Stocks Falling into Final Hour on China Bubble-Bursting Fears, Greece Debt Deal Concerns, Surging European/Emerging Markets/US High-Yield Debt Angst, Tech/Commodity Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Below Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 18.0 +7.21%

• Euro/Yen Carry Return Index 141.49 -.81%

• Emerging Markets Currency Volatility(VXY) 8.94 +1.71%

• S&P 500 Implied Correlation 62.03 +1.19%

• ISE Sentiment Index 106.0 +70.9%

• Total Put/Call 1.01 -.98%

• NYSE Arms 1.86 +65.36% 

Credit Investor Angst:

• North American Investment Grade CDS Index 71.52 +4.86%

• America Energy Sector High-Yield CDS Index 1,246.0 +.16%

• European Financial Sector CDS Index 97.39 +6.27%

• Western Europe Sovereign Debt CDS Index 29.57 +12.41%

• Asia Pacific Sovereign Debt CDS Index 60.23 +1.50%

• Emerging Market CDS Index 314.01 +4.07%
  

• iBoxx Offshore RMB China Corporates High Yield Index 120.92 +.15%

• 2-Year Swap Spread 26.50 +.5 basis point

• TED Spread 28.5 +.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -22.75 -2.0 basis points

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.

• Yield Curve 170.0 -5.0 basis points

• China Import Iron Ore Spot $52.28/Metric Tonne -5.39%

• Citi US Economic Surprise Index -23.6 +1.5 points

• Citi Eurozone Economic Surprise Index -6.5 -2.1 points

• Citi Emerging Markets Economic Surprise Index -18.20 +.4 point

• 10-Year TIPS Spread 1.89 -3.0 basis points

Overseas Futures:

• Nikkei 225 Futures: Indicating +138 open in Japan 

• China A50 Futures: Indicating -188 open in China

• DAX Futures: Indicating -78 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:    

• Greece ‘48 Hours Away From Unrest’. (video) Greek Prime Minister Alexis Tsipras probably has 48 hours to resolve a standoff with creditors before civil unrest breaks out and ATMs run out of cash, hedge fund Balyasny Asset Management said. Fund managers are questioning how the International Monetary Fund and Europe’s leaders can seal a deal with Athens following the “no” vote in a Greek referendum on Sunday. Sixty-one percent of voters rejected austerity, increasing the likelihood of an exit from the euro area. “I don’t see a good resolution any time soon,” Colin Lancaster, senior managing director with Balyasny, a $9 billion fund based in Chicago, said in an e-mailed response to questions. “The big question is whether the EU adopts a strategy of waiting them out. The hope would be that the unrest leads to a unity government or change in government.”

• ECB Tightens Collateral Terms for Greek Bank Liquidity Aid. (video) The European Central Bank made it harder for Greece’s banks to access emergency loans, adding pressure on a country whose financial system remains shuttered as it awaits political talks in Brussels. “The financial situation of the Hellenic Republic has an impact on Greek banks since the collateral they use in Emergency Liquidity Assistance relies to a significant extent on government-linked assets,” the Frankfurt-based ECB said in a statement on its website. “ELA can only be provided against sufficient collateral.”

• Greece Extends Bank Holiday, Capital Controls Through Wednesday. (video)

• Gross Sees Greece in Hurricane’s Eye as Euro Exit Odds Rise. Bill Gross, manager of the Janus Global Unconstrained Bond Fund, said Greece is in “the eye of the hurricane” and that he sees a 70 percent to 80 percent probability of a Greek exit from the euro. “I do not believe the situation really is calm,” Gross, said on Monday in a Bloomberg Television interview with Erik Schatzker, adding that he was surprised by the muted market reaction to a Greek vote on Sunday.

• German Factory Orders Fell in May as Greece Damped Optimism. German factory orders fell in May in a sign that companies may have held back as Greece’s debt crisis cast a cloud over the euro area’s economic recovery. Orders, adjusted for seasonal swings and inflation, slid 0.2 percent after rising 2.2 percent in April, data from the Economy Ministry in Berlin showed on Monday. The typically volatile number compares with a median estimate of a 0.4 percent drop in a Bloomberg survey. 

• Chinese Market Volatility Is Disconcerting: Clouston. (video) 

• China’s Push to Save Market May Add Another Victim: Brokers. China’s emergency measures to save the stock market risk creating another victim: the nation’s brokers. Securities firms will suffer the most from steps unveiled at the weekend, according to Bank of America Corp.’s head of China equity strategy David Cui. Doing their “national service” by purchasing shares to support the market may hit brokers’ earnings and balance sheets, Cui said in a note Monday.

• Emerging Market ETFs Suffer Worst Outflows in Almost Fourth Months. Investors withdrew the most money from U.S. exchange traded funds that buy emerging-market stocks and bonds in almost four months during the week ended July 3. China and Hong Kong saw the biggest outflows. Redemptions from emerging market ETFs that invest across developing nations as well as those that target specific countries totaled $1.4 billion compared with inflows of $792.7 million in the previous week, according to Bloomberg. Stock funds lost $1.7 billion and bond funds advanced by $334.9 million. The biggest change was in China and Hong Kong, where funds shrank by $521.1 million, compared with $178.7 million of inflows the previous week. 

• Brazil Real Drops as Levy Says Stalled Economy Sinks Tax Revenue. Brazil’s real declined for a second straight day as Finance Minister Joaquim Levy said a stalled economy is reducing tax revenue, adding to concern that the administration is struggling to pare deficits. Fiscal changes need to be carried out quickly, and measures to simplify taxes will soon be submitted to Congress, Levy told Valor Economico newspaper in a story published Monday in Sao Paulo. He has cautioned that failure to adopt belt-tightening measures may result in a lower credit rating.

• Hong Kong Stocks Enter Correction on China, Greece Double Hit. Hong Kong stocks sank the most since 2012 amid speculation Chinese investors were shifting money out of the city’s market, and as Greece’s rejection of austerity measures spurred equity declines across Asia. Hong Kong Exchanges & Clearing Ltd. tumbled 9.6 percent at the close, the most since October 2008, after Goldman Sachs Group Inc. recommended selling the shares. Haitong International Securities Group Ltd. slid 13 percent as mainland brokerages slumped. Internet company Tencent Holdings Ltd. fell 5.5 percent, the biggest drag on the city’s equities benchmark. The Hang Seng Index dropped 3.2 percent to 25,236.28, its steepest loss since May 2012, on volume 69 percent greater than its 30-day average. The measure has declined 11 percent from its recent peak on April 28, entering a so-called correction. 

• Loonie Storm Alert Is Sounded With Oil Poised to Swamp Demand. (graph) Canada's Dollar Faces Renewed Pressure, Tempting Speculators. 

• Europe Stocks Fall Without Panic as Investors Weigh Greek Vote. European stocks fell after Greek voters rejected creditors’ austerity demands, while a measure of volatility slid amid speculation that the resignation of Finance Minister Yanis Varoufakis will smooth further talks. The Stoxx 600 retreated 1.2 percent to 378.68 at the close of trading, after earlier losing as much as 1.6 percent.

• Muted Greek Fallout So Far Offers Fed Little Reason for Concern. So far so good for the Federal Reserve as it surveys fallout from the Greek “no” vote. The financial chaos some predicted has yet to unfold, and the impact for now looks benign for the U.S. economy. “The main way the Fed will look at it is to say, ‘These events abroad -- do they tighten financial conditions or do they ease financial conditions?’” said Torsten Slok, chief international economist at Deutsche Bank AG in New York. “The irony is they have eased financial conditions because U.S. rates have declined.”

Wall Street Journal: 

• Germany Stays Tough on Debt Relief for Greece. Comments come after Greek voters strongly reject creditors’ demands. Germany stood firm against debt relief for Greece the day after the country’s voters issued a resounding “no” to more austerity, signaling a possible tough fight ahead on one of the few remaining opportunities for compromise. About 61% of Greek voters strongly backed Prime Minister Alexis Tsipras’s stance against... 

• How Chinese Stocks Fell to Earth: ‘My Hairdresser Said It Was a Bull Market’. Having opened millions of brokerage accounts to play a rally, Chinese investors face big losses.

Fox News: 

• Officials: US jets scramble to intercept Russian bombers off California, Alaska coasts on July 4. (video)

CNBC:

• Cashin says: China is a big problem. (video) 

• Health Insurance Companies Seek Big Rate Increases for 2016. (video)

ZeroHedge: 

• It Begins: ECB Hikes Greek ELA Haircuts; Full "Depositor Bail-In" Sensitivity Analysis.

• ECB To Keep Greece On Hold Until Wednesday When Balyasny Sees Rioting Begin.

• As A Reminder, This Is What Capital Controls In Cyprus Looked Like.

• Citi Identifies Contagion "Trigger Point" For More ECB QE.

• Crude Oil Plummets Most Since February, Nears 16 Year Support Line: Tap On The Shoulder Time? (graph)

• Meet New Greek Finance Minister Euclid Tsakalotos.

• Peak Desperation: China Bans Selling Of Stocks By Pension Funds.

• Greece Set To Restart Negotiations, IMF "Ready To Assist" Greece, Lagarde Says.

• Service ISM Misses As Bird Flu Scapegoated; Employment Index Tumbles. (graph)

• Service PMI Drops To Lowest Level Since January: Job Creation Slows, Input Cost Inflation Surges. (graph)

• Presenting The ECB's "Tools" To Stem Contagion. 

• Copper Crashes, In Danger Of Breaching 15-Year Support Level. (graph)

Business Insider: 

• US Coast Guard chief: We are 'not even in the same league as Russia' in the Arctic.

• China's stock market is screwing up the government's master plan.

• War in Europe is no longer seen as completely out of the question.

• GOLDMAN(GS): Here are the 9 most overpriced stocks in the market.

• Greece's new finance minister is a change of style — but not substance.

• Greece's 'No' vote was kind of pointless – bailout conditions will be worse now.

• History has seen worse economic collapses than the depression Greece is now experiencing. (graph)

• Citi(C): China's 'Wall Street Crash' is going to get worse.

• China's ruling power grab is officially insatiable.

• ISIS is 'acting like the permanent government' in the capital of Iraq's largest province.

• It's beginning to look like we'll let Ukraine fall apart.

Platts: 

• E China steel mills cut ferrous scrap buying prices further as rebar retreats. Steel mills in eastern China further lowered ferrous scrap buying prices over the weekend in tandem with falling rebar prices. Jiangsu Shagang Group, the largest scrap consumer in China, Saturday cut its buying price by Yuan 30/mt ($5/mt), a company source said.

Reuters: 

• Shanghai rebar tumbles 5 pct to record low, drags down iron ore.

Financial Times: 

• China sell-off threatens party credibility.

Telegraph:

• Unintentionally, the Greeks have done themselves a favour. Soon, they will be out of the euro. In citing the example of German debt relief to justify another bailout for Greece, the French economist Thomas Piketty fails to see that you cannot have debt cancellation without asset write-downs, which devaluation would deliver in the least painful way.

• Why are the Greeks celebrating, ask baffled Germans. German newspapers and MP condemn Greek public's jubilant reaction to referendum result that leaves "no more basis for cooperation with Greece in the eurozone". 

• Greece news live: Banks to remain shut for another two days as creditors squeeze country after No vote. Brussels says Greece's referendum is "neither legally nor factually correct" after more than 60pc vote to reject lenders bail-out terms.  

Bear Radar

Style Underperformer:

• Mid-Cap Value -.57%

Sector Underperformers:

• 1) Oil Tankers -3.14% 2) Social Media -3.06% 3) Alt Energy -2.91%

Stocks Falling on Unusual Volume:

• AET, ES, HNT, SC, EDU, CRH, CFR, XRS, SOXX, WX, DL, CNC, BONA, RPTP, MR, DQ, NTES, WB, FMS, CMGE, TEF, NP, CCIH, CAF, BUD, GCI, RPTP, CLR and VSLR

Stocks With Unusual Put Option Activity:

• 1) SCHW 2) EWG 3) EWA 4) AXP 5) XOP
  

Stocks With Most Negative News Mentions:

• 1) VMW 2) ISRG 3) STX 4) GM 5) PBR
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth -.21%

Sector Outperformers:

• 1) Gold & Silver +1.14% 2) Gaming +.52% 3) Hospitals +.51%
  

Stocks Rising on Unusual Volume:

• VSAR

Stocks With Unusual Call Option Activity:

• 1) ODP 2) AET 3) IP 4) AXLL 5) WLL
  

Stocks With Most Positive News Mentions:

• 1) UAL 2) MDCO 3) EW 4) HUM 5) ABX
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running 2.0% Above 100-day average
• 2 Sectors Rising, 8 Sectors Declining
• 35.5% of Issues Advancing, 61.7% Declining
• 24 New 52-Week Highs, 181 New Lows
• 44.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 38.7
• Vix 16.9
• Total Put/Call .93
• TRIN/Arms 1.56

Monday Watch

Today's Headlines 

Bloomberg: 

• Tsipras Triumphs as Greece Votes Against Austerity. (video) Greece voted against yielding to further austerity demanded by creditors, leaving Europe’s leaders to determine if the renegade nation can remain in the euro. Sixty-one percent of voters backed Prime Minister Alexis Tsipras’s rejection of further spending cuts and tax increases in an unprecedented referendum that’s also taken the country to the brink of financial collapse. Tsipras described the result as a “great victory”, and said Athens would return to the negotiating table on Monday with a strengthened hand.

• Greek Party May End in Euro-sized Hangover. Greeks delivered a clear message to the rest of Europe, and then many partied into the night. As banks remain shut and European leaders prepare to respond to their vote against more austerity, the morning hangover also brings the harsh reality: the country may end up going down fighting, clinging to the euro while refusing the conditions attached to keeping it. Even as economists and European officials warned that the country would move closer to severing ties with the euro area, Greeks celebrated what they see as a better future. Prime Minister Alexis Tsipras, who called for a “no” vote in Sunday’s referendum, said he will restart talks with creditors immediately and use the victory as a bargaining chip. Nikos Panos, 55, a “no” voter in Athens, said the 61-to-39 percent result would give Greece a stronger bargaining position. “The government can go to Brussels on Monday and say we have a mandate,” he said.

• Trillion-Dollar Stock Managers See Chaos on Greek ‘No’ Vote. It shouldn’t have gotten this far. That’s the view of equity managers overseeing more than $3.7 trillion, who say the game of chicken between Greek Prime Minister Alexis Tsipras and creditors threatens lasting damage to a European stock rally that earlier in 2015 added as much as $2.17 trillion to share prices. “The market right now hasn’t priced in a potential ‘no’ vote,” said David Joy, the Boston-based chief market strategist at Ameriprise Financial Inc., which oversees $815 billion. “If we get one, we’re going to see another round of downside volatility in excess of what we saw on Monday. The move would be more violent.”

• JPMorgan to Barclays See Greek Euro Exit Likeliest Scenario. Economists from JPMorgan Chase & Co. to Barclays Plc made a Greek departure from Europe’s monetary union their base scenario after the country’s electorate rejected the austerity needed to secure international assistance. “Although the situation is fluid, at this point Greek exit from the euro appears more likely than not,” Malcolm Barr, an economist at JPMorgan in London, said in a report to clients on Sunday, adding it could come “under chaotic circumstances.” “Exit now is the most likely scenario,” Barclays analysts said in a separate report. “Agreeing on a program with the current Greek government will be extremely difficult for euro-area leaders, given the Greek rejection of the last deal offered, and will be a difficult sell at home.” 

• 10 Consequences of Greece's 'No' by Mohamed A. El-Erian. The implications will be felt primarily in Greece, but also in Europe and beyond. Here are 10 consequences of the vote that could unfold in the next few days:

• China Brokers Dust Off Wall Street’s Playbook From Crash of 1929. (graph) On Wall Street in 1929, it was the great banking houses of J.P. Morgan and Guaranty Trust Company. In China today, it’s names like Citic Securities Co. and Guotai Junan Securities Co. They’re separated by 86 years and 7,300 miles, but Chinese financiers are turning to the same playbook used by their American counterparts to fight a crash that’s wiping out stock-market fortunes on an unprecedented scale. Investors in China are hoping it works out a lot better this time around.

• China Stock Plunge Leaves Market More Leveraged Than Ever Before. (graph) Leveraged bets on Chinese stocks have increased to a record versus the size of the market as prices fall faster than margin traders cut positions. The outstanding balance of margin loans on the Shanghai and Shenzhen bourses climbed to 4.4 percent of overall market capitalization on July 2 from 3.6 percent on June 12, before the rout began, as the attached chart shows. The data doesn’t include unregulated borrowing, which Bocom International Holdings Co. estimates at around $322 billion. That would increase the debt to market cap ratio to more than 9 percent. Higher leverage may undermine government measures to stem the steepest three-week rout in the nation’s equities in a quarter-century. Margin traders reduced positions for nine days through Thursday, the longest stretch of declines on record, even as the central bank cut interest rates and the securities regulator eased margin-trading rules. 

• China Blames Rout on Short Sellers Who Bought as Stocks Tumbled. Rumor-spreading short sellers and foreign investors with a hidden agenda. If you believe China’s state-run media, those are some of the key culprits for a stock-market rout that erased $3.2 trillion of value in three weeks -- or almost $1 million for each minute of trading on mainland exchanges. The underlying message, that market manipulation is fueling the selloff, was reinforced by securities regulators last week as they pledged to crack down on “vicious” short selling. The problem with that narrative, though, is that the numbers tell a different story. Short positions on the Shanghai Stock Exchange totaled just 1.95 billion yuan ($314 million) on Thursday, or less than 0.03 percent of the country’s market capitalization, as bears closed out more than half their bets since June 12. Foreign money managers own fewer than 3 percent of Chinese shares, and they’ve been adding to holdings in Shanghai as prices tumble. The more likely reason for the rout, according to analysts in and outside China, is simply that the nation’s longest-ever bull market pushed valuations to unsustainable levels. Local investors, who borrowed record amounts of money to amplify their bets, lost faith that share prices would keep rising and now they’re heading for the exits. 

• Corker Warns Kerry Against Rush to Finish Nuclear Deal With Iran. The U.S. shouldn’t rush to finish a nuclear deal with Iran simply to meet a deadline that would allow a shorter congressional review period, said Senator Bob Corker, chairman of a committee that will be pivotal in deciding an agreement’s fate in Congress. Six world powers and Iran have been in talks since late June, attempting to complete a deal that would ease economic sanctions while allowing Iran to pursue limited nuclear activities with intrusive international monitoring. 

• Treasuries Surge With Aussie Bonds as Greece Spurs Safety Bid. Treasuries and Australian bonds surged after Greek voters opted against spending cuts being demanded by creditors, increasing concern the nation will lose access to new loans and be forced to leave the euro currency bloc. Japanese bonds rose for a second day. German 10-year yields may drop to 0.65 percent or less when bunds open Monday, after closing at 0.79 percent Friday, said JPMorgan Chase & Co. The turmoil may reduce the prospects for a Federal Reserve interest-rate increase in September, according to BNP Paribas SA.

• Aussie Below 75 Cents First Time Since 2009 Amid Greek Turmoil. The Aussie dollar dropped below 75 U.S. cents to a six-year low as the heightened risk of a Greek exit from the euro added to slumping commodity prices in spurring traders to sell the South Pacific nation’s assets. Australia’s currency was already sliding as iron ore, the country’s biggest export earner, tumbled amid a glut in supply and concern that demand will shrink as China’s economy slows. 

• Emerging Currencies Drop, Led by Forint, After Greece ‘No’ Vote. The Hungarian forint and the Romanian leu led emerging-market currencies lower as Greece’s rejection of austerity measures heightened the chance the nation will exit the euro, damping demand for riskier assets. A Bloomberg gauge of developing-nation exchange rates dropped 0.4 percent as of 9:48 a.m. in Singapore, set for its lowest close since March 19.

• Asian Bond Risk Jumps as Greek No Vote Seen Sparking Volatility. Greek voters’ rejection of austerity sent ripples through Asian credit markets as bond risk surged to a six-month high. The Markit iTraxx Asia index of credit-default swap prices leapt 6 basis points to 117 basis points, prices from Westpac Banking Corp. show. That leaves it set for its biggest daily jump since March and highest close since January, according to data provider CMA.

• Most Chinese Stocks Decline as Large-Caps Gain, ChiNext Tumbles. Most Chinese shares fell, led by technology shares, as government measures to shore up equities failed to drive a rebound outside the nation’s largest companies. About three stocks dropped for each that rose on the Shanghai Composite Index, which was 2.2 percent higher at 3,766.37 at the mid-morning break after a 7.8 percent surge at the open. The benchmark gauge was supported by more than 8 percent rallies in PetroChina Co. and Industrial & Commercial Bank of China Ltd., the two largest members on the gauge. The ChiNext index of smaller companies sank 4 percent, while the Shenzhen Composite Index tumbled 2.6 percent. Mainland shares surged at the start of trading after authorities suspended initial public offerings, brokerages pledged to buy shares and the central bank said it would provide liquidity for margin trading. Central Huijin Investment Ltd., a unit of China’s sovereign wealth fund, said it was buying exchange-traded funds on the secondary market.

• Asian Stocks Slide as Greece ‘No’ Vote Raises Risk of Euro Exit. Asian stocks fell, with the regional benchmark index heading for an almost four-month low, as Greece voted against accepting further austerity. Chinese shares rallied after posting their biggest three-week slump since 1992. Asahi Glass Co., which gets about 21 percent of sales from Europe, dropped 2.2 percent in Tokyo. BHP Billiton Ltd., the world’s biggest mining company, slipped 2.3 percent as copper futures headed for a second day of decline in London. China Airlines Ltd. gained 2.6 percent in Taipei after regulator increases flights to mainland China. The MSCI Asia Pacific Index slid 1.1 percent to 144.78 as of 10:18 a.m. in Hong Kong, heading for the lowest close since March 16.

• Brent Falls Below $60 as Investors Eschew Risky Assets on Greece. Brent crude dropped below $60 a barrel for the first time since April after Greece voted against austerity, increasing the risk of its exit from the euro area. Futures slid as much as 1.6 percent in London, falling for a second day.  

• Iron Stockpiles to Rise Further, Hurting Prices, JPMorgan Says. Iron ore reserves at China’s ports may have hit an inflection point -- and that could be bad for prices. Holdings climbed 2.8 percent last week to 81.55 million metric tons, rebounding from the lowest level since 2013 to post the first increase since April, according to Shanghai Steelhome Information Technology Co. The stockpiles fell in the three months to June, supporting a rally. “Inventories should start to pick up again and will increase,” Daniel Kang, an analyst at JPMorgan Chase & Co. in Hong Kong, said by phone on Monday, citing increased exports. “That should in turn put some pressure on iron ore.”

• Shipping Industry Gloomiest Since 2009 in Survey as Glut Endures. The shipping industry is the most pessimistic in six years about its prospects as a fleet surplus persists, according to a survey by law firm Norton Rose Fulbright. Two thirds of respondents working in the industry said they were pessimistic about its prospects, the most negative outlook since 2009, the London-based company said in a statement. The biggest contributor to their negative view was excess fleet capacity.

Wall Street Journal: 

• Greek Referendum — Live.

• Regulators Probe Marketing of Hot Private Tech Shares. Trading of such shares has boomed in recent months. Securities regulators have launched a broad investigation into whether hedge funds and other investors are improperly selling hot private technology stocks amid a boom in the trading of such shares, people close to the probe say. The regulatory scrutiny, which is at an early stage, follows a March page-one article in The Wall Street Journal that delved into the role of middlemen in the burgeoning market for private shares. The investigation, by the Securities and Exchange Commission, is focused on a burst of new activity recently by people selling pre-IPO shares as valuations of private tech companies have exploded and companies have opted to remain private for longer.

• How the Affordable Care Act Is Reducing Competition. Five big insurers seem set to become three, as Aetna buys Humana and Anthem eyes Cigna. Thanks, ObamaCare. The urge to merge is sweeping managed health care. Aetna announced Friday a $37 billion deal to acquire Humana. Anthem and Cigna are in merger talks and could be next. The national for-profit insurers are on an anxious mission to consolidate. These combinations will sharply reduce competition and consumer choice, as five big insurers shrink, probably, to three. This trend is a direct consequence of ObamaCare, reflecting the naïveté of its architects

CNBC:

• Greece: After the big No, what next?

Zero Hedge:

• Greece Contemplates Nuclear Options: May Print Euros, Launch Parallel Currency, Nationalize Banks.

• Greeks Flood Syntagma Square To Celebrate "No" Vote. (video)

• Volatility, Confusion Reign As PBoC Intervenes: Chinese Stocks Surge Then Tumble. (graph)  

• More Sellside Reactions To The Greek Referendum.

• The "Nightmare Of The Euro-Architects" Is Coming True: JPM Now Sees Grexit, Eurogroup "Split In Coming Days".

• IOUs It Is: Why Greece May Have A Problem Printing "Rogue" Euro Banknotes.

• Marine Le Pen, Anti Euro French Presidential Frontrunner, Applauds Greek Victory Over "EU Oligarchy".

• China "Crosses Rubicon" With Stock Bailout; BofA Says PBoC Risks "Hurting Its Credibility".

• Panic: China Central Bank Steps In To Bailout Stocks. (graph)

• They Want To Use "Hate Speech Laws" To Destroy Freedom Of Speech In America.

• Did They "Fix" The US Economy? (video)

• The Central Bankers Dilemma: The Pendulum’s Back Swing.

Business Insider:

• China is taking extraordinary steps to ensure its reign over the South China Sea.

• We just got the clearest sign yet that Greece could be kicked out of Europe if it votes 'No'.

• Britain's banks aren't as protected from Greece as you may think.

• Europe's very core is being threatened.

• Netanyahu unloads: The Iran deal is worse than North Korea.

• China's stock market faces a make-or-break week.

• The NSA can still do something the US government said was illegal.

• The Trans-Pacific Partnership is bad news for the American labor market.

• The US wins the Women's World Cup after dismantling Japan with 4 goals in 15 minutes.

• Another government funding showdown looms as Congress heads back work.

Reuters:

• Saudi Aramco lowers August Arab Light crude OSP to Asia. Saudi Arabia has cut the official selling price (OSP) for its benchmark Arab Light crude to Asia in August, as expected, while raising the price to European customers. State oil company Aramco has lowered the August price for its Arab Light grade for Asian customers by 10 cents a barrel versus July, setting it at minus $0.10 to the Oman/Dubai average, it said on Sunday.

Daily Caller:

• George Will: Trump A ‘One-Man Todd Akin’ For GOP, Acting Like A ‘Democratic Mole'.

Telegraph:

• Greek referendum results live: 'No' vote to Europe's bail-out terms as Greeks choose to deal. Greeks choose to give the 'Big No' to their bail-out by a 60pc majority putting the country on a collision course with the eurozone. 

• Europe thrown into crisis as Greece nears euro exit after shock referendum result. The European Union is facing its worst crisis since the formation of the euro after Greece voted decisively against the terms of a eurozone bailout deal. 

• Defiant Greeks reject EU demands as Syriza readies IOU currency. Europe suffers biggest bloody nose since failed French and Dutch referenda a decade ago in Greek landslide revolt.

People's Daily:

• China Deflation Risk Is Mounting, Ex-PBOC Adviser Says. China faces a mounting risk of a deflationary spiral, which would be the country's "worst nightmare" amid slowing economic growth and heavy corporate debt, Yu Yongding, a former adviser to the People's Bank of China, writes in a commentary. Downward pressure on prices from overcapacity in industry may push the nation into a "vicious spiral of debt deflation," Yu writes. Long-term elimination of overcapacity requires structural adjustments to improve the allocation of resources that would be "painful and slow," Yu writes.

Caijing:

• China's National Pension Fund Orders Halt to Stock Sales. National Council for Social Security Fund orders fund management cos. to stop selling stocks from portfolios, citing people familiar with the matter.

Night Trading

• Asian indices are -1.75% to -.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 117.0 +7.0 basis points.

• Asia Pacific Sovereign CDS Index 59.25 +.75 basis point.

• S&P 500 futures -1.16%.

• NASDAQ 100 futures -1.24%.

Morning Preview Links

Earnings of Note

Company/Estimate 

• (SHLM)/.77

Economic Releases

9:45 am EST

• Final US Services PMI for June is estimated to rise to 54.9 versus a prior estimate of 54.8.

10:00 am EST

• Labor Market Conditions Index for June is estimated to rise to 2.0 versus 1.3 in May.

• The ISM Non-Manufacturing Composite for June is estimated to rise to 56.4 versus 55.7 in May.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Leading Indicators report 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 lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the week.