Daily Agenda: U.S. Investors Shake Off Foreign Concerns

IMF hints that debt forgiveness for Greece may be necessary; BHP writes down shale assets in the U.S.; Yum! Brands quarterly earnings disappoint.


U.S. investors attempted to shake off geopolitical and macroeconomic fears yesterday and instead focused on the mixed signals coming out of domestic data. June retail sales data fell well short of expectations with a monthly decline of 0.1 percent excluding cars, while data that initially showed a spending surge in May was revised lower. Meanwhile, earnings reports from banking giants J.P. Morgan Chase & Co. and Wells Fargo seemed to indicate that nonperforming debt is on the decline for both consumer and commercial lenders. With Federal Reserve Chair Janet Yellen remaining firm in public statements that monetary policy tightening will commence before year’s end as labor markets improve, allocators looking at all data are left to ponder whether the glass is half full or empty for U.S. dollar-denominated assets.

Tsipras defends decisions to capitulate. In a televised speech yesterday, Greek Prime Minister Alexis Tsipras defended his decision to accept creditors terms as a “bad deal” that was forced upon his nation. Meanwhile the International Monetary Fund continued to break ranks with other Greek creditors with a report that argues the country’s current debt levels are unsustainable. The report may signal a possible run-up to a plea for a haircut by IMF Managing Director Christine Lagarde.

Yum! Brands misses estimates. Louisville, Kentucky–headquartered fast-food company Yum! Brands disappointed investors with its quarterly earnings report yesterday, with a decline in revenues of 3.1 percent versus the second quarter of 2014. One possible reason for the dent: the company’s iconic Kentucky Fried Chicken brand is still recovering from a food safety scare in China nearly a year ago, involving footage of KFC’s China meat provider using meat that had fallen on the floor of the processing factory.

BHP writes off underperforming investments. London and Melbourne–headquartered global energy giant BHP Billiton announced a $2.8 billion dollar pretax write-down for U.S. assets. The company’s Hawksville natural gas field facilities in Texas accounts for the bulk of the decline in estimated value.