Today's Headlines

Bloomberg:

• Emerging-Market Stocks Decline as Earnings Miss Estimates. Emerging-market stocks fell to the lowest level in four weeks after results from Tata Motors Ltd. to AngloGold Ashanti Ltd. (ANG) missed analysts’ estimates and Banco Santander SA lowered its outlook for Brazil’s Ibovespa. The MSCI Emerging Markets Index dropped 0.9 percent to 937.48 at 11:42 a.m. in New York, set for the lowest close since July 10. Tata Motors slumped 3 percent in Mumbai as sales growth at its Jaguar Land Rover Ltd. unit slowed, while South Africa’s AngloGold tumbled to 12-year low after also suspending its dividend. Most Brazilian shares retreated as mining company MMX Mineracao e Metalicos SA sank. Fourteen out of the 24 currencies tracked by Bloomberg fell, led by India’s rupee. About 60 percent of the companies in the benchmark of developing nations that reported quarterly results missed earnings projections, according to data compiled by Bloomberg.

• Carney’s BOE Rates Guidance Stumbles on Investor Skepticism. Bank of England Governor Mark Carney’s campaign to restrain interest-rate expectations is already running into skepticism. Gilt yields rose to the highest in more than a month after Carney took the unprecedented step of saying the bank probably won’t raise its benchmark from a record-low 0.5 percent until unemployment falls to 7 percent. While policy makers don’t expect that to occur before the third quarter of 2016, investors bet faster inflation will force them to act sooner. 

• European Stocks Drop on BOE Comments; Natixis Slides. European stocks fell as the Bank of England said it won’t raise interest rates or reduce bond purchases until the U.K.’s jobless rate falls below 7 percent, sparking concern it expects the economic recovery to be slow. Natixis SA dropped the most in six months after posting a 29 percent decline in second-quarter net income. Rexel (RXL) SA lost 4.2 percent after its largest shareholder sold a 10 percent stake. Randgold Resources Ltd. led mining stocks lower after reporting a slump in sales and earnings. ING Groep NV surged to a two-year high after quarterly pretax profit rose. The Stoxx Europe 600 Index declined 0.2 percent to 302.81 at the close of trading, as Bank of England Governor Mark Carney said the U.K. economy hasn’t reached “escape velocity.”

• BofA(BAC) Put Toxic Debt in Bond as Staff Resisted, U.S. Says. Bank of America Corp.’s traders fought off efforts by the firm in 2007 to include risky Alt-A mortgages in a securitization. That wasn’t enough to spare investors from being cheated, according to the U.S. The Department of Justice accused the company in a lawsuit yesterday of misleading investors about the quality of loans tied to $850 million in mortgage-backed securities. The complaint chronicles friction among bank staff in 2007 and 2008 as they excluded risky Alt-A loans while leaving in wholesale debts once scorned as “toxic waste” by the firm’s then-chief.

Wall Street Journal: 

• Obama Cancels Meeting With Putin Amid Tension Over Snowden. Relations Strained Over Russia's Decision to Grant Asylum to NSA Leaker. President Barack Obama canceled a bilateral meeting with Russian President Vladimir Putin set to be held in Moscow next month, following Russia's decision to grant asylum to former U.S. contractor Edward Snowden, the White House said Wednesday.

• Fed’s Pianalto: Ready to Scale Back QE if Labor Market Stays on Current Path. The president of the Cleveland Federal Reserve Bank said Wednesday she would be ready to scale back the central bank’s $85 billion-per-month bond-buying program if the labor market continues on its current path of improvement. The official, Sandra Pianalto, didn’t specify a timeframe for when she thought the first reduction in the bond-buying program would be appropriate.

• Regulator Steps Up Probe Into S&P. SEC Enforcement Division Investigates Handling of 2011 Real-Estate Offering.

Fox News: 

• Al Qaeda intercept challenges narrative of terror group 'on the run'. Reports that top-level communications among 20 Al Qaeda operatives prompted the ongoing security alert affecting U.S. embassies around the world have raised even more questions about the Obama administration's repeated claims that Al Qaeda is "on the run." The assertion that Al Qaeda -- with the death of Usama bin Laden and of many of his lieutenants -- is a shell of its former self was a linchpin of the 2012 Obama campaign. Even with the ongoing security threat, the State Department insisted as recently as Tuesday that the "Al Qaeda core has been weakened, decimated," despite lingering concerns about the affiliates.  

CNBC:

• US becoming 'refiner to the world' as diesel demand grows. U.S. refineries are expanding their diesel-production capacity, not so much for truckers in the U.S., but for drivers in places such as Mexico City and Santiago, Chile. 

• S&P 500's most shorted stocks. As the S&P 500 continues to trade near record highs, short interest appears to be on the rise. According to data from FactSet, in the first half of July average short interest for S&P 500 stocks increased more than 5 percent, with over 55 percent of those companies seeing a spike in short interest. 

Zero Hedge: 

• Springtime For Summers: Larry's "Fed Chairman" Odds Surge, Overtake Yellen. (graph)

• Abe Sanctions Government Funding To "Freeze" Fukushima With Giant Ice Wall.

• Spot The Difference. (graphs)

• From Obama 'Hope-And-Change' To Housing's 'Hhmm' Reality.

Business Insider:

• Android Now Controls A Breathtaking 80% Of The Smartphone Market.

• BRIDGEWATER: Here Are 5 Reasons Why The Euro Crisis Is Far From Over.

Indianapolis Business Journal:

• Slumping Caterpillar(CAT) to lay off 125 workers in Lafayette. Caterpillar Inc. said it's laying off 125 workers at its Lafayette large-engine plant because of weak product demand. The Peoria, Ill.-based company, the world's largest maker of construction and mining equipment, said the indefinite layoffs will begin Aug. 26. Caterpillar has a Lafayette work force of about 1,800. Company spokesman Jim Dugan said in a prepared statement that demand for the plant's products has fallen in the past year, the Journal & Courier reports. Dugan says the company has already implemented some cost-cutting measures, including "temporary layoffs, vacation shutdowns, and a reduction in flexible workforce."

Reuters:

• Merkel challenger Steinbrueck takes aim at ECB low rates policy. Chancellor Angela Merkel's main challenger in next month's German election criticised ECB President Mario Draghi's pledge to keep interest rates at record lows for an extended period, saying the move put savers in an "unspeakable situation". In rare criticism of the independent European Central Bank by a leading German politician, Social Democrat Peer Steinbrueck said on Tuesday savers faced a creeping "expropriation" of their money by inflation that is running higher than interest rates. "That is an unspeakable situation so I am very sceptical about Mario Draghi's move to announce such a low interest rate policy - almost a policy of zero interest rates - for the ECB for the coming years," Steinbrueck told Reuters in an interview.

• Carlyle profit misses estimates; prospects for U.S. deals poor. Carlyle Group LP on Wednesday posted a second-quarter profit after a year-ago loss, but it fell short of Wall Street's expectation that a stock market rally would benefit the company more, and it struck a gloomy note on the outlook for private equity deals in the United States. 

• Ralph Lauren sales at its own stores slow; shares fall. Ralph Lauren Corp on Wednesday reported disappointing quarterly sales at its own stores, raising concerns that it is expanding too quickly, and the fashion company reiterated its forecast for modest growth this fiscal year. Shares of Ralph Lauren fell 6.1 percent to $177.89 in midday trading.

Echoing fears that European policymakers remain in a state of cognitive dissonance – recognizing the need for root-and-branch overhaul of peripheral banks, but backtracking on joint liability plans – Christopher Flowers, the legendary FIG investor who now runs the £2.3 billion ($3.5 billion) private equity group JC Flowers, sounded the alarm over the negative sovereign-bank feedback loop. In a shot across the bows of market bulls, who cite the return of capital flows to weaker eurozone states, Flowers issued a stark warning: "There is a scenario where we have a Lehman-type event: we wake up some Thursday and a big country is in trouble. "And the ECB will have to decide to support banks x, y, z. And then the ECB will, in fact, decide to own bank x, y, z.


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Valor Economico:

• Brazil Govt Sees Possibility for Weak GDP Growth in 3Q. Govt knows economic activity was weak in July and sees possibility that rate of recovery seen up to 2Q will slow in 3Q, columnist Claudia Safatle reported. Anfavea data on vehicle sales and output, released yesterday, support this expectation.

Kyodo:

• Fukushima Plant Leaking 300 Tons/Day of Toxic Water to Sea. Tokyo Electric's Fukushima Dai-Ichi nuclear plant is leaking 300 tons of contaminated water into the ocean per day, citing the industry ministry's Agency for Natural Resources and Energy.