Archive for the ‘Uncategorized’ Category
UBS’ Trading Roadmap For The "Day After" Brexit
By Tyler Durden
Moments ago we presented the contrarian thesis from Greg Peters, who hinted that the equity response may be one of “selling the news” in case of Remain, and one where US stocks actually surge if Leave wins, as a result of an influx of global funds seeking US “safe haven” assets. Next, we go back to a more conventional model of how assets would react, and present “a roadmap for the ‘Day After’” from UBS, which seeks to answer the question “at what level would we buy or sell each key asset class in either a Remain or a Leave scenario?” It then show ranges of the potential near-term market reactions.
Any moves outside these ranges, UBS says, could signal that the market is under-pricing or overpricing the relevant macro risks. The Swiss bank caveats by warning that it can not predict exactly how the markets will trade immediately following the 23 June vote, as there could be liquidity driven dislocations or surprising reversals of price spikes.
Here are the summary cases:
A “Leave” scenario
Following the risk-rally of the last few days, we believe there is significant room for downside in the event of a “Leave” vote. We estimate percentage moves in the midteens for UK and EU equities but materially smaller moves for the S&P 500 and EM equities. While GBP may come under significant pressure, the EUR may be more stable. Risk currencies (CHF & JPY) would benefit, but policy responses could limit the degree of strength quickly. We think Euro-area core yields and UK yields would decline substantially (roughly 10-40 bps), and potentially even more so in the US. Moves in the range of 50bps look possible in Euro-area periphery yields and corporate credit spreads.
A “Remain” scenario
Outside European and UK stocks (where a significant relief rally is likely to manifest) we would expect much less pronounced moves across assets. In equities, we think the S&P 500 could reach new highs, albeit near-term no more than 1-3% higher than current levels. Fundamental pressures limit the potential upside in global bond yields. Yields could rise more for core Euro-area bonds, which look the most expensive. We also see limited upside across EM assets (except perhaps local currency bonds). Interestingly, we believe the potential sell-off in Gold in a “Remain” scenario would be small relative to the upside potential in the opposite case.
And the details:
Market levels for the day after
The UK referendum was always likely to be a source of uncertainty with potentially significant spill-overs across markets. We have argued that the UK’s macro imbalances would imply downside risk for the pound, and for UK domestic demand-driven UK equities and bonds. We have also argued that the macro read-across to the EU carries broader implications across European equities and bonds.
Over the past few weeks, the market’s focus on the outcome of the vote has increased. By the end of last week, the risk premium attached to the event was already quite sizeable. …read more
Source: UBS’ Trading Roadmap For The "Day After" Brexit
Martin Armstrong Rages "The EU Is Nothing Without Britain!"
By Tyler Durden
Submitted by Martin Armstrong via ArmstrongEconomics.com,
The lies being told by Cameron that Britain will suffer are rather astonishing.
It is the EU that has the most to lose on so many fronts it is rather alarming how the press do not tell the truth.
Forget the imports-exports that are just under half of the the trade between the two, which would never stop nor would it be in the EU best interest to cut Britain off. The real key is diplomacy.
Whenever Europe has EVER accomplished something useful, it has always been the UK’ in the driver’s seat.
Any thought that BREXIT would end relations is rather absurd. The EU has nothing without Britain.
The only other country that spends more on its military than the UK is the United States. Germany could not defend Europe nor could France. Without the UK, Europe would have fell to Hitler.
A post-BREXIT that tried to stand on pride in the EU would quickly find itself no longer a powerful player on the world political stage. Sorry, but the EU is nothing without Britain.
Source: Martin Armstrong Rages "The EU Is Nothing Without Britain!"
C-SPAN moves into spotlight with Democrats’ protest
C-SPAN is calling in extra staff members and refreshing Periscope constantly as it provides nonstop live coverage of a strange sight inside the House of Representatives. …read more
Source: C-SPAN moves into spotlight with Democrats’ protest
The European Union: Government By Deception
By Tyler Durden
Submitted by Raul Ilargi Meijer via The Automatic Earth blog,
I stumbled upon an article by Day of the Jackal author Frederick Forsyth, published last week in the Daily Express, that I think every Briton and European and everyone else should read. Forsyth doesn’t delve into the American pressure to form a European Union as a counterweight to the Soviet Union, he sticks with ‘founding father’ Jean Monnet and his reasoning behind the particular shape the Union took. And that is bad enough.
All Forsyth has to do is to quote from Monnet’s work, and I have to admit that while reading it I increasingly got the feeling that it’s quite remarkable that no-one, especially no journalist, does this. It’s there for everyone to see, but that means little if and when no-one actually sees it.
I have repeatedly talked about how the very structure of the EU self-selects for sociopaths and/or worse, but perhaps not enough about how that was deliberately built into the design. A feature not a flaw.
And I don’t think Monnet ever thought about how structures like that develop over time, in which the flaws in that design become ever more pronounced and the more severe cases of sociopathy increasingly take over the more powerful positions. A development that is well visible in present day Brussels.
For me, as I’ve written before, being here in Athens these days is plenty testimony to what the EU truly represents. Not only do we need to help feed many tens of thousands on a daily basis, depression levels are up 80% or so and life expectancy is plunging because proper health care is ever further away for ever more people in a country that not long ago had a health care system anyone would have been proud of.
That is the EU. And, yeah, Britons, do reflect on the NHS. Sure, you can argue it’s not the EU but Cameron and his people that are breaking it down, but it’s also Cameron who is pleading with you to vote to stay in the union.
If it can do this today to one of its member states, it will do it tomorrow to others, and more, if it sees fit. The benefits of the union flow to a select few countries, and to a select few within those countries. And ever fewer are selected as economic policies continue to fail.
It is frankly beyond me to see why anyone would want to be part of that. It’s not about Boris Johnson or Nigel Farage or George Osborne, that is just more deception. It’s about being ruled by midgets, as Forsyth puts it.
Here are some snippets from Frederick Forsyth’s article:
Birth of superstate: Frederick Forsyth on how UNELECTED Brussels bureaucrats SEIZED power
There was nothing base or inhumane about Jean Monnet, the French intellectual now seen as the founding father of the dream, nor those who joined him: De Gasperi the Italian, Hallstein the German, Spaak the Belgian and Schumann the Frenchman. In 1945 …read more
Source: The European Union: Government By Deception
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Deadlocked Supreme Court Blocks Obama Immigration Plan
By Tyler Durden
In one of today’s widely anticipated rulings by the Supreme Court, the highest US legal institution dealt a blow to President Obama on Thursday, after it was deadlocked over the legality of the president’s controversial immigration programs. In a one-sentence decision, the court affirmed a lower court’s ruling blocking the programs from going forward.
The U.S. Supreme Court divided evenly over President Barack Obama’s plan to shield as many as 4 million unauthorized immigrants from deportation, a deadlock that effectively kills the initiative for the rest of his presidency.
The 4-4 split leaves intact an appeals court ruling that said Obama overstepped his authority, along with a trial judge’s order preventing the program from taking effect.
As The Hill adds, the justices grappled during oral arguments over whether Texas and 25 other states had a legal basis to challenge the expansion of the Deferred Action for Childhood Arrivals (DACA) and the creation of the Deferred Action for Parents of Americans (DAPA) initiative, which allows undocumented immigrants who are parents of U.S. citizens or lawful permanent residents to stay in the country for three years and apply for a work permit. Both programs have been on hold since February 2015. The states claimed they would be burdened by having to spend more on public services like healthcare, law enforcement and education if undocumented parents of both American citizens and legal permanent residents are allowed to stay in the country. Texas, specifically, said it would be hurt by having to issue more drivers licenses, a benefit that’s now subsidized.
Supporters of the administration, however, argued that Texas could pass the added costs for driver’s licenses on to residents. They claim the challenging states actually stand to make money off of Obama’s programs from an increase in tax contributions.
According to Bloomberg, the deadlock may stoke what already is a fiery debate in the presidential campaign over the 11 million people who are in the country illegally.
More importantly, the decision underscores the significance of the partisan battle to fill the vacancy created by Justice Antonin Scalia’s Feb. 13 death, and how important the political affiliation of the next president wil be.
As is the court’s normal practice, the justices didn’t say which of them were on which side of the case. Arguments in April suggested the possibility of an ideological divide.
Obama acted after Congress hit a stalemate in efforts to pass a comprehensive overhaul of immigration laws. Under the program, people whose children are either U.S. citizens or legal permanent residents, and who meet other requirements, could have gotten relief from deportation for three years. Those individuals, who are primarily from Mexico and Central America, wouldn’t have been given an easier path to citizenship.
The president said the program was simply a broader exercise of his accepted power to set priorities in deciding who should be deported. Opponents said Obama was offering amnesty for people who broke the law to enter or remain in the country.
Sheryl Sandberg and 55 execs back Clinton
56 prominent business leaders announced their support for Hillary Clinton Thursday, a day after her major economic policy speech. …read more
Source: Sheryl Sandberg and 55 execs back Clinton
Gundlach Will Sell European Stocks Into "Remain" Pop; Bashes SolarCity Deal
By Tyler Durden
With cable trading just shy of 1.49, and well above what many banks had expected was the currency’s maximum “surge” rebound from last week’s lows in the case of a “Bremain” victory, the looming question among trading desks ahead of tonight’s official results is whether the market has fully priced in the brexit favorable outcome. According to at least one person the answer is yes.
Jeffrey Gundlach told Reuters that his firm is considering selling its position in European equities early Friday on a “Bremain” vote that keeps Britain in the European Union. The DoubleLine asset manager said he had purchased beaten-down European stocks a week ago, and said that the firm expects Britain to vote on Thursday to stay in the EU “so you want to sell on the pop. European stocks have been rising, so we are expecting one more push into the vote.”
He may not have to wait until Friday: the pop came this morning when European stocks rose another 2% on the back of a soaring sterling which rose above 1.49 earlier and is now at its highest level since last December, as the market now anticipates a Remain victory with virtual certainty.
Unrelated to Brexit, Gundlach also chimed in on Tesla’s proposed acquisition of SolarCity Corp, which Tesla’s Chief Executive Officer Elon Musk called a “no-brainer.” Gundlach said the Tesla-SolarCity deal is “a complete confidence destroyer” for Tesla Motors Inc shareholders.
“This is a poor idea for Elon Musk,” Gundlach said. “This is damaging to his reputation and to the way he operates.” He added that the Tesla-SolarCity deal wreaks of “bad corporate governance. I feel like there is reputational damage for Musk because he is all about creating good things.”Gundlach had proposed two years ago that Musk cut a deal with competitors in which Tesla would stop making cars and instead supply automakers’ batteries.
He joins famed shortseller Jim Chanos who likewise blasted Tesla’s proposed acquisition of SolarCity, describing it as a “brazen” bailout and “shameful example of corporate governance at its worst.”
“SolarCity, whose bonds were yielding 20 percent yesterday, is a company headed toward financial distress,” Chanos said in an emailed statement on Wednesday. “It is burning hundreds of millions in cash every quarter, a burden that now Tesla shareholders will have to bear, at a total cost of over $8 billion.”
Chanos, whose firm has been betting against Tesla and SolarCity shares, said the combined drop in the market value of the two companies was more than the equity value of the deal itself, “which means that Tesla shareholders think SolarCity shares are essentially worthless.
“Finally,” he added, “it is hard for me to believe that this deal was not being contemplated when Tesla, and Mr. Musk himself, sold shares just a few weeks ago.” Overall, Gundlach said about Musk: “This deal feels like he has lost his Midas touch. I also feel like Musk is trying to do too much.“
Even traditional Tesla cheerleaders such as Morgan Stanley’s Adam Jonas, who …read more
Source: Gundlach Will Sell European Stocks Into "Remain" Pop; Bashes SolarCity Deal
Democrat "Gun Control" Sit-In Continues Into Its Second Day On House Floor
By Tyler Durden
In a dramatic turn of events, and very symbolic of America’s dysfunctional political system today in which all decisions have been punted to the Fed for the past seven years, Democrats took the floor of the House and staged a sit-in just before Noon on Wednesday. The Democrats were demanding that Republican leadership schedule votes on gun control bills, and according to Politico, Republicans almost immediately recessed the House and turned off the chamber video cameras. That only added fuel to the fire, and the sit-in went on all day and has continued into the early hours Thursday morning.
As Politico explains:
The tumultuous day started just before noon when Democrats took over the chamber. Republicans almost immediately recessed the House and turned off the chamber video cameras. But that only drew more attention to the sit-in, as lawmakers whipped out their own phones and started livestreaming their efforts online, which was in turn broadcast by C-SPAN. The protest soon became the story of the day, leading news websites across the nation.
House Republicans earlier in the day signaled they weren’t interested in bringing in security to escort Democrats out, but they also weren’t willing to give them the votes they wanted.
If Ryan thought a few hours on the House floor would assuage the left, he was mistaken. The Wisconsin Republican entered the chamber at 10 p.m. to break up the protest by moving to a vote on unrelated legislation to override an Obama administration rule. Pandemonium ensued, a scene not witnessed on the House floor in years, if ever.
But as Ryan sought to restore order in the chamber, Democrats angrily chanted “No bill, no break!” — a reference to the upcoming July recess they want to postpone until a vote on gun control is held.
Earlier in the day, Ryan dismissed the Democratic protest as “nothing more than a publicity stunt,” noting that the proposal at issue was recently defeated in the Senate. “We’re not going to take away a citizen’s constitutional rights without due process,” the speaker told CNN.
Speaker Ryan sought to quell the demonstration by having lawmakers vote at 2:30am on several bills, including one to combat the Zika virus. As Politico reports, the clash on the floor during the vote on the unrelated bill was ugly, and a scene even longtime Hill observers have said they’ve never witnessed before.
The clash on the floor during the vote on the unrelated bill was ugly, a scene even longtime Hill observers have said they’ve never witnessed before.
Democrats who had been in the chamber all day for the protest moaned when the House stenographer came back into the chamber to take her spot, in preparation for the vote. Several dozen Democrats sat in front of the House podium to fill the area where members occasionally cast votes.
A few minutes before the vote started, as Ryan took to the podium and slammed his wooden gavel, Democrats started chanting. Guests watching from the gallery inside …read more
Source: Democrat "Gun Control" Sit-In Continues Into Its Second Day On House Floor
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Robots To Pay "Social Security" Under EU Tax Proposal
By Tyler Durden
Submitted by Michael Shedlock via MishTalk.com,
The EU is studying a proposal that would count robots as people for tax purposes.
Although the proposal is deemed “too early” to implement just yet, rest assured once nannycrats get a bad idea in their heads, it never leaves.
This provides yet another reason to vote in favor of Brexit.
Please consider Europe’s Robots to Become ‘Electronic Persons’ Under Draft Plan.
Europe’s growing army of robot workers could be classed as “electronic persons” and their owners liable to paying social security for them if the European Union adopts a draft plan to address the realities of a new industrial revolution.
Robots are being deployed in ever-greater numbers in factories and also taking on tasks such as personal care or surgery, raising fears over unemployment, wealth inequality and alienation.
Their growing intelligence, pervasiveness and autonomy requires rethinking everything from taxation to legal liability, a draft European Parliament motion, dated May 31, suggests.
The draft motion called on the European Commission to consider “that at least the most sophisticated autonomous robots could be established as having the status of electronic persons with specific rights and obligations”.
It also suggested the creation of a register for smart autonomous robots, which would link each one to funds established to cover its legal liabilities.
The draft motion, drawn up by the European parliament’s committee on legal affairs also said organizations should have to declare savings they made in social security contributions by using robotics instead of people, for tax purposes.
The motion faces an uphill battle to win backing from the various political blocks in European Parliament. Even if it did get enough support to pass, it would be a non-binding resolution as the Parliament lacks the authority to propose legislation.
Three-Fifths Rule
Like slaves in the US before the Civil War, do robots get Three-Fifths of a pre-programmed representation in the European Parliament?
Law of Bad Ideas
The Law of Bad ideas stipulates that bad ideas never go away, they just get worse over time.
At some point in the future, expect to have to register your robots and pay social security taxes on them as well.
When I first penned the “Law of Bad Ideas” I was shocked to discover nobody had used that phrase.
Source: Robots To Pay "Social Security" Under EU Tax Proposal
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