Today's Headlines

Bloomberg:

• Merkel Says Germany Backs Draghi’s ECB Aid Conditionality. Chancellor Angela Merkel backed the European Central Bank’s insistence on conditions for helping reduce borrowing costs in indebted countries, saying Germany is “in line” with the ECB’s approach to defending the euro. “Obviously time is pressing” on stamping out the debt crisis, though “on many of these issues we feel we’re on the right track,” Merkel told reporters in Ottawa today at a joint press conference with Canadian Prime Minister Stephen Harper. Euro-area policy makers “feel committed to do everything we can to maintain the common currency.”
• EU Seeks to Prevent ECB Dominance of European Bank Authority. European Union officials are seeking to prevent the 17 states that share the euro from dominating its forum for resolving disputes among financial regulators, the European Banking Authority, according to two people familiar with the plans. Euro-area leaders agreed in late June that the Frankfurt- based European Central Bank should oversee lenders in the bloc as part of their efforts to quell the debt crisis. European Commission officials drafting a proposal for a common supervisor are concerned that the central bank’s legal independence may allow it to override decisions taken by the EBA, which co- ordinates the work of supervisors in the EU’s 27 member states.
• BMW’s Phantom Sales in Germany Show Debt-Crisis Contagion. Werner Entenmann, who runs a BMW dealership in Germany’s wealthy southwest, has long made a comfortable living selling luxury sedans to well-heeled Germans at or near list price. This summer, more buyers are bargaining. “Every day customers are coming to our showroom with offers from other brands or other BMW dealers,” said Entenmann, whose Autohaus Entenmann near Stuttgart sells about 2,200 cars a year. “This is part of our daily routine.” Profits, he said, are down as the discounts eat into margins.
• China Swap Rate Rises to 3-Monthh High as Cash Crunch Worsens. China’s swap rate climbed to a three-month high, reflecting a worsening cash crunch as the central bank refrains from easing lenders’ reserve requirements. The 14-day repurchase rate, a gauge of interbank funding availability, jumped the most in almost two months even as the central bank injected 90 billion yuan ($14 billion) into the financial system using reverse-repurchase agreements. Reports last week showed banks extended the fewest new loans in July since September, while gains in industrial output, retail sales and exports slowed. The inflation rate fell to a 30-month low and Premier Wen Jiabao said yesterday there is scope to adjust monetary policy. “There is disappointment from the lack of policy action since the weak economic data released last week,” said Pin Ru Tan, a Hong Kong-based rates strategist at HSBC Securities Asia Ltd.
• Jobless Claims in U.S. Rise Slightly. Jobless claims climbed by 2,000 to 366,000 in the week ended Aug. 11, Labor Department figures showed today in Washington. The median forecast of 45 economists surveyed by Bloomberg News called for an increase to 365,000.
• MBS: Home-Loan Delinquency Rates Pose Threat for FHA, Fitch Says. Growing divergence between 90-day past due delinquency patterns for guaranteed and nonguaranteed home loans seen as potentially troubling sign of future losses, Fitch Ratings writes. FHA may be forced to put back some defaulted loans to banks, particularly if FHA funding status worsens, U.S. home prices fail to rebound quickly. "Absent a quick turnaround in delinquency and foreclosure trends, and assuming Congress will have little appetite for an FHA bailout in 2013 or later, we expect the FHA to evaluate unconventional methods to boost reserves, potentially including a more aggressive stand vis a vis banks over full insurance coverage of defaulted mortgages."
• Building Permits in U.S. Rise, Home Starts Fall: Economy. Applications, a proxy for future work, rose to an 812,000 annual rate, exceeding the highest estimate of economists surveyed by Bloomberg and the most since August 2008, Commerce Department figures showed today in Washington. Housing starts fell 1.1 percent to a 746,000 rate from June’s 754,000, which was the strongest pace in more than three years.
• Americans’ Views on Economy Are Most Pessimistic Since November. Americans this month were the most pessimistic on the economic outlook since late last year as fuel prices rose and unemployment remained elevated. The share of households viewing the economy as heading in the wrong direction rose to 45 percent in August, the highest since November, from 36 percent the prior month. The Bloomberg monthly expectations gauge dropped to minus 22 from minus 11. The weekly Bloomberg Consumer Comfort Index fell to minus 44.4 in the period ended Aug. 12, lowest since January, from minus 41.9. “The American public appears to have tired of running harder to stand still, expressing their displeasure with the current state of economic affairs in the country and their own personal finances,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.
• Oil Reaches $95 a Barrel on Middle East Tension. Oil climbed above $95 a barrel for the first time in three months as U.S. building permits reached a four-year high and on concern that Israel will strike Iran and disrupt supplies from the Middle East. Michael Oren, Israel’s U.S. ambassador, said yesterday that Israel would strike Iran to delay Iran’s ability to produce nuclear weapons for a few years. Oil for September delivery gained 92 cents, or 1 percent, to $95.25 a barrel at 11:58 a.m. on the New York Mercantile Exchange. The price reached $95.32, the highest intraday level since May 15. Brent crude for September settlement, which expires today, slid 9 cents to $116.16 on the London-based ICE Futures Europe exchange. The more actively traded October contract rose 23 cents to $114.54.
• Hall of Fame Football Coach Donnan Ran Ponzi Scheme, SEC Says. Jim Donnan, a Hall of Fame football coach who led teams at the University of Georgia and Marshall University, is facing regulatory claims that he helped run a Ponzi scheme that defrauded fellow coaches and former players. Donnan, who became a television commentator for ESPN after leaving coaching, and a business partner siphoned more than $8 million for themselves while misleading investors in their West Virginia-based business GLC Limited, the U.S. Securities and Exchange Commission said in a complaint filed in federal court in Atlanta. Donnan, 67, and Gregory Crabtree, 50, paid fraudulent returns from investor funds, the SEC said.
• Facebook(FB) Freeing 60% More Shares Seen Weighing on Stock. Facebook Inc. (FB) fell to an intraday low after freeing up an additional 271.1 million shares, boosting by 60 percent the number available to trade and compounding concerns that have depressed the stock since the initial public offering.
• Teens Turn to Oral Sex Seeking Safe Alternative, Study Finds. Two-thirds of U.S. teenagers and young adults ages 15 to 24 have had oral sex, according to U.S. researchers who say people in this group may mistakenly feel it’s less risky than vaginal intercourse.
• Hague Says U.K. Won’t Allow Assange Safe Passage out of Britain. U.K. Foreign Secretary William Hague said Britain doesn’t recognize the concept of “diplomatic asylum” and won’t allow Wikileaks founder Julian Assange safe passage out of the country after Ecuador granted him political asylum. “We cannot give safe passage to someone in this situation,” Hague told reporters in London today. “The U.K. doesn’t accept the principle of diplomatic asylum.”
• China Mobile Heads for Slowest Profit Growth Since 2000. China Mobile Ltd. (941), the world’s biggest phone company by subscribers, fell the most in more than a year in Hong Kong trading as profit growth cooled to the slowest annual pace in at least 13 years. Shares closed down 5 percent, the biggest decline since Aug. 9, 2011, at HK$86.65 after the company posted second- quarter profit that missed analysts’ estimates because of rising costs to lure customers.
• Brevan Howard Co-Founder Rokos Said to Leave Hedge Fund. Christopher Rokos is leaving Brevan Howard Asset Management LLP, according to five people familiar with the matter, the third of five co-founders to quit the $36.7 billion hedge fund in the past three years.

Wall Street Journal:

• Fed Hawks Speak Out Against QE3. The Federal Reserve's "hawks" are speaking out against additional action by the central bank to spur the economy. The Fed has moved despite this group's opposition before. Thus, the comments now don't represent a signal from the central bank that it is backing away from its statement earlier this month that it might act. But the remarks do highlight the complicated decision Fed policy makers face as they consider whether to launch a new bond-buying program, known as quantitative easing, at their meeting next month.
• Iraq Attack Kills at Least 22. A wave of insurgent attacks killed at least 22 people and wounded dozens in central and northern Iraq on Thursday, the latest series of persistent strikes aimed at undermining the government's authority. One of the bloodiest blows came around midday, when a car bomb struck near the local security forces headquarters in the northern city of Daqouq. As police rushed to the scene, a roadside bomb exploded, killing seven policemen. Another 35 people were hurt. More than 100 people have been killed in violence across the country since the start of August.
• Family Research Council Shooting Suspect Charged. A man who volunteered at a gay-community center had a backpack full of Chick-fil-A sandwiches and a box of ammunition when he said "I don't like your politics" and shot a security guard at the headquarters of a conservative lobbying group, authorities said Thursday. Floyd Lee Corkins, 28 years old, was charged in federal court a day after opening fire in the lobby of the Family Research Council.

Barron's:

• NYT: Jon Corzine, Post-MF Global, Weighs Launching Hedge Fund. Surprise! It looks like there won’t be a criminal case after the spectacular collapse of Jon Corzine’s MF Global (MFGLQ), in which $1 billion in client funds vanished. Actually, “vaporized” was the term of art for the lost cash pile, if you recall. No criminal charges is the prediction this morning by the New York Times’ Azam Ahmed and Ben Protess, who write that “criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear.” The 10-month investigation is expected to turn up its first interview with Mr. Corzine next month, the NYT reporters write — 10 months, and no direct Corzine interview! “[T]wo rounds of interviews with former employees and a review of thousands of documents have left prosecutors without a case against him, say the people involved in the investigation who spoke on the condition of anonymity,” they concluded. Far from it, the NYT’s anonymous sources say. Mr. Corzine is said to be mulling a hedge fund:

CNBC.com:

• 'Cliff' Hanger: Corporate America Puts Everything on Hold. Company executives are postponing decisions such as hiring and plant-building until they can get some clarity from Washington on the looming “fiscal cliff” and possible higher taxes, according to an analysis of earnings conference calls by Goldman Sachs.
• What Happens If China Comes In for a Hard Landing?

Business Insider:

• PRESENTING: Abby Joseph Cohen's Epic Presentation On What's Really Happening In Markets And The Economy.
• Droughts: Bad For The US, Catastrophic For India.
• Paul Ryan Just Made His First Foray Into Foreign Policy Issues And Hammered Obama On China.

Zero Hedge:

• Spain And Italy Stocks Surging, Bonds Not So Much (Again).
• Philly Fed Misses For 5th Consecutive Month, Employment Index Lowest Since September 2009. (graph)
• The percentage of disposable income spent on eating-out has plunged dramatically in the last two months (the biggest drop since Lehman!) (graph)
• Europe's Energy Costs See Biggest Two Month Jump Ever. (graph)
• The Truth About How The Fed Has Destroyed The Housing Market.

New York Post:

• Falcone Company Boosts Falcone Fund. Talk about one hand washing the other. Beleaguered hedge fund honcho Phil Falcone’s big bet on his own publicly traded entity, Harbinger Group, is helping to lift his troubled hedge fund, Harbinger Capital Management, out of the deep end. Falcone’s flagship fund posted returns of 10.6 percent in July and a whopping 28 percent gain in June, The Post has learned. The $3 billion hedge fund is still in the red for the year, down 5.8 percent. But the recent gains offer a small ray of hope in an otherwise dark period for the fallen hedge-fund heavyweight.

New York Times:

• In Peugeot’s Troubles, a Test of Contradictory Campaign Promises for Hollande.

CNSNews.com:

• U.S. Government's Foreign Debt Hits Record $5.29 Trillion. The U.S. government’s indebtedness to foreign interests has grown by 72.3 percent during President Barack Obama’s term in office. In January 2009, when Obama was inaugurated, the U.S. government owed $3.0717 trillion to foreign entities, according to the Treasury Department. That has increased by $2.2206 trillion—or 72.3 percent—to the record $5.2923 trillion reported for yesterday. Entities in the People’s Republic of China remain the largest holders of U.S. government debt. Entities in Japan, however, are on track to eclipse the Chinese as the top holders of U.S. government debt.

JWF:

• Revealed: Top Democrats Raking in Massive Amounts From Bain. Anyway, for all the nonsense we’ve been hearing about Bain Capital, it’s curious how the media largely ignores Democrats who are raking in the big bucks from them. Funny that. President Obama may be bashing Mitt Romney’s leadership at Bain Capital, but the private equity firm has been very, very good to one top Democrat: U.S. Sen. John F. Kerry.

Gallup:

• Americans Continue to Give Obama Low Marks on the Economy: Approve 36%, Disapprove 60%.
  

Rasmussen Reports:

• Election 2012, Wisconsin: Romney 48%, Obama 47%.
• Florida: Romney 45%, Obama 43%.

Reuters:

• Common EU financial policy far off- ECB's Nowotny. A common European financial policy is not likely in the next years but should be achieved within a generation, European Central Bank policymaker Ewald Nowotny said in an interview published on Thursday. "Not a full (pooling), but a certain collective element," Nowotny told Austria's Format magazine when asked about the prospects for European states to give up their national budget-making powers. "If you ask me whether this will be realised in the next three or four years, I'm sceptical. But this step should be achieved within a generation," he said.
• US not-for-profit hospitals' outlook negative -Moody's.

Telegraph:

• Angela Merkel warns 'time is of essence' on euro crisis. Angela Merkel warned that "time is of the essence" in tackling the eurozone crisis and voiced her support for ECB President Mario Draghi's crisis-fighting strategy.

Handelsblatt:

• Politicians from CDU and SPD have called for "fundamental reform" of the ECB because the bank has strayed from its mandate of monetary stability under its current president Mario Draghi. CDU lawmaker Klaus-Peter Willsch said Germany should have veto rights in all cases. Carsten Schneider, the budget spokesman for the SPD, said the ECB should never take over financing the state and in a crisis there have to be rescue plans in place.

Times of India:

• Thousands Flee Bangalore Amid Ethnic Strife. Even security guards and office helpers from Fortis Hospital and hotel workers of Bowring Institute have informed their offices and are fleeing from the city. "We are afraid what is going to happen. We have only heard of instances in Neelansandra where some of the northeast natives have been killed. We do not know who are these people who are threatening us, whether they are Muslims or Hindus but we are just scared and we trust no one," said Akash Ali, native of Tripura and an office helper in Fortis Hospital on Bannerghatta road.

Ynet:

• Israelis Defense Minister Ehud Barak said any decision to strike Iran to stop its nuclear program will be made by the Cabinet, citing remarks the minister made in parliament.