Today's Headlines

Bloomberg:

• Company, Sovereign Bond Risk Falls in Europe as Markets Steady. The cost of protecting European sovereign and corporate bonds from default fell after global markets stabilized as Japan said its economy contracted less than economists forecast. The Markit iTraxx Crossover Index of credit-default swaps on 40 companies with mostly high-yield credit ratings dropped 35.5 basis points to 593.5, according to JPMorgan Chase & Co. at 3:30 p.m. in London. The Markit iTraxx SovX Western Europe Index of swaps linked to the debt of 15 governments dropped 7 basis points to 276, the lowest since July 29. “The market is back onto risk-on mode, but it’s more a reaction to the degree of negativity that hit markets last week rather than any reversal in trend,” said Simon Ballard, senior credit strategist at RBC Capital Markets in London. “Risk is improving and spreads are back in, but we haven’t seen any fundamental change.” Credit-default swaps on Spain dropped 4 basis points to 349, according to CMA. The cost of insuring Italian government bonds declined 10 basis points to 344. France was down 2 at 150 and Ireland was 6 lower at 741. Greece rose 9 to 1,758 and Portugal increased 6 to 841. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell 10.5 basis points to 140 basis points. The Markit iTraxx Financial Index dropped 16 to 213.
• New York Manufacturing Shrinks in August. Manufacturing in the New York region unexpectedly contracted in August for a third straight month as orders dropped and managers became less optimistic about the future, signaling the industry that has led the economic recovery is at risk of stumbling. The Federal Reserve Bank of New York’s so-called Empire State Index fell to minus 7.7 from minus 3.8 in July, a report showed today. The median forecast in a Bloomberg News survey called for an index of zero, the dividing line between expansion and contraction. The bank’s six-month outlook gauge dropped to the third-weakest level on record. The Empire State gauge of new orders fell to minus 7.8 from minus 5.5 last month. A gauge of unfilled orders dropped to minus 15.2 from minus 12.2. A measure of shipments advanced to 3 from 2.2. The employment measure rose to 3.3 from 1.1. An index of prices paid dropped to 28.3 from 43.3 while prices received decreased to 2.2 from 5.6. Factory executives in the New York Fed’s district were also less optimistic about the future. The gauge measuring the outlook six months from now plunged to 8.7, the lowest reading since February 2009, during the depths of the recession, from 32.2. It was the third-lowest reading since records began in 2001.
• Oil Rises in New York on Equity Gains, Smaller-Than-Projected Japan Drop. Crude oil rose after announcements of company takeovers sent equities higher and Japan’s economy contracted less than economists estimated in the second quarter. Crude oil for September delivery increased $1.69, or 2 percent, to $87.07 a barrel at 11:57 a.m. on the New York Mercantile Exchange. Futures are up 15 percent in the past year.
• Gold Futures Rise in New York, Halts Slide, as Weaker Dollar Boosts Demand. Gold futures in New York gained for the first time in three sessions as a weaker dollar revived demand for the metal as an alternative investment. The Dollar Index of six currencies fell, heading for the biggest one-day drop since July 21. Gold climbed to a record $1,817.60 an ounce on Aug. 11 and advanced 23 percent this year before today. Gold futures for December delivery rose $6.40, or 0.4 percent, to $1,749 at 12 p.m. on the Comex in New York.
• Drought Crimps Farmland Values, Spending. A drought that devastated crops in the southern Great Plains during the second quarter slowed the growth of land values, eroded agricultural income and led to fewer purchases of farm equipment, the Federal Reserve said. While the pace of gains in cropland slowed from the first quarter, properties in a seven-state region that includes Nebraska and Oklahoma were 20 percent more expensive than a year earlier, the Federal Reserve Bank of Kansas City said today in a report on its website. Ranchland was up 11 percent from a year earlier, and farm-credit conditions remained positive even as farmers cut back spending, the bank said.
• Futures Show European Dividends to Drop by Most Ever Amid Crisis. Dividend futures for Europe’s biggest companies expiring in two years dropped to the lowest level compared with next year’s contracts amid concern the debt crisis and slowing growth will force reductions in payouts. Euro Stoxx 50 Index dividend futures expiring in 2013 are 14 percent lower than those for 2012, data compiled by Bloomberg show. The difference between the contracts was the highest ever on Aug. 10 at 17 percent. Companies in the gauge cut dividends 29 percent from their high in 2008 through 2010 during the worst global recession since World War II.
• Evergreen Solar(ESLR) Files for Bankruptcy Owing $485.6 Million. Evergreen Solar Inc., a Marlboro, Massachusetts-based maker of solar panels, filed for bankruptcy protection from creditors owed $485.6 million.
• Google(GOOG) to Buy Motorola Mobility(MMI) for $12.5 Billion. Google Inc. (GOOG), maker of the Android mobile-phone software, agreed to buy smartphone maker Motorola Mobility Holdings Inc. for $12.5 billion in its biggest deal, gaining mobile patents and expanding in the hardware business. Motorola shareholders will get $40 a share in cash, the companies said in a statement today. That’s 63 percent more than Motorola Mobility’s closing price on the New York Stock Exchange on Aug. 12.
• London House Prices Plunge Most in a Year as Market Rout Hits Confidence. London home sellers lowered asking prices by the most in a year in August as demand in Britain’s most expensive property market was hit by turmoil in financial markets, Rightmove Plc said. Asking prices in the capital dropped 3.4 percent from the previous month, when they decreased 1.4 percent, the U.K.’s biggest property website said in an e-mailed report today. Nationally, values fell 2.1 percent, a second consecutive monthly decline and the largest since December.

Wall Street Journal:

• GOP Blasts Obama Bus Tour. The Republican National Committee and state GOP chairmen in the first two states Mr. Obama is visiting complained Monday that trip amounts to a taxpayer-funded campaign swing to talk about an issue central to his reelection prospects: job creation.
• Japanese Rating Firm Warns of Sovereign Downgrade. One of Japan's two major credit-ratings firms could cut its top-notch rating on the nation within months unless it sees a commitment from the government to belt-tightening in the budget for next fiscal year. Kenji Sekiguchi, primary analyst for Japan sovereign ratings at Rating and Investment Information, said in a recent interview that there is "somewhere between 50% to 100% probability" that the company will downgrade its assessment of Japanese government debt from its current triple-A status. He said the firm, known as R&I, could take action as soon as the outline of the budget become clear.
• Moody's Lowers Economic Growth Outlook. Moody’s Analytics said its near-term outlook for the U.S. economy has fallen significantly in the past month wake of the debate over the U.S. debt ceiling and the downgrade of the nation’s credit ratings by Standard & Poor’s . Moody’s Analytics, a sister company to credit-ratings company Moody’s Investors Service, now expects real gross domestic product to increase at an annualized rate of about 2% in the second half of this year and just over 3% next year, compared with its estimate a month ago for growth of 3.5% for the second half of this year and through 2012.
• Syrian Forces Attack Two Cities, Shoot Fleeing Residents. Syrian troops besieged residential areas of two key cities Monday, firing on residents as they fled for safety and killing at least two people during a relentless military assault to root out dissent against President Bashar al-Assad's autocratic regime, witnesses said.
• Judge Strikes Down U.S. Drilling Policy. A federal judge has struck down an Obama administration policy concerning drilling on public lands, raising the possibility that more permits will be issued for oil and gas companies.

CNBC.com:

• Hedge Funds Lag S&P 500 in First Half of 2011.
• $50 Billion Goes to Money Market Funds. One of the most volatile weeks in market history sparked a bigger flight to safety than the collapse of Lehman Brothers as global investors parked a record $50 billion in money market funds this week, yanking money out of bonds and shares.
• If Warren Buffett Wants a Bigger Tax Bill, Why Doesn't He Just Send His Money to Washington?
• Mortgage Refinancing Spikes as Fed Keeps Rates Low.
  

Business Insider:

• Here's Everything Google(GOOG) Just Bought From Motorola for $12.5 Billion.

Zero Hedge:

• Citi On The Two Latest European Deus Ex Machinas: The Improbable Swiss Franc Peg Rumor and The Impossible Eurobond Initiative.
• Panic in DC as Starbucks'(SBUX) Schultz Calls for CEO Boycott of Campaign Donations, Urges Americans to Go On Strike Against Their Politicians. Bloomberg quotes from the CEO's e-mail to business leaders:"I am asking that all of us forego political contributions until the Congress and the President return to Washington and deliver a fiscally disciplined long-term debt and deficit plan to the American people."

NY Post:

• SEC Accountant Who Bungled Madoff Ponzi Probe Gets Bonus!?! He blew it big-time on Bernie Madoff -- and still got a bonus. A government accountant whose ineptitude and inexperience allowed Bernie Madoff's Ponzi scheme to rage unchecked actually landed a cash bonus from his bosses at the SEC -- for his work on none other than the Madoff case.
  

TheStreet.com:

• Biggest Quant Fund Doubles Down on Apple(AAPL). Renaissance Technologies, the biggest quantitative hedge fund in the world, made more than 500 new purchases in the second quarter. But none was as important as fund managers' decision to double its stake in Apple(AAPL). Apple became the fund's largest holding as of June 30, according to the latest 13F filing with regulators. RenTec, as Renaissance Technologies is known, picked up 763,000 shares of Apple, more than doubling its position to 1.3 million shares with a market value of $445 million. RenTec also bought 357,000 shares of Google(GOOG), boosting its stake to 554,000 shares total.

Real Clear Politics:

• At 39% Approval, Obama's Reminded the Worst Could Lie Ahead.

Reuters:

• Some US Hedge Funds Trim Gold, Financials.

USA Today:

• Chevrolet Volt Prospects Are Starting to Lose Interest. Sure, buyers start losing interest in any new model after the initial hoopla dies down and ad dollars dry up, but there's trouble on the horizon for the Chevrolet Volt, the electric wonder car. Interest in buying the $39,995 plug-in car is starting to taper off, not only among "early adopters" but among lots of other buyers as well, reports CNW Research, which tracks such things.

Financial Times:

• A Grinding Credit Crunch in the Periphery. Some more on bank funding stresses, which are one of the main reasons for the recent sell-off in European bank stocks NOT the activities of nefarious short-sellers. It’s from Morgan Stanley’s Huw van Steenis, who says eurozone banks aren’t just struggling to raise long term funding…they are increasingly falling back on the ECB right now.

Telegraph:

• Debt Crisis: Live. Rolling coverage of the rollercoaster in financial markets as the eurozone and US come under increasing pressure to deal with high levels of debt and stave off another recession.

Der Spiegel:

• Europe Pressures Merkel to Accept Euro Bonds. Euro bonds present a serious domestic political risk for Merkel.

Financial Times Deutschland:

• German Chancellor Angela Merkel's coalition is divided on whether to support the introduction of joint euro-member bond sales. Merkel's pro-market Free Democratic Party ally and the Christian Social Union aren't willing to discuss conditions for eurobonds, citing FDP party chief Philipp Roesler and CSU Chairman Horst Seehofer.

Handelsblatt:

• Clemens Fuest, a professor at the University of Oxford and a former adviser to German Finance Minister Wolfgang Schaeuble, said euro bonds are not a solution to the single currency's area's debt crisis, in a commentary. In the case that up to 60% of a country's debt could be commonly backed by euro member states, countries with higher debt like Italy would still be required to pay higher risk premiums on the remainder, Fuest wrote.

DigiTimes:

• Apple(AAPL) Hikes 2H11 iPhone Orders to Over 56 Million Units. Apple has upward adjusted the total order volume for iPhones, consisting of iPhone 3GS, iPhone 4, iPhone 4 CDMA and iPhone 5, for the second half of 2011 by 12-13%, from 50 million units originally estimated at the end of the second quarter of 2011 to more than 56 million units. iPhone 5 will account for 25.5-26 million units, according to Taiwan-based supply chain makers.

Capital Week:

• U.S. debt may still be the "best" investment in terms of risk and return, compared with other "not ideal" investments out there because of global volatility and the euro crisis, citing Guo Shuqing, chairman of China Construction Bank Corp.