Today's Headlines

Bloomberg:  

• ECB Warns of Contagion Risk If Greece Deal Not Reached Fast. A failure to reach an agreement on Greece’s aid program soon may drive yields on bonds issued by other euro-area countries higher, the European Central Bank said. “In the absence of a quick agreement on structural implementation needs, the risk of an upward adjustment of the risk premia demanded on vulnerable euro-area sovereigns could materialize,” the ECB said in its twice-yearly Financial Stability Review published Thursday in Frankfurt. “The lengthy and uncertain process of negotiations between the newly formed Greek government and its creditors” has already contributed to bouts of extreme volatility in Greek markets, it said.
• Ukraine Seeks Arms as Putin Makes Russian Troop Losses Secret. Ukrainian Prime Minister Arseniy Yatsenyuk appealed to the U.S. and Europe to arm his country in its conflict with pro-Russian separatists, as the Kremlin ordered an information blackout on deaths among troops sent on special operations. “We are not asking for offensive weapons, we are asking for defensive weapons just to defend our country,” Yatsenyuk told an international security conference in Kiev on Thursday. “We do understand that to use our military capacity to regain Donetsk or Luhansk is unacceptable.”
• How an Equity Reversal Could Undo China's Recent Economic Growth. Is the rally over? The wild rally in China's equity markets may be coming to an end. The Shanghai Composite Index fell 6.5 percent Thursday as margin calls from brokers and a liquidity drain from the central bank spooked investors. A boom in the equity market has helped prevent a sharper slowdown in China's economic growth. What would a stock slump mean? 
• China Stock Market Turnover Surges to Record. If volume dies, so will the index. More money is changing hands trading stocks in China than in the U.S., a market more than twice its size. Combined turnover in Shanghai and Shenzhen rose to a record $380 billion on Thursday, exceeding the value of shares traded in the U.S on Wednesday by $132 billion, as the attached chart shows. Turnover in London was $8.9 billion on Wednesday.
• Aussie Firms Shun Investment as RBA’s Growth Reboot Sputters. Australian businesses plan to cut investment in the next 12 months by the most on record as the economy struggles to find new sources of growth after the end of a decade-long mining investment boom. 
• China Stock Boom Built on Leverage Shows How Fast It Can Reverse. China’s equity investors are getting a reminder that leverage has a downside. Losing days on the Shanghai exchange this month have been deeper than at any other time since 2009, punctuated by the benchmark index’s 6.5 percent tumble on Thursday. At 1.65 percent, the gauge’s average retreat on down days this year is the largest among the world’s top 10 markets. It’s also bigger than the mean move of 1.44 percent when the index gains.
• Emerging Stocks Slump as Shanghai Shares Halt Seven-Day Advance. Emerging-market stocks fell to a seven-week low as Chinese shares slid for the first time in eight days after brokerages curbed margin lending. The MSCI Emerging Markets Index retreated 1.1 percent to 1,008.21 at 11:12 a.m. in New York. Shanghai-listed stocks slumped the most since mid-January. Brazil’s equity benchmark declined as lenders slid after data showed faster-than-forecast inflation. Qatar’s benchmark tumbled the most this year as the country’s soccer World Cup plans came under scrutiny. A gauge of developing-nation currencies slid for a ninth day, the longest streak of declines in more than two months. Speculation that the U.S. is moving closer to an interest-rate increase has pushed the MSCI developing-nation stock gauge down 2.8 percent in the last four days. The Shanghai Composite Index slumped 6.5 percent, ending a 15 percent rally. Citic Securities Co. sank 9.4 percent after several rivals increased their margin requirement, the collateral put up by an investor when borrowing. Changjiang Securities Co. dropped 9.5 percent after joining competitors in the move. China Construction Bank Corp. lost 3.7 percent as the Hang Seng China Enterprises Index slid 3.5 percent. Record growth in margin debt helped fuel a 127 percent gain in the Shanghai index over the past year, the most among global gauges tracked by Bloomberg. Margin lending by Chinese brokerages exceeded 2 trillion yuan ($322 billion) as of May 27, five times the level of a year earlier, exchange data showed.
• Europe Stocks Decline on Concern Greece Far From Reaching Deal. European stocks fell for the fourth time in five days amid concern Greece may not reach an accord with creditors before a payment due next week. The Stoxx Europe 600 Index lost 0.5 percent to 406.83 at the close of trading, paring a drop of as much as 1 percent. All but two of 19 industry groups slipped.
• Investors Pulling Energy Sector Bets for First Time in 8 Months. Investors are cautiously pulling money out of energy producers for the first time in eight months, taking short-term gains after oil rebounded from a six-year low. More than $1.55 billion has been withdrawn this month from exchange-traded funds concentrated on energy stocks such as Exxon Mobil Corp. and Chevron Corp. It’s on pace for the first monthly setback for the group since investors began pouring into the sector in October with an eye toward profiting from an eventual recovery in prices.
• Fed’s Williams Sees Rate Rise This Year as Growth to Recover. Federal Reserve Bank of San Francisco President John Williams said the U.S. will likely raise interest rates later this year as the world’s biggest economy recovers from a weak first quarter. The Fed will probably increase rates gradually and move them to normal levels over the next few years, he said in answer to questions after speaking at a regulatory symposium in Singapore Thursday. An increase is on the table at every meeting, including June’s, he said. “I expect they will be raising rates later this year,” Williams told reporters. “The U.S. economy’s doing well, we’re moving back towards our goals.”
• Consumer Comfort in U.S. Slumps on Views of Buying Climate. Consumer confidence in the U.S. fell for a seventh consecutive week and attitudes about whether it was a good time to spend slumped by the most since 2011. The Bloomberg Consumer Comfort Index decreased to 40.9 in the period ended May 24, the lowest level since late November, from 42.4 the prior week. The decline in Americans’ assessments of the buying climate was accompanied by the biggest drop in sentiment among women in more than seven years.
• Mortgage Rates in the U.S. Increase to Highest for 2015. Mortgage rates in the U.S. rose to a 2015 high this week as bond investors reacted to reports showing the housing market is heating up. The average rate for a 30-year fixed mortgage was 3.87 percent, up from 3.84 percent last week and matching the level at the end of 2014, Freddie Mac said in a statement Thursday. The average 15-year rate increased to 3.11 percent from 3.05 percent, according to the McLean, Virginia-based mortgage financier.

ZeroHedge:

• Welcome To The Recovery 2015: JP Morgan To Fire 5000.
• Will The Real Hillary Clinton Please Stand Up? (video)
• Poroshenko Threatens To Declare Martial Law In Ukraine Within Hours "To Demonstrate Readiness For War".
• The Stock Market - A Picture Of Excess. (graph)
• "The Greek Endgame Is Here": Probability Of IMF Default Now 70%, Says Deutsche Bank.
• How Healthcare Is Dooming the U.S. Economy (In Just 3 Charts).
• Oil Prices Drop To 7-Week Lows - Here's Why. (graph)
• Pending Home Sales Jump Most Since September 2012 To Highest Since 2006, Driven By The Northeast. (graph)
• Financial Insanity Grips The World.
• Initial Jobless Claims Rise, Miss Expectations - Gone Nowhere Since The End Of QE3. (graph)
• Bull Market Dealt A Significant Blow? (graph)

Business Insider: 

• Here's what happens when you compare the Clintons' vast wealth to that of average Americans.
• US containerized exports have plunged off the chart. (graph)
• The Federal Reserve poses a huge threat to the biotech merger 'feeding frenzy'.
• This is how you know China is worried.

Reuters:

• Saudi Aramco may raise rigs in 2016 if oil prices rise -sources. Saudi Aramco may raise the number of its oil and gas drilling rigs to as high as 250 next year if oil prices continue to firm and as domestic demand for gas increases, industry sources said on Thursday. Currently the national energy giant has 212 rigs of both types in operation and that could rise to between 220 and 250 if conditions permit, sources familiar with the plans said. "It all depends on the oil price of course," said one.

Telegraph:

• IMF openly warns of Grexit threat as judgment day approaches. Christine Lagarde admits that a Greek exit from eurozone 'is a possibility' as bail-out talks take Athens to the edge of the abyss.

ARD TV:

• IMF's Lagarde Says Much Work Remains on Greece. Greece and its creditors aren't close to a financing deal, IMF Managing Director Christine Lagarde said in an interview. Sees "a lot of ground to cover if we want to reach a comprehensive approach to putting the Greek economy in a better position, making sure that at some stage the investors are interested again in investing in Greece, that the Greek economy creates jobs."