Despite mainstream economists hopes that somehow “this time will be different,” the ongoing massaging of economic data through seasonal adjustments to obtain better headlines did not translate into actual prosperity. Of course, “reality” is a cruel mistress and despite ongoing hopes and overstatements, “fantasy” eventually gives way.
Is another major bank bailout event on the horizon? It appears so. And Italy may not be alone. In comments that were little noticed yesterday, Germany's Schauble said that Portugal may see another bailout too, saying "It would have to apply for a new program, which it would get. But the terms would be severe and it is not in Portugal's interests."
After a historic two-day selloff, which as shown yesterday slammed European banks by the most on record the wildly oversold conditions, coupled with hopes for yet another global, coordinated central bank intervention, coupled with modest hope that David Cameron's trip to Brussels today may resolve some of the Article 50 gridlock, have been sufficient to prompt a modest buying scramble among European stocks in early trading, with the pound and commodities all gaining for the first time since the shock Brexit vote.
Expectations are for a stable dose of muted confidence with no over-promising from The Chair but the Q&A is likely to be fireworks-prone as this is the last scheduled chance lawmakers, many of whom face re-election, will have to publicly question the Fed chief before voters head to the polls in November.
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.
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.
Bond manager Jeffrey Gundlach made headlines this week with the comments “central banks are losing control.” I would suggest that central bankers actually lost control back in 2012. Mario Draghi’s “whatever it takes” pledge actually amounted to concerted central bank intervention to shield global markets and economies from the intensifying forces of the downside of a historic Credit Cycle. The global Credit boom persevered for a few more years, right along with historic market distortions and economic maladjustment. Downside risks have grown significantly.
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.
Just as he previously warned - "If they’re fighting, I get rid of one or the other or do something," Donald Trump is parting ways with his campaign manager, Corey Lewandowski, a move that comes as the presumptive Republican nominee faces challenges as it moves toward the general election.