ECB bond-buying could bring on German nightmare. With Mario Draghi expected to announce the resumption of ECB purchases of eurozone government bonds today, what will he do if EU states fail to live up to their pledges, like Greece? Threats to halt the buying might carry little weight as the central bank would be too far in. A German nightmare could follow - the ECB financing governments that no longer feel the need to reform.
Italy could be forced to seek EU aid by year-end. Senior Italian officials have warned that the country might have to ask the EU to buy its government bonds by the end of the year due to its deteriorating economy and high debt costs, the FT reports. In return, Italy would have to implement even more tough austerity, with Germany especially - to prevent that nightmare - wanting to lock in any government that comes in after elections in 2013.
AIG starts selling rest of AIA stake. AIG (NYSE:AIG) reportedly intends to raise as much as $2B by selling part of its remaining 18% stake in AIA Group (OTCPK:AAIGF). AIG is offering 600M shares at HK$25.75-HK$26.75 each vs. AIA's Hong Kong closing price today of HK$26.30 ($3.39). The report follows the expiry of a lock-up on AIG's holding in AIA on Tuesday.
Top Stock News
Apple makes slow progress in ambitions to be TV star. Apple's (NASDAQ:AAPL) TV and set-top ambitions remain bogged down in a morass of pay-TV industry intransigence, Bloomberg reports. Disagreements include Apple's control of the user interface, its ability to sell directly to consumers rather than leasing hardware, and content deals. However, Apple has compromised over the latter issue, and is "furthest along" in talks with Time Warner Cable (NYSE:TWC).
Amazon could unveil smartphone. 'Tis the season for new mobile devices - following the unveiling of smartphones by Nokia (NYSE:NOK) and Motorola (NASDAQ:GOOG) yesterday, Amazon (NASDAQ:AMZN) is due to hold an event today. A TV ad has already depicted a "Paperwhite" backlit Kindle e-reader, a 7-inch Kindle Fire, and (most intriguingly) a bigger Fire. Meanwhile, The Verge reports that Amazon could show off its rumored smartphone, although it's still unfinished.
Navistar profit plunges. Navistar (NYSE:NAV) was saved from an FQ3 net loss by a $196M tax benefit that helped offset the company's failed attempt to design a new type of diesel engine. Still, net profit dropped to $84M from $1.4B last year, but without the tax benefit, Navistar would have lost $100M. Revenue slipped 6% to $3.32B, hurt by lower military sales and reduced engine volumes in South America.
Glencore-Xstrata merger could yet be saved. The mega-merger between Glencore (OTCPK:GLCNF) and Xstrata (OTC:XSRAF) could still be salvaged ahead of a vote of the latter's shareholders tomorrow, the WSJ reports. While Glencore has said it won't accede to the demands of major Xstrata investor Qatar Holdings and increase the price of its offer, all it would take is one phone call.
Top Economic & Other News
American competitiveness falls. The U.S. has slipped from fifth to seventh in the World Economic Forum's Global Competitiveness Report, dragged down by "low public trust in politicians and a perceived lack of government efficiency." Switzerland, Singapore, Finland, Sweden, the Netherlands and Germany ranked ahead of the U.S.
French unemployment hits 13-year high. France's jobless rate reached a 13-year high in Q2, rising to 10.2% from 10% in Q1. Excluding France's overseas territories, the figure was 9.7% vs. consensus of 9.8%. In all the talk about bond-buying and austerity, the figures are a reminder of the desperate state of the eurozone economy. The ECB is also making an interest rate decision today, with Credit Agricole expecting the bank to cut rates to 0.5% from 0.75%.
China looks to subway trains to help boost economy. China has recently approved 25 local-government subway projects worth 710.8B yuan ($112.1B) as it seeks to revive stuttering economic growth. The number is more than the 23 projects approved in the country's 4T yuan stimulus package in early 2009. Local authorities are supposed to provide around 40% of the funding for the new subways but could have difficulty obtaining the financing.
OECD warns of global downturn. The OECD's chief economist, Carlo Padoan, has warned of a worldwide recession unless policy makers in the U.S. and Europe act, with the global economy having deteriorated from a few months ago. Padoan described the eurozone as being "at the epicenter of the crisis" but noted that a "new development" is a fall in confidence in the U.S. manufacturing sector.
BOE holds rates at 0.5%. The Bank of England has left its policy unchanged, with its benchmark lending rate remaining at 0.5% and the size of its asset purchase program at £375B.
In Asia, Japan flat. Hong Kong +0.3%. China +0.7%. India +0.2%.
In Europe, at midday, London +0.6%. Paris +1%. Frankfurt +1.3%.
Futures at 7:00: Dow +0.5%. S&P +0.6%. Nasdaq +0.6%. Crude +1.2% to $96.48. Gold +1% to $1711.60.
Today's economic calendar:
7:30 Challenger Job-Cut Report
8:15 ADP Jobs Report
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:00 ISM Non-Manufacturing Index
10:00 Quarterly Services Report
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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