While the president will will take to the podium in 30 minutes (so realistically 60) his challenger is up now. Watch live as he spins the largely unexpected SCOTUS decision on the Affordable Care Act.
Just as we noted yesterday, the ludicrous late-day ramp in European equity markets relative to the absolute nonchalance of credit (corporate, financial, and sovereign) markets, has now reverted totally as broadly speaking Europe ends the day in the red. Spain and Italy stock indices bounced a modest 0.5% on the day as the UK's FTSE and Germany's DAX suffered the most (down 1-1.5%) on Banking Lie-Bor drama and unemployment respectively. Corporate credit leaked a little wider on the day with the investment grade credits underperforming (dragged by weakness in financials). Financials were notably weak with Subordinated credit significantly underperforming Senior credit (bail-in anyone?). Sovereigns were weak overall (not just Spain, Italy, and Portugal this time) as Spain's 2s10s has now flattened to year's lows. Swiss 2Y rates dropped further - to record closing lows at -35.2bps (after being -39bps at their best/worst of the day - suggesting all is not well, and Bunds largely tracked Treasuries as the SCOTUS decision came on and pushed derisking across assets. EURUSD tested towards 1.2400 early on but is holding -35pips or so for now at 1.2430.
Totalitarian governments, like persistent forms of cancer, have latched onto the long history of man, falling and then reemerging from the deep recesses of our cultural biology to wreak havoc upon one unlucky generation to the next. The assumption by most is that these unfortunate empires are the product of bureaucracies gone awry; overtaken by the chaotic maddening hunger for wealth and power, and usually manipulated by the singular ambitions of a mesmerizing dictator. For those of us in the Liberty Movement who are actually educated on the less acknowledged details of history, oligarchy and globalized centralism is much less random than this, and a far more deliberate and devious process than the general unaware public is willing consider.
Unfortunately, the final truth is very complex, even for us…
"What happens when the Bernanke Put dies?" is the salient question that Charles Biderman of TrimTabs asks and answers in today's effusive excursion into a market that will face both deflation and inflation. In response to the question of what happens after the current miasma of markets ends, Biderman opines that assets will deflate - once the Bernank's constant handing over of trillions to bankers is done, equity and bond prices will deflate and commodity prices will inflate. Nominal USD-priced commodities will soar against a deflating currency as asset prices for everything else will deflate. Concerned, just as we have been, that outbreaks of violence will occur in Europe as their 'safety net' unravels, Charles adds that while the US faces turmoil, Europe will get their ahead of us as "their entire welfare-state-based economies will need a do-over". He does offer a silver-lining for the post-modern world with some thoughts on the productivity boom (and not just leverage) that an online world will bring and while he believes US housing has bottomed for the lowest 2/3rds of the population, he remains extremely cautious on equity prices and their inevitable crash.
Here it is in its entirety: 193 pages of politicized goodness, or for the time press-ones, one quick word cloud.
After some initial confusion in stocks (though Precious Metals and Treasuries were convinced) equities are now down markedly (with Hospitals holding up while Managed Care is down) but it seems that US citizen/investors are selling down their gold, silver, and stocks to 'save up' for the new Obamacare tax...
Here we go:
- OBAMA'S HEALTH-CARE OVERHAUL UPHELD BY U.S. SUPREME COURT
- 5-4 decisions, with Roberts joining the court's liberals.
- Court says federal government can’t threaten to withhold money from states that don’t fully comply on Medicaid extension
- CHIEF JUSTICE ROBERTS SAYS MANDATE IS NOT A VALID EXERCISE OF CONGRESS' POWER UNDER COMMERCE CLAUSE AND NECESSARY AND PROPER CLAUSE
- HEALTH LAW'S MEDICAID EXPANSION LIMITED BY U.S. SUPREME COURT -RTRS
- ROBERTS, JOINED BY TWO JUSTICES, SAYS MEDICAID EXPANSION VIOLATES CONSTITUTION -RTRS
- FOUR JUSTICES DISSENT, SAYING THE PATIENT PROTECTION AND AFFORDABLE CARE ACT GOES BEYOND -RTRSCONGRESSIONAL POWERS UNDER CONSTITUTION -RTRS
- ScotusBlog conclusion: So the mandate is constitutional
- The bottom line: the entire ACA is upheld, with the exception that the federal government's power to terminate states' Medicaid funds is narrowly read
- The ACA is upheld as a tax, not a penalty
We posted this on Monday. With the SCOTUS ruling due out in minutes, here again is a preview of the various permutations that can come out today, and their impact on capital markets: "BofA outlines five possible scenarios and their potential impact across the healthcare sectors. They base the likelihood of their scenarios on a review of the March oral arguments, previous circuit court decisions, as well as surveys of legal experts and former Supreme Court clerks. Everything you need to know about the possible outcomes and actions to take."
The British Bankers Association Is "Shocked", "Shocked" That Lie-Bor Manipulation Is Going On In HereSubmitted by Tyler Durden on 06/28/2012 - 09:27
The British Bankers Association - the entity responsible for organizing and compiling the daily Lie-bor fixes, and which as Zero Hedge incidentally reported two weeks ago continues to report one absolutely meaningless and unchanged number in "Spirit Level... Or Li(e)bor?" has just opined on the topic of massive Lie-bor fixing collusion and manipulation. In short: they are absolutely "shocked."
As Merkel, via Schaeuble, continues unwaveringly in Germany's pursuit of their consistent call for controls if the rest of Europe gets their money, chatter on desks is that maybe its not Zee Germans that are the problem at the Summit but Les French with Hollande's insistence that "there can be no transfer of sovereignty if there is no improvement in solidarity." Strategic Alpha's Maurice Pomery is "not convinced that Germany should be deemed the stubborn aggressor in all of this" and as we have been vociferously stating "Merkel is NOT going to be bullied into any wealth transfer; forget it" and "Hollande cannot make sweeping socialist changes and expect Germany to pay for it." Critically, given the levels of financial repression, and Newedge's comment that "the counter-intuitive moves Hollande has made by cutting some pension ages and rising the minimum wage have scared the market" and taken together with his comments about growth, the markets perceive Hollande as lacking a strong commitment to austerity. Until he demonstrates otherwise, France is vulnerable to a repatriation spiral (going the same way as Spain then Italy - where the markets have increasingly repatriated themselves into domestic enclaves) and the inevitable endgame where domestic demand for bonds becomes unsustainable.
Two data points out today: the first was Initial Claims which did precisely as expected: it improved even as it deteriorated: why - the media headline will blast: "Initial Claims Decline by 6K" because last week's number of 387K was just revised to 392K. Ironically, enough, this was just as at least we expected. From 8:27 am.
Last week's Initial Claims number of 387K will be revised to at least 390K in 3 minutes
— zerohedge (@zerohedge) June 28, 2012
That what actually happened was a miss of baseline expectations, in that claims would drop to 385K is irrelevant. Just as it is irrelevant that next week, today's 386K number will be revised to 390K. And the media manipulation song and dance revisions will continue. More importantly, and continuing the 99 week cliff issue, 60,000 people dropped off initial and extended claims in the past week. In other words, 1.260 million people have fallen off extended benfits in the past year: people who no longer collect any form of unemployment benefits. Surely they have all "found jobs."
As it dawns upon the world that Ms. Merkel means exactly what she says and is not going to back down you may expect a quite negative reaction in the equity markets and a widening of spreads for some risk assets along with a strengthening of the Dollar. I am talking about the “Trend” here and not some trading strategy for today’s business. Germany is not going to flinch and cannot both due to local politics and to the now obvious fact that Germany has just about reached the limits of what she is financially able to do with a $3.2 trillion economy. To put it quite simply; they have run out of excess cash and more European contributions are only going to weaken the balance sheet of the nation and seriously imperil Germany’s financial condition. I say, one more time, Germany is not going to roll over and all of the pan European schemes brought forward by the bureaucrats and the poorer nations are not going to go anywhere. There is one novel possibility here and that is that the Germans, like the British, may opt out. Germany, Austria, the Netherlands, Finland et al may just say, “Fine, go ahead if you wish to have Eurobonds and the like but we will not guarantee them.” All plans do not need to have an either/or solution and this may well be Germany’s position in the end which would place the periphery nations and France in quite an interesting, if unenviable, place.
Earlier today there was an amusing headline generated in the WSJ "Berlin Blinks on Shared Debt" which we noted in the frontruninng section and promptly mocked, because it was patently 100% untrue, and would have a chance of happening only if markets were in full on crash mode. It also goes completely against what everyone in Germany has been saying for weeks and months. Still, the stupid markets, and especially the EURUSD algos keep responding as more and more media sources caught on to this headline. It took just under 40 minutes for Germany to get out of bed and slap the WSJ down, which as of this morning has about the same credibility as the Guardian in the Euro-rumor mongering department.
- GERMAN FINANCE MINISTRY SPOKESMAN SAYS SCHAEUBLE DID NOT SAY GERMANY WILL MOVE SOONER THAN EXPECTED TOWARDS SHARED LIABILITY FOR DEBT