Today's Headlines

Bloomberg: 

• Japan’s Debt Exceeds 1 Quadrillion Yen as Abe Mulls Tax Rise. Japan’s national debt exceeded 1,000 trillion yen for the first time, underscoring the case for Prime Minister Shinzo Abe to proceed with a sales-tax increase to shore up government finances. The country’s outstanding public debt including borrowings reached a record 1,008.6 trillion yen ($10.46 trillion) as of June 30, up 1.7 percent from three months earlier, the finance ministry said in Tokyo today. Larger than the economies of Germany, France and the U.K. combined, the amount includes 830.5 trillion yen in government bonds. The world’s heaviest debt burden will weigh on Abe when he decides next month whether to implement a two-step plan to double the tax on consumers in a nation with ballooning welfare costs. While boosting the levy would drag on growth, Moody’s Investors Service yesterday warned that a worsening of finances would erode confidence in government bonds.
• China’s Credit Expansion Slows as Li Curbs Shadow Banking. China’s broadest measure of new credit fell to a 21-month low as Premier Li Keqiang extended a campaign to curb a record expansion of lending that’s added dangers to the nation’s financial system. Aggregate financing was 808.8 billion yuan ($132 billion), the People’s Bank of China said in Beijing yesterday, compared with the 925 billion yuan median estimate of analysts surveyed by Bloomberg News. New yuan loans exceeded forecasts and accounted for about 87 percent of the total, the most since September 2011. M2 money supply growth unexpectedly accelerated to 14.5 percent.
• China H-Shares to Drop 30% in 2013, Societe Generale Says. Chinese companies traded on the Hong Kong stock market will slide the most in five years in 2013 as an economic slowdown weighs on profits and banks curtail credit, according to Societe Generale SA. The Hang Seng China Enterprises Index will drop to 8,000 by year-end, said Guy Stear, Hong Kong-based head of Asia research at Societe Generale. That’s 16 percent below yesterday’s close and would extend the gauge’s 2013 decline to 30 percent, the biggest tumble since 2008. China’s manufacturing will contract this year, while bad loans will keep rising until late 2014, Stear said. “Short-term cyclical declines and credit pressures are the two factors which make us negative about Chinese equities,” Stear said in an interview on Aug. 7. “When non-performing loans start to go up that’s going to be something that weighs quite seriously on the equity market.”    
• China Factories Turn to Undocumented Labor as Local Wages Jump. China’s embrace of higher wages to help bolster consumer spending has sparked a jump in factories along the east-coast export corridor bringing in undocumented and lower-paid workers from Myanmar and Vietnam. Border police found 59 illegal immigrants from Vietnam in a bus heading for the Pearl River Delta on July 29, the official Xinhua news agency reported on Aug. 6. “Thousands” of workers from Vietnam and Myanmar were discovered working illegally in Shenzhen between 2010 and 2012, the state-run China News Service reported, citing a local prosecutor.
• Mexican Industrial Production Unexpectedly Contracted in June. Mexican industrial production unexpectedly fell in June from the year earlier, posting the second-biggest decline since November 2009, led by a drop in construction. Output slid 2.4 percent, the national statistics institute said on its website today, missing economists’ estimates for a fifth month and worse than all 16 forecasts in a Bloomberg survey. Production was expected to expand 0.1 percent, according to the median forecast. Construction tumbled 6 percent and manufacturing dropped 1.2 percent. 
• Russian Economy Unexpectedly Slows as Recession Specter Returns. Russia’s economy unexpectedly slowed in the second quarter to extend a slide that’s stoking concern the world’s biggest energy exporter may be entering a recession. Gross domestic product expanded 1.2 percent from a year earlier, the Federal Statistics Service in Moscow said today in an e-mailed report. That was below all 19 forecasts in a Bloomberg survey, which had a median estimate of 2 percent. The Economy Ministry had projected that output expanded 1.9 percent in the period.
• French Industrial Output Unexpectedly Drops. French industrial production unexpectedly dropped in June, underscoring the government’s struggle to revive growth. Industrial production fell 1.4 percent from the previous month, state statistical institute Insee said today. The drop was worse than any of the predictions made by 22 economists in a Bloomberg survey, whose estimates ranged from a 0.5 percent decline to a 0.5 percent increase. The median forecast was for a 0.3 percent gain. 
• European Stocks Rise to 10-Week High as KPN Jumps on Bid. European stocks advanced to their highest level since May as mining companies rallied after a report showed Chinese industrial production increased at a faster-than-expected pace. A gauge of commodity producers posted its biggest increase in almost 11 months. Royal KPN NV soared the most in 15 months after billionaire Carlos Slim’s America Movil SAB offered to take over the Dutch phone company. Nestle SA fell for a third day, for the largest drag on the Stoxx Europe 600 Index. The Stoxx 600 added 0.6 percent to 305.92 at the close of trading, extending its advance this week to 0.6 percent.
• Oil Rises First Time in 6 Days on China Industrial Output. West Texas Intermediate crude climbed for the first time in six days after industrial production advanced more than forecast in China, the second-biggest oil-consuming country. Futures rose as much as 2.4 percent in New York, trimming a weekly loss.
• IEA Trims Estimate for 2014 Global Oil Demand Growth on Economy. The International Energy Agency trimmed forecasts for global oil demand growth in 2014 amid slowing expansion in China and a struggle to secure a recovery in the U.S. and Europe. Global consumption will increase by 1.1 million barrels a day, or 1.2 percent, to 92 million next year, the Paris-based adviser to energy-consuming nations said today in its monthly market report. The expansion is 100,000 barrels a day less than last month, when the estimate for 2014 was first introduced. Refinery operating rates will ease after a record surge in July, the IEA said.
• Wholesale Inventories in U.S. Unexpectedly Fall for Third Month. Inventories at U.S. wholesalers unexpectedly declined in June for the third month, the longest string in almost four years, as demand grew. The 0.2 percent decrease in stockpiles at distributors followed a 0.6 percent drop in May that was larger than previously reported, the Commerce Department said today in Washington. The median forecast in a Bloomberg survey of 28 economists projected a 0.4 percent increase. Sales climbed 0.4 percent.
• Americans Giving Up Passports Jump Sixfold as Tougher Rules Loom. Americans renouncing U.S. citizenship surged sixfold in the second quarter from a year earlier as the government prepares to introduce tougher asset-disclosure rules. Expatriates giving up their nationality at U.S. embassies climbed to 1,131 in the three months through June from 189 in the year-earlier period, according to Federal Register figures published today. That brought the first-half total to 1,810 compared with 235 for the whole of 2008.

Wall Street Journal: 

• PC Makers's Forecasts Dim as Mobile Pressure Weighs on Profitability. PC makers' hopes for a second-half rebound are fading as demand for touchscreen notebooks remains weak and the companies struggle to compete in the mobile sector. Global notebook PC shipments will likely fall about 11% in 2013 from a year earlier based on supplier checks, said Helen Chiang, a Taipei-based research director at tech-industry research firm IDC. IDC's previous forecast, released in May, was for decline of 6.7%.

MarketWatch: 

• OPEC's oil output hits lowest level since March. Oil production by the Organization of the Petroleum Exporting Countries fell to its lowest level since March in July as supply disruptions in Libya and Iraq dented the group's output, OPEC said Friday, warning of risks of further supply disruptions. According to secondary sources cited by OPEC in its monthly oil market report, the producer group's output fell by 100,000 barrels a day in July to 30.3 million barrels a day. Significant declines in Libya and Iraq offset an increase in Saudi Arabia's production of nearly 100,000 barrels a day.

CNBC: 

• Obama's mortgage plan under fire from left and right.
• Art Cashin: The market 'check engine light' is still on. (video)
• Mortgage rate spike finally hits housing. A sharp jump in mortgage rates from May to June are now beginning to weigh on the housing recovery. The two-month delay can be attributed to several factors—first and foremost that most potential home buyers lock in mortgage rates early, and sale closings can take up to two months to be finalized. Second, there may also have been a surge in homebuying because of the rise, as those on the fence suddenly jumped in, fearing rates would continue going up and they would be priced out of the market. Those factors have now expired.

Zero Hedge:

• Stock Market Bubbles And Record Margin Debt: A (Repeating) History Of Ignoring All Warnings. (graph) 
• France: From The Sublime To The Ridiculous.
• The Definitive Fund Flows Heatmap: 10 Years Of Capital Flows.

Business Insider:

• Despite All Of The Stimulus, The Economy Is Still Slogging.
• The Government Is About To Put JP Morgan Through The Ringer Like You've Never Seen Before.
• CHART OF THE DAY: If Only The Rest Of America Could Create Jobs As Fast As The Energy Sector.
• Eliot Spitzer's Opponent Totally Wailed On Him In A Debate.
• Detroit Fight Shows Why Public Pensions Are Bound For Problems.
• REPORT: Bill Ackman Says He'll Sell His JCPenney(JCP) Stake If The Board Won't Let Him Replace The CEO.

Examiner:

• Washington fixes Obamacare --- for Washington only! After intense and, sadly, bipartisan lobbying and scheming in Washington, the Obama administration announced that it is creating out of thin air a special rule to ease the pain of Obamacare -- for Washington only. You see, a specific provision of the Obamacare law says that all Members of Congress and their staffs have to procure their health care coverage on the Obamacare Exchange, just like tens of millions of Americans. This was causing mounting fear and loathing in Washington because it threatened real disruption and significantly increased expenses. No problem, the new administration rule fixes that and ensures that a huge, special taxpayer-funded subsidy will follow the ruling class to the Obamacare Exchange to take any sting out.

Reuters: 

• Obama, tech executives met to discuss surveillance. U.S. President Barack Obama met with the CEOs of Apple Inc, AT&T Inc as well as other technology and privacy representatives on Thursday to discuss government surveillance in the wake of revelations about the programs, the White House confirmed on Friday. 
• Copper sees strongest weekly gain since Sept on China data. With four straight days of gains, copper jumped 3.8 percent this week, chalking up its biggest weekly rise since September 2012.

Telegraph:

• The wheels are already coming off Carney's "forward guidance".