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R.T.M. ~ Frontrunning ~ 28th Ed., Vol.2 ~ July 11th - 15th

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#1
S&P 500 To Open At All Time Highs After Japan Soars, Yen Plunges On JPY10 Trillion Stimulus


by Tyler Durden
Jul 11, 2016 6:38 AM

Last Thursday, when we reported that Ben Bernanke was to "secretly" meet with Kuroda and Abe this week (he is said to have already met with Japan's central bank head earlier today), we said that "something big was coming" out of Japan which had "helicopter money" on the agenda. And sure enough, after a dramatic victory for Abe in Japan's upper house elections which gave his party an even greater majority, Abe announced the first hints of helicopter money when Nikkei reported, and Abe later confirmed that Japan would unveil a new JPY 10 trillion ($100 billion) stimulus and the government would consider issuing new Japanese government debt for the first time in 4 years in order to "make most of zero interest rate environment to utilize fiscal investments" in order to "support domestic demand."

We also said that "if anyone is still holding on to USDJPY shorts, now may be a good time to quietly close them out, because if Reuters is right, and a "helicopter money" is about to be served for the first time in modern history, things are about to get very volatile, very fast." Sure enough, overnight the USDJPY has soared by by over 150 pips, which in turn sent the Nikkei higher by a whopping 600 points, or 4%, to over 15,700 - the biggest one day jump since February.

On the heels of the surge in Japan, the MSCI Asia Pacific Index climbed 2%. The win for Abe’s ruling coalition in upper-house elections at the weekend will help the premier press ahead with stimulus and on Sunday he reiterated a pledge to take action. The Bank of Japan is set to announce an expansion of its monthly bond and equity purchases on July 29 and Abe will probably introduce fiscal stimulus by year-end, according to Macquarie Bank Ltd. Nintendo Co. soared 25 percent in Tokyo as its new Pokemon Go game topped smartphone app rankings.

The surge in the Nikkei, and the market's exuberant reaction to this helicopter money lite meant that US futures took another big move higher, and are now poised to open at all time highs when the market opens for trading. Additonally, the MSCI All-Country World Index rose for a third day with the Brexit losses now a distant memory. The dollar strengthened and Treasuries fell amid speculation the Federal Reserve will stand out among major central banks by not loosening monetary policy this year. Nickel advanced with copper and crude oil fell to less than $45 a barrel.

In Italy, hope of more bailouts was the catalyst to push bank stocks higher in early trade, with Monte Paschi rising as much as 9.2%, the best performer on SX7P bank index after reports Italy's bank situation would be discussed at the upcoming Ecofin meeting, Corriere reports. Mediobanca says meetings possible catalysts to better understand the chances of success of the Italian Authorities’ strategy, while Morgan Stanley strategists Greg Case and Jackie Ineke expect a scenario where Atlante fund is topped up via the state and used to both acquire NPLs and recapitalize Monte as required.

However, in later trading the Italian euphoria reversed and banks stocks dropped after Germany said there was no change in its position on Italian banks. “There’s no update” German Finance Ministry spokeswoman Friederike von Tiesenhausen says when asked about calls for major Italian bank rescue. “I have nothing new to offer on that front." As a result, Italian banks reversed earlier gains, with exception of Paschi which was still green - the FTSE Italia All-Share Banks Index was down 0.9% as of 11:45am CET, led by UniCredit which was among the biggest decliners on the SX7P, down 2.9% (as much as 5.1% today); while Pop. Emilia dropped 2.0%, after Equita mentioned no evolution in the government intervention plan for banks, and referred to news flow over the weekend.

The Stoxx Europe 600 Index added 0.6 percent at 10:39 a.m. in London for a third daily advance. All 19 industry groups rose, with gains exceeding 4 percent in ArcelorMittal and Glencore Plc pushing commodity producers to the best performance. The FTSE 100 Index climbed 0.7 percent, moving toward a bull market. The U.K. benchmark has erased its post-Brexit drop thanks to a weaker pound and is up more than 19 percent from its February low.

S&P 500 futures gained 0.2 percent. Alcoa Inc. unofficially kicks off the second-quarter earnings season as it releases results after markets close Monday. The aluminum producer rose 1.8 percent in premarket trading. Analysts forecast profit at S&P 500 firms will drop 5.7 percent in the period, which would make it the fifth straight quarterly decline, the longest streak since 2009.

In summary, global stocks are almost back to where they were at the time of the U.K.’s June 23 vote to leave the European Union, which wiped almost $4 trillion off the value of the securities. Helped mostly by the stunning Friday jobs report, Citigroup’s Surprise Index is showing data in the developed world that’s beating analysts forecasts by the most since January 2015, while shares are getting additional support from the prospect of fresh fiscal and monetary stimulus to contain the fallout from the Brexit vote.



“We had good news globally -- the jobs report in the U.S. was strong and over the weekend we also had quite a clear decision in Japan,” said Christian Gattiker, head of research at Julius Baer Group Ltd. in Zurich. “A lot of things are now meeting a very cautious European investor and make life not easy, but less threatening than just a week or two weeks ago.”

Not everything was surging however, and the energy complex dipped this morning with Brent declining as much as 86c to the lowest since May 11, while WTI mirrored Brent momentum, falling as much as 88c to $44.53, also lowest since May 11. "A stronger dollar combined with a rise in rigs seems to be the main focus," says Ole Hansen, head of commodity strategy at Saxo Bank.

Treasuries also fell, lifting 10-year yields by two basis points to 1.38 percent. Similar-maturity debt in Japan yielded minus 0.28 percent, after the rate touched an all-time low of minus 0.30 percent on Friday. Still, today's modest selloff will hardly persist: Japan’s biggest bond bulls say the plunge in yields below zero in Tokyo foreshadows record-breaking gains for U.S. Treasuries. Mitsubishi UFJ Kokusai Asset Management says U.S. 10-year yields will drop to 1 percent as soon as this month, having touched an unprecedented 1.32 percent last week. Sumitomo Mitsui Trust Asset Management says it’s likely in 2017, and Mizuho Asset Management predicts the figure may go even lower. “Welcome to the world of Japanification,” said Hideo Shimomura, the chief fund investor at Mitsubishi UFJ Kokusai in Tokyo. “One percent is inevitable.”

Market Snapshot
  • S&P 500 futures up 0.3% to 2125
  • Stoxx 600 up 0.5% to 329
  • FTSE 100 up 0.6% to 6632
  • DAX up 1.3% to 9754
  • German 10Yr yield down less than 1bp to -0.19%
  • Italian 10Yr yield up 2bps to 1.21%
  • Spanish 10Yr yield up 2bps to 1.16%
  • S&P GSCI Index down less than 0.1% to 357.9
  • MSCI Asia Pacific up 1.9% to 131
  • Nikkei 225 up 4% to 15709
  • Hang Seng up 1.5% to 20881
  • Shanghai Composite up 0.2% to 2995
  • S&P/ASX 200 up 2% to 5337
  • US 10-yr yield up 2bps to 1.38%
  • Dollar Index up 0.48% to 96.76
  • WTI Crude futures down 1.1% to $44.89
  • Brent Futures down 1% to $46.30
  • Gold spot down 0.5% to $1,359
  • Silver spot up 0.2% to $20.33
Top Global News
  • Abe’s Fiscal Stimulus Plans to Take Shape After Election Win: He has pledged “broad, bold” action to support economy
  • Boeing Sees $5.9t Airplane Market Despite Recent Turmoil: “Middle of market” aircraft will drive demand, company says; Boeing to Sell Up to $3.39b of Planes to Xiamen Airlines: order is for 737 Max 200 planes
  • Airbus Said to Near $12.6b AirAsia Deal for A321neos: Deal might be announced as early as tomorrow
  • Southern Expands Gas Footprint With $1.5b Kinder Deal: Buys 50% stake in Kinder Morgan southern natural gas pipeline system
  • Nichi-Iko Pharmaceutical to Buy Sagent in $736m Cash Deal: Bid represents 40 percent premium of over last closing price
  • UFC Said to Sell Itself to WME-IMG-Led Group for About $4b: NYT: Cites unidentified people with direct knowledge of the matter
  • ‘Pets’ Hijinks Deliver Box-Office Victory for Universal: Picture collected an estimated $103.2m in U.S., Canadian theaters
  • Citigroup Is ‘Bullish Commodities’ for 2017 as Brexit to Fade: Sees U.S., China growth to lift demand into next year
  • Falling U.S. Oil Output Not Enticing Enough for Wary Investors: American crude production slipped to lowest since May 2014
  • WellCare, Centene Said to Make Bids for Aetna Plans: Reuters: Made competing bids for Aetna’s Medicare Advantage plans that the insurer is looking to sell, Reuters says
Looking at regional markets, strong start to the week for Asian stocks having taken the impetus from Wall Street after the Friday's NFP report showed a large beat on the headline. Nikkei 225 (+4.0%) was buoyed by easing political uncertainty after PM Abe's LDP secured a super majority in the upper house election with the PM expected to announce fresh stimulus measures into the economy. Similarly, the ASX 200 (+2.0%) was supported by the diminished risks surrounding the outcome of the general election with Australian PM Turnbull declaring a narrow victory. The Shanghai Composite (+0.2%) rose albeit modestly so as the latest CPI reading slipped to its lowest since January, indicating that domestic demand remains somewhat sluggish. In credit markets, price action had been relatively muted with the Japanese 10-yr benchmark a touch softer while the Japanese yield curve saw some notable bear flattening. PBoC sets the CNY mid-point at 6.6843.

Top Asian News:
  • China Tightens Corporate Bond Borrowing Rules as Defaults Spread: Hua Chuang says possibility of more rules can’t be excluded
  • Pokemon Go Hit Underscores Nintendo’s Potential in Mobile Gaming: Nintendo shares soar as much as 25%
  • Line Prices IPO at Top of Range in Year’s Biggest Tech Debut: Messaging app to fully exercise greenshoe to sell more stock
  • China Pension Readies $300 Billion Warchest for Market Foray: Pension funds seen entering equity market in 2H
In Europe, equity markets opened in the green this morning, continuing the bullish tone in Asia overnight. EUROSTOXX opened higher and still trades in the green up 0.4% with the DAX outperforming up 1.2%. Material names lead the way higher on a sector breakdown, with a potential venture deal on the cards for Thyssenkrupp and Tata steel seeing the former currently +5%. In fixed income market, Bunds opened lower amid the upbeat sentiment, however shrugged off some of the initially losses to close the opening gap and hovering around the 168 level in what has been a largely uneventful session in terms of price action. The BoE is set to slash interest rates this week, with markets looking for a 25bps cut to 0.25%. However, many economists argue that such a small shift in borrowing costs would have little effect and expect the Bank to go further. This could see Bank rate reduced to 0% and a restart of the money-printing quantitative easing (QE) programme this summer.

Top European News
  • LafargeHolcim to Sell India Unit to Nirma for $1.4 Billion: Company confident of reaching CHF3.5 billion disposal goal
  • Rolls-Royce to Buy Remainder of Engine Components Business: s Agreed to buy the stake it doesn’t already own in Industria de Turbo Propulsores for EU720m
  • Osborne Heads to Wall Street as Disarray Roils U.K. Politics: Chancellor to lobby investors in U.S., China, Singapore; May Vows to Share U.K. Prosperity in Tory Leadership Bid
  • Italian Industrial Production Falls in Challenge for Renzi: Output dropped 0.6% in May, missing analysts’ median estimate
  • Merkel Sees Brexit as Unavoidable Once Next U.K. Leader in Place: U.K.’s ‘decision has been taken,’ German chancellor says
  • Telefonica Cuts China Unicom Stake in Effort to Slash Debt: Carrier raising cash after shelving U.K. sale amid Brexit vote
  • Aberdeen CEO Sees Property Fund Reopening Today After Outflows: Expects to reopen its GBP3.2b U.K. property fund after outflows slowed and some investors decided against selling
In commodities, the Bloomberg Commodity Index rose 0.4 percent, rebounding from a 3.7 percent weekly loss that marked its steepest slide since January. Nickel jumped 2.5 percent in London as copper climbed 1.4 percent. Gold fell 0.6 percent, retreating from its highest close since March 2014. Corn gained 1 percent, rallying for the third day in Chicago since entering a bear market on Wednesday.Commodities are poised to strengthen in the second half and through 2017 as spending cuts restrain supply and demand continues to grow at a moderate pace, according to Citigroup. The bank is “especially bullish” for next year as inventory reductions become more pronounced, analysts led by Ed Morse said in an e-mailed note received Monday. West Texas Intermediate crude fell 1.4 percent to $44.76 a barrel, after tumbling 7.3 percent last week. Crude resumed losses after data from Baker Hughes Inc. showed U.S. drillers boosted the number of rigs targeting oil to the highest in 12 weeks. Natural gas futures rose as much as 2.2 percent, the most this month, as above-average temperatures are forecast across much of the U.S.

In FX, the yen slipped 1.6 percent to 102.17 per dollar, heading for its steepest slide since June 23. The Korean won strengthened 1.3 percent, its biggest advance in a month, as last week’s U.S. jobs report boosted the outlook for the nation’s exporters. The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, rose 0.5 percent after slipping 0.3 percent in the last session. Futures put the odds of a Fed rate increase this year at 21 percent, up from 12 percent before Friday’s payrolls figures. They showed zero odds of a cut before the end of the year. “The U.S. dollar is only slightly firmer as interest-rate markets have only slightly firmed the chances of a Fed rate hike this year,” said Imre Speizer, a market strategist at Westpac Banking Corp. in Auckland. “That still appears too light, so there’s scope for further upside in both during the week ahead, as long as a decent average pace of payrolls gains is sustained during the months ahead.” The MSCI Emerging Markets Currency Index advanced for a third day, rising 0.3 percent. The offshore yuan ended a four-day retreat as data released over the weekend signaled that growth in the world’s second-largest economy is beginning to stabilize. China’s factory-gate deflation eased for the sixth month in a row, while consumer inflation accelerated more than expected.

* * *

Bulletin Headline Summary From RanSquawk and Bloomberg
  • European equities enter the North American in positive territory as Japanese stimulus hopes underpinned sentiment overnight
  • GBP continues to remain out of favour as mounting expectations for BoE action on Thursday dictates price action
  • Looking ahead, highlights include potential comments from Fed's George and a US 3yr Note Auction
  • Treasuries lower in overnight trading as global equities almost back to where they were at the time of the U.K.’s June 23 Brexit vote; week’s auctions begin with $24b 3Y notes, WI 0.745%; sold at 0.93% in June, was first 3Y auction to tail since March.
  • After the ruling party scored a convincing victory in Sunday’s upper house election, the focus now turns to Japanese Prime Minister Shinzo Abe’s plans for fiscal stimulus
  • Japanese shares posted their biggest gain in almost five months, as an election win by Prime Minister Shinzo Abe ignited optimism that government stimulus will come sooner than expected
  • Less than three weeks before the BOJ’s next scheduled policy meeting, Governor Haruhiko Kuroda met with former Federal Reserve Chairman Ben S. Bernanke over lunch on Monday. Japan has a tradition of seeking the advice of overseas experts
  • Japan’s biggest bond bulls, seasoned by two decades of economic stagnation, say the plunge in yields below zero in Tokyo foreshadows record-breaking gains for U.S. Treasuries
  • China’s pension funds, which have about 2 trillion yuan ($300 billion) for investment, are handing over some of their cash to the National Council for Social Security Fund, which will oversee their investments in securities including equities
  • China has tightened rules on leverage in the corporate bond market, highlighting authorities’ concern about rising financial risks as defaults spread
  • China’s producer-price index fell 2.6% in June compared with a 2.8% drop a month earlier, giving policy makers fresh evidence falling prices are turning a corner after more than four years of declines.
  • Italian industrial production in May decreased 0.6% from April, when it rose a revised 0.4%, creating further difficulties for Prime Minister Matteo Renzi’s plans to put the economy on a stable footing
  • Global cross-border investment may decline by as much as 15% this year as trade remains sluggish, China’s commerce minister said after a Group of 20 trade ministers meeting Sunday
  • Europe urgently needs a 150 billion-euro ($166 billion) bailout fund to recapitalize its beleaguered banks, particularly those in Italy, Deutsche Bank AG’s chief economist said in an interview with Welt am Sonntag
* * *

US Event Calendar
  • 10am: Labor Market Conditions Index Change, June (prior -4.8)
  • 10am: Fed’s George speaks in Lake Ozark, Mo.
  • 9:30pm: Fed’s Mester speaks in Sydney
DB's Jim Reid concludes the overnight wrap

One can't help hoping that article 50 activation, Brexit and a possible subsequent Scottish referendum gets delayed as long as possible to ensure that us Brits can celebrate Andy Murray for as long as possible. It was an impressive Wimbledon win yesterday. Perhaps more impressive than the cagey Euro 2016 final last night where the highlight was an extreme moth invasion before kickoff caused by ground staff leaving the floodlights on the night before. I think moths only live a few days or weeks and it makes me sad that hundreds of thousands of them at the Stade de France will go to their makers seeing this match only and thinking it representative of the great game!! On a serious note congratulations to our Portuguese readers and commiserations to those in France.

Markets were certainly exciting on Friday with Payrolls soaring by +287k (107k above expectations) and 10 and 30 year Treasuries hitting fresh record yields lows (at 1.359% and 2.099% respectively). In addition the S&P 500 (+1.53%) closed only 1pt below its record high. If you were a Martian visiting for a day you may be forgiven for wondering what on earth (or Mars) was going on. On a fascinating day for markets another landmark occurred with Dutch 10 year yields closing below zero yield for the first time. This gives us the perfect opportunity to update one of our favourite charts namely Dutch 10 year yields back to 1517, the longest history of Government bond yield proxies we have anywhere in the world.

So why did yields fall after the bumper report? Well the 3-month moving average was still only +147k (2015 average +229k, 2014 +251k) and the unemployment rate edged up 0.2% to 4.9%. Average hourly earnings also rose a little less than expected during the month (+0.1% mom vs. +0.2% expected). Crucially Fed hiking probabilities didn’t budge much with the probability of a move by September going from 2% to 10% and a move by December going from 12% to 21%. So still very low. Even a move by December 2017 is now at just 43% from 41% prior to the data.

DB's Dominic Konstam continues to think that “late cycle” labour market dynamics are in full swing. He thinks sagging productivity relative to labour input growth suggests that unless productivity accelerates, firms could reduce labour demand to protect profits. He thinks the difference between price and unit labor costs also shows a squeeze on profits. Their productivity/labour input and price/unit labor cost metrics both imply labour input could slow to less than 1 percent next year, which translates into roughly 60K in monthly job gains. His 1.25% 10 year Treasury target looks closer and closer.

The concerns over Italian banks are probably also continuing to keep fixed income well bid. It feels like we'll get some binary news at some point this month on this. It was actually a rally for Italian Banks which had helped support a strong European session prior to the data on Friday. The FTSE MIB closed up +4.08% (vs. Stoxx 600 at +1.62%) with the likes of Unicredit (+8.73%), Intesa (+10.00%), UBI (+8.65%) and Banco Popolare (+18.36%) all surging. The move for the latter in particular appeared to reflect comments from the Bank saying that its own internal stress tests confirmed its ‘resilience’ to adverse shocks. Meanwhile in comments to the Italian Banking Association, Bank of Italy Governor Ignazio Visco also confirmed that state or public intervention to support the sector ‘cannot be excluded’ and that the Bank of Italy was working with other authorities to ‘promote efficient market interventions’. The next key date looks set to be the EU stress test results on July 29th and will provide the latest point of transparency for analysts and investors alike. A potential recap before this date can’t be ruled out though.

So while the post payrolls reaction and focus on Brexit and Italian Banks continues to rumble on, the other weekend newsflow was centred on Asia and China and Japan in particular. Starting with the former, on Saturday China released its June inflation report. CPI was -0.1% mom for the fourth straight negative monthly reading, with food-inflation continuing to slow. That had the effect of dragging the YoY rate down one-tenth to +1.9%, although that did come in a tad higher than expectations of +1.8%. PPI, meanwhile, fell to -2.6% yoy from -2.8% meaning factory gate deflation has eased (in YoY terms) every month this year.

Elsewhere the news out of Japan is that PM Shinzo Abe’s ruling coalition party has won the upper house election, with the ruling coalition party comfortably exceeding the threshold needed for victory of 61 seats with the LDP taking 56 seats and Komeito winning 14 seats. The seats won by LDP came in just under the 57 seats required to secure a majority in its own right. This was all largely expected. Abe responded to the victory by saying that ‘I think this means I am being told to accelerate Abenomics, so I want to respond to the expectations of the people’. Our Japanese economists noted this morning that markets are likely to be more interested in the size and details of the second FY2016 supplementary budget, with discussions set to begin in earnest ahead of the expected convocation of an extraordinary Diet session in late September.

As we refresh our screens this morning the majority of bourses in Asia are continuing the positive price action in the wake of Friday’s strong payrolls numbers. Leading the way is Japan where the Nikkei and Topix are +3.55% and +3.51% respectively, while the Hang Seng (+1.82%), Shanghai Comp (+0.75%), Kospi (+1.24%) and ASX (+1.87%) are also higher. Gains have come despite Oil markets weakening 1% or so, while credit markets are also rallying this morning (iTraxx Asia and Aus indices 6bps tighter). US equity index futures are currently up half a percent.

Moving on. As we highlight at the end in the week ahead, earnings season unofficially kicks off in the US tonight when Alcoa is due to report after the closing bell. The headline releases come towards the back end of the week however when the Banks start to release their latest quarterlies. As it stands and based on Bloomberg estimates, forecast EPS growth for the S&P 500 is -5.7% yoy for the quarter. There’s a similar theme sector wise to last quarter which is weighing on that forecast. Financials are expected to decline -7.7% yoy and energy -76.9% yoy. Indeed stripping out the latter in particular means EPS growth for the S&P 500 ex-energy is at -2.2% yoy. As it stands revenue growth expectations is -0.8% yoy for the S&P 500 and +2.3% yoy ex-energy. As with last month we’ll be keeping a close out on the last minute analyst cuts and revisions which helped to somewhat artificially inflate the previous quarter beat/miss ratio.

Before we take a look at this week’s calendar, a quick recap of the rest of Friday’s data. In terms of the remainder of the US employment report, the labour force participation rate edged up one-tenth to 62.7%, while average weekly hours held steady at 34.4hrs. Consumer credit, meanwhile, came in above expectations at $18.6bn (vs. $16bn expected). Prior to this in Europe Germany reported a slight shrinking in its trade surplus as exports declined unexpectedly in May (-1.8% mom vs. +0.4% expected). French industrial production fell -0.5% mom as expected while the UK reported a slight shrinking in its deficit for May.

It’s fairly busy away from the data too. Euro area finance ministers are due to meet in Brussels today and tomorrow and the BoE’s Carney is scheduled to speak on financial stability tomorrow. Meanwhile over at the Fed we’re due to hear from George (today), Tarullo, Bullard and Kashkari (all Tuesday), Harker (Wednesday), Lockhart (Thursday) and Kaplan and Bullard again (both Friday). Also potentially of note will be the 18th bilateral two-day summit between the EU and China on Tuesday.

If that wasn’t enough, as highlighted earlier US earnings season unofficially kicks off this week with Alcoa due to report after the closing bell today. The banks are likely the highlight though with JP Morgan (Thursday), Citi and Wells Fargo (Friday) under the spotlight.


http://www.zerohedge.com/news/2016-...pan-soars-yen-plunges-jpy10-trillion-stimulus
 

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#2
Frontrunning: July 11


by Tyler Durden
Jul 11, 2016 7:31 AM

  • Global stocks rise as markets anticipate stimulus (Reuters)
  • Global Stocks Buoyed by Rally in Japan (WSJ)
  • Andrea Leadsom Pulls Out of Conservative Party Leadership Race (WSJ)
  • More protesters arrested, police say Dallas sniper plotted bigger assault (Reuters)
  • Voters Add to Election Turmoil by Threatening to Jump Party Lines (WSJ)
  • Under Fire, Theranos CEO Stifled Bad News (WSJ)
  • Citigroup Backs Commodities for ‘17 in ‘Especially Bullish’ Call (BBG)
  • Pokemon Go Hit Underscores Nintendo’s Potential in Mobile Gaming (BBG)
  • New Challenge for Social Media: Policing Violent Live Videos (WSJ)
  • After Dallas shooting, U.S. police forces rethinking tactics (Reuters)
  • North Korea threatens 'sea of fire' over U.S. missile system (NBC)
  • ‘Swamped by Muslims’ Party Finds Supporters in Australian Vote (BBG)
  • Mystery, concern spread with release of Chinese activist (Reuters)
  • Google Plans to Train 2 Million Indian Developers on Android (BBG)
  • U.S. sends Yemeni Guantanamo inmate to Italy, 78 detainees left (Reuters)
  • Bye-Bye Bonus: Brexit Seen Biting Profit for Years at U.S. Banks (BBG)
  • Tesla CEO Says He's Working on Another Secret 'Masterplan' (BBG)

Overnight Media Digest

WSJ

- Kinder Morgan said it is selling a 50 percent stake in a 7,600-mile natural-gas pipeline system to utility Southern Co. for $1.47 billion. http://on.wsj.com/29ymmDp

- The International Monetary Fund said the eurozone will grow at slower pace in coming years due to political and economic uncertainty following the U.K. vote to leave the European Union. http://on.wsj.com/29ymQJS

- Japanese messaging-app operator Line Corp priced its dual initial public offering in New York and Tokyo at the top end of its range due to strong demand, raising $1.14 billion. http://on.wsj.com/29ymxyL

- Excess industrial production capacity is a global issue that has depressed international commerce and harmed workers, trade ministers from the Group of 20 industrial and developing nations said after meeting in China. http://on.wsj.com/29ymX8n


FT

Gibraltar is calling for a second referendum after a Brexit deal is struck with the European Union. The British territory on Spain's south coast focuses on talks with Scotland to remain in the EU bloc.

The Bank of England is prepared to cut interest rates to new lows on Thursday in a move to prevent a predicted Brexit slowdown. BOE Governor Mark Carney said that the economic outlook had deteriorated and some monetary policy easing would probably be required over the summer.

Spirits giant Diageo Plc plans to pursue Indian liquor baron Vijay Mallya to recover about $178.76 million in funds it said were diverted, while under his control, from its Indian subsidiary United Spirits Ltd


NYT

- Tronc, the rebranded Tribune Publishing, wants to offer 2,000 videos a day, up from about 200 now, and hands-off video production is central to that aim. http://nyti.ms/29Ab0l7

- Ultimate Fighting Championship, which promotes mixed martial arts, is expected to announce as soon as Monday that it has sold itself to a group led by talent giant WME-IMG for about $4 billion, according to people with direct knowledge of the matter. Backing the deal are private equity heavyweights Silver Lake, Kohlberg Kravis Roberts, and the investment firm of billionaire Michael Dell. http://nyti.ms/29wV8Mn

- The tax plan shepherded by House Speaker Paul Ryan would fundamentally change the system, but both plans reduce taxes on capital gains and high incomes. http://nyti.ms/29IFdfZ

- Amazon.com Inc is building a complex at its Seattle headquarters where employees can sit by a creek, walk on suspension bridges and brainstorm in the boughs. http://nyti.ms/29qCppM


Britain

The Times

BOE Governor Mark Carney readies rate cut to revive growth

The Bank of England is set to slash interest rates this week, possibly to as low as zero, as it battles to soften the blow to the economy from the EU referendum. Mark Carney has said the economy is already showing signs of strain since last month's vote in favour of Brexit, and signalled the Bank would respond this summer. With the Bank rate at 0.5 percent - the lowest in the Bank's 321-year history - the governor is heading deeper into uncharted territory. Investors are now betting on a cut to 0.25 percent on Thursday. (http://bit.ly/29oRd8c)

The Guardian

BG chief paid 5.5 mln stg for nine-month stint at firm

Helge Lund, the former chief executive of BG, was paid 5.5 million pounds for his 11-month tenure at the oil exploration and production company, which was taken over by Shell earlier this year. (http://bit.ly/29wsgnn)

The Telegraph

Bank of England mulls property fund shake up to stop panic sales

Financial regulators are considering bringing in a raft of emergency measures to stem the flood of money out of Britain's biggest property funds that caused fresh market panic last week. It is understood Bank of England officials are considering the introduction of enforced notice periods before redemptions, slashing the price for investors who rush for the door, or additional liquidity requirements for funds. (http://bit.ly/29woiR7)

Diageo to pursue Indian tycoon Vijay Mallya over diverted funds

Diageo Plc is pursuing drinks tycoon Vijay Mallya to recover an estimate 12 billion indian rupees ($178.76 million)in funds it alleges were diverted from its Indian subsidiary into his associate companies. (http://bit.ly/29ruapL)

Sky News

Tata Joint Venture Attracts Asian Steelmakers

Asian steelmakers have expressed an interest in an alliance with Tata Steel Ltd's European steel operations amid a fresh wave of uncertainty for the company's 11,000-strong British workforce. India's JSW Steel Ltd and Hebei Iron & Steel, a Chinese group, are among third parties which have registered an interest in a joint venture with Tata Steel. (http://bit.ly/2a0B4mC)

The Independent

George Osborne to use U.S. trip to show post-Brexit UK is 'not quitting world'

George Osborne will travel to New York for talks with major investors in an effort to strengthen U.S.-UK trade links after the vote to leave the European Union. The Chancellor said improving ties with the U.S. is now a "top priority" and he will urge leaders from some of America's biggest investors to stick with the UK after the Brexit referendum result. (http://ind.pn/29H8siW)

http://www.zerohedge.com/news/2016-07-11/frontrunning-july-11
 

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#4
Nothing to see. If interested, better off listening in one window and playing around on GIM or surfing the web in another.

Mornings With "V" 07.11.16: The Tsunami
ROGUE MONEY


Streamed live 24 minutes ago
The latest run down of the news by The Guerrilla.
 

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#6
Gold Seeker Closing Report: Gold and Silver End Mixed While SPX Closes at Record High
By: Chris Mullen, Gold-Seeker.com
Gold jumped $7.55 to $1374.75 at the open of trade last night before it fell to as low as $1351.35 in midmorning New York trade and then bounced back higher into midday, but it still ended with a loss of 0.92%. Silver jumped to as high as $20.668 in Asia before it dropped back to $20.155 in early New York trade, but it then chopped back higher into the close and ended with a gain of 0.5%.
 

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#7
Frontrunning: July 12


by Tyler Durden
Jul 12, 2016 7:42 AM

  • Stocks Advance on Stimulus Bets (BBG)
  • Japan to craft stimulus by end-July, may issue construction bonds (Reuters)
  • May ally says Britain to trigger EU divorce 'when we're ready' (Reuters)
  • Last Woman Standing, Theresa May Offers Calm on Brexit Road (BBG)
  • Merkel urges Britain to quickly clarify relationship with EU (Reuters)
  • Hillary Clinton Is Drawing in the Left’s Last Holdouts (WSJ)
  • Sanders Joins Rest of the Party by Getting on Board With Democratic Unity (BBG)
  • Carney Defends BOE Against ‘Extraordinary’ Brexit Accusations (BBG)
  • Social Security Isn’t Just for Old Folks Anymore (BBG)
  • OPEC says Brexit to weigh on global economy but sees tighter oil market in 2017 (Reuters)
  • U.S., Europe Stocks Are Most in Sync Since ’12 on Brexit: Chart (BBG)
  • SEC Investigating Tesla for Possible Securities-Law Breach (WSJ)
  • Why Those Millennials With Tons of Loans Won’t Refinance (BBG)
  • Tribunal says China has no historic title over South China Sea (Reuters)
  • Zimbabwe police charge anti-Mugabe protest leader (Reuters)
  • Airbus, Boeing Get a Boost From Asia’s Appetite for Air Travel (BBG)
  • At least 10 dead, dozens injured in train crash in southern Italy (Reuters)

Overnight Media Digest

WSJ

- General Motors is fighting to get equipment and inventory from Clark-Cutler-McDermott, a family-owned auto parts supplier that filed for Chapter 11 bankruptcy protection last week, saying a contract dispute threatens to shut down 19 GM assembly plants in North America and lead to "tens of millions of dollars in losses." http://on.wsj.com/29AMBcC

- The U.K.'s Conservative Party made Home Secretary Theresa May prime-minister-to-be Monday, ending three weeks of leadership turmoil and political backbiting that began when Britons voted last month to leave the European Union. http://on.wsj.com/29AMbTH

- The Securities and Exchange Commission is investigating whether Tesla Motors breached securities laws by failing to disclose to investors a fatal crash in May involving an electric car that was driving itself. http://on.wsj.com/29AN0vq

- "Pokémon Go", which was released less than a week ago, boosted the market value of Nintendo Co by $9 billion in just a few days. Its sudden success is raising questions about the privacy and security technologies fueling the game, as well as the physical risks of playing it. http://on.wsj.com/29ANl1f


FT

* Canadian group Onex Corp and Baring Private Equity Asia are acquiring Thomson Reuters' intellectual property and science business in an all-cash deal worth $3.55 billion.

* Italy's UniCredit and Spain's Banco Santander are scrambling to save a plan that would create one of Europe's largest money managers after the UK's vote to leave the EU added to concerns about the outlook for the 5.3 billion euro ($5.86 billion) deal.

* The Russian government has sold a 10.9 percent stake in diamond miner Alrosa for 52.2 billion roubles ($814 million) as part of a privatisation programme aimed at plugging the country's budget deficit.

* Siemens has backed away from its earlier warnings that Brexit could make the U.K. a worse place to do business in and affect the group's future British investment plans.

NYT

- Pokemon Go, the smartphone game that has soared to the top of the download charts, shows how a new technology can break through from niche toy for early adopters to go mainstream. http://nyti.ms/29MjW4N

- Southwestern Energy Co is leading an industry group that aims to cut methane leakage to less than 1 percent of national gas production. http://nyti.ms/29LBMFh

- Twitter Inc said on Monday it would partner with CBS Corp to live-stream the Democratic and Republican National Conventions later this month, as the social media company works to be a leader in broadcasting live news and entertainment. http://nyti.ms/29sIOkc

- After defending the Affordable Care Act in all its intricacies for six years, President Obama proposed ways to improve it, saying the Congress should provide larger subsidies for private health insurance and create a public plan like Medicare to compete with private insurers in some states. http://nyti.ms/29zVYIl

Canada

THE GLOBE AND MAIL

** The LNG Canada joint venture led by Royal Dutch Shell Plc has delayed its final investment decision on exporting liquefied natural gas from Kitimat in northern British Columbia. (http://bit.ly/29t3j0g)

** The Toronto Real Estate Board is stepping up its efforts in court to overturn a decision by the federal Competition Tribunal that allows more detailed home sales data to be released on the internet. (http://bit.ly/29t39pG)

** Key stakeholders of Essar Steel Algoma Inc are pursuing a multi-pronged effort to block the purchase of the steelmaker by a New York-based private equity fund, KPS Capital Partners LP, and a group of lenders. (http://bit.ly/29t3wka)

** Canada's telecom regulator has officially given discount wireless startup Sugar Mobile a reprieve, ruling that the newcomer can keep relying on roaming services from Rogers Communications Inc - at least for the time being. (http://bit.ly/29t3rNn)

NATIONAL POST

** The provincial government announced on Monday that it was going ahead with plans that would allow the city to tax owners of vacant property - a tax pushed for and endorsed by Vancouver's mayor, Gregor Robertson. (http://bit.ly/29t3LM8)

** In barely a year, Alberta's New Democratic Party (NDP) government has gone from threatening to increase oil and gas royalties to having to provide royalty incentives to stimulate drilling activity. (http://bit.ly/29t3WHa)

** In about two weeks, shareholders of Migao Corp will be asked to vote on a transaction whereby the chief executive plans to acquire the company, which owns and operates fertilizer production plants in China, for 75 cents per share. (http://bit.ly/29t3Saw)

http://www.zerohedge.com/news/2016-07-12/frontrunning-july-12
 

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#8
Global Stocks Surge On Rising Hopes Of Japan "Helicopter Money"


by Tyler Durden
Jul 12, 2016 6:50 AM


A quick headline search for the phrases "Japan stimulus" and "helicopter money" is all one needs to understand the very familiar reason for today latest overnight global stock rally, which has sent the USDJPY surging some more, in the process pushing the Nikkei higher by 2.5%, China up over 1% (with the help of some late FX intervention by the PBOC), European stocks up 1%, US equity futures up 0.5%, and so on, in what is a global wave of green on the back of the helicopter money which after Bernanke's visit to Japan, market participants are now convinced is just a matter of time.

As Bloomberg puts it, "global stocks advanced for a fourth day and commodities rose, buoyed by the prospect of stimulus in major economies." And that is all there is to it.



While risk on assets soared, government bonds sank with the yen, which has now tumbled by over 300 pips since our warning to cover any USDJPY shorts last Thursday, when we previewed precisely these events warning that "something big" was coming. The MSCI All-Country World Index reached its strongest level since June 24, and the yen had its biggest two-day slide since 2014 after Japanese Prime Minister Shinzo Abe vowed to speed up efforts to defeat deflation. The pound rose for a third day as Home Secretary Theresa May prepared to take over as the U.K.’s next prime minister. Daimler AG led gains in European stocks and credit markets strengthened after earnings that beat analysts’ predictions. U.S. crude rebounded from a two month low.

In case it is still confusing what continues to drive the rally, here are some more hints:

"Risk remains very much on, as central banks around the world are turning more accommodative. That is trumping any fears investors may have concerning global growth,” Societe Generale strategists write in note.

“Risk appetite is in the ascendancy, and as a consequence we are seeing higher-yielding currencies rally and haven currencies including the yen decline,” said Jeremy Stretch at CIBC. “It’s a case of hopes for additional Japanese fiscal stimulus.”

Oh and remember Brexit, and the doomsday warnings should it pass? Well, global equities are now back to where they were when the U.K. voted for Brexit. Since then, futures traders have cut wagers on higher interest rates from the Federal Reserve while Abe won an election and said he would order ministers to begin compiling fresh stimulus. The majority of economists expect the Bank of England to cut interest rates this week and traders are betting there will be further monetary easing in the euro area this year.

And since central banks are once again pushing equities higher, this means that the Stoxx Europe 600 Index rose 1 percent as of 10:58 a.m. London time, after surging 4.4 percent over the last three trading days. Japan’s Topix climbed 2.4 percent and the MSCI Asia Pacific Index gained 1.2 percent. The U.K.’s FTSE 100 Index reached its highest level since August 2015. Futures on the S&P 500 added 0.5%following the gauge’s 0.3 percent advance to an all-time high on Monday. Alcoa Inc. unofficially kicked off the U.S. earnings season after markets closed Monday, reporting profit for the second quarter that topped analysts’ estimates.

While stocks were propped up by central banks, bonds got spooked that there could be a surge in supply to finance the upcoming helicopter money paradrop. As a result, yields on 10Y Treasuries rose four basis points to 1.47%, after climbing seven basis points on Monday as an auction of three-year notes attracted the weakest demand since 2009. Gains last week week pushed 10- and 30-year yields to record lows. The U.S. is due to sell $20 billion of 10-year notes Tuesday, followed by $12 billion of 30-year bonds Wednesday. German 10-year bonds, perceived to be among the safest debt securities in the euro area, declined for a second day, pushing the yield up by three basis points to minus 0.14 percent. Yields on French securities with a similar due date increased three basis points to 0.15 percent.

Global Market Snapshot
  • S&P 500 futures up 0.5% to 2141
  • Stoxx 600 up 0.9% to 336
  • FTSE 100 up 0.1% to 6690
  • DAX up 1.3% to 9962
  • German 10Yr yield up 5bps to -0.12%
  • Italian 10Yr yield up less than 1bp to 1.21%
  • Spanish 10Yr yield up less than 1bp to 1.16%
  • S&P GSCI Index up 1.4% to 361
  • MSCI Asia Pacific up 1.3% to 132
  • Nikkei 225 up 2.5% to 16096
  • Hang Seng up 1.6% to 21225
  • Shanghai Composite up 1.8% to 3049
  • S&P/ASX 200 up 0.3% to 5353
  • US 10-yr yield up 5bps to 1.48%
  • Dollar Index down 0.46% to 96.12
  • WTI Crude futures up 1.8% to $45.57
  • Brent Futures up 2.1% to $47.24
  • Gold spot down less than 0.1% to $1,355
  • Silver spot up 0.9% to $20.46
Top Global Headlines
  • Xerox Said in Talks to Acquire, Then Split R.R. Donnelley: Xerox would be acquirer, merge R.R. Donnelley with spun units
  • Seagate Expands Job Cuts to 6,500 as PC-Component Market Suffers: Cuts jobs to 14% of workforce, seeks to reduce costs
  • Airbus, Boeing Get a Boost From Asia’s Appetite for Air Travel: China, Vietnam airlines order jets at Farnborough show; Boeing, Airbus Duel for $12 Billion Deal With India SpiceJet: Planemakers said to offer steep price cuts for discounter deal
  • Alcoa Tops Estimates as Parts Business Shines Ahead of Split: Investors cheer split plan
  • Lyft Is ‘Very Likely’ to Expand Outside U.S., Co-Founder Says: Global alliance includes China’s Didi Chuxing, India’s Ola and Southeast Asia’s Grab
  • Imperva Said to Be Working With Qatalyst to Explore a Sale: Cybersecurity firm targeted by activist Elliott last month
  • UBS’s Orcel Signals Halt to Years of Investment Bank Cuts: 2016 is going to be a tough year for everyone’ on pay
  • Holder’s DoJ Overruled Advice to Prosecute HSBC, Report Says: Republican lawmakers say Holder misled Congress in testimony
  • Adidas Sues Skechers, Says It Stole Shoe Design: Reuters: Co. says Skechers infringed two patents
  • Facebook to Announce Plans to Use Microsoft’s Office 365: WSJ: Plans to be announced Tuesday
  • SEC Investigating Tesla for Poss. Securities Law Breach: CNBC/DJ: Co. didn’t notify investors of autopilot accident
Looking at regional markets, another session of gains for Asian equities following a record close in the S&P 500 with risk on sentiment in full swing. Nikkei 225 (+2.5%) outperformed again amid a softer JPY following expectations of an imminent announcement of additional stimulus from PM Abe. ASX 200 (+0.3%) and Hang Seng (+1.6%) also extended on gains with the latter benefiting from upside in gaming names with analysts at UBS noting a strong start for July in Macau gaming revenue. Shanghai Comp (+1.8%) fluctuated between gains and losses before closing higher as participants await key data releases later in the week. JGBs fell following the improvement in risk sentiment while yields saw some upside across the curve, particularly in the long end following a lacklustre 30yr auction in which the b/c was lower than the prior announcement allied with a rise in the tail in price. Japan are to contemplate the size of economic stimulus for the time being and it is possible that they will issue construction bonds as a form of stimulus.

Top Asian News:
  • Yen Extends Biggest Decline Since 2014 Before Stimulus Details: Prime Minister Shinzo Abe said he planned to add fiscal stimulus
  • BYD Loses Bulk of $270 Million Electric Bus Order in China: Shenzhen Western Bus cancels buses after adjusting capacity
  • Sun Hung Kai Billionaire Kwok Freed on Bail Pending Appeal: Former Sun Hung Kai co-chairman had been in jail since 2014
  • Ground Zero of China’s Slowdown Leaves Locals Looking for Exit: China’s regions increasingly split between winners and losers
In Europe, equities trade in positive trade once again today, continuing the trend seen in both US and Asia, to see a high of 2908 in the EUROSTOXX (+1.7%), the best performer of the European bourses is the FTSE MIB which is currently up 2.1% as financials are leading the sectors in terms of performance. Also of note the automakers are performing well as Daimler (DAI GY) posted positive sales results and boosted guidance. After the solid performance in equities, fixed income has fallen of the back of strong risk appetite and as such, Bunds haver slipped back below the 166.00 level to trade at the lowest level since July 4th. Elsewhere, Gilts also trade lower but have been relatively steady alongside comments from BoE's Carney during his appearance at the Treasury Select Committee.

Top European News
  • Daimler Rises as Profit Surprises and Mercedes Seals Sales Lead: Takata air-bag recalls cost almost EU500m, carmaker confident of reaching full-year operating-profit goal
  • Sanofi Sees Cure for Cancer Woes in Moving West for Acquisitions: French drugmaker seeks ready drugs as well as bolder pioneers
  • Covestro Cut Loose From Bayer Puts New Freedom to Work: Covestro stake could help Bayer get financing for Monsanto
  • Airbus Said Close to Winning Germania Order for 25 A320neo Jets: Order would be valued at $2.68b at list prices,
  • May Starts Work to Steady U.K. for Brexit After Promotion: Next U.K. leader best known to U.S. in fight against terrorism
  • EU Finance Chiefs Call for Accelerated Brexit With May Ascent: Britain needs to trigger Article 50 to start exit from bloc
  • Soapmaker Nirma Said to Plan $596 Million Bonds for Lafarge Deal: Nirma beats Indian billionaire Piramal, JSW in cement bidding
In FX, Japan’s currency fell 0.6 percent to 103.41 per dollar, adding to a 2.3 percent decline from the day before. Sunday’s election, which saw Abe’s ruling group score a convincing victory in the upper house, “opens up the scope for sweeping reforms,” said Mark McCormick, North American head of foreign-exchange strategy at Toronto-Dominion Bank. "The Bank of Japan is likely to add to the macroeconomic stimulus package by easing monetary policy along with a more supportive fiscal environment.” The pound rose 1 percent, its biggest gain since before the June 23 referendum, as May’s confirmation as the only remaining candidate to replace David Cameron removed a layer of political uncertainty. The Australian dollar rallied 1.3 percent, the best performance among 31 major currencies, as a report showed business confidence picked up last month and investors favored higher-yielding currencies. The MSCI Emerging Markets Currency Index added 0.1 percent. South Africa’s rand led gains, climbing 1 percent and Mexico’s peso advanced 0.7 percent.

In commodities, crude oil climbed 1.7 percent to $45.53 a barrel in New York before data forecast to show U.S. inventories fell for an eighth week. Nickel jumped 2.8 percent to $10,330 a metric ton in London amid speculation of supply cuts in the Philippines, the biggest ore producer, as the government threatens to close mines that don’t meet environment and safety standards. Goldman sees the price climbing to $12,000 over the next six months as the bank increased its price forecasts for most industrial metals through 2017. Copper, lead and zinc all gained more than 1 percent. Steel rebar jumped as much as 5.8 percent in Shanghai as the production hub of Tangshan city in China’s Hebei province was said to be restricting output before a memorial event. Iron ore climbed 5.9 percent in Singapore.

On today's US calendar, we get the NFIB small business optimism survey for June which printed at 94.5, modestly higer than the 93.8 expected. Also we'll get the JOLTS job openings report for May where the focus will be on the hiring and quits rates. That said given the rebound in payrolls for June this data may look a little stale. The other data due out this afternoon will be the wholesale inventories and trade sales report.

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg
  • European equities once again trade higher amid upbeat sentiment in Asia overnight and yesterday's record close in the S&P 500
  • JPY continues to be swayed by ongoing stimulus expectations in Japan, although some momentum was taken out of the move after Japan failed to unveil any further details on the size of the package
  • Looking ahead, highlights include US Wholesale Inventories, JOLTS Job Openings, API Crude Oil Inventories and potential comments from Fed's Bullard, Tarullo and Kashkari
  • Treasuries lower in overnight trading as global equities rally along with commodities amid rising hopes of more stimulus; auctions continue with $20b 10Y notes (reopen), WI 1.485%; last sold at 1.702% in June, lowest since Dec. 2012.
  • Theresa May is on a fast track to succeed David Cameron as prime minister and now has just two days rather than two months to build a team to rescue the U.K. from its worst political crisis in a generation and begin extricating it from the EU
  • Mark Carney defended the Bank of England against criticism that it undermined its independence by highlighting the risks of a British decision to quit the European Union in the run-up to the referendum
  • Banks’ demand for cash increased in the Bank of England’s third liquidity operation since the U.K. vote to leave the European Union sparked financial market turmoil
  • Japanese Prime Minister Shinzo Abe told former Federal Reserve Chairman Ben S. Bernanke at a meeting in Tokyo he wants to speed up the nation’s exit from deflation, underscoring his commitment to implementing fresh economic stimulus
  • The Bank of Japan will need to reduce the pace of its record purchases of government debt as it is approaching the limits of the bond market, said a former BOJ executive director
  • The global search for bond returns has pushed Ukrainian government debt to highs not seen since before the first bullets were fired amid anti-government protests on Kiev’s central Maidan square more than two years ago
  • China’s assertions to more than 80 percent of the disputed South China Sea have been dealt a blow with an international tribunal ruling it has no historic rights to the resources within a 1940s map detailing its claims
  • President Obama will send 560 more troops to Iraq to help retake Mosul, the largest city still controlled by the Islamic State. The additional troops are the latest escalation of the American military role in Iraq
US Event Calendar
  • 10:00am: Wholesale Inventories, May, est. 0.2% (prior 0.6%); Wholesale Sales, May, est. 0.5% (prior 1%)
  • 10:00am: JOLTS Job Openings, May, est. 5.65m (prior 5.788m)
  • 1:00pm: U.S. to auction $20b 10Y notes (reopen)
Central Banks
  • 9:15am: Fed’s Tarullo speaks in Washington
  • 9:35am: Fed’s Bullard speaks in St. Louis
  • 5:30pm: Fed’s Kashkari speaks in Marquette, Mich.
  • 9:30pm: Fed’s Mester speaks in Sydney
DB's Jim Reid concludes the overnight wrap

With a new PM (Theresa May) now suddenly in place in the UK - two months earlier than expected - the post Brexit policy agenda will soon be set. A combination of a new PM and Brexit is an opportunity for one country at least to embark on a major policy shift in a world where economic policy is in danger of going slowly down a col-de-sac. Obviously we may just have more of the same (loose monetary policy and fiscal straight jackets) but it's possible that the UK might use Brexit as an excuse to loosen fiscal policy with the Bank of England there to support it. Indeed it wouldn't be a surprise to see looser fiscal policy and more UK QE before year end and if that's not officially called helicopter money it might as well be. So watch to see who the new UK chancellor is and what they say. Listening to Theresa May yesterday you get the sense she would move away from deficit reduction being at the centre of policy. However the favourite for the Chancellorship according to the press seems to be Phillip Hammond who is known to be a fiscal hawk. So a fair bit of intrigue ahead. It's likely her cabinet will be in place by Thursday. One interesting comment May made recently was that Article 50 wouldn't be triggered this year. Whether this changes given her unexpected early coronation will also be closely watched.

Also under the spotlight right now is Japan where markets are on edge over the possibility of a hotly anticipated large fiscal stimulus package announcement. This comes following comments from PM Abe yesterday and the suggestion is that he is due to meet former Fed Chair Bernanke today after Bernanke met with BoJ Governor Kuroda yesterday. There’s been no announcement so far this morning but the story is dominating the wires. Our Japanese economists are noting that the market is expecting a package in the range of JPY10-20tn and the Nikkei newspaper also suggested that the government is considering issuing new debt for the first time in four years.

Japanese equity markets have rallied for a second consecutive day with the news. The Nikkei is +2.65% and the Topix +2.59%. The yen has weakened -0.30% although JGB’s are relatively little moved. Bourses elsewhere in Asia are firmer too. The Hang Seng (+0.60%), Shanghai Comp (+0.08%), Kospi (+0.05%) and ASX (+0.88%) in particular are all up.

The moves this morning come after markets yesterday continued to bask in the glow of Friday’s strong payrolls number. While moves were more modest by comparison, the S&P 500 managed to shrug off a stronger day for the Dollar closing up +0.34% and more notably at a new all time high when it passed the intraday record set back in May last year. The Nasdaq (+0.64%) also briefly passed the 5000 level for the first time this year and the Dow (+0.44%) is now within 90pts of its all time high made last year. The positive sentiment continued after the closing bell when Alcoa kicked off earnings season by reporting beats at both the earnings and revenue lines, sending shares up 4% in extended trading.

Markets in Europe were even more impressive yesterday with the Stoxx 600 closing up +1.64% and the DAX +2.12%. Meanwhile and in what feels fairly remarkable given the events of recent weeks, the FTSE 100 (+1.40%) has now entered a bull market having risen 21% from the February lows. Even the FTSE 250 surged +3.27% yesterday and has pared its post Brexit loss now to just 4%. The Euro Stoxx Banks index was up +1.50% too although that still has a fair way to go to get back to those pre-referendum levels with the index still down 18% in that time.

Just on the subject of banks, late last night the IMF weighed in on the Italian Bank debate, saying that ‘concerns related to the bail in of retail investors should be dealt with appropriately’. According to the FT the IMF mission chief for Italy said that ‘there is adequate flexibility within the existing state aid and BRRD framework to be able to deal with the problems’ and that ‘the framework exists and the framework is able to handle that’. This came after PM Renzi said earlier in the day that he sees an accord between Italy and the EU as ‘within reach’.

Where we did see a change in price action yesterday was in rates markets, where in contrast to the leg lower yields took post payrolls on Friday, sovereign bonds weakened for the most part yesterday. Indeed Treasuries stood out most with 10y yields there ending over 7bps higher at 1.431% and back to the highest in a week. 2y yields were also 5bps higher and at the highest post the UK referendum vote. Commentary attributed this partly to a weak 3y auction where demand was said to be the weakest since 2009 (based on the bid-to-cover ratio).

In terms of newsflow there wasn’t a huge amount to report outside of the latest UK political developments. We did hear from one of the most hawkish members at the Fed in Kansas City Fed President George who, having withdrawn her dissent for higher rates at the June FOMC meeting, said that the US economy is ‘at or near full employment’ and that while short term interest rates remain at historic lows, ‘keeping rates too low can also create risks’. George also said that the Fed has ‘largely achieved what it can on its dual mandate’ and that ‘I view the current level of Fed policy as too low’.

Away from this, in terms of the data that we got yesterday, in France the latest business sentiment reading in June came in unchanged at 97. Over in Italy the latest industrial production data was seen as disappointing (-0.6% mom vs. +0.1% expected) with the broader Euro area report looming tomorrow. Meanwhile in the US the lone data release yesterday came in the form of the June labour market conditions index (composed of 19 labour market indicators) which fell 1.9pts in June following a 3.6pt fall in May.

Looking now at the day ahead, this morning in Europe we’re kicking off shortly after this goes out in Germany where we’ll get the final revision to the June CPI report. Over in the US the early data release is the NFIB small business optimism survey for June which is expected to come in little changed relative to May. Following that, this afternoon we’ll get the JOLTS job openings report for May where the focus will be on the hiring and quits rates. That said given the rebound in payrolls for June this data may look a little stale. The other data due out this afternoon will be the wholesale inventories and trade sales report.

Away from the data it’s a busy day of Fedspeak. Tarullo (2.15pm BST), Bullard (2.35pm BST) and Kashkari (10.30pm BST) are all scheduled to speak today. Meanwhile the BoE is due to publish the record of the Financial Policy Committee’s meeting held on June 28th with Governor Carney due to speak shortly after at 10am BST.

http://www.zerohedge.com/news/2016-07-12/global-stocks-surge-rising-hopes-japan-helicopter-money
 

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S&P 500 Closes at Record High on Global Risk Appetite
The S&P 500 ended at a record high of 2,137.16 after touching a record intraday high of 2,143.16. It overtook the previous highs touched in May 2015 as investors harbored greater optimism about the U.S. economy after last Friday's stronger-than-expected jobs report. [Full Story]

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#11
Mornings With "V": No Markets Just Interventions
ROGUE MONEY


Streamed live 18 minutes ago
V Runs down the latest news from the South China Seas To Japans latest announcement.
 

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#12
Gold and Silver Market Morning: July-12-2016 -- Gold and silver prices waiting for the Bank of England!
By: Julian D. W. Phillips, Gold/Silver Forecaster - Global Watch
Ahead of the opening in New York the gold price stood at $1,347.65 and in the euro at €1,214.21. London is trying to establish a pattern of lower prices ahead of New York when it feels physical buying may not appear in New York and in particular the gold ETFs. The moment physical interest is shown in the ETFs the gold price is lifted.
 

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#13
Nothing to see. Better of listening in one window, playing around on GIM or surfing the web in another window.

Gold or Silver - Which is Better? | Rob Kirby Q&A
FinanceAndLiberty.com


Published on Jul 11, 2016
IN THIS INTERVIEW:
Viewers’ Questions:
- Is it better to own physical gold or silver? I know silver is an industrial metal as well as a monetary metal but I hear people talk more about owning gold as a way to protect oneself from the coming financial meltdown.
0:57
- Where is the Silver and Gold coming from to bridge the gap between demand and what is being mined?
3:13
- Is the COMEX behind on deliveries? When do you see gold and silver hitting the circuit breakers to halt trading?
6:07
- In Venezuela, people have resorted to bartering, with food as the premier currency. Do you think that this phenomena could go global after the collapse of the major currencies? If so, do you think gold and/or silver will play a role in bartering? ►10:17
- Will the next phase lead to a digital currency and the mark of the beast or do you think we will have a time yet before that where the gold standard is reinstituted in some way? ►11:22
- Would it be possible that the US Gov't would impose a heavy tax on precious metals in the event of a financial collapse? ►13:41
- Just over 23 countries have now stopped trading in the US Dollar. The Brexit is actually good for US Dollar as a lot of flight capital moves to US for safety. What is it going to take for the US Dollar to finally be rejected and go away? ►15:41
- What will happen to personal debt in Canada when the reset happens? ►19:20
- With all the volatility in the market, why haven't any of these big banks imploded? We always here they are on the verge, but yet nothing has happened. What's keeping them afloat? ►21:21
- If my bank fails, all my stocks in my tax free savings account go down with it. Should I sell my entire portfolio and buy physical now? ►25:08
- There seems to be continuous stimulation and pumping up of the markets on a daily basis. Where is this money or numbers on a computer screen coming from and how is it distributed into the market? ►26:43

FINANCE AND LIBERTY:
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This interview was recorded on June 30, 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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#14
Nothing to see. Better of listening in one window, playing around on GIM or surfing the web in another window.

Louis Cammarosano Silver Update
The Daily Coin.org


Published on Jul 12, 2016
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#16

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#17
Frontrunning: July 13


by Tyler Durden
Jul 13, 2016 7:43 AM

  • Brexit, what Brexit? Shares near 2016 highs (Reuters), Global Stocks Inch Higher (WSJ), Stocks Climb With Copper as Brexit-Induced Volatility Subsides (BBG)
  • Yen under pressure as global stock markets rally (Reuters)
  • Spanish Banks Surge as Fears Subside Over EU Mortgage Ruling (BBG)
  • Pimco Loads Up on Treasuries as Gundlach to Gross Voice Caution (BBG)
  • U.S. Presses China to Be Responsible Power After Sea Ruling (BBG)
  • Tesla Has No Plans to Disable Autopilot Feature in Its Cars (WSJ)
  • China vows to protect South China Sea sovereignty, Manila upbeat (Reuters)
  • ‘Pokémon Go’ Craze Raises Safety Issues (WSJ)
  • Record Stock-Market Rally Powered by Companies Analysts Despise (BBG)
  • U.S. arms sales approvals on track to reach nearly $40 billion (Reuters)
  • Venezuela Trucks Food Directly to the Poorest as Chaos Spreads (BBG)
  • New Black Panther Party says to carry arms in Cleveland if legal (Reuters)
  • Trump Counts on Clinton Aide Case to Keep Video Testimony Off TV (BBG)
  • Slump Might Turn Anti-Bank SoFi Into a Bank (WSJ)
  • Carney Opens Lehman Playbook at Bank of England (BBG)
  • Unicredit to raise €1bn in two days by selling stakes in other European banks (Telegraph)
  • France has identified leader of Nov. 13 attacks, documents show (Reuters)
Overnight Media Digest

WSJ

- Tesla Motors Chief Executive Elon Musk has no plans to disable the company's Autopilot function in the wake of a May crash of a Model S electric car using the technology, and the auto maker instead plans to redouble efforts to educate customers on how the system works. http://on.wsj.com/29CRjqa

- Pokemon Go is giving millions of people their first taste of futuristic augmented-reality technology. It is also raising questions about whether the game's location and mapping features are luring players into danger. http://on.wsj.com/29CRyBL

- Fiat Chrysler Automobiles is launching a so-called bug bounty program aimed at compensating hackers between $150 and $1,500 every time they uncover potential cyber security flaws in the vehicles and alert the company. http://on.wsj.com/29CRWQL

- Airbus Group SE slashed production of its A380 superjumbo jet in a retreat from one of its most ambitious projects after it said it would build just 12 A380 planes a year starting in 2018, down from the 27 it built last year. http://on.wsj.com/29CS1Uq

FT

*Airbus is slashing production of its A380 superjumbo, which has struggled to win new customers amid a lacklustre market for widebody aircraft.

*JPMorgan Chase has promised to lift basic hourly pay for 18,000 of its lowest paid U.S. workers by at least a fifth by 2019.

*The UK's markets watchdog, Financial Conduct Authority, warned the Bank of England in the immediate aftermath of the UK's vote to leave the EU that commercial-property funds could start temporarily trapping investors' money.



NYT

- Airbus Group's said on Tuesday that it would sharply curtail production of the A380 superjumbo jet, the world's largest passenger plane, as airline demand dwindles for supersize aircraft. http://nyti.ms/29OfqWz

- Even as regulators are asking new questions in the wake of a fatal crash involving Tesla Motor Inc's Model S car, executives say their technology is safe if properly used. http://nyti.ms/29Offuq

- Taser International Inc, best known for its stun guns, has drawn criticism for its relationships with the police and its sales tactics, which it says are common. http://nyti.ms/29Of3eC

- Hyperloop One co-founder Brogan BamBrogan and three other former executives sued the start-up on Tuesday, claiming that they were harassed and wrongfully fired. http://nyti.ms/29OfXb4

- A firm that put "Happy Birthday" into the public domain now wants to rescind copyright protection for "We Shall Overcome" and "This Land Is Your Land." http://nyti.ms/29OglpX

- Ireland, the country which attracts companies with a low corporate tax rate, saw its economy being revised in 2015 to 26.3 percent from a preliminary estimate of 7.8 percent, according to new figures. http://nyti.ms/29Ogv0M

Canada

THE GLOBE AND MAIL

** Halifax-based Minas Energy announced on Tuesday that it was partnering with Netherlands firm Tocardo International BV and Ontario-based International Marine Energy Inc to form the Minas Tidal Limited Partnership, to test the powerful tidal currents in the Bay of Fundy, by late 2017. (http://bit.ly/29vcRYv)

** Low-income earners will receive little benefit from the planned expansion of the Canada Pension Plan despite paying higher premiums, unless governments provide more help to offset a corresponding reduction in other government payments, according to an analysis of the new model. (http://bit.ly/29vcE7X)

** In a report issued late on Tuesday ahead of a City Council debate this week, staff urged politicians to increase new spending on road safety by about 30 percent to about C$52 million ($39.9 million) over the next five years. (http://bit.ly/29vcJIO)

NATIONAL POST

** Bell Canada sees no good reason to continue offering payphone lines at a lower price than regular business lines as it no longer views the service as essential in a society dominated by mobile phones. (http://bit.ly/29vd0LD)

** Royal LePage, in a report out on Wednesday, says economic uncertainty around the globe and low interest rates continue to fuel the Canadian existing-home market, adding that prices will rise by 12.4 percent in 2016 from 2015 to an average of C$563,000 ($431,947). (http://bit.ly/29vd1z4)

** The Canada Revenue Agency's continuing campaign against the underground economy has come to roost in small-town Canada, where special audits have confirmed the pervasiveness of tax evaders in the construction industry. (http://bit.ly/29vdbqe)

Britain

The Times

Burberry pay is 'manifestly out of touch'

A leading independent City voting adviser has criticised Burberry Group Plc over the handling of its recent management reshuffle and has attacked its pay to senior executives as being excessive and "out of touch". (http://bit.ly/29BL6iv)

The Guardian

Airbus to cut back production of A380 aircraft

Airbus Group SE is to cut production of the A380 superjumbo, highlighting the lacklustre performance of the biggest passenger jet ever built. The plane-maker aims to cut production to just 12 A380s in 2018, compared with 27 deliveries in 2015. (http://bit.ly/29wGwwd)

M&S to create small investors panel to scrutinise performance

Marks and Spencer Group Plc is offering small investors a direct line to the boardroom with the creation of a shareholder panel to scrutinise performance. The plan was announced on Tuesday by M&S chairman Robert Swannell at the company's annual investor meeting, where management regularly faces fierce criticism of its underperforming clothing business, which last week reported its biggest fall in sales since the 2008 banking crisis. (http://bit.ly/29Pw8lk)

The Telegraph

Unicredit to raise 1 billion euros in two days by selling stakes in other European banks

Italian bank UniCredit SpA is selling off a 10 percent stake in Polish lender Bank Pekao, in a deal which could raise more than 700 million euros in proceeds. (http://bit.ly/29BJSne)

Sky News

Wonga To Name Kneafsey As New Chief Executive

Wonga will name a new group chief executive this week, handing her the daunting task of returning Britain's biggest payday lender to the black after years of mounting losses. Wonga will announce that Tara Kneafsey, who already runs its UK business, is to assume control of the wider business in a move that will eventually pave the way for its chairman to step back to a non-executive role. A statement about Kneafsey's promotion is expected to be made on Wednesday. (http://bit.ly/29BPgCP)

Tata Wants Speciality Steel Bids This Week

Tata Steel Ltd has given bidders for a division employing more than 1,500 people just days to table offers, even as the rest of its British workforce faces months of uncertainty about the company's future ownership. Parties interested in buying Tata's speciality steel unit, which includes five UK manufacturing sites, have been told to table indicative proposals by 15 July. (http://bit.ly/2a7iWHE)

Deutsche Floats Surprise RBS Shipping Bid

Germany's biggest lender has emerged as a surprise contender to take on a multibillion-dollar shipping finance business even as its share price barely hovers above record lows. Deutsche Bank has expressed an interest in buying part or all of a $3 billion Greek shipping portfolio owned by the taxpayer-backed Royal Bank of Scotland Group Plc. (http://bit.ly/2a7jhud)

The Independent

UBS boss Andrea Orcel says jobs could be moved from London after Brexit

Andrea Orcel, president of UBS investment bank, has warned the Swiss bank is considering moving its staff to a European country, following the UK's vote to leave the EU. UBS Group AG , considered to be the world's largest manager of private wealth, previously warned that London is likely to see an exodus of finance jobs in the wake of the Brexit vote. (http://ind.pn/29ECc1Z)


http://www.zerohedge.com/news/2016-07-13/frontrunning-july-13
 

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#18
Global Stocks, Futures Rise On Disappointing Chinese Trade Data, Hopes For More Central Bank Intervention


by Tyler Durden
Jul 13, 2016 6:48 AM

In an otherwise quiet overnight session, which among other things saw Germany sell 10Y Bunds with a zero coupon and a negative yield (-0.05%) for the first time ever (despite being uncovered with just €4.038BN sold below the €5.00BN target) anyone hoping for a confirmation that China will be able to prop up the world economy once more, was left disappointed when earlier this morning China reported June exports and imports that once again dropped substantially in dollar terms as soft demand at home and abroad continued to weigh on the world’s largest trading nation.

The details: exports in USD terms fell 4.8% from a year earlier, in line with expectations, while imports dropped 8.4%, worse than the -6.2% expected, resulting in a $48.11 billion trade surplus driven by economic contraction.



Needless to say, and as we will shortly show, the numbers are once again not to be trusted as a result of clear fabrication in HK "trade" data which continues to soar and remains China's favorite way of smuggling out capital.

What was surprising is that Chinese trade continues to stagnate even as the yuan continued its not so stealth devaluation, posting a fifth straight drop last week, the longest losing streak this year, signaling policy makers are more tolerant of further weakening. With tepid global demand and businesses proving reluctant to invest, the government has been stepping up spending to keep its growth target of at least 6.5% this year in sight.

"It’s still very weak trade," said Iris Pang, senior economist for Greater China at Natixis SA in Hong Kong. "I don’t think there will be a significant improvement and I expect heavier and speedier fiscal stimulus in the second half."

"With little support from global demand, China will be constrained to retain an easing bias in domestic policy," Bloomberg Intelligence economists Tom Orlik and Fielding Chen wrote in a note. "Yuan weakness has bolstered competitiveness and prevented a sharper slide in overseas sales. In the immediate future, though, the central bank may be forced to lean against excess depreciation pressure. The risk of Brexit aftershocks add to the gloom on the export outlook."

It is bound to get worse: exports face downward pressure in the third quarter, a customs administration official said at a briefing in Beijing. Trade will remain sluggish, though may continue to stabilize in the second half, the official said, adding that exporters face increasing labor costs while other countries are competing with cheaper wages.

In short: more global bad news, which means more stimulus in some capacity, which means good news for stocks.

Indeed, China wasn't the only bad news out there to prop up stocks: so did Japan, which continues its helicopter money jawboning, with constantly conflicting messages. A few hours after the Sankei reported that the Japanese government is "mulling" helicopter money, Japan's Suga denied that the government was in fact considering this. However, by this morning the narrative had changed twice more and now we have "stores" that the BOJ should consider more easing in the form of QE according to an Abe advisor, while Bloomberg reported that Japan will consider JPY10 trillion in fiscal stimulus. lower than the JPY 30 trillion originally reported.

Said otherwise, trial balloon after trial balloon to gauge the market reaction.

Elsewhere, it was more of the same, with stocks everywhere now having rebounded from their pre-Brexit levels (in addition to the US trading at all time highs of course) on more central bank easing expectations:

"Risk assets are rallying, driven by renewed hopes of monetary and fiscal stimulus,” said James Woods, a strategist at Rivkin Securities in Sydney. “The rally looks sustainable, especially if the BOE cuts rates this Thursday. Abe will definitely add some kind of fiscal stimulus to boost the Japanese economy.”

As Bloomberg puts it, wherever you look in global financial markets, signs are emerging that the fallout from Britain’s vote to leave the European Union is under control. Global stocks are rising for a fifth day, having recovered almost $4 trillion in value lost in the days following the U.K.’s June 23 referendum, and emerging-market valuations are near their highest in more than a year. Copper is rising, boosted by signs policy makers are prepared to act to limit the fallout, while acquisitions have resumed and corporate bond sales are showing signs of picking up. The yen and government bonds, while climbing on Wednesday, have given back much of the gains they made since the Brexit vote.

"Calm is returning to global markets on speculation central bank action will be sufficient to restrict any Brexit contagion. Economists predict the Bank of England will cut interest rates Thursday, while Japanese Prime Minister Shinzo Abe has ordered more fiscal stimulus. Traders are pricing in less than 35 percent odds of the Federal Reserve raising rates this year, even though Fed Bank of St. Louis President James Bullard says he expects near-zero impact on the U.S. The mark on the U.K. is more enduring, with sterling about 11 percent weaker versus the dollar since the vote."

Some remain surprised by how aggressive and pervasive central bank intervention has been: 36 South Capital Advisors, a London-based volatility hedge fund, was surprised at how rapidly markets settled, according to Chief Investment Officer Richard Haworth. “This is the strangest environment I’ve seen in 30 years,” Haworth said. “I had a sneaking suspicion that Brexit could have been the butterfly’s wing that created a hurricane down the line. But maybe, maybe not.”

As a result of the above, "markets" have been more of the same, with Asia and Europe both higher, and US equity futures modestly in the green: The MSCI All-Country World Index rose 0.2 percent at 10:38 a.m. London time, leaving them 0.4 percent stronger than the close on the day before the results of Britain’s referendum were released. The Stoxx Europe 600 Index added 0.3 percent, rising for a fifth day in the longest winning streak since the Brexit vote. The gauge is within 10 points of erasing its losses after the June 23 referendum. S&P 500 futures were up 0.1%, after the benchmark ended the last session at a record high. The VIX has been cut in half halved since June 24, when the shock Brexit vote caused the wildest swings since August 2011. A similar gauge of European stock volatility fell on Tuesday to the lowest level since May.

Treasuries rose, sending the yield on notes due in a decade two basis points lower to 1.49 percent. The rate, which sank to an unprecedented 1.32 percent a week ago, surged 15 basis points over the past two sessions as demand at auctions of three- and 10-year weakened to levels last seen in 2009. Deutsche Bahn AG this week became the first non-financial company to sell negative-yielding bonds in euros. The German state-owned railroad sold 350 million euros of five-year debt to yield minus 0.006 percent on Tuesday, according to data compiled by Bloomberg. Deutsche Bahn AG this week became the first non-financial company to sell negative-yielding bonds in euros. The German state-owned railroad sold 350 million euros of five-year debt to yield minus 0.006 percent on Tuesday, according to data compiled by Bloomberg.

All of this will end in tears according to Jeff Gundlach, who during a webcast yesterday said that “there’s something of a mass psychosis going on related to the so-called starvation for yield. Call me old-fashioned, but I don’t like investments where if you’re right you don’t make any money.”

Market Summary
  • S&P 500 futures up 0.1% to 2148
  • Stoxx 600 up 0.1% to 337
  • FTSE 100 down less than 0.1% to 6675
  • DAX down 0.2% to 9943
  • German 10Yr yield up 5bps to -0.04%
  • Italian 10Yr yield down less than 1bp to 1.22%
  • Spanish 10Yr yield down 2bps to 1.16%
  • S&P GSCI Index down 0.6% to 363.3
  • MSCI Asia Pacific up 0.9% to 133
  • Nikkei 225 up 0.8% to 16231
  • Hang Seng up 0.5% to 21322
  • Shanghai Composite up 0.4% to 3061
  • S&P/ASX 200 up 0.7% to 5389
  • US 10-yr yield down 3bps to 1.48%
  • Dollar Index up 0.08% to 96.52
  • WTI Crude futures down 1.5% to $46.10
  • Brent Futures down 1.8% to $47.60
  • Gold spot up 0.6% to $1,341
  • Silver spot up 0.9% to $20.37
Top Global News
  • Disney Gets $267 Million From City to Build $450-a-Night Hotel: Park operator currently has 3 hotels in Anaheim, California
  • Fiat Chrysler Offers $1,500 to Find Vehicles’ Cyber Soft Spots: Program with Bugcrowd pays rewards to good-guy hackers
  • Canada Vitamin Maker Jamieson Labs Said to Scrap $1 Billion Sale: Sale had attracted interest from By-health, Shanghai Pharma
  • Musk Energy Plan Delivers Slow Payoff in Tesla, SolarCity Merger: Pairing solar and storage the key to $2.86b Tesla bid
  • IEA Sees Record Middle East Oil Supply While U.S. Output Slumps: Record inventories remain ‘threat to stability’ of prices
  • Exxon Said to Top Oil Search’s Bid for InterOil: Reuters: Offer comprises Exxon stk, contingent value right
  • McDonald’s Said Struggling to Get Strong Bidders for China: FT: Co. has had to turn down “a lot” of the unqualified bidders
* * *

Looking at regional markets, we start in Asia, where overnight we saw a somewhat muted affair in terms of newsflow, however equities extended on advances following on from record high closes in the Dow Jones and S&P 500. Nikkei 225 (+0.8%) pulled off best levels in the wake of comments from Japan's Suga refuting press reports that the Japanese government is considering helicopter money.ASX 200 (+0.7%) was buoyed by the gains in energy names amid the 4.5% seen in WTI Crude futures yesterday. Hang Seng (+0.5%) and Shanghai Comp (+0.4%) traded modestly in the green with participants awaiting the delayed Chinese trade balance data. 10yr JGBs trade are a touch softer amid the heightened risk appetite seen across Japanese stocks. BoJ should conduct further easing this month by purchasing more bonds, not by reducing negative rates, according to PM Abe Adviser. Sources suggest Japan is said to consider JPY 10trl in its fiscal stimulus measures. Japan's Chief Cabinet Secretary Suga refuted earlier press reports that the Japanese government is considering helicopter money. China Premier Li stated that China can achieve 6.5% GDP growth target this for 2016, adding that growth was sound in Q2.

Top Asian News
  • Japan Cuts GDP, CPI Forecasts For This Year: Real GDP to grow 1.2% in FY2017
  • Yen Rallies, Halting 2-Day Drop, on Suga Helicopter Money Denial: Currency rises against 15 of its 16 major counterparts
  • Offshore Yuan Rises as Borrowing Costs Surge Amid Reduced Supply: PBOC may be defending level of 6.7 against dollar, OCBC says
  • Top Rupee Forecaster Sees Record Low by Yearend on Brexit Clouds: Currency will drop to 69.50 per dollar, Kotak Mahindra says
  • Malaysia Unexpectedly Cuts Rate to Shield Growth as Risks Mount: Central bank lowers overnight policy rate by 25bps to 3%
  • Ex-BSI Asia CEO Sues Bank Over Bonus Amid Prosecutors’ Scrutiny: Brunner says bank has no legal basis to freeze deferred bonus
  • U.S. Presses China to Be Responsible Power After Sea Ruling: American military will keep up operations in region
In Europe, equities have traded in a choppy fashion after gapping down at the open. Currently the major European bourses are trading in the red, with the worst performer being the FTSE MIB, with financials the 2nd worst performer across Europe. Another sector to take a hit this morning is UK housing as Barratt Developments made some downbeat comments following the release of their quarterly results this morning. In fixed income markets prices pushed higher as risk seems to be pulling off after a few days worth of equity gains. This came in spite of a raft of supply from Germany, Italy and Portugal which typically can actually weigh on prices. In terms of how the auctions went, the Bund auction was the focus for European participants after the Buba issuing the bond with a negative yield for the first time and drawing a soft b/c of 1.2.

Top European News
  • Steinhoff Agrees to Buy U.K.’s Poundland for $794 Million: Offer follows 2 failed attempts to buy retailers this year
  • Airbus A380 Cut May Mark Beginning of End for Superjumbo: Co. will slash deliveries to just 12 a year from 2018
  • Burberry Sales Beat Estimates on Recent Boost in U.K. Demand: Fashion label also lowers outlook for wholesale revenues
  • ICAP’s Sales From Electronic Markets Drop Despite Brexit Spike: EBS average daily volume declines 15% to $83b
  • Theresa May’s First Job as U.K. Leader Is Naming Brexit Czar: Specialist negotiators already being hired to handle talks
  • Norway’s Largest Bank Beats Retreat From Oil as Losses Mount: DNB to increase focus on retail customers, small businesses
In FX, the yen strengthened 0.1 percent to 104.60 per dollar, after sliding more than 4 percent over the last two days. Abe has ordered his economy minister to compile stimulus measures this month, while the Sankei newspaper reported government officials are considering “helicopter money” as a policy option. Chief Cabinet Secretary Yoshihide Suga said such a policy, which involves the central bank directly financing government spending, was not being looked at. The pound rose 0.2 percent to $1.3270, headed for its longest winning streak in two months, before Theresa May takes over as prime minister later Wednesday, ending a period of political instability that has lasted since the EU vote. The result of the referendum pushed sterling to its worst day on record and sent the pound to the lowest level since 1985 last week, before it recovered some of that ground as it became clear a new leader would take power earlier than previously thought. The yuan was little changed at 6.6959 per dollar in offshore trading amid speculation China’s central bank is limiting the supply of the currency in Hong Kong to deter bets on depreciation, as it did in January to halt the yuan’s slide to a five-year low. The currency’s overnight interbank rate in Hong Kong more than doubled to 4.83 percent, the highest since February. “It feels like the People’s Bank of China is quite serious about defending the 6.7 level,” said Tommy Xie, an economist at Oversea-Chinese Banking Corp. in Singapore. “This reminds me of what happened in January.”

In Commodities, crude oil fell 1.3% to $46.20 a barrel, after jumping 4.6% on Tuesday, when API showed the nation’s stockpiles increased by 2.2 million barrels last week. Government figures on Wednesday are forecast to show supplies slid. Copper climbed 1.5 percent in London, building on a 3.9 percent advance over the last three trading days, on speculation central-bank stimulus measures will buoy demand for materials. Iron ore rose to the highest level since April on the Dalian Commodity Exchange as steel rebar traded near a 10-week high in Shanghai. Nickel fell 1.7 percent, retreating from an eight-month high. Cotton jumped as much as 5 percent to a two-year high in China after the U.S. Department of Agriculture cut its projections for world output and stockpiles by more than analysts forecast.

Looking at the day ahead, in the US we’ll get the import price index reading for June followed by the monthly budget statement and Fed’s beige book this evening. Fedspeak wise we’ve got Kaplan and Harker due to speak.

* * *

Bulletin Headline Summary
  • European equities enter the North American crossover relatively mixed as participants taking a breather from recent gains and Chinese trade data failing to instigate price action
  • The latest source reports suggest Japan are looking at a JPY 10trl fiscal package while PM Abe Adviser Hamada has put pressure on the BoJ to purchase more bonds
  • Looking ahead highlights include BoC Rate Decision and DOE U.S. Crude Oil Inventories
  • Treasuries higher in overnight trading along with global equities, which have erased Brexit losses due to hopes of yet more central bank largess; auctions conclude with $12b 30Y bonds, WI 2.20%, last sold at 2.475% in June, lowest 30Y auction stop since record low 2.43% in Jan. 2015.
  • After weeks of political turmoil, a semblance of stability is returning to U.K. politics, and the pound is headed for its longest winning streak in two months before Theresa May takes over as prime minister
  • Japan’s cabinet office cut its forecasts for growth and inflation as Prime Minister Abe orders his ministers to compile a fiscal spending package that one adviser said should be as large as 20 trillion yen ($192 billion)
  • Japan’s biggest bank, Bank of Tokyo-Mitsubishi UFJ Ltd., is quitting its role as one of the 22 primary dealers that underwrite auctions of the nation’s bonds, the first financial institution to withdraw since the central bank’s introduction of negative interest rates
  • Longer-maturity debt from Mexico to Russia has become one of the most popular post-Brexit trades on bets a split European Union will cause global growth to stagnate and thwart central-bank rate increases. It’s also leaving investors more vulnerable than ever before
  • “There’s something of a mass psychosis going on related to the so-called starvation for yield,” Jeffrey Gundlach, CEO of DoubleLine Capital, said Tuesday. “I don’t like investments where if you’re right you don’t make any money”; Germany sold EU4.78b 10Y bunds at a negative yield for the first time
  • Spanish banks surged after an aide to the EU’s top court said they may avoid having to refund billions of euros to customers who paid too much interest on home loans before a 2013 ruling on so-called mortgage floors
  • Crude oil will rise to a range of $50 to $60 a barrel until at least 2018 as demand increases and markets absorb an oversupply that’s led to lower prices over the last two years, according to the acting oil minister of OPEC member Kuwait
  • Oil fell after the biggest gain in three months as U.S. industry data showed the nation’s crude stockpiles increased, adding to concerns about oversupply


US Event Calendar
  • 7am: MBA Mortgage Applications, July 8 (prior 14.2%)
  • 8:30am: Import Price Index, June, m/m, est. 0.5% (prior 1.4%)
  • 9am: Fed’s Kaplan speaks in Houston
  • 10:30am: DOE Energy Inventories
  • 2pm: Monthly Budget Statement, June, est. $23b (prior $50.5b)
  • 2pm: Fed Beige Book
  • 6pm: Fed’s Harker speaks in Philadelphia
DB's Jim Reid concludes the overnight wrap

It’s been another decent 24 hours for markets as the concoction of abating Brexit concerns, elevated central bank stimulus expectations and Friday’s reassuring payrolls number proves to be a winning formula for now. Throw in some supportive comments yesterday from German Chancellor Merkel about the Italian banking sector and it was another day of positive price action for risk assets. We’ll touch on those comments shortly, but in terms of the moves in Europe the Stoxx 600 (+1.06%) marked the fourth consecutive session that it has finished the day with at least a 1% gain. The DAX (+1.33%) was also stronger while the FTSE MIB (+2.83%) rallied with some big gains for Italian Banks. Indeed the Euro Stoxx Banks index rallied +5.38% for its biggest one-day gain since April as Italian Banks finished anywhere from 6-13% higher. It was a similar story in credit with iTraxx senior and sub financials indices tightening 8bps and 20bps respectively on the day. The positive sentiment continued on Wall Street where a number of milestones were made. The S&P 500 (+0.70%) and Dow (+0.66%) both made new all-time highs while the Nasdaq (+0.69%) moved back into positive territory for the year. All of these moves came in the face of a big rebound for Oil (+4.56%), a softer USD for the most part and Treasury and Bund yields finishing up 7-8bps. The one outlier to yesterday was the FTSE 100 (-0.03%) which ended little changed although that largely came about due to the near 2% rally for the Pound.

So with global equities largely either passing or approaching pre-Brexit levels again we thought it would be a good time to take stock and update our performance review charts to look at total return performance for various asset classes in the period from the 23rd June (referendum day) to closing levels last night. As our charts show in the PDF, the clear winner in the wake of the vote has been Silver (+17%) which has notably outperformed Gold (+6%) with the bulk of that move coming in the first week post the vote. If we look at equity market performance, interestingly it’s EM equities which have outperformed, notwithstanding some volatility. The Shanghai Comp (+7% local, +5% USD terms), Bovespa (+5% and +7%) and MSCI EM index (+3% and +3%) all sit near the top of our leaderboard. The S&P 500 (+2%) has also turned around while unsurprisingly its European equities which occupy the lower places. The Stoxx 600 (-3% and -6%) has not quite got back to pre-referendum levels while the resurgence of fears over Italian banks has the FTSE MIB (-7% and -10%) and Stoxx 600 Banks (-14% and -16%) hovering near the bottom.

Looking at the performance of UK assets, with Sterling -11% since the vote, the FTSE 100 (+5%) is actually one of our top performers in local currency terms, however this translates to a -6% return in USD terms. It’s a similar story for Gilts (+6% and -6%) too. Meanwhile the notable theme to come from credit markets is the outperformance of US versus EUR. Indeed US indices are up 1-3% during the time with IG Non-Fin and HY sitting atop, while EUR indices sit anywhere from 0-2%. Again however, this translates into losses of 1-3% in USD terms and those returns largely reflect what we’ve seen for European government bond markets. If we look at where current CDS indices are, iTraxx Main is roughly 4bps tighter and iTraxx Crossover is more or less back to where it started. The iTraxx Senior Fins index is still 3bps wider although it has pared a move wider of as much as 43bps at one stage. Finally CDX IG is now 5bps tighter. As mentioned above, the graphs are in the PDF today.

Changing tack now and switching over to the latest in Asia this morning, we find that bourses are continuing their strong performance this week. The Nikkei (+1.00%) and Topix (+1.32%) are again leading the way as investors continue to weigh the expectation of more BoJ stimulus, although the Yen has strengthened some 0.3% or so this morning after weakening over 4% in the past two sessions. Elsewhere the Hang Seng (+0.41%), Shanghai Comp (+0.35%), Kospi (+0.38%) and ASX (+0.42%) are also higher this morning. Markets are also eagerly awaiting the June trade data in China this morning which is expected to come out shortly after this hits your emails.

Moving on and touching on those Merkel comments we highlighted at the top. According to the German Chancellor ‘intensive talks’ are in progress between the Italian government and the European Commission over some sort of solution to Italy’s banking woes. Merkel also said that ‘I am very convinced that the questions that need to be decided there will be resolved in a good way’ and that ‘I don’t see any crisis-like development overall’. Italy Finance Minister Pier Carlo Padoan added that ‘the government is now engaged in finding precautionary solutions to support any eventual case of needed intervention’. Those upbeat comments contributed to a good day for Italian bank stocks with news of some successful stake sales at Unicredit also helping fuel sentiment.

That July 29th EU stress test results date continues to be a self-imposed deadline of sorts for Italy but expect headlines to rumble on in the mean time. An important event due to come before that though is the BoE policy meeting tomorrow where the overall majority of economists are calling for a 25bp cut. One story gaining some traction on this though is the chatter of possible corporate bond buying by the BoE. Indeed the FT ran a story yesterday suggesting that expectations of such a move is on the rise, amid other possible policy options. It’s hard to argue against the ECB CSPP being anything but a success thus far (performance wise) so such a consideration is inevitable, notwithstanding what would be an obviously smaller eligible universe to choose from. Stay tuned for more on this.

On this theme, both Bloomberg and Reuters reported yesterday that Deutsche Bahn has become the first non-financial company to issue debt with a negative yield. The railway operator sold €350m of five-year bonds with a zero coupon which were priced to yield -0.006% according to Bloomberg. Given Deutsche Bahn is 100% state-owned we’d hesitate to go as far as saying that this marks the first such time a true corporate has issued negative yielding bonds in Euros, but it’s a phenomenal statistic nonetheless and shows the power of ECB bond buying at government and corporate level.

Sticking with the central bank theme, over at the Fed yesterday we heard comments from a couple of officials. The first was St Louis Fed President Bullard who has clearly become one of the more dovish members of the committee. Bullard reiterated his view that the US economy is likely stuck in a low growth environment for the next two to three years and the ‘policy rate would likely remain essentially flat over the forecast horizon’. Bullard also said that he sees the impact of Brexit on the US economy as ‘close to zero’. Meanwhile, speaking late last night the Minneapolis Fed President Kashkari (also fairly dovish) said that ‘there’s not a huge urgency to raise rates because inflation is coming up low’.

Away from this there was a bit of economic data to sift through yesterday. Across the pond the NFIB small business optimism survey rose 0.7pts to 94.5 (vs. 93.9 expected) which is the best reading since December last year. The JOLTS report for May revealed a near 300k decline in job openings during the month to 5.5m (vs. 5.65m expected). Remember that this was the month that payrolls plummeted to 11k (after Friday’s revision) so it’s not entirely surprising. We highlight that the quits rate held steady at 2%. Meanwhile wholesale inventories rose a little less than expected in May (+0.1% mom vs. +0.2% expected) with trade sales (+0.5% mom) printing in-line. The Atlanta Fed revised down their Q2 GDP forecast by one-tenth to 2.3% on account of that data. Data-wise in Europe there was little to report with the only data being the final German CPI revisions where there was no change to the +0.1% mom.

Looking at the day ahead, this morning in Europe we’ve got final June CPI revisions in France, Italy and Spain. Also due out is the Euro area industrial production report where market expectation is for a -0.8% mom print. The UK is also set to release its credit conditions and bank liabilities surveys at 9.30am BST. Over in the US this afternoon we’ll get the import price index reading for June followed by the monthly budget statement and Fed’s beige book this evening. Fedspeak wise we’ve got Harker (11pm BST) due to speak this evening.

http://www.zerohedge.com/news/2016-...g-chinese-trade-data-hopes-more-central-bank-
 

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#20
Mornings With "V" (07/13/2016) - DOW 20,000!
ROGUE MONEY


Streamed live 41 minutes ago
V talks about the markets, where its headed and what really going on.
 

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#22
There is no rule of law either...
By: Bill Holter
I finished my last writing with the question "will we still have the rule of law?" and commented what a can of worms this topic is. While I knew the question of the rule of law would certainly come up later this year, I had no idea how quickly! Normally forensic logic is a process of "connecting dots", in this instance the "dots" are more like one giant blob of crap covering the page entirely. On many previous occasions we have seen election fraud, market riggings and bogus economic reports, the corruption is now no longer contained or done in secret... it is done in public. Maybe so the public can "see it"? Let's take a look at "law".

Americans favour Coffee over Financial Freedom
By: Sol Palha
The Fed’s strategy all along has been to foster an environment that favours speculators and punishes savers and they have succeeded in achieving their objective. The next stage will be to force these savers to speculate, and that is when we can expect this market to enter into the bubble phase. The Fed’s sole purpose since it began interfering with free market forces has been to facilitate boom and bust cycles. This bull market will only end when the masses finally give into it and in doing so set the stage for a bubble. History is replete with examples of how bull markets end. No bull market has ended without mass participation; the crowd has to turn euphoric before the bull kicks the bucket.

Gold Seeker Closing Report: Gold and Silver Gain About 1% While Stocks Hold Near Unchanged
By: Chris Mullen, Gold-Seeker.com
Gold dipped $4.38 $1327.82 in early Asian trade, but it then rose to as high as $1345.06 by midmorning in New York and ended with a gain of 0.87%. Silver rose to as high as $20.466 and ended with a gain of 1.44%.
 

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#23
US Futures, Global Markets Storm Higher As More Details Emerge About Japan's "Helicopter Money"


by Tyler Durden
Jul 14, 2016 6:34 AM

The global meltup continues with the S&P set to open at new all time highs, some 20 points higher from yesterday's close, however the driver for the latest rally is not so much the imminent BOE announcement which is expected to cut rates by 25 bps from 0.50%, but a dramatic surge in the USDJPY just after 1am Eastern when Bloomberg revealed more details about Ben Bernanke's masterplan for Japan's helicopter money.



According to Bloomberg, Bernanke, who met Japanese leaders in Tokyo this week, had floated the idea of perpetual bonds during earlier discussions in Washington with one of Prime Minister Shinzo Abe’s key advisers. Abe advisor Etsuro Honda said that during an hour-long discussion with Bernanke in April the former Federal Reserve chief warned there was a risk Japan at any time could return to deflation. He noted that helicopter money could work as the strongest tool to overcome deflation, according to Honda. Bernanke noted it was an option. The implication, as we said last week when we previewed just this "big thing" is that Japan is indeed set to be the first testing ground of helicopter money in the modern financial system.

Though Honda said he thought Japan was already engaged in a strategy that involved helicopter money, he said that he watned to convey the idea to Abe and asked Bernanke to meet with the premier in Japan. While this didn’t happen in the spring, Bernanke joined central bank chief Haruhiko Kuroda over lunch this Monday and on Tuesday he attended a gathering with Abe and key officials, including Koichi Hamada, another influential economic adviser.

Honda, 61, said he told Abe about Bernanke’s views after his April meeting. “I told him now is the time for Japan to expand fiscal spending and at the same time, additional monetary easing should be taken,” Honda said. “I told him it is necessary to strengthen the effects of Abenomics” through such a strategy.

While nothing definitive has been revealed by Japan yet, bond, stock traders and economists have been mulling the possible implications of Bernanke’s visit and the next steps to come in Abenomics. Amid intense speculation about the chances of helicopter money, and the certainty of further fiscal stimulus ordered by the prime minister, Japanese shares have rallied for four consecutive days while the yen has weakened. The Japanese currency weakened sharply in late afternoon trading in Tokyo, and reached just shy of 106 around 6am ET, having soared nearly 600 pips in the past 4 days.

And with the Yen - the world's carry currency - plunging, global stocks have climbed with U.S. equity index futures. European shares rose to a three-week high and emerging-market equities advanced for a sixth day. South Africa’s rand and Russia’s ruble were among the biggest gainers against the yen after a gauge of metal prices climbed to a nine-month high and oil rebounded from a two-month low. The pound advanced as traders awaited the Bank of England’s first interest-rate decision since the U.K. voted to leave the European Union.

“The expectations of a two-pronged stimulus approach -- both fiscal and monetary -- have definitely put the yen under pressure,” said Peter Dragicevich, a foreign-exchange strategist at Commonwealth Bank of Australia in London.

Meanwhile, as Japan prepares to formalize helicopter money, the BOE is set to ease in a more conventional way in less than an hour: “Everyone is focused on the BOE and whether or not they will announce more stimulus and cut rates.”

The Stoxx Europe 600 Index rose 1 percent at 10:55 a.m. in London, paring its losses since Britain’s referendum on June 23. All industry groups in the gauge climbed, led by carmakers and commodity producers. The MSCI Emerging Markets Index added 0.7 percent in its longest winning streak since April. The gauge advanced to 8.6 percent this year and trades at the highest valuation in more than a year. The MSCI World Index of developed markets has gained 2.1 percent in 2016. Futures on the S&P 500 Index added 0.8%. BlackRock and JPMorgan are scheduled to report earnings before the market opens. Yum! Brands Inc. jumped 3.1 percent as the company raised its forecast after its KFC chain performed better than expected in China. Analysts predict second-quarter profits will drop 5.7 percent at S&P 500 firms, which would make it the fifth straight quarterly decline, the longest streak since 2009.

Sovereign debt fell in the U.S., the U.K., Japan and Germany. The yield on U.S. Treasuries due in a decade rose two basis points to 1.50 percent, while that on Japanese debt increased by two basis points to minus 0.26 percent. Yields climbed four basis points in the U.K. and Germany to 0.78 percent and minus 0.05 percent, respectively.

Global market snapshot
  • S&P 500 futures up 0.8% to 2162
  • Stoxx 600 up 0.9% to 339
  • FTSE 100 up 0.8% to 6726
  • DAX up 1.5% to 10076
  • German 10Yr yield down less than 1bp to -0.07%
  • Italian 10Yr yield down 2bps to 1.19%
  • Spanish 10Yr yield down 2bps to 1.13%
  • S&P GSCI Index up 0.6% to 360.1
  • MSCI Asia Pacific up 0.2% to 133
  • Nikkei 225 up 1% to 16386
  • Hang Seng up 1.1% to 21561
  • Shanghai Composite down 0.2% to 3054
  • S&P/ASX 200 up 0.4% to 5412
  • US 10-yr yield up 2bps to 1.49%
  • Dollar Index up 0.08% to 96.29
  • WTI Crude futures up 0.6% to $45.02
  • Brent Futures up 0.6% to $46.53
  • Gold spot down 1.2% to $1,326
  • Silver spot down 0.9% to $20.17
Top Global Headlines:
  • Bernanke Floated Japan Perpetual Debt Idea to Abe Aide Honda
  • Fed’s Harker Says Two Interest-Rate Hikes May Be Needed in 2016
  • Volkswagen’s 3-Liter Car Recall Plan Rejected by California: Talks continue on how to fix VW, Audi, Porsche vehicles
  • Monsanto Said to Revive Talks With BASF on Bayer Alternative: Monsanto board said split over merits of Bayer, BASF deals
  • UBS, BofA Merrill Lynch Lead Wealth Managers With $3 Trillion: Volatile markets, ‘hesitating’ clients crimp industry assets
  • Google Said to Face Added EU Antitrust Charges, WSJ Reports: EU Commission accuses co. of breaching EU antitrust rules by imposing strict contractual terms with its advertising service
  • Wanda in Talks to Buy 49% of Viacom’s Paramount, WSJ Reports: Any agreement could face opposition from Sumner Redstone
We start the overnight update with Asian markets, where it was another mostly quiet session for equities with participants awaiting the Bank of England rate decision. Nikkei 225 (+0.95%) traded with modest gains to continue its 4-day winning streak amid source reports that fiscal stimulus worth around JPY 10tr1 could be announced later this month. Upside in ASX 200 (+0.43%) had been curbed by the decline in crude prices seen yesterday post DoE's, while a lacklustre CNY 20bIn liquidity injection failed to lift the Shanghai Comp (-0.22%) out of the red.10yr JGBs traded flat amid the continued upside seen in Japanese stocks while a disappointing 5yr auction in which the b/c, and average yield were lower than prior failed to have a significant impact on price action.

Top Asian News
  • Bernanke Floated Japan Perpetual Bonds Idea to Abe Adviser Honda: Prominent foreign economists drawn into nation’s policy making
  • TSMC Profit Tops Estimates as China Phones Make Up for Apple: Co. raised planned 2016 capex
  • Fast Retailing Cuts Profit Forecast for Third Time This Year: Stronger yen eroded Uniqlo-owner’s earnings from overseas
  • UBS Said to Have Flagged Suspicious 1MDB Transactions to MAS: Suspicious transactions prompt investigation of accounts involved
  • Great Eagle’s Lo Halts $330 Million London Project After Brexit: Group had planned to buy land in Shoreditch for Eaton Hotel
  • Singapore Exchange Says Won’t Resume Trading at 2pm Local Time: Shares including DBS Group, Singapore Airlines not trading
Much of the price action so far today took place as European participants arrived at their desks, with significant moves seen early on amid mounting expectations for BoE and Japanese stimulus, but light newsflow thereafter has led ti subdued trade as we move closer towards the BoE rate decision. European equities saw significant upside through the open and trade in firm positive territory (Euro Stoxx: +1.4%). In terms of a sector break down, the likes of financials, materials and energy names are the best performers, while the defensive sectors healthcare and utilities are the session's laggards. Italian banks Banca Monte dei Paschi and UniCredit lead the way higher in stock specific terms after Italian press reports suggested that a capital increase was on the card for both Co.'s. Despite much of the focus on macro news falling on the potential for further easing for the likes of UK and Japan, fixed income markets have been somewhat indecisive so far today, seeing initial downside before a turnaround by mid-morning. As such, by mid-morning Bunds are on the way to closing the opening gap and trading firmly back above the 167 level.

Top European News
  • Bank of England Rate Cut in Focus as Brexit Rattles Economy: Traders are pricing in about an 80% chance of a rate reduction
  • May Draws Line Under Cameron Era as Johnson Named to Brexit Team: May fires Osborne, appoints Hammond U.K. finance minister
  • Boris Johnson an Undiplomatic Pick as Britain’s Top Diplomat: Former mayor said Kenyan ancestry affected Obama view of U.K.
  • Deutsche Boerse Edges Closer to Investor Approval for LSE Deal: Shareholder approval rises to 53% -- near 60% minimum needed
  • Commerzbank Quarterly Profit Didn’t Improve, Handelsblatt Says: 1Q net income fell 52% to EU163m y/y
  • Credit Suisse Said to Lift Salary, Chop Allowance for Some Staff: Other lenders have made similar moves in response to EU rules
In FX, the biggest story remains the Japanese yen which weakened 1.1 percent versus the dollar, after earlier strengthening as much as 0.5 percent. The pound strengthened 0.6 percent to $1.3229, having touched $1.3338 on Wednesday, the highest since July 4. Sterling rallied even amid rising speculation that the central bank will cut its benchmark rate for the first time since 2009 to support the U.K. economy from the fallout of Brexit. Futures pricing shows the chance of a reduction at this meeting has climbed to 85 percent, compared with 11 percent on June 23, the day of the nation’s referendum.“Currency investors see a rate cut today as a done deal,” Valentin Marinov, head of Group-of-10 currency strategy at Credit Agricole SA’s corporate and investment-banking unit in London, wrote in a client note. “The BOE will struggle to exceed the already dovish market expectations and this will help the pound to consolidate in the aftermath of the meeting."

In commodities, West Texas Intermediate crude oil rose 1 percent to $45.20 a barrel, after tumbling 4.4 percent on Wednesday as U.S. data showed crude stockpiles fell an eighth week, the longest declining streak since June 2015.The LME Index of six base metals rose to the highest since Oct. 15 on Wednesday as nickel climbed on potential supply disruptions and copper advanced on speculation policy makers’ efforts to spur economic growth will boost demand for metals. Zinc and aluminum rose, while tin fell. Gold declined 1.2 percent to $1,327.12 an ounce, after gaining 0.7 percent in the last session. Corn increased 2 percent in Chicago, climbing for a third day as forecasts for hot and dry weather in the U.S. Midwest raised concern crop yields will deteriorate.

On today's calendar, in addition to the much anticipated rate cut by the BOE due out shortly, in the US we’ve got the latest weekly initial jobless claims number and also the June PPI report (market expectations are for +0.3% mom at the headline and +0.1% mom at the core). Fedspeak wise Lockhart (at 4.15pm) is set to opine this afternoon and George (6.15pm BST) later this evening. As we noted earlier JP Morgan highlights the earnings calendar while Delta Airlines is also due to report.

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg
  • European equities enter the North American crossover in positive territory with all eyes now firmly placed on the BoE at 1200BST/0600CDT
  • The median expectation for the BoE is for the bank to cut rates by 25bps but analysts are very much split in their views
  • Looking ahead, highlights include BoE Rate Decision, US PPI & Initial Jobless Claims & Earnings from JP Morgan & Blackrock
US Event Calendar
  • 7am: Bank of England Bank Rate, est. 0.25% (prior 0.5%)
  • 8:30am: Initial Jobless Claims, July 9, est. 265k (prior 254k)
  • 8:45am: Bloomberg U.S. Economic Survey, July
  • 9:45am: Bloomberg Consumer Comfort, July 10 (prior 43.5)
  • 10:30am: EIA natural-gas storage change
  • 11:15am: Fed’s Lockhart speaks in Victor, Idaho
  • 1:15pm: Fed’s George speaks in Oklahoma City
  • 7pm: Fed’s Kaplan speaks in St. Louis
DB's Jim Reid concludes the overnight wrap

The market is pricing an 80% chance of a 25bps cut today with economists a little more split as to whether they do or not (30 out of 54 are expecting a cut). DB's George Buckley thinks it's a close call but on balance believes the BoE will wait the extra three weeks until the August meeting when a lot more data will be available for the post referendum period. Supporting this he says that the comments from the BoE pre-referendum seemed to hint at waiting to tailor the response to the world that emerges after the vote. The BoE will be compiling the quarterly Inflation Report/analysis of the economy coinciding with the August meeting. He thinks delaying may be the preference and they can buy themselves time with a sufficiently dovish statement today. The markets have offered the BoE an opportunity not to rush given the recent rally. Politics may also be involved to some degree. Without knowing what the new administration's policy will be, a wait and see approach maybe gives them powder for a more comprehensive package down the line. It's a fine line though and we're highly likely to see action by the August meeting at the very least.

Staying with the UK, last night should remove any doubt that Brexit does indeed mean Brexit as new PM Theresa May appointed Brexit campaigners David Davies and Boris Johnson Secretary for exiting the EU and Foreign Secretary respectively. So the long roadmap to exiting the EU started being formulated as of last night.

Away from this, today brings the first key US earnings report of the season with JP Morgan reporting before market opening. That will kick start a run of quarterly bank reports that we’re due to get in the next ten days or so including Citi and Wells Fargo on Friday and BofA, Goldman Sachs and Morgan Stanley next week. Markets hit a bit of a brick wall yesterday with the recent rally showing some signs of fatigue so these upcoming earnings reports could provide a bit of direction again.

Indeed it was a large leg lower for Oil which weighed on sentiment yesterday. WTI plunged -4.38% yesterday and tested those Monday low’s again back below $45/bbl after the latest EIA data showed evidence of an unexpected increase in gasoline supplies last week. Energy stocks were under pressure as a result and it ended with the S&P (+0.01%) fluctuating between modest gains and losses and closing pretty much flat. The Stoxx 600 (-0.13%) closed just in the red although European Banks (Stoxx Banks -1.51%) and the FTSE MIB (-1.15%) stood out. That was actually despite some more positive chatter around Italian Banks with the news that a second bank support fund to supplement Atlante is being discussed.

Meanwhile, sovereign bond markets reversed some of their weakness this week with 10y and 30y Treasury yields in particular 4-5bps lower following a strong 30y auction. In another eye catching stat for the week, a new 10y Bund was issued yesterday with a negative yield (-0.05%) for the first time ever. It’s the first Eurozone 10yr sovereign bond to be issued with a negative handle yield and joins Japan as the second G7 member to do such.

As we flick over to the latest in Asia this morning, most major bourses are following the lead from Wall Street and Europe yesterday and trading with a relatively cautious tone, although the outlier is again Japan where the Nikkei (+0.76%) and Topix (+0.75%) continue to benefit from the elevated expectations that stimulus is around the corner. Elsewhere, the Hang Seng (+0.02%), Shanghai Comp (-0.36%), Kospi (-0.06%) and ASX (+0.35%) are a bit more mixed although moves have been modest. As expected the Bank of Korea kept rates on hold this morning, although they did move to cut growth and inflation expectations this year.

Moving on. There was a bit of Fedspeak for markets to take account of yesterday. Earlier in the day we heard from Dallas Fed President Kaplan (moderately hawkish) who said that the recent US employment report shows signs of making progress in reducing labour market slack but that a ‘slow, gradual, careful’ approach to raising rates is still appropriate. Kaplan added that there are two effects coming from the current slow GDP growth environment. He noted that it means that the Fed will ‘make progress on our dual mandate but it might be slower than it would be otherwise’ and that the other impact ‘is that the neutral rate is probably lower than it would be otherwise’. Meanwhile and speaking overnight, Philadelphia Fed President Harker (also moderately hawkish) said that he believes inflation will return to target sometime next year and that ‘I anticipate that it may be appropriate for up to two additional rate hikes this year and that the funds rate will approach 3% by the end of 2018’.

Staying in the US, datawise yesterday there wasn’t too much to add to the debate. Import prices rose a less than expected +0.2% mom in June (vs. +0.5% expected) with the YoY rate now at -4.8% from -5.0%. The June Monthly Budget Statement revealed a smaller than expected surplus during the month ($6.3bn vs. $19.0bn expected) with receipts down -3.9% yoy. Later in the evening the Fed’s Beige Book revealed that the US economy has expanded at a modest pace since mid-May and that ‘districts reporting on overall growth expect it to remain modest’. The text also suggested that labour market conditions were said to have remained stable with employment continuing to grow modestly and wage pressures remaining ‘modest to moderate’.

The Bank of England also released its Q2 credit conditions survey yesterday. The main take away from the summary was the reference to the outlook post-Brexit with the summary revealing that major UK lenders expect the availability of secured credit to be little changed in the near term but the demand for secured credit to fall. The text also revealed that the availability of credit to the corporate sector is expected to hold steady, although a further tightening is expected for the commercial real estate sector.

Before we look at today’s calendar and just wrapping up the data yesterday, France revised down their final June CPI print to +0.1% mom from +0.2%, although the YoY rate stayed as is at +0.2%. More notable was the weaker than expected Euro area industrial production report for May (-1.2% mom vs. -0.8%) which has resulted in the YoY rating fall to +0.5% from +2.2%.

Looking at the day ahead, this morning in Europe the overriding focus will of course be on the aforementioned BoE meeting at midday, especially with no data coming out of note. This afternoon in the US we’ve got the latest weekly initial jobless claims number and also the June PPI report (market expectations are for +0.3% mom at the headline and +0.1% mom at the core). Fedspeak wise Lockhart (at 4.15pm) is set to opine this afternoon and George (6.15pm BST) later this evening. As we noted earlier JP Morgan highlights the earnings calendar while Delta Airlines is also due to report.

http://www.zerohedge.com/news/2016-...more-details-emerge-about-japans-helicopter-m
 

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#24
Frontrunning: July 14


by Tyler Durden
Jul 14, 2016 8:11 AM

  • BoE surprises markets by keeping rates on hold, signals August move (Reuters)
  • Bank of England Signals August Stimulus as Rate Kept at 0.5% (BBG)
  • JPMorgan results boost futures, but BoE move trims gains (Reuters)
  • Bernanke Floated Japan Perpetual Debt Idea to Abe Aide Honda (BBG)
  • Oil bounces after big losses but glut persists (Reuters)
  • Britain's new PM May gives Johnson big job, says needs time before Brexit talks (Reuters)
  • Boris Johnson Is Reborn as U.K. Foreign Secretary (WSJ)
  • Drugmakers’ Pricing Power Remains Strong (WSJ)
  • U.K.’s New Brexit Czar Sees December 2018 as Likely Leaving Date (BBG)
  • China vows to protect South China Sea sovereignty, Manila upbeat (Reuters)
  • Google Skews Search Results to Push Own Products, EU Alleges (BBG)
  • In Senator Tim Kaine, Clinton weighs a 'safe' VP pick (Reuters)
  • BlackRock’s Assets Under Management Rise on Rush to Fixed Income (WSJ)
  • VW Faces Setback as California Rejects 3-Liter Car Recall Plan (BBG)
  • Chinese man to serve U.S. prison term for military hacking (Reuters)
  • Saudi King leaves country on holiday, crown prince to manage affairs in his absence (Reuters)
  • If Wal-Mart Can't Bring Manufacturing Back to America, How Can Trump? (BBG)
  • Trucking Company Failures on the Rise (WSJ)
  • Consumer Reports urges Tesla to disable auto steering (Reuters)
Overnight Media Digest

WSJ

- Donald Trump's campaign chairman Paul Manafort said an announcement for Trump's running mate would be made on Friday, marking the end of a lot of speculation. http://on.wsj.com/29EzYkT

- Legislation to fight the growing painkiller - and heroin -abuse epidemic is headed to the president's desk following a rare bipartisan agreement, after the Senate passed a compromise bill 92-2 with both sides of the aisle seeking ways to confront an increasingly urgent problem. http://on.wsj.com/29EzSJO

- The charitable trust that controls Hershey Co could be asked to consider the sale of one of America's most famous brands to snack giant Mondelez International Inc at the same time the trustees are under scrutiny by Pennsylvania's attorney general. http://on.wsj.com/29EA4sM

- Tesla Motors Inc introduced a limited-range version of its Model X sport-utility vehicle that is priced starting at $75,200 in a bid to capture new buyers who can't afford its higher-end models. http://on.wsj.com/29EA9N6

FT

*The Scottish group Aberdeen Asset Management has reopened its property funds for trading after liquidity issues forced a host of funds to halt withdrawals last week following the Brexit vote.

*George Osborne has stepped down from the British government and has been succeeded as chancellor by Philip Hammond.

*The Co-operative Group is to sell 298 of its smaller food shops to convenience store group McColl's, in a move designed to whittle down its portfolio of small sites and put the focus on larger outlets.

*Royal Dutch Shell is bracing for strike action on seven of its North Sea platforms in the biggest industrial dispute to hit UK oilfields for a decade. Workers for Wood Group, which provides maintenance services to Shell, voted on Wednesday in favour of strike action to protest against changes to pay and conditions.

NYT

- If former Fox News anchor Gretchen Carlson's suit against her former boss Roger Ailes is forced into arbitration, her chances of winning are lessened, and little will be made public about it. http://nyti.ms/29KAuLy

- As the political chaos after Britain's vote to leave the European Union starts to subside, one of the most pressing issues for the country's new leader is how to keep doing business with the bloc's vast single market of 500 million consumers. Many are pointing to fjord-flecked Norway as a possible model for the way forward. http://nyti.ms/29zQ8pT

- As part of a broad revamping of Time Inc, Alan Murray was named chief content officer replacing Norman Pearlstine, who will stay on as vice chairman. http://nyti.ms/29PM5JN

- Cravath, Swaine & Moore, a pre-eminent law firm on Wall Street, plans to announce on Thursday that Faiza Saeed, one of the two leaders of its mergers practice, will become the 16th presiding partner in the nearly two-century history of the law firm. http://nyti.ms/29ygGsz

Canada

THE GLOBE AND MAIL

** Premier Rachel Notley's New Democratic Party government has assembled a diverse 18-member oil sands advisory panel to help figure out how to prepare the industry for keeping greenhouse gas emissions under a target of 100 megatonnes by 2030. (http://bit.ly/29yJHUL)

** Canadian Tire Corp Ltd says it sees a brighter future with former chief executive officer Stephen Wetmore than with the man who replaced him less than two years ago in the top job, Michael Medline. (http://bit.ly/29yJsZY)

NATIONAL POST

** American exchange-traded fund (ETF) provider WisdomTree Investments Inc on Thursday became the latest firm to launch ETFs in Canada as the competition for investors in the space heats up. (http://bit.ly/29yLs4m)

** The central bank on Wednesday kept its trend-setting lending level unchanged at 0.5 percent, where it has been for the past year - a remnant of the collapse of crude oil prices that began to be felt in the latter part of 2014. The bank acknowledged in its quarterly Monetary Policy Report that domestic growth "has been uneven". (http://bit.ly/29yKQfb)

** Fortified Trust, a new name and source of funding for the Bank of Montreal, placed $750 million of Class A notes in its initial foray to the market this week. The AAA-rated notes came with a five-year term and a coupon of 1.67 percent and ended up being 50 percent larger than originally anticipated. (http://bit.ly/29yLaun)

** The Toronto Star will conduct an "independent facilitation process review" of the newsroom's culture, after the union that represents the newspaper's employees last month called for an independent investigation in the wake of reporter Raveena Aulakh's suicide and the events surrounding her death. (http://bit.ly/29yLkly)

Britain

The Times

North Sea oil workers to strike over pay cuts of up to 30 pct

Up to eight North Sea oil platforms owned by Royal Dutch Shell Plc were facing the threat of strike action last night after rig workers rejected plans for further steep pay cuts. (http://bit.ly/29zp89U)

The Guardian

Co-op sells 298 small shops to McColl's

The Co-operative Group has sold 298 small shops to convenience store specialist McColl's Retail Group Plc for 117 million pounds ($153.53 million). The deal, which is subject to approval by the competition watchdog, leaves the Co-op with about 2,450 stores after the sale of 100 properties including 36 stores to Hilco in May. (http://bit.ly/2aaGzz2)

The Telegraph

Deutsche Boerse reaches halfway point in vote for London Stock Exchange merger

Deutsche Boerse AG has reached the halfway point in signing up investors to support its merger with the London Stock Exchange Group Plc, enabling a wave of investors tied up in tracker funds to join in to back the deal. The Frankfurt-based markets operator said 53 percent of its investors have now tendered their shares in support of the 21- billion-pound ($27.56-billion) tie-up, after a month-long tender process that has now been extended. (http://bit.ly/29EaQdN)

Towergate fined 2.6 mln stg for failing to ring-fence client money

Towergate has been fined 2.6 million pounds ($3.41 million)by Financial Conduct Authority for failing to ring-fence client funds, leaving accounts with shortfalls totalling 12.6 million pounds ($16.53 million) between 2005 and 2013. The Financial Conduct Authority has also fined the firm's former chief financial officer, Timothy Philip, 60,000 pounds and banned him from overseeing client and insurer money. Mr Philip left the firm in 2012. (http://bit.ly/29ELRTP)

Sky News

Poundland Agrees Takeover Deal Worth 597 million stg

A South African retailer has agreed terms to enter the UK's single price discount market in a 597-million-pound ($783.38-million) takeover of Poundland Group Plc. Steinhoff International said the chain, which has more than 900 stores across the UK and Ireland, would be a "complementary fit" for its growth ambitions across Europe. (http://bit.ly/29QV9zL)

The Independent

Aberdeen lifts property fund suspension

Aberdeen Asset Management Plc has lifted the suspension on its 2.7 billion pounds ($3.54 billion) UK property fund, the company said in a statement today. The fund manager was one of six funds that froze withdrawals last week after uncertainties about UK property prices saw investors rush to withdraw their cash. In total, around 18 billion pounds of client money was affected. (http://ind.pn/29vtt2w)

http://www.zerohedge.com/news/2016-07-14/frontrunning-july-14
 

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#27
Gold and Silver Market Morning: July-14-2016 -- Gold and silver prices marked down, waiting for the Bank of England today!
By: Julian D. W. Phillips, Gold/Silver Forecaster - Global Watch
The Chinese gold market was not convinced by the fall in New York and lifted the gold price, reflecting internal Chinese demand. After the close and ahead of London’s opening the gold price was ‘marked down’ pretty heavily and after the LBMA price setting was trading at $1,326.65. No doubt, if Shanghai prices remain higher, its banks in London will move physical gold from their London bases to Shanghai to arbitrage prices and shift more bullion into China.
 

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#29
Shipping & Energy 07/14:

Peak Oil Review: 11th July, 2016
http://www.resilience.org/stories/2016-07-11/peak-oil-review-11th-july-2016

Peak Oil Review: A Midweek Update - 14 July 2016
http://www.resilience.org/stories/2016-07-14/peak-oil-review-a-midweek-update-14-july-2016

India Begins Oil And Gas Roadshow In Houston
http://oilprice.com/Latest-Energy-News/World-News/India-Begins-Oil-And-Gas-Roadshow-In-Houston.html

North Sea Offshore Workers Back Strike Action Over Drastic Pay Cuts
http://oilprice.com/Latest-Energy-N...Back-Strike-Action-Over-Drastic-Pay-Cuts.html

INFOGRAPHIC: The volatile history of crude oil markets
http://www.mining.com/web/infographic-the-volatile-history-of-crude-oil-markets/

Containership Pays Nearly $1 Million Toll to Cross the Expanded Panama Canal
http://gcaptain.com/containership-pays-nearly-1-million-toll-to-cross-the-expanded-panama-canal/

Port of Savannah Welcomes First Ship Through Expanded Panama Canal
http://gcaptain.com/port-of-savannah-welcomes-first-ship-through-expanded-panama-canal/

South Korean Shipyard Workers Prepare to Strike
http://www.maritime-executive.com/article/south-korean-shipyard-workers-prepare-to-strike

New Zealand Readies for Biggest Container Ship Visit
http://www.maritime-executive.com/article/new-zealand-readies-for-biggest-container-ship-visit

Oil Traders Hoarding Most Oil Since 2009 Amass North Sea Fleet
http://www.hellenicshippingnews.com/oil-traders-hoarding-most-oil-since-2009-amass-north-sea-fleet/

Firms scrap July US LPG cargo loadings due to low spot prices -sources
http://www.hellenicshippingnews.com...argo-loadings-due-to-low-spot-prices-sources/

China’s Record Crude Oil Imports Slowing as Fuel Exports Surge
http://www.hellenicshippingnews.com/chinas-record-crude-oil-imports-slowing-as-fuel-exports-surge/

Loneliest Natural Gas Terminal in U.S. Bucks Pipeline Trend
http://www.hellenicshippingnews.com/loneliest-natural-gas-terminal-in-u-s-bucks-pipeline-trend/

Live International Companies’ Shipping Stocks
http://www.hellenicshippingnews.com/live-international-shipping-stocks/
 

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#30
Mornings With "V": Desperation Is Everywhere
ROGUE MONEY


Streamed live 1 hour ago
V runs through what the news of the day is and what to be looking forward to.
 

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#31
ALERT: Major Economic Update
Fabian4Liberty


Published on Jul 14, 2016
 

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#34
Nothing to see. Best bet if you're interested is to listen in one window, play around on GIM or surf the web in another link.

Bitgold, Peter Schiff, and Helicopter Money
bigdad06


Published on Jul 14, 2016
Please subscribe! I speak with Jeff Nielson about the Federal Reserve's new helicopter money policy announced in Australia yesterday and the links are here http://www.zerohedge.com/news/2016-07... and here http://www.zerohedge.com/news/2016-07... . Jeff's recent article on interest rates is here https://www.sprottmoney.com/blog/the-... . Peter Schiff breaks down Bitgold's flaws here https://www.youtube.com/watch?v=_VHbL... . Peter Schiff joins Bitgold here https://www.youtube.com/watch?v=td7K7... . Silver, gold, and all markets are still being suppressed by the computers and the link is here https://www.youtube.com/watch?v=xg-p5... . Thanks for watching!
 

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#36
A Brexit in Name Only?
By: John Browne, Senior Economic Consultant at Euro Pacific Capital
The BREXIT vote on June 23rd was part of a growing global trend in which ordinary people are expressing a desire to retain national sovereignty regardless of the cost and suffering that may be involved. The result is rightly seen as a repudiation of the political and financial elites, and should be viewed as evidence that the economic optimism presented in the halls of power has found scant credibility on the streets. The same sentiments can be seen on this side of the Atlantic in the surprising successes of the Donald Trump presidential campaign.

The Curious Case of Vanishing Lady Liberty; Only Gold and Silver Remember Her
By: Guy Christopher
The very first word anyone ever saw on a circulating United States coin was the word “LIBERTY.” From half-cents to silver dollars, each featured the likeness of an unnamed woman. The images varied, thanks to different engravers, but together they became recognized as Lady Liberty. Many, maybe most, of young America's citizens were illiterate. "Liberty" may have been the first word they ever learned to read.

Gold Seeker Closing Report: Gold and Silver Fall While Stocks Climb to New Record Highs
By: Chris Mullen, Gold-Seeker.com
Gold edged up to $1346.77 in early Asian trade before it dropped as much as $23.37 to $1320.43 at about 10AM EST and then rallied back higher for most of the rest of trade, but it still ended with a loss of 0.74%. Silver slipped to as low as $20.023 and ended with a loss of 0.64%.
 

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#37
FWIW..................

Guerrilla Update: Prequel To Global Chaos
ROGUE MONEY


Streamed live 10 hours ago
V Discusses The latest News From Around The World That Impacts The Broader Economic Picture
 

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#38
Global Stock Rally Halted In Aftermath Of Latest French Terror Attack


by Tyler Durden
Jul 15, 2016 6:23 AM

The tremendous rally of the past 4 days that has sent global stocks soaring in recent days has finally been capped and European shares, S&P futures are all modestly lower following a deadly terror attack in Nice, France. Meanwhile Asian stocks rose as Chinese economic data beat estimates, with Q2 GDP rising by 0.1% more than the estimated 6.6% on the back of stronger housing data. European stocks halted this week’s rally as French shares retreated following a deadly terror attack in Nice.

As expected in the aftermath of another tragic terrorist attack on French soil, which killed at least 80 and prompted France to extend a state of emergency, travel and leisure shares were among the worst performers on the Stoxx Europe 600 Index. The MSCI Asia Pacific Index briefly exceeded its highest close of the year as the Hong Kong-listed stocks of Chinese companies extended their biggest weekly gain in four months and Taiwan’s equities entered a bull market. Japan’s Topix index capped its best week since 2009 and the yen slid on prospects for stimulus: Japan's currency has now seen the biggest weekly drop in the 21st century on the back of rising chatter of helicopter money. The pound strengthened, oil fell and gold was poised for its first weekly loss since May.

The impact of the Nice terror attack on markets is not expected to have a lasting impact: past terror attacks on financial markets has typically proved short-lived and actually led to market rebounds. Multiple attacks in Paris in November that left 130 dead, as well as bombings that killed 191 people on Madrid commuter trains in March 2004 and left more than 50 dead in London in July 2005 spurred selloffs in equities that were erased days or weeks later.

"The attack in Nice is of course truly a horrible accident, but in terms of the market reaction, these kinds of shocks do not last very long," said Michael Kapler, an equities manager at Mittelbrandenburgische Sparkasse in Potsdam, Germany. "There are rumors that the Japanese central bank will deliver the next liquidity push to the markets, and we are expecting the Bank of England to ease in August. The focus is there, as well as on the earnings season both in Europe and the U.S."

More than $4 trillion has been added to the value of global equities since June 27 as the U.S. economy outperforms projections and speculation mounts that policy makers will take steps to limit the fallout from the U.K.’s vote to leave the European Union.

“We’re seeing better-than-expected growth, particularly in the U.S. economy, and we’ve got a higher likelihood of central bank stimulus,” Michael McCarthy, the Sydney-based chief market strategist at CMC Markets, told Bloomberg Radio. “These ideas are opposing, but at the moment they are both supporting equities. At some point there is going to have to be a resolution of that.”

But not yet, and as the chart below shows, global equities are now valued at $64.5 trillion, the highest level of 2016 as central banks around the globe scramble to preserve confidence in capital markets as the social fabric frays around the globe.



In the main economic news overnight, China’s economic growth held at 6.7% in the second quarter, beating the 6.6% consensus expansion forecast. Figures for factory output, retail sales and new lending also topped estimates, while investment slowed. The U.S. also has a data dump coming on Friday, with gauges of household spending, inflation, industrial production and consumer confidence scheduled

The Stoxx Europe 600 Index fell 0.2 percent as of 9:02 a.m. London time, trimming this week’s gain to 3.2 percent. France’s CAC 40 Index lost 0.3 percent as hotel operator Accor SA slid more than 3 percent. Swatch Group AG tumbled 12 percent after the watchmaker said first-half profit plunged 50 percent to 60 percent, the most in at least a decade. The MSCI Asia Pacific Index added 0.4 percent, boosting this week’s gain to more than 4 percent. Taiwan’s Taiex index extended its advance from a three-year low in August to more than 20 percent, meeting the common definition of a bull market. The Hang Seng China Enterprises Index boosted this week’s advance to more than 6 percent and the Shanghai Composite Index held near a three-month high.

Futures on the S&P 500 Index fell 0.1%, after the benchmark ended the last session at a record. Larry Fink, who runs the world’s largest asset manager as chief executive officer of BlackRock Inc., said Thursday that the stock rally is unlikely to be sustained without support from corporate profits. The earnings season got off to a promising start this week, with JPMorgan Chase & Co. and Alcoa Inc. exceeding estimates. Wells Fargo & Co. and Citigroup are among firms posting results on Friday.

Global Market Snapshot
  • S&P 500 futures down 0.2% to 2153
  • Stoxx 600 down 0.4% to 337
  • FTSE 100 down 0.4% to 6630
  • DAX down 0.3% to 10038
  • German 10Yr yield up less than 1bp to -0.04%
  • Italian 10Yr yield up less than 1bp to 1.22%
  • Spanish 10Yr yield up less than 1bp to 1.17%
  • S&P GSCI Index down 0.5% to 360.5
  • MSCI Asia Pacific up 0.4% to 134
  • Nikkei 225 up 0.7% to 16498
  • Hang Seng up 0.5% to 21659
  • Shanghai Composite up less than 0.1% to 3054
  • S&P/ASX 200 up 0.3% to 5430
  • US 10-yr yield down less than 1bp to 1.53%
  • Dollar Index down 0.11% to 95.97
  • WTI Crude futures down 1% to $45.21
  • Brent Futures down 1% to $46.88
  • Gold spot down 0.2% to $1,333
  • Silver spot down 0.6% to $20.20
Top Global News
  • Monsanto’s Choice: Live the Dream With BASF, or Just Cash Out: Bayer boosted its bid for Monsanto by $3 a share to $125
  • Blackstone to Purchase 32% Stake in Stockholm Landlord Carnegie: To pay 100 Swedish kronor ($11.8) each
  • Microsoft Wins Protection for E-Mails Stored Outside U.S.: Government warned of loophole in favor of hackers, fraudsters
  • What’s Next for Google as Europe’s Antitrust Complaints Increase: Co. has weeks to appeal but conversations could last years
  • Technology Leaders Call Trump a ‘Disaster’ for U.S. Innovation: Twitter’s Williams, Box’s Levie among 100-plus who sign letter
  • Xerox Said to Reject Merger Deal With R.R. Donnelley: WSJ: Proposal called for deal structured as Reverse Morris Trust
  • Mastercard Seeks to Boost Business in Germany: Reuters: Revenue in Brazil is 5x Germany’s
  • Tesla in Talks for Store in Korea’s Biggest Mall, Shinsegae Says: Starfield Hanam complex covers 70 football fields in area
  • S. Korea FTC May Impose 1t Won Fine on Qualcomm, Maeil Reports: FTC to decide on the size of fine for antitrust violations after final review
* * *
Looking at regional markets, Asian equities were initially buoyed by a plethora of strong Chinese data, in which GDP, Industrial Production and Retail Sales beat expectations. While firm liquidity and lending data releases indicated that tighter liquidity conditions had eased. As such, this has subsequently dictated price action with the ASX 200 (+0.4%), Hang Seng (+0.3%) and Nikkei 225 (+0.6%) all higher despite coming off best levels (some attributing the move to Europe reacting to the terror attacks in Nice) with the latter also supported by a softer JPY as well as index heavyweight Fast Retailing (+18%) hitting limit up following a positive earnings update. The Shanghai Comp (-0.01%) underperformed as the data would reduce the need or likelihood of further easing. JGBs fell overnight amid spill over selling in USTs, coupled with the rise in yields across the curve, although the 10-yr benchmark pulled off worst levels having found support at the 153.00 level.

Chinese Data Recap:

GDP (Q2) Y/Y 6.7% vs. Exp. 6.6% (Prey. 6.7%)
  • GDP SA (Q2) Q/Q 1.8% vs. Exp. 1.6% (Prey. 1.1%, Rev. 1.2%)
  • GDP YTD (Q2) Y/Y 6.7% vs. Exp. 6.6% (Prey. 6.7%)
Industrial Production (Jun) Y/Y 6.2% vs. Exp. 5.9% (Prey. 6.0%)
  • Industrial Production YTD (Jun) Y/Y 6.0% vs. Exp. 5.9% (Prey. 5.9%)
Retail Sales (Jun) Y/Y 10.6% vs. Exp. 9.9% (Prey. 10.0%)
  • Retail Sales YTD (Jun) Y/Y 10.3% vs. Exp. 10.2% (Prey. 10.2%)
New Yuan Loans (CNY)(Jun) 1.38t1n vs. Exp. 1tIn (Prey. 985.5bIn)
  • Aggregate Financing (CNY)(Jun) 1.63tIn vs. Exp 1.1tIn (Prey. 659.9bIn)
  • Money Supply MO (Jun) Y/Y 7.2% vs. Exp 6.1% (Prey. 6.3%)
  • Money Supply M1 (Jun) Y/Y 24.6% vs. Exp. 22.6% (Prey. 23.7%)
  • Money Supply M2 (Jun) Y/Y 11.8% vs. Exp. 11.4% (Prey. 11.8%)
  • Fixed Assets Ex Rural YTD (Jun) M/M 9.0% vs. Exp. 9.4% (Prey. 9.6%) PBoC to inject CNY
Top Asian News
  • China’s Economy Stabilizes as Consumer Spending Perks Up: Retail sales and factory output beat estimates in June
  • Yen Heads for Biggest Weekly Drop Since 1999 on Stimulus Bets: Currency pivots from June’s best performer to July’s worst
  • Singapore Home Sales Fell in June to Lowest Level in Four Months: Developers sold 536 units last month versus 1,058 in May
  • Infosys Cuts Sales Outlook as Companies Curtail IT Spending: Shares slump as much as ~11% after quarterly sales disappoint
  • Line Shares Send Positive Message at Their Market Debut: Stock soars as much as ~52% in Tokyo
  • Samsung in Talks With BYD on Buying Stake in Electric-Car Maker: BYD says Samsung has been actively pushing talks forward
  • Fast Retailing Surges Most in 7 Years After 3Q Profits Beat Est.: Shares rise as much as 15%, biggest intraday gain since Oct. 2009
European equities enter the North American crossover lower in what has been a relatively choppy start to the session ahead of upcoming data releases from the US with participants also digesting last night's terror attacks in France. Swiss listed Swatch (-11.1%) are among the worst performers in Europe today after reporting a fall in operating profit and net income for H1. Also underperforming today are Accor (-2.9%) as well as airline names across the board in the wake of the tragic events in France. Fixed income price action has been relatively muted today after the events of yesterday, with Bunds modestly lower today ahead of the key risk events later include a number of speakers, include BoE's Haldane as well as US data including CPI and retail sales.

Top European News
  • France in Shock as Third Terror Attack Upends Hollande: Bastille Day attack in Nice leaves 80 dead, scores injured
  • Swatch Profit Plunges as Demand Falls Across Europe, Asia: Drop is biggest in operating profit in at least 15 years
  • European June Car Sales Slow as Brexit Vote Cuts Confidence: VW 1H market share lingers at 5-year low, Renault registrations jump the most among top 10 carmakers
  • Carney Brexit Crisis Leadership Morphs to BOE Policy Hesitation: Traders had priced in more than 80% probability of rate cut
  • At Spain’s Undersized Phone Carriers, Years of Deals Beckon: Telecable owner predicts mergers after losing Yoigo auction
  • Husqvarna 2Q Operating Profit Beats Estimates, Sales Miss: Kepler says Gardena a highlight
In FX, the yen slipped 0.4 percent to 105.80 per dollar, headed for a 5 percent weekly loss that would be its steepest slide in 17 years. Ben Bernanke, the former chairman of the Federal Reserve, met Japanese leaders in Tokyo this week and was reported to have previously floated the idea of the nation issuing perpetual bonds. Officials on Wednesday denied a Sankei newspaper report that they’re considering the policy known as helicopter money -- which involves direct financing of government spending by the central bank. The pound climbed 0.2 percent, poised for a 3.2 percent weekly advance that would mark its best performance since 2009. The Bank of England kept its benchmark interest rate at a record-low 0.5 percent on Thursday and Theresa May took over as prime minister a day earlier, restoring some calm to U.K. politics after last month’s Brexit vote prompted David Cameron’s resignation. The won rose to its strongest level since April and Taiwan’s dollar climbed to an 11-month high after global funds pumped more than $3 billion into their stock markets this week.

In commodities, crude oil fell 1.2 percent to $45.15 a barrel in New York. Prices almost doubled between January and June, signaling that markets were finally healing as falling U.S. output, rising demand and disruptions from Nigeria to Canada all helped eliminate a global production surplus. Now, as consumption falters and halted supplies return, analysts from BNP Paribas SA and Societe Generale SA warn prices may sink towards $40. Gold fell 0.2 percent, headed for a weekly loss of 2.5 percent. "Gold prices might be further tested if tonight’s data from the U.S., particularly the retail sales data, is better than expected,” said Brian Lan, managing director of Singapore-based GoldSilver Central Pte. “This will again bring out the speculation of a rate hike from the Fed.”

On today's US calendar, along with that retail sales data, June CPI (+0.3% mom headline and +0.2% core expected) will be a big focus, while empire manufacturing (+5 expected), industrial production (+0.3% mom expected), business inventories (+0.1% mom expected) and the flash July University of Michigan consumer sentiment print (headline 93.5 expected to be unchanged) are all due out. Away from the data there’s also some Fedspeak to highlight with Williams due to speak at 6pm BST and Kashkari and Bullard at an event at 6.15pm BST. The BoE is also due to release the text of a speech by Chief Economist Andy Haldane from June 30th this morning so that may be interesting. Finally Citigroup and Wells Fargo (both before the open) highlight the corporate earnings calendar.

Bulletin Headline Summary from RanSquawk and Bloomberg:
  • European equities trade modestly lower ahead of upcoming data releases with a disappointing update from Swatch weighing on the luxury sector and markets digesting last night's terror attacks in France
  • BoE's Haldane has weighed on GBP after eluding to material easing next month from the central bank alongside their QIR
  • Looking ahead, highlights include US Retail Sales, CPI, Empire Manufacturing, Industrial Production, U. of Mich. Sentiment, BoE's Carney, Fed's Bullard, Williams & Kashkari
US Event Calendar:
  • 8am: Bank of England’s Carney speaks in Toronto
  • 8:30am: Retail Sales Advance m/m, June, est. 0.1% (prior 0.5%)
  • 8:30am: CPI m/m, June., est. 0.3% (prior 0.2%)
  • 8:30am: Empire Manufacturing, July, est. 5 (prior 6.01)
  • 10am: Business Inventories, May, est. 0.1% (prior 0.1%)
  • 10am: U. of Mich. Sentiment, July P, est. 93.5 (prior 93.5)
  • 1pm: Baker Hughes rig count
  • 1:15pm: Fed’s Kashkari and Bullard speak in St. Louis
DB's Jim Reid concludes the overnight wrap

We’re straight to the overnight events where firstly there’s some tragic news to report out of France. In what has just been described as a terrorist attack by President Francois Hollande, late last night a truck struck a crowd in Nice celebrating Bastille Day, resulting in a death toll of at least 80 people according to the BBC with many more said to be injured. The driver of the truck was subsequently shot by police, while weapons were discovered inside the truck. The news has dominated the wires overnight and will no doubt influence the European agenda today.

Also overnight we've seen the latest data dump in China. Most notable is the Q2 GDP report which showed growth as holding steady at +6.7% yoy. Market expectations were for +6.6%. It also keeps China’s economy on track relative to the government’s growth target of 6.5%-7.0%. June activity data was a bit more mixed. Retail sales (+10.6% yoy vs. +9.9% expected) rose six-tenths from the prior month and industrial production (+6.2% mom vs. +5.9% expected) rose two-tenths. However fixed asset investment (+9.0% ytd yoy vs. +9.4% expected) declined six-tenths from May. Meanwhile we’ve also had the latest credit and money aggregate data this morning. M0, M1 and M2 money supply all grew more than expected in June, while aggregate financing (1.63tn yuan vs. 1.10tn expected) and new yuan loans (1.38tn yuan vs. 1.00tn expected) were both more than expected, expanding from 985bn yuan and 660bn yuan respectively.

Chinese equity markets have been choppy since that data and have fluctuated between gains and losses. Bourses are little changed as we got to print (Shanghai Comp +0.08%, CSI 300 +0.03%). Elsewhere markets are generally firmer. The Nikkei (+1.16%) is again leading the way, while the Hang Seng (+0.80%), Kospi (+0.54%) and ASX (+0.58%) are also up. The China sensitive AUD is up +0.34% having traded softish leading into the data, while the Yen (-0.83%) has continued to sell off.

The Yen sell off has been one of the features of the last few days. Indeed Ben Bernanke’s visit this week has sparked a wave of excitement after he was said to have told PM Abe to push through with Abenomics and that there are tools left to support the economy. Special economic advisor Hamada suggested that the possibility of helicopter money may have also been discussed in the talks. Indeed since then the chatter around helicopter money has only really gathered momentum. Yesterday the focus was on one of Abe’s closest and well respected aides, Etsuro Honda, who said that at a meeting with Bernanke in April the former Fed Chief was said to have floated the idea of the government issuing perpetual bonds which the BoJ would then directly buy. The WSJ is also reporting that Honda has suggested that the government should include a minimum of ¥10tn in its planned extra budget in 2016, as well as increasing its asset purchasing target by including new assets, increasing stock purchases and lengthening the maturity on government bonds it buys. Hondo was quoted as saying that ‘if you take those actions, I believe that you can produce effects similar to those than can be generated by what Bernanke refers to as helicopter money’. Despite the exact details still being unclear, expectations for fiscal stimulus are rising by the day at the moment with the BoJ meeting now just two weeks away. Markets have certainly been boosted by the prospect of such with the Nikkei +9.8% this week as we type and the Yen -5.6%.

Talking of fresh stimulus, kudos to DB's George Buckley who went against the grain and argued why the BoE wouldn't cut rates yesterday. It's clear from what the bank said that they would likely ease soon though. The August meeting is only three weeks away and that's where we're likely to see fresh stimulus. Interestingly though, new chancellor Hammond yesterday said that he wants to work closely with the BoE and others in preparing an Autumn statement and plan of action for the economy. To us this strikes at co-ordinated action with a chance that the BoE saves some of its powder until the government is ready to act. As we said immediately after the vote, we think Brexit means that the UK will end up with helicopter money in all but name this year. Higher fiscal spending and more QE.

Away from Japan and the tragic events in France, a big focus for markets today - in what is a bumper day for data - is the June US retail sales print this afternoon. Our US economists highlight that retail sales capture approximately 25% of total consumer spending. Over the past three months spending has accelerated to a 5.8% annualized rate which is the quickest rate of advance since the three months ending June 2015. Our colleagues note however that over the last 12 months, retail sales have increased a modest 2.6%. They believe that this is likely to remain the trend because job growth is slowing while wage pressures remain fairly modest. Going forward, relatively subdued income growth, which has been evident in employee tax withholding receipts, is likely to constrain consumer spending on a sequential basis. Our colleagues are projecting real consumption growth of 2.5% this quarter and next, which would produce modest YoY gains of 2.6%. Energy prices will likely also weigh on spending given the recent rebound. In terms of expectations for this afternoon, our colleagues are forecasting -0.2% mom at the headline and +0.2% mom at the core. The market is a little more optimistic at +0.1% and +0.4% respectively.

In terms of markets yesterday, having taken a pause for breath on Wednesday, equities climbed again with US markets in particular recording fresh new record highs. Indeed that was the case for the S&P 500 (+0.53%) and Dow (+0.73%) as banks led the way following the better than expected results out of JP Morgan. Much of that had to do with stronger than expected trading numbers, particularly in fixed income, while loan growth during the quarter was encouragingly strong and broad-based. There’s unsurprisingly going to be alot of focus on how banks’ view the impact of Brexit, although JPM’s CFO downplayed the event to being a ‘political and economic challenge’ rather than any sort of financial crisis, while also suggesting that the impact on global growth and the US economy should be small.

Meanwhile, European equity markets generally held their reasonably strong opening gains with the Stoxx 600 in particular closing up +0.80%. The FTSE MIB also climbed +1.63% and Euro Stoxx Banks rallied +3.11% to be up an impressive 9% so far this week. Sovereign bond markets were weaker in tow with 10y Bund yields another 5bps higher at -0.042% and 10y Treasuries 6bps higher at 1.536%. They are now up nearly 18bps this week. The one standout yesterday was the FTSE 100 (-0.24%) although that largely had to do with the +1.49% rally for Sterling which closed at 1.3343, but did touch 1.3475 immediately post BoE.

Elsewhere, it was a fairly quiet day for data yesterday although over in the US the June PPI readings came in a little higher than expected. Indeed the headline print of +0.5% mom was two-tenths above consensus and so lifted the YoY rate up to +0.3% from -0.1%. The core ex food and energy reading of +0.4% mom (vs. +0.1% expected) was also well above expectations. The only other data yesterday was last week’s initial jobless claims data which came in unchanged at 254k which lowered the four-week average to 259k. At this time of year it’s not too uncommon to get a bit of volatility in the data given the holiday period.

Before we look at the rest of today’s calendar, we also heard from the hawkish Kansas City Fed’s George who reiterated her view that she thinks rates are too low relative to the performance of the economy and that the Fed should resume gradual rate hikes. Atlanta Fed President Lockhart (centrist) said that he can see at least one and possibly two hikes this year and finally overnight Dallas Fed President Kaplan (slightly hawkish leaning) said the Fed is making good progress towards its dual mandate.

Looking finally at the day ahead, datawise this morning in Europe we’ve got the final June CPI report for the Euro area where no change to the +0.2% mom headline reading is expected. The Euro area trade balance reading for May is also due. Over in the US and along with that retail sales data, June CPI (+0.3% mom headline and +0.2% core expected) will be a big focus, while empire manufacturing (+5 expected), industrial production (+0.3% mom expected), business inventories (+0.1% mom expected) and the flash July University of Michigan consumer sentiment print (headline 93.5 expected to be unchanged) are all due out. Away from the data there’s also some Fedspeak to highlight with Williams due to speak at 6pm BST and Kashkari and Bullard at an event at 6.15pm BST. The BoE is also due to release the text of a speech by Chief Economist Andy Haldane from June 30th this morning so that may be interesting. Finally Citigroup and Wells Fargo (both before the open) highlight the corporate earnings calendar.

http://www.zerohedge.com/news/2016-...-halted-aftermath-latest-french-terror-attack
 

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