Hertz

• Euro-Area Unemployment Increases to Record 12.1% Amid Recession (BBG)
• Fed faces calls for radical reform (FT) - Has Jamie Dimon approved of this message? No? Carry on then
• CEO Pay 1,795-to-1 Multiple of Wages Skirts U.S. Law (BBG)
• Ex-UBS Executive Convicted of Paid Sex With Underage Girl (BBG)
• Six months after Sandy, New York fuel supply chain still vulnerable (Reuters)
• Older, richer shoppers lead Japan’s surge in consumer spending (FT)
• Sharp euro zone inflation fall, joblessness point to ECB rate cut (G&M)
• Gold Rush From Dubai to Turkey Saps Supply as Premiums Jump (BBG)
• Japan Industrial Output, Retail Sales Disappoint (MW)
• Gunmen surround Libyan justice ministry (Reuters)
• Insider-Trading Probe Trains Lens on Boards (WSJ)
• Best Buy exits Europe (WSJ)
• Banker Roommates Follow Zuckerberg Not Blankfein With IvyConnect (BBG)

• Risk of instability hangs over Italy poll (FT), Protest votes add to uncertainty in close Italy election (Reuters), and... Risk On
• Czech inspectors find horsemeat in IKEA meatballs (Reuters)
• China’s Slower Manufacturing Casts Shadow Over Recovery (Bloomberg)
• So much for reform: China Prepares for Government Shuffle as Zhou Stays at PBOC (Bloomberg)
• France to pause austerity, cut spending next year instead: Hollande (Reuters)
• Sinopec to buy stake in Chesapeake assets for $1.02 billion (Reuters)
• White House warns states of looming pain from March 1 budget cuts (Reuters)
• China Quietly Invests Reserves in U.K. Properties (WSJ)
• Osborne Keeps Austerity as Investors See Downgrade as Late (BBG)
• South Korea's new president demands North drop nuclear ambitions (Reuters)
• Russia accuses U.S. of double standards over Syria (Reuters)

• Israel Mobilizes Troops as Hostilities Escalate (WSJ)
• FHA Sets Stage for Taxpayer Subsidy With 2012 Deficit (Bloomberg)
• On eve of fiscal cliff talks, positions harden (Reuters)
• Japan PM Noda contradicts challenger Abe on BOJ (Reuters)
• Regulators cut JPMorgan's ability to trade power (Reuters)
• EU Should Reach Agreement on Greek Aid Next Week, Grilli Says (BBG)
• Moscovici rejects talk of French crisis (FT)
• Egypt Urges Push for Gaza Peace as Rockets Hit Israel (BBG)
• Leading Japan politicians draw election battle lines (Reuters)
• Fed Push to Tie Zero-Rate to Economic Goals Faces Doubts (BBG)
• China’s commerce minister voted out in rare congress snub (Reuters)
• China’s new leaders could have reform thrust upon them (Reuters)
• Both Sides of Gaza Border Brace for Further Conflict (WSJ)
• Fed Sees Hurdles in Housing Rebound (Hilsenrath)
• The Complete 2012 Business Schools Ranking (Bloomberg)

• Jefferies to be bought by Ian Cumming's Leucadia in an all-stock deal for $3.59 billion or about $17/share (WSJ)
• FBI Scrutinized on Petraeus (WSJ)
• Identity of second woman emerges in Petraeus' downfall (Reuters)
• SEC staffers used government computers for personal use (Reuters)
• Japan edges towards fifth recession in 15 years  (FT)
• Europe Finance Chiefs Seek Greek Pact as Economy Gloom Grows (BBG)
• Americans Say Europe Lesson Means Act Now as Austerity Will Fail (BBG) - of course it would be great if Europe had ever implemented austerity...
• Greece battles to avert €5bn default  (FT)
• You don't bail out the US government for nothing: No Individual Charges In Probe of J.P. Morgan (WSJ)
• Israel Warns of Painful Response to Fire From Gaza, Syria (BBG)
• Greece's far-right party goes on the offensive (Reuters)
• Don’t fear fiscal cliff, says Democrat  (FT)
• Apple Settles HTC Patent Suits Shifting From Jobs’ War (BBG)
• Man Set on Fire in Argentina Over Debt (EFE)
• Iraq cancels $4.2-billion weapons deal with Russia over corruption concerns (Globe and Mail)
• An Honest Guy on Wall Street (Bloomberg)

Standing in Legoland in Carlsbad, California in 2011, fulfilling a promise to my then eight-year-old son William, it hit me. I was strolling around a Blackstone-owned property. We'd woken up in a Homewood Suites, owned by Blackstone-backed Hilton. We'd driven to the park in a rental car from Hertz, owned by private-equity firms Carlyle and Clayton, Dubilier & Rice. Practically every time I'd opened my wallet that day, it had been to a company owned by private equity. Even on vacation, I couldn't escape. A few months later, I had dinner with Greg Brenneman, who'd held top positions at Continental, Burger King, and Quizno's, all private-equity-owned at the time he was involved. Brenneman is now the chairman of CCMP Capital, whose investments have included 1-800-Flowers.com and Vitamin Shoppe. We talked at length about the ubiquity of PE ownership -- my J. Crew sweater, the Dollar General store in my wife's hometown in the Catskills. I started a running list on my BlackBerry that quickly grew to dozens of examples. Brand names piled up, from Toys "R" Us to Petco. The more I looked, the more I found it.  The numbers are staggering. Private-equity firms globally and collectively had almost $3 trillion in assets at the end of 2011. The companies they own account for about 8 percent of the U.S. gross domestic product by one estimate.

• Trade Slows Around World (WSJ)
• Debt limit lurks in fiscal cliff talks (FT)
• Welcome back to the eurozone crisis (FT, Wolfgang Munchau)
• Euro Leaders Face October of Unrest After September Rally (Bloomberg)
• Dad, you were right (FT)
• 25% unemployment, 25% bad loans, 5% drop in Industrial Production, and IMF finally lowers its 2013 Greek GDP forecast (WSJ)
• Global IPOs Slump to Second-Lowest Level Since Financial Crisis (Bloomberg)
• France's Hollande faces street protest over EU fiscal pact (Reuters)
• EU Working to Resolve Difference on Bank Plan, Rehn Says (Bloomberg)
• China manufacturing remains sluggish (FT)
• Samaras vows to fight Greek corruption (FT) ... and one of these days he just may do it
• Leap of Faith (Hssman)
• Germany told to 'come clean’ over Greece (AEP)

• UK is closed today
• Weidmann Says ECB Purchases Could Become ‘Addictive Like a Drug’ (Bloomberg)
• Dutch Premier Rutte Defends Austerity, Says No to More Greek Aid (Bloomberg)
• Storm Isaac forces Republicans to rework convention script (Reuters)
• Christie chose NJ over Mitt's VP role due to fears that they'd lose (NYPost)
• Ayrault warns EU fiscal pact rebels (FT)
• Is Canada's New $100 Bill Racist?  (BusinessWeek)
• Will Fed Act Again? Sizing Up Potential Costs (WSJ)
• Samsung Slumps Most in 4 Years on U.S. Sales Ban Concerns (Bloomberg)
• States may require insurers to hold more capital (WSJ)
• Wen Says China Need Measures to Promote Export Growth (Bloomberg)
• Economist Appearing On Max Keiser Show Forced To Resign (Forbes)

Lately, Bain founder and GOP presidential candidate Mitt Romney has found himself in a spirited defense of the private equity industry, doing all he can to spin decades of data which confirm, without failure, that PE Leveraged Buy Outs are nothing but "efficiency maximizing" transactions whose only goal is the "maximization" of EBITDA in the pursuit of dividend recap deals, IPOs or outright sales, while loading up the company with untenable amounts of leverage. All this with a 3-5 year investment horizon, which ignores the long-term viability of a company and seeks to streamline (read fire as many as possible) operations as quickly as possible in the goal of maximizing short-term returns. We wish him luck in his endeavor. As for the other side of the equation, we recreate a post we penned back in November 2009 which analyzes just how effective the mega-LBOs have been for the economy, and the workers involved. In other words - the facts. In a nutshell, here they are: "The Disastrous Performance Of Private Equity: Of The Top 10 LBOs, 6 Are In Distress, 4 Have Defaulted." Read on for the full details.

I personally believe that there is no "free" alpha. That said, there is a way to earn returns that may look like alpha, especially if you are an astute student of human nature. You can make a bet when other people are behaving irrationally, as when you buy when there is blood in the street.

China Joins Russia in Blasting U.S. Borrowing After Debt Ceiling Agreement (Bloomberg)
Eurozone Moves to Prop Up Rescue Fund (FT)
SNB Cuts Rate to Zero to Counter Franc Strength (WSJ)
US Retreats from Brink of Debt Default (FT)
Strains Ease on Short-Term Credit Markets (Hilsenrath)
China’s Non-Manufacturing Industries Expanded in July, PMI Surveys Show (Bloomberg)
Moody's, Fitch Maintain U.S. Triple-A Rating (Reuters)
Britain’s ‘Weak’ Economy May Need Tax Cuts to Boost Demand, Institute Says (Bloomberg)
Japan Keeps Up Warnings on Yen After U.S. Debt Deal (Reuters)
No Double-Dip Seen in GDP (Shanghai Daily)

• Reid, McConnell Push Revised Debt Measure as Obama Seeks to Avoid Default (Bloomberg)
• Fallback plan gains momentum in debt talks (RTRS)... aka the "change nothing" plan, and raise debt ceiling by $2.5 trillion
• China house price inflation slows in June (FT)
• Riksbank Members Fear Greek Failure Could Spark Real Crisis (Market News)
• European Stocks Retreat for Third Day After Bank Stress Tests (Bloomberg)
• ECB would reject defaulted Greek bonds as collateral (RTRS)
• Greek debt cut won't solve problem - ECB's Weidmann (RTRS)
• An Arrest and Scotland Yard Resignation Roil Britain (NYT)
• Japan set to ban Fukushima cattle shipments after radioactive meat scare (Guardian)
• Spain and Italy top results in stress tests (FT)

• Greek Unions Strike as Papandreou Seeks Support (Bloomberg)
• Massive Strike Set for U.K. (WSJ)
• U.S. Money Funds Risk Losses From Europe Crisis (Bloomberg) - Mainstream media finally wakes up
• Dubai Denies Emirate Neighbors Fuel in Struggle to Pay Debt (Bloomberg) The untold story
• Europe looks for contingency plan B (FT)
• Plan B Budget Emerges in California (WSJ)
• Greek woes may eclipse Lehman: Ackermann (Reuters)
• Italian, Spanish Bonds Advance Before Sale on Greek Optimism (Bloomberg)
• China, U.K. Forge New Trade Deals (WSJ)
• Confidence in Canada Economy at Two-Year Low, Nanos Poll Shows (Bloomberg)

• Eurozone gesteht Athen weitere Milliarden zu (Handelsblatt) always remember: German is the official language of the Weimar Republic
• Japan's Prime Minister to give up salary until nuclear crisis over (CNN), while Tim Geithner will give up nothing until debt ceiling crisis solved
• Mississippi crests in Memphis at nearly 48 feet (AP)
• New Greek Deal Possible by June (WSJ)
• Merkel Says No Aid Decisions Until Greek Assessment Reports (Bloomberg)
• Japan Unlikely to Get In Yen's Way (WSJ)
• Pressure Put on Pakistan Army (FT)
• Trouble in Syria Sets off Alarm in Tehran (FT)
• Military Draws Up Afghan Exit Plan (WSJ)

Odds and ends for a Monday.

Enjoying WTI at sub $100? Since we have at most two months of WTI trading sub $115 (and Brent at $130, assuming the WTI-Brent spread does not finally collapse) according to JP Morgan, enjoy it while you can. From Lawrence Eagles: "Although oil prices fell sharply last week, on Friday we raised our Brent crude price forecast to $130/bbl for 3Q2011 due to a tight supply/demand outlook. While product cracks and crude differentials also saw some readjustment, we do not expect a major realignment in differentials going forward as the underlying pressures remain intact." In other words, as we said last week, nothing has changed (except for some margins). And since all commodities correlate as one, and since Jim O'Neill was out earlier today bashing commodities (the surest contrarian sign ever), time to load up the boat courtesy of the CME's persistent banging the speculator is likely here.