· China – data out Wed night and Thurs reveal that growth, while moderating some, remains robust and isn’t collapsing as some feared; Thurs night, people are pointing to slightly weak IP numbers and a hot inflation reading (the inflation number came in a bit higher than expected, which is raising worries that officials may take action to cool price advances). Also – the strong Chinese numbers this week (esp. the export numbers) is sparking renewed rhetoric out of US officials about demanding a higher yuan, among other actions.
· Spain denies report of aid request to EU – late in NY trading on Thurs, the FT Deutschland reported that Spain was making a request to the EU for financial assistance; Spain on Fri denied the report. "This is lie. There's no rescue. There's nothing asked for, nor will there be, nothing, but nothing. I don't know where they got this from," (Reuters); Santander’s chief says Spain worries are being overblown in the market place. The Spanish government is implementing the "necessary measures" to shore up its public finances, a European Commission spokesman said Friday.
· Portugal has no plans to use emergency European Union funding and is confident it can borrow at lower rates in international markets, the country’s finance minister has said. FT
· European debt sales – a heavy week of issuance from some of Europe’s weaker nations goes well, inc. Fri’s Italian auction (Italy sold 4 billion euros of its new 3.0 percent June 2015 BTP); while Italy’s demand wasn’t as strong as some of the auctions earlier this week, given that prices have rallied, it is being taken as a positive. The auctions this week benefited from strong domestic demand.
· Mobile update – O2 in the UK follows AT&T’s move and drops unlimited mobile data plans; senior mgmt says the model behind such plans “broken”; Orange, 3, and T-Mobile all considering similar moves (London Independent); note that when AT&T announced the move couple wks ago, the telecom equipment stocks came for sale amid worries that network utilizations would fall.
· GS – NY Post says CFO Viniar considering stepping down while GS president Cohn said there are no indications that a settlement is close w/the SEC.
· BP Update – CEO Hayward tells WSJ that a dividend cut being considered for Q2, but no decision has been made; meanwhile, a new report out late Thurs reveals that GOM spill may have been gushing at rate of 20-40K barrels per day, much larger than expected. There will be a lot of catalysts next week as BP officials travel to the White House and appear before Congress.
· Australia and mining tax – there was some spec earlier on Thurs (early in NY session) that PM Rudd may be backing off planned resource tax; however, Rudd on Fri denied spec of a swift deal w/the mining industry; BHP also rejected spec that it was pursuing a compromise w/the gov’t (Reuters)
· Extension of home tax credit? No really - Reid seeks homebuyer tax extension (wants to extend the closing deadline to Sept. 30 for buyers who met the April 30 deadline to have a signed contract....currently have to close by June 30) this won't drive NEW housing sales - this means that if you have a contract signed by Apr 30, you will have some extra time to close on that contract.....
· NSM – overall strong results & outlook, although some making issue out of bookings slowing in May (“Company's run rate of orders, total orders, that is, was highest in the March and April months of the quarter and then moderated a little bit in May, but all three months of Q4 had bookings running higher than billings”); separately, see JPMorgan/Danely note on the semis following trip through Asia (somewhat cautious tone).
· DB – co says its US unit Taunus not an issue; recall has been some noise this week around the unit’s capital; co on Fri says US unit “not an issue” Bloomberg
· Japan’s new PM warns of a potential default if debt not tackled - warned on Friday that the country risked defaulting on its borrowing if it failed to rein in its massive public debt. Reuters
· Financial reg reform – where things stand now ahead of next reconciliation conf (which will take place this Tues) - In terms of the big issues for stocks: 1) Volcker Rules (seems like language could be strengthened, which is a neg. for banks); 2) Lincoln swaps/derivatives (Lincoln’s victory this week gives this amendment a shot in the arm although still seems like major players, inc, Dodd, Geithner, etc, aren’t for it); 3) Durbin (there is mounting bipartisan opposition to this amendment); 4) Collins (she has already acknowledges that tweaks will have to be made to this, esp. around TruPS).
· JPMorgan report - Government debt sustainability in the age of fiscal activism - Developed market fiscal positions deteriorated by a massive 6.2%-pts of GDP between 2007 and 2010, while net debt skyrocketed almost 20%-pts of GDP, reflecting the depth of the recession in a world of increased fiscal activism and dependence on asset prices for revenues. Japan stands furthest from achieving sustainability in our 2013 forecast due to its high debt and low nominal GDP growth. The US will be much closer given its better nominal growth outlook, but still fall short. Among the G-3, the Euro area will stand closest to debt sustainability in 2013. Lupton
· SP500 technicals update – Krauss - S+P 500 Cash Index closed at 1087. Sharp bounce up to 1088 June 8-9 c=a improves the tone from Wednesday’s weak close. Daily momentum shifts to buy mode, as the market stays in the 1041-1106 May-June range. Follow through past 1092 and the 1098-1100 hourly gap could set up another retest of the 1108 200 day moving average and other key resistance in the low 1100s. Day bulls keep the agenda above 1072.
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