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WALL STREET LOWER AS EARNINGS ROLL IN; FED MEET EYED

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| US ECONOMY & POLITICS | EUROPE & WORLD | TODAY IN HISTORY

WALL STREET LOWER AS EARNINGS ROLL IN; FED MEET EYED

  • Wall Street opened slightly lower on Monday as investors braced for another set of corporate earnings.
  • FOMC will begin its two-day meeting on Tuesday to decide whether the U.S. economy could absorb a rate increase in the near term.
  • The FOMC is scheduled to announce its decision on Wednesday at 2:00 p.m. ET.
  • Traders have priced in a 14.7 percent chance of a rate hike in September and a 38.5 percent chance in December.
  • Earnings of the benchmark index’s components are expected to fall 3 percent, compared with a 5 percent decline expected at the start of the earnings season.
  • Yahoo agreed to sell its core internet business to Verizon for $4.8 billion.

US FINANCIAL MARKET

Verizon Agrees to Buy Yahoo’s Web Assets for $4.83 Billion

  • Deal with telecom giant merges internet pioneer with longtime rival AOL.
  • The price tag, which includes Yahoo’s core internet business and some real estate, is a remarkable fall for the Silicon Valley web pioneer that once had a market capitalization of more than $125 billion at the height of the dot-com boom.
  • The deal is expected to close in early 2017. Until the closing, the companies said, Yahoo will continue to operate independently.
  • The sale doesn’t include, among other things, Yahoo’s cash, its shares in Alibaba, its shares in Yahoo Japan, and Yahoo’s noncore patents, called the Excalibur portfolio.
  • These assets will continue to be held by Yahoo, which will change its name at closing and become a registered, publicly traded investment company.

Sprint Revenue Beats Estimates as Discounts Attract Subscribers

  • Sprint reported 173,000 postpaid wireless additions in the quarter.
  • That compared with a net loss of 12,000 subscribers in the same period last year.
  • However, the company’s net loss widened to $302 million.
  • Revenue edged 0.2% lower to $8.01 billion.

Oil Falls to Two-Month Low as U.S. Drilling Climbs amid Surplus

  • U.S. oil explorers boosted the number of active rigs by 14 to 371, for fourth week.
  • Money managers add most bearish WTI crude bets in a year.
  • While the global oversupply has faded, high inventories of both crude oil and refined fuels coupled with signs of faltering demand growth have stifled the price recovery.

Morgan Stanley on Oil Prices: ‘A Refinery-Driven Correction Is Upon Us’

  • The global oil market is “severely oversupplied” with gasoline — with stocks at a five-year high — serving as a blow to crude prices from next month, reckon Morgan Stanley analysts led by Adam Longson.
  • “Given the oversupply in the refined product markets, fading refinery margins, and economic run cuts, we expect crude oil demand to deteriorate further over the coming months.”

Tesla Races to Finish ‘Gigafactory’ in Time for Model 3 Rollout

  • CEO Elon Musk anticipates plant could be capable of producing 105 gigawatt hours of battery cells by 2020.
  • Tesla has doubled the amount of people constructing the “gigafactory,” which sits on more than 3,000 acres near Reno.
  • Now, 1,000 workers build seven days a week on two shifts in an effort to start churning out lithium-ion cells by early 2017.

Nintendo shares dive as company plays down Pokemon GO’s earnings impact

  • Shares in Nintendo Co tumbled as much as 18% on Monday after the company said Pokemon GO would have a limited impact on its earnings – their biggest setback so far after a huge run-up on the smash-hit game.
  • Pokemon GO’s success has triggered massive buying in Nintendo shares.

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US ECONOMY & POLITICS

Debate over U.S. Debt Changes Tone

  • The national debt as a share of gross domestic product has more than doubled since 2007, to around 75%, but net interest payments on the debt have actually declined.
  • They fell to 1.25% of GDP last year, the lowest level since 1968.

Debt Alarms

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EUROPE & WORLD

China’s growth sucks in more debt bucks for less bang

  • The world’s second-largest economy grew 6.7 percent in the first half of the year, unchanged from the first quarter.
  • Total bond debt in China is up over 50 percent in the past 18 months to 57 trillion yuan ($8.5 trillion), equal to around 80 percent of GDP, and new total social financing, the widest measure of credit provided by China’s central bank, rose 10.9 percent in the first half of 2016 to 9.75 trillion yuan.

LVMH Sells Donna Karan to G-III for $650 Million

  • Sale marks an unusual retreat for the French luxury giant from a brand it tried for years to revive.
  • After struggling to grow the loss-making Donna Karan and DKNY lines amid increased competition, it tried repeatedly to restructure the brand, cutting costs and simplifying the branding.
  • LVMH—which owns a bevy of brands including flagship fashion label Louis Vuitton, champagne house Moët & Chandon and cognac label Hennessy—bought Donna Karan in 2002 for about $243 million.
  • Founded in 1984 by American designer Donna Karan, the brand’s clothes, shoes and bags quickly gained in popularity. The company went public 12 years later.

South Korea Plans $9.7 Billion Addition to Budget

  • Supplementary spending intended to finance companies’ restructuring and create jobs.
  • The country is also bracing for the negative impact on the labor market of the industrywide overhaul of shipbuilding and shipping companies.
  • Seoul fears as many as 63,000 jobs could disappear from shipyards by next year.

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TODAY in HISTORY

The United States tested the first underwater atomic bomb at Bikini Atoll  (1946)

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Puerto Rico became a commonwealth of the United States (1952)

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The world’s first test-tube baby, Louise Joy Brown, was born in Lancashire, England (1978)

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Soviet cosmonaut Svetlana Savitskaya became the first woman to walk in space (1984)

The supersonic airliner Concorde crashed after takeoff outside Paris (2000)

 

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This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, Wall Street Journal.

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