Today's Headlines

Bloomberg:

• Hollande Says Greek Deal Possible as Merkel Sees No Progress. (video) French President Francois Hollande held out the prospect of a deal for Greece even as German Chancellor Angela Merkel said negotiations looked to be going backward. The contrast in tone from the heads of Europe’s two biggest economies reflected the frustration among leaders and finance ministers after days of talks in Brussels failed to yield a breakthrough. Finance chiefs will reconvene on Saturday for their fifth session on Greece in just over a week.

• Dueling Greece Plans Confound Race for Bailout Deal. (video) Euro-area finance ministers expressed bemusement on the status of talks with Greece after they were presented at the last minute with competing proposals aimed at resolving the standoff over aid. Greece’s creditors pulled together a common position that doesn’t have the support of the Greek government and sent it to finance chiefs to review as the basis for a deal, said Jeroen Dijsselbloem, the Dutch finance minister who chairs meetings of his euro-area counterparts. A Greek government official said that Greece had submitted its own proposals.

• More ‘Tantrums’ Likely as Fed Tightens, India’s Rajan Says. Indian central bank Governor Raghuram Rajan warned of more volatility in global financial markets on par with the so-called “taper tantrum” in 2013 that sent the rupee in a tailspin. “With the back-to-back quantitative easing stimulus programs by other major central banks, alongside possible tightening by Fed, what we have seen might be only one of a series of ‘tantrums’ that the global financial markets are likely to witness,” Rajan wrote in a forward to the Financial Stability Report published by the Reserve Bank of India.

• Brazil Real, Stocks Sink on Legal Petition to Avert Lula Arrest. Brazilian stocks and the real sank after a news report that a legal measure was filed to prevent former President Luiz Inacio Lula da Silva from being arrested amid Brazil’s largest graft probe. The Ibovespa led losses in the Americas and the currency reversed earlier gains after Folha de S. Paulo newspaper reported a so-called habeas corpus request was filed on behalf of Lula. The legal maneuver would allow detainees to seek relief from unlawful imprisonment. Lula hasn’t taken any such legal action, according to a spokesman for his institute. “That’s all adding to the political instability environment we’re living in Brazil these days,” Raphael Figueredo, an analyst at the brokerage firm Clear Corretora, said by message. “As investors saw this, they ran to look for protection. That’s why the Ibovespa and the real plunged.” The benchmark gauge slumped 1.6 percent to 52,9755.62 at 12:29 p.m. in Sao Paulo. The real slid 0.6 percent to 3.117 per dollar.

• China Goes on a $46 Billion Aussie Home Spending Spree. Surging Chinese demand for Australian homes is dwarfing efforts to root out illegal buyers as the government struggles to avert a backlash against unaffordable housing. Since announcing a crackdown on unlawful home purchases in February, the government has forced only one foreigner to sell up. Chinese already buy almost a quarter of new homes in Sydney and their outlay will more than double to A$60 billion ($46 billion) in the six years to 2020, according to Credit Suisse Group AG. 

• Dubai Seen Prepared as Home Prices Predicted to Tumble 20%. Faced with predictions that Dubai home prices may drop as much as 20 percent this year, analysts say the emirate’s real estate developers and lenders are better prepared than when a crash in 2008 brought the city to the brink of bankruptcy. Standard & Poor’s this week estimated that values may fall by as much as a fifth this year, while brokers CBRE Group and JLL Inc. see a 10 percent decline. Still, builders and banks face less risk than they did six years ago, thanks to lending restrictions, a clampdown on speculation and greater dependence on rental income.

• Emerging Stocks Drop as China Slumps, Greek Debt Talks Continue. Emerging-market stocks fell for the first time in four days as Chinese equities slumped and concern grew that Greece may not reach a deal with creditors. The Shanghai Composite Index plunged 3.5 percent, led by technology companies, after traders sold shares purchased with borrowed money for a third day. Brazilian stocks and the real tumbled following a report that former President Luiz Inacio Lula da Silva is taking preventive legal measures to avoid an arrest amid a graft probe. Hungary’s BUX index led declines in developing Europe, dropping 1.7 percent. The MSCI Emerging Markets Index slipped 0.5 percent to 988.30 at 11:28 a.m. in New York.

• Europe Stocks Drop Second Day as Greek ‘Groundhog Day’ Continues. European stocks extended a selloff as the region’s leaders differed on how Greek talks were progressing. The Stoxx Europe 600 Index lost 0.2 percent to 396.39 at the close of trading. 

• Tin Set for Worst First Half in Quarter Century on Ample Supply. Tin prices are set for the biggest first half decline in at least a quarter century amid ample supplies and lackluster demand. The metal used in electronics and packaging is down 23 percent this year, the worst-performing industrial metal on the London Metal Exchange. That’s the biggest percentage decline in full-year data on Bloomberg going back to 1990.

• Tarullo Sees No Convincing Explanation for Changes in Liquidity. Federal Reserve Governor Daniel Tarullo said regulatory changes may be one factor affecting liquidity in financial markets, but there isn’t a “very precise and convincing explanation of exactly what has happened.” Something does seem to have changed, including market structure, a bigger role for asset managers than before the 2008 financial crisis and the growth of high-frequency trading, Tarullo said Thursday at a conference in New York.

• Worried About Debt-Market Liquidity? Let Go of Those Bank Bonds. Call it the liquidity curse. If rising interest rates prompt investors to flee debt markets, bank bonds could be the hardest hit among corporate securities, according to Bank of America Corp. “We’re now moving into an environment of outflows, which means a lot of investors are going to have to sell bonds for an extended period of time,” Hans Mikkelsen, head of U.S. investment-grade credit strategy at Bank of America Merrill Lynch, said in a telephone interview.

• Options Bears Take Fresh Stab at Biotech Amid Rally Topping 500%. Knives are out again for biotechnology stocks amid a rally that has burned skeptics repeatedly for six years. Demand for options tied to declines in an exchange-traded fund tracking the companies rose to the highest level in three years relative to bullish ones, according to data compiled by Bloomberg. The Nasdaq Biotechnology Index has risen 549 percent since March 2009, including a 3.8 percent advance last week. Interest in bearish options on drug developers has jumped in the last year after the group was called out as overvalued by Federal Reserve Chair Janet Yellen on two occasions. Biotechs are selling stock at a pace not seen in a decade and one concern is that something will disrupt the money spigot. Biotech companies are doing follow-on stock offerings at the fastest pace in more than 10 years. In the first quarter, biotech and pharmaceutical companies used 93 share sales to reap $18.7 billion, three times more than in 2014, according to data compiled by Bloomberg.

• Aetna(AET) Closing In on Deal to Acquire Humana(HUM). Aetna Inc., the second-largest U.S. health insurer by market value, is closing in on an acquisition of Humana Inc. and could reach a deal as early as this weekend, several people with knowledge of the matter said. Humana shares rose 8 percent to $198.99 at 1:47 p.m. in New York, the biggest intraday gain since May 29. Aetna shares rose 2.8 percent to $131.07.

Wall Street Journal:

• Supreme Court Upholds Health-Care Subsidies–Live Blog.

Fox News:

• Supreme Court upholds ObamaCare subsidies. (video) The Supreme Court on Thursday upheld ObamaCare subsidies nationwide, in the second major court victory for President Obama on his signature health care law. In a 6-3 decision, the court ruled that subsidies are valid even in states that did not set up their own insurance exchanges. A ruling against the administration would have threatened subsidies worth millions in nearly three-dozen states and imperiled the program itself. For months, though, the administration said it had no back-up plans, confident the Supreme Court would rule in its favor.

• Watchdog reveals evidence was destroyed during probe of IRS targeting. (video) The lead government watchdog for the IRS revealed Thursday that computer evidence was erased during the investigation into the agency's targeting scandal, months after the IRS was told to preserve documents. J. Russell George, the Treasury inspector general for tax administration, testified to the House Oversight and Government Reform Committee that IRS employees erased computer backup tapes shortly after officials discovered thousands of emails related to the tax agency's Tea Party scandal had been lost. As many as 24,000 emails were lost because 422 backup tapes were "magnetically erased" around March 4, 2014.

CNBC:

• I see THIS as 3rd bubble in 15 years: Analyst Peter Boockvar. (video) "This is the third bubble in 15 years. It's in fixed income," the managing director at economic advisory firm The Lindsey Group predicted in a CNBC "Squawk Box" interview. 

• State budget balancing is putting pensions at risk. Some 150 state and local pension funds reported assets under $3 trillion to cover the estimated $4.1 trillion needed to pay benefits.

ZeroHedge:

• Merkel "Won't Be Blackmailed By Greece", Demands Deal Before Market Open On Monday.

• "Most Liberal Supreme Court Since 1960s" Gives Obama Huge Victory With 6-3 Vote In Favor Of Obamacare.

• Forget Grexit, "Madame Frexit" Says France Is Next: French Presidential Frontrunner Wants Out Of "Failed" Euro.

• Grexident Looming: Eurogroup Meeting Ends Prematurely With No Deal.

• US Services PMI Misses By Most On Record, Tumbles To Lowest Since January. (graph)

• These Three Events Will Shatter "Liquidity Illusion", Trigger Crisis, OECD Says.

• Personal Spending Surges Most Since August 2009 As Savings Rate Tumbles. (graph)

• Bundesbank Slams ECB's "Bridge Financing" To Greece. (graph)

• Individual Stocks Struggling To Keep Up With Nasdaq Rally. (graph)

• Fed Gains Fizzle As Trannies Tank. (graph)

• Dijsselbloem Says 'Saturday Or Bust' On Greece Deal - Cancels Leaders Summit.

• Shots Fired: ECB Again 'Threatens' To Collapse Greek Bank System.

Business Insider:

• Justice Scalia slammed Chief Justice Roberts in his Obamacare dissent.

• The poster child for what was once a 'can't lose' investment is filing for bankruptcy.

• Those Chinese hackers got into FBI files too.

• Kroger(KR) just announced a stock split, higher dividends, and a $500 million buyback.

• BLACKROCK(BLK) WARNS: China's debt has lost its potency and is now 'turning into poison'. Their research, citing IMF data, points to only four other credit booms of similar magnitude in China over the past 50 years. On all four occasions they ended in a banking crisis occurring within three years. Blackrock, citing a study by consultancy group McKinsey, says that between 2007 to 2014 total debt accumulated in China ballooned by $21 trillion. That increase took total Chinese debt as a percentage of GDP from 158% to 282% in just eight years.

Financial Times:

• Shadow lending crackdown looms over China’s stock market. China’s shadow banks, increasingly wary of lending into a slowing economy, have turned to the stock market, fuelling a surge in unregulated margin lending that has driven the market’s dizzying gains over the past year. Now regulators are cracking down on shadow lending to stock investors, a campaign analysts say is partly to blame for last week’s 13 per cent fall in the Shanghai Composite Index — the largest weekly drop since the global financial crisis in 2008.

• Greece’s businesses buckle after months on brink of bankruptcy. When a country teeters for months on the brink of bankruptcy — becoming a spectacle for television cameras chronicling social breakdown and prompting doomsayers to predict imminent chaos — its businesses must resort to special measures to survive.

China Business News:

• Banks in China's Shenzhen Raise Home Mortgage Rates. CCB and BOC canceled discount on interest rates of home mortgage in Shenzhen amid the city's booming housing market.