All eyes on Jackson Hole. Fed Chairman Ben Bernanke is due to give his much anticipated speech at Jackson Hole later today, and while markets rose earlier this week partly on hopes of QE3, there is little expectation he will announce further bond buying. Instead, Bernanke may unveil more modest measures to boost the flailing economy, although Rob Parenteau of The Levy Economics Institute believes it may be time to finally realize that central bankers "are not the omnipotent demigods that a generation of investors has expected them to be."
East coast prepares for Irene. After lashing the low-lying Bahamas yesterday, Hurricane Irene was due to hit North Carolina today before heading to Virginia, Washington, New York and beyond at the weekend. Irene slightly weakened to Category 2 today from Cat. 3, but still had winds of up to 110 mph. Insurance and airline stocks took a hit on Thursday on fears of major damage and mass flight cancellations respectively, although Beacon Roofing Supply (BECN) rose 3.3% after William Blair said the company could benefit.
Buffett earns $1.3B in one day. Shares in Bank of America (BAC) ended +9.4% following news of Warren Buffett's $5B investment in the bank, but were down from +25% earlier. Still, Warren Buffett may have made a paper profit of $1.3B from the sprinkling of his stardust, which led Fitch to say that it maintains BofA's credit ratings and that the chance of a downgrade has been reduced. However, Mike Krieger of the KAM fund reckons Buffett's move is bearish as it shows BofA did need capital, contrary to its protestations. And as "no-one has confidence in the Fed to come save the day," they went to the next best thing: "Uncle Warren."
Apple developing technology for TV. As Tim Cook settles into his new job, Apple (AAPL) is reportedly preparing another assault on one of its greatest unconquered territories - television. The company is developing new technology to deliver video to TVs and has been discussing whether to launch a subscription service, having failed at an attempt in 2009. However, Apple faces fierce competition, and, by Steve Jobs' own admission, an entrenched industrywide business model that hampers innovation.
Kan finds that he can't and quits. Japanese Prime Minister Naoto Kan has announced his long-awaited resignation as head of the ruling Democratic Party, opening the way for the grouping to choose the country's sixth premier in five years. Seven candidates are running to replace Kan, including Finance Minister Yoshihiko Noda and Foreign Minister Seiji Maehara. The vote is due to take place on Monday and the winner will be anointed PM the next day.
Greece sets 90% adoption rate in debt-swap plan. Greece today said at least 90% of the private holders of its government bonds maturing by 2014 or 2020 must take part in the country's debt swap plan for it to proceed. Greece's stipulation comes amid signs that the program is facing delays, with between 60%-70% of bondholders participating so far. However, the issue could be rendered moot if eurozone fissures over the use of collateral in Greece's rescue plan cause the deal to break apart. Finland again said it remained an "absolute precondition," but it's a stance that Germany opposes.
Spanish parties reach deal on deficit law. Seeking to engender confidence that it's serious about debt, Spain's government has reached an agreement with the main opposition People's Party to change the constitution and cap the structural deficit at 0.4% of GDP, although the limit won't come into effect until 2020. Spain hopes to slash its deficit to 6% this year from 11.1% in 2009, but Q2 GDP data today highlighted the difficulty of the task. Annualized growth slowed to 0.7% from 0.9% in Q1, increasing doubts that Spain will reach its 2011 target of 1.3%.
Short-selling extension fails to support banks. France, Spain and Italy yesterday extended short-selling bans on financial shares and related derivatives, but the measures did little to prevent some European banks from trading lower by midday. SocGen (SCGLY.PK) was -0.8% and Credit Agricole (CRARY.PK) -1.3%, although UniCredit (UNCFF.PK) was +2%. Originally due to expire this weekend, the new regulations will now stay in place at least until the end of September.
787 finally set to receive FAA approval. Nearly three years behind schedule and several billion dollars over budget, Boeing's (BA) 787 Dreamliner airplane is due to today receive operating certification from the FAA. Boeing has 827 orders for the jet, whose light-weight carbon-composites airframe is designed to help lower fuel costs for airlines. Boeing will deliver the first 787 to Japan's All Nippon Airways (ALNPY.PK) next month, although it is unknown when the plane manufacturer will turn a profit from the aircraft.
Treasury recovers $900M in H1. The Treasury recouped $900M in the first half from the sale of stocks in financial firms, nearly a third of which came from the divestment of Citigroup (C) shares. The government has now recovered $314B of the $413B it spent bailing out banks, other financial institutions and automakers.
Today's Markets:
In Asia, Japan +0.3% to 8798. Hong Kong -0.9% to 19583. China -0.1% to 2612. India -1.8% to 15849.
In Europe, at midday, London -0.5%. Paris -1.0%. Frankfurt -1.9%.
Futures at 7:00: Dow +0.1%. S&P flat. Nasdaq +0.1%. Crude -0.5% to $84.89. Gold +1.4% to $1787.70.
Friday's economic calendar:
8:30 GDP Q2
8:30 Corporate Profits
9:55 Reuters/UofM Consumer Sentiment
10:00 Bernanke: 'Near- and Long-Term Prospects for the U.S. Economy'
Earnings Results: Companies that beat EPS expectations last night and today include Pandora Media (P shares +4.25), OmniVision Technologies (OVTI -23%), Krispy Kreme Doughnuts (KKD -0.9%), MICROS Systems (MCRS +9%), Tiffany (TIF +7.75%). Full real-time earnings coverage here.
Notable earnings before Friday's open: TIF
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