Stocks Falling into Final Hour on Rising Global Growth Fears, Rising Asian/Eurozone Debt Angst, Technical Selling, Commodity/Tech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 19.61 +3.76%
• Euro/Yen Carry Return Index 133.65 -.17%
• Emerging Markets Currency Volatility(VXY) 11.79 +.68%
• S&P 500 Implied Correlation 60.11 +4.20%

• ISE Sentiment Index 70.0 -10.26%

• Total Put/Call .99 -14.66%

• NYSE Arms 1.19 +29.39% 

Credit Investor Angst:

• North American Investment Grade CDS Index 96.99 +3.18%

• European Financial Sector CDS Index 190.19 +5.39%

• Western Europe Sovereign Debt CDS Index 95.50 +.53%

• Emerging Market CDS Index 369.30 -2.1%

• 2-Year Swap Spread 19.5 -.5 bp

• TED Spread 23.5 -.25 bp

• 3-Month EUR/USD Cross-Currency Basis Swap -12.75 +.25 bp

Economic Gauges:

• 3-Month T-Bill Yield .04% unch.

• Yield Curve 217.0 +1 bp

• China Import Iron Ore Spot $116.60/Metric Tonne -1.69%

• Citi US Economic Surprise Index -8.10 +3.9 points
• Citi Emerging Markets Economic Surprise Index -38.60 +5.1 points 

• 10-Year TIPS Spread 1.92 -2 bps

Overseas Futures:

• Nikkei Futures: Indicating +160 open in Japan

• DAX Futures: Indicating +46 open in Germany

Portfolio: 

• Higher: On gains in my index hedges and emerging markets shorts
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short
• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg: 

• Snowden Fleeing Damaging to U.S.-China Relations, Carney Says. Hong Kong’s decision to let fugitive Edward Snowden leave for Moscow “unquestionably” damages U.S. relations with China, President Barack Obama’s spokesman said. The U.S. government has expressed its “frustration and disappointment with Hong Kong and China” for letting Snowden flee, White House press secretary Jay Carney said today. 
• Berlusconi Convicted by Milan Court in Sex-With-Minor Case. Silvio Berlusconi, the 76-year-old billionaire and former Italian prime minister, was found guilty by a Milan court of paying a minor for sex and abusing the power of his office. He was sentenced to seven years in jail. Berlusconi was also given a lifetime ban from public office, Judge Giulia Turri said in the Milan courtroom after a two-year trial. The ruling doesn’t become binding until the end of the appeals process, which could take months or years, and even if the sentence were enforced, it may involve house arrest due to his age. Turri urged prosecutors to seek perjury charges against more than 30 witnesses in the case.
• European Stocks Drop on China Concern; Erste Group Falls. European stocks fell for a fifth day, erasing their gains for the year, as Goldman Sachs Group Inc. cut China’s growth forecast amid concern banks in the world’s second-largest economy face a cash crunch. Erste Group Bank AG tumbled the most in 17 months as it planned a rights offer to repay state aid. Kazakhmys Plc plunged to a four-year low as it backed a bid to take Eurasian Natural Resources Corp. private. Kabel Deutschland Holding AG rose 1.7 percent after Vodafone Group Plc offered to buy the German cable company for 7.7 billion euros ($10.1 billion). The Stoxx Europe 600 Index declined 1.7 percent to 275.66 at the close in London. The equity benchmark has entered a so-called correction, having slumped 11 percent since May 22.
• Company Credit Swaps in U.S. Rise to Highest Level Since Dec. 5. A gauge of U.S. corporate credit risk rose for a fourth day to a more than six-month high as Chinese equities entered a bear market on concern that a cash crunch will injure the economy. The Markit CDX North American Investment Grade Index, a credit-default swaps benchmark that investors use to hedge against losses or to speculate on creditworthiness, increased 5.7 basis points to a mid-price of 99.7 basis points at 8:28 a.m. in New York, according to prices compiled by Bloomberg. Earlier the index reached 99.8 basis points, the highest intraday level since Dec. 5.
• Copper Declines as Inventories Advance to 10-Year High. Copper fell to the lowest in almost three years in New York on concern that slowing growth in China will curb demand as inventories reach a 10-year high. Aluminum extended the longest slump since at least 1987. China’s central bank said there’s a reasonable amount of liquidity in the financial system and urged banks to control risks from credit expansion, signaling no relief from a cash squeeze. Copper stockpiles monitored by the London Metal Exchange climbed to the highest since June 2003 and Freeport-McMoran Copper & Gold Inc. (FCX)’s Grasberg mine in Indonesia is resuming output after a tunnel collapsed on May 14. “China’s credit crunch is exacerbating a slowdown there that was already going on,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “That’s going to slow world demand for copper. And inventories are growing.” Copper futures for September delivery fell 2.3 percent to settle at $3.0285 a pound at 1:12 p.m. on the Comex in New York after touching $2.9935, the lowest for a most-active contract since July 20, 2010. Trading volume in New York was 38 percent higher than the average for the past 100 days at this time, according to data compiled by Bloomberg.
• Kocherlakota Says Fed Policy Guidance Is ‘Insufficient’. Federal Reserve Bank of Minneapolis President Narayana Kocherlakota, who doesn’t vote on monetary policy this year, said the central bank needs to set clearer guideposts for the outlook for record stimulus and commit to press on with monthly bond purchases at least until unemployment falls below 7 percent. “The committee’s communications have provided insufficient detail about how its policy strategy will play out when the recovery is more advanced,” Kocherlakota said in a statement today released by the Minneapolis Fed.
• Fed’s Fisher Says He Backs Tapering QE With Economic Improvement. Federal Reserve Bank of Dallas President Richard Fisher, who doesn’t vote on monetary policy this year, said he favors scaling back the Fed’s monthly bond-buying if the economy makes the kind of progress officials are currently expecting. “I agree fully with the chairman that we should dial back on the stimulus” should “we achieve what the 19 of us forecast,” Fisher said today in a speech in London. The central bank is currently purchasing $85 billion in bonds every month. 
• U.S. FTC Said to Open Probe of Oil Price-Fixing After EU. The U.S. Federal Trade Commission opened a formal investigation into how prices of crude oil and petroleum-derived products are set, mirroring a European Union inquiry, two people familiar with the matter said. The investigation, now in a preliminary stage, will probably become a broad probe similar to the multi-jurisdictional inquiry into bank manipulation of the London interbank offered rate, or Libor, the people said. FTC investigators are reviewing the progress their European counterparts have made, said the people, who asked not to be named because the matter is confidential.
• Options on Debt Derivatives Nearing $100 Billion: Credit Markets. The market for options on credit derivatives indexes has surged more than 40 percent in the past month to $98.8 billion as investors search farther afield for cheap hedges protecting against a sell-off in the bond markets. The contracts, which give investors the right but not the obligation to buy or sell indexes of credit-default swaps at a certain price, have doubled from $48.7 billion a year ago, Depository Trust & Clearing Corp. data show. That compares with a 17 percent drop in the amount covered by swaps benchmarks on U.S. and European investment-grade debt and a 4 percent decline for all credit derivative products in the year through June 14.

MarketWatch:

• Emerging-market rout sparks fears of full-fledged crisis. (graph)
• Gold, copper drop as China worries mount. Copper falls to lowest level in nearly 3 years. Gold futures were under renewed pressure Monday, while copper dropped to its lowest level in nearly three years after tightening credit conditions in China triggered a global equity selloff on fears about Chinese economic growth.

CNBC:

• Mark Mobius: China's Problems as Big as US Subprime. While China's housing market problems are similar in scale to those faced during the U.S. subprime mortgage bubble and its banks are rife with bad loans, it won't lead to another Lehman-style crash, Franklin Templeton's Mark Mobius told CNBC on Monday. Mobius manages some $53 billion in emerging market funds and has more money invested in China than in any other market.
• Earnings Season Already Looks Like a Train Wreck. Employers Test Plans That Cap Health Costs. Hoping to cut medical costs, employers are experimenting with a new way to pay for health care, telling workers that their company health plan will pay only a fixed amount for a given test or procedure, like a CT scan or knee replacement. Employees who choose a doctor or hospital that charges more are responsible for paying the additional amount themselves.

Zero Hedge:

• China Crashing: Shanghai Composite Tumbles Most Since 2009. (graphs)
• Bank Of China Declares Moratorium On Transfers, Online Banking; Counters Inoperable.
• European Stocks Plunge To Seven-Month Lows; Banks In Bear Market. (graphs)
• Market's 'Hall Pass' Is Gone: "Bad News Is No Longer Good News".
• Where Are We Now? - A World View.

Business Insider: 

• Every Student And Parent Should See These Charts On Earnings By Major.
• Glenn Hubbard Explains The Doomsday Scenario That America Will See In 20 Years If There's No Change In Spending.
• Dallas Fed Manufacturing Survey Surges.
• The Brazilian Bond Market Massacre In One Huge Slide.

Marc to Market: 

• Emerging Market Preview in the Week Ahead.

Reuters: 

• TREASURIES-U.S. 30-year bond prices turn positive.
• Dalio's Bridgewater big loser in market sell-off -sources. A $70 billion portfolio managed by hedge fund titan Ray Dalio's Bridgewater Associates and widely held by many pension funds is emerging as a big loser in the recent sell-off by markets, according to two people with knowledge of the numbers. The Bridgewater All Weather Fund is down roughly 6 percent through this month after losing 5 percent in May, the people said. For the year, the All Weather fund is down 8 percent. 
• Hospital chain Tenet(THC) to buy Vanguard Health(VHS) for $1.73 bln.
• EMERGING MARKETS-Latam stocks drop in emerging markets sell-off.

Telegraph: 

• Green rules will leave Europe importing even dirtier fuel from elsewhere, Essar Energy warns. Draconian green regulations risk putting European refineries out of business, leaving the continent importing more fuels from dirtier plants elsewhere in the world, Essar Energy has warned.

Handelsblatt:

• CDU's Willsch Recommends Greek Euro Exit. Euro exit is Greece's only chance to recover via devaluation of a new currency and structural reforms, citing Klaus-Peter Willsch, a lawmaker from German Chancellor Angela Merkel's Christian Democratic Union party and budget-committee member, as saying. After successful reforms Greece could reapply for euro membership, Willsch said. Willsch skeptical Greek Prime Minister Antonis Samaras' government can reach EU, IMF targets after failed privatization of natural gas company Depa.

Xinhua:

• Shanghai will continue to implement the nation's property control policies, citing Pang Yuan, vice director of the Shanghai housing bureau.

Bear Radar

Style Underperformer:

• Mid-Cap Value -1.86%

Sector Underperformers:

• 1) Education -6.71% 2) Gaming -4.89% 3) Steel -4.20%

Stocks Falling on Unusual Volume:

• SZYM, EVC, EROC, NIHD, BOFI, CTCM, PBR, CIT, STO, LVLT, RLD, THO, DLX, AGN, ZTS, PHT, PMF, MEN, TREX, ACWI, PFE, HPI, HYGS, NGG, FAM, ELP, FLS, TPH, PBA, BUD, VCV, MSZ, LVS, BFZ, AFB, MYD, WLT, CYY, ETH, ETG, CHY, YHOO, WHR, CWH, WYNN, GNW, TCAP, ALDW, LAD, AI, NTI, AB, CNX, MITT, AMBA, URI, PSP, SSO, AWF, BOE, NFJ, SLRC, CHI, BFAM, BBEP, SPH, VWO, MAIN, ROVI, UTF, AHT, CVY, NRP and LL

Stocks With Unusual Put Option Activity:

• 1) IEF 2) RF 3) JNK 4) XOP 5) TGT
  

Stocks With Most Negative News Mentions:

• 1) DE 2) ITW 3) FCX 4) MGM 5) GS
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Value -1.93%

Sector Outperformers:

• HMOs +.23% 2) Hospitals -.34% 3) Foods -1.05%
  

Stocks Rising on Unusual Volume:

• VHS, THC and ISIS

Stocks With Unusual Call Option Activity:

• 1) CVC 2) AOL 3) SVNT 4) PFE 5) TBT
  

Stocks With Most Positive News Mentions:

• 1) PVH 2) LMT 3) CQB 4) SCHW 5) AMD
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Monday Watch

Weekend Headlines 
Bloomberg:

• China Central Bank Says Financial-System Liquidity ‘Reasonable’. China said there’s a reasonable amount of liquidity in the financial system and urged banks to control risks from credit expansion, signaling no relief for a cash squeeze that risks exacerbating an economic slowdown. “At present, the overall liquidity in China’s banking system is at a reasonable level, but due to many changing factors in the financial markets and also because of the mid-year point, the requirements for commercial banks in liquidity management have become higher,” the People’s Bank of China said in a statement dated June 17 and published on its website today in Beijing. The government’s most explicit comments on this month’s cash squeeze add to signs that Premier Li Keqiang is committed to stamping out speculation funded by cheap money. Slowing growth in the world’s second-largest economy, a crackdown on illegal capital inflows and efforts to rein in shadow banking have contributed to increased borrowing costs. Goldman Sachs Group Inc. economists led by Cui Li in Hong Kong said in a report earlier today that the liquidity tightening is another indication that the government’s priority is to tackle “structural problems” in the economy. Goldman Sachs cut its 2013 expansion forecast to 7.4 percent from 7.8 percent. 

• World’s Worst Real Estate Bonds Targeted in Crunch. China’s builders have been the world’s worst-performing real-estate bonds this quarter as Premier Li Keqiang allowed a record cash crunch to rebalance the economy away from property investment. Dollar-denominated notes sold by Chinese developers have lost 4.1 percent this quarter, the most since the three months ended Sept. 30, 2011 and the worst among peers in major economies in Bank of America Corp.’s Global Corporates Real Estate Index. That marks a reversal after the debt topped 2012 rankings with a 22 percent return. Australian builders lost 0.8 percent since March 31, while Japan’s shed 1.7 percent.

• Chinese Banks’ Bond Risk Rises Most in Asia Amid Moody’s Warning. Bank of China Ltd. (3988), Export-Import Bank of China and China Development Bank Corp. led gains in Asian bond risk last week as Moody’s Investors Service warns credit curbs could threaten small and mid-sized lenders. Prices of swaps tied to Bank of China, the nation’s fourth-largest lender, rose 70.4 basis points last week to 192.4, the biggest increase among members of the Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan, according to data provider CMA. The cost of insuring Asian corporate and sovereign bonds from default surged 27.6 basis points last week, the most since November 2011, CMA prices show.

• World’s Biggest Pension Fund Doubts 2% Inflation for Japan. Japan’s central bank probably promised too much when it set a goal of lifting inflation to 2 percent within two years, according to Takahiro Mitani, president of the country’s public pension fund. History is against the Bank of Japan as it undertakes unprecedented asset purchases in pursuit of a pledge to overcome 15 years of deflation, Mitani, the 64-year-old head of the 112 trillion yen ($1.14 trillion) Government Pension Investment Fund, said in a Tokyo interview June 21. The world’s biggest manager of retirement savings, which said on June 7 that it’s cutting local bond holdings to buy more stocks and foreign securities, plans to leave its asset allocations at the new levels until at least March 2015, he said.

• S. Korea to Tighten Monitoring of Banks’ Liquidity: Choo. South Korea’s government plans to tighten monitoring of banks’ liquidity and scale down its bond sales volumes in July as possible reductions in Federal Reserve stimulus roil capital flows from developing countries. South Korea’s fundamentals from budget to foreign reserves are sound, so speculation on a Fed move is unlikely to spur any drastic capital outflows, Vice Finance Minister Choo Kyung Ho said in Seoul.

• Foreign Instiutional Demand for Asian Equities Falling Rapidly. (graph)

• India Funding Strain Grows as Fed Outlook Hurts Rupee. India faces growing strain to fund the widest current-account deficit in major Asian nations after the rupee slid to an all-time low on concern the U.S. will curb monetary stimulus as its economy improves. The deficit narrowed to $21 billion last quarter, from $32.6 billion or a record 6.7 percent of gross domestic product in October to December, the median of nine estimates shows in a Bloomberg News survey before data due June 28. The Reserve Bank of India estimates the sustainable level at 2.5 percent of GDP. 

• China’s Stocks Extend Three-Week Slump as Financial Shares Fall. China’s stocks fell, led by financial and consumer companies, as the nation’s equities extended a three-week slump. China Minsheng Banking Corp. sank 5 percent, leading a gauge of financial shares to the lowest level since December. Gree Electric Appliances Inc. lost 3 percent, pacing declines among consumer shares. Jiangxi Copper Co. declined 1.4 percent after copper inventories gained for a fourth week. The Shanghai Composite Index (SHCOMP) declined 1.3 percent to 2,045.59 as of 9:50 a.m. in Shanghai. It slumped 4.1 percent last week, the most in four months, amid concerns about economic growth and tighter liquidity after interbank lending rates surged.

• Asian Stocks Drop on China Outlook, Extending Decline. Asian stocks declined, with the benchmark regional index heading toward the worst monthly loss in a year, as Goldman Sachs Group Inc. cut its growth forecast for China amid concern a cash crunch at banks in the world’s second-largest economy. Industrial & Commercial Bank of China Ltd., the world’s largest lender, lost 1.7 percent in Hong Kong, having risen just one day in June. BHP Billiton Ltd., the No. 1 mining company, declined 3.1 percent, dragging Australia’s S&P/ASX 200 Index lower. AMP Ltd. tumbled 10 percent, heading for its biggest slide in 4 1/2 years, after Australia’s biggest life insurer and pension manager said it expects profit will fall as much as 16 percent. The MSCI Asia Pacific Index slid 1 percent to 126.45 as of 10:35 a.m. in Hong Kong. About two shares fell for every one that advanced.

• EU Leaders to Stave Off Market Turmoil After Bank Talks Fail. European Union leaders will this week attempt to stave off a resurgence of market tremors after talks on setting up unified banking rules broke down. Negotiations among the 27-member bloc’s finance ministers stalled over the weekend in Luxembourg after they tried to reach agreement on assigning losses at failing banks as part of proposed rules on bank resolution and recovery. They will regroup June 26, before EU leaders gather the next day for a summit meeting in Brussels. “We shouldn’t be lulled by the current calm in the markets,” German Finance Minister Wolfgang Schaeuble said in a statement after the meeting. “Rather we should quickly ensure that we’re prepared for every eventuality.”  

• Hollande No Schroeder as Businesses Work Through Ambiguous Rules. What French President Francois Hollande gives with one hand he takes away with the other. That’s what some of the country’s business leaders say about the Socialist president’s yearlong effort to try and make France more competitive while also appeasing his labor union supporters. Hollande pushed through a law in April making firings easier and labor rules more flexible. Now, he’s threatening to slap companies closing plants in France with multimillion-euro fines. 

• ‘Window-Dressing’ Undermines Bank Risk-Weight Trust: BIS. Global banks have improved their capital ratios in part by understating the riskiness of their assets, not by raising their ability to stem losses, the Bank for International Settlements said. Regulators need to monitor the use of internal risk models in determining the capital lenders hold against losses and complement them with gauges that don’t use risk weightings, the BIS said in its annual report released today. The BIS, based in Basel, Switzerland and owned by 60 central banks, hosts the Basel Committee on Banking Supervision, a group of regulators and central bankers that sets global capital standards.

• Rubber Trades Near Lowest in Nine Months on China Demand Concern. Rubber declined, heading for a fifth monthly loss, amid concern that demand may weaken from China, the world’s largest consumer of the commodity used in tires. The contract for delivery in November on the Tokyo Commodity Exchange fell as much as 1.3 percent to 233.3 yen a kilogram ($2,376 a metric ton), nearing a nine-month low of 228 yen reached on June 21. Futures traded at 234.1 yen at 11:17 a.m., extending losses for this month to 9 percent. 

• Rebar Falls on Lower Iron Ore, Smaller Reduction in Inventory. Steel reinforcement-bar futures in China fell after a decline in iron ore prices and as inventory shrank at the slowest rate in 10 weeks. Rebar for delivery in October on the Shanghai Futures Exchange fell as much as 1.6 percent to 3,457 yuan ($563) a metric ton, before trading at 3,458 yuan at 10:33 a.m. local time.

• Treasury Yields Surge Most Since 2003. Treasury 10-year (USGG10YR) note yields climbed the most since the start of the Iraq war as investors fled U.S. debt after the Federal Reserve predicted economic growth will be strong enough to allow policy makers to stop buying bonds. 

• Obama Said to Announce Emission Curbs on Power Plants Next Week. The initiatives to curb climate change that President Barack Obama plans to unveil will include the first limits of carbon emissions from existing power plants, according to a person familiar with the plans. “I’ll lay out my vision for where I believe we need to go: a national plan to reduce carbon pollution, prepare our country for the impacts of climate change, and lead global efforts to fight it,” Obama said yesterday on the social media outlets YouTube and Twitter. “This is a serious challenge, but it’s one uniquely suited to America’s strengths.”

• Apple(AAPL) Awaits E-Book Decision With More Suits in Wings. Apple Inc. (AAPL) will find out sometime in the coming weeks whether it’s legally responsible for an alleged scheme to fix prices for electronic books, after an unusual three-week civil antitrust trial in Manhattan. U.S. District Judge Denise Cote, who heard the trial without a jury, will rule on U.S. claims that Apple, the world’s biggest technology company, led a conspiracy of five publishers to raise the retail price of e-books and to force Amazon.com Inc. (AMZN), the No. 1 e-book seller, to change its pricing model.

Wall Street Journal:

• Chinese Industrial Subsidies Grow 23%. Chinese companies are under growing financial pressure as the country's economic growth slows. So industries ranging from airlines to steel to consumer appliances increasingly are leaning on the Chinese government. Companies listed on China's stock exchanges received 85.68 billion yuan ($13.83 billion) in government subsidies last year, up 23% from a year earlier, while corporate profits rose less than 1%, according to a Chinese data provider. The subsidies were equivalent to more than 4% of the companies' total profits last year, up from around 3% between 2009 and 2011.

• Australians Nervous Over China Investment. Most Australians think the government is allowing too much Chinese investment, a poll suggests, even as ownership of local assets by the nation's biggest trading partner remains relatively small. In the Lowy Institute poll, 57% said they were concerned over Chinese buying of assets from farmland to listed companies. The institute surveyed 1,002 Australian voters in March. 

• Brazil Finds Itself in a Bind over Spending. Demonstrators Have Been Promised Better Services, But Investors May Be Scared Off by Bigger Deficits, Higher Inflation. "The problem that they have is they need to calm down two very nervous stakeholders, the market and the population, and they are demanding different things," said Pedro Barbosa, a partner at Rio de Janeiro-based hedge fund STK Capital.

• The IRS's Best Friend in Congress. Rep. Elijah Cummings says the House investigation is a 'witch hunt.' Yet revealing evidence keeps coming.

Marketwatch.com:

• Weak yen is not the answer to Japan’s problems. Commentary: ‘Abenomics’ has many disturbing contradictions.

• China’s alarming credit crunch. Commentary: People’s Bank of China may have bigger problems.

Fox News:

• US revokes NSA leaker Edward Snowden's passport, as he reportedly seeks asylum in Ecuador.
  The anti-secrecy website WikiLeaks said Sunday it is helping Edward Snowden, the former National Security Agency contractor who exposed secrets about the federal government's surveillance program, to seek asylum in Ecuador. The announcement came as a source confirmed to Fox News Saturday that the United States revoked Snowden's passport. 

CNBC:

• Hedge Funds Shift to Stocks, Just in Time for Pullback. Hedge fund investors have begun to like stocks again—just in time for what appears to be a rough summer ahead for the equity markets. Reversing a trend that began in March 2010, hedge funds in May saw inflows to equity-based products and outflows from fixed income. 

• Housing Market: From Recovery to Bubble–Already? Only a year after the housing market bottomed, "bubble" talk has surfaced as soaring, double-digit price gains sweep markets across the country. 

• Average Pay of Top Bankers Drops 10%.

• Goldman(GS) Joins Bandwagon, Downgrades China.

Zero Hedge:

• Treasuries' Worst Week In 50 Years; Stocks Worst Week In 2013.

• The Illustrated History Of High Yield. (graph)

• The Waste List: 66 Ways The U.S. Government Is Blowing Your Hard-Earned Money.

• Everything Is Being Sold. (video)

• David Stockman's Non-Recovery Part 4: The Bernanke Bubble.

• The Toxic Feedback Loop: Emerging <-> Money <-> Developed Markets.

• The Pandering And Politics Of The Fed's Punch-Bowl.

• Meet The Man In Charge Of America's Secret Cyber Army (In Which "Bonesaw" Makes A Mockery Of PRISM).

• How Resilient Is EM To The End Of QE – A Vulnerability Heatmap.

• China's Mea Culpa: "It Is Not That There Is No Money, But The Money Has Been Put In The Wrong Place".

• 5 Reasons Why Now Is The Time To Buy Bonds.

• Profiling Japan's Daytrading "Mister Watanabe".

• The BIS Chart That Abe And Kuroda Would Rather You Didn't See.

• David Stockman's Non-Recovery Part 5: Peak Debt And The Wages Of Keynesian Sin.

• The Bank Of International Settlements Warns The Monetary Kool-Aid Party Is Over.

Business Insider:

• Report: Britain's Spying Agency Is Intercepting A Huge Amount Of Data From Fiberoptic Cables To Share With The NSA.

• REPORT: The CIA Has Been Secretly Training Syrian Rebels For Months.

• Drone Spying Capabilities Are About To Take Another Huge Leap.

• Wall Street's Brightest Minds Reveal THE MOST IMPORTANT CHARTS IN THE WORLD.

• This Is What's Happening To Everyone Who 'Bought Brazil'.

• NOMURA: It Was An Epic Week, The Rules Have Changed, And There Will Be No Reversing The Fed's Big Bang.

• PRESENTING: The Bubble With No Name Yet. (graph)

• MAULDIN: Regulations And Socialism Are Crushing The French Economy, And It's Going To Get Worse.

• In One Chart, Here's How Assets That People Thought Were 'Safe' Got Buried.

• The World's Central Banks May Have Just Started A Strike.

• Stocks Have Lost A Major Advantage They Had Over Bonds.

• MARK YOUR CALENDARS: We've Got 7 Huge Fed Speeches Coming Up This Week.

• FTC To Conduct Antitrust Review Of Google(GOOG) Over $1.1 Billion Waze Deal.

• The Housing Finance Mechanism In The US Is Not Fixed.

Wall Street All-Stars:

• Indicator Update: Digesting the Fed News.

New York Times:

• China Said to Have Made Call to Let Leaker Depart. The Chinese government made the final decision to allow Edward J. Snowden, the former National Security Agency contractor, to leave Hong Kong on Sunday, a move that Beijing believed resolved a tough diplomatic problem even as it reaped a publicity windfall from Mr. Snowden’s disclosures, according to people familiar with the situation.

LA Times:

• Wi-Fi is about to get a lot faster and more reliable. Next-generation Wi-Fi routers, using 802.11ac technology, will be able to accommodate more devices and provide better coverage in a home or office space.

Washington Post: 

• Risky derivatives trading comes roaring back. The exotic financial products that nearly crippled the economy in 2008 are roaring back at the nation’s biggest banks, according to data released Friday that reform advocates worry come just as regulations to rein in risky trading are being weakened in Washington. Demand for derivatives — contracts whose value is derived from stocks, bonds, loans and currencies — is growing as investors and corporations try to lock in low interest rates. But critics worry that there are too few rules to protect taxpayers from a market dominated by a handful of banks. On Friday, the Office of the Comptroller of the Currency reported that banks pulled in $7.5 billion in revenue from trading derivatives in the first three months of 2013, a 7 percent increase from the corresponding period a year ago, and a 72 percent jump from the fourth quarter of 2012. The face value of the derivatives held by banks rose 4 percent over the prior year to $231.6 trillion, according to the report.

Market News International:

• China International Capital Corp. cuts China 2013 GDP growth forecast to 7.4% from 7.7% earlier.

Telegraph:

• BIS fears fresh bank crisis from global bond spike. Soaring bond yields across the world threaten trillion of dollars in losses for investors and a fresh financial crisis unless banks are braced for the shock, the Bank for International Settlements has warned.

Sueddeutsche Zeitung:

• Weidmann Sees No Need for Immediate Interest-Rate Increase. Bundesbank head Jens Weidmann comments in interview. The ECB's new bond-buying program OMT has 'noticeable restrictions,' which is a step in the right direction. Potential bond buys by ECB are still 'problematic'.

Real News:

• Greece Needs Another Debt Writedown, Merkel Aide Says. Greece needs a further reduction in its sovereign debt level and participation by government creditors shouldn't be considered a taboo, citing an interview with Peter Bofinger, economic adviser to German Chancellor Angela Merkel. Bofinger says will be "very difficult" for Greece to cut debt to acceptable level over next years. Bofinger says he doesn't see turn for the better in Greek economy based on current data. Bofinger repeated view that tax should be imposed on wealthy in indebted euro-area countries, austerity has mainly hit the poor.

Financial News: 

• Reserve Ratio Cut Not Best for China Growth. Monetary easing policies such as cutting reserve requirement ratio are not the best options for China's growth, according to a front-page commentary written by reporter Xu Shaofeng. Reserve ratio cut will increase overcapacity and expand debt scale for local government financing vehicles. Financing environment for smaller companies which need funds will not be improved with a reserve ratio cut. 

China Securities Journal:

• China Credit Market Liquidity Mismatch 'Serious'.  China's credit market has a "very serious" mismatch in liquidity as reflected by the current tight money conditions, Liu Yuhui, a researcher at the Chinese Academy of Social Sciences, writes in a commentary. Some institutions match short-term interbank funds with long-term assets for profit, Liu writes. Risks are exposed when cash flows from long-term assets can't cover short-term debt obligations when the economy slows. The sale of new debt to cover interest payments on old debt displays "ponzi" characteristics, Liu said. A quick drop in asset prices triggered by a sell-off of assets would cause a "hard landing," he said. Crackdowns on shadow banking and expansion of leverages are "timely," Liu wrote.

Night Trading

• Asian indices are -2.0% to -.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 160.0 -6.0 basis points.

• Asia Pacific Sovereign CDS Index 126.25 -8.0 basis points.

• FTSE-100 futures -.15%.

• S&P 500 futures -.40%.

• NASDAQ 100 futures -.31%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SONC)/.26

Economic Releases
8:30 am EST

• The Chicago Fed Nat Activity Index for May is estimated to rise to -.15 versus -.53 in April.

 10:30 am EST

• The Dallas Fed Manufacturing Activity Index for June is estimated to rise to -1.0 versus -10.5 in May.

Upcoming Splits

• (SIX) 2-for-1

• (CRVL) 2-for-1

Other Potential Market Movers

• The Fed's Fisher speaking, German IFO Business Climate and the JPMorgan Healthcare Conference could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by financial 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 25% net long heading into the week.

Weekly Outlook

U.S. Week Ahead by MarketWatch (video). 
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as quarter-end window dressing, short-covering and bargain-hunting offset rising global growth fears, more emerging markets unrest, increasing Eurozone/Asian debt angst and technical selling. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 25% net long heading into the week.