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Opening Bell: 07.11.11

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Debt reduction talks in limbo as clock ticks toward Aug. 2 deadline (WaPo)
Talks among President Obama and congressional leaders Sunday evening failed to break a partisan stalemate over how to raise the federal borrowing limit, leaving the politically charged negotiations in limbo three weeks before the administration says the country will begin to default...Both sides appeared Sunday to dig further into their positions, leaving the talks deadlocked, a historic default looming and a fragile economy increasingly vulnerable to the consequences of Washington’s entrenched partisanship and ideological divide over taxes and entitlements.

Geithner: Failure on debt deal not an option (CBS)
"You can't wait until August 2," Geithner said. "The credit rating agencies of the world have already made it clear in public, the longer we go into July without a path to resolution, the more risk they are going to put a cloud over our credit rating…There's no reason why the leadership in Congress should let that happen," he added. Failure to reach an agreement, he warned, "is not an option."

Deutsche Bank May Risk Co-CEO Pitfalls to Satisfy Jain, Germany (Bloomberg)
Jain, a 48-year-old native of India, may be named co-chief executive officer with Juergen Fitschen, 62, or another German speaker, people familiar with the matter have said. Chairman Clemens Boersig convened the nominations committee of the supervisory board yesterday to push for a two-CEO solution, said the people, who declined to be identified because the talks are confidential…Still, partnering Jain with another executive carries risks because shared leadership can lead to turf battles, divided loyalty among employees and sclerotic decision making, analysts said.

EU stance shifts on Greece default (FT)
European leaders are for the first time prepared to accept that Athens should default on some of its bonds as part of a new bail-out plan for Greece that would put the country’s overall debt levels on a sustainable footing. The new strategy, to be discussed at a Brussels meeting of eurozone finance ministers on Monday, could also include new concessions by Greece’s European lenders to reduce Athens’ debt, such as further lowering interest rates on bail-out loans and a broad-based bond buyback programme. It also marks the possible abandonment of a French-backed plan for banks to roll-over their Greek debt.

Italian Debt Adds to Fears in Euro Zone (NYT)
Top European officials planned to meet on Monday to wrestle with threats to the currency union as fears mounted that Italy could become a victim of the debt crisis even as discussions stalled over a second bailout for Greece…Investors were unnerved in part by evidence of a growing divide between the Italian prime minister, Silvio Berlusconi, and the finance minister, Giulio Tremonti, who has been praised for his handling of the economy during the financial crisis and for maintaining control of the budget deficit. The euro zone has been shaken by the fiscal troubles of Greece, Portugal and Ireland, though their economies are relatively small. The Italian economy is more than twice the size of the combined economies of those three countries.

Italy Regulator Introduces Short Selling Disclosure (Reuters)
Starting on Monday, investors will have to inform Consob of net short positions on Italian stocks when they represent 0.2 percent or more of the company's share capital, the regulator said in a statement on its website. After that, investors will have to notify every variation equal to at least 0.1 percent of the capital.

Jim Rogers: Whatever Happens, Commodities Win (CNBC)
“If the world economy gets better, I earn money on commodities. If the global economy gets worse then they will print more money and I will make money in commodities,” Rogers said.

US hedge funds bet against Italian bonds (FT)
The funds have increased the size of short positions in the last month, speculating that investor concerns over the country’s ability to fund itself may spread from Europe’s periphery to Italy, according to investors in the funds briefed on the strategy.

Sheila Bair’s Bank Shot (NYT)
‘They should have let Bear Stearns fail,” Sheila Bair said.

Gansevoort pool city's dirtiest; public pools much cleaner (NYP)
The Gansevoort Hotel's uber-cool rooftop pool belly-flopped in a Post test for water cleanliness, scoring last among six city swimming spots…The hotel pool was the only one to test positive for coliform bacteria, which could indicate possible fecal contamination, and had the highest levels of "solids" -- organic and mineral particles that shouldn't be there. There was also a high nitrate count and high sodium level.

AIG Will Dump Some Bankers (WSJ)
American International Group Inc. is planning to replace one or more Wall Street banks in a group of four managing its next sale of shares from the U.S. government, reflecting dissatisfaction about the first sale in May. AIG hasn't decided which investment banks that led its first offering to drop, but will definitely make changes to the line-up of lead underwriters before the next share sale later this year, Chief Executive Robert Benmosche said in a recent interview.

Economy Faces a Jolt as Benefit Checks Run Out (NYT)
Close to $2 of every $10 that went into Americans’ wallets last year were payments like jobless benefits, food stamps, Social Security and disability, according to an analysis by Moody’s Analytics. In states hit hard by the downturn, like Arizona, Florida, Michigan and Ohio, residents derived even more of their income from the government. By the end of this year, however, many of those dollars are going to disappear, with the expiration of extended benefits intended to help people cope with the lingering effects of the recession. Moody’s Analytics estimates $37 billion will be drained from the nation’s pocketbooks this year.

Wall St. Banks Expected to Post Weak 2nd-Quarter Results (NYT)
Bank of America, Citigroup, Goldman Sachs and Morgan Stanley are expected to report similar news. After helping prop up Wall Street during the financial crisis, core trading revenue is projected to drop, on average, by as much as 25 percent from the first quarter, according to Credit Suisse research. That will put further pressure on the banks’ growth prospects, which are already strained by stagnant loan growth and more stringent regulation. It is also prompting nearly every major Wall Street firm to contemplate another round of layoffs amid growing concerns that at least part of the weak results are permanent.

McKinsey concedes Galleon case ‘embarrassing’ (FT)
Clients had been very supportive, Dominic Barton, McKinsey’s global managing director, said in his fullest public comments on the affair, pledging to make the organisation stronger. “I feel like some turpentine was thrown on the hood of the car,” Mr Barton told the Financial Times when asked about the state of a brand that has stood for trusted high-level advice and strict client confidentiality. “I wish I could say it changed next week or in six months … I really think it will be in the 10 to 20 year time frame we’ll know.”

AIG Joins Citigroup, GM in Deferred Tax Asset ‘Hall of Fame’ (Bloomberg)
American International Group Inc. (AIG), Citigroup Inc. (C) and General Motors Co. (GM), once the largest insurer, bank and automaker, hold a new distinction after losses forced them to take bailouts. The firms accumulated some of the biggest deferred tax assets that may lower obligations to the government that rescued them. Losses at New York-based AIG and its subsidiaries helped rack up more than $25 billion in the assets.

Longmont Chili's Mistakenly Serves 3 Children Tequila On July 4th (HuffPo)
Bruenning isn't sure her children became intoxicated, though her 8-year-old passed out at the park during the fireworks show and her 6-year-old seemed "extra wild."