Today's Headlines

Bloomberg:

• U.S. May Have Enough Cash to Delay Aug. 2 Deadline for Default. The U.S. Treasury Department may have enough cash to pay the government’s bills for days or even weeks if Congress fails to raise the debt limit before an Aug. 2 deadline, say analysts at UBS AG (UBSN) and Barclays Capital. The date set by the Treasury is a projection for when the U.S. exhausts its authority to borrow, not when it runs out of money. Chris Ahrens at UBS and Ajay Rajadhyaksha at Barclays say the debt limit may not have to be raised next week, in part because tax revenue is coming in higher than forecast. “Having borrowing authority is like having a credit card,” Rajadhyaksha said in an e-mail yesterday. While the Treasury “will no longer be able to use its credit card” after Aug. 2, “it should still be able to pay its bills on Aug. 3, which is ultimately what matters most.”
  
• Troop Pullouts Become Easy Savings in Debt-Reduction 'Smoke'. More than a third of Senate Majority Leader Harry Reid's new $2.7 trillion debt reduction plan comes from $1 trillion in "savings" that are happening anyway -- the reduction of U.S. forces in Iraq and Afghanistan. The Congressional Budget Office is required to assume that war spending will stay at current levels of $159 billion a year, plus inflation, for the next 10 years, at a cost of $1.8 trillion, even as President Barack Obama has announced a troop drawdown. Based on that official "baseline" projection, Reid, a Nevada Democrat, may count the already-begun reduction of U.S. forces as a cut. "It's just one more thing that makes you cynical about what's going on in Washington," said Rudolph Penner, a former CBO director who is now a fellow at the Urban Institute. Analysts such as Todd Harrison of the Center for Strategic and Budgetary Assessments in Washington agreed. "Let's not fool ourselves into thinking these are real savings," said Harrison. "This is money we were never going to spend anyway."
• Sovereign, Corporate Credit-Default Swap Indexes Fall in Europe. The cost of insuring against default on European sovereign and corporate debt fell, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments dropped 4.5 basis points to 261.5 at 12 p.m. in London. A decline signals improvement in perceptions of credit quality. Contracts on the Markit iTraxx Crossover Index of 40 companies with mostly high-yield credit ratings decreased 5 basis points to 425, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell 1.5 basis points to 113.75 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers declined 3 basis points to 169 and the subordinated index dropped 6 to 297.5.
  
• Italian, Spanish Yield Spreads to Bunds Widen After European Debt Auctions. Italian and Spanish 10-year bonds fell and benchmark German bunds advanced, widening the difference in yield between the securities, after debt sales by the Mediterranean nations. The Spanish 10-year bond yield increased four basis points to 6.07 percent as of 10:32 a.m. in London, widening the spread to bunds by six basis points to 333 basis points. The Italian 10-year bond yield climbed six basis points to 5.72 percent. The Italian-German spread rose to 298 basis points. Italy auctioned six month bills at the highest yield in almost three years, while Spain sold 2.89 billion euros ($4.2 billion)of three-month bills and six-month bills compared with a maximum target of 3 billion euros.
• New Home Sales Unexpectedly Fell for 2nd Month. Sales of new U.S. homes unexpectedly fell for a second month and a gauge of property values also dropped, showing the industry that sparked the recession is stagnating. Purchases dropped 1 percent in June to a 312,000 annual pace, a three-month low, figures from the Commerce Department showed today in Washington. Prices in 20 cities dropped 4.5 percent in the year ended May, the most since November 2009, according to a report from S&P/Case-Shiller.
• U.S. Consumer Confidence Unexpectedly Rises. Confidence among U.S. consumers unexpectedly rose in July from an eight-month low, led by a rebound in the outlook for jobs over the next six months. The Conference Board’s index climbed to 59.5 from a revised 57.6 reading in June that was lower than previously estimated, figures from the New York-based private research group showed today.
• George Soros to End Hedge Fund Career, Return Money on Increased Regulation. George Soros, the billionaire best known for breaking the Bank of England, is returning money to outside investors in his $25.5 billion firm, ending a career as hedge-fund manager that spanned more than four decades. Soros, who turns 81 next month, will hand back the money, less than $1 billion, by the end of the year, according to two people briefed on the matter. His firm will focus on managing assets solely for Soros and his family, according to a letter to investors. Keith Anderson, 51, chief investment officer since February 2008, is leaving, said the letter, signed by Soros’s sons Jonathan and Robert, who are co-deputy chairmen. “We wish to express our gratitude to those who chose to invest their capital with Soros Fund Management LLC over the last nearly 40 years,” they said in the letter. “We trust that you have felt well rewarded for your decision over time.” Soros’s sons said they took the decision because new financial regulations would have made it necessary for the firm to register with the Securities and Exchange Commission by March 2012 if it continued to manage money for outsiders.
• N.Y. Crude Oil Climbs to 6-Week High on U.S. Confidence Gain, Dollar Drop. Crude oil for September delivery rose $1.11, or 1.1 percent, to $100.31 a barrel at 12:17 p.m. on the New York Mercantile Exchange. The contract climbed to $100.62, the highest intraday price since June 10. Futures have increased 27 percent in the past year.
• Copper Gains as Strike Enters Fifth Day at Escondida, World's Biggest Mine. Copper rose to a one-week high in New York on speculation that a strike at the world’s biggest mine may worsen a global supply shortage. A strike at BHP Billiton Ltd.’s Escondida mine entered a fifth day as Chilean labor authorities prepared to mediate talks between union and company officials. The stoppage has cost about 12,000 metric tons in lost output, said Roberto Arriagada, a union director.
• Greece to Host Talks This Week on Private-Sector Role in Rescue. Athens will host a working meeting this week on implementing private-sector involvement in Greece’s second rescue package, a Greek Finance Ministry official said. The July 28 meeting, announced after talks in Washington yesterday between Greek Finance Minister Evangelos Venizelos and Institute of International Finance Managing Director Charles Dallara, will be the first such gathering and include foreign participants, said the official, who declined to be named in line with policy.
• Receive China 10-Year Swap as Growth Slows, Credit Agricole Says. Investors should receive China's interest-rate swaps because the world's second-largest economy will slow in the second half, Credit Agricole CIB said.
• Beef Tainted by Radiation to Be Recalled in Japan as Contamination Widens. Japan will help meat producer groups remove beef tainted with cesium from the market and has directed them to seek compensation from Tokyo Electric Power Co. as radioactive contamination spreads in the country’s food supply. The government will financially support the purchase, storage and incineration of meat from cattle fed with contaminated hay, which may cost as much as 2 billion yen ($25 million), said Hideo Harada, director for livestock policy planning at the Ministry of Agriculture, Forestry and Fisheries. The ministry said today that 2,906 cattle ate tainted feed before shipment. Fallout from Tepco’s crippled Fukushima nuclear plant poses a growing threat to Japan’s food supply as unsafe levels of cesium found in beef on supermarket shelves were also detected in vegetables and the ocean.
• SAP(SAP) to Reach Top End of Profits, Shares Surge. SAP AG, the world’s largest maker of business-management software, said it will meet the top end of its range of profit forecasts after second-quarter license sales beat estimates, sending the stock 5 percent higher in the final minutes of trading in Frankfurt.
• 3M Slumps as Profit Forecast Trails Estimates on Drop in LCD Screen Demand. 3M Co. tumbled the most in nine months after reporting lower-than-expected profit margins and sales because of lower demand for products used in LCD televisions. 3M fell $4.47, or 4.5 percent, to $90.60 at 12:36 p.m. in New York Stock Exchange composite trading.
• UPS Falls Most in a Year on 'Slow' Forecast. United Parcel Service Inc., the world’s largest package-delivery company, fell the most in 14 months after saying the third quarter will be “fairly slow” before demand picks up in the last three months of 2011. Atlanta-based UPS dropped $3.39, or 4.6 percent, to $70.66 at 11:56 a.m. in New York Stock Exchange composite trading, after slumping 6 percent, the biggest intraday decline since May 6, 2010.
• CFA Pass Rate Declines for First, Second Levels of Three-Part Examination. A lower percentage of hopefuls for the Chartered Financial Analyst designation passed the first and second level of their three-part exam in June compared with a year earlier, as a record number of people tried to get an edge in Wall Street hiring. Forty-two percent of applicants passed the exam’s first test, CFA Institute spokeswoman Kathy King said today, down from 46 percent on the June 2009 exam. Thirty-nine percent of applicants passed the second, compared with 41 percent a year earlier.

Wall Street Journal:

• Live Blog: The U.S. Debt Battle.
  
• Greece Expects Bond Swap in August. Greece expects to implement a deal with private creditors to swap their holdings of Greek bonds with longer-dated securities next month, the country's deputy finance minister said in a television interview Tuesday. Speaking on the privately owned Mega television channel, Deputy Finance Minister Philippos Sachinidis said bond holders would be offered four choices for trading in their existing Greek government bonds for 30-year debt.
• India Markets Drop After RBI Interest Rate Move. Indian stocks tanked on Tuesday morning, following a higher-than-expected increase in interest rates by the central bank. The Reserve Bank of India raised the benchmark interest rate by 0.50%, twice the hike that most analysts had expected. Within minutes of the announcement, Bombay Stock Exchange’s Sensex started falling and was down nearly 290 points or 1.55% to 18,578.61 by 1 p.m. “We are extremely disappointed,” said Gaurav Dua, head of research at Mumbai securities firm Sharekhan Ltd. “This could lead to a much higher than expected slowdown in the economy.”
• Chinese Outrage Grows Over Train Crash. A torrent of online outrage Tuesday over a deadly high-speed train accident reflected the mounting challenge China's leaders face in managing opinion of their governance among an increasingly wired and demanding public. Anger and skepticism that emerged quickly after Saturday's collision of two bullet trains in eastern China—which killed at least 39 people and injured more than 192—has intensified as the government has drawn fire for not being forthcoming enough with information on the disaster. Much of the criticism played out on Sina Weibo, China's most active Twitter-like microblogging site.

MarketWatch:

• Cummins(CMI) Up Nearly 5% After Profits Double.

Business Insider:

• China Hands Out Life Sentences for Selling Chemically-Enhanced Pork.
• The 20 Hot Silicon Valley Startups You Need to Watch.
• China Successfully Tests a Submersible That Will Give It Access to 99.8% of the Ocean Floor.
  

Zero Hedge:

• SAC Up 9.2% YTD, Paulson Heart Boehner, And Other Hedge Fund Observations.
• ISDA, Which Refuses to Declare Greece in Default, Has Given the US a 3 Day Grace Period Before a CDS Trigger. ISDA is rapidly deteriorating to rating agency status when it comes to credibility. After it made it all too clear in the past few weeks that no matter what happens it would never "determine" Greece (or any other European insolvent country) to have breached a CDS trigger (as that would apparently destroy the world), the same trade association (logically enough comprised of the same firms that make up the heart of the status quo) has joined the rating agencies, and as of last night the CME, in making it all too clear that a debt ceiling plan (preferably Reid's because it achieves absolutely nothing) has to pass, or else, after it earlier announced that the US has precisely 3 days to cure any missed debt payment before US CDS are triggered. Obviously this can not be allowed to happen, so expect this latest development to be used by the president in his nighlty scaremongering session.

New York Times:

• Congress to Consider Law Banning Jobless Discrimination.
• SEC Removes Credit Ratings From Regulations. Credit ratings are sprinkled throughout hundreds of pages of financial statutes and guidelines. But ever since Standard & Poor’s, Moody’s and other credit rating agencies belatedly sounded the alarms about the subprime mortgage mess, securities regulators have aimed to curb their influence over the financial industry. On Tuesday, the Securities and Exchange Commission unanimously approved a plan to erase references to credit ratings from certain rulebooks. The agency also adopted a substitute to the ratings, the first of several such changes the commission must enact in the coming months.
• Euro Zone Rescue Effect Appears to Peter Out. The wave of relief in European markets that accompanied a new rescue plan for embattled euro zone governments appears to have mostly run its course, suggesting that investors are becoming more skeptical about the plan’s prospects for success.

LA Times:

• McDonald's(MCD) to Make Happy Meals More Healthful. The fast food chain plans to add a serving of fruit or vegetable to all of the Happy Meals, which are aimed at children, and shrink the portion of French fries.

Gallup:

• Obama's Weekly Job Approval Ties Term Low of 43%.

Politico:

• Democrat David Wu Resigns. Democratic Rep. David Wu (Ore.) resigned from the House on Tuesday, just days after news broke that Wu had been accused of having an “unwanted sexual encounter” with a teenage girl. The Taiwanese-bornWu, 56, said he was stepping down to protect his family while he responds to “these very serious allegations.”
• Senate GOP, Dems, Write Obama on UN Gun Push. Thirteen Democratic senators have signed a letter opposing possible elements of the U.N. Arms Trade Treaty, which President Obama and Secretary of State Hillary Clinton back. The letter on the ATT is the latest mark of Congressional Democrats' unwillingness to engage on the stalled issue of gun control, and of gun owners' groups' -- led by the NRA -- deep inroads into the Democratic caucus in both houses.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that 24% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-three percent (43%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -19 (see trends).

Reuters:

• Wall St. Hammers U.S. Steelmakers on Weak Outlooks. Shares of U.S. steelmakers fell sharply on Tuesday after the companies warned of lower third-quarter profits due to slow economic recovery, a drop in steel prices due to over-capacity, and higher raw material costs.

El Mundo:

• Spanish regional governments may say they won't be able to meet deficit targets again this year, citing the transcript of the last meeting that members of regional governments held in April. Regional politicians in charge of taxes, who are due tomorrow to meet Spain's Finance Minister Elena Salgado and Manuel Chaves, a deputy prime minister in charge of relations with the regions, may say they see the deficit targets as impossible to achieve.