Bloomberg:
- Zombie Companies Littering Europe May Tie the ECB's Hands for Years. Watch out for the zombies. The plethora of companies propped up by the European Central Bank will limit policy makers’ ability to withdraw monetary stimulus that’s been supporting the continent’s bond market since the financial crisis, according to strategists at Bank of America Corp. About 9 percent of Europe’s biggest companies could be classified as the walking dead, companies that risk collapse if the support dries up, according to the analysts. After the crash of Lehman Brothers sent global markets into a tailspin, a decade of easy-money policies gave breathing room for nations to get their balance sheets in check and allowed for a spirited revival in corporate profits. But as central bankers look to pull back stimulus for fear of overheating, the potentially grim outlook for vulnerable companies may give them pause, according to Bank of America.
- Euro Area Economy Grows at Slowest Pace in Six Months. Growth in the euro-region economy started the third quarter at the weakest pace in six months as manufacturing cooled. A composite Purchasing Managers’ Index fell to 55.8 in July from 56.3 in June, IHS Markit said on Monday. The figures indicate that gross domestic product is expanding at a 0.6 percent quarterly pace, compared with 0.7 percent in the second three months of the year.
- European Real Estate Is Entering Bubble Territory, Fidelity Says. Inexperienced, yield-hungry French retail investors are pouring money into real estate funds, pushing up prices for the best European commercial properties to unsustainable levels, according to Fidelity International Ltd.
- European Stocks Fall With Carmakers as Busy Earnings Week Begins. (video) The Stoxx Europe 600 Index fell 0.2 percent at the close. Equities fell as much as 0.6 percent after data showed the euro-area economy in July grew at the slowest pace in six months.
- Tarullo Says Weak Inflation Clouding Fed's Rate-Hike Outlook. (video) Former Federal Reserve Governor Daniel Tarullo said weak inflation could weigh on the central bank’s discussions about whether to raise interest rates again, with only little risk that prices will surge out of control. “People are thinking about what’s going on with inflation,” Tarullo, who stepped down from the Fed on April 5, told Bloomberg Television’s David Westin on Monday. “We don’t know whether in the next couple of meetings those concerns will be strong enough that the Fed will hold off from another rate increase or not.”
- Protection Against a Dollar Plunge Is the Costliest Since 2009. (video) With the Federal Reserve expected to hold interest rates steady Wednesday, traders in the $5.1-trillion-a-day currency market are paying an added premium for the first time since October 2009 on options to protect against an extreme decline in the dollar against the euro over a six-month tenor. One measure, known as a 10-delta risk reversal, is an indication of trader bias in the options market, which currently reflects expectations that any move in the euro would be dramatic.
MarketWatch.com:
- Oil prices advance as Saudis pledge to cut exports; Nigeria agrees to output cap. September West Texas Intermediate crude CLU7, +1.16% rose by 42 cents, or 0.9%, to $46.19 a barrel on the New York Mercantile Exchange.
Fox News:
Zero Hedge:
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