Eurozone

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%.

Would New All-Time Highs Negate The Bear Market?

... it is not uncommon for the markets to briefly make new “all-time” highs during a correction process as emotional sentiment runs ahead of fundamental and economic deterioration.

Frontrunning: June 7

  • Soothing Fed sounds send stocks to five-week high (Reuters)
  • Clinton reaches magic number in fight for Democratic nomination (Reuters)
  • Euro-Area Economy Grows Faster as Consumption Gathers Pace (BBG)
  • Trump unyielding on Hispanic judge uproar (Reuters)
  • European Firms Find ‘Increasingly Hostile’ Environment in China (WSJ)
  • China tells U.S. to play constructive South China Sea role (Reuters)

"Rising" Rates Hit New Lows

Despite ubiquitous calls and expectations for rising interest rates, yields on the long bond closed the week at a 52-week low.

Futures Flat Ahead Of Strike-Impacted Jobs Report; Commodities Approach Bull Market

After yesterday's two key events, the ECB and OPEC meetings, ended up being major duds, the market is looking at the week's final and perhaps most important event of the week: the May payrolls report to generate some upward volatility and help stocks finally break out of the range they have been caught in for over a year.

Exposing The ECB's Illusory Independence

"...the pretense of independence serves as a fig leaf for interventions that are not only politically driven, but that are also utterly inconsistent with the principles of liberal democracy."

Mario Draghi Explains Why 'Buying Corporate Bonds As Well' Will Work This Time - ECB Press Conference Live Feed

With rates left unchanged - deep in NIRP-land - amid an increasingly fragile banking system (see Italian bank stocks), we expect ECB chief Mario Draghi to reassure an anxious public how well QE is working (despite weak growth and tumbling PMIs), how great negative rates are for stimulating 'something' despite inflation's drift lower, and how his about-to-be-launched corporate bond buying bonanza will really solve the problems of the world (by enabling firms to lever up even more and buyback more stock?).

Preview Of Today's ECB Announcement

With the ECB announcement due in a few minutes, followed by Draghi's press conference, today's ECB meeting should be a relatively dull affair as they are currently in 'wait and see' mode with regards to previous policy actions. As RanSquawk notes, general consensus among analysts is that the ECB are to keep rates on hold this month and avoid added stimulus.

Another Reason To Vote Brexit: UK Taxpayers Biggest Funders Of 'Failed' Juncker "Immigration" Plan

British citizens seeking yet another reason to vote Brexit, have one in spades. The roots of this reason go back to last year when European Commission president Jean Claude Juncker hatched a 3-year plan to leverage €20 billion in seed capital to produce a €300 billion gain in Eurozone investment. As one might expected, the results are nonexistent even though Juncker has already used up the €20 billion in seed capital. Juncker now wants to up the seed capital, make the plan permanent, and extend the plan outside the EU to immigration zones such as Syria and Africa! Here’s the kicker. The UK ponied up the biggest share of this monstrous boondoggle so far.

The Message From The Collapsing Yield Curve

The FOMC is tightening monetary policy because Fed officials believe that the US economy is showing more signs of sustainable growth with inflation rising back near their 2% target. Yet the yield curve is warning that the Fed’s moves could slow the US economy and halt the desired upturn in the inflation rate. Most worrying for the Fed's narrative is the fact that the yield curve spread on a weekly basis has been highly correlated with the y/y growth rates in both the forward revenues and forward earnings of the S&P 500. The recent narrowing of the spread isn’t a good omen for either of them.