Today's Headlines

Bloomberg:

• Egypt Brotherhood Torches Building as Death Toll Rises. Hundreds of supporters of ousted Egyptian President Mohamed Mursi torched government headquarters in Giza, as the death toll rose above 500 after a crackdown on Islamists calling for his reinstatement. Brotherhood members attacked the building in Giza after hurling Molotov cocktails and firing gunshots, governorate spokesman Amin Abdel-Moneam said by phone. Televised footage showed flames and smoke billowing from the site, and local media said police repelled the assailants. 

• WTI Oil Rises a Fifth Day as Egypt Unrest Boosts Concern. West Texas Intermediate crude rose for a fifth day, the longest stretch of gains since April, as worsening unrest in Egypt bolstered concern that Middle East supplies may be cut. Brent oil climbed to a four-month high. Futures advanced as much as 1 percent in New York after Egypt declared a state of emergency and more than 500 people were killed as security forces broke up sit-ins. The country controls the Suez Canal, which is used by tankers carrying oil to Europe and North America from the Arabian Peninsula. WTI retreated and equities tumbled after falling U.S. jobless claims raised concern that the Federal Reserve will trim stimulus. “Oil is rallying on the eruption of violence in Egypt,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “Equities are getting pounded, which is putting downward pressure on the market. WTI is caught between these opposing forces.” WTI crude for September delivery increased 75 cents, or 0.7 percent, to $107.60 a barrel at 1 p.m. on the New York Mercantile Exchange. Futures reached $107.87, the most since Aug. 2. The volume of all futures traded was 0.5 percent above the 100-day average. 

• Treasury Yields Rise to Highest Since 2011 on Fed Policy Outlook. Treasuries fell, pushing yields on 10- and 30-year securities to the highest since August 2011, on speculation stronger U.S. growth will prompt the Federal Reserve to reduce its bond buying program as soon as next month. Yields on 10-year notes, a benchmark for corporate and consumer borrowing rates, climbed above 2.8 percent for the first time in two years.

• Europe Stocks Drop the Most in Five Weeks on Fed Concern. European stocks dropped the most in more than five weeks as better-than-forecast U.S. jobless claims fueled speculation the Federal Reserve will taper its bond-buying program this year. Zurich Insurance Group AG (ZURN) lost 3.6 percent after second-quarter profit missed analysts’ estimates. Hennes & Mauritz AB (HMB) declined the most in seven weeks as Europe’s second-biggest clothing retailer reported worse-than-expected sales. BG Group Plc, which derives 20 percent of its oil-and-gas production from Egypt, slipped 2.4 percent as the death toll from nationwide violence in the most populous Arab country climbed above 500. The Stoxx Europe 600 Index slid 1.1 percent to 305.34 at the close in London, its largest drop since July 5.

• Credit: High Yield Index Rises Most in 7 Weeks on U.S. Yields, Citi Says. iTraxx Crossover currently 20 bps wider at 415, heading for the biggest daily increase since June 24, according to Bloomberg. Yields breaking out of previous ceiling of 2.75% put pressure on Crossover index, and other risk assets. As U.S. yields rise, total returns in credit turn negative. In recent years a significant proportion of inflows into credit have been from total-return-sensitive investors, like retail, the note said.

• Homebuilder Confidence in U.S. Jumps to Highest Level Since 2005. The National Association of Home Builders/Wells Fargo index of builder confidence climbed to 59 from a revised 56 in July, which was lower than previously reported, the Washington-based group reported today. The median forecast in a Bloomberg survey of economists called for the gauge to be 57.

• Consumer Comfort in U.S. Declines. The Bloomberg Consumer Comfort Index fell to minus 26.6 for the period ended Aug. 11, its first drop in four weeks. “Rising interest rates and a slower pace of job gains add to concerns of households that are still facing, at best, restrained job growth,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.

• Jobless Claims in U.S. Decline to Lowest Level Since 2007. The number of claims for jobless benefits dropped by 15,000 to 320,000 in the week ended Aug. 10, the least since October 2007, according to Labor Department data today in Washington.

Wall Street Journal:

• Egypt Death Toll Passes 500 as Brotherhood Vows New Protests. Funerals, Rallies Likely to Inflame Tensions. The death toll from Egypt's wave of violence on Wednesday climbed to at least 525, fueling anger and deepening the political cleavages in the Arab world's most populous nation. Cairo's streets were mostly calm Thursday morning in neighborhoods not affected by the previous day's clashes, which were sparked when Egypt's military regime brutally cleared Muslim Brotherhood protests in Cairo. But later Thursday, Brotherhood leaders called on their supporters to regroup in protest despite a military curfew set to go into effect at dusk, fueling tensions over the possibility of renewed conflict. An hour before the 7 p.m. curfew, Brotherhood supporters continued to mass at the protest site, Imam Mosque in Cairo's Nasr City.

• Fed’s Bullard Says Impact of Easy Money Remains a Concern.

• Clock Ticks on Junior Bank CDS, Citi Warns. Traders and investors should dump some contracts that protect against losses on the riskiest of bank bonds, say credit analysts at Citigroup Stung by the fallout from some previous restructurings of troubled European banks, rule-setters in the credit default swaps market have gone back to the drawing board. Next year, shiny new contracts will emerge, giving holders of CDS on banks’ bonds, including junior debt (the stuff that’s first in line for losses) better protection. The problem is, when that happens, the old CDS contracts will lack natural buyers, say Citi analysts Abel Elizalde and Joseph M. Faith.

• Singapore New Private-Home Sales Plunged in July. Government Measures to Cool Price Growth Damped Market Sentiment. Sales of new private homes in Singapore plunged in July to the lowest level in more than 3½ years, after recent government curbs on property loans damped investor sentiment and prompted developers to hold back new project launches. Property analysts say the slump, which followed two straight months of increasing sales, will likely be followed by more lean months.

• Options Traders Pile Into Bullish Bets on Apple(AAPL).

MarketWatch:

• Gold rallies on haven demand; silver up 5%. Gold futures rallied on Thursday as steep losses for U.S. stocks and a decline in the U.S. dollar lured investors into the perceived safety of the precious metal. Gold for December delivery GCZ3 +2.35%  rose $27.50, or 2%, to end at $1,360.90 an ounce on the Comex division of the New York Mercantile Exchange, rebounding after touching lows below $1,320.

CNBC:

• The really bad news behind the jobless claims drop. Less-publicized data Thursday showed that real weekly earnings tumbled 0.5 percent from June to July, according to the Bureau of Labor Statistics. The figure is derived from a 0.2 percent drop in real average hourly earnings, plus a 0.3 percent decrease in the average work week. What's more, wages dropped an an annualized basis as well. The BLS said average hourly earnings fell 0.1 percent from July 2012 to July 2013. 

• New normal returns to DC this fall: Fiscal chaos. There's nothing a Washington politician loves these days more than a crisis. And while it's been awhile since Congress set the country on a crisis course over the federal budget and debt, this fall is ripe with opportunity for fiscal chaos. "This ratcheting up of the threat level every time we go through this is a terrible way to do business," said Robert Bixby, executive director of The Concord Coalition, a nonpartisan budget watchdog. "But it looks like were headed there again. The new regular order is chaos."

• Market valuation looks like 2007 all over again: Economist. (video)

• Obamacare is coming, and so are the con artists. As the debate rages over who benefits from the Affordable Care Act, one thing is becoming clear: The controversial program is a dream come true for rip-off artists.

Zero Hedge:

• Hedge Fund Second Quarter 13F Summary. 

• Industrial Production Misses For 4th Month In A Row. (graph)

• Foreigners Sell More US Securities Than After Lehman Bankruptcy. (graph)

• Philly Fed Drops Most In 9 Months. (graph)

• As Egypt Burns, Obama "Strongly Condemns" Violence From Martha's Vineyard Vacation House.

• India Bans All Gold Coin Imports, Increases Capital Controls.

• Fidelity Asks How Long Can Draghi's Bond-Buying Bluff Hold?

ValueWalk:

• China’s Economic Rebound May End Around September: Citi. China’s recent power comsumption may be due only to hot weather.

Business Insider:

• It Appears George Soros Has Made A Huge Bearish Bet. As Marketwatch reporter Barbara Kollmeyer points out, one interesting highlight from Soros' filing is that he bought a bunch of puts on the SPDR S&P 500 ETF in Q2. It's his biggest holding in the filing.

• One Picture Sums Up The Surreal 'New Normal' In Egypt.

New York Times:

• Arab Spring Countries Find Peace Is Harder Than Revolution. In Libya, armed militias have filled a void left by a revolution that felled a dictator. In Syria, a popular uprising has morphed into a civil war that has left more than 100,000 dead and provided a haven for Islamic extremists. In Tunisia, increasingly bitter political divisions have delayed the drafting of a new constitution. And now in Egypt, often considered the trendsetter of the Arab world, the army and security forces, after having toppled the elected Islamist president, have killed hundreds of his supporters, declared a state of emergency and worsened a deep polarization.

NBC Philadelphia: 

• Philadelphia to Borrow $50M to Open Schools on Time. Philadelphia Mayor Michael Nutter says the city will borrow $50 million to ensure that schools can open on time next month. "Today, as Mayor of this great City, I’m here to say I WILL NOT RISK A CATASTROPHE. We WILL avoid this disaster," Nutter said in a prepared press release.

Washington Post:

• Obama’s unconstitutional steps worse than Nixon’s. Explaining his decision to unilaterally rewrite the Affordable Care Act (ACA), he said: “I didn’t simply choose to” ignore the statutory requirement for beginning in 2014 the employer mandate to provide employees with health care. No, “this was in consultation with businesses.”

Economist's View:

• Who Is Driving the Auto Lending Recovery? About 23 percent of new auto loans (calculated as a share of aggregate loan balances originated) were issued to borrowers with credit scores under 620 in 2013:Q2, well below the 25-30 percent shares that we have seen historically. On the other end, the share of borrowers with credit scores over 720 peaked at over 50 percent during the recession and is about 45 percent now.

Fertilizer Week:

• Potash Trade Slows as Buyers Eye Price Cut. Indian importers may seek a 25%-30% cut on the current contract price when renegotiating, citing people familiar with the matter. A 25% drop equals $320 per ton including freight, from $427. Trading has 'ground to a halt' as some companies have already taken the contracted quantities for year and others have reserves for at least 2 months. Importers in Malaysia and Indonesia say end-users are unwilling to pay more than $320-$340 even as producers seek $440-$450.

Reuters:

• Wal-Mart(WMT) sales disappoint as shoppers worldwide curb spending. Wal-Mart Stores Inc posted disappointing quarterly sales on Thursday after shoppers worldwide proved cautious, prompting the discount retailer to lower its revenue and profit forecasts for the year. "The retail environment was challenging across all of our markets," Chief Executive Officer Mike Duke said in a recording. Shares of Wal-Mart fell 2.5 percent to $74.50 in premarket trading. Sales at stores open at least a year fell 0.3 percent at Walmart U.S, the company's biggest unit by far, while Wall Street analysts were expecting a 1 percent gain, according to Thomson Reuters I/B/E/S. Wal-Mart reported a 0.5 percent decline in the number of visits from its U.S. customers, who are still reeling from higher payroll taxes and gas prices as well as a shaky employment recovery. The world's largest retailer expects little improvement going into the fall. It forecast flat U.S. same-store sales in the current quarter, which began on August 1 and includes the important back-to-school season. Things were also difficult outside the United States. International sales rose 2.9 percent, but that was not enough to lift the division's operating profit. The company said it had more work to do to control costs in those markets, which include Mexico, China, India, Canada and Britain.

• METALS-Copper slips on worries over Fed stimulus, rise in output.

• Brazil real weakens past 2.35/dlr on Fed stimulus fears. The Brazilian real weakened about 1 percent on Thursday, crossing the mark of 2.35 per U.S. dollar for the first time in more than four years, as investors feared the Federal Reserve is about to cut down on stimulus measures that have long supported appetite for emerging market assets. 

• EMERGING MARKETS-Latam stocks fall on weak corporate earnings.

Telegraph:

• Unbalanced and unsustainable – if something cannot go on forever, then it will stop.