European Union

In Unprecedented Decision, Europe Will Sanction Spain, Portugal Over Deficits While Ignoring France, Italy

Confirming yet again that just like in the US, "some are more equal than others", moments ago the European Commission announced that it would seek sanctions for Spain and Portugal for breaching limits on budget deficits in an unprecedented step to enforce rules designed to prevent another debt crisis.  Punishing the Iberian countries will be a deeply contentious and divisive issue. That’s because while other countries including France and Italy have all received warnings in recent years after missing targets on deficit or debt, no country has so far been sanctioned. Until now.

As Redemption "Panic" Accelerates, Two More UK Property Funds Slash Value Of Their Property Assets

Legal & General's fund arm and F&C Investments both cut the value of their UK property funds on Thursday, as the industry seeks to stem a tide of redemption requests since Britain's vote to leave the European Union. More than 18 billion pounds of investor cash has been frozen in the last week as funds run by M&G Investments, Standard Life Investments and Threadneedle Investments, among others, suspended trading.

Following Near Record Buying Spree, Gold ETF Holding Rise Above 2,000 Tons, Highest Since 2013

Holdings in bullion-backed exchange-traded funds rose 4.1 tons to 2,001.4 tons on Wednesday, data compiled by Bloomberg show. That’s larger than the alleged gold reserves held by China (in reality China holds far more gold but it willing to only represent a fraction of its official holdings) the biggest consumer and a consistent central-bank buyer in recent months. The latest increase followed the biggest one-day gain since 2009 in the SPDR Gold Shares, the largest gold ETF.

Frontrunning: July 7

  • Global stocks and sterling bounce after Brexit bashing (Reuters)
  • FBI director to face Republican fire over Clinton email probe (Reuters)
  • UK's Hammond says Article 50 a decision for government, not parliament (Reuters)
  • GOP Puts Pressure on Clinton, FBI After Lynch Closes Email Probe (WSJ)
  • Gold’s Most Accurate Forecaster Says Prices May Go to $1,425 (BBG)
  • Central Banks Put Squeeze on Sovereign-Debt Market (WSJ)

European Stocks Storm Higher As Bank Fears Subside; US Futures Flat

After yesterday's afternoon surge in US stocks, facilitated by the "uncertain" Fed's FOMC Minutes, today the rest of global market are playing catch up with European stocks rebounding from one week lows, snapping the longest losing streak in three weeks, as well as Asia where most stock markets climbed, led by gains among energy producers as crude prices advanced, while a stronger yen weighed on Japanese shares.

Gundlach: "When Deutsche Bank Goes To Single Digits People Will Start To Panic"

"Banks are dying and policymakers don’t know what to do. Watch Deutsche Bank shares go to single digits and people will start to panic... you'll see someone say, 'Someone is going to have to do something'." Jeff Gundlach said on Wednesday that gold remains the best investment amid fears of instability in the European Union and prolonged global stagnation “Things are shaky and feeling dangerous,” Gundlach said. "I am not selling gold."

"Incredibly Stupid" Juncker Opens Pandora's Box

Someone who’s not known to be overly bothered by accountability or integrity is everybody’s favorite wino, European Commission President Jean-Claude Juncker. But Juncker, whatever else may be wrong with him, is not a stupid man. And unless I’m gravely mistaken, he has just saddled the European Union with a problem that could well trigger its undoing.

Domino #7: In Dramatic Twist, UK Property Fund Cuts Value Of Its Assets By 17%

Instead of suspending trading and implicitly disallowing redemptions, giant fund manager Aberdeen has forced investors in its UK Property fund to take a 17% haircut wiping hundreds of millions of dollars off its value. The fund stated that shareholders wishing to redeem will do so at a reduced price in order to reflect the current market environment and the fact that short term trading in the property market has "relatively penal consequences." Which makes us wonder - is all this post-Brexit selling because UK property prices are 20% over valued?

It's Not The Brexit Stupid!

Brexit is just a symptom of the disease eating away at the fabric of our global economy. Lehman’s collapse was not the cause of the 2008 worldwide financial crisis. It was just the excuse for something that was going to happen no matter what. Bad debt, bad bankers, bad regulators, bad politicians, media cheer leading, and a willfully ignorant populace were a toxic combination – and it’s worse today.

FOMC Minutes Reveal Fed Wanted More Info Before Hiking

Since June's FOMC statement, bonds and bullion have been well bid with stocks unchanged as rate-hike hopes collapsed. For those looking to glean insight from a confused Fed's minutes today, we wish them luck. As WSJ notes, the minutes can prove to be dated and that will be especially so given that Brexit occurred just days after, so the best we could hope for from today's minutes was "what-ifs."

  • *ALMOST ALL FED OFFICIALS SAW MAY PAYROLLS RAISING UNCERTAINTY
  • *SOME OFFICIALS SAID LOWER PAYROLLS MAY SIGNAL BROADER SLOWDOWN
  • *FOMC: PRUDENT TO WAIT FOR CONSEQUENCES OF U.K. VOTE

So nothing new whatsoever but definitely a Fed that is increasingly facing the realization that normalization is over as we draw readers' attention to the fact that the wordcount for 'uncertain' soared to 38.

Is Russia Winning The Oil Export War Against The Saudis?

The European Union might be skeptical about increasing its crude supply from Russia, but China seems to be keen on receiving more Russian Crude. Russian oil exports to this part of the world have doubled year over year last April at the expense of Saudi Arabia and Iran.