Today's Headlines

Bloomberg:

• CFTC Wants Budget Boost, Is Ready to Write Swap Rules. The Commodity Futures Trading Commission is requesting a bigger budget as it organizes staff to write new rules governing the $615 trillion over-the-counter derivatives market, Chairman Gary Gensler said. Congressional legislation, which may be voted on today by the Senate, would give the CFTC new authority over swaps markets that have been explicitly unregulated since 2000. The commission has identified 30 areas where rules will need to be written, Gensler said, according to prepared remarks he is expected to deliver today at a Security Industry and Financial Markets Association conference in New York. The $261 million CFTC budget proposed by President Barack Obama for 2011 is an increase from $168.8 million this year and represents “a substantial boost in funding,” Gensler said. Based on how the legislation has taken shape, however, the commission is requesting $25 million more, he said. This comes on top of an additional $45 million Gensler asked for earlier this year to deal with the legislation’s demands. “We need significant new resources,” Gensler said. “The next year of rule writing will test the very talented staff of the CFTC.” The commission will rely on the bill language as well as input from other regulators and the public in its creation of new rules, Gensler said.
• Back-to-School Sales May Rise 16%, Fueling Recovery. Back-to-school spending may rise as much as 16 percent in the U.S. this year, reversing year-ago declines and putting more muscle behind the economic rebound. Families with students plan to spend about $55.1 billion in the period, compared with $47.5 billion a year earlier, the National Retail Federation said, citing consumers surveyed by BIGResearch. “I’m pretty confident the sales will be good,” Fifth Third Asset Management fund manager Dan Popowics said in a telephone interview. “The profitability will be a bit under pressure given the urgency companies have of achieving those sales. It will be promotional.” His firm has $18 billion in assets under management, including Target Corp. shares. Sales at stores that sell family clothing, shoes, electronics and books will jump 5.4 percent in the July to September period from a year ago, when they declined 2.8 percent, the International Council of Shopping Centers said today. That would be the best showing since 2005. Clothing will have the biggest gain with 6.5 percent, the group said. This year, the average family with students in kindergarten through 12th grade may spend $606.40, up from $548.72 last year, for a total of $21.4 billion, the Washington-based NRF said. College spending probably will amount to about $33.8 billion.
• Commodity Shipping Has Longest Drop in 15 Years on Oversupplies. Commodity shipping costs measured by the Baltic Dry Index extended their longest losing streak to almost 15 years as reduced demand for iron ore carriers worsened a surplus of vessels with fleets expanding. Fleet capacity of vessels able to carry commodities shipped in bulk, such as iron ore and coal, will grow 16 percent this year, according to Clarkson Plc, the world’s biggest shipbroker. Imports of iron ore by China, the world’s biggest user of the commodity, will decline this year for the first time since 1998, Mysteel Research Institute forecasts. “We’re faced with oversupply,” Nigel Prentis, director of research and consultancy at HSBC Shipping Services Ltd., said by phone today. The fleet of capesize vessels, three times the size of the Statue of Liberty, expands by about one every two days, he said. The index fell 9 points, or 0.5 percent, to 1,700 points, according to the Baltic Exchange in London. That’s the 35th consecutive drop, the longest streak since November 1995.
• U.S. Jobless Claims Fall as Fewer Factories Shut Down. Fewer Americans than projected filed applications for unemployment benefits last week, reflecting a smaller number of factory closings for this time of year. Initial jobless claims dropped by 29,000 to 429,000 in the week ended July 10, the fewest since August 2008, Labor Department figures showed today in Washington. The government anticipates an increase in temporary factory layoffs in early July that did not occur this year, leading to the decrease in applications, a Labor Department spokesman said. “The key story here is the extreme uncertainty over the near-term path of claims as a result of the annual retooling shutdowns, which throw the seasonal adjustments into chaos,” Ian Shepherdson, chief U.S. economist at High Frequency Economics LLC in Valhalla, New York, said before the report. The four-week moving average, a less volatile measure than the weekly figures, fell to 455,250 last week from 467,000, today’s report showed. The number of people continuing to receive jobless benefits jumped by 247,000 in the week ended July 3 to 4.68 million. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, rose to 3.7 percent in the week ended July 3, from 3.5 percent in the prior week. Twenty-three states and territories reported a decline in claims, while 30 reported an increase.
• U.S. Economy: Manufacturing Contracts, Wholesale Prices Decline. Manufacturing in the U.S. contracted in June by the most in a year and wholesale prices declined more than anticipated, underscoring the Federal Reserve’s reduced forecasts for economic growth and inflation. Factory output fell 0.4 percent in June, a Fed report showed today. Producer prices slid 0.5 percent after a 0.3 percent decline the month before, the Labor Department said. Other reports showed factories pulled back in the New York and Philadelphia regions in July.
• Guber, Lacob Said to Buy NBA's Warriors for $450 Million. Peter Guber and Joe Lacob bought the Golden State Warriors for $450 million, a record price for a National Basketball Association team, according to a person familiar with the transaction.
• Dutch City's Marijuana Curbs Are Justified, Aide Says. A Dutch city’s ban on sales of marijuana and hashish to foreign customers in so-called coffee shops is a lawful and necessary measure to cut crime from drug- tourism, an adviser to the European Union’s highest court said. The city of Maastricht’s ban on shops selling cannabis- derived products to non-residents is necessary to maintain public order, Yves Bot, an advocate general at the European Court of Justice, said in a non-binding opinion today. “As drug tourism represents a genuine and sufficiently serious threat to public order in Maastricht, the exclusion of non-residents from coffee shops” is a “necessary” means to protect residents, said Bot.
• Hamptons Home Sales More Than Double in First Half. Home sales in the Hamptons, the beachside resort towns favored by celebrities and Wall Street financiers, more than doubled in the first half of 2010 from a year earlier, according to property broker Corcoran Group. Sales in 15 New York villages and hamlets that make up the Hamptons rose to 923 homes from 433, Corcoran said in a report today. The dollar volume of all transactions more than doubled to $1.5 billion, while the median price of homes sold climbed 34 percent to $935,000. “We’ve returned to a fairly healthy normal market,” Rick Hoffman, a Corcoran senior vice president who oversees sales on Long Island’s East End, said in a telephone interview.

Wall Street Journal:

• Copper, Nickel Stolen from JPMorgan(JPM) U.K. Warehouses. Thieves swiped hundreds of tons of nickel and copper from a Liverpool warehouse in May, the latest in a rash of commodities heists spurred by high prices. The material was stolen May 31 from a shed in Liverpool's docklands area that was owned by warehousing company Henry Bath & Son, a unit of J.P. Morgan Chase & Co. According to police in Merseyside County, which includes Liverpool, the metal sheets were worth "several million pounds."
• Senate VIP Loans Mount. Countrywide Dealt With More Lawmakers and Staffers Than Previously Known. U.S. senators or Senate employees received 30 loans—far more than had previously been known—under a controversial lending program at Countrywide Financial Corp. that provided cut-rate terms to favored borrowers. The information is contained in a letter sent to the Senate Select Committee on Ethics by Rep. Darrell Issa (R., Calif.), who has been spearheading the House Oversight and Government Reform Committee's investigation into Countrywide's so-called VIP mortgage program. Sens. Christopher Dodd (D., Conn.) and Kent Conrad (D., N.D.), have previously been identified among the high-profile individuals who received such loans. Both senators have denied wrongdoing. Until the Issa letter, no other senators or their staff members had been linked to the VIP loan program.
• Greek Union, Employers Groups Clinch 3-Year Wage Pact. Greece's private sector umbrella union GSEE and the country's major employers' groups reached a three-year wage pact Thursday that freezes wages and pegs future increases to euro zone inflation. According to a statement by GSEE, Greek workers will get no salary increase this year, and will only see rises of roughly 1.5% in 2011 and 1.7% in 2012.
• BP(BP) Fixes Leak on Cap, Prepares for Test.
  

CNBC:

• Millions of Americans Will Lose Access to Banks: Bove. Financial regulation reforms, now in the last stages before becoming law, will mean that millions of people will lose access to banking services, Dick Bove, banking analyst at Rochdale Securities, told CNBC Thursday.
• One Retail Sector Defies Sluggish Economy. As murky as the consumer picture is now, there is one spot on retail landscape that is still shining bright: online sales. Shop.org and Forrester Research surveyed retailers about their gross online sales, and found that second-quarter Web sales were up about 15.1 percent from the same period a year ago, and nearly half of those who responded said their growth was more than 10 percent.

NY Times:

• Fund-Raising Before House Financial Reform Vote Draws Scrutiny. Lawmakers take contributions every day from corporate executives and lobbyists hoping for their votes. The question of whether that represents business as usual in Washington or an ethics breach is at the heart of a far-reaching Congressional ethics investigation that is stirring concerns throughout Washington and Wall Street. The Office of Congressional Ethics has sent corporate donors and fund-raising hosts more than three dozen requests for documents involving eight members who solicited and took large contributions from financial institutions even as they were debating the landmark regulatory bill, according to lawyers involved in the inquiry. The requests are focusing on a series of fund-raisers last December, in the days immediately before the House’s initial adoption of the sweeping overhaul, which could win final approval this week. Some of the fund-raising events took place the same days as crucial votes. For example, on Dec. 10, one of the lawmakers under investigation, Representative Joseph Crowley, a New York Democrat who sits on the Ways and Means Committee, left the Capitol during the House debate to attend a fund-raising event for him hosted by a lobbyist at her nearby Capitol Hill town house that featured financial firms, along with other donors. After collecting thousands of dollars in checks, Mr. Crowley returned to the floor of the House just in time to vote against a series of amendments that would have imposed tougher restrictions on Wall Street.

Business Insider:

• Now The Amount Hedge Funds Are Using Algos Is Increasing and Sales Desks are Doomed. There's a new research report by TABB that says hedge fund trading activity in US equities is growing in contrast to trades carried out by proprietary trading desks. The TABB report, US equity trading 2010: low-touch trends, showed two interesting things. From Hedge Fund Review:

Zero Hedge:

• China Has Been Covertly Funding a Housing Bubble Five Times Larger Than that of the US: 65 Million Vacant Home Uncovered.
• ICI Reports Largest Equity Fund Outflow in Two Months, Coinciding With Short-Covering Market Surge.
  

Institutional Investor:

• Big Asset Managers Fight Rising High-Frequency Trading Cancel Orders. Large asset managers such as mutual funds and some hedge funds are meeting with legislators and lobbyists in the U.S. to discuss ways to clamp down on the high rate of cancel-and-replace orders originating from high frequency trading firms. “The rhetoric has picked up,” says the head of one bulge-bracket prime broker, who says that banks are also reevaluating their pro-HFT stance.
• Renaissance Funds Lead the Way in First Half. Super-secretive Medallion, the computer-driven, rapid trading fund closed to outsiders for years, was up 17 percent for the first half. Renaissance Institutional Equities Fund International L.P. (RIEF), its newer fund that had been struggling, climbed about 2.4 percent in June and was up about 3.5 percent for the first half of the year.

World Net Daily:

• Top Democrat Fundraiser Sentenced to 12 Years. Backer of Hillary, Obama, Kerry heads to prison for bank fraud. Hassan Nemazee, a multimillionaire Iranian-American investment banker and top Democratic Party fundraiser, was sentenced today to 12 years in federal prison for bank fraud. Nemazee, 60, served as the national finance chairman of Hillary Clinton's 2008 presidential campaign before raising more than $500,000 for Barack Obama's campaign.

Lloyd's List:

• Secondhand Dry Bulk Values Could Plunge by Up to 25%. SECONDHAND dry bulk values are forecast to crash by 20%-25% in the next three months as plunging freight rates sees deals fail, and owners withdraw ships from the market. Bulk carriers are losing more than a million dollars in value each week, brokers reported, as the Baltic Dry Index continued its 34-day freefall today, closing at 1,700 points, down 60% since late May.

Politico:

• Pollution Fight Cools Climate Talks. Closed-door meetings between a select group of environmentalists and a handful of electric utility executives may determine the fate of climate change legislation in the Senate.

Real Clear Politics:

• Financial Reform's Empty Promises by Senator Tom Coburn.

Reuters:

• 30-Year Mortgage Rate Holds Record Low - Freddie Mac. U.S. 30-year fixed mortgage rates held at record lows last week, while shorter-term borrowing costs hovered at or near all-time lows, home funding company Freddie Mac said on Thursday. The 30-year mortgage rate stayed at 4.57 percent for the week ended July 15, matching the prior's week's all-time low in Freddie Mac records dating back to 1971.
• Gulf Projects Hit By Drilling Moratorium. President Barack Obama's administration issued a new six-month moratorium on deepwater oil drilling in the Gulf of Mexico, replacing an earlier ban that had been struck down by U.S. courts as being too broad.Here are examples of 2010 drilling operations by major Gulf producers that have been delayed by the ban:
• U.S. Card Losses Improve Despite Recovery Fears. Fewer Americans fell behind on credit card payments in June, with delinquencies at their lowest this year at major U.S. card lenders.

Les Echos:

• European banks may receive some of the aid to be distributed by a new fund charged with containing the region's debt crisis, the fund's head said. While the fund will provide aid only to national governments, "a country can decide to request aid for different reasons, and it is possible that part of the funds will be used to recapitalize the banking sector," Klaus Regling, who on July 1 became chief executive officer of the European Financial Stability Facility, said. Greece, which has already received 110 billion euros in aid from the EU and IMF, has allocated about 10% of that to banks, Regling said. "That example could be followed elsewhere."

DigiTimes:

• Apple(AAPL) Readies 11.6-Inch MacBook Air and New iPod Touch. Apple is ready to launch a new generation MacBook Air featuring an 11.6-inch display and Intel Core i-series ultra-low voltage processor in the second half of 2010, as well as a new iPod touch in August or September.

China Daily:

• A survey of southern China's Guangdong found that 40% of the province's soil is polluted with heavy metals, citing Wang Hongfu, a researcher with the Guangdong Institute of Eco-environment and Soil Sciences. Soil pollution in Guangdong has "severely worsened" since 2008, Wang said.

China Business News:

• It would not be "unusual," if China's economic growth in the second half slowed to less than 9%, citing Li Daokui, an advisor to the central bank. Slowing growth in China will be a normal deceleration because a series of economic stimulus policies, which went into effect in 2008, is going to an end.

Caijing:

• China's macro policy won't change in the second half of the year, Xia Bin, an adviser to the People's Bank of China, said. China won't implement a second stimulus package this year, Xia said