Opening Bell: 07.18.11

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Senate Debt Plan Promises Months of Budget Wrangling (WSJ)
With few signs of movement over the weekend on negotiations to raise the federal borrowing limit, Senate leaders are planning this week to unveil a back-up plan that would force more budget wrangling before the end of the year…Senate officials worked through the weekend to iron out details of the back up plan by Senate Majority Leader Harry Reid (D.,Nev.) and Senate Minority Leader Mitch McConnell (R.Ky.), who hope by mid-week to introduce the bill to give the president new powers to raise the debt limit.

Moody's suggests U.S. eliminates debt ceiling (Reuters)
The United States is one of the few countries where Congress sets a ceiling on government debt, which creates "periodic uncertainty" over the government's ability to meet its obligations, Moody's said in a report. "We would reduce our assessment of event risk if the government changed its framework for managing government debt to lessen or eliminate that uncertainty," Moody's analyst Steven Hess wrote in the report… Moody's said it had always considered the risk of a U.S. debt default very low because Congress has regularly raised the debt ceiling during many decades, usually without controversy.

EU Stress Tests Fail to Convince Analysts (Bloomberg)
“I’m quite skeptical that this whole exercise will have any favorable consequences,” said Cesar Molinas, a former head of European fixed income at Merrill Lynch & Co. and now an independent consultant. “It seems to have been something of a waste of time and money.”

Pressure rises for Greek debt buy-back, swap (Reuters)
German Chancellor Angela Merkel called on Sunday for private investors to make a major contribution to bailing out Greece, as pressure rose for radical action to cut the country's debt burden. Officials proposed a range of schemes for Europe's bailout fund, the European Financial Stability Facility, to finance a buy-back or a swap in which private owners of Greek government bonds -- banks, insurers and other investors -- would accept cuts in the face value of their holdings.

Economists See Deepening Euro Crisis (WSJ)
All but one of 49 economists surveyed by The Wall Street Journal last week said Greece will be forced to restructure its debt. Fifty-three economists, who are mostly U.S.-based, take part in the survey, but not everyone answers every question.

Gold Rallies to Record in Best Run Since 1980 (Bloomberg)
Immediate-delivery gold gained as much as $6.55, or 0.4 percent, to $1,600.10 an ounce and traded at $1,596.88 by 8:26 a.m. in London. Prices are up for an 11th day, the longest streak of gains since July 1980. Gold for August delivery was 0.5 percent higher at $1,597.50 an ounce on the Comex in New York after reaching a record $1,601.

Goldman says recession risk rising (Fortune)
Goldman Sachs, which just seven months ago was the loudest voice for a stronger than expected U.S. recovery, now expects U.S. output to creep ahead at a snaillike 1.5% clip in the second quarter and a less than vigorous 2% in the third. Friday's call stands as quite a comedown for economist Jan Hatzius, who in May forecast a 2% expansion in the second quarter and a 3.25% gain in the third quarter – numbers that themselves represented a retreat from the firm's bullish start-of-the-year forecast.

Bankruptcy on the table for Alabama County Says Governor (Reuters)
Bankruptcy is still a "very strong possibility" for Alabama's Jefferson County, Governor Robert Bentley said on Saturday -- a move that could make for the largest municipal bankruptcy in U.S. history.

Citigroup Estimates It Has $22 Billion at Risk in Five European Countries (Bloomberg)
Citigroup estimated it has at least $22 billion in loans, trading assets and other “exposures” to Greece, Italy, Portugal, Spain and Ireland. The net figure includes $13 billion in so-called funded exposure as of June 30, mostly in the form of credit to financial institutions and companies, according to an earnings presentation today on the New York-based firm’s website.

Chevron's Email 'Oops' Reveals Energy Giant's Sway Over Markets (WSJ)
The midday email, inadvertently sent Friday to media organizations, contained spreadsheets, tables and charts that gave a breakdown of Chevron's profits, losses and exposures trading crude and refined products such as gasoline. They offered an unusually detailed look at how one of the world's largest energy producers was able to leverage its size and geographic reach to profit to the tune of $360 million this year to date through trading activities.

LME Orders Warehouses To Move Faster (WSJ)
The LME's new rules aim to lower the cost of buying aluminum and help reduce long delays that have angered big consumers like Coca-Cola Co. and Novelis Inc. From April 2012, Goldman's Metro International Trade Services will have to deliver out 3,000 metric tons a day, double the previous rate. While the new delivery rate applies to any warehousing company storing over 900,000 tons of metal in one location, Goldman's Metro is the only one currently doing so.

Obama to nominate Richard Cordray for consumer agency, bypassing Warren (WaPo)
President Obama will nominate former Ohio attorney general Richard Cordray to lead the new Consumer Financial Protection Bureau, sidestepping Harvard professor Elizabeth Warren, who envisioned the agency and spent the past year setting it up, the White House said Sunday. Cordray, who lost his bid for reelection in November, is already at the agency as director of enforcement. The bureau, which will police financial products such as credit cards and mortgages, will officially open its doors Thursday.

Greenhill rushes out results to calm investors (FT)
Greenhill rushed out strong second-quarter earnings ahead of schedule on Sunday as the US investment bank sought to calm investor fears following the departure of senior executives. Shares in Greenhill had dropped 12 per cent on Friday, the largest one-day fall in the company’s history, following reports that a third managing director had departed to a rival…Reliant in large part on the volume of merger and acquisition deals, net income in the quarter of $21m was up from the $17.5m made in 2010, double the consensus prediction of analysts, and a rebound from losses in the first quarter.

Morgan Stanley’s Grimes Masters ‘CityVille’ to Win IPOs From Goldman Sachs (Bloomberg)
When investment bankers fled Silicon Valley after the dot-com bust in 2000, Morgan Stanley (MS)’s Michael Grimes and his team stayed put on Menlo Park’s Sand Hill Road. They’re now listed as the first underwriter on all the hottest Web deals, including the initial public offerings of LinkedIn Corp., Pandora Media Inc., Groupon Inc. and Zynga Inc. Morgan Stanley is even in the running for the lead role in Facebook Inc.’s IPO, which looked like it was a shoo-in for its top rival Goldman Sachs Group Inc. (GS) only a few months ago.

Fed Members Release Financial Reports (RT Economics)
Federal Reserve Vice Chairman Janet Yellen stands as potentially the wealthiest member of the central bank’s board of governors since joining in October. Yellen reported assets valued between $5.1 million and $14.4 million, according to financial disclosure forms released Friday.

Politicians Can’t Agree on Debt? Well, Neither Can Economists (NYT)
The politicians grappling over how to pay the nation’s debts have been contributing to the heat of summer with back-and-forth charges that their opponents are disregarding the laws of economics. Such laws, unfortunately, do not exist. Economists agree that federal borrowing must be reduced, but they do not agree about the proper mix of tax increases and spending cuts.

Talent boom (NYP)
Becky Quick seems to be in her final trimester while Wall Street reporter Kate Kelly is sporting a bump. Media re porter Julia Boorstin gave birth to a baby, Henry, on Wednesday. A network rep said, "CNBC is definitely on a growth trajectory, and we're proud of it."

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