By Kristen Scholer
Morning MoneyBeat is the Journal's pre-market primer packed with
market updates, insights and must-read news links. To receive this
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MARKET SNAP:At 06:00 a.m. ET, S&P 500 futures down 0.10%.
Treasury yield higher at 2.31%. Nymex up 0.82% to $49.19; gold
0.71% lower at $1085.40. In Europe, FTSE 100 up 0.54%, DAX up 0.35%
and CAC up 0.51%. In Asia, Nikkei 225 up 1.08% and Hang Seng down
0.49%.
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WATCH FOR: 8:30 a.m. EDT. Weekly Jobless Claims. [Expected
270,000 vs. 255,000 in the previous week.]; 8:30 a.m. EDT. 2Q GDP,
1st read. [Expected 2.7% vs. 0.2% in 1Q.]
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THE BREAKFAST BRIEFING
The first read on second-quarter GDP growth is released
Thursday.
Economists surveyed by Dow Jones predict the economy expanded
2.7% from April to June after contracting 0.2% in the first three
months of the year. If growth settles at 2.7% that would be roughly
in line with where it's been the past several years.
Thursday's figure has added weight as the Fed tries to gauge
whether weakness in the first quarter was just a one-off and that
the recovery is back on track -- and enough for the central bank to
increase rates this year.
Fed Chair Janet Yellen told Congress earlier this month that Fed
policy makers anticipate liftoff will happen this year, but
reiterated that their outlook is based on the expected path of the
economy. If the data is strong enough, from the Fed's perspective,
then it will raise rates. If it isn't, short-term borrowing costs
will remain near zero -- where they've been since 2008.
Since the first quarter, the labor market has added an average
221,000 jobs each month, compared to 195,000 in the first three
months of the year. And the unemployment rate has declined further
to 5.3% in June.
It isn't all rosy though. A firmerU.S. dollar could crimp trade
and keep a lid on inflation. And consumers are still shy to spend
their savings at the pump. Retail sales were uneven during the
spring and the Conference Board's consumer confidence index
surprisingly tanked in July to its weakest level in nearly a
year.
In the Fed's policy statement Wednesday, the central bank
maintained its view that the economy is expanding "moderately" and
that inflation is forecast to gradually ascend to its 2% target
over the medium term. Still, it wants to see "some further
improvement" before normalizing monetary policy.
Growth of 2.7% would surely demonstrate improvement from the
first quarter's doldrums. But, because it follows such a dismal
print, the Fed will likely want to see more upbeat evidence before
upping rates.
"The July FOMC statement was slightly more upbeat about the data
and suggested continued progress toward liftoff," wrote Bank of
America Merrill Lynch U.S. economist Michael Hanson. He thinks
liftoff will come in September.
With the data being the biggest factor in the Fed's decision on
when to raise rates, Thursday's GDP growth report will shed light
on how close the central bank is to acting.
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Morning MoneyBeat Daily Factoid: On this day in 1976, Bruce
Jenner, now known as Caitlyn Jenner, won the Olympic gold medal in
the decathlon at the Montreal games.
-By Kristen Scholer
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STOCKS TO WATCH
Time Warner Cableis projected to report second-quarter earnings
of $1.80 a share, according to analysts surveyed by FactSet. The
cable company earned $1.89 a share a year earlier.
ConocoPhillipsis forecast to earn 4 cents a share, down from
$1.61 a share a year ago.
Mondelezis expected to post second-quarter earnings of 39 cents
a share, down from 40 cents a share a year ago.
LinkedInis likely to post second-quarter earnings of 30 cents a
share, down from 51 cents a share a year ago.
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MUST READS (LINKS)
Fed, Citing Jobs, Stays on Track to Raise Rates: The Federal
Reserve kept rates near zero but cited progress in the U.S. job
market, a sign it remains on course to raise interest rates in
September or later this year.
FOMC Closer to September Hike, Even If the Market Doesn't Think
So: In assessing the changes to the June statement compared to the
April statement, a number of commentators concluded that the
statement did in fact move the central bank closer to its first
interest-rate increase in nearly a decade.
Shell Posts Sharp Fall in Profit, to Cut 6,500 Jobs:Royal Dutch
Shell reported a sharp fall in second-quarter profit and said it
would cut 6,500 jobs, illustrating the strain sustained low oil
prices are putting on large producers.
Deutsche Bank Profit Beats Forecasts, Driven by Investment
Bank:Deutsche Bank on Thursday reported a sharp rise in
second-quarter profit driven by unexpectedly strong investment
banking revenues and lower overall taxes, but warned challenges
remain.
Banks Pitch Swaps as Alternative to Buying Stock
: Banks are nudging certain hedge-fund clients to use
derivatives instead of actual stocks when placing some bets, an
effort aimed at lessening the impact of new capital rules on the
banks' businesses.
UBS Deal Shows Clinton's Complicated Ties:After Secretary of
State Hillary Clinton helped settle UBS's legal battle with the IRS
in 2009, the Swiss bank increased donations to the Clinton
Foundation.
Facebook, Google Tighten Grip on Mobile Ads:Facebook offered
fresh evidence of its allure to deep-pocketed big brands, as it and
Google increasingly take the lion's share of the fast-growing
mobile advertising market.
Chevron and Exxon Get the Plaudits, but Some Smaller Drillers
Faring Well:Giant oil companies are weathering the oil slump better
than the average shale driller, but even their famous stability is
at times being surpassed by much smaller companies that own some of
the choicest U.S. oil-and-gas fields.
Carlyle and Apollo Find Selling Is Easy; Buying, Not So
Much:
Private-equity firms reckon with high stock prices that make
sales lucrative but purchases expensive
5 Things to Know If You Own a China Fund or ETF: U.S. investors
holding China-stock mutual funds and exchange-traded funds have
been watching the recent bloodbath in China's markets with a wary
eye. But for U.S. fund investors, things may not be as bad as they
seem.
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