Flash Crash

Economic announcements :

* Thursday: New jobless claims: consensus of 448k, have been essentially flat for the past few weeks

* Friday: Retail sales

* Gold above $1250 for the first time (UK credit rating, hedge against weaker euro, inflation)

* Monday: Bernanke cautiously optimistic (US recovering at a "moderate" pace)

* Fitch warned UK faced "formidable" challenge to keep its AAA rating

* FTSE Eurofirst 300 down 1% to 979.44 on sovereign debt contagion concerns

* EU finance ministers are moving ahead with plans for a bank Levy; currently being resisted by the UK.

* RBS nearing the close of selling its commodities and private equity business (expecting 4bn)

* May 6 'flash crash'

Not so much risk appetite

* Prudential made a failed bid for AIA; nearly 800MM in management fees wasted

* Only 41k jobs created in the US in May, far fewer than expected

* Michael Gordon (BNP Asset Mgmt): Blames exchanges for encouraging high frequency traders; do not help the market ascertain a company's value, don't provide a service

* ECB purchased E750bn government bonds (Greek, Portugal, Ireland); ignored Spain and Italy, who's yields have increased (widest since mid 90s)

* Belgium debt difficult to auction; had to go to 100+bunds compared to 50+ previously

Dampening of Investor Risk Appetite

* geopolitical pressure Asia, Europe

* uncertainly in financial regulation reform

* Gulf of Mexico oil spill

* AIA: AIG Asian insurance business, may be worth $25bn instead of $36bn originally sought

* Decay of infrastructure - $40,000bn needs to be spent over the next 25 years (emerging and developed markets)

* Germany reveals 95bn in spending cuts, cutting 15,000 public jobs

* Much larger than expected factory order increase of 2.8% (revisited up to 5.1%); shows weaker euro is having an effect boosting growth

Updates on Greece

Greek Crisis

• Spain, Italy spreads over Germany highest since 1999
• Expectation that Greece will face a managed default; Spain, Portugal would follow suit
• BNP Paribas has 6.1bn in Greek debt
• Greece, Spain, Portugal, Ireland and Italy: $4tn in public/private lending 2009
• European banks were insulated from initial credit crisis, regulators didn't create additional capital requirements. With the Greek crisis, these banks are now suffering. Debt (most of which comes due in 2012) will be difficult to refinance as they'll be stretched for capital