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26Jun2015 Pre-Market Commentary: U.S. Futures Lower On China's 7.4% Fall, Crude Prices Falling Fast And Greek Resolution Stands At 50-50

Written by Gary

U.S. stock futures indexes were up fractionally earlier, but were melting down to the unchanged line as China's stocks plunge 7.4%, Greek debt resolution stands at 50-50 and crude actively testing its support.

Markets are expected to open flat and then melt down into the red.


Here is the current market situation from CNN Money

European markets are mixed. The CAC 40 is higher by 0.35%, while the FTSE 100 is leading the DAX lower. They are down 0.55% and 0.27% respectively.

What Is Moving the Markets

Here are the headlines moving the markets.

China stocks plunge, other global markets lower as developments awaited in Greece debt talks

HONG KONG (AP) — Chinese stocks [under-performed] badly Friday as panicked investors rushed to sell over fears that an extended bull market was coming to an end. Elsewhere, stocks traded softly as the standoff between Greece and its international creditors appeared little closer to being resolved.

KEEPING SCORE: In Europe, the FTSE 100 index of leading British shares was down 0.7 percent at 6,784, while Germany's DAX fell 0.2 percent to 11,454. The CAC-40 in France bucked the trend, trading 0.2 percent higher at 5,049. Wall Street was poised for a steady opening with Dow futures and the broader S&P 500 futures up 0.1 percent.

GREEK TALKS: Global investors are watching closely as Greek debt talks go down to the wire. On Thursday, a key meeting of eurozone finance ministers on Greece's rescue package broke up without agreement. The 19 ministers are due to meet again on Saturday. Greece's creditors will not free up billions in bailout money until there's an agreement over economic reforms and budget cuts. Greece needs a deal to pay 1.6 billion euros ($1.8 billion) to the International Monetary Fund due Tuesday. Failing to do so would put the country on a possible path toward default and exit from the euro.

ANALYST TAKE: "While these deadlines can quite often be taken with a pinch of salt, Greece has literally run out of time on this occasion," said Craig Erlam, senior market analyst at OANDA. "If we see a Greek deal then there will be cause for celebration while no deal could create panic."

German finance chief dismisses Greek proposals, saying they include no public spending cuts

FRANKFURT, Germany (AP) — German Finance Minister Wolfgang Schaeuble is dismissing the most recent Greek proposals for more bailout money. Schaeuble said Friday that Greece's proposed conditions "are only increasing taxes, only increasing contributions. No cuts." German and other creditors, particularly the International Monetary Fund, are concerned that Greece will rely too much on taxes and pension contributions that could hurt growth rather than on cutting pensions and spending. Greece and its creditor are in tough talks about what the indebted country is willing to do to get the last installment of bailout money needed to avoid missing a debt repayment to the IMF June 30. Schaeuble implied time is short: "The 30th of June is the 30th of June," he said. "Not the first of July."

Merkel, Hollande dangle financing before Greece's Tsipras

BRUSSELS (Reuters) - The leaders of Germany and France offered to release billions in frozen aid on Friday in a last-minute push to talk Greek Prime Minister Alexis Tsipras into contentious pension reforms in exchange for filling Athens' empty coffers until November.

Treasurys' Swoon Doesn't Rattle Debt Investors

Although Treasury prices are on track for their first quarterly decline since 2013, money managers remain mostly upbeat on Treasurys.

Chinese Stock Market Collapses 7.4% - Gold Demand Surges To Record

Today's AM LBMA Gold Price was USD 1,174.40, EUR 1,048.38 and GBP 745.89 per ounce.
Yesterday's AM LBMA Gold Price was USD 1,174.60, EUR 1,052.51 and GBP 748.80 per ounce.

Gold fell $1.30 or 0.11 percent yesterday to $1,173.10 an ounce. Silver slipped $0.03 or 0.19 percent to $15.87 an ounce.

GOLD in USD - 5 Day

GOLD in USD 5 Day

Gold in Singapore for immediate delivery inched up 0.3 percent at $1,177.20 an ounce near the end of the day, while gold in Switzerland went a few dollars higher prior to selling pressure capped the gains and saw another correction.

Gold is lower in all major currencies this week. Today, gold is marginally higher over uncertainty with the Greek debt crisis as safe haven investors returned, equity markets dipped and Chinese stocks crashed.

Silver briefly hit a three month low at $15.50 an ounce. Palladium crashed to nearly a two-year low, seeing its largest one day fall since September, on demand concerns.

On a weekly basis, palladium is down 4.7%, ...

How Europe Tackles Its Debt Crisis: Caption Contest

In the following Reuters photo, Italy demonstrates to Germany how it plans to "tackle" Europe's debt crisis.

Source: WSJ

Troika Offers Greece Third Bailout Program, Prepares Emergency Plan If No Deal

On the heels of Thursday's failed Eurogroup meeting and heading into what is again being presented as an all or nothing, "Lehman weekend" for Greece and its creditors, reports suggest the troika has offered Greece a third bailout program:


GREEK CREDITORS OFFER EU15.5B OVER NEXT 5 MONTHS: HANDELSBLATT

ECB, IMF, EU OFFER GREECE 3RD AID PROGRAM: HANDELSBLATT

GREECE'S CREDITORS PROPOSE EU15.5B TIED TO AID DEAL: OFFICIAL

Here are the details, according to Bloomberg (citing an unnamed EU official):

EU creditor proposal foresees EU8.7b in EFSF funds: official

Creditor proposal foresees EU3.3b in SMP profits: EU official

Creditor proposal foresees EU3.5b in IMF funds: EU official

If true, this would mark a dramatic about-face for the IMF which had suggested it would not be interested in participating in a third Greek program. Similary, lawmakers in Berlin have voiced their opposition to a third bailout program for Athens as the German public has grown tired of throwing money at the Greek 'problem.'

As for the specifics as outlined above, note that if Greece receives €3.3 billion from SMP profits it will mean that the ECB has forfeited the money it made on the Greek bonds it purchased in the past, effectively allowing Athens to repay th ...

Futures rise on hopes of Greece deal

(Reuters) - U.S. stock index futures were higher on Friday after a note prepared for the Eurogroup said the euro zone could help Greece repay maturing debt if the current bailout program is extended to November.

Frontrunning: June 26


Chinese Stock Plunge Leaves State Media Speechless (BBG)

China's Market Selloff Accelerates (WSJ)

Any Deal on New Greek Bailout Funds Put Off Until Weekend (WSJ)

ECB keeps ELA funding limit for Greece unchanged for third day in a row (Reuters)

Impoverished Greek City Stands With Alexis Tsipras (WSJ)

Why It Won't Be a Default If Greece Misses IMF Payment Next Week (BBG)

Valeant Makes Takeover Approach to Zoetis (WSJ) - or how Ackman assures himself another good T+3 quarter

From Deutsche Bank to Siemens: What's Troubling Germany Inc.? (BBG)

Obamacare ruling puts Supreme Court on hot seat in U.S. presidential race (

From The Vault: Gauging Treasury Market Liquidity

by Liberty Street Economics

-- this post authored by Anna Snider

Recent news and market analysis has featured a spate of warnings about diminished liquidity in the U.S. Treasury market and reminders of how quickly markets can seize. It's a topic we've addressed on our blog with an investigation of the bond market sell-off of 2013.

Trucking Tonnage Index Recovers Partially in May 2015.

Econintersect: The American Trucking Associations' (ATA) trucking index rose 1.1% following an upwardly revised decline of 1.4% in April.

China Plunges Most Since 2007, Points Away From Bear Market; Greek Drama Continues

Following yesterday's furious market drop in Chinese stocks, just before the overnight open, Morgan Stanley came out with a much distributed report urging investors "Not to buy this dip", and so they didn't. As a result, the Shanghai Composite imploded, at one point trading down 8% while the Chinext and Shenzhen markets crashed even more. This was the single biggest Shanghai Composite one-day drop since 2007, and with a close at 4192.87 the SHCOMP is now on the verge of a bear market, down 19% from its June 12 highs. China's second largest market, Shenzhen, is now officially in a bear market.

We wonder if the media will blast that Chinese stocks have lost $2 trillion in 2 weeks with the same euphoria as they explained how Chinese stocks crossed $10 trillion in market cap precisely two weeks ago.

What caused the plunge? Many factors were involved, and here is a brief summary from RanSquawk:


In recent weeks, the Shanghai Comp has traded in a volatile fashion and has on occasions seen intraday declines of around 4% before staging a late rally to close positive.

This volatility also follows the stellar rally seen in Chinese stocks with the Shanghai Comp still up by around 34% YTD, amid a surge of speculation by Chinese household investors which have been turning to stocks for investment purposes following a slump in the property sector,

Today's declines are also in the wake of a reduction in margin trading, as the recent measures taken by ...

Ferrovial, Macquarie put up for sale concession in Chicago toll road

MADRID (Reuters) - Spanish infrastructure group Ferrovial and Australia's Macquarie have put up for sale their concession for the Chicago Skyway toll road in the U.S., a source with knowledge of the matter said on Friday.

Charter lists consumer benefits to win merger approval

(Reuters) - Charter Communications Inc formally argued for regulatory approval for its Time Warner Cable Inc and Bright House Networks deals, saying consumers would benefit as Internet services would become cheaper and faster.

Europcar Shares Decline in Early Trading After Paris I.P.O.

The French rental car company sold about $985 million in an offering of 71.8 million shares, which was priced late Thursday.

Oil slips as market awaits Iran, Greece talks

LONDON (Reuters) - Oil prices slipped on Friday but remained stuck in tight trading ranges as investors awaited the outcome of Iranian nuclear talks which could lead to a big increase in Iranian crude exports.

Stocks fall before crunch weekend for Greece

LONDON (Reuters) - Global stocks fell on Friday as equity investors sought to cut exposure to risk after Greece and its creditors again failed to resolve their differences, paving the way for a last-ditch effort on Saturday to avert a default.

China e-commerce firm JD.com to launch credit-scoring rival to Alibaba's

BEIJING/SHANGHAI (Reuters) - China's No. 2 e-commerce firm JD.com Inc is launching a Chinese consumer credit data system as a joint venture with U.S. credit-scoring technology company ZestFinance, taking on a rival service linked to the larger Alibaba Group Holding Ltd .

Honda restates earnings after booking expanded airbag recall costs

TOKYO (Reuters) - Honda Motor Co on Friday restated its financial results for the business year ended March, to account for additional costs to cover an expanded recall of cars equipped with Takata Corp air bag parts.

Decision time strikes for Greek enigma Tsipras

BRUSSELS (Reuters) - After five months in power, Greek Prime Minister Alexis Tsipras has 48 hours to make a decision that will shape his country's future for decades, yet his negotiating partners cannot be sure which way he will jump.

Tesco sales down less than expected in first quarter

LONDON (Reuters) - Britain's biggest supermarket chain Tesco said sales had declined less than expected in its first quarter, suggesting a tentative recovery in its key home market could be starting to move onto a stronger footing.

Valeant Pharmaceuticals And Zoetis: A True Mega Deal Is On The Horizon

A prospective Valeant and Zoetis tie-up is likely to come as little surprise to those following the consolidating pharmaceutical and healthcare sector, as drug manufacturers and specialized players look to combine overlapping corporate structures, sales forces, distribution infrastructure and drug pipelines.

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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