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US FINANCIAL MARKET

U.S. Stocks Rise as Deals, Economic Data Offset Iraq

  • Covidien surged 21 percent after Medtronic agreed to buy the Irish company for $42.9 billion.
  • Williams jumped 22 percent after agreeing to buy control of Access Midstream Partners for $6 billion.
  • Iraq’s army killed more than 279 rebels yesterday as the prospect of civil war in OPEC’s second-largest producer intensified with Sunni Muslim insurgents controlling territory north of Baghdad.
  • The International Monetary Fund (IMF) cut its growth forecast for the U.S. economy this year and said the Fed may have scope to keep interest rates at zero for longer than investors expect.
  • Ukraine said Russia cut natural gas supplies while maintaining flow to EU after demanding fuel payments be made in advance.
  • Brent crude was projected by Wall Street analysts to average as much as $116 a barrel by the end of the year. 

SanDisk to buy Fusion-io for $1.1 billion

  • SanDisk’s NAND flash memory chips are widely used in smartphones, cameras and other mobile devices to store music, pictures and other data.
  • Fusion-io employs Apple co-founder Steve Wozniak as its chief scientist.

Starbucks to subsidize U.S. workers’ college degree

  • Starbucks plans to partly pay for an online bachelor’s degree program for its employees in the United States.
  • As of September 2013, Starbucks had 137,000 employees, about three-fourths of its global workforce, in the United States.

Medtronic to buy Covidien for $42.9 billion, rebase in Ireland

  • While the deal will allow Medtronic to reduce its overall global tax burden, Medtronic said it was driven by a complementary strategy with Covidien on medical technology rather than tax considerations.

U.S. orders mandatory inspections for F-35s after engine issue

  • The U.S. military has ordered mandatory inspections of all Lockheed Martin Corp F-35 fighter jets before further flights after a Marine Corps F-35B model suffered an in-flight emergency last week.

Wal-Mart India Woos Mom-and-Pop Stores to Tap $50 Billion

  • Wal-Mart has opened an e-commerce website to supply goods to mom-and-pop merchants in India as the world’s largest retailer seeks to dominate a market it estimates will be valued at $50 billion by 2020.

Williams to Buy Access Midstream Partners for $5.99 Billion in Cash

  • Williams is proposing a merger with Access Midstream after a $6 billion purchase that would create one of the biggest U.S. transporters of oil and natural gas.
  • The combined companies would have a market value of about $36.9 billion.

Sony’s ‘22 Jump Street’ Outguns ‘How to Train Your Dragon 2’

  • DreamWorks shares drop after its “How to Train Your Dragon 2” had $50m in domestic box office receipts this weekend vs est. $61.7m, and coming in 2nd place behind Sony’s “22 Jump Street,” which had sales $60m vs. est. $57.7m.

US ECONOMY & POLITICS

IMF cuts U.S. growth outlook, says full employment years off

  • The IMF forecast economic growth of 2 percent this year, below the 2.8 percent rate it predicted in April, due to a weak first quarter.
  • It kept its 2015 forecast unchanged at 3 percent.
  • The IMF also urged the United States to boost the minimum wage, which is below most international standards, to fight poverty, which lingers above 15 percent.
  • It said its forecasts show the U.S. economy would only return to full employment by the end of 2017, with inflation remaining low, suggesting the Fed could keep rates at zero for longer than the middle of 2015.
  • The IMF also said it foresees longer-run potential growth averaging around 2 percent for the next several years, below historical averages and less than last year’s estimate.
  • The IMF forecast comes less than a week after the World Bank reduced its 2014 growth forecast for the U.S., to 2.1 percent from 2.8 percent.
  • Private economists have also lowered their forecasts this month. The median forecast in a Bloomberg survey of 84 economists this month calls for growth of 2.2 percent this year, down from a May projection of 2.5 percent.

U.S. manufacturing output rose in May and factory activity in New York state accelerated sharply this month

  • Factory production increased 0.6 percent last month.

The New York Federal Reserve’s “Empire State” general business conditions index rose

  • The index rose to 19.28 this month, the highest reading since June 2010, from 19.01 in May.
  • Readings above zero indicate growth.
  • The amount of manufacturing capacity in use rose to 77.0 percent last month, the highest level since March 2008, from 76.7 percent in April.
  • Overall industrial capacity increased to 79.1 percent from 78.9 percent. It remained 1.0 percentage point below its long-run average.

U.S. home builder sentiment rises for first time this year

  • The National Association of Home Builders/Wells Fargo index of homebuilder confidence rose four points to 49 in June.
  • A reading below 50 means more builders view market conditions as poor than favorable.
  • The June reading was the index’s fifth in a row to come in below 50.
  • Analysts polled by Reuters had expected the index to inch up to 47.

EUROPE & WORLD

Iraq and Ukraine tensions keep markets on edge

  • Worries about Iraq were intensifying after Sunni insurgents from the Islamic State of Iraq and the Levant (ISIL) seized a mainly ethnic Turkmen city in the northwest of the country over the weekend.
  • Iraq is oil cartel OPEC’s second largest producer and the worries left Brent hovering at $112.50 per barrel as it settled slightly after a $4 jump at the end of last week had hoisted it to a nine-month high.
  • Pro-Russian separatists shot down a Ukrainian army transport plane, killing all 49 military personnel on board.
  • Russia’s Gazprom says Ukraine fails to pay debt by deadline. Gazprom said Ukraine would now have to pay up front for deliveries.

Siemens and Mitsubishi to present competing Alstom bid on Monday

  • Germany’s Siemens and Japan’s Mitsubishi Heavy Industries will present a joint offer for France’s Alstom in Paris, challenging a GE’s bid that sparked French government concern about retaining jobs and industry expertise.

China to meet this year’s 7.5 percent growth target: Premier Li

  • China is confident it will hit its growth target of 7.5 percent this year, Chinese Premier Li Keqiang said.
  • A Reuters poll in April forecast China’s economic growth could slow to 7.3 percent in the second quarter from a 18-month low of 7.4 percent in the previous quarter, with full-year growth of 7.3 percent in 2014, the weakest in 24 years.

TODAY in HISTORY

  • The Battle of Stoke ended the Wars of the Roses(1487)
  • Senate candidate Abraham Lincolndeclared, “a house divided against itself cannot stand.” (1858)
  • President Franklin D. Roosevelt signed the National Industrial Recovery Act(1933)
  • Valentina Tereshkova of the USSR became the first woman in space(1963)
  • Russia voted in its first independent presidential election. Boris Yeltsin eventually won in a runoff (1996)

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.

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