Today's Headlines

Bloomberg:

• Stocks, Euro Rise Amid Greece Optimism. Stocks gained, erasing the MSCI All- Country World Index’s 2011 loss, while the euro rose and Treasuries fell amid speculation Europe will take action to prevent a Greek default. “With the German banks on board, you find the solution which alleviates some of the European debt problems,” said Tom Wirth, senior investment officer for Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York. “If you can get beyond that sovereign crisis, then confidence comes back and we can see a rally in risk assets.”
• Greek Strike Overshadows Budget Vote. Greek police fired tear gas to disperse protesters in the center of Athens as labor unions shut down government services before a vote on austerity measures that may determine if the nation can avoid a default. Lawmakers have now begun a second day of debate on Prime Minister George Papandreou’s five-year plan of budget cuts and asset sales after a crowd estimated by police to number 20,000 thronged outside Parliament to mark a 48-hour general strike. Hooded youths faced volleys of tear gas as they attacked riot officers, smashed windows at a McDonald’s Corp (MCD) restaurant and set two vans on fire. “We are determined to stop this plan from passing and if it does pass, we will continue our efforts,” said Dimitra Oikonomou, 50, a schoolteacher who joined today’s rallies. “The government might not listen to us now, but in the end they will hear it all at once.”
  
• German Banks Said to Meet Government Tomorrow Over Greek Aid Contributions. German banks and insurers will use a French proposal as a blueprint for discussion when they meet with finance ministry officials in Berlin tomorrow to seek an agreement on their role in a Greek rescue, two people with knowledge of the matter said. The working-level talks will focus on possible adjustments to the French banks’ plan to roll over a portion of maturing bonds to help prevent a Greek default, said the people, who declined to be identified because the talks are private. Germany’s banking associations agreed with government officials today to pursue such a model, one of the people said. The talks are part of Europe-wide efforts to get creditors to share the burden of a second Greek bailout and prevent the euro-region’s first default, a year after a 110 billion-euro ($157 billion) package failed to stop the debt crisis from spreading.
• Sovereign Bond Risk Retreats From Record in Europe, Swaps Show. The cost of insuring against default on European sovereign debt pulled back from record levels, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments dropped 11 basis points to 232 at 4 p.m. in London. A decline signals improvement in perceptions of credit quality. Swaps on Portugal tumbled 51 basis points to 795, Ireland dropped 38 to 780 and Greece fell 36.5 to 2,072.5, according to CMA. Contracts on Belgium, Italy and Spain also fell. Swaps on the Markit iTraxx Crossover Index of 40 companies with mostly high-yield credit ratings decreased 12 basis points to 422, the first decline in five days, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell 3 basis points to 112.25 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers decreased 6.5 basis points to 169 and the subordinated index dropped 13 to 293.5.
  
• Greek Rollover Would Probably Rate as Default, Fitch Says in FT. A “voluntary rollover” of Greek bonds, as they mature, into bonds with similar terms would “very likely” be viewed by Fitch Ratings Ltd. as a sovereign default, according to David Riley, Fitch’s group managing director with responsibility for sovereign ratings and international public finance. In a letter to the Financial Times, published today, Riley disputed a statement in a June 24 FT article that Fitch has “signaled” that it wouldn’t downgrade Greek bonds to default in the event of such a rollover, which wouldn’t amount to “a failure to pay coupons or principal.” In fact, the Greek sovereign rating would probably be placed in “restricted default,” Riley wrote. Fitch is “guided by the spirit as well as the letter” of its yardsticks and “if it looks like a default, we will rate it as a default,” Riley said.
• Crude Oil in New York Rises From Near Four-Month Low. Oil rose from a four-month low amid speculation that Greek lawmakers will approve austerity measures to prevent a default on the country’s debt and on forecasts U.S. fuel demand will rise before the Fourth of July holiday. Crude increased as much as 1.7 percent as the euro strengthened ahead of the Greek vote tomorrow that would prevent the euro-zone’s first sovereign debt default. The U.S. Independence Day weekend typically marks the peak consumption period for U.S. motorists. Crude for August delivery rose 76 cents, or 0.8 percent, to $91.37 a barrel at 11:36 a.m. on the New York Mercantile Exchange. Futures have gained 17 percent in the past year and have fallen 14 percent so far in the second quarter.
• U.S. Consumer Confidence Hits Seven-Month Low. Consumer confidence dropped to a seven-month low in June as Americans grew concerned about the outlook for jobs and wages. The Conference Board’s sentiment index decreased to 58.5 from a revised 61.7 in May that was higher than previously estimated, figures from the New York-based private research group showed today. Home prices fell in the year ended in April by the most in 17 months, another report showed. Unemployment hovering around 9 percent, deterioration in the housing market and a drop in share prices may restrain Americans’ sentiment, raising the risk that the biggest part of the economy will stagnate.
• Obama's $7 Billion Renewable Energy Grants Targeted for Audits. Government investigators are auditing some of President Barack Obama’s more than $7 billion in renewable energy grants to determine whether the money was awarded properly and the recipients were eligible. Examiners are reviewing 14 of the 2,600 projects that received tax dollars under the initiative to promote wind and solar power created in the 2009 stimulus bill, according to Richard Delmar, counsel to the Treasury Department’s inspector general. Under the program run by the Treasury, developers receive as much as 30 percent of the cost of a project.
• Obama Serves Lobster Not Justice to 'Fat Cats': William D. Cohan. As we head into the 2012 presidential election cycle, the new, official Obama administration policy on Wall Street is crystalline: Hands off the bad guys.
• Siemens Sees Growth Easing in Second Half as Boost From Economy Eases Off. Siemens AG (SIE) predicted growth will be tougher to achieve in the second half as the stimulus from an economic rebound is petering out, sending the shares of Europe’s largest engineering company on their biggest drop in 15 weeks. “The tailwind from the economic recovery is likely over,” Chief Financial Officer Joe Kaeser told analysts in Shanghai today, in comments broadcast on the Internet. “Now, increased efforts are required for continued growth.”
• Trichet's 'Strong Vigilance' Comment Signals ECB to Raise Rates Next Week. European Central Bank President Jean-Claude Trichet said policy makers are in “strong vigilance mode,” signaling they intend to raise interest rates next week even as Greece struggles to avert a default. “We’re taking the decision progressively to anchor inflation expectations,” Trichet said at a press conference in Amsterdam today following a seminar with central bankers from the Asia-Pacific region. “As far as we’re concerned, we’re in strong vigilance mode,” he said, repeating a phrase the ECB uses to indicate a rate increase is imminent.

Wall Street Journal:

• Firms Loosen Grip on Cash. Companies are starting to spend some of their record piles of cash, making acquisitions and increasing capital expenditures that could provide a much-needed boost to the economy.

MarketWatch:

• Lagarde Selected as Next IMF Managing Director.

CNBC.com:

• Economy May Grow 4% in Second Half: Dallas Fed Chief.
• Consumer Stocks Doing Well Despite Economic Gloom.
  

Business Insider:

• Here's Google's(GOOG) Long Awaited Facebook-Clone: Google+.
• ZYNGA: IPO Filing Likely Tomorrow, Looking For $15 Billion To $20 Billion Valuation.
• California Reaches Budget Deal Including New Taxes and Fees.
• The Speed at Which China's Local Governments Are Taking On Debt Is "Terrifying".
  

Zero Hedge:

• Streaming Video From Syntagma Square - First Day of Greek General Strike.

Muddy Waters Research:

• Open Letter to Spreadtrum Communications(SPRD) Chairman.

Rasmussen Reports:

• Generic Republican 46%, Obama 42%.

Reuters:

• Exclusive: Up to 15 EU Banks to Fail Stress Test. Up to one in six European banks is set to fail an EU-wide financial health check, according to euro zone sources close to the stress-testing, as officials scramble to set up backstops for those at risk. The result, which the European Central Bank (ECB) and others hope will persuade investors that the EU is finally coming clean about the extent of its banks' problems, will put pressure on reluctant states to prop up lenders if they cannot raise money themselves. Euro zone sources said the European Banking Authority is set to announce within weeks that between 10 and 15 of the 91 banks being scrutinized in the tests had failed, with casualties expected in Greece, Germany, Portugal and Spain.
• Surging China Costs Turn Some U.S. Makers Homeward. U.S. makers of everything from running shoes to refrigerators shifted much of their production overseas over the past few decades, chasing the low unit prices that foreign factories could offer as a result of their lower wages. But over time, executives said, much of those savings have been erased by other costs that crept up -- goods damaged in transit, the need to maintain traveling quality-control staffs and the need to maintain about twice as much inventory as a hedge against delays in shipping.

Die Welt:

• European Central Bank Executive Board member Juergen Stark said he does not expect the international community to finance Greece further after July if the country does not implement its austerity plan, citing an interview. Stark added that he did not doubt the will of the Greek parliament overall to implement the agreed savings plan.

Handelsblatt:

• The German economy may grow 4% this year and 2.3% in 2012, citing IMK research institute.

Shanghai Daily:

• China Internet Vendors Concerned About New Tax.
• Shanghai Home Sales Likely to Dwindle. SALES of both new and existing houses are likely to register a month-on-month decline in Shanghai in June while prices remained stable, real estate companies said.