Market Snapshot
Asia: Japan -3.1% to 19738. Hong Kong -5.8% to 23517. China -5.9% to 3507. India -1.7% to 27688.
Europe: London +0.3%. Paris +0.7%. Frankfurt +0.6%.
Futures: Dow -1%. S&P -1.1%. Nasdaq -1.1%. Crude +0.6% to $52.66. Gold +0.1% to $1153.30.
Ten-year Treasury Yield -3 bps to 2.19%
Economic News
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
1:00 PM Results of $21B, 10-Year Bond Auction
2:00 PM FOMC minutes
3:00 PM Consumer Credit
Key earnings after the close
AA, WDFC
Markets
U.S. stocks fall this morning as the continuing slide in Chinese stocks raised concerns about the pace of global economic growth. The markets, however, were off their lowest levels of the session after Greece formally requested a three-year bailout from the eurozone’s rescue fund Wednesday and pledged to start implementing some of the reforms demanded by its creditors. The news boosted European stocks.
Chinese shares plunged again today as investors shrugged off a series of regulatory support measures, including a PBOC statement this morning that affirmed it would support market stability by providing liquidity, while guarding against financial risk. Nearly half of all Chinese listed companies have now suspended their shares from trading to insulate themselves from the meltdown. The panic in mainland markets also rippled across the border, knocking Hong Kong down 5.8% and Japan 3.1%, and across the Pacific – U.S. index futures are down by about 1.1%. Shanghai -5.9%; Shenzhen -2.6%.
Minutes from the Federal Reserve’s June policy-making meeting, once expected to be the moment the Fed began to raise interest rates, will be released today at 2 p.m. ET. The action will follow a renewed call from the IMF for the Fed to hold off on hikes until “clear signs of wage and price inflation.” The declaration puts itself at odds with Fed Chair Janet Yellen who has said “clear signs” are not a prerequisite for higher rates. Yellen is also scheduled to speak about the economy in Cleveland on Friday, granting a chance to see how her thinking has evolved since the June meeting.
After winning key legislation in Congress last month, the Obama administration has now scheduled a high-level trade meeting for late July in an effort to conclude the Trans-Pacific Partnership. Several other lower-level talks will take place beforehand, including tomorrow’s meeting between the U.S. and Japan to close gaps on auto and agriculture trade. According to people following the talks, a deal in coming weeks could allow the TPP to come to a final vote in Congress before the end of the year.
After five months of drama, false dawns and unpleasant surprises, are Europe’s leaders finally ready to show Alexis Tsipras the door? Yesterday, eurozone officials gave Greece until Friday morning to come up with viable reform proposals, while the ECB provides enough liquidity to keep Greek banks afloat. All 28 members of the EU will then meet on Sunday to decide whether to accept the deal. Economists are now speculating what currency Athens would turn to if a Grexit becomes a reality: Return to the drachma, develop a parallel currency, a euro pegged currency, or keep the euro only as a monetary agreement.
Puerto Rico is not intending to cut principal payments to bondholders but to renegotiate debt terms, the head of the island’s Government Development Bank, Melba Acosta, told reporters. Officials are set to meet creditors on Monday, marking the first meeting since Puerto Rico’s Governor Alejandro Garcia Padilla dropped a bombshell last week saying he wanted to restructure debt and postpone bond payments. Meanwhile, presidential hopeful Hillary Clinton has joined calls for changes in U.S. bankruptcy laws that would allow debt restructuring for the commonwealth, pairing with Senator Bernie Sanders and former Governor Martin O’Malley.
Stocks
Earnings season for the second quarter of 2015 unofficially kicks off this afternoon when aluminum giant Alcoa (AA) reports results. Investors will be looking for signs of hope to anchor a U.S. stock market that has been tossed around by the crisis in Greece, prospects of an interest rate hike, a stronger dollar, energy prices and the downturn in China.
Barclays has fired its chief executive, Antony Jenkins, and put its new Chairman John McFarlane in charge until a new head is appointed. In a press release, the bank said its non-executive directors, led by Deputy Chairman Michael Rake, had decided that “new leadership is required to accelerate the pace of execution going forward.” Barclays’ (BCS) interim results are due on July 29.
Ferrari, the luxury car unit being spun off by Fiat Chrysler Automobiles (FCAU), has picked UBS to help manage its initial public offering in New York this year, Bloomberg reports. JPMorgan and Goldman are also due to help in selling 10% of Ferrari’s shares to investors. Reason for the spin-off: Debt-laden Fiat Chrysler hopes the move will help fund a €48B ($52.5B) investment program that focuses on expanding the Jeep, Alfa Romeo and Maserati brands globally.
In a regulatory filing, Humana (HUM) and Aetna (AET) have disclosed the termination fees to be paid if their $37B merger failed. Aetna would pay a termination fee of $1.69B, while Humana would pay $1.31B. Aetna is also required to pay Humana $1B if the deal is not closed by June 30, 2016.
JPMorgan has agreed to pay at least $125M to settle investigations by U.S. state and federal authorities that it sought to improperly collect and sell consumer credit card debt. JPMorgan (JPM) has been accused of relying on robosigning and other methods of collecting debt from consumers that they may not have owed and providing inaccurate information to debt buyers.
Microsoft plans to announce a major new round of layoffs as early as today, as the company seeks to further cut costs amid a shifting technology landscape. The new cuts are in addition to the roughly 18,000 employees Microsoft said it planned to let go a year ago, and are expected to affect people in the company’s hardware group.
In other banking news, Jon Corzine and other former MF Global officials have agreed to be part of a $64.5M settlement to end litigation brought by investors burnt by the 2011 collapse of the futures brokerage. The move marks the first time the former New Jersey governor agreed to pay those who lost money in MF Global, which became the eighth-largest bankruptcy in U.S. corporate history when a bet on European sovereign debt soured.
PVH is winding down the production of Donald Trump’s menswear after exclusive retail partner Macy’s (M) decided to stop selling his products in protest against his recent remarks about Mexicans. PVH (PVH), whose brands include Tommy Hilfiger, Calvin Klein, Van Heusen and Arrow, signed a licensing deal in 2004 for apparel under the Donald J. Trump brand. That deal was supposed to end in 2018.