European Union

Janet Yellen’s $200-Trillion Debt Problem

More than $10 trillion of government bonds now trade at negative yields. And another $10 trillion or so worth of U.S. stocks trade well above their long-term average valuations. And there’s more than $200 trillion of debt in the world – with about $60 trillion added since the global financial crisis. All of this sits on the Fed’s financial applecart. Does Janet Yellen dare upset it? Nah. It will have to upset itself.

Frontrunning: June 21

  • Tiny Tilt in ‘Brexit’ Polls Roils Global Markets (WSJ)
  • Oil prices slip after rally as market turns cautious (Reuters)
  • What to Watch for in Janet Yellen’s Congressional Testimony (WSJ)
  • Cracks emerge in the European consensus on Russia (Reuters)
  • Iraqi forces retake two Falluja districts from Islamic State, push west (Reuters)

German Top Court "Reluctantly" Rejects Challenges To ECB's OMT Program, Lists 6 Conditions

With traders already on edge in illiquid markets ahead of the Breferendum, one potential risk to sentiment today was the long-awaited decision by Germany’s powerful constitutional court whether Mario Draghi's OMT, or Outright Monetary Transactions, was constitutional. However, any lingering concerns were swept away when the Kardinals of Karlsruhe "reluctantly" ruled in favor of the one of the European Central Bank’s most important tools to fight financial crises, which however was caveated with six specific conditions.

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.

The New Iron Curtain - A Monument To Washington's Imperial Folly

A foreign army consisting of 31,000 soldiers from an anti-American alliance are conducting military “exercises” a few miles from San Diego. Hundreds of tanks converge on the Rio Grande, while jets from 24 countries converge in attack formation, darting through Mexican skies. It isn’t hard to imagine Washington’s response. Yet that’s precisely what has been happening on Russia’s border with the NATO alliance, as the cold war returns.

The Fed Has Lost Its "Myth Magic"

The Fed provides us with an illustration of how institutionalized cowardice has become worldwide. Rather than own up to the mess it has made, it hides behind a silly and superficial myth - that it can protect the economy with centrally planned interest rates. And now, thanks largely to its own mismanagement, the world is deep in debt, with far too many people all over the world who earn far too little income to support it.

Cable Pumps'n'Dumps On Latest Polls As Telegraph Backs "Leave"

With bookies' odds shifted by a mere GBP25k bet overnight, and decoupled from the only post-Cox death polls' "leave" bias, traders were focused on the release of new polls tonight... YouGov "Leave" +2pts; ORB "Remain" +7; and NatCen "Remain" +6

Why Brexit Is Better For Britain

Mises argues that whenever the state meddles with the free market, it reduces the standard of living that had prevailed prior to any state intervention. Essentially, a Brexit will remove another layer of government intervention from the lives of Brits, and therefore there shouldn’t be any fear of a Brexit. On the contrary. A Brexit may hold the key to make Europe abandon a doomed course, bringing it to its senses and back onto the road of freedom and prosperity.

Is This The "Morally Unacceptable" Reason Why Cable Flash-Crashed?

Update: It appears the catalyst for the flash-crash in Cable was headlines about Pro-EU campaign executive director Will Straw's "morally unacceptable" plot to use Jo Cox's death to make case for Remain and "call out" Brexit supporters...

GBPUSD just air-pocketed 100 pips - shortly after a very boring 2Y Treasury auction. The plunge from 1.47 to 1.4575 was extremely sharp.

European Stocks Surge Most In 10 Months (To One-Week Highs)

Europe's Stoxx 600 index surge 3.7% today - the biggest rip since the bounce after August 2015's crash - as hope runs wild that The UK will stay in the zombified European Union. Spain and Italy are leading the surge, as are banks (especially UK banks)...

Frontrunning: June 20

  • Britain's rival EU camps resume campaign as polls show momentum for 'In' (Reuters)
  • Britain's 'In' campaign wins more support, buoys markets (Reuters)
  • Brexit Campaigners Are Deceiving Voters, Cameron Says (BBG)
  • German trade body lowers export forecast: 'Brexit is poison' (Reuters)
  • Beyond the Turmoil, Central Bankers Dread Brexit’s Shadow (BBG)

Global Stocks Soar, Pound Surges Most Since 2008 As Brexit Odds Tumble

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.