Today's Headlines

Bloomberg:

• Euro Crisis Faces Tests in German Court, Greek Infighting. A German high court decision on bailout funding and Greek coalition infighting this week threaten to derail the European Central Bank’s bid to wrest control over the euro area’s three-year-old crisis. Germany’s Federal Constitutional Court in Karlsruhe will decide whether to suspend the 500 billion-euro ($639 billion) European Stability Mechanism on Sept. 12. In Athens, Prime Minister Antonis Samaras’s governing partners balked at budget cuts demanded by the country’s so-called troika of creditors. In a week of activity that may determine the course of the crisis, the court’s decision comes on the same day as Dutch voters decide whether to back parties questioning an expansion of European powers and as the European Commission issues a proposal for an integrated banking system. “The ECB is saying I’m here to support you but I can only build a bridge for you,” Mohamed El-Erian, chief executive officer and co-chief investment officer of Pacific Investment Management Co., said in a Sept. 7 Bloomberg Television interview. “You have to do your job as well.”
• Italian, Spanish Bonds Fall as ECB Aid Rules Concern Saps Demand. Italian 10-year bonds snapped a five-day advance, leading declines in Europe’s lower-rated debt, amid concern conditions imposed on nations seeking assistance may hamper requests for European Central Bank bond purchases. Germany’s 10-year bund yield rose after last week climbing the most in six after ECB President Mario Draghi announced details of an unlimited asset-purchase program to tame the region’s debt crisis. Spanish notes dropped before a German high court decision on bailout funding due Sept. 12 and after Greek Prime Minister Antonis Samaras yesterday failed to win agreement from his coalition partners on spending cuts required by lenders to his country to release funds. “Greece shows us how difficult life can be within a program and the ECB’s purchases are conditional,” John Wraith, a fixed-income strategist at Bank of America Merrill Lynch said in a Bloomberg Television interview with Mark Barton. “If the Spanish or Italian governments start to pull back on the prospect of entering any program, then that will give the market a scent of blood and there will be periods where the yields come under upward pressure.” The rate on Italian 10-year debt climbed 11 basis points, or 0.11 percentage point, to 5.17 percent at 4 p.m. London time. It jumped as much as 16 basis points, the biggest intraday gain since Aug. 2.
• Stagnant Incomes Signal Curbs on U.S. Consumer Spending: Economy. Wages are stagnating as the job market cools, restraining the consumer spending that is needed to sustain the U.S. economic recovery. Average hourly earnings were little changed in August from the prior month and up 1.7 percent from a year earlier, matching the smallest gain since records began in 2007, the Labor Department reported last week. Payroll growth slowed to 96,000 last month, while the unemployment rate fell as more people left the labor force.
• HP(HPQ) Says Expands Job Cuts From Reorganizing to 29,000. Hewlett-Packard Co. (HPQ), the world’s largest personal-computer maker, expanded the total job cuts under its reorganization plan announced in May to 29,000, more than it had originally disclosed. The cuts, exceeding the 27,000 estimated earlier, will take place through fiscal year 2014, Hewlett-Packard said today in a regulatory filing. The company said it will book reorganization expenses of about $3.7 billion during the period.
• Goldman Sachs(GS) Analysts Decide Bank Slowdown Isn’t Temporary. New bank regulations and capital requirements are “structural” changes to the industry that are more to blame for declining profits than the U.S. economic slump, Goldman Sachs Group Inc. (GS) analysts said. “The operating environment is unlikely to change any time soon, and we see shareholders of challenged banks becoming more demanding in asking management teams to lay out a path to unlocking value in the near term,” analysts led by Richard Ramsden in New York wrote in a report published today.

Wall Street Journal:

• Iran in Talks to Sell Oil to Egypt.
• Chinese Mystery: What Ails Xi Jinping? Xi Jinping, the man expected to start to take the reins as China's top leader within a few weeks, called off a meeting with Danish Prime Minister Helle Thorning-Schmidt, the latest in a series of canceled meetings, fueling widespread speculation about the health of the future Chinese president.

Fox News:

• Chicago teachers strike for first time in 25 years. Thousands of Chicago teachers walked off the job Monday for the first time in 25 years, after union leaders announced they were far from resolving a contract dispute with school district officials. The walkout in the nation's third-largest school district posed a tricky test for Mayor Rahm Emanuel, who said he would work to end the strike quickly.

CNBC.com:

• How the ‘Fiscal Cliff’ Could Hurt Married Couples.
• Euro Zone Will Pay ‘Terrible Price’: Jim Rogers. Rogers said: “These guys have been saying the same old garbage for a long time. It’s not a game-changer – it’s good for the market for maybe a month. The debt keeps going higher and higher and eventually we’ll all going to pay a terrible price.” He warned that the market rally, which many have seen as an opportunity to get back into riskier assets, would only be a short-term rebound.
• Youthful Pot Use Linked to Testicular Cancer.

Business Insider:

• If You Look At What Chicago Schoolteachers Are Striking Over, You Can See Why People Are Furious.
• More Grandparents Are Bankrolling Families Than Ever Before.

Zero Hedge:

• Goldman(GS) On The Fed: Perception Over Substance.
• Another Ex-Fed Governor Admits "Only So Much Fed Can Do".
• Why 'Tax The Rich' Doesn't Solve Anything: It's The Math, Stupid. (tables)
  
• Europe's Leaking. (graphs)
  

market folly:

• Bill Ackman on Why He Sold Citigroup (C).

Reuters:

• Insight: GM's(GM) Volt: The ugly math of low sales, high costs. n">General Motors Co sold a record number of Chevrolet Volt sedans in August — but that probably isn't a good thing for the automaker's bottom line. Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts.
• Analysis: Hollande's growth goal gutted by deficit plans. French President Francois Hollande has set himself a deadline to turn around the economy by the end of 2014, but having hamstrung the effort with tax rises to meet deficit targets, economists doubt his growth goals will ever fly. Hollande in "battle mode" pledged to the nation on Sunday to reverse a relentless rise in unemployment and return the stalled economy to growth in two years, but a government spending freeze and looming tax rises in 2013 could stifle growth, much as they have elsewhere in Europe where deficit-cutting measures have been tried.
• Consumer credit falls unexpectedly in July. Consumer credit fell in July for the first time in nearly a year as Americans reduced credit card debt, a worrisome sign for the U.S. economy which has struggled to create jobs. Consumer credit shrank by $3.28 billion in July, the Federal Reserve said on Monday. That was well below the $9.1 billion advance Wall Street economists had forecast in a Reuters poll.

Telegraph:

• Debt crisis: ECB's Draghi Plan doused by rebellions in Germany and Greece. A delay to the highly anticipated German court decision on bail-out funding and a rebellion in the Greek government over austerity doused hopes that the European Central Bank will be able to stem the crisis after all.

Handelsblatt:

• ECB Bond Buys Need Full Conditions, Meister Says. Euro region countries that want bonds purchased by the ECB must also request a full aid program under the area's financial backstops, German lawmaker Michael Meister from Chancellor Angela Merkel's Christian Democratic Union said. Any aid program must be approved by the German lower house of parliament, Meister said.