- EFSF Cut to AA+ by Fitch in Wake of France’s Loss of Top Rating. Europe’s temporary rescue facility lost its AAA rating in a move by Fitch Ratings to match it to the level of France after the country lost its own top grade last week. The European Financial Stability Facility was downgraded by one level to AA+, Fitch said in a statement in London today. The company attributed the decision as a consequence to its July 12 cut to the rating of Europe’s second-largest economy. “EFSF’s ratings rely on the irrevocable and unconditional guarantees and over-guarantees provided by euro-area member states,” Fitch said. After France’s downgrade, “the EFSF’s long-term debt issues are not fully covered by AAA guarantees and over-guarantees and, for debt issued before October 2011, by the cash reserve.”
- Yuan Touches 2-Week Low as Economic Growth, Factory Output Slow. China’s yuan touched a two-week low after data showed growth and factory output slowed, adding to signs Asia’s biggest economy is cooling. “Yuan appreciation has come to an end as the export growth outlook remains grim,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong. “The window for depreciation from current levels has been opened given the U.S.-China talks are over. It’s time to shift focus back to fundamentals.”
- UBS’s Weber Sees Fed Tapering at Awkward Time for Euro Area. UBS Chairman and former European Central Bank Governing Council member Axel Weber says the Federal Reserve’s plan to reduce stimulus will have a negative effect on the European economy. “The Fed is doing the right thing for the United States,” Weber, who headed the German Bundesbank until 2011, said in an interview with Bloomberg Television’s Mike McKee on July 12 at the Rocky Mountain Economic Summit in Jackson Hole, Wyoming. “That’s their mandate, but it’s undisputed that through transaction and arbitrage it has spillover effects to other constituencies. It’s coming for Europe at an awkward point in time.”
- India Inflation Reaches Three-Month High as Rupee Fans Costs. Indian inflation accelerated to a three-month high in June, threatening to curb scope for a further interest-rate cut as rupee weakness stokes import costs. The wholesale-price index rose 4.86 percent from a year earlier, exceeding May’s 4.7 percent climb, a Commerce Ministry statement showed in New Delhi today. The median estimate in a Bloomberg News survey of 30 analysts was 4.94 percent. The Reserve Bank of India’s threshold level is about 5 percent.
- WTI Gains as Empire State Manufacturing Index Advances. West Texas Intermediate crude advanced as manufacturing in the New York region expanded at the fastest pace in five months. Prices gained for the fourth time in five days as the Federal Reserve Bank of New York’s general economic index for July climbed to 9.5, the highest level since February. WTI for August delivery gained 33 cents to $106.28 a barrel at 2:23 p.m. on the New York Mercantile Exchange. The volume of all futures traded was 13 percent below the 100-day average for the time of day. The contract climbed $1.04 on July 12, capping a 13 percent rally over three weeks.
- Copper Futures Decline as China’s GDP Expansion Eases. Copper futures fell for the second straight session on concern that demand will ebb after economic growth slowed for the ninth time in 10 quarters in China, the world’s biggest user of industrial metals. Gross domestic product expanded 7.5 percent in the second quarter from a year earlier, down from 7.7 percent in the prior three months, the government said today. That matched the median estimate in a Bloomberg survey of analysts. Industrial production (CHVAIOY) slowed in June for the third time in four months. “The base metals have started the week with a softer tone, coming under pressure after a choppy start on the back of a weakening Chinese economic data and a stronger dollar,” Leon Westgate, a London-based analyst at Standard Bank Plc, said in a report today. “Concerns over the trajectory of China’s economy continue to mount.” Copper futures for September delivery declined 0.8 percent to $3.13 a pound at 11:03 a.m. on the Comex in New York. On July 12, the price fell 0.7 percent.
- Bets on VIX Decline Reach 2-Year High. (video)
- Justice Department faces evidence hurdles in proving Zimmerman bias after verdict. The Justice Department was running into immediate hurdles Monday in its investigation of possible civil rights violations by George Zimmerman in the shooting death of Trayvon Martin -- namely, that after examining the case for more than a year, the evidence has not changed.
Zero Hedge:
- Retail Sales Slide, Miss: Biggest Drop And Miss In 12 Months. (graphs)
- Goldman Joins JPM In Cutting Q2 GDP To 1% Stall Speed; A "Funny Chart" Becomes Funnier. (graph)
- The One Chart Explanation Behind Ben Bernanke's "Open Mouth Operation" Scramble.
- EFSF Downgraded To AA+, Or French Fitch Flunks EFSF Following France Flub.
- Wall Street's Biggest Institutions Are Testing Software That Will End The Era Of The Quants.
- Google(GOOG) Has Discovered A Massive New Revenue Driver — And It's A Huge Threat To Amazon(AMZN).
- Zimmerman lawyer to move ‘asap’ against NBC News. Last night’s not-guilty verdict in the George Zimmerman trial will enable the neighborhood-watch volunteer to resume his case against NBC News for the mis-editing of his widely distributed call to police. Back in December, Zimmerman sued NBC Universal Media for defamation over the botched editing, which depicted him as a hardened racial profiler.
- Citigroup(C) profit jumps 41 percent, possible potholes ahead. Citigroup Inc posted a 41 percent increase in quarterly profit, as stronger home prices reduced mortgage losses and bond trading revenue jumped, underscoring the bank's recovery since the financial crisis. Still, storm clouds lie ahead for the third-largest U.S. bank by assets as rising bond yields in the United States are expected to cut into debt underwriting volume, and slowing growth in emerging markets may cut into profit from overseas. About 58 percent of its revenue last year came from outside of North America.
- Hedge Funds, Super-Wealthy Leaving France. Following President Francois Hollande’s pledge to raise a top income tax rate of 75% last year, a number of ultra wealthy individuals have already reportedly exited the country to more liberal tax regimes, according to a new whitepaper by ultra-high net-worth tracking firm Wealth-X.
- More Americans Disapprove of the Affordable Care Act. (video) Gallup Editor-in-Chief Frank Newport shares that 52% of Americans disapprove of the Affordable Care Act, up from 45% in November 2012.
- Deepening Spanish credit crunch could hit banks, economy, says IMF. Spain's economic problems could tempt its banks to cut lending further, but they need to resist this and boost their capital ratios by cutting cash dividends or issuing new shares instead, The International Monetary Fund said. The IMF, which is monitoring Spain's banking reforms after a European bailout last year, said in a report on Monday the lenders' solvency had improved. But economic problems including record unemployment had left the sector mired in a deepening credit crunch. That pressure could push banks, whose profitswill likely suffer, to further cut lending as they shore up capital, hitting growth and potentially forcing the government to rethink its plans for restructuring the sector.
- US outstrips Europe in crisis-era securities deals. The US has widened its lead over Europe in the market for “slicing and dicing” loans, raising questions over whether European banks and businesses will miss out on a potentially important post-crisis source of finance. In the year before the 2008 financial crisis US issuance of asset-backed securities – financial instruments blamed by many for sparking the crisis – totalled $1.5tn in the US and $440bn in Europe. That gap has since widened to become a chasm.
- Spain Barcenas scandal: Rajoy rejects resignation calls. Spain's prime minister says he will not give in to "blackmail", amid calls for him to resign over alleged links to a suspect in a payments scandal. Mariano Rajoy said he would fulfil the mandate given by the Spanish people. The calls came after a newspaper published text messages he allegedly sent to the suspect, Luis Barcenas, ex-treasurer of his Popular Party (PP). Meanwhile Mr Barcenas repeated in court allegations that Mr Rajoy received payments from a slush fund.
- China Hangzhou May Levy Property Tax on 2nd Homes. The eastern Chinese city of Hangzhou may be the third city after Shanghai and Chongqing to start property tax trial in China, citing people familiar with the matter. Luxury homes may be taxed at 8%.
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