Today's Headlines

Bloomberg:

• U.S. Embassy in Tunisia Stormed. Protesters penetrated the embassy grounds in Tunis after scaling the walls, and a cloud of smoke hung over the compound. Tunisian security forces fired shots and entered the embassy compound chasing the demonstrators, who didn’t get into the main embassy building. Authorities attempted to extinguish a fire set by protesters at the American school near the embassy. In Sudan’s capital, Khartoum, Germany’s embassy was set afire and crowds also gathered outside U.S. and British missions. Police used water cannons and fired warning shots into the air to disburse hundreds of protesters who rallied for a second day at the U.S. Embassy in Yemen’s capital.
• Ryan Calls for ‘Moral Clarity’ in American Foreign Policy. Republican vice presidential candidate Paul Ryan called for U.S. foreign policy to have “moral clarity and firmness of purpose” in remarks today to the Family Research Council’s voter summit in Washington. His address followed criticism by Republican presidential candidate Mitt Romney of how President Barack Obama’s adminsitration has handled attacks on U.S. diplomatic outposts this week in the Middle East.
• Spanish Regions’ Debt Swells as Aid Dilemma Continues: Economy. Spanish regions’ debt load continued to swell in the second quarter, as the cash-strapped local administrations urged the government to speed up its planned bailout fund. The regions’ debt rose to 14.2 percent of gross domestic product from 13.8 percent in the first three months of the year, the Bank of Spain in Madrid said today on its website. The overall public debt load rose to 75.9 percent of GDP from 72.9 percent in the prior quarter.
• Spanish Home Prices Fall Most on Record as Economy Shrinks. Spanish home prices fell the most on record in the second quarter as the euro area’s fourth- largest economy shrank and a reduction in mortgage lending crimped demand for property. The average price of houses and apartments declined 14.4 percent from a year earlier, the most since the measurement began in 2008, the National Statistics Institute in Madrid said today in an e-mailed statement. Prices fell 3.3 percent from the previous quarter. “The data reflects a significant drop and confirms that prices haven’t bottomed out yet,” said Fernando Encinar, co- founder of Idealista.com, Spain’s largest property website. “Only homes that are heavily discounted will sell as access to credit has completely dried up for potential buyers.” Spain, which forecasts an economic contraction of 1.7 percent this year, is in its second recession in three years. The country’s 25 percent unemployment rate is Europe’s highest and has diminished lending for residential real estate. House prices more than doubled in the decade through 2007, before turning negative in the first quarter of 2008 and have since fallen by about 23 percent, data from the Ministry of Public Works show. Home prices have fallen 32.4 percent since a December 2007 peak, according to separate data from Tasaciones Inmobiliarias, Spain’s largest home appraiser.
• India's August Inflation Rate May Be at 7.5%, Bloomberg India TV. The median of 35 estimates is for a 7.1% gain, according to a Bloomberg News Survey.
• Hong Kong Tightens Mortgages Amid QE3 Concerns of Bubble. Hong Kong’s central bank tightened mortgage lending after saying a third round of quantitative easing by the U.S. Federal Reserve risks pushing up home prices that have already surpassed their 1997 peak. The central bank is limiting the maximum term on all new mortgages to 30 years, Norman Chan, chief executive of the Hong Kong Monetary Authority, told reporters yesterday. Mortgage payments for investment properties can’t be more than 40 percent of buyers’ monthly incomes, from the current 50 percent, he said.
• U.S. Consumer Price Index Increases by Most Since 2009. The cost of living in the U.S. climbed in August by the most in more than three years, reflecting a surge in fuel costs. The 0.6 increase in the consumer-price index was the biggest since June 2009 and followed no change in the previous month, the Labor Department reported today in Washington. The median forecast of 85 economists surveyed by Bloomberg News called for an advance of 0.6 percent. The core index, which excludes volatile food and fuel costs, climbed a less-than- projected 0.1 percent for a second month.
• Commodities Set for Longest Run of Weekly Gains Since ’10. Commodities headed for the longest run of weekly gains since 2010 as the Federal Reserve’s third round of monetary measures to boost the U.S. economy spurred speculation that energy and metal demand will increase as the US dollar declines. The Standard & Poor’s GSCI Spot Index of 24 raw materials rose 1.1 percent to 694.71 at 12:29 p.m. New York time. The gauge was poised for the seventh straight weekly advance, the longest rally since October 2010. Industrial metals led the rally, and crude oil in New York topped $100 a barrel for the first time since May. The Fed said yesterday it will expand holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month and keep the benchmark interest rate near zero “at least through mid-2015.” The GSCI index surged 92 percent from the end of 2008 through June 2011 as the Fed bought $2.3 trillion of debt in the first two rounds of quantitative easing and held borrowing costs at a record low.
• Oil Rises to $100 for First Time in Four Months on Fed. Oil climbed above $100 a barrel in New York for the first time since May as the Federal Reserve announced it will buy mortgage-backed securities to encourage growth in the world’s largest economy. Crude oil for October delivery advanced 66 cents, or 0.7 percent, to $98.97 a barrel at 1:52 p.m. on the New York Mercantile Exchange. Futures breached $100 for the first time since May 4 and touched $100.42. Prices have increased 2.6 percent this week and are up 11 percent from a year ago. Brent oil for November settlement climbed 91 cents, or 0.8 percent, to $116.79 a barrel on the London-based ICE Futures Europe exchange. Prices reached $117.95, the highest level since May 3.

Wall Street Journal:

• Protesters Storm U.S. Compounds in Mideast, Africa. Demonstrations sparked by an anti-Muslim video that started in Egypt this week spread across parts of Africa, Asia and the Middle East on Friday, with crowds assaulting U.S. diplomatic compounds in Tunisia, Sudan and Yemen. Thousands of demonstrators massed outside the U.S. Embassy in Tunis and some were seen climbing the outer wall of the grounds and raising a flag on which was written the Muslim profession of faith. Police responded by firing tear gas, and police gunfire could be heard. A group of several dozen protesters briefly managed to enter the embassy compound and set fire to cars in an embassy parking lot. They were pushed back outside by security forces who continued to arrive on the scene.
• Live Updates: Mideast Turmoil.

MarketWatch:

• Why defend dividends? Commentary: Raising the tax rate will slow the economic recovery. Last month, Apple Inc. paid out nearly $2.5 billion in dividends to its shareholders. For now, recipients of the technology giant’s prosperity will be subject to a tax rate of 15%, as dictated by the Bush-era tax cuts. But with those rates set to expire at the end of the year and a Congress focused on a major election in November, the future of taxation on savings and investment remains a mystery. Congress should act now to alleviate the uncertainty. Without action from Congress, the top rate on dividends (now 15%) will expire at the end of this year, and revert to a staggering 43.4% (39.6% plus the health care surcharge of 3.8%) raising taxes by almost 190% for millions of Americans. Capital gains tax rate will rise to 23.8% (20% plus the healthcare surcharge).

Fox News:

• Bomb threats lead to evacuations at University of Texas, North Dakota State University. Thousands of people streamed off university campuses in Texas and North Dakota on Friday after phoned-in bomb threats prompted evacuations and officials warned students and faculty to get away as quickly as possible. No bombs were found on either campus by early afternoon it was not clear whether the threats were related. The University of Texas received a call about 8:35 a.m. from a man claiming to be with Al Qaeda who said he had placed bombs all over the 50,000-student Austin campus, according to University of Texas spokeswoman Rhonda Weldon. He claimed the bombs would go off in 90 minutes and all buildings were evacuated at 9:50 a.m. as a precaution, Weldon said.
• White House warns planned budget cuts 'deeply destructive' to military, other agencies. A White House report is warning that $110 billion in across-the-board spending cuts at the start of the new year would be "deeply destructive" to the military and core government responsibilities like patrolling U.S. borders and air traffic control. The Obama administration says the automatic cuts, mandated by the failure of last year's congressional deficit "supercommittee" to strike a deal, would require an across-the-board cut of 9 percent to most Pentagon programs and an 8 percent cut to many domestic programs. The cuts, combined with the expiration of Bush-era tax cuts at the end of this year, have been dubbed a "fiscal cliff" for the country. Economists warn that the one-two punch could drive the economy back into recession.

CNBC.com:

• Fed's 'QE Infinity': Four Things That Could Go Wrong.
• UnitedHealth(UNH) to Replace Kraft in Dow Industrial Average.
• Anti-US Protests Spread; Gunfire at Embassy in Sudan.
• Still No Deal to End Chicago Teachers Strike.
• Is a ‘Trust Deficit’ in China Destabilizing Growth?

Business Insider:

• An Incredible Map Of Today's Global Islamic Protests.
• Prepare For A Surreptitious 30% Haircut Every Decade.
• American School In Tunisia Torched.

Zero Hedge:

• Consumer Confidence Rises On Inflation Expectations... Dropping. (graph)
• Anti-US Protests Spread To India, Bangladesh, Indonesia.
• Germany Opines: "Obama's Middle East Policy Is in Ruins".
• Industrial Production Plunges Most Since March 2009. (graph)
  

New York Times:

• Fed May Have Limited Effect, at Best, on Real Estate.

Minyanville:

• QE-Infinity: Poking Holes in Bernanke's Logic.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Friday shows Mitt Romney attracting support from 48% of voters nationwide, while President Obama earns 45% of the vote. Two percent (2%) prefer some other candidate, and five percent (5%) are undecided.

Reuters:

• Apple(AAPL) shares hit record high as iPhone 5 demand seen strong.
• U.S. House Republicans pass "No More Solyndras" bill. The Republican-controlled U.S. House of Representatives passed a bill on Friday that would phase out a program for energy loans after a lengthy investigation into why a now-bankrupt California solar panel maker got a $535 million government loan. The "No More Solyndras" bill, named after the company that has become a stock campaign talking point for Republicans ahead of the Nov. 6 presidential elections, is highly unlikely to be taken up by the U.S. Senate or signed by President Barack Obama. But the 245-161 vote gives Republicans another chance to hammer home a message about Obama's energy policies and the administration's management of the economy ahead of the elections.
• Grim factory sales darken Canada outlook. Canadian manufacturing sales dropped sharply in July on weakness across most industries, data showed on Friday in a troubling omen that analysts say may result in the economy failing to grow in that month. Factory sales fell 1.5 percent in July from June versus market expectations of a 0.4 percent gain, dragged down mainly by a drop in sales of aerospace products, motor vehicles, and machinery, Statistics Canada said. In volume terms, sales fell 2 percent in July.
• Oil prices risk pushing world back into recession -IEA economist. Current oil prices risk pushing back the global economy into recession, the International Energy Agency's chief economist said after U.S. crude rose above $100 a barrel on Friday, its highest level in four months. "I see the prices today, in this economic context, as unbearable for consumers," Fatih Birol told Reuters by telephone. "High prices together with other factors could push the global economy back into recession," he added.

Sueddeutsche Zeitung:

• ECB at Odds With Bundesbank on Crisis, Draghi Says. ECB President Mario Draghi said the ECB and Germany's Bundesbank are at odds over how to solve the euro area's sovereign debt crisis, citing an interview. "It would be good if we could always work together. Often we can, but at this time we have different views on how to manage the crisis."
  

Talouselaemae:

• Banking Union No Solution to Europe Crisis, Nordea Chairman Says. Europe must recapitalize its lenders to resolve the lack of confidence in the banking industry, Nordea Bank Chairman Bjoern Wahlroos said. A "banking union won't resolve this fundamental issue" that banks haven't been recapitalized, he said. Joint liability is "absurd" as it would imply extensive transfers, endanger the stability of the entire system, he said. "The assumption that backing from the good banks would be reflected on lenders in bad shape could be reversed, meaning that the large majority of banks doing poorly could destroy the last healthy part of the system". Finland shouldn't provide more funds to euro-area rescues, Wahlroos said.