Today's Headlines

Bloomberg:  

• Tsipras Faces Off With Europe Over Austerity Before Sunday Vote. Greek and European leaders dug into their positions before the country’s referendum on Sunday, as polls showed the outcome is impossible to predict and what happens next even more uncertain. Officials from Berlin to Madrid reiterated that a “no” to the latest proposals by creditors would deepen Greece’s economic misery. Greek Prime Minister Alexis Tsipras told supporters in Athens that a “no” vote was the ticket out, as he appealed for a 30 percent cut in his nation’s debt.

• Greeks Face German Parliament Hurdles Even If Vote Is ‘Yes’. Any future bailout program for Greece faces hurdles in Germany’s lower house of parliament even if Greeks ignore their government’s advice to reject a creditor offer in Sunday’s referendum and vote “yes,” German lawmakers said. Sentiment has soured among members of Chancellor Angela Merkel’s bloc since Prime Minister Alexis Tsipras took office and adopted a confrontational stance, said the lawmakers. Tsipras, or any possible successor, may struggle to get the Bundestag to even authorize Merkel to start negotiations on a third aid program, they said.

• Schaeuble Popularity Soars as Germans Doubt Greece’s Euro Future. German Finance Minister Wolfgang Schaeuble scored his highest-ever approval rating in an ARD-DeutschlandTrend poll that identified a decline in public support for Greece remaining in the euro. Seventy percent of Germans said they were satisfied with Schaeuble’s work, placing him second on a list of Germany’s leading politicians above Chancellor Angela Merkel, who was in third slot with 67 percent, according to the poll conducted by Infratest Dimap released Friday. Foreign Minister Frank-Walter Steinmeier topped the list with 73 percent approval.

• Euro Area Said to Weigh Push for Aid Deal Even If Greeks Vote No. Euro-area finance ministers may be ready to start work on a third bailout agreement for Greece after Sunday’s referendum, even if voters reject the bloc’s last aid proposal, according to two officials familiar with negotiations. A broad majority of finance chiefs have agreed to examine an official request from Greek Prime Minister Alexis Tsipras for aid from the European Stability Mechanism, the people said, asking not to be identified because the talks are confidential. That process could begin as soon as next week, one of them said.

• The Other Contagion: What If Greece Thrived After Euro Exit? It is the scenario few talk of: What if Greece left the euro area and its economy thrived? The reason for the silence may be that it’s too ridiculous a concept to even consider. As the country’s referendum on austerity nears, economists are lining up to warn that quitting the euro and defaulting on its debts would make Greece an even bigger pariah in financial markets and push it toward a deeper depression with the bankruptcies, unemployment and social unrest that entails. Such pain, so the conventional wisdom goes, would scare the likes of Spain and Portugal into rededicating themselves to the German-branded austerity and economic reform that membership of the single currency demands. To some, a euro zone without Greece would be smaller yet possibly stronger. But economists at Oxford Economics Ltd. and Citigroup Inc. this week gave voice to the question of what would happen if Greece dusted itself down within a couple of years and rode a falling currency back to economic growth. That would challenge the theory that leaving the euro was economic suicide. And it could encourage other members to consider devaluation and default more appealing than life within the euro and so pose an even bigger threat to the currency bloc’s sustainability than if Greece stayed.

• ECB Said to Extend Backstop to Bulgaria Amid Greek Fallout. The European Central Bank is set to extend a backstop facility to Bulgaria and is ready to assist other nations in the region to ward off contagion from Greece, according to people familiar with the situation. The ECB would provide access to its refinancing operations, offering euros to the banking system against eligible collateral, the people said, asking to remain anonymous because the matter is confidential. The ECB and the Bulgarian central bank declined to comment.

• Can China Catch the Falling Knife in Equity Markets? (video) Bloomberg’s Stephen Engle reports on the current drop in Chinese equities and the government’s attempt to restore confidence in those markets.

• European Stocks Fall as German Bunds, Yen Rise Before Referendum. European stocks fell for a second day and German bonds gained as Greece called for a writedown on its debt and investors braced for a referendum this weekend. The yen and the Swiss franc strengthened. The Stoxx Europe 600 Index decreased 0.5 percent at 10:46 a.m. in New York. The yield on Germany’s 10-year bund fell five basis points to 0.79 percent. The yen and the franc climbed 0.3 percent against the dollar. Humana Inc. jumped in German trading as Aetna Inc. agreed to buy the company. Chinese shares capped their biggest three-week slide since 1992. Oil was set for its worst week since March. U.S. markets were shut for a holiday. Stocks extended declines in a week where more than $1.5 trillion was erased from the value of global equities after Greek Prime Minister Alexis Tsipras short-circuited bailout talks by calling a referendum. Tsipras said today that a 30 percent so-called haircut and a 20-year grace period was the only way the country’s debt could become sustainable. 

• Europe Stocks Fall Most Since December. The Euro Stoxx 50 Index lost 5 percent in the week after Greek Prime Minister Alexis Tsipras announced a surprise referendum on creditors’ bailout demands. 

• Seven-Day Plunge in Iron Ore Sinks Vale as Brazilian Stocks Fall. A seven-day selloff in iron ore sent Vale SA, the world’s largest producer of the commodity, to its worst week since January. The Ibovespa joined a slide in emerging-market stocks. Shares of Vale extended their weekly tumble to 8.8 percent as shipments of the steelmaking ingredient surged and data showed the slowdown in China’s steel industry deepened. The miner, whose top export market is the Asian nation, accounts for about 6 percent of Ibovespa’s weighting.

• Iron Ore Routed on Jump in Cargoes as Citi, Goldman Get It Right. Iron ore capped the biggest weekly loss since April as shipments surged and data showed the slowdown in China’s steel industry deepened, vindicating banks from Goldman Sachs Group Inc. to Citigroup Inc. that had forecast declines. Ore with 62 percent content delivered to Qingdao lost 0.7 percent to $55.26 a dry metric ton on Friday, falling for a seventh day, according to Metal Bulletin Ltd. Prices lost 11 percent this week to the lowest level since April. Producers’ shares sank, with Rio Tinto Group dropping to the lowest since 2009 in London and Anglo American Plc falling to a 12-year low.

Wall Street Journal:

• Regulators Warn Banks on Loans to Oil, Gas Producers. Move could limit ability of energy companies to obtain financing. U.S. regulators are sounding the alarm about banks’ exposure to oil-and-gas producers, a move that could limit their ability to lend to companies battered by a yearlong slump in prices. The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. are telling banks that a large number of loans they have issued to these companies are substandard, said people familiar with the matter, as they issue preliminary results of a joint national examination of major loan portfolios. The substandard designation indicates regulators doubt a borrower’s ability to repay or question the value of the assets that back a loan. The designation typically limits banks’ ability to extend additional credit to the borrowers.

• Holiday Weekend Brings Worries of Islamic State Terror Attacks. U.S. Officials monitor potential suspects ahead of July 4; scare at Washington Navy Yard. Federal counterterrorism officials are on edge heading into the July 4 weekend, monitoring hundreds of potential suspects they fear could be contemplating attacks on behalf of Islamic State, officials said.

MarketWatch.com:

• Know this about Sunday’s Greek referendum! Here’s a guide to what’s happening and what’s at stake.

• As China stocks sink, some accuse Morgan Stanley(MS), other foreign forces. The recent, drastic stock-market meltdown in China seems to have freaked out the country’s government and central bank, as their repeated efforts to stabilize the markets have failed, at least so far. And now, some segments of Chinese society are now raising the possibility that “evil” market forces going short to ruin the economy, and even suspecting investment “predators” of lurking behind the turmoil, with Morgan Stanley among the names mentioned.

Fox News:

• Man arrested in connection with San Francisco killing had been deported several times, officials say. (video) The man arrested in connection with the seemingly random killing of a woman who was out for a stroll with her father along the San Francisco waterfront is an illegal immigrant who previously had been deported five times, federal immigration officials say.

ZeroHedge:

• What It All Comes Down To On Sunday. 

• Massive "No" Demonstration Floods Athens' Syntagma Square As Tsipras Speaks - Live Webcast. (video) 

• Greek Banks Considering 30% Haircut On Deposits Over €8,000: FT. 

• BofA's Dire Prediction: Only Direct Government Buying Can Save China Stocks Now. (graph)

• Martin Armstrong: Troika Is Maneuvering To Rig The Greek Referendum.

• Barack Obama Tells Another Whopper - He Did Not Create 12.8 Million Jobs. (graph)

• Do Share Buybacks Create Value? (Spoiler Alert: No). (graph)

• Crude Carnage Continues - WTI Hits $55 Handle, Brent Tests $60. (graph)

• 3 Things: Valuations, Employment, Sectors. (graph)

• Egypt Is On The Edge Of Full Blown Civil War.

• Contagion Continues: Italy, Spain Stocks Tumble To Post-Greferendum Lows. (graph)

• Chinese Stocks Plummet Despite Government Threats To Shorts, Europe Lower, US Closed. (graph)

Business Insider:

• The Iran deal is the worst agreement in US diplomatic history.

• 9 photos show the chaos in Greece right now. (pic)

• China's slowdown is bad news for the world's big industrial exporters.

Reuters:

• Greek FinMin Varoufakis says bail-in report "malicious rumour". Greek Finance Minister Yanis Varoufakis said on Friday a Financial Times report that Greece was making contingency plans for the possible bail-in of deposits was a "malicious rumour". Varoufakis made the comment on his Twitter account. The Financial Times said the contingency plans could include a 30 percent bail-in on deposits above 8,000 euros.

Financial Times:

• Renzi threatened by political contagion from Greece. Beppe Grillo, the comedian and leader of Italy’s populist Five Star Movement, was so gleeful at Alexis Tsipras’s decision to call a bailout referendum last weekend that he quickly hatched plans to travel to Greece for the occasion. “Power to the people, not the banks,” Mr Grillo wrote on his blog as he announced he would be in Athens’ Syntagma Square on Sunday to cheer on the embattled Greek prime minister.

Telegraph:

• Whether Greece votes yes or no, the euro cannot survive in its current form. Best case scenario? The EU will undergo years of painful convulsions, precipitating a new treaty that imposes greater centralisation and restrictions on the fiscal independence of nation states.

• Enough of this charade: Greece must be told to leave the euro. It is no use pretending that the buffoons who pass for a government in Athens can solve this economic crisis. 

• Greece crisis live: Banks will run out of money on Monday morning as Tsipras urges Greece to reject "blackmail". Yes and No voters come out in force in Athens tonight after it is revealed Brussels tried to block IMF report calling for Greek debt relief.