Good morning New York,
FT ALPHAVILLE
What's going on with China's bad banks? We've been pondering for a while here how China might avert or delay a full-blown financial crisis (or worse). Or, if you want to put it in a different light, how China might make its growth sustainable. In that vein, Kate picks up on the interesting tale of China's bad banks and a potential(ly repeatable) fiscal transfer.
NEWS
Eurozone returns to growth: The 17-member area grew 0.3 per cent during the second quarter, beating economists' forecasts for 0.2 per cent expansion and heralding a long-awaited return to growth for the first time since the end of 2011. France and Germany beat expectations earlier in the morning. Germany's economy grew 0.7 per cent between April and the end of June, seasonally adjusted from the first quarter, outstripping forecasts thanks mainly to the strength of domestic private and public consumption. France confirmed it had pulled out of a mild recession after it reported unexpectedly strong growth of 0.5 per cent during the second quarter. (Eurostat) (Financial Times)
JP Morgan 'whale' traders could be charged today: Javier Martin-Artajo and Julien Grout, neither of whom now works at the bank, are expected to be criminally charged in connection with misvaluing trades, according to people familiar with the investigation. A lawyer representing Martin-Artajo said his client was confident he would be exonerated once the relevant events were reconstructed. The bank could also face civil charges. (Wall Street Journal) (Bloomerg)
"China's Baidu Inc said on Wednesday it has agreed to buy the app store of Hong Kong-listed Netdragon Websoft Inc for $1.85 billion in cash in what would be the biggest deal in China's IT sector." (Reuters)
UK gilt yields reach two-year record on doubts Carney will keep inflation contained: The yield on 10-year UK gilts rose above 2.6% on Tuesday – the highest since October 2011 – before easing slightly, as improving economic data convinced investors that official interest rates would rise sooner than expected by the Bank. Today is the first release of UK jobs data since new BOE governor Mark Carney gave guidance relating to the unemployment rate. (Financial Times) The minutes of the MPC's August meeting, published on Wednesday, show external member Martin Weale voted against forward guidance in the form unveiled last week. (Financial Times)
Kroes rebuked for 'unambitious' telecoms reform: "Brussels' top competition authority has called for 28 national telecoms regulators to be replaced by a single pan-European watchdog in a sharp rebuke to a set of proposals from Neelie Kroes, the bloc's telecoms chief." (Financial Times)
The US Department of Justice sued to block the merger of US Airways and American Airlines' bankrupt parent. The DoJ says the $11bn merger with AMR Corp and US Airways would push up fares. The two companies had been confident of completing the merger next month after more than a year of negotiations. Antitrust lawyers said the companies would have difficulty resolving the DoJ concerns. (Financial Times)(Bloomberg)
BP sues US government over post-disaster contract ban: The Environmental Protection Agency temporarily suspended BP from winning new contracts last November over the Deepwater Horizon disaster, saying the ban would not be lifted until it could provide sufficient evidence that it met federal business standards. "In a filing made in the US District Court for the southern district of Texas, BP challenged the EPA's decision and called on the court to declare the suspension and disqualification null, void and unenforceable." (Financial Times)
Icahn amasses 'large' Apple positions, pushes for bigger buyback: Carl Icahn announced a 'large' position on Twitter and said he'd talked with CEO Tim Cook about his views on bigger share buyback. Icahn says Apple has the ability to do a $150bn buyback now by borrowing funds at 3%. (Reuters) (Bloomberg)
China is accelerating plans to cut excess industrial capacity. "The government will complete by the end of 2014 its overcapacity reduction plan for the five years through 2015, and will seek to cut further outdated capacity, China National Radio said yesterday, citing Industry Minister Miao Wei." (Bloomberg)
Foxconn considers moving into solar panels: Taiwan's Hon Hai Precision, best known for assembling Apple products, may end up timing such a move well despite overcapacity concerns, say analysts. ""We aim to make a decision about whether or not we will enter this market by the end of this year," Foxconn spokesman Simon Hsing told Reuters. " (Reuters)
Whirlpool agreed to buy a majority stake in Hefei Rongshida Sanyo Electric Co, a Chinese home-appliances maker. The purchase of a 51% stake for $552m in cash (Rmb3.4bn) is a big expansion of Whirlpool's Asia business, with the region only accounting for 4.7% of its sales last year. (Wall Street Journal)
"Antero Resources, an energy company backed by New York private-equity firms, plans to spend more than half a billion dollars on a pipeline [to] carry water from the Ohio River to fracking sites in West Virginia and Ohio." (Wall Street Journal)
Markets: The FTSE Eurofirst 300 is down 0.2 per cent after Europe received a meek handover from Asia, where trading was thinned by Hong Kong's closure for Typhoon Utor. The dollar index is barely changed and gold is up $1 to $1,322 an ounce. The FTSE All-World equity index is up 0.1 per cent to 248.9, leaving it just one point below its best close since June 2008. US index futures suggest the S&P 500 will dip five points to 1,689 writes the FT's Global Markets ballcock Jamie Chisholm.
