- China is stepping up efforts to rein in risks in the financial sector, curbing banks’ use of complex financial products and resisting lobbying to relax the rules governing bad-loan buffers. China’s banking regulator is pushing back against requests from the country’s largest banks to reduce the 150 percent minimum ratio for bad-loan provisions, a move that is likely to curb their profits, people familiar with the matter said Thursday. Banks whose ratios are already below that level are being urged by the China Banking Regulatory Commission to take steps to restore their buffers, said the people, who asked not to be named discussing private information. "Tightening WMP is something we want to see and will reduce risks in the banking system," said Sophie Jiang, a Hong Kong-based analyst at Nomura International (HK) Ltd. "Understandably, the regulator is doing this out of prudence and maintaining financial stability," she added.
- Japan’s consumer prices dropped for a fourth consecutive month, showing how far prices are from the Bank of Japan’s 2 percent inflation target. In a slew of key economic indicators being released just hours before the BOJ announces any changes in monetary policy, household spending slumped while industrial production rose more than economists forecast.
- If Vladimir Putin were scripting ways to weaken NATO, he couldn’t do much better than what’s happening right now. In the U.S., Republican candidate Donald Trump is questioning the alliance’s basic principle and hinting at recognizing Putin’s annexation of Crimea. In Turkey, officials led by President Recep Tayyip Erdogan’s chief adviser are blaming the U.S. for a failed coup by rogue officers in NATO’s second-largest military, fueling a surge of anti-Americanism that Putin is rushing to exploit. Suddenly, with little effort, the KGB veteran is reaping a surprise windfall from the internal politics of two pillars of Europe’s collective defense structure. “Putin has the luck of the devil,” said Mark Galeotti, a visiting fellow at the European Council on Foreign Relations. “He can just sit back and watch this richer, more powerful and legitimate values-based bloc tear itself apart.”
- India’s plan to inject more capital into state-owned banks is doing little to alleviate investor concern that lenders’ credit profiles are deteriorating. The cost of insuring bonds issued by State Bank of India, IDBI Bank Ltd. and Bank of India have risen this week, credit default swap data compiled by Bloomberg show. The increases come even after the finance ministry said earlier this month that 13 public sector lenders would receive a 229.2 billion rupee ($3.4 billion) capital boost from the government.
- Asian stocks swung between gains and losses as the yen strengthened in volatile trading before the Bank of Japan’s policy decision. The MSCI Asia Pacific Index rose 0.1 percent to 134.97 as of 9:06 a.m. in Tokyo, after dropping as much as 0.1 percent.
- Oil headed for the biggest monthly decline in a year as brimming crude and fuel inventories stifle a price recovery. Futures dropped as much as 0.5 percent in New York, down 15 percent for the month. U.S. crude inventories rose for the first time since May while gasoline stockpiles expanded through July 22, swelling a surplus of supplies that are at the highest seasonal level in at least two decades. Libya’s biggest oil ports are reopening after a dispute with guards at the facilities was settled. Oil has slipped about 20 percent since early June after almost doubling from a 12-year low in February as supply disruptions from Nigeria to Canada trimmed a worldwide surplus. Producers including BP Plc, Royal Dutch Shell Plc and Total SA reported sharp declines in second-quarter earnings as lower prices continued to take their toll. “There is too much oil in the market, there’s an incredible amount,” said Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney. “Oil is in a range of $40 to $50 a barrel and prices below $40 a barrel are going to be a problem.”
Wall Street Journal:
- Clinton’s Image Among Democrats at a Historic Low. Hillary Clinton heads into the biggest speech of her political life Thursday night suffering from a more negative image within her own party than any previous Democratic nominee on the eve of the party convention in the last quarter century, a new analysis of Wall Street Journal/NBC News polling shows.
- New York Fed to Relocate Examiners Out of Banks. Move comes amid criticism that regulator has grown too close to lenders. The Federal Reserve Bank of New York is moving scores of regulators out of their offices inside big banks amid criticism that it has grown too close to the institutions it supervises. The New York Fed expects that all of its nearly 250 on-site bank examiners—about a third of its bank-supervision group—will be relocated to newly refurbished central-bank offices in lower Manhattan by the end of 2017, people familiar with the matter...
- 5 Things to Watch in Second-Quarter GDP Report.
- DNC Convention: Live Blog.
- Bags banned from Cannes beaches over terror attack fears in country. The mayor of Cannes announced Thursday that, due to the terror threat in France, bags have been banned from the city’s world-famous beaches. The Sun reported that sunbathers were told to carry transparent bags if needed or face arrest. Security officials told the newspaper they had serious concern attackers could smuggle "weapons or explosives" onto the beaches.
- Companies have a $10 trillion bill that is coming due. (video) The corporate debt pile is continuing to pile up, with a $10 trillion bill coming due over the next several years. That's how much of the $51 trillion in global company IOUs is maturing between now and 2021, according to data from S&P Global Ratings, which warns of potential dangers ahead.
- Jim Bianco: Fed is letting inmates run the asylum. CNBC's Rick Santelli and Jim Bianco, president of Bianco Research, discussed how investors have figured out they can control the Federal Reserve's actions as the central bank won't move if asset prices are falling. "Inmates are running the asylum. And the inmates have figured out now if they don't price it in [a rate hike], the Fed's too afraid of bad financial markets ... so they won't move," Bianco said.
- We are in the last innings of the auto cycle, Morgan Stanley analyst says. (video) Ford's earnings miss Thursday not only reflects problems for the automaker, it could be a watershed moment for the industry, Morgan Stanley's Adam Jonas said. "We think we are in the extra innings, perhaps the 11th inning, of a 14-inning ballgame when it comes to the auto cycle. We are at a point where you have to make it worth someone's while to get into a dealership," Jonas, head of global auto research for Morgan Stanley, told CNBC's "Power Lunch" on Thursday. The industry is already ramping up incentives, with Ford's up 20 percent in July.
- Google(GOOG) parent Alphabet's earnings: $8.42 per share, vs. expected EPS of $8.04. (video)
Earnings of Note
8:30 am EST
- Previewing The BOJ's Decision: What Wall Street Expects Will Happen.
- USDJPY Just Flash-Crashed. (graph)
- Even Bank of America Is Losing It: "Bring On The Herikoputa!"
- BoJ Turmoil: USDJPY Risk Explodes To Highest Since Lehman. (graph)
- David Stockman Warns "2008 Was Just Spring-Training For What Comes Next".
- Amazon(AMZN) Smashes Expectations As Cloud Profits Soar; Stock Dips Then Jumps.
- Why MainStreet Isn't Buying Obama's Economic Story.
- Stocks Dump-n-Pump Amid Crude Carnage, Credit Crumble. (graph)
- Facebook(FB) said it might have to pay the feds between $3 billion and $5 billion.
- Microsoft(MSFT) is laying off another 2,850 people in the next 12 months.
- 'Unique, strange, and terrible' — ISIS may have created a new type of bomb.
- 4 ominous reasons American fast food is headed for a huge crash.
- The US will name a Navy ship after gay-rights activist Harvey Milk.
- IAN BREMMER: Hillary Clinton’s email scandal highlighted one of her biggest flaws. (video)
- US oil in bear market territory: 5 things to watch. Crude oil’s quiet slide from its 2016 high sharpens questions about the outlook. The major US crude oil benchmark has fallen into a bear market, heaping more pressure on oil companies and major producing countries that had hoped the worst of the rout was over.
- Asian equity indices are -.50% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 120.0 unch.
- Asia Pacific Sovereign CDS Index 48.75 -.25 basis point.
- Bloomberg Emerging Markets Currency Index 71.95 +.03%.
- S&P 500 futures -.05%.
- NASDAQ 100 futures +.05%.
Earnings of Note
8:30 am EST
- The 2Q Employment Cost Index is estimated to rise +.6% versus a +.6% gain in 1Q.
- Advance 2Q GDP QoQ is estimated to rise +2.6% versus a +1.1% gain in 1Q.
- Advance 2Q Personal Consumption is estimated to rise +4.3% versus a +1.5% gain in 1Q.
- Advance 2Q GDP Price Index is estimated to rise +1.9% versus a +.4% gain in 1Q.
- The Chicago Purchasing Manager Index for July is estimated to fall to 54.0 versus a reading of 56.8 in June.
- Final Univ. of Mich. Consumer Sentiment for July is estimated to rise to 90.2 versus 89.5 in June.
- None of note
- The Fed's Williams speaking, Fed's Kaplan speaking, BOJ rate decision and the Eurozone CPI report could also impact trading today.