From Developed Back to Emerging: Greece's Full Circle

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One of the biggest names in market indexes just dropped a bit of a bombshell: according to them, Greece is now an emerging market country!

There's plenty of worries about capital outflows from emerging markets, but here's a curve ball: last night MSCI, the leader in stock indexes, announced that Greece will now be designated an "emerging market."

Talk about a downgrade! It was upgraded to a developed market some 12 years ago. The Greek stock market is down 1.7 percent today, the worst performer in Europe. This is not just a casual moves: the MSCI indices are tracked by $7 trillion worldwide. It means some who are indexed to the funds will remove Greek stocks.

Speaking of emerging markets: prior to May 22nd— the date Federal Reserve Chairman Ben Bernanke gave his congressional testimony and ignited the current debate on Fed tapering — money flows into emerging markets had been mostly positive.

Indeed, there has been widespread investment in bonds and stocks in many countries (Mexico, Phillipines, Thailand, and even Turkey). In contrast to meager growth in the U.S., and recession in Europe, emerging markets had higher growth and higher interest rates. Even investing in government debt had been a better bet, since many emerging market countries (Thailand, Phillipines, Colombia, Mexico) had seen upgrades of their sovereign date this year.

Emerging economies rely on foreign capital inflow to fund growth. Now that we are starting to see outflows, the currencies of many countries have been weakening.

Emerging markets performance since May 22:

Turkey -18.6%

Mexico -18.5%

Thailand -12.1%

Philippines -11.2%

India -5.1%

Elsewhere:

1) Gigamon priced 6.8 million shares at $19.00, the middle of an expected $18 – $20 range. The company provides data traffic analysis to companies that helps ensure the reliability and security of their network infrastructure.

But the big IPO of the week is expected to price tonight: Coty, the well-known cosmetics and fragrance manufacturer, whose brands include Calvin Klein, Chloe, Adidas, Marc Jacobs, and Sally Hansen.

But the surprise IPO has been Chinese Light in the Box, which makes consumer goods and debuted on the NYSE last Thursday at $9.50, and is currently at $14.30.

This is the first Chinese IPO since YY in November. They have been mired in concerns over accounting issues. This is a big problem, since talk that Chinese internet company Alibaba may go public is all over the place — and that may be the biggest IPO of the year. Still, they may only list in Hong Kong.

2) On Monday, JP Morgan downgraded Lennar on the basis of valuation. Today, KBW upgraded Lennar...on the basis of valuation, saying the recent sell-off (down about 17 percent from its recent high a few weeks ago) was an "attractive entry point."

Here's an interesting stat I didn't know: Lennar has 135,000 lots in its inventory—a roughly 8-year supply—which will "enable it to take advantage of potential land scarcity in certain markets."

3) Mortgage application demand rose last week for the first time in a month as rising rates stimulated prospective buyers. Loan requests for home purchases were up 4.7 percent, while a gauge of refinancing rose five percent. Mortgage rates are up about half a percent since the start of May amid worries the Fed may slow down its stimulus program sooner than had been expected. Fixed 30-year mortgage rates rose to their highest level in just over a year to average 4.15 percent in the week ended June 7.

—By CNBC's Bob Pisani