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US FINANCIAL MARKET

U.S. Stocks Little Changed at the Open as Lowe’s Slumps before Fed

  • The annual Fed Bank of Kansas City’s economic symposium starts tomorrow in Jackson Hole, Wyoming.
  • Fed Chair Janet Yellen and ECB President Mario Draghi will discuss their outlook for the economy and monetary policy on Aug. 22.
  • Three rounds of Fed stimulus and better-than-estimated corporate earnings have sent the S&P 500 higher by as much as 194 % from its bear-market low on March 2009.
  • Lowe’s fell 2.5 % after trimming its revenue projection for this year.
  • Hertz slumped 12 % after saying its full-year results will miss the low end of its forecast.
  • Staples will shut about 140 locations this year, part of a store-closing plan announced earlier.

Apple Soars to Record amid Optimism about Coming Products

  • Apple’s stock crossed an all-time high, surpassing a 2012 record. Apple rose as high as $100.77 this morning.
  • After rising more than sevenfold following the 2007 debut of its smartphone, Apple’s stock lost a third of its value in the year after the iPhone 5’s release on concerns that the company was running out of hit product ideas without co-founder Steve Jobs.
  • Investors are buying into the strategy outlined by CEO Tim Cook, who has been prodded to introduce bigger iPhones, give more money back to stockholders and introduce new devices.

Target Lowers Forecast as Sales Slump, Canadian Losses Widen

  • Target cut its full-year adjusted profit forecast to $3.10-$3.30 per share from $3.60-3.90.
  • The company cut its earnings estimate for the second quarter earlier this month, saying a pullback in consumer spending had led to weak sales.
  • Target said its net profit fell to $234 million from $611 million a year earlier.
  • Total sales rose 1.7 % to $17.41 billion, while sales at stores open for at least a year were flat.

Lowe’s Cuts Sales Forecast on Weak Air-Conditioner Sales

  • Lowe’s cut its sales growth forecast to about 4.5 % from about 5 % for the year ending January, taking into account its sales so far this year.
  • The retailer is cutting its annual revenue outlook amid rising consumer spending in the U.S. and a housing recovery that remains uneven.
  • Home Depot on Tuesday maintained its full-year sales growth forecast of about 4.8 %.
  • Net income rose to $1.04 billion in the quarter from $941 million a year earlier.
  • Revenue rose 5.6 % to $16.59 billion.

Staples to Shut 140 Stores This Year as Sales Decline

  • Staples has been spending heavily on advertising to promote itself as a seller of products other than traditional office supplies such as ink, toner and paper products.
  • The company has also been investing to boost its online business, which grew 8 % in the quarter.
  • Staples’ net income fell 20 % to $81.9 million.
  • Total sales fell 1.8 % to $5.22 billion.

Lear nears deal to buy Eagle Ottawa for more than $800 million

  • The maker of auto seats and electrical power systems is nearing a deal to buy Eagle Ottawa, a supplier of premium automotive leather, for more than $800 million.
  • Eagle Ottawa’s leather products are used in car brands such as BMW, Buick, Honda, Volvo, Renault, Chrysler and Mercedes-Benz.
  • Lear counts Ford, General Motors, and BMW as its largest customers. The three companies represented 54 % of Lear’s sales in 2013.

McDonald’s U.S. grocery packaged coffee sales to start next year

  • McDonald’s and Kraft will begin selling the fast-food giant’s McCafe brand packaged coffee in grocery stores across the United States beginning in early 2015.

Allergan seeks deal with Salix to fend off Valeant

  • Allergan has approached Salix Pharmaceuticals and at least one other company about a potential takeover in a bid to avert the $53 billion hostile takeover from Valeant.

Ex-CEO Ballmer quits Microsoft board to focus on NBA’s Clippers

  • “I see a combination of the Clippers, civic contribution, teaching and study taking a lot of time,” Ballmer said in a letter to Microsoft CEO Satya Nadella made public by Microsoft on Tuesday.
  • “The fall will be hectic between teaching a new class and the start of the NBA season so my departure from the board is effective immediately,” he wrote.

3-D Printers Making Jets and Bikes Drive Demand for Metal

  • Now that 3-D printers are turning out homes, jet-fighter components, handguns and bicycles, mining and metal companies are making a play to provide the raw materials.
  • The systems “print” objects by laying down thin layers of metal, plastic or ceramic, one atop another, to create a three-dimensional finished product.
  • As the technology improves, larger and faster printers will drive up demand for the raw materials.
  • The technology is starting to move into factories. Nike offers 3-D printed football cleats and General Electric is using them to make jet engine nozzles.

Snapchat in talks to expand services

  • Snapchat might expand its service to videos, news articles and advertisements.
  • At least a dozen media companies have shown interest in providing content for Snapchat Discovery.
  • Snapchat Discovery will allow users to read publications and watch video clips by holding down a finger on the screen.
  • Snapchat is very popular among teenage users.

 

US ECONOMY & POLITICS

U.S. mortgage applications rise in latest week

  • MBA’s mortgage application activity index rose 1.4 % in the week ended August 15.
  • Fixed 30-year mortgage rates averaged 4.29 % in the week, down 6 basis points from the week before.

Jackson Hole Guide: Investors Seek Yellen Job-Market View

  • The highlight will be Fed Chair Janet Yellen’s speech Aug. 22 on labor markets at 10 a.m. New York time.
  • She’ll probably reiterate the Fed’s view that there is plenty of room for improvement in the labor market.
  • Wage focus: Tepid growth in wages is one area Yellen could choose to explore in more detail if she wants to advance the conversation.
  • Average hourly earnings rose 2 % in July from the year before, matching the mean increase over the past five years and down from 3.1 % in the year ended December 2007.

 

EUROPE & WORLD

Global stocks halts rally, BoE minutes stun markets

  • World stocks fell on Wednesday as investors braced for the possibility that a major central bank could raise interest rates this year after Bank of England minutes showed two of the bank’s nine rate-setters voted for a hike earlier this month.
  • Sterling and UK bond yields also rose after the unexpected shift closer to higher British rates, while record-low euro zone money market rates pushed the euro to its weakest against the dollar in a year.

Bank of England splits over rate hike for first time in three years

  • Bank of England policymakers broke ranks over interest rates for the first time in three years this month.
  • Two of the nine-member Monetary Policy Committee unexpectedly voted to tighten policy and revived speculation about a 2014 rate hike.

France’s Hollande says to accelerate reforms to boost growth

  • The most unpopular French president in modern history has come under growing fire from both the opposition and ruling Socialist party lawmakers over his economic policy.
  • His government was forced to abandon growth and fiscal targets last week.
  • Housing has become a major headache for the government, with housing starts in France down to a 16-year low.
  • Property developers blame the problem partly on regulations that took effect this year to set rent limits in cities with more than 50,000 people.

Japan export rebound offers hope for economic growth

  • Japan’s exports rose 3.9 % in July for the first time in three months.
  • Exports to Asia, which account for more than half of Japan’s total exports, rose 3.4 % in July from a year ago as automobile shipments grew.
  • Exports to China, another important market for Japan, were up 2.6 % in July due to gains in shipments of metal processing equipment and car parts.
  • Exports to the United States rose an annual 2.1 % as Japan shipped more car parts.
  • Japan’s imports rose 2.3 % in the year to July.

Brazil Eases Credit Rules to Inject $4.5 Billion in Economy

  • The bank published the rules in today’s Official Gazette, altering rules for payments on non-cash deposits.

Iraqi Kurdistan oil pipeline export capacity to double

  • The capacity of Iraqi Kurdistan’s independent oil pipeline will almost double to at least 200,000 barrels per day by the end of this month.
  • Industry sources also said the capacity of the pipeline to Turkey, which began operating at the start of this year, was set to rise to around 200,000-220,000 bpd from 100,000-120,000 bpd before the flow stopped for upgrade work.
  • So far, 7.8 million barrels of Kurdish oil have flowed through the independent pipeline, of which 6.5 million have been loaded onto tankers for export.

 

TODAY in HISTORY

  • The Soviet Union and other Warsaw Pact nations invaded Czechoslovakia (1968)
  • The space probe Voyager 2 was launched. It continues to explore to this day, and is now more than 7 billion miles from Earth (1977)
  • Italian Reinhold Messner made the first successful solo ascent of Mount Everest and without oxygen (1980)

 

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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