Merrill Lynch

The Helicopter Has Already Been Tested - And It Failed Spectacularly

Most of what passes for modern monetary policy is nothing more than one assumption piled upon another (and then another, and so on). Taken for granted for so long, rarely are these unproven precepts ever challenged to justify themselves to the minimal standard of internal consistency, let alone prove discrete validity by parts. The latest is “helicopter money”, another sham in a long line of them proffered by at least one central bank today because it knows, as the others, nothing they have done has worked.

The Financial System Is Breaking Down At An Unimaginable Pace

Now it’s $13 trillion... the total sum of negative-yielding debt in the world has increased in the last sixteen days alone by an amount that’s larger than the entire GDP of Russia. And just like the build-up to the 2008 subprime crisis, investors are snapping up today’s subprime bonds with frightening enthusiasm. So this trend will continue to grow for now, until, just like in 2008, the bubble bursts in cataclysmic fashion.

US Futures, Global Markets Storm Higher As More Details Emerge About Japan's "Helicopter Money"

The global meltup continues with the S&P set to open at new all time highs, some 20 points higher from yesterday's close, however the driver for the latest rally is not so much the imminent BOE announcement which is expected to cut rates by 25 bps from 0.50%, but a dramatic surge in the USDJPY just after 1am Eastern when Bloomberg revealed more details about Ben Bernanke's masterplan for Japan's helicopter money.

"China Is Headed For A 1929-Style Depression"

“The government is allowing speculation by providing cheap financing,” Andy Xie exclaimed, China “is riding a tiger and is terrified of a crash. So it keeps pumping cash into the economy. It is difficult to see how China can avoid a crisis.”

The Italian Job: "How Did Things Go So Bad?"

How on earth did things go so wrong? Could it be as simple as power-mongering and greed? To rob a line from the 2003 Italian Job, “There are two kinds of thieves in this world: The ones who steal to enrich their lives, and those who steal to define their lives.” Could it be that average working Italians, especially those who have been around for a good long while, feel as if they’ve been victims of both of the two kinds of theft, doubly wronged? “Basta!” their voices scream in defiance. Enough is enough!

As Of This Moment, Barclays Is Not Accepting FX Stop Loss Orders

"Both Barclays Electronic Trading Desk and Barclays Voice Spot Trading Desk will endeavour to operate as close to normal levels of service as the Disrupted Market Conditions allow.  However, taking into account the potential Disrupted Market Conditions during the EU Referendum Period, Barclays has decided to impose certain restrictions on its electronic and voice FX Stop Loss order offering during this period and would like to highlight certain matters with respect to Disrupted Market Conditions."

Frontrunning: June 23

  • ‘Brexit’ Vote: U.K. Heads to the Polls in Historic Referendum on EU Membership (WSJ)
  • The Brits Have No Good Options on Europe Vote (BBG)
  • Stocks Rise With U.S. Futures as Pound Gains While U.K. Votes (BBG)
  • Trump and Clinton Place Bets to Woo Undecided Voters (BBG)
  • China brushes off doubts over support on South China Sea, says it is growing (Reuters)

Frontrunning: June 22

  • Nervy global investors revisit 1930s playbook (Reuters)
  • Stocks Trade Near Week High Before Brexit Vote; Commodities Gain (BBG)
  • Yellen May Face Tougher Crowd in House Appearance (WSJ)
  • In SolarCity Bid, Tesla’s Musk Targets Customers Wanting All (BBG)
  • Trump to detour from campaign to visit Scotland golf properties (Reuters)

Too Orange To Jail? US Government Drops Suit Against Countrywide's Mozilo

U.S. prosecutors have abandoned their case against Angelo Mozilo, the over-tanned character at the center of the risky subprime mortgages that fueled the financial crisis, after a two-year quest to bring a civil suit against him. As Bloomberg resports, The Justice Department has decided not to sue Mozilo, according to people familiar with the matter, ending a decade-long hunt for someone, anyone to jail over what happened.

Why Are So Many Bankers Committing Suicide?

"Yes he killed himself. But there’s a question: could it be suicide by extortion... There’s a couple suspicions I have..." - son of Deutsche Bank exec William Broeksmit

These Are The Bonds The ECB Is Now Buying

Today is a historic day for the corporate bond market: with the launch of the ECB's CSPP, Mario Draghi is now directly buying European investment grade non-financial bonds. This means that no longer will European corporate bonds trade based on their fundamentals, but purely on expectations of frontrunning future ECB purchases, such as the following...