Apple sinks after earnings miss forecasts. Apple (AAPL) shares were -4.7% premarket after its FQ3 earnings missed expectations even though EPS rose to $9.32 from $7.79 and revenue jumped 22% to $35B. Apple's FQ4 guidance for $7.65 and $38B was below consensus as well. Sales of iPads jumped 44% on quarter to 17M, but those for iPhones fell to 26M from 35M in FQ2. Apple said iPhone 5 rumors are prompting consumers to wait for its release, which contributed to the firm's earnings miss, as did economic uncertainty.
ECB's Nowotny: ESM could have bank license. ECB council member Ewald Nowotny has told Bloomberg there are "pro arguments" for giving the eurozone's ESM permanent rescue fund a banking license. Such a move would give the ESM access to ECB loans, adding to its €500B of firepower, although there are legal arguments against granting the license. The comments have given a lift to European shares, while the euro was +0.7% vs. the dollar premarket.
Fed mulls more action to spur economy. Fed officials have become impatient with the sluggish economic growth and high unemployment, and could decide at a meeting next week to try to do something about it, the WSJ reports. Purchases of mortgage-backed securities, a pledge to keep rates low for longer, or even a move to further push down the nearly microscopic short rates are among the choices available to the FOMC.
Top Stock News
International operations hit Ford profit. Ford's (F) net profit plunged 57% to $1B, with its overseas operations and an increased tax rate offsetting a good performance in North America. Adjusted EPS of $0.30 and revenue of $33.3B beat forecasts. Ford cut its FY profit guidance and increased its expected losses from Europe to over $1B from an earlier forecast of $600M. Shares were -1.2% premarket.
Netflix plunges after earnings warning. Netflix's (NFLX) Q2 EPS slumped to $0.11 from $1.26 but beat Street estimates, while revenue climbed 12.7% to $889M and met expectations. Shares plummeted 19.4% premarket after the company predicted possible or definite losses in the coming quarters, partly due to international expansion. Netflix also guided lower for domestic subscription additions, raising doubts it will meet its user-growth targets for the year.
BOE raised flags on JPM's CIO well before whaling loss trades. Bank of England staff expressed concerns to the bank's top brass already in late 2010 about the dominance of JPMorgan's (JPM) CIO in various areas of the U.K. markets, the WSJ reports. However, the BOE doesn't seem to have acted on the concerns, because JPM was providing important liquidity to British banks, and because the central bank wasn't JPM's supervisor.
L-3 wins $1.98B order from the Army. L-3 Communications (LLL) has been awarded a $1.98B contract from the U.S. Army to provide maintenance, logistics and other related sustainment support for over 600 helicopters.
VC fund raises $2.6B. New Enterprise Associates, which backed Groupon, has closed a $2.6B fund, the second-largest venture capital fund ever. NEA uncovered "enormous interest" in VC as an asset class as investment managers returned to the sector. One wonders if low interest rates and market volatility were a factor - you can put your money in a VC for 5-10 years and forget about it. Then, you might not be there if things go awry.
Top Economic & Other News
Geithner set for Libor questions from Congress. Timothy Geithner is set for a couple of fun-filled days in Congress, where he's expected to be asked about the NY Fed's actions after Barclays' (BCS) admitted to officials in 2008 - when Geithner was in charge at the NY Fed - they were rigging Libor. The BOE says the Fed bank never said anything about any wrongdoing, a claim that's backed up by a Washington Post report.
Moody's cuts outlook of rescue fund. Moody's has cut its outlook on the European Financial Stability Facility, the eurozone's temporary rescue fund, to negative from stable. The move follows the agency's decision to change the outlook for Germany, the Netherlands and Luxembourg to negative. All three of those countries are EFSF guarantors, with Germany holding the largest share at around 29%.
Japan enjoys trade surplus as imports decline. Japan posted an unexpected June trade surplus of ¥61.7B ($789M) as lower oil prices contributed to the first drop in imports since December 2009, with economists forecasting a trade deficit of ¥140B. Imports fell 2.2% on year and exports 2.3%.
In Asia, Japan -1.4%. Hong Kong -0.1%. China -0.5%. India -0.4%.
In Europe, at midday, London +0.2%. Paris +0.7%. Frankfurt +0.5%.
Futures at 7:00: Dow +0.5%. S&P +0.5%. Nasdaq -0.4%. Crude +0.3% to $88.73. Gold +1%% to $1596.70.
Today's economic calendar:
7:00 MBA Mortgage Applications
10:00 New Home Sales
10:30 EIA Petroleum Inventories
1:00 PM Results of $35B, 5-Year Note Auction
Notable earnings before today's open: ALXN, AOL, ARMH, ATI, BA, BMY, CAT, CBE, COP, CP, CVE, DAL, DLR, DRH, ECA, ELN, F, GD, GLW, HCBK, HES, JBLU, LCC, LLY, LO, LVLT, MSI, MT, NDAQ, NLSN, NOC, NYB, OCR, PDS, PEP, PX, REGN, ROK, SO, SWI, TEL, TMO, TROW, UMC, USG, WLP, WYN
Notable earnings after today's close: Notable earnings after Wednesday's close: AEM, AKAM, AMP, AVB, BCR, CCI, CDNS, CLF, CMO, CROX, CTXS, CYH, DRE, EQR, FLEX, FTNT, ISIL, KBR, LRCX, LSI, LVS, OI, OII, ORLY, STR, SUSQ, SYMC, TER, TEX, TSCO, TSLA, V, VAR, WDC, WFM, WLL, ZNGA
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