Decent Earnings, Deal Talk Boosts US Markets

Economic Data

- (IL) Israel Q1 Final GDP Annualized: 2.9% v 2.7% prelim
- (US) MBA Mortgage Applications w/e July 11th: -3.6 v +1.9% prior
- (BR) Brazil July FGV Inflation IGP-10 M/M: -0.6% v -0.5%e
- (ZA) South Africa May Retail Sales M/M: 0.8% v 0.5%e; Y/Y: 2.4% v 0.7%e
- (PL) Poland Jun CPI Core M/M: 0.2% v 0.1%e; Y/Y: 1.0% v 0.9%e
- (PL) Poland Jun Average Gross Wages M/M: 1.7% v 2.9%e; Y/Y: 3.5% v 4.6%e
- (PL) Poland Jun Employment M/M: 0.2% v 0.2%e; Y/Y: 0.7% v 0.7%e
- (BR) Brazil May Retail Sales M/M: +0.5% v -0.1%e; Y/Y: 4.8% v 3.7%e; Broad Retail Sales Y/Y: 0.9% v 0.3%e
- (RU) Russia Jun PPI M/M:0.8% v 0.5%e ; Y/Y: 8.9% v 9.0%e
- (US) Jun PPI Final Demand M/M: 0.4% v 0.2%e; Y/Y: 1.9% v 1.9%e
- (US) Jun PPI Final PPI Ex Food and Energy M/M: 0.2% v 0.2%e; Y/Y: 1.8% v 1.7%e
- (CA) Canada May Manufacturing Sales M/M: 1.6% v +1.0%e
- (US) May Net Long-term TIC Flows: $19.4B v +$25.0Be; Total Net TIC Flows: $35.5B v $136.8B prior
- (US) Jun Industrial Production M/M: 0.2% v 0.3%e; Capacity Utilization: 79.1% v 79.3%e
- (CA) Bank of Canada (BOC) leaves Interest Rates unchanged at 1.00%, as expected
- (US) July NAHB Housing Market Index: 53 v 50e
- (US) DOE Crude: -7.5M v -2.5Me; Gasoline: +0.17M v +1Me; Distillate: +2.53M v +2Me

- US equities gained before the open of cash trading on a raft of strong earnings reports, but have been losing altitude in mid-morning trade. As of writing, the DJIA is up 0.18%, the S&P500 is up 0.32% and the Nasdaq is up 0.18%.

- EUR/USD has fallen lower this morning, with the pair testing 1.3530, not far from the lower end of its six-week range. Key support is seen around 1.3503, which matches the lows seen after the ECB announced its latest round of extraordinary measures in June. Crude has ticked up slightly more than 1% this morning after dropping below $100 yesterday. Note that the DoE weekly inventory data indicated a much larger than expected drawdown in crude stocks.

- Today is day two of Fed Chair Yellen's testimony before Congress, this time at the House of Representatives. Little new is coming out of the hearings. Yellen has reiterated that requiring the Fed to use a set, formal policy framework of rules would be a grave mistake.

- On an adjusted basis, Bank of America's second quarter EPS beat expectations and saw solid y/y gains, but before adding back litigation expenses, the bank's earnings were a disappointing $0.19. Total revenue was down about 4% y/y. Mortgage originations were very weak, although FICC revenue grew, unlike its investment bank competitors. US Bancorp's profit increased slightly as the firm posted higher revenue and loan growth. Profit at PNC Financial Services Group fell slightly in the second quarter as revenue declined. USB is down 1.5%, PNC is down 3.5% and BAC is down 2%. Asset managers Blackrock and Charles Schwab met all expectations in Q2, with moderate growth.

- Reports out this morning asserted that Rupert Murdoch's Twenty-First Century Fox made a $85/shr, $80 billion bid for Time Warner. The company later confirmed that it had rejected the bid, saying its strategic plan was superior to any proposal that Fox was in a position to offer and also cited regulatory uncertainty. Subsequent reports indicated Fox could offer a higher bid. At the Sun Valley conference last week, rumors had floated around that there was merger interest in Time Warner. Shares of TWX are up 17.5%, trading around $83.50/shr.

Looking Ahead

- (BR) Datafolha and Sensus Brazil election polls could be released
- 12:00 (US) Fed's Fisher on monetary policy in LA
- 14:00 (US) Federal Reserve Releases Beige Book
- 14:00 (EU) EU Leaders summit
- (BR) Brazil Central Bank (BDB) Interest Rate Decision: Expected to leave Selic Target Rate unchanged at 11.00%
- 21:55 (AU) RBA's Edey speaks on Panel in Sydney