Economy
China's $8.8T stock market has plunged from first to worst on global performance rankings as leveraged speculators unwind their positions and a growing number of analysts warn that valuations have climbed too far. The Shanghai Composite Index tumbled 7.4% today, following a sell-off on Thursday that left Chinese shares down 3.5%. Morgan Stanley has now advised clients to refrain from purchasing mainland shares, saying Shanghai's June 12 high likely marked the top of the bull market. Shenzhen -8.2%; ChiNext -8.9%.

Japan's primary inflation gauge rose only fractionally in May, triggering concern that the BOJ won't reach its 2% target by September 2016. Consumer prices excluding fresh food increased 0.1% from a year earlier vs. forecasts by economists for inflation to be unchanged. Unemployment remained at 3.3% while household spending eked out a gain for the first time in more than a year.

The U.S. and Japan are likely to resolve outstanding bilateral issues so a 12-nation Trans-Pacific Partnership deal can be struck at a multilateral ministerial meeting in July, a senior Japanese official told Reuters. A deal between the two countries is vital to clinching the TPP pact, which would cover 40% of the world economy. Remaining bilateral issues include Japan's market for farm products and the U.S. market for auto parts.

Is this the final, final deadline? Eurozone finance ministers will meet again on Saturday in a last-ditch effort to find an agreement with Greece, ahead of the country's crucial €1.6B debt payment due to the IMF by Tuesday. German Chancellor Angela Merkel said the upcoming meeting would be "of decisive importance," but declined to speculate about what would happen if such a deal was not reached.

Stocks
Health care stocks, especially hospital operators, rose sharply yesterday after the Supreme Court ruled that Obamacare federal subsidies were legal. Fresh health care M&A chatter also followed the decision. New reports suggested Aetna (NYSE:AET) is close to a deal for Humana (NYSE:HUM), while Zoetis (NYSE:ZTS) finished the day up 12% on word that Valeant (NYSE:VRX) made a bid for the firm. ZTS +2% AH.

The Herbalife drama continues...A video (dating back to 2005) seen by the NY Post displays CEO Michael Johnson bad-mouthing the company with criticisms one would expect to hear from Bill Ackman. Success in Herbalife (NYSE:HLF), he decried, was a "lottery ticket," with few making it to the top ranks. In fact, he said, distributors had sometimes engaged in "false promises, claims, in hopes for product, for money, for recruiting, for customers, for pyramiding."

Sony CEO Kazuo Hirai has been re-elected to the company's board with 88% support of shareholders, despite a year rocked by a massive cyber attack, a $1B loss and the first-ever scrapping of the Japanese company's dividend. Proxy advisory firm ISS had recommended a vote against Hirai, noting that Sony (NYSE:SNE) posted an average return-on-equity of -7.7% over the past five years.

Winding down a five-year relationship, HSBC has ended its marketing tie-up on business activity surveys (including the closely watched China PMI) with financial information firm Markit (NASDAQ:MRKT). Neither gave a specific reason for the end of the partnership, but some industry insiders suspect it may have become too expensive and a potential political liability for HSBC.

JD.com and ZestFinance are launching a joint venture called JD-ZestFinance Gaia to support the development of consumer credit in China. The project will leverage ZestFinance's machine learning-based credit-decisioning technology and JD.com's (NASDAQ:JD) reservoir of consumer data. Assigning people and businesses accurate credit risk scores has been difficult in China, in part due to a lack of publicly available data and little information-sharing between financial institutions.

Among those who placed initial bids last week for GE's (NYSE:GE) health-care finance unit was the diverse group of Capital One (NYSE:COF), Apollo Global (NYSE:APO), Ares Management (NYSE:ARES), and Ventas (NYSE:VTR), Bloomberg reports. The operation could fetch more than $11B. The unit's sale comes as General Electric breaks up GE Capital by selling several lending businesses totaling roughly $200B in assets.

Alarm.com, a provider of home/business security, video monitoring and automation services, has priced its initial public offering of 7M shares at $14 a share, implying a market valuation of about $627.9M. The stock will begin trading on the Nasdaq Global Select Market today under the ticker symbol "ALRM." Underwriters have been granted a 30-day option to purchase up to an additional 525K shares from the company and up to 525K shares of common stock from selling shareholders.

Tesco, the world's second largest supermarket chain by sales, warned that the U.K.'s retail landscape is still tough as it reported better-than-expected sales for the first quarter. "We are fixing the fundamentals of shopping to win back customers and relying less on short-term couponing," said chief executive Dave Lewis. "Nobody said this was going to be quick or easy." Sales at U.K. stores open at least a year dropped 1.3%, compared with the previous quarter's 1.7% decline and a fall of 1.6%-3% forecast by analysts. Tesco (OTCPK:TSCDY, OTCPK:TSCDF) shares are up 3.6% in London.

Ending months of uncertainty, Israel's security cabinet has voted in favor of a plan to let Noble Energy (NYSE:NBL) and Delek Group (OTCPK:DGRLY) keep control of most of the country's natural gas deposits, after the anti-trust regulator branded them a monopoly last year. Details of the agreement have yet to be made public, but industry sources have said Noble Energy and Delek Group will be allowed to keep control of Leviathan, the world's largest offshore gas discovery of the past decade.

After making a long-awaited public appearance on Thursday, Takata (OTCPK:TKTDY) CEO Shigehisa Takada apologized over the company's deadly air bag inflators and suggested the possibility of a fund to compensate victims. "I regret that I haven’t offered enough explanations," he added, saying he wouldn't step down because he wants to resolve the problem. The recalls began in 2008, when he was president of the company, and escalated in mid-2014, after he became CEO and chairman.

Meanwhile, Honda has restated its financial results for the business year ended March, to account for the additional recall costs of cars equipped with Takata (OTCPK:TKTDY) air bags. Under U.S. accounting standards, Honda (NYSE:HMC) revised its operating profit to ¥606.9B ($4.9B), from the ¥651.9B stated in April. The new figure represents a 19% decline from the previous year.

Thursday's notable earnings
Accenture (NYSE:ACN) +1.8% after beating estimates. (link)
Barnes & Noble (NYSE:BKS) -1.5% on a heavy sales decline. (link)
Micron (NASDAQ:MU) -12.1% AH following an FQ3 miss and soft guidance. (link)
Nike (NYSE:NKE) +3.5% AH after topping estimates. (link)

Today's Markets:

In Asia, Japan -0.3% to 20706. Hong Kong -1.8% to 26664. China -7.4% to 4194. India -0.3% to 27812.
In Europe, at midday, London -1%. Paris -0.4%. Frankfurt -0.5%.
Futures at 6:20: Dow flat. S&P -0.1%. Nasdaq -0.1%. Crude -0.4% to $59.47. Gold +0.1% to $1173.40.
Ten-year Treasury Yield +1 bps to 2.40%

Today's economic calendar:

10:00 Reuters/UofM Consumer Sentiment

Notable earnings before today's open: FINL