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R.T.M. ~ Frontrunning ~ 24th Ed., Vol.2 ~ June 13th - 17th

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Frontrunning: June 13


by Tyler Durden - Jun 13, 2016 7:37 AM

  • Chaos, Carnage Amid Orlando Rampage (WSJ)
  • FBI Twice Probed Orlando Gunman (WSJ)
  • How the Orlando Shooting Unfolded (WSJ)
  • Brexit fear factor sends stocks spinning (Reuters)
  • Pound Judgment Day Means Either Drop to 30-Year Low or 6% Rally (BBG)
  • Asia Yields Follow Europe’s to All-Time Lows on Brexit Concern (BBG)
  • Gunman in worst U.S. massacre described as 'quiet' but grew hateful (Reuters)
  • Iraq makes arrests over reports of Sunnis executed in Falluja (Reuters)
  • KKR’s Henry Kravis: ‘Always Worry About What You Might Lose on the Downside’ (BBG)
  • Verizon, AT&T set to make final round of bids for Yahoo web assets (Reuters)
  • Walgreen Terminates Partnership With Blood-Testing Firm Theranos (WSJ)
  • South Korea's Hotel Lotte postpones $4.5 billion IPO indefinitely after raids (Reuters)
  • Regulators to Banks: We’ll Size Up Your Risks (WSJ)
  • Iran Plans Oil-Refinery Expansion to Cut Gasoline Imports (BBG)
  • U.S. Regulator NHTSA Says Tesla Clarified Agreement Language (BBG)
  • The Most Pessimistic Bull Market in History (WSJ)
Overnight Media Digest

WSJ

- The deadliest shooting attack in U.S. history killed at least 50 people at popular gay nightclub Pulse in Orlando, Florida and injured 53. (http://on.wsj.com/1Oksq4n)

- Drugstore operator Walgreen formally ended a strained alliance with Theranos as regulators near a decision on whether to impose sanctions against the embattled Silicon Valley blood-testing firm. (http://on.wsj.com/1OkrYmA)

- British Prime Minister David Cameron sought to inject fresh energy into his campaign to keep Britain in the EU, in an interview to the BBC, he repeatedly underscored the risks of leaving the EU. (http://on.wsj.com/1Okrugq)

FT

- The Libyan Investment Authority claims that Goldman Sachs Group Inc exploited the sovereign wealth fund's limited financial experience in 2008, forcing it into risky and loss-making trades.

- RateSetter is breaking into small business loans with the help of government backing. The company has hired a specialist team and built a technology platform to support business loans ahead of its launch into the market this week.

- Deutsche Bank AG's transaction unit is to use the rest of this year improving its systems stability and security, which have been criticised by regulators for providing inadequate controls against financial crime.

- Elderly home-care provider HC-One is seeking a sale and leaseback deal on 200 million pound worth of property in a bid to reduce its borrowings.

NYT

- Heather Dietrick, Gawker Media's president and general counsel, said in an interview over the weekend that after taking a few moments to collect her thoughts, she joined Nick Denton, Gawker's founder and chief executive, at a company wide meeting. There they told some 200 employees that Gawker, facing a $140 million judgment from a lawsuit by the retired wrestler Hulk Hogan, had filed for bankruptcy and was putting itself up for sale. (http://nyti.ms/1tloXsg)

- Walgreens said it was terminating its relationship with Theranos, dealing a severe blow to the embattled blood testing company. Walgreens said it would immediately close all 40 of the Theranos testing centers in its Arizona drugstores, the source of most of Theranos's customers. (http://nyti.ms/1sBkhyy)

- Blue Coat Systems said late on Sunday that it would sell itself to Symantec Corp for $4.65 billion. As part of the deal, Blue Coat's chief executive, Greg Clark, will take over as the chief executive of the combined security software maker. (http://nyti.ms/1WKW0T9)

- In recent weeks, staff members for Bobby Rush, a Democratic congressman from Illinois, have asked fellow lawmakers to sign a letter opposing a Federal Communications Commission proposal to limit how broadband providers can share users' personal data. (http://nyti.ms/1sATW3M)

Canada

THE GLOBE AND MAIL

** Finance Canada is quietly pushing the idea of a federal carbon tax as the Liberal government looks to set a minimum national price and complement provincial carbon pricing plans, sources say. (bit.ly/1rld6ZX)

** Support for Britain pulling out of the EU appears to be rising, with one poll released Friday showing support for "Vote Leave" at 55 percent compared with 45 percent for "Remain". However, two polls published Saturday put the race much closer, with "Remain" ahead by two points in one and "Vote Leave" leading in another by one point. (bit.ly/1rleb40)

** A group advocating for younger Canadians is urging finance ministers to think more broadly about why some people are not saving enough for retirement, including factors like ballooning home prices, student debt and the cost of child care. (bit.ly/1rlftfA)

NATIONAL POST

** The threat that the roll-out of the Ontario Retirement Pension Plan (ORPP) in 2018 may further fragment Canada's retirement system has moved Canada Pension Plan (CPP) expansion up the agenda for the June 20 federal-provincial finance ministers' meeting (bit.ly/1rlc2p5)

Britain

The Times

- Bain Capital, co-founded by Mitt Romney, the 2012 U.S. Republican presidential candidate, is exploring a 2 billion pound ($2.84 billion) float of TI Automotive, founded as Tube Investments in Birmingham in 1919. (http://bit.ly/1U34T4P)

- The Bank of England will face overwhelming pressure to slash interest rates to new lows if Britain opts to quit the EU, according to international investors. With polls indicating the result is too close to call, fears that a Brexit vote could derail the recovery are mounting. (http://bit.ly/1U35Mdy)

The Guardian

- MPs are preparing to invoke a list of sanctions against Philip Green should the billionaire retailer fail to appear before this week's parliamentary select committee examining the collapse of BHS. (http://bit.ly/1U35IdT)

The Telegraph

- Royal Dutch Shell Plc is preparing to retreat from high-cost oil operations in the North Sea after 45 years as it attunes its global operations to the new reality of low oil prices. (http://bit.ly/1U35HGY)

- Philip Green's Arcadia Group discussed selling BHS to turnaround fund Sun Capital or Dominic Chappell before offloading the chain to a former bankrupt person with no retail experience. (http://bit.ly/1U35Ude)

Sky News

- BT Group Plc and the trade unions representing tens of thousands of its workers will take the unusual step this week of issuing a joint statement supporting the UK's continued membership of the European Union. (http://bit.ly/1U36lnI)

- Wal Mart Stores Inc, the world's largest retailer by profitability, is poised to parachute in Sean Clarke, who runs its operations in China, as Asda's next boss. (http://bit.ly/1U36sj8)

The Independent

- BP Plc sold its Norwegian oil fields, some more than 40 years old, to a company controlled by billionaire Kjell Inge Roekke in a $1.3 billion stock deal. The new business, called Aker BP, will be the seventh-largest producer in Norway. (http://ind.pn/1U35yDh)

http://www.zerohedge.com/news/2016-06-13/frontrunning-june-13
 

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#2
Global Stocks Plunge; US Futures, Oil Slide As Brexit Fears "Jolt Markets"


by Tyler Durden - Jun 13, 2016 6:52 AM

Just last week we were commenting on the unprecedented level of complacency ahead of a plethora of June event catalysts, key among which the June 23 Brexit referendum vote. And then everything changed over the past few days, when the Leave camp was seen making dramatic gains in the polls, culminating with yesterday's Opinium poll that has "Brexit" leading by a remarkable 19 points. That, and of course the 4 central bank meetings on deck, each of which has the capacity to shock and disappoint the markets if one of the world's central banks says something that markets disagree with.

But right now it is all about the immediate fate of the UK, and as Bloomberg explains the "jolted markets" and overnight plunge in global risk assets, "growing anxiety over the prospect of the U.K. exiting the European Union dominated financial markets, sending global stocks down for a third day and the British pound to an eight-week low while boosting demand for havens such as the yen and gold."



“There are many uncertainties, so we could continue seeing declines and touch new lows in the days to come,” said John Plassard, a senior equity-sales trader at Mirabaud Securities in Geneva. “Even though nobody is expecting a rate hike, everyone will look at what Yellen will say at the press conference, and we are 10 days from the Brexit vote, and also days away from the election in Spain, while oil is lower and volatility is the highest in months.”

As we showed last night, the number of hedge fund net short position on cable is the highest since the summer of 2013, which of course means that should the vote go against the "Leave" camp, the short squeeze will be nothing short of spectacular.



Meanwhile, Asia was ugly, with the Yen soaring to its May highs (and the all important USDJPY carry trade plunging as a result) while Asian stocks slumped between 2%-3.5% as investors dumped risk assets ahead of UK’s referendum. The surge in the Yen slammed Japan, and the Nikkei was down a whopping 3.5%, just north of 16,000 as concerns about Kuroda's (and Abe's) professional career and tenure mount. China's Shanghai Composite tumbled the most since February, dropping 3.2%, which is hardly the move those expecting a surge on a potential inlusion of China in the MSCI Index were hoping for.

But the worst was in Europe, where equities headed for the lowest close since February and the pound weakened against all of its 16 major peers after polls showed the outcome of a referendum on whether Britain will stay in the EU was too close to call. The yen rose toward its strongest level since 2014, while the cost of insuring corporate debt against default increased to the highest in more than two months. Oil retreated after a report showed a jump in U.S. drilling rigs, while massively bullish positioning by spec investors threatens a wipeout if and when the selling begins.

And since this "market" is all about momentum, those who were euphoric just days ago, are now panicking: “There are many uncertainties, so we could continue seeing declines and touch new lows in the days to come,” said John Plassard, a senior equity-sales trader at Mirabaud Securities in Geneva. “Even though nobody is expecting a rate hike, everyone will look at what Yellen will say at the press conference, and we are 10 days from the Brexit vote, and also days away from the election in Spain, while oil is lower and volatility is the highest in months.”

Others blame uncertainty: “The market hates uncertainty,” said Yoshinori Ogawa, a markets strategist at Okasan Securities Co. in Tokyo. “Most market participants think that the U.K. will probably remain, but we’re seeing some poll results that show those who’ll vote to leave outnumber the ‘Remain’ camp.”

How dare central bankers allow uncertainty in the market. Please fix it immediately, and make it certain that even more trillions in future growth will be borrowed just to make the P&Ls of people like Ogawa rise some more.

And speaking of central banks, and specifically frontrunning them it goes without saying that global bonds yields fell to a fresh record low overnight, with new all time lows touch in both Japan and Germany, while US 10Y are down 2bps to 1.62% and very likely set to drop far lower as the great rotation out of stocks begins in earnest.

Market Snapshot
  • S&P 500 futures down 0.4% to 2079
  • Stoxx 600 down 1.5% to 328
  • FTSE 100 down 0.4% to 6093
  • DAX down 1.4% to 9701
  • S&P GSCI Index down 0.1% to 380.8
  • MSCI Asia Pacific down 2% to 128
  • MSCI Asia Pacific down 2% to 128
  • Nikkei 225 down 3.5% to 16019
  • Hang Seng down 2.5% to 20513
  • Shanghai Composite down 3.2% to 2833
  • US 10-yr yield down 2bps to 1.62%
  • German 10Yr yield down less than 1bp to 0.02%
  • Italian 10Yr yield up 5bps to 1.43%
  • Spanish 10Yr yield up 5bps to 1.48%
  • Dollar Index down 0.06% to 94.51
  • WTI Crude futures down 1.2% to $48.48
  • Brent Futures down 1% to $50.05
  • Gold spot up 0.7% to $1,283
  • Silver spot down 0.1% to $17.31
Global Top News
  • Brexit Risk Rattles Markets as Stocks Sink With Pound; Yen Jumps: Bearish bets on sterling are highest in almost 3 years
  • Asia Yields Follow Europe’s to All-Time Lows on Brexit Concern: Haven demand accelerates ahead of Fed, BOJ meetings
  • Apple holds Worldwide Developers Conference; Analysts expect biggest announcements on Siri, updates to operating systems
  • Symantec to Buy Security Firm Blue Coat for $4.65 Billion: cash deal will close around the third quarter of 2016
  • Orlando Massacre Shows Cracks in U.S. Bid to Stop Terrorism: FBI had twice interviewed alleged killer for terror links
  • Verizon, AT&T Said to Make Final Round Bids for Yahoo: Reuters: co. to start reaching out to bidders early as Monday
  • Disney’s Foreign Curse Could End With China Resort Project: Entertainment giant opens Shanghai Disneyland on June 16
  • Wal-Mart Names China Head to Replace Andy Clarke as Asda Chief: The change will take place July 11
  • Iran to Cut Gasoline Imports With $14 Billion Refinery Expansion: Country to build 5 refineries, expand existing plants
  • Merck, Pfizer Double Size of Diabetes Drug Study to Catch Rivals: Medicine cuts blood sugar levels, helps patients meet goal
  • J&J Diabetes Drug May Help With Weight Loss: Study: Combo was well tolerated, no new or unexpected safety signals
  • Canada Willing to Work With Bombardier on Share Structure: Reuters: Canada is willing to “find a solution” with Bombardier
  • Dr. Reddy’s to Buy Generics From Allergan, Teva for $350 Million: products are “complex generics” in various dosage forms, all but one awaiting U.S. approval.
  • U.S. Regulator NHTSA Says Tesla Clarified Agreement Language: U.S. safety agency analyzing data on Model S suspensions
Looking at regional markets, we start as usual in Asia, where equity markets traded with heavy losses following Friday's negative close on Wall St. as the slump in energy prices weighed on sentiment. Energy names were among the underperformers in Nikkei 225 (-2.6%) after WTI crude futures fell below USD 49/bbl while a firmer JPY also soured exporter sentiment. Elsewhere, Chinese markets have conformed to the negative picture in Asia with the Shanghai Comp (-3.2%) crashing on its return from its 4-day weekend and also followed an unexpected decline in Foreign Direct Investment, while Australian markets were closed for the Queen's Birthday. The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong fell 2.8 percent, down 4.9 percent over two days. Finally, 10yr JGBs traded relatively flat despite risk-averse sentiment, although yields were pressured in early trade with the 5yr, 10yr, 20yr and 30yr declining to fresh record lows.

As we noted last night, two out of three key Chinese economic datapoints missed:
  • China FDI (May) Y/Y -1.0% vs. Exp. 5.0%. (Prey. 6.0%). (Newswires)
  • Chinese Retail Sales (May) Y/Y 10.00% vs. Exp. 10.10% (Prey. 10.10%)
  • Chinese Industrial Production YTD (May) Y/Y 5.90% vs. Exp. 5.90% (Prey. 5.80%)
Top Asian News
  • China’s Stocks Decline Most Since February on Economic Concern: Shanghai Composite Index dropped 3.2% at Monday’s close
  • China’s Economy Steadies in May Even as Investment Growth Slows: Industrial output climbs 6%, retail sales increase 10%
  • Asia Yields Follow Europe’s to All-Time Lows on Brexit Concern: Haven demand accelerates ahead of Fed, BOJ meetings this week
  • Abe Aide Sees Potential for BOJ Buying Riskier Corporate Debt: Nakahara says JGB buying should rise 20t yen a year
  • Richest Indian’s $41 Billion Push Spurs Reliance Bonds to Record: Yield on RIL’s perpetual dollar notes hit record low Friday
  • Lotte Scraps $4.5 Billion Hotel IPO as Probes Deepen Crisis: Co. cancels remaining IPO schedule after discussing with arrangers
Europe has suffered from the same risk off sentiment as has hit Asia, and stocks have been pressured as Brexit fears rise amid weekend polls leaning towards the leave camp. As a result European equities headed for the lowest close since February and the pound weakened against all of its 16 major peers after polls showed the outcome of a referendum on whether Britain will stay in the EU was too close to call. Elsewhere, financials have been among the worst performers in Europe, weighed on the by the global uncertainty, while energy names have been weighed by the move lower in WTI which now resides sub USD 49/bbl. Despite the soft tone, Bunds remain below 165.00 this morning and continue to trade in a tight range, with supply weighing on the German benchmark as Italians come to market with EUR 7-9bIn. Focus lies on whether the German benchmark will see yields slip below 0%. Similar to last week, global bond yields have fallen with Gilts and Bunds yet again hitting record lows.

The Stoxx Europe 600 Index dropped 1.5 percent at 10:50 a.m. in London. Carmakers posted the biggest decline of the 19 industry groups on the equity gauge, with BMW AG falling 2.1 percent after its sales chief told Automobilwoche that the U.S. market “will stagnate at best” in 2016. Energy companies also slid, led by Tullow Oil Plc, as crude retreated.

Top European News
  • Pound Judgment Day Means Either Drop to 30-Year Low or 5% Rally: Remain vote may send pound to highest level this year
  • ECB Says Oil-Price Slump Not the Global Boon It Might Have Been: Initial supply-driven price drop reflects slowing activity
  • SNB Braces for Brexit Tsunami as Franc Defenses Prepared: Swiss central bank to brief media after policy meeting June 16
  • StandChart CEO Cracking Down on ‘Above the Law’ Bankers: Firm addresses staff’s loans to each other, outside businesses
  • Putin Could Sketch Deal on Europe Gas Link in Talks With Juncker: Leaders may discuss Nord Stream 2 this week in Russia
  • Merkel Presses China on Investment Rules as Li Says No Trade War: Merkel chooses words to limit conflict on trip to Beijing
  • Rio Tinto Hires Goldman to Help Privatize Copper Unit: S. Times: Goldman Sachs has sounded out potential buyers
In FX, the early trade in Europe has been dominated by the risk off theme which as kept the JPY — primarily — on the front foot, with the USD/JPY making an initial test on 105.51 lows (from early April). We have managed to hold off this for now, but with the Euro bourses through the Friday lows, all eyes are now on Wall Street, which will dominate trade from here. Fresh losses for GBP as the latest EU polls over the weekend show the leave camp gaining favour again. Now just 10 days ahead of the 23 Jun referendum, the nerves are clearly telling and Cable has been pushed down towards 1.4100 and EUR/GBP now eyeing .8000. Trade in the CAD and AUD has been a little mixed, though with a heavy leaning to the downside, where risk sentiment dominates. EUR/USD is being largely buffered by cross rate flow with no discernible direction of note here. No data of note apart from the OPEC report due out at 11.00am London time, so we CAD may be a little livelier further into the session.

In commodities, WTI and Brent crude futures fell overnight and for much of the European session so far. West Texas Intermediate crude fell 1.1 percent to $48.53 a barrel after Baker Hughes Inc. data on Friday showed that rigs targeting crude in the U.S. rose by three to 328 last week, capping the longest run of weekly gains since August. Iran is seeking to boost output by 600,000 to 700,000 barrels a day over five years from fields in an area west of the Karoun River along the Iraqi border, Oil Minister Bijan Namdar Zanganeh said. Of note, today will see the release of the OPEC monthly report which does often provide volatility. Gold has been strong after Asian participant have entered back into the markets trading as high as $1284/oz looking to make new highs. Silver is currently trying to break through a consolidation area to get to new highs for the month and is currently trading at the USD 17.29 level. Copper prices are up 1.2 % at USD 4,572 on strong volume of 5,796 lots, lead is up 0.3 %, while the rest are weaker with zinc down 1% at USD 2,067.50. Total volume, overnight have been 11,512 lots.

There are no major economic releases on the US calendar today.

Bulletin Headline Summary from RanSquawk and Bloomberg
  • Global equities pressured amid softness in financials, while energy names track crude prices lower.
  • GBP trades with heavy losses as Brexit fears rise with the latest polls leaning towards the leave camp.
  • Light calendar today with no notable UK, EU or US data scheduled.
  • Treasuries rally in overnight trading while European equities head for lowest close since February and gold rallies amid Brexit concern; FOMC, BOJ, and BOE rate decisions this week.
  • The pound tumbled to the lowest level in two months against the dollar as anxiety about a potential British exit from the European Union continued to build
  • Prime Minister David Cameron turned to his traditional rivals in the opposition Labour Party to win over undecided voters with just 10 days to stop Britain from voting to leave the European Union
  • A British vote to leave the EU on June 23 would practically guarantee a surge in the franc, popular among investors at times of market stress, according to a Bloomberg survey of 23 economists
  • German 10Y yield fell to record-low 0.009% on Friday
  • Blackstone Group LP, the world’s largest private equity manager, expects this month to finish raising the biggest buyout pool yet designed to mimic the long-term, buy-and- hold strategy of Warren Buffett
  • Investors will get a first hint on Monday about how much Mario Draghi is prepared to pump into the corporate-bond market. At about 3:45 p.m. in Frankfurt, the ECB will report how much it spent on company bonds
  • With turnover shrinking at the fastest pace since at least 2006 banks are under growing pressure to either downsize their Asian equity desks or exit parts of the business altogether
  • China’s economy steadied in May as factory production held up and consumers and the government offered support against diminishing growth in private investment, which has been hurt by declines in old-line industries such as coal
US Event Calendar
  • No major economic data expected:
DB's Jim Reid concludes the overnight wrap

In Friday's EMR I discussed how at our Euro LevFin conference the day before one of the questions I polled the audience of several hundred was whether they thought the UK would vote to leave the EU? 83% thought 'no' which to be honest could have been even higher based on recent straw polls I've done. So it's fair to say that there has been some complacency on this looming issue. However some of this unraveled in a risk-off day on Friday and then intensified after a shock poll (released late in the day) from ORB for the Independent newspaper (online sampling) showing a 10-point lead for "leave". Sterling traded as low as $1.4198 in the evening session after being as high as $1.4473 in the morning session. This morning we are at $1.4185 as we go to print. The two weekend polls we've seen don't corroborate this shock survey but show the polling back to being remarkably close with the Opinium poll for the Observer giving 'Remain' a narrow lead and YouGov for the Sunday Times giving 'Leave' a narrow lead. With 10 days to go until polling day it's inevitable that the focus on this will step up aggressively from here.

As usual we'll go through the full week ahead at the end but the highlights are clearly the FOMC conclusion on Wednesday and perhaps the BoJ on Thursday. US Retail sales tomorrow is also interesting and is probably the biggest release since payrolls 10 days ago. As for the Fed the main focus will be on the dots, economic projections and any signalling seen on rates in the statement and Yellen's press conference. It's hard not to see a fairly dovish outcome given payrolls and 'Brexit' risks but knowing the Fed several members will still want to keep the dots at fairly similar levels. Whether the market believes this is realistic is another matter.

Moving on to an important start to the week in China, the main monthly data dump is already out. Industrial production rose 6% YoY in May, in line with expectations. Retail sales climbed 10% last month (10.1% expected), while fixed-asset investment increased 9.6% YTD (annualised) which was the weakest since 2000 and below any of the consensus forecasts on Bloomberg.

Staying with China, the IMF deputy David Lipton discussed something we looked at in a Credit Bites last week namely Chinese corporate debt. He said that “Corporate debt remains a serious -- and growing -- problem that must be addressed immediately and with a commitment to serious reforms,”.

Asian markets are weak overnight following on from the risk off on Friday. The Nikkei is down -2.9%, Hang Seng -2.5% and China bourses down just under 1% as we go to print.

Global risk assets were hit hard on Friday with investors turning cautious ahead of the numerous risk events on the horizon. Despite some positive economic data (more on this later), European equities were battered with the STOXX 600 posting its third consecutive day of losses on Friday (-2.44%) and subsequently ending the week down by the same amount. Every sector ended the day lower with Banks (-3.66%), Insurance (-3.32%) and Financial Services (-2.94%) industry groups posting the worst losses likely in part down to rising 'Brexit' concerns. In fact, the broad sell off saw all but 17 out of 600 companies in the index end Friday in negative territory. The S&P 500 closed -0.92% but was actually fairly stable all day around that level. Oil fell nearly 3% which didn't help the global sentiment with highs of $50.72 in the Asian session turning into $48.88 by the US close. This morning we are at $48.44. German 10Y yields got ever closer to zero as they hit fresh all time lows of 0.02% after dropping by -1.2bps on Friday and ending the week cumulatively lower by -4.8bps. Will this week be the one where we see it tip into negative territory?

Interestingly most of the data out of Europe was largely positive on Friday. Germany’s final May CPI number was unrevised as expected (+0.3% mom). Industrial production numbers for April out of France (+1.2% mom vs. +0.4% expected) and Italy (+0.5% vs. +0.3% expected) surprised on the upside. These figures rounded out the industrial production numbers for the Euro Area’s top four economies, with activity expanding in Italy, Germany and France (although it stalled in Spain). Given that these economies make up more than three-fourths of the Euro Area’s industrial output, the numbers so far are certainly positive signals ahead the Euro area figure due next week.

Over in the US, the preliminary June reading for the University of Michigan Consumer Sentiment Index clocked in slightly above expectations at 94.3 (vs. 94.0 expected) but still fell from the previous month’s one-year high of 94.7. Consumers’ optimism about their personal finances was offset by concerns about continued economic growth. While the year ahead expected inflation rate of 2.4% in June remained unchanged from May, long term inflation expectations fell to their lowest levels in nearly fifty years with consumers expecting an average inflation rate of just 2.3% over the next five years (down from expectations of 2.5% recorded in the prior two months).

Away from the data expect there to also be a big focus on the Fed’s revised dot plot projections which we’ll get at the Wednesday meeting along with Yellen’s press conference. Meanwhile over at the ECB we’ll hear from Nouy today and Nowotny on Thursday, before Draghi is scheduled to speak late afternoon on Friday. Meanwhile, Spanish PM Rajoy is due to hold a televised debate today ahead of the June 26th election which could be worth keeping an eye on.

http://www.zerohedge.com/news/2016-...s-futures-oil-slide-brexit-fears-jolt-markets
 

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#3

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#6
Frontrunning: June 14


by Tyler Durden - Jun 14, 2016 7:36 AM

  • German 10-Year Government Bond Yields Dip Below Zero for First Time (WSJ)
  • U.K. Moves Closer to Brexit as The Sun Backs ‘Leave’ Vote (BBG)
  • Global Stock Selloff Deepens as Investors Seek Safer Assets (WSJ)
  • Futures tread lower for fourth day; Fed meet awaited (Reuters)
  • Oil falls as Brexit threat rattles markets (Reuters)
  • Polls show increasing support for Brexit; Murdoch's Sun backs 'Leave' (Reuters)
  • U.K.’s Upstart Lenders Face Brexit Shock in First Downturn (BBG)
  • Clinton and Sanders to meet as DC marks the final primary (AP)
  • Trump Faces New Challenges Testing Terror Playbook Against Clinton (BBG)
  • Netanyahu, Facing Trump or Clinton, Urged to Take Obama Aid (BBG)
  • Thousands converge on Paris to protest against changes to labor law (Reuters)
  • Muslim leaders condemn Florida massacre, brace for backlash (Reuters)
  • EU Envoy to Turkey Resigns as Tensions Threaten to Derail Migration Deal (WSJ)
  • Yellen Faces Rate Dilemma as U.S. Economy Runs Short of Workers (BBG)
  • Italian ex-PM Berlusconi's heart surgery went well: source (Reuters)
  • South Korea probe into Lotte Group widens with more raids (Reuters)
  • Giant Wildfire Is No Longer the Canadian Oil Industry's Biggest Problem (BBG)
Overnight Media Digest

WSJ

- Microsoft agreed to buy LinkedIn for $26.2 billion, marking the largest deal in the software giant's history, in a bet the professional social network will give a jolt to its widely used Office portfolio of productivity applications. (http://on.wsj.com/1Pqnaa8)

- The U.S. Supreme court struck down Puerto Rico's effort to restructure its public utility debts, ruling Congress precluded the territory from enacting its own bankruptcy law. (http://on.wsj.com/1PqltcT)

- Libya's sovereign-wealth fund, in a long-awaited trial that started Monday, alleged Goldman Sachs took advantage of its lack of financial sophistication to draw it into losing trades. (http://on.wsj.com/1PqlRZ1)

FT

* TransCanada and IEnova consortium have won a tender to build an 800-km sub-sea pipe from southern Texas to the Gulf of Mexico. The pipeline is expected to commence operations by October 2018.

* Privately owned bank Berenberg is looking to double its employees in the United States by the end of 2017. The bank opened an equity-trading desk in New York last year.

* JIC Group and Wise Road Capital are buying Standard Products, a unit of NXP Semiconductors for about $2.8 billion.

* Airbus said it would use China-based manufacturers to assemble its helicopters as a part of a deal to supply 100 helicopters for 700 million euros

NYT

- Microsoft Corp's blockbuster $26.2 billion takeover of LinkedIn Corp might be an attempt to travel through time. Specifically, to the heady heights of yesteryear's technology valuations. (http://nyti.ms/1ZMVZME)

- With sales sluggish and stiffening competition from rivals like Google and Facebook, Apple announced on Monday coming improvements to the software that runs its devices, including a revamped Music app, an easier login process and better information-sharing across devices. (http://nyti.ms/1U6dUdo)

- Donald Trump said his campaign would revoke the press credentials of The Washington Post, effectively prohibiting journalists from one of the nation's largest newspapers from joining the traveling press corps of the presumptive Republican nominee. (http://nyti.ms/28AA80Z)

- The Supreme Court rejected an effort in Puerto Rico to allow public utilities there to restructure $20 billion in debt, striking down a 2014 Puerto Rico law. (http://nyti.ms/1U9iRHD)

Britain

The Times

Mounting fears that Britain will vote to leave the European Union this month have sent the cost of insurance against a collapse in the pound to an eight-year high. (http://bit.ly/1VW1N7q)

Andy Clarke, chief executive of Asda, has been ousted from his role managing one of Britain's "Big Four" grocers after a steep fall in sales and market share. He will be replaced by the head of Walmart's Chinese business, Sean Clarke. (http://bit.ly/1VW2ei5)

The Guardian

Hermes Investment Management is spearheading an effort to break with the City's notorious short-termism and push fund managers to focus on the social, environmental and economic consequences of investment decisions. (http://bit.ly/1VW1kSB)

FIFA has welcomed the decision by its financial auditor KPMG to resign. The break in a decade-long relationship was announced Monday, months after KPMG said it would review its work with football's scandal-hit world governing body. (http://bit.ly/1VW0xkO)

The Telegraph

Barclays is the British bank most exposed to the referendum on the UK's membership of the EU, as its international operations will be hit the most by Brexit according to analysts. (http://bit.ly/1VW0LbI)

Schneider Electric has resuscitated tie-up talks with software company Aveva, six months after abandoning plans for a 1.3 billion pounds ($1.85 billion) merger. (http://bit.ly/1VW2MV4)

Sky News

Goldman Sachs has rejected a demand from members of Parliament to probe into the collapse of BHS, that would drag its executives deeper into their inquiry. (http://bit.ly/1VW0Z2j)

Two directors of the vehicle which owned BHS until it plunged into administration in April discussed the payment of a 250,000 pounds ($355,150) bonus despite the retailer's ongoing cash flow problems. (http://bit.ly/1VW2Kwv)

The Independent

Mike Ashley, the founder of Sports Direct, has written to administrators to confirm that he is still interested in buying parts of collapsed retail chain BHS. (http://ind.pn/1VW1jye)

Libya's sovereign wealth fund will go head-to-head with Goldman Sachs in London's High Court over claims that the U.S. investment bank exploited the fund by encouraging it to make risky and ultimately worthless investments. (http://ind.pn/1VW2625)

http://www.zerohedge.com/news/2016-06-14/frontrunning-june-14
 

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#7
Soaring Brexit Fears Spark Global Flight To Safety, Send 10 Year Bunds Tumbling Below 0%


by Tyler Durden - Jun 14, 2016 6:42 AM

The Fed's June rate hike decision is due in just over 24 hours, but at this moment nobody cares for two reasons: the market implied probability of a rate hike announcement is 0% (technically, less than zero), and, as DB puts it, "the UK EU referendum is suddenly totally dominant in financial markets" - the increased focus comes as the leave campaign has gathered steam as 4 polls yesterday afternoon/evening put the 'leave' campaign ahead.
  • ICM phone and online poll showed 53% would vote to leave EU and 47% to remain. (Guardian)
  • YouGov/Times poll showed 46% would vote to leave EU and 39% to remain. (The Times)
  • ORB/Telegraph poll showed 49% would vote to leave EU 48% to remain. (The Telegraph)
But it's not just the volatile polls this time: overnight Britain’s biggest selling daily newspaper The Sun has backed the campaign for the UK to leave the European Union, delivering a major boost to the Brexit camp just nine days before the EU referendum. In a front-page article headlined “BeLEAVE in Britain” the Rupert Murdoch owned tabloid declared that remaining in the EU would be “worse for immigration, worse for jobs, worse for wages and worse for our way of life”.



This has boosted concerns which emerged over the weekend, that a major shift in UK public sentiment toward Brexit is underway, which in turn proceeded to slam global risk markets yesterday, and continued to do so today. In fact, increasing odds of a U.K. exit from the European Union boosted demand for havens, sending Germany’s 10-year bond yields below zero for the first time.



The risk off move was widespread: US treasuries rallied for a sixth day, with the yield falling four basis points to 1.57%, having reached the lowest since Feb. 11; Treasury yields fell to records in Australia and Japan, stocks in Europe slid for a fifth day, while the yen rose against its 31 major peers. U.S. oil slipped toward $48 a barrel. Naturally, the pound fell to two month lows as Brexit implied odds hit a new record high.



The shift in investor sentiment in just the past week has been phenomenal: from sheer complacency, there is now downright tangible panic just below the surface. Case in point: “Nobody buys bunds at these yield levels thinking they are attractive,” said Jussi Hiljanen, head of European macro and fixed income strategy at SEB A/B in Stockholm. “Demand for haven assets are being driven by fear of Brexit and growth concern. Investors are buying bunds as a hedge against uncertainty.”

Others piled on: "people are now insulating portfolios against the worst-case scenario as polls indicate some momentum for the Brexit camp, but the European policy response is underestimated," said William Hobbs, head of investment strategy at the wealth-management unit of Barclays, from London. "It doesn’t mean the sentiment can’t swoon after, but the contribution of the U.K.’s economy to world’s capital markets is, in the end, limited. Europe looks better equipped than before to handle such a risk."

And just like yesterday, European stocks are getting slammed the most, with the Stoxx Europe 600 Index sliding over 1% , heading for its biggest five-day decline since February, amid investor concern that the tide has turned in favor of Britain seceding from the EU; all 19 groups on the Stoxx 600 fell, with miners and carmakers sliding the most. Among shares active on corporate news, GAM Holding AG tumbled 18 percent after the Swiss asset manager said first-half profit will probably halve as performance fees dry up.

Futures on the S&P 500 slipped 0.2%, indicating equities will extend losses after falling for a third day Monday, their longest losing streak in a month. The MSCI Emerging Markets Index fell 0.8 percent, losing 4.7 percent in four days. Equity benchmarks in Russia, South Africa, Poland, Turkey and the Philippines declined at least 1.3 percent.

Investors will look to an advance report on retail sales Tuesday for indications of the health of the world’s largest economy.

Market Snapshot
  • S&P 500 futures down 0.3% to 2063
  • Stoxx 600 down 1.4% to 322
  • FTSE 100 down 1.2% to 5970
  • DAX down 1.2% to 9537
  • German 10Yr yield down 5bps to -0.03%
  • Italian 10Yr yield up 2bps to 1.48%
  • Spanish 10Yr yield up 3bps to 1.53%
  • S&P GSCI Index down 1% to 377.4
  • MSCI Asia Pacific down 0.7% to 126
  • Nikkei 225 down 1% to 15859
  • Hang Seng down 0.6% to 20388
  • Shanghai Composite up 0.3% to 2842
  • S&P/ASX 200 down 2.1% to 5203
  • US 10-yr yield down 4bps to 1.57%
  • Dollar Index up 0.49% to 94.83
  • WTI Crude futures down 1.5% to $48.15
  • Brent Futures down 1.3% to $49.70
  • Gold spot down 0.3% to $1,280
  • Silver spot down 0.9% to $17.29
Global Top News
  • 4 Polls Put U.K. on Course to Leave EU as ‘Sun’ Backs Brexit: Leave campaign ahead in both phone and online polling; biggest-selling newspaper uses front page to support leaving; Pound Falls Toward Two-Month Low on Brexit Vote Concern
  • Fed Grip on $2.5 Trillion Treasury Stash Seen Firm for Years: Traders now see less than a 50% chance of the next increase coming this year
  • NXP Selling Products Unit for $2.75b to Chinese Group: Buyers are Jianguang Asset Management and Wise Road Capital; Nexperia business had $1.2b in revenue in 2015
  • Goldman Tied to Rival Bidder as Morgan Stanley Wins on Microsoft: Morgan Stanley won the role as Microsoft’s adviser on its agreement to buy LinkedIn, climbs to No. 1 dealmaker for tech this year
  • BofA CEO Eyes Market-Share Gains as Europe Peers Sound Alarm: U.S. banks against tough rules, markets are still stronger than many overseas rivals, will take their business: CEO Moynihan
  • Apple Opens Siri to Developers in Effort to Catch Up With Rivals: Apple unveiled software that will allow its voice- activated personal assistant Siri to order pizza, call for a cab or check a bank balance
  • Redstone’s Ex-Girlfriend Seeks New Trial Over Mental Capacity: Manuela Herzer claims she has new evidence to prove her case
Looking at regional markets, we start in Asia which traded mostly lower following the losses in the US, where declines in energy dragged US stocks to 2-week lows, while the looming FOMC decision and Brexit concerns further added to the cautious tone. Nikkei 225 (-1.0%) fell below the 16,000 level as JPY broke below the 106.00 handle, while ASX 200 (-2.1%) is the laggard as it tracks the weakness across global equity markets on its return from its extended weekend. Elsewhere, the Shanghai Comp (+0.3%) shook off the negative tone after the PBoC upped its liquidity injection, while participants are also tentative ahead of the MSCI decision on whether to include Chinese A-shares. Finally, 10yr JGBs traded higher amid weakness seen in Japanese stocks, with yields across the curve pressured as 5yr, 10yr and 20yr yields all printed fresh record lows.

Top Asian News
  • Yuan Approaches Five-Year Low Amid Concern Over Economy, Brexit: Currency impact from any MSCI inclusion to be marginal, SocGen says
  • MSCI Is About to Make Its Big Call on World’s Worst Stock Market: Index clearing house to announce whether to add Chinese equities
  • Best-Performing Asian Stock Market May Get Extra MSCI Boost: Pakistan has 70% chance of upgrade to EM, says Tundra Fonder
  • India Wholesale Inflation Rate Exceeds Estimate to 19-Mo. High: WPI rate rises 0.79% in May, highest since Oct. 2014
  • Disney Plays by China Rules With Shanghai Park, Media Strategy: Content ambitions hemmed in by piracy, government push-back
  • Baidu Reduces Revenue Forecast on Ad Restrictions: Rules follow death of student who used results to treat health
In Europe markets continue to remain gripped by the global uncertainty surrounding the EU referendum and the Fed with more polls overnight leaning to the leave camp, subsequently adding fuel to the fire regarding Brexit fears.
  • ICM phone and online poll showed 53% would vote to leave EU and 47% to remain. (Guardian)
  • YouGov/Times poll showed 46% would vote to leave EU and 39% to remain. (The Times)
  • ORB/Telegraph poll showed 49% would vote to leave EU 48% to remain. (The Telegraph)
As such, credit markets have yet again soared with global bond yields plummeting to record lows in the past couple of weeks, with Bunds now yielding negative for the first time on record, while Gilts also drop to all-time lows. Elsewhere, equities continue to find no reprieve with broad based weakness across Europe (Euro Stoxx -1.6%). In turn, the aforementioned global uncertainty, coupled with the fall in crude prices in which WTI has tested USD 48/bbl to the downside has seen pressured the FTSE 100 to break below 6,000 for the first time since February.

Top European News
  • Germany’s 10-Year Bond Yield Declines Below Zero for First Time: The nation joined Japan and Switzerland in having 10- year bond yields of less than zero
  • Daetwyler to Buy Premier Farnell for About $1.1b: Premier Farnell investors to get 165p/share in cash; offer represents a premium of about 51% from Monday’s close.
  • France Braces for New Street Demonstrations Against Labor Bill: labor union CGT maintains opposition to government plans.
  • Allianz Buying U.K. Stocks That Brexit Concern Makes Attractive: company fundamentals seen the same regardless of outcome
  • GAM Holding Plummets After Saying 1H Profit to Drop 50%
In FX, the pound continued to weaken, dropping 0.9% versus the dollar, approaching a two-month low. Four opinion polls from three separate companies have put the campaign for Britain to leave the EU in front of the "Remain" camp. A gauge of the pound’s anticipated volatility over the next two weeks -- a period that includes the June 23 referendum -- climbed to the highest on record. “Risk sentiment has taken a beating with volatility up partly on latest Brexit polls still showing the U.K. is on course to quit the European Union,” said Ray Attrill, co-head of currency strategy at National Australia Bank Ltd. in Sydney. “Amid all of this, the yen continues to demonstrate its preeminent safe-haven characteristics.” Japan’s currency strengthened 0.5 percent, nearing its highest level since 2014. Against the euro, Japan’s currency rose for a sixth day, gaining 1 percent. China’s yuan weakened in Shanghai to within 0.2 percent of a five-year low reached in January, when a slide in the currency heightened concern about the health of the nation’s economy and spurred a selloff in global stocks and commodities. The MSCI Emerging Market Currency Index dropped 0.5 percent and is down 1.5 percent in four days. Russia’s ruble and South Africa’s rand led declines, declining at least 1.2 percent.

In commodities, commodities followed equity markets lower. Oil fell for a fourth day, with West Texas Intermediate crude sliding 1.6 percent to $48.08 a barrel and Brent dropping 1.5 percent to $49.61. The global oil market surplus is shrinking more quickly than expected and the market will be almost balanced next year as demand rises faster than production, the International Energy Agency said Tuesday. Zinc led a decline in industrial metals, falling 1.7 percent to $2,042.50 a ton. Copper lost 0.4 percent while aluminum gained 0.5 percent after Chinese smelters reached an agreement that could to cut production. Gold dropped 0.4 percent to $1,279.43 an ounce.

On the US calendar today, we have the retail sales number for May that is expected to clock in at +0.3% mom (+1.3% previous) and will likely be the most closely watched release since payrolls. Aside from that we will also see the import price index number for May which is expected to come in at +0.7% mom (+0.3% previous).

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg
  • Fixed income markets continue to extend, with Bund yields falling below 0% for the first time
  • Equities tumble amid the risk off sentiment, which sees USD/JPY fall below 106.00
  • Highlights Include US Import price index, Business Inventories and Retail sales advance as well as API Crude Oil Inventories
  • Treasuries higher in overnight trading as recent polls in U.K. show “Leave” campaign ahead of “Remain” and that nation’s largest paper comes out in support of a Brexit; Germany’s 10-year government bond yields tumbled below zero for the first time on record.
  • There’s no road map for European authorities facing the prospect of a British exit from their 28-nation union -- by design. Officials in Brussels are under orders not to commit any scenarios to paper to avoid alarmist leaks
  • The pound fell toward a two-month low as concern grew that the U.K. will vote to leave the European Union. A gauge of the pound’s anticipated volatility over the next two weeks climbed to the highest on record
  • Banks took 2.46 billion pounds ($3.5 billion) in the first of three extra liquidity operations the Bank of England is holding this month to shore up funding as the U.K. considers its future in the European Union
  • U.K. inflation unexpectedly held at 0.3% in May as rising transport costs were offset by falls in the price of clothing and food. Core inflation, which excludes volatile food and energy prices, remained at 1.2%
  • Spanish and Italian banks scoop up more than half of the money the European Central Bank provides in its regular refinancing operations, signaling that borrowing in financial markets remains difficult or unattractive for them
  • Japan and Australian 10-year yields fell to record lows, extending a global bond market rally. Japan’s benchmark dropped to minus 0.17%. Australia’s slid to 2.05%
  • The Federal Reserve’s liftoff from near-zero interest rates in December sparked angst over how quickly the central bank would start whittling down its $2.5 trillion hoard of Treasuries. It turns out that investors had little cause for concern
US Event Calendar
  • 06:00am: NFIB Small Business Optimism, May; 93.8 vs est. 93.6 (prior 93.6)
  • 8:30am: Import Price Index m/m, May, est. 0.7% (prior 0.3%)
    • Import Price Index y/y, May, est. -5.9% (prior -5.7%)
  • 8:30am: Retail Sales Advance m/m, May, est. 0.3% (prior 1.3%)
    • Retail Sales Ex Auto m/m, May, est. 0.4% (prior 0.8%)
    • Retail Sales Ex Auto and Gas, May. est. 0.3% (prior 0.6%)
    • Retail Sales Control Group, May, est. 0.3% (prior 0.9%)
  • 10:00am: Business Inventories, April, est. 0.2% (prior 0.4%)
DB's Jim Reid concludes the overnight wrap

The UK EU referendum is suddenly totally dominant in financial markets. The increased focus comes as the leave campaign has gathered steam as 4 polls yesterday afternoon/evening put the 'leave' campaign ahead.

First the Guardian/ICM polls late yesterday afternoon UK time (after the close) reported a six point lead in their phone and online polls. The big story with this poll is that the lead was fairly consistent in both their phone and online polls. The former have tended to favour the 'remain' side. Recent polls showing 'leave' in the lead were mainly online polls only so this is a major development. Then at around 10pm BST two more polls continued to show a similar trend. A YouGov online survey showed 'leave' at 46% with 'remain' at 39%, and an ORB phone poll had 'leave' at 49% and 'remain' at 48% among those certain to vote. If there was a silver lining for 'remain' then it can be found in ORB suggesting a 49%/44% split in favour of 'remain' amongst all voters.

Events appear to be starting to mirror the Scottish referendum a touch (but perhaps more extreme) where markets were suddenly roiled by a shock poll suggesting 'leave' had moved into the lead. In the end this may have motivated those wanted to stay in the Union to vote. One wonders whether such recent polls will have a similar impact. Impossible to tell at this stage.

Asian equities are weak but the polls don't seem at this stage to have accelerated the downward momentum seen yesterday. The Nikkei is around -1.5% lower as we type. Chinese equities are only around 0.25% lower as they await news tomorrow as to whether they get included in MSCI global indices. US equity futures are flat at the moment but expect the polls to be the focus of attention this morning in Europe and perhaps also that the front page of this morning's Sun newspaper (the largest circulation in the UK) which has backed the 'leave' campaign.

Into the US close we only had the two ICM polls and equities again out-performed stateside but the S&P500 still fell -0.81%. However the real stunner was the 22.78% climb in the VIX from 17.03 at Friday's close to 22.97 last night. US Equities rarely see such sanguine performance when the VIX climbs by that amount in a day. At least half of the rise followed the two ICM polls and could probably be seen as investors hedging their risk.

Before this European equity markets posted their fourth consecutive day of losses with the STOXX dropping by -1.84%. Every industry group was in negative territory again, with the losses once again led by Banks (-2.93%), Insurance (-2.66%) and Financial Services (-2.52%) sectors as Brexit concerns continued to mount even before the latest poll. The sell-off was once again broad based as only 19 out of the 600 companies in the index ended the day in the green. European credit markets followed suit with iTraxx Main and Crossover widening by +4.2bps and +16.2bps as both spreads hit their widest levels in three months.

At the other end of the risk spectrum, German 10Y yields inched marginally higher to 0.024% (+0.3bps) after touching all time lows yesterday. Meanwhile UK 10Y Gilt yields continued to drop, falling to 1.21% (-2.3bps) on the day.

Sterling faced a roller coaster ride on the day, swinging from an early low of 1.4116 to an intraday high of 1.4302 as speculation in the market falsely anticipated a 'remain' lead in the latest ICM poll before declining again to 1.4230 (-0.19%) after the actual correct ICM poll results were released. We're at $1.4187 this morning after the additional polls.

Our Chief UK Economist George Buckley examines some of the latest issues surrounding the vote while also discussing some of the logistics of the actual day of the vote.

Staying with Europe I wanted to highlight a hard hitting piece by our Head of Research and Chief Economist David Folkerts-Landau suggesting that the ECB has seen policy gone awry with the need for them to change direction. He suggests that after seven years of ever-looser monetary policy there is increasing evidence that following the current dogma, broad-based quantitative easing and negative interest rates, risks the long-term stability of the eurozone. David believes that it is already clear that lower and lower interest rates and ever larger purchases are confronting the law of decreasing returns but they still push policy to further extremes. This causes mis-allocations in the real economy that become increasingly hard to reverse without even greater pain. Worse, by appointing itself the eurozone’s “whatever it takes” saviour of last resort, the ECB has allowed politicians to sit on their hands with regard to growth-enhancing reforms and necessary fiscal consolidation. Thereby ECB policy is threatening the European project as a whole for the sake of short-term financial stability. The longer policy prevents the necessary catharsis, the more it contributes to the growth of populist or extremist politics. The piece argues that in its fight against the spectres of deflation and unanchored inflation expectations the ECB’s monetary policy has already become too loose. Hence, they believe the ECB should start to prepare a reversal of its policy stance. The expected increase in headline inflation to above one per cent in the first quarter of 2017 should provide the opportunity for signalling a change. A returning to market-based pricing of sovereign risk will incentivise governments to begin growth-friendly reforms and to tackle fiscal stability. He thinks flagging the move should dampen adverse reactions in financial markets. David concludes by suggesting that normalising rates would be seen as a positive signal by consumers and corporate investors. The longer the ECB persists with unconventional monetary policy, the greater the damage to the European project will be.

On the subject of ECB purchases yesterday we learnt that they purchased €348mn on their first day of corporate bond purchases last Wednesday. They were the only day's purchases that would have settled before Friday's reporting cut-off and only includes secondary. Obviously one has to be cautious about extrapolating one day of data, especially as they probably knew this one particular day would be a focal point until more data was collected. Having said this, the high number helps confirm our expectations that the ECB plans to conduct meaningful corporate bond purchases making us more confident that our 'over €5bn/month' forecast (average with big ranges over the holiday season) is achievable in the early stages at least, notwithstanding anomalies around the upcoming summer months. We probably won't know until later in the year if they are starting to struggle to maintain a high initial run rate.

After a quiet day yesterday in terms of data, we have some interesting numbers due today. We’ll see the latest May inflation data for the UK with the CPI (expected +0.3% mom; +0.1% previous), RPI (expected +0.3% mom; 0.1% previous) and PPI (expected +0.3% mom; +0.4% previous) numbers due – all of which should be watched closely ahead of the BoE meeting on Thursday. We will also get the final May CPI numbers for Spain (expected +0.5% mom; +0.5% previous). Following that we also have the April industrial production numbers out for the Euro area (expected +0.8%; -0.8% previous).

Over in the US, we will see the NFIB Small Business Optimism index for May which is expected to be unchanged over the previous month (expected 93.6). Following that we have the retail sales number for May that is expected to clock in at +0.3% mom (+1.3% previous) and will likely be the most closely watched release since payrolls. Aside from that we will also see the import price index number for May which is expected to come in at +0.7% mom (+0.3% previous).

However everything is starting to be overshadowed by Brexit fears.

http://www.zerohedge.com/news/2016-...aring-brexit-fears-spark-global-flight-safety
 

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#8

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#10
Gold and Silver Market Morning: June-14-2016 -- The gold and silver prices still have work to do!
By: Julian D. W. Phillips, Gold Forecaster
To be clear on this by isolating single events such as ‘Brexit’ there is a danger of ignoring collateral damage, which in turn may well create subsequent crises. For instance if heavy outflows of capital from Britain takes place how ill the euro be affected? Will such an event damage global growth still further? At what point in a disrupted currency world will protectionism raise it ugly head?
 

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#11
RON PAUL: Global Dollar Rejection & Threats to Liberty
FinanceAndLiberty.com


Published on Jun 13, 2016
IN THIS INTERVIEW:
- Why is liberty so important? ►0:48
- Orlando attacks -- How should the government combat terrorism without sacrificing personal liberty? ►3:02
- The threat to liberty is not limited to the U.S. ►7:06
- Why democratic socialism is not the solution ►10:21
- Keep up the peaceful fight for liberty! ►13:50

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DISCLAIMER: The financial and political opinions expressed in this video are not necessarily of "Finance and Liberty" or its staff. Opinions expressed in this video do not constitute personalized investment advice and should not be relied on for making investment decisions.
 

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#12
How Wall Street Is Strangling The Economy | Rana Foroohar
FinanceAndLiberty.com


Published on Jun 14, 2016
This video was posted with permission from http://PeakProsperity.com

FINANCE AND LIBERTY:
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DISCLAIMER: The financial and political opinions expressed in this video are not necessarily of "Finance and Liberty" or its staff. Opinions expressed in this video do not constitute personalized investment advice and should not be relied on for making investment decisions.
 

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#15
Gold Seeker Closing Report: Gold and Silver End Near Unchanged Before Fed Day
By: Chris Mullen, Gold-Seeker.com
Gold edged down to $1277.17 in Asia before it rallied up to $1289.83 by a little after 9AM EST and then chopped back down to $1280.47 by early afternoon in New York, but it then bounced back higher into the close and ended with a gain of 0.11%. Silver fell to $17.229 before it rose to as high as $17.482 in early New York trade, but it still ended with a loss of 0.23%.
 

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#16
Brandon Smith: Gold Will Be Vital To Avoiding A Dollar Crash
The Daily Coin.org


Published on Jun 14, 2016
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#17
Bill Holter-Dire Warnings from Top Wall Street Pros Signal Trouble Coming Soon
Greg Hunter


Published on Jun 14, 2016
Big well known money people have been making ominous warnings about another coming financial meltdown. Why are they making these dire warnings now? Financial writer Holter says, “Because it’s gotten so obvious . . . these guys are extremely brilliant people. I am glad they finally came around and figured it out. . . . They’re getting on the record is what they are doing. You would not have the caliber of names all lining up in the last 60 to 90 days . . . unless it was going to happen pretty soon.”

Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Bill Holter of JSMineset.com.

All links can be found on USAWatchdog.com:
 

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#18
Frontrunning: June 15


by Tyler Durden - Jun 15, 2016 7:32 AM
  • Osborne Warns of Brexit Tax Toll as ‘Leave’ Gains in Polls (BBG)
  • Clinton wins D.C. primary, has 'positive' meeting with Sanders (Reuters)
  • Federal grand jury could charge wife of Orlando shooter (Reuters)
  • Brexiteers swiftly closing in on Remain as poll reveals there’s just one point between the two sides (Sun)
  • Trump gains slightly on Clinton after Florida attack: Reuters/Ipsos poll (Reuters)
  • Hill Republicans despondent over Trump (Politico)
  • London traders brace for biggest night since 'Black Wednesday' (Reuters)
  • Venezuela in talks with China for grace period in oil-for-loans deal (Reuters)
  • Why Billions in Proven Shale Oil Reserves Suddenly Became Unproven (BBG)
  • Bank of America axe hovers over thousand of retail jobs (FT)
  • About 16 pct of Europe's top-rated corporate bonds yield below zero (Reuters)
  • Andreessen Sees Big Exits for Tech Startups in Next Wave (BBG)
  • China spy ship 'shadowing' U.S., Japanese, Indian naval drill in Western Pacific (Reuters)
  • BOJ could be bracing for Brexit with delayed bond buying (Nikkei)
  • As gates open in Shanghai, Disney already adding to $5.5 billion park (Reuters)
  • China May new yuan loans rise to 985.5 bln yuan, beating forecasts (Reuters)
Overnight Media Digest

WSJ

- U.S. Republican House Speaker Paul Ryan joined Barack Obama and Hillary Clinton in rejecting Donald Trump's call for a ban on Muslim immigration in the wake of the Orlando shootings. (http://on.wsj.com/1S4NyWX)

- The U.S. Democratic presidential race officially came to an end with Hillary Clinton winning the District of Columbia's primary. (http://on.wsj.com/1S4OqLi)

- Uber Technologies is turning to the so-called leveraged-loan market for the first time to raise as much as $2 billion in a sign of the popular ride-sharing network's hunger for cash as it expands around the world. (http://on.wsj.com/1S4Pf6P)

- Media mogul Sumner Redstone, who has been out of the public eye for more than a year, paid a visit to Viacom Inc's Paramount Pictures movie studio in Hollywood, according to a letter made public from Viacom's lead independent director on Tuesday. (http://on.wsj.com/1S4OYRi)

FT

- London Business School raised 125 million pounds ($176.46 million) in a major fundraising round, closing its five-year fundraising schedule ahead of time.

- Twitter's venture capital arm has invested in online music platform SoundCloud. The investment is reportedly $70 million at a $700 million valuation.

- Volkswagen would seek to change its incentives in its components business so they can compete more with suppliers. It is likely to revamp its components business to shore-up profitability.

- Car-hailing company Uber seeks to raise $2 billion in leveraged loans and is being underwritten by Barclays and Morgan Stanley

NYT

- MSCI Inc, a widely-followed global index provider, said on Tuesday it wasn't adding China's local-currency shares to its benchmark emerging markets index, a fresh setback for China's efforts to join international markets. (http://on.wsj.com/1Ooj4Vn)

- Federal prosecutors claim that Andrew Caspersen ran a Ponzi-like scheme to defraud friends, family and a hedge fund foundation of nearly $40 million over an 18-month period. (http://nyti.ms/25WQC4J)

- High-speed internet service can be defined as a utility, a federal court has ruled in a sweeping decision clearing the way for more rigorous policing of broadband providers and greater protections for web users. (http://nyti.ms/1UstWls)

- Iran has reached an agreement with the Boeing Co for the acquisition of new passenger planes to help modernize its outdated fleet, state-run Iranian news media reported on Tuesday. (http://nyti.ms/21lcCQa)

Britain

The Times

A global flight to safety triggered by the prospect of Britain leaving the European Union and central banks' ability to stimulate economic growth pushed 10-year German government borrowing costs into negative territory for the first time in history. (http://bit.ly/1U7xnur)

British tenpin bowling operator Hollywood Bowl Group will unveil plans today for a stock market flotation valuing the company at about 280 million pounds ($395.11 million). (http://bit.ly/1U7x3eV)

The Guardian

Kingfisher, the owner of B&Q, will face further pressure over pay and conditions for staff at its annual shareholder meeting on Wednesday when campaigners will ask the retailer to reverse cuts made this year. (http://bit.ly/1U7vMEN)

The UK government now fully backs a legal ban on polluting plastic microbeads in cosmetics and toiletries, environment minister George Eustice said on Tuesday. (http://bit.ly/1U7wJNm)

The Telegraph

Betfred, the bookmaker led by billionaire chairman Fred Done, is to pay out more than 800,000 pounds ($1.13 million)after it was found that one of the company's VIP customers was betting online with stolen money. (http://bit.ly/1U7w0vM)

Equipment hire company Ashtead is to launch a 200 million-pound share buyback after a strong performance in the North American construction market helped push pre-tax profits up 24 percent to 616.7 million pounds. (http://bit.ly/1U7wqCc)

Sky News

A former finance executive, Barry Nightingale, at the airline Monarch will be installed on Wednesday in a top job at the troubled owner of Garfunkel's and Frankie & Benny's. (http://bit.ly/1U7vWfh)

Virgin Active, majority-owned by South African investment group Brait, is selling 35 UK gyms as it moves further to fund its expansion into luxury fitness clubs. (http://bit.ly/1U7wq5e)

The Independent

Evidence given by the former BHS owner Dominic Chappell at an enquiry into the collapse of the chain has been branded "not correct" by Goldman Sachs, days after a former financial adviser to the retailer slammed Chappell as a "Premier League liar". (http://ind.pn/1U7w7r4)


http://www.zerohedge.com/news/2016-06-15/frontrunning-june-15
 

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#19
All Eyes On Yellen As Global Stocks Rebound Despite Brexit Fears, Record Low Yields


by Tyler Durden - Jun 15, 2016 6:47 AM

Following MSCI's second Chinese snub in as many years, when yesterday the indexer again decided not to include China in its EM index due to concerns over Chinese "market integrity", there was some concern that Chinese stocks would tumble now that China's market manipulation is the primary topic preventing the country from being integrated into the financial community. That was ironic because after Chinese equities opened down around a percent they promptly spiked with Shanghai closing 1.6% higher, despite the global risk off yesterday, on - you guessed it - more manipulation and government intervention, which pushed not only Chinese equities higher but the USDCNY which after rising to the highest in 5 years, dipped just fractionally below the key resistance level of 6.60.

“It’s a sharp [equities] reversal so there has to be some government intervention,” said Francis Lun, CEO at Geo Securities in Hong Kong. “The Chinese government never wants to see the market falling too much.” Dear Francis, no government ever wants to see that.

Aside from China, the story has been more of the same: Brexit and today's Fed meeting (to be followed by tomorrow's BOJ decision), and after several days of muted of concentrated selling, European stocks rallied, helping end the steepest selloff in global equities since January, as the British pound rebounded ahead of the Federal Reserve’s policy review on stronger than expected UK employment data (Feb-April Unemployment 5.0%, Exp. 5.1%).

The Stoxx Europe 600 Index climbed for the first time in six days and most shares rose on the MSCI Asia Pacific Index. As noted above, Shanghai equities reversed initial losses, which according to Bloomberg spurred speculation state-backed funds were supporting prices: surely to be expected on Xi Jinping's birtday. The British pound strengthened, after sliding more than 1 percent in two of the last three trading sessions, and the yen retreated from its strongest level since 2014. Futures on the S&P 500 Index were up 0.2%, after the U.S. benchmark ended the last session at a three-week low. The MSCI Asia Pacific Index rose 0.1 percent, after sliding 4.4 percent over the last four trading days. Japan’s Topix rebounded from a two-month low as the yen snapped a three-day advance and Hong Kong’s Hang Seng Index gained 0.2 percent. Toshiba Corp. surged more than 7 percent in Tokyo as brokerages including CLSA Ltd. turned more positive on the stock.

On the face of this modest global rebound in assets, crude continued to suffer and sank
to about $48 a barrel after a report showed U.S. stockpiles increased; it will be interesting if today's DOE report once again violently disagrees with the API data.

Over in the wacky world of bonds, yields on Japan’s benchmark government bonds hit record lows across tenors from two to 40 years. The rate on the 10Y JGB fell to an unprecedented minus 0.195%, while 20-year and 30-year yields touched historic lows of 0.135% and 0.21%, respectively. At least they are still positive. Ten-year U.S. Treasuries yielded 1.62 percent, after ending the last two sessions at 1.61 percent, the lowest closing level since 2012. The rate on similar-maturity German debt held near zero, after sliding into negative territory for the first time on Tuesday as the U.K.’s potential exit from the EU fueled demand for haven assets. In an auction conducted earlier today, Germany sold €3.259BN in 10Y Bunds (less than the €4.0BN expected) at an average yield of just 0.01%.



Today's key event will be the Fed's interest rate decision at 2pm when however, the probability of the Fed doing nothing, according to the market, is 100%. The Fed is expected to keep the benchmark lending rate unchanged when its two-day policy meeting concludes in Washington, though the central bank’s statement and Chair Janet Yellen’s comments at a press briefing will be scrutinized for clues on the likely timing of the next increase. Futures indicate the odds of a move by July tumbled to 16 percent from 53 percent since the start of this month, damped by weak U.S. payrolls data and turbulence in global financial markets.

Meanwhile pessimism persists: “While we get a bounce following the huge knockdown across markets, investors should probably sell into the strength ahead of the Brexit vote,” said Nicholas Teo, a trading strategist at KGI Fraser Securities Pte in Singapore. “There’s a lot of uncertainties out there. A statement from the Fed tonight may help calm the market, but concerns remain on the timing of the rate hike.”

Market Snapshot
  • S&P 500 futures up 0.3% to 2071
  • Stoxx 600 up 1.5% to 325
  • FTSE 100 up 1.1% to 5986
  • DAX up 1.3% to 9648
  • German 10Yr yield up 1bp to 0.01%
  • Italian 10Yr yield down 3bps to 1.48%
  • Spanish 10Yr yield down 3bps to 1.54%
  • S&P GSCI Index down 0.6% to 377.1
  • MSCI Asia Pacific up 0.1% to 127
  • Nikkei 225 up 0.4% to 15920
  • Hang Seng up 0.4% to 20468
  • Shanghai Composite up 1.6% to 2887
  • S&P/ASX 200 down 1.1% to 5147
  • US 10-yr yield up 2bps to 1.63%
  • Dollar Index down 0.13% to 94.81
  • WTI Crude futures down 1.2% to $47.92
  • Brent Futures down 1.4% to $49.12
  • Gold spot down 0.3% to $1,282
  • Silver spot up less than 0.1% to $17.41
Looking at regional markets, we traditionally start in Japan where equity markets were resilient and shrugged off the weak lead from the US to trade mostly higher, although still lingers on Brexit concerns and the looming FOMC capped upside. Nikkei 225 (+0.4%) was initially pressured at the open but then recovered as USD/JPY found support at the 106.00 level, while ASX 200 (-0.5%) was led lower by commodity names after iron ore fell over 4% and crude prices declined for the 4th consecutive day with WTI below USD 48/bbl following an API Inventory build. Elsewhere, Hang Seng (+0.4%) and Shanghai Comp (+1.6%) recovered despite the initial disappointment from the MSCI decision to delay China inclusion in the EM index, with the rebound led by outperformance in Shenzhen markets on hopes of action for future MSCI inclusion. Finally, 10yr JGBs lead futures rose to record highs as yields continued to slump with the 5yr, 10yr, 20yr and 30yr yields all printing record lows, while the BoJ entered the market to purchase JPY 1.15trl of government debt and also kick-started its 2-day policy meeting.

Top Asian News
  • MSCI Rebuffs Chinese Shares for Third Time in Blow to Xi’s Goals:Measures on trading halts, quotas failed to sway index firm
  • China Cracks Down on $1.5 Trillion Dark Corner of Fund Industry: CSRC regulations target funds’ role as shadow banking channel
  • China Coal Firm Flags Bond Default Risks as Debt Woes Spread: Sichuan Coal Industry unsure it can repay 1.057b yuan
  • Ultra-Low Japan Yields Go Global as Hedged Yen Buying U.S. Bonds: Japanese investors bought record amount of Treasuries in March
  • Carry Trade Success Convinces Funds Rupee Will Ride Coming Storm: Rupee Sharpe ratio is second highest among developing nations
It has been a relatively quiet start to the session in terms of newsflow after the recent volatility seen and ahead of the key risk event of the FOMC rate decision later today, the DAX has made a slow start to the session but has ticked slightly higher in a retracement from the lows seen yesterday. So far in the session, financial names have outperformed in a corrective move after the sharp selloff yesterday. Despite also being in positive territory, the energy sector is the worst performing and the larger than expected build in API inventory levels may be a catalyst for the sectors underperformance. Bund yields are back in positive territory today after slipping below 0 for the first time on record yesterday. In terms of price action, the upside in equities has seen Bunds come off their best levels and firmly back below 165.50, however still remaining above the 165 level. Additionally, the latest Bund auction was technically uncovered with yields continuing to hover between negative and positive territory.

Top European News
  • Osborne Warns of Brexit Tax Toll as ‘Leave’ Gains in Polls: Says that reduced trade, investment would leave GBP30b “black hole."; Rising Brexit Angst Drives Weaker-Pound Wagers to $35b
  • VW Said to Plan Merging Components Units, Weigh Asset Sale: CEO to present sweeping strategy update to public on Thursday
  • U.K. Unemployment Falls to Lowest Rate in Almost 11 Years: Jobless rate declined to 5% in 3 months through April, the lowest since 2005.
  • Steinhoff Mulls Poundland Bid in Latest European Retail Push: Announcement made without Poundland’s consent, Steinhoff said.
  • Schneider’s Second Attempt to Acquire Aveva Ends Abruptly: Cos. had sought to resurrect earlier talks that snagged on concern that integration costs would be too high.
In FX, the yuan fell as much as 0.1 percent to a five-year low of 6.6047 a dollar in Shanghai, before trading little changed at 6.5933. The pound strengthened 0.4 percent to $1.4166. It slid 1.1 percent on Tuesday after five opinion polls in two days put the ‘Leave’ campaign ahead of ‘Remain’ in the run-up to the EU vote and as Britain’s best-selling newspaper, The Sun, backed a withdrawal. The amount wagered on the currency falling to $1.35 or lower -- levels last seen in the 1980s -- after the referendum has more than doubled during the past three months. The yen weakened 0.2 percent to 106.28 per dollar, after rallying almost 1 percent over the past three sessions. It touched 105.55 on May 3, the strongest level since October 2014. New Zealand’s dollar rose 0.5 percent, the best performance among 16 major currencies tracked by Bloomberg. It recovered from earlier weakness as shares rallied in China, the country’s biggest export market.

In commodities, West Texas Intermediate crude slipped 1.1 percent to $47.95 a barrel, falling for a fifth day. Concern over a global glut in the commodity reemerged with the American Petroleum Institute reporting a 1.16 million-barrel increase in U.S. oil inventories for last week. Nigerian militants, whose attacks on oil infrastructure have sent the country’s output plunging to its lowest level in 27 years, also said for the first time they are considering peace talks. Copper rose 1.5 percent in London and nickel gained 1 percent, advancing for the first time in a week. Gold was little changed, after surging 3.4 percent over the last five days.

On today's US event calendar, highlights Include the Producer Price Index and Empire Fed reports, Industrial Production, the DoE crude inventory report, as well as the latest TIC data, however the main event will be the June FOMC rate decision at 2pm and subsequent comments from Fed Chair Yellen.

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg
  • Risk on sentiment across European equities amid upside in financial names ahead of the FOMC meeting.
  • GBP regains its footing against major counterparts with early Brexit fears subsiding.
  • Highlights Include, FOMC rate decision, US PPI Final Demand, DoE crude inventory report and comments from Fed Chair Yellen.
  • Treasuries lower in overnight trading as global equities rally, oil and precious metal drop; FOMC rate decision and SEP at 2pm ET followed by presser at 2:30pm; Fed will skip rate move at meeting and is likely to retain its forecast for 2 hikes this year, based on published research by economists and others; next possible move seen in 3Q or 4Q
  • Fed fund futures fully pricing next rate hike around June 2017, implied rate 62bp, near midpoint of 50-75bp target range
  • The campaign to keep the U.K. in the European Union is seeking to regain momentum with a warning from Chancellor of the Exchequer George Osborne that a vote to leave could create a fiscal crisis
  • Over in Canada, a $7 billion fund manager is loading up on cash in an attempt to profit if the U.K. votes to leave the European Union
  • The U.K. jobless rate declined to 5% in the three months through April, the lowest since 2005, as labor market showed signs of resilience in the face of the referendum on European Union membership
  • China’s stocks jumped the most in two weeks, reversing an earlier loss and spurring speculation that state-backed funds may be supporting the market after MSCI Inc. refused to add the nation’s domestic equities to benchmark indexes
  • China’s overall growth numbers are stabilizing. However, beneath the surface, signs of increasing weakness in hiring and private-sector investment are ringing alarm bells
  • As well as a surging yen, non-existent inflation and a weak economy, Bank of Japan Governor Haruhiko Kuroda has something else to think about when deciding monetary policy this week: unhappy banks


US Event Calendar
  • 7am: MBA Mortgage Applications, June 10 (prior 9.3%)
  • 8:30am: PPI Final Demand m/m, May, est. 0.3% (prior 0.2%)
  • 8:30am: Empire State Manufacturing, June., est. -4.90 (prior -9.02)
  • 9:15am: Industrial Production m/m, May, est. -0.2% (prior 0.7%)
  • 10:30am: DOE Energy Inventories
  • 2pm: FOMC Rate Decision (Upper Bound), est. 0.5% (prior 0.5%); (Lower Bound), est. 0.25% (prior 0.25%)
  • 4pm: Net Long-term TIC Flows, April (prior $78.1b)
  • 7:40pm: Bank of Canada’s Poloz speaks in Whitehorse, Yukon Territory
DB's Jim Reid concludes the overnight wrap

Asian markets have stabilised though despite the risk off yesterday and despite the news last night that MSCI has decided to delay the inclusion of Chinese equities into their global benchmark. Chinese equities opened down around a percent but the Shanghai and Shenzhen are up around 1.5% and 3% as we type. Bloomberg is reporting speculation that perhaps the Chinese government is intervening to soften the blow. The Nikkei is 0.55% higher ahead of the BoJ tomorrow. GBPUSD is at $1.414 up from around $1.410 at the time of the ComRes poll.

The slightly better Asian risk sentiment followed another day of risk off globally. European equities extended their losses to a fifth consecutive day, dropping by -1.92% yesterday. UK equities were also hit hard as the FTSE also posted its fourth consecutive day in the red with losses amounting to -2.01%. Both indices saw broad based declines across all sectors, with every company but one declining in the latter index. Credit markets were also caught in the crossfire with both iTraxx Main and Crossover spiking off yesterday’s three month highs as spreads widened further by +5.5bps and +22.8bps respectively on the day. US equities yet again outperformed and impressively only closed down -0.18%. The VIX also stabilised after Monday's outsized move. Decent US data (see below) perhaps helped.

As we discussed at the top, Germany 10Y yields turned negative for the first time in recorded history, hitting -.004% (-2.7bps). The demand for safe haven assets also caused US 10Y treasuries to rally for the sixth consecutive day as yields dropped to 1.6% (-1.2bps) - although we're back above 1.62% this morning.

Trading the possible Brexit outcomes saw another layer of complexity yesterday as a widely read Reuters article suggested that the ECB will soon release a public statement pledging that they will backstop financial markets alongside the Bank of England if the UK does vote to leave the EU. The ECB’s pledge is expected to involve opening swap lines with the Bank of England to provide unlimited funding to banks in Euro and Sterling in hopes of preventing a liquidity crunch and subsequent economic fallout.

As a final word on the EU referendum for today, yesterday my team published a report "Brexit Risk in GBP and EUR Credit". Firstly, we provide a performance overview of GBP vs. EUR and USD credit in terms of both cash bond spreads and currency-adjusted spreads. Secondly, we compare the performance of UK issuers' bonds vs. Eurozone and US issuers' bonds across currencies. We find that GBP bonds have underperformed EUR and USD bonds, especially in the non-financial sector. There has also been some underperformance of UK issuer credit recently, particularly in the GBP space. However, it seems that Brexit risk mainly manifests itself via the currency channel rather than credit risk here. See your emails at 1525 BST yesterday from Michal Jezek for the report or contact him (Michal.Jezek@db.com) if you haven't got it.

A few weeks ago when Fed rate hike expectations started to build it would have been hard to imagine that the preview of today's FOMC would be relegated to the 9th paragraph but that reflects how events have changed. DB's Joe Lavorgna expects the Fed to remain on hold tonight (along with everyone else) and the tone of the statement to be mixed. While the Fed is unlikely to signal a July hike with risks of a possible labor market slowdown following the May employment report, it will likely leave the growth, employment and inflation forecasts largely intact with only minor tweaks to the Summary of Economic Projections (SEP). In particular he does not expect the Fed’s 2016 and 2017 median rate forecasts as per the ‘dot plot’ to fall, thus allowing the Fed the option to raise rates in the coming months should the data improve. The Fed should also address the fact that its five-year forward breakeven inflation rate has moved substantially downward. Yellen’s post-meeting Press conference will likely focus on many of the themes of her speech last week, with an emphasis on the uncertainty associated with the Fed’s forecasts and the data dependent nature of the monetary policy action. Brexit will also likely feature as a risk to their outlook.

Data took an understandable back seat yesterday but for completeness let's look at what we saw. Starting off in the UK, we saw May inflation numbers which largely came in softer than expected. CPI (+0.2% mom vs. +0.3% expected) and PPI (+0.1% mom vs. +0.3% expected) both came in lower than expected, and while RPI was in line with expectations on a monthly basis (+0.3% mom) but disappointed in annual terms (+1.4% YoY vs. +1.5% expected). We also saw the final May CPI numbers for Italy (-0.3% YoY) and Spain (+0.5% mom; -1.1% YoY), both of which were in line with expectations. One major positive data point was the April industrial production data out of the Eurozone, which clocked in at the very upper end of the forecast range and well above expectations (+1.1% mom vs. +0.8% expected).

Heading over to the US, the data was positive across the board. The NFIB Small Business Optimism index for May surprised on the upside to hit its highest level since January (93.8 vs. 93.6). Despite May’s weak payrolls report, the uptick was largely supported by a better labour market outlook among small business owners, with both a moderate improvement in plans to hire (12% vs. 11% previous) as well as raise worker compensation (26% vs. 24% previous). Although expectations for the economy remained negative, the sub index improved on the month (-13% vs. -18% previous).

Thereafter we saw the closely watched US retail sales also beat expectations, posting an increase of +0.5% mom in May (vs. +0.3% expected). The uptick was a general broad-based gain, as nine out of 13 categories demonstrated increases in demand with online merchants and clothing stores leading the way. We also saw the import price index for May beat estimates (+1.4% vs. +0.7% expected), primarily driven by the rising cost of oil. Both the improved retail sales data and the rising import prices could have sparked a more interesting debate ahead of the FOMC meeting had it not been for last month’s weak unemployment numbers.

After a relatively quiet start to the week, today is certainly a busy day in terms of data. We start off in Europe where we’ll get final May CPI numbers for France, which is expected to come in at +0.3% mom without any revisions. Thereafter we’ll get the employment report from the UK, where the April unemployment rate is expected to hold steady at 5.1% (5.1% previous). Average weekly earnings are expected to have grown at a slower rate (expected +1.7% 3M/YoY vs. 2.0% previous), while jobless claims for May are expected to be unchanged (vs. -2.4k previous). We will also see the Eurozone trade balance for April (expected 21.5b vs. 22.3b previous).

It’s even busier day over in the US. First off we’ll get PPI numbers for May, which are expected to clock in at +0.3% mom (+0.1% ex-Food and Energy). DB’s Joe Lavorgna notes that the PPI data will be important for market participants and Fed policymakers because they should provide clues as to the near-term direction of the core PCE deflator. The PPI series on selected healthcare industries, a direct input into estimating the medical care component of the core PCE deflator (the Fed’s preferred measure of inflation), should be closely watched. It should also be noted that the PPI data will be the last inflation data point that the Fed’s policymakers will see before the conclusion of the FOMC meeting.

Thereafter we’ll get a forward and backward looking perspective on the health of the US factory sector with the NY Fed’s Empire State Manufacturing Survey (expected -4.50 vs. -9.02 previous) and the industrial production numbers for May (expected -0.2% vs. +0.7% previous) respectively, both of which are expected to indicate weakness in the industrial sector.

http://www.zerohedge.com/news/2016-...ebound-despite-brexit-fears-record-low-yields
 

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#21
Algos Now Working For Higher Gold Prices And Bitcoin Breaks $700! | Craig Hemke
FinanceAndLiberty.com


Published on Jun 15, 2016
Craig Hemke a/k/a Turd Ferguson joined us for another insightful discussion. Seems like the computers are no longer working for the bad guys. Now that gold has been going up they've been buying the dips and helping to drive gold higher. Today gold is up another $11 and probably headed higher. What's a central banker to do? And Bitcoin briefly broke $700 as well. Not good news for the global cabal, no matter how you slice it.

This video was posted with permission from http://FinancialSurvivalNetwork.com

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DISCLAIMER: The financial and political opinions expressed in this video are not necessarily of "Finance and Liberty" or its staff. Opinions expressed in this video do not constitute personalized investment advice and should not be relied on for making investment decisions.
 

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#22
Gundlach: 'Central Banks Losing Control'
Jeffrey Gundlach, the chief executive of DoubleLine Capital, said investors are dropping risky assets and turning to safer securities including Treasurys and gold because they are losing faith in central banks. "Central banks are losing control and they don't know what to do ... just like the Republican establishment and Donald Trump," Gundlach told Reuters. [Full Story]

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#24

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#25
Nothing to see. Probably better off listening in one window, playing around on GIM or surfing the web in another window.

The Art Of the Deal | Jason Hartman
FinanceAndLiberty.com


Published on Jun 15, 2016
Jason Hartman comes on and we review how to analyze a real estate. We looked at two houses, one in Ohio and the other in Florida. Don't be intimidated by numbers, they tell us a story. You just need to learn how to read that story and the rest becomes very easy. It seems like a mystery at first, but one you get into them, it becomes very obvious. Click the link below to download the PDF for each deal.

This video was posted with permission from http://FinancialSurvivalNetwork.com

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DISCLAIMER: The financial and political opinions expressed in this video are not necessarily of "Finance and Liberty" or its staff. Opinions expressed in this video do not constitute personalized investment advice and should not be relied on for making investment decisions.
 

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#26
Nothing to see. Probably better off listening in one window, playing around on GIM or surfing the web in another window.

Ahead: SILVER PRICE BREAKOUT | Bill Murphy
FinanceAndLiberty.com


Published on Jun 15, 2016
IN THIS INTERVIEW:
- Are gold and silver ready to break out to the upside? ►0:48
- End of the gold and silver price manipulation? ►3:58
- Viewers Questions:
-- Are there legal charges against price manipulators? ►4:55
-- Is the U.S. government involved with the price manipulation? ►8:24
-- Could gold and silver rise indefinitely? ►10:14
-- Will Hillary Clinton or Donald Trump do anything about the price manipulation? ►13:51

FINANCE AND LIBERTY:
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Title and video graphics by Josiah Johnson Studios ►http://JosiahJohnsonStudios.com
Sponsors: http://SilverDoctors.com & http://ReluctantPreppers.com

This interview was recorded on June 15, 2016.

DISCLAIMER: The financial and political opinions expressed in this interview are those of the guest and not necessarily of "Finance and Liberty" or its staff. Opinions expressed in this video do not constitute personalized investment advice and should not be relied on for making investment decisions.
 

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#27
Frontrunning: June 16


by Tyler Durden - Jun 16, 2016 7:30 AM

  • Global Stocks Fall as Bank of Japan Stands Pat (WSJ)
  • European stocks, oil slide as growth fears add to Brexit pressure (Reuters)
  • Yellen Says Forces Holding Down Rates May Be Long Lasting (BBG)
  • Fed's Yellen acknowledges difficulty of escaping world's low rate grip (Reuters)
  • Oil hits three-week low on weak U.S. stock draw, Brexit fear (Reuters)
  • China Dumping More Than Treasuries as U.S. Stocks Join Fire Sale (BBG)
  • Brexit would make all of Europe seem less reliable: German minister (Reuters)
  • Scottish leader says EU referendum on knife edge, Brexit could trigger independence vote (Reuters)
  • 'Lone hacker' claims responsibility for cyber attack on Democrats (Reuters)
  • Orlando Shooter Raised Suspicion at Gun Shops (WSJ)
  • Brexit darkens cloud hanging over European banks (Reuters)
  • U.S. officials say American Muslims do report extremist threats (Reuters)
  • Corporate Clients Push Back After Law Firms Hike Starting Salaries (WSJ)
  • For One Breed of Wall Street Bankers, Business Is Booming Again (BBG)
  • Post-Islamic State Iraq should be split in three: top Kurdish official (Reuters)
  • China’s Postal Savings Bank Presses Ahead With Over $7 Billion IPO (WSJ)
  • Heatzilla Will March Across the West From California to Arizona (BBG)
  • Disney's China fairytale begins with $5.5 billion park opening (Reuters)
  • Rome set for first female mayor as Renzi faces vote setbacks (Reuters)
  • Main locations of EgyptAir wreckage identified by deep ocean vessel (Reuters)
Overnight Media Digest

WSJ

- The U.S. Federal Reserve held short-term interest rates steady and officials lowered projections of how much they'll raise them in the coming years, reflecting concerns about persistently slow growth and low inflation. (http://on.wsj.com/25YPbTd)

- Tencent Holdings Ltd is nearing a deal to buy the Finnish maker of the popular "Clash of Clans" game in a deal that values the company at more than $9 billion, said people familiar with the matter, a move that could thrust the Chinese internet giant atop the fast-growing and lucrative mobile-games industry.(http://on.wsj.com/25YPvl7)

- Pregnant women infected with Zika in their third trimesters may not face a major risk that their babies will develop abnormalities linked to the virus, according to a study, published by public-health scientists in Colombia and at the U.S. Centers for Disease Control and Prevention in the New England Journal of Medicine. (http://on.wsj.com/25YPMo9)

- Envision Healthcare Holdings and AmSurg agreed to merge, in a deal that will create a company providing a range of hospital-related services worth some $10 billion. (http://on.wsj.com/25YPA8o)

FT

* Cameron plans Trident vote to unify Tories after EU poll (http://bit.ly/1YsMh3G)

* RBS to make cash machine switch at same time as referendum (http://bit.ly/1YsMyDA)

* London commuters caught up in acrimonious rail dispute (http://bit.ly/1YsNl7H)

* New Zealand economy grows faster than expected in Q1 (http://bit.ly/1YsNZSF)

Overview

- In attempts to bring together the Conservative party after the EU referendum battle, David Cameron is planning a Commons vote on new Trident submarines next month.

- Royal Bank of Scotland is installing new ATMs in approximately 300 branches that are being hived off to create Williams & Glyn, the challenger bank that is being formed from RBS branches in England and Wales and NatWest outlets of Scotland.

- The RMT rail union and Govia dispute has left passengers stranded. The conflict is centered over plans to change the role of train conductors and has led to several days of strikes.

- Ahead of forecasts, New Zealand's economy grew by a seasonally adjusted pace of 0.7 percent quarter-on-quarter in the first three months of this year, down from 0.9 percent in the December quarter.

NYT

- A multibillion-dollar hedge fund focused on healthcare had an inside view of the drug approval process at the Food and Drug Administration. Federal authorities have filed criminal and civil securities charges against three current and former traders at Visium Asset Management, including Sanjay Valvani, one of the firm's top portfolio managers and the former brother-in-law of the firm's founder. (http://nyti.ms/1UPYagN)

- The Fed said on Wednesday, after a two-day meeting of its policy-making committee, that it would not raise its benchmark interest rate, and that future increases were most likely to unfold at a slower pace. (http://nyti.ms/1WOhvCz)

- Nick Denton, the founder and chief executive of Gawker, published a roughly 3,000-word blog post about the state of his company. He waxed poetic about the company's future, opined on the balance of power between privacy and a free press and took Silicon Valley billionaires to task for trying to control their image. (http://nyti.ms/1Ue8IJX)

- The ailing media mogul Sumner Redstone declared in a rare missive sent on Wednesday that he no longer trusted Philippe Dauman, Viacom's embattled chief executive, or those who support him. (http://nyti.ms/1UAdXO9)

Britain

The Times

The Financial Conduct Authority has caved in to banks over payment protection insurance compensation by backing the banks' call for a two-year deadline for new claims, against the view of its own experts. (http://bit.ly/1rqR744)

Berkeley Homes, one of Britain's most upmarket house builders, has reported a 20 percent fall in reservations for the past five months and added that it had launched no new schemes in London this year amid uncertainty over the European Union referendum. (http://bit.ly/1rqSn74)

The Guardian

Rolls-Royce has written to staff to say the company wants Britain to stay in the European Union. (http://bit.ly/1rqRcVt)

Areva, one of the French companies at the heart of the controversial Hinkley Point C nuclear project, has unveiled plans to break itself up into three parts in a bid to stem huge losses. (http://bit.ly/1rqSuQ2)

The Telegraph

Heathrow has sought to pressure the government into giving a controversial third runway the go-ahead by warning that ministers' much-heralded "Northern Powerhouse" idea is "at risk" if the airport if not expanded. (http://bit.ly/1rqSz6o)

Hollywood Bowl, the operator of bowling lanes, plans to float in London next month in a deal that will value the business at around 280 million pounds ($397.54 million). (http://bit.ly/1rqSxeT)

Sky News

South African retailer Steinhoff has confirmed it is considering a possible takeover bid for discount chain Poundland. (http://bit.ly/1rqR9sJ)

Sir Philip Green has apologised for the sale of BHS and its "sad" collapse, telling an MPs' inquiry he is finding a solution to the 571 million pounds ($810.71 million) pension deficit - pledging "we'll sort it". (http://bit.ly/1rqQxmX)

The Independent

Heads of Unilever, Airbus and General Electric have accused the official 'Leave' campaign of "deliberately" attempting to "mislead" voters by using their logos on a taxpayer-funded leaflet making the case for Brexit.


http://www.zerohedge.com/news/2016-06-16/frontrunning-june-16
 

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#28
Global Stocks Continue To Plunge As Central Banks Disappoint, Brexit Looms


by Tyler Durden - Jun 16, 2016 6:50 AM

The last time US equities fell after the Fed came out as overly dovish was in January, when the Fed modestly relented on its "tightening" plan. It was immediately dubbed as "policy error" and led to the February market swoon as a result of Yuan-induced market volatility. But if January was bad for the Fed, yesterday was even worse, with stocks proceeding to stumble and close at the lows after a rambling, disjointed press conference by Yellen failed to convince anyone that the Fed has any idea what it is doing anymore and that the "rate hike cycle may have left the building" as Jeff Gundlach put it. Even Steve Liesman admitted that "the Fed is as close to capitulation as I've ever seen them."

“The very dovish comments from Janet Yellen didn’t bring much support,” said Guillermo Hernandez Sampere, the head of trading at MPPM EK in Eppstein, Germany. “The market took a breather yesterday but there was nothing more to it. There aren’t enough buyers out there to prevent the downside. The more people are talking about a possible Brexit the more it creates fear among investors.

The odds of the Fed raising key borrowing costs this year are now below 50 percent. About 28 percent of economists in a Bloomberg survey had forecast additional easing at this BOJ meeting, with 55 percent looking to the next gathering in July. The Bank of England will announce its policy decision at noon in London.

Then the BOJ added insult to injury after Kuroda confirmed the BOJ is likewise trapped and did nothing to ease the pain in either the soaring Yen which is back to October 2014 highs, or the Nikkei, when proceeded to tumble another 3% and is now down over a quarter from its summer of 2015 highs.



The pain was not confined just to Japan however, and stocks slid virtually in every corner of the globe, as the MSCI with commodities after central banks in the U.S and Japan signaled increased concern about the global economic outlook. Indeed, the selloff that erased $2.4 trillion from global equities in the past week resumed as central bank policy reviews exacerbated investor anxiety at a time when volatility in global markets is surging before the U.K. vote on a Brexit. The BOJ’s decision to leave its record monetary stimulus unchanged came less than 12 hours after the Fed reined in its projection for interest-rate increases over the next two years, with Yellen saying some of the economic forces holding down U.S. borrowing costs may be long-lasting.

And then there is of course the rising fear of Brexit made even worse with the latest Ipsos-Mori poll, which showed a rising percentage of supporters for the Leave camp:
  • U.K. POLL ON EU SHOWS 47% REMAIN, 53% LEAVE: IPSOS-MORI
As a result of all of the above, futures on the S&P 500 slipped 0.3%, as U.S. equities are on track to extend losses for a sixth day. Europe's Stoxx 600 fell to a four-month low, sliding 1% for its sixth decline in seven days, and U.S. crude retreated for a sixth day in the longest losing streak since February. Bond yields sank to records in Germany, Australia after Japan as Federal Reserve Chair Janet Yellen said next week’s U.K. vote on European Union membership was a factor in the decision to hold interest rates steady. The Yen surged more than 2% as the Bank of Japan refrained from adding any new stimulus, as a result Japan’s Nikkei tumbled 3.0%. The MSCI Emerging Markets Index slid 1% to a three-week low.

Investors will look to data Thursday on initial jobless claims, business sentiment and inflation for further indication of the health of the world’s biggest economy and the trajectory of interest rates.

Market Snapshot
  • S&P 500 futures down 0.3% to 2057
  • Stoxx 600 down 0.9% to 321
  • FTSE 100 down 0.6% to 5930
  • DAX down 0.7% to 9542
  • S&P GSCI Index down 0.9% to 372.9
  • MSCI Asia Pacific down 1.2% to 126
  • Nikkei 225 down 3% to 15434
  • Hang Seng down 2.1% to 20038
  • Shanghai Composite down 0.5% to 2873
  • S&P/ASX 200 down less than 0.1% to 5146
  • US 10-yr yield down 1bp to 1.56%
  • German 10Yr yield down less than 1bp to -0.02%
  • Italian 10Yr yield up 5bps to 1.55%
  • Spanish 10Yr yield up 4bps to 1.6%
  • Dollar Index down 0.1% to 94.52
  • WTI Crude futures down 1.4% to $47.33
  • Brent Futures down 1.4% to $48.26
  • Gold spot up 1.2% to $1,307
  • Silver spot up 1.3% to $17.75
Top Global Headlines
  • BOJ Keeps Policy Unchanged, Shifting Stimulus Focus to July: Kuroda holds off ahead of Japan election, U.K. vote on Brexit; majority of economists see central bank moving at next meeting
  • Yellen Says Forces Holding Down Rates May Be Long Lasting: Fed chief discusses the “new normal” that’s holding rates down
  • Envision to Merge With AmSurg to Create Health Services Giant: cos. to merge in all-stock deal that will create U.S. provider of physicians and health-care services with combined enterprise value of $15b
  • Cavium to Buy QLogic for About $1.36b to Broaden Products: Cavium will pay $15.50/share for QLogic, consisting of $11 in cash and 0.098 of a share of Cavium stock
  • ASML to Acquire Taiwan’s Hermes Microvision: ASML is buying Taiwan-based Hermes Microvision for about $3.1b, seeking to add technology for creating smaller chips
  • VW Gets More Time to Hammer Out U.S. Diesel-Cheating Accords: judge orders delay due to “highly technical” nature of talks; one-week deferral for settlements with owners and regulators
  • Pioneer Expands as Devon Retreats From Top U.S. Oil Field: shale driller Pioneer to expand rig fleet in Permian Basin; Devon says sales mean divestitures plan is ahead of schedule
  • Amazon Cuts Shipping Fees in Threat to Alibaba’s U.S. Business: prices drop 67% for small, flat items like USB cords, makeup
  • Sumner Redstone Says He No Longer Trusts Viacom CEO or Board: Redstone sends message to Viacom lead director Fred Salerno
  • Oil Falls 6th Day as Easing Disruptions Counter U.S. Supply Drop
Looking at regional markets, we start in Asia, where stocks traded mostly lower as the region digested the FOMC meeting which was more dovish than prior, although Fed Chair Yellen reiterated that all meetings were live, while BoJ also disappointed. Nikkei 225 (-3.0%) underperformed after the BoJ kept its policy on hold which saw USD/JPY decline below the 105.00 level and soured sentiment. BoJ said the decision to keep rates unchanged by 7-2 vote, while monetary base decision was by 8-1 vote. BoJ also stated it expects price trends to steadily increase and that will add stimulus if necessary. Elsewhere, Chinese markets (Hang Seng -2.1%, Shanghai Composite -0.5%) were subdued after Aggregate Financing data missed expectations and a lacklustre liquidity injection by the PBoC, while ASX 200 (0.0%) bucked the trend with consumer discretionary and basic material names leading the advances on reports Crown Resorts are to spin-off some of its property assets and after metals were underpinned by a weaker USD post-FOMC. Finally, 10yr JGBs were immediately pressured after the BoJ kept policy on hold, but then staged a late recovery amid the risk-averse tone, with yields across the curve also declining fresh record lows today. BoJ kept monetary policy unchanged with the Annual Rise in Monetary Base at JPY 80trl and Policy Rate kept at -0.10%.

Top Asian News
  • Yen Gains Beyond 105 Per Dollar for First Time Since Sept 2014: USD/JPY slides as much as 1.4% to 104.53 after BOJ maintains policy
  • China Dumping More Than Treasuries as U.S. Stocks Join Fire Sale: Drop of 38% compares with 9% reduction for all foreigners
  • Sun Hung Kai Properties Offers 120% Mortgages in Hong Kong: Home prices have fallen 13% from September as economy slows
  • Casino Titan Packer Hives Off Macau Stake From Aussie Assets: Nobu stake, Vegas development site included in spinoff
  • Australia Added Jobs in May as Part-Time Employment Climbed: Jobless rate holds at 5.7%; economy adds 17,900 positions
  • Australian Bond Yields Drop to Record Below 2% on Brexit Concern: Swaps market shows 71% chance RBA will cut rates by year-end
In Europe, equities and fixed income have both spent the morning reacting to the Fed last night, with risk off sentiment clearly evident. Bunds have reached fresh record highs to trade above 165.50, despite supply today coming in the form of French and Spanish auctions. As such, GE 10Y yields plunged further into negative territory, to reach lows of -0.0355%. Equities have spent the session firmly in the red, with financials underperforming given the diminished expectations of a US rate hike, with Deutsche Bank shares hitting fresh record lows.

Top European News
  • SNB Holds Fire as Brexit Blues Pressure Franc at 2016 High: deposit rate held at -0.75% as intervention pledge; Brexit may cause stress in Europe, SNB president has warned
  • VW’s Europe Market Share Stuck at Five-Year Low After Scandal: carmaker’s 5-month sales rose 4.9% versus 9.7% market growth
  • Carney Hits Back on Brexit Charge as Poll Shows Leave in Lead: Carney says BOE has “a duty” to report its judgments: BBC
  • Rate-Cut Expectations Rise as BOE Holds Tight Before Brexit Vote
  • U.K. Retail-Sales Surge Boosts Hopes for Second-Quarter Growth: U.K. retail sales climbed more than forecast in May
  • Deutsche Bank Chairman Says Brexit Would Be “Disaster” for U.K
  • Schneider Would Review London Finance Base in Case of Brexit
  • CS, UBS Need Added Going-Concern Capital of ~CHF10b Each: SNB
  • Airbus to Review Goal of 50 A350 Deliveries in Late Summer
In FX, The Bloomberg Dollar Spot Index fell 0.2%, following a 0.3% decline on Wednesday. Fed officials continue to forecast two 25 basis-point rate hikes this year, after leaving the target range for the benchmark interest rate unchanged at 0.25 percent to 0.5 percent. The pound dropped toward a two-month low versus the dollar as traders awaited the BOE’s final policy meeting before the June 23 referendum. Last month, Governor Mark Carney said Brexit could lead to a U.K. recession as the central bank downgraded its growth forecasts. The currency weakened against 11 of its 16 major peers, slipping to a three-year low versus the yen. The Swiss National Bank kept its rates unchanged Thursday. Officials there have said the British vote has the potential to cause “enormous stress” in Europe. The yen jumped 1.6 percent to 104.38 a dollar, strengthening for a fifth day. The currency gained against all 31 major peers. BOJ Governor Haruhiko Kuroda said the authority will be monitoring currency movements closely, indicating a risk of intervention. “The BOJ was facing too much of a headwind in the market,” said Yunosuke Ikeda, head of Japan foreign-exchange research at Nomura Securities Co. “Ineffective easing would just question their credibility.” Russia’s ruble and South Africa’s rand both dropped 0.4 percent, the worst performers in emerging markets, as commodities declined.

In Commodities, it was all about gold which jumped to the highest level since January 2015. Bullion for immediate delivery rose over 1% or as high as $1,314 an ounce before the BIS intervened to keep the price lower at the European open. Prices have surged 23% this year as increasing global economic and political risks drive investors to havens. Silver rose 1.1 percent as assets in exchange-traded funds backed by the precious metal climbed to a record. Nickel and copper led a decline in industrial metals. West Texas Intermediate crude fell 1.2 percent to $47.45 a barrel and Brent dropped 1.2 percent to $48.37, on speculation that easing global supply disruptions will offset a decline in U.S. crude stockpiles. Output in Canada is expected to ramp up this month after wildfires cut production. While U.S. crude inventories dropped for a fourth week to 531.5 million barrels, they remain about 33 percent above the five-year seasonal average, the U.S. Energy Information Administration said Wednesday.

Bulletin Headline Summary from RanSquawk and Bloomberg
  • The fall out of the Fed's slightly dovish meeting and the BoJ's inaction has seen equities softer across Europe
  • GBP trades in range with the Ipsos Mod poll's 6% lead for the leave camp offset by the strong UK retail sales
  • Highlights today include BoE rate decision, US CPI and Philadelphia Fed Business Outlook
  • Treasuries rise on the long-end while global equities and oil drop, gold rallies back above $1300/oz on renewed growth concerns, while Fed, SNB and BOJ held policy steady.
  • Mark Carney hit back against critics who accused him of supporting the U.K.’s membership in the European Union as a new poll showed the Leave campaign holding its lead ahead of next week’s referendum
  • U.K. retail sales climbed 0.9% in May, more than economists forecast, as warm weather spurred demand for summer clothing and department stores offered promotions
  • The BOJ refrained from expanding monetary stimulus ahead of the U.K. vote on Brexit next week that could roil global markets, and before a domestic election in which the political opposition has made the bank’s NIRP an issue
  • Federal Reserve Chair Janet Yellen seems to be coming around to what her one-time rival, Lawrence Summers, has been arguing for a while: Some of the forces holding down interest rates may be long-lasting and secular
  • Indonesia’s central bank cut its benchmark interest rate for the fourth time this year, indicating its willingness to favor economic growth over stability in the face of mounting global risks
  • The Swiss National Bank kept interest rates unchanged, conserving ammunition ahead of a British vote on European Union membership that has the potential to complicate monetary policy-making the world over
  • The job market is grim on Wall Street. Except in one little corner of the financial world, where managers can’t read resumes fast enough. The turnaround expert is in hot demand
US Event Calendar
  • 7am: Bank of England Bank Rate, est. 0.5 (prior 0.5%)
  • 8:30am: Current Account Balance, 1Q, est. -$125.0b (prior - $125.3b)
  • 8:30am: Initial Jobless Claims, June 11, est. 270k (prior 264k)
  • 8:30am: CPI m/m, May, est. 0.3% (prior 0.4%)
  • 9:45am: Bloomberg Economic Expectations, June (prior 44.5)
  • 10am: NAHB Housing Market Index, June, est. 59 (prior 58)
  • 10am: Freddie Mac mortgage rates
  • 10:30am: EIA natural-gas storage change
  • 3pm: Bank of England’s Carney speaks in London
DB's Jim Reid completes the overnight wrap

The Fed look like helping bond yields stay low in the near-term as their meeting concluded in dovish fashion with July increasingly looking like it’s off the table for the Fed. One stat showing the dovishness is that the number of committee members only seeing one hike in 2016 has gone up from 1 to 6 (out of 17) relative to March's last round of forecasting. The median forecast is still for two hikes but there are clearly more dovish voices now. Even long standing hawk President George didn't dissent to the statement which surprised a few. The median expected Fed Funds rate expectation for end 2017 and 2018 were cut 25bps and 62.5bps respectively with the 2018 number now at 2.375%.

Stocks hardly reacted to the statement but fell sharply in the last 30 mins of trading perhaps due to a fall in oil below $47.50 having trading as high as $48.68 just before Europe went home. The S&P 500 closed -0.2% after having been a third to a half percent higher most of the day. Treasuries yields fell after the number with 10 year (1.572%) and 2 year (0.67%) yields 4bps and 5bps lower on the day - most of which occurred post the statement. 10 year yields are another 1.5bps lower in the Asian session.

The BoJ has followed the Fed's lead and has maintained policy at current levels overnight. Although only around a quarter of economists expected anything today (and probably even less investors), the Yen has strengthened over 1% and through 105 to the dollar for the first time since September 2014. Asian shares are on the way down for their sixth day with the Nikkei around -1.8% lower. Elsewhere the Hang Seng is down -1.75% but Chinese stocks are broadly flat. Gold is up for a 7th day.

Before the late day US sell-off and Asian weakness, European equities bounced off their lowest levels since late February as the STOXX 600 and the FTSE gained +0.97% and +0.73% respectively on the day. The gains also appeared to be broad-based as all 19 sectors in the STOXX index turned up, led by Basic Resources (+3.65%) and Retail (+1.75%). Financial services were the most actively traded sector ahead of the referendum with volumes touching 166% of the 30 day average volume.

While some of the gains can be attributed to decent economic data out of Europe and the UK (discussed later), Brexit concerns will likely continue to overshadow anything else at the moment. Today we see two crucial polls both expected to be out around 1230 BST. They are both phone polls and are from Ipsos-Mori and Survation/IG. These are credited as being the most accurate pollsters in the Scottish referendum so that and the fact they are phone polls make them key. So far phone polls are where the 'remain' campaign still have the upper hand notwithstanding the ICM poll early this week.

Moving onto the latest in the German 10Y yield saga, they continue in negative territory and ended yesterday at -0.010%. This number does however disguise some of the intraday moves that saw yields initially rise back above zero to an intraday high of 0.017%, before rapidly delving back into negative territory.

Now reviewing some of the data out yesterday, we saw the final May CPI numbers out of France surprise on the upside at +0.5% mom (vs. +0.3% expected; +0.3% previous) with much of the gains being driven by food price inflation (+1.0% mom). Prices were up +0.1% YoY (0.0% expected). Over in the UK we saw the labor market remain resilient despite uncertainty ahead of the upcoming referendum, with the unemployment rate for May declining to 5.0% (vs. 5.1% expected; 5.1% previous) – the lowest levels since 2005. Wages growth also ticked up as weekly earnings increased by +2.3% 3m/YoY (vs. +2.0% expected; +2.2% previous).

Heading over to the US, we saw producer prices for May tick up by +0.4% mom (+0.2% previous) and beat estimates (+0.3% expected), primarily driven by the biggest rebound in energy costs since May 2015. However, these headline numbers may be misleading as prices excluding volatile components such as food, energy and trade services actually disappointed by declining for the first time in seven months (-0.1% mom vs. +0.1% expected). Our Chief US Economist Joe Lavorgna also notes that the temporary energy-related spike in prices is likely to reverse in light of a soft growth backdrop in the US and abroad, with is certainly reflected by the mixed bag of data on the manufacturing front. While the NY Fed Empire Manufacturing survey rebounded sharply in June and clocked in well above expectations (6.01 vs. -4.90 expected), the hard industrial production numbers for May disappointed by dropping by -0.4% mom (vs. -0.2% expected). The drop in the latter was largely due to sluggish production of consumer goods (-0.7% mom), which in turn was primarily dragged lower by falling automotive output (-4.4% mom). Capacity utilization for May also fell to 74.9% (vs. 75.2% expected; 75.3% previous), which was consistent with an ongoing slowdown in aggregate demand.

Taking a look at the day ahead, we’ll start off in Europe with the UK May retail sales number which is expected to report a slowdown (expected +0.2% mom; +1.3% previous). Shortly after we will also see the final May CPI report for the Eurozone which is expected to be unchanged from the flash estimate on an annual basis (expected -0.1% YoY) and tick up from the previous month (expected +0.3% vs. 0.0% previous). We then have the BoE rate decision which should come out around midday, where the rate is expected to remain unchanged.

Over in the US the big release will be the May CPI numbers (expected +0.3% mom; +1.1% YoY), which should be closely watched for signs of renewed inflationary pressures following yesterday’s PPI data. However, Joe Lavorgna once again notes that the slack in the industrial sector suggests that recent inflationary pressure is unlikely to be sustained. Any tick up in the CPI figures will likely be due to temporary energy related effects similar to those seen in yesterday’s PPI numbers. Away from the inflation numbers we will also see the weekly initial jobless claims (expected 270k vs. 264k previous) and continuing jobless claims (expected 2140k vs. 2095k previous) numbers that should also be monitored given some of the mixed signals regarding US labor market resilience. The Philadelphia Fed Business Outlook survey for June is also due and is expected to head back into positive territory (expected +1.0 vs. -1.8 previous) and should also be closely watched after the mixed bag of industrial sector data so far. We should also get the reading of the NAHB Housing Market index which expected to largely hold stable at 59 (vs. 58 prior).

The two lunchtime Brexit phone polls already mentioned could be the key highlight today though.

http://www.zerohedge.com/news/2016-...-plunge-central-banks-disappoint-brexit-looms
 

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#31
China Smells 'Risk,' Dumps $126 Billion of US Stocks
China's stash of American stocks sank about $126 billion, or 38%, from the end of July through March, to $201 billion. This move comes after China, owner of the world's biggest foreign-exchange reserves, dumped $250 billion of U.S. government debt. “The Chinese are taking the view that sitting in U.S. equities is presumably quite risky," an HSBC Bank official said. [Full Story]

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#32
Tom Cloud's Precious Metals Market Update (06/14/16)
FinanceAndLiberty.com


Published on Jun 16, 2016
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#36

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#37
Frontrunning: June 17


by Tyler Durden - Jun 17, 2016 7:45 AM

  • Sell-off abates as Brexit opinion seen shifting (Reuters)
  • IMF chief Lagarde says economic risks bigger if Britain leaves EU (Reuters)
  • U.S. State Department Officials Call for Strikes Against Syria’s Assad (WSJ)
  • St. Louis Fed's Bullard says U.S. may only need single rate hike for now (Reuters)
  • A Life of Violent Threats Paved Way for Orlando Attack (WSJ)
  • Sanders vows to help Clinton beat Trump, but keeps campaign alive (Reuters)
  • The World Economy Looks a Bit Like It's the 1930s (BBG)
  • Sig Sauer, maker of Orlando gunman's weapon, is expanding rapidly in U.S. (Reuters)
  • Senate inches toward possible gun control action (Reuters)
  • Microsoft’s LinkedIn to Be Like Facebook for Careers, Gates Says (BBG)
  • Draghi’s Euro-Saving Pledge Runs Into Risk of Populist Backlash (BBG)
  • Sumner Redstone’s National Amusements Moves to Oust Five Viacom Directors (WSJ)
  • Breaking the back of the London copper market (Reuters)
  • U.S. corruption probe puts renewed pressure on Ericsson (Reuters)
  • Boomers Are Making Sure the Divorces Keep Coming (BBG)
  • Trumped by candidate's rhetoric, Republican lawmakers at a loss for words (Reuters)
  • Iraqi forces take Falluja government building from Islamic State (Reuters)
  • U.S. says it will stay in Black Sea despite Russian warning (Reuters)
Overnight Media Digest

WSJ

- Dozens of State Department officials protested this week against U.S. policy in Syria, signing an internal document calling for targeted military strikes against the Damascus government and urging regime change as the only way to defeat Islamic State. (http://on.wsj.com/1UZrXRy)

- A two-year campaign by the United States and other countries to defeat Islamic State has failed to disrupt its capability to carry out terrorist attacks, CIA Director John Brennan said. (http://on.wsj.com/1UZryyt)

- A lawmaker from the UK's main opposition Labour Party, Jo Cox, died Thursday after a brutal attack on the street in northern England, prompting a halt to official campaigning ahead of next week's referendum on EU membership. (http://on.wsj.com/1UZrKOa)

- Sumner Redstone's National Amusements moved to replace five board members of Viacom Inc, deepening turmoil in the mogul's $40 billion media empire and setting up a likely legal battle over corporate governance. (http://on.wsj.com/1UZsinr)

FT

- Larry Ellison, Co-founder and chairman of Oracle said that Oracle would be the first company to reach $10 billion in cloud revenues.

- UK equities invested funds recorded a $1.1 billion of redemptions this week, as many investors are braced for the referendum on Britain's membership of the EU.

- MPs have said that the National Grid, the company that run's Britain's electricity system, should be broken up to transform the UK's energy supply.

- Sumner Redstone and Shari Redstone have moved to replace the five independent directors of the Viacom board, beginning a new saga in the fight for control of the media group that owns MTV, Nickelodeon and Paramount Pictures.

NYT

- Sumner Redstone's National Amusements company announced On Thursday that it had moved to replace Philippe Dauman and four other directors on the Viacom Inc board. The development sets the stage for the firing of Dauman as the company's chief executive, escalating the war for control of Redstone's $40 billion media empire.(http://nyti.ms/1tzoPWU)

- More than five years after United merged with Continental, combined carrier United Continental Holdings Inc's 24,000 flight attendants are still operating as if the company were running two airlines. That disconnect has made scheduling crews and flight routes more complicated and has contributed to operational challenges, including flight delays. (http://nyti.ms/1W2EmJQ)

- Capping months of speculation about major executive changes, Twenty-First Century Fox said on Thursday that Stacey Snider, the studio's co-chairwoman, would succeed Jim Gianopulos as chairman and chief executive when his contract expires on June 30, 2017. (http://nyti.ms/1UzowoT)

- Volkswagen on Thursday outlined an ambitious plan to increase profit after an emissions scandal by sharply increasing the production of electric vehicles and reducing costs. (http://nyti.ms/2614kDL)


Canada


Britain

The Times

Volkswagen plans to launch more than 30 all-electric cars by 2025 as the scandal-hit company repositions itself as a leading player in environmentally sustainable driving. (http://bit.ly/1YvJUg1)

Lloyds has won a narrow victory over thousands of bondholders and will now not have to pay extra money to buy back their investments. The decision by the Supreme Court, which saves Lloyds about 1 billion pounds ($1.42 billion), has infuriated some of the savers and investors. (http://bit.ly/1YvJBlp)

The Guardian

The Bank of England has issued a fresh warning that a vote to leave the EU in next week's referendum risks knocking economic growth, pushing the pound sharply lower and sending shockwaves through the global economy. (http://bit.ly/1Q7F8Ea)

The House of Commons energy and climate change committee's report, Low Carbon Network Infrastructure, has called for the National Grid to be stripped of its powers for balancing the energy system in Britain due to a potential conflict of interest. (http://bit.ly/1OteKUI)

The Telegraph

Barclays has branded accusations of fraud levelled by financier Amanda Staveley against the bank as "fundamentally misconceived", court documents show. (http://bit.ly/1W2gC8t)

HSBC has agreed to pay more than 1 billion pounds ($1.42 billion), to settle a securities fraud class action that stemmed from the bank's takeover of a U.S. sub-prime lender more than a decade ago. (http://bit.ly/1XsxFBP)

Sky News

The Bank of England has issued a fresh warning on the economy ahead of the EU referendum, saying it is "increasingly probable" a Brexit would send the pound plunging further. (http://bit.ly/1YvGVnT)

Downing Street is targeting company bosses who have previously remained neutral in the EU referendum campaign in an attempt to swell business support for 'Remain' in a final push ahead of next week's poll. (http://bit.ly/1YvIRwC)

The Independent

Past and current bosses of Unilever have voiced their support for the UK remaining in the EU ahead of the referendum on 23 June. (http://ind.pn/1YvIrXh)


http://www.zerohedge.com/news/2016-06-17/frontrunning-june-17
 

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#38
Global Stocks Rebound As Brexit Odds Decline Following Tragic Death Of UK Lawmaker


by Tyler Durden - Jun 17, 2016 6:51 AM

Traders are still stunned by the dramatic move in risk assets during yesterday's US session. As a reminder, at the lows for the day in the mid-morning Eastern Time, we saw the DAX at -1.81%, FTSE -1.13%, S&P500 -1.03%, US 10y yield 1.516% (lowest since August 2012) and GBPUSD 1.401. By the various closes these rallied to -0.59%, -0.27%, +0.31%, 1.580% and 1.420 respectively!

What changed?

Unfortunately it had everything to do with the death of Jo Cox, which as even Deutsche Bank admits, "while it seems insensitive to talk about markets in relation to this event, unfortunately this story heavily influenced them yesterday. Before this news came out the two phone polls that the market had been waiting for both came out in favour of 'leave' (Ipsos-Mori 53%/47% and Survation 45%/42%)." The reason: BBC eyewitness reports (later questioned) suggesting the killer shouted 'put Britain first'. As a result, campaigning has been suspended for now and it's unclear when it will get going again. As we first noted, the immediate outcome of the shooting was a rumor that the Brexit vote next Thursday will be postponed, which in turn boosted "Remains" odds.

And, as Bloomberg also puts it, "Sterling rebounded from a two-month low as an opinion poll on voter intentions in next week’s referendum was delayed."



Odds on the U.K. leaving the EU slid to 38 percent after hitting a record 44 percent on Thursday, according to Oddschecker calculations based on bookmakers’ quotes. “If you do see uncertainty, that typically will drive voters to the status quo,” said Karl Schamotta, director of foreign-exchange research and strategy in Toronto at Cambridge Global Payments, which hedges currencies for companies. “We’re seeing a trade that’s entirely too crowded -- at the end of the day, the market expectation remains that we will see a stay vote.”

In short, as Bloomberg, DB and Reuters all admit, the tragic death of Jo Cox had a morbidly levitating effect on all risk assets. “The halt in campaigning may just take Brexit off the headlines momentarily, and that may have given an opportunity to just to see a little bit of a retracement in a comparatively quieter environment,” said Orlando Green, a rates strategist at Credit Agricole SA’s corporate and investment-banking unit in London. “We’ll see a choppy environment as we head toward the referendum.”

Ten-year bonds in Japan and the U.K. declined for the first time in more than a week. Global stocks rebounded from a four-week low and commodities advanced with the pound as campaigning in Britain’s referendum on European Union membership was suspended for a second day. Oil rose, paring its biggest weekly decline in more than two months.

German bonds fell for the first time in four days, ending a three-day rally that pushed the yield into negative territory for the first time. The yield was near-zero, from minus 0.02 percent on Thursday. Similar-maturity U.K. debt snapped an eight-day run of gains. Spanish and Italian debt rallied as investors snapped up higher-yielding assets.



Japan’s 10-year bonds fell for the first time in seven days, lifting their yield by five basis points to minus 0.15 percent. It sank to a record minus 0.21 percent in the last session as the BOJ said inflation in the nation may be zero or negative. The rate on similar-maturity bonds in Australia climbed eight basis points to 2.09 percent, after slipping below 2 percent for the first time on Thursday. U.S. Treasuries due in a decade fell, lifting their yield by two basis points to 1.60 percent. It touched 1.52 percent in the last session, the lowest intraday level since August 2012, after the Fed on Wednesday lowered its projections for the path of policy tightening.

As a reminder, it is not just sterling: “With Brexit risks an important driver of currencies in the near term, dollar-yen can track lower next week,” said Joseph Capurso, a senior currency strategist in Sydney at Commonwealth Bank of Australia. “That raises the risk the Ministry of Finance may intervene to stem the recent rapid gains in the yen.” As Shunichi Otsuka, general manager of research and strategy at Ichiyoshi Securities, added “The dollar-yen market has calmed somewhat,” said “We’ll probably see a rebound from the steep fall yesterday. The fact that U.S. shares have risen is also a tailwind for Japanese equities.”

Meanwhile, while it may very well not last and all of yesterday's gains could evaporate instantly if David Cameron announces that the Brexit vote will take place as scheduled, while polling remains unchanged from before Jo Cox's tragic death, all 10 industry groups in the MSCI All-Country World Index advanced, with the index of global equities rising 0.7% trimming the week’s drop 1.6%. The Stoxx Europe 600 Index rose 1.4%. European lenders rallied the most, buoyed by Italian banks. Futures on the S&P 500 were little changed, after equities Thursday snapped their longest losing streak since February.

Meanwhile, the biggest event earlier in the week, the FOMC rate hike decision, is now all but ancient history: the odds of a move on borrowing costs have fallen to 4 percent for July and less than 40 percent for as late as February 2017, after the Federal Reserve this week scaled back its projections for increases.

Global Market Snapshot
  • S&P 500 futures down less than 0.1% to 2070
  • Stoxx 600 up 1.7% to 327
  • FTSE 100 up 1.5% to 6039
  • DAX up 1.3% to 9679
  • S&P GSCI Index up 0.9% to 371.2
  • MSCI Asia Pacific up 0.6% to 126
  • Nikkei 225 up 1.1% to 15600
  • Hang Seng up 0.7% to 20170
  • Shanghai Composite up 0.4% to 2885
  • S&P/ASX 200 up 0.3% to 5163
  • US 10-yr yield up 3bps to 1.61%
  • German 10Yr yield up 3bps to 0.01%
  • Italian 10Yr yield down 3bps to 1.51%
  • Spanish 10Yr yield down 3bps to 1.57%
  • Dollar Index down 0.16% to 94.42
  • WTI Crude futures up 1.1% to $46.71
  • Brent Futures up 1.6% to $47.93
  • Gold spot up 0.5% to $1,285
  • Silver spot up 1.1% to $17.39
Top Headline News
  • Brexit Campaign on Hold for Second Day After Lawmaker Murder: Labour’s Jo Cox was shot dead in northern England on Thursday
  • Oracle’s Revenue Exceeds Estimates on Strength of Cloud Products: rev. in cloud forecast to increase 75%-80% in quarter
  • Revlon Seeks to Revive Cosmetics Clout With Elizabeth Arden Deal: the $14-a-share deal values Elizabeth Arden at ~$870m when debt is included
  • Redstone Family Reclaims Control of Viacom in Slow Motion: Redstone’s holding co. replaced 5 Viacom board members; Delaware court to decide on move’s legality in coming months
  • Found to Have Violated Chinese Rival’s Patent: Apple may have to halt sales of its latest iPhones in Beijing, the city’s intellectual property authority ruled.
  • Salesforce Said to Have Been Rival Suitor for LinkedIn: Microsoft agreed to buy networking website for $26.2b
  • Lumber Liquidators Settles With Regulator; No Product Recall: CPSC says testing showed no unsafe levels of formaldehyde
  • Allianz Sees Pimco Hiring in Pivot From Bill Gross’s Former Fund: board member Theis cites potential in alternative investments; insurer’s U.S. unit cut jobs Thursday after decline in assets
  • UFC Said to Get Bids of ~$4.1b From WME/IMG, CMC Groups: ESPN
Looking at regional markets, Asia equity markets traded higher following the positive lead from the S&P500 in which US equities snapped its 5-consecutive day of declines. Nikkei 225 (+1.1) outperformed on bargain-buying following yesterday's BoJ-triggered 3% drop, with a rebound in USD/JPY from its lowest level since August 2014 underpinning exporter sentiment. ASX 200 (+0.3%) was led by Financials after reports ANZ is considering the sale of its wealth and life units, although gains were capped by commodity weakness. Elsewhere, Chinese markets conformed to the positive picture in the region with the Hang Seng (+0.7%) & Shanghai Comp (+0.4%) both positive after the PBoC returned to a net weekly injection in its interbank liquidity operations. Finally, 10yr JGBs traded firmly in negative territory amid the improvement in sentiment in riskier assets in Japan, while today's enhanced liquidity auction printed a lower b/c. The yield on Japan’s 20-yr govt bond rose as much as 8.5 bps to 0.175%, while 30-yr yield climbs 5.5 bps to 0.205%. The reason: the FinMin extra auction with remaining maturities of 15.5-39.0 yrs drew bid-to-cover ratio of 1.88, the lowest for any maturities since 2012.

Top Asian News
  • Japan’s Aso Invokes G-7, Seeks Coordination After Yen Jump: Any post-Brexit turmoil seen as potential yen-sales trigger
  • China Probes Brokerages’ Futures Units Amid Frenzies in Trading: Guotai Junan, Orient Securities say regulator investigating
  • 1MDB Confident of Legal Position in Debt Dispute With Abu Dhabi: Co. hires law firm Weil Gotshal & Manges to represent case
  • India Woos Explorers of Rare Earths Used in Missiles and Lasers: Govt to issue a new policy for private cos.
  • Mass Deportation Threat Raises Stakes in U.S.-Pakistan Spat: Pakistan seeks to send back 1.5 million Afghan refugees
In Europe, the session has seen a quiet start as is usually the case as the week draws to a close. As such, equities continue to be on the mend led by financials. Of note, today does mark quadruple witching which sometimes is associated with increased volatility — particularly in the DAX. Alongside this, the risk on sentiment has seen global yields also recover with the German 10-yr pulling off their near record lows while the curve has seen an unwind of the bull flattening earlier in the week, with price action seeing Bunds back below the 165 level. Additionally, peripheral bond yields have been outperformed relative to the German 10-yr benchmark.

Top European News
  • Stoxx 600 up 1.7% to 327
  • FTSE 100 up 1.5% to 6039
  • DAX up 1.3% to 9679
  • German 10Yr yield up 3bps to 0.01%
  • Italian 10Yr yield down 3bps to 1.51%
  • Spanish 10Yr yield down 3bps to 1.57%
  • S&P GSCI Index up 0.9% to 371.2
In commodities, the Bloomberg Commodity Index gained 0.6%, ending three days of losses, as a retreat in the dollar increased the appeal of commodities priced in the U.S. currency. Oil rose, paring its biggest weekly decline in more than two months. West Texas Intermediate added 0.8 percent to $46.60 a barrel and Brent climbed 1.3 percent to $47.79. There’s no need for Russia and Saudi Arabia to cooperate on influencing crude markets now and low prices may persist for 10 to 15 years, Russian Oil Minister Alexander Novak said in a Bloomberg television interview. Zinc and copper led industrial metals higher, gaining 1.6 percent and 0.9 percent respectively. Gold headed for a third weekly advance. Bullion for immediate delivery rose 0.4 percent to $1,283.75 an ounce. The metal touched $1,315.71 on Thursday, the highest since August 2014. Silver advanced 1 percent.

In FX, in addition to the volatile Yen, it remains all about the British pound which strengthened 0.5%, after erasing a slump of more than 1.3 % in the last session. Odds on the U.K. leaving the EU slid to 38 percent after hitting a record 44 percent on Thursday, according to Oddschecker calculations based on bookmakers’ quotes. “If you do see uncertainty, that typically will drive voters to the status quo,” said Karl Schamotta, director of foreign-exchange research and strategy in Toronto at Cambridge Global Payments, which hedges currencies for companies. “We’re seeing a trade that’s entirely too crowded -- at the end of the day, the market expectation remains that we will see a stay vote.”

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, slipped 0.2 percent in a third day of losses. Currencies of Australia, Canada, South Africa and Russia climbed 0.4 percent or more, rallying with metals and crude. The yen was little changed at 104.34 per dollar, after earlier weakening as much as 0.6 percent. Japanese Finance Minister Aso told reporters Friday that he was very concerned about one-sided, abrupt and speculative currency movements, speaking after the currency jumped 1.7 percent in the last session as the Bank of Japan refrained from expanding its record monetary stimulus. The yen climbed as high as 103.55 on Thursday, the strongest level in almost two years. “With Brexit risks an important driver of currencies in the near term, dollar-yen can track lower next week,” said Joseph Capurso, a senior currency strategist in Sydney at Commonwealth Bank of Australia. “That raises the risk the Ministry of Finance may intervene to stem the recent rapid gains in the yen.”

On today's US calendar, we’ll get the May housing starts and building permits data. The former in particular is expected to fall -1.9% mom however permits are expected to have risen modestly. More interest perhaps could come from comments from ECB President Draghi who is set to speak at 4pm BST in Munich. Its unclear what the topic is but clearly any comments around the UK referendum will be closely watched but given yesterday's events he may chose to pass on the subject. The ECB’s Coeure is also due to speak around lunchtime.


Bulletin Headline Summary From RanSquawk and Bloomberg
  • A more upbeat sentiment today has seen European and Asian equities pare some of the losses from earlier in the week, with Bunds falling away from their record highs
  • FX markets remain subdued by recent standards during European trade, with GBP/USD above 1.4250
  • Highlights today include US housing starts, building permits, Canadian CPI as well as comments from ECB's Draghi, Constancio and Couere
  • Treasuries lower in overnight trading as global equities and commodities rally and Brexit campaigns on hold until this weekend; housing starts today, forecast 1150k.
  • Debt investors rushed to hedge against the risk that Britain votes to exit the European Union this week as polls show a departure has become a real possibility
  • Amid all the murk surrounding Britain’s vote on leaving the European Union, one thing is certain: a lot of cash is piling up just outside the equity market, and having it all come flowing back has the potential to put a charge in stocks
  • Local elections in Italy on June 19 will prefigure votes in Europe over the next 18 months that could see populist politicians translate their increasing support into real power
  • Japan’s sovereign debt rally will push yields on the nation’s 40-year bonds, its longest maturity, below zero in about two months if it keeps up at the current pace
  • From the immediate possibility of Britain leaving the European Union to the longer-term consequences of aging populations, the world’s major central banks this week just aren’t sure what to do next
  • $375m IG Credit priced yday, $5.725b WTD, $60.13b MTD, YTD $863.095b
  • No HY priced yday, 26 deal for $19.925b MTD
  • BofAML Corporate Master Index OAS +1bp yday at +161bp, +9bp MTD, -10bp YTD; T1Y range 221/129
  • BofAML High Yield Master II OAS +14bp yesterday at +632bp, +35bp MTD, -63bp YTD; T1Y range 887/438
  • Sovereign 10Y yields mixed, Greece ~16bp lower; European, Asian equities rise; U.S. equity- index futures mixed; WTI crude oil, precious metals rally
* * *

US Event Calendar
  • 8:30am: Housing Starts, May, est. 1.150m (prior 1.172m)
  • Housing Starts m/m, May, est. -1.9% (prior 6.6%)
  • Building Permits, May, est. 1.145m (prior 1.116m, revised 1.130m)
  • Building Permits m/m, May, est. 1.3% (prior 3.6%, revised 4.9%)
Central Banks
  • 11:30am: ECB’s Draghi speaks in Munich
* * *

DB's Jim Reid concludes the overnight wrap

The U.K. EU referendum was put into some perspective yesterday by the tragic death of a Labour Member of Parliament with eyewitness reports to the BBC suggesting the killer shouted 'put Britain first'. Campaigning has been suspended for now and it's unclear when it will get going again. While it seems insensitive to talk about markets in relation to this event, unfortunately this story heavily influenced them yesterday. Before this news came out the two phone polls that the market had been waiting for both came out in favour of 'leave' (Ipsos-Mori 53%/47% and Survation 45%/42%). At the lows for the day we saw the DAX at -1.81%, FTSE -1.13%, S&P500 -1.03%, US 10y yield 1.516% (lowest since August 2012) and GBPUSD 1.401. By the various closes these rallied to -0.59%, -0.27%, +0.31%, 1.580% and 1.420 respectively. The political bookmakers odds started the day close to predicting a 66% chance for remain, then fell to 61% following the polls. They then climbed back to 66% by the end of the day with thoughts that the tragic events may change the shape of the last stages of the campaign. Odds had peaked at 85% on May 23rd.

Even before this, it was interesting to see such two important phone polls go in favour of 'leave' without the political bookmaker odds moving even more towards 'leave'. One wonders whether there is still a view that 'leave' needs an even bigger lead in the polls to get victory at the ballot box.

With markets swinging back positively in the late afternoon yesterday, bourses in Asia this morning are continuing that positive momentum and paring back slightly what has been a rough week for risk assets in the region. Leading the way is Japan where the Nikkei and Topix are currently +1.63% and +1.36% respectively as the relentless rally for the Yen (-0.20%) seems to be taking a bit of a pause for breath. Those markets are still down well over 5% this week however which will mark the biggest five-day declines since February. Meanwhile, the Hang Seng (+1.01%), Shanghai Comp (+0.82%), Kospi (+0.34%) and ASX (+0.21%) are also higher, while bond yields have edged higher generally in the region. US equity index futures are pointing towards a modestly firmer start too.

Moving on. As a result of yesterday’s tragic turn of events, BoE Governor Carney cancelled his planned Mansion House speech which was scheduled for last night, with a talk by Chancellor of the Exchequer George Osborne also scrapped. As we noted at the start referendum campaigning has been suspended for a second day today with events planned by the UKIP party, Economists for Brexit and Labour Leave all cancelled. Bloomberg is also suggesting that a planned release of an IMF report on the implications of the UK leaving the EU is also to be postponed as well as a referendum poll run by polling company BMG being delayed 24 hours.

Prior to the event the BoE announced no change to its current policy as had been widely expected with the minutes unsurprisingly pointing towards the outcome of the vote next week as being ‘the largest immediate risk facing UK financial markets, and possibly global financial markets’.

The SNB also stayed put at their meeting yesterday while at the same time joined the growing chorus of concern over next week’s vote, highlighting in particular the ‘uncertainty’ and potential increase in market ‘turbulence’. SNB President Jordan confirmed that ‘we intend to stabilize the market in case such a situation arises’.

Meanwhile, it certainly wasn’t just those assets we mention at the top which were subject to big swings yesterday. Indeed Gold peaked at $1316/oz in the afternoon which was close to +2% on the day and the highest since August 2014 before dipping into the close to finish back below $1300/oz again. That was the trend for most precious metals while energy markets had a day to forget. WTI tumbled -3.75% yesterday to $46.21/bbl, the sixth consecutive day it’s fallen and it means, a modest rebound this morning aside, that prices are now nearly $5.50/bbl off the highs of just a week ago as focus turns to the restart of production in the Canada oil sands region.

Credit markets were unsurprisingly volatile throughout yesterday also. After opening around 373bps, the iTraxx Crossover got as wide as 394bps before rallying back into the close to finish at 379bps. The iTraxx Main also traded in a near 5bp range while over in the Bund market our daily 10y Bund yield watch saw yields dip another 1.4bps to close at -0.025%. They did however reach a low of -0.039% in the afternoon. Finally, while its perhaps becoming less of an extraordinary event, yesterday also marked the day that the Swiss 2058 maturity Government Bond went into negative territory on the ask side. It now means that there is only one outstanding Swiss govie trading with a positive yield, that being the 2064 bond which is currently yielding just 0.041%. Incredible.

Away from the obvious focus on the UK Referendum newsflow it was actually another fairly busy day for economic data, although once again this is not getting much attention at present. The highlight yesterday was the May inflation report for the US where headline CPI gained +0.2% mom last month, coming in a tad under the +0.3% expected. As a result the YoY rate dipped one-tenth to +1.0%. The core did come in in-line however at +0.2% mom which has had the effect of nudging up the YoY rate by one-tenth to +2.2% which means it’s been running above 2% now for seven months on the trot. This is clearly in contrast to what we’re seeing in implied inflation expectations, both through the Fed’s 5y forward breakeven and also the University of Michigan survey. As our US economists note also, YoY core PCE inflation – the Fed’s favoured metric of price pressures – is running at just 1.6%.

Away from this, initial jobless claims were reported as rising 13k last week to 277k (vs. 270k expected), while the NAHB housing market index reading for June rose 2pts to 60 (vs. 59 expected). Meanwhile the Philadelphia Fed’s headline manufacturing index reading made for a positive read-through this month after printing at +4.7 (vs. +1.0 expected) which is 6.5pt improvement from May and the best reading since March.

Elsewhere, there was also some data to mention in Europe yesterday. Headline CPI for the Euro area came in at +0.4% mom in May which was a tenth better than expected. The YoY rate was confirmed at -0.1% which marks a one-tenth increase. Also released were the latest retail sales numbers for the UK in May which were up a bumper +1.0% mom (vs. +0.3% expected) excluding fuel and +0.9% mom (+0.2% expected) including fuel.

Finally this morning before the day ahead, Michal Jezek in my team has published notes on the DB Insurance Capital Forum held in London yesterday. Deutsche Bank’s inaugural Insurance Capital Forum has brought together regulators, issuers and investors to exchange views and offer insights about the insurance industry. The key theme of the conference was the Solvency II regulation that entered into force this year, having being in the making for over a decade. This comes at a time when the sector has faced an unprecedented pressure from the low-rate environment. Indeed, on the day of the conference European nominal interest rates reached their all-time lows. The keynote address was delivered by Gabriel Bernardino, Chairman of EIOPA. It was then followed by a regulatory and rating agency panel, an issuer panel and a credit investor panel. See his email just published for more on this.

Looking at the day ahead, the calendar is fairly sparse with little in the way of notable releases in Europe this morning while over in the US we’ll get the May housing starts and building permits data. The former in particular is expected to fall -1.9% mom however permits are expected to have risen modestly. More interest perhaps could come from comments from ECB President Draghi who is set to speak at 4pm BST in Munich. Its unclear what the topic is but clearly any comments around the UK referendum will be closely watched but given yesterday's events he may chose to pass on the subject. The ECB’s Coeure is also due to speak around lunchtime.

What a week!!

http://www.zerohedge.com/news/2016-...ds-decline-following-tragic-death-uk-lawmaker
 

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#39
The Fed Has Brought Back "Taxation Without Representation"


by Tyler Durden - Jun 16, 2016 8:30 PM

Submitted by Simon Black via SovereignMan.com,

In February 1768, a revolutionary article entitled “No taxation without representation” was published London Magazine.

The article was a re-print of an impassioned speech made by Lord Camden arguing in parliament against Britain’s oppressive tax policies in the American colonies.

Britain had been milking the colonists like medieval serfs. And the idea of ‘no taxation without representation’ was revolutionary, of course, because it became a rallying cry for the American Revolution.

The idea was simple: colonists had no elected officials representing their interests in the British government, therefore they were being taxed without their consent.

To the colonists, this was tantamount to robbery.

Thomas Jefferson even included “imposing taxes without our consent” on the long list of grievances claimed against Great Britain in the Declaration of Independence.

It was enough of a reason to go to war.

These days we’re taught in our government-controlled schools that taxation without representation is a thing of the past, because, of course, we can vote for (or against) the politicians who create tax policy.

But this is a complete charade. Here’s an example:

Just yesterday, the Federal Reserve announced that it would keep interest rates at 0.25%.

Now, this is all part of a ridiculous monetary system in which unelected Fed officials raise and lower rates to induce people to adjust their spending habits.

If they want us little people to spend more money, they cut rates. If they want us to spend less, they raise rates.

It’s incredibly offensive when you think about it– the entire financial system is underpinned by a belief that a committee of bureaucrats knows better than us about what we should be doing with our own money.

So this time around the grand committee decided to keep interest rates steady at 0.25%.

Depending on where you sit, this has tremendous implications.

If you’re in debt up to your eyeballs (like the US government), low interest rates are great.

It means the government can continue to borrow even more money and go even deeper into debt.

Low interest rates are also good for banks, because they can borrow for nothing from the Fed, then earn a handsome profit on that free money.

But if you’re a responsible saver, low interest rates are debilitating.

Banks only pay their depositors about 0.1% interest. Yet according to the US Labor Department, inflation is at least 1.1%, and has averaged 2.23% since 2000.

This means that when adjusted for inflation, anyone who bothers saving money is losing at least 1% every single year.

That might not sound like much. But compounded over a longer period, it can lead to a substantial difference in your standard of living.

Maybe that’s why the government’s own numbers show that wages, when adjusted for inflation, are far lower than they were even 15 years ago.

Or why wealth inequality is now at a level not seen since the Great Depression.

Or why alarming data from Pew Research last year show that the middle class is now no longer the dominant socioeconomic stratum in the United States.

Back during his days as a presidential candidate, Ron Paul used to frequently remark that inflation is an invisible tax on the middle class.

And he’s right.

The combination of inflation and low interest rates benefits certain people, while it causes middle class people’s savings to lose purchasing power.

This constitutes a transfer of wealth from savers to debtors.

In other words, it’s a tax.

Yet unlike a normal tax which is passed by Congress, this inflation/interest rate tax is created by the central bank.

You and I don’t get to vote for the twelve members of the Federal Reserve Open Market Committee (FOMC) who dictate interest policy.

In fact, based on the way the Federal Reserve works, the majority of the committee members are actually appointed by commercial banks.

Here’s the quick version: there are twelve Federal Reserve banks in the US banking system.

They’re located in major cities like New York, San Francisco, St. Louis, Dallas, etc. And each Federal Reserve bank has its own separate Board of Directors.

Yet two-thirds of the board members for each Federal Reserve bank are appointed by big Wall Street banks like JP Morgan and Goldman Sachs.

And oh, hey, what a surprise, the last three major appointments to the Federal Reserve were all former high-level Goldman Sachs employees.

These guys aren’t even trying to hide the fact that Wall Street banks control the Fed.

So, Wall Street banks control the boards of directors at the Fed banks. The Fed bank boards of directors appoint the committee members who set monetary policy.

And the monetary policy they set ends up being a gigantic tax… a transfer of wealth from the middle class to a tiny group of beneficiaries, including the US government and the banks themselves.

This is an unbelievable scam… and it truly is taxation without representation.

Unelected bureaucrats impose their will over the entire financial system in a way that benefits a handful of people at the expense of everyone else.

And we have absolutely no say in the matter.

Well, actually we do.

Even though we can’t vote for the boards of directors at the various Federal Reserve banks like Citigroup and Goldman Sachs can do, we are able to vote with our dollars.

Think about it: every single dollar that you keep in this poor excuse for a financial system is a tacit vote in favor of the corruption.

Every dollar you take out of the system is a vote against it.

And as we’ve explored before, there are substantial options for your savings– precious metals, cryptocurrencies, productive real estate, safe P2P arrangements with strong yields, and well-capitalized banks abroad that actually pay sufficient interest to keep up with inflation.


http://www.zerohedge.com/news/2016-06-16/fed-has-brought-back-taxation-without-representation