Overnight Developments

• Global stocks are higher with the European Euro Stoxx 50 Index up +1.01% and Sep S&Ps up +1.30 points. The dollar is little changed, Treasuries are stronger and commodities are mixed. European bank stocks gained, led by a 8% surge in Banco Santander SA, after Spain’s biggest lender said its outlook is “brilliant” and that is can benefit from rivals’ “weakness” in mature markets. Novartis gained 3.4% after winning a US regulatory advisory panel’s backing to introduce the first pill to treat multiple sclerosis with its drug Gilenia. Continental AG rose 3.8% after Europe’s second-biggest tire maker was raised to “buy” from “hold” at Deutsche Bank AG, while BP gained 8.7% as it snapped 4 days of declines that saw its stock tumble to a 13 year low, after the WSJ reported the company is considering cutting or deferring its Q2 dividend payment. Also boosting European stocks today was the action by the Bundesbank to raise its g rowth forecasts for Germany, as it now predicts GDP growth of 1.9% this year and 1.4% in 2011, higher than a Dec prediction of 1.6% growth in 2010 and 1.2% for 2011 as the economy profits from a pick-up in global demand. 
• The Asian markets today closed higher with Japan up +1.70%, Hong Kong +1.22%, China +0.32%, Taiwan +1.64%, Australia +1.58%, Singapore +0.60%, South Korea +1.62%, India +0.84%. Asian stock markets rallied after several economic reports from China showed its economy continues to strengthen. May China retail sales surged +18.7% y/y and May industrial production climbed 16.5% y/y as the Chinese economy proves resilient so far to the European debt crisis. Computer-related companies closed higher after Acer, the world’s largest vendor of laptop computers, rallied over 3% higher when it reported a 45% jump in May sales and Taiwan Semiconductor Manufacturing, the biggest maker of custom chips, said that it’s optimistic about the chip industry and the global economy for the second half of 2010. This adds to bullishness in the technology sector after the Semiconductor Industry Association said that global sales of microchips will rise 28% to $290.5 billion this year, boosted by demand in China and India, compared with a Nov forecast of 10% growth.

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Overnight Developments

• Global stocks are mixed with the European Euro Stoxx 50 Index down -1.14% and June S&Ps up +4.30 points. The dollar is little changed while the price of gold climbed to a record after Fitch Ratings said Britain’s deficit challenge is "formidable," adding to concerns that the European sovereign-debt crisis is spreading. Fitch said the UK is lagging behind other European nations in publishing deficit-reduction plans as investor concerns over government debt loads increase and that British Prime Minister Cameron needs to accelerate budget-deficit cuts to protect the nation’s top credit rating. Most German utility companies weakened, led by 3% declines in E.ON AG and RWE AG, after the German government signaled it will raise new taxes on the nuclear power industry to increase government revenue. The yield on German 10-year bunds declined to a record low of 2.50% on increased safe-haven demand due to sagging equity markets and funding concerns, with the yield spread between Spanish 10-year government bonds and German bunds widening to 213 bp, a level not seen since before the introduction of the euro in 1999. On the positive side, April German industrial production rose a more-than-expected +0.9% m/m as a weaker euro boosted export demand and local companies stepped up spending.
• The Asian markets today closed mostly higher with Japan up +0.18%, Hong Kong +0.56%, China +0.13%, Taiwan -0.08%, Australia +1.28%, Singapore -0.19%, South Korea +0.79%, India -0.98%. Asian stocks rose for the first time in 3 days after comments from Fed Chairman Bernanke last night that the US recovery is moving at a "moderate" pace. Asian exporters that have exposure to the US gained after the Fed Chairman’s comments eased concern that the US economy may slow. Asian raw material and commodity producers gained amid speculation global growth will revive metals demand while gold producers strengthened after the price of gold climbed to a record. Zhang Liqun, a researcher at China’s State Council Development and Research Center said that Chinese economic growth may slip to between 10% and 11% this quarter as industrial production and investment expand at a slower pace, and that "the 11.9% growth rate in Q1 won’t be sustained and the outlook for investmen t and export growth is uncertain." China is maintaining stimulus measures as Europe’s efforts to rein in its fiscal deficits slow the economy and threatens demand for its exports.

Overnight U.S. Stock News

• June S&Ps this morning are trading up +4.30 points. The US stock market yesterday fluctuated on either side of unchanged into early afternoon when it plunged into the close and finished on its low (Dow Jones -1.16%, S&P 500 -1.35%, Nasdaq Composite -2.04%). The Dow Jones, S&P 500 and the Nasdaq all dropped to 1-1/2 week lows. Bearish factors included (1) carry-over weakness from a slump in European equity markets after a weekend meeting of the Group of 20 finance chiefs failed to agree on steps to ensure the economic recovery will strengthen and the post meeting statement in which the G-20 finance ministers said that the global economic rebound faces "significant challenges," (2) weakness in financial stocks after the Financial Crisis Inquiry Commission subpoenaed Goldman Sachs for not complying with requests for documents in the financial-crisis probe, (3) weakness in raw materials and commodity producers after copper prices plunged to an 8- month low on concern that slowing global economic growth will curb demand for industrial metals and other commodities, (4) the action by Daiwa Capital Markets to cut its GDP growth estimate for the US for the second half of this year to annualized growth of between 2.25% to 2.5%, down from a previous forecast of 3.0%, as the sovereign-debt crisis in Europe, fading government support and persistently high joblessness will weigh on expansion in the second half of the year, and (5) comments from Fed Vice Chairman appointee Yellen who said that while there appear to be improvements in the global economy, "significant headwinds to stability remain."
• Bullish factors included (1) the unexpected increase in Apr German factory orders, which eased concern that the European debt crisis was derailing the economic recovery, (2) the action by a Hungarian government official to tone down comments about his country potentially defaulting on its debt, (3) the prediction from Blackstone Group LP that with the options market showing confidence in stocks falling to a record low, it signals that now is the time to buy equities, and (4) the unexpected increase in Apr consumer credit which rose for the first time in 3 months (+$1.0 billion versus expectations of -$1.0 billion).

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Overnight Developments

• Global stocks are mixed with the European Euro Stoxx 50 Index up +0.02% and June S&Ps up +2.20 points. The dollar index rallied to a 14-3/4 month high and copper slid to an 8-month low after the weekend meeting of the Group of 20 finance chiefs failed to agree on steps to ensure the economic recovery will strengthen. The G-20 post meeting statement said the global economic rebound faces "significant challenges," while US Treasury Secretary Geithner warned that the world cannot count on the US consumer to drive growth and urged other nations to stimulate their own demand. The euro fell to a fresh 4-year low against the dollar but erased its losses after German factory orders unexpectedly gained for a second month on April as the weaker euro boosted export demand and companies increased investment. April German factory orders rose +2.8% m/m, when the market was expecting a -0.4% m/m decline, and gained +29.6% y/y, the biggest year-over-year increase s ince data began in 1992. Greece’s benchmark stock index, the ASE index, tumbled to a 12-year low, and was led lower by weakness in bank stocks, while European telecommunication stocks fell after Hellenic Telecommunications Organization SA plunged 6.6% when it announced that it will pay a lower dividend than planned. Also giving European stocks a lift was the unexpected increase in the June Euro-Zone Sentix investor confidence, which climbed +2.3 points to -4.1 when the market was expecting a -0.6 point decline to -7.0.
• The Asian markets today closed lower with Japan down -3.84%, Hong Kong -2.03%, China -1.77%, Taiwan -2.54%, Australia -2.78%, Singapore -1.95%, South Korea -1.67%, India -1.97%. Asian stock markets closed lower as they played catch up with last Friday’s losses in European and US markets. Asian mining companies and raw materials producers weakened on concerns a slowing global economy may undercut demand for commodities, while Japanese exporters slid after the yen strengthened. KB Financial Group fell 5.3% and led Asian financial companies lower on concern the European sovereign debt crisis is spreading, while China’s Hon Hai Precision Industry, the world’s largest contract electronics manufacturer, declined 5.6% after the company announced the base wage for workers at a China factory will double following recent employee suicides at its plant.

Overnight U.S. Stock News

• June S&Ps this morning are trading up +2.20 points. The US stock market last Friday traded lower the entire day and finished with sharp losses (Dow Jones -3.15%, S&P 500 -3.44%, Nasdaq Composite -3.64%). The Dow Jones, S&P 500 and the Nasdaq all dropped to 1-week lows. Bearish factors included (1) carry-over weakness from a slump in European equity markets on concern that the European sovereign debt crisis is spreading after Hungarian Prime Minster Orban said Hungary’s economy is in a "very grave situation" because the previous government manipulated figures and lied about the state of the economy and that talk of a default is "not an exaggeration," (2) concerns that the US economic recovery may not be robust after the weaker-than-expected May nonfarm payrolls (+431,000 versus expectations of +520,000) with private payrolls up +41,000 (versus expectations of +178,000), (3) weakness in energy and raw material producers after the doll ar surged to a 14-3/4 month high and prompted a sell off in most commodities, and (4) comments from Atlanta Fed President Lockhart who said that falling commercial property prices pose a growing challenge to the banks in the Southeastern US where more failures are likely to occur.
• Bullish factors included (1) the larger-than-expected drop in the May US unemployment rate (-0.2 to 9.7% versus expectations of -0.1 to 9.8%), (2) the +31,000 increase in temporary workers in May, the eighth straight monthly increase, which may be a harbinger of future payroll gains as employment at temporary-help agencies often picks up before companies take on permanent staff, and (3) the drop in the yield on the 10-year T-note to a 1-week low of 3.20% which cuts the cost of capital for consumers and businesses.
• Talecris Biotherapeutics (TLCR) soared 38% in pre-market trading after Grifols, Europe’s largest maker of blood-plasma products, agreed to buy Talecris for about $3.4 billion in cash and stock.

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Overnight Developments

• Global stocks are mostly higher with the European Euro Stoxx 50 Index up +1.78% and June S&Ps up +3.80 points. The dollar is little changed, Treasuries are weaker and most commodities are higher on increased economic optimism. European stocks received a boost after the May Euro-Zone PMI composite was unexpectedly revised up to 56.4 from the originally reported 56.2. Automakers gained, led by a 5.5% jump in Peugeot, after Deutsche Bank AG raised its recommendation on Europe’s second-largest carmaker to "buy" from "hold," and Daimler AG rose 2.5% after its Mercedes Benz division reported a 23% gain in US sales in May. Air France-KLM Group jumped 4.8% after Europe’s biggest airline said passenger traffic rose 4.3% in May. Limiting stock gains was the unexpected decline in Apr Euro-Zone retail sales which fell -1.2% m/m, the biggest drop in 1-1/2 years and weaker than market expectations for a +0.1% m/m increase. European banks are parking c ash with the ECB amid concern that a 750 billion-euro European rescue package may not be enough to stop the crisis from spreading and spilling into the banking industry. Overnight deposits with the ECB rose to a record 320.4 billion euros ($394 billion) and deposits have exceeded 300 billion euros for the past five days as the sovereign debt crisis makes banks wary of lending to each other.
• The Asian markets today closed mostly higher with Japan up +3.24%, Hong Kong +1.62%, China -0.78%, Taiwan +2.29%, Australia +2.40%, Singapore +2.42%, South Korea +2.14%,India +1.68%. Japanese businesses cut spending for the 12th consecutive quarter after Q1 capital spending excluding software fell -12.9% y/y. The much larger than expected decrease in capital spending will lead the government to downgrade Japan’s Q1 GDP figures later this month. Japanese exporters closed higher as the yen slumped to a 2-week low against the dollar and Asian carmakers gained on increased US sales. Nissan Motor closed 4.8% higher after reporting a +24% y/y increase in US car sales in May, Toyota rose 3.6% after posting a 5.7% sales gain and Kia Motors advanced 3.2% after its US sales rose 21% last month. The South Korean won rose sharply after JPMorgan Chase raised the nation’s equities to "overweight" and said the won is one of the "most undervalued" emerging-marke t currencies.

Overnight U.S. Stock News

• June S&Ps this morning are trading up +3.80 points. The US stock market yesterday opened higher and maintained a positive tone throughout the day as it trended higher into the close and finished on its high (Dow Jones +2.25%, S&P 500 +2.58%, Nasdaq Composite +2.64%). Bullish factors included (1) a rally in homebuilders after the stronger-than-expected Apr US pending home sales (+6.0% m/m and +24,6% y/y versus expectations of +5.0% m/m and +21.0% y/y), (2) a rally in energy producers and oil service providers after crude oil rose, (3) strength in airline stocks after Continental airlines beat monthly estimates for monthly unit revenue, which signals a stronger return of business travelers who pay higher fares, and (4) the prediction from MFS Investment Management that "the US is in the middle of a V-shaped economic recovery and that the European bank crisis does not have the scale and scope of Lehman and AIG and it doesn’t have the ingredients to bring down the banking system."
• Bearish factors included (1) the slump in the MBA’s home purchase index to its lowest level since Apr 1997, which indicates future US housing sales may be weak as the expiration of government tax incentives to purchase homes by the end of April has led to a reduction in home sales since then, and (2) carry-over weakness from a slump in European stocks on concern the region’s sovereign debt contagion is spreading after the yield premium between Spanish 10-year government bonds and 10-year German bunds widened to a 13-year high of 177 bp.
• Alcoa (AA) rose 1.6% in European trading after the company was upgraded to "outperform" from "neutral" at Macquarie Group Ltd.
• Las Vegas Sands (LVS) climbed 2.6% in pre-market trading after Morgan Stanley raised its recommendation on the casino company to "overweight" from equal weight."

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Overnight Developments

• Global stocks are mixed with the European Euro Stoxx 50 Index down -0.89% and June S&Ps up +6.40 points. European stocks retreated and were led lower by losses in energy producers and oil service companies as the US opens up criminal and civil investigations into BP Plc’s Gulf of Mexico oil spill. Prudential Plc, the UK’s biggest insurer, fell nearly 3% after its $35.5 billion takeover attempt of American International Group’s Asian unit collapsed, while Aegis Group Plc slipped 3.1% after the world’s largest independent buyer of advertising space was downgraded to “sell” from “hold” at Deutsche Bank AG. Also undercutting European stock prices was the larger-than-expected +0.9% m/m increase in April Euro-Zone PPI, the biggest monthly gain in 1-3/4 years, as a weaker euro made imports more expensive and energy costs rose.
• The Asian markets today closed mostly lower with Japan down -1.12%, Hong Kong -0.13%, China +0.49%, Taiwan -1.28%, Australia -0.73%, Singapore +0.45%, India +1.02%. Most Asian stock markets fell and the yen droppped to a 2-week low against the dollar after Japanese Prime Minister Hatoyama said he will resign, less than 2 months before elections, which raises uncertainty after the future direction of the Japanese economy. The next prime minister will inherit an economy that’s dependent on exports and remains within the throes of deflation that the BOJ has failed to stop. With consumer spending slowing in Q1, the reliance on trade leaves Japan vulnerable to any slump in overseas demand stemming from Europe’s debt crisis. Australia’s Q1 GDP rose +0.5% q/q, its fifth straight quarterly increase, as government stimulus spending helped counter consumer demand that weakened. Policy makers expect Australia’s economic growth to almost double in he next 2 years, as China’s de mand for resources spurs a mining investment boom.

Overnight U.S. Stock News

• June S&Ps this morning are trading up +6.40 points. The US stock market yesterday shook off early weakness and rallied into early afternoon, but then plummeted into the close and finished on its low (Dow Jones -1.11%, S&P 500 -1.72%, Nasdaq Composite -1.54%). Bearish factors included (1) concerns that the global economy may begin to slow after China’s May purchasing managers index slowed more than forecast (-1.8 to 53.9 versus expectations of -1.2 to 54.5) (2) weakness in bank stocks after the ECB said in its bi-annual Financial Stability Report that Euro-Zone banks may see another 90 billion euros in net writedowns this year on loans and securities and will need to make provisions for losses of about 105 billion euros next year, (3) the plunge in the euro to a 4-year low against the dollar after the April Euro-Zone unemployment rate unexpectedly rose +0.1 to a 12-year high of 10.1%, and (4) geopolitical concerns after AFP reported that Lebanon fired on Isr aeli warplanes that were flying over its airspace.
• Bullish factors included (1) optimism the US economy may be able to overcome the negative effects of the European debt crisis after the May ISM manufacturing index fell less than expected (-0.7 to 59.7 versus expectations of -1.0 to 59.4), (2) the unexpected increase in April construction spending which had its largest monthly increase since June 1998 (+2.7% m/m versus expectations of unchanged), and (3) the prediction from the chief equity strategist at JPMorgan Chase who said that the 5-week decline in the S&P 500 Stock Index is consistent with a temporary pullback within a bull market.
• JPMorgan Chase (JPM) climbed 1.6% in pre-market trading after UBS upgraded the stock to “buy” from “neutral.”
• Joy Global (JOYG) rose 2.7% in pre-market trading after Goldman Sachs raised its recommendation on the stock to “buy” from “neutral.”

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