- Inflation Eases to 6.8% as Energy Prices Fall
- Argentina Vote Shock Leaves Investors Dreading the Next Default
- Lebanon Freezes Accounts of Former Central Bank Governor
- China Asks Some Funds to Avoid Selling Stocks as Markets Sink
- Zhongrong Trust’s Missed Payments Trigger Fears Among Chinese Investors
- China Scuttles a $5.4 Billion Microchip Deal Led by U.S. Giant Intel
- The U.S. Is Turning Away From Its Biggest Scientific Partner at a Precarious Time
- Vital Natural Gas Is Being Stashed in Caverns Beneath War-Torn Ukraine
- Race to Control Electric-Vehicle Supply Chains Leads to Africa
- I.R.S. Says Cash Influx Has Made Agency Bigger and More Digital
- Coinbase Gets NFA Approval to Offer Crypto Futures
- Goldman CEO’s Most Loyal Deputy Is Tested by Mutinous Partners
- Brookfield Chases Rivals for Private Equity’s New Money-Spinner
- Billionaire Charlie Ergen Conjures M&A Magic to Save His Empire
- Dubai Leapfrogs Lisbon as Best Destination for Globetrotting Executives
- A Vietnamese Electric Carmaker is Now Worth More Than Volkswagen and Ford
- High-Potency Pot Market Worth Billions Draws Regulator Scrutiny
- Estée Lauder’s Big Bet on China Is Looking Not So Pretty
- Target Sales Are Punished by Pride Month Backlash
- Forget the Office Gym. Welcome to the Gym Office
- Japan’s Economy Grows at 6% Rate
- Taiwan’s Election Is All About War
- Argentine Shops Hit With 20% Overnight Price Hike After Election
- Uganda Cuts Rate for First Time in Two Years on Easing Inflation
- Russia’s Emergency Rate Hike Fails to Lift Ruble After Crash
- China Slashes Rates, Suspends Youth Jobless Data as Economy Signals Sharper Downturn
- The Fed’s Interest-Rate Debate Is Shifting
- How (Many) Economists Missed the Big Disinflation
- Binance Files for Protective Order Against SEC
- FDIC to Propose Comprehensive Changes to Regional US Bank Living Wills
- Fitch Warns It May Be Forced to Downgrade Multiple Banks, Including JPMorgan
- Steve Schwarzman Is Pushing Blackstone Growth to Get its Act Together
- Suncor Energy’s Quarterly Profit Halves on Lower Oil and Gas Prices
- Home Depot Beats Earnings Estimates, But Sales Slide As Consumers Pull Back on Big-Ticket Buys
- Target’s Struggles Are Only Getting Worse
- Streaming Prices Are Up Nearly 25% in a Year. That’s Part of the Plan
- Using a Credit Card? At These Restaurants It’ll Cost You.
- More Americans Are Ending Up Homeless—at a Record Rate
- Serve a Drink, Then Save a Life: This Is Restaurant Work During the Opioid Epidemic
- The Airport Is an Increasingly Dangerous Place to Work
Todays Open Interest Change
It was only a year ago that Beijing and Moscow touted a new world order, but things appear to be unraveling fast for their economies. Exports, manufacturing activity and property prices are sliding in China, which has decided to stop reporting the country's rising youth unemployment rate, while a worsening debt crisis and deflationary spiral are threatening growth. A collapse in commodity-based export revenues and extensive military spending have also weighed on sanctioned Russia, which just saw the ruble fall past the psychologically important level of 100 to the dollar after tumbling 37% YTD.
Central bank divergence: While the news has been grim, the countries are responding to their economic problems in different ways. On Tuesday, China slashed a range of key interest rates to shore up its economy, aiming to reignite growth and investment. It followed missed payments by Country Garden Holdings (OTCPK:CTRYF) - one of China's largest developers of real estate - in a sector that accounts for a quarter of overall economic activity. On the other hand, Russia's central bank hiked rates by 3.5 percentage points at an emergency gathering, bringing its key rate to a total of 12%, fearing inflationary pressures that could ripple through its economy.
As many Western companies have already pulled out of Russia, or are attempting to do so, investors are keeping a closer eye on the impacts of multinationals operating in China. Recent earnings calls from industrial players have flagged increasing headwinds, such as warnings from Caterpillar (CAT), Danaher (DHR), Dow Inc. (DOW), DuPont (DD), LyondellBasell (LYB) and Parker Hannifin (PH). Click through the transcripts and search for "China."
"While there is always a chance of a positive breakthrough in U.S.-Chinese relations that will lift Chinese stocks, markets reflect the current economic and geopolitical landscapes," noted SA Investing Group Leader Andrew Hecht.
What to watch: The gloomier outlook means China might miss its annual GDP growth target of 5% this year as it looks to sort out its economic problems. The first thing that needs to be addressed is the concern of growing financial contagion, and debt problems that span from local authorities to the central government. Declining domestic demand means shortfalls in tax revenue, while weakness in finances could harm Beijing's fiscal policy toolkit to help support the economy. (4 comments)
Over in the U.S., July retail sales powered past estimates to rise 0.7% M/M, as consumers continued to show resilience and bolster the economy. A strong performance from the automotive sector and health & personal care categories stood out, while Amazon's (AMZN) Prime Day provided a further boost. The retail sales data indicates a 3% GDP growth rate is possible for Q3, according to ING Economic and Financial Analysis, though there could be some challenges down the line. Economists will also look to the release of FOMC minutes today for clues about the central bank's future path on monetary policy. (20 comments)
On the earnings front, American big-box retailer Home Depot (HD) ticked up 0.7% to $332/share on Tuesday after earnings topped estimates. CEO Ted Decker also noted that while there was a sequential improvement in comparable sales, a lot of that was a seasonal recovery for Q2. Home Depot additionally maintained its FY outlook, while costs improved as suppliers demanded fewer price hikes. Two other retail giants will report before the market open today, including TJX (TJX) and Target (TGT) - see the preview here. (13 comments)
There still may be some worries on the horizon. Fitch analyst Chris Wolf has warned that dozens of U.S. banks' credit ratings - including at some of the nation's biggest lenders - are at risk, though it's not a foregone conclusion. The cautious comment, which pushed financial stocks lower, comes a week after Moody's downgraded multiple small and mid-sized banks, and placed six larger lenders on watch. Earlier this month, Fitch downgraded the U.S.' long-term credit rating, partly blaming erosion of governance. (11 comments)
In Asia, Japan -1.4%. Hong Kong -1.4%. China -0.8%. India +0.2%.
In Europe, at midday, London -0.4%. Paris flat. Frankfurt +0.1%.
Futures at 7:00, Dow +0.02%. S&P +0.01%. Nasdaq +0.1%. Crude flat at $80.98. Gold +0.1% to $1,937.10. Bitcoin -0.7% to $29,157.
Ten-year Treasury Yield -3 bps to 4.19%.
Today's Economic Calendar
7:00 MBA Mortgage Applications
8:30 Housing Starts and Permits
9:15 Industrial Production
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
2:00 PM FOMC Minutes
Companies reporting earnings today »
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