Good morning! Here’s what you need to know.
1) Ukraine Cease-Fire Is Announced, Then Retracted. Ukrainian President Petro Poroshenko’s press office retracted a statement it had released saying he had reached a cease-fire agreement with Vladimir Putin that sent stocks surging. A Kremlin representative subsequently said no such agreement was in place, and fighting continued in Ukraine’s east. “Putin and Poroshenko in fact discussed the steps that would be conducive to a cease-fire between the militias and the Ukrainian security forces,” Putin’s press secretary Dmitry Peskov said, RIA Novosti reported. Russia cannot negotiate a cease-fire “because it is not a party to the conflict,” he said according to MarketWatch.
2) Obama Sending More Personnel To Iraq. President Obama has authorised an additional 350 military troops to “protect our diplomatic facilities and personnel in Baghdad, Iraq,” according to a spokesman. “The decision was made at the recommendation of the Department of Defence and noted that additional forces will not serve in a combat role,” NBC said. “Additionally, the President will be consulting this week with NATO allies regarding additional actions to take against Islamist militants.”
3) Apple In Crisis? BI’s Jim Edwards argues that on the eve of one of the iPhone 6 announcement, the company now faces a crisis of confidence thanks to the celebrity hacking scandal. There was also an iTunes outage Tuesday night. “Trust is a huge part of the Apple brand. People use Apple because its products ‘just work,’ and because hackers and malware tend to operate on Windows and Android systems, not Apple’s OS and iOS platforms … Now, Cook is in danger of seeing that trust slip away. He was just about to ask consumers to place even more faith in iCloud, which will sit at the center of ambitious plans to extend Apple’s mobile payments capabilities (through NFC and Touch ID), its online e-commerce strategy (through iTunes, the app stores, and Beats), through improvements to its Mac operating system (OS X Yosemite will have an iCloud Drive storage system), and through Handoff, a new system that lets you switch your work between your Mac and an iPad seamlessly. Instead of the tech media being filled with stories about how exciting this is all going to be, blogs are running “how-to” guides for people who want to switch off iCloud.”
4) Today’s Bad Europe News. According to Eurostat, retail sales fell 0.4% in the Euro area in June. For what it’s worth, it’s only the first time since January that this figure has declined. Meanwhile the purchasing managers’ index for services firms fell to 53.1 in August from 54.2 in July, though it is still well above the crucial 50 level that marks an expansion in activity, reports the FT’s Claire Jones.
5) UK Services Growth Fastest In 10 Months. The Markit/CIPS services purchasing managers’ survey for Britain hit 60.5 in August, up from 59.1 in July. Samuel Tombs, senior U.K. economist at consultancy Capital Economics said per the FT that the strength of the survey provided “reassurance” that the economic recovery was not losing pace and that the U.K. was “set for a period of strong, non-inflationary growth.” Meanwhile analysts expect the Bank of England to leave rates unchanged at its policy meeting this week, according to AFP.
6) Norway Oil Slowdown. Oil companies expect to invest 19% less in Europe’s largest oil producer in 2015 than 2014, according to a new survey. Norway has become increasingly dependent on oil revenues, and the slowdown is likely to hit the broader economy.
“Lower oil-sector investments may limit overall growth and lead Norway’s central bank to lower its expectations of future rates, as an economic slowdown would normally call for lower key rates to boost growth,” Marketwatch’s Kjetil Malkenes writes.
7. Commerzbank CEO Calls For Common Bonds. Martin Blessing, the head of one of the world’s largest banks, published an op-ed arguing that eurozone lenders should begin issuing Eurobonds to help boost the euro. FT: “The Commerzbank chief argued in the article that the European Central Bank’s response to the crisis, which has involved buying government debt, and the bonds issued under the European Stability Mechanism bailout vehicle meant sharing debt burdens was ‘already a reality.’ Mr Blessing, who has chaired the board of Germany’s second largest bank since 2008, said on Wednesday that eurobonds ‘would permanently establish the euro as a globally important currency, ensuring the sustained importance and competitiveness of Europe.'” Germany’s finance ministry quickly pushed back saying this would let peripheral countries off the hook from reforming their economies.
8. LVHM Cuts Hermes Loose. LVMH Moet Hennessy Louis Vuitton SA will devolve its $US7.5 billion holding in Hermes International SCA after a French ruled in favour of the Birkin bag maker, Bloomberg’s Andrew Roberts reports. LVHM “will distribute the stake to its shareholders and institutional investors, leaving…holding company Groupe Arnault with an 8.5 per cent interest, the Paris-based company” Bloomberg said. LVMH currently holds about 23 per cent of Hermes. Hermes had sued LVHM after they’d built up holdings that caught Hermes equity holders unawares. The resolution reduces “the speculative appeal of Hermes which goes back to being a normally traded company,” one analyst told Bloomberg. Hermes shares fell 11% in Paris, while LVHM climbed 3.9%.
9. Data. All day we’ll learn light vehicle sales for August. Consensus is for an increase to 16.5 million SAAR in August from 16.4 million in July (Seasonally Adjusted Annual Rate). At 10 a.m. we get factory orders for July consensus is for a 10.5% increase. And at 2 p.m. we get the Fed’s Beige Book survey of economic conditions.
10. Markets. Stocks in Europe and U.S. futures surged on the Ukraine ceasefire announcement. Germany’s DAX Index rose 1.2%. London’s FTSE climbed 0.9% In Asia, Hong Kong’s Hang Seng China Enterprises Index of mainland shares jumped 3.2%, its biggest rally since November according to Bloomberg. Dow futures were up 74 points.
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