Good afternoon,
Markets are mixed and likely to hold on to gains for the month of July. LinkedIn continued to take a beating after investors zoomed in on its decelerating rate of growth and change in ad mix. It’s been an unforgiving week for the social media biggies — Twitter, Facebook, LinkedIn. With sky-high valuations, investors want more than just an EPS beat.
Uber raises $1 billion at $50 billion-plus valuation. It’s the unicorn of unicorns, taking a seat next to Facebook, the only other startup to command that kind of pricing. Investors are said to include Microsoft and Bennett Coleman & Co., an Indian media conglomerate. The ride-sharing app is just five years old. Wall Street Journal (paywall)
Dollar dips as US employment costs post smallest gain ever. The Employment Cost Index gained just 0.2%, the Labor Department said Friday, the smallest gain second 1982. The euro briefly rose to $1.11 against the U.S. dollar before edging back down below $1.10 as some wonder the slowdown will prompt the Federal Reserve to delay the much-awaited rate hike. MarketWatch
Carlyle parts way with commodity hedge fund after assets shrink to $50 million from $2 billion. Vermillion Asset Management’s Viridian commodity fund lost 23% in 2014 and has suffered a wave of redemptions. Carlyle seems to be playing a losing hand in hedge funds: earlier this week, a consultant recommended that its clients withdraw funds from Claren Road Asset Management, a $4.9 billion hedge-fund owned by Carlyle. Wall Street Journal (paywall)
The Olympic committee chose Beijing to host the 2022 winter games, the first time a city has hosted both summer and winter events. Wall Street Journal
Exxon, Chevron drop after earnings fall short. Exxon Mobil reported a 52% profit drop for the second quarter, driving the stock down 4.5% Friday morning. Earnings were $1/share, down from the expected $1.11 a share. Chevron took a 30% revenue hit and earnings of 30 cents a share, and its stock fell about 4.5% Friday as well. Expectations were low for the oil giants, but they fell short of even those. Royal Dutch Shell is laying off 6,500 people and said in its earnings report Thursday that it expects the slowdown to extend two years. Also reporting today: Seagate Technology, CBOE Holdings, Tyco International, and more. Estimize, Wall Street Journal
Commodities slammed in July. Oil was poised to record the worst month of the year, down 20% in July. “Copper, considered a bellwether for global economic activity, was facing a 9 percent monthly loss as it stumbled to $5,238 an tonne. Gold was down over 7 percent on the month at $1,081.95 an ounce as it chalked up its longest run of week-on-week falls in 16 years.” MarketWatch, Reuters
Inflation steady in the EuroZone in June. Eurostat reports that inflation was up 0.2% on an annualized basis. Energy prices fell 5.6% while food, alcohol, and tobacco rose 0.9%. Unemployment was unchanged at 11.1%. European stock markets were narrowly changed. BBC
China ends worst month since 2009. Despite miraculously halving their losses in the last 20 minutes of trading, Chinese stocks still had their worst month in six years, with both Shanghai and Shenzhen losing over 14% this July. Year-to-date Shanghai is up 13.3%, while Shenzhen is up almost 50%. On Friday, Shanghai shed 1.1% and Shenzhen dipped 0.82%. Meanwhile in Hong Kong, the Hang Seng index managed to climb 0.56%, ending the month at 24,636.28 while over in Japan, the Nikkei Average edged up 0.3% to 20,585.24.
The hunt for “malicious short-sellers” goes beyond the mainland. In the latest twist in the malicious short-seller saga, the China Securities Regulator Commission is now requesting trading records from Singapore and Hong Kong. Reuters
The Swiss central bank lost $51.8 billion and now the franc is getting slammed. Highlighting the perils of having a safe-haven currency, the Swiss National Bank reported the loss for the first half of the year, largely thanks to massive devaluations in its currency positions against the swissie. The Swiss Franc tanked 0.4% on the news. WSJ (paywall), Business Insider
IMF steps back from Grecian bailout. Continuing their hard stance on reforming Greece’s debt, the International Monetary Fund has disqualified Greece from receiving a third bailout, citing the nation’s “high debt levels and poor record of implementing reforms.” They will re-enter talks however once Greece has “agreed on a comprehensive set of reforms” while EU leaders “agreed on debt relief.” Financial Times (paywall)
The boys are back in town. Great news! After quitting (or in Clarkson’s case, losing) their jobs following “the fracas,” Top Gear presenters Jeremy Clarkson, Richard Hammond, and James May are now heading to Amazon’s new streaming service. BBC News
Photo: Ian Burt