Evening Headlines
Bloomberg:
- Greece Ordered to Stop Gambling With its Future as Endgame Nears. Greece was told to stop fighting creditors’ demands and sign a deal that will avert a default and exit from the euro. Diplomatic niceties evaporated in Brussels as European Union President Donald Tusk rebuked Greek Prime Minister Alexis Tsipras for dragging his feet on a debt agreement and the International Monetary Fund’s team walked out of negotiations. One official said after a four-hour meeting of EU government staffers that Greece was given less than 24 hours to come back with firm proposals to end the impasse. “There is no more time for gambling,” Tusk told reporters in Brussels on Thursday. “The day is coming, I am afraid, that someone says the game is over.”
- Keeping Greece in the Euro May Have Nothing to Do With Finances. A bronze statue of Harry S. Truman stands unguarded in the side of a busy Athens road, a reminder of Greece’s post-World War II position as a strategic bulwark for the U.S. and Europe. If euro-area policy makers overcome their frustration over Greek financial brinkmanship and cough up more aid, it will be in no small part because of that role.
- There They Go Again: Asia Central Bank Policies Spur Bubbles. Recent years have seen reams of research on the role of central banks in inflating asset-price bubbles. The latest developments in Asia suggest that more may be coming. With interest-rate cuts in New Zealand and South Korea, and the potential for more easing in Australia and China, policy makers are fanning the risk of bubbles a decade after their U.S. counterparts oversaw a record mortgage boom. The central bank of New Zealand Thursday lowered interest rates even in the face of a booming property market in the nation’s largest city. South Korea followed suit, potentially encouraging gains in household debt levels that are already at a record. The Reserve Bank of Australia governor Wednesday said he may lower rates again, even as he wrung his hands over what he dubbed as “crazy” Sydney house prices.
- Only in China Can Riskiest Provincial Debt Get Best Yield. Ranking provinces by their fiscal and economic strengths puts Jilin at the bottom and Tianjin at the top. In China’s bond market, that’s a waste of time. Jilin is the riskiest among the nation’s 31 provinces, autonomous regions and municipalities, according to a Bloomberg analysis of their debt and the potential to repay using taxes and land sales. It issued three-year notes Thursday at 2.87 percent, matching the similar-maturity sovereign yield. Tianjin also sold at a zero premium three days earlier.
- War-Weary Ukraine Shutters Cash-Starved Banks as Trust Plummets. As if fighting a year-long war against pro-Russian separatists wasn’t enough, Ukraine is also scrambling to shore up a banking system that’s bleeding assets amid skyrocketing inflation, a tumbling economy and wavering talks with creditors about overdue debt. A run of liquidations has shaken consumers’ confidence in the often mismanaged financial institutions they once trusted to protect their money.
- Asian Currencies Drop This Week Amid Stock Outflows, MERS Risk. Asian currencies dropped, led by the Philippine peso, as funds pulled money from emerging markets on signs the U.S. is moving closer to raising interest rates. Overseas investors sold a net $1.5 billion of stocks in Taiwan, South Korea and India since June 5, exchange data show. The Federal Reserve reviews borrowing costs next week as data suggests the world’s largest economy is emerging from a first-quarter slowdown. The Bank of Korea said the spread of Middle East respiratory syndrome posed a threat to consumption as it cut its benchmark rate to a record low on Thursday.
- Asian Stocks Rise Third Day on U.S. Economy Optimism, Weaker Yen. Asian stocks rose for a third day after data on retail sales bolstered confidence in the strength of the U.S. economy and a weaker yen sent Japanese shares higher. The MSCI Asia Pacific Index gained 0.2 percent to 147.81 as of 9:01 a.m. in Tokyo, headed for a 0.1 percent decline this week. Japan’s Topix index added 0.2 percent after the yen slid 0.6 percent against the dollar Thursday.
Wall Street Journal:
- Iran Backs Taliban With Cash and Arms. Shiite Tehran has quietly boosted ties with the Sunni militant group and is now recruiting and training its fighters.
- As Minimum Wages Rise, Smaller Firms Get Squeezed. An Indianapolis hot-dog business cites staffing costs in decision to revise expansion plans.
MarketWatch.com:
CNBC:
Zero Hedge:
- Europe Gives Greece 24 Hours To Comply; Germany Draws Up Capital Control Plans.
- The End Of Buybacks? Goldman Warns Political Pressure On Share Repurchases Is Rising. (graph)
- Iceland Imprisoned Its Bankers And Let Banks Go Bust: What Happened Next In 3 Charts. (graph)
- How Obama Will Centrally-Plan Your Neighborhood: Here Comes The "Affirmatively Furthering Fair Housing" Rule.
- For Millennials, The Homeownership Dream Is Dying.
- Trapped In A Bubble. (graph)
- "Buy Low, Sell High" - How China's Senior Citizens Are Learning To Trade Stocks. (graph)
- Something Doesn't Add Up: JOLTed Optimism. (graph)
- 3 Things: Oversold Bounce, Relative Risk, More Downside Potential. (graph)
- The Warren Buffet Economy, Part 2: Why Its Days Are Numbered.
- Bonds Soar, Stocks Snore After "Good" News Sparks Hindenburg Omen Uncertainty. (graph)
Business Insider:
- I just interviewed Twitter's(TWTR) Jack Dorsey and Dick Costolo — here's what they had to say.
- Mercedes is taking on Tesla(TSLA) in the race to build home batteries.
- Union: The massive federal employee data hack was much worse than Obama let on.
Telegraph:
- Britain faces fiscal crunch from demographic timebomb. Office for Budget Responsibility (OBR) casts doubt over George Osborne's plans to run a budget surplus in times of economic growth.
- EU issues final warning to Greece as last-ditch talks achieve nothing. The Greek interior ministry has ordered governors and mayors to transfer all cash reserves to the central bank as bankruptcy closes in.
Evening Recommendations
- None of note
Night Trading
- Asian equity indices are -.25% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 109.0 unch.
- Asia Pacific Sovereign CDS Index 61.0 -.75 basis point.
- S&P 500 futures -.20%.
- NASDAQ 100 futures -.16%.
Earnings of Note
Company/Estimate
- None of note
Economic Releases
8:30 am EST
- PPI Final Demand for May is estimated to rise +.4% versus a -.4% decline in April.
- PPI Ex Food and Energy for May is estimated to rise +.1% versus a -.2% decline in April.
10:00 am EST
- Preliminary Univ. of Michigan Consumer Sentiment for June is estimated to rise to 91.2 versus 90.7 in May.
Upcoming Splits
- (ROST) 2-for-1
Other Potential Market Movers
- The German CPI report, Russell preliminary rebalancing list and the (CNC) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.
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