Bloomberg:
- Greece's Sovereign Rating Cut Three Levels to CCC by Fitch. Greece’s credit rating was cut three levels by Fitch Ratings, which cited the lack of a credible support program for the debt-laden nation, uncertainties on the role of private investors in funding and the growth outlook. The downgrade to CCC from B+ “reflects the absence of a new, fully-funded and credible” program by the International Monetary Fund and the European Union, the ratings company said today in a statement in London. It also reflects “heightened uncertainty surrounding the role of private creditors in any future funding, as well as Greece’s weakening macroeconomic outlook.” Fitch is the third agency to cut Greece to the bottom tier of its rankings, reflecting concerns that a new aid package being negotiated for the country will entail investor losses. Greece was cut to Caa1 by Moody’s Investors Service on June 1 and CCC by Standard & Poor’s on June 13.
- Italian Debt Risk Puts France's BNP Paribas, Credit Agricole on Fronline. French banks, including BNP Paribas SA and Credit Agricole SA (ACA), have the most at risk from the euro- region’s debt crisis infecting Europe’s largest borrower, Italy. At the end of 2010, French banks carried $392.6 billion in Italian government and private debt, according to data from Basel, Switzerland-based Bank for International Settlements. That’s the most for financial institutions from any foreign country and more than double held by German lenders. “They’re on the frontline,” said Julian Chillingworth, who helps manage about 16 billion pounds ($25 billion) at Rathbone Brothers Plc in London. “French banks like BNP Paribas have taken substantial positions in Italy when the market opened up to foreign players and now they face the downside.”
- Irish Yields Jump on Credit-Rating Downgrade; Bunds Decline After Auction. Irish 10-year bonds slumped for a sixth day, sending yields to a euro-era record, after the nation became the third in the currency union to have its credit rating cut below investment grade. German 10-year bunds fell as the nation auctioned fewer bonds than its maximum target. Two-year Irish note yields surged to a record, and Greek and Portuguese 10-year bonds fell, after Moody’s Investors Service yesterday cut Ireland to Ba1 from Baa3, saying the nation is likely to need more rescue financing. Italy’s 10-year bonds were little changed, reversing an earlier advance, as the nation prepares to sell more than 3 billion euros ($4.2 billion) of debt tomorrow. Ireland’s downgrade “puts the focus back on the euro crisis as a whole,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “Politicians in Italy and Spain are trying to reassure investors that they are working hard to get their public finances in order. There is no quick fix.” Irish 10-year yields increased 58 basis points to 13.93 percent as of 4:31 p.m. in London, after touching 14 percent, a euro-era record. The 5 percent security due October 2020 fell 1.99, or 19.9 euros per 1,000-euro ($1,417) face amount, to 55.015. Two-year Irish note yields climbed 243 basis points to a record 20.17 percent. The yield difference, or spread, between Irish 10-year bonds and similar maturity benchmark German bunds widened to a record 11.23 percentage points.
- Greece Has Little Margin for Error: IMF. Greece has little margin for error in implementing the budget cuts and asset sales attached to its 110 billion-euro ($156 billion) bailout, the International Monetary Fund’s staff said. In an appraisal of Greece’s policies under the joint rescue plan with the European Union, the IMF warned that exceptional liquidity support from the European Central Bank is “critical.” European policy makers need to decide how to provide additional funding for Greece, the staff said. “For the program to succeed, it is essential that the authorities implement their fiscal and privatization agenda in a timely and determined manner,” the IMF staff wrote. “The debt dynamics show little scope for deviation.” European finance chiefs haven’t yet agreed on how to reduce Greece’s debt burden, floating ideas this week from bond buybacks to a temporary default as they sought to shift a strategy that has failed to contain the debt crisis.
- Fed Ready With More Stimulus If Needed: Bernanke. Federal Reserve Chairman Ben S. Bernanke told Congress the central bank is prepared to take additional action, including buying more government bonds, if the economy appears to be in danger of stalling. “The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support,” Bernanke said in prepared testimony before the House Financial Services Committee in Washington today. “The Federal Reserve remains prepared to respond should economic developments indicate that an adjustment of monetary policy would be appropriate.” The comments are Bernanke’s first since a government report on July 8 showed the economy added 18,000 jobs in June, less than the most pessimistic forecast in a Bloomberg News survey of economists. He also said that “the economy could evolve in a way that would warrant a move toward less- accommodative policy.”
- U.S. Import Prices Fall for First Time in a Year. The 0.5 percent fall in the import-price index followed a revised 0.1 percent gain in May, Labor Department figures showed today in Washington. Compared with a year earlier, import prices rose 13.9 percent, the biggest 12-month advance since August 2008, today’s report showed. The cost of imported petroleum fell 1.6 percent from the prior month, the largest one-month drop since June 2010. Even with the decrease, the cost was still up 50 percent from a year earlier. Excluding all fuels, import prices decreased 0.1 percent from the prior month and were up 4.8 percent from June 2010. The 12-month gain was the biggest since October 2008. Rising costs for automobiles limited the overall decline in prices. Costs of imported automobiles, parts and engines climbed 0.3 percent, and were up 2.9 percent over the past 12 months. It was the biggest yearly gain since August 2008.
- Gold Advances to Record on Debt Crisis. Gold climbed to a record in New York on concern that Europe’s debt crisis will spread. Silver prices surged the most since March 2009. Ireland joined Portugal and Greece yesterday as the third euro-area nation to have its credit rating cut to below investment grade. The dollar fell against a six-currency basket on signs that the Federal Reserve will continue to use monetary stimulus to revive the U.S. economy. Investors have boosted holdings of exchange-traded products backed by precious metals to more than $125 billion. “We’re in a very difficult financial period in the world,” Martin Murenbeeld, the chief economist at Toronto-based DundeeWealth Inc., which manages more than $50 billion, said on July 11. “The faith in paper currency is rapidly ebbing.” Gold futures for August delivery climbed $24.30, or 1.6 percent, to $1,586.60 an ounce at 10:53 a.m. on the Comex in New York, after touching a record $1,587.20. The previous all-time high of $1,577.40 was set on May 2. Prices extended gains today after Fed Chairman Ben S. Bernanke told Congress that the central bank is “prepared to respond” by taking additional stimulus action if the economy appears to be stalling. The metal has doubled since Dec. 1, 2008, as the U.S. central bank kept interest rates at a record low and governments spent trillions of dollars to spur global growth.
- Orange-Juice Breakfast Heads for Record Cost. U.S. consumers are poised to pay the most ever for their breakfast orange juice as inventories dwindle. Retail orange-juice prices have climbed to the highest level since reaching a record in March 2009. Stockpiles of the frozen beverage slid 40 percent in the 12 months through May, the most recent government data show. "Retail prices will be hitting records by winter time," Tintle, who correctly predicted an orange-juice rally in December, said by telephone from Tampa, Florida. "We'll still have a rally into next year and production will be down."
- Crude Oil Advances in New York After Inventories Fall More Than Expected. Crude oil climbed after a U.S. Energy Department report showed a bigger-than-expected decline in inventories and as equities rallied. Crude oil for August delivery rose $1.15, or 1.2 percent, to $98.58 a barrel at 12:06 p.m. on the New York Mercantile Exchange. Crude oil imports tumbled 8.7 percent to 9 million barrels a day last week, according to the department. Supplies of gasoline fell 840,000 barrels to 211.7 million last week, the report showed. A 500,000-barrel gain was projected, according to the median of 15 analyst responses in a Bloomberg News survey. Output dropped 6.6 percent to 8.9 million barrels a day, the least since the week ended May 6.
- Weidmann Says Governments Need Plan to Stop Contagion, Zeit Says. European Central Bank Governing Council member Jens Weidmann said euro-region governments need to develop a plan to stop contagion in case of a Greek default, Germany’s Zeit newspaper reported, citing an interview. “Politicians must have a plan to rein in the threats of contagion in case of a failure of the Greek program,” Weidmann told the newspaper, according to an e-mailed pre-release today. “Member states need instruments to absorb potential negative consequences on domestic financial systems.” Lawmakers need to show their determination and unity to solve the region’s fiscal crisis, said Weidmann, who is also head of Germany’s Bundesbank.
- Mumbai Rocked by Bombs; At Least 10 Killed. Three bomb blasts hit Mumbai in the biggest attack on India’s financial capital since the November 2008 terrorist raid, killing at least 10 people. The blasts occurred in the Dadar, Zaveri Bazar and Opera House neighborhoods, Home Minister P. Chidambaram said in a briefing in New Delhi today. The explosions injured more than 54 people, he said. Mumbai police chief said 15 people had died.
- Joy Global(JOYG) Said to Be in Talks to Acquire International Mining Machinery. Joy Global Inc. (JOYG) is in talks to buy International Mining Machinery Holdings Ltd. (1683), the Chinese maker of coal-mining equipment, according to two people with knowledge of the matter.
- Never-More-Similar Estimates Backfire for U.S. Equity Analysts. Wall Street analysts are more united on earnings forecasts than ever before, and using their predictions to buy stocks flopped during the first half of 2011, according to Bank of America Corp. (BAC) There is an “unprecedented level of complacency” among analysts given that the difference between the highest and lowest estimates has shrunk to the smallest level since at least 1986, according to Savita Subramanian, a New York-based quantitative strategist at Bank of America. Investing in companies that had their average profit projections increased the most returned 1 percent between Dec. 31 and June 30, the third-worst strategy out of 36 tracked by Bank of America, Subramanian said. “Consensus estimates haven’t been adding value,” Subramanian wrote in a note dated July 11. They may be “not as predictive given what we regard as a marked level of complacency built into consensus earnings expectations.” The Standard & Poor’s 500 Index rose 5 percent in the first six months of this year as corporate earnings beat analysts’ estimates for the ninth straight quarter. Profits of S&P 500 companies grew 13 percent during the second quarter, the slowest pace since the July-through-September period in 2009, according to estimates compiled by Bloomberg.
- China's Rising Need for More Rate Increases. Time for a rethink? Within China, speculation has been rife that the government is set to announce a targeted loosening of monetary policy. Most China economists think the central bank is done raising interest rates. The key factor to watch still is inflation. The consensus among economists is that it has peaked and gradually will decline for the rest of the year. If that is the case, there may not be a need for another interest-rate increase. But forecasters have a poor record predicting Chinese inflation; nearly all of them underestimated its current severity. Volatile factors like pork shortages and weather conditions make it inherently unpredictable. China should raise rates further to tame inflation and avoid further distortions from negative real interest rates. The chances have risen that it actually might take more of the medicine it needs.
- McConnell Plan Gets Support From Reid. The top Senate Democrat commended his Republican counterpart for proposing a plan to ensure the country's debt ceiling is increased in case Congress fails to reach agreement on a major deficit-reduction package before an Aug. 2 deadline.
- Euro-Zone Summit May Be Delayed. Tentative plans for the euro zone's top leaders to meet Friday to break the deadlock on a new Greek bailout remained in doubt late Wednesday, with some officials suggesting the summit could be pushed into next week.
- Census: Number of Children in U.S. Hits Low. Children now make up less of America's population than ever before, even with a boost from immigrant families. And when this generation grows up, it will become a shrinking work force that will have to support the nation's expanding elderly population—even as the government strains to cut spending for health care, pensions and much else. The latest 2010 Census data show that children of immigrants make up one in four people under 18, and are now the fastest-growing segment of the nation's youth, an indication that both legal and illegal immigrants as well as minority births are lifting the nation's population. Currently, the share of children in the U.S. is 24%, falling below the previous low of 26% in 1990. The share is projected to slip further, to 23% by 2050, even as the percentage of people 65 and older is expected to jump from 13% today to roughly 20% by 2050 due to the aging of baby boomers and beyond.
- News Corp.(NWS/A) Drops Bid for BSkyB. News Corp. dropped its bid to take full control of British Sky Broadcasting Group PLC, a sharp retreat for the media giant as it acknowledged that getting the deal through would be difficult in the current climate, amid a scandal over reporting tactics at one of its U.K. tabloid newspapers.
CNBC.com:
Financial Times Deutschland:
- The FBI Has a Whopping 97 Fund Managers on Wiretap. There's a long list of hedge fund managers—and their co-conspirators—brought down by an FBI wiretap. Raj Rajaratnam is obviously the most famous of the wiretapped investors, brought down because he was heard getting illegal tips on the phone. Now a whopping 97 others might share the same fate, because according to an article in the Financial Times, if you had a working relationship with expert network firm Primary Global Research, chances are, the FBI has a tape with your voice on it, in storage.
- Is This The Beginning of the End for Euro? "The continued failure of European policymakers to agree on a new package to support Greece and the growing signs that larger economies like Spain and Italy are being dragged further into the crisis could mark the beginning of the end for the single currency union in its current form," Jonathan Loynes, the chief European economist at Capital Economics, wrote in a research note.
- US Pessimism Deepens on Rising Economic Concerns. Americans are deeply pessimistic about the future as economic concerns rise and White House talks on raising the U.S. debt limit sputter, according to a Reuters/Ipsos poll released Wednesday. The number of Americans who believe the country is on the wrong track rose to 63 percent this month, up from 60 percent in June.
- US Budget Deficit on Track to Top $1 Trillion. The federal budget deficit is on pace to break the $1 trillion mark for the third straight year, ratcheting up the pressure on the White House and Congress to reach a deal to rein in spending. The deficit totaled $971 billion for the first nine months of the budget year, the U.S. Treasury Department said Wednesday. Three years ago, that would have been a record high for the full year. With three months to go, this year's deficit will likely top last year's $1.29 trillion gap, according to an estimate by the Congressional Budget Office.
- 14 Cities That Are Being Eaten Alive By Public Sector Workers.
- Check Out Leaked Directives From The Chinese Propaganda Department.
- Fed's Fisher Tells The Truth. Some brutal truth from the Dallas Fed's Fisher: FISHER SAYS THERE IS `PRICE' FOR `TINKERING' MORE WITH POLICY (about $1MM per FOMC Member) FISHER SAYS THINGS WILL BE WORSE IF FED JUST PRINTS MORE MONEY (there is no money printing... the Chairsatan said so) FED'S FISHER SAYS `MONETARY POLICY HAS EXHAUSTED ITSELF (but the Chairsatan just said the Fed is prepared to confirm its madness by doing for the third time what failed twice already)
- US States' Sales Tax Growth Slows in June - Report. U.S. state sales tax revenues grew slowly in June, with an average gain of only 2.1 percent, according to a report released on Wednesday, suggesting a weakening trend that could threaten states' recoveries. Only 58 percent of states met or exceeded their forecast sales tax collections in June, compared with 82 percent in May, according to the economic newsletter The Liscio Report, which surveys states about their tax levels. The 2.1 percent average year-on-year growth in June was down from growth of 4.9 percent in May, the Liscio Report showed.
- White House Opposes Balanced Budget Amendment.
- Cash Flows to Debt Funds, Exits Domestic Equity - ICI.
- Adtran(ADTN) Shares Fall on Q3 Revenue Outlook. Shares of Adtran Inc fell as much as 7 percent after the network communications gear maker forecast lower-than-expected revenue for the third quarter.
- 'Too Many Cooks' in Euro Debt Crisis: OECD Head. Finding a solution to the euro zone crisis is such a complex task that investors, as well as many citizens of the European Union, have grown disgruntled with attempts to sort out the debt.
Financial Times Deutschland:
- Greece may buy back debt at an average price of about 50% of bonds' nominal value, citing a concept discussed by euro-zone governments.
- Greek Prime Minister George Papandreou said the country needs a decision soon on a second aid program, citing an interview.
- PIMCO CEO El-Erian said a restructuring of Greek debt is "very likely" and will probably happen within the next six months, citing an interview. The biggest risk for Greece is a run on the country's banks, he said. He also said that a restructuring of Portuguese and Irish debt is "avoidable," while Spain and Italy are "vulnerable" in case of a "psychological escalation" of the region's fiscal crisis.
- Dutch Finance Minister Jan Kees de Jager said European lawmakers no longer exclude a temporary default by Greece, citing an interview. "New is that some of the options can no longer exclude a temporary default. Obviously, we still prefer a voluntary contribution" by the private sector "but since that's not possible we're thinking differently."
- China's tightening will continue into the second half of this year, citing a person familiar with discussions at the top levels of the planning body.