Today’s Top Stories; On a Bank Tax “Tax Hikes and the 2011 Economic Collapse”

Today’s Top Stories

· Fiscal consolidation - The main takeaway from the G20 meeting this weekend was a reduction in the emphasis on pushing for fiscalstimulus and a shift towards urging countries with fiscal challenges to accelerate the pace of consolidation.  Away from the G20 summit,Germany is pushing ahead w/larger budget cuts while the UK’s Cameron this morning says that country’s budget situation is worse thanexpected and will require larger cuts.  The BBC this morning asks if Europe is moving from Keynesian policies of deficit spending to stimulate growth towards Hoover-like measures.

· Fed outlook from the WSJ – says low rates to stay for long due to renewed market turmoil (stemming from Europe), tepid job growth, and low inflation readings.

· European bailout – more details could come today/tomorrow - European finance ministers meeting - This evening the Eurogroupmeets (the Finance Ministers of the Euro area countries) ahead of the full Ecofin meeting tomorrow (the Finance Ministers of the whole EU).  Separately, Spiegel reported over the weekend that Germany's constitutional court is considering an injunction request against the Europeanbailout (FT Alphaville/Spiegel) 

· Hungary – the country’s cabinet met in emergency sessions over the weekend & will be holding a press conf later this morning; the government is considering introduction of special tax on banks and could change its pension system; the moves are aimed at helping shore up int’l confidence in the nation’s finances; the nation promised to stick to the 3.8 percent of GDP budget deficit target agreed with international lenders for this year (Reuters)

· On a Bank Tax –G20 finance ministers have abandoned their pledge to only introduce bank taxes if a consistent plan could be applied unilaterally on the world’s banks.

· European bank stress tests are nearly complete and the results could be made public according to an ECB official – Reuters

· CEO Hayward claims BP to have made substantial progress in stemming flow; the recently installed containment cap is said to be capturing 16K barrelsper day, (the initial forecast was that the well was capturing 6K BPD but that number was raised steadily throughout the weekend).

· SocGen – the co is apparently telling analysts that it didn’t suffer losses on derivatives (recall this speculation on Fri hit SocGen shares and weighed onthe broader market as well) – Bloomberg

· GS – criticism of Goldman spreads to China – the co is coming under pressure for apparently creating and selling oil hedging contracts to state-owned Chinese companies that lost billions when oil prices plunged (FT) 

· “Tax Hikes and the 2011 Economic Collapse” – Arthur Laffer oped in the WSJ - On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply.  People are accelerating their economic activity and earnings into ’10 to avoid the ’11 tax hike

· Drilling – oilfield services firm OII cut its earnings outlook b/c of the gov’t deepwater drilling moratorium.

· HPQ - HP notebook shipments in May fall short of expectations; May shipments hit 2.6-2.7MM vs. expectations 3.2-3.4MM due to softness in Europe and China.  HPQ will need to ship 3.3MM in June to stay flat.  Digitimes

· In Korea, S. Korea's leader on Saturday ruled out going to war with N. Korea, hours after his government asked the United Nations to punish the communist nation over the sinking of a warship (AP) and S. Korean gov’t bonds rose after the country’s finance minister said interest rates may need to stay on hold for an extended period (Reuters). In N. Korea, Kim Jong-il attended a rare session of the country’s parliament on Monday which replaced the country'spremier (Reuters).