Daimler profits are up 70%

The DAX has been profiting from the bullish markets and is up 0,35%, reaching the 12310 point mark. The strongly criticized German car industry is still suffering the repercussion from the cartel allegations. Daimler and BMW are the only DAX members recording stock losses. Volkswagen is up 2,35%. Reports have surged, from the usually well-informed Sueddeustche Zeitung, that Daimler was first in coming clean with Germany’s and Europe’s cartel watchdogs, and it could avoid a multi-billion fine. Volkswagen came in second, and could get a 50% rebate on the punishment. BMW, one of the least suspicious in the dieselgate scandal, is kept holding the bag.

Following an inconclusive session on Monday and the start of the Federal Reserve’s two-day FOMC meeting yesterday morning, the bulls got the new session rolling in a big way with an immediate jump forward of more than 150 points in the Dow Jones Industrial Average. Along with the Dow’s snappy opening gain, the Standard and Poor’s 500 Index soared to another intraday all-time high, advancing to just shy of 2,480 at the opening bell. The NASDAQ, however, was held back, posting a small early loss under pressure from a 28-point loss in shares of Alphabet on news of an antitrust fine. The strong start, however, could not be sustained, and as we neared the one-hour mark of trading, the 57-point Dow gain had been pared to some 65 points. The NASDAQ, meantime, barely held at breakeven, while the S&P 500 Index saw its gain cut to a handful of points. The big influence was earnings, as industrial giant Caterpillar posted bottom-line results that exceeded expectations and shares of that Dow-30 component jumped nicely in early dealings. It was a far different story for fellow Dow stock 3M Company. That industrial giant disappointed investors with its top-and-bottom-line miss, and the stock tumbled. The Dow’s pullback didn’t continue, however, and as we passed the one-hour mark, that index again started to press higher, soon returning to past the 100-point advance mark. The strength continued through the morning, so that as the noon hour arrived, the market was up strongly, with the Dow’s advance holding at a formidable 130 points, in spite of the 3M profit miss and subsequent price drop. The strong advance persisted into the close, with the Dow’s triple-digit point gain staying intact until shortly before the concluding bell. As was the case earlier, the bullish tone was driven by better-than-expected earnings, not only from the Dow’s Caterpillar, but also from McDonald’s, another component of that 30-stock composite. Those two issues continued to overcome the further weakness in 3M. Also, most of the leading sectors were trading higher, led by basic materials and energy, while stocks rising in price easily topped those equities falling back. In short, there were few places for the encumbered bears to hide. When all the number were thus in, the Dow, with a last minute push higher closed higher by 100 points; the S&P 500 added seven points; and the NASDAQ eked out a small win. More substantial gains were posted by the smaller indexes. Now, as we await a new day, additional earnings data, and a report on sales of new dwellings (following Monday’s solid report of sales of existing homes, the big story will be the Fed. The central bank, which commenced its latest FOMC meeting yesterday, will end matters this afternoon at approximately 2:00 PM (EDT), with a likely decision, as noted above, to keep interest rates unchanged.

Daimler has posted another quarter of record sales and revenue, creating a strong base off which it says it will be able to “exploit new business models” amid industry disruption. The Stuttgart-based carmaker said net profit for the second quarter rose 2% to €2.51bn, as revenue rose 7 per cent to €41.2bn, Operating margins for Mercedes cars rose from 6.4% a year ago to an amazing 10.2%. Overall operating profit jumped 15% to €3.75bn, led by a stunning 70 % climb in Mercedes-Benz profits, to €2.4bn. Profits fell by double digits at the group’s vans, buses, and trucks’ divisions. After overtaking BMW to be the world leader leader in luxury car sales last year, Mercedes increased car sales by 9 % to 595,178 units.Total Daimler sales across all units were up 8 per cent from a year ago to 822,504 units.Chief executive Dieter Zetsche called the quarter excellent. “We have set ourselves ambitious targets. And we are achieving them – in terms of unit sales and of profitability.” The car industry is in the early stages of being upended by “megatrends” that will see passengers use electric, self-driving cars that are shared rather than owned. Mr Zetsche said Daimler’s “strong core business is the best basis” to meet this transformation. Meanwhile, the legacy business model is expected to keep growing. Daimler said worldwide demand for all cars is expected to 1-2 per cent this year, which would mark an 8th straight year of growth. US sales are expected to fall, but Europe and China should see slight growth, while India should see “significant” growth.

Morgan Stanley tops expectations

After a bad start to the week the German DAX was able to recover from some of its losses in the early trading hours. In the afternoon the DAX has been has been circling around the 12’430 point mark. The sideward movement in the DAX is mainly due to the ECB meeting tomorrow. The EURUSD had to take a break on its rise and has weakened as of today.

In the US the stock market, following an indecisive start to the week on Monday, looked poised to press higher yesterday–or at worst mark time once again. And, in fact, the equity futures were showing little change several hours before the start of trading on our shores. Then, in some apparent rethinking, the bears started to flex their muscles. This shift was not dramatic at first, and there was no wholesale selloff of stocks through much of the morning, but there was some movement lower from the start. However, the impetus was not earnings season, which now is under way, but rather the dysfunction in Washington, which has taken a turn for the worse. Specifically, the bears resurfaced following news that the Republican leaders in the U.S. Senate had decided to abandon their health care bill, which was designed to repeal and replace the Affordable Care Act (ACA). The reason is that two more GOP Senators had gone on record with their intention to oppose the measure. That would leave the Senate Republicans two votes short of the 50 needed for approval. And without a new health care bill, efforts at tax reform–a key part of the bull market story–would be that much harder. So, stocks wilted and fell, even with no worse than a mixed early showing on the corporate earnings front. As noted, stocks pulled back, and the situation worsened as the morning progressed, with the Dow Jones Industrial Average falling to a morning-worst loss of almost 160 points before some subsequent buying surfaced to pare the deficit. For the moment, at least, earnings are taking a back seat to Washington. Interestingly, it was mostly the Dow that fell back, as the NASDAQ, on comparative strength in the technology group, managed to hold with just modest losses. As for the Dow, it was also influenced by a drop in the shares of Goldman Sachs, as the financial services giant reported a drop in bond trading revenues. Meanwhile, the Dow’s loss continued to ease into the lunch hour as a one-time near 160-point deficit was cut in half as the noon hour arrived. The S&P 500 Index’s loss was minimal at that time, while the NASDAQ was in the black. As we entered the afternoon, it looked as though we would remain in the loss column throughout the day’s session. The stock market continued to press lower as the afternoon moved along, but the deficit on the Dow gradually eased as the session proceeded, even though a proposal to just repeal the ACA failed as a third GOP Senator voiced her opposition even before a vote could be taken. When the final numbers were in, the worst morning’s setback had been overcome, with the Dow cutting its loss by some two-thirds to end matters off just 55 points. The S&P 500 Index managed to end on the plus side of the ledger, if incrementally, while the NASDAQ inked a 27-point increase. Just modest losses were tallied by the smaller composites, as losing stocks, once well ahead of winners, were just narrowly in the lead on the Big Board.

Morgan Stanley reported second quarter earnings Wednesday that soundly topped expectations, helped by an increase in stock trading revenues and profits from its wealth management business. Earnings per share: 87 cents vs. 76 cents expected by a Thomson Reuters consensus estimate. Revenue: $9.50 billion vs. the $9.09 billion estimate. The shares are trading about 3 percent higher this morning. Equity sales and trading net revenues increased by $100 million to $2.2 billion, little changed from a year ago but up 7 percent from the first quarter, “reflecting strong contributions across products and regions,” Morgan Stanely said in a statement. Overall sales and trading revenue decreased by $100 million, or 2 percent, from a year ago, to $3.2 billion. Bond trading revenue fell $100 million, or 4 percent, to $1.2 billion in the second quarter, “driven by lower volatility and sporadic activity during the quarter,” the release said. Fixed income trading revenue was $1.7 billion in the first quarter. The second quarter marked the second in a row for which Morgan Stanley’s fixed income trading revenue topped that of Goldman Sachs.

Today’s Economic Calendar:

1. MBA Mortgage Applications
2. Housing Starts
3. EIA Petroleum Status Report

 

Nvidia triples share value in 12 months

Today the DAX seems to be stuck around the 12‘634 mark in another indecisive session. During his speech today Draghi gave some indications that the ECB is likely to signal September that its 2.3 trillion euros bond-buying program would be gradually wound down next year. This was obviously pretty bad news for all investors, who are expecting a decrease in liquidity.

Following back-to-back indecisive sessions to start the week the bulls stepped out front yesterday morning on Wall Street  and wound up fashioning another wire-to-wire win. And, in fact, there was little question about the ultimate outcome, as stocks soared from the opening bell, with the Dow Jones Industrial Average jumping out to a triple-digit gain in minutes. The bulls sustained most of that momentum through the morning, entering the afternoon hours with that composite up by better than 125 points, securing another record in the process. Breaking the advance down, it was, as noted, led by energy, as oil prices rose on a larger-than-expected drawdown of fuel stocks. Health care also did well, gaining almost a percentage point in the morning. The industrials, technology, and the recently struggling telecoms likewise acquitted themselves quite well, while gaining stocks held a formidable lead over declining issues. At the end of the day the Dow Jones was able to record a 123 points increase at the end of the day. The S&P 500 Index was better by 18 points and the NASDAQ, buoyed by notable strength in technology, advanced by a strong 68 points, or 1.1%.

Delta Air Lines reported a 2,5% increase in quarterly passenger unit revenue. The Passenger unit revenue is a keys ratio in the aviation industry that measures sales relative to flight capacity. Nonetheless the company’s net income fell 20.8 percent to $1.22 billion, or $1.68 per share, in the quarter ended June 30, from $1.55 billion, or $2.03 per share, a year earlier. This was merely due to a higher cost structure. Aircraft fuel related expenses rose 18 percent to $1.45 billion during the quarter, while salary costs were up 9 percent to $2.62 billion. Shares of the No. 2 U.S. airline by passenger traffic fell as much as 2.4 percent to $54.13 in early trading.

Nvidia‘s shares have more than tripled in the last 12 months, beating out the returns of any other company in the S&P 500. Early last month, Citi set a 12-month price target of $180 on Nvidia. That’s a tad more bullish than SunTrust. The stock posted a record close of $159.94 in early June before pulling back. Nvidia closed today up $6.63 to $162.51. The shares are still a few dollars short of their all-time intraday high of $168.50 touched last month.

Oil prices slumped Thursday after the International Energy Agency said global oil supply rose in June as producers “opened the taps. Light, sweet crude futures for delivery in August dropped 31 cents, or 0.7%, to $45.18 a barrel on the New York Mercantile Exchange, while September Brent crude gave up 39 cents, or 0.8%, to $47.34 a barrel.

Todays Economic Calendar:

1. Jobless Claims
2. PPI-FD
3. Bloomberg Consumer Comfort Index
4. EIA Natural Gas Report

EU to end disciplinary measures against Greece?

Today the DAX was able to break the daily high set yesterday and is up to the 12’630 mark. Considering the rise in the EURO, which has reached the 1,145 EURUSD mark, the growth in the German Index is remarkable.

Yesterday was expected to be a quite mid-summer session on Wall Street. After all, there were few news items of note on the business calendar. Yesterday’s trading began in uneventful and rather flattish fashion, with the averages moving back and forth and achieving little. The calm was then broken down with the Dow Jones Industrial Average tumbling to a session-worst decline of about 130 points or 1% in a range of 30 mins. The reason for that sudden reversal were the e-mails released by Donald Trump Jr. The Dow’s plunge reflected renewed concerns about the Russia controversies that have plagued Mr. Trump’s Presidency from the outset. Traders lamented that each time there is a flare-up of this sort, the potential for policy reform–the main cog in the stock market’s steep climb since last November–lessens somewhat. And with health care reform hanging in the balance, this was the last thing the market needed. By mid-afternoon, the Dow was back on the plus side of the ledger, as was the NASDAQ, the Russell 2000, and the S&P Mid-Cap 400. The large-cap S&P 500 Index, though, retained a small loss on the political concerns. The likely reason for the later comeback was the announcement by Senate Majority Leader Mitch McConnell that the Senate’s planned August recess would be delayed.

United Continental, an airline holding company headquartered in the Willis Tower in Chicago, sees Q2 unit revenue up 2% and capacity up 5.0% to 23.644B available seat miles. The June load factor went up 1,4% to 85.7%. YTD load factor -10 bps to 81.7%. UAL is up1,12% premarket to 77.78USD.

Naga’s winning streak shows no signs of letting up, with the Hong Kong-listed casino operator posting another impressive half-year result, reporting profits up more than 20 percent year-on-year during the first six months of 2017 on a surge in VIP rollings and visits to its main gaming floor. Gross gaming revenue soared nearly 40 percent year-on-year to $386.8 million at its NagaWorld hotel and casino in Phnom Penh, while net profit increased 20.3 percent to $150.6 million, the company said in a filing late Monday of unaudited results for the first six months of 2017. Naga also linked the performance to a strengthened balance sheet and rising international status. The company’s assets were valued at $5.4 billion in March 2017 by Colliers International, while it remains debt-free.

BMW Group, which owns the Mini, Rolls-Royce and BMW brands, said its June car sales rose 2.1% worldwide, despite a 16.5% sales dip in Germany. For the BMW Group, June passenger car sales were up 2.1% on the year to 232,620 cars, of which 192,873 were sales of BMW branded cars, the company said.

Greece‘s fiscal position has improved and the European Union should end disciplinary procedures against it over its excessive deficit, the EU commission said on Wednesday, paving the way for the country to return to international bond markets. Greece recorded a 0.7 percent surplus last year and is expected to have a deficit of only 1.2 percent in 2017. “Our recommendation to close the excessive deficit procedure for Greece is another positive signal of financial stability and economic recovery in the country,” EU Commission Vice President Valdis Dombrovskis said in a statement. Ending the procedure – a step that must still be confirmed by EU states – would further reduce the pressure on Athens after euro zone creditors unblocked new loans to it worth 8.5 billion euros ($9.6 billion) last week as part of its 86 billion euro bailout program.

Snap shares fall below IPO price

Today the German DAX was able to set a mark by easily breaking through the 12’500 point line in the morning. As of now the DAX seems to have lost some of its momentum and has gone down by nearly 0,10% hitting 12’458 points. Throughout the day investors have been looking for trading impulses, which they fallen short off. Wall Street commenced the new week on a down note, as some profit taking gave traders initial cause to lighten up positions. But that selling lasted just moments, and the stock market, which got a healthy lift late last week on the release of constructive economic data, quickly resumed its climb. The solid jobs increase, coupled with earlier upbeat reports on manufacturing and non-manufacturing, gave the economic bears cause to reconsider their erstwhile pessimism about the direction of the long business expansion. The latest data, in fact, seemed to suggest that the second quarter’s improvement might well have been rather impressive and that the pending gains in the current interim and the concluding three months might well be decent, as well. But the market’s early comeback yesterday morning, albeit encouraging at first, never really amounted to much, and the Dow Jones Industrial Average, which had fallen back by more than 40 points in the first half hour of the session, could not get all that far onto the plus side of the ledger, topping out with a mid-session increase of some 30 points. Things went somewhat better on the NASDAQ, though, where a gain of more than 35 points was seen late in the day on strength in the tech stocks.

Pepsi’s quarterly profit beat estimates as a higher pricing of sodas and snack foods in North America paid off and the company sold its stake in Britvic Plc. The reaction seems to be quite moderate though as PepsiCo is trading with 0,37% loss in the pre-markets PepsiCo said on Tuesday that sales in its North America beverage unit, the company’s largest, rose 2 percent to $5.24 billion in the second quarter ended June 17. While volume sales were flat, net pricing was up 1 percent. PepsiCo and rival Coca-Cola have focused on selling smalle,; higher-margin packs in developed markets while pulling back on promoting large discount packs as they look to cushion the impact of falling demand for fizzy drinks. Revenue from PepsiCo’s Frito-Lay North America business rose 3 percent, helped by a 1 percent rise in volume and a 3 percent rise in net pricing. The question now for any Pepsi investor will be how long and by how much the beverage and snack company can boost revenues by raising prices to offset declining volume.

It looks like Snap will not get any sit-back period. After the stock fell under its initial public offering price of 17USD, the stock has been downgraded by Morgan Stanley from 28 USD to 16 USD. This is an investing strategy (short-selling Snap) we had proposed on the 3rd of February here on SirofFinance. This is a rare rebuke by a firm that helped bring it public. The analysts are separate from the underwriters, but it still creates an awkward appearance. The shares of Snap haven fallen 6% percent in the pre-market.

Yesterday Steam published its hardware and software survey for June. Steam is Valve’s online gaming platform, considered to be the largest of its kind. Steam has 125 million registered accounts and is a reference for every gamer. Although Steam addresses only a very distinct segment of pc users it is a very important battleground for Intel and Nvidia. AMD’s current Ryzen processors, as well as its forthcoming Threadripper, clearly target the gaming/enthusiast market. Likewise, Intel’s latest Skylake-X processors appear to be the company’s attempt to counter Ryzen by providing even more performance, albeit at the cost of high power consumption. Nvidia and AMD compete in desktop graphics cards oriented towards gamers. Although Nvidia has branched out into machine learning and autonomous vehicles, gaming GPUs are still its most important source of revenue. In the company’s most recent fiscal quarter, gaming was 53% of its $1.937 billion in revenue. Nvidia is currently considered dominant in high-end desktop GPUs, but that may change with the arrival of AMD’s Vega architecture, which is thought to be equivalent to Nvidia’s current high-end Pascal architecture GPUs. So, Steam has its finger on the pulse of a key market for all three companies, and therefore, its monthly survey of the computer hardware and software that its customers use is probably a good indicator of the state of the PC gaming market.

Today’s economic calendar:

1. NFIB Small Business Optimism Index
2. Redbook
3. JOLTS
4. Wholesale Trade

Financial outlook for the second half-year of 2017

The good performances in the U.S. and Asia have given the German Index some momentum, bringing in some wins at this week’s start. In the afternoon the German Index was up by 0,30% reaching the 12’426 mark. The EURUSD had a good run in the afternoon, nearly reaching the 1,14 mark. In the states the bulls were emboldened by a strong report on the labor market. Specifically, the Department of Labor reported that nonfarm payrolls increased by a stronger-than-expected 222,000 positions in June. The strong jobs data, along with encouraging reports earlier in the week on manufacturing and nonmanufacturing activity, prompted some buying. On Friday the Dow 30 increased by 94 points, the NASDAQ won 64 points, and the broader S&P 500 went up 15 points. In general, the economically sensitive groups fared the best on the strength of the jobs data, with the leadership coming from technology, industrial, and consumer discretionary sectors.

In the meantime, the new week will bring some notable reports from Corporate America, as the second-quarter earnings season kicks off. Analysts seem to share the opinion that earnings news will have to be good for stocks to make another notable move higher. The consensus is that the second-quarter reporting season will prove constructive, but the question is whether the results and, maybe more importantly, the guidance will be enough to give the equity averages another boost. The earnings season heats up this Friday, with reports from banking giants JPMorgan Chase and Wells Fargo due before the opening bell. The final trading day of this week also will bring a number of important economic reports, including data on consumer prices, retail sales, industrial production, and consumer sentiment. Prior to that, we will get a report on producer (wholesale) prices (Thursday) and the latest Beige Book summation of economic conditions from the Federal Reserve (Wednesday ). All of the economic data will be scrutinized, as it may give more clues about whether the central bank will be more hawkish or dovish during the second half of this year, which may play a big role in how stocks fare in a market that is clearly overheated right now. Investors also should note that Federal Reserve Chair Janet Yellen will speak before Congress on Wednesday morning, an event that is sure to be watched for more clues to what the central bank is thinking.

After the initial takeover planes have failed Bain Capital and Cinven are set to increase their takeover offer for German generics drug maker Stada, as they seek to revive what would be Europe’s largest buyout in four years. The private equity consortium is poised to raise its offer by €0.25 to €66.25 a share after applying for an exemption from a one-year exclusion period to submit a renewed voluntary public takeover approach. Stada has officially come out backing the revised takeover bid.

After fielding takeover offers, teen clothing retailer Abercrombie & Fitch said on Monday it is no longer up for sale, and will instead focus on fixing the long ailing business itself. The news sent Abercrombie shares plummeting 20%. In May, after reporting yet another quarter of dismal sales, the once popular company confirmed it was in “preliminary discussions with several parties.“ According to subsequent media reports, potential bidders included competitors like Express and American Eagle Outfitters, as well as Sycamore Partners, a buyout shop focused on retail.

German financial software group GFT Technologies issued its second profit warning this year after Deutsche Bank and Barclays, GFT’s main income sources, cut spending on its products by almost a quarter, sending its shares down sharply on Monday. Deutsche Bank and Barclays are restructuring their investment banks, trying to cut their costs. “The temporary decrease in revenue with our two major customers is currently unavoidable due to the realignment of these financial institutions,” said GFT, which helps banks to implement regulatory requirements and digitize processes.

The Economic Calendar for today:

1. Labor Market Conditions Index
2. Consumer Credit

 

Santander launches 7.1 bn Euro stock sale

The German DAX was not able to defend its 12‘475 point mark it set at its close yesterday. The DAX showed a downwards trend during the day, having lost 15 bp by noon. The Wall Street will be closes today. I wish a happy Independence Day to all my fellow American readers.

Stada replaced its top management as the German generic-drug maker faces a decision about whether to allow  Bain Capital and Cinven to make a fresh takeover offer after their 5.3 billion-euro ($6 billion) bid failed last week. Stada’s supervisory board named Engelbert Coster Tjeenk Willink, 56, a former executive at Boehringer Ingelheim GmbH, as CEO, replacing Matthias Wiedenfels with immediate effect. Bernhard Duettmann, 57, former CFO of chemical company Lanxess AG, replaces  Helmut Kraft. Bain and Cinven could formally approach Stada about a second bid in the coming days, people familiar with the matter said. The private equity firms’ attempt to secure Stada failed last week after months of tension — first as companies competed for the winning bid and then as it became clear their offer wouldn’t garner sufficient backing from shareholders.

The German auto supplier Bosch has seen a surge in demand for radar systems and video sensors as automakers race to add driver assistance features and automated functions to cars. In the radar system segment Bosch expects a leap of 60 percent and of 80 percent in the video sensors segment. It forecast sales at its Mobility Solutions division, which makes sophisticated safety systems as well as autonomous car components, would grow around 7 percent this year, benefiting from a broader push to make vehicles more intelligent.Last year, Mobility Solutions – which employs 227,000 staff – generated 43.9 billion euros ($49.8 billion) in sales, boosted by deliveries of crash avoidance technologies.

Santander announced in early June that it would buy the troubled Bank Popular for the symbolic price of 1 EUR after authorities had declared the Madrid-based bank “failing or likely to fail”. At the time, it said it would raise approximately €7bn in capital to rebuild Popular’s balance sheet, which at the time was saddled with €37bn in toxic real estate and loans. This Morning Santander announced that it would raise its capital by 7,1 billion EUR to acquire Banco Popolar. During the capital raise, current Santander shareholders will be able to purchase one share for every 10 they own at a price of €4.85/share, a discount of 17.75 per cent to the theoretical ex-rights price (TERP) based on the closing price of 3 July.The subscription period for the capital raise will run from 6 July to 20 July; the new shares are expected to begin trading 31 July.

This morning the Kraftfahrt-Bundesamt (KBA) announced that German car sales fell by 3.5 percent last month to 327’693 vehicles. The number of sold diesel cars was down by 9 percent, with sales of gasoline-powered vehicles rising almost 12 percent.

Reviewing the first half-year of 2017

A block of positive economic data gave the European Indices some momentum in the early hours of the day. But the dynamics quickly changed around the afternoon with the DAX losing 0,6 percent and dropping down to the 12´395 mark. Investors are wary off a tightening off the monetary policy, which seems to dawn on the European Union. The American markets had a similar day as the European market. The bullish behavior on Friday was due to a strong quarterly report from Dow 30 component and apparel giant Nike, a continued recovery in oil prices and some decent news on the economy. For the day the Dow and the S&P 500 closed with a 63 and a four points increase respectively.

Tesla founder Elon Musk has confirmed that production of the new Model 3 will be completed on Friday. On the third of July the South-African born entrepreneur tweeted: “ Model 3 has passed all regulatory requirements for production two weeks ahead of schedule. Expecting to complete SN1 on Friday.”. Musk also announced that the first 30 customers to pre-order the Model 3 will be thrown a “handover party” on the 28^th of July.

Lockheed Martin was awarded a U.S. Army contract worth 3.8 billion USD for Black Hawk helicopters for sale to Saudi Arabia, the Pentagon said on Friday.

Now will follow a short review of the first half-year:

The modest gains Friday on Wall Street capped an outstanding first half and second quarter. Year to date, the Dow 30, the NASDAQ, and the S&P 500 Index are sporting gains 8.0%, 14.1%, and 8.2%. In general, the buying has been rather broad-based, with most of the major sectors contributing to the strong rally. The energy stocks, hurt by weaker oil prices, and financial issues, hurt by low bond yields over much of the six-month stretch, were the notable laggards. The technology group, which has shown some fatigue in recent weeks, provided a great deal of leadership during the first half of the year.

That said, the continued buying has pushed market valuations higher. The VIX sitting at 11.18 indicates the market is overheated. Against this backdrop, analysts think the fast approaching second-quarter earnings will be important for stocks. The results will probably have to be good for stocks to maintain their levels or even push further higher. The prevailing consensus is for earnings growth of 6%-8% for the S&P 500 companies. There are a few issues that may be making for a wall of worry for Wall Street, including a more hawkish posture with regard to monetary policy from the Federal Reserve; concerns about gridlock in Washington D.C., which will make it difficult for legislation to get passed; and some recent disappointing readings on the U.S. economy.

The Economic Calendar for today:

1. PMI Manufacturing Index
2. ISM Mfg Index
3. Construction Spending

Covestro Vows to Cash Out Shareholders

The DAX was able to recover after its 6 week low. In the early morning hours the DAX increased by 0,52 % reaching the 12713 point mark. The recovery follows a heated day in the U.S. For the first time after the financial crisis all the Banks, a total of 34, were able to pass the annual stress test imposed by the Feds. As a follow-up Regulators have given US banks the go-ahead to pay out almost all their earnings to shareholders this year in a signal of their confidence in the health of the financial system.

BMW plans to introduce an electric version of its popular 3-Series line of cars at IAA in September. This is BMW’s direct response to the Model 3. The German carmaker already has a line of electric and hybrid vehicles, but this is the direct response to the impending debut of Tesla’s $35,000 Model 3 sedan, said Handelsblatt. The BMW is said to have a reach of 400 kilometers.

Covestro, the German plastics and chemicals group, has pledged to pay out massive special-dividends in case it cannot find a suitable takeover target within the next two years. The total amount of total operating cash flow is 5 billion Euros. CEO Patrick Thomas has also announced that the normal dividends will increase.

The Economic Calendar for today:

U.S. GDP

U.S. Jobless Claims

Corporate Profits

Bloomberg Comfort Index

EIA Natural Gas Report

FED Balance Sheet

Money Supply

 

 

Eu antitrust regulators hit Google with a record 2,42 billion euro fine

Good Morning dear Readers.

 

The miserable Wall Street performance yesterday and the strong Euro have been the main stimulants for the weak DAX performance this morning. Yesterday the DOW Jones closed with a loss of 0,5% and the Nasdaq closed with an even bigger loss of 1,6%. Tech-stocks had recovered as of lately, but talks of over-valuation have never seized. During the Dodd-Franck act talk addressing the easing of regulations on financial Markets, Janet Yellen took a hard stance towards over-valuation, saying many stocks were over-priced and that the planned de-regulation would not be advisable. The DAX has followed up on its downward movement by losing 0,86 percent hitting the 12’561 points mark.

The Euro set a new 52 week high by reaching the 1,1379 EURUSD mark. Mario Draghi´s speech in Portugal, with the narrative of a healthy and wealthy European Union was the main Catalyst for the Euro outbreak. During his speech Draghi confirmed that the ECB would be able to reach the 2% inflation target.

According to Bloomberg reports Deutsche Bank is on the verge of realizing a loss of 60 million USD. This loss is related to derivate-trading. These derivates were used to gamble on the US inflation. The reports states that all risk limits were exceeded by the Managers. This deal is under internal investigation as of now.

EU antitrust regulators hit Alphabet unit Google with a record 2,42 billion Euro fie on Tuesday. It is the biggest fine the EU has ever imposed on a single company in an antitrust case, exceeding a 1,06 billion euro sanction handed down to U.S. chipmaker Intel in 2009.

The Economic Calendar for today:

International Trade in Goods

Pending Home Sales Index

EIA Petroleum Sales