10 Things You Need To Know Today (DIA, SPY, SPX, QQQ, KO, MNST)
Good morning! Here's what you need to know:
Iraq's Maliki Relinquishes Power. "Nuri al-Maliki finally bowed to pressure within Iraq and beyond on Thursday and stepped down as prime minister, paving the way for a new coalition that world and regional powers hope can quash a Sunni Islamist insurgency that threatens Baghdad," reported Reuters' Raheem Salman and Michael Georgy. "Maliki ended eight years of often divisive, sectarian rule and endorsed fellow Shi'ite Haider al-Abadi in a televised speech during which he stood next to his successor and spoke of the grave threat from Sunni Islamic State militants who have taken over large areas of northern Iraq." "I announce before you today, to ease the movement of the political process and the formation of the new government, the withdrawal of my candidacy in favor of brother Dr. Haider al-Abadi," Maliki said.
Monster Deal. Coca-Cola is buying a 16.7% stake in energy drink company Monster Beverage. "Our equity investment in Monster is a capital-efficient way to bolster our participation in the fast-growing and attractive global energy drinks category," Coke CEO Muhtar Kent said. Shares of Monster are up 20% in pre-market trading.
UK Is A G-7 Star. The U.K.'s GDP grew by 0.8% in Q2, which reflects 3.2% year-over-year growth. This was in line with expectations. And it confirms that the U.K. is the fastest-growing economy among the G-7 nations. "The broader picture of the U.K. recovery is one of employment-led growth as spare capacity is absorbed," Bloomberg economists Jamie Murray and Niraj Shah said.
Alibaba Accounting Issue. "A media firm Alibaba Group Holding Ltd recently bought said on Friday a review of its finances revealed possible accounting irregularities, casting doubts on the Chinese e-commerce giant's due diligence as it prepares for a U.S. initial public offering," reported Reuters' Elzio Barreto. "The announcement by Alibaba Pictures Group Ltd comes less than two months after Alibaba Group completed its $804 million purchase of a 60 percent stake in the film and TV production company once known as ChinaVision Media Group Ltd."
Ackman Sues The US Government. "Pershing Square Capital Management LP, the hedge fund firm run by William Ackman, on Thursday sued the U.S. government, claiming that its stripping of profits from Fannie Mae and Freddie Mac unconstitutionally short changes investors in the companies' common stock," reported Reuters' Jonathan Stempel. "In a complaint filed with the U.S. Court of Federal Claims in Washington, D.C., Pershing said the practice since 2012 of sweeping profits from government-controlled Fannie and Freddie into the U.S. Treasury as dividends creates a "windfall" for the government at the expense of shareholders."
Soros Bets Against The Stock Market. According to a new SEC 13-F filing, George Soros' Soros Fund Management cranked up his put option position on the SPDR S&P 500 ETF (SPY), a fund that mimics movements on the S&P 500. A put option protects the holder from price declines. Soros now holds puts on 11.29 million shares of SPY, up from 1.6 million three months ago.
Markets Are Up. U.S. futures are in the green with Dow futures up 48 points and S&P futures are up 4.7 points. In Europe, Britain's FTSE 100 is up 0.6%, France's CAC 40 is up 0.7%, and Germany's DAX is up 0.9%. Asia closed up with Japan's Nikkei 0.01% above breakeven.
Inflation Check. The producer price index report will be released at 8:30 a.m. ET. Economists estimate PPI climbed by just 0.1% month-over-month or 1.7% year-over-year. Excluding food and energy, core PPI is estimated to have climbed by 0.2% or 1.6%, respectively. "The higher producer prices combined with rising unit labor costs will likely play a role in moderating corporate profits as the year progresses," said Wells Fargo's John Silvia. "The magnitude of the impact on profits will depend on the ability for producers to pass along the higher costs to consumers."
Industrial Production Check. The industrial production report will be released at 9:15 a.m. ET. Economists estimate production increased by 0.3% in July with capacity utilization increasing to 79.2%. "Based on the BLS’s accounting of aggregate hours worked, we expect manufacturing production (excluding vehicles) to decline in July, while mining output should remain unchanged," said Nomura economists. "We expect vehicle production to increase, especially given reports that there were fewer auto factory shutdowns for retooling this July. Lastly, based on weekly utility output data, we expect utilities production to decline due to less cooling demand (July was cooler than usual). Taking these factors into consideration, we expect industrial production to remain unchanged in July."
Confidence Check. The University of Michigan's consumer confidence report will be published at 9:55 a.m. ET. Economists estimate this index of sentiment climbed to 82.5 in August from 81.8 in July. "This would largely reflect equity markets, which have moved lower as volatility has picked up," said Barclays economists.