- EU Aims at Russian Banks, Technology in Widest Sanctions. The European Union curbed Russia’s access to bank financing and advanced technology in its widest-ranging sanctions yet over President Vladimir Putin’s backing of the rebellion in eastern Ukraine. EU governments agreed today in Brussels to bar state-owned banks from selling shares or bonds in Europe and restricted the export of equipment to modernize the oil industry, a key prop for Russia’s economy, two EU officials told reporters. New contracts to sell arms to Russia and the export of machinery, electronics and other civilian products with military uses will also be banned. “The political implications of the escalation in tensions are likely to cast a further chill over relations between Russia and the West,” Citigroup Inc. (C:US) analysts including Eric Lee and Tina Fordham said in a note to clients before the EU decision. “Economic costs are starting to bite, but it could be a while before the economic consequences bear domestic political costs for Russia.”
- Germany Inc. Says Time’s Finally Up for Putin After Crash. Germany’s business and political leaders are lining up to support a tougher stance on Russia, giving Chancellor Angela Merkel critical backing as she pushes her European Union counterparts to expand sanctions. Industry group chiefs and lawmakers from Merkel’s governing coalition are expressing the need for deeper measures targeting Russia’s economy following the downing of Malaysia Air (MAS) Flight 17. Public opinion has also shifted, with a majority of Germans now favoring wider actions against Russia. “This shooting down of a plane is really a turning point,” Martin Wansleben, head of the Association of German Chambers of Commerce and Industry, said in an interview. “It’s such an outrageous act that one must give a clear response.”
- Gaza Violence Intensifies as Netanyahu Seeks Disarmament. Israeli aircraft, warships and artillery intensified their attacks on the Gaza Strip, after Prime Minister Benjamin Netanyahu told his country to brace for an extended campaign. The army said it has struck more than 70 sites across the Hamas-controlled coastal strip since late yesterday, with targets including Hamas’s Al-Aqsa broadcast stations and the home of Hamas Gaza leader Ismail Haniyeh. Haniyeh, like other Hamas leaders, has gone into hiding and no casualties were reported from that strike.
- German Bund Record Shows All Is Not Right in Euro Area. Europe’s debt crisis is a fading memory, its most-indebted nations have never been able to borrow so cheaply and growth is returning, yet German bonds, a key gauge of economic malaise, are setting the sort of records usually reserved for times of turmoil. Bunds have joined a rally that’s swept borrowing costs to record lows across the euro area. The last time their yields plumbed such levels was when the region was in the grip of a downturn that threatened the euro’s existence. That they’ve dropped further reflects concern that the European Central Bank’s plan to stave off deflation and boost growth can’t work without further stimulus.
- China Trade Numbers Still Don’t Add Up Post-Fake Exports. China’s trade numbers still don’t add up. A discrepancy between Hong Kong and Chinese figures for bilateral trade remains even after a crackdown last year on Chinese companies’ use of fake export-invoicing to evade limits on importing foreign currency. China recorded $1.31 of exports to Hong Kong in June for every $1 in imports Hong Kong tallied from China, for a $6.4 billion difference, based on government data compiled by Bloomberg News.
- China Raids Microsoft(MSFT) Offices in Anti-Monopoly Investigation. China regulators opened an anti-monopoly investigation into Microsoft Corp. (MSFT:US), seizing computers and documents from offices in four cities amid escalating tensions with U.S. technology companies.
- Goldman(GS) Says China Growth Must Slow Below 7% to Meet Goal. China should allow economic growth to slow to below 7 percent to reduce reliance on investment spending, according to Goldman Sachs Group Inc.’s Ha Jiming. Achieving Premier Li Keqiang’s target of 7.5 percent gross domestic product growth for this year could further aggravate imbalances and a rate “below 7 percent” is roughly what China needs, said Ha, the Hong Kong-based vice chairman and chief investment strategist at Goldman’s investment management division for China. Next year, “I hope the target could be lowered to reflect the need for economic rebalance,” he said.
- Geopolitical Risk Rises for Global Investors. Since the start of the year, conflicts in Syria, Gaza and Iraq have escalated, China has become more assertive in pursuing territorial claims against Japan, Thailand reverted to military rule, Russia annexed Crimea and separatists in Ukraine downed a civilian airliner. These crises have had little lasting impact on major financial markets in the U.S., Europe and in Asia. Now Raj Hindocha, a managing director with Deutsche Bank Research in London, is warning that investors and money managers could be in for a rude awakening later this year. “It’s the abundant liquidity that has numbed the markets,” he said in a telephone interview yesterday. “Nobody wants to bet against that firepower.”
- Europe Stocks Climb After Two-Day Drop as Ferrovial Gains. European stocks climbed, following a two-day decline, as companies including Ferrovial SA and Next Plc reported better-than-expected results. Ferrovial rose 1.2 percent after the Spanish construction company posted first-half profit that exceeded projections and said it will buy back shares. Next advanced 2.6 percent after the retailer increased its annual profit and sales forecasts. BP Plc, which owns a stake in OAO Rosneft, declined 2.5 percent. Renault SA slid the most in four months as the French carmaker revealed that it is consuming more cash than it did a year ago. The Stoxx Europe 600 Index added 0.3 percent to 342.27 at the close of trading, paring gains in the final half an hour of trading as the European Union agreed to impose new sanctions on Russia for its role in the insurgency in eastern Ukraine.
- Million-Dollar U.S. Housing Loans Surge to Record Level. Banks are handing out mortgages of as much as $10 million to the wealthy in record numbers while first-time homebuyers struggle to get loans. Erin Gorman, managing director at Bank of New York Mellon Corp., said she’s fielding more requests for home loans of at least $2 million than ever before. The number of loans from $1 million to $10 million to buy single-family homes in the 100 largest metropolitan areas surged to more than 15,000 in the second quarter, the highest ever, according to property data firm CoreLogic.
- UPS(UPS) Cuts Profit Outlook on Costs for Holiday Shipments. United Parcel Service Inc. (UPS) lowered its full-year profit outlook as the company boosts spending to help handle booming demand for fast shipping during the holidays. The shares tumbled the most in a year.
- JPMorgan(JPM) Said to Cut Support Jobs Amid Trading Slump. JPMorgan Chase & Co. (JPM), the biggest U.S. lender, is cutting hundreds of technology support employees in its corporate and investment bank amid a revenue decline, people with knowledge of the move said.
- Paul Singer: US stocks 'frothy' by 'all measures'. Billionaire investor Paul Singer thinks stocks are way overvalued. "By all measures, the U.S. stock market is currently frothy," the founder of $24.8 billion hedge fund firm Elliott Management wrote in a letter to investors Monday. Singer repeated his long-held view that central banks are creating asset bubbles through their market stimulus programs.
- Our Marginal Economy. (graph)
- Behold The New Normal Definition Of "Confidence". (graph) The biggest problem for the 'recovery', "plans to buy a home" collapsed to its lowest since Feb 2013.
The Daily Beast:
- ISIS’s Black Flags Are Flying in Europe. The symbol of the murderous Islamic State is waving in The Hague. ‘Death to the Jews,’ shout the demonstrators. Yet the Dutch government authorized the protests. “Death to the Jews” chanted the crowd waving the black flags of the Islamic State, or ISIS as it used to be known. They were looking for new supporters for their cause, the creation of a worldwide caliphate answering to the man who now calls himself Ibrahim: a zealot too radical even for Al Qaeda who has stormed through Syria and Iraq carrying out mass executions, crucifying rivals, beheading enemies. But these marchers were not in Syria or Iraq; they were in The Hague in The Netherlands. And their message was one tailored to the disaffected young descendants of Muslim immigrants in Europe.
- Police shoot dead dozens of attackers in attack in China's Xinjiang: Xinhua. Chinese police shot dead dozens of knife-wielding attackers on Monday morning after they staged assaults on two towns in the westerly Xinjiang region, the official Xinhua news agency said on Tuesday, citing local police. It said a gang armed with knives had first attacked a police station and government offices in the town of Elixku, in Shache county, and some then moved on to the nearby town of Huangdi, attacking civilians and smashing and setting fire to vehicles. Xinjiang, home to many Turkic-speaking Uighurs, has for years been beset by violence, which the government blames on Islamist militants or separatists who it says are bent on establishing an independent state called East Turkestan.
- Exclusive: Goldman(GS) unit eyes foray into China amid metals financing scandal. Goldman Sachs Group Inc's metals warehousing unit is exploring its first foray into China, and privately held C Steinweg has expanded capacity there, sources said, as a financing scandal in a major Chinese port fuels a scramble for market share.
- European bond yields enter the death zone. European bond yields are once again on depression alert – and this time it is not just German bunds which are signalling an economic contraction to come. The Spanish ten year bond yield has fallen to its lowest level since the French revolution in 1789; it's a similar story elsewhere in the eurozone.
- Russia May Introduce Term 'Country-Aggressor' in Laws. State Duma may introduce term "country-aggressor" in national legislation, referring to countries that impose sanctions against Russian citizens, cos., citing draft law. Proposal is to ban cos. registered in states defined as "country-agressor" from providing audit, consulting, legal services in Russia. If implemented, this may refer to Deloitte, KPMG, Ernst & Young, PriceWaterhouseCoopers, Boston Consulting Group, McKinsey & Co., citing lawmaker Evgeny Fedorov.
- State Economist Says China Faces Downward Pressure in 2H. China still faces relatively large downward pressure in 2H, says Zhang Liqun, a researcher with the State Council's Development Research Center, according to a report. Downward pressure lies in property market adjustment, overcapacity reduction and risks in local government debt, Zhang said.
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