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Markets nervously await the FOMC. U.S. stock futures and European shares were higher at the time of writing as markets await the outcome of the FOMC's two day policy meeting, which starts today. All the focus is on whether the Fed will announce the winding down of its bond-buying. Yesterday, U.S. shares fell on FT speculation that the taper was drawing near, only for them to recover somewhat after reporter Robin Harding cast doubt on his own predictions.

U.K.: G8 makes progress on tax reform. British Prime Minister David Cameron will lead talks on the exceptionally thorny topic of international tax reform at the G8 summit in Northern Ireland today. The discussion will focus on the key areas of transparency, tax havens and multinational tax avoidance. "We have made more progress in the last 24 hours than people have had in the past 24

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AT&T reportedly thwarted in Telefonica bid. AT&T (T) has reportedly been thwarted in a €70B bid to acquire Telefonica (TEF) by Spain's government, which has the power to stop the sale of any company that is deemed strategic. The U.S. carrier told state representatives that it would take on the Spanish operator's €52B of debt as part of any transaction. Telefonica said it hasn't "received any approach or...indication of interest," from AT&T. The Spanish company's shares were +3.1% at midday in Madrid.

Kabel Deutschland sees Vodafone deal at €11B. Kabel Deutschland (KBDHY.OB) reportedly wants Vodafone (VOD) to pay over €8B in cash to acquire the German cable operator and assume nearly €3B in debt. The cash component would represent a premium of around 10% on Kabel's Friday close in Frankfurt and and an 11%+ premium on the €7.2B that Vodafone has already reportedly offered.

Boeing,

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Detroit restructuring plan set to be unveiled. Detroit emergency manager Kevyn Orr is due to unveil his restructuring plan for the debt-laden city today to unions, bondholders and bond insurers, including MBIA (MBI) and Assured Guaranty (AGO). Orr will reportedly try to persuade creditors to accept as little as 10 cents on the dollar for the city's debt. He has indicated that creditors would be far better off compromising now than taking their chances with a bankruptcy filing.

Hilsenrath: Tapering doesn't mean end of QE. The WSJ's Jon Hilsenrath, who seems to have the inside track at the Fed, yesterday quoted officials as saying that a tapering of asset purchases doesn't mean an end to asset purchases, and a hike in short-term interest rates isn't anywhere close to being on the radar at this point. The report helped Wall Street to close higher, although stock

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Great global sell-off continues. The Nikkei (NKY) has taken another thrashing, plunging 6.4% to 12,445.38 as uncertainty about the Fed's QE program continues to grip global markets. The fall has prompted further dollar weakness, with the greenback -1.8% against the yen at the time of writing. Chinese shares plunged in reaction to tepid economic news, while the sell-off in emerging markets continued. European stocks and U.S. stock futures have joined the anti-party, as have commodities.

Safeway surges on $5.7B sale of Canadian unit. Safeway (SWY) shares defied the global rout and jumped 21% premarket after the supermarket retailer said it has agreed to sell its Canadian unit for C$5.8B ($5.7B) to Empire's (EMP.A) Sobeys subsidiary. Safeway will use $2B of the proceeds to repay debt and most of the rest on buybacks. "The higher multiples attributed to Canadian supermarket companies" contributed to Safeway's

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Vodafone confirms Kabel Deutschland interest. Vodafone's (VOD) shares were -3.95% premarket after its stock went ex-dividend and following the company's confirmation that it is interested in acquiring Kabel Deutschland (KBDHY.OB). Vodafone has reportedly offered €10B for the German cable TV, Internet and telecom operator, whose shares were +9.5% at lunchtime in Frankfurt. That gives it a market cap of €7.17B. Any deal would mark a major departure by Vodafone from its focus on the cellular market.

U.K. regulator mulls probe into possible forex manipulation. The U.K.'s market supervisor, the Financial Conduct Authority, is reportedly considering opening an investigation into the alleged manipulation of WM/Reuters benchmark foreign-exchange rates, which are used to fix the value of trillions of dollars of investments. The practice has apparently been going on every day for at least a decade at major banks.

Amgen's Enbrel blockbuster drug no better than

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SoftBank raises bid for Sprint to $21.6B. SoftBank (SFTBF.PK) has sweetened its bid for Sprint (S) by increasing its offer to $21.6B from $20.1B - or $7.65 vs $7.30 - and raising the cash component by $4.5B. The deal would also give the Japanese carrier 78% of Sprint instead of 70%. Paulson, owner of 7%+ in Sprint, backs SoftBank's revised proposal. Dish (DISH), which has made a $7-a-share bid for Sprint worth $25.5B, is reviewing its options. Clearwire (CLWR) remains a wild card.

BOJ refrains from adding to stimulus. As expected, the Bank of Japan has kept its ultra-loose monetary policy unchanged, although it gave a slightly more upbeat outlook for exports and the wider economy. The BOJ also said "some indicators suggest a rise in inflation expectations." Some market participants had hoped that the bank would take action to address bond volatility, such as by

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Nikkei jumps 4.9% as Japan GDP revised up. Japan has revised its annualized Q1 GDP reading to 4.1% from an initial reading of 3.5%, helping to send the Nikkei (EWJ, DXJ) up 4.9%. A strengthening of the dollar against the yen following U.S. payroll data on Friday also helped boost stocks. However, Barclays warned that the GDP revision "should not be viewed as a reflection of economic strength," as it was mainly due to a quirk in the way the data is calculated.

Booz Allen employee source of NSA leaks. Government contractor Booz Allen Hamilton (BAH) has become caught up in the revelations about the National Security Agency's surveillance programs after one of its employees, Edward Snowden, came forward as the source of the leaks. Booz Allen has said in securities filings that leaks could hurt its business - the firm generated 98% of

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NSA tracks data from swath of tech firms. Revelations over government electronic surveillance have widened to include several of the country's largest technology companies under a program called PRISM. A National Security Agency document reportedly shows that it has "direct access" to the servers of Microsoft (MSFT), Yahoo (YHOO), Google (GOOG), Facebook (FB), Paltalk, AOL (AOL), Skype, YouTube and Apple (AAPL). While the NSA document says PRISM has the consent of these firms, those contacted denied any knowledge of the program. The question is whether the disclosures will cause a drop in user activity.

Samsung plunges on analyst pessimism. Samsung's (SSNLF.PK) shares plummeted 6.2% in Seoul and wiped $12B off the company's market value, although it's still worth $188B. The plunge followed bearish analyst reports after the company met with investors to temper Galaxy S4 expectations. JP Morgan wrote that Q3 shipments will probably disappoint

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NSA demands consumer records from Verizon. The Foreign Intelligence Surveillance Court has ordered Verizon (VZ) to provide the National Security Agency with records of all calls made within the U.S. or originating in the U.S. for a three-month period ending on July 19. Verizon, which has tens of millions of customers, has to hand over the numbers of the parties on a call, location data, call duration and unique identifiers. However, the contents of the conversation are not covered.

Microsoft, FBI take on massive cybercrime ring. Working in partnership with the FBI and authorities in over 80 countries, Microsoft's (MSFT) Digital Crimes Unit has launched a successful attack on one of the world's biggest cyber-crime rings. Microsoft forced the closure of at least 1,000 out of an estimated 1,400 malicious networks known as Citadel Botnets, which are believed to have stolen over $500M from accounts

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Japanese PM unveils "third arrow" of reform... Japanese Prime Minister Shinzo Abe has announced a sweeping package of reforms, or the "third arrow" of his grand plan to pull his country out of deflation. The arrow itself comprises three "pillars:" improving productivity in the private sector, labor reform, and developing new markets. The program includes allowing Japan's massive public pension funds to buy more stocks, the creation of special economic zones, free-trade agreements, privatization, and power-market reform. The hope is to raise average income by 3%, which is greater than the two-year inflation target of 2%.

...but Nikkei plunges in disappointment. The Nikkei (EWJ) dropped sharply once again and took other Asian bourses with it, with the fall this time because of disappointment with Shinzo Abe's grand reform plan. The measures "aren't enough for Japan to achieve sustained economic growth and overcome deflation," says

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Ballmer plans Microsoft reorganization. Microsoft (MSFT) CEO Steve Ballmer is reportedly planning to reorganize the company as he looks to foster better co-operation between product teams. Under one possible plan, Microsoft would put more focus on devices and services, and cut the number of divisions from eight to four. The groupings would be enterprise business, hardware, applications and services, and operating-systems. The speculation follows news that CIO Tony Scott has left the company.

AIG, Prudential, GE Cap to be labeled systemically important. As expected, the Financial Stability Oversight Council has proposed to designate AIG (AIG), Prudential Financial (PRU) and GE Capital (GE) as systemically important. Prudential is evaluating whether to appeal the proposed determination, although AIG won't. The Fed has yet to finalize its requirements for systemically important non-bank financial companies, but they're expected to include stress tests and higher capital holdings.

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Nikkei,

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Sunbelt apartment firms to merge in $8.6B deal. Colonial Properties Trust (CLP) and Mid America Apartment Communities (MAA) have agreed to merge in a deal that will create a Sunbelt-focused apartment REIT with a combined market cap of about $8.6B. Under the terms of the agreement, each CPT share will be converted into 0.36 of a newly issued MAA share.

Eurozone PMI improves markedly but recession still on. Eurozone manufacturing PMI rose to a 15-month high of 48.3 in May from 46.7 in April, with the downturn easing across the bloc, although price deflationary pressures remained. Of particular note was Spain, whose PMI jumped to its best level in two years with an increase to 48.1 from 44.7. However, the overall eurozone data "still suggest that GDP is likely to have fallen 0.2%" in Q2, says Markit, extending the eurozone's recession into a seventh quarter.

Drug

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Eurozone unemployment hits record - again. As expected, eurozone unemployment edged up to a new high of 12.2% in April from 12.1% March, with an eye-watering 19.4M people without a job. Meanwhile, inflation rose in line with consensus to an annual 1.4% in May from 1.2% in April, while core CPI increased to a greater-than-expected 1.2% from 1%. Inflation is well below the ECB's target of just under 2%, so could give the bank further room to loosen monetary policy.

Japanese stocks break nine-month winning streak. The Nikkei 225 (EWJ) closed +1.4% today after several volatile sessions, but that wasn't enough to prevent the index from ending May 0.6% lower, its first monthly loss in ten. Stocks rallied following a report yesterday that Japan's $1T Pension Investment Fund could increase its equity allocation.

Clearwire delays vote on buyout offers. Clearwire (CLWR) will adjourn

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Japanese shares plunge again. A late sell-off in an already weak market caused the Nikkei (EWJ) to close -5.2%, taking the index's losses since the volatility began late last week to over 14%. Fears about the end of the Fed's QE program and the market undergoing a correction are cited as reasons for the turbulence, as well as the falling dollar-yen (FXY), although the equity-currency relationship seems to have become reciprocal.

Dish raises Clearwire offer to $4.40 a share. Dish (DISH) has increased its offer for Clearwire (CLWR) to $4.40 a share, easily trumping Sprint's (S) revised $3.40 bid. The proposal values Clearwire at about $6.3B and comes before its minority shareholders vote on Sprint's offer on Friday. The bid raises the question as to what Dish is up to, given that it's also trying to acquire Sprint. Clearwire's shares were +21.55% premarket.

Berkshire

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Smithfield Foods soars on buyout report. Smithfield Foods (SFD) is reportedly close to selling itself to China's Shineway in a deal worth $4.5-5B. The acquisition would represent a 25-30% premium over Smithfield's close yesterday of $25.97. The speculation comes amid calls from large shareholders for the company to split up. Smithfield's shares were +23.2% premarket at $31.99.

U.S. Treasurys stabilize following blood-letting. U.S. bond prices were higher premarket following the carnage yesterday, when the 10-year yield rose 15 bps to a 13-month high of 2.16%. Maybe more troubling for those borrowing short and lending long was a 12 bp jump in the 5-year yield to 1.01% (it's up from 0.65% in a month), and a 4 bp pop in the 2-year yield to 0.28%. It was shoot first, ask questions later for many income plays such as mREITs, utilities and leveraged income funds.

U.S. prosecutors

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Valeant soars on $8.7B deal to buy Bausch & Lomb. Valeant (VRX) shares surged 7.7% premarket following news the company will acquire Bausch & Lomb for $8.7B in cash, including $4.2B in debt. The purchase - Valeant's 15th since 2010 - will boost its offerings in the ophthalmology sector, which, said CEO Mike Pearson, the company has been looking at for three years. "It's a lot like dermatology - a growing market, a growing specialty."

China steals designs from top defense firms. Chinese hackers have stolen the designs for some of the U.S.'s most advanced weapons' systems, a study for the Pentagon has reportedly alleged. The programs to have been breached include missile systems from Raytheon (RTN) and Lockheed Martin (LMT), and aircraft made by Boeing (BA), Textron's (TXT) Bell Helicopter and United Technology's (UTX) Sikorsky. Pentagon officials are not surprisingly frustrated by the degree

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Tokyo shares close higher following another volatile day. Japanese shares ended +0.6% after a roller coaster session in which stocks bounced nearly 4% and then plunged anew - dropping to more than -3% before eventually recovering. The gyrations followed yesterday's slump of 7.3%. The currency markets have also been volatile, with the dollar -0.7% at ¥101.32 at the time of writing. Despite the stabilization of Tokyo shares, U.S. stock futures were looking shaky premarket, while Europe had turned red after being in the green earlier.

P&G turns to former CEO Lafley to rework his magic. Procter & Gamble (PG) has taken what it hopes is no gamble by reappointing A.G. Lafley as CEO to replace the retiring Bob McDonald. The latter's departure comes after P&G's growth stagnated, prompting vocal criticism from activist investor William Ackman. During Lafley's first stint as CEO from 2000-2009, he

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In Japan: Gravity. Isaac Newton paid Japan's equity markets a visit Thursday and it turns out that even Japanese stocks are subject to the law of gravity (who knew?). A confluence of factors sent the Nikkei (EWJ, DXJ) plunging 7.3% in a wild session where the swing from intraday high to low was ~9%. Yields on JGB 10s (JGBL) spiked above 1% at one point, as an already skittish and volatile market was further rattled by what have generally been perceived as hawkish comments out of Ben Bernanke and other Fed officials on Wednesday. Yields pulled back in late trading. Compounding the problem for Japanese stocks was the yen (FXY), which was strong against the dollar throughout (the USD/JPY pair traded down to 101.8 during the Asian session), and a weak read on Chinese manufacturing courtesy of the HSBC flash PMI, which printed in contraction territory

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Bird watching: Doves may offer policy hints in testimony, meeting minutes. Fed watchers (a title which nowadays seemingly encompasses nearly every market participant) will be listening closely to Ben Bernanke's testimony before the Joint Economic Committee (10 a.m.) in hopes of gleaning some hint as to the future course of monetary policy, even as the Chairman is likely to reveal little in his remarks. Perhaps more interesting will be minutes from the FOMC's latest policy meeting due, as usual, at 2:00 p.m.

A Dimon by any other name… A bid to strip Jamie Dimon of his chairmanship at JPMorgan (JPM) failed Tuesday when "only" one in three shareholders voted for a proposal to split the dual role of chairman and CEO. It appears the considerable time expended by the board over the past several weeks lobbying for votes indeed paid dividends (no pun intended) as support

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Senate says Apple used Irish subsidiaries to avoid taxes. A Senate report purports to show Apple (AAPL) used three Irish subsidiaries that have no tax residency in either Ireland or the U.S. to avoid paying taxes on some $74B in profits from 2009-2012. Although the practice was legal and is to a certain extent commonplace, the report says AAPL's scheme was unprecedented in terms of both its complexity and its brashness in the "use of multiple affiliates that had no semblance of a physical presence." The most glaring example is an Irish affiliate which reported profits of $30B over the period in question but paid no taxes whatsoever. Tim Cook will defend the company (which he says has done nothing wrong) before Congress today.

Cohen, SAC square off with prosecutors. A settlement between SAC Capital and the federal government regarding allegations of insider trading was likely