Stocks Reversing Higher into Final Hour on Greece Debt Deal Hopes, Short-Covering, Lower Long-Term Rates, Gaming/Utility Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Above Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 16.7 -1.88%

• Euro/Yen Carry Return Index 140.44 -.87%

• Emerging Markets Currency Volatility(VXY) 9.25 +3.47%

• S&P 500 Implied Correlation 59.63 -3.40%

• ISE Sentiment Index 61.0 -42.45%

• Total Put/Call 1.32 +23.36%

• NYSE Arms .95 -34.91% 

Credit Investor Angst:

• North American Investment Grade CDS Index 71.67 +.41%

• America Energy Sector High-Yield CDS Index 1,268.0 +1.72%

• European Financial Sector CDS Index 100.76 +3.56%

• Western Europe Sovereign Debt CDS Index 31.85 +7.73%

• Asia Pacific Sovereign Debt CDS Index 61.83 +2.14%

• Emerging Market CDS Index 317.08 +1.31%
  

• iBoxx Offshore RMB China Corporates High Yield Index 120.75 -.15%

• 2-Year Swap Spread 25.50 -1.0 basis point

• TED Spread 27.5 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -22.75 unch.

Economic Gauges:

• 3-Month T-Bill Yield .01% +1.0 basis point

• Yield Curve 167.0 -3.0 basis points

• China Import Iron Ore Spot $49.60/Metric Tonne -5.13%

• Citi US Economic Surprise Index -21.5 +2.1 points

• Citi Eurozone Economic Surprise Index -6.7 -.2 point

• Citi Emerging Markets Economic Surprise Index -18.60 -.4 point

• 10-Year TIPS Spread 1.89 -3.0 basis points

Overseas Futures:

• Nikkei 225 Futures: Indicating -6 open in Japan 
• China A50 Futures: Indicating -759 open in China

• DAX Futures: Indicating +157 open in Germany

Portfolio: 

• Higher: On gains in my retail/medical sector longs and emerging markets shorts

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg:    

• Chinese Trading Suspensions Freeze $1.4 Trillion of Shares Amid Rout. Chinese companies have found a guaranteed way to prevent investors from selling their shares: suspend trading. Almost 200 stocks halted trading after the close on Monday, bringing the total number of suspensions to 745, or 26 percent of listed firms on mainland exchanges, according to data compiled by Bloomberg. Most of the halts are by companies listed in Shenzhen, which is dominated by smaller businesses. The suspensions have locked up $1.4 trillion of shares, or 21 percent of China’s market capitalization, and are becoming increasingly popular as equity prices tumble. If not for the halts, a 28 percent plunge in the Shanghai Composite Index from its June 12 peak would probably be even deeper. “Their main objective is to prevent share prices from slumping further amid a selling stampede,” said Chen Jiahe, a strategist at Cinda Securities Co.  
• Behind China’s Stocks Bailout: A Need to Salvage New Economy. Who to bail out? And who to let fail? Those are questions policy makers round the world have faced repeatedly in recent years. In China, the leadership’s all-guns-blazing policy response to a stock-market correction shows how its priorities have changed in the campaign to rebalance the world’s No. 2 economy. While rust-belt industries are being allowed to wind down in China’s northeast, officials are micro-managing stock listings and tapping the central bank to arrest a slide in equities. Underlying the effort is concern that, while the old economy drivers languish, the outlook for the new, services and consumption-driven sectors will be damaged by a shock to confidence from tumbling shares. Add to the mix financial stability concerns arising from the leverage used in retail stock purchases, and the case for action became compelling.
• China’s Bubble Burst: Surveillance. (video)
• Greece Clings to Euro Lifeline as Pessimism Clouds Talks. (video) Greece sidestepped an immediate collision with creditors by promising to put its economic proposals in writing as German Chancellor Angela Merkel warned that “only a few days” are left to reach a deal. Euro-area finance chiefs will discuss Greece’s request on a conference call Wednesday morning, the first step toward restarting talks that Greece broke off late last month.
  The rapprochement lessens the risk that the European Central Bank will pull the plug on Greek banks, which are bleeding cash and have been shut for seven business days.
• ECB Adds ‘Moral Hazard’ to Emergency Liquidity Assistance Rules. The European Central Bank warned that “moral hazard” could be a reason to object to the emergency liquidity assistance it allows lenders to access, just a day after it tightened conditions on the aid for Greece. The Eurosystem’s functioning could be disrupted by “provision of ELA at overly generous conditions, which, in turn, could increase the risk of moral hazard on the side of financial institutions or responsible authorities,” the ECB said in a document published on its website Tuesday. “The objective of ELA is to support solvent credit institutions facing temporary liquidity problems. It is not a monetary-policy instrument.” The document on the ECB’s financial-risk management clarifies the conditions surrounding emergency bank aid at a time when policy makers are restricting the provision of such funding to Greek banks. The reference to moral hazard indicates that officials are worried that bending the liquidity rules for Greece, as the country heads for a possible default, may lead future recipients to act less responsibly. 
• Greek Banks Seen Days From Breakdown as Bailout Talks Resume. (video) Greek banks may be facing the end game. The European Central Bank is tightening the credit that’s their only lifeline. Money was pouring out of customer accounts before banks were closed and capital controls imposed a week ago. The prospects of Greece reaching a deal with creditors remain slim after its voters rejected austerity on Sunday. It all adds up to the probability that shareholders, depositors and taxpayers will be tapped to avoid outright failure, according to a person with direct knowledge of discussions on lenders. The crippled financial system poses the greatest threat to Greece remaining in the euro, and the ECB’s cutback in collateral may worsen the banks’ plight.
• China Slump Spreads as Alibaba Sinks, ADRs Approach Bear Market. The rout in Chinese stocks is going global. U.S.-traded Chinese equities extended their plunge to 21 percent from this year’s high as of 10:34 a.m. in New York, approaching a bear market. Alibaba Group Holding Ltd. tumbled to the lowest since its initial public offering, while JD.com Inc. sank a record 9.4 percent. The stocks plunged after the Shanghai Composite Index sank for the fourth time in five days as measures to stabilize the market failed to stop a rout that’s erased more than $3.2 trillion of value in less than a month. “Investors are fleeing anything associated with China, they don’t want to have anything related to China in their portfolio,” Brendan Ahern, chief investment officer at Krane Fund Advisors LLC in New York, said by phone on Tuesday. “Investors are reading the risks around China, and there is a spillover effect in the U.S.-listed stocks.” The Bloomberg US-China Equity Index fell 8.4 percent to 111.14, the steepest drop in four years. The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF, the largest exchange-traded fund tracking mainland shares in the U.S., fell 9.2 percent to $37.53, the lowest since March. Alibaba plunged 4.9 percent to $76.32. JD.com declined to $28.90. 
• European Stocks Inch Toward Correction as Greek Talks Drag on. European stocks extended a four-month low, coming within 0.1 percent of a correction, as Greece attempted to secure a rescue and stay in the euro. The Stoxx Europe 600 Index lost 1.6 percent to 372.74 at the close of trading, reversing gains of as much as 0.4 percent. Italian shares fell the most among western-European markets, with the FTSE MIB Index dropping 3 percent after entering a correction on Monday. Portugal’s PSI 20 Index slid 2.2 percent. “Week by week, we’re seeing markets enter corrections as Greece steps closer to the edge,” said Alessandro Bee, a strategist at Bank J Safra Sarasin, said by phone from Zurich. “We have moments of panic and then take a few days to digest things. I think that will continue as long as the Greek issue drags on.” The Stoxx 600 slid on Monday after Greeks voted against austerity measures in a referendum. The gauge has tumbled 9.98 percent from its April record.
• Iron Tumbles Below $50 as Bear Market Deepens on Supply Outlook. (graph) Iron ore’s bear market deepened, with prices dropping below $50 a ton for the first time since April on concern that low-cost supplies from Australia and Brazil will expand further while demand stumbles in China. Ore with 62 percent content delivered to Qingdao sank 5.1 percent to $49.60 a dry ton on Tuesday, falling for a ninth day, according to Metal Bulletin Ltd. Prices entered a bear market Monday, dropping more than 20 percent from a June high.
• Industrial Metals Drive Commodities Down on China, Greece Woes. Copper tumbled to a six-year low and nickel plummeted the most since 2010 as industrial metals led a plunge in commodities after China’s equity rout and turmoil in Greece eroded prospects for raw-material demand. The Bloomberg Commodity Index of 22 prices fell as much as 2.6 percent to 96.48, the lowest since March 18. Aluminum and lead entered bear markets. Freeport McMoRan Inc., the world’s top publicly listed copper producer, posted the third-biggest drop among companies in the Standard & Poor’s 500 Index of equities. Glencore Plc, the largest commodity trader, slumped to a record in London.
• Refracking Is the New Fracking. The technique itself is nothing new. Oil crews across the world have been schooled on its simple principles for generations: Identify aging, low-output wells and hit them with a blast of sand and water to bolster the flow of crude. The idea originated somewhere in the plains of the American Midwest, back in the 1950s. But as today’s engineers start applying the procedure to the horizontal wells that went up during the fracking boom that swept across U.S. shale fields over the past decade, something more powerful, more financially rewarding is happening. The short life span of these wells, long thought to be perhaps the single biggest weakness of the shale industry, is being stretched out. Early evidence of the effects of restimulation suggests that the fields could actually contain enough reserves to last about 50 years, according to a calculation based on Wood Mackenzie Ltd and ITG Investment Research data.
• Cracks in Junk-Bond Market Form as BofA Sees Outlook Darkening. Junk-bond investors who’ve been enjoying more than six straight years of gains fueled by easy-money policies may soon find their streak nearing an end. After the three strongest years on record for issuance and annual returns of 15 percent since the start of 2009, there are growing signs of trouble in high-yield debt. For every speculative-grade company that has had its credit rating upgraded this year, about two others have been downgraded -- the worst ratio since 2009. U.S. high-yield companies posted two consecutive quarters without earnings growth for the first time since the financial crisis. And their average level of debt-to-earnings is at an all-time high. All of this is creating what Bank of America Corp., the second biggest underwriter of the notes, sees as a grim outlook for investors because companies have left themselves little room for error to withstand an interest rate hike just as the Federal Reserve is considering such a move. “The conditions are the worst since the crisis and therefore outlook is the worst since the crisis,” Michael Contopoulos, the head high-yield strategist at Bank of America, said in a telephone interview. “The longer-term prospects for the asset class are worrying.”

CNBC: 

• Are Greece and China repeating history? Two historical parallels are playing out simultaneously on the world market stage — in Greece and in China. Greece may very well suffer the fate of Germany in the inter-war years, battling depression and hyperinflation at the same time, if it ultimately exits the euro and starts printing drachmas to pay off its heavy debts. China's recent meteoric stock market rise, and 30 percent decline in the last three weeks, resembles Japan in late 1989 and the early 1990s: A meteoric rise fueled by the belief in a superior economic system that, in the end, was just as vulnerable to decline as any other speculative bubble in market history. Neither scenario is pretty.
• Oil rout dashes hopes of reprieve for some drillers. (video)
• Blame China stock slide for oil's plunge: Analyst. (video)

ZeroHedge: 

• Europe Revolts: "What Is Happening Now Is A Defeat For Germany".
• China Bans Use Of Terms “Equity Disaster” And “Rescue The Market". (graph)
• The 'Smart' Money Has Been Dumping Stocks Since Greferendum. (graph)
• It Is NOT Priced-In, Stupid!
• European Equity Losses Accelerate: Does This Look 'Contained' To You? (graph)
• "Unleash The Bullard" - S&P 500 Breaks Below Crucial Support. (graph)
•  Greece "Uncontained" - European Bond Yields Are Soaring; Is Portugal Next? (graph)
• The Three Greek "Scenarios" Discussed Today In Brussels.
• ECB Board Member Says Introduction Of Another Greek Currency "Most Realistic Scenario".
• US Trade Deficit Widens In May As Exports Tumble Most In 3 Months. (graph)
• Energy Credit Risk Re-Surges As WTI Crude Extends Losses To Worst Since November. (graph)

Business Insider:

• This editorial should send chills down the spine of every foreign company in China. When Xinhua publishes an editorial telling foreign companies to "put their victim mentality to rest ... and embrace new rules" on national security that expand China's legal reach "to almost every aspect of public life," you can bet this is coming straight from the top. Here's some more:
• Morgan Stanley(MS) thinks Shake Shack(SHAK) shares are just way too expensive right now — and now the stock is getting crushed.
• Here's what happened during the last 10 US bear markets.
• Russia and Argentina's auto markets have both endured massive collapses.
• The US still doesn't have a strategy that has a chance of defeating ISIS.
• 4 ways that staring at screens all day is destroying kids' minds and bodies.
• Gold and silver are getting crushed. (graph)

Telegraph: 

• Greece news live: Obama intervenes in Greek talks after Athens delegation turn up to summit without new reform proposals. President Obama urges for successful conclusion to Greek talks as EU leaders openly discuss ways to manage a "Grexit". 
• European Central Bank tightens noose on banking system as creditor powers punish Greece. Greek 'No' vote sees lenders act in concert, warning of imminent bankruptcy unless Athens capitulates to fresh reform demands.

news.com.au:

• Chinese chaos worse than Greece. WHILE the world worries about Greece, there’s an even bigger problem closer to home: China. A stock market crash there has seen $3.2 trillion wiped from the value of Chinese shares in just three weeks, triggering an emergency response from the government and warnings of “monstrous” public disorder. And the effects for Australia could be serious, affecting our key commodity exports and sparking the beginning of a period of recession-like conditions. “State-owned newspapers have used their strongest language yet, telling people ‘not to lose their minds’ and ‘not to bury themselves in horror and anxiety’. [Our] positive measures will take time to produce results,” writes IG Markets. “If China does not find support today, the disorder could be monstrous.”

21st Century Business Herald:

• Chinese Stock Suspensions Rise to >1,200. More than 500 China-listed companies apply fr share suspensions, including continuation of suspensions, as of 10:10 pm local time, citing exchange data. In total, >1,200 companies (>40% of listed companies) plan suspensions July 8.

Bear Radar

Style Underperformer:

• Small-Cap Growth -.75%

Sector Underperformers:

• 1) Gold & Silver -5.01% 2) Coal -4.02% 3) Social Media -2.33%

Stocks Falling on Unusual Volume:

• CATM, STON, EPC, CHA, PUK, SOHU, USLV, NTES, NOAH, JMEI, CMCM, HCLP, ZPIN, WLB, XRS, WUBA, WBAI, ING, IMAX, CBPO, KANG, TOUR, AET, VNET, CYOU, OLN, CFR, ZION, RGLD, STLD, IBKR, WAL, SWC, PRIM, GLPI, SWKS, FCX, OVTI, CMA, OVTI, LC, TSLA, GOGO, ALDR and NHTC

Stocks With Unusual Put Option Activity:

• 1) NRG 2) SCHW 3) OIL 4) M 5) EWW
  

Stocks With Most Negative News Mentions:

• 1) SHAK 2) PBR 3) VALE 4) DDD 5) AET
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Mid-Cap Value -.34%

Sector Outperformers:

• 1) Gaming +3.09% 2) Utilities +2.17% 3) REITs +1.18%
  

Stocks Rising on Unusual Volume:

• DEPO, TVIX, PNK and JOE

Stocks With Unusual Call Option Activity:

• 1) NUE 2) HTZ 3) ZTS 4) RSX 5) FIT
  

Stocks With Most Positive News Mentions:

• 1) DUK 2) GEL 3) APC 4) EPD 5) PNK
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running 40.0% Above 100-day average
• 1 Sector Rising, 9 Sectors Declining
• 23.2% of Issues Advancing, 74.4% Declining
• 29 New 52-Week Highs, 296 New Lows
• 42.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 38.2
• Vix 18.6
• Total Put/Call 1.36
• TRIN/Arms 1.89

Tuesday Watch

Evening Headlines 

Bloomberg:  

• Merkel Warns Greece Time Is Running Out to Save Place in Euro. Greek Prime Minister Alexis Tsipras was given hours to come up with a plan to keep his country in the euro as citizens endure a second week of capital controls. German Chancellor Angela Merkel said “time is running out,” as she and French President Francois Hollande, leaders of the two biggest countries in the euro bloc, responded for the first time to Sunday’s referendum. The European Central Bank piled on the pressure by making it tougher for Greek banks to access emergency loans. Finance ministers from the 19-member region gather on Tuesday for an emergency meeting. After promising voters a “no” against austerity would strengthen his negotiating hand, the onus is on Tsipras to prove he can get a deal with creditors insistent on tax hikes and spending cuts as the price for a new bailout of Europe’s most indebted nation.

• Stock Corrections Come to Europe as Greek Vote Hits Italy, Spain. While most financial markets were spared selloffs Monday, it was hardly a good day in equities -- especially those perceived as vulnerable to Greek contagion. Stocks in Italy and Portugal fell more than 3.8 percent, and benchmark indexes in Spain and France lost 2 percent after voters in Greece rejected bailout terms. Half of the 18 western-European markets tracked by Bloomberg are now in corrections, with shares down 10 percent or more from their 2015 highs.

• Greek Risk Seeps Through Currencies to Torment ECB’s Neighbors. Greece’s debt turmoil has found a favorite conduit for spreading contagion: the $5.3 trillion-a-day foreign-exchange market. From Sweden to Switzerland, central banks are battling to contain an appreciation of their currencies versus the euro. Greek risks are also infiltrating markets in Eastern Europe after Greece’s decisive vote against austerity this week. Even the Bank of England, whose economy is showing signs of a gradual recovery, may find itself compelled to delay tightening monetary policy.

• As China Intervenes to Prop Up Stocks, Foreigners Head for Exits. Foreign investors are selling Shanghai shares at a record pace as China steps up government intervention to combat a stock-market rout that many analysts say was inevitable. Sales of mainland shares through the Shanghai-Hong Kong exchange link swelled to an all-time high on Monday, dual-listed shares in Hong Kong fell by the most since at least 2006 versus mainland counterparts. Options traders in the U.S. are paying near-record prices for insurance against further losses after Chinese stocks traded in the U.S. plunged Monday by the most since 2011. The latest attempts to stem the country’s $3.2 trillion equity rout, including stock purchases by state-run financial firms and a halt to initial public offerings, have undermined government pledges to move to a more market-based economy, according to Aberdeen Asset Management. They also risk eroding confidence in policy makers’ ability to manage the financial system if the rout in stocks continues, said BMI Research, a unit of Fitch. “It’s coming to a point where you’re covering one bad policy with another,” said Tai Hui, the Hong Kong-based chief Asia market strategist at JPMorgan Asset Management, which oversees about $1.7 trillion. “A lot of investors are still concerned about another correction.”

• China ADRS Plunge Most Since 2011 as Support Fails to Stem Rout. U.S.-traded Chinese stocks plunged the most in four years after the government’s latest support measures failed to stem the rout in mainland markets. The Bloomberg China-US Equity Index sank 5.1 percent to 121.36 in New York, the steepest drop since September 2011. Internet companies including Weibo Corp., Xunlei Ltd. and Changyou.com Ltd. tumbled more than 12 percent. The biggest U.S. exchange-traded fund tracking mainland stocks slumped 2.5 percent, extending its loss since a June 12 peak to 25 percent.

• Aussie Slides Toward Six-Year Low as Iron Slump Haunts Stevens. Australia’s dollar fell toward a six-year low on speculation central bank Governor Glenn Stevens will call for a weaker currency after setting monetary policy Tuesday. The Aussie slid against its 16 major peers as all 27 economists in a Bloomberg survey said the Reserve Bank of Australia will keep interest rates at a record low. It was below 75 U.S. cents for a second day amid concern an eight-day selloff in iron ore, Australia’s biggest export earner, and a rout in China’s stock market will hurt the nation’s economy.

• China’s Stocks Resume Rout as Traders Unwind Record Margin Bets. China’s stocks dropped for the fourth time in five days as government measures to support the market failed to stop traders unwinding margin bets by the most on record. The Shanghai Composite Index slid 1.7 percent to 3,710.52 at 9:51 a.m., with about 24 stocks down for every one that rose. For a second day, technology and small-company stocks plunged, while PetroChina Co. and Industrial & Commercial Bank of China Ltd., the two largest members on the index, rallied amid speculation of buying by state-directed funds. 

• China A-Share Crash Destabilizing for Leadership. (video)

• Asian Stocks Climb After Rout as Investors Weigh Greece Crisis. Asian stocks rose, with the regional benchmark index rebounding from the biggest drop since February 2014, as investors weighed developments in Greece’s debt crisis before an emergency meeting of European leaders. The MSCI Asia Pacific Index gained 0.4 percent to 144.06 as of 9:02 a.m. in Tokyo after falling 2 percent on Monday.

• Iron Ore’s Bear Market Seen Deepening as Clarksons Forecasts $40. Iron ore will probably extend declines after falling back into a bear market on Monday as low-cost supplies from Australia and Brazil are set to expand further this half while demand stumbles in China. Prices may drop toward $40 a metric ton, according to Clarksons Platou Securities Inc. A deepening slowdown in China’s steel industry and higher iron ore exports from the largest miners are weighing on prices, said Sanford C. Bernstein & Co.

• Obama Urged to Convene Crisis Group Over Puerto Rico’s Debt. The first woman of Puerto Rican descent elected to the U.S. House of Representatives called on President Barack Obama Monday to do more to help the debt-wracked island. The Obama administration has signaled it has no intention of intervening and said any help for Puerto Rico needs to come from Congress, where top Republicans have shown little inclination to get behind bankruptcy legislation.

Wall Street Journal:

• Germany’s Power Polarizes Europe. The Continent’s most powerful country is grappling with its leadership role—and other nations are, too. Under the glass Reichstag dome in Germany’s parliament last week, left-wing opposition leader Gregor Gysi lit into Chancellor Angela Merkel for saddling Greece with a staggering unemployment rate, devastating wage cuts, and “soup kitchens upon soup kitchens.”

• Greece and the Flight From Reality. A people who want wealth without work will have neither.

Fox News: 

• CDC official called Obama ‘Marxist,’ ‘amateur’ over 2014 border surge. (video) A federal health official dealing with the surge of illegal immigrants last year at the southern U.S. border ripped President Obama for the months-long crisis, calling him a "Marxist" and “the worst pres we have ever had,” according to newly released internal emails.

Zero Hedge: 

• Greece Fallout: Italy & Spain Have Funded A Massive Backdoor Bailout Of French Banks.

• There is Only One Way Out For Greece.

• The Biggest Winner From The Greek Tragedy. (graph)

• Chinese Stocks Open Down Hard, "VIX" Hits Record High, "Nasdaq" Down 40% From Highs. (graph)

• Can China Keep Miami's Condo Bubble From Bursting? (graph)

• In China, Hairdresser Bull Call Goes Horribly Wrong, Broker IPO Crashes 31%. (graph)

• This Is How Much It Cost To Keep The Shanghai Composite Green For A Day.

• Obamacare Sticker Shock Arrives: Insurance Premiums To Soar 20-40%. (graph)

• Is It Slowing China Or Grexit That Is Driving Financial Market Price Changes? (graph)

• Why Greece Matters A Lot: The Case Of Europe's Falling Dominoes. (graph)

• This Is What Greece's "Triumphant Return" Looks Like Now. (graph)

• "Greece Is Contained" Except In Crude, Copper, FX, US & EU Stocks, & Peripheral Bonds. (graph)

Business Insider: 

• El-Erian: Keep a close eye on Chinese stocks.

• China's desperate attempts to control the stock market will end badly.

• The US's response to Iran's cheating is a very bad omen.

• Target(TGT) is quietly opening a new kind of store in cities across America.

• The bad news for oil is getting worse by the day.

• Iran's regime knows 'snapback sanctions' aren't going to be able to stop it from going nuclear.

• Iran is now pushing for an end to the weapons embargo as part of nuclear deal.

• The Greek government may have to start issuing IOUs and that could mean a 'Grexit'.

Reuters:

• China economic uncertainty a potential risk for U.S. chipmakers. Tumbling markets and economic uncertainty in China pose a risk to major chipmakers such as Qualcomm Inc that derive a big portion of their sales from the world's second-largest economy. Consumer electronics giant Apple Inc could also be vulnerable - 17 percent of the company's overall revenue last fiscal year came from China, and in the most recent quarter it sold more iPhones in the country than in the United States for the first time. But the slowing pace of China's economic growth - on top of already weakening demand for mobile devices - could deliver a particularly tough blow to chipmakers, analysts said.

• Humana(HUM) cuts outlook, raising new concerns about Aetna(AET) deal. Humana Inc, fresh from announcing an agreement to be purchased by larger rival Aetna Inc, prompted new investor concerns about the $33 billion deal on Monday by lowering its 2015 financial forecasts.

• Chipmaker AMD(AMD) cuts revenue estimate, citing weak PC sales. Chipmaker Advanced Micro Devices Inc lowered its revenue estimate for the second quarter, below analysts' average estimate, saying the demand for personal computers was weaker-than-expected. AMD's shares fell as much as 15 percent to $2.10 in extended trading, after the company also cut its adjusted gross margin forecast for the quarter ended June 27.

Financial Times:

• Saudi sovereign fund to invest $10bn in Russia. Saudi Arabia’s sovereign wealth fund has agreed to invest $10bn in Russia, in a powerful sign of the rapprochement between Moscow and Riyadh. The Public Investment Fund signed a deal with the Russian Direct Investment Fund for the largest foreign direct investment yet in Russia, RDIF said late on Monday. “The first seven projects have received preliminary approval, and we expect to close 10 deals before the end of the year,” said Kirill Dmitriev, RDIF chief executive.

Telegraph: 

• Greece: Even Wile E Coyote eventually fell off the cliff. Greece is in a state of suspended animation but it will eventually fall off the cliff, with monumental consequences. 

• Greece news live: Banks to remain shut for another two days as Greeks told 'reform or it's over'. European Central Bank takes unprecedented move to squeeze the Greek banking system as Dutch tell Athens to reform or go bust. 

• European Central Bank tightens noose on banking system as creditor powers punish Greece. Greek 'No' vote sees lenders act in concert, warning of imminent bankruptcy unless Athens capitulates to fresh reform demands.

Bild:

• Oettinger Says Bankrupt Nations Don't Fit Monetary Union. EU Commissioner Guenther Oettinger says in interview he has serious concerns about Greece remaining within the monetary union. Greece will probably soon have to pay wages, pensions and billion in IOUs. An insolvent country introducing a parallel currency wouldn't suit a monetary union. Remains sceptical over further talks with Greek govt. Referendum may have mobilized citizens, but doesn't change fact that Greece faces bankruptcy. Govt needs to tackle reforms and if it continues to refuse reforms, new negotiations have no sense. Referendum was "remarkable event," question was misleading, govt campaign was polemic and there were verbalisations against EU partners that were "indecent".

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -1.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 113.0 -4.0 basis points.

• Asia Pacific Sovereign CDS Index 60.5 +1.25 basis points.

• S&P 500 futures +.27%.

• NASDAQ 100 futures +.20%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (TCS)/-.13

• (HCSG)/.23

• (MSM)/.96

Economic Releases

8:30 am EST

• The Trade Deficit for May is estimated to widen to -$42.7B versus -$40.9B in April.

10:00 am EST

• JOLTS Job Openings for May are estimated to fall to 5300 versus 5376 in April.

• The IBD/TIPP Economic Optimism Index for July is estimated to rise to 48.9 versus 48.1 in June.

Upcoming Splits

• None of note

Other Potential Market Movers

• The RBA rate decision, UK industrial production report, G8 meetings, $24B 3Y T-Note auction, weekly US retail sales reports and the (AUO) June sales update could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by real estate and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.