Today's Headlines

Bloomberg:

• Italian Bonds Decline After Borrowing Costs Rise at Nation's Debt Sale. Italian bonds fell for a second day, increasing the yield spread over German bunds, after the nation’s borrowing costs rose at a sale of 10-year debt and Standard & Poor’s said Greece risks further defaults. Italy’s 10-year yield surged to the most in more than a week amid speculation a probe into a former aide of Finance Minister Giulio Tremonti may force him to step down. Italian 10-year bond yields rose eight basis points to 5.84 percent as of 4:16 p.m. in London. The 4.75 percent security due September 2021 fell 0.540, or 5.4 euros per 1,000-euro ($1,4308) face amount, to 92.390. That drove the difference in yield, or spread, over 10-year German bonds nine basis points wider to 320. It earlier reached 337 points, the most since July 18. Italy sold 2.7 billion euros of its 10-year benchmark security, less than the maximum target of 3 billion euros. The debt was priced to yield 5.77 percent, higher than 4.94 percent the last time the securities were sold on June 28, and drew bids for 1.38 times the securities on offer, compared with 1.33 times. In six sales of 10-year bonds this year, the average bid- to-cover ratio was 1.42 and the average yield was 4.81 percent. “With Italy investors have recognised that the debt ratio is 120 percent” of gross domestic product, said Julian Callow, chief European economist at Barclays Capital in London. “That’s very high. Any country really above 80 ought to be getting concerned and looking at ways of bringing down that ratio. When you’re above 100, that’s flashing red signals. As well, in Italy you’ve had very weak economic growth.” The 10-year euro swap spread, which shows the difference between the 10-year swap rate and the yield on benchmark German bunds, used as a measure of perceived risk, rose to 54 basis points, the most since January 2009.
• Advisers Tell Investors Not To Sell as Debt Deadline Nears. “It’s kind of like you’re standing on a cliff, and as long as you don’t fall off the cliff you’re fine,” said Rainbolt, who lives in Dallas and works in real estate. “If you do fall off the cliff, it doesn’t matter what you do.” Rainbolt is among investors whose financial advisers are telling them not to sell their stocks or bonds as time runs out for Congress to pass a deal to raise the U.S. debt ceiling.
• Lacker Says Fed Stimulus Could Lift Inflation, Not Growth. Federal Reserve Bank of Richmond President Jeffrey Lacker said additional monetary stimulus would likely raise inflation further while not providing a substantial lift to economic growth. “Given current inflation trends, additional monetary stimulus at this juncture seems likely to raise inflation to undesirably high levels and do little to spur real growth,” Lacker said in a speech before the Dulles Regional Chamber of Commerce in Chantilly, Virginia. “When coming out of a recession, real GDP has typically grown several percentage points faster than the 3 percent long- run trend rate,” Lacker said. “This time, real GDP has risen at a 2.75 percent annual rate since the end of the recession.”
• Jobless Claims in U.S. Fall to 3-Month Low. Applications for unemployment benefits fell more than forecast last week to the lowest level since April, a sign the weakness in the labor market is fading. Jobless claims dropped by 24,000 to 398,000 in the week ended July 23, Labor Department figures showed today in Washington. The median estimate of economists in a Bloomberg News survey called for a drop to 415,000. Another report showed the number of contracts to buy previously owned homes unexpectedly rose in June.
• U.S. Consumer Confidence Fell Last Week. Consumer confidence dropped last week as Americans’ views of the economy plunged to the lowest level since the recession. The Bloomberg Consumer Comfort Index was minus 46.8 in the period to July 24, the lowest since May, compared with minus 43.3 the prior week. Six percent of those surveyed said the economy was in good shape, the fewest since April 2009. Seniors and the unemployed were among those showing the most negative readings, a sign that partisan wrangling over the nation’s budget deficit was jarring those likely to be affected by cuts in spending. Unemployment above 9 percent, falling home prices and a rebound in gasoline costs may be weighing on sentiment overall, posing a risk for consumer spending.
• India 10-Year Bond Yield at 34-Month High After Rate Increase. India’s 10-year bond yield rose to its highest level in 34 months after the central bank boosted interest rates this week for the fifth time in 2011 to damp inflation. The Reserve Bank of India raised the repurchase rate by 50 basis points to 8 percent on July 26, double the increase forecast by most economists in a Bloomberg survey. Finance Minister Pranab Mukherjee said yesterday he couldn’t say if the central bank has reached the end of the rate-rise cycle. The yield on the 7.8 percent government debt due April 2021 rose two basis points, or 0.02 percentage point, to 8.47 percent, the highest level since Sept. 29, 2008, as of the 5 p.m. close in Mumbai, according to central bank data. Inflation has held above 8 percent every month since the beginning of 2010. Wholesale prices rose 9.44 percent in June from a year earlier after climbing 9.06 percent the previous month, according to the latest government data issued on July 14.
• Exxon(XOM) Misses Estimates on Lower Refining Profits. Exxon Mobil Corp. (XOM) reported lower- than-estimated second-quarter profit as production growth lagged analysts’ forecasts and refining earnings outside the U.S. declined. Per-share profit was 16 cents lower than the $2.34 a share forecast, based on the average estimate of 18 analysts in a Bloomberg survey.
• Goldman Sachsd(GS), Citigroup(C) Scrap $1.5 Billion CMBS Sale That S&P Won't Rate.
• U.S. Banks Urge Congress to Close Deal on Debt-Limit Debate. Bankers including Goldman Sachs Group Inc. (GS) Chairman and Chief Executive Officer Lloyd Blankfein and JPMorgan Chase & Co. (JPM) chief Jamie Dimon called on President Barack Obama and Congress to raise the federal debt limit to steer the U.S. government away from the threat of default.

Wall Street Journal:

• Live Blog: U.S. Debt Battle.
• U.S. Accuses Iran of Pact With Al Qaeda. The U.S. for the first time formally accused Iran of forging an agreement with al Qaeda, helping operatives move money, arms and fighters through Iranian territory to the terrorist group's bases in Pakistan and Afghanistan.
• Taiwan's Ma Sees Weaker Global Economy. Taiwan President Ma Ying-jeou said that the changing relationship between the U.S. and China will make it increasingly difficult for Taiwan to purchase weapons from the U.S., even as he pressed again for Washington to sell the island advanced fighter jets. In a wide-ranging interview with The Wall Street Journal, Mr. Ma also said Thursday that debt problems in the U.S. and Europe could slow global economic growth in the second half of this year and may impact Taiwan's export-reliant economy.

Fox Business:

• New Al Qaeda Chief Praises Syrian Protesters. Al Qaeda's new leader praised Syrian protesters seeking to topple the regime of President Bashar Assad while trying to portray the uprising as an Islamic battle against American and Israeli interests.

CNBC.com:

• Health Tab to Hit $4.6 Trillion in 2020: Government. The nation's health care tab is on track to hit $4.6 trillion in 2020, accounting for about $1 of every $5 in the economy, government number crunchers estimate in a report out Thursday. How much is that? Including government and private money, health care spending in 2020 will average $13,710 for every man, woman and child, says Medicare's Office of the Actuary.By comparison, U.S. health care spending this year is projected to top $2.7 trillion, or about $8,650 per capita, roughly $1 of $6 in the economy. The analysis found that President Barack Obama's health care overhaul would only be a modest contributor to growing costs, even though an additional 30 million people who would be otherwise uninsured stand to gain coverage.
• 'The Global Recovery Is Over': Siemens CEO. Siemens, the German engineering and power giant, on Thursday posted third-quarter earnings that missed analyst forecasts blaming a slowdown in the global economy for the drop in profits.

Business Insider:

• LIVE COVERAGE: Boehner: "Let's Pass This Bill and End The Crisis," Reid: "But It Will Be Defeated."
  
• The Debt Ceiling Debacle Is Only The Beginning of a Major Fiscal Crisis. If you think the current debt ceiling circus is bad, just wait for the real debt crisis. Peter Coy at Businessweek writes today that the debate over raising the debt limit ignores just how ailing the nation's fiscal health really is. Here are the highlights from his piece:
• Ken Langone Flips Out on Obama, Accusing Him of Long Lasting "Destruction". Ken Langone, the former director of the NYSE and a veteran of Wall Street banking, had some harsh words for President Obama. Langone lambasted Obama's leadership during the debt ceiling crisis to CNBC, saying it has been "unpresidential." Langone opined:
• And The Crisis Is Now Officially Back On In Italy.
  

Chicago Tribune:

• Amazon(AMZN) Quietly Launches Deals in Chicago.

ABCNews:

• APNewsbreak: Arctic Scientist Under Investigation for Drowned Polar Bear Claims. A federal wildlife biologist whose observation in 2004 of presumably drowned polar bears in the Arctic helped to galvanize the global warming movement has been placed on administrative leave and is being investigated for scientific misconduct, possibly over the veracity of that article. Charles Monnett, an Anchorage-based scientist with the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement, or BOEMRE, was told July 18 that he was being put on leave, pending results of an investigation into "integrity issues."

New York Daily News:

• You Think the Debt Crisis is Bad Now? Wait Until Obamacare Takes Its Toll. One of the main reasons for enacting Obamacare was to bring down health care costs - so said the President, then-House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid. But since its passage, the sweeping overhaul of one-sixth of our economy has done just the opposite. If you think the debt debate on Capitol Hill has revealed that this nation is on the road to fiscal ruin, just wait until health care reform really kicks in.

Forbes:

• New NASA Data Blow Gaping Hole In Global Warming Alarmism. NASA satellite data from the years 2000 through 2011 show the Earth’s atmosphere is allowing far more heat to be released into space than alarmist computer models have predicted, reports a new study in the peer-reviewed science journal Remote Sensing. The study indicates far less future global warming will occur than United Nations computer models have predicted, and supports prior studies indicating increases in atmospheric carbon dioxide trap far less heat than alarmists have claimed.

CNN Money:

• Official: Bomb Materials Found in Soldier's Room Near Fort Hood. FBI agents discovered a bevy of potential bomb-making materials in the hotel room of a missing Muslim American soldier who was arrested near Fort Hood, Texas, the military base where a 2009 shooting spree killed 13 people, an FBI spokesman said Thursday. Pfc. Naser Jason Abdo, a Muslim American who refused to deploy to Iraq and later went AWOL after facing child pornography charges, was arrested at a traffic stop Wednesday by police in Killeen, Texas, just outside Fort Hood, said the FBI spokesman, Erik Vasys. He is expected to face federal charges, possibly as early as Thursday afternoon, a federal law enforcement official said.

InvestmentNews:

• With Registration Looming, Many Hedge Funds Say They'll Follow Soros. With registration requirements looming, more hedge fund managers are likely to follow George Soros in opting for the family office structure over the red tape of running a hedge fund. According to a sentiment survey of 40 hedge fund managers, released today from research firm Infovest21 LLC, 56% of managers said they expect more hedge funds to start returning clients' money in order to run family offices.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 25% 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 -18 (see trends).

Reuters:

• GM(GM) Invests in Solar Energy Systems Maker.
• CME(CME) Tax Situation 'Untenable,' May Exit State - CEO. CME Group Inc is evaluating whether to move some operations to other states from Chicago to reduce its taxes, but it has not decided on an exact timeline, CEO Craig Donohue said Thursday.

Telegraph:

• Cyprus, Iceland, and German Bail-Out Fatigue. Credit default swaps (CDS) on Cyprus debt have jumped to 674 basis points, the sort of level that preceded the EU rescues of Greece, Ireland, and Portugal. The CDS were trading in the 300s earlier this month, according to Markit.

Al Jazeera:

• Libya Opposition 'Arrests Senior Leader'. There have been unconfirmed reports that General Abdel Fatah Younis, the chief of staff of the rebel forces in Libya, has been arrested by the National Transition Council. He is being held at an undisclosed military garrison in Benghazi, the reports said. Al Jazeera's Tony Birtley, reporting from Benghazi, quoted unconfirmed reports as saying the former minister of interior was arrested for dealing with and smuggling arms to Gaddafi loyalists.