Market Update:GS subpoena 12:40pm

Market Update – futures are off their lows of the overnight session (sp500 futures at 1066 as of 12:15pmET vs. overnight lows of 1052), but buyers very hesitant after Fri’s drubbing; the only buyers are really just short covering; the tape remains very tentative w/any rally being viewed as a selling opportunity.  Equities flattish heading into the afternoon, w/people eyeing AAPL/Jobs (1pmET) and the Eurogroup meeting tonight.  There was a lot of noise out of Europe this weekend, but on the whole nothing to change investor’s cautious view of the region.  Hungary tried to backstop from its “Greece-like” comparison comments of last week, but CDS spreads on the country’s debt are still wider.  The theme of the G20 meeting this weekend was one of deficit reduction, which is raising fears that a coordinated worldwide contraction in government stimulus spending could tip the world back into a double-dip.  Meanwhile, it would be hoped that as European governments scale back spending, the ECB would ramp up its bond purchases (this isn’t the case though as buys fell to just EU5.5B in the latest week vs. EU16.5B bought in the first week of the program).  The euro is off the worst levels of the overnight session, but remains under 1.20 still as several officials (and the G20) appear to have countenanced the recent decline (see below for broader update on Europe).  European Finance ministers are expected to formally sign off on the EU440B proposed SPV tonight, although such a move is pretty much widely expected (there was some talk over the weekend that Germany's constitutional court is considering an injunction request against the European bailout).  The FOMC doesn’t meet until later in June (6/22-23) although there was some speculation of an “unexpected” gathering taking place today (this is in accurate as the meeting today is concerning discount rates and takes place somewhat frequently – see below for more).  In the US, a lot of the same market themes from last week are present today w/the weak labor number from Fri continuing to leave a bad taste in investor’s mouths.  The GS subpoena (Goldman received a subpoena from the Financial Crisis Inquiry Commission for failing to hand over documents in a timely manner) prob. isn’t a big deal but is weighing somewhat on Goldman shrs and the rest of the financials (and reminding investors that the SEC issue remains outstanding and unsettled).