Amazon  |  Bloomberg Businessweek’s Brad Stone has written a book on Jeff Bezos, the founder of Amazon, which is excerpted in the magazine. “Amazon’s culture is notoriously confrontational, and it begins with Bezos, who believes that truth shakes out when ideas and perspectives are banged against each other,” Mr. Stone writes. BLOOMBERG BUSINESSWEEK

An Executive at Dropbox Is Leaving  |  Ruchi Sanghvi, the vice president of operations at Dropbox, said she needed “to take some time off,” AllThingsD reports. ALLTHINGSD

LEGAL/REGULATORY »

Britain Weighs Creating System to Reward Whistle-Blowers  |  The British government said it would examine creating provisions similar to those in the United States that allow whistle-blowers to receive a share of any financial penalties levied when they work with prosecutors and regulators to uncover fraud. DealBook »

Madoff Trustee Asks Supreme Court to Let Him Sue Banks  |  Lawyers for Irving H. Picard argue that a ruling that he lacks standing to sue banks on claims that they abetted the fraud contradicts other court decisions. DealBook »

S.E.C. Leader Delivers Warning to the Market  |  “Minor violations that are overlooked or ignored can feed bigger ones, and, perhaps more importantly, can foster a culture where laws are increasingly treated as toothless guidelines,” Mary Jo White, the chairwoman of the Securities and Exchange Commission, said in a speech. “I believe it is important to pursue even the smallest infractions.” REUTERS

After Issuing Warnings, S.E.C. Drops a Fifth of Inquires  |  About 20 percent of the recipients of a so-called Wells notice from the Securities and Exchange Commission - warning over a possible lawsuit - end up not facing charges, government numbers show, The Wall Street Journal reports. WALL STREET JOURNAL

Amid Shutdown, Small Businesses Feel the Pinch  |  With the Small Business Administration closed, small businesses are finding it difficult to get loans that they need, The New York Times reports. NEW YORK TIMES

Wal-Mart Drops Expansion Plan for India  |  “The announcement adds to the gloom enrobing the Indian economy,” The New York Times writes. NEW YORK TIMES

Judge Says LightSquared Creditors Can Vote on Restructuring  | 
REUTERS