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� Euro Creator Mundell Blasts CNY Depegging, Says May Erode Stability In Global And Chinese Economies � ZH link

o Robert Mundell, the "intellectual" creator of the currently most despised monetary experiment in the history of the world, i.e., the euro, told reporters in Hong Kong, that "China�s pledge to return to a more flexible exchange-rate policy may erode stability in the global and Chinese economies." According to Bloomberg "keeping the yuan pegged to the dollar has been �a great source of stability� for China and the world, the Columbia University professor told reporters in Hong Kong today before giving a speech."

� G-20 headlines will dominant this week

o US vs EU :� Merkel Signals G-20 Clash With Obama On Financial Policy � DJ

� Russia Backs Stronger Rivals To Dollar WSJ(6/19)

o Russian President Dmitry Medvedev on Friday said he hosted talks with Chinese leaders about turning the yuan into a convertible reserve currency, part of a broader goal to move international reserves assets into emerging-markets currencies and away from the dollar.

� Russian Finance Minister: "There Are Doubts" On US Ability To Cut Deficit � DJ

� Deutsche's Hooper: Crisis Needed In US To Focus Political Will � DJ

� JAPAN: govt may raise FY10/11 GDP forecast to 2.6% from 1.4% this week because of strong Asia exports and stimulus measures boosting consumption of autos and electronics. The govt, also expected to announce its growth strategy plan at the G20 - TTN

� EU/ UK headlines:

o UK budget tomorrow in focus

� Bloomberg) -- U.K. Chancellor of the Exchequer George Osborne said he�ll raise taxes on banks and savers, while cutting welfare spending in a budget tomorrow that aims to close a record deficit without strangling an economic rebound

o ECB Council Member: Should Sell Govt Bonds To Stabilization Fund � WSJ

� The European Central Bank should consider selling billions of euros of government bonds to the euro zone's new stabilization fund, said George Provopoulos, a member of the bank's governing council, in an interview.

� �Mr. Provopoulos's proposal would unite two parallel props that the euro zone has put in place to prevent the debt crisis from worsening, while also ridding the ECB of some of the risks associated with the accumulation of government bonds.

o ECB member Paramo said over the weekend the ECB will "absolutely not" provide banks with capital should stress tests show they need it � SA

o The proposed publication of bank stress tests in Europe are fuelling fears over French and German banks� exposure to weaker eurozone economies such as Greece, Portugal and Spain, reports the FT. Investors warn the tests could expose the European banking system�s interdependence and spread contagion

o EU banks stress tests?� WSJ(6/19): No Good Answers From Euro Tests

� European leaders may have hoped to draw a line under Europe's sovereign crisis by agreeing to publish individual bank stress-test results. But that may be easier said than done.

� Which are being tested? What is being tested? And what will be done with the results? It isn't clear that what is being contemplated will provide convincing answers to any of them.

� What the leaders appear to have agreed on -- and there are mixed messages across Europe over this -- is to publish bank-by-bank results of a stress test currently being conducted by the Committee of European Bank Supervisors. But if that is all they have to offer, it isn't going to convince anyone. This particular test covers about 25 of the largest European banks, excluding the majority of Spanish and German savings banks whose potential capital deficits most worry markets.

� �Nor is it likely to be particularly stressful.

o US Officials Travel To Madrid As Spain Crisis Deepens-Embassy - DJ

� A delegation of top U.S. Treasury officials visited Madrid on Thursday and Friday as Spain's financial and economic crisis deepened.

o Talk of '2-Tier Euro Zone' Could Upset Euro: ING

� Last week's rebound of Europe's single currency may be jeopardized by reports over the weekend that France and Germany are mulling a two-tier euro zone

� A "super-euro" zone would initially include France, Germany, Holland, Austria, Denmark and Finland, a European official told UK newspaper the Daily Telegraph. Countries like Greece, Spain, Italy, Portugal and Ireland would be left in a second-tier group

� http://www.cnbc.com//id/37819702

o ECB's Wellink commented that it was a positive phenomenon that the euro decline had been curbed. ECB to purchase Gov't bonds as long as monetary policy transmission needed - TTN

o ECB steps up pressure for tougher budget rules

� The core of the economic union is the surveillance of fiscal policies," he told television channel Russia Today, ahead of an address to European parliamentarians later on Monday.

� http://www.businessspectator.com.au/bs.nsf/Article/REFILE-WRAPUP-1-ECB-steps-up-pressure-for-tougher--6NBDF?opendocument&src=rss

o An �11bn stress test scenario for Santander, BBVA FT Alphaville

� While their initial �adverse scenario� assessment in March, concluded that both banks would need to raise �8bn to meet potential funding shortfalls, their latest findings now hike that figure to �11bn.

� http://ftalphaville.ft.com/blog/2010/06/21/266791/an-e11bn-stress-test-scenario-for-santander-bbva/

o European Central Bank President Jean-Claude Trichet blamed France and Germany for helping to pave the way to the current debt crisis in the euro zone by setting a poor fiscal example.�� In remarks published Sunday in Germany's Welt am Sonntag newspaper

o Medvedev: Russia Fears For Health Of Euro - AFP

� Russia, which holds over 40% of its forex reserves in euros, fears for the health of the single currency after its dramatic plunge, President Dmitry Medvedev said Saturday

� Medvedev, giving the final speech of the Saint Petersburg economic forum, said Russia was also concerned about a second wave of the economic crisis.

o Russia Fears For Greece:� markets are prepared to accept a default on Greek debt, Russian Finance Minister Alexei Kudrin said Saturday,� DJ

o Moody's See Risk of Greek Default At 7% Over 5-Yrs � DJ

o IMF Says Greek Program Looks On Track So Far � DJ

o IMF's Lipsky: Not Negotiating With Spain � DJ

o Goldman's O'Neill: Russian GDP May Grow 7% In 2010 � DJ

o Investor Bets Against Euro Plummet By 44% - DJ

� Investors dramatically scaled back their bets against the euro, according to data released Friday.� Bets against the euro plummeted by 44% compared to week-earlier levels

o Former Bank of England member Blanchflower commented today that a UK double dip recession is 'absolutely certain', further reiterating that UK needs a sensible plan to reduce its deficit. � TTN

o senior French official says new spending cuts are in the pipeline to help deliver the �100bn in savings needed to meet the country�s pledge of bringing its public deficit in line with European targets by 2013 - FT

� http://link.ft.com/r/M2ZOXX/GKF8TB/007S7/8AQZVT/YHOXSD/T3/h

� Data

o UK June Rightmove house prices +5.0% y/y vs prior +4.3%

o Japan April all-industry-activity index +1.8% m/m vs survey +2.0%

� M&A:�

o VRX Valeant Pharmaceuticals, Biovail (BVF) to merge

� For Biovail stockholders, this transaction represents a 15% premium based on a calculation of the stock prices over the last 10 trading days.

� call: 08:30 ET, 877-295-5743 (North America) or +1-973-200-3961, confirmation code 83365938.

o JPMorgan Chase is proceeding with talks to buy a large Brazilian hedge fund and private equity group, despite impending US legislation aimed at limiting the involvement ...FT

o LINTA Liberty Media Corp board authorizes management to split off Liberty Capital (LCAPA), Liberty Starz (LSTZA) tracking stock groups

� call: 11:00 ET, 888-481-2877 or +1-719-457-2704

o LZ Cognis owners choose lower offer from BASF (BAS.GR) over higher one from Lubrizol � Reuters

o BASF Said to Announce Purchase of Cognis as Soon as Tomorrow - BBG

o Corn Products International (CPO) to acquire National Starch (AKZA.NA) for $1.3B in cash

� Conference call: 09:30 ET +1-719-325-4753

o LNY:�� Pershing Square Capital Management decides to support CEO's takeover of Landry's Seafood - WSJ

o PTRY Barron's is positive on The Pantry, Barron's� says it could eventually become a takeover target

o Time Warner (TWX) to acquire Shed Media for �75M, says Sunday Times

o Acergy (ACY.NO) and Subsea 7 (SUB.NO) agree to merger.

o Apollo to raise �770M offer for Brit Insurance Holdings this week, says Sunday Times

o Aegon NV, the owner of U.S. insurer Transamerica Corp., rose in Amsterdam trading after a newspaper reported that the company is preparing to sell its U.K. life and pension business.� Bloomberg

� Hedge fund Magnetar Capital is a focus of an SEC investigation into mortgage deals that led to Wall Street losses. The fund had input into certain collateralized debt obligations.� WSJ

� Hedge funds:� The rally in natural-gas prices has sparked losses for hedge funds that had been betting on a drop.� WSJ

� Demand??:� Baltic Dry was down 3.2% on Friday, for the week, the Baltic Dry was down 18%...

� Verizon Wireless could start a dividend in 2012, boosting Verizon Communications and Vodafone.� WSJ

� DIS Toy Story 3 has largest opening ever for a Pixar (DIS) film -- LA Times

� Google working on system to allow news providers to charge for content, says La Repubblica � NYT

o http://mediadecoder.blogs.nytimes.com/2010/06/20/googles-newspass-is-the-king-of-free-about-to-help-news-providers-get-paid/

� AFFY �Affymax and Takeda (4502.JP) announce Phase 3 trials meet primary endpoints for Hematide (peginesatide

o AFFY Affymax to hold conference call and webcast at 08:00 ET 21-Jun

o 877-354-4057 (North America) or +1-224- 357-2391 (international), Conference ID 83101977.

� Acer reveals rare price increase FT.com

o The world�s second-largest PC company manages to raise the price of its products for the first time in five years as strong demand offsets the impact of rising cost pressures

� Japan's prime minister is pushing to lower in stages the country's 40% corporate tax rate as part of a wider growth strategy. WSJ

� BP stories: �BP dn 3% Monday on $ raising concerns (per BBG)

� BP Says Oil Spill Up to 100,000 BPD; Cost $2 Billion � CNBC link

� BP Managed to Blunt U.S. Demands � WSJ link

� has succeeded in pushing back on two White House proposals it considered unreasonable even as it made large concessions

� With $20 Billion Fund, BP Limiting Liability: Feinberg� � CNBC link

� Cramer: A Hurricane Would 'Finish' BP� � CNBC link

� BP and Anadarko turn on each other � FT link

� The Obama administration �forced� BP Plc to take more aggressive steps to deal with the oil spill in the Gulf of Mexico, White House Chief of Staff Rahm Emanuel said when asked about the government�s response to the nation�s worst environmental disaster on ABC�s �This Week.�

� BP To Raise $50 Bln To Cover Gulf Of Mexico Oil Spill Costs - The Sunday Times

o Embattled oil company BP PLC (BP) plans to raise $50 billion to cover the cost of the Gulf of Mexico oil spill, more than twice the amount previously disclosed

o The board of directors approved the plan last week, the newspaper reports. The first wave of capital raising could come as soon as next week with a $10 billion bond sale. The company is also in talks with banks on arranging another $20 billion in loans. The final $20 billion is expected to come from asset sales over the next two years

� BP $5B debt offering may yield between 8-10% -- CNBC

� BP to sell North Sea interests, hold on to interest in TNK-BP (TNBP.RU) � Observer

� BP CEO to head to Russia to tell President Dmitry Medvedev that company is not about to go under - FT

� BP Chief Executive Tony Hayward on Saturday attended a prestigious yacht race in Britain, DJ reported, the day after it was confirmed he was handing over daily control of the Gulf of Mexico oil spill.

o The story sparked fury from environmental groups in Britain, who said it was "yet another public relations disaster" for Hayward and BP, whose handling of the crisis has been slammed in the United States.

� White House Calls Yacht Holiday By BP's Hayward 'Big Mistake' � DJ

� Church of England may sell its BP shares on ethical rather than financial grounds - Daily Mail

� BP Plans To Use Oil-Water Separators Made By Actor Costner's Co. (AFP)

o Hollywood star Kevin Costner and BP Chief Operating Officer Doug Suttles announced plans to begin using an invention that the actor says will accelerate clean-up of oily water from the gushing Gulf leak. "I didn't come here to save the day," an emotional Costner told reporters here Friday, adding: "I have come to participate."

� APC: BP: No Decision To Sue Anadarko Over Oil Spill Costs � DJ

o BP said Sunday that it hasn't decided whether to sue Anadarko Petroleum Corp. (APC) for shirking

o responsibility for its share of the liabilites resulting from the Gulf of Mexico oil spill.

o The Sunday Telegraph reports that BP is planning to sue Anadarko for failing to take responsibility for its share of the cleanup costs and financial liabilities resulting from the Gulf of Mexico oil spill

� APC:: �BP planning to sue Anadarko Petroleum for its "fair share" of Gulf cleanup costs -- London Telegraph

o http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7840455/Oil-spill-BP-to-sue-partner-in-Gulf-oil-well.html

o APC: Anadarko unleashed a broadside against BP.� WSJ

o The minority partner of BP in the Gulf oil well accused the British company of "gross negligence or willful misconduct" that led to the spill.

o APC: BP 'Strongly Disagrees' With Anadarko Pete Allegations - DJ

o APC: Moody's downgrades Anadarko Petroleum to junk

� Backlash Against Oil Could Backfire � WSJ link

o Troubling signals for the oil industry�not just BP�and its customers, have emerged.

� Oil groups expect rethink on drill moratorium - FT

o The big oil companies are keeping their rigs on standby in the Gulf of Mexico in expectation of at least a partial lifting of the moratorium on new deep-water drilling ahead of its scheduled ending in November

o http://link.ft.com/r/M2ZOXX/GKF8TB/007S7/8AQZVT/BMK3G1/T3/h

� Bloomberg) -- President Barack Obama and Democratic lawmakers are trying to �seize on a crisis� to pass a �national energy tax,� Senate Republican Leader Mitch McConnell said.

� Obama administration to push to reinstate Superfund tax on oil, chemical companies - Washington Post

o There is no question that the Superfund program, first established 30 years ago to clean up sites around the country contaminated with hazardous waste, is facing a budget crunch.

o http://www.washingtonpost.com/wp-dyn/content/article/2010/06/20/AR2010062001789.html

� FRE, FNM:�� NY Times notes that the bailouts of Fannie Mae and Freddie Mac could end up costing more than the rescue of the banking industry

o http://www.nytimes.com/2010/06/20/business/20foreclose.html?hp=&pagewanted=all

� Volcker Rule under attack this week�NYT

o Banking Lobbyists Make a Run at Reform Measures

o To secure the support needed for their bill, Senate negotiators are leaning toward creating a series of exemptions to the Volcker Rule that would allow banks to continue to operate these businesses as investment funds that hold only client money

o http://www.nytimes.com/2010/06/21/business/21volcker.html?ref=business

� GS:� SEC Approves Goldman Extension To Respond To Lawsuit

o Goldman Sachs Group (GS) has been given extra time to respond to the government's civil-fraud lawsuit after obtaining approval from the U.S. Securities and Exchange Commission for an extension

o has been filed with a New York federal court judge. It could allow Goldman's lawyers and the SEC to hold more face-to-face discussions about the case in the coming weeks.� DJ

� Citi CEO Pandit: "Credit Story Is Getting Better" Worldwide--CNBC

� Citi CEO Pandit: Concerned About Basel Capital Rules - DJ

o Citigroup Inc. (C) Chief Executive Vikram Pandit said Friday he is concerned that the capital rules being hammered out by international bank regulators could hamper lending

o Pandit, in Russia for the St. Petersburg International Economic Forum, said on CNBC that the new rules the Basel Committee on Banking Supervision is working on are of concern not for United States banks, which have mostly beefed up capital over the last 12 months. Rather, the economies around the world could suffer if too much capital is tied up at banks and not made available for loans, the CEO said.

� JNJ:� Bribery Probe Of Top China Official Linked To J&J - AFP

o A top official at China's food and drug safety watchdog who is under investigation has been linked to alleged bribery cases involving U.S. giant Johnson & Johnson

o �Zhang Jingli, one of four deputy heads of China's State Food and Drug Administration (SFDA), is being investigated for "suspected serious disciplinary violations," the official Xinhua news agency reported earlier this week.

� Airlines:� UK, Unite Union is planning for a possible third strike tomorrow. According to the Guardian, Unite is expected to notify British Airways of a new ballot of 11,000 members. Unite are in preparation for vote that may be sent to British Airways as early as tomorrow, which would allow voting in a week. If strikes are to occur, actions may begin as soon as 3rd of August depending on voting results by flight attendants.� TTN

� Miners:�� POSCO GAINS 4.2% ON YUAN, POSSIBLE PRICE INCREASE��

� Miners:� BHP Billiton (BLT.LN) and Rio Tinto (RIO.LN) confirm agreement with the government of Western Australia to amend royalties and State agreements

� Miners:�� Ernst & Young throws doubt on Australia's mining super tax Telegraph

o The model the Australian government used to assess its proposed resources super-tax was "flawed" because it didn't take into account that investment can move elsewhere, according to research from Ernst & Young.

� Aluminum Bottoms With Ghosn Outlook Helping Deripaska � BBG

o Billionaire Oleg Deripaska�s forecast for a potential shortfall in aluminum supplies and record global car output predicted by Carlos Ghosn mean the world�s second most-used metal may be about to rebound.

� Autos:�

o Several European auto companies announce bond offerings - TTN

o Toyota, Honda boost China pay as flexible yuan may erode profit Automotive News

� Toyota Motor Corp. and Honda Motor Co. sacrificed earnings in China by raising wages to end strikes last week. The government's decision to let the yuan strengthen may further erode profits

� http://www.autonews.com/article/20100620/GLOBAL03/100629999/1131

o Honda� WSJ: Honda Hit By New Labor Dispute In Guangdong

o Toyota said Sunday that it will resume operations at an auto assembly plant in China starting Monday as a strike at a local parts plant was settled Saturday amid labor disputes spreading at automobile factories in the world's biggest auto market � DJ

� FX, Yuan impact on industry:� Air China (601111.CH) and other carriers in the country jumped 7-8% on the belief that a stronger yuan will cut the companies� dollar costs and reduce their debt burdens

� FX, Yuan impact on industry:�� Luxury shares rally on the back of China's decision to abandon the US$ peg and allow more flexibility to the yuan exchange. The move has been seen as a show of confidence on China's prospects and the outlook for the global economy.� Cheuvreux says the announcement of a shift in Beijing's currency� policy should� boost China's earnings contribution to Western companies. SWATCH (+5.68%) and RICHEMONT (+4.88%) are among companies with notable mainland China� sales exposure � S&P

� FX,� EUR impact on industry:� Germany's MTU Aero Engines May Raise Guidance

o German equipment maker MTU Aero Engines Holding AG's (MTUAY) earnings could receive a boost from the euro's low external value, weekly Euro am Sonntag reports Sunday.

� Geo � Politics:�

o Russia Cuts Gas Deliveries to Belarus NYT

� The decision to cut deliveries of natural gas to Belarus over unpaid debts could jeopardize supplies to Poland and other European countries.

� ordered Gazprom to gradually reduce supplies sent through Belarus, whose pipelines carry roughly 20 percent of Russia�s experts to Europe.

� http://www.nytimes.com/2010/06/22/world/europe/22belarus.html?partner=rss&emc=rss

o LAGARDE WANTS EUROPE REGULATION OF COMMODITY DERIVATIVES: ECHOS

o Obama Blasts Republicans For Blocking Vote On Jobless Bill - DJ

� President Barack Obama on Saturday used his weekly radio address to blast Republicans for blocking attempts to allow votes on legislation that would extend jobless benefits and raise the liability for oil companies that harm the environment.

o Obama To Sue To Strike Down Ariz Illegal Immigrant Law

� The Obama administration will try to strike down the controversial Arizona law targeting illegal immigrants, the New York Times

o US Mulls Unilateral Financial Sanctions On N. Korea�Kyodo

o Iran bars two IAEA inspectors Financial Times

� In a rare move, Iran has barred two UN nuclear inspectors from entering its territory for allegedly disclosing the �totally unreal� contents of a report before the International Atomic Energy Agency studied it, a senior official

o Israel spells out plan to ease Gaza blockade - FT

� Israel has moved to calm international disquiet over its Gaza policy by spelling out how it plans to ease the blockade of the territory ahead of a meeting between Benjamin Netanyahu and Barack Obama next month

� http://link.ft.com/r/M2ZOXX/GKF8TB/007S7/8AQZVT/KER8ZV/T3/h

o Medvedev�s U.S. Trip Aids Push to Reset Economic Ties � BBG

� Dmitry Medvedev and Barack Obama will try to jumpstart economic links this week as Russia�s president travels to Silicon Valley and Washington, building on improved political ties after the U.S. �reset� relations.

o Rahm Emanuel Expected to Quit White House

� Telegraph) -- Rahm Emanuel, the White House chief of staff, is expected to leave his job later this year after growing tired of the "idealism" of Barack Obama's inner circle.� Washington insiders say he will quit within six to eight months in frustration at their unwillingness to "bang heads together" to get policy pushed through.

Upcoming this week:

Economics:

There are no major events scheduled this session

Earnings:

There are no major companies reporting this session

Busy week before street gets lazy for 4^th of July:� Fed, Financials overhaul, some earnings and conferences to pay attention to, G20 next week,� and any word on EU bank stress tests

Eco data:

� FOMC Meeting dominates:� Wednesday will also see the FOMC announcing its decision on�� interest rates in the US, with analysts expecting the Fed to keep rates� unchanged and reiterate its message regarding health of the US economy. The final reading of US 1Q GDP is due on Friday, expected to be unchanged at+3.0%.

� Durable Goods Orders (May)

� 6/22�Richmond Fed Mfg. Survey (Jun)

� 6/24� KC Fed Manufacturing Survey (Jun)

� 6/25� Gross Domestic Product (Q1)

� Preliminary May U.S. steel imports are due at 10AM ET, June 22

� Eurozone flash manufacturing and services PMI are the highlights of the European data�� calendar, although they are seen showing little variation month-on-month

� 6/23 BoE release minutes of prior (9 & 10th June) MPC meeting

Housing data:

� Reporting this week:� LEN 6/24 and KB Home 6/25,

� 6/22� Existing Home Sales (May)

� 6/22�� FHFA House Prices (Apr)

� 6/23 Architecture Billings Index

� 6/23� New Home Sales (May)

Corporate news:

� Tech, homebuilders, consumer busy with earnings�

� Reporting 6/22:� WAG, ADBE, JBL, CMC, RHT, PRGS, JEF

� Reporting 6/23:� KMX, RAD, BBBY, DRI, NKE, PAYX,

� Reporting 6/24:�� CAG, LEN PALM, ACN, ORCL, RIMM, HRB, DFS

� Reporting 6/25:�� KB Home

� BBBY to report results after-market on June 23^rd

^�CCL to report earnings before-market on June 22^nd

� 6/23: KBR� Analyst and Investor Day

� 6/24:�� DELL� Analyst Meeting � Austin

� 6/21:� JNJ:� FDA's Pediatric Advisory Committee will discuss pediatric safety of several drugs

� financial reform bills: Geithner echoed the claims of top lawmakers -- expressing confidence that the House and Senate's financial reform bills will be merged and signed by the Fourth of July. � The Hill

� Financial Reform: Schedule for Next Week�most likely the Big issues on the table now

o Tuesday, June 22: Volcker Rule, Resolution Fund, Collins Rule

o Wednesday, June 23: CFPA and Interchange.

o Thursday, June 24: Derivatives and whatever else is left.

� UK budget due:� investors will be keeping a firm eye on events in the UK on�� Tuesday. Fewer than 50 days after the general election, the new coalition�� government announces its emergency budget.

CONFERENCES busy, including:

o Big conference for Shipping companies: Marine Money Week (June 22-24, 2010)

o Deutsche Bank Industrials Conference

o Jefferies Consumer Conference

o Wells Fargo Securities Healthcare Conference

o Wells Fargo Financial Services Conf

� BP bond sales this week?� BBG says possible

� Fed watch, rates: Next week, Fed Officials May Trim U.S. Growth Outlook on Europe Risks (BBG)

o Federal Reserve officials may trim forecasts for U.S. economic growth when they meet next week to set interest rates as Europe�s debt crisis saps demand for American goods and roils financial markets

o Central bankers may reduce their 2010 estimates by �several tenths� of a percentage point and as much as 0.75 point for 2011, said former Fed Governor Lyle Gramley. That would mark a reversal from April, when officials raised their projections for this year to a range of 3.2 percent to 3.7 percent and left 2011 and 2012 forecasts little changed

o The new estimates are likely to reinforce the Fed�s pledge, in place since March 2009, that interest rates will stay very low for an �extended period,� said former Fed researcher John Ryding.

� Obama to meet senators on energy bill next week- Reuters

o President Barack Obama will meet key Republican and Democratic senators on June 23 to discuss a way forward for energy legislation that is currently stalled in the Senate

� G20: 2010 G8/G20 Summit: June 25-27 in Canada

� G20 in focus next week:� Obama tells EU to Spend, spend spend!: President Barack Obama urged the Group of 20 nations to �safeguard and strengthen� the global economic recovery with continued stimulus, setting up a possible split at next week�s leaders� summit as European governments push to cut budget deficits. his focus on growth is at odds with that of German Chancellor Angela Merkel�s preference for budget cuts amid Europe�s debt crisis. Continued stimulus risks bondholder revolt - BBG

� Big mkt trigger: Europe Stress Tests: Expected over the next few weeks to impact countries and banks. Focus on Spanish banks especially

o Berlin, which had been skeptical about revealing details of tests on the financial health of its banks, dropped its objections after both France and Spain came out in favor of a move the Obama administration has pressed Europe to take.

o Lagarde said the results should be made public ideally before the end of July- Reuters

TODAY�S BIG STORIES

� Credit Markets: �Bond Sales Make Comeback as Swap Spreads Narrow - BBG

o corporate bond sales are back to levels not seen since April as interest-rate swap spreads show investors are gaining confidence that Europe�s debt crisis is contained

o $36.1 billion of global sales last week, the most since the period ended April 23

� Credit Markets: ��Corporate Defaults Slide to 1%, but Future Is Uncertain - Fitch

o Corporate defaults have fallen to an annualized rate of barely 1% in 2010, but that drop belies a highly uncertain outlook for the remainder of the year and beyond, Fitch Ratings said.

o High-yield defaults have slowed so sharply in 2010 that even the most optimistic forecasts don't reflect that defaults are running at a full-year rate of roughly 1%, Fitch noted. In the first five months of 2010, there have been nine issuer defaults affecting a combined $1.7 billion in bonds, for a year-to-date par default rate of less than half a percent, according to a report released by Fitch on Monday.

� Central banks are the weak link in finance, IMF's Lipsky says

o A big lesson that should have been learned from the financial crisis is that central banks and other monetary regulators need to do a better job, said John Lipsky, deputy managing director of the International Monetary Fund. Before the crisis, central banks didn't understand risks presented by new financial products and weren't able to make sure financial firms under their supervision understood them either, he said. Emirates Business 24/7 (United Arab Emirates) (21 Jun.)

� Is the Fed out of bullets?� CNN link

�

o Economists are more nervous about the chances of another recession. And one of biggest fears is that the Federal Reserve may have run out of bullets to fight another downturn.

� Earnings season is coming -� Barron's wrap

o Mid - July, companies should report robust second-quarter profits, and analysts see a 27% rise from last year

o Since mid-May, Wall Street analysts have quit nudging estimates higher, says Thomson Reuters analyst John Butters. But they haven't cut them, either � despite evidence of weakening global growth.

o Particularly vulnerable are analysts' projections for Standard & Poor's 500 companies to earn $96.43 in 2011. That's a 17.5% increase from 2010 and would surpass the $88.18 earned in 2006 as the best year ever.

� Demand �..and supply: Factories Grapple With How Fast to Ramp Up - WSJ

o Everyone wants to ramp up," says Mike Arnold, executive vice president of the company's bearings and power-transmission group. "But nobody wants to overcapitalize," he says. "It's a very tough call."

o Any mistakes could be costly. Bringing idled capacity back online too quickly can damp prices, as is beginning to happen in the steel industry

o http://online.wsj.com/article/SB10001424052748703302604575294604002361446.html?mod=WSJ_hps_LEFTWhatsNews

� Jobs good news:�� WSJ(6/19) States See Growth In Jobs

o The sluggish U.S. jobs recovery is inching beyond the industrial South and Midwest, and is spreading toward the service-heavy economies of the two coasts, in a sign of hope for a labor force hit by the worst recession in generations

o New Labor Department data, released Friday, showed that the decline in unemployment was widespread: The jobless rate fell last month from April in 37 states, plus the District of Columbia

o "The recovery has spread out," said Steven Cochrane, an economist at Moody's Analytics.

� Jobs:� Employers in U.S. add hours but not workers

o An overlooked bright spot in U.S. unemployment statistics is an increase in the average number of hours worked per week, which rose from 34.1 in April to 34.2 in May. Rather than adding employees, many companies are meeting customer demand by shifting part-time workers to full time and giving full-time employees more overtime. USA TODAY (20 Jun.)

� Taxes: �barrons �says it pays to take a good look at exactly what is happening in Washington.�

o With congressional elections approaching in November, many policy makers would be more comfortable sidestepping the politically charged issue of taxes.

o But if Congress takes no action, the tax cuts enacted by President Bush in 2001 and 2003 will expire at year's end, and tax rates could go up significantly for almost all taxpayers.

o The current 10% bracket will disappear. While income cutoffs haven't been specified, couples earning up to about $70,000 would probably pay a 15% rate. The 25%, 28%, 33% and 35% brackets would most likely pop up to 28%, 31%, 36% and 39.6%

o Letting the Bush cuts lapse also would push the long-term capital-gains rate from 15% to 20%. Dividends, now taxed at� 15%, would become subject to rates on ordinary income.

o But the chance that Congress will allow all of that to happen is close to nil.

� Stock Split Levels Still Are Low � may rise - Barron's cites S&P

o Could stock splits make a comeback? Howard Silverblatt, Standard & Poor's senior index analyst, thinks so. The logic for splits is gone, he says, but there is something else to consider: the logic of psychology.

o Ten years ago, Silverblatt notes, there were 83 stock splits by S&P 500 companies. Last year, there was just one, by AmerisourceBergen (ticker: ABC). Thus far in 2010, he has counted three, by Danaher (DHR), Express Scripts (ESRX) andGeneral Mills (GIS). All were 2-for-1 divisions.

� Financially stressed U.S. states reduce pension, delay retirement

o U.S. state governments are increasingly scaling back pension benefits and making employees work longer before retiring, as they face reduced tax revenue and a widening budget deficit. Despite these changes, some experts predicted that the pension funds of Connecticut, Illinois, Indiana and New Jersey will run out in less than 10 years� NYT (6/19)

� Private-equity tax change may go on ice NY Post

o The fate of the jobs bill that includes carried interest and extending unemployment benefits is up in the air, a Republican source said.

o On Friday, Democrats voted to break into pieces the American Jobs and Closing Tax Loopholes Act of 2010 -- bringing to the floor a piece that extends current Medicare physician payments for six months but leaves more controversial pieces in committee.

� No China inflation spiral ??� World Bank: Wages Can Rise In China WSJ(6/19)

o The World Bank said Friday the recent round of wage increases in China is unlikely to set off an inflationary spiral, as Chinese companies can absorb pay increases by raising productivity.

o In its latest quarterly update on China, the World Bank also said Beijing should raise interest rates, which would be more effective than the administrative and regulatory approaches undertaken so far to rein in overinvestment and real-estate speculation.

� As China Aids Labor, Unrest Is Still Rising NYT

o Laws enacted in 2008 to protect workers have raised worker consciousness and may be contributing to a rise in labor disputes.

o http://feeds.nytimes.com/click.phdo?i=388127d7d0487a73f97e0b50cd6d3e33

� China and Taiwan's airlines have agreed to cut airfares for flights across the strait by 10%-15%, the official Xinhua News Agency

o Li Jiaxiang, head of the Civil Aviation Administration of China made his comment at a forum discussing cross-strait relationships

o two sides will each add 50 flights a week across the straits

� Japan compensation:� Sony Corp. (6758.TO) said Friday Chief Executive Howard Stringer received about Y410 million ($4.5 million) in total compensation and stock options worth Y415 million during the fiscal year ended March.�

o The announcement is the first closely-watched disclosure of the until-now largely confidential salary details of Japan's top executives.

o Recently introduced corporate disclosure rules are expected to shed light on the long-suspected gap in compensation levels between non-Japanese executives and their Japanese counterparts.

� Foreign Investors Reinforcing Presence In Japan Inc. -Nikkei

o Foreign ownership of listed Japanese companies has risen in terms of market value, The Nikkei reports in its Sunday edition, citing Tokyo Stock Exchange data.� Foreign investors reinforced their presence in Japan Inc. in fiscal 2009, buying more than Y6 trillion more Japanese shares than they sold.

� Russia�� Goldman Far More Bullish On Russia Than IMF, World Bank - DJ

o Russia's economy may surprise in 2010 with growth of 7%, Goldman Sachs chief economist Jim O'Neill said Saturday, suggesting an expansion two percentage points ahead of official forecasts

o "The big surprise is Russia is going to grow close to 7% for the next two years," O'Neill told Dow Jones Newswires on the sidelines of the St Petersburg International Forum.

� Russia may save up to 37 billion rubles (around $1.2 billion) annually over the next three years by cutting 20% of� government employees, Finance Minister Alexei Kudrin said Saturday.� DJ

� Oliver Stone's� Pro-Chavez Documentary Bombs In Venezuela

o Oliver Stone's latest documentary "South of the Border," which offers a mostly favorable view of Venezuela's anti-U.S. government President Hugo Chavez, has been a flop at theaters in Venezuela, according to the entertainment trade magazine Variety - DJ

o In the 12 days after its June 4 debut, it grossed only $18,601 on 20 screens in Venezuela

� An al Qaeda-linked insurgent shot and killed his own father for refusing to quit his job as an Iraqi interpreter for the U.S. military. according to authorities.� DJ

� Caracas Asks Interpol To Arrest Anti-Chavez Media Mogul (AFP)--The Venezuela government on Friday asked Interpol to arrest opposition Globovision TV boss Guillermo Zuloaga, who ran afoul of President Hugo Chavez earlier this year for allegedly slandering him.

� Polish presidential elections are to be extended as the leading candidate was unable to claim a majority thus continuing a second round of voting. Though various polling data indicate that interim president Komorowski was in the lead, he may still be below the 50% needed for outright victory. A runoff appears likely to continue on Sunday, the 4th of July - TTN

COMPANY NEWS WITH MACRO IMPLICATIONS

� Changes in the latest IBD 100 List:

o Added: AAPL, WRLD, CRUS, CYD, BIG, FFG, ANV, AIXG, CPLA, SAN, CRVL, WIT, BCPC, NFX.

o Deleted: WX, JOSB, BGH, ARO, ESRX, ROVI, COH, UHS, PLCE, DSW, ABII, EZPW, WMS, BAP.

� Barron's summary:

o Cover: Suggestions on efforts taxpayers might take to reduce the impacts of likely coming tax increases.

o Interview: Investment banker and author Robert Lawrence Kuhn discusses China and its reforms efforts.

o MET Positive on MetLife with the addition of Alico.

o SF Positive on Stifel Financial, Thomas Weisel merger should bolster its competitive position.

o Positive on 4 U.S. steel stocks: X, NUE, STLD, AKS.

o Positive on The Pantry (PTRY), it could eventually become a takeover target.

o Economic Beat defends his use of the CPI, especially of Core CPI.

o Other Voices argues in favor of investing in BP (BP). The company could earn its way out of trouble as the costs from the spill will likely be spread out over several years.

o Editorial calls price-fixing the third greatest refuge of scoundrel governments as it discusses Greece's recently lowered prices for pharmaceuticals.

o The Trader suggests it is time to take profits in Netflix (NFLX) and says any technical selling of America Movil (AMX) due to the rebalancing of the IPC could be cause for buying.

o European Trader is positive on ArcelorMittal (MT) saying the recent drop appears overdone.

o Asia Trader says the IPO of Agricultural Bank of China could provide a boost for other listed Chinese banks.

o Current Yield says that investors who can handle volatility need to look at the bonds of BP (BP).

o The Striking Price speculates on the idea of the NYSE Euronext (NYX) buying the Chicago Board of Options Exchange (CBOE) saying it would create a U.S. derivatives powerhouse.

o Commodities Corner says platinum will rise into the end of the year and into 2011 even if the near term is choppy.

o Follow Up says Exxon (XOM) could rise once it closes the XTO deal later this month and is still positive on Mela Sciences (MELA) saying the delay in FDA approval is likely the fault of the FDA's process and not the company's device.

o Up and Down Wall Street discusses the negative impact the political sphere is having on the markets and considers future Fed policy moves.

o Streetwise believes this earnings season will focus on margins and may lead to downward earnings revisions as companies once again spend some money on growth.

o D.C. Current notes the continued problems at small banks citing the failure of 91 banks, many of them small, community banks, to pay dividends on their TARP investments.

o Speaking of Dividends says share splits may come back in style for the psychological reason that investors like splits, in the opinion of one analyst.

o Technology Trader says Nokia (NOK) needs to take drastic action because it is being crushed at the high end in this era of app-phones driven by consumer marketing, not carrier relationships. The shares are a value trap.

o Plugged In notes the expected Supreme Court decision on business method patents and the potential to impact all sorts of companies that rely upon patented software.

� Stocks mentioned on CNBC's Mad Money with Jim Cramer - TheStreet.com

o + MWE, VRTX, SJM, CREE, CRUS, STD, S, SPW��

o � GMCR

Energy

� BP stories:� BP dn 3% Monday on $ raising concerns (per BBG)