German Banks Are Next. After BNP Paribas, federal authorities are now targeting Commerzbank for violating U.S. sanctions, the New York Times reports. “The bank, which is suspected of transferring money through its American operations on behalf of companies in Iran and Sudan, could strike a settlement deal with the state and federal authorities as soon as this summer, said the people briefed on the matter, who were not authorised to speak publicly.” Deutsche Bank will also come in for a settlement, the paper says.
Two Profit Warnings. Samsung is warning of a profits drop of as much as 26.5% YOY. WSJ: “In a first for the company, Samsung included a one-page explanation for the poor numbers, citing weaker-than-expected demand for its products in China and Europe, and South Korea’s strengthening currency. Smartphone adoption is slowing in advanced markets, while the rise of low-cost producers threatens Samsung’s competitiveness in emerging markets.” Meanwhile Royal Dutch-KLM said its 2014 EBITDA would decline 12% on lower traffic, as well as “difficulty repatriating revenues from Venezuela, due to a currency dispute,” the FT said.
The Nicaragua Canal? A Chinese tycoon got a Nicaraguan committee to approve a new $US40 billion shipping canal across the Central American country that would compete with the Panama Canal, Reuters reported. It’s ridiculously ambitious and probably illegal, but Chinese lawyer Wang Jing, who heads Xinwei Telecom Enterprise Group, says it will help develop the country.
Calls For ECB To Act. Executives in Europe are calling on Frankfurt to weaken the Euro. “[Europe] cannot be the only economic zone of the world that doesn’t consider its currency as a weapon . . . as a key asset to promote its economy,” Airbus CEO Fabrice Brégier told the Financial Times in an interview. Brégier says it should be at least 10% lower from its $US1.35 level.
Alcoa. After the bell we get our first major earnings of Q2, aluminium giant Alcoa. Analysts expect $US0.12/share on $US5.61 billion revenues. Alcoa is a widely followed bellwether of global economic activity.
RIP Crumbs. The cupcake seller has officially closed all its stores as of Monday night.
Sluggish Europe. U.K. manufacturing fell most in 16 months in May, while German exports contracted more than estimated.
U.S. Data. At 7:30 a.m. we get the NFIB small business optimism index for June. At 10:00 a.m. we get JOLTS. In April, job openings were up 17% YOY, and quits were up 11% YOY. And at 3 p.m. we get May consumer credit data consensus is for an increase of $US17.5 billion.
Fed Speakers. Richmond’s Jeffrey Lacker addresses a Charlotte audience at 1 p.m., and Minneapolis’ Narayana Kocherlakota presents in front of a hometown crowd at 1:45 p.m.
Markets. U.S. futures were lower. European stocks were down. Asian markets saw mixed gains, with Indian stocks falling more than 2% on profit taking after reaching record highs. Russia’s Micex climbed to the highest level since October, Bloomberg said. Indonesian shares rallied for a third day before an election tomorrow, it said.
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