Monday Watch

Today's Headlines 

Bloomberg:  

• EU Demands Complete Capitulation From Tsipras. European leaders gave Greek Prime Minister Alexis Tsipras a straightforward choice on Sunday: ditch his principles or quit the euro. At an emergency summit in Brussels, Tsipras was presented with a laundry list of unfinished business from previous bailouts that he’d pilloried in opposition and during six turbulent months in office. Euro-area leaders gave him three days to enact their main demands to keep alive chances of adding bailout funds of as much as 86 billion euros ($96 billion) to earlier commitments of 240 billion euros. With Greece running out of money and its banks shut the past two weeks, the gathering was billed as the country’s last chance to stay in the euro. Tsipras, who says he wants to keep Greece in the currency union, has been in financial limbo since his government missed a payment to the International Monetary Fund and allowed its second rescue package to lapse on June 30. 

• China Reality Check: Stocks Are Still Too Expensive for Mobius. Chinese shares have tumbled faster than any of their global peers, suffered the first bear-market retreat since 2012 and erased more value in a month than the annual economic output of the U.K. After all those losses, is now the time to go bargain hunting? Not just yet. That’s the refrain from BlackRock Inc., UBS Group AG and Templeton Emerging Markets Group’s Mark Mobius, who say mainland stocks need to fall further before they’re worth buying.

• China June Imports Fall 6.7% on Year. (video)

• Asia’s Rising Economic Stars Lose Luster on China’s Slowdown. For years after the 2008 financial crisis, Asia’s rapidly expanding economies propped up global growth, with China clocking a pace of more than 9 percent, pulling along its neighbors. Now, China’s continuing slowdown is dragging them too, exposing weaknesses across the region, from Indonesian borrowing needs to record Korean household debt and the bureaucratic and corruption hurdles in the Philippines that hold back its infrastructure projects. Growth is undershooting forecasts, hurt by exports that are falling in nine among 12 main Asian economies, according to data compiled by Bloomberg. The slump, which spans India to Malaysia and South Korea, is partly a consequence of China’s deceleration -- to a growth estimated at 6.8 percent for last quarter, behind the government’s target for about 7 percent for 2015.

• Asian Stocks Advance as Investors Weigh Progress in Greece Talks. Asian stocks rose, with the regional index on course for a third day of gains, as investors weighed negotiations between European leaders and Greece. The MSCI Asia Pacific Index added 0.4 percent to 141.63 as of 9:10 a.m. in Tokyo after dropping 3.7 percent last week.

• Oil Bulls’ Will Broken as Roiled Economies Pose Risk to Growth. Speculators retreated from bullish oil bets at the fastest pace since 2012 on mounting concern that economic turmoil in Europe and Asia will prolong a supply glut. The net-long position in West Texas Intermediate crude fell 20 percent in the week ended July 7, U.S. Commodity Futures Trading Commission data show. Longs dropped 1.7 percent as short wagers jumped 56 percent. 

• Copper Bears Rewarded as Economic Threats Spur Metal Rout. Investors are hastening their retreat from copper, unnerved by the threats to global economic growth. The metal slumped to a six-year low last week as Greece’s efforts to reach a deal with creditors stumbled and Chinese equities plunged. Europe and China consume about two-thirds of the world’s copper. Goldman Sachs Group Inc. and Societe Generale SA see little prospect of a rebound anytime soon.

Zero Hedge:

• The Latest Out Of Europe: "Pretty Steady Level Of Shittiness".

• The Greek "Choice": Hand Over Sovereignty Or Take Five Year Euro "Time Out".

• China Stocks Mixed After Regulators "Bust Illicit Stock Sellers" And Unhalt Over 400 Securities.

• GMO's Montier Shifts To 50% Cash, Sees 3 "Hellish" Scenarios For Markets.

• How Fascist Capitalism Functions: The Case Of Greece.

• Leaked Eurogroup Statement Demands Much More From Greece, Keeps "Temporary Grexit" Option.

• A Broken Greek PM Says He Is "Ready For An Honest Compromise".

• The Crony Capitalist Pretense Behind Warren Buffett's Banking Buys.

• America - We Have A Problem. (graph)

• Russia Readies Fuel Deliveries To Athens, Will Support Greek "Economic Revival".

Business Insider:

• Mexico's most notorious drug lord just escaped from prison in a tunnel built under his cell.

• High debt could crush US shale companies.

• 'China is in the midst of a triple bubble'.

• Europe has made Greece a terrible offer, and the Greek government thinks it's 'very bad'.

• VAROUFAKIS: A 'Grexit' was always part of Germany's plan.

• MERKEL: 'The most important currency has been lost and that is trust'.

Telegraph: 

• Greece news live: eurozone split over Grexit ultimatum plan as Greeks says they are being 'crushed' by Brussels. Negotiations continue into the early hours of the morning as Greek prime minister Tsipras fights to gain "honourable compromise" and stay in the euro.

Night Trading

• Asian indices are unch. to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 109.75 -2.25 basis points.

• Asia Pacific Sovereign CDS Index 60.0 -1.75 basis points.

• S&P 500 futures -.06%.

• NASDAQ 100 futures +.05%.

Morning Preview Links

Earnings of Note

Company/Estimate 

• None of note

Economic Releases

2:00 pm EST

• The Monthly Budget Statement for June is estimated at $50.0B versus $70.5B in May.

Upcoming Splits

• (KR) 2-for-1

• (NFLX) 7-for-1

Other Potential Market Movers

• The Greece EUR 464B IMF payment being due and (AMAT) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and financial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 50% net long heading into the week.