US FINANCIAL MARKET
U.S. Stocks edges higher at the Open despite weak GDP report
- The U.S. economy shrank 2.9 % in the first quarter, the worst reading since 2009, as consumer spending cooled.
- Investors speculated that the economy is recovering from a first-quarter contraction.
- Investors are also concerned about the impact prolonged turmoil in Iraq could have on oil prices, which are already up 3.8 % this month.
- U.S. crude futures fell 0.3 % to $105.71 per barrel in early trading
Monsanto in $10 Billion Buyback after Syngenta Talks End
- Monsanto, the largest seed company, rallied 5.5 % after it announced a $10 billion stock buyback plan.
General Mills to Cut Costs as Earnings Miss Estimates
- General Mills fell as much as 4.1 % to $51.50 in early trading in New York.
- The maker of Cheerios cereal said the cost-cutting plan is expected to generate pretax savings of $40 million in fiscal 2015.
Bristol-Myers Stops Skin Cancer Study on Positive Data
- The company stopped a late-stage study of a top experimental drug after skin cancer patients showed “superior overall survival” with the medicine compared with a group on chemotherapy alone.
Lockheed wins $1.9 billion deal for U.S. missile-warning satellites
- SBIRS is a new U.S. strategic missile warning system that replaced the 1970s Defense Support Program satellites. It provides continuous early warning of ballistic missile launches and other infrared surveillance to U.S. leaders.
AT&T tells lawmakers DirecTV deal won’t guarantee lower prices
- U.S. lawmakers grilled AT&T and DirecTV on Tuesday over a proposed merger that some Democrats and public interest groups fear will result in higher costs and less competition.
Cash stash may reflect fear of wealth going out of fashion
- The number of households with more than $1 million in investable wealth rose almost 15 % to 13.7 million in the year through 2013, according to CapGemini/RBC survey.
- Their total wealth rose almost 14 % to $53 trillion.
- Estimates of the amount of cash that non-financial U.S., European and Japanese companies are sitting on is as high as $5 trillion – twice the levels of 10 years ago as capital expenditure and investment has largely seized up.
US ECONOMY & POLITICS
U.S. Economy Shrank in First Quarter by Most in Five Years
- GDP fell at a 2.9 % annualized rate, more than forecast of 1.8 %, after a previously reported 1 % drop.
- It marked the biggest downward revision from the agency’s second GDP estimate since records began in 1976. The revision reflected a slowdown in health care spending.
- The economy will expand at a 3.5 % rate in the second quarter and average 3.1 % in last half of the year, according to the median projection economists.
- Consumer purchases, which account for about 70 % of the economy, rose at a 1 % annualized rate in the first quarter. The gain, which added 0.71 percentage point to GDP, compared with the previous estimate of 3.1 %.
- Inventories increased by $45.9 billion in the first quarter, compared the $49 billion gain previously reported and less than the $111.7 billion buildup in the last quarter of 2013. Inventories subtracted 1.7 percentage points from GDP.
- The weather earlier this year also hampered production at factories. Business investment fell at a 1.2 % annualized rate.
- Trade was also a bigger drag on GDP than last estimated. Net exports subtracted 1.53 percentage points from GDP, compared with a prior estimate of 0.95 percentage point.
Obama Administration Widens Export Potential for U.S. Oil
- The U.S. Commerce Department opened the door to more U.S. oil exports as long as the crude is lightly processed, tempering the impact of a law that’s banned most overseas petroleum shipments for the past four decades.
- The U.S. has restricted most crude exports since 1975, in response to the Arab oil embargo. Shipments to Canada are an exception.
- Any oil that has been processed through a distillation tower — a preliminary form of refining — is no longer defined as crude oil, and therefore is eligible for export.
- U.S. crude production has jumped 45 % since the start of 2012.
U.S. top court rules against TV startup Aereo
- On a 6-3 vote, the court handed a victory to the four major TV broadcasters and cast Aereo’s immediate future into doubt.
- The court said the service constitutes a public performance of copyrighted content.
- Aereo had argued that cloud services use the Internet in the same way as it does to store and transfer copyrighted content.
- The case came before the court when Walt Disney’s ABC network, CBS, Comcast’s NBCUniversal and Twenty-First Century Fox appealed a decision by the 2nd U.S. Circuit Court of Appeals in April 2013.
U.S. services sector expands at fastest pace in four-and-a-half years
- Markit’s “flash” services Purchasing Managers Index (PMI) hit 61.2 in June, the highest reading since the survey began in October 2009, compared with May’s final reading of 58.1.
- Markit’s “flash” composite PMI, a weighted average of its manufacturing and services indexes, hit 61.1 in June, also a record high, versus 58.4 in May.
Fed’s Dudley sees mid-2015 rate hike as ‘reasonable’
- “The market expectations are that the Federal Reserve will start to raise short-term interest rates around the middle of 2015 – that sounds to me like a reasonable forecast,” said Dudley after a speech.
- Dudley, who as chief of the New York Fed holds a permanent vote on the U.S. central bank’s policy.
- Traders of short-term interest-rate futures expect the Fed to begin raising rates in June 2015.
EUROPE & WORLD
Abe Declares Deflation End as Growth Plan Confronts Skeptics
- Abe said the deflation that wiped out much of Japan’s growth the past 15 years and so stunted the economy that it slipped to No. 3 behind China has ended and will be thwarted by new government policies designed to encourage business expansion.
- What’s now the world’s third-largest economy is 3.5 % smaller than when Abe took office for the first time, in September 2006.
Asian shares wither as Iraq crisis dims mood
- Crude oil markets were mixed as traders weighed the likelihood of supply disruptions from Iraq.
TODAY in HISTORY
- Virginia became the 10th state in the Union (1788)
- Communist North Korean troops invaded South Korea, beginning the Korean War (1950)
- The first commercial color TV program was transmitted by CBS from New York to Baltimore, Philadelphia, Boston, and Washington, DC (1951)
- Croatia and Slovenia proclaimed their independence from Yugoslavia, beginning the Yugoslavian civil war (1991)
- Oceanographer Jacques Cousteau died (1997)
- Michael Jackson, lifelong musician, pop singer, and superstar, dies at age 50 (2009)
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