Key Brexit Question: Is Cameron The Biggest Liar In History?

Submitted by Michael Shedlock via,

Please recall that Prime Minister David Cameron repeatedly stated there will be no second vote.

Cameron also stipulated that he would invoke article 50 of the Lisbon treaty, which represents formal notification of a decision to leave the EU.

Unfortunately, the battle is not over. A key question remains: Is Cameron an even bigger liar than we all know?

Now that the vote is in, I fully expect all the other liars, notably French president Francois Hollande and German Chancellor Angela Merkel to propose a second vote with added sweeteners.

Also note the Brexit vote is not legally binding. Cameron could easily resign, leaving this up to the next parliament to decide.

Either of those is arguably more likely than straight-up leave negotiations.

And we have yet to hear from European Commission president Jean-Claude Juncker who now doubt will promise (lie) anything and everything to get another vote.

Vote by Country

Results by Country

I captured that snapshot earlier in the evening. I have no update but it is likely reasonably close.

What I am certain of is the two biggest votes for remain were Scotland and Northern Ireland.

Final Question

I leave you with one final question: Whose country is this, and will Cameron support it?

via Tyler Durden

“Now It’s Our Turn” – Geert Wilders Calls For A Dutch Referendum

Just as we warned, the historic British rejection of the EU’s totalitarian rule has sparked renewed ambitions to leave the clutches of Brussels across Europe. First to congratulate Britain was Holland’s Geert Wilders, who calls for a Dutch referendum as soon as possible…

Thursday, June 23, 2016, will go down in history as Britain’s Independence Day.


The Europhile elite has been defeated. Britain points Europe the way to the future and to liberation. It is time for a new start, relying on our own strength and sovereignty. Also in the Netherlands.

A recent survey (EenVandaag, Dutch television) shows that a majority of the Dutch want a referendum on EU membership. It also shows that more Dutch are in favour of exit than of remaining in the EU.

The Dutch people deserve a referendum as well. The Party for Freedom consequently demands a referendum on NExit, a Dutch EU exit.


As quickly as possible the Dutch need to get the opportunity to have their say about Dutch membership of the European Union.

Geert Wilders: “We want be in charge of our own country, our own money, our own borders, and our own immigration policy. If I become prime minister, there will be a referendum in the Netherlands on leaving the European Union as well. Let the Dutch people decide.”

Meanwhile, Europe is a bloodbath…This is the biggest drop in EURUSD (DEMUSD) since 1978!!


as NExit looms…


Just as we warned in April.

via Tyler Durden

UK to Leave EU, Probably

The BBC, ITV, and Sky News have all called the Brexit vote in favor of leaving the European Union. The “Leave” side leads by nearly a million votes with about 85 percent of districts reporting.

Bookmakers had been favoring Remain by 3 to 1 before voting started. The markets did not appear to have anticipated Leave either, with severe downward corrections to the sterling (which hit 30-year lows) beginning with the first results announcements at the beginning of the night.

More than 80 Conservative members of Parliament who backed the “Leave” campaign signed a letter urging Conservative Prime Minister David Cameron, who supported “Remain” and was re-elected as prime minister last year in part on a promise to hold a referendum, to remain as prime minister. ITV’s Allegra Stratton reported that Cameron would make a “dignfiied exit” that would not be “immediate.”

In the wake of the call, supporters of “Remain,” who spent much of the campaign warning British voters of the negative economic consequences of leaving the European Union—some imposed by the EU itself—blamed voters for voting “emotionally,” as Labor member of Parliament Keith Vaz put it.

Jacob Rees-Mogg, a pro-Leave Conservative member of Parliament, argued that the “Leave” campaign was about returning sovereignty to the people of the United Kingdom, which the Parliament is supposed to return in full to the people every time a new parliament is elected.

Rees-Mogg also did not rule out the possibility of a new general election being triggered by the Brexit vote. The British government is expected to invoke Article 50 of the Lisbon Treaty, which governs how member states of the EU leave the organization. Some pro-Leave campaigners insist that’s not necessary, as the referendum was a rejection of the treaty, which governs the EU, as a whole.

Eurocrats in Brussels are expected to make the process of leaving the EU difficult for the UK. Rees Mogg suggested that if that happened the EU wouldn’t be a club anyone would want to belong to in the first place and would more resemble a Mafia.

The first minister of Scotland, which held a referendum about remaining in the U.K. in 2014, has suggested that Scotland could hold another referendum about the U.K. if the U.K. decided to leave the EU. Scotland broke in favor of the “Remain” side, setting up the possibility that while the United Kingdom voted the EU out it could keep a foot in Great Britain. “It’s clear that Scotland sees its future as part of the EU,” she said after the vote. 62 percent of Scottish voters chose ‘Remain.’ Sinn Fein in Northern Irleand, which went 55 percent in favor of Remain, may also call for a referendum about remaining with the U.K.

Howard Dean declared on Twitter that “the sun has finally set” over the British Empire. Joining the European Free Trade Association, made up of four Western European nations, is another option for the U.K. 

Another possibility is that at some point in the near future, after some amount of negotiation between the British government and the EU, another referendum is held to “approve” the exit negotiations.

For their part, BBC analysts have described the drops in the markets as the world coming down around them. Pro-Leave Conservative member of Parliament Andrea Leadsom minimized the movement in the markets. “Markets are volatile,” she noted, suggesting the intense fearmongering by the Remain side could’ve contributed to that volatility and insisting that the fundamentals of the British economy remains strong. “We need calm,” she explained to the BBC anchors.
“fundamentals in our economy remains very strong.”

from Hit & Run

Morgan Stanley Explains “What Leave Means” (Spoiler Alert: A Lot Of Pain For The Longs)

With the voting out of the way, the only thing left is the crying. Oh, and the margin calls which start in just a few hours. And, alongside all of that, forecasts of doom that have to comply with all the scaremongering that was unleashed over the past few months as part of the Remain campaign. Sure enough, here is Morgan Stanley’s Andrew Sheets explaining “What Leave Means.”

It’s not pretty. Here is the summary answer:

We see GBP moving to 1.25-1.30 and 15-20% downside to European equities relative to Thursday’s levels. Corporate and sovereign credit present the best opportunities to buy on weakness

  • Economic implications: The UK faces a prolonged period of uncertainty which should lead both investment and consumption to wane. Longer term, a less open economy could lower the UK’s rate of potential growth. Risks to the economy will likely lead the Bank of England to keep an easing bias – staying on hold through 2017-18, or a rate cut to 10bp with further QE depending on exit negotiations.
  • What has furthest to fall: Negative implications extend beyond the UK. We see the most downside in GBP and EU equities, and would also be sellers of AUDJPY (target 70), USDJPY (90) and EURCHF (1.02) on a flight to safety. Gilt yields could rally 30-35bp to all-time lows, but breakeven inflation could ultimately rise, given weaker GBP. In EM FX and local rates, sell Poland and South Africa.
  • Where to be brave: ECB support, both potential and existing, argues for buying corporate and sovereign credit into weakness. We discuss levels and our expected central bank response.
  • FX: Poor fundamentals could support 10%+ downside in GBP. Higher global volatility favours JPY and CHF. Increased concerns over eurozone vulnerabilities make PLN the best short in EM.
  • European equities: We expect significant downside for European stocks – SX5E at 2400-2550 and FTSE 100 at 5000-5300. Financials and Consumer Discretionary will likely lead the market lower, while Staples and Healthcare should outperform.
  • Credit: We expect a strong response from the ECB – we’d add risk in CSPPeligible assets and ‘A’-rated ineligible non-fins on initial weakness. We’d also add bank credit selectively on what we expect will be materially lower prices today – UK banks’ LT2 and AT1s have best asymmetric returns.
  • European rates: We reiterate our long duration recommendations and believe UK yields could rally 30-35bp. GBP depreciation should be a dominant force on inflationary pressures over the next two years – long Nov-18 UKTi breakevens. The decline in global yields could see 30y UK real yields return to all-time lows; we reiterate long Mar-46 UKTi real yield. BTP spreads moving more than 25bp would represent value to ‘buy on weakness’, in our view.
  • EM fixed income: We expect risk-aversion to widen the impact beyond countries with direct UK links. We see Poland and South Africa most exposed in rates and FX, and South Africa and Turkey most exposed within EM credit.

And the full one:

Cross-asset implications: Bracing for volatility, by  Andrew Sheets


It looks likely that the UK has voted to leave the EU. This result will come as a surprise to markets, based on Thursday’s pricing, and creates material political and economic uncertainty in Europe. Both are negative for risk premiums, and the question over the next several days is not whether prices fall, but by how much, and whether central banks respond.


What level of sell-off is warranted? A great deal of uncertainty hovers around all of our estimates in this scenario. Generally speaking, we see the most downside in European FX and equities. We think both European corporate and sovereign credit will be better insulated, given central bank support.


Specifically, we think GBPUSD could trade down to 1.25-1.30, as valuations need to adjust sharply before the currency is ‘cheap’, in our view. EURUSD could fall to 1.05 over the next six months as its correlation with risk flips, reverting back to the pattern seen in 2011-12, when EUR served as a proxy for European cohesion. JPY and CHF, in contrast, should be well-supported. We think European equities could sell off by 15-20%, on a ~5% hit to earnings and de-rating the P/E back to near historical averages. Within equities, we prefer to be defensive,  favouring Staples and Healthcare, and our ‘Weaker EUR beneficiaries’ basket (MSSTWKEU). 


While spreads should also widen, we think corporate and sovereign credit stand to outperform FX and equities significantly, given the ECB’s outstanding purchase programmes for both. We expect CDS to materially underperform cash, with XOver moving out towards 450bp.


What to watch for? All eyes are now on the ECB, and how aggressively it decides to intervene in order to protect its member states and deflect downside risks to inflation that could result from increased economic uncertainty. In the very short term, we think the ECB could reassure markets about liquidity provision (including via FX swap lines and emergency liquidity assistance) today. We would also watch MS GRDI* (STGRDI <Index>), our preferred sentiment measure, dropping below -3, for assessing if the sell-off has run its course. We see US assets across the spectrum – stocks, FX, credit and government bonds – becoming relative safe havens: We reinforce our preference for US versus ROW in equities. We think EM equities are more vulnerable to contagion risks from Europe than US equities.


We see US assets across the spectrum – stocks, FX, credit and government bonds – becoming relative safe havens: We reinforce our preference for US versus ROW in equities. We think EM equities are more vulnerable to contagion risks from Europe than US equities.

* * *

What else? Oh yes: central banks to the rescue, of course.

Statements and actions by central bankers


Elga Bartsch and Chetan Ahya, our global economists, think that in the immediate aftermath of a vote to leave key global central banks will make statements that they stand ready to support markets by providing liquidity and by reopening existing FX swap lines. Such statements could well be coordinated across the G7. Central banks with active QE programmes could make operational adjustments to their asset purchase programmes, if needed. Beyond these emergency measures, however, they do not expect changes in the monetary policy stance in the immediate aftermath of a vote to leave.

Good luck.

via Tyler Durden

How To Defuse A Rabid Anti-Trumper

"Just for fun, I've un-hypnotized several rabid anti-Trumpers lately," Dilbert creator Scott Adams explains, noting that it takes less than ten minutes, requires nothing but conversation, and you can probably pull it off just by reading how he did it. Here's how…

When you encounter a rabid anti-Trumper, ask her what are the biggest concerns of a potential Trump presidency. 

If “Supreme Court nominee” is one of the top objections, discontinue your persuasion for ethical reasons. This person has put some thought into the decision and has a legitimate opinion that is at least partly based on reason. I don’t recommend changing that person’s mind.

But if a person’s main objections to Trump include any the following four reasons, I would consider it ethical to apply persuasion.

Objection 1: Trump is a loose cannon who might offend other countries and maybe even start a nuclear war.


Objection 2: Trump is terrible at business because he has several bankruptcies.


Objection 3: Trump is a racist.


Objection 4: Trump is anti-women and anti-LGBT

If any of those four objections are behind an anti-Trumper’s opinion, you have ethical license to persuade, so long as you are sticking to facts and adding context. I’ll show you how to do that with each objection.

Objection 1: Trump is a loose cannon who might offend other countries and maybe even start a nuclear war.

Persuasion: Trump has five decades of acting rational in business dealings, and getting along with people all over the world, including China and Russia. By now you would have heard stories of Trump being a loose cannon in his business dealings if such a thing had happened. We are hearing no stories of that nature. And people don’t suddenly change character at age 70. (That last sentence is the important one.)

Read more here…

Objection 2: Trump is terrible at business, as proven by his several bankruptcies.

Persuasion: Ask how many bankruptcies Trump has had. Most people say between 5-10. Then ask how many entities Trump has his name on. The answer is about 500. Then ask if that is a good performance for an entrepreneur who is often trying things in new fields.

(Asking questions in that fashion is good persuasion technique. It removes the adversarial frame and gives the person a sense of coming to a new conclusion without pressure.)

Read more here…

Objection 3: Trump is a racist.

Persuasion: Trump has never mentioned race beyond pointing how how many African-Americans and Latinos support him. Ask your anti-Trumper to offer evidence otherwise. Then point out…

Mexico is a country, not a race.

Islam is open to all races.

If the topic of Judge Curiel comes up, point out that all human beings are biased by their life experiences. Ask anti-Trumpers if they think Curiel would be comfortable at his next family gathering if his verdict favors Trump. (Notice the question form of persuasion again.)

Read more here…

Objection 3.1: But Trump wants to discriminate based on religion!

Persuasion: Clarify to the subject of your persuasion that Trump only wants to discriminate against non-citizens. That is literally the job description of a president. 

For context, point out that Islam is unique among religions in that it includes an order from God that Muslims should overthrow any government that is not compatible with Islam. Moderate Muslims around the world ignore that part of the religion, but refugees are coming from places where it is considered mandatory.

Read more here…

Objection 4: Trump is anti-women and anti-LGBT


Trump is the only candidate calling out Islam for its followers’ views on women and the LGBT community.

Trump wants women to have the right to own guns to protect themselves. 

Trump is the only candidate concerned about crimes against women that are perpetrated by illegal immigrants from Mexico.

Trump has a long business record of promoting women to executive positions in his company. He was doing it years before it was fashionable.

The women in his personal life – including his ex-wives – seem to like him. 

Trump is offensive in the way he has talked about women. But keep in mind that Trump has offended nearly everyone at some point. 

The way to know your persuasion is working is that your subject will change the topic instead of addressing your point.

Read more here…

via Tyler Durden

Spot The Odd One Out – Political Uncertainty Edition

The presence of a negative relationship between uncertainty and economic activity seems intuitive. Presumably, as Goldman explains, more uncertainty reduces the incentive for firms and households to engage in economic transactions that are costly to reverse (e.g., investments, hiring, purchases of durable goods). To the extent that this is the case, one would expect the resulting dampening effect on aggregate demand and economic activity to ebb as the fog of uncertainty clears.

But the consequences of an uncertainty shock may prove more malign than typically assumed.

To paraphrase former Fed Governor Jeremy C. Stein, uncertainty “gets in all the cracks”: it distorts economic decisions and behavior through numerous channels, in a manner that policymakers cannot easily restrain. Indeed, recent academic research argues that, when such dynamics become self-fulfilling and/or self-perpetuating, spikes in uncertainty (as witnessed in 2008-09) can lead to financial turmoil, as well as to a pronounced slowdown in activity.

And so, judging by the economic uncertainties of the following nations, there is one country that stands out…

The “sanctioned” and “increasingly alone” Russians see near record low levels of economic uncertainty… which may explain why their currrency, bonds, and stock market are all doing so well in recent months.

Source: Goldman Sachs

via Tyler Durden

‘Is 2016 the moment Libertarians have been waiting for?’ Matt Welch Asks at CNN Opinion

Was last night’s somewhat awkward performance by Gary Johnson fatal to the Libertarian Party’s prospects in 2016? Not so fast, I argue at CNN Opinion. Here’s how the column begins:

Like teenagers on New Year’s Eve, libertarians are conscious enough about their shaky social status that they tend to become over-invested in individual moments.

Watching your long-marginalized political bloc step out blinkingly into the national spotlight, as former New Mexico governor Gary Johnson and former Massachusetts governor William Weld did Wednesday night at CNN’s Libertarian Town Hall, can be fraught with expectation and not a small amount of dread.

Johnson’s halting performance last night had many party faithful lunging for the panic button, almost certainly prematurely given this year’s unprecedented opportunity for and interest in the country’s leading third party.

But his often defensive posture in the face of challenging questions stems from an intra-Libertarian divide that the ticket is going to have to address more forthrightly if it wants to meet the 15 percent polling threshold to get into this fall’s presidential debates.

Read the whole thing here.

Previous Reason coverage of the Johnson/Weld town hall:

* “Nice Guys Finish Third: Gary Johnson’s Awkward Night,” by Matt Welch

* “Gary Johnson/William Weld: ‘Skeptics’ of Intervention That Will Involve Congress in Decisions on Military Action,” by Ed Krayewski

* “Drug War Ringer Pushes Johnson to Explain Reality of Prohibition,” by Scott Shackford

* “What Gary Johnson Should Have Said About Heroin,” by Jacob Sullum

* “Gary Johnson: The Presidential Candidate for Non-Crazy Americans,” by Robby Soave

* “As Governor of New Mexico, Gary Johnson Was an Early Advocate for School Choice,” by Tyler Koteskey

* “Gary Johnson on Tonight’s CNN Town Hall: ‘It can’t be bigger. I mean, really, this is really, really big,’” by Matt Welch

* And “CNN’s Libertarian Town Hall in 3 Minutes,” by Zach Weissmueller & Justin Monticello:

from Hit & Run

The End Of Cheap China – 16 Emerging Low Wage Economies

Originally posted at Time Price Research,

China has completed its cycle as a high-growth, low-wage country and has entered a new phase that is the new normal.

China will continue to be a major economic force but will not be the dynamic engine of global growth it once was. International capitalism requires a low-wage, high-growth region for high rewards on risk capital. In the 1880s it was the United States, for example. China was the most recent region, replacing Japan. No one country can replace China, but we have noted 16 countries with a total population of about 1.15 billion people where entry-level manufacturing has gone after leaving China. Identifying the Post-China 16 countries is not a forecast. It is a list of countries in which we see significant movement of stage industries, particularly garment and footwear manufacturing and mobile phone assembly.

The Post-China 16 countries are strictly successors to China as low wage, underdeveloped countries with opportunities to grow their manufacturing sectors dramatically.

The new activity is focused on Africa, Asia and to a lesser extent, Latin America.

Peru, the Dominican Republic, Nicaragua and Mexico are the Post-China countries in Latin America.

When you look at the map, much of this new activity is focused in the Indian Ocean Basin.

Sri Lanka, Indonesia, Myanmar and Bangladesh are directly on the Indian Ocean. The Indochinese countries and the Philippines are not on the Indian Ocean, and even though I don't want to overstate the centrality of the Indian Ocean, they are nearby. At the very least we can say that there are two ocean basins, the Indian Ocean and the South China Sea.

The most interesting pattern is in the eastern edge of Sub-Saharan Africa: Tanzania, Kenya, Uganda and Ethiopia. It is primarily garment and footwear manufacturers that are firstly starting to relocate. The second area where there has been a change-over is the market of cell-phone assembly operations. In the first field it’s the skills that are easily exploitable in the workforce. In the second sector of activity is the need to have low-prices to be competitive. 50 Turkish garment factories are currently relocating to Ethiopia for example. Hennes & Mauritz AB (H&M) are also currently considering purchasing more than 1 million garments from Ethiopia every month. Costs per unit in Ethiopia are 50% cheaper than in China at the moment. However, this is estimated to rise to the current Chinese level by 2019. Chinese salaries increased last year by 17.1% and the previous year it was 18%. Salaries in China are on average just 30% lower than in the US today. Salaries in China now exceed those in Mexico and in Turkey. Ethiopia has an economic growth of 10% today. However, it remains one of the poorest countries in the world despite having one of the top economic-growth prospects of the continent.

via Tyler Durden