Moments ago Deutsche Bank stock, which has been well away from the headlines in the past two weeks, spiked following a Manager Magazin report according to which the Qatar and Abu Dhabi Sovereign Wealth Fund together with Chinese investors would be willing to raise their stake in DB to 25% in the case of a capital increase.
Global hedge fund tycoon and political provocateur George Soros is leading a war of symbols, namely flags and banners either resurrected or conjured up by his myriad non-profit groups, to stir religious, racial, and ethnic tensions the world over.
Amid what some might call self-inflicted economic collapse, Saudi Arablia has announced a $5.3 billion bailout of its banking system as interbank borrowing rates near the highest since Lehman. In what the supposedly central bank calls "supportive monetary policy...on behalf of government entities," is easing liquidity constraints with 28-day repo agreements and is the second liquidty injection this year.
WTI Crude is now down 6% from last week's highs, back below $47 as supply concerns (Abu Dhabi production rise and ConocoPhilips' CEO comments) and OPEC freeze talks doubts have combined with the biggest collapse in speculative short positions in history (following the Saudi statement) - removing the last 'short-squeeze' leg of support from this dead-cat-bounce.
If oil were to drop back under $40, not only would it precipitate even more selling of oil as momentum strategies flip, but it would catalyze a liquidation by those SWFs who thought they were done selling equities, leading to a return of the same sellers that pushed the S&P back to the low 1,900s a short 6 months ago. So for all those curious where stocks are going next, the simple answer is: keep an eye on what oil does next.
The Saudi circular ref (low oil prices -> budget deficits -> more oil pumping -> even lower oil prices) continues to iterate toward it's ultimate conclusion which (spoiler alert) will not be pleasant... and the banking system bailouts have only just begun.
Today we got the first official confirmation of just how vast the 1MDB money-laundering scheme was and that it stretched to the very top. What is now also confirmed, is that at the heart of the fundraising operation was none other than Goldman Sachs.
Global equities rallied and the pound strengthened the most since 2008, soaring by 300 pips since the Friday close as polls signaled the campaign for the U.K to stay in the European Union was gaining momentum. Haven assets including the yen, U.S. Treasuries and gold slumped. The Stoxx Europe 600 Index surged by the most since February as the MSCI Asia Pacific Index advanced with S&P 500 futures. Haven assets including the yen, U.S. Treasuries and gold slumped.
While it may very well not last and all of yesterday's gains could evaporate instantly if the Brexit vote is set to take place as scheduled, all 10 industry groups in the MSCI All-Country World Index advanced, with the index rising 0.7% trimming the week’s drop 1.6%. The Stoxx Europe 600 Index rose 1.4%. Futures on the S&P 500 were little changed, after equities Thursday snapped their longest losing streak since February. . Oil rose, paring its biggest weekly decline in more than two months. Bond yields around the globe fell.
The New York bank regulator has asked Goldman Sachs to "swiftly report" on its internal review of more than $6 billion in bond sales for 1MDB, Malaysia's failed sovereign wealth fund. In a letter, the New York bank regulator also asked Goldman to provide an overview, by June 14, of every investigation in the U.S. and abroad into its work for the fund. This is bad new for Mr. Kimora Lee.
Although oil has rebounded off the recent lows, the Saudi budget remains stretched and in an attempt to help raise revenues in the short term (and transition away from dependency on oil in the longer term), the government is weighing an income tax on expat workers. There are nine million foreigners living and working in Saudi Arabia said Mufrej Al-Haqbani, the country's labor minister, and Finance Minister Assaf said that there are no plans to tax Saudi nationals.
Every ugly jobs report has a silver lining, and sure enough following Friday's disastrous jobs report, global mining and energy companies rallied alongside commodities after the jobs data crushed speculation the Fed would raise interest rates this month. “The disappointing U.S. jobs report on Friday means that a summer Fed rate hike is off the table,” said Jens Pedersen, a commodities analyst at Danske Bank. “That has reversed the upwards trend in the dollar, supporting commodities on a broader basis. The market will look for confirmation in Yellen’s speech later today.”