Weekly Scoreboard*

Indices

• S&P 500 1,268.45 -.24%
  
• DJIA 11.934.58 -.58%
  
• NASDAQ 2,652.89 +1.39%
  
• Russell 2000 797.79 +2.05%
  
• Wilshire 5000 13,306.43 +.14%
  
• Russell 1000 Growth 583.25 +.32%
  
• Russell 1000 Value 645.91 -.47%
  
• Morgan Stanley Consumer 752.93 -.57%
  
• Morgan Stanley Cyclical 1,038.09 +2.23%
• Morgan Stanley Technology 626.93 +.77%
  
• Transports 5,214.15 +1.08%
  
• Utilities 423.99 -.66%
  
• MSCI Emerging Markets 45.79 -.21%
  
• Lyxor L/S Equity Long Bias Index 1,011.24 -.38%
  
• Lyxor L/S Equity Variable Bias Index 880.09 -.10%
  
• Lyxor L/S Equity Short Bias Index 622.17 -.29%
  

Sentiment/Internals

• NYSE Cumulative A/D Line 123,041 +1.14%
  
• Bloomberg New Highs-Lows Index -222 +57
  
• Bloomberg Crude Oil % Bulls 25.0 -26.47%
  
• CFTC Oil Net Speculative Position 149,067 -10.40%
  
• CFTC Oil Total Open Interest 1,528,927 -3.53%
  
• Total Put/Call 1.05 -11.76%
  
• OEX Put/Call 1.39 +17.80%
  
• ISE Sentiment 97.0 +3.19%
  
• NYSE Arms 2.25 +164.70%
  
• Volatility(VIX) 21.10 -3.43%
• G7 Currency Volatility (VXY) 11.48 -.09%
  
• Smart Money Flow Index 10,169.72 +1.30%
  
• Money Mkt Mutual Fund Assets $2.699 Trillion -.30%
  
• AAII % Bulls 37.46 +29.17%
  
• AAII % Bears 35.74 -16.40%

Futures Spot Prices

• CRB Index 329.89 -1.66%
  
• Crude Oil 91.16 -2.28%
  
• Reformulated Gasoline 277.66 -5.75%
  
• Natural Gas 4.23 -2.42%
  
• Heating Oil 275.03 -7.87%
  
• Gold 1,500.90 -2.53%
  
• Bloomberg Base Metals 246.27 -.51%
  
• Copper 411.55 -.05%
  
• US No. 1 Heavy Melt Scrap Steel 404.58 USD/Ton +.31%
  
• China Hot Rolled Domestic Steel Sheet 4,761 Yuan/Ton -1.16%
  
• UBS-Bloomberg Agriculture 1,625.42 -1.49%
  

Economy

• ECRI Weekly Leading Economic Index Growth Rate 2.9% -80 basis points
  
• S&P 500 EPS Estimates 1 Year Mean 95.99 unch.
  
• Citi US Economic Surprise Index -97.90 +4.0 points
  
• Fed Fund Futures imply 29.9% chance of no change, 70.1% chance of 25 basis point cut on 8/9
• US Dollar Index 75.58 +.80%
  
• Yield Curve 253.0 -4 basis points
  
• 10-Year US Treasury Yield 2.86% -8 basis points
  
• Federal Reserve's Balance Sheet $2.841 Trillion +1.04%
  
• U.S. Sovereign Debt Credit Default Swap 53.53 +4.14%
• Illinois Municipal Debt Credit Default Swap 203.0 +2.89%
  
• Western Europe Sovereign Debt Credit Default Swap Index 235.83 +4.97%
• Emerging Markets Sovereign Debt CDS Index 188.92 +12.41%
• Saudi Sovereign Debt Credit Default Swap 97.34 +3.01%
• Iraqi 2028 Government Bonds 90.59 -1.37%
• 10-Year TIPS Spread 2.20% +3 basis points
  
• TED Spread 24.0 +3 basis points
  
• N. America Investment Grade Credit Default Swap Index 100.03 +.44%
  
• Euro Financial Sector Credit Default Swap Index 130.16 +12.22%
  
• Emerging Markets Credit Default Swap Index 234.76 +1.82%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 202.0 -1 basis point
  
• M1 Money Supply $1.935 Trillion -.21%
  
• Business Loans 647.30 -.32%
  
• 4-Week Moving Average of Jobless Claims 426,300 +.1%
  
• Continuing Claims Unemployment Rate 2.9% unch.
  
• Average 30-Year Mortgage Rate 4.50% unch.
  
• Weekly Mortgage Applications 549.90 -5.94%
  
• Bloomberg Consumer Comfort -44.9 -.9 point
  
• Weekly Retail Sales +3.90% +20 basis points
  
• Nationwide Gas $3.60/gallon -.08/gallon
  
• U.S. Cooling Demand Next 7 Days 17.0% above normal
• Baltic Dry Index 1,424 +.07%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 40.0 +2.56%
  
• Rail Freight Carloads 237,682 +.11%
  

Best Performing Style

• Small-Cap Growth +2.89%

Worst Performing Style

• Large-Cap Value -.47%

Leading Sectors

• Coal +3.55%
• Networking +2.75%
  
• Alt Energy +2.22%
• HMOs +2.13%
• Gaming +1.76%

Lagging Sectors

• Energy -1.30%
• Tobacco -1.39%
• Banks -2.38%
  
• I-Banks -2.48%
  
• Oil Tankers -4.63%

Weekly High-Volume Stock Gainers (14)

• TOBC, AVAV, USAP, PMC, SUG, RBN, SCS, AREX, ANEN, RHT, BIIB, CBOU, BAH and PRMW
  

Weekly High-Volume Stock Losers (5)

• PSEC, EXL, GEVO, THS and CPTS
  

Weekly Charts
ETFs

• High-Volume Gainers
• High-Volume Losers

Stocks

• High-Volume Gainers
• High-Volume Losers
  

*5-Day Change

Stocks Falling into Final Hour on Rising Eurozone Debt Angst, Tech Sector Earnings, Global Growth Worries, Emerging Markets Inflation Fears

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Almost Every Sector Declining
  
• Volume: About Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 21.05 +9.12%
  
• ISE Sentiment Index 97.0 +11.0%
  
• Total Put/Call 1.08 +4.95%
  
• NYSE Arms 2.16 +58.80%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 100.03 +.05%
  
• European Financial Sector CDS Index 130.67 +5.38%
  
• Western Europe Sovereign Debt CDS Index 235.83 +4.43%
  
• Emerging Market CDS Index 234.35 +1.36%
  
• 2-Year Swap Spread 29.0 +1 bp
  
• TED Spread 24.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .00% -1 bp
  
• Yield Curve 253.0 -4 bps
  
• China Import Iron Ore Spot $168.70/Metric Tonne -1.29%
  
• Citi US Economic Surprise Index -97.90 +1.0 point
  
• 10-Year TIPS Spread 2.20% unch.
  

Overseas Futures:

• Nikkei Futures: Indicating -60 open in Japan
• DAX Futures: Indicating +19 open in Germany

Portfolio:

• Slightly Lower: On losses in my Retail, Biotech and Tech longs
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short
  
• Market Exposure: Moved to 50% Net Long

BOTTOM LINE: Today's overall market action is very bearish as the S&P 500 trades back down to its 200-day moving average on rising eurozone debt angst, global growth concerns, emerging market inflation fears, US debt ceiling worries and technical selling. On the positive side, Education, Ag, REIT and Restaurant shares are relatively strong, falling less than -.5%. The UBS-Bloomberg Ag Spot Index is dropping -.50%, oil is falling -.7%, lumber is up +.5%, copper is rising +1.3% and gold is down -1.5%. On the negative side, Airline, Retail, Hospital, Networking, Disk Drive, Computer, Software, Internet, Oil Service and Oil Tanker shares are under significant pressure, falling more than -2.0%. The US price for a gallon of gas is -.01/gallon today to $3.60/gallon. It is up .46/gallon in less than 4 months. China's Iron Ore Spot Index is on the verge of a technical breakdown. The Italy sovereign cds is climbing +3.37% to 203.67 bps, the Belgium sovereign cds is rising +4.53% to 171.50 bps, the Russia sovereign cds is rising +2.62% to 161.50 bps and the Greece sovereign cds is rising +10.55% to 2,184.99 bps. The large gain in the Eurozone Financial Sector CDS Index remains a large negative. As well, the Western Europe Sovereign CDS Index is making another record high. The Emerging Markets Sovereign CDS Index is soaring +10.9% today to 188.92 bps. Finally, the Greece sovereign cds is making another new record high. Analysts' S&P 500 earnings estimates haven't come in at all, which is of concern considering the large slowdown in global growth and stocks' negative reactions to earnings misses. The fact that the S&P 500 is just hovering around its 200-day moving average without bouncing meaningfully is usually a bad indication. Moreover, the fact that eurozone cds are moving meaningfully higher today despite the positive rhetoric regarding the situation coming from eurozone leaders is a large negative. It appears as though investor worries over contagion are intensifying. I expect US stocks to trade mixed-to-lower on rising eurozone debt angst, global growth worries, emerging market inflation fears, technical selling and tech sector weakness.

Today's Headlines

Bloomberg:

• EU Vows to Rescue Greece in Exchange for Papandreou's $111 Billion Savings. European Union leaders vowed to stave off a Greek default as long as Prime Minister George Papandreou pushes through a package of budget cuts next week, pledging to do whatever it takes to stabilize the euro economy. “We have agreed that there will be a new program for Greece,” German Chancellor Angela Merkel told reporters at an EU summit in Brussels today. “This is an important decision that says once again we will do everything to stabilize the euro overall.” Greece’s next hurdle is to shepherd 78 billion euros ($111 billion) of austerity measures through parliament, after yesterday’s endorsement of the program by experts from the European Commission, the European Central Bank and the International Monetary Fund.
• Merkel Jostles With Banks on Greek Rollover. German Finance Ministry officials rebuffed a bid by bondholders for a state guarantee of new Greek securities as Chancellor Angela Merkel’s government jostled with creditors over their share of a second rescue for Greece. German banks and insurers including Deutsche Bank AG (DBK) and Allianz SE (ALV) signaled a willingness to roll over maturing Greek debt if governments offer incentives such as guarantees, said five people with knowledge of the talks. The Finance Ministry sees guarantees as a non-starter because they would undermine the aim of relieving the burden on taxpayers, a government official said. All spoke on condition of anonymity because the talks are ongoing and in private. The clash underscores Merkel’s difficulty in balancing voter interests with those of financial companies before a self- imposed July 3 deadline. They may be rendered irrelevant unless Prime Minister George Papandreou pushes through a package of budget cuts next week, the first hurdle to avert default. “Substantially all the creditors have to participate” in a voluntary debt plan for Greece, Angel Gurria, the secretary- general of the Organization for Economic Cooperation and Development, told Bloomberg Television’s Andrea Catherwood in an interview from Paris today.
• Italian Banks Lead Increase in Financial Credit Risk in Europe. Italian banks led an increase in the cost of insuring European bonds amid concern the European debt crisis may spread just as lenders face scrutiny from regulators over capital levels. Credit-default swaps on the senior debt of Unione di Banche Italiane SCPA (UBI) jumped 48 basis points to 283, according to CMA. Banca Popolare di Milano Scrl climbed 37 basis points to 295 and UniCredit SpA (UCG), whose stock was briefly suspended after breaching limits on intraday swings, rose 21 to 234. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased 4 basis points to 176 and the subordinated index rose 4 to 305, according to JPMorgan Chase & Co. (JPM). The Markit iTraxx SovX Western Europe Index of swaps on 15 governments soared 5 basis points to a record 244. Contracts on the Markit iTraxx Crossover Index of 40 companies with mostly high-yield credit ratings increased 5 basis points to 431. The gauge, which is headed for an eighth weekly increase, is up from about 350 basis points at the beginning of May. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings dropped 0.25 basis point to 115.5.
• Italian Bank Plunge, German Yield Spread Widens on Debt Concern. Italy’s markets watchdog said it will investigate trading in bank shares after the country’s biggest lenders posted their largest decline in two years. Part of the slump was due to automatic stop-loss trades, an official for the regulator said by telephone today. The watchdog hasn’t ruled out market manipulation. UniCredit SpA (UCG), Italy’s biggest bank, and Intesa Sanpaolo SpA (ISP), the second-largest, led lenders lower, falling 5.5 percent and 4.3 percent respectively. Both stocks were briefly suspended after breaching limits on intraday swings. Bank stocks tumbled amid concern the European debt crisis may spread just as lenders face scrutiny from regulators over capital levels. Italian 10-year bonds also fell, increasing the additional yield investors demand to hold the securities over benchmark German bunds to the most since the euro was introduced in 1999. “Contagion fears keep re-emerging as long as credible, lasting solutions in Greece are pending,” said Christian Weber, a Munich-based strategist at UniCredit.
• Euro Weakens Versus Most Major Counterparts on Greece Debt-Crisis Concern. The euro fell versus the majority of its 16 most-traded counterparts amid speculation a Greek austerity plan and a European Union pledge to stabilize the region’s economy won’t resolve its sovereign-debt crisis. “Greece concerns and Italian banks are what the market is focusing on,” said Camilla Sutton, head of currency strategy at Bank of Nova Scotia in Toronto. “Everyone is just reacting to headlines. News from Europe will outweigh any economic data that comes out in the next few weeks.”
• Crude Oil Falls to Four-Month Low in London on IEA Plans to Tap Reserves. Crude oil declined in New York and reached a four-month low in London after the International Energy Agency announced the release of 60 million barrels. Futures in London tumbled 7.5 percent in two days on the IEA’s plan to respond to the drop in Libyan exports by the coordinated action of its members. “The IEA release was a bit of a shock to the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Worries about the economy and the Greek debt crisis had been sending prices lower before the release and are coming back to the fore.” Crude oil for August delivery declined 84 cents, or 0.9 percent, to $90.18 a barrel at 12:19 p.m. on the New York Mercantile Exchange. The August contract is down 3 percent this week. Brent crude oil for August delivery dropped $2.73, or 2.6 percent, to $104.53 a barrel on the London-based ICE Futures Europe exchange.
• Sarkozy Campaign Against Food Price Speculators Moves to Finance Ministers. French President Nicolas Sarkozy’s fight to curb speculation in agricultural commodities, blamed for the “plague” of record food prices, moves to the Group of 20 finance ministers, who may balk at the toughest proposals. France, which holds the G-20 presidency this year, won the backing of agricultural ministers meeting in Paris this week to put commodity market regulation on the agenda of the finance ministers, who meet in September in Washington. The ministers probably won’t agree on “tough” measures, said Shenggen Fan from the International Food Policy Research Institute.
• Former Premier Zhu Rongji Stirs China Property Policy Debate on Price Gain. Former Chinese Premier Zhu Rongji’s recent criticism of the country’s property policy underscores the debate over the extent to which rising real estate prices are benefiting the country as a whole. Zhu, who served as premier from 1998 to 2003, said in a speech at Beijing’s Tsinghua University that a decision to allow local governments to pocket money from land sales contributed to rising property prices and has been like “plundering” from the people. The remarks are spurring discussion in China because they reflect people’s dissatisfaction, said Joseph Cheng, a political-science professor at the City University of Hong Kong. The comments by Zhu reflect a 1994 policy that boosted local government revenue as property prices soared. Discontent over China’s widening income gap and corruption has deepened, contributing to riots and demonstrations in some regions. “We formulated a wrong policy by letting local governments pocket all of the land sale revenue without taking some for the national budget,” Zhu said in April at a 100th anniversary celebration for Tsinghua University, according to a report by the website of Phoenix TV. “The money is like plundering from people and has lifted up land prices so much.”
• Orders for U.S. Durable Goods Increased Greater-Than-Forecast 1.9% in May. Orders for durable goods climbed more than forecast in May, signaling manufacturing may be one of the first areas of the U.S. economy to rebound from a first-half slowdown in growth. Bookings for equipment meant to last at least three years rose 1.9 percent after a 2.7 percent April drop that was smaller than previously reported, data from Commerce Department showed today in Washington.
  

Wall Street Journal:

• China Delays Unveiling Airbus Deal. China's anger with the European Union's emissions-trading scheme for airlines has delayed the revealing of a major Airbus deal and could undermine upcoming deals, according to people familiar with the situation.
• CFTC Scrutinizes Suspicious Oil Trade Ahead of IEA Move.
• Obama, Top Senators to Meet on Budget.
• Cars 2 - Oil Industry Responds to 'Bad Guy' Label.
  

CNBC.com:

• Scenarios: Possible Impact of a Greek Ratings Default. As euro zone officials try to find a solution to the Greek debt crisis, it remains unclear what impact a Greek ratings downgrade to default could have on financial markets. Rating agencies are playing hard ball. They would consider a Greek debt restructuring, a reprofiling and even a voluntary rollover of existing debt holdings when they mature -- currently the most widely-touted solution to the crisis -- as a default.
• IEA Ready to Release More Oil, Show Its Bite: Tanaka. The International Energy Agency is ready to release more oil onto the market if necessary, Nobuo Tanaka, Executive Director of the agency, told CNBC in a first on CNBC interview Friday morning. “We are ready to act at any time and if we have to we will continue,” Tanaka said. He added that the watchdog “sometimes had to bite”.

Business Insider:

• The War in Libya Will Continue. In a small victory for President Barack Obama, a vote to cut funding for the U.S. military intervention in Libya failed in the House of Representatives this afternoon 238-180. Over 50 Republicans crossed the aisle to oppose the bill, which had the support of Speaker of the House John Boehner, and would have limited U.S. resources to non-combat operations like search and rescue.
  
• Here's What Happened At That Big Dinner With Obama And The Hedge Funders.
• Support for Greek Austerity Crumbling, As ANOTHER Ruling Party Politician Says He May Vote Against A Deal.
  

Zero Hedge:

• Why The Eurozone And The Euro Are Both Doomed.

Seeking Alpha:

• Credit Default Swaps for Doomers, Politicians and the Media.

TheStreet.com:

• Hedge Funds Adapt to New Clients.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Friday 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).

Reuters:

• Exclusive - Banks Discuss New Greek Rollover Plan - Source. European banks and insurers moved closer on Friday to a voluntary rollover of their Greek government debt holdings, hoping to get around rating agencies' reservations and avoid a Greek government default.
• Investors Wary of PC Sales After Micron Results. Micron executives' comments late on Thursday about limited visibility of consumer PC demand and higher-than-ideal inventories of DRAM chips sparked a Friday sell-off in stocks linked to personal computers.
• European Shares Hit Longest Losing Run Since 1998.
  

Financial Times Deutschland:

• Economic growth in the euro region excluding Germany and France shrank in recent weeks amid rising oil prices, persistent debt and effects from the Japanese earth quake, citing surveys of euro-area purchasing managers.

Shanghai Daily:

• Developer Told to Drop Luxury Villa Prices. THE developer of Top Forest Villa, a luxury real estate project in the Sheshan area in Shanghai that has captured newspaper headlines over the past few days due to its expensiveness, has been told to lower prices and register with the local industry watchdog.

China Finance 40 Forum:

• China may raise interest rates at the end of June or early July, Zhang Ming, a researcher with the Chinese Academy of Social Sciences, wrote in a commentary. Zhang also warned that China's foreign exchange reserves may suffer from significant losses from dollar depreciation and global inflation.

Bear Radar

Style Underperformer:

• Large-Cap Growth (-1.31%)

Sector Underperformers:

• 1) Disk Drives -3.51% 2) Airlines -2.61% 3) Computer -2.31%

Stocks Falling on Unusual Volume:

• F, HOC, FTO, BCS, DLLR, ORCL, STO, AEGR, SFSF, FINL, ORCL, CHTR, VRA, VOCS, SNDK, SHPGY, PRAA, RIMM, ICLR, BBBY, AMGN, IBKR, LSTZA, CTRP, ESRX, GOOG, AIXG, WMB, SOA, ALR, UAL and STRI
  

Stocks With Unusual Put Option Activity:

• 1) AMGN 2) EMC 3) EWT 4) HRB 5) JASO
  

Stocks With Most Negative News Mentions:

• 1) BSX 2) CPRT 3) SBAC 4) X 5) MU
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume
  

Bull Radar

Style Outperformer:

• Mid-Cap Growth (-.49%)

Sector Outperformers:

• 1) Utilities +.56% 2) REITs +.08% 3) Computer Services -.21%

Stocks Rising on Unusual Volume:

• HANS, CPB, CNP, CEG, SWC, HMC, BBBB, ALE, SNP, CBOU, TIBX, ASMI, GTIV, SREV, MSTR, FMCN, BIDU, SINA, FTNT, ABCO, CISG, SUG, NMI, ACN and CHL
  

Stocks With Unusual Call Option Activity:

• 1) IP 2) BBBB 3) SYMC 4) ODP 5) UAL
  

Stocks With Most Positive News Mentions:

• 1) CEG 2) ALGT 3) SUG 4) THS 5) ABT
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume
  

Friday Watch

Evening Headlines

Bloomberg:

• EU Vows to Rescue Greece in Exchange for Cuts. European Union leaders pledged to stabilize the euro-area economy, vowing to stave off a Greek default as long as Prime Minister George Papandreou pushes through a package of budget cuts next week. “This is not only a green light but also a positive sign for the future of Greece,” Papandreou told reporters after the first session of an EU summit in Brussels late yesterday. Greece’s next hurdle is to shepherd 78 billion euros ($111 billion) of austerity measures through parliament, after yesterday’s endorsement of the program by experts from the European Commission, European Central Bank and International Monetary Fund.
• Euro Set for Third Weekly Drop Versus Dollar as EU Discusses Greece Rescue. The euro was set for a third weekly decline against the dollar, the longest streak in four months, before European Union leaders conclude a summit in Brussels today on financing needs for debt-saddled Greece. “On a six-month view I’m looking for much lower levels in the euro,” said Michael McCarthy, the Sydney-based chief market strategist at CMC Markets. “On the Greek situation, one of the problems for markets is that the solution is going to take months and years to come through.”
  
• China Inflation Will Be 'Under Control': Wen. Premier Wen Jiabao said that China’s efforts to stem inflation have worked and that the pace of consumer-price increases will slow, an assessment that contrasts with some economists advocating further steps. “There is concern as to whether China can rein in inflation and sustain its rapid development -- my answer is an emphatic yes,” Wen wrote in an opinion piece in the Financial Times newspaper. China has paused for 11 weeks in raising interest rates, the longest gap since increases began in October, even as analysts predict inflation will surpass 6 percent for the first time since 2008 in coming months. With one-year bank deposit rates more than 2 percentage points below the pace of consumer- price gains, inflation continues to erode household savings. Wen pointed to evidence of a moderation in lending and money supply, an “oversupply of main industrial products” and “abundant” grain. The National Development and Reform Commission said this week that inflation may accelerate this month and “remain elevated for some months.” The China Securities Journal said in an unsigned front-page editorial this week that consumer prices may jump by more than 6 percent this month after climbing 5.5 percent in May, adding pressure for the People’s Bank of China to increase rates again. The central bank has raised rates four times starting in October and boosted banks’ reserve requirements nine times since November to a record 21.5 percent for the biggest lenders.
• S&P Assigns CME Group(CME) Negative Outlook on Competitive Threats. Standard & Poor’s affirmed its rating of CME Group Inc. (CME), the world’s largest futures exchange, and said the outlook on the company and its debt was negative after assessing competitive risks from NYSE Euronext. (NYX)
• Williams(WMB) Offers $4.9 Billion for Southern Union(SUG). Williams Cos. offered to buy pipeline company Southern Union Co. (SUG) for $4.86 billion in cash, topping a bid by Energy Transfer Equity LP. (ETE) The Williams offer values Southern Union at $39 a share, according to a statement today from the Tulsa, Oklahoma-based company. That’s $6 a share, or about $750 million, more than the June 16 sale price announced by Southern Union and Energy Transfer.
• Emerging-market equity funds reported a third straight week of outflows on concern the global economic recovery will slow amid Europe's debt crisis, according to Citigroup Inc. Funds investing in developing-nation shares saw withdrawals of about $343 million in the week ended June 22, Citigroup analysts led by Markus Rosgen wrote in a report, citing data compiled by EPFR Global. The MSCI Emerging Markets Index has dropped 3.7% this year.
• Russia May Face Debt Crisis Like Greece. Russia may face a debt crisis similar to the one gripping Greece by 2030 unless the government reduces spending, said Sergei Ulatov, the resident World Bank economist in Moscow. “By 2030 the debt level would be unsustainable like in Greece” if nothing changes, Ulatov said in an interview during the Russia and CIS Capital Markets Forum organized by Euromoney in London today. “Right now, we are mostly helped by oil prices and not by a very prudent macroeconomic policy.” Finance Minister Alexei Kudrin this week urged the government to cap annual spending increases at 4 percent to stabilize public finances and avoid state “paternalism” in running the economy.
• India Said to Plan Raising Fuel Cost. India may raise fuel prices when a ministers’ panel meets today, seeking to trim fuel subsidies that threatens to exceed the government’s forecast of $5.3 billion this year, an oil ministry official said. An increase in fuel costs may spur inflation in Asia’s second-largest energy consumer, where diesel and cooking-fuel prices are capped to protect livelihoods of three-quarters of the population the World Bank says survives on less than $2 a day. Prime Minister Manmohan Singh’s government is raising prices to keep its pledge of narrowing the budget deficit.

Wall Street Journal:

• Tax Dispute Stalls Debt Talks. The drive for a major deficit-reduction deal entered a new phase Thursday when Republican negotiators pulled out of bipartisan talks, leaving it to President Barack Obama and House Speaker John Boehner to resolve the toughest issues. House Majority Leader Eric Cantor (R., Va.) said he was backing out of the talks for now because the group had reached an impasse over the question of whether tax increases should be included in the deal.
  
• Hacker Group Posts Arizona Police Documents. A group of hackers that has claimed attacks on websites run by the U.S. Senate and the Central Intelligence Agency posted a cache of documents from Arizona police, calling it a protest against a controversial state law. On Thursday, Lulz Security posted files labeled as training manuals, emails, intelligence documents and other material that it says it poached from the Arizona Department of Public Safety. LulzSec, as the group commonly refers to itself, said the posting of the documents was a protest of Arizona's SB1070, controversial state legislation that critics say is anti-immigration.
• Nader Kindles Fires of Revolt. Ralph Nader, the scourge of American business and onetime presidential candidate, has found his next corporate demon: Cisco Systems Inc.(CSCO) Mr. Nader isn't calling for a router recall or claiming the company's networks are unsafe at any speed. Instead, he wants the tech company to pay a bigger dividend to boost its shares.
• Providence Equity Nears Deal to Buy Blackboard(BBBB). Buyout firm Providence Equity Partners is in exclusive talks to buy educational-software company Blackboard Inc., and a deal could be announced as early as next week, people familiar with the matter said.
• Of Wealth and Incomes. Why Americans are so unhappy with this economic recovery. The Federal Reserve is ending its second round of quantitative easing this month, and Chairman Ben Bernanke was asked recently if he thought the $600 billion in bond purchases had worked. Yes, he replied, because the stock market had risen sharply in value. Then this week Mr. Bernanke was asked why the economy was lagging. "We don't have a precise read on why this slower pace of growth is persisting," he said, in a rare and revealing case of modesty. Maybe we can shed a little light, and in a way that also explains why so many Americans feel so unhappy about this economic recovery. The Fed can create new dollars, but it can't determine where those dollars will flow in a global economy that still runs mostly on a dollar standard. And with QE2 piling on near-zero rates, dollars flooded into assets other than stocks. In particular, they flowed into emerging markets like China and Brazil and into commodities nearly across the board. The nearby chart also shows the trend in oil prices as one example of the commodity price move.
• White House Oil Epiphany. Supposedly a little bit of oil doesn't matter, except when it does. It wasn't long ago that the Obama Administration was trying to drive up the price of fossil fuels to reduce carbon emissions, promote "green jobs" and save the planet from global warming.
  

MarketWatch:

• Fitch: Japan Fiscal Talks Key to Ratings Move. Japan's political landscape has descended further into partisan infighting which is hindering the fiscal consolidation the country needs, a senior official at Fitch Ratings said Friday. Andrew Colquhoun, head of Asia Pacific sovereign ratings, said the partisan bickering has worsened since Fitch's most recent move on Japan affirming its AA minus local currency rating, with particular uncertainty over the future of Prime Minister Kan. "It does move that quickly it seems," Colquhoun told Dow Jones Newswires in Sydney. Fitch has a negative outlook on Japan and there's a risk it could be forced to revisit the rating, with the outcome of talks on fiscal reforms key, Colquhoun said.

CNBC:

• Oracle(ORCL) Earnings Top Forecasts as Software Demand Rises. Oracle topped forecasts for both earnings and revenue as sales of business software came in at the high end of expectations. But the company said revenue from computer servers and analysts worried that the company's technology spending is slowing down. The stock fell in after-hours trading.

Business Insider:

• Tonight: Hedge Funders Are Paying $36,000 to Have Dinner With Obama. President Obama's Wall Street offensive continues tonight, with a $35,800 per guest dinner at Upper East Side restaurant Daniel. He'll also be attending two other DNC events, according to Ben White at Morning Money.
  

IBD:

• Gear Maker Veeco Instruments(VECO) Profits On LED Expansion.

CNNMoney:

• World Bank Hires Ex-Lehman Risk Manager. In the echoes-of-2008 department, the World Bank just hired a former Lehman Brothers risk manager to run its finances. The bank, which lends money to developing countries in a bid to curb poverty, said Madelyn Antoncic will "be responsible for maintaining the World Bank's high standing in financial markets." It is tempting here to make a joke about Antoncic's qualifications for that task. After all, you could hardly have a lower standing in financial markets than Lehman, whose September 2008 collapse nearly brought down the world economy. Antoncic was for a spell the chief risk manager at Lehman, reporting to the peerless perfect-storm skipper Dick Fuld. For whatever reason the firm's success in risk management was, let's say, less than total.

Index Universe:

• Forget Greece, Watch Out For The Banks. The mainstream press is focusing on Greek sovereign debt default. But the tense standoff over bank bonds may matter more.

Majority Leader.gov:

• Congressman Cantor: House to Consider Balanced Budget Amendment. Congressman Eric Cantor (VA-07) today issued the following statement regarding House consideration of a balanced budget amendment, H.J. Res. 1, sponsored by Congressman Bob Goodlatte: “We are being asked by the Obama Administration to approve a debt limit increase. While President Obama inherited a bad economy, his overspending and failure to enact pro-growth policies have made it worse and now our national debt is currently more than $14 trillion. House Republicans have made clear that we will not agree to raise the debt limit without real spending cuts and binding budget process reforms to ensure that we don’t continue to max out the credit card. One option to ensure that we begin to get our fiscal house in order is a balanced budget amendment to the Constitution, and I expect to schedule such a measure for the House to consider during the week of July 25th. I have no doubt that my Republican colleagues will overwhelmingly support this common sense measure and I urge Democrats to as well in order to get our fiscal house in order."

Reuters:

• Analysis: Christmas Gloom for China Toymakers as Orders Shrivel. China may be the world's toy-making capital, but for Cheung Tak Ching the Christmas season is shaping up to be lean and joyless. Sitting in a showroom amid an array of bright smiling toys he makes for Walt Disney Co (DIS.N) and Mattel Inc (MAT.O), the 40-year industry veteran bemoans a 5-10 percent fall in pre-orders. After wrenching change that saw hundreds of toy factories in China shut down in the 2008 financial crisis, hopes were high for a rebound. But Europe's debt crisis and a sluggish U.S. economic recovery are curbing Western demand, while cost and Labor pressures within China are mounting. The attrition has seen net profit margins of Hong Kong toymakers -- which run a sizeable share of toy factories in southern China's Guangdong province and around the Pearl River Delta -- shrink to 3-5 percent from more than 10 percent in the 1990s, said Cheung, who also heads Hong Kong's toy manufacturers association. The gradual appreciation of China's currency, which has risen almost 30 percent against the U.S. dollar since it was revalued in 2005, has also hit hard. Cheung estimates toymaker profit margins will be shaved by 1 percentage point for every 2 percent rise in the yuan against the U.S. dollar. Higher wage bills and a 20 percent rise in materials and input costs for toymakers have already translated into average product prices rising about 10-15 percent this year.
• JPMorgan(JPM) Slashes Oil Price Forecast After IEA Release. J.P. Morgan slashed its forecasts for crude oil prices in the third quarter after the International Energy Agency on Thursday announced the release of 60 million barrels of oil over the next month to shore up the economic recovery. The bank now foresees the price of Brent crude to average $100 a barrel in the third quarter, down from $130, it said in a note to clients late on Thursday. "If pursued rigorously, the 60 million-barrel sale over 30 days is a sufficient volume to cause a very substantial drop in the oil price," said J.P. Morgan analysts led by Lawrence Eagles. "IEA countries have replaced OPEC as the supplier of the marginal barrel to the market, with significant pricing power conferred to the U.S. by virtue of its large contribution to the release pool."
  
• US Fed Balance Sheet Hits Another Record Size. The U.S. Federal Reserve's balance sheet expanded to a record size in the latest week, as the central bank bought more bonds in an effort to support the economy, Fed data released on Thursday showed. The purchase was part of its $600 billion program, dubbed QE2, aimed at stimulating investment and economic activity. The balance sheet -- a broad gauge of Fed lending to the financial system -- swelled to $2.841 trillion in the week ended June 22 from $2.811 trillion the prior week.

Telegraph:

• Greece's Olympic Dream Has Turned Into a Nightmare for Village Residents. The vast glass edifice was once the gleaming entrance where the world's athletes signed in for the 2004 Olympics but it now stands empty, stripped of all assets including copper piping, electricity points and marble tiles. "I don't know why we're here now," said one guard smiling behind his Ray-Bans. "Thieves took everything of value, I guess we're just here to stop the squatters moving in." Seven years after the outpouring of national pride and delight as Athens showcased its new public works to the world, the Olympic Village, 12 miles north west of the capital in the shadow of mount Parnitha, is now a symbol of national shame.

Handelsblatt:

• Germany should put off its bank levy for three years to encourage lenders to agree voluntarily to Greek debt cuts, citing a state finance minister. The bank levy, intended for bailing out banks in crisis, may generate about $1.4 billion a year, citing Hartmut Moellring, finance minister of Lower Saxony. Lifting it temporarily would make it easier for banks to agree to reduce Greek debt, he said.

The Times of India:

• Food Inflation Accelerates in Mid-June, Protein Items Maintain Pressure. NEW DELHI: Food inflation accelerated in the week ending June 11 on the back of costly fish, milk, chicken, egg and other items keeping up the pressure, fueling expectations that the Reserve Bank of India (RBI) will maintain its tight monetary policy in the months ahead. Data released by the commerce and industry ministry showed food inflation quickened to an annual 9.13%, in the week to June 11, rising from the previous week's 8.96%. The index for food articles group rose 1.5% to 191.9 from 188.4 for the previous week due to higher prices of fish (5%), milk (4%), tea and chicken (3% each), jowar and egg (2% each) and fruit and vegetables (1% each). Food inflation has remained persistently high for the past several months after showing some signs of moderation. Food articles account for 14% of the wholesale price index. General inflation now stands at 9.06% and economists say the country may face a period of double-digit inflation given the sharp revisions in the data for February, March and April. Reserve Bank of India deputy governor Subir Gokarn said food inflation remained uncomfortably high.

Xinhua:

• The China Banking Regulatory Commission has asked banks to cut lendings to property developers as part of measures to control risk, citing Liao Min, head of the banking regulator's Shanghai branch. Risks for property loans are still "controllable," Liao said.
• The number of people in the Communist Party of China exceeded 80 million, citing Wang Qinfeng, a deputy head of the organization department at the Party's Central Committee.
  

China Daily:

• Poor "social management" was one of the major reasons behind the unrest in a suburb of Guangzhou, citing Zhang Guangning, party chief of the capital of southern Guangdong province. Social management has lagged behind economic growth and that led to the clash in Zengcheng city, Zhang said.
• China aims to prospect for and find 6.5 billion tons of "geological" crude oil reserves and 3.5 trillion cubic meters of natural gas reserves in the five years through 2015, according to the Ministry of Land and Resource's plan posted to the People's Daily newspaper today. The nation aims to find 300 billion tons of coal reserves and 10 billion tons of iron ore reserves during the five-year period, the plan said. It also aims to find 15 million tons of copper reserves and 1,600 tons of gold reserves in the period.
• China may continue to tighten its policies in the second half because consumer prices may surge if the policies were loosened too early, citing Chen Dongqi, a deputy head of the National Development and Reform Commission's macroeconomic research institute. The country could expand the yuan's trading band to curb imported inflation, citing Wang Songqi, a researcher with the Chinese Academy of Social Sciences.
  

Evening Recommendations
Citigroup:

• Reiterated Buy on (K), boosted estimates, raised target to $62.

Night Trading

• Asian equity indices are -.25% to +1.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 118.50 -.5 basis point.
  
• Asia Pacific Sovereign CDS Index 127.0 +2.0 basis points.
  
• S&P 500 futures +.48%.
  
• NASDAQ 100 futures +.56%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note
  

Economic Releases
8:30 am EST

• Durable Goods Orders for May are estimated to rise +1.5% versus a -3.6% decline in April.
• Durables Ex Transports for May are estimated to rise +.9% versus a -1.5% decline in April.
• Cap Goods Orders Non-Defense Ex Air for May are estimated to rise +1.0% versus a -2.6% decline in April.
• Final 1Q GDP is estimated to rise +1.9% versus a prior estimate of a +1.8% gain.
• Final 1Q Personal Consumption is estimated to rise +2.2% versus a prior estimate of a +2.2% gain.
• Final 1Q GDP Price Index is estimated to rise +1.9% versus a prior estimate of a +1.9% gain.
• Final 1Q Core PCE is estimated to rise +1.4% versus a prior estimate of a +1.4% gain.
  

Upcoming Splits

• (IIVI) 2-for-1
• (FLO) 3-for-2
• (CERN) 2-for-1
• (SIX) 2-for-1

Other Potential Market Movers

• None of note
  

BOTTOM LINE: Asian indices are mostly higher, boosted by consumer discretionary and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.