Today's Headlines

Bloomberg:

• Portugal Ratings Cut to Junk by Moody's. Portugal’s long-term government bond ratings were cut to Ba2, or junk, from Baa1 by Moody’s Investors Service. The outlook is negative. The reductions stem partly from “the growing risk that Portugal will require a second round of official financing before it can return to the private market,” Moody’s said today in a statement. There is also “the increasing possibility that private sector creditor participation will be required as a pre-condition,” the ratings company said. Portugal is the second country rated non-investment grade by Moody’s, joining Greece, after winning a 78 billion-euro ($113 billion) international bailout in May as the Iberian nation struggles to repair its finances. Concern that Portugal won’t be able to fully achieve its deficit-reduction target was also a reason for the cut, Moody’s said.
• EU Stress Tests on Banks 'Missing the Point,' Credit Suisse Analysts Say. European regulators’ stress tests on 91 of the region’s banks are in practice assessing government bailout systems rather than the lenders themselves, analysts at Credit Suisse Group AG (CSGN) said. “Although exercises looking at the sensitivity of individual banks are not wholly without value, they are largely missing the point,” analysts led by Daniel Davies wrote in a note to clients today. “Everyone can do arithmetic on balance sheets. The information that the markets need is whether there is a well-organized and well-capitalized structure in place to recapitalize the failures.” Five or six Spanish savings banks may fail the tests and need as much as 12 billion euros ($17.4 billion), the analysts said. That would require the Spanish bailout fund, known as FROB, to borrow additional money in the six months after the results, the analysts said. The fund has about 12 billion euros in cash, and can boost its capacity to about 99 billion euros.
• Orders to U.S. Factories Rose .8% in May. Orders placed with U.S. factories increased in May, indicating manufacturing may rebound from a slowdown in economic growth in the first half of 2011. Bookings for manufacturers’ goods rose 0.8 percent, less than forecast, after a revised 0.9 percent decline in April that was smaller than previously estimated, figures from the Commerce Department showed today in Washington. Demand for durable goods that are meant to last at least three years increased 2.1 percent, while unfilled orders climbed the most since September.
• Crude Oil Advances to Two-Week High on Signs of Growth in U.S. and China. Crude oil climbed to the highest price in more than two weeks on signs of economic growth in the U.S. and China, the world’s two biggest oil consumers. Oil rose as much as 2.2 percent as data showed orders placed with U.S. factories increased in May, indicating manufacturing may rebound from a slowdown. China’s services industries expanded at the second-fastest pace this year as new orders and employment climbed. “As long as we can see the economy growing, we are going to see more strength in oil,” said Carl Larry, director of energy derivatives and research with Blue Ocean Brokerage LLC in New York. “If we settle above $96, it could be a strong sign for bulls, and oil may rise to $100 this month.” Crude for August delivery gained $2.03, or 2.1 percent, to $96.97 a barrel at 12:36 p.m. on the New York Mercantile Exchange. Prices reached $97.04, the highest intraday level since June 15.
• Dollar Rises as China Inflation Concern Spurs Safety Demand; Euro Declines. The dollar advanced versus most of its major counterparts on speculation China’s efforts to tame inflation will cool growth and damp demand for riskier assets. The euro dropped for the first time in seven days versus the greenback after Moody’s Investors Service said banks rolling over Greek bonds into new securities may incur impairment charges. “We had this insipient risk recovery last week, and it has all of a sudden stalled,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York. “Moody’s has been in the news saying that the recent rollover plan constitutes a credit event. We thought Greece was taken off the table last week, and it’s still there, so that’s taken the steam out of the euro.” he dollar appreciated 0.6 percent to $1.4464 per euro at 11:42 a.m. in New York, from $1.4539 yesterday, when it touched $1.4578, the weakest level since June 9. China is likely to raise rates to combat consumer-price increases that may have reached 6.2 percent in June, said the Economic Information Daily, citing market estimates. That followed comments by the People’s Bank of China yesterday that the country still faces “large” inflationary pressure.
• Greece's Only Option Now is to Leave the Euro, Share's Jacomb Writes in FT. The motives for the European Union’s “rescue” of Greece are to preserve the euro and to prevent another banking crisis, but the policy won’t work, said Martin Jacomb, the chairman of Share Plc, a former chairman of Prudential Plc and a former director of the Bank of England. Writing in the Financial Times, Jacomb said the EU’s future depends on enabling its poorest members to become competitive again, and that requires a quite different approach. Greece can’t earn its way out of the mess it’s in, Jacomb said, because its adoption of the euro made it uncompetitive, and that will be the case as long as the euro remains its currency. Regaining competitiveness always involves a temporary reduction in labor costs and living standards, and the only way that can be accomplished with relative harmony is through currency devaluation, he argued. Therefore, dismantling the euro is the least painful course of action for Greece and for the EU, Jacomb concluded.
• Immucor(BLUD) to Be Bought by TPG Capital for $1.97 Billion. Immucor Inc. (BLUD), maker of blood- screening systems for transfusions, agreed to be acquired by TPG Capital for $27 a share in cash in a deal valued at $1.97 billion. The shares rose above the offer price. The per-share offer is 30 percent more than Immucor’s closing price on July 1, the last trading day before the deal was announced, the Norcross, Georgia-based company said in a statement today.
• National Oilwell(NOV) Will Buy Ameron(AMN) for $772 Million to Gain Fiberglass Pipes. National Oilwell Varco Inc. (NOV), the world’s largest provider of oilfield equipment, agreed to buy Ameron International Corp. (AMN) for about $772 million in cash, gaining access to its pipeline-production company. Holders of Ameron will receive $85 for each share they own, Houston-based National Oilwell said today in a statement. The companies’ boards have approved the transaction, which may close as soon as the fourth quarter. The price is a 28 percent premium to Ameron’s closing price on July 1.
• China Discusses Allowing SEC Probes. U.S. and Chinese officials will meet next week to discuss giving American securities regulators the right to investigate companies within China for the first time, said two Chinese officials with direct knowledge of the plans. Representatives from the Securities and Exchange Commission and the Public Company Accounting Oversight Board will meet with counterparts from the China Securities Regulatory Commission in Beijing from July 11 to 12, said the officials, who asked not to be named because the talks are private.

Wall Street Journal:

• Moody's Warns on China Debt. Moody's Investors Service said China's main government auditor may have understated banks' loans to local governments by half a trillion dollars, escalating the ratings firm's warnings that the scale of such loans could pose a threat to China's banking system.‬ In the absence of a clear plan to reduce local-government debt, Moody's views the credit outlook for Chinese banking system as potentially turning to negative, the ratings firm said Tuesday.‬
• Strauss-Kahn Sex Case Appears Headed to Dismissal. After airing doubts last week about the credibility of the woman who accused former International Monetary Fund chief Dominique Strauss-Kahn of sexual assault, prosecutors now are no longer certain there was a crime after examining lies by Mr. Strauss-Kahn's accuser, according to law enforcement officials.
• Moody's Warns Banks of Greek Bond Impairment Charges. Banks rolling over some of their Greek debt into new instruments may have to take impairment charges, Moody's Investors Service said Tuesday, in another setback for efforts to involve private bondholders in a new international bailout. Rival rating firm Standard & Poor's Corp. on Monday rocked plans to involve the private sector in giving Greece more time to work out its fiscal problems by saying a proposal being promoted by French banks would likely put the country in "selective default."
• Rare-Earth Prices Decline Within China. Prices within China for some rare-earth metals posted their first monthly drop this year, ahead of a decision by Beijing on its global export quota for the metals. Domestic prices of some of the elements were down at the start of this month as much as 7.2% from a month earlier, Australian miner Lynas Corp. said. The decline suggested that a rush to acquire the metals—a group of 17 elements used in applications such as high-performance magnets and LED phosphors, and in products including iPads and Prius cars—may have eased in recent weeks.
• BofA's(BAC) Mortgage-Bond Pact Draws Challenge. A group of bond investors said it plans to challenge in court last week's proposed $8.5 billion settlement by Bank of America Corp. with holders of mortgage-backed securities.
• New Financing Values Twitter As High As $7 Billion. Twitter Inc., the fast-growing Internet messaging service, is privately raising hundreds of millions of dollars in a new financing round that values the company at as high as $7 billion, said a person familiar with the matter. The move comes seven months after Twitter, which lets people broadcast and read messages called tweets, raised $200 million in a financing round led by Kleiner Perkins Caufield & Byers that valued the company at $3.7 billion.
  

CNBC.com

• Retailers Should See Strong Back-to-School Season.

Business Insider:

• Almost Half The Kids in Fukushima Have Thyroid Radiation Exposure.
• Casey Anthony Found Not Guilty of Killing Her Daughter.
• That World's Longest Bridge in China Was Such a Rush Job, It Already Has Safety Problems. These types of incidents are piling up. Also recently Chinese officials had egg on their face after a big high-speed rail project could not go as fast as planned. These shoddy investments have financial implications, since revenues from these projects (or expected economic benefit from them) are crucial to the health of those heavily indebted Chinese municipalities that suddenly everyone is talking about.
• As Its CDS Spreads Widen, Suddenly Everyone is Talking About China's Government Debt. (graph)
  

Zero Hedge:

• Summary June Hedge Fund Performance.

LA Times:

• Goldman Sachs(GS) Flexes Its Lobbying Muscle. The investment bank has bolstered its Washington presence significantly, turning a low-key lobbying operation into a sophisticated, high-powered enterprise led by a well-connected former congressional staffer, Michael Paese. Facing the wrath of the public and the government after the global financial crisis that hit three years ago, Wall Street titan Goldman Sachs Group Inc. has opened a new front for its aggressive business tactics — the nation's capital. Increased federal oversight and the threat to its lucrative investment bank business from investigations and pending regulations have led Goldman to bolster its Washington presence significantly, turning a low-key lobbying operation into a sophisticated, high-powered enterprise.
  

Washington Post:

• Global Race on to Match U.S. Drone Capabilities. At the most recent Zhuhai air show, the premier event for China’s aviation industry, crowds swarmed around a model of an armed, jet-propelled drone and marveled at the accompanying display of its purported martial prowess. In a video and map, the thin, sleek drone locates what appears to be a U.S. aircraft carrier group near an island with a striking resemblance to Taiwan and sends targeting information back to shore, triggering a devastating barrage of cruise missiles toward the formation of ships. Little is known about the actual abilities of the WJ-600 drone or the more than two dozen other Chinese models that were on display at Zhuhai in November. But the speed at which they have been developed highlights how U.S. military successes with drones have changed strategic thinking worldwide and spurred a global rush for unmanned aircraft.
• Mobile Payments to Triple to $670 Billion by 2015; Digital Goods Will Represent 40% of Transactions. Juniper Research is releasing a new study today that reports that the transaction value of mobile payments for digital and physical goods, money transfers and NFC (Near Field Communications) transactions will reach $670 billion by 2015, up from $240 billion this year. The top 3 regions for mobile payments (East Asia and China, Western Europe and North America) will represent 75% of the global mobile payment gross transaction value by 2015. Digital goods payments will account for nearly 40% of the market in 2015.

cnet News:

• iPhone 5 Order: 15 Million for Sept. Launch, Report Says.

Reuters:

• Netflix(NFLX) Expands Online Service to Latin America. Netflix Inc is expanding its online video service to 43 countries in Latin America and the Caribbean, sending its shares up more than 6 percent.
• Hedge Fund Giants Are Coming Up Small This Year.
• Euro Zone Growth Slows, Orders Dry Up - PMIs. European services growth slowed in June in the face of sluggish new orders and rising interest rates, giving firms less optimism about the year ahead, business surveys showed on Tuesday.

Handelsblatt:

• Forty percent of German investors see the Greek debt crisis spreading to Spain and Italy, citing a survey of almost 1,000 respondents conducted by the Frankfurt-based Sentix Institute.

Shanghai Daily:

• Slow Home Sales. BUYING sentiment for existing properties in Shanghai fell for the first time in four months in June as an uncertain market outlook kept more home seekers on sidelines, industry data showed yesterday. A total of 13,100 units, or 1.16 million square meters, of existing properties were sold across the city in June, a month-on-month decrease of 7.3 percent and 9.8 percent, Century 21 China Real Estate, operator of the city's largest estate chain in terms of outlet numbers, said in a report released yesterday. It was the first monthly loss registered since March, as more potential buyers, in fear of further tightening measures from the government in the second half, chose to take a wait-and-see attitude, said Huang Hetao, a Century 21 analyst.