- Israel Renews Gaza Bombing After Hamas Rejects Truce Plan. Israel renewed its air raids on the Gaza Strip after a Palestinian rocket bombardment left an Egyptian truce proposal the Israelis accepted in tatters. Hamas, the militant movement that controls Gaza, said it wasn’t consulted on the Egyptian plan, and its military wing rejected it. Within six hours, the cease-fire efforts crumbled after Gaza militants barraged Israel with 50 rockets, according to the Israeli military’s count. The developments heightened the possibility that Israel, which has mobilized 38,000 reservists, would send ground forces to invade Gaza. “If Hamas doesn’t accept the truce proposal -- and that’s how it looks now -- Israel will have the international legitimacy to broaden the military offensive,” Prime Minister Benjamin Netanyahu said shortly before the air campaign resumed.
- Europe Manufacturing a Weak Spot as SKF Sees Stagnant Demand. A recovery in Europe’s manufacturing industry is struggling to gather steam, curbed by subdued demand for factory equipment and automotive parts, according to SKF AB (SKFB), a ball-bearing maker that’s a bellwether for industrial health. While Europe and Latin America face restrained demand in the third quarter, orders from North America and Asia will be “slightly higher,” said Tom Johnstone, who has led the Gothenburg, Sweden-based company for more than a decade.
- German ZEW Investor Confidence Drops for Seventh Month. German investor confidence declined for a seventh month in July as slower growth and geopolitical risks weighed on the outlook for Europe’s largest economy. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, dropped to 27.1 from 29.8 in June. Economists forecast a decrease to 28.2, according to the median of 36 estimates in a Bloomberg News survey. The gauge has dropped every month since reaching a seven-year high in December.
- China Rate Swap Advances to 12-Week High as Easing Bets Recede. China’s benchmark interest-rate swaps rose to a 12-week high as a pickup in lending cooled speculation the central bank will ease monetary policy. M2 (CNMS2YOY), the broadest gauge of money supply, rose 14.7 percent in June from a year earlier, the fastest pace since August, official data showed today. New yuan loans increased to the highest level in five months.
- Boko Haram Killed 2,053 Civilians in Nigeria This Year. The Nigerian Islamist militant group Boko Haram killed at least 2,053 civilians in the first six months of this year in an increasing number of attacks that may constitute crimes against humanity, Human Rights Watch said. Boko Haram carried out 95 attacks that included bombings on more than 70 towns and villages in northeastern Nigeria, New York-based Human Rights Watch said today in a statement. The figures were based on analysis of media reports and field investigations, it said.
- Global Savings Glut II Leaves Risk Rally Prone to Reverse. It’s been almost a decade since Ben S. Bernanke pointed to a global savings glut to explain low interest rates. One financial crisis and a global recession later, the glut lives on. The currency reserves of developing nations swelled to $11.9 trillion from $6.9 trillion in 2008, led by a $2 trillion boost in China. That has helped absorb bond sales of rich nations, helping send average 10-year yields on Group of Seven government bonds to about 2.5 percent from 15 percent at the start of the 1980s.
- WTI Oil Falls Below $100 a Barrel as Supply Risks Abate. West Texas Intermediate oil fell below $100 and Brent tumbled to a three-month low as supply-disruption concerns eased with Libyan output gains and Iraqi shipments are unaffected by an insurgency.
- Wall Street Wins (Or Doesn’t Lose Much) on Junk Trading. Here’s what went right: Banks from JPMorgan Chase & Co. (JPM) to Goldman Sachs Group Inc. (GS) reported second-quarter earnings that were higher than analysts expected largely on the back of debt-trading revenue that declined less than some of the banks predicted. In particular, they benefited from more transactions in high-yield bonds, a record June for U.S. corporate-debt sales and a couple of decent wagers on Treasuries. Junk-bond trading volumes soared to a daily average of $7 billion in June, a record for the month and 14 percent higher than the period in 2013, according to data from the Financial Industry Regulatory Authority.
- Fed Warns Junk Debt Excess May Lead to Higher Defaults. The Federal Reserve warned that froth in the riskiest parts of debt markets may lead to more defaults. “Signs of excesses that could lead to higher future defaults and losses have emerged in some sectors, including for speculative-grade corporate bonds and leveraged loans,” according to a report published today by the central bank as part of Chair Janet Yellen’s semi-annual testimony to the Senate Banking Committee. A boom in the market for junk-rated loans has drawn the attention of the Fed and the Office of the Comptroller of the Currency, who have been urging banks since last year to curb risky lending. While issuance has been robust, “underwriting standards have loosened,” according to today’s report. There have been $222.7 billion of new loans arranged in the U.S. this year after a record $357.9 billion in 2013, according to data compiled by Bloomberg. Loans helped finance some of the biggest leveraged buyouts during the last credit boom.
- Federal Debt to Reach 106% of Economy in 2039, CBO Says. The U.S. debt held by the public is expected to rise to 106 percent of the economy in 2039 from 74 percent this year, largely driven by increases in the cost of health benefits, the Congressional Budget Office said. To put federal finances on a sustainable path, Congress must boost revenue, cut spending on benefit programs or combine the approaches, the nonpartisan CBO said in its long-term budget outlook released today. “The unsustainable nature of the federal tax and spending policies specified in current law presents lawmakers and the public with difficult choices,” CBO said in the report. “Unless substantial changes are made to the major health-care programs and Social Security, spending for those programs will equal a much larger percentage of GDP in the future than it has in the past.” Higher spending on Medicare and Medicaid will cause the budget deficit to begin increasing in 2016, according to CBO’s projections. As a share of the economy, the budget deficit will increase to 3.7 percent in 2024 and 6.4 percent in 2039, from 2.8 percent in 2014, theagency said today.
CNBC:
- Fed slaps stocks with unusually targeted comments on valuation froth. The Federal Reserve's unusually targeted comments that biotech and social media stocks are overheated sucked the wind out of a rally that had taken the Dow to a new high in early trading. In a section of its Monetary Policy report released Tuesday, the Fed noted: "...signs of risk-taking have increased in some asset classes. Equity valuations of smaller firms as well as social media and biotechnology firms appear to be stretched, with ratios of prices to forward earnings remaining high relative to historical norms." The small cap Russell 2000, home to small cap and many speculative names, led the declines, losing more than 1 percent in late morning trading.
- Here's what the Fed needs to do: STOP IT. Here's a novel solution: DISCONTINUE A FED POLICY THAT HAS DONE NOTHING TO KICKSTART ROBUST ECONOMIC GROWTH NOR SUBSTANTIALLY INCREASE EMPLOYMENT, AND INSTEAD, HAS INFLATED ASSETS HELD MAINLY BY THE WEALTHIEST 1 PERCENT, AND INCREASED THE WEALTH GAP BETWEEN RICH AND POOR TO RECORD LEVELS.
- Alpha addict: The amazing career of Leon Cooperman.
- Why a $60B fund manager is sitting in 20 percent cash. (video)
- Yellen's "Irrational Exuberance" Moment Arrives As She Pops Momo, Biotech, Social Media Bubble.
- Meanwhile In Europe: Juncker Approved, Hague Out, Lord Hill To Brussels: What Does It Mean?
- The Next Domino: Espirito Santo Holding Company Preparing To File Bankruptcy.
- Why The Status-Quo Is Unsustainable: Interest and Debt (What Yellen Won't Tell You). (graph)
- Wall Street "Throws In The Towel" On Q3/Q4 Revenue Growth Expectations. (graph)
- Goldman(GS) Explains What Yellen Really Said: "Hawkish Shift".
- China Warns US To Stay Out Of South China Sea Dispute.
- BRICS Announce $100 Billion Reserve To Bypass Fed, Developed World Central Banks.
- Elizabeth Warren Destroys Janet Yellen Over JPMorgan's 'Living Will'.
- This East Ukraine Village Now Looks Post-Apocalyptic. (pics)
- ISIS Militants Captured 52 American-Made Artillery Weapons That Cost $500,000 Each.
- ECB's Praet Says Investment in France Is 'Acute' Problem. The ECB's chief economist comments in an interview with daily newspaper Les Echos that the pace of recovery in France is "disappointing."
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