Creditors

Frontrunning: June 23

  • ‘Brexit’ Vote: U.K. Heads to the Polls in Historic Referendum on EU Membership (WSJ)
  • The Brits Have No Good Options on Europe Vote (BBG)
  • Stocks Rise With U.S. Futures as Pound Gains While U.K. Votes (BBG)
  • Trump and Clinton Place Bets to Woo Undecided Voters (BBG)
  • China brushes off doubts over support on South China Sea, says it is growing (Reuters)

Voting Begin: Stocks Surge, Sterling Hits 2016 Highs, Futures Flirt With 2100

On the day voting for the UK referendum finally began, what started off as a trading session with a modest upward bias, promptly turned into a buying orgy in painfully illiquid markets shortly after Europe opened as an influx of buy orders pushed European stocks 2% higher, propelled by cable which was above 1.49 for the first time since December and USDJPY climbing over 1.05 in sympathy, following the release of the final Ipsos Mori poll which showed Remain at 52% to 48% for leave.

Brazilian Telecom Giant Files Largest Bankruptcy In Nation's History

Brazil’s troubled telephone company Oi SA on Monday filed the largest bankruptcy protection request in the country’s history just days after debt restructuring talks with creditors collapsed. The filing of Oi and six subsidiaries lists 65.4 billion reais ($19.26 billion) in debt.

Stocks, Sterling Rise As "Brexit" Fears Forgotten; Dollar Drops Ahead Of Yellen Speech

Tuesday's overnight price action has been a continuation of yesterday's Brexit relief rally, as investors focused on the two latest polls favorable to Remain in Thursday's referendum (while ignoring the YouGov poll which gave Leave a small lead), and hoping the doom and gloom by George Soros will convince the undecideds to vote against Leaving. As a result, global stocks continued their advance while pound extending the biggest rally since 2008.

Brexit: All Eyes On European Banks

England’s upcoming vote on June 23rd may be the first of several votes that reveal the deep flaws embedded in the European Union. In particular, Europe’s undercapitalized and overleveraged banks are dangerously exposed to rising political unrest.

Austerity Kills! Bank Of Greece Admits "Greeks' Health Deteriorating, Life Expectancy Shrinks"

The economic crisis and the strict austerity bound to the Greek bailout agreement kills... according to The Bank of Greece's Monetary Policy Report, noting that that "while it takes longer to record the exact effect, trends show a deterioration of the health of Greeks in the years of loan agreements and austerity cuts." Finally, and quite stunningly, The BoG report warns that the economic crisis and the devaluation of the health sector threaten to shrink the life-expectancy.

'X' Marks The Spot - Wages Started Losing When The Dollar Delinked From Gold In 1971

At “X” Marks the Spot, "[s]omething happened," and the wages of goods-producing workers flatlined, never to recover. As it happens, “X” correlates with Nixon shutting down the Bretton Woods gold standard in 1971 and the epic failure to get it fixed and restored in 1973. The drag, after a modest lag, filtered into the working economy. The rest is persistent stagnation for median families.

Puerto Rico Bonds Jump As Supreme Court Strikes Down Debt Restructuring: Only Congress Can Bail Them Out Now

"Our constitutional structure does not permit this court to rewrite the statute that Congress has enacted," explained Justice Clarence Thomas, siding with bondholders challenging the law, the court ruled 5-2 that the measure was barred under federal bankruptcy law. Puerto Rico bond prices are rallying on the news. The decision leaves Puerto Rico dependent on Congress to extricate the island from its difficulties.

Futures Slide On Rising Dollar As Global Bond Yields Hit Fresh Record Lows

Please do not adjust your screens: that off-green color you are seeing, that is not a malfunction. Yes, for the first time in six days, global stocks are lower with the MSCI all-country world index dipping from a 6 month high dragged down by lower European and Japanese equity markets, as the USDJPY dropped to a fresh five-week low while Treasury yields continued to hit new record lows because, as Bloomberg explains, "traders assessed the outlook for the global economy."

Next Banking Scandal Explodes in Spain

The Spanish investment group Blackbird claims that Banco Popular bank is offering customers dirt-cheap loans or refinancing deals, at an interest rate of just 2.5%, as long as they use some of the funds to purchase the bank’s new shares. 

Futures Levitate To Session Highs As ECB Enters The Bond Market; Crude Hits $51

In an overnight session dominated by the latest political developments out of the US where Hillary Clinton officially claimed the democratic nomination, the financial newsflow focused on China's trade data, where exports fell 4.1% from a year earlier, in line with expectations, but imports dropped 0.4% from a year earlier, the smallest decline since they turned negative in November 2014, driven entire by soaring "imports" from Hong Kong - aka capital outflows - which soared by 243% y/y.  The other main news was the official launch of the ECB's corporate bond buying, which helped drive government bonds yields in German to new record lows, and the average yields on investment-grade corporate debt below 1%.

Theranos: Unicorn Valley's Madoff Moment

In “The Valley” the last 7 or 8 years has seen a morphing of true business fundamentals into a place of pure financially adulterated fantasy. Here is where the story changed from “Something built that customers love and will pay for," into “Build something that can give the illusion VC’s want to see and hear so they can pay for the right to then sell that illusion to Wall Street and we all get rich.” True business metrics or morals be damned.