Good morning! Here’s what you need to know:
Rupert Murdoch Builds Up His Cash Position. “Britain’s BSkyB has agreed to pay $US9 billion to buy Rupert Murdoch’s pay-TV companies in Germany and Italy, taking its hunt for growth into Europe by creating a media powerhouse with 20 million customers,” reports Reuters’ Kate Holton. “The deal adds to a flurry of consolidation in the global media sector and Fox is expected to use the proceeds to fuel its pursuit of Time Warner, which recently rejected Fox’s initial $US80 billion bid.”
$90-$95. “With this new cash, Fox could be in a position to raise its Time Warner offer beyond the $US90-$95 range without threatening its debt rating,” said Business Insider’s Henry Blodget. Earlier this month, the New York Times reported that Time Warner had rejected an offer of $US85 per share.
Amazon.com’s Losing Money. Amazon reported a Q2 net loss of $US0.27 per share, which was much worse than the $US0.15 net loss expected. Management also warned that it expected to book an operating loss of $US410 million to $US810 million in Q3 as it aggressively invests for growth. The stock is down by around 10% in premarket trading.
Starbucks’ Coffee Sales Are Hot. Starbucks reported Q2 global comparable store sales grew by 6%, beating expectations for 5.1% growth. This helped earnings come in at $US0.67 per share, which was a penny ahead of analysts’ estimates. “Our Q3 results give us confidence in our ability to deliver on our full year fiscal 2014 targets and support the strong 2015 revenue and profit growth targets we introduced today, despite continued challenging economic and consumer headwinds in many of the global markets in which we operate,” said CFO Scott Maw.
Visa Beats. Visa earned $US2.17 per share in Q3, beating expectations fo $US2.10. Total payments volume at the transactions company jumped 11% to $US1.2 trillion during the period. Visa CEO Charlie Scharf said the company’s earnings grew, “in the face of a continued, subdued global economy.”
German Confidence Falls. “German business confidence is down for a third month in a row amid ongoing concerns about the economic impact of the crises in Ukraine and Iraq,” reported the AP. “The closely-watched Ifo Institute survey fell to 108 points in July from 109.7 points in June. Economists had widely been expecting a slight rise over June’s figure.”
Japanese Inflation Cools. “Japan’s core consumer inflation eased slightly in the year to June, highlighting the challenges the central bank faces in meeting its 2 per cent inflation target sometime next year,” reported Reuters’ Leika Kihara. “The nationwide core consumer price index, which excludes volatile prices of fresh food but includes prices of oil products, rose 3.3 per cent in June from a year earlier, government data showed on Friday, matching a median market forecast and slowing from a 3.4 per cent gain in May.”
Russia Raises Rates. The Bank of Russia unexpectedly raised its benchmark interest rate to 8.0% from 7.5%. “Inflation deceleration in July 2014 has been slower than expected,” they said. “At the same time, inflation risks have increased due to a combination of factors, including, inter alia, the aggravation of geopolitical tension and its potential impact on the ruble exchange rate dynamics, as well as potential changes in tax and tariff policy.”
Markets Are Mixed. U.S. futures are in the red with Dow futures down 28 points and S&P futures down 3.9 points. In Europe, Britain’s FTSE is down 0.1%, France’s CAC 40 is down 0.6%, and Germany’s DAX is down 0.5%. In Asia, Japan’s Nikkei closed up 1.1% and Hong Kong’s Hang Seng closed up 0.3%.
One Big Economic Report. We’ll get the June durable goods orders report at 8:30 a.m. ET. Economists estimate orders climbed 0.5% in July. Nondefense capital goods orders excluding aircraft is forecasted to have climbed by 0.5%. “Pullbacks in the volatile defence goods and civilian aircraft categories will probably restrain overall orders for a second month, but business surveys continue to point to improvement in core capital goods orders, including our MBSCI survey, which showed the highest capital spending plans of the year in June,” said Morgan Stanley’s Ted Wieseman. “The 0.5% rise we’re forecasting for nondefense capital goods ex aircraft orders would leave them up 15% annualized in the past four months after a winter weak patch.”