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Jul 20, 2012

Stocks and markets in the News | Wall Street at Close: Dow, Nasdaq Friday losses erase July gains

  SAN FRANCISCO (MarketWatch) -- U.S. stocks fell Friday for the first down day in four, erasing July gains for both the Dow Jones Industrial Average and the Nasdaq Composite Index as earnings reports and Europe concerns triggered a selloff. The Dow fell 120.79 points, or 0.9%, to close at 12,822.57, putting the index down nearly 0.5% for July. The Nasdaq dropped 40.60 points, or 1.4%, and closed at its intraday low of 2,925.30, for a 0.3% loss for the month of July. The S&P 500 Index closed down 13.85 points, or 1%, at 1,362.66, and barely hung onto a gain of less than 0.1% for the month of July. For the week, the Dow closed up 0.4%, the S&P 500 rose 0.4%, and the Nasdaq advanced 0.6%.

 Dow, Nasdaq Friday losses erase July gains

Stocks andmarkets in the News | European Markets at Close: Europe stocks fall; Spain plunges on debt worries.

European Markets

Europe stocks fall; Spain plunges on debt worries European equity markets retreat, trimming weekly gains, as stocks in Spain and Italy plunge on debt worries. Yields on Spanish government bonds spike above pivotal 7% mark. 19 min ago

ADVFN World Daily Markets Bulletin: U.S. Market | Canadian Market | Europen Market | Asia Marketet

ADVFN III World Daily Markets Bulletin  
Daily world financial news

Friday, 20 July 2012

US Market Reports
Stocks Partly Offsetting Recent Gains In Early Trading

Stocks have moved mostly lower in early trading on Friday, giving back some ground after trending higher in the past few sessions. The major averages have shown notable downward moves, partly offsetting their recent gains.

The major averages have seen some further downside in the past few minutes, hitting new lows for the session. The Dow is down 87.07 points or 0.7 percent at 12,856.29, the Nasdaq is down 17.14 points or 0.6 percent at 2,948.76 and the S&P 500 is down 8.82 points or 0.6 percent at 1,367.69.

Profit taking is contributing to the early weakness on Wall Street, as some traders cash in on the recent strength in the markets, which lifted the major averages back toward near-term resistance.

Continued uncertainty about the financial situation in Europe is also weighing on stocks, with eurozone finance ministers meeting today to approve a deal to lend up to 100 billion euros to help Spain recapitalize its ailing banking system.

Brokerage stocks are seeing significant weakness in early trading, dragging the NYSE Arca Broker/Dealer Index down by 1.6 percent. E*Trade (ETFC) is leading the sector lower after reporting disappointing second quarter results.

Steel, banking, and railroad stocks have also come under pressure, moving lower along with most of the major sectors. On the other hand, some oil service stocks are bucking the downtrend, with Baker Hughes (BHI) posting a standout gain.

Among individual stocks, Microsoft (MSFT) is up by 0.4 percent after reporting fourth quarter adjusted earnings of $0.73 per share, ahead of the $0.62 per share consensus estimate. Revenues, adjusted for deferred revenues, rose 7 percent to $18.60 billion, ahead of the consensus estimate.

Google is also trading higher after reporting second quarter adjusted earnings rose to $10.12 per share from $8.74 per share last year. Revenues, excluding traffic acquisition costs, totaled $8.36 billion, slightly shy of the $8.41 billion expected by analysts.

Diversified conglomerate General Electric (GE) released its second quarter results before the start of trading, reporting earnings that exceeded estimates but on slightly weaker than expected revenues. Shares of GE are up by 1.1 percent.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index tumbled by 1.4 percent, while Australia's All Ordinaries Index edged down by 0.1 percent.

The major European markets have also moved to the downside on the day. The U.K.'s FTSE 100 Index is down by 0.9 percent, the German DAX Index is down by 1.2 percent and the French CAC 40 Index is down by 1.7 percent.

In the bond market, treasuries have moved back to the upside after ending the previous session in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.8 basis points at 1.477 percent.

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TSX Down At Open Friday

Toronto stocks dipped at open Friday amid marginal selling across a variety of sectors, with the S&P/TSX Composite Index losing 64.88 points or 0.56 percent to 11,600.82.

The Diversified Materials Index was down nearly 2 percent, with Teck Resources and First Quantum Minerals shedding over 2 percent each

In the oil patch, Suncor Energy, Cenovus Energy and Petrobakken Energy were down around 2 percent each.

Fertilizer makers Agrium Inc. and Potash Corp. were down about 1 percent each.

Meanwhile, broadband wireless access provider Redline Communications Group Inc. rose 10 percent after providing updates on second quarter order bookings.

Gold stocks were steady, with Seabridge Gold and Goldcorp. edging up nearly 1 percent each.

In the commodities market, the price of crude oil moved down Friday morning on profit taking after seven straight days of gains that pushed prices to a two-month high, as escalating fighting in Syria, the bombing of a bus carrying Israeli tourists in Bulgaria and disruptions in output in the North Sea escalated supply fears.

Crude for September delivery, the most actively traded contract lost $1.79 to $91.18 a barrel.

The price of gold eased Friday morning as the U.S. dollar was steady versus a basket of currencies. Gold for August slipped $5.50 to $1,574.90 an ounce.

In corporate news from Canada, desktop and mobile VoIP software products company CounterPath Corporation  reported a wider fourth quarter net loss of $1.2 million or $0.03 per share compared to the net loss of $0.8 million or $0.02 per share in the comparable quarter last year.

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European Markets Weak As Fiscal Worries Mount

The European markets are declining modest to moderately on Friday, as sentiment in the region remained impacted by apprehension that peripheral nations are facing a dicey fiscal situation. The Asian markets ended mostly down and the U.S. futures indicate a weak open.

Eurozone finance ministers are expected to approve an agreement on the proposed financial assistance to Spain to recapitalize its troubled banks. The group will hold a conference call on Friday at Brussels to finalize the details of the 100 billion euros bailout deal for Spanish banks struck last month.

The Euro Stoxx 50 index of eurozone bluechip stocks is falling 1.02 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is losing 0.59 percent.

The German DAX is losing 0.28 percent and the French CAC 40 is falling 0.70 percent. The UK's FTSE 100 is dropping 0.50 percent and Switzerland's SMI is sliding 0.29 percent.

In Frankfurt, RWE is falling 2.5 percent and peer EON is losing 1.2 percent. UBS cut RWE to "Sell" from "Neutral."

Leoni is losing 1.2 percent after the stock was downgraded at Kepler. Deutsche Wohnen is declining nearly 3 percent. Merrill Lynch reduced its rating on the stock.

In Paris, EDF is declining 3.7 percent, leading the losers on the index. Credit Agricole is retreating 1.8 percent. BNP Paribas and Societe Generale are moderately lower.

Publicis Groupe is climbing 3.6 percent. The advertising and communications firm said its consolidated revenue increased 15.5 percent in the second quarter. The firm confirmed that growth in its second half will be higher than in the first half.

EADS is gaining 3.4 percent. Goldman Sachs added the stock to ''Conviction Buy" list.

In London, Resolution is plunging nearly 10 percent. The firm canceled the 250 million pounds capital return originally targeted for the first half of 2012, saying it would be inappropriate.

Vodafone is losing 2.4 percent. The firm reported lower first-quarter revenues, hurt by challenging conditions, mainly in Spain and Italy, as well as the impact of cuts in mobile termination rates.

Goals Soccer Centres has agreed to be acquired by Goliath Bidco Ltd., a company controlled by Canada's Ontario Teachers' Pension Plan Board, for 144 pence per share in cash. The stock is surging over 8 percent.

Heineken is up 1.1 percent in Amsterdam. The Dutch brewer has offered to acquire its joint venture partner Fraser & Neave Ltd.'s stake in Singapore-based Asia Pacific Breweries Ltd. for $4.07 billion.

Sulzer is climbing 4.2 percent in Zurich. The pump maker reported a slight growth in profit for the first half of the year, but sales and order intake increased in double-digits.

Galenica is declining 3.9 percent reportedly on a broker downgrade.

Orkla is losing 3.7 percent in Oslo after reporting second-quarter results.

In economic news, Germany's producer price inflation eased more-than-expected in June to its lowest level in two years, the Federal Statistical Office said.

Asia Market Reports
Asian Stocks Drop On Growth Worries

Asian stock markets fell broadly on Friday, as a strong performance on Wall Street overnight failed to enthuse investors. With a slew of weak U.S. economic data raising concerns over the health of the world's largest economy, investors avoided extending their long positions going into the weekend.

State media reports from China that Beijing has asked its local governments to maintain a firm grip on the real estate market to prevent property prices from rebounding also weighed on investor sentiment to some extent.

Crude prices fell from a nine-week high and copper lost a percent, while gold prices were modestly higher on speculation concerning additional stimulus measures from the U.S. Federal Reserve.

The euro fell against the dollar and yen ahead of a conference call of euro-zone finance ministers later in the day, where they are expected to formally approve Spain's bank bailout plan. Spanish 10-year government bond yields continue to trade close to the danger zone of 7 percent despite Germany approving the Spanish bank recapitalization plan.

Tokyo stocks fell sharply, with the Nikkei average hitting a three-week low, as dismal U.S. data and a relatively firmer yen prompted investors to dump shares before the weekend. The Nikkei average fell 1.43 percent to its lowest close since June 26, with major exporters like Canon and Toyota Motor bearing the brunt of the selling ahead of the upcoming corporate earnings season.

Canon fell 1.6 percent, Toyota Motor lost 1.8 percent,Sony retreated 2.2 percent, Panasonic declined 3.5 percent and NEC plunged 3.9 percent. Advantest, the world's biggest maker of memory-chip testers, tumbled 3.1 percent, weighed down by mounting concerns over a slowdown in the global semiconductor industry.

Financial stocks also lost ground on concerns over ethics in banking after regulators fined British banking group Barclays 290 million pounds for attempting to manipulate the London interbank offered rate and HSBC admitted massive shortcoming in its anti-money laundering operations. Mizuho Financial Group slumped 3.9 percent, while Mitsubishi UFJ Financial Group lost 3.4 percent.

Power stocks saw heavy selling, with Chubu Electric Power losing a whopping 5.8 percent as fresh concerns surfaced over nuclear reactor restarts. Toshiba bucked the downward to end 1.1 percent higher after its U.S. business partner SanDisk Corp., reported better-than-expected earnings for the second quarter.

Australian shares fell modestly as buying momentum waned following a 2 percent rally the day before sparked by steep gains in the energy sector. The benchmark S&P/ASX 200 slid 0.18 percent, while the broader All Ordinaries index eased 0.14 percent.

Resource stocks turned in a mixed performance, with BHP Billiton rising 0.8 percent and Rio Tinto gaining marginally, while smaller rival Fortescue plunged 5 percent after chairman Mark Vaile said he expects Nathan Tinkler to succeed in his effort to garner enough money to fund the takeover of the group.

The big four banks ended on a subdued note, losing between 0.4 percent and 1.4 percent. Westpac slid 0.4 percent following an announcement that its acting financial services boss Peter Hanlon would take on a new advisory role with the bank after stepping down from his current job next month. Shares of Fairfax Media ended 2.7 percent higher, a day after the company granted a board seat to Jack Cowin.

In economic news, import prices in Australia rose more than expected in the June quarter with the weak dollar pushing up prices of fuel and pharmaceutics, data released by the Australian Bureau of Statistics showed.

Seoul shares ended on a flat note, as concerns about a slowdown in the U.S. economy and Spain's financial troubles overshadowed gains in tech shares. The benchmark Kospi average ended a range-bound session down 0.03 points at 1,822.93. SK Hynix jumped 4.2 percent ahead of its earnings due out next week. Polysilicon maker OCI dropped a percent after China said it would begin investigating imported U.S. and South Korean solar-grade polysilicon.

New Zealand shares fell notably, ending the week on a subdued note as investors awaited more clues from the upcoming earnings season. The benchmark NZX-50 index slid 0.63 percent. Heavyweight Telecom lost a percent in volatile trading, exporter Fisher & Paykel Healthcare fell 1.5 percent, national carrier Air New Zealand retreated 2.2 percent and gold miner OceanaGold tumbled almost 5 percent despite higher gold prices on Thursday.

Shares of cloud-based accounting provider Xero led the gainers on the exchange, climbing 2.2 percent. The company announced after market hours that it bought Wellington-based developer Spotlight Workpapers for $800,000 in cash and scrip in an attempt to further strengthen its presence in the accounting software market, especially against incumbent suppliers. Cavalier, Freightways, New Zealand Refining and the Warehouse Group rose between 0.6 percent and 1.5 percent.

Elsewhere, China's Shanghai Composite index fell 0.74 percent, while Hong Kong's Hang Seng index rose 0.42 percent. India's benchmark Sensex was last trading down 0.54 percent, Indonesia's Jakarta Composite index was moving down 0.37 percent, Malaysia's KLSE Composite edged down 0.1 percent and Singapore's Straits Times index was down 0.37 percent, while the Taiwan Weighted average advanced 0.23 percent.

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Crude Slips On Profit Taking

The price of crude oil moved down Friday morning on profit taking after seven straight days of gains that pushed prices to a two-month high.

Light Sweet Crude Oil (WTI) futures for September delivery, the most actively traded contract, lost $1.13 to $91.84 a barrel. Yesterday, oil extended gains for a seventh session to end sharply higher on geopolitical issues as traders viewed the tension build-up in the Middle East between Iran and Israel, and in Syria, could possibly disrupt oil supplies from the region. Oil prices were also supported by a weakening dollar and lower U.S. crude stockpiles.

The price of gold was little changed Friday morning as the U.S. dollar was steady versus a basket of currencies.

Gold for August delivery, the most actively traded contract, edged up $0.50 to $1,580.90 an ounce. Yesterday, gold snapped its three-session losing streak as investors were on bargain buying with most commodities trading higher. The dollar also weakened against a basket of currencies, although it was trading a shade higher against the euro.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, moved down to 1,257.05 tons from 1,266.11 tons.

This morning, the U.S. dollar was hovering around its 2-year high versus the euro and ticking higher against sterling. The buck was lingering around a monthly-low versus the yen and moving higher against the Swiss franc.

In economic news from the euro zone, producer price inflation in Germany slipped in June to its lowest level since May 2010, the Federal Statistical Office said. The producer price index rose 1.6 percent year-on-year in June from 2.1 percent in May. This was the lowest rate of inflation since May 2010, when it stood at 0.9 percent. Economists expected an increase of 1.8 percent in the producer price index.

CBS NEWS | Selected News From Daily News Summary: Paul Ryan: We're not talking about tax "cuts"

CBS - Daily News Summary
July 20, 2012 | DAILY NEWS SUMMARY

Paul Ryan: We're not talking about tax House Budget Committee chairman says Democrats are threatening to raise taxes, not let the Bush tax cuts expire

Tenn. mosque won't be ready for Ramadan's start Opponents of Islamic center sued to stop construction in 2011 and lost

Suspect in Colo. movie-theater shooting identified Law enforcement source identifies 24-year-old as alleged gunman in deadly "Dark Knight Rises" screening

Aurora witnesses describe shooter's entrance, chaos Eyewitnesses describe scene at mass shooting in Colo. movie theater: "A lot of crazy, crazy stuff going on"

Mass shooting at Batman premiere near Denver Police confirm at least 12 people killed, dozens more wounded after man apparently hurls gas canister, opens fire in theater

George McGovern still a bleeding-heart liberal at 90 The Nation: Former Democratic presidential nominee still mixes politics, history, literature, humanity in ways few elected officials do

The financial system was systemically corrupt: Ezra Klein's Wonkbook | The Washington Post

Very few banks came out of the financial crisis looking good. But JPMorgan and Barclays were in that elite club. Their apparent rectitude raised the possibility — as JPMorgan CEO Jamie Dimon said over and over again — that what we’d had were a few bad banks, not a hopelessly corrupted financial system. Fast forward a couple of years, and JPMorgan and Barclays are not looking so good anymore. And the particular way in which they’re not looking so good points to the fact that we did, indeed, have a hopelessly corrupted financial system.
If you haven’t been following the Libor scandal, read Dylan Matthews’ great primer. But if you refuse to do even that, here it is in a few sentences: Libor is the rate at which banks lend to each other. It’s considered a measure of how safe the financial system is. As such, many banks use it as a benchmark to set the rate on the consumer debt you and I buy — they start with the Libor rate and then they add on whatever they think our risk is. But there’s something odd about Libor: It’s a rate the banks report themselves. And, in recent weeks, we’ve found out Barclays was lying about it.
In recent days, however, we’ve found out that it wasn’t just Barclays lying about it. Everybody was lying about it. Citigroup was lying about it. German banks were lying about it. We know a number of banks — though we don’t know exactly who — are talking to the feds about a settlement. We know HSBC, Deutsche Bank and JPMorgan Chase are being investigated.
On Wednesday, Lloyd Blankfein, CEO of Goldman Sachs, was asked about Libor. “The biggest impact is once more undermining the integrity of a system that has already been undermined substantially. There was this huge hole to dig out of in terms of getting trust back and now it’s that much deeper.”
Remember when Ronald Reagan said “trust, but verify”? Well, we’ve spent the last few years verifying. And when it comes to the financial system, the lesson is not to have too much trust.

Wonkbook dashboard
RCP Obama vs. RomneyObama +1.2%; 7-day change: Obama -1.4%.
RCP Obama approval:  46.9%; 7-day change: -0.1%.
Top story: Gimme Gimme Libor
Dylan Matthews’ Libor explainer:
The Libor scandal in one graphic:
The Libor scandal shows the flaws in rate-setting. “It is an open secret in the banking world: the interest rates for many mortgages and loans are based on a benchmark that is largely guesswork. The flaws in the rate-setting process, which is used to determine the pricing for trillions of dollars of financial products, have been exposed by the latest banking scandal. Regulators around the world are investigating whether big banks gamed the rates for their own benefit before and after the financial crisis. But even if banks do not deliberately manipulate the rates, the benchmark remains vulnerable. Banks derive the rates from estimates rather than real market data. So the benchmark, a measure of how much banks charge each other for loans, does not necessarily represent actual borrowing costs. This weakness has only been exacerbated in recent years, as banks have mostly stopped lending to each other.” Peter Eavis and Nathaniel Popper in The New York Times.
Libor rigging may have had upsides. “Is it possible that the ma­nipu­la­tion actually had an upside? As analysts assess the fallout, there has been a lot of fog and little clarity about the precise impact on the global economy, markets, investors and average consumers. While many lost because of the rigging, many others, aside from the banks, may have benefited…Barclays was found to have reported sometimes artificially low rates, so consumers whose mortgages, auto loans or student loans were linked to Libor may have paid less. On the other hand, investors who were paid interest based on the benchmark rate, which included investment funds and municipalities, would have lost out. Perhaps the most difficult question about the scandal is whether violating the public trust — especially when much of the illegal activity occurred in the credit crisis of 2008 — helped prop up the financial system overall.” Zachary Goldfarb and Jia Lynn Yang in The Washington Post.
David Leonhardt talks Libor with Stephen Colbert: Is it more like a cupcake or like a terrorist?
A group of banks are considering a group settlement. “A group of banks being investigated in an interest-rate rigging scandal are looking to pursue a group settlement with regulators rather than face a Barclays-style backlash by going it alone, people familiar with the banks’ thinking said. Such discussions are preliminary, and it is unclear if regulators will enter these talks, aimed at resolving allegations that banks attempted to manipulate the London interbank offered rate, or Libor, a benchmark that underpins hundreds of trillions of dollars in contracts. Still, there are powerful incentives for the banks to enter joint negotiations…The sources told Reuters that none of the banks involved now want to be second in line for fear that they will get similarly hostile treatment from politicians and the public.” Katharina Bart and Diane Bartz in Reuters.
@nicholasdunbar Proposed Libor settlement boils down to: ‘How much do we need to pay for you not to publish all our juicy emails?’
Wall Street may sue Wall Street over Libor. “Wall Street, grappling with mounting regulatory probes and investor claims over alleged interest-rate manipulation, may face yet another formidable foe: Itself. Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS) are among financial firms that may bring lawsuits against their biggest rivals as regulators on three continents examine whether other banks manipulated the London interbank offered rate, known as Libor, said Bradley Hintz, an analyst with Sanford C. Bernstein & Co. Even if Goldman Sachs and Morgan Stanley forgo claims on their own behalf, they oversee money-market funds that may be required to pursue restitution for injured clients, he said.” Donal Griffin in Bloomberg.
Central bankers will consider scrapping Libor in September. “Central bankers and regulators will hold talks in September on whether the troubled global Libor interest rate can be reformed or whether it is so damaged that the benchmark of borrowing costs should be scrapped. Bank of England Governor Mervyn King told fellow central bankers in a letter that it was ‘very clear that radical reforms of the Libor system are needed’. Fed Chairman Ben Bernanke and global financial regulator Mark Carney, who is also governor of the Bank of Canada, on Wednesday floated possible alternatives to the London interbank offered rate, which some bankers manipulated in the 2007-09 financial crisis.” Randall Palmer in Reuters.
The scandal has hit Germany. ”German banks are caught in the cross hairs of the global investigations into rate manipulations. Deutsche Bank and the now-defunct WestLB AG were both given positions on the panel that created the London interbank offered rate, or Libor, considered a prestigious posting at the time for a foreign bank. Now both are complying with regulator requests for documentation in an investigation into at least 15 global financial institutions to determine whether banks purposefully manipulated Libor rates last decade, in part to disguise high funding costs during the 2008 financial crisis.” Laura Stevens in The Wall Street Journal.
Citi may have been the biggest Libor liar. “Earlier this week, Citigroup CEO Vikram Pandit told analysts not to use Barclays’ $450 million Libor settlement as a guidepost for what his firm might have to pay. And he could be right. Citigroup (C) might end up paying much more. A number of studies have shown that when it comes to lying about the key bank rate, Barclays was far from the worst offender. That title may belong to Citi. In early 2010, two economics professors from UCLA and the University of Minnesota looked at Libor manipulation and found that, at least according to one measure, Citi had misstated its lending rate by more than any other large U.S. bank in the run up to the financial crisis. The worst offender worldwide, according to the analysis, was the Royal Bank of Canada.” Stephen Gandel in Fortune.
WEIL: The Justice Department let Barclays’ executives off the hook. “Imagine you ran a too-big-to-fail bank under criminal investigation by U.S. prosecutors. Now ask yourself this: How much of your company’s money would you pay to have the Justice Department inoculate you personally against the prospect of any government charges? If you said ‘the sky’s the limit,’ you’re not alone. Prosecutors often settle claims against corporations in exchange for fines, while letting the executives off scot-free…In essence, although it didn’t mention him by name, the Justice Department publicly cleared Diamond of wrongdoing over the way he responded to a pivotal phone call from Paul Tucker…By all appearances, Barclays paid a lot of money for a deal that let its top executives off the hook, while prosecutors accepted Diamond’s version of events as part of the negotiations. That let them get a settlement and move on. Whatever its basis for concluding that Diamond’s story was the truth, the Justice Department owes the world an explanation.” Jonathan Weil in Bloomberg.
WARREN: The Libor scandal shows we can’t weaken Wall Street regulations. “The Libor scandal is more than just the latest financial deception to come to light. It exposes a fraud that runs to the heart of our financial system…Real accountability would mean prosecuting the traders and bank officials who violated federal laws and prosecuting the executives who knew what they were up to…But the heart of accountability lies deeper. It rests on acknowledging that we cannot trust Wall Street to regulate itself — not in New York, London or anywhere else. The club is corrupt. When Mitt Romney says he will move to repeal all of the new financial regulations, he supports a corrupt system. When members of Congress grill regulators for being too tough on Wall Street and slash the budgets of the regulators charged with overseeing Wall Street, they prop up a corrupt system.” Elizabeth Warren in The Washington Post.
Top op-eds
1) RYAN: The U.S. needs a debt fix to avoid a lost decade. “Sluggish economic growth and our crushing burden of debt are the result of a broken federal government. Washington has a critical role in defending our natural rights, keeping the US safe and promoting opportunity for all, particularly society’s most vulnerable. Yet both political parties – for years – have pushed government beyond its core functions, increasing spending to unsustainable levels. Repeated rounds of incomplete quick fixes will only guarantee that the US enters its own lost decade or even a lost generation. Structural reforms that convincingly reduce debt and ignite growth are what we need to prevent those outcomes.” Paul Ryan in The Financial Times.
2) KRUGMAN: The recovery isn’t being held back because Barack Obama doesn’t like rich people. “Not only do many of the superrich feel deeply aggrieved at the notion that anyone in their class might face criticism, they also insist that their perception that Mr. Obama doesn’t like them is at the root of our economic problems. Businesses aren’t investing, they say, because business leaders don’t feel valued. Mr. Romney repeated this line, too, arguing that because the president attacks success ‘we have less success.’ This, too, is crazy…There’s no mystery about the reasons the economic recovery has been so weak. Housing is still depressed in the aftermath of a huge bubble, and consumer demand is being held back by the high levels of household debt that are the legacy of that bubble. Business investment has actually held up fairly well given this weakness in demand. Why should businesses invest more when they don’t have enough customers to make full use of the capacity they already have?” Paul Krugman in The New York Times.
3) SCHNAPP: Med school grads earn less and take on more risk than business school grads. “Proposals for transforming compensation for physicians expose a peculiar difference between business- and medical-school graduates. MBAs can readily skate past even fairly egregious business misjudgments and misdeeds. An M.D. must bear the tangible cost of malpractice insurance, a very considerable one in such specialties as surgery and obstetrics. If a physician is tagged, fairly or even unfairly, with above-average professional failings, his insurance premiums skyrocket. Unlike the investment banker who presides over a major bungle, he may even lose the license to practice.” John Schnapp in The Wall Street Journal.
4) GERSON: Educational federalism is a massive failure. “The boldest use of the waiver power, however, has come on the No Child Left Behind Act of 2001 (NCLB)…Right and left — Republican governors and teachers unions — have found rare ideological agreement on educational federalism. The only problem: Education is a massive failure of federalism. By the second half of the 20th century, America’s public schools were betraying many of the students in their charge, including the overwhelming majority of poor and minority students. In 2000, 5 percent of African American fourth-graders and 7 percent of their Hispanic peers were assessed proficient in math…There is room for improvement in NCLB — some adjustments in standards, but mainly to make them more uniform and rigorous. These waivers provide money to states with fewer strings attached, an approach that failed for 40 years.” Michael Gerson in The Washington Post.
5) ROLANDO: Retiree health benefits are to blame for the Postal Service’s red ink. “There is indeed red ink, but the reasons are unrelated to the mail. In 2006 Congress required that, within the next decade, the Postal Service pre-fund future retiree health benefits for the next 75 years — a burden no other agency or company faces. That accounts for 85 percent of all of the agency’s red ink since — and more than 90 percent of the $6.46 billion shortfall from the first half of fiscal 2012. Before pre-funding began in 2007, the Postal Service had annual profits in the low billions.” Fredric Rolando in The Washington Post.
Top long reads
Peter Whoriskey on drugs taxpayers spend billions on with no evidence that they work: “For years, a trio of anemia drugs known as Epogen, Procrit and Aranesp ranked among the best-selling prescription drugs in the United States, generating more than $8 billion a year for two companies, Amgen and Johnson & Johnson. Even compared with other pharmaceutical successes, they were superstars. For several years, Epogen ranked as the single costliest medicine under Medicare: U.S. taxpayers put up as much as $3 billion a year for the drugs. The trouble, as a growing body of research has shown, is that for about two decades the benefits of the drug — including ‘life satisfaction and happiness’ according to the FDA-approved label — were wildly overstated, and potentially lethal side effects, such as cancer and strokes, were overlooked.”
@BCAppelbaum: An infuriating, heartbreaking story about the medication that used to cost Medicare the most money.
Bill McKibben on the new math of global warming: “If the pictures of those towering wildfires in Colorado haven’t convinced you, or the size of your AC bill this summer, here are some hard numbers about climate change: June broke or tied 3,215 high-temperature records across the United States. That followed the warmest May on record for the Northern Hemisphere – the 327th consecutive month in which the temperature of the entire globe exceeded the 20th-century average, the odds of which occurring by simple chance were 3.7 x 10-99, a number considerably larger than the number of stars in the universe. Meteorologists reported that this spring was the warmest ever recorded for our nation – in fact, it crushed the old record by so much that it represented the ‘largest temperature departure from average of any season on record.’ The same week, Saudi authorities reported that it had rained in Mecca despite a temperature of 109 degrees, the hottest downpour in the planet’s history.”
Alternative rock interlude: Black Francis plays “I Burn Today” for 89.3 The Current.
Got tips, additions, or comments? E-mail me.
Still to come: Bad news for housing; readmission rates stay high; a new cybersecurity bill; the drought may get worse; and a watermelon explodes slowly.
Previously owned home sales fell in June. “Housing markets that just two years ago struggled with a glut of homes are now facing a new problem: There are fewer properties to lure buyers. Sales of previously owned homes fell 5.4% in June from May to a seasonally adjusted annual rate of 4.37 million, the National Association of Realtors said Thursday. While above the sales level of a year ago, the number nonetheless disappointed analysts because other recent housing indicators have signaled stronger improvement…Some economists and the Realtors’ group attributed last month’s decline to a sharp drop in the number of homes on the market, leaving would-be buyers with less to choose from.” Nick Timiraos and Kelsey Gee in The Wall Street Journal.
@NickTimiraos: June’s home sales report is the weakest in 8 months, but it’s still better than 15 of the 16 months before that.
@goldfarb: It looks like this may well be the second worst quarter of GDP growth since the recession ended.
Senate Democrats are dropping an estate tax plan. “Senate Democratic leaders are eliminating a provision to tax wealthy estates in order to shore up support within their ranks for President Barack Obama’s election-year tax plan, senators and aides said Thursday. Since there was no consensus in the Senate Democratic Caucus over the levels to tax estates transferred after a person’s death, Senate Majority Leader Harry Reid told senators Thursday he’d drop that provision…The original version of the Senate Democrats’ tax legislation included a provision that set the maximum estate tax rate at 45 percent for estates valued at more than $3.5 million. Right now, there’s a 35 percent rate for estates worth more than $5.12 million. But if Congress doesn’t act, estates worth $1 million could be hit with a 55 percent tax rate next year.” Manu Raju and Seung Min Kim in Politico.
Extending tax cuts for the rich would cost about $80 billion a year. “A Republican proposal to preserve tax cuts for the nation’s wealthiest households next year would cost about $80 billion more than a Democratic proposal to extend the cuts solely for middle-class taxpayers, according to official estimates released Thursday. The GOP measure, introduced by Senate Republicans, would devote an additional $50 billion to retaining the George W. Bush-era tax cuts for taxpayers in the top two tax brackets. Reducing the estate and gift tax, which disproportionately benefits the wealthy, would eat up another $31 billion, according to cost estimates by the nonpartisan Joint Committee on Taxation. All told, the Republican measure would add $300 billion to next year’s budget deficit, the JCT said. A competing Democratic proposal to extend the Bush tax cuts only on income under $250,000 would increase the deficit by about $223 billion next year.” Lori Montgomery in The Washington Post.
Time is running out for the SEC to pursue financial crisis fraud. “Five years after the financial crisis began to unfold, questions are arising about whether federal securities regulators are running out of time to pursue alleged fraud. The answer, as usual, depends on who you ask. Some courts have ruled that the Securities and Exchange Commission can only obtain civil penalties for fraud within five years of the activity taking place. More recently, the influential federal district court in Manhattan ruled that time runs out five years after the SEC discovers or should have discovered the alleged fraud.Either way, the agency is pressing up against deadlines — at least in matters that arose early in the financial crisis, which erupted in mid-2007, legal experts said…The SEC has charged 110 entities or individuals in financial crisis-related cases and collected $1.6 billion in penalties, the agency said.” Dina ElBoghdady in The Washington Post.
Lawmakers are pushing a bill to let payday lenders operate under federal rules. “A bipartisan team of House lawmakers is pushing new legislation that would allow nonbank lenders, including those typically known as payday lenders, to choose to operate under a federal charter and avoid dealing with a patchwork of often conflicting state laws. Supporters, which include an influential group of online providers of short-term, small-dollar loans, say the measure would help consumers who can’t get affordable credit from traditional sources such as credit cards and bank loans, especially given the current tight lending environment in which only consumers with sterling credit scores can obtain loans. More than a dozen states either outright or indirectly ban payday lending, for instance, while others have varying laws governing short-term lending that some industry players says makes it harder to get new products to the market and keeps costs higher than they need to be.” Victoria McGrane in The Wall Street Journal.
Short film interlude: Scary Smash, a story written and told by 5-year-old Brett Baligad.
Health Care
Many House Republicans want more votes against Obamacare. “A large bloc of House Republicans urged their leaders to hold more votes to block funding for the healthcare law. Joined by roughly half of the House GOP, Reps. Michele Bachmann (R-Minn.) and Jim Jordan (R-Ohio) stated that efforts to subvert ‘ObamaCare’ must continue ‘until we are successful.’ ‘We urge you not to bring to the House floor … any legislation that provides or allows fund to implement ObamaCare,’ they wrote in a letter, adding that all current implementation funds should be rescinded.” Sam Baker in The Hill.
Hospital readmission rates remain high. “Hospitals are making little headway in reducing the frequency at which patients are readmitted despite a government campaign and the threat of financial penalties, according to Medicare data released Thursday. The federal government and health policy experts consider frequent readmissions a sign of the shortcomings of the nation’s health-care system, with more than one in five Medicare patients returning to the hospital within a month of discharge. Medicare in October will begin to penalize hospitals with higher than expected readmission rates as required by the 2010 federal health-care law…The Medicare data published Thursday on its Hospital Compare website showed that 19.7 percent of heart attack patients were readmitted within 30 days of discharge, a drop of only a 0.1 percentage point from the previous year’s figures.” Jordan Rau in The Washington Post.
Domestic Policy
The White House backed discharging some student debt through bankruptcy . “The Obama administration urged Congress to make it easier for people to discharge a portion of certain student debt by filing for bankruptcy protection. The recommendation, in a report by the Education Department and the Consumer Financial Protection Bureau, wouldn’t affect the vast majority of student debt, which is issued by the federal government. It would apply only to the roughly $150 billion, or 15% of total outstanding student debt, issued by private lenders such as SLM Corp.’s Sallie Mae and Wells Fargo & Co. Consumer bureau chief Richard Cordray said Congress should consider modifying a 2005 law that, except in rare circumstances, prohibits discharging private student loans through bankruptcy.” Josh Mitchell in The Wall Street Journal.
@rortybomb: Just shy of 2-year bday, @CFPB puts out solid, quality report on private student loans, with strong recommendations.
A revised cybersecurity bill was introduced. “Senate Homeland Security Committee leaders Sens. Joe Lieberman (I-Conn.) and Susan Collins (R-Maine) introduced a revised version of their cybersecurity bill on Thursday. The latest version of the bill includes elements of a voluntary program outlined in a compromise framework drafted by a bipartisan group of senators led by Sens. Sheldon Whitehouse (D-RI) and Jon Kyl (R-Ariz.)…Senate Majority Leader Harry Reid (D-Nev.) on Thursday put the new version of the bill on the Senate calendar…Lieberman had said he expects the Senate to take up the cybersecurity bill by the end of next week.” Jennifer Martinez in The Hill.
Some House Republicans want action on the farm bill this month. “More than three dozen House Republicans — including a member of the GOP leadership — have joined Democrats to press Speaker John Boehner (R-Ohio) to bring the farm bill to the floor this month. Behind Reps. Kristi Noem (R-S.D.) and Peter Welch (D-Vt.), the bipartisan group of lawmakers says reauthorizing the bill, which expires Sept. 30, is necessary to ensure the nation’s farmers ‘can continue to provide an abundant, affordable and safe food supply.’…The letter was signed by 24 Democrats and 38 Republicans, including Rep. Cathy McMorris Rodgers (R-Wash.), who is a member of GOP leadership as vice chairwoman of the House Republican Conference.” Mike Lillis in The Hill.
Slow motion interlude: A watermelon explodes in slow motion.
The worst drought in over half a century is set to get worse. “The drought that has settled over more than half of the continental United States this summer is the most widespread in more than half a century. And it is likely to grow worse. The latest outlook released by the National Weather Service on Thursday forecasts increasingly dry conditions over much of the nation’s breadbasket, a development that could lead to higher food prices and shipping costs as well as reduced revenues in areas that count on summer tourism. About the only relief in sight was tropical activity in the Gulf of Mexico and the Southeast that could bring rain to parts of the South…The government has declared one-third of the nation’s counties — 1,297 of them across 29 states — federal disaster areas as a result of the drought, which will allow farmers to apply for low-interest loans to get them through the disappointing growing season.” John Eligon in The New York Times.

Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.

RTTNews Daily Market Analysis

RTT News: Global Financial Newswires
Daily Market Analysis
Friday, July 20, 2012, 09:06
The major U.S. index futures are pointing to a lower opening on Friday, with sentiment weighed down by risk aversion amid lingering apprehension about the economy's trajectory and some mixed earnings. Risk assets are all moving to the downside. In the absence of any major economic catalysts, the negativity is likely to cloud market sentiment. Earlier today, Spain got a relief after Eurozone finance ministers approved a Spanish bailout deal. The markets may not get an impetus from the development, as the problem at hand is so large to be tackled by such modest measures. (Jul 20, 2012) Full Article

Morning Market Briefing July 20, 2012

Commentary  July 20, 2012
After trending higher over the past few sessions, stocks are likely to move back to the downside in early trading on Friday. The major index futures are currently pointing to a notably lower open for the markets, with the Dow futures down by 66 points. (Jul 20, 2012) Full Article
Economic News
The U.K. government should not accelerate its fiscal consolidation if growth fails to gather momentum despite further monetary and credit easing, the International Monetary Fund said in a review report on Thursday. (Jul 20, 2012) Full Article
Eurozone finance ministers are expected to sign an agreement on the proposed financial assistance to Spain to recapitalize its troubled banks, at a meeting on Friday. (Jul 20, 2012) Full Article
Import prices in Australia rose more than expected in the June quarter with the weak dollar pushing up prices of fuel and pharmaceutics. (Jul 20, 2012) Full Article
Germany's producer price inflation eased more-than-expected in June to its lowest level in two years, the Federal Statistical Office said Friday. (Jul 20, 2012) Full Article
The U.K. public deficit widened in June raising concern about the ability of the government to bring down its shortfall to the target as the economy is struggling to avoid sinking deeper into a double-dip recession. (Jul 20, 2012) Full Article
Eurozone finance ministers unanimously agreed the bailout deal for Spanish banks on Friday during a conference call, the Eurogroup said in a statement. The bailout will provide funding up to EUR 100 billion, as agreed last month. In the beginning, EUR 30 billion will be set aside to be used in case of 'urgent unexpected financing needs'. (Jul 20, 2012) Full Article
Earnings News
Advanced Micro Devices Inc. (AMD) on Thursday reported 39 percent decline in second-quarter profit and missed estimates, hurt by lower demand for its desktop processors in China and Europe. (Jul 20, 2012) Full Article
Google Inc. (GOOG) on Thursday reported better-than-expected earnings for the second quarter, thanks to online advertising revenue. The recent acquisition of Motorola Mobility Holdings helped drive up Internet giant's overall sales. (Jul 20, 2012) Full Article
Microsoft Corp. (MSFT) on Thursday posted its first quarterly loss in 26 years, due to several one-time items. However, the software giant's adjusted earnings came in above expectations. (Jul 20, 2012) Full Article
Thursday, SanDisk Corp. (SNDK) posted a fall in earnings for the second quarter, dented by weaker sales and profit margins. However, the results came in above Street view. (Jul 20, 2012) Full Article
Baker Hughes Inc. (BHI) on Friday reported higher-than expected results for the second quarter on back of improved results in US onshore projects as well as increased revenue from its business in Europe and the Middle East. (Jul 20, 2012) Full Article
Friday, SunTrust Banks Inc. (STI) reported a 54 percent rise in second-quarter profit, surpassing consensus, as provisions for credit losses declined, amid higher revenues. (Jul 20, 2012) Full Article
Broker Ratings Changes
KeyBanc Capital Markets Downgrades Hub Group Inc. (HUBG) To Hold From Buy
(Jul 20, 2012)
KeyBanc Capital Markets Upgrades Stanley Black & Decker, Inc. (SWK) To Buy From Hold With $80 Price Target
(Jul 20, 2012) 
Nomura Starts EQUINIX INC (EQIX) At Buy With $210 Price Target
(Jul 20, 2012)
Nomura Starts Rackspace Hosting Inc. (RAX) At Neutral With $47 Price Target
(Jul 20, 2012) 
Todays WS Events
American Electric Power Q2 12 Earnings Conference Call At 9:00 AM ET
American Electric Power Co., Inc. (AEP) will host a conference call at 9:00 AM ET on July 20, 2012 to discuss its Q2 12 Earnings Results. To access the live webcast, visit (Jul 20, 2012) 
Baker Hughes Q2 12 Earnings Conference Call At 8:00 AM ET
Baker Hughes Inc. (BHI) will host a conference call at 8:00 AM ET on July 20, 2012 to discuss its Q2 12 earnings results. To access the live webcast, log on at To hear the live call, dial 800-374-2469(US) or 706-634-7270 (International). A replay of the call can be heard by dialing 800-585-8367 (US) or 404-537-3406 (International) with access code 59811229. (Jul 20, 2012)
First Horizon National Q2 12 Earnings Conference Call At 9:30 AM ET
First Horizon National Corp. (FHN) will host a conference call at 9:30 AM ET on July 20, 2012, to discuss Q2 12 earnings results. To access the live audio webcast, log on to To listen to the call, dial 877-303-6618 (US) or 224-357-2205 (International) with conference ID number 93925894. For a replay call, dial 855-859-2056 or 404-537-3406 with passcode 93925894. (Jul 20, 2012)
General Electric Q2 12 Earnings Conference Call At 8:30 AM ET
General Electric Company (GE) will host a conference call at 8:30 AM ET on July 20, 2012 to discuss Q2 12 Earnings results. To access the live webcast, visit (Jul 20, 2012)
Schlumberger Q2 12 Earnings Conference Call At 9:00 AM ET
Schlumberger Ltd. (SLB) will host a conference call at 9:00 AM ET on July 20, 2012 to discuss its Q2 12 earnings results. To access the live webcast, log on at To hear the live call, dial + 1-800-230-1951 (US) or +1-612-234-9960 (International). A replay of the call can be heard by dialing +1-800-475-6701 (US) or +1-320-365-3844 (International) with passcode 246811. (Jul 20, 2012) 
SunTrust Banks Q2 12 Earnings Conference Call At 8:00 AM ET
SunTrust Banks Inc. (STI) will host a conference call at 8:00 AM ET on July 20, 2012, to discuss Q2 12 earnings results. To access the live webcast log on to To listen to the live call, dial 1-888-972-7805 (US) or 1-517-308-9091 (International) with passcode: 2Q12. For a replay call, dial 1-800-239-4590 (US) or 1-402-220-9698 (International). (Jul 20, 2012)
Xerox Q2 12 Earnings Conference Call At 10:00 AM ET
Xerox Corp. (XRX) will host a conference call at 10:00 AM ET on July 20, 2012 to discuss Q2 12 Earnings results. To access the live webcast, visit (Jul 20, 2012) 

Spain Bailout: Eurogroup approves Spain bank bailout: reports - by MarketWatch

By MarketWatch 
FRANKFURT (MarketWatch) -- Euro-zone finance ministers on Friday formally approved an agreement with Spain that will allow the country's government to borrow as much as 100 billion euros ($123 billion) from the euro zone's rescue funds to recapitalize its ailing banking sector, news reports said. "We have formally approved the memorandum that lays out the conditions under which Spain can be lent money for the recapitalization of its banks," Luxembourg Finance Minister Luc Frieden told reporters, according to Reuters. Approval was widely expected. Spanish government bonds remained under pressure, with the 10-year yield ES:10YR_ESP +2.56% rising 0.09 percentage point to 7.08%, according to Tradeweb. The euro EURUSD -0.7447% was down 0.7% versus the dollar at $1.2192.

DealBook | DealB%k Today's Top Headlines: Libor Scandal Shows Many Flaws in Rate-Setting

Friday, July 20, 2012
Top Story
Libor Scandal Shows Many Flaws in Rate-Setting It is an open secret in the banking world: the interest rates for many mortgages and loans are based on a benchmark that is largely guesswork.

The flaws in the rate-setting process, which is used to determine the pricing for trillions of dollars of financial products, have been exposed by the latest banking scandal. Regulators around the world are investigating whether big banks gamed the rates for their own benefit before and after the financial crisis.

But even if banks do not deliberately manipulate the rates, the benchmark remains vulnerable. Banks derive the rates from estimates rather than real market data. So the benchmark, a measure of how much banks charge each other for loans, does not necessarily represent actual borrowing costs. This weakness has only been exacerbated in recent years, as banks have mostly stopped lending to each other.

The Federal Reserve chairman, Ben S. Bernanke, told Congress this week that he did not have "full confidence" in the process, calling it "structurally flawed."
Mervyn King, governor of the Bank of England.
Bank of England Says New York Fed Gave No Warning on Rate-Rigging American authorities did not warn British officials about the rate-rigging scandal during the height of the financial crisis in 2008, according to documents released by the Bank of England on Friday.
Asian Financial Regulators Examine Local Lending Rates Financial authorities in Hong Kong, Singapore and South Korea said they are looking into how lenders within their jurisdictions set major rates.
London Fund-Raisers Become P.R. Headache Mitt Romney is planning two events for donors in London next week, and several of the hosts "are top executives at banks tied to the interest rate-fixing scandal that is now engulfing London's financial and political world, linking Mr. Romney, however superficially, to a messy moment in the continuing debate over Wall Street excesses," The New York Times reports.
Lavish Pay for Yahoo's C.E.O. Marissa Mayer's pay package, which could reach $129 million over five years, includes bonuses that depend on her ability to turn around the company. The Bits blog notes that Ms. Mayer's compensation is higher than that of Meg Whitman, but not as high as Timothy D. Cook's.
Google's Chief Is Still a No-Show Larry Page, Google's chief executive, was absent from the company's earnings call on Thursday, after recently missing other Google events. The Bits blog writes: "Mr. Page has lost his voice. Three people who have been briefed on Mr. Page's condition but were not authorized to discuss it said it is not a serious health issue."
An Insider's View of the Bailout A new book by Neil M. Barofsky, who was the special inspector general of the Troubled Asset Relief Program, includes a quotation from Timothy F. Geithner that is not fit to be printed in a family newspaper.
Heineken Offers $4.1 Billion for Asia Pacific Breweries Stake Heineken's bid for a bigger stake in the Singapore-listed brewer of Tiger Beer trumped an offer by a Thai brewer, and would help bolster the Dutch company's footprint in fast-growing emerging markets.
Duke Energy Tried to Stop Merger, Former Progress Chief Says William Johnson, the former chief executive of Progress Energy, indicated that the relationship between the companies soured after Duke tried to back out of the deal.
Unit of PPG to Merge With Georgia Gulf in $2 Billion Deal The specialty chemicals company PPG Industries will spin off a commodities unit and merge it with Georgia Gulf in a deal valued at about $2 billion.
Vivendi Said to Consider Selling Brazil Unit Reuters reports: "Vivendi is considering selling its Brazilian telecom unit GVT, sources familiar with the matter said, in a sale that could help its battered shares regain lost ground. A sale of GVT - a cherished jewel in Vivendi's crown - could be worth up to 8.5 billion euros ($10.42 billion) and comes after the French group's exploratory talks to offload video games unit Activision Blizzard found few takers at the price it sought, the sources said."
Indie Labels Await Leavings From Universal-EMI Deal The Media Decoder blog writes: "After tough scrutiny from the European Commission, Universal now seems willing to sell large chunks of EMI as concessions to regulators - as much as half the company could be put up for sale, by one analyst's estimate. And in one scenario now playing itself out with consequences at all levels of the industry, the biggest beneficiary of this process might be independent labels."
Chevron Buys Oil Assets in Iraqi Kurdistan The New York Times reports: "Chevron, the second-largest United States oil company after Exxon Mobil, said Thursday that it was entering the Kurdistan region of Iraq by buying a majority stake in two exploration blocks."
Singapore Exchanges Plays Down Talk of a London Merger The Financial Times reports: "The Singapore Exchange said on Friday it was not in merger talks with the London Stock Exchange, scotching speculation of a tie-up between the U.K. and Asian bourses."
Penguin Acquires Self-Publishing Company Penguin has pushed into the booming self-publishing market by acquiring Author Solutions, a company based in Bloomington, Ind., for $116 million, Julie Bosman reports for The New York Times.
After Health Care Ruling, Centene Is Cast as Takeover Target The Supreme Court's decision upholding President Obama's health care overhaul could spur deal-making in the Medicaid sector, and at least one analyst says the Centene Corporation is a potential takeover target.
Robert Wolf will leave UBS to start a firm called 32 Advisors.
Wolf to Leave UBS to Form New Firm Robert Wolf, a top executive at UBS and a major fund-raiser for President Obama, has left the Swiss bank to form his own advisory shop, according to an internal memorandum reviewed by DealBook.
Goldman's Ex-Mortgage Chief Plans a Fund for Foreclosed Homes Donald Mullen, a former Goldman Sachs executive who was an architect of the subprime mortgage trade, is trying to raise at least $500 million for a fund that will buy foreclosed homes and turn them into rental properties, Reuters reported.
Ghosts of Mortgage Lending Past Reuters reports: "Investors like Fannie Mae and Freddie Mac have been pressing banks to buy back bad mortgages for years, but in recent months those requests have intensified, the banks have said in recent second-quarter earnings reports."
Citic Securities Said to Be Near Deal for Hong Kong Firm The Wall Street Journal reports: "China's Citic Securities is close to a deal to acquire Hong Kong-based brokerage CLSA Asia-Pacific Markets from France's Crédit Agricole SA following lengthy negotiations, people familiar with the matter said Friday."
Morgan Stanley and Citigroup Differ on Value of Broker Reuters reports: "Morgan Stanley reckons the retail brokerage business it jointly owns with Citigroup is worth less than half as much as Citigroup believes, Citi said in a filing on Thursday with the Securities and Exchange Commission."
Rothschild Has Chosen an Heir Alexandre de Rothschild, 32, who worked at financial firms before joining his family's bank, is "being groomed to run Rothschild and succeed his 69-year-old father, David, within five years, according to three people with direct knowledge of the plan," Bloomberg News reports.
Credit Suisse Lures Away Morgan Stanley Banker David Hammond, a longtime Morgan Stanley banker, will lead Credit Suisse's metal and mining advisory unit.
Report Describes Student Loan Woes The New York Times reports: "As in the housing market, securitization of student loans led to more aggressive underwriting for borrowers who could not possibly afford the debt they took on, according to a government report."
  • new york times 
    K.K.R. Opens Its Doors to Individual Investors K.K.R. is starting two mutual funds aimed at individual investors, departing from the buyout industry's practice of allowing only institutions and the wealthy to commit capital to deals.
    Blackstone Profit Fell 74% in Second Quarter The Blackstone Group on Thursday reported a 74 percent decline in second-quarter earnings, underscoring some of the challenges the private equity industry faces.
    Leon Black Commits to 3 More Years at Apollo Reuters reports: "Apollo Global Management said on Thursday it had entered into three-year agreements with its founders, including billionaire Leon Black, having previously said it was debating whether such contracts were necessary in the first place."
    A Private Equity Paradox The political debate over Mitt Romney's past status as head of Bain Capital has drawn a comparison to quantum mechanics. Tim Fernholz writes in a Reuters blog post: "From 1999 to 2002, he both was and was not the chief executive officer and sole owner of a powerful Bain Capital investment fund. After that period, Romney's surrogates explain, he 'retroactively' retired from this post. But, as Schrödinger's famous thought experiment reminds us, just because you find a retroactively dead cat doesn't mean he wasn't previously simultaneously alive and dead."
    TPG Said to Consider Bid for Nine Entertainment Reuters reports: "U.S. private equity firm TPG is considering partnering with a Hollywood media executive to bid for debt-laden Australian media company Nine Entertainment, sources said, in what could be a $3.1 billion buyout."
    Cartesian Capital Invests in Russian Exchange Reuters reports: "A U.S.-based private equity firm has invested alongside a Russian state fund in Moscow's MICEX-RTS bourse, gaining access to the stock exchange ahead of an expected IPO, the parties announced on Friday."
    No Jail Time for Cooperating Witness in Galleon Case Anil Kumar, a former top partner at McKinsey & Company, was a crucial witness for the government in its cases against the hedge fund manager Raj Rajaratnam and the former Goldman Sachs board member Rajat Gupta.
    Insider Trading Sentences Get Longer Bloomberg News reports: "Since Jan. 1, 2011, the judges have sent the average violator to prison for more than 22 months, according to an analysis of sentencing data by Bloomberg News. That was a 20 percent increase from the average term of 18.4 months during the previous eight years."
    Hedge Fund Assets Shrink Reuters reports: "Even though investors put a net $4.1 billion into hedge funds in the second quarter of 2012, it was not enough to offset performance losses at many funds that resulted in total industry assets shrinking. Hedge fund capital dropped from $2.13 trillion in the first quarter to $2.1 trillion, with the average fund down 2.7 percent, fund tracking firm Hedge Fund Research said on Thursday."
    A Breakup for Whitney Tilson The New York Post reports: "Whitney Tilson and his longtime partner at T2 Partners Management, Glenn Tongue, are parting ways after the second-worst monthly performance ever for the firm. Tilson - an outspoken hedge-fund manager and regular TV talking head - said he will spend more time running money and less time talking about it."
    Palo Alto Networks Prices I.P.O. Above Expected Range Palo Alto Networks raised $260.4 million in its I.P.O., and Kayak Software, which also priced its deal above the proposed range, raised $91 million, Bloomberg News reports.
    Fender Withdraws Its I.P.O. The guitar maker cited market conditions in deciding not to go public.
    Taesa of Brazil Raises $873 Million in I.P.O. Reuters reports: "Transmissora Aliança de Energia Elétrica, a unit of power holding company Cemig, raised on Thursday 1.76 billion reais ($873 million) in an initial public offering, an indication of the growing appeal of energy deals in Latin America's largest economy."
    Asian Property Trust Looks to Attract Investors Far East REIT, a real estate trust that owns hotels in Singapore, began pre-marketing for an I.P.O. of up to $558 million, "betting on demand from yield-hungry investors burnt by volatile global markets," Reuters reports.
    Bain Starts a Training Program for Entrepreneurs The venture capital affiliate of Bain Capital announced the launch of StartUp Academy, "a newly created initiative to provide students with invaluable exposure to entrepreneurship and insights on how to build a business and work with innovative."
    Founder of Autonomy Said to Plan Technology Fund Bloomberg News reports: "Mike Lynch, the founder of U.K. data-analysis company Autonomy Corp., is planning to set up a technology investment fund that will back young firms, according to people with knowledge of his plans. Lynch, who left Hewlett-Packard Co. this year after the U.S. company agreed to acquire Autonomy for $10.3 billion last August, will tap the expertise of other former Autonomy executives for the fund, the people said, asking not to be identified as the plans are private."
    New Enterprise Associates Invests in Education Firms The venture capital firm New Enterprise Associates said it led a $25 million financing round in Edmodo, a social network for teachers and students, Bloomberg News reports. The firm this week also added to its stake in Coursera, a site offering higher education classes.
    Build Your Own Mobile Apps The Economist writes: "Several start-ups already offer D.I.Y. app services. Conduit, a firm which was valued at $1.3 billion after JPMorgan acquired a 7 percent stake for $100 million earlier this year, allows people to build mobile apps themselves with a simple graphical interface. AppMakr, a similar service, has helped to create some 10,000 apps."
    German Parliament Backs Spanish Bank Bailout The New York Times reports: "Amid much griping, the German Parliament voted Thursday in favor of a plan to rescue Spanish banks, but only after the government of Chancellor Angela Merkel assured skeptical lawmakers that it was essential to survival of the euro and that the Spanish government would remain responsible for repaying the money."
    Banks Said to Consider Group Settlement in Rate Case Reuters reports: "A group of banks being investigated in an interest-rate rigging scandal are looking to pursue a group settlement with regulators rather than face a Barclays-style backlash by going it alone, people familiar with the banks' thinking said."
    BlackRock Said to Weigh Legal Action Over Libor Fox Business Network, citing an unidentified person with direct knowledge of the matter, reports: "BlackRock, the world's largest money management firm, is weighing what action it should take, if any, in light of allegations that major global banks manipulated a key interest rate that could have depressed investment returns for many of its customers."
    U.S. Said to Speed Sale of Baiout Assets The Wall Street Journal reports: "The U.S. government is speeding up efforts to sell billions of dollars of remaining assets that were acquired in the controversial bailout of the financial system four years ago, according to investors and government officials."
    AMR Can Propose Its Own Bankruptcy Plan Reuters reports: "American Airlines' bankrupt parent AMR Corp won court approval on Thursday to extend through December 28 its exclusive right to present a plan to emerge from bankruptcy."
    Japan Looks to Criminalize Insider Leaks Bloomberg News, citing a document, reports: "Japan's ruling party is seeking changes to insider-trading rules that would allow criminal charges and fines for brokerages and bankers who leak stock offering information."
    Delays for International Accounting Standards "In the world of accounting, the dream of having just one decider, whose rules would apply everywhere, has repeatedly been endorsed by major governments around the world," Floyd Norris writes in his column in The New York Times. But, he continues, "it is not going to happen."
    Deadline Extended for Proposed Dewey Settlement Reuters reports: "The deadline for former partners of bankrupt law firm Dewey & LeBoeuf to reach a settlement has been extended until August 7, according to a former partner who received a copy of an email notice issued by Dewey's restructuring officer."