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Good morning. Here’s what you need to know.
- Asian indices were up in overnight trading with the Nikkei up 1.05%. Europe is mostly higher, but going back and forth. US futures are lower, as the rally fizzles out.
- The FOMC’s promise to keep rates ultra-low until 2013 is the talk of the day. Everyone’s trying to figure out, still, what it all means. Goldman Sachs says: “QE3 is now our base case.”
- Yields on Italian treasury bills fell after the European Central Bank began buying the country’s bonds. Italy sold $9.3 billion of bills today, and yields on its one-year bills fell to 2.959%, down from 3.67% at the July auction. Long-term Italian rates are also lower. Now here is the sad story of how Italy got to be such a wreck >
- China’s trade surplus surged to $31.5 billion in July, its highest point in over two years, with exports up 20.4% year-over-year, from 17.9% in June; and imports up 22.9% year-over-year, from 19.3% in June. The yuan jumped to a new high against the dollar on the news, but the outlook for China remains unclear amidst global economic uncertainty. Check out the 10 countries that will dominate world trade in 2050 >
- The Bank of England has downgraded its growth forecast for 2011 on slower than expected global economic recovery. The bank cuts its growth forecast to 1.4% in 2011 and warned that inflation could surge to 5% this year.
- With U.S. default narrowly avoided, President Obama has toughened his tone calling for federal spending that is aimed at creating jobs, and pulling away from talks of deficit cuts. He also added that democrats unlike Republicans see the government as a partner with the private sector. Check out the companies that will get crushed when the government stops spending >
- Capital One Financial Corp. has agreed to buy HSBC’s U.S. credit card unit for $32.7 billion. The sale is part of HSBC’s $3.5 billion cost cutting plan.
- The Treasury department releases its monthly budget for July at 2 PM ET. Consensus is for a deficit of $132 billion. Follow the release at Money Game >
- In earnings news, Walt Disney beat expectations posting net income of $0.77 per share on revenue of $10.68 billion. The company’s media networks arm reported a 5% rise in revenue, while revenue from its theme parks and resorts jumped 12%.
- Another bank is hurting from its exposure to Eurozone debt. German Commerzbank was hit by a bigger than expected €760 million writedown on Greek bonds. The company’s net profit was down 93% to €24 million and sales were down 24% to €2.4 billion. Refresher: Check out who gets crushed if Greece defaults >
- BONUS – Angelina Jolie and her children were spotted painting at the Pottery Cafe in Richmond, London.