Today’s market summary of bullish and bearish events includes positive earnings surprises from the financial sector; Fed Reserve Chair Yellen’s testimony; Economic news from Europe concerning UK inflation, German Investor Sentiment, and Portugal’s banking risks; Asian economic updates on China’s M2 supply of money.
- Positive Earnings Radar / Goldman Sachs (GS): Goldman reported Q2-2014 EPS @ $4.10 vs. consensus estimates @ $3.09 on revenues of $9.13bn vs. forecasted $7.98bn.
- Positive Earnings Radar / JP Morgan Chase (JPM): As JP Morgan continues to struggle with weak trading revenue, Q2-2014 earnings contracted @ 7.9% compared to last year, it was still enough to beat expectations. The firm reported a $6bn profit or $1.46 EPS vs. consensus estimates @ $1.29 and previous year @ $1.60 on revenue of $24.45bn vs. estimated $23.76bn.
- Europe / Economy / UK Inflation: Great Britain’s CPI (consumer price index) increased to 1.9% vs. consensus estimates @ 1.6% and previous readings @ 1.5%.
- Asia / Economy / China Money Supply: China’s M2 during June rose to its highest level in 10 months @ 14.7% yr/yr vs. consensus forecasts @ 13.6% yr/yr. New yuan loans in June increased to the highest level in 5 months @ 1.080trn yuan vs. forecasts @ 955bn yuan.
- Europe / Economy / Investor Sentiment: Europe’s largest and strongest economy, Germany, is finding less to cheer about despite its winning the 2014 World Cup Football championship. The German ZEW Survey indicated that the outlook for Current Conditions contracted for the first time since November-19-2013 to 61.8 vs. forecasts @ 67.0 and previous readings @ 67.7. Meanwhile, the gauge for Economic Sentiment has decreased for seven consecutive months to 27.1 vs. forecasts @ 28.0 and previous readings @ 29.8.
- Europe / Banking / Portugal Systemic Risks: Portugal’s banking concerns continue to shadow the markets as Banco Espirito Santo SA’s stock reportedly was down 13%. The price decline is attributed to its holding company, Rioforte Investments SA, facing 837mm euros ($1.2bn USD) in short-term debt obligations due today.
- U.S. Economy / Fed Reserve Testimony: Fed Chair Janet Yellen in her semi-annual testimony before Congress acknowledged that if labor market conditions continue to improve faster than anticipated, the U.S. Central Bank could raise its key short-term interest rates sooner than, e.g. sometime in 2015. Nevertheless, Chair Yellen still sees mixed signals in the economy and “little recent progress” from the housing sector. Chair Yellen has vowed to remain flexible and committed to maintaining an accommodative or tightening policy, if warranted.