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T3's Take 3: China Drops Yuan, Google Rockets on Reorganization


Today's financial recap and tomorrow's financial outlook.

Today on T3 Live

T3 Live is hosting its first annual Finance Festival and you're invited!

The event will be held November 6-8 at the Mayfair Hotel & Spa in Miami, Florida, just minutes from Miami beach.

We'll kick off Friday evening with a VIP dinner followed by a weekend full of insightful keynote discussions, great food, and what promises to be the party of the year!

Click here to learn more about T3 Live's Finance Festival

China Drops Yuan

The Chinese government shocked markets by announcing it will devalue its currency. Today, the yuan slumped 1.9% against the dollar, the currency's largest devaluation ever. The decision sent shivers down the backs of investors, worrying that a drop in China's economy may came out  worse than was anticipated.

The government called the devaluation a one-off adjustment, in an attempt to not seem desperate given the country's recent economy worries. China's central bank announced that the methods it used for the devaluation will help the exchange rate become more market-oriented.

Markets Compress

The devaluation made investors concerned about the impact on US companies, which tend to benefit from stronger overseas currencies.

The S&P 500 closing down 1.0% while the NASDAQ dropped 1.3%.

European stocks also felt the pressure of China's decision.

Red arrows were seen across the board, led by exporters. Germany, an export-oriented economy, saw its DAX fell 2.7% as its automakers generate a large portion of their revenues from China. The ZEW indicator of German economic expectations also came in lower-than-expected. France's CAC fell 1.9%.

Greece had a different story as the Athex Composite rallied 2.14% after a government official announced that an agreement had been reached with creditors on measures that will secure a third bailout for the country.

Asian markets fared slightly better.

The Shanghai Composite was flat while Japan's Nikkei dropped 0.4%.

Google's ABCs

Google (GOOG) shares rallied after the company announed it would be undergoing a major corporate restructuring. The move will see the internet giant become a wholly-owned subsidiary of a new parent company called Alphabet. Many of Google's current smaller operations will be spun off and become their own companies under the Alphabet umbrella. Most of Google's core business components such as search and Youtube will operate as they have.

Current Google executives will reprise their roles within Alphabet, while Sundar Pichai, Google's product chief, takes the reigns as the new CEO of Google.

Google shares finished up 4.3% as investors believe the new structure will make the company more flexible and more innovative.

Wednesday's Financial Outlook

US economic data for tomorrow will include MBA mortgage applications, JOLTS job openings, DOE oil reports, and July monthly budget statement.

Overseas economic data will include Swiss fixed assets, industrial production and retail sales, the British employment report, and euro-zone industrial production.

Alibaba (BABA), Aramark (ARMK), Israel Chemical (ICL), and Macy's (M) will announce earnings before the open tomorrow. Cisco Systems (CSCO), Flowers Foods (FLO), and News Corp. (NWSA) will release their earnings reports after the close.
No positions in stocks mentioned.
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