Today's Headlines

Bloomberg:

• German Exports Fell in February Amid Euro-Area Recession. German exports fell more than economists forecast in February as the euro area, the country’s biggest trading partner, struggled to emerge from recession. Exports, adjusted for working days and seasonal changes, dropped 1.5 percent from January, when they gained 1.3 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a 0.3 percent decline, according to the median of 15 estimates in a Bloomberg News survey. Imports fell 3.8 percent. Shipments from Germany to the euro area dropped 4.1 percent in February from a year ago, while those to the European Union decreased 3.4 percent. Exports to non-EU members fell 1.9 percent, today’s report showed. 
• European Stocks Are Little Changed; Lagardere Falls. European (SXXP) stocks climbed as mining shares rallied and Alcoa Inc. began the U.S. earnings season with profit that beat analysts’ estimates. 
• Fitch Cuts China Yuan Debt Rating on Local Government Borrowing. Fitch Ratings Ltd. cut China’s long- term local-currency debt rating, citing increasing risks to the country’s financial stability given the lack of transparency in the increased borrowing of local governments. Fitch lowered the rating to “A+”, its fifth-highest level, from “AA-,” the London-based company said in an e- mailed statement today. The company estimates total credit in China’s economy, including various forms of so-called shadow banking, may have reached 198 percent of gross domestic product at the end of 2012, up from 125 percent at end-2008. “Fitch believes Chinese LGs likely have significant additional contingent liabilities arising from debts of LG- linked corporates,” the company said, referring to local governments in China. “The classification of lending between corporate and LG sectors have been opaque. Lack of transparency over the indebtedness of LGs is a shortcoming for China relative to peers.”
• China Surging Wages Threaten Economy’s Competitiveness, ADB Says. China’s surging wages and other costs are showing signs of undermining the competitiveness of the nation’s economy, threatening its growth potential, the Asian Development Bank said. Average inflation-adjusted wages have more than tripled in a decade and non-wage costs for procedures such as hiring and firing have risen since the introduction of a 2008 labor law, the ADB said in a report published today. The labor market is being squeezed across the nation as the pool of working-age people shrank last year. At stake is China’s position as the world’s biggest producer of low-cost goods, while competitors from Vietnam to Mexico stand to gain as investors seek to relocate to countries that have cheaper labor or are closer to big markets in the U.S. and Europe. “Rapid aging of the population is taking its toll on the labor market,” Hamid L. Sharif, the ADB’s country director for China, said at a press briefing in Beijing. “Unless compensated by rising labor productivity, high wages would erode the economy’s competitiveness and growth potential, hampering government development plans.”
• N. Korea Threats Boost Odds of First BOK Rate Cut Since October. North Korea’s threats are raising the odds of the first interest-rate cut by its southern neighbor since October as they threaten to damp business and consumer sentiment in Asia’s fourth-largest economy.
• Egypt Pope Criticizes Mursi Over Sectarian Clashes Response. Egypt’s Coptic pope criticized the Islamist president’s handling of the worst sectarian clashes in months, and demanded stronger action against violence that has deepened the nation’s rifts. Days of Muslim-Christian fighting outside a Coptic cathedral in Cairo and in a nearby town have left at least eight dead, most of them Christians. President Mohamed Mursi demanded an investigation into the violence, vowed the perpetrators would be brought to justice and ordered the revival of a little-known body charged with tackling discrimination. 
• Corn Boom Goes Bust With U.S. Sales in Record Drop: Commodities. The record collapse in U.S. corn exports and shrinking domestic demand are leaving more grain in silos, spurring a bear market just eight months after drought drove prices to an all-time high. Stockpiles will be 836 million bushels (21.2 million metric tons) on Aug. 31, or 32 percent more than the U.S. Department of Agriculture forecast last month, according to the average of 35 analyst estimates compiled by Bloomberg. Export sales from the world’s largest grower and shipper fell 54 percent in the year that began Sept. 1, heading for the biggest annual drop in government data that starts in 1960. 
• Gold, Silver Gain on Bets Central Banks Will Add More Stimulus. Gold rallied to a one-week high on speculation that central bankers in the world’s major economies will take additional steps to spur growth, boosting demand for the precious metal as a store of value. Silver jumped.
• Lacker Says Government Should Be Ready to Let Big Banks Fail. Federal Reserve Bank of Richmond President Jeffrey Lacker said plans to limit the size or change the structure of the largest financial institutions must be made with the intent of allowing a failure without government aid. “It makes perfect sense to constrain the scale and scope of financial firms in a way that ensures that they can be resolved in an orderly manner, without government protection for creditors,” Lacker told a conference at the University of Richmond.

Fox News:

• 14 injured in knife attack on Lone Star College campus, suspect arrested. Over 12 people were stabbed Tuesday on the campus of Lone Star Community College campus in Cypress, Texas, after a male suspect reportedly used a small knife, ran from building to building and randomly attacked individuals along the way. Harris Country Sheriff Adrian Garcia says the suspect, described as a young white male, has been taken into custody. No further information about the suspect or about the weapon has been released as the investigation is still active and ongoing.

CNBC:

• France Faces 'Devastating Scandal' as Economy Stalls.
• I'd Be Willing to Scale Back QE, Fed's Bullard Says. (video)

Zero Hedge:

• Broke And Broker: US Casino Spending Tumbling Back To Great Recession Levels. (graph) What the chart shows is quite clear: at a drop of 4.3% Y/Y, far below the cyclical rises in 2011 and 2012, discretionary spending allocated for proceeds one can "afford to lose" is back to Great Recession levels, and sliding lower. 
• Small Businesses Planning To Hire: 0%. (graph)
• Italian Bank Holdings Of Italian Debt Rise To All Time High. (graph)
• What Do Interest Rates Tell Us About The Economy. (graph)
• Charles Gave: "France Is On The Brink of A Secondary Depression".

Business Insider:

• Intel's(INTC) Cable TV Killer Is Blowing Away The People Who See It.
• KOTOK: A Major Transition Is Underway Regarding Bank Deposit Safety.
• China's Bird Flu Problem Is Getting Worse.
• There's No Sign Of Economic Recovery In America's 'Soup Lines' [Chart].
• CHART OF THE DAY: Why The Personal Savings Rate Is Tumbling.

New York Times:

• Prosecutors Said to Be Investigating Tips at KPMG Involving Herbalife(HLF) and Skechers(SKX). Federal prosecutors and securities regulators in Los Angeles are investigating a former senior partner at KPMG for leaking secret information to a stock trader, according to people with direct knowledge of the inquiry. The case involves alleged tips about confidential data related to Herbalife, the nutritional-supplement seller, and Skechers USA, the footwear maker, according to these people. On Tuesday morning, both Herbalife and Skechers announced that KPMG had resigned as their auditor.

Reuters:  

• ECB's Asmussen sees growing risks for H2 recovery. European Central Bank Executive Board member Joerg Asmussen said on Tuesday there were more downside risks to a recovery of the euro zone economy in the second half of the year than one or two months ago. His comments further fuelled expectations that the ECB is getting ready to cut interest rates further, following last week's comments by ECB President Mario Draghi that the bank would "monitor very closely" all data and stands "ready to act". "There are more downside risks to a recovery in the second half of the year than four or eight weeks ago," Asmussen said in a speech in Nuertingen. 

Telegraph:

• Slovenia faces 'severe banking crisis', warns OECD. Slovenia faces a "severe banking crisis" and must act fast to avoid the "daunting outcome" of a prolonged downturn and being cut-off from financial markets, the Organisation for Economic Co-operation and Development has warned.
• Greece enters deflation for first time in 45 years. Greek consumer prices fell year-on-year in March, taking the battered economy into deflationary territory for the first time since 1968.

Yonhap News:

• North Korea completed preparation for mid-range missile launch, citing South Korean govt officials. North Korea is technically able to launch missile as early as tomorrow.