Monday Watch

Weekend Headlines
Bloomberg:

• Greek Default Would Not Destabilize the Euro, Bundesbank's Weidmann Says. Bundesbank President Jens Weidmann raised the pressure on governments to agree to a Greek bailout without the European Central Bank taking part in easing the country’s debt burden, saying the euro can withstand a default. Weidmann said the ECB was unwilling to turn its emergency bond-buying program into a “lasting institution” and that Greece’s implementation of austerity measures and asset sales was crucial to securing the handout to prevent a default. He spoke in an interview with German newspaper Welt am Sonntag. “If the commitments are not met, that cancels the basis for further funds from the aid package,” Weidmann told the newspaper. “This would be Greece’s decision, and the country then would have to bear the surely dramatic economic consequences of a default. I don’t think this would be sensible, and it would surely put partner countries in a difficult situation. But the euro would even in this case remain stable.” Weidmann’s depiction of a default as a liveable outcome contrasts with warnings from fellow ECB officials Lorenzo Bini Smaghi and Christian Noyer, as well as European Union Economic and Monetary Affairs Commissioner Olli Rehn, who described it as a “Lehman Brothers catastrophe” last week. A bailout for Greece must include “voluntary” investor participation and meet the approval of central bankers, Luxembourg’s Jean-Claude Juncker said yesterday in an effort to narrow the dispute. “We cannot push through private investor participation without, or against, the ECB,” Juncker said on Radio Berlin- Brandenburg. “A default would mean the ECB would have to end its accompanying programs. A default would mean we have reached the end of the line.” Forcing losses on creditors may also hurt confidence, Commerzbank AG Chief Executive Officer Martin Blessing said in an interview published today in Welt am Sonntag. Investors had been told they wouldn’t need to join any efforts before 2013, and reneging on that pledge would “not exactly help build trust in the markets,” Blessing said, according to the newspaper.
• Euro Touches Month's Low as Debt Concerns Counter Rate Increase Prospects. The euro traded 0.3 percent from a two-week low against the dollar after Luxembourg’s Jean-Claude Juncker said a bailout for Greece must include “voluntary” investor participation and meet the approval of central bankers. The common currency fell versus most of its 16 major counterparts on speculation European Central Bank President Jean-Claude Trichet will signal today the pace of interest-rate increases this year will slow. The yen was supported as Asian stocks extended losses by equities globally, boosting demand for the Japanese currency as a refuge. “The market has an impression that Europe is faltering on the debt issue,” said Junichi Ishikawa, a Tokyo-based market analyst at IG Markets Securities Ltd. “Policy makers can’t easily raise interest rates while dealing with the sovereign crisis. The euro used to be bought on rate-hike expectations, but that seems to be over.” The euro traded at $1.4348 as of 9:13 a.m. in Tokyo from $1.4347 in New York on June 10, after earlier touching $1.4300, the weakest since May 31.
• Bank Swaps at 5-Month High as Economy Weakens: Credit Markets. Credit-default swaps on the largest U.S. banks and financial firms are trading at the highest level in five months as regulators proposed stricter capital rules just as the global economy shows signs of weakening. The average cost of protecting JPMorgan(JPM), Bank of America(BAC), Wells Fargo(WFC), Citigroup(C), Goldman Sachs(GS) and Morgan Stanley(MS) soared 20.6 basis points this months to 138.4 basis points, according to CMA.
  
• Greece to Collapse Without New Aid, Kauder Tells Bild am Sonntag. A failure to agree upon a new aid package for Greece would be irresponsible and highly risky, Volker Kauder, the parliamentary leader of German Chancellor Angela Merkel’s Christian Democratic bloc, told Bild am Sonntag newspaper. The Greek economy would collapse, the country could not repay its debt, and the financial systems of other countries would be in danger, possibly resulting in a new financial and economic crisis, Kauder said according to the article.
• China Researcher Sees June CPI Exceeding 6%, Securities Reports. China’s inflation in June may exceed 6 percent, the China Securities Journal reported today, citing Zhang Zhuoyuan, an economist at the Chinese Academy of Social Sciences. Consumer prices may rise about 5 percent this year, the Beijing-based newspaper cited Zhang as saying. Rapid investment growth and excessive lending are fueling inflation, according to the report.
• Syrian Forces Seize City of Jisr al-Shughour. Syrian President Bashar Al-Assad’s security forces took control of the northwestern town of Jisr al-Shughour in an armed clash with rebels yesterday, five days after the regime says 120 government troops were killed. U.S. Secretary of State Hillary Clinton described Assad’s response to the uprising as “revolting” and British Foreign Minister William Hague called the violence “unacceptable” and demanded that he allow the Geneva-based International Committee of the Red Cross access to the Arab nation. Units of the Syrian army took full control over Jisr al- Shughour after it rolled into the city yesterday to “purify it from members of armed groups,” Syrian television reported.
• Saudi Arabia Wants to Have a 'Greater Role' at IMF, SPA Reports. Saudi Arabia, the Arab world’s biggest economy, wants to have “a greater role” at the International Monetary Fund, the official Saudi Press Agency reported, citing the kingdom’s Finance Minister Ibrahim al- Assaf. The world’s largest oil supplier has played an “important role” in stabilizing prices with its crude production, the news service said today, citing al-Assaf as saying during a press conference yesterday with French Finance Minister Christine Lagarde in Jeddah. Saudi Arabia doesn’t want the IMF presidency limited to a certain region, the news service said, citing al-Assaf. The country will support the “best candidate" and ‘‘most efficient one from its viewpoint,’’ the news service reported. Lagarde, Mexican central bank chief Agustin Carstens and Bank of Israel Governor Stanley Fischer are in the race to succeed Dominique Strauss-Kahn, who resigned last month after he was charged with attempted rape, as managing director. Strauss- Kahn has pleaded not guilty.
• Japan Amateur Radiation Sleuths Using Borrowed Geigers Seek Hidden Dangers. Masanori Monma, principal of the Kashima Elementary School in Minami Soma, borrowed a portable Geiger counter from the science ministry. Last month, he got a reading of 2.1 microsieverts an hour at a ditch next to a school flowerbed, about 35 times higher than in downtown Tokyo and at the top end of the annual safety limit for radiation exposure. More than three months after the biggest earthquake in Japan’s history and a 15-meter (40-foot) tsunami wrecked the Fukushima atomic power station, a picture emerges of ad-hoc responses to the crisis. Radiation leaks from the Fukushima reactors have spread over 600 square kilometers, Tomio Kawata, a fellow at the Nuclear Waste Management Organization of Japan, said in a research report published May 24 and given to the government. Radioactive soil in pockets of areas outside the 20- kilometer exclusion zone around the plant have reached the same level as in Chernobyl following a reactor explosion in the former Soviet Union territory 25 years ago, the report said. This past weekend, thousands of protesters gathered in Tokyo to rally against nuclear power, according to the Associated Press, without citing the source of the estimates. Japan’s government criticized Tepco last month for withholding radiation data, a move that was contributing to “public distrust,” Chief Cabinet Secretary Yukio Edano told reporters on May 27. The utility responded by pledging to publish in August the combined figures of radiation released to the atmosphere and in contaminated water.
• Tepco opens -6.3% lower in Tokyo on Monday morning. 5-year credit default swaps rose 28% last week to 960 bps.
• Crude Oil Declines for a Second Day on U.S., China Economic Growth Concerns. Crude for July delivery fell as much as 59 cents to $98.70 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.83 at 7:07 a.m. Singapore time. The contract on June 10 slid 2.6 percent to $99.29 a barrel, the biggest drop since May 11. Oil is up 31 percent the past year.
• Funds Boost Bullish Agriculture Bets for Third Week as Crops May Decline. Funds increased bullish bets on agriculture prices for a third straight week, the longest string of gains this year. Speculators raised their net-long positions in 11 U.S. farm goods by 0.4 percent to 759,974 futures and options contracts in the week ended June 7, government data compiled by Bloomberg show. That’s the highest since May 3. Gains were led by a 59 percent jump in bets on rising prices for soybean meal. Sugar holdings climbed 6.9 percent. The Standard & Poor’s GSCI Agriculture Index has surged 79 percent in the past year.
• Obama to Nominate Martin Gruenberg as FDIC Chairman to Succeed Shelia Bair.
• Goldman Sachs's(GS) Tourre Must Face SEC's Lawsuit Over 'Abacus' Transaction. Fabrice Tourre, the Goldman Sachs Group Inc. (GS) trader accused of misleading investors in a collateralized debt obligation, must face a lawsuit brought by the U.S. Securities and Exchange Commission, a judge ruled.
• China's Lending in Below Estimates as Economy Cools. China’s lending was less than economists estimated in May and money-supply growth cooled, adding to signs that the world’s fastest-growing major economy is slowing. Loans were 551.6 billion yuan ($85 billion), less than the 650 billion yuan median estimate in a Bloomberg News survey of 20 economists. The Shanghai Composite Index has tumbled since mid-April on concern that government measures to combat inflation will trigger a slowdown. A report tomorrow may show that consumer prices jumped 5.5 percent in May from a year earlier, the biggest gain in almost three years, the median forecast in a Bloomberg News survey shows. China’s economy “is moderating, but not crashing,” Qu Hongbin, a Hong Kong-based economist at HSBC Holdings Plc (HSBA) said before today’s announcement. “Inflation still outweighs growth as the top macro risk,” he said. M2, the broadest measure of money supply, expanded 15.1 percent from a year earlier, from 15.3 percent in April.
• Fischer's Last-Minute Candidacy to Run IMF May Not Slow Lagarde's Momentum. Bank of Israel Governor Stanley Fischer’s last-minute bid for the International Monetary Fund’s top job may not slow Christine Lagarde’s momentum as she gathers support to run the Washington-based lender.
• Short Sales Climb to 8-Month High in Hong Kong. Short selling in Hong Kong has risen to the highest level since September 2010 as concerns of slowing Chinese economic growth and further monetary-policy tightening intensify, according to a report from Data Explorers. Borrowed shares have risen to 12.2 percent of stock available for lending as of June 7, compared with 8.8 percent in January, Data Explorers, a New York-based research provider, wrote in a report June 9. The increase comes as Chinese companies listed in Hong Kong, Canada and the U.S. face pressure from short sellers amid allegations of lax corporate governance and fraud. “The Hong Kong equities market has become progressively more short,” wrote Will Duff Gordon, a senior research analyst at Data Explorers. The increase in short sales “has been driven by a sell-off of holdings by institutional investors coupled with strong demand to borrow equities.” The Hang Seng Index has slumped 2.7 percent this year as Chinese policymakers raised interest rates four times since October. “A lot of people are of the view that property is in a massive bubble in China and perhaps they’re betting on a collapse in that area,” said Puru Saxena, who oversees about $350 million as chief executive officer of Puru Saxena Wealth Management in Hong Kong.

Wall Street Journal:

• Job Picture Set to Test Obama in Key States. The nation's high joblessness, already a problem for President Barack Obama as he seeks re-election next year, is shaping up to be a particular burden in a handful of key swing states where the unemployment rate is above the national average. In four states that may prove key to the Obama re-election strategy—Florida, Nevada, North Carolina and Michigan—the jobless picture is bleak. In three of the four, the rate tops 10%.
• Hipster Battles Funds. The 33-year-old Washington Mutual investor, with no legal experience, delivered what people in the courtroom called an unusually eloquent speech, helping persuade the judge to investigate trading by some of the nation's biggest hedge funds and to reject a plan for the bank's exit from bankruptcy. The net result was a settlement between small investors and the hedge funds, which included Appaloosa Management and Centerbridge Partners. That deal has paved the way for the bank to exit from bankruptcy and gives the little guys a chance of recovering some of their losses.
• Citi(C) Kept Clients in Dark on Hack. Citigroup Inc. waited as long as three weeks to notify credit-card customers of a hacking attack because it was conducting an investigation and producing replacement cards, according to a person familiar with the situation.
• Bank Probes Its Executives. The board of Regions Financial Corp.(RF) is investigating whether executives delayed public disclosure of loans that were going sour during the financial crisis, according to court documents and people familiar with the matter.
• The Easy Credit That Fueled Brazil's Boom Now Imperils It. Brazilian policy-makers have fueled their country's economic boom through a state-owned bank that keeps business flush with credit. Now the engine that has helped the nation become a global player in beef, oil and mining is colliding with another policy imperative: battling inflation.
• America Needs the Shale Revolution. The drilling boom is the best U.S. energy news in generations and is crucial for reviving domestic manufacturing.

Bloomberg Businessweek:

• Nickel Plunging Into Bear Market on Biggest Glut in Four Years. Nickel is heading for the biggest glut in four years, driving prices lower into 2012. Next year’s surplus will rise to 60,000 metric tons from 12,000 tons in 2011, making nickel the most oversupplied metal relative to output or use, according to Bank of America Merrill Lynch, the most-accurate forecaster tracked by Bloomberg over two years. New mines will boost supply 11 percent in 2012, the most in 17 years, Macquarie Group Ltd. says. Prices may drop 12 percent to $20,000 a ton by Dec. 31, the median estimate in a Bloomberg survey of 17 analysts and traders shows. “I’m not particularly optimistic about nickel,” said Ian Henderson, who manages about $10 billion of natural-resource assets at JPMorgan Chase & Co. in London, including the Global Natural Resources Fund, which doubled in two years. “I don’t think there is a commercial logic for the price where it is today. A nickel price of $15,000 is entirely possible.”

CNBC:

• Japan Machinery Orders Fall, Capex Recovery to be Delayed. Japan's core machinery orders unexpectedly fell in April in a sign that demand related to the reconstruction of the country's earthquake-ravaged northeast has been slow to materialize. Core machinery orders fell 3.3 percent in April from the previous month, Cabinet Office data showed on Monday. The Cabinet Office decided to exclude orders for mobile phones from April data, saying they no longer reflect capital expenditure trends. The fall in core orders, a highly volatile data series regarded as a leading indicator of capital spending, compared with the median estimate for a 2.2 percent increase and follows a 1.0 percent rise in March.

NY Times:

• Obama Seeks to Win Back Wall Street Cash. A few weeks before announcing his re-election campaign, President Obama convened two dozen Wall Street executives, many of them longtime donors, in the White House’s Blue Room. The guests were asked for their thoughts on how to speed the economic recovery, then the president opened the floor for over an hour on hot issues like hedge fund regulation and the deficit. Mr. Obama, who enraged many financial industry executives a year and a half ago by labeling them “fat cats” and criticizing their bonuses, followed up the meeting with phone calls to those who could not attend. The event, organized by the Democratic National Committee, kicked off an aggressive push by Mr. Obama to win back the allegiance of one of his most vital sources of campaign cash.
• I.M.F. Reports Cyberattack Led to 'Very Major Breach'. The International Monetary Fund, still struggling to find a new leader after the arrest of its managing director last month in New York, was hit recently by what computer experts describe as a large and sophisticated cyberattack whose dimensions are still unknown. The fund, which manages financial crises around the world and is the repository of highly confidential information about the fiscal condition of many nations, told its staff and its board of directors about the attack on Wednesday.
• Too Big to Fail, or Too Trifling for Oversight? It is not very often that business people head to Washington to explain how unimportant they are. But over the last several months, executives from more than two dozen financial companies and their trade groups have paraded into the Treasury Department, the Federal Reserve and other government agencies to try to persuade top regulators that they are not large or risky enough to threaten the financial system if they should ever collapse. Big insurers like the Mass Mutual Financial Group and Zurich Financial Services; hedge funds like Citadel and Paulson & Company; and mutual-fund companies like BlackRock, Fidelity Investments and Pacific Investment Management Company have all been making the rounds, according to documents filed by the regulatory agencies. What they are all hoping to avoid is being designated “systemically important” by a council of financial regulators. That would require them to face stricter federal oversight and keep more cash on hand, which they fear would erode profits.
• Deutsche Bank's(DB) Chief Casts Long Shadow in Europe.
  

Business Insider:

• Inside The Terrifying IMF Hack: Who the Hackers Were And What They Took. As if the fact that the International Monetary Fund was hacked in a "very major breach" isn't terrifying enough, Bloomberg now speculates that the hackers were from a foreign government. Someone familiar with the matter told Bloomberg that the IMF was "attacked by hackers believed to be connected to a foreign government."
• ANONYMOUS: BERNANKE IS NEXT. (video) Anonymous has set its sights on Ben Bernanke. The most well-known hacker group, Anonymous, uploaded a video message to youtube yesterday calling for Fed Reserve Chairman Ben Bernanke to resign, among other things. It's embedded below.
  
• The Oil Under Los Angeles.
• The First Photos of Gabrielle Giffords Have Been Released. (pics)
• Greek Tragedy: The Unbearable Absurdity of the Euro.
• The Government Just Put A Chemical That's in EVERYTHING On The Cancer List.

Zero Hedge:

• The Boom and Bust of China's Rise by Dee Woo. In 1994, Management guru Peter Drucker told Japanese retail tycoon Isao Nakauchi that even though the Chinese market is very attractive, it still has more systemic risks than others and China will eventually face very serious inflation. And “the bubble is both much bigger and more extended than the bubble that burst in Japan a few years ago.” This prophecy sounded very sensational back then when the Chinese miracle started taking off and the Japanese one went bust, but now its shocking precision has beckoned.“ 'Made in China’ has subsidized many countries’ economical living but not China’s itself. Today from Shanghai to Shenzhen, Many mainland Chinese harbor a passion for bulk shopping trip to Hong Kong to save their gyrating living cost. “buy soy sauce in Hong Kong” becomes a trendy slogan to many informed mainland urbanites. China’s GDP per capita is still 10 times less than Hong Kong’s, but its price level has surpassed Hong Kong’s in many areas. The underlining worry is the high inflation and hot money is always a hotbed of rampant speculative activities. The average Chinese consumer still has relatively low disposable income, which leaves little room to manage under the high inflation. Through China’s history, unbearable living cost is always the blasting fuse of severe social upheaval. That’s something the government fears the most.
• Goldman(GS) Goes Short Nat Gas.
• Exclusive: The Fed's $600 Billion Stealth Bailout of Foreign Banks Continues at the Expense of the Domestic Economy, Or Explaining Where All The QE2 Money Went.
  

Commercial Mortgage Alert:

• CMBS Spreads Blow Out in Softening Market. Amid weakening conditions in the financial markets, new-issue spreads blew out to the highest level of the year yesterday as Morgan Stanley and Bank of America priced a $1.2 billion multi-borrower offering. The dealers were forced to boost the spreads on most of the deal’s triple-A bonds by 22-28 bp from initial price guidance. And the final spreads on the subordinate bonds exceeded original price talk by 40-135 bps. Meanwhile, UBS, Deutsche Bank and Ladder Capital began marketing a $2.1 billion offering Tuesday. That transaction, backed by 67 loans on 132 properties, is expected to price next week.

Seattle Times:

• Canadian Oil Boom May Bring Many More Tankers to Northwest Waters. In the icy oil fields of Alberta, gargantuan machines traverse open-pit mines to access one of the greatest oil deposits on Earth: Canada's oil sands. That massive store of energy has touched off political feuds in the U.S. over a proposed 1,700-mile pipeline to funnel crude oil to the Gulf of Mexico. But fights over Canada's oil sands could have an impact much closer to home. One company is hoping to boost oil-sands shipments to Asia through Northwest waters — plans that would quadruple tanker traffic through Vancouver, B.C., and dramatically increase the amount of oil traveling through the Strait of Juan de Fuca.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Sunday shows that 23% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Thirty-nine percent (39%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -16 (see trends).

Politico:

• Abandoned, Defiant Anthony Weiner Seeks 'Treatment,' House Leave.

AP:

• China Communist Party Newspaper Cautions Vietnam. A newspaper published by China's ruling Communist Party warned Vietnam on Saturday to show restraint or come out the loser in an escalating squabble over territorial claims in the South China Sea. Vietnam on Friday announced a live ammunition drill in an apparent response to China's demand that it halt all oil exploration in an area of the South China Sea claimed by both sides. "If Vietnam insists on making trouble, thinking that the more trouble it makes, the more benefits it gains, then we truly wish to remind those in Vietnam who determine policy to please read your history," the editorial concluded. Vietnam announced its navy will carry out two exercises on Monday in an area off the country's central Quang Nam province and warned ships to stay out of the area. It was the first time Vietnam has issued such an alert about maritime drills. The notice came a day after China and Vietnam traded demands to stay out of waters they claim. Saturday's editorial mixed righteous indignation with patronizing language in a reflection of the condescension with which Beijing frequently regards its smaller Communist neighbor.

Reuters:

• Pakistan Tells CIA Chief It Sticks to U.S. Troop Cuts. Pakistan's army and intelligence chiefs told CIA Director Leon Panetta they were not willing to reverse a decision to cut the number of U.S. troops allowed in Pakistan, Pakistani military officials said on Saturday.
• Weidmann Against ECB Extending Greek Bond Maturities. Germany's central bank opposes extending the maturities of Greek bonds held by the European Central Bank, Bundesbank head Jens Weidmann said in comments released on Saturday. European officials are closing in on a second bailout for Greece, but the ECB and the German government are at loggerheads over ideas of how to get private investors to contribute. A variety of mechanisms for so-called "soft restructuring" are on the table, most centring around ways to get private investors to follow the EU and IMF in prolonging existing loans. Weidmann signalled he was not in favour of doing so with the bonds the ECB has bought under a programme of bond-buying that has supported struggling state borrowers but lain dormant in recent months. "We are against monetary policymakers taking on the necessary additional financing and accompanying risks," Weidmann, also an ECB Governing Council member, told Welt am Sonntag weekly. Asked if this meant European central banks should not extend maturities of the Greek bonds they have bought over the past 13 months as part of the ECB's dormant bond-buying programme, Weidmann said: "Correct". "That would transform the programme, now rightly inactive for two months, from a rather short-term application of support into a lasting institution," he said. "That was never the intention." Heavily indebted Greece holds it own fate in its hands, Weidmann told the paper, and would have to face the consequences of a default if it did not reform its economy as agreed as part of its bailout terms. "If the agreements are not met, the basis for further funds from the aid programme disappears. Greece would have made this decision and would have to live with the surely dramatic economic consequences of a default.""I do not consider this sensible, and it would surely put partner countries in a difficult situation," he added. "But the euro would also remain stable in this situation." Weidmann said he opposed any forced restructuring of Greece's debt, but would welcome a voluntary solution.
• Russia, China Snub U.N. Council Talks on Syria: Envoys. Russia and China snubbed U.N. Security Council talks on Saturday convened to discuss a draft resolution that would condemn Syria's bloody crackdown on pro-democracy protesters, U.N. diplomats said. "Russia and China didn't think it necessary to show up," a council diplomat told Reuters on condition of anonymity. "It's a pretty clear message," another diplomat said.

Financial Times:

• International Banks Challenge Proposed U.S. Tax Law. Non-U.S. banks are challenging a proposed U.S. tax law that will require them to report on American clients to the IRS, citing people familiar with the matter.
• Online Sales Tax Battle Looms in US.
• Eurozone Periphery Bond Trading Volumes at New Lows. Even eurozone pension funds and insurance groups, which have until now traded these bonds, have stuck to the sidelines recently because of the uncertainty, say fund managers.

Telegraph:

• Climate Change Should be Removed From the National Curriculum. Climate change should be removed from the national curriculum, the government adviser conducting a review of the syllabus for five to 16 year olds in England has claimed.
• Industry Begins to Count the True Cost of 'Climate Change'. Heavy industry in Europe faces a crippling bill for global warming, says Christopher Booker.

Athens News Agency:

• Unions at Public Power Corp SA, Greece's biggest electricity company, decided to hold rolling 48-hour strikes from June 20. The strikes are being held to oppose government plans to sell a 17% stake in the former power monopoly and are expected to lead to power cuts.

Financial Post:

• Sino-Forest Credit Default Swaps Take Another Jump. (graph) The cost of insurance on Sino-Forest C0rp. bonds is going up. Again. Credit default swap spreads on five-year Sino debt soared to 2,794 basis points by the close of Friday, up more than 40% from the previous day, according to Markit, a London-based financial information firm. Since the middle of last week the spread has more than quadrupled. In plain English that means that to ensure $10-million of Sino bonds against default on Friday, you would pay $2.794-million, compared to $1.994-million on Thursday.

NHK:

• Seawater taken near Tokyo Electric Power Co.'s Fukushima Dai-Ichi nuclear plant has a level of radioactive strontium as much as 240 times the legal limit, citing the utility.

Cable TV:

• Over 1,000 migrant workers gathered in the Chinese city of Zengcheng in Guangdong province, smashing police cars and setting fire to some local-government offices yesterday. Protesters were "dispersed" today, it said.

Xinhua:

• At least 600 people, including 103 children were found to suffer from lead poisoning in China's eastern province of Zhejiang, citing a spokesman from the local health bureau.

South China Morning Post:

• Macau casinos face uncertainty over whether the government will renew their licenses as the first of six licenses expires in March 2020, citing analysts and investors. SJP Holdings Ltd.'s and MGM China Holdings Ltd.'s licenses will run out in 2020, the report said. Those of Wynn Resorts Ltd., Melco Crown Entertainment Ltd., Galaxy Entertainment Group Ltd. and Sands China Ltd. will expire in 2022, the report said. The newspaper cited University of Macau associate professor Jorge Godinho, Macquarie Securities gaming analyst Gary Pinge, Goldman Sachs Group Inc. Managing Director Eric Greenberg and Nelson Rose, a legal consultant to the gaming industry.

Financial News:

• China should use quantitative and price tools, such as medium and long-term central bank bills, to rein in liquidity as part of its efforts to control inflation, citing Xu Nuojin, vice governor of the People's Bank of China's Guangzhou branch. The current inflation situation still remains "grim", Xu said in an interview.
• China still has a need to increase interest rates as prices including for food and non-food items continue to rise, according to a commentary published in today's newspaper. The nation should specifically raise interest rates on deposits, which would help "improve" the situation of negative real interest rates, according to the commentary written by Li Qian, a reporter for the Financial News.
  

China Daily:

• A clash between local authorities in southern China with a pregnant woman and her husband, who were suspected of illegally selling goods on a village street, set off riots involving more than 100 people. The woman fell to the ground during the clash that took place in Dadun village under the jurisdiction of the city of Zengcheng on the evening of June 10, citing mayor Ye Niuping. More than 100 people at the scene tried to "prevent" the woman from being "taken to a local hospital for examination" after she and her husband had agreed to stop selling goods in the street. The crowd attacked police with bottles, bricks and stones. At 3 a.m. on June 11, more than 100 people gathered again and attacked police that were investigating the case and clearing the scene. "Rumors" had spread that the woman was seriously injured and that her husband was killed by police. The government of Zengcheng has sent teams to the area to "talk" to local residents and "clarify" what happened.

Weekend Recommendations
Barron's:

• Made positive comments on (BAC), (C), (GS), (JPM), (WFC) and (MS).

Night Trading

• Asian indices are -1.25% to -.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 115.0 +2.5 basis points.
• Asia Pacific Sovereign CDS Index 118.50 +1.5 basis points.
  
• S&P 500 futures +.02%.
• NASDAQ 100 futures +.09%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (NX)/.11
• (CASY)/.50
• (AMSC)/-.24

Economic Releases

• None of note

Upcoming Splits

• (AAON) 3-for-2
• (CSX) 3-for-1
• (ALC) 2-for-1
  

Other Potential Market Movers

• The Fed's Lacker speaking, 3-Month/6-Month T-Bill Auctions, CSFB Software/Internet Conference and the (CPA) investor day could also impact trading today.
  

BOTTOM LINE: Asian indices are lower, weighed down by real estate and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the week.