Today's Headlines

Bloomberg: 

• Awkward Alliance Running Germany Exposed by Greek Crisis. In 2000, Angela Merkel pushed past Wolfgang Schaeuble on her way to the top of the political ladder. As finance minister, he’s won her pledge of a free hand in policy making in exchange for his loyalty. Now the awkward alliance that forms the core of Europe’s financial crisis-fighting effort is under its biggest strain yet. As officials prepare a third Greek bailout, Merkel is holding fast to the view that the 19-member currency union must stay intact. Schaeuble has pushed back, dangling the threat of expulsion to what he considered an untrustworthy government.

• European Banks Face Capital Hit From Second-Quarter Bond Selloff. The bond market selloff in the second quarter probably dented the capital defenses of many European banks, with lenders in Italy and Spain hit hardest. The extent of the damage will be disclosed when banks report earnings starting this week. It probably won’t be so much as to force lenders to sell shares, analysts at brokerages including Nomura Holdings Inc., Deutsche Bank AG and Citigroup Inc. agreed.

• Rating-Cut Angst Lurks as Brazil Stocks, Real Decline on Budget. Traders now have one more reason to expect a downgrade of Brazil’s credit rating. A press report saying President Dilma Rousseff will cut the primary budget surplus goal, which excludes interest payments, spurred the biggest slide in the world for the real and sank the Ibovespa. An earlier-than-estimated revision of the target is seen hurting the government’s credibility and worsening the outlook for an economy set for the worst recession in 25 years. The Ibovespa retreated 1.6 percent to 50,653.63 at 3:06 p.m. in Sao Paulo, led by lender Itau Unibanco Holding SA. The real slid 1.7 percent to 3.2240 per dollar, the most in two months.

• Russia Braces for Longest Recession in Decades With $50 Oil. For an economy that lives and dies by crude prices, the latest downturn in the world oil market means Russia’s recession may stretch into next year for the longest slump in two decades. Russia’s first economic slump since 2009 looked like it would plateau as oil gained 40 percent from a six-month low in January. Crude’s recovery has faltered in recent weeks, raising questions about government assurances that the economy will return to growth in 2016 and further squeezing a budget already on course for its widest deficit in five years.

• China's Bubbles Are a Big Challenge for Apple: Bevan. (video)

• ARM(ARMH) Revenue Misses Estimates as Smartphone Market Cools. ARM Holdings Plc, the chip designer whose technology powers almost all smartphones, reported sales that missed analysts’ estimates after device shipments by customers including Apple Inc. trailed predictions. Second-quarter revenue rose 22 percent to 228.5 million pounds ($356 million), the Cambridge, England-based company said Wednesday. Analysts had predicted 234.9 million pounds on average, according to data compiled by Bloomberg. 

• Emerging-Market Stocks Retreat as Apple Outlook Saps Tech Shares. Emerging-market stocks fell, led by technology companies, as Apple Inc.’s lower-than-forecast iPhone shipments and disappointing revenue forecast dragged down suppliers and Hong Kong-traded Chinese stocks slumped. Hon Hai Precision Industry Co., which makes iPhones for Apple, slid 1.6 percent in Taipei. Hong Kong’s Hang Seng China Enterprises Index sank to a one-week low. Naspers Ltd. led declines in South Africa. The Ibovespa fell for a fourth day as concern mounted that Brazil’s credit rating will be cut. Turkey’s lira slid 1 percent against the dollar after two police officers were killed in an attack along the Syrian border. The MSCI Emerging Markets Index declined 1 percent to 930.34 at 11:24 a.m. in New York.

• European Stocks Fall for Second Day Amid Apple Miss, Earnings. European stocks fell after Apple Inc.’s worse-than-forecast results dragged semiconductor companies lower and commodity producers deepened declines. Apple chip suppliers Dialog Semiconductor Plc and Infineon Technologies AG lost at least 5.2 percent. ARM Holdings Plc, whose technology is used in iPhones, tumbled 6.6 percent. The company’s quarterly revenue also missed estimates. BHP Billiton Ltd. slid 5.7 percent, leading a drop in miners, after saying petroleum, copper and coal output will drop in fiscal 2016. The Stoxx Europe 600 Index slipped 0.6 percent to 400.28 at the close of trading.

• Gold Rout Spreads to Copper, Tin and Zinc. Nothing is safe. The selloff in gold is infecting metal markets from copper to zinc and tin. “Commodities are not in vogue,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said by e-mail. “The speculative financial investors are still withdrawing from the markets. The weakness of the precious metals prices is spilling over to the base metals.” Copper, zinc and lead fell more than 1 percent. The worst losses were in tin, which fell as much as 4.9 percent, the most this month.

• Commodity Losses Accelerate as Miners See Lows of 2009 Crisis. The commodities rout that’s pushed prices to a 13-year low pulled some of the biggest mining and energy companies below levels seen during the financial crisis. The FTSE 350 Mining Index plunged as much as 4.9 percent to the lowest since 2009 on Wednesday, with BHP Billiton Ltd. and Anglo American Plc leading declines. Gold and copper are near the lowest in at least five years, while crude oil retreated to $50 a barrel. “This commodity bear market is like a train wreck in slow motion,” said Andy Pfaff, the chief investment officer for commodities at MitonOptimal in Cape Town. “It has a lot of momentum and doesn’t come to a sudden stop.”

• This measure of copper is another bad omen for the commodities meltdown. A measure of demand for copper, the metal used in everything from power lines to electronics, is at the weakest in more than two years, signaling the meltdown that’s sweeping through commodity markets could get even worse. The number of requests to withdraw copper from London Metal Exchange warehouses relative to the level of global inventories tracked by the bourse dropped this week to the lowest since March 2013. That shows consumption has almost dried up for the stockpiles that have doubled over the past year.

• Americans Fleeing Pricey Cities as Foreigners Rush In. New York City, Los Angeles, Honolulu: They're all places you would think would be popular destinations for Americans. So it might come as a surprise that these are among the cities U.S. residents are fleeing in droves. Twenty metropolitan areas among the 100 most populous in the United States lost the greatest share of local people to other parts of the country between July 2013 and July 2014, according to a Bloomberg News analysis of U.S. Census Bureau data. The New York City area ranked second, just behind  El Paso, Texas. New York lost about a net 163,000 U.S. residents, closely followed by a couple surrounding suburbs in Connecticut. Honolulu ranked fourth and Los Angeles ranked 14th.

• Taxpayers Could Lose Billions If Students Walk Away From Loans. Cody Roderiques, a college senior, owes the federal government more than $100,000 for his student loans. He may not have to pay taxpayers back. That’s because the New England Institute of Art is vanishing around him. On the campus of the for-profit college near Boston, studios were shuttered, teachers lost their jobs and the school announced in May it was closing for good. Under U.S. law, the institution’s death might excuse Roderiques, who will graduate in December, from his loan debt.

Fox News:

• Boehner vows fight to scuttle Iran nuclear deal. (video)

ZeroHedge: 

• Nine Reasons Why Low Oil Prices May "Morph" Into Something Much Worse. (graph)

• Retail Investors' "Cult"-est Stocks.

• Subprime Auto Loan "Titan" Proclaims There's Nothing To Worry About.

• Forget Recession: According To Caterpillar There Is A Full-Blown Global Depression.

• Perhaps It Wasn't Such A Good Idea To Leave The Fate Of The Tech Bubble In The Hands Of Apple(AAPL). (graph)

• Retail Federation Slashes Sales Outlook By 15%, Blames "Deflationary Enviornment". (graph)

• Bonds Say Let The Rate Hikes Begin: 1Y Bills Sells At Highest Yield In 5 Years. (graph)

• In Case You Needed Any More Proof That There Is No Bond Market Liquidity Left...

• Will The Oil Patch Bust Trigger Recession? (graph)

• Ongoing Greece Deposit Run Forces ECB To Boost Greek ELA Ceiling Yet Again. (graph)

• WTI Back Below $50 After Inventory Build Takes Crude Stocks To Highest In 80 Years. (graph)

• Existing Home Prices Hit Record; Sales Soar To 8 Year High. (graph)

• It's Not Just Greece: Total European Debt Hits New All Time High. (graph) 

• Mind The Dow Divergence - Transports Are Signaling A Slump. (graph)

Bild:

• Germany's Krichbaum Says No Greek Aid Without Reforms. German CDU lawmaker Gunther Krichbaum, chairman of European Affairs committee in lower house of parliament, says Greece's implementation of reforms is being observed very closely and aim will only be released if terms are fulfilled, citing an interview. Krichbaum said Greek exit is still an option.

WirtschaftsWoche:

• Issing Says Greek Euro Exit Will Be Topic Again in Months. Former ECB chief economist Otmar Issing says a possible Greek exit from the euro region will be on the agenda again within months, citing an interview. "I don't think that a Grexit would be the beginning of the end of the euro," he said. "If Greece drops out, the others move together even more closely in order to avoid a similar fate. I'm convinced of that," While state bankruptcy laws are needed globally, they can't be applied to euro region members because "it would be absurd if a country that can't service its debt with the ECB would receive further loans for its banks from Frankfurt," Issing said. Loans to Greece are "largely lost", creditors are likely to extend maturities by several decades. "Officially this is not a haircut, but boils down to the same thing. At a company you'd call this accounting fraud," he said. Political union that would fix the euro area's shortcomings is not in sight. "I can't imagine that a majority would vote in favor of a political union - neither in France nor in Germany. Therefore, reforms aimed at an unattainable political union should be banned," Issing said.

Shanghai Securities News:

• China Securities Finance's Stake in Some Stocks Exceeded 5%. China Securities Finance Corp. transferred some shares to asset management account at fund co. after figuring out that its holdings in some stocks exceeded 5% of listed cos.' total equity, citing a company official. Shares transferred haven't been sold.

Caijing:

• China Mobile Cuts Managers' Pay by 20%-50%. Compensation of senior executives will be cut by as much as 50% while that of junior managers will be reduced by 20%, citing a pay cut plan released at co.'s interim meeting. The pay cut is implemented based on salary reform plan for managers at central government administered cos. announced earlier.