Today's Headlines

Bloomberg:

• China's Debt Load Is (Much) Higher Than Previously Thought, Goldman Says. New credit creation points to an "uncomfortable" trend. Count total social financing (TSF) as another Chinese statistic of increasingly dubious value, according to analysts at Goldman Sachs Group Inc. With many investors grappling to understand the degree to which China's economic growth has been fueled by debt, efforts to get a grip on measures of new credit creation have gained fresh urgency. To date, many have relied on the TSF invented by the Chinese authorities in 2011 as a way of capturing a larger slice of the country's shadow banking activity, but Goldman analysts led by M.K. Tang cast fresh doubt, in a note published on Wednesday, on the measure's ability to gauge credit creation. They identify a discrepancy between China's official TSF and Goldman's new proprietary estimates of credit, describing the increasing difference as "an uncomfortable trend that has gotten more discomforting."
• Boom-Bust in China’s Equity Market Leaves an Economic Hangover. As China’s stock market boomed in early 2015, financial services provided a fillip to an ailing economy. What a difference a year makes: share trading is down more than 80 percent and the number of companies selling stock for the first time has plunged 65 percent. The fading impact on growth from the nation’s financial sector is adding to a list of economic headaches that includes weak demand for exports and a glut of spare capacity in the steel and coal industries. 
  
• Leave Takes Brexit Poll Lead as Major Turns Fire on Johnson. (video) Campaigners to get Britain out of the European Union have moved into the lead, according to a YouGov poll that increases the pressure on Prime Minister David Cameron with less than three weeks until the referendum. The online poll for ITV’s Good Morning Britain program Monday put “Leave” voters at 45 percent and “Remain” at 41 percent, with 11 percent undecided, according to an e-mailed statement. The poll comes on the back of others showing Brexit campaigners narrowing the gap or even leapfrogging “Remain” in the debate to sway voters ahead of the June 23 ballot. A second online poll released Monday, by TNS and conducted May 19-23, gave “Leave” a lead of 43 percent support to 41 percent.
• German Factory Orders Declined in April on Weak Export Demand. German factory orders declined in April as demand for investment goods from outside the 19-nation currency region slumped. Orders, adjusted for seasonal swings and inflation, fell 2 percent from the prior month, when they rose a revised 2.6 percent, data from the Economy Ministry in Berlin showed on Monday. The reading, which is typically volatile, compares with economists’ forecast for a drop of 0.5 percent. Orders slid 0.5 percent from a year earlier. 
• Dollar Touches 3-Week Low as Yellen Keeps Quiet on Fed’s Timing. (video) The dollar reached a three-week low after Federal Reserve Chair Janet Yellen said additional gradual interest-rate increases are appropriate, without specifying their precise timing. The Bloomberg Dollar Spot Index fluctuated after last week’s 1.6 percent decline, which was triggered by a U.S. Labor Department report showing employers in May added the fewest number of workers in almost six years. In a speech in Philadelphia Monday, Yellen said she is watching “four areas of uncertainty” in the economic outlook.
• Europe Stocks Advance as Miners, Oil Shares Climb on Price Gains. (video) European stocks rebounded from their first weekly drop in a month as energy and raw-material producers advanced, while U.K. shares surged. Rio Tinto Group and BHP Billiton Ltd. led miners to the best performance of the 19 industry groups on the Stoxx Europe 600 Index as commodities jumped. BP Plc added 2.8 percent, pushing oil stocks higher, as crude rose after Abu Dhabi forecast prices could climb as high as $60 a barrel. Air France-KLM Group slid 5.4 percent, dragging travel-and-leisure stocks to the biggest drop on the equity benchmark as Barclays Plc cut its price target on the airline. The Stoxx 600 climbed 0.3 percent to 342.41 at the close of trading, after earlier rising as much as 0.6 percent.
• Fed’s Rosengren Says Important to See If Weak Jobs Were Anomaly. (video) Federal Reserve Bank of Boston President Eric Rosengren said he expects U.S. economic conditions to continue improving, making further rate increases appropriate, although it will be important to see whether a weak employment report for May proves to be an anomaly. “Lately the economic data have been choppy,” Rosengren said in the text of a speech prepared for delivery at a central banking conference in Helsinki on Monday. “However, I still expect sufficient economic growth to justify a gradual removal of accommodation.” 
• Cheap Money Helped Inflate Energy Balloon.

Wall Street Journal: 

• Fed’s Bullard Sees Diminished Chance of June Rate Rise. St. Louis Fed president is leaning against supporting an interest-rate increase. Federal Reserve Bank of St. Louis President James Bullard said in an interview Monday that he is leaning against supporting a rate rise at the central bank’s coming meeting. If the Fed is going to raise its short-term interest-rate target, “I’d rather move on the back of good news about the economy,” Mr. Bullard told The Wall Street Journal. And since the Fed will be meeting following the release of the underwhelming May jobs data,... 
• Yellen Says Latest Jobs Report Raises Questions About Economic Outlook. Fed chief declines to say when a rate raise could come, after saying in May that a hike was probable ‘in the coming months’.
• Trump and the ‘Mexican’ Judge. Why equating ethnicity with judicial bias is so offensive.

Fox News:

• IRS releases list of groups targeted in scandal – 3 years later. (video)

CNBC:

• Janet Yellen probably just signaled two interest rate hikes for this year. If Fed Chair Janet Yellen has her way, there likely will be two rate hikes this year, contrary to current market expectations. While Yellen didn't overtly express that desire, there was one key section of the speech she prepared Monday that strongly signaled two hikes on the way: 
• Goldman(GS): China, not Fed, to dictate market's move.
• Santoli: Beware the high price for 'safe' stocks.
• Classic theory predicts more pain for stocks, technician says. (video)

Zero Hedge: 

• JPM(JPM) Still Hates The Market Rally: Here Are Its Reasons. (graph)
• Citi(C) On Yellen's Speech: "What She Did Not Say Is Dovish".
• UK PM Cameron Goes M.A.D. As Brexit Odds Hit Record High.
• ISIS Burns Alive 19 Women For Refusing Sex; Executes Dozens Of Its Own Fighters In Spy Purge.
• "I'm Considering Filing Bankruptcy" - St. Louis Proves A Harbinger Of Things To Come For Subprime Auto Lending.
• Paris Becomes Massive Camp For Illegal Migrants.
• Fed Sees Labor Market Deteriorating At Fastest Pace In 7 Years. (graph)
• Pure Coincidence? Massive McKinsey-Managed Hedge Fund Has Made Money In 24 Out Of 25 Years.
• The Keynesians Stole The Jobs. (graph)
• Fill In The Blank: Fed's Lockhart Says "Policy Continues To Stimulate The ..........." (graph)
• Morgan Stanley's(MS) Dour S&P500 Outlook: 5% Of Possible Upside vs 27% Of Downside. (graph)

Business Insider:

• Donald Trump is causing major alarm for Republicans again — and they're calling him out.
• The Fed is going to raise rates again soon — and this will drive some people crazy.
• Goldman Sachs(GS) says China's debt poses a 'sustainability risk'.

Washington Post: 

• Trump says it’s ‘inappropriate’ for ally Newt Gingrich to criticize his attacks on the ‘Mexican’ judge. Gingrich strongly rebuked Trump's comments during an interview on "Fox News Sunday," as did a number of prominent Republicans over the weekend. Senate Majority Leader Mitch McConnell (R) said that he “couldn’t disagree more” with Trump, although he would not label the attacks as racist. Senate Foreign Relations Committee Chairman Bob Corker struggled to answer questions about Trump's positions, at one point saying he had agreed to be interviewed just about foreign policy. House Speaker Paul D. Ryan (R-Wis.) said Friday that he disagreed with Trump's comments, adding: “He clearly says and does things I don’t agree with."