Sour Data and Russia Sanctions Dampen Sentiment

Economic Data

- (RU) Russia Central Bank (CBR) raised its One-Week Auction Rate by 50bps to 8.00%; not expected
- (EU) ECB: 8 banks to repay total €3.0B in 3-Year LTRO Repayment vs €5.8Be
- (BR) Brazil July FGV Consumer Confidence: 106.9 v 103.8 prior
- (TR) Turkey July Capacity Utilization: 74.9% v 75.3% prior; Real Sector Confidence: 109.0 v 110.7 prior
- (IN) India Forex Reserves w/e July 11th: $317.9B v $317.0B prior
- (US) Jun Durable Goods Orders: 0.7% v 0.5%e; Durables Ex Transportation: 0.8% v 0.5%e; Capital Goods Shipment (non-defense/ex-aircraft): -1.0% v +1.3%e; Capital Goods Orders (non-defense/ex-aircraft): 1.4% v 0.5%e; Durables Ex-Defense: 0.8% v 0.6% prior
- (BE) Belgium July Business Confidence: -7.5 v -6.5e
- (MX) Mexico Jun Preliminary Trade Balance: $423.7M v $756.0Me
- (BR) Brazil Jun Current Account Balance: -$3.35B v -$3.9Be; Foreign Direct Investment (FDI): $3.92B v $3.8Be

- The weak July German IFO survey and reports of fresh EU sanctions on Russia are being blamed for the steep declines in European indices. Skepticism about the June durables report has further dampened sentiment in the US session. As of writing, the DJIA is down 0.90%, the S&P500 is down 0.30% and the Nasdaq is down 0.76%.

- The June durables data were stronger than expected across the board, with the exception of capital shipments non-defense/ex-aircraft (core capital goods). The May numbers were revised downward slightly. Core capital goods shipments fell 1.0% in June and were revised from +0.7% to -1.2% for June, raising some concerns about GDP, as the metric is a key component of GDP calculations.

- EUR/USD took out yesterday's lows around 1.3440, dropping right to its 200-week MA around 1.3427 just after the open of US cash equity trade. The euro suffered from the weak German IFO survey and reports that the EU would be adding more Russian sanctions. Cable also retested yesterday's lows, trading as low as 1.6961.

- Rupert Murdoch is building 21st Century Fox's war chest for its pursuit of Time Warner. Fox is selling its cable TV operations in Italy and Germany for more than $9 billion to BSkyB (which is 39% owned by Fox). There have been more reports that Time Warner might consider an offer of more than $100/shr, a 25% premium to the current offer.

- Shares of heathcare name WellCare are down 22% this morning after the firm slashed its FY earnings expectations and disclosed a loss in its second quarter, very widely missing expectations. Revenue was half the expected amount. WellCare blamed the expansion of Florida's Medicaid pilot program for "unexpected financial burdens" that wrecked its Q2. Second-tier health insurers are getting hit along with WellCare: MOH is down 5%, CNC is off 7% and MGLN is down 11% (although the latter also disclosed a big earnings miss in its own second quarter results this morning).

- Amazon is not bouncing back after its weak second quarter earnings report, out last night. Revenue was solid however operating income was negative, while third quarter guidance for operating income was -$810 to -$410M. Amazon executives said the losses in the quarter and next quarters were all due to investments in its business. AWS usage grew by 90% year-over-year and that the company plans on continuing to invest heavily.

Looking Ahead

- (BE) Belgium Sovereign Debt Rating May Published by S&P
- (EE) Estonia Sovereign Debt Rating May Be Published by Moody's
- (DK) Denmark Sovereign Debt Rating May Be Published by Moody's
- 12:00 (FR) France Jun Net Change in Jobseekers: +10.5Ke v +24.8K prior; Total Jobseekers: 2.40Me v 3.389M prior