“I never buy at the bottom and I always sell too soon.” — Baron Rothschild

1. China imports disappoint, exports slow — Imports grew 6.3% in June from a year earlier, versus expectations for an 11.3% rise tipped in a Dow Jones Newswires poll, and below a 12.7% gain in May. Export shipments grew 11.3% for the month, ahead of the 9% rise expected in the Dow Jones Newswires survey, but down from May’s 15.3% rise.
2. Spain unveils €65 billion in new austerity — Spanish Prime Minister Mariano Rajoy announced €65 billion ($79 billion) of new austerity measures in an effort to meet new budget-deficit targets agreed with euro-zone partners. The additional austerity includes an increase in the standard rate of value-added tax to 21% from 18%, and the lower rate to 10% from 8%.
3. Third California city to file for bankruptcy — San Bernadino is set to become the third California city to file for bankruptcy protection in the last month after officials said it faced an imminent financial crisis. San Bernadino, which will join Stockton and Mammoth Lakes, hopes to restructure its finances while in Chapter 9, but a concerned municipal bond market may have other plans.
4. China second-quarter growth slows to 7.6% — Expansion marks slowest pace of growth in more than three years; Recent data meant China’s economy had cooled for six straight quarters, exceeding the five consecutive quarters of cooling seen in a financial crisis during the late 1990s that ended a rapid period of growth for the Asian region.
5. Moody’s downgrades Italy’s government bond rating — Moody’s Investors Service stated that it has cut Italy’s government bond rating to Baa2 from A3 with a negative outlook. The ratings firm said that Italy is more likely to experience a further sharp increase in its funding costs, or the loss of market access, than five months ago “due to increasingly fragile market confidence.” Also, Italy’s near-term economic outlook has deteriorated.
6. Banks could be hit for $22B in Libor penalties — Twelve global banks publicly linked to the Libor scandal face up to $22B in combined regulatory penalties and damages to investors and counterparties, according to admittedly “crude” Morgan Stanley estimates.

The week ahead — Economic data from Econoday.com:

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