U.S. stock futures are pointing to a higher open as equities look to close out the second quarter by extending Tuesday's big rally into the best three-day gain since February. The Dow and S&P 500 are now back in the black for 2016 and for Q2, but the Nasdaq is still in the red for both periods. Overall, major U.S. averages have now recovered about 60% of their post-Brexit losses.

Economy

Britain's decision to leave the EU has "unleashed" a crisis in the markets similar to the global financial crisis of 2007 and 2008, George Soros told the European Parliament in Brussels. "It is likely to reinforce the deflationary trends that were already prevalent," he added. Continental Europe's banking system hasn't even recovered from the financial crisis and will now be "severely tested."

The eurozone returned to inflation in June after four months of falling or stagnant consumer prices, principally due to a marked slowdown in the decline of energy prices. The flash inflation estimate from Eurostat rose to 0.1% Y/Y in June from -0.1% in May, while core inflation remained at 0.8%. The figures offer some good news for the ECB, which has struggled to boost prices across the euro area.

Leaders of Canada, the U.S. and Mexico mounted a fierce defense of free trade at Wednesday's "Three Amigos Summit," offering a counterweight to popular sentiment in America and Europe threatening to sap support for deeper integration. Underscoring concerns that a Brexit could spur feelings against other political and trading blocs, Donald Trump pledged this week to withdraw from or renegotiate NAFTA, bring WTO complaints against China and torpedo the TPP.

Oil is headed for its biggest quarterly advance since 2009, rising 29% in the last three months as falling American supply adds to speculation that the global surplus is easing. Data from the EIA yesterday showed U.S. crude stockpiles dropping to the lowest since March and output falling for a third week. Supply disruptions in Nigeria and Canada, as well as fears over strike outages in Norway, have also given the commodity a big lift.

Looking to restore investor confidence, open up the country's economy and attract foreign investment, President Mauricio Macri has unveiled the results of Argentina's revised growth numbers for the past decade. GDP shrank 0.7% in the first quarter from the last three months of 2015, marking its third consecutive Q/Q contraction and confirming the new president inherited an economy in recession.

Investors in Puerto Rico's debt-burdened economy still face risks of default on some of the island's $70B in debt even after Congress gave the green light for a powerful federal oversight board to manage credit restructurings. President Obama said he will quickly sign the Puerto Rico Oversight, Management, and Economic Stability Act before Friday, when the territory faces a default on $1.9B worth of debt payments.

Stocks

Nearly all of the largest U.S. banks are on steady enough footing to issue dividends or make share buybacks after passing the final round of the Fed's annual stress tests. Deutsche Bank (NYSE:DB) and Santander (NYSE:SAN) were the only lenders to fail for a second year in a row, meaning they cannot increase shareholder payouts until they establish a new plan. "Material weaknesses" were also seen at Morgan Stanley (NYSE:MS), but the Fed allowed the bank to proceed with a dividend hike and $3.5B buyback while it rectifies the issues.

Media leaks over who could buy Yahoo have died down ahead of the company's annual meeting today, where investors will likely ask for an update on the sales process. Shareholders are expected to approve Yahoo's (NASDAQ:YHOO) new board of directors, which in April was expanded to 11 from nine members, and drill executives about the web portal's slow progress in selling its core internet business (final bids are due in early July).

"Since China is a great opportunity, we continue to look into China," Ted Sarandos, Netflix's (NASDAQ:NFLX) chief content officer, said at a media event in Seoul. The streaming service has countered slowing U.S. growth by launching in more than 130 new markets, but remains absent in the world's most populous country, where content providers face stringent regulations and censorship challenges.

There's no Fire 2, but Amazon (NASDAQ:AMZN) is getting back in the smartphone business. Starting today, Prime members can buy an unlocked BLU R1 HD for just $50 or the Moto G for $150. Where's the money? Amazon's apps, services and ads are all over the phones even on a locked screen. If you're a dedicated shopper this may be desirable, but if you want to kill the ads, you'll have to pay back the $50 subsidy.

Japan's Fair Trade Commission has approved Canon's (NYSE:CAJ) acquisition of Toshiba's (OTCPK:TOSYY) medical equipment unit, but said it would prohibit further use of the deal's unusual structure. Hurt by an accounting scandal and in a hurry to raise cash before closing its books in March, Toshiba structured the ¥665.5B ($6.5B) sale in an unorthodox way so it could book proceeds before securing approval from regulators.

The SEC is examining SoftBank over possible conflicts of interest or questionable behavior involving former president Nikesh Arora, who stepped down last week. SoftBank (OTCPK:SFTBY) and Arora have described the departure as an amicable one, saying Masayoshi Son, chairman and chief executive of the company, recently decided he wanted to stay longer instead of handing over power next year.

It's been discussed extensively, but a deal for Lions Gate Entertainment (NYSE:LGF) to buy premium cable channel Starz (NASDAQ:STRZA) is now in advanced talks. A deal could come in the next few days valuing Starz at more than $30 per share, sources told Bloomberg. Lions Gate climbed 7.6% while Starz gained 9.1% during yesterday's postmarket session.

Looking to free up TV spectrum for cellular use, the FCC has acquired a whopping $86.4B worth of wireless airwaves from television broadcasters in the first phase of a complex auction. The agency hopes bidders will be willing to spend that much when it resells the airwaves in an auction that will start later this summer, but it may have to sell less spectrum than expected, or use multiple rounds to settle bidding by broadcasters. Spectrum players: VZ, T, TMUS, S, DISH, SBGI, EVC, CMCSA, CHTR, NXST, CBS, MEG

The U.S. Education Department has agreed to forgive $171M in debt held by former students of the defunct Corinthian Colleges (OTCPK:COCOQ), which liquidated in bankruptcy last year amid allegations that it advertised fraudulent career success statistics. The government turned to a law known as "borrower defense" and a rule that forgives debt for students whose schools close before they finish their studies.

AB InBev's roughly $108B takeover of SABMiller (OTCPK:SBMRY) has been cleared by South Africa’s Competition Tribunal, leaving only two more approvals before the deal can close. To appease U.S. and Chinese regulators, AB InBev (NYSE:BUD) has agreed to sell SABMiller's interest in MillerCoors to Molson Coors (NYSE:TAP) and CR Snow to China Resources Beer Holdings (OTCPK:CRHKY).

Aspartame-sweetened Diet Pepsi isn't the only soda making a comeback. PepsiCo (NYSE:PEP) is returning Crystal Pepsi to store shelves this summer as the company taps 1990s nostalgia. While no TV ads are planned, the clear soda will be supported by what Pepsi marketing director Linda Lagos describes as an "extensive paid media campaign on digital channels."

The Justice Department has told Anthem (NYSE:ANTM) its planned takeover of Cigna (NYSE:CI) threatens competition and probably can't be fixed by selling parts of their businesses, Bloomberg reports. The companies recently met with Bill Baer, the department's No. 3 official, in a bid to get the $48B deal approved. A decision on the combination is expected by mid-July.

Another driverless car collaboration? Intel (NASDAQ:INTC) is working with Mobileye (NYSE:MBLY) to develop self-driving car technology for BMW (OTCPK:BAMXY), according to Bloomberg. Senior executives from each company will hold an event on Friday to discuss the driverless vehicle initiative.

Bombardier has delivered its first CSeries jet to launch operator Swiss International Air Lines (OTCQX:DLAKY), marking the company's emergence as a direct competitor to challenge Airbus (OTCPK:EADSY) and Boeing (NYSE:BA) in the single-aisle passenger jet market. The plane's development ran 2.5 years late and blew billions past its initial $3.4B budget, weighing on Bombardier's (OTCQX:BDRAF, OTCQX:BDRBF) stock price and triggering the replacement of most of its executive team.

Wednesday's Key Earnings

General Mills (NYSE:GIS) +3.2% after beating expectations.
Monsanto (NYSE:MON) +2.4% despite weak earnings.

Today's Markets

In Asia, Japan +0.1% to 15576. Hong Kong +1.8% to 20794. China -0.1% to 2929. India +1% to 26999.
In Europe, at midday, London +0.5%. Paris +0.7%. Frankfurt +0.3%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.2%. Crude -0.9% to $49.42. Gold -0.5% to $1319.70.
Ten-year Treasury Yield +5 bps to 1.52%

Today's Economic Calendar

8:30 Initial Jobless Claims
9:45 Chicago PMI
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet