Today's Headlines

Bloomberg:

• Schaeuble Dismisses Quick Bank Union, Limiting Euro Aid Tools. Germany dismissed a rapid move toward direct bank recapitalization by the European rescue fund, limiting the tools for shoring up Spain’s banks as the euro-area debt crisis simmers. Finance Minister Wolfgang Schaeuble dismissed “false expectations” raised by euro leaders last month that the economically troubled euro zone would act quickly to unify the oversight of its banking system. “It will take time, it’s complicated, it isn’t easy to do,” Schaeuble told reporters before a meeting of euro finance ministers in Brussels today. “Everyone knows that the setup of European bank supervision isn’t a trivial matter, but a huge job.” Germany’s go-slow approach reflected mounting public opposition to bailouts in northern Europe just as southern countries such as Spain and Italy clamor for official assistance to tame an increase in borrowing costs. A four-day slump in Spanish and Italian bonds puts euro- area governments under pressure to act, especially after the European Central Bank showed no signs of restarting its bond- buying program.
• Spanish Yields Show Summit Shortfall, El-Erian Says: Tom Keene. Spanish bond yields at levels that have prompted bailouts signal last month’s European summit wasn’t enough to stem the region’s debt crisis, according to Pacific Investment Management Co.’s Mohamed El-Erian. Yields on Spanish debt due in 10 years rose to more than 7 percent today, corresponding to interest rates that spurred Greece, Portugal and Ireland to seek emergency loans. The difference in yield between the securities and similar-maturity German bunds climbed 10 basis points to 573 basis points, within 16 basis points of the record level set June 18.
• Roesler Says Debt Crisis Threatens German Growth, Bild Reports. German Economy Minister Philipp Roesler said the European debt crisis may affect the economic development in Germany, Bild reported today, citing Roesler. While the government’s 0.7 percent growth projection still stands, it will evaluate this in the fall, Roesler said, according to the German newspaper.
• VIX Falls to Cheapest Since '08 Before Earnings Reports. The biggest June rally in U.S. stocks since 1999 has pushed options prices to the lowest level before any earnings season in almost four years even as analysts predict profits will fall. The Chicago Board Options Exchange Volatility Index, which tracks the cost of contracts on the Standard & Poor’s 500 Index, has lost 36 percent since its 2012 peak last month. It slipped 6.8 percent below the S&P 500’s 20-day historical volatility, a measure of actual swings, on July 6, data compiled by Bloomberg show. That’s the cheapest contracts have been one trading day before Alcoa Inc. (AA) reports profit since October 2008.
• Fed’s Lacker Sees ‘Tepid’ U.S. Growth, Not Recession Risk. Federal Reserve Bank of Richmond President Jeffrey Lacker said that “some of the slowdown is real” for the U.S. economy though the reduction in growth isn’t severe enough to tip the economy back into a recession. “The numbers have been pretty tepid, we’re definitely experiencing a slowdown,” Lacker said today in a Bloomberg radio interview on “The Hays Advantage” with Kathleen Hays and Vonnie Quinn. “I don’t think this is fatal. I don’t think this is pushing us back into a recession right now.”
• Mitsubishi UFJ Suspends Two London Traders on Libor Probe. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest publicly traded bank, suspended two London-based traders as investigators probe the suspected manipulation of benchmark interest rates, a person briefed on the matter said.

Wall Street Journal:

• OECD Leading Indicators Point to Slowdown in Major Economies. Growth in most major economies is set to slow down in coming months, with only Brazil expected to experience a pickup, according to the Organization for Economic Cooperation and Development's composite leading indicators. The indicators, which have proved reliable in the past, will come as a blow to any lingering hopes among policy makers around the world for a quick emergence from a period of sluggish activity that stretches back to the end of last year.
• Draghi Signals ECB Ready to Do More. The European Central Bank is willing to do more if needed to support the euro bloc's struggling economy and banks, ECB President Mario Draghi signaled on Monday, days after officials lowered interest rates to record lows. "The ECB will keep the liquidity lines open to all solvent banks," Mr. Draghi said in testimony to the European Parliament. The central bank "retains full capacity to act in a firm and timely manner" to ensure price stability, he said.
• Price of Plastic Going Up? Merchants May Get Surcharge Rights. Merchants may soon begin to impose a surcharge each time a customer pays with a credit card, a practice Visa Inc. and MasterCard Inc. currently prohibit. Retailers have long pushed for the right to charge extra to customers who pay with plastic versus cash, saying the practice would help defray their costs for accepting credit and debit cards. Merchants pay transaction fees on each card swipe.
• WellPoint(WLP) to Buy Amerigroup(AGP). Managed-care company WellPoint Inc. said it plans to buy Medicaid-focused insurer Amerigroup Corp. for $4.46 billion to capitalize on a fast-growing market for the government-based health plan for the poor.
• Egypt Court Rejects Plan to Restore Parliament. Egypt's constitutional court affirmed Monday that an earlier decision that led to the dismissal of Parliament was final, rejecting a challenge by the new president and moving the country another step closer to a constitutional crisis.
  

MarketWatch:

• Oil rises 2% as Norway lockout looks likely.
• Fed’s Williams sounds alarm on outlook. ‘Essential’ that Fed provide sufficient policy accommodation.

CNBC.com:

• China's Christmas Exports Are Already Tumbling. Christmas comes but once a year. For Leo Ho, who runs a factory that makes plastic Christmas trees in Yiwu, China's export capital for novelty knick-knacks, it comes in July, when tree orders start rolling in. But early signs point to a lean Christmas for low-cost exporters like Ho, who told Reuters his sales were down 20 percent year-on-year in 2012.
• Euro Zone Fragmenting Faster Than EU Can Act. Signs are growing that Europe's economic and monetary union may be fragmenting faster than policymakers can repair it.

Business Insider:

• More Than Half Of Voters Think Obama Has Changed America...For The Worse.
• OBAMA: We'll Deal With The Fiscal Cliff 'After The Election'.
• Shocking Footage Shows Execution of Afghan Woman for Adultery.
• WOLFGANG MUNCHAU: The Euro Crisis Won't Be Resolved For 20 Years, If At All.
• A Quote From An Anonymous European Official Is Undermining The Entire EU Summit.

Zero Hedge:

• Italy's Version Of Austerity: 3 Months Of Vacation.
• Between A German Rock And A Global Hard-Place.
• Mapping The EU Summit Political Maneuvers.
• The Perfect Storm - Santelli Meets Farage.

MoneyNews:

• RealClearMarkets' Tamny: US Pursues Weak Dollar Policy at its Peril. The Treasury and Federal Reserve are pursuing a weak dollar policy, as John Tamny, editor of RealClearMarkets.com sees it. And the economy will continue to suffer if they don’t change course, he says.

4-Traders:

• Towers Watson & Co.: Top 100 Alternative Investment Managers Exceed US$3 Trillion Assets Under Management.

FINalternatives:

• Quants Burned by Euro Whipsaw. It seems quantitative hedge fund managers are going to have to go back to school, thanks to the European debt crisis. Commodity trading advisers in June suffered their worst month in seven, losing 3.1% on the month, according to the Newedge CTA Index. Much of the pain came on the last trading day of the month, Friday the 29th.

Reuters:

• UBS downgrades Visa(V), MasterCard(MA) on weak consumer spending. UBS Investment Research downgraded payment processors Visa Inc and MasterCard Inc to "sell" from "neutral," citing slower consumer spending in the United States and sluggish global economic growth. "We believe both companies' exposure to a slowing consumer spending backdrop makes a slowdown in key metrics simply unavoidable," UBS analyst John Williams wrote in a note and cut his price target on both the stocks. Williams is rated five stars for the accuracy of his earnings estimates on Mastercard according to Thomson Reuters StarMine data.
• Russian budget banks on firm oil prices.
• Spain faces budget risks despite looser target-document. Looser budget deficit targets for Spain may still prove difficult to reach, according to an EU document that demands the country be subjected to three-monthly checks, a move that will tighten supervision of the euro zone's fourth-largest economy.
• Greek economy heading for 7 percent tumble. Greece's crippled economy will fall a steeper-than-expected 6.9 percent this year, a think-tank formerly run by the new finance minister said on Monday, a tumble that will hamper efforts to cut the deficit and bring yet more pain to Greeks. Such a decline would mean Greece's economy has shrink by a fifth since the end of 2007.

Politico:

• John Boehner Dimisses Obama Tax Plan. Speaker John Boehner rebuffed President Barack Obama’s offer to cut taxes for the majority of Americans, decrying the move as “quixotic.” “In the wake of another weak jobs report, the president is doubling down on his quixotic call for the same small businesses tax hikes that have been routinely rejected by the House and Senate,” Boehner said in a statement. “How will these small business tax hikes create jobs? Even Democratic congressional leaders and former President Clinton have turned their back on this proposal.”
  

Telegraph:

• China heads for a deflationary shock.

Xinhua:

• China Bans Government Purchase of Luxury Goods. China will prohibit government agencies from buying luxury goods starting Oct. 1, part of an effort to reduce corruption as the Communist Party celebrates the People's Republic's founding. New rules to reduce administrative costs of government and public institutions include tightening the use of public funds for receptions, vehicles and overseas trips, the official news agency said.