Your Wall Street Rundown covers a slew of economic reports today that mostly offered bad news; the European bank stress test results; and Google's and a bunch more earnings reports. Plus we run down the day's most active stocks list for you with the day's biggest winners and losers.
Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.
Consumer Prices Inflation watchers were sharply attuned to the release of the Consumer Price Index (CPI) Report for the month of June this morning. After the Producer Price Index projected heated inflation yesterday, with the Core PPI up 0.3%, the Core CPI lit a fire as well, rising 0.2%. Economists expected the increase, based on Bloomberg’s survey, but it is concerning nonetheless. At the headline, CPI declined 0.2%, also in line with expectations, on cheaper energy costs as gasoline came down from spring highs.
Consumer Mood Well it goes to show you the American consumer is paying attention to all this debt doomsday coverage. The University of Michigan/Reuters Consumer Sentiment Index dropped like a rock in this mid-July measurement, sinking to 63.8 from 71.5 at the end of June. Economists were looking for sentiment to moderate, but only to 71.0. The result was just a great divide worse than expectations.
New York Manufacturing New York’s Empire State Manufacturing Survey scared the market last month when its business conditions index turned into negative territory with a -7.8 reading. This month, economists were looking for an index mark of 8.0, with the economists’ range set from 3.0 to 15.0. Yes, not one economist surveyed by Bloomberg saw the NY area measure sticking in negative territory, but that’s exactly what it did, with the index improving to just -3.76. With the manufacturing sector now seemingly shrinking, you would think American governors would be doing all they could to take away uncertainty by passing a debt ceiling hike.
Industrial Production Industrial Production rose 0.2% in June against economists’ expectations for a 0.4% increase. Capacity utilization was expected to improve on better production, but it instead stuck at 76.7%.
European Bank Stress Test Results The European Banking Authority (EBA) published stress test results for 90 European banks. Unfortunately for the eight that failed, they’ll need to raise about $3.5 billion by year’s end. The not so great eight included 2 Greek banks, 5 Spanish institutions and one Austrian bank. One German bank is thought to have failed, but it pulled its information release a few days ago. Another 16 banks barely passed. It looks to me as if the news is not good for European stocks or the euro next week, or it shouldn’t be, considering that the test itself projected a mild GDP contraction of 0.5% as the test scenario. Unfortunately, Standard & Poor’s (NYSE: MHP) didn’t agree with the EBA, saying that about $250 billion needs to be raised in fact. Credit-default swaps are now projecting an 87% likelihood of a Greek default, perhaps a worse scenario than the mild recession projected by the EBA.
Corporate Wire Google (Nasdaq: GOOG) shares jumped $69 Friday after the company reported EPS at the close on Thursday. The 13% rise followed the company’s earning $7.68 per share, and $8.74 before employee stock compensation costs; that was far enough above the analysts’ consensus for $7.84 per share to trigger several price target hikes and analyst upgrades.
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