Morning Market Internals

NYSE Composite Index:

• Volume Running 2.0% Above 100-day average
• 10 Sectors Rising, 0 Sectors Declining
• 73.8% of Issues Advancing, 24.0% Declining
• 94 New 52-Week Highs, 56 New Lows
• 43.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.4
• Vix 14.5
• Total Put/Call .90
• TRIN/Arms 1.06

Monday Watch

Today's Headlines 

Bloomberg:  

• EU Demands Complete Capitulation From Tsipras. European leaders gave Greek Prime Minister Alexis Tsipras a straightforward choice on Sunday: ditch his principles or quit the euro. At an emergency summit in Brussels, Tsipras was presented with a laundry list of unfinished business from previous bailouts that he’d pilloried in opposition and during six turbulent months in office. Euro-area leaders gave him three days to enact their main demands to keep alive chances of adding bailout funds of as much as 86 billion euros ($96 billion) to earlier commitments of 240 billion euros. With Greece running out of money and its banks shut the past two weeks, the gathering was billed as the country’s last chance to stay in the euro. Tsipras, who says he wants to keep Greece in the currency union, has been in financial limbo since his government missed a payment to the International Monetary Fund and allowed its second rescue package to lapse on June 30. 

• China Reality Check: Stocks Are Still Too Expensive for Mobius. Chinese shares have tumbled faster than any of their global peers, suffered the first bear-market retreat since 2012 and erased more value in a month than the annual economic output of the U.K. After all those losses, is now the time to go bargain hunting? Not just yet. That’s the refrain from BlackRock Inc., UBS Group AG and Templeton Emerging Markets Group’s Mark Mobius, who say mainland stocks need to fall further before they’re worth buying.

• China June Imports Fall 6.7% on Year. (video)

• Asia’s Rising Economic Stars Lose Luster on China’s Slowdown. For years after the 2008 financial crisis, Asia’s rapidly expanding economies propped up global growth, with China clocking a pace of more than 9 percent, pulling along its neighbors. Now, China’s continuing slowdown is dragging them too, exposing weaknesses across the region, from Indonesian borrowing needs to record Korean household debt and the bureaucratic and corruption hurdles in the Philippines that hold back its infrastructure projects. Growth is undershooting forecasts, hurt by exports that are falling in nine among 12 main Asian economies, according to data compiled by Bloomberg. The slump, which spans India to Malaysia and South Korea, is partly a consequence of China’s deceleration -- to a growth estimated at 6.8 percent for last quarter, behind the government’s target for about 7 percent for 2015.

• Asian Stocks Advance as Investors Weigh Progress in Greece Talks. Asian stocks rose, with the regional index on course for a third day of gains, as investors weighed negotiations between European leaders and Greece. The MSCI Asia Pacific Index added 0.4 percent to 141.63 as of 9:10 a.m. in Tokyo after dropping 3.7 percent last week.

• Oil Bulls’ Will Broken as Roiled Economies Pose Risk to Growth. Speculators retreated from bullish oil bets at the fastest pace since 2012 on mounting concern that economic turmoil in Europe and Asia will prolong a supply glut. The net-long position in West Texas Intermediate crude fell 20 percent in the week ended July 7, U.S. Commodity Futures Trading Commission data show. Longs dropped 1.7 percent as short wagers jumped 56 percent. 

• Copper Bears Rewarded as Economic Threats Spur Metal Rout. Investors are hastening their retreat from copper, unnerved by the threats to global economic growth. The metal slumped to a six-year low last week as Greece’s efforts to reach a deal with creditors stumbled and Chinese equities plunged. Europe and China consume about two-thirds of the world’s copper. Goldman Sachs Group Inc. and Societe Generale SA see little prospect of a rebound anytime soon.

Zero Hedge:

• The Latest Out Of Europe: "Pretty Steady Level Of Shittiness".

• The Greek "Choice": Hand Over Sovereignty Or Take Five Year Euro "Time Out".

• China Stocks Mixed After Regulators "Bust Illicit Stock Sellers" And Unhalt Over 400 Securities.

• GMO's Montier Shifts To 50% Cash, Sees 3 "Hellish" Scenarios For Markets.

• How Fascist Capitalism Functions: The Case Of Greece.

• Leaked Eurogroup Statement Demands Much More From Greece, Keeps "Temporary Grexit" Option.

• A Broken Greek PM Says He Is "Ready For An Honest Compromise".

• The Crony Capitalist Pretense Behind Warren Buffett's Banking Buys.

• America - We Have A Problem. (graph)

• Russia Readies Fuel Deliveries To Athens, Will Support Greek "Economic Revival".

Business Insider:

• Mexico's most notorious drug lord just escaped from prison in a tunnel built under his cell.

• High debt could crush US shale companies.

• 'China is in the midst of a triple bubble'.

• Europe has made Greece a terrible offer, and the Greek government thinks it's 'very bad'.

• VAROUFAKIS: A 'Grexit' was always part of Germany's plan.

• MERKEL: 'The most important currency has been lost and that is trust'.

Telegraph: 

• Greece news live: eurozone split over Grexit ultimatum plan as Greeks says they are being 'crushed' by Brussels. Negotiations continue into the early hours of the morning as Greek prime minister Tsipras fights to gain "honourable compromise" and stay in the euro.

Night Trading

• Asian indices are unch. to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 109.75 -2.25 basis points.

• Asia Pacific Sovereign CDS Index 60.0 -1.75 basis points.

• S&P 500 futures -.06%.

• NASDAQ 100 futures +.05%.

Morning Preview Links

Earnings of Note

Company/Estimate 

• None of note

Economic Releases

2:00 pm EST

• The Monthly Budget Statement for June is estimated at $50.0B versus $70.5B in May.

Upcoming Splits

• (KR) 2-for-1

• (NFLX) 7-for-1

Other Potential Market Movers

• The Greece EUR 464B IMF payment being due and (AMAT) analyst meeting could also impact trading today.

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

Weekly Outlook

Week Ahead by Bloomberg. 

Wall St. Week Ahead by Reuters.

Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as Fed rate hike worries, earnings outlook concerns and China bubble-bursting fears offset technical buying, short-covering and Greece debt deal hopes. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Today's Headlines

Bloomberg:     

• Greece Talks Spill Into 2nd Day as Finance Chiefs Deadlock. European finance ministers deadlocked over how to keep Greece in the euro, forcing emergency talks to continue Sunday and threatening to delay the infusion Prime Minister Alexis Tsipras desperately needs. With Greece running out of money and its banks shut for the past two weeks, the hardline group led by Germany signaled that the country’s debt was too great, Tsipras’s reform proposals were inadequate and, in any event, the Greeks couldn’t be trusted to keep their word. Finance ministry aides will work through the night, allowing finance chiefs to reconvene at 11 a.m. in Brussels before a leaders’ summit.

• Greek Bailout Dissected as German Skepticism Clouds Talks. European officials are grilling Greece on its bailout proposals in talks to save its place in the euro as a German-led bloc questions whether they go far enough. Hours after Greek Prime Minister Alexis Tsipras won overwhelming support in Parliament for the package of spending cuts, pension savings and tax increases, some finance ministers arriving in Brussels voiced skepticism over the details. Their meeting begins two days of wrangling that will conclude with a summit on Sunday, the deadline to reach a new deal. 

• Yellen Puts Bond Market on Notice 2015 Rate Increase Is Looming. Janet Yellen is reminding the bond market that 2015 will include at least one interest-rate increase. After Treasuries posted a four-day rally through July 8 on refuge demand linked to unsolved Greek bailout talks and plunging Chinese stocks, U.S. debt reversed direction. The Fed chair’s remarks then helped extend the biggest two-day rout since 2013, along with improved chances of a Greek solution and a rebound in China’s equities, which cooled concern of a meltdown for the world’s second largest economy.

ZeroHedge:

• Eurogroup Meeting Ends Without Agreement: "Huge Problems", "Issue Of Greek Trust Very Difficult".

• Someone Told Merkel...

• Varoufakis' Stunning Accusation: Schauble Wants A Grexit "To Put The Fear Of God" Into The French.

• German FinMin Blasts Greek Proposal: Debt Restructuring Impossible, "Everyone Knows They Can't Be Believed".

• It's Not Just The Troika: 79% Of Greeks Oppose Syriza's Third Bailout Proposal.

• Schauble Proposes "5 Year Grexit With Humanitarian Support".

• The Chart That Keeps Angela Merkel Up At Night. (graph)

• Over To You Merkel: Greek Govt Approves Bill The Greek People Soundly Rejected.

• "There Is Going To Be A Taper Tantrum In Latin America... It Is Inescapable".

• How The World Works - The Santelligram.

• Risky Loans Are 'Driving' US Auto Sales: 3 Charts.

• Violent Crime Is Surging In Major U.S. Cities And The Economy Is Not Even Crashing Yet.

• China's Margin Mania In Context, The "Striking" Comparison With The US And Japan. (graph)

• Finland Echoes Germany, Wants Greece Out; Five Other Nations Back Grexit.

• Mapping The World's "Grey Swans". (graph)

• 5 Things To Ponder: "China Rising" Or Not? (graph)

• Dramamine Required: Stocks End Week Unchanged Despite Nausea-Inducing Wild Ride. (graph)

Business Insider:

• Greece appears to be on its way to a 3rd bailout.

• High valuations are weighing on US stocks ahead of earnings.

• The entire world learned a very important lesson about China this week.

• Jeb Bush’s ‘longer hours’ remark will haunt him.

• Junk bond issuance has 'frozen up'.

Telegraph: 

• Greece news live: Germany readies five-year temporary Grexit plan after finance ministers fail to reach agreement. Wolfgang Schauble reportedly rejects Greece's new austerity measures, favouring a "temporary" Grexit as creditors demand even more austerity from Greece.

• A focus on Greece means we risk downplaying important events in China. The reduction in the value of Chinese shares in the past month alone has been 13 times the size of the Greek economy.

Market Week in Review

• S&P 500 2,078.99 +.20%*

The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 2,078.99 +.20%

• DJIA 17,779.10 +.24%

• NASDAQ 5,003.25 -.16%

• Russell 2000 1,250.90 +.24%

• S&P 500 High Beta 32.97 -1.46%

• Goldman 50 Most Shorted 139.93 -1.01% 

• Wilshire 5000 21,760.70 +.04%

• Russell 1000 Growth 1,003.48 +.49%

• Russell 1000 Value 1,012.37 -.18%

• S&P 500 Consumer Staples 505.55 +2.17%

• Solactive US Cyclical 129.60 -1.36%

• Morgan Stanley Technology 1,011.64 -.28%

• Transports 8,205.26 +.97%

• Utilities 571.85 +1.83%

• Bloomberg European Bank/Financial Services 116.87 +.66%

• MSCI Emerging Markets 38.38 -4.08%

• HFRX Equity Hedge 1,182.87 -2.46%
• HFRX Equity Market Neutral 989.04 -.70%

Sentiment/Internals

• NYSE Cumulative A/D Line 232,493 -.76%

• Bloomberg New Highs-Lows Index -370 -112

• Bloomberg Crude Oil % Bulls 28.21 +33.0%

• CFTC Oil Net Speculative Position 328,179 +.23%
• CFTC Oil Total Open Interest 1,670,091 +1.22%

• Total Put/Call 1.02 -.98%

• OEX Put/Call 1.0 +163.16%

• ISE Sentiment 79.0 -.34%

• NYSE Arms .92 -17.85%

• Volatility(VIX) 16.72 -1.07%

• S&P 500 Implied Correlation 58.39 -4.68%

• G7 Currency Volatility (VXY) 9.79 -2.68%

• Emerging Markets Currency Volatility (EM-VXY) 8.87 +.91%

• Smart Money Flow Index 16,735.92 -.31%

• ICI Money Mkt Mutual Fund Assets $2.634 Trillion +.73%
• ICI US Equity Weekly Net New Cash Flow -$5.514 Billion

• AAII % Bulls 27.9 +23.4%
• AAII % Bears 29.2 -16.8%

Futures Spot Prices

• CRB Index 218.25 -2.81%

• Crude Oil 52.72 -6.64%

• Reformulated Gasoline 202.22 -.63%

• Natural Gas 2.78 -2.29%

• Heating Oil 173.78 -5.19%

• Gold 1,160.80 -.47%

• Bloomberg Base Metals Index 158.15 -2.47%

• Copper 254.20 -3.70%

• US No. 1 Heavy Melt Scrap Steel 249.33 USD/Ton unch.
• China Iron Ore Spot 50.10 USD/Ton -9.34%

• Lumber 295.20 +2.37%

• UBS-Bloomberg Agriculture 1,164.74 -.18%

Economy

• ECRI Weekly Leading Economic Index Growth Rate 1.2% -20.0 basis points

• Philly Fed ADS Real-Time Business Conditions Index -.1268 +.94%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 125.70 +.06%

• Citi US Economic Surprise Index -21.8 +3.3 points

• Citi Eurozone Economic Surprise Index -3.9 +.5 point

• Citi Emerging Markets Economic Surprise Index -19.5 -.9 point

• Fed Fund Futures imply 54.0% chance of no change, 46.0% chance of 25 basis point cut on 7/29
• # of Months to 1st Fed Rate Hike(Morgan Stanley) 7.43 +13.1%

• US Dollar Index 96.02 +.1%

• Euro/Yen Carry Return Index 142.88 +.13%

• Yield Curve 177.0 +1.0 basis point

• 10-Year US Treasury Yield 2.42% +4.0 basis points

• Federal Reserve's Balance Sheet $4.443 Trillion +.05%

• U.S. Sovereign Debt Credit Default Swap 15.94 -4.33%

• Illinois Municipal Debt Credit Default Swap 229.0 +1.60%

• Western Europe Sovereign Debt Credit Default Swap Index 25.25 -3.99%

• Asia Pacific Sovereign Debt Credit Default Swap Index 59.92 +.98%
  

• Emerging Markets Sovereign Debt CDS Index 298.53 -4.29%
  

• Israel Sovereign Debt Credit Default Swap 66.0 +1.14%

• Iraq Sovereign Debt Credit Default Swap 740.24 +2.22%

• Russia Sovereign Debt Credit Default Swap 327.66 -1.11%

• iBoxx Offshore RMB China Corporates High Yield Index 119.24 -1.24%

• 10-Year TIPS Spread 1.89% -3.0 basis points

• TED Spread 26.75 -.5 basis point

• 2-Year Swap Spread 25.75 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -19.25 +1.5 basis points

• N. America Investment Grade Credit Default Swap Index 69.41 +2.05%

• America Energy Sector High-Yield Credit Default Swap Index 1,259.0 +1.27%

• European Financial Sector Credit Default Swap Index 79.42 -13.33%
  

• Emerging Markets Credit Default Swap Index 298.55 -.23%
  

• CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 91.0 +.5 basis point

• M1 Money Supply $3.049 Trillion +.62%

• Commercial Paper Outstanding 1,020.60 +7.20%

• 4-Week Moving Average of Jobless Claims 279,500 +4,750

• Continuing Claims Unemployment Rate 1.7% unch.

• Average 30-Year Mortgage Rate 4.04% -4 basis points
• Weekly Mortgage Applications 383.50 +4.64%

• Bloomberg Consumer Comfort 43.50 -.5 point

• Weekly Retail Sales +1.50% +10.0 basis points

• Nationwide Gas $2.76/gallon -.01/gallon

• Baltic Dry Index 853.0 +5.96%

• China (Export) Containerized Freight Index 804.80 +1.79%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 37.50 +15.38%
• Rail Freight Carloads 255,015 -7.46%

Best Performing Style

• Small-Cap Growth +.4%

Worst Performing Style

• Mid-Cap Value -.5%

Leading Sectors

• Airlines +2.6%

• Utilities +1.9%

• Drugs +1.9%

• Homebuilders +1.9%

• Tobacco +1.1%

Lagging Sectors

• Disk Drives -4.0% 

• 3D Printing -4.6%

• Oil Tankers -5.0%

• Gold & Silver -6.1%

• Coal -9.5%

Weekly High-Volume Stock Gainers (5)

• DEPO, TISI, CTCT, MDCO and TCS

Weekly High-Volume Stock Losers (9)

• WCIC, HNT, CAP, YELP, SC, CATM, AOS, PRFT and QLGC

Weekly Charts

ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change