Good morning! Here’s what you need to know:
Russia Is Advancing On Ukraine, Says Ukraine. “I have made a decision to cancel my working visit to the Republic of Turkey due to sharp aggravation of the situation in Donetsk region, particularly in Amvrosiivka and Starobeshevo, as Russian troops were brought into Ukraine,” Ukraine President Petro Poroshenko said. “Current servicemen are also fighting in our ranks, as they came to us to struggle for our freedom instead of their vacation.”
Russia Is Advancing On U.S. Banks? “Russian hackers attacked JPMorgan Chase & Co. and at least four other banks this month in a coordinated assault that resulted in the loss of gigabytes of customer data, according to two people familiar with the investigation,” Bloomberg’s Michael Riley and Jordan Robertson report. “At least one of the banks has linked the breach to Russian state-sponsored hackers, said one of the people. The FBI is investigating whether the attack could have been in retaliation for U.S.-imposed sanctions on Russia, said the second person, who also asked not to be identified, citing the continuing investigation.”
Sentiment In Europe Is Getting Worse. The bad economic news out of Europe has yet to end. The eurozone’s consumer confidence index fell to 100.6 in August from 102.2 in July. This was worse than the 101.5 expected by economists. “Based on sentiment surveys, the eurozone is off to a poor start in Q3, and while we are yet to see any decisive hard data, it does not leave much optimism for a strong rebound in GDP growth,” said Pantheon Macroeconomics’ Claus Vistesen. “Flagging business confidence makes sense given tensions in Ukraine, poor economic data and weakness in equity prices.”
Germany’s Still Struggling. The number people unemployed in Germany unexpectedly climbed by 2,000 in August. Economists were expecting this number to decline by 5,000. The unemployment rate in Europe’s largest economy held at 6.7%.
Markets Are Down Everywhere. In Europe, Britain’s FTSE 100 is down 0.4%, France’s CAC 40 is down 0.8%, and Germany’s DAX is down 1.4%. Asia closed lower with Japan’s Nikkei down 0.4% and Hong Kong’s Hang Seng down 0.7%. Dow futures are down 65 points and S&P 500 futures are down 7.9 points.
The State Of The U.S. Economy. There’s lot of economic data coming out of the U.S. today, starting with an updated estimated of Q2 GDP. Economists estimate GDP growth will be revised down to 3.9% from 4.0% a month ago. Personal consumption is estimated to have slipped to 2.4% from 2.5%. Here’s Morgan Stanley’s Ted Wieseman: “Lower inventories partly offset by higher net exports should result in a downward revision to the 4.0% advance GDP estimate but with a better demand/inventories mix, a positive for the Q3 outlook. June results for nondurable manufacturing, wholesale, and retail ex auto inventories all came in well below elevated BEA assumptions, pointing to the +1.7pp contribution to Q2 growth from inventories being revised down to +1.1pp. The surprising $US3 billion narrowing in the June trade deficit to a five-month low, however, points to the net exports contribution being revised up to -0.4pp from -0.6pp.”
The State Of U.S. Jobs. At 8:30 a.m. ET, we’ll get the latest weekly tally of initial jobless claims. Economists estimate weekly initial claims ticked up to 300,000 from 298,000 a week ago. “Initial claims have hovered around 300k for the past few weeks and should continue to do so as labour markets tighten,” said Nomura economists.
The State Of U.S. Housing. At 10:00 a.m. ET, we’ll get the July pending home sales report. Economists estimate the pace of pending sales climbed 0.5%. “Since pending home sales track signed contracts, this suggests continued improvement in existing home sales,” said Bank of Ameria Merrill Lynch economists.
Nonbank Mortgage Lenders Are On The Rise. “In the first half of the year, lenders that aren’t banks made almost a quarter of all mortgage loans, the highest level since at least the financial crisis, according to data on the top-30 mortgage originators from industry newsletter Inside Mortgage Finance,” the WSJ’s Joe Light reports. “Mortgage lending at big banks such as Wells Fargo & Co. and J.P. Morgan Chase has dropped more quickly than the rest of the industry in the wake of large mortgage-related legal settlements, new banking standards that require lenders to carry more capital, and increased scrutiny from regulators.”
Goldman Moves Out Of The NYSE, Robots Move In. “When Scott Knudsen rang the opening bell at the New York Stock Exchange this week, he signaled the ceremonial start of the day’s session and the conquest of the NYSE floor by high-frequency trading firms,” Bloomberg’s Sam Mamudi and John Detrixhe write. “His firm, IMC Chicago LLC, just finished its takeover of Goldman Sachs Group Inc.’s NYSE unit, giving it rights to manage buying and selling of dozens of stocks including prominent ones like International Business Machines Corp., Verizon Communications Inc. and Visa Inc. IMC joins rival automated trading firms Virtu Financial Inc. and KCG Holdings Inc. facilitating transactions at the NYSE in lower Manhattan, a role once filled solely by humans.”
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