Wall Street Breakfast: Wall Street Wins 3 Gold Medals

Economy

A slew of readings on China’s economy decelerated in July, offering further evidence of a slowdown in the mainland. Retail sales and industrial production rose but were below expectations, while fixed asset investment fell to its slowest rate in more than 16 years. The data sharpens the dilemma facing the nation’s policy makers – boost growth with cheap credit that risks undermining financial stability, or curb debt expansion even if that slows the economy.

According to a UBS analysis of 765 banks in China, it appears that the country is finally starting to deal with some of its bad debt problems via bank recapitalizations, bailouts and cash calls. Efforts to clean up the nation’s financial system are said to be well underway, with as much as 1.8T yuan ($271B) of impaired loans shed between 2013 and 2015, and 620B yuan of capital raised in the same period.

Thailand’s Prime Minister has urged authorities to boost security after a string of bomb attacks in several provinces killed at least four people and injured dozens. The blasts come only a few days after a referendum which saw the country vote in favor of a military-backed constitution. It was not clear who was behind the attacks, but police said they were not linked to terrorism but rather local sabotage.

The eurozone’s largest economy is growing faster than thought, signaling it may be robust enough to handle the fallout from Britain’s decision to leave the EU. According to the Federal Statistics Office, German GDP rose a seasonally-adjusted 0.4% in the three months through June. Growth was driven by net trade, while private and government consumption also supported the expansion. Eurozone Q2 GDP flash estimates showed a 0.3% rise, in line with expectations.

Venezuelan President Nicolas Maduro will reopen his country’s 1,400 mile-long border with Colombia tomorrow after a year of isolation failed to bring promised improvements in food sourcing and security. Economists say that while the open border will reduce social tensions by improving supply, it doesn’t address the currency and price controls at the root of Venezuela’s economic crisis.

The Federal Reserve should raise interest rates further in 2016, according to San Francisco Fed President John Williams, given improved labor market conditions and the likelihood that inflation is heading higher. “As the economy gets closer to its goals, we can again pull our foot off the gas a bit and hopefully execute a nice, soft landing over the next couple of years,” he told the Washington Post.

Consumer spending appears to have been a bright spot for the U.S. economy this year, with impressive earnings reports yesterday from Macy’s (NYSE:M), Kohl’s (NYSE:KSS) and Nordstrom (NYSE:JWN). Today’s July retail sales data could give an indication of the strength of future growth. It’s forecast to rise by half a percent, just below last month’s reading of 0.6%.

Stocks

Big Wall Street banks, including Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and JPMorgan Chase (NYSE:JPM), have asked the Federal Reserve to grant them an additional five-year grace period to comply with the Volcker rule, sources told Reuters. If granted, the extension would see the changes not kick in until 2022. The Fed also said the lenders must specify the investments they are referring to, before it makes a decision.

Sharp shares surged almost a fifth overnight after Chinese antitrust authorities approved Foxconn’s (OTC:FXCOF) $3.8B takeover of the struggling Japanese display maker. The green light from China was the final hurdle to clear the acquisition, which will see Tai Jeng-wu, a close aide of Foxconn founder Terry Gou, replace Sharp’s (OTCPK:SHCAY) current chief executive Kozo Takahashi.

Don’t log out of Twitter yet! The site has denied rumors it will be shutting down in 2017, denouncing the claims as groundless. “There is absolutely no truth to the claims whatsoever,” a Twitter (NYSE:TWTR) spokesman said in a statement. Social media started buzzing with #SaveTwitter early on Thursday, with more than 100K tweets mentioning the hashtag by early afternoon. TWTR -3.7% premarket.

South Korea’s antitrust watchdog is looking into whether Google (GOOG, GOOGL) violated the country’s anti-competition laws, officially confirming its scrutiny of the global internet search group for the first time. The news comes a day after Russian officials fined Google $6.8M for abusing its market position with Android, a relatively small penalty that nevertheless represents a growing list of regulatory problems for the tech giant.

Delek US soared 16.2% in extended trading on Thursday after a NY Post article stated Carl Icahn-controlled refiner CVR Energy (NYSE:CVI) plans to make an offer for the company. The report also speculates that Icahn, who sits on Delek’s (NYSE:DK) board, is building a personal stake in the firm. Refiners have been hurt this year by narrowing oil spreads plus the rising price of Renewable Identification Numbers; DK has lost 39% and CVI has shed 65% YTD.

At least 22 customers and two crew members have been taken to a hospital for evaluation after a JetBlue (NASDAQ:JBLU) red-eye flight from Boston to Sacramento experienced heavy turbulence. “It was like a dream, people were flying out of their seat belts and hitting their head on the ceiling, it was very scary,” passenger Rhonda Renee said. It’s believed that weather played a role in creating the bumpy flying conditions.

Contract talks between Delta Air Lines (NYSE:DAL) and its pilots have been suspended for three weeks by a federal mediator because of a lack of progress. The two sides were notified of the break Aug. 3 by the National Mediation Board, according to a letter posted on the union’s website, which said the hiatus will allow each side to assess its bargaining position and goals.

General Motors is seeking a rehearing of an appeals court ruling that exposes it to hundreds of potential lawsuits and some $10B in liabilities from faulty ignition switches. Lawyers for the nation’s largest automaker said the court made two “fundamental errors” when it last month ruled against GM’s efforts to use its 2009 bankruptcy to shield itself from the litigation.

Caterpillar expects no significant demand growth for its energy and transportation products for the rest of 2016 as oil prices stay weak, Caterpillar’s (NYSE:CAT) Jim Umpleby told analysts. The world’s largest manufacturer of heavy equipment is restructuring its businesses as demand has slowed for construction, mining, energy and transportation products since 2012. It has slashed 13,900 jobs worldwide since mid-2015, and said last month it planned more cuts.

Controversy around Roger Ailes’s alleged sexual misconduct didn’t end when the Fox News (FOX, FOXA) chief resigned from the company three weeks ago. Instead, new allegations are surfacing, bringing with them new potential liabilities for the media giant. The number of women who have come forward in the investigation to say they were victims of Ailes now reaches into the double-digits, WSJ reports.

The Obama administration will transfer a total of $81M within the Department of Health and Human Services to work on Zika vaccines amid an increase in cases in the United States. The money is intended to keep research going despite the lack of funding from U.S. lawmakers, who left for summer recess before allocating funds to halt the spread of the virus. Related tickers: SNY, INO, AEMD, XON, CEMI, BCRX, TMO, OTCQB:GOVX