Wall Street Breakfast: European Markets Fall Ahead Of Greek Meeting

Economy
European equities are heading south as investors watch a meeting between the leaders of Greece and Germany, beginning a week that may prove decisive for Greece's future in the euro zone. At last week's EU summit, Greek PM Alexis Tsipras agreed to speed up his economic reform plans in order to unlock the long-withheld aid payments needed to keep his country afloat. If a deal is not reached, Greece is likely to run out of cash by early next month.

Singapore has declared a week-long period of national mourning following the death of its first prime minister Lee Kuan Yew, who transformed the country from a colonial trading center into one of Asia’s most prosperous nations. He was 91. Lee’s core principles - including clean and efficient government, business-friendly economic policies, and social order - helped attract massive investment and many of the world’s largest companies to Singapore during the 31 years he was prime minister between 1959 and 1990.

Asian stocks extended a six-month high today after global equities capped their biggest weekly advance since July 2013. Japanese stocks soared despite a stronger yen, while the Shanghai Composite recorded its ninth straight day of gains after jumping more than 7% last week. The advance comes on the heels of the dollar's worst week since October 2011 and the Fed's dovish policy statement that shook off investor worries about higher interest rates in the U.S.

Facing defiance from allies that have signed up to support the new Asian Infrastructure Investment Bank, the Obama administration has now proposed the bank work in partnership with Washington-backed development institutions, such as the World Bank. "Co-financing projects with existing institutions like the World Bank or the Asian Development Bank will help ensure that high quality, time-tested standards are maintained," said Nathan Sheets, U.S. Treasury Under Secretary for International Affairs. Yesterday, the IMF and World Bank stated they would be "delighted" to cooperate with the AIIB, following the pledge of 27 countries to become members in the $50B lender.

Oil is tumbling once again after Saudi Arabia reiterated it would not unilaterally cut its output to defend prices. "We tried, we held meetings and we did not succeed because countries outside OPEC were insisting that OPEC carry the burden and we refuse that OPEC bears the responsibility," said Saudi oil minister Ali al-Naimi at Sunday's energy conference in Riyadh. OPEC governor Mohammed al-Madi also commented on the future price of oil at the meeting, saying it would be difficult for oil to reach a range of $100-$120/bbl again. Crude futures -2.5% to $45.41.

Stocks
RadioShack's fate hangs in the balance today when a bankruptcy auction kicks off, pitting companies that want to liquidate the retailer's remaining assets against a hedge fund that has vowed to keep about half the chain's stores open. Standard General, which has allied with Sprint (NYSE:S) in a bid to create co-branded outlets, calls its offer the "only hope" for RadioShack (OTCPK:RSHCQ) to survive bankruptcy and stave off liquidation.

China National Chemical Corp. is making a bid for Pirelli (OTCPK:PPAMF) that could value the world's fifth-largest tire maker at €7.1B ($7.7B). ChemChina's tire making unit China National Tire & Rubber will first buy the 26.2% stake that Italian holding firm Camfin owns in Pirelli, and will then launch a mandatory takeover bid for the rest. The ChemChina unit also envisages taking Pirelli private.

Following a four-day pilot strike hitting 220K passengers, almost all of Lufthansa's (OTCQX:DLAKY) services resumed on Sunday, but unions warned of further disruptions in the coming weeks if there was no sign of an agreement. Pilots have initiated 15 strikes since last April over retirement benefits and the airline's expansion, costing the carrier over €200M ($214M) in lost operating profit.

Ending a 3-year expansion freeze imposed by the automaker's president Akio Toyoda, Toyota (NYSE:TM) is finalizing plans for its first car assembly plant in Mexico, Reuters reports. Although Mexico has lured carmakers through its low labor costs and tariff-free access to the U.S., Toyota has been the last mass-market automaker to not have a major production hub in the country.

In the latest twist to the showdown between Argentina and Citigroup (NYSE:C), a U.S. federal court has agreed to allow Citi to make interest payments to investors holding $2.3B of Argentine bonds at the end of this month and on June 30. Previously, U.S. Judge Thomas Griesa ruled that Argentina must settle with its holdout hedge funds before it continues paying interest to the majority of investors who accepted debt writedowns following the country's $100B default in 2002.

Benjamin Lawsky, New York state's financial services regulator, has added himself to the regulators investigating Deutsche Bank (NYSE:DB) for the alleged rigging of Libor, FT reports. The bank is currently negotiating another plea deal with the DOJ and is one of the few European banks yet to reach a settlement with prosecutors. Separately, Reuters reported over the weekend that Deutsche will probably spin off its consumer bank to help it meet capital requirements. DB +2.8% premarket.

After kicking off a race relations campaign last week, Starbucks (NASDAQ:SBUX) CEO Howard Schultz told employees on Sunday they will no longer be encouraged to write "Race Together" on drinks cups, but the company's efforts are "far from over." The move was met with skepticism on social media, with many complaining the company was overstepping its boundaries with a campaign on sensitive cultural topics that had no place in the coffee shop's lines.

Total is seeking the equivalent of up to $15B in Chinese financing to fund its expansion in Russia, despite U.S. and European sanctions imposed on the country. The company expects Russia to be the most important region for its oil and gas output by 2020, when it hopes for production of around 400K bbl/day. Last year, Total (NYSE:TOT) as a whole produced 2.2M bbl/day.

Tenet Healthcare is poised to buy United Surgical Partners in a deal that could be worth more than $2.5B, WSJ reports, saying the acquisition could be announced as soon as today. United Surgical Partners, which operates more than 200 short-stay surgical facilities, is controlled by P-E firm Welsh, Carson, Anderson & Stowe. THC +1.4% premarket.

After investing $5M in Lyft last year at an $850M valuation, GSV Capital (NASDAQ:GSVC) has invested another $2.5M in the ride-sharing platform/Uber archrival through its latest funding round, which valued the company at $2.5B. GSV's Lyft stake is now worth over $17M. The figure suggests Lyft is now GSV's #5 holding, behind Twitter (NYSE:TWTR) ($57.4M), Palantir ($45.5M), Dropbox ($25.1M), and 2U (NASDAQ:TWOU) ($23.3M), and ahead of Coursera ($14.5M).

Today's Markets:
In Asia, Japan +1% to 19754. Hong Kong +0.5% to 24495. China +2% to 3688. India -0.2% to 28192.
In Europe, at midday, London -0.4%. Paris -1.3%. Frankfurt -0.9%.
Futures at 6:20: Dow -0.2%. S&P -0.2%. Nasdaq -0.1%. Crude -2.5% to $45.41. Gold -0.2% to $1182.
Ten-year Treasury Yield -5 bps to 1.93%

Today's economic calendar:
8:30 Chicago Fed National Activity Index
10:00 Existing Home Sales
10:00 PM Fed's Williams: Economic Outlook

Source: http://seekingalpha.com/article/3020096-wall-street-breakfast-european-markets-fall-ahead-of-greek-meeting