Today's Headlines

Bloomberg:

• Draghi Says ECB Works on Bond Plan Amid German Concerns. European Central Bank President Mario Draghi said the ECB may wade forcefully into bond markets in tandem with Europe’s rescue fund, stepping up its crisis response despite the reservations of Germany’s Bundesbank. The euro declined and Spanish bond yields rose on disappointment that Draghi didn’t signal imminent ECB action. While Draghi said the Bundesbank has reservations about ECB bond purchases, and the details of the plan still need to be hammered out, the proposal nevertheless signals a new chapter in the battle against the debt crisis. Draghi left open the question of whether the ECB would print new money by refraining from sterilizing asset purchases
• Monti Warns Italy Risks Anti-Euro Shift Without Action on Spread. Italy risks a public backlash that could lead to an anti-euro government in the region’s third- biggest economy should European policy makers fail to bring down borrowing costs, said Prime Minister Mario Monti. Monti made the remarks in Finland during a three-nation tour aimed at challenging his European Union colleagues to back his fight to lower the extra yield investors are imposing on Italian and Spanish government debt. Spain and Italy are now in focus as they suffer contagion from the debt crisis that erupted in Greece almost three years ago. “If the spread in Italy remains at this level for some time, then you’re going to see a non-EU oriented, non-euro oriented, non-fiscal discipline oriented government in Italy,” Monti said in a speech in Helsinki.
• Credit-Default Swaps Rise in Europe as Draghi Plan Disappoints. The cost of insuring corporate and sovereign debt rose after ECB President Mario Draghi failed to flesh out plans to bring down borrowing costs for Italy and Spain and bolster the economy. The Markit iTraxx Crossover Index of credit-default swaps on 50 companies with mostly high-yield ratings rose as much as 20 basis points to 640 before being quoted at 632 at 3:20 pm in London. "At the end of the day, Draghi's comments were much to do about nothing," Adrian Miller, director of global markets strategy at GMP Securities LLC in New York, wrote in a note. "Bold statements of support from the ECB and EU policy makers in the past has historically been followed by disappointing results." The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers jumped 17.5 basi spoints to 264 and the subordinated index climbed 18 basis points to 430. Credit default swaps on Italy increased 24 basis points to 510 while Spain soared 30 to 566. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments rose 9 basis points to 264.
• The Shanghai Property Stock Index fell -4.86% overnight. (graph)
• Knight(KCG) Has 'All Hands On Deck' After $440 Million Bug. Knight Capital Group Inc. (KCG) has “all hands on deck” and is in close contact with creditors, clients and counterparties as it tries to weather trading errors that cost it $440 million, Chief Executive Officer Thomas Joyce said. Joyce said it’s “hard to comment” on discussions with creditors as Knight stock extended a two-day plunge to 70 percent and the firm explored strategic and financial alternatives following a loss almost four times its annual profit. The problems were triggered by what Joyce called “a bug, but a large bug” in software as the company, one of the largest U.S. market makers, prepared to trade with a New York Stock Exchange program catering to individual investors.
• Consumer Comfort in U.S. Falls on Concern Over Growth: Economy. Consumer confidence in the U.S. dropped last week to the lowest level in two months on mounting concern over the state of the economy. The Bloomberg Consumer Comfort Index fell to minus 39.7 in the week ended July 29 from minus 38.5 in the previous period. Americans’ views on the economy slumped to a five-month low. Other reports showed claims for jobless benefits increased and factory orders dropped. A rebound in gasoline prices and rising food costs caused by drought in parts of the Midwest may curb the household spending that accounts for about 70 percent of the economy.
• Orders to U.S. Factories Unexpectedly Declined 0.5% in June. Orders placed with U.S. factories unexpectedly declined in June, reflecting less demand for business equipment and the biggest decrease in bookings for non- durable goods in more than three years. The 0.5 percent drop in bookings followed a revised 0.5 percent increase in the prior month, the Commerce Department said today in Washington. The median forecast of economists in a Bloomberg News survey called for a 0.5 percent gain. June orders for durable goods climbed 1.3 percent, revised from the 1.6 percent surge reported last week. Demand for non-durable items, reported today for the first time, slumped 2 percent, the biggest drop since March 2009.
• Jobless Claims in U.S. Climbed. Jobless claims climbed by 8,000 to 365,000 in the week ended July 28, Labor Department figures showed today in Washington. The median forecast of 47 economists surveyed by Bloomberg News called for an increase to 370,000. Starting next week, the data should be clear of any influence from the annual auto plant retooling closures that make it difficult to adjust the data for seasonal variations, a Labor Department spokesman said as the report was released to the press.
• Intense Drought spreads, Midwest to Dry Through October. The most extreme forms of drought spread last week in the lower 48 states, and moderate or worse conditions are expected to persist in the Midwest through October, according to U.S. monitors. Extreme and exceptional drought, the two worst categories on a four-step scale, increased to 22.3 percent of the region in the week ended July 31, up from 20.6 percent, and expanded to 18.6 percent of the U.S. as a whole, up from 17.2 percent in the previous period, said the Drought Monitor in Lincoln, Nebraska.
• San Bernardino, California, Files Chapter 9 Bankruptcy. San Bernardino, California, filed for municipal bankruptcy after disclosing a $46 million shortfall in the city’s budget, the third California city to seek court protection from creditors since June 28. California cities from the Mexican border to San Francisco Bay are confronting rising pension costs as they contend with growing unemployment and declining property- and sales-tax revenue. The costs stem from decisions made when stock markets were soaring and retirement funds were running surpluses.
• Amtrak Food Service Lost $834 Million in 10 Years, Mica Says. Amtrak lost $84.5 million selling food and beverages last year and $833.8 million over 10 years, House Transportation and Infrastructure Chairman John Mica said, calling for a “better way” to run those operations. It costs taxpayers $3.40 for each can of soda the U.S. passenger railroad sells on its trains, and Amtrak charges $2.00, the Florida Republican said at a hearing today.
• Facebook(FB) Slump Continues After Two Senior Executives Exit. Facebook Inc. (FB) dropped as much as 4.7 percent to a record low, the fifth straight day of declines after the world’s largest social-networking service reported earnings that showed slowing growth.

Wall Street Journal:

• Spanish Markets Pummeled Over ECB Disappointment. Spanish stocks and bonds bore the brunt of investor disappointment with European Central Bank President Mario Draghi and the absence of fresh, concrete policy measures to fight the euro zone's debt crisis. Madrid's IBEX 35 stock index closed down 5.2% at 6373.40, while the yield on its benchmark 10-year government bond surged 0.44 percentage point to 7.13%, according to Tradeweb, putting it back above a level that economists say can't be sustained. The euro slid to $1.2152 in midday New York trading from the day's high of $1.2406. Italian markets also suffered, with the FTSE MIB stock benchmark falling 4.6% to 13282.55. Yields on 10-year Italian government bonds rose 0.39 percentage point to 6.30%,
  

CNBC.com:

• 'Knight-mare': Trading Glitches May Just Get Worse.
• Tax Scam: IRS Pays Out Billions in Fraudulent Refunds. The IRS is paying out billions of dollars in fraudulent tax refunds to identity thieves; a problem that the tax service’s inspector general told CNBC is a “growing problem” involving numbers that are increasing “exponentially.”

Business Insider:

• The 50 Stocks Hedge Funds Love The Most.
• GASPARINO: A $5 Billion Trade That Was Supposed To Happen Over 5 Weeks Is What Doomed Knight Capital(KCG).
• THE DEATH OF TV: It's Not Just Comcast; DirecTV and Time Warner Cable Lost Thousands Of Subscribers, Too.
• The 'Bread And Peace Model' Says Obama Is Toast In November.

Zero Hedge:

• European Bonds Give Up ALL Draghi "Believe" Gains In Worst Day In Over A Decade. (graphs)
• BNP Furious That Draghi "Jumped The Gun". Ken Wattret who is chief Euroarea economist for BNP is quite furious with Draghi: the reason? Precisely what we warned last week: that Draghi is posturing and attempting to bluff the Bundesbank into accepting his "conditions." End result, Buba called the bluff and the ECB blew it in a fashion so spectacular that Draghi actually had to defend himself from reporters who were mocking him and the ECB with questions if the ECB won't get its inflation call wrong "again."
• Investors are piling into income-generating stocks at the fastest pace seen in decades. (graph)
  

CNET:

• Facebook(FB): 8.7 percent are fake users.

LA Times:

• Chick-fil-A 'appreciation' sales make for a 'record-setting day'. Chick-fil-A appears to have set a company record in sales on Wednesday, a day on which Americans were encouraged to show their support for the fast-food restaurant whose leadership has drawn both criticism and praise in recent weeks for its opposition to same-sex marriage. The privately held company declined to give specific sales figures but released a statement to the Los Angeles Times confirming that frenzied sales of chicken sandwiches and cross-cut waffle fries had made for a record-setting day."We are very grateful and humbled by the incredible turnout of loyal Chick-fil-A customers on August 1 at Chick-fil-A restaurants around the country," said Steve Robinson, executive vice president of marketing, in the statement.

Gallup:

• U.S. Unadjusted Unemployment Rate Increases in July. Underemployment declines to 17.1%. (graph)
  

Reuters:

• Spain arrests al Qaeda suspects planning European attacks. Three people linked to al Qaeda have been arrested in the south of Spain, one in possession of explosives they planned to use in attacks in either the Iberian country or other European nations, Interior Minister Jorge Fernandez Diaz said on Thursday.
• Fears of new property curbs sink shares in China, Hong Kong. China shares resumed their downward spiral on Thursday, hurt by steep losses for property developers that dragged down on the Hong Kong market, after state-run media reported there could be fresh curbs, which would hit the sector. Poly Real Estate, one of the mainland's biggest developers, dived 9.2 percent in Shanghai -- its worst daily loss since April 19, 2010, right after Beijing announced a clampdown on the sector. Thursday's decline was onshore Chinese markets' third in four days. The CSI300 Index of the top Shanghai and Shenzhen listings shed 1 percent. The Shanghai Composite Index slipped 0.6 percent, hovering near 41-month lows.
• S&P cuts ArcelorMittal(MT) TO 'BB+'.
• Copper falls as dollar rises, ECB disappoints.
• Sony slashes profit outlook, Sharp cuts jobs first time in 60 years. Sony Corp (6758.T) slashed its forecast for 2012/13 operating profit and lowered its sales expectations for key products including its handheld PSP and PS Vita devices as new boss Kazuo Hirai battles to revive the fortunes of the electronics giant. Sony said April-June operating profit fell a much steeper-than-expected 77 percent to 6.28 billion yen ($80 million) compared with a year earlier, blaming a strong yen and weak economies. Analysts had penciled in a 36 percent fall. Rival Sharp Corp (6753.T) announced a 94 billion yen operating loss ($1.2 billion) for the June quarter and plans its first job cuts in more than 60 years as Japan's electronics industry scrambles to keep up with foreign competitors.
• European stocks slide after ECB disappoints. "Draghi put himself in such a difficult position that he had to deliver today and he has not. There has been a swift change in rhetoric from 'we will' last week to 'we may' today," Joshua Raymond, chief market strategist at City Index, said. Investors, who had pushed stocks higher before Draghi's comments on hopes of some concrete policy support, rushed to dump equities, with the FTSEurofirst 300 index closing 1.2 percent lower at 1,055.34 points, Spain's IBEX slumping 5.2 percent and Italy's FTSE MIB falling 4.6 percent, the biggest one-day decline in nearly four months. "And even though he hints towards bond purchases, all he has done is kick the can down the road. It would appear the ground continues to be laid for ECB action, but this action is not going to come this week and leaves a taste of disappointment." Euro zone banks, which are exposed to several highly-indebted countries in the region, suffered the most, with the index slipping 6.4 percent and Spain's Banco Santander falling 6.7 percent.
• U.S. retailers' July same-store sales review.
• Monster Worldwide(MWW) forecasts weak quarter, shares hit life low. Monster Worldwide Inc's second-quarter profit more than halved from a year earlier and the online recruitment firm forecast weak results for the current quarter due to soft demand in Europe, sending its shares down 20 percent to a record low. The company did not provide an update on the strategic review it announced five months ago except to say that it was proceeding as planned. "Over the second quarter, the situation (in Europe) did deteriorate further in that more countries slowed down," Chief Executive Sal Iannuzzi said on a call with analysts. "The issue and the slowdown or the caution has spread to the entire continent."
• Spain, Italy say any talk on seeking EU aid premature. Spain and Italy said on Thursday it was premature to say if they will seek the activation of EU mechanisms to buy their debt and bring down their borrowing costs. Such a request, which would entail negotiating a memorandum of understanding with other euro zone countries and would likely bear strong conditionality, is required to trigger a coordinated intervention of the European Central Bank, its president Mario Draghi said on Thursday. But asked at a joint news conference following a meeting in Madrid if they would consider taking this step, the Spanish and Italian Prime Ministers Mariano Rajoy and Mario Monti insisted it was not on their agenda at the moment.

Telegraph:

• Mario Draghi's speech: what the analysts say. Spanish borrowing costs rise and stock markets fall - with the Madrid bourse dropping sharply - after ECB president Mario Draghi said the bank may act independently in markets but announced no specific measures. Here is what some top analysts said.

ABC:

• Spain's Industry Ministry may cut subsidies for renewable energy, citing government officials.
  

Xinhua:

• Shanghai property curbs are in a crucial period, citing a special team from the State Council checking the implementation of property curb policies. Shanghai should "unswervingly" implement the control policies and prevent home prices from rebounding. Shanghai should increase supplies of normal housing especially small and medium-sized housing, the team said.