Morning Call 6/15/2010

Stone Street Advisors

ChiBondKing laszlochi@gmail.com

Morning Focus
Overnight Asian markets were mixed, but the notable headlines were made by the Bank Of Japan which elected to keep rates low
and introduce a new lending scheme designed to get banks to lend. Australia down 0.01pct to 4505, while the Nikkei and Hang
Seng were both up, NK up 0.08pct to 9887, HS up 0.05pct to 20062 while China remains closed for holiday. Early pre-open, Europe
is higher, with the CAC-40 gaining 0.66pct, DAX up 0.43pct and the FTSE up 0.47pct despite mixed economic news out of the
region. Political risk continues to be the theme today, with Irans aid ship approaching Gaza and President Obama speaking to the
nation tonight. The markets surprisingly yawned at Italys debt which is now over a trillion euros announced yesterday and the
catch-up game of the ratings agencies to finally get around to downgrading Greece.

Notable Overnight Headlines

Asia
Japan Govt Official: To Start Discussing Econ Growth Strategy With Each Ministry (DJ)
Japan Govt Official: Govt To Aim To Put Debt-To-GDP Ratio In Downtrend In FY2021 (DJ)
Bank of Japan leaves policy rate unchanged at 0.1%
Japan Lending
o Bank of Japan offers $33 billion in new lending (MarketWatch)
o BOJ To Lend Y3 Tln At 0.1% To Boost Bank Lending
o BOJ: Each Participating Bank Can Borrow Y150 Bln From BOJ (DJ)
o BOJ: Japan showing 'further signs' of recovery (MarketWatch)
o BOJ: New Facility Aimed At Raising Productivity, Creating Demand (DJ)
o BOJ: Employment, Income Conditions Remain Severe But Degree Of Severity Has Eased (Reuters)
o BOJ Shirakawa: Cannot Continue Bank Lending Support Plan Permanently (DJ)
India Finance Minister: Inflation Is An Area of Concern (DJ)
Australia's RBA in wait-and-see mode: minutes (MarketWatch)
RBA Minutes: Appropriate To Leave Cash Rate Unchanged, Global Events Could Impact Medium-Term Inflation
Australia April Home Loans Up 0.6% On Month
Singapore April Retail Sales Fall 2.6% Annually, Consensus 0.8%
Singapore Q1 Employment Up 36.5K Vs. 37.5K In Q4, Q1 Jobless Rate Falls To 2.2% From 2.3% In Q4
South Korea Q1 asset/debt ratio at over 2-yr high (Reuters)
Australian debt levels sustainable says central bank (Reuters)

Europe
U.K. May annual CPI slows to 3.4% (MARKETWATCH)
U.K. May Consumer Prices Rise 0.2% On Month, Consensus 0.4%
German ZEW index falls sharply in June
Swiss parliament approves US tax deal on 2nd try (AP)
Czech May PPI Up 1.5% On Year Vs. 0.4% In April, Consensus 1.1%
ECB's Stark: Sees No Signs Of Second Downturn For Eurozone
Fitch says no immediate plan to cut Greece to junk (Reuters)
SocGen targets net profit of around EUR6B in 2012 (MARKETWATCH)
Spanish house prices fall 2.9% in first quarter (MARKETWATCH)
Cash For Clunkers, European Edition: Car sales slide in EU as incentives dry up (MARKETWATCH)
Turkey March Jobless Rate At 13.7% Vs. 15.8% Last Year
Turkey April Industrial Turnover Up 19.1% On Year, Falls 4.3% m/m
BoE's first indexed 3-month repo covered 1.54 times (Reuters)

See Important Disclosures on page 4

 Irish Q1 unemployment falls to 12.9 pct (Reuters)

US Pre Open
Economic News

Gov't puts employers on notice over health costs (AP)

House Democrats seek changes in Senate bank bill (AP)
1.6 million more Americans volunteered in 2009 (AP)

Equities

ESPD: Split CFTC approves box-office futures (AP)

HSY: Hershey to cut 500 to 600 jobs, to spend up to 300m on modernization (MARKETWATCH)
CBOE: CBOE prices IPO at $29 a share, top of range (MarketWatch)
RIMM: RIM plans new phone, experiments with tablet: WSJ (MARKETWATCH)
BP: BP rating cut to BBB from AA at Fitch (MARKETWATCH)
CME: Upgraded to buy from reduce at Erste (Reuters)

Interesting Morning Reading

Hedging and 2-Way Liquidity, Professor Pinch: http://professorpinch.wordpress.com/2010/06/13/hedging-and-2-

way-liquidity-explained-ice-block-edition/
Jeff Gundlach (Clusterstock): http://www.businessinsider.com/jeffrey-gundlach-interview-2010-6
Goldman Sachs Envy Drove Big Boys To Blow Up Money Grid:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aT8lW9rXYJDo

Notable Bond Market/Economic Events

Bond Auctions (1PM ET)
o 4 Week Bill
Upcoming Bond Auctions (This Week)
o None
Economic Releases For Today
o 8:30AM
Import Prices, consensus -1.1pct m/m
Empire State Manufacturing, cons. 20.1
o 9:00AM - TIC Long Term Purchases, cons. 77B
o 9:30PM Australian Housing Starts

See Important Disclosures on page 4

Market Summary 7AM

Futures Currencies Fixed Income

Symbol Last Chg Symbol Last Chg Symbol Last Symbol Last
DOW 10189 48 EURUSD 1.2256 0.0036 2s5s 132.00 US2Y .73
SP500 1092 5.75 GBPUSD 1.4728 -0.0016 2s10s 254.00 US5Y 2.05
NSDQ 1857.25 10.75 EURJPY 111.92 0.05 2s30s 346.00 US7Y 2.72
ZB 123'10 +0'01 USDCAD 1.029 -0.005 5s10s 122.00 US10Y 3.27
ZN 120'050 -0'010 USDJPY 91.32 -0.27 5s30s 214.00 US30Y 4.19
ZF 116'312 -0'005 NZDUSD 0.6941 -0.0004 10s30s 92.00 UK5Y 2.27
ZT 109'035 +0'005 UK10Y 3.54
CLN0 75.84 0.72 UK30Y 4.3

See Important Disclosures on page 4

 Morning Call 6/15/2010
Stone Street Advisors
ChiBondKing laszlochi@gmail.com

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