Today's Headlines

Bloomberg:

• Office Vacancy Rate in U.S. Climbs to 17-Year High, Reis Says. Office vacancies in the U.S. rose to the highest level since 1993 in the second quarter as the sluggish economic recovery damps demand from corporate tenants, Reis Inc. said in a report. The vacancy rate climbed to 17.4 percent from 16 percent a year earlier and 17.3 percent in the first quarter, the New York-based research company said today in a statement. Effective rents, the amount tenants actually pay landlords, fell 5.7 percent from a year earlier and 0.9 percent from the previous three months, according to Reis. Private employers made fewer hires in June than economists had forecast, reinforcing concerns the recovery will weaken, the Labor Department said July 2. Washington, D.C., remained the city with the lowest office vacancy rate, at 10 percent, according to the firm. New York vacancies stayed at 11.7 percent. Detroit had the highest vacancy rate, at 26.3 percent, amid declining employment in the auto industry, Reis said.
• Service Industries in U.S. Expand Less Than Forecast. Service industries in the U.S. expanded in June at a slower pace than forecast, indicating the economy was beginning to cool entering the second half. The Institute for Supply Management’s index of non- manufacturing businesses, which covers about 90 percent of the economy, fell to a four-month low of 53.8 from 55.4 in May. The June figure was less than the median forecast of 55 in a Bloomberg News survey. The group’s index of new orders for non-manufacturing industries declined to 54.4 in June, the lowest this year, from 57.1 a month earlier. The employment gauge fell to 49.7 last month from 50.4. Export orders dropped to 48 in June, the lowest since February, from 53.5. A gauge of prices-paid fell to 53.8 from 60.6.
• U.S. Banks Risk 'Untold Problem' as Muni Debt Holdings Swell. Citigroup Inc., State Street Corp. and U.S. Bancorp are among U.S. banks whose municipal bond holdings have reached a 25-year high just as state budget deficits swell to $140 billion, the most since the start of the recession. Commercial lenders added more than $84 billion to their holdings since 2003, according to the Federal Reserve, pushing total investments to $216.2 billion at the end of the first quarter. Bank regulators and ratings companies are ramping up scrutiny of banks most at risk of being forced to raise more capital should debt prices slide. “There is a huge untold problem here,” said Walter J. Mix III, a former commissioner of the California Department of Financial Institutions who closed 30 banks during the last banking crisis in the 1990s. “The economics lead to the conclusion that there will be downward pressure on these bonds.” At Cullen/Frost Bankers Inc., the biggest Texas lender, holdings of municipal debt exceeded Tier 1 capital, a key measure of a bank’s ability to absorb losses, by $491 million at the end of the first quarter, data compiled by Bloomberg show. For State Street, based in Boston, the holdings make up 50 percent of Tier 1 capital. U.S. Bancorp, the Minneapolis lender, has a ratio of 28 percent. It’s 11 percent at Citigroup, the data show. Default speculation drove municipal bond yields to a 13- month high relative to U.S. Treasuries in the first half of the year. Now, the Federal Deposit Insurance Corp. has asked analysts to look into the issue, according to spokeswoman Michele Heller. Citigroup had the largest municipal holdings among the biggest banks, with $13.4 billion of state and local government bonds, according to FDIC call reports. Bank of America Corp. held $8.5 billion, Wells Fargo & Co. owned $7.6 billion and JPMorgan Chase & Co. held $4.5 billion. Each accounted for less than 8 percent of Tier 1 capital, according to the FDIC. U.S. states are likely to face $140 billion in cumulative budget gaps in the coming year, according to the Center on Budget and Policy Priorities. Last year, 187 tax-exempt issuers defaulted on $6.4 billion of securities, the most since 1992, according to data from Distressed Debt Securities in Miami Lakes, Florida. “It’s a market where it’s clear that the underlying fundamentals are lousy,” said Michael Aronstein, chief investment strategist at Oscar Gruss & Son Inc., a New York- based brokerage. “People can say fundamentals don’t matter but I’ve been doing this for 32 years. They do.”
• Sovereign Default Risk Climbs Average 30%, CMA Says. The cost of insuring sovereign debt against default climbed 30 percent on average last quarter amid Europe’s escalating fiscal crisis, according to CMA DataVision. Credit-default swaps on 93 percent of the 70 governments tracked by CMA rose, with Greece temporarily overtaking Venezuela as the country with the world’s highest bond risk, the CME Group Inc. unit said in a report published today. “The major widening action in European sovereign credits indicates that the eurozone remains the hub and focus of the global debt crisis,” according to CMA’s Global Sovereign Credit Risk report. “None of the Western European sovereign credit- default swaps tightened.” Protection costs for the quarter’s worst European performers more than doubled, with swaps on Greece soaring 190 percent, Belgium climbing 168 percent, Spain 129 percent and Portugal 127 percent, the report said. Swaps on South Korea climbed 65 percent as tensions with neighboring North Korea mounted when a warship sank, making it Asia’s worst-performing sovereign. With a 2 percent increase Vietnam was Asia’s best performer. The cost of insuring Australia’s debt increased 52 percent after a new mining tax was levied on resource companies. The U.S. was one of eight nations whose default swaps showed improvement in the quarter, falling 2.4 percent, according to CMA.
• Commodity prices are tracking swings in equities more closely than at any time on record, undermining the traditional role of investments in raw materials as a hedge against financial-market volatility, Commerzbank AG said. Inflows into structured notes, and exchange-traded and commodity-index-linked funds reached $8.6 billion in May, the second-highest on record, taking assets under management to $291 billion, Barclays Capital said. "Investors are looking to diversify their holdings and are likely to trim their investments in commodities should the strong correlation between commodities and equities continue," Commerzbank analyst Eugen Weinberg said. As of July 2, the correlation between weekly percentage changes in the S&P 500 and CRB was .73, from as low as minus .35 in August 2008.
• BNP Says Europe Should Be Ready to Break From U.S. Over Rules. BNP Paribas SA Chairman Michel Pebereau said European countries should be prepared to break from the U.S. on bank capital requirements and bonus rules if such regulations risk harming their economies. “There is a necessity, which is not to overreact at the level of regulation,” Pebereau said at the Europlace conference in Paris today. “At this period of time, it is clear we have a different situation if we compare the U.S. and Europe. The priorities are not the same.” His remarks reflect concern on the part of banking executives across Europe that Group of 20 plans to raise capital requirements risk choking off growth in the region, which is more dependent on banks for financing than the U.S. Within the G-20, the U.S. is pushing for faster implementation of new rules while European governments want a phasing-in period. “If we overreact on the field of banking regulation, we’re going to have a problem on the level of financing the economy in Europe,” Pebereau said. “The future of growth in Europe is totally dependent on that. It would be better to have good regulation in Europe than to try to have global regulation in which Europe will not be able to have growth.” He also expressed concern that stricter application of rules on banker pay than elsewhere risks driving business away. “We’re not on a level playing field,” Pebereau said, speaking in English. “In the U.S., there is a very low level of regulation for compensation. If in Europe we have very high level of regulation, you will have a situation in which it is no more possible for European banks to be competitive.”

Wall Street Journal:

• BP(BP) Won't Issue New Equity to Cover Spill Costs. BP PLC killed speculation Tuesday that it was looking for a white knight investor to take a large equity stake in the company by saying it won't issue new equity to raise money to cover the costs of the oil spill in the Gulf of Mexico.
• U.S. to Challenge Arizona Immigration Law. The Justice Department is expected later Tuesday to file its long-expected challenge to an Arizona state law intended to crack down on illegal immigration, two administration officials said. The law passed in April and set to take effect later this month makes illegal immigration a state crime and requires police to verify the immigration status of people stopped for other alleged crimes.

Barron's:


Bloomberg Businessweek:

• Crude is Poised to Test New Lows This Year: Technical Analysis. Crude oil is poised to resume its decline and test new lows for the year in the weeks ahead, according to a technical analysis by Barclays Capital. Crude futures are “heading to the lows last seen in July 2009,” MacNeil Curry, a Barclays analyst in New York, said in a telephone interview. “The bigger picture includes a trend in risk aversion, and we are seeing equities and risk assets breaking down pretty hard.” “Volume is picking up as we break down and volume tends to go with the trend, so it all points to further weakness,” Curry said. “Other commodities are trending down. The S&P is breaking down and risk assets will remain under pressure.”

Fox News:



CNBC.com:

• Italy Is the Ticking Time Bomb: Economist. As Silvio Berlusconi’s government calls for a vote of confidence over his unpopular €25 billion ($31.45 billion) austerity package, Roger Bootle and his team over at Capital Economics are questioning whether the country holds great danger for the euro zone.

MarketWatch:




NY Post:




New York Times:






Business Insider:

• A Closer Look at the Structural and Demographic Headwinds That Could Derail China's Rise.
• Illinois Construction Workers Make $50-68 Hour, Strike for 15% More. Illinois construction workers live in fantasy land of business-as-usual.
  

Zerohedge:

• Baltic Dry Index Dropping 4%, Posting Longest Consecutive Loss in 6 Years at 28 Days. (graph)

Boston Globe:






The Deal:





Forbes:

• Exclusive: Rolling Stone Writer Who Brought Down a General Gets a Big Book Deal.

Washington Post:

• Obama's Worst Foreign-Policy Mistake.

MarketFolly:






Rigzone:

• Shell to Award Deals to Develop Iraq's Oil Field. Shell and its Iraqi state partner are in the process of awarding a deal to drill new oil wells at Iraq's super giant Majnoon oil field in southern Iraq, the head of Iraq's state-run South Oil Co. Dhiaa Jaafar said Tuesday. Shell, which partnered Malaysia's state-run Petronas to develop Majnoon, will also award engineering, procurement and construction deal to build various production installations at the field, an Iraqi oil industry source familiar with the project said. Separately, the Iraqi oil industry source said that firms including Halliburton, Weatherford International, and Petrofac have been invited to submit bids for these two tenders. Shell said earlier that it was planning to drill 15 new wells over the next two years at Majnoon, that would help lift production to 175,000 barrels a day by 2012 from current 45,000 barrels a day. The Anglo-Dutch super major and Petronas were awarded a contract in December to develop the Majnoon field, which is located in Basra governorate and holds some 12.6 billion barrels of proven oil reserves. Shell owns 45% of the venture and Petronas 30%, with Iraq's state-run Missan Oil holding 25%.

Washington Post:





The Hill:

• EBay(EBAY) Opposes Delahunt Bill That Would Expand States' Reach on Online Sales Tax. EBay is opposing federal legislation that would allow states to collect more sales taxes from online purchases. The legislation, introduced last week by Rep. William Delahunt (D-Mass.), would allow states to collect online sales taxes from all retailers, and not just those with a “physical presence” in the state. While supporters have argued it would level the playing field among businesses, eBay said the bill would stunt economic growth. “Year after year supporters of increased Internet sales taxes recommend legislation that would impose significant new costs on hundreds of thousands of online small businesses and e-commerce entrepreneurs, which is sure to harm the economy and kill small business jobs,” the company’s vice president for government relations, Tod Cohen, said in a statement. “At a time when unemployment rates are high and small businesses across the country are closing shop, we are confident that Congress will protect small internet retailers and the consumers they serve from another Internet tax scheme.”

National Real Estate Investor:

• CMBS Delinquency Rate Slowing. In another sign that the commercial real estate market is reaching bottom, the delinquency rate on commercial mortgage-backed securities (CMBS) increased in June by the smallest amount in the past 12 months. According to a new report from New York-based researcher Trepp, the CMBS delinquency rate, defined as loans that are 30 days or more past due, climbed just 17 basis points in June to 8.59%. Still, that’s no cause to break out the bubbly just yet. The June delinquency level is, once again, the highest in the history of the CMBS industry. In fact, if defeased loans were taken out of the equation, the overall delinquency rate would be 9.15% - breaking the 9% threshold for the fi­rst time. It is also more than double the rate of 4.07% in June 2009.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that 26% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-three percent (43%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -17 (see trends).

Politico:




UNODC:




Reuters:

• Sub-50% Chance of Double-Dip Recession - Fitch. The risk of a double-dip recession is less than 50 percent, Brian Coulton, managing director of European ratings at Fitch Ratings told Reuters Insider Television in an interview on Tuesday. "We still think it's a long way below 50 percent, it's not our central forecast at all," Coulton said of the risk of a double-dip recession. "We do think there are problems in certain sector in particular the Spanish saving sector, but by and large, the major Spanish banks look pretty strong to us," he said. Asked about stress tests gauging the health of the banking sector, Coulton said large Spanish banks looked "pretty strong to us."
• Europe to Outline Bank Test Methods Wednesday - Sources.
• Global Annual Chip Sales Up 47.6% - SIA.
• Global PMI Sags in June as New Order Growth Tapers Off. The pace of global expansion in the private sector sagged in June to a four-month low, according to a survey on Tuesday that pointed to slowing growth in order books and employment. The Global Total Output index, produced by JPMorgan with research and supply management organisations, fell to 55.4 in June from 57.0 in May

Financial Times:





The Independent:



Der Spiegel:






Handelsblatt:



Kathimerini:




Expansion:

• Spanish lenders increased their net investment in the country's treasury debt in May to a record 153.3 billion euros from 147.5 billion euros in April. Spanish banks and savings banks therefore covered 84% of Spain's net state debt in May, citing data from the treasury. The net amount of debt in the hands of investors outside Spain fell by 2.2 billion euros to 206.4 billion euros.

DigiTimes:






Xinhua:






NetEase:

• BYD Co.'s China vehicle sales in June fell 21% to 35,356 units from May, citing the company. June sales rose 3% from a year earlier.

The Age:

Bear Radar

Style Underperformer:

• Small-Cap Value (-.24%)

Sector Underperformers:

• Coal (-2.87%), REITs (-1.31%) and Steel (-1.13%)

Stocks Falling on Unusual Volume:

• GRMN, MLNX, TRC, CFFN, ISLE, SYKE, MAIN, AGNC, HUSA, TCAP, ARCL, MEAS, CHBT, ARBA, RAIL, ADBE, CIX, RHB, GNI, DOM and ROCK
  

Stocks With Unusual Put Option Activity:

• 1) MO 2) PXP 3) KBH 4) MU 5) AFL
  

Stocks With Most Negative News Mentions:

• 1) BP 2) XOM 3) FE 4) LCC 5) JCP
  

Bull Radar

Style Outperformer:

• Small-Cap Growth (+.61%)

Sector Outperformers:

• Tobacco(+2.0%), Semis (+1.49%) and Networking (+1.23%)

Stocks Rising on Unusual Volume:

• OVTI, CHU, NE, COG, LOOP, AMLN, AVAV, MPR, RAI, MO and HRB
  

Stocks With Unusual Call Option Activity:

• 1) STX 2) FE 3) SWKS 4) CECO 5) ARG
  

Stocks With Most Positive News Mentions:

• 1) AAPL 2) NE 3) URS 4) BA 5) GOOG

Monday Watch

Weekend Headlines
Bloomberg:

• Treasuries Advance as Group of 20 Vows to Cut Budget Deficits. Treasuries rose, pushing two-year yields down to match the lowest level this year, after Group of 20 leaders endorsed targets to cut their budget deficits. U.S. government securities extended gains from last week after the G-20 said advanced economies will aim to halve deficits by 2013, curbing record debt sales. Economists say a U.S. report this week will show the nation lost jobs this month, boosting demand for the relative safety of debt. “The G-20 communiqué is good news for the bond market,” said Yasutoshi Nagai, chief economist in Tokyo at Daiwa Securities Capital Markets Co., a unit of Japan’s second-largest brokerage. “I’m pessimistic on the outlook for the U.S. economy.”
  
• Bond Distress Rises as Goldman(GS), JPMorgan(JPM) Vary on Defaults: Credit Markets. The percentage of corporate bonds considered in distress is at the highest in six months, a sign debt investors expect the economy to slow and defaults to rise. The number of speculative-grade companies worldwide with yields at least 10 percentage points more than government bonds climbed to 399 this month, or 16.7 percent of the total, the highest share since December, according to Bank of America Merrill Lynch index data. The ratio compares with 9.2 percent on April 30, which was the lowest since November 2007. Junk bond sales slumped to a 15-month low in June amid concern government efforts to control spiraling budget deficits will hamper global growth and drive up borrowing costs for the neediest borrowers. The 2010 default rate in the U.S. may jump as high as 6 percent by year-end from 1.3 percent currently, according to analysts at Goldman Sachs Group Inc. “The default driver will be a reversal of easy refinancing conditions,” said Charles Himmelberg, the chief credit strategist at Goldman Sachs in New York.
• Commodity-shipping costs, which have dropped for 21 straight days, may fall as much as 20% in the third quarter because of an expanding fleet of dry-bulk vessels and slowing Chinese demand for iron ore, according to Mirae Asset Securities Co. Total capacity increased 7.2% in the first five months of the year, according to Clarkson Plc, the world's largest shipbroker. The global bulk fleet may expand 14% this year, as shipping lines move ahead with deliveries delayed during the credit crisis and global economic slump, according to Woori Investment & Securities Co.
• G-8 Leaders Expect Israel May Act on Iran Nuclear Program, Berlusconi Says. Group of Eight leaders expect Israel may decide to take action against Iran out of concern that the country is building nuclear weapons, Italian Prime Minister Silvio Berlusconi said. Since “Iran is not guaranteeing a peaceful production of nuclear power, the members of the G-8 are worried, and believe absolutely that Israel will probably react preemptively,” Berlusconi told reporters today in Huntsville, Ontario, after a two-day meeting with other G-8 leaders. He didn’t elaborate.
• Chinese Exports May Suffer on Yuan Flexibility, Debt Crisis, Official Says. China’s pledge for a more flexible yuan will slow the nation’s exports this year, adding to difficulties that include the European debt crisis and rising costs, a Chinese government official said. “I’m not optimistic about the exports this year,” Yu Jianhua, a Ministry of Commerce director general, told reporters at the Group of 20 meetings in Toronto yesterday. “It’s essential for exporters to cut cost and keep their share in the world trade market.”
• Iran Has Enough Enriched Uranium for Two Weapons, Panetta Says. Central Intelligence Agency Director Leon Panetta said today that the U.S. believes Iran has enough low-enriched uranium to produce two nuclear weapons that could be ready for delivery within two years.
• Wall Street Hiring Increases Most Since 2008 as Guaranteed Bonuses Return.
• Banking Bill Invites the Next Global Meltdown: Roy C. Smith.
  

Wall Street Journal:

• States Weigh Big Claims Against BP(BP). Gulf Coast states are gearing up to follow shrimpers and hotel owners in seeking payouts from BP PLC for lost revenue and other damages stemming from the Gulf of Mexico oil spill. The demands could far exceed the $305 million BP has already given the states of Louisiana, Mississippi, Alabama and Florida to help pay cleanup costs, promote tourism and begin building sand berms off the coast of Louisiana, state officials say. Lawyers advising the states said they would eventually seek multi-billion dollar payouts, but it was still too early to give a tally.
• Bucyrus(BUCY) International Fears Loss of India Order. Bucyrus International Inc. said it may lose a $310 million order for mining machinery from a subsidiary of Reliance Power Ltd. of India because of a decision by the U.S. Export-Import Bank against providing loan guarantees for the project. The decision is equivalent to "throwing 1,000 jobs in the ditch," Tim Sullivan, chief executive of the South Milwaukee, Wis., maker of mining equipment, said.
• Chinese Funds Venture Into U.S. Market. Chinese investment funds are tiptoeing into the U.S. stock market, raising their holdings of U.S. companies as they seek diversification from their volatile home market and see better prospects in the U.S. than elsewhere in the world. Securities filings show that Chinese funds that cater to individual investors have been allocating a larger share of their investments to the U.S. market in recent months. New entrants are also rolling out U.S.-focused investment products.
• Corruption Suspected in Airlift of Billions in Cash From Kabul. More than $3 billion in cash has been openly flown out of Kabul International Airport in the past three years, a sum so large that U.S. investigators believe top Afghan officials and their associates are sending billions of diverted U.S. aid and logistics dollars and drug money to financial safe havens abroad.
• Triumph of the Regulators. The Dodd-Frank financial reform bill doubles down on the same system that failed. President Obama hailed the financial bill that House-Senate negotiators finally vouchsafed at 5:40 a.m. Friday, and no wonder. The bill represents the triumph of the very regulators and Congressmen who did so much to foment the financial panic, giving them vast new discretion over every corner of American financial markets.

Bloomberg Businessweek:

• Gillard May Move to Slow Australian Population Growth. Julia Gillard, who last week replaced Kevin Rudd as Australian prime minister, may move to slow Australia’s population growth amid concerns about failing infrastructure and the nation’s environment. “The change of direction is to put front and center the sustainability issues,” Gillard said in an interview with the Nine television network today “There are environmental issues about water and about soil. But there are also sustainability issues about planning, about services.”
• Obama Discovers One More Crisis for a Toxic Tax: Kevinn Hassett.
• Vancouver's Real Estate Bubble Trouble.
  

NY Times:

• The Next Crisis: Public Pension Funds. Ever since the Wall Street crash, there has been a bull market in Google hits for “public pensions” and “crisis.” Horror stories abound, like the one in Yonkers, where policemen in their 40s are retiring on $100,000 pensions (more than their top salaries), or in California, where payments to Calpers, the biggest state pension fund, have soared while financing for higher education has been cut. Then there is New York City, where annual pension contributions (up sixfold in a decade) would be enough to finance entire new police and fire departments. Chicken Little pension stories have always been a staple of the political right, but in California, David Crane, the special adviser to Gov. Arnold Schwarzenegger, says it is time for liberals to rally to the cause. “I have a special word for my fellow Democrats,” Crane told a public hearing. “One cannot both be a progressive and be opposed to pension reform.” The budgetary math is irrefutable: generous pensions end up draining money from schools, social services and other programs that progressives naturally applaud. In California, which is in a $19 billion budget hole, Calpers is forcing hard-pressed localities to cough up an extra $700 million in contributions. New York State, more creatively, has suggested that municipalities simply borrow from the state pension fund the money they owe to that very fund. Such transparent maneuvers will not conceal the obvious: for years, localities and states have been skimping on what they owe. Public pension funds are now massively short of the money to pay future claims — depending on how their liabilities are valued, the deficit ranges from $1 trillion to $3 trillion.

Business Insider:

• Spain's Debt Maturity Wave Hits Next Month And It's Already Obvious They Don't Have Enough Cash.
• Bloomberg Wants Comcast(CMCSA) to be Forced to Sell CNBC.
  

Washington Post:

• General McChrystal Allies, Rolling Stone Disagree Over Article's Ground Rules.

LA Times:

• Deeds-In-Lieu Gain Favor With Lenders as Alternative to Foreclosure.

NYDailyNews.com:

• Two Census Bureau Managers Fired for Creating at Least 10,000 Bogus Questionnaires to Meet Deadlines. Two Census Bureau managers from a Brooklyn field office were fired after their bosses found they faked household surveys to meet deadlines, the Daily News learned. Instead of pounding the pavement and knocking on doors, the corner-cutting people-counters mined the phone book and Internet to make up answers to questionnaires, regional director Tony Farthing said. The managers - turned in by whistleblower employees - were caught last week. Now, at least 10,000 surveys need to be done or redone, officials said.

Reuters:

• Police in Standoff With G20 Protesters. Toronto police clashed with protesters for a second straight day on Sunday, with a final standoff played out in the downtown core near the just-finished G20 summit of world leaders. Police said that overall 605 protesters had been arrested by late afternoon. The running tally did not include the dozens seen detained by a Reuters witness just blocks away from where the Group of 20 leaders wrapped up talks focused on fixing the ills of the global economy.

Financial Times:

• Peter Orszag resigned from his pot of White House budget director this week after he failed to convince the administration that more aggressive cuts were needed to reduce the fiscal deficit. Orszag had become frustrated by the government's wariness of longer-term budget restraint, citing people in and outside the White House.

Telegraph:

• UK's Osborne Tries to Put the Brakes on Banking Reform. George Osborne is to push for a delay in global banking reform to get a deal on levels of liquidity and capital needed by banks so that multi-billion taxpayer funded bail-outs are not needed again. The Chancellor will argue at the G20 meeting today that banks should be given a longer transition period to put in place the new Basel III rules, possibly pushing the impact of the reforms out to 2018. He will also say that the Government will only agree to a delay if the terms of the new rules can be agreed by the next G20 meeting in South Korea in November.
• UK banks told to boost funds by £130bn. Britain's banks will have to permanently bolster their balance sheets by as much as £130bn – equivalent to £5,200 for every household in Britain – under new rules agreed by world leaders.

Securities Times:

• China's gross domestic product growth may drop below 8% in the fourth quarter of the year if the global economy experiences a double-dip recession, citing Frank Gong, JPMorgan Chase's(JPM) China strategist.

China Business News:

• China's exports after June or July may feel the effect of the European debt crisis, Zhao Jinping, a researcher at State Council's development and research center, said. Zhang Yansheng, a researcher at the National Development and Reform Commission, said he was not optimistic about the nation's imports and exports this year, according to the report.

Weekend Recommendations
Barron's:

• Made positive comments on (NYX), (BMY), (MRK), (PFE), (LLY), (WYNN), (GS), (RTP), (YUM) and (BWA).
• Made negative comments on (AUXL) and (RIMM).

Night Trading

• Asian indices are -.50% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 133.0 -2.0 basis points.
• Asia Pacific Sovereign CDS Index 133.25 +2.25 basis points.
• S&P 500 futures +.18%.
• NASDAQ 100 futures +.19%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BKS)/-.81
• (MU).43
• (SMSC)/.27
  

Economic Releases
8:30 am EST

• Personal Income for May is estimated to rise +.5% versus a +.4% gain in April.
• Personal Spending for May is estimated to rise +.1% versus unch. in April.
• The PCE Core for May is estimated to rise +.1% versus a +.1% gain in April.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Warsh speaking, Chicago Fed National Activity Index, Dallas Fed Manufacturing Activity Index, (ABMD) Analyst Meeting and the (SI) Capital Market Day could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by automaker and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the week.

Weekly Outlook

U.S. Week Ahead by MarketWatch (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as China bubble worries, rising economic pessimism, regulatory fears, tax hike worries and oil spill concerns offset end-of-the-quarter short-covering and bargain-hunting. My intermediate-term trading indicators are giving mostly bearish signals and the Portfolio is 75% net long heading into the week.

Market Week in Review

S&P 500 1,076.76 -3.65%*



The Weekly Wrap by Briefing.com.

*5-Day Change