- Euro-Area Economic Output Contracted on Spain: Economy. The euro-area economy shrank in the second quarter after the worsening debt crisis and tougher budget cuts forced at least six nations into recessions. Gross domestic product in the 17-nation currency bloc fell 0.2 percent from the first quarter, when it stagnated, the European Union’s statistics office in Luxembourg said today. That’s in line with the median estimate of 35 economists in a Bloomberg survey. The contraction was softened by stronger-than- forecast growth in Germany, the region’s largest economy. Europe’s slump is deepening as governments struggle to restore investor confidence and companies eliminate jobs. While Germany’s economy helped to support the euro region in the first half, surveys are weakening, with a gauge of investor confidence dropping in August. The Bank of Japan (8301) today cited the euro turmoil among risks to its economy. “The ongoing recession in large parts of the periphery will continue to hold back euro-zone growth,” said Martin Van Vliet, an economist at ING Bank in Amsterdam. “Any recovery will likely remain sluggish and fragile. There are a lot of things that could go wrong on the crisis resolution that could derail the envisaged recovery.” Italy’s economy contracted for a fourth straight quarter, shrinking 0.7 percent. In Spain, which received external aid earlier this year, GDP dropped 0.4 percent from the first quarter, when it fell 0.3 percent. Portugal’s economy contracted 1.2 percent in that period and Cyprus also remained in a recession.
- China Reluctance on Reserve Cut Signals Inflation Concern. China’s slower-than-forecast cuts in banks’ reserve requirements show authorities are reluctant to shake their concern inflation will quicken, three months after Premier Wen Jiabao shifted priorities to boosting growth. China has left the reserve ratio for the biggest banks at 20 percent since mid-May while lowering interest rates in June and July, bucking forecasts from HSBC Holdings Plc and Societe Generale SA that the government would build on three ratio reductions since Nov. 30. Industrial-production and loan data for July that missed estimates last week fueled further speculation the People’s Bank of China would cut the ratio as soon as Aug. 10. “The central bank is still concerned about a rebound in inflation, and it is reluctant to loosen too much on the liquidity side,” said Xu Gao, an economist with Everbright Securities Co. in Beijing who previously worked for the World Bank. “The key problem now is that banks have money but the money can’t be channeled to the real economy.”
- China ‘Golden Years’ Are Gone as Growth Slows, Vale Says. China’s “golden years” are gone as economic growth at the world’s second-biggest economy slows, said an official at Vale SA (VALE5), the top iron-ore producer. Vale, which shipped about 44 percent of its iron ore and pellets to Chinese steelmakers in the second quarter, expects the country to start to recover by the end of the year, said Roberto Castello Branco, the Rio de Janeiro-based company’s director of investor relations. Vale sees some “early signals” of recovery, which are still “very weak,” he said. “We are not going to see the spectacular growth rates of 10, 12 percent per year,” Castello Branco said at the Bloomberg Brazil Economic Summit conference in Rio today. “The golden years are gone.” Iron-ore prices dropped to the lowest since Dec. 2009 yesterday on slower growth in China, the biggest user of the steelmaking ingredient, and a weaker outlook for the global economy. Vale said on July 25 that second-quarter profit plummeted 59 percent, missing analysts’ estimates for the fourth time in the past five quarters, after prices for minerals and metals declined. Vale is “very negative” about the prospects for growth in Europe, Castello Branco said.
- Retail Sales in U.S. Rose More Than Forecast in July: Economy. The 0.8 percent advance, the biggest since February and first gain in four months, followed a 0.7 percent decrease in June, Commerce Department figures showed today in Washington. Economists projected a 0.3 percent rise, according to the median forecast in a Bloomberg survey.
- U.S. Technology Calls Jump to Two-Year High on Spending: Options. Traders are boosting bullish wagers on U.S. technology stocks to the highest level in more than two years amid speculation that executives will increase spending on equipment and software even as the recovery slows. The ratio of outstanding calls to buy the Tech Select Sector SPDR Fund versus puts to sell jumped to 1.24 on Aug. 8, according to Bloomberg. That was the highest since June 2010.
- Apple’s(AAPL) IPad Shipments, Market Share Surge: IHS. Apple Inc. shipments of iPad tablets surged 44 percent to 17 million in the second quarter, giving the company its biggest share of the market in more than a year as devices from competitors lost ground. Apple’s market share climbed to 69.6 percent in the quarter from 58.1 percent in the previous three-month period, according to a report today from IHS. Cupertino, California-based Apple’s share of the tablet market hasn’t been that high since the first quarter of 2011, when it was 70 percent, IHS said.
- BP Said to Seek $7.9 Billion Selling Gulf of Mexico Fields.
- Knight(KCG) Trading Loss Said to Be Linked to Dormant Software. Knight Capital Group Inc.'s $440 million trading loss stemmed from an old set of computer software that was inadvertently reactivated when a new program was installed, according to two people briefed on the matter.
- U.S. Government Finances Deteriorating, S&P’s Swann Tells MNI. The U.S. government’s finances have deteriorated “gradually” since Standard & Poor’s stripped the country of its top grade, Nikola Swann, an analyst for the credit-rating company, said in an interview with newswire MNI. America has had an AA+ rating with a negative outlook since Aug. 5, 2011, when S&P downgraded the country for the first time, citing the government’s failure to agree on a plan to reduce deficits. The grade may be cut again by 2014, the New York-based unit of McGraw-Hill Cos. said in a June 8 report. “The U.S. fiscal profile has continued to gradually deteriorate since last summer, at a rate in-between our base- case scenario and our downside scenario of August 2011, keeping the U.S. at the high end of our indebtedness range,” Swann said in an interview published today by MNI.
- Gold Drops Below $1,600 Per Ounce. Gold prices fell nearly 1 percent on Tuesday, with a breach of support near $1,605 an ounce triggering technical selling, after forecast-beating U.S. retail sales data dampened speculation of another round of monetary easing and lifted the dollar.
- How Bad Is Greece? Worse Than You Think, Ross Says. Though other parts of the continent are improving, Greece actually is worse up close than it appears from the outside, investor Wilbur Ross told CBNC.
- US Small Business Sentiment Slips Again in July: NFIB. U.S. small business sentiment fell for a third straight month in July as owners worried about sales revenue against the backdrop of weak domestic demand, an independent survey showed on Tuesday. The National Federation of Independent Business said its optimism index eased to 91.2 last month from 91.4 in June.
- Home Depot(HD) Earnings Beat Forecasts, Ups Guidance. Home Depot raised its fiscal-year earnings outlook on Tuesday as tight cost controls helped the world's largest home improvement chain offset sales weakness and beat Wall Street's profit estimates in the latest quarter.
- THE PAUL RYAN BUMP: Mitt Romney Takes His Biggest Gallup Lead In Two Months. Romney leads 47 percent to 45 percent. Back on June 14, Romney held the same 2-point lead. In all, it's a 7-point swing from July 1, when Obama looked to be opening up a huge 5-point lead on Romney.
- Credit Suisse Picks The 7 Best Stocks For The Robot Economy.
- Joe Biden Said Republicans Want To Put Americans 'Back In Chains,' And The Romney Campaign Is Flipping Out. Vice President Joe Biden caused a flare-up on the campaign today, when he told voters at a Virginia campaign event that a Mitt Romney presidency would put Americans "back in chains." The Romney campaign freaked out about the comment, sending out this statement from Press Secretary Andrea Saul: “After weeks of slanderous and baseless accusations leveled against Governor Romney, the Obama Campaign has reached a new low. The comments made by the Vice President of the United States are not acceptable in our political discourse and demonstrate yet again that the Obama Campaign will say and do anything to win this election. President Obama should tell the American people whether he agrees with Joe Biden’s comments.”
- 36 Weird Economic Indicators That You've Never Heard Of.
- There's An Israeli Media Blitz Over A Possible Strike On Iran.
- Chinese Companies Are Pulling Out Of The Once Desirable US Stock Markets.
- BANK OF AMERICA(BAC): The Market Is Engaged In 'Wishful Thinking' And Things Are Going To Collapse Again In Europe.
- Mystery Of July Retail Sales "Beat" Solved: It Is All In The "Seasonal Adjustment".
- Mark Grant And Rick Santelli On Europe: "It's A Ponzi Scheme To Be Honest With You".
- The Economic 'Recovery' In Historical Context.
- The Shape Of The Debt Reset.
- BofA Merrill Lynch Fund Manager Survey Finds Resurgence in Investor Sentiment. Investor sentiment has risen sharply from the lows of July and fund managers have increased allocations to equities, real estate and commodities, according to the BofA Merrill Lynch Survey of Fund Managers for August. A net 15 percent of the 173 panelists participating in the global survey believe that world economy will get stronger in the coming 12 months. This represents a monthly swing of 28 percentage points, the largest leap in confidence since April to May 2009, when the world emerged from the credit crunch. In July, a net 13 percent said the economy would weaken. BofA Merrill Lynch’s Growth Expectations Composite has risen to 49 from 37 in July. Fears about the outlook for corporate profits have reduced since July. A net 21 percent of the panel expects profits to deteriorate in the coming year, down from a net 38 percent a month ago. The fresh optimism comes amid growing expectations of intervention by the European Central Bank (ECB). The proportion of the panel ruling out more quantitative easing by the ECB has halved to 9 percent, while 38 percent expect the ECB to act during the third quarter (up from 29 percent in July). China’s economy is also providing optimism with a net 14 percent of the regional panel saying China’s economy will improve – the most positive reading since November 2010. “August’s surge in confidence seems to be more a triumph of policy projection and potential than positive economic data. As indicated by the survey, the risk is now that inaction by policy makers would lead to a negative reaction in global markets,” said Gary Baker, head of European Equities strategy at BofA Merrill Lynch Global Research.
- German GDP growth slows, contraction looms. German growth slowed in the second quarter and a key sentiment indicator dropped for the fourth successive month, threatening contraction for Europe's largest economy if the euro zone crisis runs unresolved for much longer. German gross domestic product (GDP) grew by 0.3 percent in the second quarter, data showed on Tuesday, a touch better than expected and helped by exports to countries outside of Europe as well as a pick-up in consumption. But growth slowed from 0.5 percent in the first three months and the forward-looking ZEW sentiment index undercut even the lowest estimate in a Reuters poll, falling to -25.5 from -19.6. "Growth turned out to be pretty solid. But this could be the last positive piece of news out of Germany for some time," said Joerg Kraemer at Commerzbank. "The German economy could contract in the summer. It is fundamentally in good structural shape, but can't decouple from the recession in the euro zone, plus the global economy has also shifted down a gear," he said. If the slowdown were to accelerate, it could affect the willingness of average Germans to contribute to euro zone bailouts, but for now Germany's labour market is holding up well, wages have risen and inflation is relatively low.
- Dick's Sporting(DKS) Sees FY Profit Largely Below Estimates. Dick's Sporting Goods Inc, the largest publicly traded U.S. sports goods retailer, reported a better-than-expected quarterly profit on higher sales, but forecast full-year earnings largely below Wall Street expectations. The company raised its 2012 forecast for the second time in three months and now expects per-share earnings of $2.47 to $2.51 during the year, up from its earlier range of $2.45 to $2.48. Analysts were expecting earnings of $2.51 per share, according to Thomson Reuters I/B/E/S.
- Mariano Rajoy remains tight-lipped on Spanish bail-out. Spanish prime minister Mariano Rajoy has remained tight-lipped on whether he will make a formal request for a bail-out, as Olli Rehn indicated the ECB and EU were ready to shore up the eurozone.
- Oettinger Sees Greek Exit Deal Possible in September. European Union Energy Commissioner Guenther Oettinger said a potential exit from the eurozone by Greece is likely to come as soon as September, citing an interview. A decision is likely to come then as Greece's troika of international creditors - the IMF, the European Commission and the European Central Bank - publishes a report on Greece, Oettinger said.
- The proportion of non-performing loans in Greece's banking system has reached 20%, with repayment arrears amounting to 48 billion euros.
- Shanghai's Exports Plunge. SHANGHAI'S exports posted the biggest fall in nearly three years in July, hurt by the worsening European economic crisis, data from Shanghai Customs showed yesterday. The total value of the city's imports and exports in the first seven months rose 1.2 percent on an annual basis to US$462.7 billion, compared with a 2.4 percent climb in the first half, Shanghai Customs said. In July, exports fell 8.6 percent from a year earlier to US$43.8 billion, the biggest drop since November 2009, while imports added 2.7 percent to USS$26.9 billion.