Today's Headlines

Bloomberg:

• Homebuilder Confidence in U.S. Falls to One-Year Low. Builders in the U.S. turned more pessimistic in July than forecast, a sign the expiration of a government tax credit will depress home construction. The National Association of Home Builders/Wells Fargo confidence index dropped to 14 this month, the lowest level since April 2009, from 16 in June, data from the Washington- based group showed today. “The housing sector is going to be in a hangover for a few months and it looks like it will be quite a nasty one,” said David Sloan, a senior economist at 4Cast Ltd. in New York, who correctly forecast the decline. “This will weigh on growth in the third quarter and well into the fourth quarter as well.” The builders group’s index of current single-family home sales fell to 15 from 17. The gauge of buyer traffic dropped to 10 from 13 the prior month. A measure of sales expectations for the next six months decreased to 21, the lowest level since March 2009, from 22. Home seizures climbed 38 percent in the second quarter from a year earlier, RealtyTrac Inc. said last week, putting lenders on pace to claim more than 1 million properties this year.
• Commodity Manipulation May Be Easier to Prove After Overhaul. Traders will face new rules aimed at making it easier for regulators to prove manipulation in markets for commodities such as oil, wheat and natural gas under the financial overhaul awaiting President Barack Obama’s signature. The regulations, written in part by Senator Maria Cantwell, a Democrat from Washington state, attempt to relieve the Commodity Futures Trading Commission of the burden of proving a trader intended to manipulate prices. Instead, the CFTC will have to show the trading was “reckless.” “It will make it easier for the CFTC to bring cases and get people to settle, because people will be reluctant to go to court,” said Geoffrey Aronow, former director of enforcement at the commission and a partner at the Washington law firm Bingham McCutchen LLP.
• Gold 100-Day Moving Average Signals Drop: Technical Analysis. Gold may extend declines to the lowest price in almost three months after slipping below a key moving average, according Bayram Dincer at LGT Capital Management.
• Intel(INTC), Yum(YUM) Show Dual-Speed Economy as Technology Outperforms. Intel Corp. Chief Executive Officer Paul Otellini told investors July 13 he is seeing “renewed economic momentum.” A day later, Yum! Brands Inc. Chief Financial Officer Richard Carucci predicted “sustained unemployment and a concerned U.S. consumer.”The contrasting views of companies reporting second-quarter earnings illustrate the two-speed economic recovery: Production of business equipment has jumped 5 percent this year through June, while consumer goods have risen 0.2 percent, Federal Reserve data show.
• Gulf Oil Spill May Cost 17,000 Jobs, Moody's Says. BP Plc’s(BP) oil spill may cost the U.S. Gulf Coast region 17,000 jobs and about $1.2 billion in lost economic growth by year-end even if the flow is stanched permanently next month, Moody’s Analytics said in a report. Under a more pessimistic scenario in which the oil spill continues through December and President Barack Obama’s six- month moratorium on deepwater drilling is extended, economic losses may reach $7.4 billion, and more than 100,000 jobs would be lost, Moody’s said today in a report written by Marisa Di Natale, a director based in West Chester, Pennsylvania.

Wall Street Journal:

• Double Dip? Seven Reasons Why Not.
  
• ExxonMobil(XOM) Eyes .26M B/D From Iraq W Qurna-1 1Q 2011. Exxon Mobil Corp. (XOM) is planning to raise production from Iraq's supergiant West Qurna oil field to 250,000-260,000 barrels a day during the first quarter of next year, the company's vice president said Monday.
• Gel Cuts AIDS, Herpes Risk for Women.
  

Bloomberg Businessweek:

• Hungary-IMF Talks Breakdown Is 'Bad News,' Moody's Says. Moody’s Investor Service said the breakdown of talks between Hungary and the country’s international creditors on the further availability of a 2008 rescue loan “is bad news.” Failure to agree on fiscal targets to secure the backing of the International Monetary Fund and the European Union triggers “market volatility” and increases uncertainty about government policies, said Dietmar Hornung, Moody’s lead analyst for Hungary, in a telephone interview from Frankfurt. “If you have a large debt to gross-domestic-product ratio you are susceptible to an increase in financing costs.”
• Wheat Prices Peaking as Glut Subdues Best Performer. The five-week rally in wheat that made it the best performer of any commodity is under threat as prospects for the second-biggest stockpiles in almost a decade overwhelm damage caused by drought. Wheat rose 35 percent to $5.78 a bushel in Chicago since June 9 as a lack of rain in Russia, Kazakhstan and the European Union and floods in Canada hurt crops. That prompted the U.S. Department of Agriculture on July 9 to cut harvest estimates by 1.1 percent, while global inventories will be the second-highest since 2002. Prices will drop 15 percent to $4.94 by Dec. 31, based on the median in a Bloomberg survey of 14 analysts. “I don’t think prices will hold these higher levels,” said Pete Sorrentino, who helps manage $13.1 billion at Huntington Asset Advisors in Cincinnati and correctly predicted the 2008 crash in commodity prices. “We’re going to be getting some massive harvests, and that’s going to keep stockpiles swelling.”
• Bin Laden Son Says U.S. May Agree to Let in Family. A son of Osama bin Laden said about 20 members of his family stranded in Iran are seeking sanctuary in a third country and that the U.S. may agree to accept them. Omar bin Laden, the al-Qaeda leader’s fourth son, said in an interview with Al Arabiya television that Iran is refusing to allow his relatives to go to Saudi Arabia. Shiite Muslim- dominated Iran is a regional rival of Sunni-ruled Saudi Arabia. Al-Qaeda, a Sunni group, is hostile to Iran. “The Americans offered to help them out of Iran and even hinted at the possibility of receiving them in the U.S.,” he said in the interview, which was aired late yesterday and posted on the Dubai-based channel’s website.
• For-Profit Schools Gain Amid Optimism Over Government Regulation. Education Management Corp. led gains among shares of for-profit colleges amid speculation U.S. President Barack Obama's proposed industry regulations won't reduce profit as much as had been projected.

CNBC:

• FinReg Will be 'Disastrous' for Economy: FCIC's Wallison. The Wall Street Reform bill, an overhaul of US financial rules that won final approval in the Senate on Thursday, will be “disastrous” for the US economy and will slow economic growth permanently, according to Peter Wallison, a member of the Financial Crisis Inquiry Commission.

Business Insider:

• Does Tim Geithner Think Elizabeth Warren Will Destroy the Banking System? The financial reform bill will create a new consumer protection agency, and TARP watchdog, and Harvard professor Elizabeth Warren has widely been seen as one of the frontrunners. But last week the Huffinton Post reported that Tim Geithner opposes the nomination of Warren to the position.

Zero Hedge:

• Hypo Real Estate Said To Fail Banking Stress Test.

LA Times:

• Fannie Mae to Prohibit Lenders From Changing Home Appraisals. The mortgage giant addresses complaints that home sales have been sabotaged by arbitrary reductions in appraisers' valuations. Lenders unilaterally may be lowering the numbers on the appraisals submitted to them to avoid accusations that the loans they sell to giant investors Fannie Mae or Freddie Mac are based on inflated appraisals — even slightly inflated. Such value inflations can expose lenders to "buyback" demands, forcing them to repurchase loans at huge costs. The vice chairman of the National Assn. of Realtors' Appraisal Committee, Frank K. Gregoire of St. Petersburg, Fla., says it's a widespread problem — large numbers of legitimate home sales "sabotaged by lenders and underwriters arbitrarily reducing the value estimate" provided by the appraiser. Effective Sept. 1, Fannie Mae is prohibiting lenders who sell it loans from changing appraisers' numbers. In guidance issued June 30, Fannie Mae said lenders must contact appraisers to resolve any disagreements about the valuation. If that's not possible, they should order a second appraisal — not just chop the value supporting the real estate contract. Appraisers applauded the new rule. "This is huge," said Gary Crabtree, president of Affiliated Appraisers of Bakersfield and a member of the national government relations committee of the Appraisal Institute, an industry group. Pat Turner, an appraiser in Richmond, Va., said Fannie's new requirement "is great news for consumers" because loan underwriters hundreds of miles from the property "no longer will be able to change the appraiser's valuation" simply because they pulled a lower number off a computer.

New Yorker:

• The Volcker Rule. Volcker Disappointed in FinReg Bill. Obama’s economic adviser and his battles over the financial-reform bill.

Ag Professional:

• World Development Movement Report Blames Commodity Derivatives for Food Crisis. In the report "The Great Hunger Lottery," the World Development Movement says it has compiled extensive evidence establishing the role of food commodity derivatives in destabilizing and driving up food prices around the world. This in turn, has led to food prices becoming unaffordable for low-income families around the world, particularly in developing countries highly reliant on food imports.

CNN:

• U.S. Citizen Believed to be Writing for al Qaeda Website, Source Says. A senior U.S. law enforcement official has told CNN that U.S. intelligence believes the principal author of the new online al Qaeda magazine is an American citizen who left for Yemen in October 2009. The magazine -- called "Inspire" -- appeared last week. Running to nearly 70 pages online, it included articles on bomb-making and encrypting electronic messages, as well as an interview with fugitive Yemeni-American cleric Anwar al Awlaki. The source has identified the driving force behind "Inspire" as 23-year-old Samir Khan, who previously lived in North Carolina and was involved in radical Islamist blogs, including one he ran called "Jihad Recollections."

Reuters:

• Baidu(BIDU) Promotes Fake Drug Sites: Chinese TV Station. China's main state-run television station accused the country's top Internet search engine Baidu Inc of directing users to websites that sell counterfeit drugs, the People's Daily reported on Monday. CCTV reported on Sunday that Baidu and other search engines had profited from promoting three websites offering counterfeit drugs that duped more than 3,000 people in China, said the newspaper, the mouthpiece of the ruling Communist Party.

Financial Times:

• China's Partners Set to Reject Trade Plan. The US and China’s other big trading partners are expected to demand major improvements to Beijing’s latest proposal to join a global pact on government purchases because it does not go far enough in opening the $500bn Chinese procurement market to foreign businesses. The US and China’s other big trading partners are expected to demand major improvements to Beijing’s latest proposal to join a global pact on government purchases because it does not go far enough in opening the $500bn Chinese procurement market to foreign businesses.

The Independent:

• Stephen King: Western Economies Are Still in Danger of Sinking Under an Ocean of Self-Created Debt. As the UK's new Government delivers unprecedented austerity, the great deleveraging will affect the UK as much as everyone else.

Century Weekly:

• China may experience an inflation crisis within two years, former Morgan Stanley economist Andy Xie wrote. China will raise its interest rates twice this year by 27 basis points each time, Xie wrote. These measures may ease inflation expectations without stabilizing inflation, Xie wrote.

National Business Daily:

• China should raise interest rates now to counterbalance the impact from a high level of actual inflation, citing former Morgan Stanley economist Andy Xie.