Italy's troubled Monte Paschi was halted after tumbling for yet another day to fresh new record lows, while the Italian bank sector tumbled in Milan on Monday amid fresh concerns the country’s lenders are under pressure to raise capital to bolster their finances. This follows a statement by Italy's third largest bank that the ECB has asked Monte Paschi to reduce its load of soured debt to 14.6 billion euros ($16.2 billion) in 2018 from 24.2 billion euros at the end of 2015.
In today's US holiday-impacted session, the biggest overnight story was the dramatic surge in precious metals, which saw silver briefly soar above $21 following a Chinese short squeeze sending the metal as much as 7% higher overnight, its biggest one day gain since December 1, 2014. As we reported overnight, silver touched a two-year high and gold rallied for a fourth day after the Brexit vote spurred demand for havens. The catalyst is familiar: speculation central banks in some of the world’s leading economies will step up monetary stimulus in the wake of Britain’s decision to leave the European Union.
Unfortunately the travel before and after the 4th of July is a different story, with it widely considered one of the worst travel days of the year. While the desire to take advantage of the holiday to enjoy friends and family is a natural product of humans being inherently social creatures, the degree to which this congestion leads to headache and misery rests solely with the institution responsible for them during the rest of the year – the government.
If you wanted a more clear example of why people have not only left this "market" along with many of the business/financial media outlets, this interview just about says it all.You can replace every-time he said "Theranos" with "current monetary policy" and "Ms. Holmes" with "Chair Yellen" and the narrative and storytelling would be about the same.
Having been forced to remove herself from the Hillary Clinton email probe, Loretta Lynch admitted that her shockingly ill-advised private meeting with Bill Clinton has "cast a shadow" over the investigations and questions on the meeting are "fair." Her magnanimity was further expressed "I wouldn't do it again," while claiming that she had made the decision to 'recuse' herself days before her Bubba meeting.
"By dumping the responsibility for the heavy lifting for growth on central banks, we have ended up with asset bubbles, rampant speculation, lack of investment in productivity and in the real economy, significant levels of financial engineering to artificially boost earnings, and merely the (now failed) hope that “trickle down” still works. The outcome has been almost unprecedented levels of rising inequality in the global economy. I suspect that it is this inequality that was behind a fair chunk of last week’s Brexit outcome and which has driven the rise of extremism across other important nations/blocs."
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.