Wall Street Breakfast: Investors Brace For Today's ECB Policy Meeting

by: Wall Street Breakfast
Wall Street Breakfast
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All eyes are on the ECB's policy meeting today, which will decide whether an overvalued euro and tensions with Russia will lead to further stimulus measures. Although most economists expect the ECB to keep interest rates on hold and refrain from large-scale QE at least for today, many banks predict that Mario Draghi may commit to buying ABSs. Draghi previously announced at Jackson Hole that the ECB's Governing Council will "use all the available instruments" to deliver price stability over the medium term.

The Bank of Japan held to its upbeat view on the economy and heavy monetary stimulus this morning, despite the recent stings from a 3% sales tax hike in April. The projection of economic recovery saw consumption benefiting from a tightening job market resulting in higher wages. Leaving its policy framework unchanged, the central bank also pledged to increase base money by 60T-70T yen ($571B-$666B) per year via aggressive asset purchases to reflate its declining economy.

Traders participating in Argentina's CDS auction yesterday valued the country's restructured bonds at $0.395 to the dollar. The final results were in line with analyst expectations of around $0.40, slightly below the market price of Argentina's euro-denominated Par bonds.

U.S. regulators have approved the proposed liquidity rules to safeguard banks in case of another financial crisis. The rules are requiring large U.S. banks to load up on ultra-safe assets to ensure enough cash and securities to fund their operations for 30 days. Separate liquidity rules for foreign banks will be drawn up at a later date. Big banks will need to hold a total of about $2.5T in easy-to-sell assets by 2017, which would result in a $100B shortfall if the threshold applied today.

Intel has unveiled a high-tech smart bracelet featuring a 1.6-inch curved touchscreen made of sapphire glass. The bracelet has 3G capabilities, can operate independently of a smartphone and be charged wirelessly or via USB cable. Intel (NASDAQ:INTC) calls the device MICA, which stands for "My Intelligent Communication Accessory" and will begin selling the bracelet in Barneys stores by the end of the year.

Baidu is rivaling Google Glass, after unveiling its new prototype called Baidu (NASDAQ:BIDU) Eye. However, unlike Glass, Baidu Eye has no display. Rather, the head-mounted device analyzes images and other data from a user's surroundings, and transfers the data to a paired smartphone. Baidu argues the lack of a display both improves battery life and lowers eye strain.

JPMorgan's investigators have found evidence that a global network of computers available for hire by sophisticated criminals was used to send the bank's stolen data to a major Russian city. JPMorgan (NYSE:JPM) investigators have uncovered what they believe to be the assault’s staging ground, called a "bulletproof" hosting platform because of its resilience to other attackers and law enforcement.

Commerzbank is closing in on a settlement with U.S. authorities over its dealings with countries under U.S. sanctions, including Iran and Sudan. Commerzbank (OTCPK:CRZBF, OTCPK:CRZBY) is expected to announce the deal within the month and is expected to pay approximately $650M to resolve the probes. New York's Department of Financial Services is likely to get the bulk of the settlement, receiving $300M.

Execs with Tesla Motors will join Nevada Governor Brian Sandoval at a press conference in Carson City today, during which it's expected that an announcement will be made regarding a Nevada location for Tesla's (NASDAQ:TSLA) new gigafactory. CEO Elon Musk has declared that the facility will eventually produce more lithium-ion batteries than the rest of the world manufactured in 2013 and promises 6,500 new jobs.

After a German court last month ordered a Lorillard (NYSE:LO) subsidiary to stop selling its blu e-cigarettes as a result of yet another lawsuit by Zippo, Lorillard has now decided to take the lighter manufacturer to a U.K. High Court. Zippo declares that it has been using the Blu brand name for its butane torch lighters since 2007, although Lorillard says the threats are unfounded and is seeking damages for Zippo's conduct.

Expedia's international expansion effort has hit a bump in Australia, after the country's Competition and Consumer Commission announced concerns over its $660M takeover of Wotif.com (OTCPK:WTIFY). In its preliminary assessment of the deal, the antitrust regulator says that Expedia's (NASDAQ:EXPE) bid could inflate commission rates charged to accommodation providers. The regulator's final decision is due in October.

Carl Icahn has unloaded his holdings in Family Dollar, making a profit of close to $200M on the investment. Icahn became Family Dollar's (NYSE:FDO) largest shareholder in June with a 9.4% stake, but towards the end of July, he reduced his position to only 3.6%. It's not clear when Icahn sold the remaining stake, but his decision reduces some activist pressure on the company.

Manulife Financial has agreed to acquire the Canadian operations of the U.K.'s Standard Life (OTC:SLFPF) for approximately C$4B ($3.7B). The company says the deal will expand its group benefit, group retirement and asset management offerings for customers in Quebec and across the rest of Canada. As part of the deal, Manulife Financial (NYSE:MFC) has also agreed to distribute some of Standard Life's funds among its Canadian, U.S. and Asian wealth management operations.

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Today's Markets:
In Asia, Japan -0.3% to 15676. Hong Kong -0.1% to 25298. China +0.8% to 2307. India -0.2% to 27086.
In Europe, at midday, London +0.1%. Paris -0.2%. Frankfurt -0.6%.
Futures at 6:20: Dow flat. S&P +0.1. Nasdaq flat. Crude -0.4% to $95.15. Gold +0.2% to $1272.30.
Ten-year Treasury Yield flat at 2.4%

Today's economic calendar:
Chain Store Sales
7:30 Challenger Job-Cut Report
8:15 ADP Jobs Report
8:30 Gallup US Payroll to Population
8:30 Initial Jobless Claims
8:30 International Trade
8:30 Productivity and Costs
9:45 PMI Services Index
10:00 ISM Non-Manufacturing Index
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
11:00 Global Composite PMI
11:00 Global Services PMI
12:30 PM Fed's Mester: Economic Outlook and Monetary Policy
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Notable earnings before today's open: CIEN, HOV, JOY, MEI, MFRM, PAY, UTIW

Notable earnings after today's close: ACET, AMBA, BEBE, BLOX, COO, ESL, FNSR, SEAC, VRNT, ZQK, ZUMZ

See full real-time earnings coverage »

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