Evening Headlines
Bloomberg:
- Greek Pension Mess Shows There’s No Easy Way Out of Impasse. To find out why Greece’s pension system is tying negotiators up in knots, look no further than Maria Kounani, 59, a mother of two, single parent and early retiree. The maker of sewing patterns applied for a reduced pension last year, when the business where she’d worked for 20 years struggled with unpaid orders. To qualify for a full pension she needed to work another 10 years. She opted for early retirement, the only real choice she says she had, and one Greece’s creditors say is undermining the pension system. “I did it because no one is hiring me,” Kounani said. “They’re not even hiring my daughter who’s 39.” As Greek pensions become a key sticking point in talks with creditors, cases like Kounani show why there are no simple ways out. For creditors, the pension system is still too generous. For the Greek government, it’s a system struggling to cope after five years of recession and dwindling contributions in a nation with the European Union’s highest unemployment.
- Greece Cut to CCC From CCC+ by S&P. (video)
- Is the Next Detroit in China? Wenzhou is among the Chinese cities most heavily indebted and at risk of defaulting on its loans, according to Nomura Holdings Inc. Wenzhou is among the cities most heavily indebted and at risk of defaulting on its loans, according to Nomura Holdings Inc. In a new analysis described as one of the first of its kind, Nomura has dug into China's lending trail to see which cities and provinces are creaking under debt. They examined credit risks covering 30 provincial authorities and 265 cities.
- South Korea Cuts Key Rate to Record Low While MERS Spreads. The Bank of Korea lowered its key interest rate to an unprecedented low as the spread of Middle East respiratory syndrome risks derailing an economic recovery. The central bank cut the seven-day repurchase rate to 1.5 percent on Thursday, the fourth reduction since August 2014. The decision was forecast by 11 out of 18 analysts surveyed by Bloomberg. The rest had expected no change.
- Asian Stocks Follow U.S. Shares Higher Amid Optimism on Greece. Asian stocks rose for a second day, following U.S. shares higher amid optimism progress is being made in Greece’s debt talks. The MSCI Asia Pacific Index gained 0.4 percent to 147.54 as of 9:07 a.m. in Tokyo.
- Leveraged Loans Tumble as Buyers Feel Impact of Shrinking Yields. Investors are getting tired of yields being squeezed on risky U.S. corporate loans this year. Leveraged loans dropped to their lowest level in four months amid a pullback by buyers stung by borrowers such as Dollar Tree Inc. and Goodyear Tire & Rubber Co., who have taken advantage of a paucity of new deals by seeking to lower payments on existing debt. Barclays Plc last week cut its 2015 forecast for U.S. leveraged-loan issuance to as little as $250 billion as regulatory scrutiny slows the pace of buyout financings.
- Meredith Whitney Says She’s Done With Hedge Funds After Struggle. Meredith Whitney, who turned fame as a banking analyst into a stint running her own hedge fund, is through with managing other people’s money. “I think that chapter of my life is over,” she said in an interview with Fox Business on Wednesday. “This whole experience has been highly unfortunate and I’m putting it behind me.”
Wall Street Journal:
- Bye, Bye, American History. Professors and historians urged opposition to the College Board’s new curriculum for teaching AP U.S. History.
Fox News:
- Bill Clinton contradicts Hillary on email claims. (video) Bill Clinton appeared Wednesday to contradict his wife's claims about their personal email use, saying he's only sent two emails in his life -- despite Hillary Clinton saying some of the private messages on her personal server were from her and her husband.
CNBC:
- World Bank pares global growth forecast. The World Bank trimmed its global economic growth outlook on Wednesday, warning that developing markets faced a raft of headwinds ranging from lower commodity prices to the prospect of higher borrowing costs. The Washington-based lender now expects the world economy to expand 2.8 percent in 2015, down from its January projection of 3 percent, according to its bi-annual Global Economic Prospects (GEP) report. It maintained its growth forecasts for 2016 and 2017 at 3.3 percent and 3.2 percent, respectively.
Zero Hedge:
- Biotech Bubble; China Crash; Rate Rumble: How Goldman Is Hedging The "What Ifs". (graph)
- China's Global Ambitions Take Shape As AIIB Structure Revealed, Germany Pledges Full Support.
- Why EIA, IEA, And BP Oil Forecasts Are Too High.
- Only 1 In 20 "Skilled" Traders Profit From VIX ETFs.
- Taxpayers To Lose Billions On Student Loan Refinancing.
- No Steve Schwarzman, That's Not How "The Next Financial Crisis Will Happen".
- "Denied" Greek Rumor Sparks Stock Buying Panic As Bonds Near Death Cross. (graph)
- Oops! Fed Admits QE Widens Inequality.
- Rigging Markets? How To Determine If You Will Go To Jail In A Simple Flow Chart.
- The Upside Of Soaring Obamacare Premiums?
- China Officially Doubles Down On Multi-Trillion Yuan Debt Swap Program. (graph)
- Aussie Central Bank Admits, Property Prices "Have Gone Crazy". (graph)
Business Insider:
- Former DIA director: Obama's Middle East policy is one of 'willful ignorance'.
- And now the World Bank is asking the Fed to put off rate hikes until 2016.
- S&P DOWNGRADES GREECE, WARNS IT'LL LIKELY DEFAULT WITHIN 12 MONTHS.
- Box(BOX) stock skyrockets after second-ever earnings report.
- China is done with 'microphone diplomacy' over its moves in the South China Sea.
Telegraph:
- Bond crash across the world as deflation trade goes horribly wrong. Markets ignored clear warnings in Europe and America that the money supply is catching fire, signalling a surge of inflation later this year.
- Brexit referendum will trigger another Scotland independence vote, warns JP Morgan.
Evening Recommendations
- None of note
Night Trading
- Asian equity indices are .unch to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 109.0 -2.0 basis points.
- Asia Pacific Sovereign CDS Index 61.75 -1.25 basis points.
- S&P 500 futures -.15%.
- NASDAQ 100 futures -.13%.
Earnings of Note
Company/Estimate
- (BOJA)/.15
- (XONE)/-.33
- (KFY)/.47
- (RH)/.20
Economic Releases
8:30 am EST
- Retail Sales Advance for May are estimated to rise +1.2% versus unch. in April.
- Retail Sales Ex Autos for May are estimated to rise +.8% versus a +.1% gain in April.
- Retail Sales Ex Autos and Gas for May are estimated to rise +.5% versus a +.2% gain in April.
- The Import Price Index for May is estimated to rise +.8% versus a -.3% decline in April.
- Initial Jobless Claims are estimated to fall to 275K versus 276K the prior week.
- Continuing Claims are estimated to fall to 2190K versus 2196K prior.
10:00 am EST
- Business Inventories for April are estimated to rise +.2% versus a +.1% gain in March.
12:00 pm EST
- Household Change in Net Worth for 1Q.
Upcoming Splits
- (MPC) 2-for-1
- (ROST) 2-for-1
Other Potential Market Movers
- The China Industrial Production report, Bloomberg US Economic Survey for June, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index, (HRL) investor day and the (DHR) analyst event could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and industrial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.