Markets Mull Merger Meltdowns

Economic Data

- (US) MBA Mortgage Applications w/e Aug 1st: +1.6% v -2.2% prior
- (US) Jun Trade Balance: -$41.5B v -$44.8Be
- (CA) Canada Jun Int'l Merchandise Trade: C$1.9B v C$0.0Me
- (MX) Mexico Jun Leading Indicators M/M: 0.1 v 0.1 prior
- (BR) Brazil July Vehicle Production: 252.6K v 215.9K prior; Vehicle Sales: 294.7K v 263.6K prior
- (UK) July NIESR GDP Estimate: 0.6% v 0.9% prior
- (US) DOE Crude: -1.76M v -1.5Me; Gasoline: -4.39M v 0Me; Distillate: -1.8M v +0.5Me
- (MX) Mexico July Vehicle Production: 259.6K v 287.3K prior; Vehicle Domestic Sales: 96.2K v 84.1K prior; Vehicle Exports: 231.9K v 230.4K prior

- Poor German manufacturing data and negative Italy GDP numbers further underlined the EU's tenuous economic situation, sending European indices deep into the red. In addition, Ukraine tensions have returned to a boil as Russia bulks up forces on its border with Ukraine, raising fears that an invasion under the pretext of a "humanitarian intervention" is imminent. US stocks dipped in the first 30 minutes of trade but are back to unchanged. As of writing, all three major US indices are up slightly.

- The June US trade deficit narrowed more than expected, dropping 7% to $41.5 billion, the lowest reading since January. The main dynamic in the data was a decline in petroleum imports to a 3.5 year low.

- Two major M&A deals have fallen apart over the last day, while a third deal has been altered to remove the tax inversion component following a strong political pushback. 21st Century Fox abandoned its $80 billion offer to acquire Time Warner, citing hostility to the deal at Time Warner and reluctance to overpay. Shares of FOXA are still up nearly 6%, while TWX is down 11%, off its worst levels. Meanwhile, Sprint has abandoned attempts to reach a deal to acquire T-Mobile, costing CEO Dan Hesse his job. Shares of Sprint are down 17.6%, while TMUS is coming off its worst levels, down 7%. Walgreen said it would buy up the rest of Alliance Boots it does not already own and abandon plans to move its tax address abroad. After falling 16% in the premarket, WAG is slowing recovering, down -12% as of writing.

- The Fed announced this morning it had no objections to a resubmitted capital plan from Bank of America. Recall that back in April, the Fed directed the company to resubmit its CCAR application after it emerged that the bank had incorrectly reported data used in the calculation of regulatory capital ratios. BoA boosted its dividend to $0.05 per share from $0.01 per share after the disclosure.

- Chrysler reported very good growth in second quarter net income and revenue in numbers out this morning. Note that during the European session, shares of parent Fiat were halted after they dropped to YTD lows, down more than 8%. There were unconfirmed reports that Fiat shareholders might vote down management's plan to consummate a merger of Fiat and Chrysler.

Looking Ahead

- (EU) ECB's Draghi to meet with EU Commission candidate Juncker over Maastricht stability measures
- (CO) Colombia July CPI Core M/M: No est v 0.2% prior; Y/Y: No est v 2.7% prior
- 11:30 (BR) Brazil July Commodity Price Index M/M: -3.0%e v -1.5% prior; Y/Y: No est v 6.7% prior
- 12:00 (CA) Canada to sell 5-Year Bonds
- 21:30 (AU) Australia July Employment Change: +13.2Ke v +15.9K prior; Unemployment Rate: 6.0%e v 6.0% prior