U.S. stock index futures were up fractionally this morning following strong earnings results from large-cap banks and other companies who managed to beat lowered expectations.
Also weighing on investors this morning is that China grew at its slowest pace in six years at the start of 2015 and weakness in key sectors suggested the world's second-largest economy was still losing momentum, intensifying Beijing's struggle to find the right policy mix to shore up activity.
The markets are expected to open up.
Here is the current market situation from CNN Money
European markets are higher today with shares in France leading the region. The CAC 40 is up 0.67% while Germany's DAX is up 0.36% and London's FTSE 100 is up 0.34%.
The euro zone is doubtful that a deal will be struck with Greece next week on economic reforms for bailout funds, potentially leaving the country perilously short of money.
WTI oil is edging up to a resistance of 54.20 and the U.S. Dollar remains in the 99 range, but modestly melting upwards.
The New York Federal Reserve's gauge of manufacturing activity in the region dropped to -1.19 in April, widely missing expectations for an increase to 7 from a March reading of 6.9. The reading is the first one in negative territory since December.
The second-biggest U.S. bank by assets revealed first-quarter profits per share of 27 cents, missing analysts' expectations by two cents. Revenue excluding a debt valuation adjustment came in at $21.42 billion, below forecasts for $21.5 billion. Bank of America shares were lower in pre-market trade.
(Reuters) - Bank of America Corp, the No. 2 U.S. bank by assets, posted a first-quarter profit, narrowly beating analysts' estimates, as legal costs fell steeply and the bank earned more from mortgage lending and investment and brokerage services.
When everyone begins to draw up the contingency plans you know the end may well be nigh.
Just two days ago FT reported that the Greek government â€" which has reportedly resorted to "acting like a taxi driver" when it comes to asking for money from creditors â€" has "come to the end of road" and is prepared to declare a default on its debt to the IMF (so no gas for Kiev?) if no agreement is struck between Syriza and the people who are not to be called "the troika" by the end of this month. Of course, Athens denied the "rumor," without explaining how it planned to find enough money to make good on its obligations coming due in May.
As FT noted, "a default would almost certainly lead to the suspension of emergency European Central Bank liquidity assistance for the Greek financial sector, the closure of Greek banks, capital controls and wider economic instability." Couple this with unpaid pensions and salaries and you have the recipe for what we'll call a "domestic issue" and by that we mean a popular uprising. In what may be an early attempt to head off (or at least ameliorate) such a scenario, Germany is reportedly prepping a plan to support Greek banks in the event Greece does in fact take the plunge.
From Die Zeit (via Google translate):
[Berlin] is working on a plan that would allow it to keep Greece in the case of a sove ...
ABU DHABI (Reuters) - The boss of Abu Dhabi's Etihad Airways has warned Europe that it will suffer if it restricts the access of foreign carriers to its market, in a fresh effort by fast-growing Gulf airlines to head off what they see as Western protectionism.
One look at BofA's earnings report shows why contrary to popular opinion, the bank that bailed out insolvent Merrill Lynch is far better off to be pnealized with tens of billions in legal fees than running its business unbothered by the racketeering government. The reason: a year after BofA reported $6 billion in litigation charges, moments ago Bank of America announced only $0.4 billion in legal fees, which meant it barely had any credible addbacks. So when looking at its numbers on a realistic, GAAP basis, BofA once again missed EPS, with the bottom line printing at $0.27, or below the $0.29 estimate.
Of course, since the estimate was established by other bank analysts who are desperate to get credit for their own addbacks, the number which management hopes algos focus on is the $0.36 non-GAAP pro forma net of addbacks.
As BofA reports, first quarter 2015 reported earnings per diluted common share of $0.27. However, "Pre-tax results included the following items:"
$1.0B annual retirement-eligible incentive costs, or $0.06 per share (recorded in both 1Q15 and 1Q14)
$0.5B negative market-related adjustments to net interest income, or $0.03 per share, driven by the acceleration of bond premium amortization on debt securities due to lower long-term rates
It was unclear if the above are non-cash and why they should be therefore added back, especially since with BofA nothing is "non-recurring."
The breakdown was as follows:
Of note: even in a quiet quarter, BofA still suffered $400 million in litigation expenses. In fact, it is safe to say that being sued is ordinary course of business for BofA now.
LONDON (Reuters) - Brent crude oil prices rose on Wednesday amid tension in the Middle East and signs of a dip in U.S. production, but gains were capped by a report from the International Energy Agency (IEA) indicating that supplies would take longer to tighten than previously expected.
Nobody was expecting any actual rate change announcements by the ECB today, and none were made, with the ECB announcing moments ago that it kept all three rates unchanged, with depositors still expected to pony up %0.20 to keep their funds at a financial institution, while those who take out a mortgage can expect the bank to pay them a likewise amount.
From the ECB:
Monetary policy decisions
At today's meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.05%, 0.30% and -0.20% respectively.
The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14.30 CET today.
All eyes now on Draghi in 45 minutes where, as DB said, "expect a lot of questions on whether they can see out the term given the distortions its creating in European bond markets" or as Bloomberg reprhrased it, "Draghi is set to be asked at his regular press conference what happens if he succeeds before September 2016." By succeeds, Bloomberg clearly means runs out of bonds to buy, and with Bunds ticking in at 0.13%, and just 33 bps away from the price the ECB can no longer buy them, this will come very soon.
BRUSSELS (Reuters) - The European Union accused Google Inc on Wednesday of cheating competitors by distorting Internet search results to favor its shopping service, and launched another antitrust investigation into its Android mobile operating system.
LONDON (Reuters) - Barclays Plc shareholders should reject the British bank's remuneration policy, as pay for Chief Executive Antony Jenkins is "excessive", a shareholder advisory group said on Wednesday.
BEIJING (Reuters) - China grew at its slowest pace in six years at the start of 2015 and weakness in key sectors suggested the world's second-largest economy was still losing momentum, intensifying Beijing's struggle to find the right policy mix to shore up activity.
LONDON (Reuters) - European shares hit a 14-year high on Wednesday before a meeting at which the European Central Bank is expected to affirm its loose policy stance, as weak data from China raised prospects of monetary easing there too.
Today's even highlight is the monthly ECB meeting day. Given we're only a few weeks into a new policy that's scheduled to last 18 months, expect a lot of questions on whether they can see out the term given the distortions its creating in European bond markets. Greece will also be a focus.
If yesterday stocks surged on the worst 4-month stretch of missing retail sales since Lehman, one which BofA with all seriousness spun by saying "it seems not unreasonable to suspect that the March 2015 reading on retail sales gets revised up next month", then the reason why futures are now solidly in the green across the board even as German Bunds have just 14 bps to go until they hit negative yields and before the ECB is fresh out of luck on future debt monetization, is that overnight China reported its worst GDP since 2009 together with economic data misses across the board confirming China's economy continues its hard landing approach despite a stock market that has doubled in the past year.
Unexpectedly the Shanghai Composite was down overnight despite what is "clearly" evidence of more PBOC easing, and even the bubbly Hang Seng could barely eek out a 0.2% increase. Elsewhere in Asia, stocks trade mostly lower led by Chinese bourses amid poor data, with the Shanghai Comp (-1.2%) on course to for its biggest drop in 6-weeks. Q1 GDP (7.0% vs. Exp. 7.0% (Prev. 7.3%) and March industrial production (Y/Y 5.6% vs. Exp. 7.0%) came in at their 6yr lows, while retail sales (Y/Y 10.2% vs. Exp. 10.9%) also tumbled to multi-year lows. ASX 200 (-0.6%) was weighed on by the Chinese data while the Nikkei 225 (-0.2%) was weighed on by a strong JPY.
European equities bounce back from yesterday's negative close with the energy sector leading gains after API crude inventories printed a much smaller build than its previous reading, which had reported its largest build since February 18th. In stock specific news, the latest merger deal including Nokia and Alcatel Lucent ...
FRANKFURT (Reuters) - European Central Bank policymakers have sanctioned further emergency funding for Greece's banks, a banking source said, amid clear signs that the wider euro zone economy is picking up.
BEIJING (Reuters) - Chinese transportation robotics firm Ninebot said on Wednesday it has acquired U.S. rival Segway Inc, the company behind the self-balancing scooter that became a technological marvel when it was launched in the early 2000s but whose hype then faded.
BERLIN/STUTTGART (Reuters) - Volkswagen's first leadership crisis in a decade has burst into the open with Chairman Ferdinand Piech's surprise public denunciation of CEO Martin Winterkorn -- but the standoff is now more likely to play out behind closed doors.
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