Today's Headlines

Bloomberg:

• Corporate Default Swaps Head for Biggest Monthly Rise Since May in Europe. The cost of insuring against losses on European corporate bonds rose, posting the biggest monthly increase since May, on concern a slowdown in the U.S. recovery will trigger a global double-dip recession. The Markit iTraxx Crossover Index of credit-default swaps on 50 companies with mostly high-yield credit ratings climbed 53 basis points this month to 532, and was 7 basis points higher today, according to JPMorgan Chase & Co. at 4 p.m. in London. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings climbed 13.25 basis points this month and 0.75 basis points today to 118.25, JPMorgan prices show. The index is up 45 basis points this year. The Markit iTraxx Financial Index of 25 banks and insurers is up 32.5 basis points this month and 1.5 basis points today at 148, the highest level since July 7. The gauge has more than doubled since the start of the year. Ireland led an increase in the cost of insuring against losses on government debt, with credit-default swaps on the nation climbing 10.5 basis points to 252, the highest level since March 2009, according to data provider CMA. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments jumped 43.25 basis points this month to 158, the biggest monthly increase since it started trading last year. The gauge is 2 basis points higher today and up from about 69 basis points at the start of the year.
• Fed Saw Risk August Decision Would Send Wrong Signal. Some Federal Reserve officials were concerned last month that a decision to stop their securities holdings from shrinking would send the wrong signal that the central bank was ready to resume large-scale asset purchases, minutes of the Aug. 10 meeting showed. Also, a few policy makers said the economic effects of the decision “likely would be quite small,” the Fed’s Open Market Committee said in a report today in Washington. At the same time, some officials saw “increased downside risks to the outlook for both growth and inflation” and voiced concern that further shocks would cause “significant slowing in growth.”
• Business Activity in U.S. Expands at Slower Pace Than Estimated, ISM Says. Business activity in the U.S. expanded in August at the slowest rate this year, a private survey showed, adding to evidence the recovery is cooling. The Institute for Supply Management-Chicago Inc. said today its business barometer fell to 56.7 this month, the lowest since November, from 62.3 in July.
• Banks in Europe Would Face Fines for Failing to Report Derivatives Trading. Banks and companies that fail to report trading in over-the-counter derivatives face fines under rules being considered by the European Union. The draft law would force traders to “report the details of any OTC derivative contract” they have entered into “no later than the working day following the execution” of the trade, according to a European Commission document obtained by Bloomberg News.
• Irish Government, Banks Debt Risk Rises, Default Swaps Show. The cost of insuring against default on Irish government and bank debt rose, according to data provider CMA. Credit-default swaps on Irish sovereign debt climbed 10.5 basis points to 352, the highest level since March 2009. Contracts on Allied Irish Banks Plc increased 22.5 basis points to 523.5, the highest since April 2009. Swaps on Anglo Irish Bank Corp. jumped 15 basis points to 614, the highest in more than 13 months. Irish Life & Permanent Group Holdings Plc increased 14.5 to 396 and Bank of Ireland rose 15 to 393.5, both the highest since July.
• Gold Advances to Two-Month High on Haven Demand Amid Global Equity Slump. Gold futures rose to a two-month high as slumping global equity markets boosted the appeal of bullion for investors seeking a haven. The MSCI World Index of stocks has dropped about 4 percent in August, heading for the biggest monthly decline since May, on concern that the economic rebound is slowing. Before today, gold gained 13 percent this year, reaching a record $1,266.50 an ounce in June. “Gold is the primary beneficiary of this general angst over the economy,” said Matthew Zeman, a metal trader at LaSalle Futures Group in Chicago. “The flight-to-safety bid is back on, and Treasury yields are a joke now. That’s a good setup for gold to go higher.” Gold futures for December delivery rose $8.60, or 0.7 percent, to $1,247.80 an ounce at 11:11 a.m. on the Comex in New York. Earlier, the price touched $1,249.40, the highest since June 28.
• Summer Movie Attendance Falls to Lowest Since 1997.
• Yuan Set for Biggest Monthly Drop Since 1994 as Economy Slows, Dollar Gains. The yuan had its biggest monthly loss since January 1994 after China’s government sought to support economic growth and the U.S. currency rallied. The yuan declined 0.5 percent in August, trimming gains since the central bank ended a two-year dollar peg on June 19 to 0.3 percent. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major trading partners, gained 2 percent this month. Central bank governor Zhou Xiaochuan yesterday told a meeting in Beijing that policy makers should maintain financial stability, amid calls for faster appreciation in the currency from trading partners. “Policy makers didn’t allow fast appreciation of the yuan because economic growth has slowed,” said Guan Jiaying, a Beijing-based currency analyst at China Citic Bank Corp.
• Panasonic Says Samsung Starts Price War for 3-D TVs in U.S. Panasonic Corp., the world’s largest maker of plasma televisions, said it may fail to meet its sales target for 3-D sets after Samsung Electronics Co. unleashed an “unexpected” price war in the U.S. “No one can keep up” with price cuts by Samsung in the world’s biggest TV market, Yoshiiku Miyata, a managing executive officer at Osaka-based Panasonic’s TV business, said in an Aug. 30 interview.
• Apple(AAPL) May Unveil New iPod, TV-Show Rental Service at Annual iTunes Event. Apple Inc., hosting an annual event devoted to music and media tomorrow, may introduce a revamped iTunes site, an upgraded iPod and push deeper into consumers’ living rooms with a new TV set-top box that plays video.
• Hurricane Earl Puts U.S. East Coast on Evacuation Alert Should Path Shift.
• Chinese Aluminum Goods to Face Higher U.S. Tariffs After Subsidies Ruling. Chinese exporters of aluminum products used in window and door frames will face higher U.S. tariffs after the Commerce Department ruled that they receive unfair government subsidies. In a preliminary decision released today, the department said the additional tariff would be as much as 138 percent in a case brought by the United Steelworkers union and closely held aluminum manufacturers in nine U.S. states.
• RIM(RIMM) Falls as Survey Shows BlackBerry Corporate Loyalty Fading.
  

Wall Street Journal:

• Why We Fourth and What We Achieved. Saddam had launched multiple wars, used weapons of mass destruction and aided global terrorism. Now Iraq's government is an ally and represents all the Iraqi people. The U.S. effort in Iraq is not over. Some 50,000 U.S. troops, together with a robust diplomatic presence, continue to train and assist Iraq's security forces and support its democratic progress. The American people, our coalition allies and especially the Iraqi people have paid an enormous price. It is important to remember why.

Business Insider:

• More Loose-Lips At The White House, As Press Secretary Robert Gibbs Bascially Admits Stimulus Doesn't Work.
• Bankrupt Miami in Fiscal Emergency, Breaks Employee Contracts, Hikes Property Taxes. Miami is bankrupt. Unfortunately the city refuses to admit it.
• If You Start Seeing Roubini on TV A Lot, Start Buying Stocks Like Mad. (graph)
• Chart of The Day: Number of "Problem" Banks Hits Brand-New High.
• RUMOR: Rift is Growing Between China's Top Leaders, As Hu And Wen Fight Over Reform.

Boston Herald:

• Local Cos.: Credit Still Tight at Bigger Banks. Despite two years of the Fed pumping massive amounts of money into the banking system, some local business owners say credit is still too tight to meet the financial needs of many firms. Large national and “super-regional” banks are simply not providing enough commercial credit, though smaller community banks are trying to step up to the plate, business executives say

Sidley Austin:

• Dodd-Frank Essentials for End Users of OTC Derivatives - Update 2.

Rasmussen Reports:

• 75% Say Congress Should Cut Its Own Pay Until Budget is Balanced.

Politico:

• Public Sours on Health Care Reform as Midterms Loom. A new poll shows that public support for health care reform dropped sharply in August — a dagger in Democrats’ hopes that their landmark legislation will help them in November’s midterm.
• Democrats Seek Separation From Nancy Pelosi. Some of the Democratic Party’s most endangered lawmakers are taking steps to distance themselves from Speaker Nancy Pelosi in an attempt to inoculate themselves from charges that they are beholden to the unpopular House leader and supportive of the ambitious national Democratic agenda.
  

Reuters:

• Gartner Lowers Second-Half PC Sales Forecast. Technology research firm Gartner cut its forecast for personal computer sales for the second half of the year by 2 percent, signaling that a resurgence in tech spending that started earlier this year may not be as strong as expected. Worldwide PC shipments are now projected to grow by just over 15 percent for July through December, said Gartner. That's slightly lower than its previous forecast, largely due to the return of economic uncertainty in the United States and Western Europe.

Xinhua:

• China's banking regulator will "strictly implement" government policies aimed at curbing soaring housing prices, citing Ye Yanfei, a China Banking Regulatory Commission official. Ye, deputy head of the CBRC's statistics department, said the agency will restrain "speculative" investment in real estate, support the construction of affordable housing and control risk.

DigiTimes:

• Intel(INTC) Almost Halves Prices for Core i7-950. Intel recently dropped the price of its quad-core Core i7-950 processors to US$294 from US$562 to defend from AMD's recent price cuts for its quad-core Athlon II X4 640 CPU from US$122 to US$99, according to sources from motherboard makers.
• DRAM Contract Prices Continue to Fall, Says DRAMeXchange. DRAM contract prices continue trending downwards in the second half of August, according to DRAMeXchange. Pricing in the spot market is also facing a continual drop amid weak demand. Late August contract prices for mainstream 1Gb DDR3 chips have gone down by up to 5% to US$2.22-2.41, driving the price of 2GB DDR3 modules to US$40 on average, DRAMeXchange data show. Meanwhile, same-density DDR2 parts have slid by up to 2% for the same period slashing 2GB DDR3 module prices to US$36. The recent fall in DRAM prices is encouraging PC makers to increase memory content per PC. However, demand is growing at a slower pace than output from the supply side, commented Nobunaga Chai, analyst for semiconductor at Digitimes Research.