Bull Radar

Style Outperformer:

• Mid-Cap Growth -.27%

Sector Outperformers:

• Homebuilders +.99% 2) REITs +.69% 3) Utilities +.39%
  

Stocks Rising on Unusual Volume:

• GRPN, BEE, RH, ELN, INVN and SCTY

Stocks With Unusual Call Option Activity:

• 1) SWHC 2) OCN 3) TWO 4) SVNT 5) GME
  

Stocks With Most Positive News Mentions:

• 1) GME 2) PG 3) SCHW 4) CB 5) PFE
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Friday Watch

Night Trading

• Asian equity indices are unch. to +2.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 137.50 -5.0 basis points.

• Asia Pacific Sovereign CDS Index 113.25 -5.75 basis points.

• FTSE-100 futures +.39%.

• S&P 500 futures -.28%.

• NASDAQ 100 futures -.14%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SFD)/.42

Economic Releases
8:30 am EST

• The Producer Price Index for May is estimated to rise +.1% versus a -.7% decline in April.

• The PPI Ex Food & Energy for May is estimated to rise +.1% versus a +.1% gain in April.

• The 1Q Current Account Deficit is estimated to widen to -$111.3B versus -$110.4B in 4Q.
  

9:15 am EST

• Industrial Production for May is estimated to rise +.2% versus a -.5% decline in April.

• Capacity Utilization for May is estimated at 77.8% versus 77.8% in April.

• Manufacturing Production for May is estimated to rise +.1% versus a -.4% decline in April.

9:55 am EST

•  Preliminary Univ. of Mich. Consumer Confidence for June is estimated at 84.5 versus 84.5 in May.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Inflation data and Net Long-Term TIC Flows for April could also impact trading today.

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

Bear Radar

Style Underperformer:

• Large-Cap Growth +.14%

Sector Underperformers:

• 1) Gold & Silver -1.0% 2) Restaurants -.31% 3) Software -.28%

Stocks Falling on Unusual Volume:

• WAB, ACTV, CLDT, CTB, EAC, FSLR, RKUS, LYV, UAN, NOW, BKS, SIRO, HRB, CHL, NKA, PPO, SI, TRLA, PTR, BLK, DXCM, WMB, ULTA, ABBV, RXN and VNDA

Stocks With Unusual Put Option Activity:

• 1) SPLS 2) XLNX 3) OIH 4) KBH 5) DXJ
  

Stocks With Most Negative News Mentions:

• 1) FCX 2) SFD 3) CAAS 4) COCO 5) DF
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Thursday Watch

Evening Headlines 
Bloomberg:

• World Bank Cuts Global Outlook as China Slows, Europe Contracts. The World Bank cut its global growth forecast for this year after emerging markets from China to Brazil slowed more than projected, while budget cuts and slumping investor confidence deepened Europe’s contraction. The world economy will expand 2.2 percent, less than a January forecast for 2.4 percent growth and slower than last year’s 2.3 percent, the bank said in a report released today in Washington. It lowered its prediction for developing economies and sees the euro region’s gross domestic product shrinking 0.6 percent. In contrast, forecasts were raised for the U.S. and Japan, which was helped by fiscal and monetary stimulus. 

• Hollande to Ask French to Work More as Pension Deficit Balloons. President Francois Hollande has an unpalatable message for the French: they need to work more. Thirty-two years after France’s first Socialist President Francois Mitterrand cut the retirement age by five years, his party’s successor at the Elysee Palace is telling the French preserving their way of life means staying in jobs longer. Hollande’s government tomorrow kicks off three-month long talks with employer and employee groups to save a state pension system that last year lost 14 billion euros ($18 billion).

• EU Rights Official Asks Holder to Clarify Prism Program. European Union Commissioner Viviane Reding asked U.S. Attorney General Eric Holder for more information on the U.S. surveillance program Prism and its consequences for the rights of EU citizens. “Given the gravity of the situation and the serious concerns expressed in public opinion on this side of the Atlantic, you will understand that I will expect swift and concrete answers to these questions,” Reding said, according to a copy of a June 10 letter to Holder obtained by Bloomberg News. Reding, the European Commission’s vice president for justice, fundamental rights and citizenship, said she has serious concerns about reports that the U.S. is accessing and processing data of EU citizens who are using U.S. online service providers. 

• Japanese Stocks Tumble as Nikkei 225 Nears Bear Market. Japan’s Nikkei 225 Stock Average (NKY) plunged, falling more than 19 percent from a recent high and close to entering a bear market, as the yen rose to its strongest against the dollar in more than two months. The Nikkei 225 slumped 5.3 percent to 12,587.40 at the trading break in Tokyo, its third fall of more than 5 percent in the past month. The gauge dropped as much 6.6 percent today, the biggest loss since shares in Japan plummeted on May 23. “Selling breeds selling and it’s snowballing,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $126 billion.

• Yen Surges Past 95 Per Dollar to 2-Month High on Japan Flow Data. The yen surged, jumping to the strongest level in two months against the dollar, after government data showed Japanese investors were net sellers of overseas bonds and stocks for a fourth-straight week.

• China Stocks Drop to 5-Month Low on Economic Data After Holiday. China’s stocks fell after a three-day holiday, dragging the benchmark index to a five-month low, after government reports showed industrial production and exports trailed estimates. SAIC Motor Corp. led declines for automakers after growth in industrial output slowed to 9.2 percent last month from 9.3 percent in April. Baoshan Iron & Steel Co. (600019), the listed unit of China’s second-biggest steelmaker, lost 1.9 percent after it cut product prices. Sany Heavy Industry Co., the biggest Chinese machinery maker, tumbled 6.2 percent. The Shanghai Composite Index (SHCOMP) dropped 2.2 percent to 2,162.44 as of 9:38 a.m., heading for the lowest close since Dec. 24 and extending losses since a Feb. 6 high to 11 percent.

• Bank of Korea Holds Rate After Cut in May to Fight Yen Fall. The Bank of Korea left its interest rate unchanged after a surprise cut in May aimed at boosting an economy hit by a yen drop that gives Japanese companies an edge over Korean exporters. Governor Kim Choong Soo and his board kept the benchmark seven-day repurchase rate at 2.5 percent, the central bank said in a statement in Seoul today. All 15 economists surveyed by Bloomberg News predicted the move. 

• Prada Plummets Most in a Year on Slower Growth. Prada SpA (1913), the Italian luxury-goods maker, fell the most in almost 12 months in Hong Kong trading after reporting first-quarter profit growth that decelerated to the slowest pace in at least a year. Prada dropped 6.6 percent, headed for the biggest drop since June 21, to HK$68.40 as of 10:01 a.m., compared with a 3.2 percent decline in the city’s benchmark Hang Seng Index.

• Hong Kong Democracy May Lead to Conflict With China, Leung Says. Increased democracy in Hong Kong may lead to China’s refusal to appoint a leader elected by the city’s people, Chief Executive Leung Chun-ying said. China occasionally has declined to accept officials chosen by the city, which suggests it reserves the same right over the chief executive position, Leung said yesterday in an interview in New York. “The possibility exists for Beijing and Hong Kong people not seeing eye-to-eye on the best candidate to lead Hong Kong,” Leung said. “This is another issue we need to tackle under One Country, Two Systems.” 

• Hopewell Hong Kong Pulls $780 Million IPO as Stocks Slide. Hopewell Hong Kong Properties Ltd., the owner of buildings in the Wan Chai business area including Hopewell Centre, scrapped a $780 million initial public offering in the city after stock markets tumbled.

• Hong Kong Chief Executive Pledges Property Curbs to Stay. Hong Kong, the world’s most expensive home market, will not ease its real-estate curbs until there’s a steady supply of new properties as the government seeks to address concerns that it favors developers. Earlier actions have brought down prices and rents, and the government can do more if needed, Chief Executive Leung Chun-ying, 58, said in an interview in New York. 

• Asian Stocks Slip on World Bank as Kiwi Drops; Yen Gains. Asian equities dropped, with the region’s benchmark index headed toward a correction, and the yen rose to the strongest in two months against the dollar after the World Bank cut its global growth forecast amid concern central banks may pare monetary stimulus. New Zealand’s currency weakened. The MSCI Asia Pacific Index tumbled 2.6 percent at 11:16 a.m. in Tokyo, erasing this year’s gains. Japan’s Topix Index sank 4.1 percent and the Shanghai Composite Index declined 3.1 percent after a three-day break.

• Rubber Falls to Nine-Month Low on Stronger Yen, Demand Concerns. Rubber retreated to a nine-month low as a strengthening Japanese currency reduced the appeal of yen-based contracts and a downward growth revision by the World Bank raised concern that demand is weakening. The contract for delivery in November fell as much as 4 percent to 230.5 yen a kilogram ($2,435 a metric ton), the lowest level since Sept. 10, on the Tokyo Commodity Exchange, and was at 231.5 yen at 11:01 a.m. local time. Futures have plunged 23 percent this year. 

• Rebar Trades Near 9-Month Low on Signs of Slowing Chinese Growth. Steel reinforcement-bar futures in Shanghai traded near the lowest level in nine months as investors returning from a three-day holiday remained concerned that economic growth shows signs of slowing in the world’s biggest steel consumer. Rebar for delivery in October on the Shanghai Futures Exchange fell as much as 1 percent to 3,386 yuan ($552) a metric ton, the cheapest since Sept. 7, and was at 3,426 yuan at 11:09 a.m. local time. Futures have dropped 14 percent this year.

• Individuals Pull Most Money From Bond Mutual Funds Since 2008. Investors pulled $10.9 billion from U.S. bond mutual funds in the past week, the biggest redemption since October 2008, after speculation that the Federal Reserve may scale back its bond buying sent fixed-income markets lower. Taxable bond funds suffered withdrawals of $8.7 billion and municipal bond funds lost $2.3 billion in the week ended June 5, according to an e-mailed statement from the Investment Company Institute, a Washington-based trade group. Investors withdrew $942 million from stock funds, the ICI reported.

Wall Street Journal: 

• Traders Pay for an Early Peek at Key Data. On the morning of March 15, stocks stumbled on news that a key reading of consumer confidence was unexpectedly low. One group of investors already knew that. They got the University of Michigan's consumer report two seconds before everyone else.

• Debt Makes Comeback In Buyouts. Shareholders in BMC Software Inc. will receive $6.9 billion to sell the corporate-software developer to a group of private-equity firms. But the buyers, led by Bain Capital LLC and Golden Gate Capital, only intend to pay $1.25 billion in cash out of their own pockets. The rest will come from debt raised by BMC to finance its takeover. The little-noticed acquisition is another milestone in the return of cheap debt and higher-risk deals to Wall Street: The cash put down by BMC's private-equity buyers is the lowest as a percentage of the purchase price of any buyout with loans exceeding $500 million since 2008, according to data-provider Thomson Reuters LPC.

• Regulators Question Banks on Business Lending Risks. U.S. regulators are grilling banks over lending standards and warning them about mounting risks in business loans. Lending to companies has been a bright spot for banks searching for revenue amid slow economic growth and historically low interest rates. But regulators worry that banks have sweetened loan terms too much, which could put them in jeopardy if corporate borrowers can't repay.

• Credit Helps Drive Americans to the Mall. Experian Automotive reported that the percentage of cars leased rose during the first quarter, to the highest level since it began tracking that statistic in 2006. The recent interest-rate spike is unlikely to derail a credit revival. It may even be outweighed by easier lending standards. But in the longer run, borrowing alone provides a shaky foundation for sales growth. Cumulative growth in income has been far slower than in any postwar recovery, while savings has only been lower during asset bubbles. It's nice to see more Americans shopping, but not to the point that they drop.

• Henninger: The Sum of All Fears. The IRS audits and NSA surveillance flow into the same national anxieties.

Fox News: 

• Fox News poll: Voters oppose NSA program, most lack trust in government. Most Americans find it unacceptable for the National Security Agency to collect the phone records of millions of U.S. citizens. In addition, a majority lacks trust in the federal government, and an increasing number of people say it’s too big. These are just some of the findings of a Fox News poll released Wednesday. Sixty-two percent of voters say the government secretly collecting the phone records of millions of Americans is an “unacceptable and alarming invasion of privacy rights.” That’s nearly twice as many as think it’s an “acceptable government action to help prevent terrorism” (32 percent). Republicans (by 74-18 percent) and independents (by 67-26 percent) think the NSA surveillance of Americans is unacceptable.  Democrats split: 48 percent say it’s acceptable, while 46 percent say unacceptable.  

MarketWatch.com:

• H&R Block(HRB) misses earnings estimates.

• Martin Fridson: The junk bond market ‘hasn’t come down to earth’. High-yield bond guru Marty Fridson still thinks his sector is overpriced. The rigorous researcher of junk bonds said as much to a cohort of high-yield research analysts from hedge funds, banks, and asset managers during the New York Society of Security Analysts’ 23^rd Annual High Yield Bond Conference.

• There’s more than one way to leave the euro. Commentary: Millions fleeing Greece, Spain, Ireland, Italy, Portugal.

CNBC:

• Why Bullish BofA(BAC) Thinks Market Gains Might Be Over. Savita Subramanian looked overly optimistic when she picked her 2013 stock market price target last year—and pessimistic now that she's holding to that prediction.

Zero Hedge: 

• Monkeyhammered Nikkei Plummets 6% On Risk Exodus. (graphs)

• Government Celebrates Austerity With Fourth Largest Spending Month Ever. (graph)

• Santelli Schools Cramer & Co. On The High Freaks. (video)

• Buy (Bonds) In June, After The Swoon? (graphs)

• Bank Of England's Haldane: "We've Intentionally Blown The Biggest Bond Bubble In History".

• "Tapering" From Currency-Wars To Interest-Rate-Wars.

• Goldman(GS) Harakiris Muppets On Long Nikkei Reco Stop Loss. (graphs)

Business Insider:

• In One Chart, You'll See Why This Japan Situation Is Putting Speculators In A Whole World Of Hurt.

• BP: US Recorded Largest-Ever Gain In Oil Production in 2012, And Coal Is Still King Of The World. 

• FORMER MERRILL LYNCH CEO JOHN THAIN: The Financial Crisis Can 'Absolutely' Happen Again.

Reuters:

• BOJ official: inflation caused solely by weak yen could hurt economy. A senior Bank of Japan official said on Thursday that price hikes caused solely by a weak yen could hurt economic recovery, stressing the need for inflation to accompany balanced growth. "If price hikes are caused solely by a weak yen, that would be cost-push (inflation) and thus could negatively affect a steady economic recovery," BOJ Executive Director Masayoshi Amamiya said at a parliamentary committee session.

• S&P cuts Detroit rating to CCC- as city strives to avoid bankruptcy.

• Emerging markets at risk when loose policies end -World Bank. The World Bank said eventual monetary tightening in advanced economies could crimp growth in emerging markets as interest rates rise, lowering the nations' potential output by as much as 12 percent. That long-term risk is likely greater than the short-term impact from volatility in emerging market currency and bond markets, as traders try to position themselves for when the U.S. Federal Reserve begins its exit from ultra-loose monetary policies, said Kaushik Basu, the World Bank's chief economist. 

• Coty prices IPO at midpoint of expected range. Beauty company Coty priced its initial public offering at $17.50 a share on Wednesday, in the middle of the expected range, according to a source briefed on the matter. 

• Greeks strike over state TV closure as backlash grows. Greek workers stage a nationwide strike on Thursday, forcing hospitals to work on emergency staff and disrupting transport, in protest against the "sudden death" of state broadcaster ERT, switched off in the middle of the night by the government. 

• EMERGING MARKETS-Latam stocks continue decline to long unseen lows. 

• Analysis: After emerging corporate bond boom, default risks on rise. The $1 trillion market in emerging corporate bonds could be headed for a surge in defaults if company earnings in swiftly depreciating roubles or pesos fail to keep pace with dollar-based debt repayments.

Financial Times:

• US debt auction raises hopes over repo failures. Some so-called “fails” are expected in the repo market, where investors come to borrow short-term funds using low-risk collateral such as Treasury debt, but large numbers of fails have alarmed policy makers in the past because of potential systemic risk.

China Securities Journal:

• China Growth Slowdown May Last Into 3Q. Slowdown in China's economic growth may last into 3Q. China's inflation will be moderate this year, the newspaper said. Uncertainties on investment growth will increase as China's urbanization may be slower than expected. China won't ease its monetary policy, the newspaper said.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -3.50% to -1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 142.50 +1.5 basis points.

• Asia Pacific Sovereign CDS Index 119.0 +1.5 basis points.

• FTSE-100 futures -1.09%.

• S&P 500 futures -.37%.

• NASDAQ 100 futures -.31%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CASY)/.62

• (RH)/.04

Economic Releases
8:30 am EST

• Advance Retail Sales for May are estimated to rise +.4% versus a +.1% gain in April.

• Retail Sales Less Autos for May are estimated to rise +.3% versus a -.1% decline in April.

• Retail Sales Ex Auto & Gas for May are estimated to rise +.3% versus a +6% gain in April.

• Initial Jobless Claims are estimated at 346K versus 346K the prior week.

• Continuing Claims are estimated to rise to 2978K versus 2952K prior.

• The Import Prices Index for May is estimated unch. versus a -.5% decline in April.
  

10:00 am EST

• Business Inventories for April are estimated to rise +.3% versus unch. in May.

Upcoming Splits

• (SAIA) 3-for-2

Other Potential Market Movers

• The Italian 10Y Bond auction, ECB Monthly Report, 30Y T-Bond auction, BoJ Minutes, China FDI data, Bloomberg US Economic Survey for June, weekly EIA natural gas inventory report and thee weekly Bloomberg Consumer Comfort Index could also impact trading today.

BOTTOM LINE: Asian indices are sharply lower, weighed down by technology and financial shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the day.

Stocks Reversing Lower into Final Hour on Rising Global Growth Fears, Rising Asian/European Debt Angst, Technical Selling, Biotech/Commodity Sector Weakness

Broad Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Below Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• VIX 18.37 +7.62%

• ISE Sentiment Index 69.0 -27.37%

• Total Put/Call 1.19 +16.67%

• NYSE Arms .88 +4.10%

Credit Investor Angst:

• North American Investment Grade CDS Index 87.28 +2.02%

• European Financial Sector CDS Index 163.32 +.43%

• Western Europe Sovereign Debt CDS Index 90.0 -1.36%

• Emerging Market CDS Index 334.11 -2.53%

• 2-Year Swap Spread 17.0 -1.0 bp

• TED Spread 22.75 +.25 bp

• 3-Month EUR/USD Cross-Currency Basis Swap -12.5 +.25 bp

Economic Gauges:

• 3-Month T-Bill Yield .04% unch.

• Yield Curve 190.0 +4 bps

• China Import Iron Ore Spot $110.90/Metric Tonne n/a

• Citi US Economic Surprise Index -30.0 +1.0 point

• 10-Year TIPS Spread 2.06 -3 bps

Overseas Futures:

• Nikkei Futures: Indicating -325 open in Japan

• DAX Futures: Indicating -24 open in Germany

Portfolio: 

• Slightly Higher: On gains in my index hedges and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Today's Headlines

Bloomberg: 

• ECB Crisis-Plan Judges Focus on Limits to Monetary Policy. German top judges examining the European Central Bank’s plan to buy bonds of crisis-torn countries asked whether the operation crosses the line from legitimate monetary policy to illicit state financing. Witnesses at the second day of hearings before the Federal Constitutional Court in Karlsruhe faced queries from the panel on whether the central bank’s Outright Monetary Transactions program oversteps the mark beyond the ECB’s mandate to conduct monetary policy. Judges also asked whether the rules underpinning that mandate should be revamped. 
• Turkish Police Retake Square Amid Clashes. Turkish protesters urged people to return to Taksim Square this evening, after they were driven out by police last night. The Taksim Solidarity group, which says it represents protesters, called in an e-mailed statement for people to return to the square from 7 p.m. It reiterated demands including the preservation of the park, the dismissal of governors and police chiefs in cities where demonstrators have been attacked, and the release of those detained during the rallies.
• Citigroup(C) Pushes Back Brazil Stock Rebound Call After Selloff. Citigroup Inc. (C) tempered its projections for a recovery in Brazilian stocks after the Ibovespa plunged into a bear market, predicting that the benchmark won’t rebound until next year. The 71-stock index has plunged more than 22 percent in 2013 from its peak of 63,312.46 on Jan. 3. Citigroup analysts Stephen Graham and Nicolas Riva, who had forecast a return to a level of 63,000 by the end of this year, now project that the measure will rebound by mid-2014, according to a research note dated yesterday. The bank had already cut its year-end Ibovespa target twice this year, according to the note. “The second half is only three weeks away, and things have just gotten uglier,” the analysts wrote. “Growth expectations around 4 percent are a distant memory.” The Ibovespa fell 0.9 percent to 49,304.44 at 3:13 p.m. in Sao Paulo today.
• India’s Slower Industrial Growth Adds Policy-Change Pressure. India’s industrial-output growth slowed in April, adding pressure for more government steps to spur the economy as elevated consumer-price inflation threatens to limit the central bank’s room to extend monetary easing. Production (INPIINDY) at factories, utilities and mines rose 2 percent from a year earlier after a revised 3.4 percent gain in March, the Central Statistical Office said in New Delhi today. Another report showed consumer prices climbed 9.31 percent in May from a year earlier, exceeding the median 9 percent estimate in a Bloomberg News survey. Asia’s third-largest economy expanded at the weakest pace in a decade in the year ended March, hurt by an uneven global recovery and moderating investment. The rupee fell to a record low this week, a drop that may make imports costlier and stoke price increases that have narrowed the Reserve Bank of India’s scope for a fourth straight interest-rate cut on June 17. “This reaffirms that demand remains weak,” said Shubhada Rao, chief economist at Yes Bank Ltd. in Mumbai.
• Emerging-Market Anxieties Jump by Most Since ’08: Credit Markets. The biggest drop in perceived creditworthiness for emerging-market borrowers since the credit crisis is deepening as speculation intensifies that central banks will scale back record stimulus. Prices on the Markit CDX Emerging Markets index, a credit-default swaps benchmark for debtor nations from Latin America to the Middle East and Asia, have tumbled 4 cents in the two weeks through yesterday to 107 cents on the dollar. The decline is the biggest since the failure of Lehman Brothers Holdings Inc. reverberated across financial markets and caused the index to plunge 6.7 cents in the period ended Nov. 18, 2008. 
• Grain Prices Tumble as U.S. Sees Bigger Corn Supply, Wheat Crops. Corn futures tumbled the most in five weeks, leading declines in wheat and soybeans, after the U.S. said inventories will be bigger than analysts’ forecast as global production rebounds from a drought last year. Record domestic corn output of 14.005 billion bushels this year will more than double inventories before the harvest in 2014, and soybean production will be 3.39 billion bushels, the most ever, the U.S. Department of Agriculture said today in a report. While drought damage late last year will reduce the 2013 U.S. wheat harvest, global output will rise 6.1 percent.
• Protectionism Surges to Worst Since Crisis as G-8 Nears. Global trade protectionism has surged to its highest since the financial crisis began in a threat to economic growth, according to Global Trade Alert. Four-hundred-thirty-one new protectionist measures were imposed from June 2012 to this month compared with 141 steps taken to liberalize commerce, said GTA, which was created in 2009 by University of St. Gallen professor Simon Evenett in Switzerland. Another 183 practices aimed at restricting trade are in the pipeline. With trade on the agenda for the upcoming U.K. meeting of Group of Eight leaders, the report said such nations were responsible for almost a third of protectionist measures over the past year.
• Obama Quietly Raises 'Carbon Price' as Costs to Climate Increase. Buried in a little-noticed rule on microwave ovens is a change in the U.S. government’s accounting for carbon emissions that could have wide-ranging implications for everything from power plants to the Keystone XL pipeline. The increase of the so-called social cost of carbon, to $38 a metric ton in 2015 from $23.80, adjusts the calculation the government uses to weigh costs and benefits of proposed regulations. The figure is meant to approximate losses from global warming such as flood damage and diminished crops. With the change, government actions that lead to cuts in emissions -- anything from new mileage standards to clean-energy loans -- will appear more valuable in its cost-benefit analyses. On the flip side, approvals that could lead to more carbon pollution, such as TransCanada Corp. (TRP)’s Keystone pipeline or coal-mining by companies such as Peabody Energy Corp. (BTU) on public lands, may be viewed as more costly. “As we learn that climate damage is worse and worse, there is no direction they could go but up,” Laurie Johnson, chief economist for climate at the Natural Resources Defense Council, said in an interview. Johnson says the administration should go further; she estimates the carbon cost could be as much as $266 a ton.
• IBM(IBM) Said to Start U.S. Job Cuts Today Amid Global Reduction. International Business Machines Corp. (IBM) began cutting U.S. jobs today as part of a plan announced in April to spend $1 billion globally to trim its workforce, according to a person familiar with the move. The reduction targets employees with a range of seniority, from rank-and-file workers to executives, said the person, who asked not to be named because the information is private.
• Traders Said to Rig Currency Rates to Profit Off Clients.
• Budget Deficit in U.S. Widened in May as Spending Increases 10%. The U.S. budget deficit widened in May from a year earlier on a 10 percent increase in spending, the Treasury Department said. Outlays exceeded receipts by $138.7 billion last month compared with a $124.6 billion shortfall in May 2012, the Treasury said today in Washington.

Fox News: 

• Al Qaeda-linked fighters seek to change image in Syria with social outreach. Battle-hardened Al Qaeda-linked fighters helping insurgents in Syria are winning over their fellow warriors with a newfound discipline that could make them even more formidable in the war for the hearts and minds of civilians caught in the crossfire of a bloody civil war.
• I'm 'not a traitor,' NSA leaker Edward Snowden tells Hong Kong newspaper.

CNBC:

• Byron Wien Expects ‘Trouble Ahead’. (video) The stock market is beginning to sense headwinds unrelated to quantitative easing, Blackstone Advisory Vice Chairman Byron Wien said Wednesday.  "I think while valuations are still fair, I think the market's made a lot of progress, and I think there's some trouble ahead," he said. "The trouble is that profit margins, in my opinion, have peaked and that earnings are going to be disappointing in the second half, and that's what the market is beginning to sense."

Zero Hedge: 

• Crisis And Chaos Return To Greece Following National TV Shutdown.
• Summarizing The Known Rigged Markets.
• Auto Incentives Jump To 8% Of Car Value, Highest In Two Years. (graph)
• Things In Greece Are Once Again Going Bump In The Trading Day. (graphs)
• Dear Primary Dealer: Please Tell The Fed What To Do.
• Depite Bearish Rhetoric, Bill Gross Retains Treasurys As Most-Held Asset. (graph)
• Nikkei Futures Plunge. (graph)

Business Insider: 

• ANALYST: 'There Are So Many Dominoes Just Waiting To Topple That We’re No Longer Sure What To Watch'.
• ALBERT EDWARDS: 'One Of The Biggest Economic Bubbles Is About To Go Into The Minsky Masher'.
• The World Is Heading For An Oil Production Glut.
• Traders Are Massively Betting Against The Australian Dollar.

New York Times:

• French Air Controller Strike Spreads to Other Countries. Air travel disruptions intensified across Europe on Wednesday as a strike led by French air-traffic controllers broadened in its second day to include smaller labor actions in other countries. Unions are protesting a plan by the European Union to accelerate the integration of air traffic management systems across the Continent. 
• Indian Tire Maker to Buy Cooper Tire(CTB) for $2.5 Billion. One of India’s largest tire makers, Apollo Tyres, announced a deal on Wednesday to acquire the Cooper Tire and Rubber Company for $2.5 billion in cash. The acquisition would give Apollo a major foothold in the United States, the world’s second-largest auto market after China. Cooper, which focuses on passenger and light- and medium-truck replacement tires, is the fourth-largest tire maker in North America. Its brands include Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.

Index Universe: 

• Shiller: Housing Rebound Could Be Flaky. Shiller told IndexUniverse.com Managing Editor Olly Ludwig that between the housing market’s clear dependence on the Federal Reserve’s ultra-easy monetary policies and signs the public’s enthusiasm about home ownership may be waning, there are clear grounds to wonder if the price gains in the past year may halt or even reverse.

Washington Post:

• IRS taxing of tanning beds and other Obamacare absurdities.

Reuters:

• U.S. prime money funds raise euro zone exposure -JPMorgan. U.S. prime money market funds boosted their holdings of euro zone bank debt in May as part of a broader move into higher-yielding investments, according to a report by JPMorgan Securities released on Wednesday. 
• Greek political jitters unsettle European equities. European shares fell on Wednesday, pressured by autos and banks, as concerns over Greek politics pushed regional indexes nearer to key support levels which, if breached, could trigger further losses. 
• Mexican stocks deepen losses to near 1-yr low as Banorte weighs. Mexico's IPC stock index fell more than 2 percent on Wednesday, dragged down to its lowest level in nearly a year after shares in bank Grupo Banorte tumbled on news it plans a global share offering of up to $3 billion.

Financial Times:

• Bundesbank’s Jens Weidmann backs legal curbs on ECB. The head of Germany’s Bundesbank said on Wednesday he would support a clarification of the European Central Bank’s room for manoeuvre in how it conducts monetary policy. Although Jens Weidmann did not explicitly call for EU treaty change, any attempt to change the ECB’s mandate would require such a move, a prospect likely to be greeted with alarm in European capitals.

Telegraph:

• Italian showdown with Germany over euro looms closer. Italy’s simmering revolt against Germany, austerity and its own ultra-European elites is coming to a head again, in a reminder that the deep clash of interests between the euro’s north and south remains as bitter as ever.
• A 'disorderly' bursting of biggest bond bubble in history is biggest risk to financial stability, say BoE's Andy Haldane. Andy Haldane, the Bank of England's executive director for financial stability, believes the biggest risk to the global financial system is a "disorderly" bursting of the bond bubble created by quantitative easing.