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US FINANCIAL MARKET

U.S. Stocks Open Positive as Yellen Says Stimulus Must Continue

  • JPMorgan and Goldman increased more than 1.5 % after the banks reported better-than-estimated earnings.
  • Lorillard dropped 7.1 % after Reynolds American reached agreement to buy its rival for $27.4 billion including debt.
  • The S&P 500 Index is higher by more than 190 % during the current five-year bull market. The gauge has rallied 7.2 % this year.
  • Retail sales increased 0.2 % after a 0.5 % advance in May that was larger than previously reported.
  • Manufacturing in the New York region grew in July. The Federal Reserve Bank of New York’s general economic index rose to 25.60.

JPMorgan Profit Beats Estimates on Trading, Shares Climb

  • Net income declined 7.9 % to $5.99 billion from $6.5 billion a year earlier, topping average estimate.
  • Revenue slid 2.3 % to $25.4 billion from a year earlier.
  • JPMorgan, the second largest U.S. mortgage lender after Wells Fargo, said its profit from mortgage lending fell 38 % to $709 million, while mortgage application volumes dropped 54 % to $30.1 billion.

Goldman Posts Surprise Profit Gain on Trading, Deal Fees

  • Net income climbed 5 % to $2.04 billion from $1.93 billion a year earlier. That beat average estimate.
  • Revenue rose 6 % to $9.13 billion.
  • Goldman Sachs ranked first in advising on announced mergers and acquisitions and fifth in underwriting U.S. bonds.

J&J’s New Hepatitis C Medicine Pushes Profit Past Estimates

  • Net income rose 13 % to $4.3 billion from $3.8 billion a year earlier.
  • Revenue was $19.5 billion, up 9 % from a year before.
  • Johnson & Johnson also raised its adjusted earnings guidance for the year.

Reynolds Acquiring Lorillard for About $25 Billion

  • Reynolds, the producer of Camel and Pall Mall cigarettes, will pay a mixture of cash and stock valuing each Lorillard share at $68.88.
  • British American Tobacco (BAT) will fund $4.7 billion of the transaction, letting it maintain a 42 % stake in Reynolds.
  • BAT’s U.K. rival Imperial Tobacco, meanwhile, will acquire brands such as Kool and Blu e-cigarettes for $7.1 billion.

Hewlett-Packard Chairman Whitworth Resigns for Health

  • Hewlett-Packard will discuss a replacement for Whitworth, 58, at its next meeting.

Time Warner Seeks NBA Renewal to Tap Sports Gold Mine

  • Time Warner, along with Walt Disney’s ESPN, is seeking to renew the last major U.S. sports deal that’s up for grabs until 2021.
  • The current deal expires in 2016.
  • Time Warner and Disney, which split up airing the games, pay the league an average of $930 million a year combined.
  • Time Warner currently has rights to air 52 regular-season games and up to 52 playoff games.
  • Disney’s rights include 75 regular season games and up to 29 playoff games.
  • The merger of Comcast and Time Warner Cable will give the combined company 30 million TV subscribers, while AT&T’s bid to buy DirecTV will give it a total of about 25 million subscribers.
  • The added heft would give them more leverage when negotiating licensing agreements with programmers like Time Warner.

U.S. approves limited flights for F-35 fighters

  • U.S. military officials have approved limited flights for Lockheed Martin’s F-35 fighter jets.
  • The F-35, the world’s most expensive weapons project with a price tag of about $400 billion, has been grounded since the massive failure of the Pratt & Whitney engine on a U.S. Air Force F-35 plane at a Florida air base on June 23.
  • Global orders for the F-35 are expected to exceed 3,000, with Italy, Turkey, Canada and Australia among the U.S. allies planning to purchase the plane.

Google’s Nest launches network technology for connected home

  • Google’s Nest Labs unveiled an industry group to encourage makers of smart home gadgets like locks and light bulbs to use Thread, a new standard for devices to communicate on a network.
  • The attempt by Nest to lead the way on how future household devices to speak to each other, underscores the importance Google puts on areas like cars and the home.

GE expects to meet $30 billion air show target early

  • GE Aviation CEO expects to achieve its Farnborough Airshow target of $30 billion of orders.

 

US ECONOMY & POLITICS

Yellen Says Continued Easing Needed Amid Job-Market Slack

  • Janet Yellen told lawmakers the central bank must press on with monetary stimulus as “significant slack” remains in labor markets and inflation is still below the Fed’s goal.
  • Yellen cited labor-market weaknesses even after an unexpectedly fast decline in unemployment put pressure on Fed officials to consider accelerating their timetable for an interest-rate increase.
  • Signs of labor-market slack include slow wage growth and low labor-force participation.

Retail Sales in U.S. Showed Broad-Based Increase in June

  • Purchases increased 0.2 % after a 0.5 % advance in May that was larger than previously reported.
  • The reading fell short of the 0.6 % increase projected by the median estimate of 83 economists.
  • Consumers are more comfortable opening their wallets as a strengthening labor market lifts earnings.
  • Core sales, the figures used to calculate GDP and which exclude such categories as autos, gasoline stations and building materials, increased 0.6 % last month, the best showing since March.

U.S. business inventories up, retail stocks rise modestly

  • Inventories increased 0.5 % after rising 0.6 % in April.
  • Retail inventories, excluding autos, which go into the calculation of GDP, edged up 0.1 % after a similar gain in April.
  • A sharp slowdown in the pace of inventory accumulation helped to weigh down on the economy, which contracted at a 2.9 % annual pace in the first quarter.
  • Inventories subtracted 1.7 percentage points from GDP and a swing in restocking is expected to raise growth above a 3.0 % pace in the second quarter.
  • Business sales rose 0.4 % in May after advancing 0.8 % in April.

 

EUROPE & WORLD

EU’s Juncker urges minimum wage in all EU countries

  • Designated European Commission President Jean-Claude Juncker said he would work towards the introduction of a minimum social wage in each member state of the European Union.

 

TODAY in HISTORY

  • Georgia became the last of the Confederate States to be readmitted to the Union (1870)

 

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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