Lloyds

Following yesterday's confusing exuberance, which saw the sluggish market rise in the last hours of trading as the latest Scottish poll showed a reverse of the "Yes" momentum (and fading Gartman's latest reco of course), overnight European jitters have re-emerged once more following a speech by Catalonia's Artur Mas, who has long pushed for independence of the region, and who said that while there are different ways Catalonia can vote, the important issue is that Catalans vote somehow. Mas says Spanish govt will likely try to block Catalan vote "the reasons why the central government is blocking the vote are political not legal", which in turn has once again brought attention to Europe's artificial, unstable and temporary political and monetary union, which threatens a reversion of the nightmare days from 2012 when Mario Draghi was promising he would do everything in his power to send the EUR higher (as opposed to now).

Quick update, and outline of reasons to suspect anxiety over Scottish independence has peaked. 

• Showtime for Apple: Big phones, smart watches and high expectations (Reuters)
• Bank of England Gov. Mark Carney Signals Spring Rate Rise (WSJ)
• Quebec Shows Scots Question Returns Even If Answer Is No (BBG)
• Hush money with a 9 year vesting period: Ex-SAC Fund Manager Martoma Sentenced to Nine Years in Prison (BBG)
• Dreams on hold, Brazil's 'new middle class' turns on Rousseff (Reuters)
• Fed to Hit Biggest U.S. Banks With Tougher Capital Surcharge (WSJ)
• Egypt court sentences Brotherhood leader, cleric to 20 years in jail (Reuters)

While overnight US equity futures have done nothing notable, what everyone's attention has been fixed on, in addition to the GBP and the read-through to all things UK-ish ahead of the Scotland independence referendum, is the sudden flare up in USDJPY trading and volatility, which exploded by some 100 pips in the past 24 hours hitting fresh post-2008 highs, on what appears to be a major capital reallocation move (it surely is not driven by any news) and/or forced squeeze. What is more perplexing is the change in correlations signals, because while until recently the USDJPY was synonymous with the E-Mini, and thus the S&P, as of late the USDJPY pair has moved tick for tick with the 10Year yield: almost as if the NY Fed's favorite HFT trading shop was instructed to change its vast array of signal inputs away from the S&P and to force a gentle levitation in the 10Y.

For those just catching up on the main news event of the weekend, namely the sudden surge in Scotland "Yes" vote polling surpassing 50% for the first time, here is a complete round up of the background, updates and expert reactions from RanSquawk, Bloomberg and AFP.

After being solidly ignored for weeks, suddenly the Scottish independence referendum is all anyone can talk about, manifesting itself in a plunge in the GBPUSD which ha slide over 100 pips in the past 24 hours, adding to the slide over the past week, and is now just above 1.61, the lowest since November 2013. In fact, the collapse of the unionist momentum has managed to push back overnight news from Ukraine, major Russian sanction escalations, Japan GDP as well as global trade data on the back burner. Speaking of global trade, with both China and Germany reporting a record trade surplus overnight, with the US trade deficit declining recently, and with not a single country in the past several month reporting of an increase in imports, one wonders just which planet in the solar system (or beyond) the world, which once again finds itself in a magical global trade surplus position, is exporting to?

• FTW: Europe Stocks Rise as Data Signals Need for Stimulus (BBG)
• More de-escalation: Dozens die in Ukraine in street battles, Donetsk shelling (Reuters)
• Calm largely holds in Missouri after grand jury opens shooting investigation (Reuters)
• Attorney General Eric Holder Vows Thorough Probe of Ferguson Shooting (WSJ)
• World’s Biggest Wealth Fund Slows Emerging Market Investment (BBG)
• Market Chilly to Argentine Debt Proposal (WSJ)
• Israeli air strike kills three Hamas commanders in Gaza (Reuters)
• Retooled Hamas Bloodies Israel With Help From Hezbollah (BBG)
• Investors Pour Into Vanguard, Eschewing Stock Pickers (WSJ)
• Fed Debates Early Rate Increases (WSJ)

• Russia bans all U.S. food, EU fruit and vegetables in sanctions response (Reuters)
• Snowden receives three-year Russian residence permit (Reuters)
• Headline of the day: Europe's Recovery Menaced by Putin as Ukraine Crisis Bites (BBG)
• Americans worry that illegal migrants threaten way of life, economy (Reuters)
• Almost 90% of Uninsured Won't Pay Penalty Under the Affordable Care Act in 2016 (WSJ)
• Germany’s Bond Advance Sends 2-Year Note Yield Below Zero (BBG)
• Gaza War’s Critics in Crosshairs as Israelis Back Offensive (BBG)
• The 1% May Be Richer Than You Think, Research Shows (BBG)
• Bank of America Near $16 Billion to $17 Billion Settlement (WSJ)
• Deep Water Fracking Next Frontier for Offshore Drilling (BBG)

• As we predicted yesterday, the "big" Gaza ceasefire lasted all of a few hours (Reuters)
• To Lift Sales, G.M. Turns to Discounts (NYT)
• Espirito Santo Family’s Swift Fall From Grace Jolts Portugal (BBG)
• Argentine Debt Feud Finds Much Fault, Few Fixes (WSJ)
• Fiat Says Ciao to Italy as Merger With Chrysler Ends Era (BBG)
• Euro zone factory growth eases in July as inflation fades away (Reuters)
• CIA concedes it spied on U.S. Senate investigators, apologizes (Reuters)
• Ukraine Reports Losses After Pro-Russian Ambush Near Malaysia Airlines Flight 17 Crash Area (WSJ)
• U.S. says India refusal on WTO deal a wrong signal (Reuters)
• Why Putin Has 2006 Flash Before His Eyes After Sanctions (BBG)

• Fed Decision-Day Guide: QE Tapering to Inflation Debate (BBG)
• Obama says strains over Ukraine not leading to new Cold War with Russia (Reuters)
• Siemens to BP Prepare for Downward Russia Business Spiral (BBG)
• Paying Ransoms, Europe Bankrolls Qaeda Terror (NYT)
• Argentina Banks Preparing Bid to Help Argentina Avoid Default (WSJ)
• Obama Weighs Fewer Deportations of Illegal Immigrants Living in U.S. (WSJ)
• India Warships Off Japan Show Rising Lure as China Counterweight (BBG)
• Hong Kong Popping Housing Bubbles London Can’t Handle (BBG)
• Carnage at U.N. school as Israel pounds Gaza refugee camp (Reuters)

• EU finalises Russian sanctions as BP warns of impact on business (FT)
• Geopolitical Risk Rises for Global Investors (BBG)
• Jaded Argentines brace for looming debt default (Reuters)
• In Argentina, Mix of Money and Politics Stirs Intrigue Around Kirchner (WSJ)
• Mom ‘Trusting God’ for Ebola-Infected U.S. Doctor’s Life (BBG)
• Thanks NSA: Tech Companies Reel as NSA's Spying Tarnishes Reputations (BBG)
• Goldman unit eyes foray into China amid metals financing scandal (Reuters)
• Cash out time: London’s Gherkin Tower Offered for Sale by Its Lenders (BBG)
• Apenomics strikes again: McDonald’s Japan axes profit guidance amid food safety scandal (FT)
• Do you see what happens Larry when you are the only USDJPY bid? Nomura Profit Falls More Than Estimated on Broking Slump (BBG)

That will teach them! Having received full credit for for co-operation and suspending some individuals, Lloyds Bank has been fined the staggeringly wrist-slap-like sum of $105 million for the "manipulation, attempted manipulation, and false reporting of Libor." As WSJ reports, the British bank becomes the seventh financial institution to strike a deal with U.S. and U.K. authorities who are conducting a long running probe into allegations of widespread attempts to manipulate Libor. With no less than the head of the Bank of England calling the bank's actions (mainpulating JPY Libor for at least 2 years) "reprehensible," and the CFTC adds individuals bevahior was a "gross breach of trust." Well we are sure after this they will never manipulate another market ever again...

Let's take a look at the amount of settlements/fines from various banks and financial institutions around the world since the crisis.

• Argentine holdout NML says government "choosing" to default (Reuters)
• Crunch time for Gaza truce talks as death toll passes 800 (Reuters)
• Don’t Tell Anybody About This Story on HFT Power Jump Trading (BBG)
• U.S. Accuses Russia of Shelling Eastern Ukraine (BBG)
• France’s Wheat Exports in Question as Rain Spoils Quality (BBG)
• Tapering in action: Lower printer sales hurt Xerox's revenue (Reuters)
• No liquidity? No Problem, there's an ETF for that: Bond ETFs Swelling in Europe as Trading Debt Gets Tougher (BBG)
• Herbalife hires ex-Biden chief to fend off regulators (NYPost)
• GM recalls far from calamity for some dealers who find new customers, business (Reuters)
• Bad weather likely cause of fatal Air Algerie crash: French officials (Reuters)

• Bubble Paranoia Setting in as S&P 500 Surge Stirs Angst (BBG)
• But how will math PhDs determine "fair value" - Wall Street Techs Take Secrets to Next Job at Their Peril (BBG)
• U.S., EU Escalate Russia Sanctions as Putin Holds Firm (Bloomberg)
• Australia Becomes First Developed Nation to Repeal Carbon Tax (WSJ)
• Gaza humanitarian truce goes into force, hours after tunnel clash (Reuters)
• Barclays, Deutsche Bank Said to Face U.S. Senate Hearing (BBG)
• ECB Asset Buying Far Off and May Not Come, Hansson Says (BBG)
• Time Warner win would make Murdoch U.S. media king (Reuters)
• Costly Vertex Drug Is Denied, and Medicaid Patients Sue (WSJ)
• China Rallying for All Wrong Reasons to Top-Rated Analyst (BBG)
• GM recalls some cars with problematic switches; judges others safe (Reuters)