Wednesday, June 16, 2010

Today’s Top Stories-(European paper says EU250B liquidity facility being prepared for Spain

Today’s Top Stories

· Spain - more speculation of a bailout for Spain (European paper says EU250B liquidity facility being prepared for Spain).....Spain/EU denies (again)....Spain/German bond spread hits lifetime high….Spain insists a meeting scheduled for this Fri w/IMF officials has nothing to do w/a bailout; Spanish debt sale scheduled for this Thurs & will be closely watched. 

· Germany - Is Merkel's Government About to Crumble?    Merkel facing her own "Waterloo" at an event coming up June 30; a failure to have her selection for president voted into the job could doom her government (Spiegel)

· European banks - ECB’s Paramo says EU banks face large funding needs.....“Over the next few years the euro-area banking sector will face large funding needs....The 20 largest euro-area banking groups have about 800 billion euros of long-term debt outstanding that will need to be refinanced between May 2010 and end-2012" (Bloomberg)

· Russia to buy Canadian and Australian dollars for the first time in a diversification move – Bloomberg 

· Europe eco data - UK Consumer Confidence fell in May, Eurozone May CPI came inline w/expectations (w/ECB’s Stark separately saying that there are no inflation risks in sight) and UK Apr. Unemployment fell more than expected.

· BP/GOM Update - Obama speech Tues night seen as non-event; only 18 min and didn’t contain any specifics (he talked about achieving energy independence, although again nothing specific was unveiled - note that solar stocks rallied Tues in anticipation of a new initiative being unveiled last night); also Bloomberg has a separate article saying that despite the GOM spill, there isnt a lot of momentum on Capital Hill for climate legislation ahead of the Nov mid-terms; there are fre interesting BP-related stories this morning: 1) Bloomberg says talks between WH and BP officials have broken down re creating an escrow account; 2) Reuters says that BoA has told its traders to cut back on dealings w/BP; 3) scientists again raised their forecast for the Deepwater spill size - now thinks 35-60K barrels flowing daily. 

· BP/White House escrow deal falls through; talks continue but the two sides have failed to reach a deal heading into today’s meeting between the president and BP execs (Bloomberg) 

· BAC instructs its traders to limit the duration of its trades w/BP; BoA traders told not to enter trades w/BP that extend beyond June ’11 (Reuters)

· RIG (Transocean) Tues night says the White House deep-water drilling moratorium doesn’t constitute a case of force majuere; "We do not believe that a force majeure event exists as a result of the drilling moratorium,"; separately, Statoil declares force majeure on Maersk rig job in the Gulf (Reuters) 

· PIMCO’s Gross says his firm is moving into equities - "We are making a move into equities...we are recognizing the global market place is not just bond related,"; Gross says equities look attractive - "Corporate equities, however, in terms of valuation are selling at very low (price-earnings) ratios” (DJ)

· Treasuries – Vanguard’s FI head still neg. on TSYs - Robert Auwaerter, head of the fixed-income group at Vanguard Group, says TSY yields will rise; DJ

· Fed officials may trim forecasts for U.S. economic growth when they meet next week – Bloomberg 

· For-profit colleges – positive news Tues night – DOE has delayed a decision on “gainful employment”, which concerns the treatment of for-profit college programs whose graduates do not earn enough to repay their loans.  Move was somewhat expected but could be a mild pos. for the group (NYT) 

· Australia mining tax – Rudd says he has some flexibility on the tax, but not the 40% rate; will consider treating sectors of the mining industry differently – Reuters 

· SP500 technicals - Strong rally cuts through clustered resistance including 1106 June 3,14 highs and 1109 200 day moving average (now day support). Short term tone stays positive with continued closes above the 1041-1106 range, setting up a potential move toward 1125-1150 summer target. Short term bears retake the agenda below 1077/1072.  Short term resistance is 1119/1123/1125 then 1130 followed by another resistance cluster at 1149-1152. Day support is at 1109/1106. Beyond that, short term support is 1089/1088 and then 1079/1077/1072/1070.  Krauss 

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