Top Stories -Fin Reg Reform – increasingly looking like Senate vote won’t take place this week; Japan Unemployment Worse Than Expected; $GOOG losing License in China

· China – revision to eco reading prompting concerns around growth; China equities sink >4% to fresh lows; the U.S. Conference Board corrected its Apr. Leading Economic Indicator reading for China from +1.7% to +0.3%, which represents a sharp move lower from Mar.’s +1.2% rise.

· In Europe, the ECB’s EUR440B 12-month liquidity facility is set to expire on Thursday and continues to be a big source of concern for the markets.  The ECB has said it will make liquidity available via 3-month maturities and the focus tomorrow will be on the amount of funds that are rolled into the 3-month maturities w/the FT saying that a number below €150-250B would be considered a positive for the market while anything above €300B would be considered troublesome. Also weighing were comments from the ECB’s Noyer that some banks may suffer from the expiration of the facility and commentary in the FT that Spanish banks are in a “rage” over the facility’s expiration.  ECB Governing Council member Ewald Nowotny said on Tuesday that the ECB is not considering offering banks another batch of 12-month loans to replace those expiring this week (Reuters)

· In Japan, the May unemployment reading came in worse than expected w/the unemployment rate rising 10bps to 5.2% vs. St. looking for a 10bps improvement to 5.0% and IP fell 0.1% vs. St. flat.

· Eurozone June Consumer Confidence came in stronger than expected, China & Taiwan signed a trade pact and new Australian PM Gillard reiterated that she would end the current controversy around the proposed mining tax (there is growing speculation that Gillard may call an election within weeks to capitalize on her current popularity – Reuters).

· Fin Reg Reform – increasingly looking like Senate vote won’t take place this week; House vote due Tues or Wed and passage widely expected; however, in Senate, Republicans Snowe, Brown, and Grassley all express reservations about the bill (all these Republicans voted for the original Senate vote back in May); meanwhile, Democrat Feingold says he would still vote against the Dodd/Frank text (he voted against the original Senate bill in May too); while no one is making the call that Dodd/Frank will fail in the Senate, opposition is mounting. 

· GOOG – the co is at risk of losing its license to operate in China; the license expires on Wed; GOOG says it is making an attempt to retain the license (WSJ)

· Banks + BP - the NY Fed is said to be conducting inquiries looking into banks' trading/credit relationships w/BP; the Fed has found that no systemic risks exist in the event of a BP failure (Reuters)

· SP500 technicals – from Krauss - Short term tone remains cautious as Monday’s inside day follows Friday’s 1077 bullish reversal day/bearish outside week. Unless the market can retake 1106-1112, another retest of the 1045-1041 lows seems likely.