Today's Headlines

Bloomberg:

• Preusser Says Italy Was Loser at Euro Summit, Boersen Reports. Ralf Preusser, who heads European rates research at Bank of America Merrill Lynch, said Italy was “the big loser” at the euro summit last month, Boersen-Zeitung reported, citing an interview. Italy’s main difficulty is its debt burden, at 120 percent of gross domestic product, not its banking system, as in Spain, the newspaper cited Preusser as saying. He said the European Union’s decision on a banking union therefore benefits Italy little and the country’s goal of joint euro-area bonds didn’t materialize, Boersen reported.
• German Referendum Needed to Fix Euro, Bofinger Tell Standard. Peter Bofinger, an economic adviser to German Chancellor Angela Merkel, said Germany will probably need a referendum before politicians fix the structural defects of Europe’s currency, Vienna’s Der Standard newspaper reported, citing an interview. While the German judicial system weighs the legality of the European Stability Mechanism “the best way in Germany would be to hold a referendum,” he told the newspaper. “The problem we have now is not a problem of constitutional politics but that, for two years now, small-scale solutions have been tried to solve a systemic crisis,” Bofinger said.
• Italian Investors Feud Over Biggest Builder Impregilo. The fate of Impregilo SpA (IPG), Italy’s biggest construction contractor with projects from Brazilian highways to the Panama Canal, was postponed until July 17 after the company’s two biggest investors clashed at a shareholder meeting today.
• Peugeot To Shut Plant To Raise Job Cuts To 14,000 Posts. PSA Peugeot Citroen (UG), Europe’s second-biggest carmaker, will shut the first auto factory in France in 20 years and reduce its workforce by 6.7 percent in an effort to stem widening operating losses. The automaker will cut a total of 14,000 jobs, with 8,000 additional positions being eliminated on top of the 6,000 posts already announced last year, Chief Executive Officer Philippe Varin said today at a press conference in Paris.
• ECB Says Overnight Deposits Fall to Lowest in Seven Months. The European Central Bank said overnight deposits from financial institutions dropped by more than half to the lowest level in almost seven months after policy makers stopped paying interest for the funds. Banks in the 17-nation euro region parked 324.9 billion euros ($397.2 billion) at the ECB yesterday, down from 808.5 billion euros the previous day, the Frankfurt-based institution said. That’s the least since Dec. 21.
• Sany Heavy Cut Excavator Sales Goal on Weak China Demand. Sany Heavy Industry Co. (600031), China’s biggest maker of excavators, lowered annual unit-sales forecast as slowing economic growth and government’s curbs on property market sap demand. Excavator sales may increase 10 percent this year, slower than a previous target of 40 percent, Vice Chairman Xiang Wenbo said in a July 11 interview in Changsha, Hunan province, where the company is based. Sany will still outperform the industry that may see a contraction in demand, he said. “At the beginning of this year, we estimated the whole market to grow slightly. Now it seems we were too optimistic,” Xiang said. Nationwide excavator sales plunged about 38 percent in the first six months, according to data from consultancy China Construction Machinery Business Online. Komatsu Ltd. (6301)’s sales of excavators in the country fell more than half in the quarter ended in June from a year earlier, its Chief Executive Officer Kunio Noji said last week. Domestic and overseas suppliers of mining equipment may have accumulated inventories of more than six months, he said.
• Americans in Poll Say Obama’s Health-Care Law Amounts to Tax. A majority of U.S. voters consider Barack Obama’s health-care law to be a tax increase, leaving the president to defend an election-year vow not to raise levies on the middle class, according to a Quinnipiac University poll. By a margin of 55 percent to 36 percent, respondents said the Patient Protection and Affordable Care Act amounts to a tax increase. Participants were less sure of what they thought about the future of the law, saying 48 percent to 45 percent that the U.S. Supreme Court was right to uphold it, while also saying 49 percent to 43 percent that Congress should repeal it. Voters’ view of the law as a tax might pose a problem for Obama as he takes on former Massachusetts Governor Mitt Romney in the November presidential election, said Peter Brown, assistant director of the Hamden, Connecticut-based Quinnipiac University Polling Institute. “Obama has worked mightily to avoid the ‘T’ word,” Brown said in an e-mailed statement accompanying the poll, conducted July 1-8. The main question is whether Republicans can convince voters that the health-care law “breaks his promise not to raise taxes on those who make less than $250,000,” Brown said.
• An "overall stagnating economic recovery" is likely to slow the US housing market during the second half of the year, Corelogic Chief Economist Market Fleming said.
• Consumer Comfort In U.S. Stagnates Amid Unemployment. Consumer confidence stagnated last week as scant improvement in the labor market left Americans more discouraged about the economy. The Bloomberg Consumer Comfort Index held at minus 37.5 in the week ended July 8. Some 86 percent of those surveyed said the economy was in bad shape, 21 percentage points higher than the average since 1985. “Consumers remain generally downbeat about the economy and expectations for the future,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Given slower job growth and the recent stabilization of oil and gasoline prices near current levels, there is little impetus to support an improvement in overall sentiment in the near term.”
• Jobless Claims in U.S. Drop on Fewer Auto Shutdowns. Fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, reflecting the volatility of applications during the annual auto-plant retooling period. Applications for jobless benefits decreased by 26,000 in the week ended July 7 to 350,000, the fewest since March 2008, Labor Department figures showed today. Economists forecast 372,000 claims, according to the median estimate in a Bloomberg News survey. Last week’s distortion is likely to unwind slowly over coming weeks, a Labor Department spokesman said as the data was released to the press.
• JPMorgan(JPM) Puts Cheapest in Two Years After Shares Plunge: Options. Bearish options on JPMorgan are the cheapest in two years on speculation the shares already reflect the bank's multibillion-dollar trading loss. Puts protecting against a 10% drop in the NY-based lender cost 1.15 times more than calls betting on a 10% gain, according to data on 30-day options compiled by Bloomberg. The price relationship known as skew is at the lowest level since January 2010.
• Bank of America(BAC) Cuts Earnings Forecast for S&P 500 in 2012, 2013. Bank of America Corp. cut its earnings estimates for the Standard & Poor’s 500 Index for 2012 and 2013, citing concern that lower commodity prices and slower global growth will weigh on corporate profits. Strategists for the Charlotte, North Carolina-based bank reduced earnings forecasts for S&P 500 (SPX) companies by 1.4 percent for this year and next year. Strategists Dan Suzuki, Savita Subramanian and Jill Carey now project income of $102 per share for 2012 and $109 for 2013, implying growth of 4 percent and 7 percent, respectively, according to a note to clients today. “Although the bottom-up consensus forecasts have continued to drift lower since last summer, they still appear too optimistic,” the strategists wrote in a note today. “The recent weakness in earnings revision and guidance trends may be a sign that consensus expectations are in the early stages of being reset lower.”
• Wells Fargo(WFC) Said to Settle Loan Probe for $125 Million. Wells Fargo & Co. (WFC), the largest U.S. mortgage lender, will pay $125 million to settle federal claims it violated fair-lending laws, according to a person with direct knowledge of the agreement. The case relates to independent mortgage brokers who worked with the bank, said a person with knowledge of the inquiry who requested anonymity because the accord hasn’t been made public. The deal may be announced as early as today.

Wall Street Journal:

• Cartier CEO Sees Slowdown in Chinese Demand. Cartier, the luxury watch and jewelry brand owned by Cia. Financière Richemont SA, is seeing slowing demand for its high-end watches in China, the driver behind the recent boom in luxury watches, its chief executive said Wednesday. "After a phenomenal year last year, there's been a bit of a slowdown in mainland China," Cartier CEO Bernard Fornas said in an interview at the company's factory at La Chaux-De-Fonds.
• Chinese Luxury Appetite Wanes. Chow Tai Fook, Burberry See Slower Growth as Affluent Buy Fewer Watches, Handbags. China's voracious appetite for luxury goods is starting to wane as wealthy buyers succumb to nervousness about the country's slowing economy and the government cracks down on corruption that often takes the form of pricey gifts. Sales of everything from gold watches to leather handbags are declining, although they are still robust by global standards. Nevertheless, the downturn is a blow to the world's luxury-brand companies, who once considered the Chinese market to be immune to the economic malaise afflicting their business in Europe and the U.S.
• India Considers 21% Import Tax on Some Power Gear. India is considering a 21% import tax on power generating equipment for large projects to protect local manufacturers from cheaper equipment from China, two senior government officials said Thursday.
  

Dow Jones:

• ECB Knot: Nothing to Stop ECB Cutting Rates Below 0.75% - Report.

MarketWatch:

• Defensive stocks trade near 52-week highs. Investors took shelter in defensive stock sectors Thursday, boosting some stocks near or past their 52-week highs, as the broader market risked heading toward a sixth day of losses.
• China Slams the Brakes on GM's(GM) Accelerating Car Sales. New government rules could put a damper on the General's success.

CNBC.com:

• Home Prices May Hit Roadblock Soon. The recent growth in U.S. home prices may hit a roadblock in the coming months, thanks to a new supply of distressed properties hitting the market. Banks are moving more delinquent loans through the pipeline at a faster pace, according to a new report released Thursday by foreclosure sale website RealtyTrac. The number of homes starting the foreclosure process for the first time grew for the second month in a row on an annual basis.
• Investors Warn EU Hedge Fund Rules Could Hit Other Funds. Leading fund management firms have warned the European Commission's head of financial regulation that new rules aimed at tightening practice at hedge funds could damage the rest of the industry's ability to operate effectively. Twenty investors, including Allianz, BlackRock, Fidelity and Schroders, have written to Michel Barnier, the Commissioner in charge of financial regulation, stating proposed reforms risk hampering Europe's single market in investment funds.
• Debate Rages Over Benefits of Fiscal Austerity. The Spanish government’s new package of tax increases and spending cuts throws a spotlight on an increasingly contentious debate about whether fiscal austerity in Europe is further damaging the patient’s health rather than leading to recovery.
• Poll: The Rich Deserve Their Wealth. A new survey from GlobeScan shows that 58 percent of Americans agree with the statement that “the rich deserve their wealth.” That’s actually higher than it was in 2008, before the economic crisis, Wall Street bailouts and the Occupy movement. Americans remain among the most wealth-friendly in the world, ranking third when it comes to their votes on the deserving rich (only Australia and Canada are higher). An earlier Gallup poll showed that the number of Americans who want inequality to be “fixed” has declined since 1998. In 1998, 52 percent of Americans wanted the gap between rich and poor to be fixed. Today 48 percent say so.

Business Insider:

• Here's The Chart That Will Get Obama Fired...
• UH-OH! Warren Buffett Seems More Bearish Than Usual.
• More Cracks Appear In The Chinese Banking System.

Zero Hedge:

• Euro Strength? A Mystery No More.
• Europe's Equities Catch-Down To Credit.
• Five Things I’ve Learned On The Ground In Portugal.
• NYSE Short Interest Plunges By Most Since January, As Equity Outflows Hit One Month High. (graphs)
• US June Deficit: $60 Billion, $17 Billion Worse Than Prior Year. (graph)
• Here Come The Libor Liability Estimates.
  

New York Times:

• Orders at Air Show Decline for Top Aircraft Companies. Boeing and Airbus announced a final flurry of orders at a major aerospace trade show here Thursday, but the world’s two biggest aircraft manufacturers are heading home with around $54 billion in deals — just over half what they drew last year.
  

Reuters:

• Copper slips ahead of China GDP data, growth concerns.
• U.S. expands sanctions on Iran, blacklists firms and persons. The United States ratcheted up its sanctions against Iran on Thursday, blacklisting a number of firms and individuals for contributing to what it says is an effort to acquire nuclear weapons. The U.S. Treasury said it was also identifying a number of "front companies and banks" linked to nuclear proliferation, an attempt to make it harder to evade existing sanctions.

Telegraph:

• Italy statisticians 'too squeezed to track recession'. Italy's official statisticians are threatening to down calculators and stop reporting on its stricken economy – as they fall victim to the recession they are paid to track.

Xinhua:

• Rising medical costs caused by smoking and Chin's aging population may "cripple" the nation's social-security system in two decades, citing Liang Xiaofeng, deputy director of the Chinese Center for Disease Control and Prevention. Tobacco-related deaths in China have been increasing over the past decade and will peak between 2025 and 2030. China will overtake Japan as the world's most-aged society at the same time, the report said.

Securities Daily:

• China will launch its first trading platform for rare earths on August 8, citing Zhang Rihui, the board secretary of Baotou Steel Rare-Earth Hi-Tech Co., one of the creators of the platform.