- Merkel Warns Against Debt Perils as She Begins Re-Election Bid. Chancellor Angela Merkel warned against the perils of excessive debt as she began campaigning for Germany’s Sept. 22 election, seeking to defend her lead in the polls to clinch a third term. Addressing a crowd of more than 1,000 in the Hessian city of Seligenstadt today, Merkel embraced a report that the 17-nation euro area had emerged from recession as “good news,” though she said growth must not be based on debt. “We’ve seen what can happen if you accumulate too much debt,” Merkel said. Higher borrowing costs spur rising interest rates, putting businesses in danger, she said. “Then you have unemployment -- and at that point you have a spiral."
- European Stocks Climb for Fifth Day on Euro-Area Growth. European stocks rose for a fifth day, with the benchmark Stoxx Europe 600 Index advancing to a 12-week high, as a report showed the euro area’s economy emerged from a record-long recession in the second quarter. Subsea 7 SA, an offshore oil services provider, surged the most in three years after reporting a smaller-than-expected quarterly loss. Rentokil Initial Plc (RTO) jumped to the highest price in more than two years after reporting an increase in first-half earnings and sales. RWE AG lost 4.5 percent after second-quarter net income missed analysts’ estimates. The Stoxx 600 rose 0.3 percent to 308.62 at the close of trading.
- India Inflation Tops Estimates as Rupee Plunge Tests Rajan. Indian inflation accelerated more than economists estimated in July as a plunging rupee stoked import costs, with the central bank today announcing curbs on foreign-exchange outflows to try and support the currency. The wholesale-price index rose 5.79 percent from a year earlier, a five-month high that exceeded the median 5 percent estimate in a Bloomberg News survey of 34 analysts, a government report showed today. The Reserve Bank of India later reduced the amount some companies can invest overseas, as well as the limit on resident individuals’ remittances abroad.
- China Banks’ Bad Loans Rise for Seventh Quarter as Economy Slows. Chinese banks’ bad loans rose for a seventh straight quarter, extending the longest streak in at least nine years as the world’s second-largest economy continued slowing.
- Cathay Profit Misses Estimates on Cargo Slump, North Asia. Cathay Pacific Airways Ltd. (293), Asia’s biggest international carrier, reported first-half profit that missed analyst estimates as cargo revenue dropped and declining yields in North Asia masked gains from carrying more passengers. Net income totaled HK$24 million ($3.1 million) in the six months ended in June, Cathay said in a stock exchange statement today, compared with the HK$590 million median profit estimate in a Bloomberg News survey of five analysts. It was the smallest profit in at least 15 years for the Hong Kong-based airline.
- S&P 500 Valuation vs VIX Shows Concern Lacking: Chart of the Day. Investors are becoming overly content about the prospects for stocks after more than four years of gains, according to David Bianco, chief US equity strategist at Deutsche Bank AG. Bianco's P/E-VIX ratio closed yesterday at 1.2. At that level, a lack of concern that share prices may fall starts to supplant "realistic and disciplined" investing, he wrote.
- Janus Funds Post Highest Withdrawals in More Than Three Years. Janus Capital Group Inc. (JNS) had its biggest monthly mutual-fund withdrawals in more than three years after a large client pulled money from the money manager’s oldest fund. Investors pulled a net $2.2 billion from the Denver-based company’s long-term funds in July, the most since May 2010, according to research firm Morningstar Inc. (MORN) A single client redeemed $1.3 billion from the now $7 billion Janus Fund in July, John Groneman, head of investor relations at Denver-based Janus, said today in a telephone interview.
- Egypt's Deadly Crackdown Spurs Street Violence. Health Ministry Says 149 Killed in Effort to Clear Antigovernment Sit-Ins in Cairo. Egypt's efforts to end Muslim Brotherhood protests turned deadly Wednesday morning, with well over 100 people killed across the country in violence set off when police, later backed by Egyptian soldiers, moved in against two antigovernment sit-ins in Cairo. The move to clear supporters of former President Mohammed Morsi, which had been anticipated since his ouster by the military on July 3, set off violent upheaval across Cairo. Protesters tried to storm police stations across Egypt's capital, while entire neighborhoods succumbed to fighting between neighbors on opposite sides of the political divide, an early taste of the bloodshed that has been feared for weeks by many Egyptians. Several observers worried that the violence has spiraled out of control and taken on sectarian shadings. Egypt's interim president declared a monthlong national state of emergency to start Wednesday afternoon.
- Two Charged in J.P. Morgan(JPM) 'Whale' Trades. Prosecutors Allege Colleagues of Trader Attempted to Hide Losses; Trader Himself Isn't Charged.
- Former Rep. Jesse Jackson Jr. sentenced to 30 months in prison. Former Rep. Jesse Jackson Jr. was sentenced to two and a half years in prison Wednesday after pleading guilty to scheming to spend $750,000 in campaign funds on TV's, restaurant dinners, an expensive watch and other costly personal items. His wife received a sentence of one year. Jackson, the 48-year-old son of civil rights leader Jesse Jackson, had been a Democratic congressman from Illinois from 1995 until he resigned last November. In an emotional speech to the judge during which he became choked up and used tissues to blow his nose, he apologized and said he wanted to "take responsibility for my actions." "I misled the American people," he said.
- Mortgage apps defy rate dip, hit lowest in more than a month. Applications for U.S. home loans fell last week to their lowest level in more than a month despite a slight decline in interest rates, data from an industry group showed on Wednesday. The gauge of loan requests for home purchases, a leading indicator of home sales, fell 5.4 percent, resuming a downward trend that was interrupted with a slight rise the prior week.
- Newly revealed Obamacare delay draws fire. Obamacare might not be a "train wreck," but the wheels sure do keep coming off of it. Yet another delay in a key part of the Affordable Care Act gave critics more ammunition and raised further questions about the Obama administration's authority to delay implementing sections of the law without congressional approval.
- Europe Returns To "Growth" After Record 6-Quarter Long "Double Dip" Recession; Depression Continues. (graphs)
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- Away from Egypt, Bahrain’s Own Arab Spring Uprising Heats Up Again. While violence rages in Cairo, the dysfunctional epicenter of the Arab Spring, another unresolved conflict from that season of unrest in the region is flaring. Amid increasing tension and violence in the tiny Gulf kingdom of Bahrain, pro-democracy protesters planned to mass in nationwide demonstrations on Wednesday that marked the two-and-a-half-year anniversary of the nation’s own frustrated Arab Spring moment.
- Asian Emerging Markets Spreads Widen On China Fears. Spreads on Asia's emerging market credit default swaps have widened in the last three months, as prices on developed market CDS have tightened, according to data from Markit. And China's economic situation suggests the trend may be set to strengthen.
- Deere(DE) posts strong profit, but farmbelt spending a concern. Deere & Co (DE.N) reported a much higher-than-expected quarterly profit on Wednesday on strong sales of its tractors and harvesters in the Americas, but some analysts said the results represented the high-water mark for the company in the current farm cycle. Deere also said sales for the current quarter would be 5 percent lower than a year earlier. Its shares fell more than 1 percent.
- Macy's(M) same-store sales fall 0.8 percent. Macy's Inc on Wednesday reported lower-than-expected sales and profit, citing consumers' limited willingness to spend on non-essentials, leading the department store chain to reduce prices on items. Macy's, which also operates the upscale Bloomingdale's chain, reported net income of $281 million, or 72 cents a share, for the quarter that ended Aug. 3, up slightly from $279 million, or 67 cents per share a year earlier. That was six cents per share less than expected, according to Thomson Reuters I/B/E/S, The retailer said comparable sales and overall sales fell 0.8 percent. Analysts expected comparable sales to be up 2.3 percent.
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