Market Snapshot
Asia: Japan -4.0% to 17748. Hong Kong +0.7% to 20865. China -7.6% to 2948. India +0.7% to 25298.
Europe: London +2.5%. Paris +2.9%. Frankfurt +3.1%.
Futures: Dow +2.7%. S&P +2.8%. Nasdaq +3.1%. Crude +2.0% to $39.00. Gold -1.0% to $1147.50.
Ten-year Treasury Yield +6 bps to 2.05%
Economic News
8:55 Redbook Chain Store Sales
9:00 FHFA House Price Index
9:00 S&P Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
10:00 Richmond Fed Mfg.
10:00 New Home Sales
Markets
Global markets attempt to find their footing after a rough start to the week. Asian markets fell again with the Shanghai Composite Index closing with a 7.6% loss and the Nikkei down 4.0%, while other key Asian markets closed with milder losses and Hong Kong ended up in positive territory. European markets are broadly higher with the Stoxx Europe 600 up a solid 3.1%, led by the first rise in the FTSE 100 in 11 sessions.
Oil is trying to stage a comeback with WTI crude retaking the $39 level. Economists expect global supply will start drying up next quarter if oil stays below the $40 level.
The government in China pointed to data showing economic activity is still buzzing right along. An early look by the state planning agency at power production in the nation showed a 4% Y/Y increase for the first twenty days of the month. Economists consider electric power output in China a key data point. During July, power production was down 2%. The true state of the economy in China is the subject of some debate. Earlier today, Japanese Finance Minister Taro Aso said there is “suspicion” on whether official GDP numbers are accurate.
A read on German business confidence topped expectations as companies focused on domestic spending trends. The Ifo Business Climate Index rose to 108.3 for August from 108.0 the previous month. The consensus estimate from economists was for a 107.6 mark.
Economists in Brazil forecast inflation will accelerate to a 5.50% rate in 2016 and GDP will fall 0.24%. The revised outlook marks the third consecutive week the estimate for inflation has been raised and the view on GDP trimmed amid a weak local currency. Multinationals, including automakers and consumer products companies, banking on a pre-Olympics economic rush in Brazil have had to pull back lofty expectations.
The Conference Board of Leading Indicators for China rose 0.9% to 331.2 in July. The monthly gain was driven mainly by growth in bank loans, while the reading for manufacturing and exports came in weak. The index was up 0.6% in June and 1.1% in May.
Stocks
Boeing expects to cut several hundred jobs in its satellite unit through the end of this year. The company said some of those people could find work in other parts of Boeing (BA). The cuts come amid delayed commercial orders caused by launch vehicle failures as well as uncertainty around the Export-Import Bank. Boeing also raised its outlook for aircraft demand in China despite the recent turmoil in the nation. The Seattle company sees China buying 6,330 aircraft in the next 20 years, a 5% jump from last year’s forecast.
A two-week strike at a General Motors plant in Brazil has ended after the company agreed to suspend nearly 800 job cuts. As part of the deal, GM (GM) and the local metalworkers’ union agreed that the workers facing termination would spend the next five months on paid leave and would get an extra rescission payment if their jobs are cut early next year. GM said last month that the plant would not be included in 6.5B reais ($1.9B) of new investments in Brazil through 2019 because the factory is not cost competitive. Auto sales in Brazil are down ~20% this year amid rising inflation, unemployment and interest rates. Separately, Daimler (DDAIF) said today it would cut an additional 1,500 jobs at a Mercedes-Benz truck plant near Sao Paulo, leading workers to declare an open-ended strike at the factory.
Newell Rubbermaid plans to offer 3.3K former employees a lump-sum pension payout in a bid to lower future obligations and costs. The group of employees account for close to 13% of Newell Rubbermaid’s (NWL) benefit obligation in the U.S. The company expects to take a charge of $35M in Q4 to account for the action based on historical acceptance rates, according to a SEC filing.
Disney parts ways with two execs at Maker Studios. Chief Content Officer Erin McPherson and senior VP of Marketing Jeremy Welt have left the multichannel video producer in its highest-profile executive departures since Disney (DIS) bought it for $500M last year. McPherson had joined Maker Studios prior to the Disney deal, after serving as VP and head of video for Yahoo. Welt had left and rejoined Maker previously, having left for Sean Combs’ Revolt TV. Executive VPs Bonnie Pan and Gabriel Lewis will take over McPherson’s programming duties, the company said in an update, and Marketing VP Glenn Frese will take over Welt’s duties in the interim.
The Russian government will not fund four of the five projects for which Rosneft (RNFTF) had requested financing from the country’s sovereign wealth fund. The decision reflects the growing pressure on Russian government resources and is a further blow to Rosneft’s ambitious growth plans. Last year, the energy group asked for more than $40B in state support, but later trimmed its request to just five projects requiring ~300B rubles ($4.3B).