Eurozone growth slows. Eurozone GDP growth fell more than expected to 0.2% on a quarterly basis from 0.8% in Q1 - the slowest since the end of the recession in 2009. Of particular concern is that the German economy almost stalled at +0.1%, down from 1.3% in Q1. Today's figures come on top of France showing no growth in Q2, and spark questions about the ability of the eurozone's major economies to support the weaker ones.
Sarkozy, Merkel to meet amid fears for euro's future. Nicolas Sarkozy and Angela Merkel are due to meet today amid fears that if they don't move towards closer monetary union through the creation of eurobonds, the eurozone could break apart. Merkel and much of Germany are opposed to collectivizing debt, and the issue won't apparently be on the agenda today. But some believe eurobonds are the only way for distressed nations to obtain affordable financing. That was brought home yesterday when the ECB disclosed it spent €22B ($32B) last week propping up Spanish and Italian bond prices.
Wal-Mart profit rises 12.4%. Wal-Mart (NYSE:WMT) beat Street estimates in Q2 as diluted EPS rose 12.4% to $1.09 and revenues climbed 5.5% to $108.6B. Most of the company's operations made contributions, with Walmart International increasing its net sales 16.2% to $30.1B, although U.S. sales fell 0.9%. The retailer raised its full year EPS guidance range to $4.41-$4.51.
Home Depot tops forecasts, ups guidance. Home Depot's (NYSE:HD) Q2 earnings beat expectations as net profit climbed to $0.86 per diluted share from $0.72 and sales increased 4.2% to $20.2B, with results "driven by a rebound in our seasonal business, storm-related repairs and strength in our core categories." Home Depot also raised its 2011 profit guidance and now expects EPS from continuing operations "to be up approximately 16% to $2.34" vs. consensus of $2.30. Shares +2.9% premarket.
Android rivals support Google-Motorola deal. Handset makers that use Android have released statements supporting Google's (NASDAQ:GOOG) proposed $12.5B purchase of Motorola Mobility (NYSE:MMI) amid reassurances from Google it won't show favoritism to the unit. The endorsements from Samsung (OTC:SSNLF), Sony Ericsson (SNE ERIC), HTC and LG Electronics comes because the acquisition provides Google with a portfolio of over 17,000 patents it can use to defend Android device makers in an increasing number of IP disputes with Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT).
Buffett's latest trades. Verisk Analytics (NASDAQ:VRSK) jumped 6.2% in post-market trading and Dollar General (NYSE:DG) climbed 3.9% after Berkshire Hathaway's (NYSE:BRK.A) latest 13-F filing showed it bought stakes in the companies. Berkshire also increased its holdings in Wells Fargo (NYSE:WFC) and Mastercard (NYSE:MA), but reduced its position in Kraft (KFT). Of other major investors, John Paulson slashed his holdings in Bank of America (NYSE:BAC) and Comcast (NASDAQ:CMCSA) but increased his positions in Capital One (NYSE:COF) and Wells Fargo (WFC), while Carl Icahn reported new stakes In Vector Group (NYSE:VGR) and El Paso (EP).
Carlyle in talks to buy PPD. Pharmaceutical Product Development (NASDAQ:PPDI) surged 18.5% yesterday following a report that Carlyle is in talks to buy the drug R&D outsourcing firm, possibly for up to $4.3B. PPD's shares closed at $31.51, valuing the company at $3.59B. Although the talks are exclusive, Carlyle is negotiating with other private-equity firms about joining it in buying PPD.
Major insurers may escape surcharges. Sources say insurers assessed as "systemically important" will avoid the type of capital surcharges facing banks under rules being formulated to ensure that no insurer is too big to fail. The reason: insurers aren't exposed to a run on their money in the same way as banks. The proposed regulations will probably be finalized by the G20 meeting in Mexico next year, and would be designed to prevent a repeat of the problems caused by AIG's failure.
Sky goes dark on Evergreen Solar. Evergreen Solar (ESLR) filed for Chapter 11 bankruptcy, surrendering in its battle against strong Chinese competition and slumping European demand. Shares in the solar-panel maker reached an all-time high of $113.10 in late 2007 on optimism about its String Ribbon wafer technology. However, a huge fall in silicon prices meant the company's advantage became less meaningful. Shares yesterday fell from $0.42 to $0.18.
Moody's cuts U.S. growth outlook. Moody's didn't downgrade the U.S., but it did lower its growth forecast to 2% for the rest of the year and 3% for next year from a prior estimate of 3.5% growth for H2 2011 and for 2012. The likelihood the U.S. will fall back into recession in the next year is one in three, with the odds increasing if stocks drop. Moody's cited the disputes over the U.S. debt ceiling and the EU debt crisis as leading factors for its gloomier outlook.
High-frequency traders make high profits. High-frequency traders made record profits during last week's violent market swings after months of poor returns. Research firm Tabb Group estimates they made $60M in U.S. stock exchanges on August 8, when the Dow closed down 5.5% and the NYSE composite volume saw its fourth-biggest trading day on record, and $40M-$56M on other days. However, regulators are scrutinizing some of the tactics involved for possibly distorting prices and hurting other investors, including the making of large batches of lightning-fast orders and rapid cancellations.
Feds make further progress in fraud battle. Mark Kaiser, the former marketing head at U.S. Foodservice, faces almost five years in jail after pleading guilty to participating in an $800M securities fraud. Separately, Joseph Skowron, a former manager at hedge fund FrontPoint Partners, admitted insider trading by using tips from a French doctor working on clinical drug trials. Skowron also faces up to five years in prison. Kevin Cassidy, the former CEO of commodities broker Optionable, admitted to being involved in a plot to inflate the value of Bank of Montreal's (NYSE:BMO) natural-gas trading portfolio. Cassidy faces just over three years.
In Asia, Japan +0.2% to 9107. Hong Kong -0.2% to 20212. China -0.7% to 2608. India -0.7% to 16731.
In Europe, at midday, London -1.2%. Paris -1.8%. Frankfurt -2.5%.
Futures at 7:00: Dow -1.1%. S&P -1.5%. Nasdaq -1.4%. Crude -1.05% to $86.96. Gold +1.05% to $1776.50.
Tuesday's economic calendar:
7:45 ICSC Retail Store Sales
8:30 Housing Starts
8:30 Import/Export Prices
8:55 Redbook Chain Store Sales
9:00 Hearing: Financial Institutions and Consumer Credit
9:15 Industrial Production
10:00 E-Commerce Retail Sales
Earnings Results: Companies that beat EPS expectations last night and today include Wal-Mart (shares +0.5%), Home Depot (+2.9%), Agilent (+3.6%), Urban Outfitters (-6.9%). Full real-time earnings coverage here.
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