Today's Headlines

Bloomberg: 

• Ukraine Moves to Destroy Rebel Bases in East, Ruling Out Cease-Fire. Ukraine’s government accused pro-Russian rebels of destroying bridges, as it expressed its determination to wipe out insurgent bases and ruled out a unilateral cease-fire in the battle-torn east. “Government troops are blocking roads to Donetsk and Luhansk to prevent rebels’ reinforcement and weapons delivery,” a Defense Ministry spokesman, Andriy Lysenko, told reporters in Kiev today. “Rebels are putting mines on infrastructure, such as bridges.”

• Carney’s Hawkish Turn Seen Setting Fashion for Yellen. The question investors are now asking is whether Federal Reserve Chair Janet Yellen will take the same journey. The debate burns brighter after U.S. unemployment fell to its lowest in more than five years. Goldman Sachs Group Inc. now sees a Fed increase in the third quarter of next year, rather than the first three months of 2016. 

• China Local Funding Unit Got Funds Illegally, Beijing News Says. Jiamusi New Era Infrastructure Construction Investment Group Co., a local government financing vehicle in northeastern China, used fabricated documents to illegally obtain funds, Beijing News reported on July 4. The LGFV, based in the city of Jiamusi near the Russian border in Heilongjiang province, used fabricated urban planning documents to boost the area of land for which it owns the usage rights, Beijing News reported, citing Song Xueying, former head of the city’s Department of Land and Resources. The financing unit used the land as collateral to sell bonds, according to the report.

• German Industrial Output Falls in Sign of Slower Growth. German industrial output dropped for a third month in May amid signs Europe’s largest economy is taking a breather. Production, adjusted for seasonal swings, fell 1.8 percent from April, when it declined a revised 0.3 percent, the Economy Ministry in Berlin said today. Economists forecast output to remain unchanged, according to the median of 35 estimates in a Bloomberg News survey. Production rose 1.3 percent in May from the previous year when adjusted for working days. 

• European Banks Seen Facing $50 Billion More in Legal Expenses. Europe’s banks face a further $50 billion of legal costs as they catch up with their U.S. counterparts, according to analysts at Morgan Stanley. European firms, which have set aside or paid out more than $80 billion since 2009, face about $130 billion of litigation and settlement costs in total, analysts led by Huw van Steenis wrote in a note to clients today. U.S. firms, which have so far made provisions for or paid out $125 billion, may have only to set aside a further $25 billion, the analysts said.

• Europe Stocks Drop After Biggest Weekly Rally Since March. European stocks fell the most in almost two weeks as investors assessed equity valuations following the biggest rally since March. Sky Deutschland AG and Deutsche Boerse AG slipped at least 2.5 percent each after brokerages downgraded the shares. TeliaSonera AB and Tele2 AB advanced after the Swedish company agreed to buy Tele2’s Norwegian business. PostNL NV (PNL) rallied the most in more than two years after boosting its profit forecast. The Stoxx Europe 600 Index dropped 0.9 percent to 344.8 at the close of trading in London, with all 19 industry groups retreating.

• Copper Drops as Stockpiles Increase, Rally Seen Excessive. Copper futures for delivery in September dropped 0.6 percent to settle at $3.261 a pound at 1:11 p.m. on the Comex in New York, where floor trading was closed on July 4 for the Independence Day holiday.

• Travelers to U.S. Asked to Turn On Mobile Devices as Security Beefed Up. U.S.-bound travelers from some overseas airports are being asked to turn on mobile phones and other devices under enhanced security measures from the Transportation Security Administration. Electronic devices that don’t power up won’t be permitted onboard the aircraft and the passenger may be subject to further screening, the TSA said yesterday in a statement.

Wall Street Journal:

• Ukraine Forces Working to Block Donetsk, Official Says. Interior Ministry Adviser Says Armed Rebel Fighters Unable to Leave City.

CNBC:

• Why this bullish pro sees big market drop soon. (video)

• The BIG threat to Obamacare (that you've never heard of). (video) If you wake up tomorrow and hear a top U.S. court has issued a ruling that could end up effectively destroying much of Obamacare, don't say we didn't warn you.

ZeroHedge: 

• Why An End To Dark Pools Would Be A Clear Nightmare For The Fed. (graph)

• What's Lurking Beneath The Glossy Veneer Of The Jobs Report? (graph)

• Consumer Spending Slides In All Important June, Gallup Finds. (graph)

• More Powderkegs: Israel Prepares For Gaza Escalation, Boosts Troops On Gaza Border.

• Russia Rushes To Seal Ukraine-Bypassing Gas Pipeline: Lavrov Pays Bulgaria A Visit.

• "This Could Be The Last Straw" 90% Of China Loan Guarantors Bankrupt.

• Japan Sounds Emergency Warning As "Once In Decades" Supertyphoon Neoguri Approaches.

• ISIS' Latest And Most Ambitious Plan Yet: Invade Spain.

Business Insider:

• China's Shadow Banking System Could Bring Down The World's Hottest Property Markets.

• The 17 Most Exciting New Tech Products That Will Launch Before The End Of The Year.

• Everyone Is Passing Around This Chart Showing How Much The Great Investors Have Beat The Market.

Chicago Tribune:

• Fourth of July weekend toll: 82 shot, 14 of them fatally, in Chicago. For 10 minutes, it seemed like the shooting was everywhere in the South Chicago neighborhood. It started when someone shot and wounded a couple, then two people fired at the shooter, then there was a chase and shots exchanged and a man sitting on a porch was hit. Responding officers kept cutting each other off on their radios as they reported other gunfire in the area late Sunday night and early Monday morning. Then the heavy equipment rolled in: A helicopter and SUVs packed with lockers of rifles. SWAT teams in green coveralls patrolled the streets with uniformed officers.