The second-leg of the Fed's annual bank stress tests will be released today. The CCAR scores will determine whether the 34 largest U.S. financial institutions can go ahead with their capital distribution plans, including higher dividends or stock buybacks. Stay tuned! Bank shareholders and general investors will be watching closely, as the results are likely to move the market.

Economy

The euro has reached a fresh 2017 high of $1.1369, as markets digested recent comments from Mario Draghi. The central bank could potentially "adjust" its policy in response to "improving economic conditions," he declared at an event in Sintra, Portugal. Meanwhile, Janet Yellen said yesterday she didn't expect another financial crisis in "our lifetimes" and warned against any unwinding of financial reforms.

A blow to the Trump agenda? U.S. stock markets sold off on Tuesday after Republican leaders postponed a Senate vote on healthcare reform until after the July 4 recess. Senate Republican leader Mitch McConnell said there was a "really good chance" the bill will eventually be passed despite the delay and a number of GOP lawmakers expressing their reservations.

He called it "The Engima Network." Six weeks ago, David Webb, an activist investor and former director of the Hong Kong exchange, issued a report on "50 stocks not to own". Yesterday, most of the shares he named abruptly plunged, pointing to chronic regulatory problems over small-cap shares in the Asian financial hub. Hang Seng took another leg down overnight, falling 0.6% to 25,684.

President Trump is growing increasingly frustrated with China over its inaction on North Korea and bilateral trade issues and is now considering possible trade actions against Beijing, three senior administration officials told Reuters. He's looking at a range of options, including tariffs on steel imports. The news comes as Japanese and EU negotiators meeting in Tokyo press ahead with a free trade deal that aims to counter U.S. protectionism.

Bahrain has accused Doha of a "military escalation" in the crisis that has embroiled the region, warning there would be consequences after Turkey deployed additional troops to its base in Qatar. Several Arab states have severed diplomatic ties with the nation, as well as trade and travel links, in the most serious internal crisis since the formation of the Gulf Cooperation Council.

Tensions are at a high in Venezuela as a police helicopter fired 15 shots at the Interior Ministry overnight and dropped four grenades on the Supreme Court, however, there were no reports of injuries. It comes ahead of President Maduro's July 30 vote for a special super-body called a Constituent Assembly, which could rewrite the national charter and supersede other institutions such as the opposition-controlled Congress.

A Brazilian Senate committee will review a bill today that would loosen the country's mazelike labor law, which has been a big deterrent for investment. Markets have rallied as it advanced through the lower house earlier this year, but new corruption allegations against the proposal's main supporter, President Temer, have fanned opposition, making its approval more complicated.

Stocks

Hackers have struck again in another large-scale cyberattack that targets some of the world's biggest corporations and government infrastructure. It involves malware known as "Petya," locking victims' computers and asking them to pay a Bitcoin-based ransom of $300. The disruption has spread to Maersk (OTCPK:AMKAF), Merck (NYSE:MRK), WPP (NASDAQ:WPPGY), Reckitt Benckiser (OTCPK:RBGLY) and Rosneft (OTC:RNFTF), who all blamed IT outages on the attack.

Facebook has now hit 2B monthly active users, representing a doubling of its user base in just the past five years. It hit the 1B user mark in October 2012, the year it went public. It's the latest of a few metric milestones for Facebook (NASDAQ:FB), which celebrated 250M daily users of Instagram Stories last week, and Instagram overall hitting 700M MAUs in April.

Holding its annual shareholders meeting today, Toshiba (OTCPK:TOSYY) said it would file a lawsuit against Western Digital (NYSE:WDC), claiming ¥120B ($1.07B) in damages for interfering with the sale of its memory chip division. Toshiba also decided to shut out Western Digital employees - based outside the Yokkaichi chip plant - from accessing information relating to the two companies' joint venture.

Looking to strengthen its cloud business, Alibaba (NYSE:BABA) is closing in on a deal to acquire ZTE's (OTCPK:ZTCOY) software subsidiary, sources told Bloomberg, quoting a price tag of between 2B and 3B yuan ($294M-$441M). A sale will also help replenish ZTE's coffers, depleted by a record $1.2B fine levied this year by the U.S. government for violating sanctions on technology exports.

The Department of Homeland Security will start construction on four to eight prototypes for a border wall in the San Diego area this summer, although it has not yet chosen vendors. Funding for the wall was not included in the budget submitted by the White House for fiscal year 2018, but the DHS has allocated $20M from other programs to pay for the prototypes. Possible beneficiaries: ACM, CX, CXW, EXP, FLIR, FLR, GEO, GVA, KBR, MLM, NUE, STLD, SUM, TPC, TTEK, USCR, USG, VMC, WMS, X

CNN retracted a false story which suggested a link between a Trump associate and a Russian fund after being threatened with a $100M libel lawsuit, according to the NY Post. The drama came amid federal scrutiny of corporate parent Time Warner's (NYSE:TWX) pending purchase by AT&T (NYSE:T) - and the widespread belief among media execs that CNN President Jeff Zucker can't survive a merger.

The heat-not-burn wars... Japan Tobacco (OTCPK:JAPAY) hopes to catch up with Philip Morris' (NYSE:PM) "IQOS" in smokeless tobacco by expanding the number of public places that allow its vaping product "Ploom Tech." Tobacco firms see Japan as the vaping industry's test ground, as e-cigarettes using nicotine-laced liquid are not allowed under the country's pharmaceutical regulations.

Bolstering its growing healthcare business, Philips (NYSE:PHG) has agreed to buy Spectranetics (NASDAQ:SPNC) for $38.50 per share in cash, or a total value of $2.2B, including debt. Spectranetics uses techniques including lasers and tiny drug-covered balloons to clean the insides of veins and arteries that have become clogged due to heart disease. SPNC +25% premarket.

Jury selection in the trial of Martin Shkreli is set to enter its third day, as the difficulty of finding impartial jurors becomes apparent in a case involving pharmaceutical company Retrophin (NASDAQ:RTRX). "I understand Mr. Shkreli, God bless him, has brought this notoriety upon himself," his lawyer told District Judge Kiyo Matsumoto. "Nevertheless, Shkreli has the right to have jurors who aren’t biased."

The Port Canaveral Board of Commissioners is scheduled to consider SpaceX's (Private:SPACE) proposal today on expanding facilities to store its reusable rocket boosters as it increases the pace of its launches. Another Elon Musk dream? He's talking to Chicago Mayor Rahm Emanuel about the possibility of digging a tunnel from the city's downtown area to O'Hare airport.

Speeding up airport security... American Airlines (NASDAQ:AAL) is buying new 3-D carry-on bag screeners that it will deploy at eight U.S. airports once the machines get fully certified by the TSA. 3-D scanners not only give TSA agents a clearer view of potential problems, but the machines - built by Analogic (NASDAQ:ALOG) - are designed to go twice as fast checking carry-on bags.

NASA has cleared a significant milestone to reviving supersonic passenger jet travel in the U.S. It's completed a preliminary design review for a plane, drawn up with Lockheed Martin (NYSE:LMT) as lead contractor, that uses Quiet Supersonic Technology, which creates a soft "thump" rather than a loud sonic boom. The boom is what led federal authorities to ban supersonic passenger flight over land in 1973.

Today's Markets

In Asia, Japan -0.5%. Hong Kong -0.6%. China -0.5%. India -0.4%.
In Europe, at midday, London flat. Paris -0.3%. Frankfurt -0.5%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq -0.3%. Crude -0.5% to $44.03. Gold +0.5% to $1253.40.
Ten-year Treasury Yield +5 bps to 2.25%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 International trade in goods
10:00 Pending Home Sales
10:30 EIA Petroleum Inventories
11:30 Results of $13B, 2-Year FRN Auction
1:00 PM Results of $28B, 7-Year Note Auction