10 Things You Need To Know Before The Opening Bell

ROB WILE

AUG. 8, 2014

REUTERS/Kham

A man transports paper replicas of various items to be sold for the Vu Lan Festival out of Dong Ho village, outside Hanoi August 7, 2014.

Good morning! Here’s what you need to know.

1.  Obama Authorizes Iraq Airstrikes, But None Have Occurred Yet. The White House clarified that it is so far running humanitarian sorties to come to the aid of the Yazidi groups trapped on a mountain in the north near the Syrian border. “A senior administration official described the airstrike authorization as ‘narrow,’ but outlined a number of broad contingencies in which they could be launched, including a possible threat to U.S. personnel in Baghdad from possible breaches in a major dam Islamist forces seized Thursday that could flood the Iraqi capital,” the Washington Post reported.

2.  Record Junk Bond Outflows. High yield bond funds have posted $7.1 billion in outflows according to Lipper data, the largest outflows on record. The withdrawals come as investors grow increasingly leery of the “reach for yield” trade amid chatter that the Fed could raise rates sooner than expected. But it also means the value of other assets like stocks could soon also come down. 

3.  China Exports Crush Expectations. China saw a record trade surplus in July, with exports climbing 14.5% YOY, the fastest pace in 15 months. That’s double the 7.2% rate in June and roundly beating market expectations. “Some analysts attributed the export spurt to delayed shipments caused by recent volatility in the yuan which may not sustain,” Reuters said. Imports fell 1.6%, leaving the country with a record trade surplus of $47.3 billion for the month, the wire said.

4.  Global Market Selloff On International Affairs Worries. U.S. futures are in the red, European markets are down by nearly 1%, and Asia closed sharply lower, with Japan’s Nikkei plunging 2.9%, BI’s Sam Ro notes. “Risk aversion rules: The Ukraine conflict shows no sign of being resolved (rather, there’s far too high a chance of escalation for comfort),” Societe Generale’s Kit Juckes said in a note this morning. “Overnight, the US has approved limited airstrikes in Northern Iraq. The conflict on Gaza too, is in danger of re-escalation. Investors have plenty of reasons to take risk off the table and are doing so across the board.”

5.  FICO Tweak Will Open Up Lending. The Wall Street Journal’s Annamaria Andriotis reports credit score gatekeepers Fair Isaac Corp. will no longer include data reflecting failure to pay a bill in its tabulations if the individual paid or settled with a collection agency. It will also give less weight to unpaid medical bills owed to a collection agency. “The changes are expected to boost consumer lending, especially among borrowers shut out of the market or charged high interest rates because of their low scores,” Andriotis writes. ‘It expands banks’ ability to make loans for people who might not have qualified and to offer a lower price [for others],’ said Nessa Feddis, senior vice president of consumer protection and payments at the American Bankers Association, a trade group.”

6.  Banks Could Flee Independent Scotland. BI’s Jim Edwards explains why 9% of Scottish GDP would be at risk in the event of a successful referendum: “The immediate problem is that Scottish banks would be cut off from the Bank of England as a ‘lender of last resort,’ the national central bank that props up all other banks and provides a backstop against total collapse (as in the 2007-2008 crisis). Without credible central bank backing, U.K. bank regulators would likely require all banks to register in the U.K. and not Scotland, the report says. This, obviously, could lead to a vast financial exodus from Scotland. About 9% of Scotland’s GDP is financial services, and finance is 15% of the country’s exports — so the economic damage to to Scotland would be severe.

7.  Ebola Treatment Stock Up 25% Pre-Market. Tekmira shares are soaring after the company announced the FDA has lifted its “hold” designation on the Canadian drug maker’s ebola treatment.

8.  Malaysia Airlines Delisting. The country’s sovereign wealth fund will buyout the tragically troubled company’s outstanding shares.

9.  Data. At 8:30 we get productivity and costs data. Consensus is for productivity growth of 1.4%, compared with a decline of 3.2% prior, while unit labor costs are expected to have increased 1.6% compared with 5.7% prior. At 10 a.m. we get wholesale trade data. Consensus is for an increase in inventories of 0.7% compared with 0.5% prior. 

10.  No Major Earnings Today.  Happy Friday. 

10 Things You Need To Know Before the Opening Bell

Rob Wile 

. 1, 2014

REUTERS/Eduardo Munoz

Jorge, an immigrant from Mexico, dressed as the Sesame Street character Elmo rests in Times Square, New York, July 29, 2014.

Good morning and welcome to August. Here’s what you need to know.
1.  Jobs Day. The consensus among analysts is for nonfarm payrolls to hit 230,000. Nomura sees it coming in a bit higher, at 255,000. “With the six-month moving average of payroll growth already at 231k in June, the largest since early 2006, incoming data on the labor market in July suggest that conditions continued to improve. We forecast that government employment, which has increased in four of the past five months, will rise by 5k in July, due to the improving fiscal balances of state and local governments. As such, we estimate that private payrolls rose by a net new 250k.” They also see a 0.1% decline in the unemployment rate to 6.0%.
2.  Tesla Delivers. The electric automaker reported adjusted earnings and revenue that topped forecasts and says it’s still on track to deliver 35,000 vehicles in 2014, despite lowering its guidance for Q3 deliveries. The firm now predicts it will deliver 100,000 on an annualized basis in 2015. Barclays calls this a massive ramp-up but not unattainable: “While guiding to a below-consensus 3Q’14 on deliveries and earnings, Tesla gave bullish guidance for 2014 and 2015 that should support the shares – guiding to a 4Q delivery rate of over 13,000 units and an exit rate of 100k units in 2015. The guidance provides us some insight into Tesla’s expectations for a quite steep delivery ramp-up over the coming years and into the Model 3 era.” Adjusted EPS was $0.11 against $0.04 forecast. Revenue came in at $857.5 million, versus a consensus estimate for $813 million.
3.  Chinese Manufacturing Hits 18-Month High. HSBC China manufacturing PMI hit 51.7 in July, up from 50.7 in June. That missed expectations for a rise to 52, and was also lower than the flash reading of 52. But it’s still pretty good — anything above 50 indicates expansion. “The economy is improving sequentially and registered across-the-board improvement compared to June,” Hongbin Qu, HSBC chief economist for China, said in a press release.
4.  Markets Tank. U.S. futures, along with stocks in Europe and Asia, were down across the board in advance of the jobs report. S&P500 futures were off 0.7%. London’s FTSE fell 1%; Frankfurt’s, DAX 2%. Hong Kong’s Hang Seng declined 0.9%. Japan’s Nikkei was off 0.6%. U.S. crude hit its lowest level since March, falling below $98. U.S. yields on the 10-year climbed two basis points. “Investors have been looking for an excuse to sell,”Angus Gluskie, who helps oversee more than $550 million at White Funds Management in Sydney, told Bloomberg. “We’ve got a range of convenient reasons for investors to take some money off the table. The geopolitical risks have been rising and data flow in the U.S. is suggesting that the Fed may have to raise interest rates sooner rather than later. The Argentine issue is another piece of adverse news flow.”
5.  Eric Cantor Is Resigning. After losing a primary last month, the House Majority Leader now says he’ll leave office early, on August 18, and is requesting a special election to replace him. “The Virginia Republican told the Richmond Times-Dispatch that he has called on Gov. Terry McAuliffe to set up a special election for his 7th congressional district seat so that his replacement can begin immediately after the election and not when the 114th Congress starts in January,” Politico reported.
6.  Earnings. Burger King, Chevron, Church & Dwight, Clorox, and Procter & Gamble all report before the bell.SociétéGenerale earlier reported year-over-year profits growth of 7.8%, but shares were down 2% in Friday trading as revenue from equities climbed by only 3%, and net banking income fell 4%, the FT noted.
7.  More Data. 

• 8:30 a.m. Personal Income and Outlays. Personal income and consumer spending are both expected to have climbed 0.4%.
• 9:45 a.m. PMI Manufacturing Index. Consensus forecast is for a reading of 56. against 57.3 prior.
• 9:55 a.m. UMich/Reuters Consumer Sentiment. Consensus forecast is for a reading of 81.5 versus 81.3 prior. 
• 10 a.m. ISM Manufacturing. Consensus forecast is for a reading of 56.0 against 55.3 prior.
• 10 a.m. Construction Spending. Consensus forecast is for a reading of 0.5% compared with 0.1% prior.

8. Auto Sales. Global automakers will be announcing results throughout the day. Chrysler already reported U.S. sales climbed 20% in July. Japan domestic sales were slightly higher.
9.  Cease Fire Breaks Down. A three-day cease fire that was supposed to start today collapsed in a matter of hours as fighting between Israel and forces in Gaza resumed. It wasn’t clear what triggered the break down.
10.  French Phone Company In T-Mobile Bid. Iliad has upset presumed negotiations between Sprint and T-Mobile by launching its own $15 billion cash bid for T-Mobile. From WSJ: “Iliad appears to have seized an opening in Sprint and T-Mobile US’s failure to announce a deal yet, saying its deal likely wouldn’t encounter regulatory obstacles. Sprint has yet to disclose a formal offer for T-Mobile US. ‘The U.S. mobile market is large and attractive,’ Iliad said in confirming a report on its bid by The Wall Street Journal. ‘T-Mobile US has successfully established a disruptive position, which in many ways, is similar to the one Iliad has built in France,’ said Iliad, which is known for sparking a price war in the country’s mobile-telephone market.”

10 Things You Need To Know Before The Opening Bell

ROB WILE 

 JUL. 31, 2014

REUTERS/Kim Hong-Ji

1.  Argentina Defaults. Argentina defaulted after failing to make $539 million interest payment to a group of hedge funds. No one really knows what will happen next — the country’s been locked out of international credit markets since 2001. There’s still a chance the two sides could work out a settlement. “It’s in their best interest to delay acceleration and not introduce more difficulties,” Jane Brauer, a strategist at Bank of America, told Bloomberg. “The best thing for Argentina to do is to continue seeking a solution.”

2.  Adidas Shares Plunge On Russia. The footwear giant fell 14% in Europe trading after warning instability in Eastern Europe would impact store openings and profits. “[T]he recent trend change in the Russian rouble as well as increasing risks to consumer sentiment and consumer spending from current tensions in the region point to higher risks to the short-term profitability contribution from Russia/CIS,” said management in a new statement. “As a result, Management has decided to significantly reduce its store opening plan in the market for 2014 and 2015, and to further increase the number of store closures.”

3.  Tesla Officially Signs With Panasonic On Gigafactory. As Nikkei.com had previously reported, Tesla and Panasonic announced the Japanese electronics giant had agreed to provide equipment necessary for Tesla to assemble and package lithium ion batteries, with the goal of doubling the world’s supply by 2020. A person familiar with the matter told Reuters on Tuesday that Panasonic would initially invest around 20 to 30 billion yen ($200-300 million) into the factory and would ultimately invest about $1 billion. ”We have already engaged in various collaborative projects with Tesla toward the popularization of electric vehicles,” Panasonic said. “Panasonic’s lithium-ion battery cells combine the required features for electric vehicles such as high capacity, durability and cost performance. And I believe that once we are able to manufacture lithium-ion battery cells at the Gigafactory, we will be able to accelerate the expansion of the electric vehicle market.”

4.  Tesla Earnings. The announcement comes as Palo Alto firm will report earnings after the bell. Consensus is for a loss of $0.24/share. In a note yesterday Morgan Stanley’s Adam Jonas said there’s a chance numbers could come in light, but that investors should be “prepared to buy the dips.” “N. American Model S volume should continue to be down significantly YoY,” he writes. “After falling 47% YoY in 1Q, we expect Tesla’s NA revenues to be down around 20% YoY in 2Q (on NA shipments down nearly 30% YoY). While the company has highlighted supply prioritization for the international roll-out, this won’t stop some investors from wondering if markets like California are approaching saturation. We expect a vastly superior Model X (on the road by middle of next year) to put an end to these concerns.

5.  Russia. Russian equities are finishing off their worst month in more than a year, falling 29%. But Bloomberg reports those who’ve profited from the drop aren’t adding to their positions because the situation has never been muddier. “Many people are staying away from betting on or against the market because everything depends on the Russian government’s actions,” Sabina Mukhamedzhanova, a fund manager at Promsvyaz Asset Management in Moscow, which manages about 17.9 billion rubles ($500 million), told Bloomberg. “There’s no clarity regarding what’s going to happen.” Meanwhile, the Wall Street Journal reports Vladimir Putin and his closest ally in Europe, Angela Merkel, haven’t spoken in more than a week. “Three days after the crash of Malaysia Airlines Flight 17, German Chancellor Angela Merkel spoke to Russian President Vladimir Putin for at least the 30th time since the Ukraine crisis erupted,” Anton Troianovski and Alan Cullison report. “She had a blunt message, according to people briefed on the phone conversation: Call me if you have progress to report in defusing the conflict.”

6.  Banco Espirito Santo May Need A Bail-In. Shares in the Portuguese bank fell 40% before being halted after it reported a $3.6 billion loss and said it had suspended staff over “harmful management” linked to the bank’s exposure to business holdings of the Espirito Santo family. Reuters’ George Hay says creditors may now need to step in as private investors are scared off.  WSJ’s Simon Nixon says the BES situation is a blow to the ECBS’ credibility.

7.  Europe Data. Inflation slowed to 0.4%, the lowest level since 2009. The unemployment rate dropped a tenth to 11.5%. Youth unemployment in Spain and Greece remains above 20%.   

8.  U.S. Data. At 8:30 a.m. we get weekly jobless claims. Consensus is for 305,000, up from 284,000 prior. We also get the employment cost index. Consensus is for 0.5%, up from 0.3% prior. At 9:45 a.m. we get Chicago PMI. Consensus is for 63.2, up from 62.6. 

9.  Earnings. Besides Tesla, we get quarterly earnings announcements from Exxon, Mastercard, Sony, and Trulia before the bell. After the bell we get Expedia, LinkedIn, GoPro, Valeant, WWE. BNP reported a loss of $5.8 billion on U.S. fines for its worst quarter ever. Shell said it was still working to offload bad bets on U.S. shale plays. 

10.  Markets. U.S. futures are down 0.6%. London’s FTSE was down 0.25%. Frankfurt’s DAX was off 1%. Japan’s Nikkei was down 0.1%. Hong Kong’s Hang Seng was up 0.1%.

10 Things You Need To Know Before The Opening Bell

ROB WILE

 JUL. 28, 2014

REUTERS/Leonhard Foeger

Singer Ildebrando D’Arcangelo (C) as Don Giovanni performs on stage during a dress rehearsal of Mozart’s opera “Don Giovanni” in Salzburg, Austria, July 24, 2014.

Good morning and welcome to a monster week for economic data, where we’ll learn both the latest GDP reading, and celebrate Jobs Day Friday. Here’s what you need to know.

1)  Dollar Tree is buying Family Dollar for $74.50 per share, a 22.8% premium. Family Dollar is up 20% premarket. Carl Icahn was recently Family Dollar’s largest stakeholder and stands to make up to $131 million.

2)  The Hague has ruled Russia must pay a group of shareholders in defunct oil giant Yukos $50 billion. The ruling could have implications for current Russian oil giant Rosneft, which ended up with many Yukos assets, although the firm quickly put out a statement saying it would not be affected. But Tim Osborne, the head of the shareholder group that sued for the assets, said he couldn’t be 100% sure Rosneft’s Western holdings would be “safe.”

3)  Meanwhile, Angela Merkel said she was ready to back a halt on current arms sales to Russia, and would take part in an EU Council session if one was convened. She’d already been hoping to have the EU sign off on a sanctions by the end of this week, according to Businessweek, saying she’s prepared to take a hit on German technology exports as an expected reprisal. German intelligence also says cracks have begun performing in Vladimir Putin’s powerbase, with hardliners and oligarchs now vying to assert their vision for his administration. 

4)  As a result of all this, Russia’s MICEX index is down 1.5% and is set to see its worst performing month since March. We learned Friday the country barely escaped a technical recession. 

5)  Virgin America has filed for a proposed IPO. Bloomberg had earlier reported CEO Richard Branson was seeking $509 million in financing to take some of its branded companies public. 

6)  The mega-week for econ data kicks off at 9:45 a.m. with the “flash” reading for services PMI. Consensus is for a reading of 60 against a prior reading of 61.2. Then at 10 we get pending home sales, which are expected to have climbed 0.3% from 6.1%. Finally at 10:30 we get the Dallas Fed’s manufacturing survey. Expectations are for a reading of 12, up from 11.4 prior.

7)  Herbalife, Tyson Foods and Denny’s all report quarterly earnings today.

8)  U.S. futures were a touch lower. European stocks saw mixed gains. Stocks in Asia were mostly higher. The dollar was just shy of its strongest level in eight months against the euro according to Bloomberg as the FOMC convenes tomorrow. 

9)  Treasury Secretary Jack Lew is warning that tax inversions are increasing at “breakneck speed” and eroding the U.S. tax base. In an op-ed in the Washington Post that went online last night, Lew pleads with Congress to pass legislation proposed by President Obama 

10)  McDonald’s France is on its way to its best year ever. Sales have climbed 4.8% since January, and CEO Jean-Pierre Petit says they should be able to maintain their current rate through the end of the year, according to LeFigaro. McDonald’s saw close to $6 billion in French revenue last year. Petit has been CEO for 10 years, during which time he’s made “McDo” the second-most profitable regional branch in the world. 

10 Things You Need To Know Before The Opening Bell

SAM RO 

JUL. 23, 2014, 7:20 PM

REUTERS/Alex Kuzmin

Ukrainian parliamentary deputies tussle during a session in Parliament in Kiev July 22, 2014.

Good morning! Here’s what you need to know:

Apple Beats On The Bottom Line. Apple reported Q2 earnings jumped 22% year-over-year to $1.28 per share, beating expectations for $1.23. Revenue was a bit light, climbing just 6% to $37.43 billion; analysts were looking for $38 billion. During the quarter, iPhone sales jumped 13% to 35.2 million units, iPad sales fell 9% to 13.3 million units, and Mac sales jumped 18% to 4.4 million units.

Apple Huge In China. On the earnings conference call, CEO Tim Cook said iPhone unit sales spiked 48% in China. Cook said China was surprising because its a market that’s actually contracting as a whole.

Microsoft Blames Nokia. Microsoft reported Q2 revenue of $23.38 billion, which was a bit higher than the $23.01 billion expected. Earnings, however, was disappointing at $0.55 per share; analysts were looking for $0.60. Management blamed its Nokia acquisition for taking $0.08 off the bottom line.

Bing! Bing search ad revenue was up a whopping 40%, and Microsoft says it now has 19.2% of the U.S. search market share.

Global Chemical Giant Beats. Dow Chemical reported earnings of $0.74 per share, beating expectations for $0.71. Dow is bellwether of global economic activity. “Gains were reported in all operating segments, led by Performance Plastics (up 4 percent) and Electronic and Functional Materials (up 5 percent),” said management. “Agricultural Sciences also increased sales, rising 3 percent in the quarter and achieving a first-half sales record of $4 billion.”

PepsiCo Beats, But Takes A Swipe At The Economy. Global beverage and snack giant PepsiCo reported Q2 earnings of $1.32 per share, beating expectations for $1.23. Organic revenue grew 3.6% during the quarter. “Despite operating in what continues to be a challenging and volatile macro environment, we are delivering consistent, strong results,” said CEO Indra Nooyi.

Markets Are Up. In Europe, Britain’s FTSE 100 is up 0.3%, France’s CAC 40 is up 0.5%, and Germany’s DAX is up 0.6%. In Asia, Japan closed down 0.1% while Hong Kong’s Hang Seng rose 0.8%. U.S. futures are up with Dow futures up 25 points and S&P futures up 3.3 points. On Tuesday, the S&P 500 touched an all-time intra-day high of 1,986.24.

Demand For Mortgages Pick Up. The MBA Mortgage Applications Index climbed 2.4% last week, driven by a 4.1% jump in refinancings. Purchase applications rose 0.3%. This comes as the average 30-year fixed rate mortgage holds steady at 4.33%.

Deutsche Bank’s Got Problems, Says Fed. “An examination by the Federal Reserve Bank of New York found that Deutsche Bank AG’s giant U.S. operations suffer from a litany of serious financial-reporting problems that the lender has known about for years but not fixed, according to documents reviewed by The Wall Street Journal,” reported the WSJ’s David Enrich, Jenny Strasburg and Eyk Henning. “In a letter to Deutsche Bank executives in December, a senior official with the New York Fed wrote that reports produced by some of the bank’s U.S. arms ‘are of low quality, inaccurate and unreliable. The size and breadth of errors strongly suggest that the firm’s entire U.S. regulatory reporting structure requires wide-ranging remedial action.’”

Chrysler Recall. “Chrysler Group LLC said on Tuesday it is recalling 792,300 older-model Jeep SUVs for ignition switch problems, the second recall of its kind for the No. 3 U.S. automaker this year,” reported Reuters Bernie Woodall. “This brings to 1.68 million the number of vehicles Chrysler has recalled for ignition switches that can be bumped out of the “on” position by a driver’s knee, which can cause the engine to shut off and disable air bags.”

10 Things You Need To Know Before The Opening Bell

Sam Ro

Jul. 14, 2014

REUTERS/David Gray

Argentina’s Gonzalo Higuain collides with Germany’s goalkeeper Manuel Neuer (top) during their 2014 World Cup final at the Maracana stadium in Rio de Janeiro July 13, 2014.

Good morning! Here’s what you need to know.

The Latest Tax Inversion Mega-Deal. Dublin-based drugmaker Shire is willing to recommend a $53 billion takeover bid by Chicago-based AbbVie, a move which would allow the U.S. company to take advantage of Ireland’s low tax rates. This is the latest in a series of M&A proposals with this controversial “tax inversion” plan at its core.

Another Pharma Deal. Abbott Laboratories will sell its non-U.S. developed markets branded generic drug business to Mylan Inc. for $5.3 billion in an all-stock transaction.

Europe’s Economy Is Stumbling. Euro zone industrial production activity fell by 1.1% in May, reversing a 0.7% gain in April. While this wasn’t as bad as the 1.2% decline expected by economists, it nevertheless puts more pressure on the European Central Bank to become more aggressive in its efforts to stimulate the economy and stoke inflation.

Citi On Deck. Global banking giant Citi announces its Q2 financial results later this morning. Analysts expect the bank to earn $1.05 per share. Lately, Wall Street has been slammed by weak mortgage demand and slowing trading activity
.
Also In Citi News. Citigroup will pay $7 billion to end the U.S. Justice Department’s probe into the bank’s handling of mortgage bonds. Citi expects to see a $3.8 billion pretax charge in Q2.

Markets Are Up. Asian markets closed higher overnight with Japan’s Nikkei up 0.8% and Hong Kong’s Hang Seng up 0.5%. In Europe, Britain’s FTSE 100 is up 0.7%, France’s CAC 40 is up 0.5%, and Germanys DAX is up 0.7%. U.S. futures are up with Dow futures up 54 points and S&P futures up 6 points.

Goldman Raises Its Stock Market Target. Goldman Sachs strategist David Kostin just raised his year-end target on the S&P 500 from 1,900 to 2,050. From his note: “US equities soared 42% during the past 18 months but the stellar return borrowed heavily from the future. History shows S&P 500 rallies and the P/E multiple expands during the year prior to the start of a tightening cycle. But after tightening begins, the multiple contracts and the index typically delivers only modest returns. Incorporating our lower 10-year US Treasury yield forecast with other valuation approaches, we lift our year-end 2014 S&P 500 price target to 2050 (from 1900) and 12-month target to 2075, reflecting prospective returns of 4% and 6%, respectively.”

A China Crash Warning From A Central Bank Head. The Bank of International Settlements’ Jaime Caruana sent out a warning via an interview with The Telegraph. When asked about what would happen in the next crisis, Caruana responded: “The ramifications would be particularly serious if China, home to an outsize financial boom, were to falter.” From The Telegraph: “BIS officials doubt privately the whether China can avoid a ‘hard landing’, fearing that the extreme credit growth over the last five years must lead to a financial reckoning. They also doubt whether the aftermath will in the end be easier to deal with in a state-controlled banking system where the Communist Party controls the credit levers.”

Jeff Gundlach Has Advice For Elon Musk. Legendary bond fund manager Jeff Gundlach is bullish on the potential of Tesla’s battery business, so much so that he thinks Musk should shift more of his efforts in that direction. Here’s Gundlach in an interview with Barry Ritholtz: “I just think that the battery technology that Tesla has developed is so far ahead of everybody else that it could really have broad uses. If I was running GM, or BMW or Ford, I would be open to the idea of just buying the batteries from Tesla … If I was Elon Musk, I might go to all the other auto companies and say, I’ll make you a deal: I’ll get out of the car business, but let’s set up a long-term deal on you buying my batteries.”

No Economic Data. There is no major market-moving economic data scheduled for release in the U.S. today. On Tuesday, Fed Chair Janet Yellen will appear before Congress to give her Semiannual Monetary Policy Report.

10 Things You Need To Know Before The Opening Bell

 

Rob Wile Markets 

 Jul. 10, 2014

AP Photo/Christophe Ena

Spectators brave the rain as they line one of the cobblestone sections of the fifth stage of the Tour de France cycling race over 155 kilometers (96.3 miles) with start in Ypres, Belgium, and finish in Arenberg, France, Wednesday, July 9, 2014.

Good morning! Here’s what you need to know.
Europe Is Backsliding. French manufacturing plummeted 2.3% in May, while output dropped 1.7%, far worse than expectations. Italian industrial output declined 1.2%, the largest drop since November 2012. “In one line: Horrible; GDP contraction in the second quarter is now base case,” Pantheon Macro said.
Portuguese Yields Spike. The coupon on Portugal’s 10-year note surged to 4%, the highest since early April, after trading in the parent company of Banco Espirito Santo, Portugal’s biggest bank, had to be suspended on concerns about its solvency. “Espirito’s stresses have brought questions over the underlying health of peripheral banks and the still evolving mechanisms for dealing with struggling institutions back into the spotlight,” Deutsche Bank’s Jim Reid wrote. 
Bullard. Describing himself as “the North Pole of inflation hawks,” St. Louis Fed President James Bullard told Bloomberg last night he believes the Fed is going to overshoot its inflation targets and that rates could come up sooner than some investors are currently anticipating. They seem to be ignoring the median projections of the FOMC, which call for a target interest rate of 1.13% at the end of 2015 and 2.5% a year later. “It is a mistake for the market not to go with the median of the committee,” he said. “I think that’s the best indication we have.”
Trimmed Forecast Roundup. Lumber Liquidators and Potbelly’s both cut their 2014 outlooks after Wednesday’s bell; the latter was down 17% after hours. Destination Maternity, a U.S. retailer, delivered a profit warning Thursday, citing the weak economy.
China Exports Up On US Demand. Chinese exports climbed 7.2% in June on the back of strengthening U.S. consumer demand, WJS said, though this was below expectations of 10%. “The global demand recovery is still on track but the momentum is very modest,” said HSBC economist Ma Xiaoping.
Claims; Trade; Fischer. At 8:30 a.m. we get jobless claims — consensus is for an increase of 1,000 to 316K. At 10:00 a.m. we get wholesale trade data; consensus is for a 0.6% increase in inventories. Fed Vice Chairman Stanley Fischer will speak on financial sector reform at the NBER in Cambridge at 4:30 p.m.
Family Dollar. The discount retailer reports earnings this morning; expectations are for $0.90/share. 
Chinese Hackers Breach Government Database. From NYT: “The intrusion at the Office of Personnel Management was particularly disturbing because it oversees a system called e-QIP, in which federal employees applying for security clearances enter their most personal information, including financial data. Federal employees who have had security clearances for some time are often required to update their personal information through the website.”
BOE Does Nothing. The Bank of England keeps its benchmark interest rate at 0.5% and its asset purchase plan at 375 billion pounds. This was in line with expectations.
Markets. Stocks are lower around the world. 

10 Things You Need To Know Before The Opening Bell

ROB WILE MARKETS  JUL. 9, 2014

REUTERS/Eloy Alonso

A Dolores Aguirre fighting bull falls at the Estafeta corner, during the second running of the bulls of the San Fermin festival in Pamplona July 8, 2014.

Good morning! Here’s what you need to know.

Alcoa Surges. The aluminum giant reported strong top- and bottom-line figures after the bell Tuesday, and shares were up 2% pre-market Wednesday. The company reaffirmed its 2014 outlook for global aluminum demand growth of 7%, and increased its 2014 estimate for the North America commercial transportation market to a range of 10% to 14%, from a previous range of 5% to 9% in the first quarter on rising truck orders and backlogs.

Carlos Slim Is Dismantling His Empire. The FT’s Jude Webber says he faces punitive measures if he doesn’t. “América Móvil said it would sell off assets to bring it below a 50% market share threshold to prevent it from being classed as the dominant group in the market, subject to onerous new rules. Barring such a move, Mr. Slim’s empire faces being forced to share infrastructure with rivals for free – something América Móvil has slammed as ‘confiscatory.‘“

INDONESIA: Both Candidates Claim Victory. Jakarta governor Joko “Jokowi” Widodo was shown to be leading ex-general Prabowo Subianto in unofficial polls. “Financial markets would favour a victory for Joko Widodo, the current mayor of Jakarta, and would almost certainly take a turn for the worse if his opponent, Prabowo Subianto, a former Suharto era general, were to emerge as the winner,” Capital Economics’ Gareth Leather said in a note before results came in. “But in reality there is enormous uncertainty over how either of the candidates would perform once in office.”

China Inflation Leaves Wiggle Room. June data came in at 2.3%, underneath 2.4% consensus forecasts and well below the government’s 3.5% target. “…it leaves enough room for the government to roll out small-scale supportive measures to deliver the around -7.5% annual growth target, while the steadily rise of yoy PPI inflation may help alleviate some concerns about deflation,” BAML’s Ting Lu writes.

No Let-Up In The Middle East. “We are killing terrorists of different ranks, and this operation will persist and intensify,” Israeli Defense Minister Moshe Ya’alon said after an IDF offensive entered its second day. “For our part, this doesn’t have to be a short battle. We will continue hitting Hamas and other terrorist groups hard.” But the Guardian reportedthat NGO Defence for Children International Palestine said it has confirmation of the killing of seven children in the Israeli offensive. “Most were killed in an air raid that targeted Hamas activist Odeh Ahmad Mohammad Kaware in the southern Gaza city of Khan Younis, it said.” 

FOMC Minutes At 2:00. Notes will be from the June 18 meeting; Pantheon Macro’s Ian Shepherdson is interested in what Fed members have been saying about inflation. ” …the May CPI numbers showed that core CPI inflation had jumped to 2.0%, thanks to increases across a broad array of components. Chair Yellen dismissed this as ‘noise’ at her press conference, but we wonder if the upturn in the numbers triggered a more substantive discussion at the meeting.”

Citi Settlement. Citigroup is reportedly going to pay $7 billion to settle mortgage fraud charges, twice what analysts were expecting. Reuters said analysts had expected, on average, that Citi would have to pay $3.4 billion to settle the case. The FT said analysts were expecting a $1.5 billion payout.

Obama Seeks Border Surge. The President will ask Congress for nearly $4 billion to address a recent flood of young migrants that’s created unsafe conditions at the border.  

Markets. U.S. futures were flat. European stocks saw mixed gains. Shares in Asia were mostly lower.  

No Major Economic Data. Argentina-Netherlands kicks off at 4 p.m. ET.

10 Things You Need To Know Before The Opening Bell

Mamta Badkar 

Dec. 23, 2011

Image: AP Images

Good morning. Here's what you need to know.

• Asian markets were mixed in overnight trading with the Hang Seng up 1.37%. Markets are fairly quiet leading up to Christmas, Europe is higher and U.S. futures are moderately higher ahead of the market open.

• The French economy grew less than previously expected in the third quarter. GDP climbed 0.3% from the second quarter, against previous reports of a 0.4% gain. French statistics institute Insee has said that the economy is probably already in a recession, and investment growth slowed to 0.2% in the third quarter. 

• Italian consumer confidence fell to 91.6 in December, from 96.1 the previous month, declining to its lowest level since 1996. Confidence tanked as consumers grew more concerned about austerity measures and a probable recession.

• Congress looks set to pass a two-month payroll tax cut extension today after months of political wrangling. House speaker John Boehner and Senate majority leader Harry Reid agreed yesterday to extend the payroll tax cut and emergency unemployment benefits into 2012. The extension is almost entirely like the bill that passed the Senate on Saturday, but will need unanimous consent to assure an expeditious passage through the House and Senate.

• Durable goods orders and personal income and outlays for November will be released at 8:30 AM ET. Consensus is for a 1.9% month-over-month increase in new orders, and a 0.3% month-over-month increase in consumer spending.

• In M&A news, Deutsche Boerse won U.S. approval to buy NYSE Euronext, on the condition that its subsidiary, the International Securities Exchange, divest its stake in Direct Edge. The $9 billion deal could still be blocked in Europe. Meanwhile, Malaysian state-owned oil and gas company Petronas is in talks with oil giants Shell, Exxon Mobil and chemical maker Dow Chemical Co. among others, to develop petrochemical plants within its $20 billion refinery complex.

• Meanwhile, AT&T has won approval from U.S. regulators for its $1.93 billion purchase of Qualcomm Inc's airwaves, days after its bid for T-Mobile USA collapsed. The FCC cleared the sale of frequencies for 300 million people, but AT&T can't use airwaves in a manner that would interfere with other wireless carriers.  

• UK services output fell 0.7% in October from the previous month, but output was up 1.1% from a year ago. Services account for about 75% of the UK economy. Business services and finance, which account for about 40% of the index, fell 0.7% in October. Meanwhile, Q3 GDP was unexpectedly revised up to 0.6%, from an initial report of 0.5% growth.

• Moody's downgraded Slovenian sovereign debt to A1 from Aa3, with a negative outlook. Risks to the country's balance sheet, from the potential need for support to banks, and risks to economic growth, were cited as the main reasons for the downgrade. 

• New home sales data for November will be released at 10 AM ET. Expectations are for November new home sales to come in at 314K.

Read more: http://www.businessinsider.com/10-things-december-23-2011-12#ixzz1hMZ6DZnV

10 Things You Need To Know Before The Opening Bell

Mamta Badkar 

Dec. 19, 2011

Image: Shuttershock

Good morning. Here's what you need to know.

• Asian markets were down in overnight trading with the Seoul Composite plummeting 3.43% after the death of Kim Jong-il. Europe is higher, and U.S. futures are moderately higher after the market open.

• North Korean leader Kim Jong-il has died at 69 according to the country's state media. His youngest son Kim Jong-un has been named the "Great Successor"

• ECB president Mario Draghi has warned of the costs of a eurozone break-up. In an interview with the FT he said that there is no trade-off between fiscal austerity and growth and competitiveness. He also said that the latest liquidity measures to banks will not necessarily give banks incentive to buy eurozone bonds, in fact they might be used to finance small and medium enterprises. 

• Euro-area finance ministers are meeting in Brussels today to discuss €200 billion in additional funding through the IMF and the mechanics of a fiscal compact. The conference call will see European officials try and meet a self-imposed deadline for drawing aid, and attempt to form new budget rules. 

• Swedish car maker Saab has filed for bankruptcy after its owner Swedish Autmobile gave up repeated attempts at finding financing. The move came after General Motors vetoed a plan involving Chinese investor Zhejiang Youngman Lotus Automobile. General motors still licenses technology to  Saab, and has a small shareholding in the company.

• Exxon Mobil Corp. is reportedly considering a £7 billion acquisition of Gulf Keystone Petroleum, a Kurdistan-focused oil and gas explorer. Exxon is  considering making an 800 pence per share bid for Gulf Keystone.

• The housing market index for December will be released at 10 AM ET. Consensus is for the housing market index to hold steady at 20. 

• Prince Alwaleed bin Talal has invested $300 million in Twitter through his Riyadh-based company Kingdom Holding. The Saudi investor already has stakes in Apple and Citigroup.

• The U.S. Senate passed a two-month extension of the payroll tax-cuts on Friday but John Boehner, the speaker of the House, has said that he and his caucus are not behind the deal. Republicans are concerned that the extension would allow President Obama to continue making the tax-cut which has broad public support, as he fires up his election campaign.

• Moody's downgraded the sovereign rating of Belgium from Aa1 to Aa3 with a negative outlook after the U.S. market's close on Friday. Moody's attributed the downgrade to uncertainty surrounding troubled bank Dexia.  This comes as everyone anticipates S&P's results on its downgrade review of 16 eurozone nations. 

10 Things You Need To Know Before The Opening Bell

Mamta Badkar 

 Dec. 12, 2011

Image: Shuttershock

Good morning. Here's what you need to know.

• Asian markets were mixed in overnight trading with the Nikkei surging 1.37%. Europe is lower as concerns remain after the EU summit, and U.S. futures are lower ahead of the market open.

• Italy sold €7 billion of one-year bills at a yield of 5.952%, down from 6.087% at a previous target. Italy met the maximum target for the one year-bills but demand was 1.92 times the amount on offer, compared with 1.99 times last month. Meanwhile, the yield on the Italian 10-year bond which had fallen below 5.8%, is back above the 6.5% mark. 

• This morning Moody's reiterated its warning that the ratings of the entire Eurozone could be at risk in the absence of decisive policy measures at the EU summit. The ratings agency plans to revisit sovereign ratings of the euro area and EU countries in Q1 2012. 

• The OECD has warned of a developed world funding crisis in 2012, as borrowing by industrialized governments is expected to reach $10.40 trillion in 2011 and is expected to increase further next year. The OECD also said the share of short-term debt issuance stayed at 44.00%, higher than the before the global financial crisis.

• Time Warner Inc made a $1.3 billion all-cash offer for Endemol NV, the Dutch producer of "Big Brother" television show.

• Dutch financial services company ING Groep has offered to re-purchase and exchange $7.7 billion of debt to boost its finances and meet regulators' demand for higher capital services. ING made three offers for seven tranches of debt securities with prices ranging from 58% to 87% of nominal value. 

• Gold has fallen 2% since Friday, as investors opted for the U.S. dollar and moved out of commodities, over doubts about how much last week's measures  from the EU will change the region's problems. Gold for February delivery is down to $1,684.00 per ounce. 

• The Indian rupee fell by 23 paise to a low of 52.26 per U.S. dollar, on demand for the U.S. dollar from banks and importers. Meanwhile October industrial production fell 5.1% from a year ago. 

• Inspectors from the EU and IMF arrived in Greece today for another round of talks about crucial aspects of a new bailout plan for Greece, and to check on Athens' progress since its first rescue. Greek finance minister Evangelos Venizelos is scheduled to meet officials from the IIF at 7 AM ET to make progress on a voluntary debt restructuring.

• The U.S. treasury budget for November will be revealed at 2 PM ET. Consensus is for a rise in the November deficit to $139 billion. 

• 
  

10 Things You Need To Know Before The Opening Bell

Mamta Badkar 

 Dec. 8, 2011

 

Image: AP Images

Good morning. Here's what you need to know.

• Asian markets were down in overnight trading with the Hang Seng falling 0.69%. Europe is sharply lower ahead of the EU summit, and the rally in U.S. futures has collapsed.

• EU leaders are meeting today for the start of a summit to save the euro and resolve the region's debt crisis. Officials are expected to arrive in Brussels around 11 AM ET, and begin their working dinner at 1:30 PM ET. The president of the European Commission Jose Manuel Barroso spoke before the start of the summit, to urge leaders to put aside their differences and find a solution to the crisis. This comes after French president Nicolas Sarkozy and German chancellor Angela Merkel formed a "complete agreement" that involved amending the EU treaty. 

• The European Central Bank cut interest rates by 25 basis points to 1.00%. They might also relax their criteria for collateral to stimulate bank lending.

• Japan's machinery orders plunged 6.9% in October, against expectations of a 0.5% fall. This comes after an 8.2% fall the previous month. The data shows that firms are slashing spending, and that a slowdown in the global economy and a strong yen is hurting Japan's recovery.

• Wholesale trade data for October will be released at 10 AM ET. Consensus is for a 0.4% month-over-month gain in wholesale inventories. Initial jobless claims fell more than expected to 381K >

• Costco posted Q1 net income of $320 million or $0.73 per share, up from $312 million or $0.71 a year ago. Revenue jumped 12.5% to $21.18 billion, driven by higher gasoline prices and foreign exchange rates.

• Former MF Global CEO Jon Corzine will be testifying in front of a House Committee today, and his testimony has been released. Corzine has said that he does not know where the money is. Federal regulators and the justice department are investigating the collapse of MF Global, and are trying to find as much as $1.2 billion in missing client funds.

• Alibaba Group is looking for up to $4 billion in debt financing to help buy back a 40% stake in the company owned by Yahoo! Inc.

• The Bank of England held interest rates steady at 0.50% today. It also maintained its asset purchase target at £275 billion. Bank of England's governor Mervyn King had previously said that it made little sense to change policy until they could tell how events in Europe would play out after the EU summit.

• Australia's unemployment rate increased to 5.3%, and the country lost 39,900 jobs in November. The economy added 26,2000 full time jobs last month. This comes after the Australian economy posted Q3 GDP growth of 1% from the previous quarter, beating expectations.

• BONUS - Angelina Jolie and Brad Pitt took their children on shopping trip to FAO Schwarz, an upscale New York toys store.

Read more: http://www.businessinsider.com/10-things-december-08-2011-12#ixzz1fxABJSTe

10 Things You Need To Know Before The Opening Bell

Mamta Badkar 

 Dec. 7, 2011

 7:31 AM

Image: AP Images

Good morning. Here's what you need to know.

• Asian markets were up in overnight trading with the Nikkei surging 1.71%. Europe is higher in the build up to the EU summit on December 9, and U.S. futures are moderately higher ahead of the market open.

• Germany sold €4.09 billion of of five-year notes (Bobls). Demand for the country's debt was much higher than at its November auction. Meanwhile, Portugal sold €1 billion of three-month treasury bills at a yield of 4.873%, down from 4.895% at the November auction. The sale met the lower end of the country's target.

• German industrial production climbed 0.8% in October, from a 2.8% decline the previous month. Production of investment goods rose 2.2% in October, from the previous month, when it plunged 4.5%.

• U.S. treasury secretary Tim Geithner who is on a three-day trip to Europe to press officials for a resolution to the European crisis ahead of the EU summit, is pushing governments to build a "stronger firewall" to end the debt crisis. Speaking today, he said he expects European officials to succeed. Geithner will meet with Italian prime minister Mario Monti tomorrow. 

• Citigroup has announced plans to cut 4,500 jobs and the firm expects to take a $400 million charge in the fourth quarter related to the job cuts, including severance. The bank employed about 267,000 people as of September 30, and the job cuts represent 1.7% of its workforce.

• Lloyds Banking Group is in "exclusive talks" with U.S. private equity group Lone Star over the sale of £900m of distressed property loans. Lloyds which is government controlled is expected to take a 40% hit on the sale. Meanwhile, Banco Santander has sold its Colombian arm to Chile's CorpBanca for $1.2 billion in an effort to shore up its capital and requirements from Europe's banking regulators.

• The consumer credit report for October will be released at 3 PM ET. Consensus is for a month-over-month increase in consumer credit of $7.5 billion.

• UK manufacturing output fell more-than-expected 0.7% in October from the previous month. This was the fastest pace of decline in the last six months. Manufacturers have been hit by the slowing global economy and some Bank of England members have been arguing for more easing.

• Dutch ING Group NV expects to take a $1.48 billion loss from its U.S. annuity business in the fourth quarter. The final services company plans to list its insurance and investment management operations in two IPOs for state aid received in 2008.

• Australia's Q3 GDP grew 1% from the previous quarter, beating expectations. The economy grew 2.5% from a year ago. Household spending climbed 1.2%, adding 0.7 percentage point to GDP growth, and non-dwelling construction surged 24.4%. 

10 Things You Need To Know Before The Opening Bell

Mamta Badkar 

 Dec. 6, 2011

 7:30 AM

Image: AP Images

Good morning. Here's what you need to know.

 

• Asian markets were down in overnight trading with the Nikkei falling 1.39%. Europe is lower after S&P placed 15 euro nations on credit watch negative, and U.S. futures are moderately higher ahead of the market open.

• S&P has placed 15 eurozone countries on downgrade review. The ratings agency threatened a one-notch downgrade for Austria, Belgium, Finland, Germany, Netherlands, and Luxembourg. Other nations including France could see their credit ratings cut by two notches. Markets fell immediately after the news but are pushing higher today. S&P expects to wrap up the review after the EU summit concludes on December 8-9

• German factory orders increased 5.2% in October, much better than estimates of a 1% gain. Orders however were driven by demand from abroad, with international orders jumping 8.3%, compared with a 1.4% rise in domestic orders.

• U.S. treasury secretary Tim Geithner, acting on the request of President Obama, is on a trip to Europe to urge officials to find a solution to the European crisis. Geithner will meet with ECB president Mario Draghi in Frankfurt and German finance minister Wolfgang Schaeuble in Berlin today. Tomorrow, he is expected to meet with French president Nicolas Sarkozy and Spanish prime minister Mariano Rajoy. Geithner will meet with Italian prime minister Mario Monti on Thursday.

• The European Union's antitrust watchdog is probing whether Apple and five major publishing houses worked together to restrict competition in the market for e-books. The probe includes an investigation into deals between Apple and News Corp.’s Harper Collins, and CBS’s Simon & Schuster.

• Multinational Veolia Environnement SA is selling $6.7 billion of assets to cut debt, as it exits the mass-transit business, to focus on sales of regulated water assets in the UK, and solid waste operation in the U.S. The company is also reportedly planning to lower its dividend.

• An investigative panel has found that Olympus concealed losses of $1.7 billion and has called for legal action against executives responsible for the cover-up. They however didn't find any links with organized crime. Olympus Corp. risks being delisted from the Tokyo Stock Exchange even if it makes a December 14 deadline to announce earnings.

• BP has accused Halliburton of intentionally destroying evidence relating to the Deepwater Horizon oil spill. BP has accused Halliburton of destroying test results and computer analysis to prevent the information from being used against it at trial. 

• In an effort to raise funds for the renovation of Lambeau Field, the Green Bay Packers are selling 250,000 shares at $250 per share, with a 200-share limit.

• Italian prime minister Mario Monti said Italy risked a Greek-style economic collapse that could threaten the euro, without the government approved austerity package. He urged other European partners to 'to do their part'. Meanwhile, yields on 10-year government bonds are moving lower.