Wild Cards for the Fed’s Exit Strategy (WSJ)
The Federal Reserve’s plans to wind down its big bond-buying program depend on solving four economic puzzles involving the job market, the inflation rate and fiscal policy. Fed Chairman Ben Bernanke gets another chance to clarify the central bank’s thinking when he testifies before Congress on Wednesday and Thursday, after weeks of market volatility generated largely by confusion and uncertainty about the Fed’s plans. Here are four questions that Fed officials are considering as they think about when to pull back on the monetary throttle and that lawmakers might pose to Mr. Bernanke in the days ahead: Is job growth sustainable? … Is the jobless rate overstating the labor market’s health? … Will inflation return to target? … Is more fiscal chaos coming?
Bank of England puts QE differences on hold at first Carney meeting (Reuters)
Bank of England Governor Mark Carney and fellow policymakers voted unanimously against more bond purchases earlier this month, surprisingly setting aside their differences ahead of a review on giving guidance about future interest rates. British government bond prices slid and the pound rallied following release on Wednesday’s of the minutes of the bank’s July 3-4 meeting, the first under Carney and the first to show no support for more quantitative easing bond purchases since last October.
Top Witness for the S.E.C. Turns Testy on the Stand (DealBook)
Over around two hours of testimony, Mr. Pellegrini, a tall, imposing investment executive, repeatedly paused and claimed he could not remember what he previously said. At one point, he complained that his questioner, Matthew T. Martens of the Securities and Exchange Commission, was being too imprecise in his queries, making them hard to answer. “It’s a bit of a trick question, but I’ll try to answer it,” he said. … Mr. Pellegrini at one point spent about 10 minutes bickering with Mr. Martens over the definition of a “custom C.D.O.” Later, Mr. Pellegrini sighed, “I am upset about this conversation.”
Morgan Stanley is having an identity crisis (Qz)
What does Morgan Stanley stand for? It has long been known as an investment banking powerhouse, often going head to head with Goldman Sachs in several areas such as mergers and acquisitions (M&A) and initial public offerings (IPOs.) But Morgan Stanley’s investment banking operations have faded a bit from the spotlight and its trading arm had been disappointing though is staging a comeback, while its wealth management arm is getting more attention—and seeing more success. Overall, Morgan Stanley hasn’t completely adjusted to the world after the financial crisis. In Wall Street’s map of the world, the bank is in something of a no-man’s land.
Alleged Oklahoma burglar accidentally dials 911 during break-in (UPI)
“There was a 911 call made by an individual who was breaking into a residence … . We believe the 911 call was made accidentally by pocket dialing. The two burglars were discussing what they were taking from the house,” Pittsburg County, Okla., Undersheriff Richard Bedford said. Emergency dispatchers listened to the conversation, Bedford added.
Yahoo trims 2013 sales outlook as CEO Mayer’s effort falters (Reuters)
Yahoo Inc trimmed its outlook for 2013 revenue after revealing a sharp 12 percent slide in ad prices in the second quarter, signs that CEO Marissa Mayer’s attempts to revive the struggling Internet giant may not produce quick results. The company is now forecasting revenue of $4.45 billion to $4.55 billion this year, down from $4.5 billion to $4.6 billion previously. Yahoo also reported that second-quarter net revenue was down slightly at $1.071 billion, though it posted adjusted profit that was ahead of Wall Street targets.
Spain Covered 63% of This Year’s Funding Goal, Official Says (Bloomberg)
Spain has covered 63.2 percent of its issuance target for 2013 including short-term bills after a debt sale yesterday and is open to other forms of funding, an Economy Ministry official said. The Treasury in Madrid will consider ways of diversifying its funding methods with instruments such as longer-dated bonds, inflation-linked bonds or dollar bonds if positive market sentiment continues, said the official, who asked not to be named in line with government policy. The yield on Spain’s benchmark 10-year bond has fallen about 300 basis points since European Central Bank President Mario Draghi pledged to support the euro in July 2012. Still, with the economy shrinking, the government is struggling to deal with its fiscal burden. The European Commission forecasts that debt will rise to 97 percent of output next year from 84 percent in 2012.
Hollande Sets Out EU3 Billion in Cuts in Face of Poll Slump (Bloomberg)
President Francois Hollande’s government will today set out 3 billion euros ($3.9 billion) in spending cuts and close tax loopholes as he struggles to revive a stalled economy and his own slumping popularity. The savings are part of Hollande’s MAP program to modernize government services and range from trimming consular services to eliminating special low-tax rates on diesel fuel for farmers and fisherman, according to a presentation to journalists by officials yesterday. For Hollande, cutting state spending is a priority as he seeks to reduce France’s budget deficit after he and his predecessor Nicolas Sarkozy increased taxes by 70 billion euros over three years, helping to choke off growth in Europe’s second-largest economy. Business leaders including Total Chief Executive Christophe de Margerie this month urged the government to shrink itself to give businesses room to grow.
International Paper’s Big Pulp Bet Hits a Frosty Siberia (WSJ)
International Paper’s joint venture in Bratsk has the advantage of being able to harvest logs more cheaply than in most parts of the world. Labor costs are also relatively low, and there is a rail connection to China. But the U.S. company needs to show it can thrive in a business climate hobbled by inefficiency, corruption and bureaucracy. … The company also faces the Wild East atmosphere around the Bratsk mill, a smoky jumble of more than 500 buildings occupying 3,700 acres surrounded by pine-wooded hills along the Angara River. It is a place where temperatures can plunge to 65 below zero Fahrenheit and the air is foul with a putrid smell from pulp production. … After the Soviet Union’s collapse in 1991, however, Bratsk became better known for its crime than its industry. At one point, the pulp plant ran short of money and paid workers with cafeteria coupons. Armed standoffs over ownership of factories took place in Bratsk and elsewhere across Siberia.
Formula 1 boss Ecclestone indicted (BBC)
German prosecutors have indicted Formula One boss Bernie Ecclestone for alleged bribery. The charge relates to a $44m (£29m) payment to a German banker, Gerhard Gribkowsky of Bayern Landesbank. It was linked to the sale of a stake in F1. Mr Ecclestone said he had paid Mr Gribkowsky to avoid a UK tax inquiry into the sale of Formula 1 in 2006, but denied the payments were bribes.
Mass. man fights shark and brings it to shore (CBS)
“I had my shark gear in my car, ran out and got it, threw out half a bluefish on a hook and like 30 seconds later I had hooked up on this shark,” Sudal said. “It just pulled out like a 150 yards of line and started going.” Sudal fought with the brown shark for 45 minutes. When the shark got ashore, he handed the fishing rod to his cousin and then went into the water. “You have to run in the water and grab it by the tail and pull it on shore because you can’t just drag it on because they’re too heavy,” he explained. After having the shark on shore for about a minute, Sudal, who said he caught 100 sharks in the last eight months, let the shark go back into the water.
Vatican offers ‘time off purgatory’ to followers of Pope Francis tweets (Guardian)
In its latest attempt to keep up with the times the Vatican has married one of its oldest traditions to the world of social media by offering “indulgences” to followers of Pope Francis’ tweets. … But a senior Vatican official warned web-surfing Catholics that indulgences still required a dose of old-fashioned faith, and that paradise was not just a few mouse clicks away. “You can’t obtain indulgences like getting a coffee from a vending machine,” Archbishop Claudio Maria Celli, head of the pontifical council for social communication, told the Italian daily Corriere della Sera. Indulgences these days are granted to those who carry out certain tasks – such as climbing the Sacred Steps, in Rome (reportedly brought from Pontius Pilate’s house after Jesus scaled them before his crucifixion), a feat that earns believers seven years off purgatory. But attendance at events such as the Catholic World Youth Day, in Rio de Janeiro, a week-long event starting on 22 July, can also win an indulgence. Mindful of the faithful who cannot afford to fly to Brazil, the Vatican’s sacred apostolic penitentiary, a court which handles the forgiveness of sins, has also extended the privilege to those following the “rites and pious exercises” of the event on television, radio and through social media. “That includes following Twitter,” said a source at the penitentiary, referring to Pope Francis’ Twitter account, which has gathered seven million followers. “But you must be following the events live. It is not as if you can get an indulgence by chatting on the internet.”
