A ‘Welcome to Detroit’ sign is seen along 8 Mile Road in Detroit, Michigan January 27, 2013. Throughout its long decline, Detroit has sought ways to restore to its former glory a city that was home to 1.8 million people, pinning its hopes on grandiose plans for the automotive industry or casinos. With just 700,000 people left, ambitions are now focused on making less populated neighborhoods viable and repurposing land, perhaps for urban farming. Where the cash-strapped city can’t provide, grassroots groups and investors help fill the gaps. Picture taken January 27, 2013.
Good morning. Here’s what you need to know.
- Markets in Asia were mostly lower in overnight trading. The Japanese Nikkei 225 fell 1.5%, the Hong Kong Hang Seng rose 0.1%, and the Shanghai Composite lost 1.5%. European markets are in the red, with Spain currently down 0.6%. In the United States, futures point to a positive open.
- General Electric reported second quarter earnings of $0.36 per share, a penny above consensus, but revenues came in at $35.1 billion, below expectations for $35.6 billion. Industrial revenue was down 1% from a year ago, while sales from the company’s power and water unit were down 17%. Shares are higher in pre-market trading.
- The OECD has prepared a “blueprint” for world governments to combat sophisticated tax-avoidance strategies employed by companies like Google and Apple. The 40-page report will be presented at this weekend’s G20 summit.
- Detroit has filed for the largest municipal bankruptcy in the history of the United States. “Right now, the City cannot meet its basic obligations to its citizens,” said Michigan Governor Rick Snyder in the Chapter 9 filing. “Right now, the City cannot meet its obligations to creditors.”
- Moody’s revised its outlook on the USA’s credit rating to stable from negative while re-affirming its AAA rating. The rater cited declining U.S. budget deficits in the release. “The action reflects Moody’s assessment that the federal government’s debt trajectory is on track to meet the criteria laid out in August 2011 for a return to a stable outlook, removing the downward pressure on the rating over Moody’s outlook period,” wrote the Moody’s global credit research team.
- Chipotle reported earnings of $2.82 per share, just above consensus expectations for $2.81. Revenues also came in above expectations, at $816.8 million versus $802.77 million. The company said same-store sales increased 5.5% during the second quarter. Shares are higher in pre-market trading.
- Microsoft reported earnings of $0.59 per share, missing consensus estimates for $0.75. Revenues were less than expected, at $19.9 billion versus $20.72 billion. The company cited a decline in the PC market as partly to blame for its lackluster results. Shares are lower in pre-market trading.
- Google reported earnings of $9.56 per share, below expectations for $10.80. Revenues were also below consensus at $14.1 billion versus $14.4 billion. Shares are lower in pre-market trading.
- In the week ended July 12, Japanese investors bought ¥1.11 trillion in foreign bonds, up from ¥973.9 billion the week before, while selling ¥88.2 billion of foreign stocks, up from ¥14.1 billion in sales the previous week. Over the same time period, foreign investors purchased ¥0.8 billion of Japanese bonds – down from ¥3.5 billion the week before – and bought ¥398.2 billion of Japanese stocks, down from ¥485.3 billion in the previous week.
- Investors put $19.7 billion into global equity funds in the week ended July 17, with the lion’s share going to U.S. equity funds, which saw their biggest weekly inflow since June 2008. Over the same period, investors redeemed $700 million from bond funds.
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