Falling Chinese trade sends stocks tumbling. Shares have fallen globally after China's trade surplus narrowed to $25.1B in July from $31.7B in June and came in well below consensus. On-year export growth slumped to 1% from 11.3% while that for imports declined to 4.7% from 6.3%. A major problem was the EU, where exports tumbled 16.2%. Along with industrial production figures yesterday, the trade data indicates that the Chinese economy may not rebound in Q3, as many had predicted.
J.C. Penney shares slide as earnings miss forecasts. J.C. Penney (NYSE:JCP) shares were -5% premarket after its Q2 earnings missed Street expectations, with the retailer making an adjusted EPS loss of $0.37 vs. a profit of $0.19 a year ago, while revenue plunged 23% to $3.02B and Internet sales sank 33%. J.C. Penney also said it doesn't expect to achieve its FY guidance. The results follow a mediocre Q1 and probably reflect the confusion J.C. Penney finds itself in over its pricing strategy.
IBM offers to buy RIM's network operations centers. IBM (NYSE:IBM) has informally approached RIM (RIMM) about acquiring its network operations centers (NOCs), which secure and compress content delivered to BlackBerries, Bloomberg reports. While RIM has faced calls to turn its NOCs into a standalone business that services multiple platforms, co-CEO Jim Balsillie was reportedly kicked out for wanting to do this. RIM shares were +4% premarket.
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Chesapeake probed for antitrust breaches. Chesapeake Energy (NYSE:CHK) is the subject of a U.S. antitrust investigation over its purchase and lease of oil and gas rights. Chesapeake reportedly plotted with Encana (NYSE:ECA) to suppress land prices in a promising oil and gas play in Michigan. Chesapeake shares fell 2.3% after hours.
Lions Gate posts surprise net loss. Lions Gate (LGF) unexpectedly swung to an FQ1 net loss of $44.2M from a profit of $10.3M a year earlier, due to a $90M increase in film-marketing costs. However, revenue surged 81% and beat forecasts, boosted by the massive success of "The Hunger Games" and the takeover of Summit Entertainment. While S&P's Tuna Amobi said that the benefits of the marketing investment will be realized in later quarters, shares fell 3.2% after hours.
NY's StanChart allegations more about the cover up. New York's case against Standard Chartered (OTCPK:SCBFF) is more about whether the bank violated the "books and records" law by covering up its dealings with Iran using allegedly false records rather than whether those dealings themselves broke the law. Breaches of records law are more clear cut and easier to prove than violations of regulations that restrict dollar transactions with sanctioned countries.
Mayer could abandon Yahoo's $5.5B share buyback. Yahoo (NASDAQ:YHOO) CEO Marissa Mayer is reviewing the company's capital allocation strategy, which could lead to the pulling of a $5.5B stock buyback program tied to Alibaba's $7.1B repurchase of half of Yahoo's 40% stake in the Chinese company. Dan Loeb, who supported Mayer's hiring, can't be happy about it. Shares were -3.8% premarket.
LVS faces yet another probe. The WSJ has reported another investigation into Las Vegas Sands (NYSE:LVS), this one concerning a breach of U.S. anti-bribery laws in mainland China involving a real-estate payment, sponsorship of a basketball team, and a ferry deal. The probe adds to those for possible money laundering and one centered on LVS's Macau casinos.
Barclays names bank veteran as Chairman. Barclays (NYSE:BCS) has appointed former Bank of England Executive Director David Walker as Chairman to replace Marcus Agius, who is leaving in the wake of the Libor scandal. Walker's first job will be to find a CEO to replace Bob Diamond, who also resigned because of Libor.
Banks ordered to formulate emergency recovery plans. The Fed and the Office of the Comptroller of the Currency have directed five leading banks to formulate recovery plans for preventing their collapse in the event of severe financial stress and even general instability, Reuters reports. The plans are different to those for living wills, with requests first sent two years ago to Citigroup (NYSE:C), Morgan Stanley (NYSE:MS), JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS).
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Libor not "fit for purpose" - regulator. FSA Managing Director Martin Wheatley said Libor is no longer "fit for purpose" as he laid out what his review of the rate will look at. This includes governance, possible alternatives, and basing Libor calculations more on trades rather than judgements. The U.K. finance regulator added that other benchmarks, such as for gold, stocks and oil, are also being reviewed and could face tighter supervision.
USDA report to show extent of drought damage. A USDA survey of 27,000 farmers is today likely to show the depth of damage the drought has wrought, with the department expected to forecast that the 2012 corn harvest will slump 11% and that yields will be 23% below normal. The soybean harvest will probably fall 8% and yields 9%. At least most of the wheat crop has escaped the damage and production is seen exceeding 2011.
As U.S. corn crops suffer, global food prices rise. The UN's index of global food prices increased 6% in July, its largest rise since November 2009, boosted by too much rain in Brazil, not enough rain in the U.S., and a hot summer in Russia. While healthy supplies of wheat and rice are helping to offset the problems with corn and soybeans, a major concern is that governments will curb food exports, as Russia did with wheat in 2010.
Japan passes sales tax. Japan's upper house has joined the lower chamber and passed a law that will double sales tax to 10% by 2015 - as long as there is an "economic upturn," the definition of which is open to debate - and hopefully help the country deal with its massive debt burden. To obtain the support of the opposition, which holds sway in the upper house, PM Yoshihiko Noda had to promise to dissolve the lower house "in the near term."
Consumer agency wants to tighten rules for mortgage servicers. The Consumer Financial Protection Bureau (CFPB) yesterday proposed tighter rules for mortgage service firms, which collect payments from homeowners. The regulations would require servicers to send monthly statements to borrowers, warn them prior to changes in interest rates, offer more options to avert repossession, and protect them from buying higher-cost insurance unnecessarily.
In Asia, Japan -1%. Hong Kong -0.7%. China -0.2%. India flat.
In Europe, at midday, London -0.3%. Paris -0.8%. Frankfurt -0.8%.
Futures at 7:00: Dow -0.4%. S&P -0.5%. Nasdaq -0.4%. Crude -1.2% to $92.23. Gold -0.5% to $1611.80.
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