Today's Headlines

Bloomberg:

• Companies Added 157,000 Workers to Payrolls. Companies in the U.S. added twice as many workers as forecast in June, signaling an improvement in the labor market that may help bolster the economy in the second half of the year. The 157,000 increase followed a 36,000 gain the prior month, according to data from ADP Employer Services. The median forecast in a Bloomberg News survey called for an advance of 70,000. Other reports today showed fewer Americans filed jobless claims and consumer confidence eased from a 10-week high. While hiring may be picking up, a sustained drop in the unemployment rate from 9.1 percent may require bigger job gains. Payroll increases of around 200,000 a month are needed for a sustained decline in the unemployment rate, according to Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. The Bloomberg Consumer Comfort Index decreased to minus 45.5 for the period ended July 3 from minus 43.9 the prior week. All three components in the Bloomberg survey fell. An index of consumers’ views of the economy decreased to minus 80.9, the worst showing since the week ended April 3, from minus 79.2 the prior week. The gauge of personal finances declined to minus 8.4, the lowest in four weeks, while the buying climate measure was little changed at minus 47.1.
• Portugal, Spain Government Notes Fall as Trichet Comments Provide No Balm. Government notes from Europe’s most- indebted nations declined as European Central Bank measures to accommodate recently-downgraded Portuguese bonds failed to alleviate concern the debt crisis is spreading. Yields on Portuguese and Irish two-year notes rose to records even after ECB President Jean-Claude Trichet said in Frankfurt today that policy makers “decided to suspend the application of the minimum credit-rating threshold” for Portugal. German bunds slid after the central bank raised borrowing costs and Trichet said monetary policy in the euro region remains “accommodative.” “The situation is simply so bad,” that “really the market is focused on the other negatives, like Portugal being downgraded,” said Niels From, chief analyst at Nordea Bank AB in Copenhagen. “There is a negative spiral for Portugal and there are definite concerns about contagion to other bigger peripherals.” The yield on two-year Portuguese notes was up 84 basis points at 17.59 percent as of 3:08 p.m. in London after reaching a record 18.28 percent. Spanish two-year note yields rose four basis points to 3.66 percent, Italian yields on securities of similar maturity increased six basis points to 3.33 percent and Irish two-year yields jumped 67 basis points to 15.98 percent. Greek two-year notes fell, pushing the yield up 35 basis points to 28.79 percent.
• Spain's Regions Need to Boost Deficit Control, Think Tank Says. Spain's regional governments must boost "rigor and discipline" to meet central government deficit targets, and the government's austerity measures need to be carried out on time, a think tank said. Spain, which is aiming to cut its budget deficit to 6% of gdp this year from 9.2% in 2010, need to gain the trust of the financial markets, said Fernando Casado, director of the Business Council for Competitiveness. "Anything that may lead to a delay of the reforms will have a negative impact," Casado said at Telefonica SA's headquarters in Madrid today.
• World Food Prices Increased 1% Last Month on Cost of Sugar, Dairy Products. World food prices rose in June as the cost of sugar, meat and dairy increased, adding to inflationary pressure that has prompted central banks across the world to raise interest rates. An index of 55 food commodities rose to 233.8 points from 231.4 points in May, the United Nations’ Food and Agriculture Organization said in a report on its website today. The gauge climbed to an all-time high of 237.7 in February. The European Central Bank raised rates today for the second time this year and China did so for the third time yesterday in a bid to control inflation partly blamed on food costs. “We’re not yet seeing any break,” Abdolreza Abbassian, a senior economist at the FAO, said via phone from Rome today. “Almost in every country, including in Europe, the issue of higher food prices has already become tangible.”
• Oil Climbs to Three-Week High in New York After U.S. Companies Add Workers. Oil surged to a three-week high in New York on signs that the U.S. economic recovery is whittling down crude inventories in the world’s largest user of the commodity. Futures climbed as much as 2.1 percent in New York after reports showed that U.S. companies added 157,000 workers in June and applications for unemployment benefits declined last week. Crude for August delivery gained as much as $2.05 to $98.70 a barrel in electronic trading on the New York Mercantile Exchange. That’s the highest since June 15.
• JPMorgan(JPM) to Pay $228 Million to Settle Bid-Rig Case. JPMorgan Chase & Co. (JPM) agreed to pay $228 million to settle federal charges that the bank conspired to rig the bidding on investment contracts sold to state and local governments, the Securities and Exchange Commission said. JPMorgan, the second-biggest U.S. bank, agreed to pay $177 million to settle federal and state charges and to return $51.2 million to municipal borrowers affected by the conduct, the SEC said in a statement.
• Goldman Sachs(GS) Sued for Alleged Fraud by Liberty Mutual on Freddie Mac Stake. Liberty Mutual Insurance Co. and Safeco Corp. sued Goldman Sachs Group Inc. (GS) for “making misleading statements and omissions” in a preferred-stock offering for the Federal Home Loan Mortgage Corp. (FMCC) in 2007. The plaintiffs, which also include Peerless Insurance Co., said they invested $37.5 million in the offering of Freddie Mac shares, which was underwritten by Goldman, according to a filing yesterday in federal court in Massachusetts. Goldman claimed Freddie Mac “already met its regulatory capital requirements” and that the offering was made to increase the mortgage company’s capital base, the plaintiffs said. “The stated purpose for the offering was false,” the plaintiffs said in the complaint. “Goldman knew or recklessly ignored that Freddie Mac did not meet its regulatory capital requirements, and Freddie Mac remained severely undercapitalized even after the sale of the preferred stock.”
• Ecuador May Buy Oil Hedge Against 'Drastic' Drop in Prices. Ecuador, the smallest member of the Organization of Petroleum Exporting Countries, may buy oil hedges to protect against sharp declines in the price of crude, central bank President Diego Borja said today. The government hasn’t decided when it might purchase the oil hedges, Borja said in an interview on television channel Ecuavisa, without providing more details. Ecuador’s President Rafael Correa said July 2 a possible economic slowdown in Europe and the U.S. could push crude prices lower in 2012, according to a statement in the presidential gazette.

Wall Street Journal:

• Pimco's El-Erian: Greece Vulnerable for Euro Zone Sabbatical. One of the world's biggest bond investors warned Thursday that the euro-zone debt troubles may spin out of control should policy makers continue to kick the can down the road. In written comments for a live question-and-answer event at Reuters.com on Thursday, Mohamed El-Erian, chief executive and co-chief investment officer of Pacific Investment Management Co., or Pimco, said: "If it wishes to avoid a really disorderly outcome, Europe will be forced to opt for one of two corner solutions: fiscal union, or debt restructuring and, possibly, a euro-zone sabbatical for at least one (and possibly up to three) of the 17 members of the euro-zone." "The more Europe delays this choice—and it is a difficult one—the greater the risk that policy makers may lose control of the situation," said Mr. el-Erian. He added that Greece is the most vulnerable country for both a debt restructuring and a euro-zone sabbatical.
• News Corp.(NWSA) to Close Its News of the World Tabloid. News Corp. said it will close its News of the World newspaper, a dramatic move to quell a scandal over the U.K. paper's controversial reporting tactics, which have led to allegations that, in its pursuit of scoops, it intercepted voice mails of celebrities, murdered girls and terrorist victims.
• Ethanol Subsidies May End by August. Key Senate lawmakers have reached a deal to end two ethanol subsidies by the end of the month, sooner than expected and a sign of how tax policy can change as attention focuses on the deficit.
  

MarketWatch:

• Debt Talks 'Constructive' But No Deal: Obama. Talks with congressional leaders about cutting the federal deficit and raising the debt limit were “very constructive,” but Democrats and Republicans are still far apart on issues, President Barack Obama said Thursday.
• Positive June Retail Sales Augur Well For Back to School. U.S. retailers, from discounter Target Corp. to high-end retailer Saks Inc., posted better-than-expected June sales, giving an encouraging sign about the state of consumers heading into the industry’s key back-to-school and second-half selling season. All but three of 25 retailers that reported their June numbers topped expectations, according to Thomson Reuters. Overall, sales rose 6.5%, topping the 4.9% analysts expected and marked the strongest showing since February 2004 when comparisons strip out the Easter-benefited months, analyst Jhraonne Martis at Thomson Reuters said in an email.

CNBC.com:

• Tough June for Hedge Funds as They Struggle to Keep Gains. For Paulson & Co., the $38 billion fund company, the last couple of months have been brutal, rendering its Advantage fund down roughly 15 percent, according to one investor.
• Apple(AAPL) Just Inked iPhone Deal with China Mobile?
  

Business Insider:

• Karachi EXPLODES: Dozens Already Dead as Wave of Violence Sweeps Through Pakistan's Largest City.
• Check It Out: Default Odds Have Worsened For Virtually Every Single Country In Europe Today.
  

Zero Hedge:

• Obama Administration to Extend Mortgage-Free Living for America's Unemployed to One Year.
• Imagine Grand Central Station After A Flesh-Eating Virus Outbreak And You Get Guangzhou South Station. (pics)
  

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 24% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Thirty-nine percent (39%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -15 (see trends).

Reuters:

• China may reduce investment on seven strategic emerging industries, including high-speed rail and wind power, on concerns of corruption and overcapacity, citing two persons close to the Communist Party leadership.
• Junker Says Wants European Rating Agency. Eurogroup chairman Jean-Claude Juncker said on Thursday he was in favour of having a European credit rating agency and that it was not right to downgrade countries like Portugal just as they were implementing reforms. Juncker, joining the ranks of policymakers who have criticised rating agencies, said they would lose relevance if they continued to act like they have been. European politicians accused credit rating agencies on Wednesday of anti-European bias after Moody's downgrade of Portugal's debt to "junk" cast new doubt on EU efforts to rescue distressed euro zone states without debt restructuring.

Telegraph:

• There Has Been No Global Warming Since 1998. The headline of this post really shouldn’t be controversial. It chimes perfectly with what Kevin “null hypothesis” Trenberth wrote in that notorious 2009 Climategate email to Michael Mann: The fact is that we can’t account for the lack of warming at the moment and it is a travesty that we can’t. And it’s what Phil Jones admitted in a BBC interview when he said that there had been no “statistically significant” warming since 1995. Why then am I mentioning it now? W-e-l-l, because just as ze war is to the Germans, Chappaquiddick is to the Kennedy family and that Portland masseuse incident to Al Gore, so the recent lack of warming is to the, er, Warmists. They hate it. It’s an affront to everything they believe in. Damn it, if the world isn’t warming with the alacrity they’d prefer, how are they going to keep the funding gravy train going, and how are they going to persuade an increasingly sceptical populace that the “science” is “settled”, the debate over and the time for action is now? That’s why they can’t be reminded of the truth often enough.

Portfolio.hu:

• Investors who purchased Greek bonds should "pay for their mistake," Market Mobius, who oversees about $50 billion as the executive chairman of Templeton Emerging Markets Group, said. "What needs to be done now is there ought to be strong leadership to recognize the debt, to downgrade it, to have the people who made these purchases of these bonds take a haircut, pay for their mistake," Mobius said.

Expansion:

• Spain is considering creating a state-owned holding company controlled by the bank rescue fund to manage its stakes in the weakest savings banks which will likely be nationalized as investors shun their stock.

Caijing:

• About one third of China's municipal financing vehicles have negative net operating cash flow, citing a Guotai Junan research note. The vehicles' ability to repay debt has decreased as their money flow to current liabilities and interest ratios have fallen to 47% in the first quarter, the note said.

China Business Daily:

• A unit of the Aviation Industry Corp. of China, a fighter jet maker, is purchasing grains and oilseeds for stockpiling on behalf of the government. The company has bought 200,000 metric tons to 300,000 tons of corn and is preparing to purchase wheat through a joint venture with a local grain warehouse in Hebei.