Today's Headlines

Bloomberg:

• Monti Says Rescue Fund Will Win Bank License to Tap ECB. Italy’s Prime Minister Mario Monti said the permanent rescue fund should have access to European Central Bank liquidity via a bank license, challenging German policy makers to back more actions to tame the euro-area crisis. “I think this would help, I think this will in due course occur,” Monti said today in Helsinki at a news conference with Finnish Prime Minister Jyrki Katainen. Monti’s assertion was a rebuff to Chancellor Angela Merkel’s Cabinet after ministers meeting in Berlin earlier today hardened their opposition to granting the planned bailout fund access to the ECB’s resources. Monti is prodding colleagues across Europe to back his fight to lower the borrowing costs that investors are imposing on Italy and Spain. In travels from Paris to Helsinki and on to Madrid tomorrow, where he’ll meet with Spanish Prime Minister Mariano Rajoy, Monti is seeking to bridge a north-south divide on crisis fighting and capitalize on a pledge by ECB President Mario Draghi to do whatever it takes to defend the euro. Monti and Katainen both declined to say what they wanted to hear from Draghi after a meeting of ECB policy makers tomorrow. The Italian premier instead urged central bankers to show equal respect for ECB independence, after Bundesbank President Jens Weidmann said the ECB shouldn’t exceed its inflation-fighting mandate and stressed Germany’s importance in setting common strategy in the 17-nation euro area, according to an interview conducted in June and posted on the Bundesbank’s website today.
• U.K. Manufacturing Slump Deepens as Export Orders Fall: Economy. U.K. manufacturing shrank the most in more than three years in July as export orders slumped, indicating the economy’s recession continued to deepen at the start of the third quarter. A factory-output gauge fell to 45.4 from a revised 48.4 in June, London-based Markit Economics said today. The reading was weaker than any of the 30 forecasts in a Bloomberg News survey. The decline was led by weaker demand in the euro area, where a separate index showed manufacturing shrank for a 12th month.
• SocGen Profit Misses Estimates With 42% Slide on Writedowns. Societe Generale SA (GLE), France’s second- largest bank, posted a bigger-than-expected 42 percent drop in second-quarter profit after taking writedowns on its Russian unit and U.S. asset manager TCW Group.
• Fed Signals More Steps to Spur Economy Amid Slower Growth. The Federal Reserve said the economy has slowed and foreshadowed new steps to boost the weakening expansion. “Economic activity decelerated somewhat over the first half of this year,” the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington. “The committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”
• Knight(KCG) Market-Making Unit Says It Had 'Technical Issue'. Knight Capital Group Inc. (KCG) told some clients of its market-making unit that a “technical issue” was affecting its systems and advised them to route orders elsewhere as dozens of U.S. stocks swung more than 10 percent today. Knight, which helps execute billions of dollars in equity transactions every day, said the issue was confined to market making and other operations were unaffected. Its stock plunged as much as 26 percent as investors speculated on its role in the incident, which spurred concern that computers had distorted trading for the second time in two weeks. The incident, occurring after three Dow Jones Industrial Average stocks fluctuated in regular hourly patterns for a full trading day on July 19, may embolden critics of American market structure who say the computers that dominate trading have become too complex to control.
• U.S. Manufacturing Unexpectedly Shrinks for Second Month. American manufacturing unexpectedly contracted in July for a second month, reflecting a drop in orders that threatens to undercut a mainstay of the recovery. The Institute for Supply Management’s factory index was 49.8 last month, little changed from a three-year low of 49.7 reached in June, the Tempe, Arizona-based group said today. Economists surveyed by Bloomberg News projected a reading of 50.2, according to the median estimate, just above the 50 mark that separates expansions and contractions. The report showed bookings dropped for a second month, indicating Europe’s debt crisis and the looming U.S. government spending cuts and tax increases that constitute the so-called fiscal cliff are taking a toll on customers globally. Federal Reserve policy makers are meeting today to determine if the world’s largest economy needs another dose of stimulus as companies such as Cummins Inc. (CMI) lower sales forecasts. “We’ve seen slower growth in emerging markets, the recession in Europe -- all of that is still ever-present,” said Sam Bullard, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “Firms are holding pat right now.” Another report showed companies added more workers than projected in July. Payrolls climbed by 163,000 workers after a 172,000 gain the prior month, Roseland, New Jersey-based ADP Employer Services said. The median estimate of 38 economists surveyed by Bloomberg News called for an advance of 120,000.
• China’s Xi Warns Communists Not to Fall Into Abyss of Corruption. Chinese Vice President Xi Jinping, in line to take over leadership of the 82 million-member Communist Party later this year, warned in a speech that personal extravagances and corruption by cadres could undermine the party’s hold on power. “The ancients said that if history is any guide, for any country or household, austerity breeds success while luxury leads to failure,” Xi said in a June 28 speech published today in the party magazine Qiushi. “We Communists should heed this warning.”
• Metro Atlanta Voters Defeat Transportation Tax. Voters have rejected a penny sales tax referendum to pay for transportation projects in nine of 12 regions in Georgia, including in metro Atlanta, unofficial returns show. With 94 percent of precincts reporting, 63 percent of metro Atlanta voters rejected the tax, compared to 37 percent in favor. The penny sales tax to pay for billions in transportation projects over the next decade was a draw for many voters in Tuesday's primary election. The issue was on the primary ballot in 12 districts around the state, with voters in each region deciding whether to levy the tax to pay for road and transit projects in their communities. Statewide approval was not required. The Atlanta region stood the most to gain. Critics derided the proposal as an unfair tax on the poor that wouldn't deal with the problems of sprawl. Tuesday's vote "shows the power of the people," said Debbie Dooley, Georgia Tea Party Patriots state coordinator and an outspoken opponent of the measure. "They ran a top-down, PR campaign, whereas we ran a bottom-up, true grassroots political campaign," Dooley said Tuesday. "The people are sending a message, and elected officials would do well to take heed: You aren't getting any more of our tax dollars until you can show you're responsible and can be trusted with the money you have now."
• Police Chief's $204,000 Pension Shows How Cities Crashed. Stockton, California, Police Chief Tom Morris was supposed to bring stability to law enforcement when he was appointed to the job four years ago. He lasted eight months and left the now-bankrupt city at age 52 with an annual pension that pays more than $204,000 -- the third of four chiefs who stayed in the position for less than three years and retired with an average of 92 percent of their final salaries.
• Facebook(FB) Plunge Continues as Growth Concerns Persist. Facebook Inc. (FB) dropped as much as 3.9 percent to a record low, the fourth straight day of declines after the world’s largest social-networking service reported second-quarter results that showed slowing growth.

Wall Street Journal:

• Genetically Modified Tires. High yielding, genetically modified crops have transformed the economics of U.S. farming. But they also pack an unexpected punch: Their tougher stalks are puncturing tires and stranding farm equipment in the field.

MarketWatch:

• How to keep the young unemployed. Commentary: Government is doing everything it can.

CNBC.com:

• GM(GM) Sales Drop 6%; Ford(F) Sales Down 4%. All three U.S. automakers reported lower-than-expected July auto sales on Wednesday as high U.S. unemployment and weak consumer confidence kept would-be buyers on the sidelines.
• Where Are the Move-Up Home Buyers? Housing has never been more affordable, and yet home ownership is still falling and more Americans are renting.
• Latest Market Glitch Shows 'Trading Out of Control'. Wednesday morning's stock snafu had a familiar ring to it — mysterious volume in trades that simply could not have been made by a human comes surging out of nowhere, causing brief but acute market mayhem.

Business Insider:

• 50 Stocks That Hedge Funds Are Shorting Like Crazy.
• How The Global Economy Changed In One Month.
• The Asian Economy's 'Canary In The Coal Mine' Just Got Crushed. South Korean July exports plunged 8.8 percent from a year ago. Economists surveyed by Bloomberg were looking for a decline of 3.7 percent.
• Is Germany Preparing For A Spanish Default?

Zero Hedge:

• Beyond The BLS BS: New Online Help Wanted Ads Plunge The Most Since January 2009. (graph)
  
• Dan Loeb Lets Loose On Barack Obama.
• US Manufacturing Sector Contracts For Second Month In A Row, Misses Expectations Of Expansion. (graph)
• Investing Legend Louis Bacon Has Had Enough Of Algos And Central Planners, Calls It Quits.
• The PIIGS Are Rapidly Losing Their Leverage Over Germany.

Reuters:

• Fitch: Italy payment holidays default rate hits 10 pct.

Financial Times:

• Insurers Group Warns Against 'Too Big To Fail' Plan. International regulators' plans to treat global insurers as "too big to fail" might destabilize the financial system, according to the Geneva Association, a policy review group funded by the insurance business. Proposed rules might persuade insurers to cut their holdings of government bonds and bank-issued securities, to manage their "systemic risk" ranking; that would make it more difficult for banks and governments to refinance, citing the association.
• Bundesbank urges ECB to keep within remit. The head of Germany’s Bundesbank has warned the European Central Bank against straying beyond its remit and reminded the bloc’s monetary guardians of the importance of keeping Germany’s central bank onside.

Telegraph:

• Global manufacturing slows as euro crisis dents demand. Manufacturing contracted in China and Europe and slowed in the United States and Canada in July as the eurozone debt crisis dented global and domestic demand.

ORF Radio:

• Former ECB Chief Economist Juergen Stark said granting the European Stability Mechanism a banking license would violate European law, according to an interview. "This is a clear violation of European law because it means unlimited and indirect state funding by the European Central Bank," Stark said. "This has to be prevented."

Bundesbank Magazine:

• Weidmann Says ECB Mustn't Overstep Its Mandate. Interview with Jens Weidmann, President of the Deutsche Bundesbank, and Helmut Schlesinger, former Bundesbank President, published in the staff magazine of the Bundesbank on 27 July 2012.

Bild-Zeitung:

• Sixty-one percent of respondents in a survey commissioned by Bild-Zeitung agree with Economy Minister Philipp Roesler that a Greek exit from the euro area has "lost its terror." A majority also favor opposition parties.
  

La Tribune:

• Renault SA French new car registrations fell 16% in July, while those at PSA Peugeot Citroen slid 14.5%, citing official figures. French new car registrations as a whole fell 12% in July.