Good morning! Here’s what you need to know.
- Asian markets got crushed. Japan’s Nikkei fell -4.00%, Australia’s ASX200 declined -1.85%, and Korea’s Kospi was off -1.48%. European markets are faring little better: Germany’s DAX has retreated -0.65%,; London’s FTSE, -0.40%.
- The MBA’s weekly mortgage applications will be published at 7:30 am. Cleveland Fed President Sandra Pianalto will speak at 1:40 pm. And the latest consumer credit figures will come out at 3 pm — a decline of -$US4.6 billion to $US15 billion is expected for June outstanding credit.
- Tesla and Groupon announce earnings after the bell today. Green Mountain, Ralph Lauren, Time Warner, and SolarCity also announce today. For Tesla, analysts expect $US0.19 per share, on revenue of $US387.9 million. Read our Mamta Badkar’s full preview here »
- It looks increasingly likely the Fed will begin to taper its bond-buying program in September. Yesterday, Chicago Fed President Charles Evans, one of the Fed’s most dovish members, told an audience he liked what he was seeing out of the labour market and would “clearly not rule out” a September taper. SocGen’s Alvin Tan notes that since the last FOMC meeting, all three Fed members to speak have in one way or another endorsed a September start date.
- Bank of England Governor Mark Carney said he will not raise interest rates until unemployment falls below 7%. He also upgraded GDP forecasts to 1.5% in 2013 and 3.7% in 2014.
- President Obama said Tuesday it was time to “wind down” Fannie Mae and Freddie Mac, the government-sponsored enterprises that helped enable the financial crisis. He said he supported a Senate plan to replace the GSEs with a system that would, “charge lenders for explicit government guarantees of some mortgage loans,” the New York Times’ Binyamin Appelbaum reports. Appelbaum adds: “For all the talk, however, it will be difficult to alter the government’s role in housing finance, which has remained substantially unchanged for half a century — notwithstanding Fannie and Freddie’s move from informal to formal wards of the state. That is because Americans like cheap mortgage loans and it is hard to preserve the benefits without the costs of the current system.”
- The SEC and Justice Department charged Bank of America with alleged fraud over 2008 mortgage backed securities sales yesterday, but the Wall Street Journal’s Jean Eaglesham reports the SEC’s push to sanction entities involved in the financial crisis is actually losing steam. Citing unnamed sources, she writes: “Despite last week’s courtroom victory in a civil trial against former Goldman Sachs Group Inc. trader Fabrice Tourre over his role in a deal called Abacus 2007-AC1, securities regulators are quietly winding down some of their highest-profile investigations related to the crisis, these people said.”
- Carl Icahn told Fox Business Network yesterday he’d already made $US500 million on his long-Herbalife position, which he took based on Bill Ackman’s short. We also know George Soros is long the stock, and this week Ackman filed a complaint with the SEC that he believes Soros may have engaged in insider trading.
- Former Detroit Medical Center chief Mike Duggan and former Detroit Police Chief and current Wayne County Sheriff Benny Napoleon won yesterday’s primary for Detroit’s mayoral election and will square off for the November vote. Last week, we explained all the problems that had cropped up in the race and why lots of important groups have endorsed Duggan.
- There are signs childhood obesity among low-income groups is waning. New federal data show that between 2008 and 2011, obesity declined in 19 of 43 states measured.
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