· Europe: DJ Euro Stoxx flat; FTSE +0.1%; Japan flat; China closed; Hong Kong flat; India +0.4%; Australia flat; SP futures +4.6pts.
· Greece Update - Moody’s came out Mon (at ~1:08pmET) and downgraded Greece. The Moody's action was taken in stride by the markets and it didn’t seem to have a major impact on the NY equities tape as Moody s already had Greece on review for a d/g since Apr 22 and following the action is now inline more-or-less w/S&P (both S&P and Moody’s have Greece at the highest junk rating while Fitch remains @ BBB-, which is lowest IG rung). Greece came out late Mon and said the Moody’s downgrade ignored recent progress made on the budget front while the FT said Chinese funds are going to announce on Tues investments in some Greek projects. Both Citi and Barclays said they will be taking Greek debt out of some of their indices, but keep in mind that the ECB already changed its repo collateral rules for the country's paper some weeks back in anticipation of further ratings declines. Greek is effectively out of the bond markets for the next three years as a result of the recent European bailout. The market is most focused on Spain for the moment and the co's debt sales coming up this Thurs.
· Greece - China prepares to invest in Greek projects; Chinese SWFs could invest in Greek shipping, logistics, and airport projects; Chinese officials could seal deals during visit to Greece to Tues (FT) http://www.ft.com/cms/s/0/8e736a84-77d9-11df-82c3-00144feabdc0.html?ftcamp=rss
· Greece - Citigroup said on Monday it is preparing to remove Greek government debt from its World Government Bond Index (Reuters)
· Greece - Greek government bonds will be removed from Barclays Capital’s Global Aggregate, Global Treasury, Euro Aggregate and Euro Treasury indexes from the end of June – Bloomberg
· Germany - Angela Merkel's government threatened with collapse; German coalition faces trouble on several fronts; Election of new president could prove to be catalyst – Guardian. http://www.guardian.co.uk/world/2010/jun/14/angela-merkel-germany-coalition-collapse
· Eurozone – Cautious comments from Fitch. Fitch sees “increasing concern that there will be a double-dip recession in the Eurozone,” Bloomberg reported, citing R. Hunger, MD of EMEA.
· Europe - Standard & Poor's Ratings Services believes that European speculative-grade companies still have some way to go to tackle the 'wall of refinancing' they face, following the recent stalling of the speculative-grade bond market
· EU leaders to back levy on financial institutions - initiative to be rolled out on Thurs, but specifics still need to be considered. EU hopes to build momentum for the measure ahead of June 26-27 G20 leaders summit. DJ
· Spain's largest union is considering Sept. 29 as a possible date for a general strike, to coincide with Europe-wide protests against austerity measures (Reuters)
· “Spain banks in credit crunch” says the WSJ – Spanish officials have acknowledged that its banks and companies are having a tough time finding credit. BBVA said credit markets remain closed for many Spanish companies. WSJ http://online.wsj.com/article/SB10001424052748704324304575306471722364404.html?mod=WSJ_hps_LEFTWhatsNews
· Spain – Borrowing costs rose at 12 & 18 month bills auctions. Avg. yield on 12m notes was 2.303% vs. 1.59% last month and avg. yield on 18m notes was 2.837% vs. 1.951% on May 18th. Bloomberg
· Spain to cut renewable energy goals - Spain will aim to increase clean power capacity to 70 gigawatts by 2020 from 40 GW at the end of 2009, compared with a previous goal of 75 GW. The objective for solar energy will be cut to 13.4 GW from 15.7 GW while the target for offshore wind power will be cut to 3 GW from 5 GW (Blomberg)
· European equity strategy - Equities are down on the year but Cyclical sectors are holding up well, actually outperforming the market ytd, as well as over the past 1m and 3m. We are facing questions whether Cyclicals are the “next shoe to drop”, similar to ’08 when it was Financials that rolled over first, and Cyclicals followed. We do not agree with the rotation call, and remain OW Beta, a view we held throughout this year. While the macro momentum appears to have peaked, the earnings momentum remains a key factor driving stock performance and it continues to be resilient. So far ytd, 2010 European Cyclical EPS moved up by 20%, vs Defensives EPS which is flat. Matejka
· Swiss Moving closer to approving UBS deal after the lower house of parliament backed the deal (Reuters)
· UK pound – PIMCO thinks the pound could be vulnerable to further declines due to sovereign debt risks and inflation – Bloomberg
· Europe's Alumina says investors overreacting - Investors are "clearly overreacting" to the scale of the euro zone crisis, Joaquin Almunia, EU Commissioner for Competition Policy and vice president of the European Commission - CNBC http://www.cnbc.com//id/37699819
· Europe update - AXA fears "fatal flaw" that will rip apart Eurozone - Analysts at the French financial group AXA see a serious likelihood that the eurozone will break in half or disintegrate, dismissing Europe's €750bn (£623bn) rescue package for Club Med debtors as a stop-gap measure that misdiagnoses the problem. http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7827867/AXA-fears-fatal-flaw-will-destroy-eurozone.html
· German ZEW for June came in weaker than expected. ZEW fell to 28.7 from 45.8 vs, St, 42.5. DJ
· Eurozone Apr. Trade Surplus Smaller than expected. EUR 1.8B vs, St, EUR 3.0B. DJ
· UK May CPI lower than expected. +3.4% vs. St. +3.5% DJ
· Perspectives on China and Global Commodities from J.P. Morgan’s China Conference 2010 - There was general acknowledgment of some short term concerns about the economic environment, but confidence about the long term prospects. Greg Boyce emphasized that China remains in a commodities “Supercycle”, which is effectively a multi-decade period of rising demand and growth. Although copper inventories in China are at elevated levels, stockpiles are still relatively small compared to demand. Positive outlook on gold. Ulrich
· China – the country’s regulator warns on property and local gov’t risks - China's Banking Regulatory Commission (CBRC) said on Tuesday that the global economic recovery is likely to be "slow and tortuous" and China faces risks from a multitude of factors. CBRC's annual report also warned of risks from "imprudent behavior" in personal housing loans in 2010. Reuters
· Chinese Premier Wen Jiabao urged better treatment of the nation's vast army of migrant laborers; Wen said he recognized that a new generation moving from poor villages to work in factories and on building sites would not be satisfied with the same tough conditions their parents endured. – Reuters
· China & the yuan – a think tank in the country says a sharply higher yuan revaluation would wind up hurting China’s economy. DJ
· China - Jeremy Grantham thinks China’s tightening measures could allow the country to avoid a US-style housing market crash – Bloomberg
· China leading economic indicator rises - The measure gained 1.7 percent to 147.1 in April, compared with a revised 1.2 percent increase in March – Bloomberg
· China will make an announcement on Hong Kong’s political reform for 2012 by the end of this week – Bloomberg
· Japan – the BOJ’s two-day meeting wrapped up today; the BOJ will offer as much as Y3T ($33B) in loans to companies for as long as 4 yrs. The move was expected – Bloomberg
· Australia – Rudd says miners shouldn’t be so surprised by his mining tax proposal as it was first suggested back in ’08. However, some of Rudd's own senior ministers have conceded in recent days that the tax policy should have been subjected to more rigorous scrutiny before being unveiled May 2. DJ
· Australia – Rudd could be near announcement on tax changes - Rudd's Labor government is near an agreement with some sectors of the nation's key mining industry over changes to the "resource super profits tax," which would assess a 40% tax on the net income of many mining companies, the Sydney Morning Herald reported. Marketwatch http://www.marketwatch.com/story/australian-mining-tax-changes-reportedly-imminent-2010-06-14?siteid=rss&rss=1
· Australia minutes - The Reserve Bank today released the minutes from its June Board meeting at which officials elected to leave the cash rate steady. There were few surprises. As expected, the minutes confirmed that the RBA’s decision to pause earlier this month owed mainly to the troubling events in Europe. Kevans
· North Korea has raised its military readiness though no signs of fresh provocation were visible (AP)
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