Good morning and welcome to the biggest economic week of the summer. Here’s what you need to know.
BNP Paribas To Pay Record Fine. The $US8.9 billion penalty will be the most paid by any European bank. The French firm is accused of violating U.S. sanctions. Bloomberg reported its dollar trading ban won’t begin until 2015.
Blackstone Is Making A Hedge Fund. It will be designed to handle “large, risky bets,” the Wall Street Journal’s Rob Copeland reported. “In one way, Blackstone’s model resembles SAC Capital Advisors LP, the fund led by
Steven A. Cohen,” he writes. “Blackstone’s trading teams will pitch their best ideas to a group including new hire Parag Pande, formerly of closed hedge-fund firm Ziff Brothers Investments, risk officer Gideon Berger and Mr. Hill. If it likes the ideas, Blackstone will give the team additional cash to piggyback on the trades or use the ideas in other firm products.”
GM Is Readying Payouts For Crash Victims’ Families. The automaker has hired a compensation expert to determine how much will be required to settle with families who lost loved ones in crashes allegedly linked to faulty ignition switches. The New York Times says the total amount is likely to end up in the billions.
Goldman Sachs Lifted
Its 2014 UK GDP Estimate To 3.4%. At one point it was as low as 2.7%, citing the “persistent” strength of the country’s various economic indicators this year. But it also brought forward its rate hike estimate, suggesting the Bank of England will lift rates to 1% by the end of next year. Mortgage approvals hit an 11-month low as tighter lending standards took hold.
Argentina May Miss A Payment Today. It will get a 30-day grace period though, and bonds are trading at levels suggesting investors believe a deal will be reached with debt-holding hold-outs. From WSJ: “Gorky Urquieta, co-head of emerging-market debt at Neuberger Berman, holds a variety of Argentine bonds in his portfolio and says any potential selloffs could offer buying opportunities. He says he expects the country to miss the interest payment on Monday but ultimately settle with holdout creditors before a default. ‘I like the fact that Argentina is under the gun,’ Mr. Urquieta said. ‘That’s going to make them come to the table.'”
European inflation goes nowhere. Data for June showed core inflation climbed to just 0.8% from 0.7%. We are still at a four-year low.
We get three datapoints today. First is Chicago PMI at 9:45 a.m.. Consensus is for a decrease to 64.0, versus 65.5 in May. Next is pending home sales at 10 a.m., with consensus for a 1% increase. Finally, we get the Dallas Fed’s manufacturing survey at 10:30 a.m. — it’s the last of the regional Fed manufacturing surveys for June.
Bitcoin Prices Surge. The cryptocurrency is seeing a nearly 5% pop this morning to $US625 as users await the results of the U.S. Marshals auction held Friday.
Global M&A Activity Hits An 11-year High.The $US1.75 trillion-worth of deals is the most ever through the first half of the year. “Companies have strategic imperatives to do deals, they have the cash to do deals, and they can borrow additional cash at record-low rates,” said Frank Aquila, a mergers and acquisitions lawyer at Sullivan & Cromwell LLP. “It really is a bit of a perfect storm when it comes to dealmaking.”
Markets are flat. Asian indexes were mostly higher. European stocks were marginally higher. U.S. futures were doing nothing.
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