en Obamacare Accounted For 58% Of US "Growth" In The First Quarter <p>Remember when the Supreme Court decided that Obamcare is legal but it's a tax? Well, the nuances were irrelvant, but when it comes to the Bureau of Economic Analysis they could not have been greater: by effectively counting a tax as part of US economic growth, Obama, the Supreme Court and the US government's beancounters assured themselves of a steady stream of "economic growth" for quarters to come, and sure enough, Q1 was no different.</p> <p>As regular readers know, when it comes to the one constant source of US economic growth, nothing is more reliable than Healthcare, which is merely another name for how Obamacare figured in the beancount reports. And, we are confident, it will come as no surprise that in Q1, when real GDP grew by $44 billion in real terms, or 1.1% annualized, from $16.471 trillion to $16.515 trillion, <strong>Healthcare was reponsible for $26 billion, or a whopping 58.4% of the total</strong>.</p> <p><a href=""><img src="" width="500" height="281" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="997" height="560" alt="" src="" /> </div> </div> </div> Obamacare Tue, 28 Jun 2016 13:19:15 +0000 Tyler Durden 564696 at Case-Shiller Home Prices Rise At Slowest Pace In 8 Months As San Francisco Sales Slump <p>April was not a good month for home prices - despite hopeful signs from seasonally adjusted sales data. S&amp;P Case-Shiller 20-City index <strong>rose just 0.45% MoM (well below expectations and March's 0.85% gain) - the weakest rise since Aug 2015</strong>. The broader Home Price Index hovered near unchanged for the 2nd month - the weakest since January 2012. Most worrisome, perhaps, is the <strong>18.16% YoY plunge in San Francisco home sales</strong>... as perhaps the bubble is finally bursting.</p> <p>20-City (Seasonally Adjusted) Index...</p> <p><a href=""><img src="" width="600" height="316" /></a></p> <p>&nbsp;</p> <p>Broad (Seasonally-Adjusted) Home Price Index...</p> <p><a href=""><img src="" width="600" height="318" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="958" height="508" alt="" src="" /> </div> </div> </div> Case-Shiller Tue, 28 Jun 2016 13:12:27 +0000 Tyler Durden 564695 at About That Historic Collapse In Sterling: It Was "Only" The 9th Biggest Drop Going Back To 1862 <p>Over the past several days, the financial media has been preoccupied with the fascinating - and historic - drop in sterling which as this site also noted, was the biggest in history. As it turns out, that is not the case, as the data was limited by the available records on file with major service providers such as Bloomberg and Reuters. However, if one goes back in time, as DB's Jim Reid has done, it appears that Friday's sterling move was rather puny by <em><strong>true </strong></em>historical comparisons.</p> <p>As Reid writes, "I'm sure you've read by now that Sterling's drop on Friday (-7.64% based on GFD data) was the largest on record against the dollar. Think again. Although it's the biggest drop since the collapse of the Bretton Woods system in the early 1970s there have been 8 bigger daily down moves since 1862. </p> <p><a href=""><img src="" width="600" height="367" /></a></p> <p>The bigger moves (with brief reasons for those within the last century) are 1) 19 Sep 1949: (-30.41%) Pound devalued under Bretton Woods due to economic concerns; 2) 21 Sep 1931: (-23.57%) Gold Standard abandoned in the Depression; 3) 30 Sep 1869: (-18.75%); 4) 20 Nov 1967: (-13.02%) Harold Wilson's famous 'pound in your pocket' devaluation to battle the UK's economic problems; 5) 25 Mar 1863: (-10.90%); 6) 10 May 1940: (-9.79%) War related deviation from the dollar peg; 7) 25 Sep 1931: (-7.89%) A few days after the Gold Standard was abandoned, the pound continued to depreciate although it did jump by 7.14% next day. 8) 19 June 1866: (-7.76%).</p> <p>So in the &gt;38,000 business days since 1862, Friday was only the 9th worse day for Sterling. So maybe it's not all that bad...</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="782" height="478" alt="" src="" /> </div> </div> </div> Jim Reid Reuters Tue, 28 Jun 2016 12:59:56 +0000 Tyler Durden 564694 at Final Q1 GDP Rises 1.1% Despite Worst Personal Consumption In Two Years <p>And so the final, and largely irrelevant, estimate of Q1 GDP is in the history books. Moments ago the BEA reported that in the first quarter GDP rose a tepid 1.1%, higher than the first and second estimates of 0.5% and 0.8%, respecitvely, and also higher than consensus estimates of 1.0%. </p> <p><a href=""><img src="" width="500" height="299" /></a></p> <p>So far so good. The only problem is that the all important personal consumption expenditures component of GDP rose a modest 2.0% annualized, missing expectations of a 2.1% print, a 1.5% sequential increase, and a contribution of just 1.02% to the bottom line GDP. This was the worst showing by the US consumer since Q1 of 2014 and confirms that the spending power of the US consumer which accounts for 70% of GDP, is getting increasingly worse.</p> <p><a href=""><img src="" width="500" height="272" /></a></p> <p>&nbsp;</p> <p>So where were did the positive changes come from? Virtually all other components:</p> <ul> <li>Fixed Investment was found to have subtracted only -0.06% from Q1 GDP, better than the -0.25% in the previous estimate</li> <li>Private Inventories were largely unchanged at -0.23%</li> <li>Exports were surprisingly revised higher from a negative 0.25% to contribution of 0.04%, which meant that net trade instead of subtracting 0.2% from the bottom line GDP print actually added 0.1%. It is curious how the US had a favorable trade balance at a time when global trade is contracting at the fastest pace since the financial crisis.</li> <li>Government consumption was also largely unchanged at 0.23%.</li> </ul> <p><a href=""><img src="" width="506" height="118" /></a></p> <p>The full breakdown is below.</p> <p><img src="" width="500" height="298" /></p> <p>More details from the report:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The deceleration in real GDP in the first quarter primarily reflected a deceleration in PCE, a larger decrease in nonresidential fixed investment, and a downturn in federal government spending that were partly offset by upturns in state and local government spending and exports and an acceleration in residential fixed investment. </p> <p>&nbsp;</p> <p><strong>Real gross domestic income (GDI), </strong>which measures the value of the production of goods and services in the United States as the costs incurred and the incomes earned in production, increased 2.9 percent in the first quarter, compared with an increase of 1.9 percent in the fourth. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.0 percent in the first quarter, compared with an increase of 1.7 percent in the fourth. </p> <p>&nbsp;</p> <p><strong>Real gross domestic purchases </strong>-- purchases by U.S. residents of goods and services wherever produced -- increased 0.9 percent in the first quarter, compared with an increase of 1.5 percent in the fourth. </p> <p>&nbsp;</p> <p><strong>The price index for gross domestic purchases, </strong>which measures prices paid by U.S. residents, increased 0.2 percent in the first quarter, compared with an increase of 0.4 percent in the fourth. Excluding food and energy prices, the price index for gross domestic purchases increased 1.4 percent, compared with an increase of 1.0 percent.</p> </blockquote> <p>Will this change the market's take on what the Fed will do over the next few months, where odds of a rate hike are now 0% compared to rate cut odds of over 10%? Not at all.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1260" height="754" alt="" src="" /> </div> </div> </div> fixed Personal Consumption Trade Balance Tue, 28 Jun 2016 12:46:11 +0000 Tyler Durden 564693 at Greenspan Warns “Early Days Of A Crisis,” Inflation Coming and Urges Return To Gold Standard <div> <div> <p>Alan Greenspan, the former Chairman of the Federal Reserve has warned that Brexit was a “terrible outcome in all respects” and that we are in the “early days of a crisis.”&nbsp;U.K. policy makers miscalculated and made a “terrible mistake” in holding a referendum on whether to quit the European Union, Greenspan said.</p> </div> <p><a href=""><img src="" width="850" height="400" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter" /></a></p> <div> <p>That decision led to a “terrible outcome in all respects,” Greenspan, said in an interview with <a href="">Bloomberg Surveillance</a>&nbsp;yesterday in Washington.</p> <p>“It didn’t have to happen,” Greenspan said. He warned that it is&nbsp;now likely that Scotland, whose majority of voters wanted to stay in the EU, will have another referendum on its own independence. He predicted such a vote would be successful, and Northern Ireland would “probably” go the same way.</p> </div> <p>He also warned about the massive entitlements and unfunded liabilities in the U.S. and western world. The U.S. national debt is heading rapidly towards $19 trillion but the U.S. also has unfunded liabilities estimated to be between $100 trillion and $200 trillion.</p> <p><em>“The issue is essentially that entitlements are legal issues. They have nothing to do with economics. You reach a certain age or you are ill or something of that nature and you are entitled to certain expenditures out of the budget without any reference to how it’s going to be funded. Where the productivity levels are now, we are lucky to get something even close to two percent annual growth rate. That annual growth rate of two percent is not adequate to finance the existing needs.”</em></p> <p><em>“I don’t know how it’s going to resolve, but there’s going to be a crisis.”</em></p> <p>He warns that the crisis will likely lead to inflation:</p> <p><em>“I know if you look at human history, there are times and times again where we thought that there was no inflation and everything was just going fine. And I just basically say, wait. This is not the way this thing ordinarily comes up. I don’t know. I cannot say I see it on the horizon. In fact, commodity prices are soggy. The oil prices has had a terrific impact on global inflation. It’s not about to emerge quickly, but I would not be surprised to see the next unexpected move to be on the inflation side. You don’t have inflation now. And you don’t have it until it happens.”</em></p> <p style="text-align: center;"><em><strong><a href="!graph_id=gold&amp;time_scale=year&amp;currency=GBP" rel="attachment wp-att-5634"><img src="" alt="gold_GBP_270616" width="570" height="347" class=" wp-image-5634 aligncenter" /></a>Gold in GBP – 1 Year</strong></em></p> <p>Finally, Greenspan advocates a return to the gold standard as a way to create financial, economic and monetary stability:</p> <p><em>“If we went back on the gold standard and we adhered to the actual structure of the gold standard as it exited prior to 1913, we’d be fine. Remember that the period 1870 to 1913 was one of the most aggressive periods economically that we’ve had in the United States, and that was a golden period of the gold standard. I’m known as a gold bug and everyone laughs at me, but why do central banks own gold now?”</em></p> <p><strong>Gold Prices (LBMA AM)<br /></strong>28 June: USD 1,312.00, EUR 1,185.79 &amp; GBP 985.84 per ounce<br /> 27 June: USD 1,324.60, EUR 1,200.49 &amp; GBP 996.36 per ounce<strong><br /></strong>24 June: USD 1,313.85, EUR 1,181.28 &amp; GBP 945.58 per ounce<strong><br /></strong>23 June: USD 1,265.75, EUR 1,112.22 &amp; GBP 850.96 per ounce<br /> 22 June: USD 1,265.00, EUR 1,122.31 &amp; GBP 862.98 per ounce<br /> 21 June: USD 1,280.80, EUR 1,129.67 &amp; GBP 866.72 per ounce<br /> 20 June: USD 1,283.25, EUR 1,132.08 &amp; GBP 877.49 per ounce</p> <p><strong>Silver Prices (LBMA)</strong><br /> 28 June: USD 17.57, EUR 15.84 &amp; GBP 13.17 per ounce<br /> 27 June: USD 17.70, EUR 16.06 &amp; GBP 13.40 per ounce<br /> 24 June: USD 18.04, EUR 16.32 &amp; GBP 13.18 per ounce<br /> 23 June: USD 17.29, EUR 15.16 &amp; GBP 11.61 per ounce<br /> 22 June: USD 17.20, EUR 15.23 &amp; GBP 11.72 per ounce<br /> 21 June: USD 17.36, EUR 15.34 &amp; GBP 11.78 per ounce<br /> 20 June: USD 17.34, EUR 15.30 &amp; GBP 11.85 per ounce</p> </div> <p><strong><br /> Gold News and Commentary<br /></strong>Gold rose yesterday to €1,205/oz, Climbed 10% in 2 trading days (Irish Examiner)<br /> UK stripped of final ‘AAA’ rating and FTSE 350 surrenders £140bn in Brexit aftermath (Telegraph)<br /> Gold holds steady as global stocks weaken after Brexit vote (Reuters)<br /> Retail gold buyers take profits in bullion after Brexit price surge (Reuters)<br /> Gold Holdings in Biggest One-Day Surge Since ‘12 on Brexit Vote (Bloomberg)</p> <p>Greenspan Warns A Crisis Is Imminent, Urges A Return To The Gold Standard (Zero Hedge)<br /> Greenspan Calls Brexit a ‘Terrible Outcome’ (Bloomberg Video)<br /> Gold Continues To Shine (FX Street)<br /> Onward Toward Bullion Bank Collapse (Gold Seek)<br /> Gold Veteran Says Brexit May Be Start of ‘Major Bull Market’ (Bloomberg Video)<br /><strong style="line-height: 1.5;"><a href="">Read More Here</a></strong></p> Alan Greenspan Central Banks European Union Federal Reserve Ireland National Debt Reuters Tue, 28 Jun 2016 12:32:22 +0000 GoldCore 564692 at Brexit Is What Happens When The Pie Is Shrinking <p><a href=""><em>Submitted by Charles Hugh-Smith via OfTwoMinds blog,</em></a></p> <p><em>This process of withdrawal into the relative safety of internally cohesive groups and group identities is intrinsically messy in globalized, multicultural societies.</em></p> <p><strong>A great many narratives are drifting around the Brexit pool:</strong> a return to sovereignty, class war, &quot;controlled demolition,&quot; nothing-but-another-political-Kabuki- spectacle, end of the European Union, etc.</p> <p><strong>I think it boils down to something much simpler: the pie is shrinking, and the illusion that it&#39;s about to start growing has been shattered.</strong> For many communities in the developed world, the pie started shrinking in the 1970s, and has been shrinking (despite the narrative of &quot;45 years of strong growth&quot;) since then.</p> <p><strong>Labor&#39;s share of the GDP has been declining for 45 years.</strong> Occasional blips higher during debt-fueled bubbles quickly fade when the bubble du jour pops, and the decline of labor&#39;s share of the economy resumes its trendline decline.</p> <p><img align="middle" border="0" class="wide" src="" /></p> <p><strong>Since 2008, the only group who feels the pie is growing is the class that has benefited from the unparalleled expansion of debt and leverage</strong>, financialization, globalization and central planning--roughly 20% of the work force, with the top 5% gathering most of the gains in income and wealth, and the top .1% gathering most of the increase in wealth. (See chart below)</p> <p><strong>For seven long years, the citizenry has been told the economy is expanding and therefore they&#39;re &quot;doing better.&quot; But this narrative is not supported by their actual lived experience.</strong> Inflation is woefully under-reported by official statistics, and the rosy &quot;rising employment&quot; narrative is based largely on part-time jobs in hospitality and food services (bartenders, waiters, etc.) that are highly contingent on the spending of the top 10%.</p> <p>While supporters of the status quo are quick to deride supporters of Brexit, the cold reality is <em>the economic pie is shrinking</em>, and Brexit is a direct result of that reality.</p> <p><strong>A shrinking economic pie generates widespread insecurity that pressures every status quo arrangement as people <em>circle the wagons</em></strong> in an attempt to protect their remaining slice of the pie from others&#39; claims for a larger piece of the dwindling pie.</p> <p>The general media line is that the Brexit vote arose out of anger with the status quo&#39;s inequalities and asymmetries of wealth and power. While this is largely self-evident, it isn&#39;t the most fundamental dynamic at work. <strong>I see Brexit as a reflection of our naturally-selected defensive response to insecurity and instability: <em>circle the wagons</em>.</strong></p> <p>By <em>circle the wagons</em>, I mean our tendency to withdraw into an internally cohesive group with defined membership and boundaries.</p> <p>The largest such political group is the nation-state, and so it is natural for people with strong national identities to circle the wagons around their national identity.</p> <p>We can also expect people to circle the wagons around ethnic, religious, localized and economic-social class identities. (Some people might feel more kinship with other fans of Manchester United than they do with any religion, ethnicity or state.)</p> <p><strong>As people identify themselves as members of the class that has not benefited from neoliberal/globalized crony capitalism</strong>, the ruling Elites become the &quot;other,&quot; i.e. &quot;foreigners&quot; with whom we have little contact, people who &quot;aren&#39;t like us&quot;-- in effect, an &quot;enemy class&quot; that is inherently opposed to our self-interests.</p> <p><strong>This process of withdrawal into the relative safety of internally cohesive groups and group identities is intrinsically messy in globalized, multicultural societies.</strong> No wonder populations are dividing into camps of increasingly angry people with little interest in compromise. Our instinct is to seek clear delineations of &quot;us&quot; and &quot;them&quot; and to seek the relative comfort of &quot;us,&quot; which in a multicultural nation, can contain quite a mixed bag of people who nonetheless feel a shared identity.</p> <p><strong>Much to the chagrin of political parties whose success is based solely on &quot;identity politics,&quot; the emerging group identities are not conforming to the political classes&#39; conventional fault lines.</strong> &quot;Us&quot; for many people includes everyone who isn&#39;t a protected insider of the status quo, and &quot;the enemy&quot; is any protected insider of the status quo.</p> <p>That includes virtually the entire political class, the entire class of state nomenklatura/technocrats, the entire banking sector and the wealthy class that&#39;s benefited so handsomely from the globalized, debt-leverage bubbles and state / central bank support that characterize this era of neoliberal/globalized crony capitalism.</p> <p><img align="middle" border="0" class="wide" src="" /></p> <p><strong>Nothing to see here--move along, folks--you&#39;re better off than ever before.</strong></p> <p><img align="middle" border="0" class="wide" src="" /></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="525" height="345" alt="" src="" /> </div> </div> </div> ETC European Union Reality Tue, 28 Jun 2016 12:30:09 +0000 Tyler Durden 564691 at How They Hedged Brexit: Soros Was Short Deutsche Bank, Druckenmiller Was Long Gold <p>As we reported yesterday, one of the bigger losers from the Brexit referendum was none other than Soros, who as it turned out had put his money where his "doom and gloomy" Guardian Op-Ed was and as a spokesman said, Soros was long the pound before Britain’s vote to leave the European Union on Friday, and didn’t “speculate against sterling while he was arguing for Britain to remain.”&nbsp; </p> <p>Soros wasn't the only one long sterling. According to internal UBS flow data, the pound saw the strongest normalized net inflows in G-10 in the lead up to the U.K. referendum on EU membership, recording the second-strongest week of net buying in over a year and a half suggesting hedge funds bought the pound aggressively before the vote. Curiously, as UBS also notes, despite buying GBP at the highest level since 2008, outflows from the pound recorded on the Friday after the referendum outcome were only marginal despite a 17-big- figure sell off in morning trading.</p> <p>But back to recently bearish Soros, who many were surprised to see have an unhedged position going into such a major event. Well, as it turns out Soros was hedged after all. </p> <p>As <a href="">Bloomberg reports</a>, <strong>Soros Fund Management took a short position in Deutsche Bank AG of about 7 million shares, or a total notional of about $100 million</strong>, as turmoil from the U.K.’s decision to leave the European Union sent bank stocks lower. The position taken on Friday was equivalent to 0.51 percent of Deutsche Bank’s share capital, according to a German filing published on Monday. The document doesn’t show at which price the fund took the position. </p> <p>Deutsche Bank shares fell 16% at the open on Friday and closed down 14 percent at 13.37 euros. Their highest price that day was 13.95 euros. At that level, a 0.51 percent stake would be worth about 98 million euros ($108 million). After extending losses on Monday, the shares were trading 4.5 percent higher at 10 a.m. Tuesday in Frankfurt. </p> <p>In other words, Soros' Op-Ed which was subtitled "The Brexit crash will make all of you poorer – be warned", should have added that "it will also make me richer via my Deutsche Bank short."</p> <p>Soros was not the only one who hedged. As Reuters reported overnight, Stanley Druckenmiller's Duquesne Family Office LLC <strong>was long gold futures ahead of last week's vote in Britain to leave the European Union,</strong> a source familiar with the matter said on Monday.</p> <p>Gold soared on Friday in its best day since 2009, hitting two-year highs as uncertainty after Britain's vote to leave the European Union pushed investors to sell equities and seek safer assets. The size of the trade was not known.</p> <p>In short: while Brexit's so-called "disastrous" impact on millions of common people has yet to be observed , a process which will take years, the billionaires once again won. </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="259" height="194" alt="" src="" /> </div> </div> </div> Deutsche Bank European Union None Reuters Tue, 28 Jun 2016 12:15:23 +0000 Tyler Durden 564690 at Previewing Today's Main Event: David Cameron Arrives In Brussels <p>For the first time since triggering a political earthquake that’s shaken Europe's foundations with his now massively backfired decision to hold a EU membership referendum in 2015, a decision which won him the parliamentary election battle but lost him, and Europe, the war, UK Prime Minister David Cameron is set to face his fellow - and very angry - European Union leaders at what may be Cameron's last summit (or supper as <a href="">Bloomberg </a>puts it) in Brussels, even as back in London, the race to succeed him is heating up.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Cameron arriving at the EU summit in the next half hour or so.....</p> <p>— Laura Kuenssberg (@bbclaurak) <a href="">June 28, 2016</a></p></blockquote> <script src="//"></script><p>As <a href="">BBC puts </a>it, David Cameron wanted to arrive in Brussels triumphant... instead he is coming as a disgraced failure.</p> <p><a href=""><img src="" width="500" height="281" /></a></p> <p>"Cameron wanted to come back here today as the man who'd kept the UK in the EU, who'd settled the question that has plagued the UK for decades. And instead, he has to look round the table and say, "I've just taken the UK out, with all the consequences that brings". But of course, these are European leaders, it's not going to descend into any kind of bickering. I think they'll all be trying to say, "How do we move forward from here?""</p> <p>As Bloomberg <a href="">eloquently adds</a>, Cameron will endure an awkward dinner with his EU cohorts Tuesday after his effort to calm the U.K.’s divided public and soothe investors failed to stop the pound and the country’s biggest banks from getting clobbered. The premier has already announced he will quit after last week’s vote, leaving him little leverage at the table. </p> <p>His government has signaled it prefers a gradual exit from the EU while the region’s three largest economies are keen to set a timetable to contain the economic damage. Which is contrary to his earlier claims (made when he was confident of Remain winning) that the Article 50 process would be triggered immediately after a Leave vote.</p> <p>“We don’t know how long he is going to be prime minister for, when a new government could begin to negotiate terms,” said Mark Leonard, director of the European Council on Foreign Relations. “The rest of the EU feel they bent over backwards to accommodate Cameron over the last months and he launched this reckless referendum and lost it so the other EU states are in no mood to do him any favors.”</p> <p><strong>In Brussels, Cameron will be pressed to give some indication on how he expects the U.K. to trigger Article 50 of the Lisbon Treaty - the mechanism for leaving the EU - and what he thinks Britain’s relationship with the bloc will look like after the divorce, according to diplomats in Brussels. </strong></p> <p>But the outgoing prime minister has said those details would be up to his successor to hash out, a strategy which Merkel has endorsed in hopes that as the fallout over the Brexit decision settles the UK may collectively change its mind about its depature.&nbsp; </p> <p>“He’s likely to talk about a number of factors that he thinks were issues in the campaign, and in the debate,” said Helen Bower, Cameron’s spokeswoman. “He will reiterate that Article 50 is a matter for the next prime minister.”</p> <p>The EU gathering unfurls against a backdrop of market turmoil, with shares in Barclays Plc and Royal Bank of Scotland Group Plc crashing to their lowest level since the financial crisis. Reeling from the referendum outcome, EU leaders are split on how hard to come down on the U.K. In the meantime, Britons have lost any influence they had in the 28-nation bloc while remaining bound by its rules and membership fees for at least two years.</p> <p>Another point of confusion: who will the UK be negotiating with next:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>For now, the U.K. is stuck in a political impasse. Cameron’s Conservative Party said Monday a new leader should be in place by Sept. 2. Some in the EU are holding out hope that if the U.K. waits a long time to activate the exit trigger, the decision to leave might even be reversed, one European diplomat said.</p> <p>&nbsp;</p> <p>A YouGov poll of Conservative voters for the Times gave Home Secretary Theresa May 31 percent support compared with 24 percent for former London Mayor Boris Johnson, a leading backer of the leave vote. </p> <p>&nbsp;</p> <p>Chancellor of the Exchequer George Osborne, who was criticized by the pro-Brexit camp for scaremongering over the economy, will not be a candidate. The onetime favorite to succeed Cameron wrote in the Times that "I am not the person to provide the unity my party needs."</p> </blockquote> <p>Meanwhile, after digesting the shocking news, the EU has calibrated its response to a U.K. departure. The knee-jerk reaction of some had been that the U.K. should trigger Article 50 as early as this week. German Chancellor Angela Merkel is among those calling for a more thoughtful approach, with two EU diplomats saying the alliance could potentially wait until the end of the year.</p> <p>“We can’t afford an extended waiting game because that would be bad for the economy of both sides of the EU -- the 27 members and Britain,” Merkel said. “But I have a certain level of understanding if Britain takes some time to analyze things first.” </p> <p>Merkel said the U.K. would need to give its official declaration to exit the bloc before formal negotiations on the terms of its future relationship can begin. In a joint statement with her French and Italian counterparts, she urged the EU summit to “set in motion a process based on a concrete timetable and precise commitments.” Speaking from London, U.S. Secretary of State John Kerry called on EU leaders not to take revenge on Britain and to handle the transition with care. </p> <p>“While there is some uncertainty in the air, leaders have the ability and responsibility to restore certainty, to make wise choices in the days ahead and that means choices that are, in every way possible, not aimed at retribution, not aimed at anger, but ways that bring people together,” he said.</p> <p>In short: anyone hoping for a resolution from today's summit will be disappointed. If anything, prepare for a long, hard slog with elevated volatility, as the market twists and turns on every unexpected political development out of the UK, and any hint that the democratic referendum wave started in Britain has spread to the continent. </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="904" height="508" alt="" src="" /> </div> </div> </div> Barclays European Union Royal Bank of Scotland Volatility Tue, 28 Jun 2016 11:59:09 +0000 Tyler Durden 564689 at This Is What Draghi Said To Spark Speculation Of Another Global Central Bank Bailout <p>Both Janet Yellen and Mark Carney may have previously announced they would withdraw from the ECB's Forum in Sintra, Portugal (due to pressing market stabilization issues), but it was what Mario Draghi said here that has captured the market's attention this morning. The head of the ECB avoided mentioning the U.K.’s vote to leave the European Union but instead called for <strong>greater alignment of policies globally to mitigate the spillover risks from ultra-loose monetary measures</strong>.&nbsp; </p> <p>“We can benefit from alignment of policies,” Draghi said at the ECB Forum in Sintra, Portugal. “What I mean by alignment is a shared diagnosis of the root causes of the challenges that affect us all; and a shared commitment to found our domestic policies on that diagnosis."</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Global economy can benefit from policy alignment, Mario Draghi says <a href=""></a> <a href=""></a></p> <p>— Bloomberg TV (@BloombergTV) <a href="">June 28, 2016</a></p></blockquote> <script src="//"></script><p>Most didn't read between the lines, and assumed that "alignment of policies" was simple code for the ECB demanding another global intervention. It immediately led to statement such as the following by John Plassard, a senior equity-sales trader in Geneva at Mirabaud Securities who told Bloomberg that “<strong>stocks are rebounding on the expectation that there will be a coordinated intervention by central banks. </strong>What central banks can do is put confidence back in the market by telling everyone that they are here and ready to act. If we don’t get that sort of support, we’ll see further declines."</p> <p>Ironically, what Draghi may have been referring to is not so much a coordinated response, i.e., another global central bank intervention, as much as central banks sitting down to figure out how to move on from a world flooded by central bank intervention, one where overnight every single Japanese bond across the entire curve was yielding less than 0.1%, after the latest overnight rally in Japan <a href="">pushed yields on the nation’s longest debt</a>, the 40-year bond, to 0.065% on expectation of, you guessed it, more BOJ intervention.</p> <p><a href=""><img src="" width="500" height="281" /></a></p> <p>&nbsp;</p> <p>As the BIS ranted over the weekend in its latest annual report, central banks’ extraordinary measures to boost inflation since the global financial crisis have depressed interest rates, stoking discontent among savers and drawing accusations that they have helped boost the support for populist parties. Draghi, who has often criticized euro-area governments for inadequate structural reforms, said there is a “common responsibility” to address the sources of low inflation, such as low productivity and an output gap.</p> <p>As Bloomberg adds, Draghi didn’t explicitly refer to the latest shock to markets, the U.K.’s shock vote to exit the EU, after he said Monday that the best word to describe his sentiment in reaction to the British referendum probably was “sadness.”</p> <p>ECB Executive Board members Benoit Coeure and Peter Praet are scheduled to chair panel discussions on Tuesday at the ECB Forum, a European equivalent of the U.S. Federal Reserve’s Jackson Hole symposium. A panel discussion between Draghi, Bank of England Governor Mark Carney and U.S. Federal Reserve Chair Janet Yellen that was planned for the final day on Wednesday has been canceled.</p> <p>“We have to think not just about the composition of policies within our jurisdictions, but about the global composition that can maximize the effects of monetary policy so that our respective mandates can best be delivered without overburdening further monetary policy,” Draghi said. “This is not a preference or a choice. It is simply the new reality we face."</p> <p>So did Draghi preview more intervention, or just the contrary, hint that the monetary status quo is no longer working? Expect to say the debate play out across markets today even if as futures indicate the early read is one of even more liquidity about to be injected. </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="539" height="317" alt="" src="" /> </div> </div> </div> Bank of England BIS Bond Central Banks European Union Federal Reserve Global Economy Janet Yellen Japan Monetary Policy Output Gap Portugal Reality Tue, 28 Jun 2016 11:53:02 +0000 Tyler Durden 564686 at The "Synergies" Arrive: Dow Fires 2,500 <p>The Dow Chemical Company <a href="">announced on June 1</a> that it had completed the transaction with Corning Inc,. which allowed Dow Chemical to take full control of Dow Corning, a joint venture the two companies entered into years earlier.</p> <p>Today, less than a month later, the "synergies" which we previewed last December...</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Dow + DuPont merger = -10,000 well paying jobs and +25,000 waiters</p> <p>— zerohedge (@zerohedge) <a href="">December 9, 2015</a></p></blockquote> <script src="//"></script><p>... have begun. <strong></strong></p> <p>This morning it hit the <a href="">wires</a> that cost-synergies would be achieved through a global RIF, or reduction in force (another of Wall Street's favorite acronyms) of approximately 2,500 jobs, or 4% of the workforce according to Bloomberg. Dow will take a charge of approximately $410 million to $460 million in Q2 2016 relating to the measures. The June 1 announcement claimed that $400 million a year in cost savings would be achieved by the restructuring actions.</p> <p>Dow plans to shut down manufacturing facilities in Greensboro, North Carolina, and Yamakita, Japan, as well as other facilities throughout the process.</p> <p>"<strong>We are moving quickly and effectively to integrate Dow Corning and deliver the synergies </strong>that will drive new levels of value creation for our customers and generate even greater returns for our shareholders. With these difficult but necessary actions, we are bringing together the best of each company's talent and technology, accelerating Dow's strategy to go narrower and deeper into attractive, targeted market sectors, and setting the stage for the new Dow - the world's leading material science company" CEO Andrew Liveris said.</p> <p>More layoffs, more cash for buybacks - that is the theme of the "recovery."</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="449" height="288" alt="" src="" /> </div> </div> </div> Japan recovery Tue, 28 Jun 2016 11:41:43 +0000 Tyler Durden 564688 at