Congressman: Only Politicians Need Firearms For Protection

Authored by Joshua Krause via (h/t,

charlie rangel wikimedia

There are millions of Americans who want to restrict firearm ownership and use by one degree or another. While you may disagree with those people, at least they’re consistent. For the most part, die-hard gun grabbers don’t own firearms, and have probably never even held a gun before. They’re not hypocrites, unlike the handful of politicians and celebrities who often lead them.

It’s been pointed out by Second Amendment supporters for years, that the wealthy and famous liberals who say they hate gun so much, are typically flanked by professionally trained and armed security guards at all times. They tell us that we don’t need firearms to protect ourselves, while they go about their lives constantly surrounded by firearms.

Unfortunately, this hypocrisy is rarely challenged in person. These people are singled out by pro-gun activists over and over again, but nobody with a microphone or a video camera has had the opportunity to question these elites over their blatant hypocrisy. We’ve never seen the right reporter with the right questions, get close enough to one of these high profile anti-gun crusaders. Clearly, having a squad of armed guards has plenty of perks for people who don’t like to explain themselves.

Fortunately, it has finally happened. An anti-gun politician has finally been put on the spot over this matter. Democratic Representative Charlie Rangel spoke to the Daily Caller on Tuesday, in regards to a recent scandal involving four NYPD officials who were arrested for accepting bribes in exchange for police escorts and gun licenses, among other perks.

When asked by The Daily Caller his thoughts on the difficulty of getting a concealed carry permit in New York City and how rare it is for such permits to be issued by the NYPD, Rangel replied, “I’m glad to hear you say that very few people get it.”


“We don’t need that many guns,” he continued. “I didn’t know that briberies were involved in getting a gun, and that is wrong, but overall, if it is difficult to get a concealed weapon permit, I’m glad to hear that.”

Rangel went on to say that his own law-abiding constituents in Harlem shouldn’t have to carry guns for their own protection. However, the same rules don’t apply to the political elite.

“Law-abiding citizens just shouldn’t have to carry a gun. You’re not gonna push me in that direction,” he said, standing just five feet from a Capitol Police officer, who stood at his post by the House Speaker’s Lobby.


TheDC noted to Rangel he and other members of Congress are protected by armed members of the U.S. Capitol Police.


“Well that’s a little different.  I think we deserve–I think we need to be protected down here.” Rangel laughingly insisted.

Rangel never bothered to explain why average citizens shouldn’t be armed in public, while members of his protected class are exempted. That’s because there isn’t a good explanation. There’s no way for a politician like Rangel to argue that people don’t need guns without sounding like an out of touch elitist.

You’ve got to love how he says that he ‘deserves’ protection before quickly correcting himself. This is the mindset of the political elite. They deserve to be protected with firearms. The people who have our legal rights in their hands, believe that they are better than the rest of us, who are mere children that can’t be trusted with guns. We all knew that this was the case, but it’s satisfying to hear people like Charlie Rangel admit to that fact in so many words.

via Tyler Durden

Another Sexual Assault Gets Refugees Banned From Pools In Austria

Earlier this year we reported that a town in Germany had banned adult male asylum seekers from the public pool after receiving complaints that some women were sexually harassed. As a result, Germany created a leaflet that it handed out to "sexually frustrated" immigrants at local swimming pools to teach them proper poolside etiquette.

The leaflet shows that among other things, it is not acceptable to do the following: touch the behind of an unsuspecting female swimmer (#12), drown others (#4), push women into the pool (#3), or jump onto a screaming blonde (#7).

A similar flyer was created by Switzerland which detailed acceptable behaviors in order to prevent refugee sex attacks. The flyer was a modified version of one that was created in Austria during the initial influx of refugees.

For those that chuckle at the effort, there does appear to be a real problem with sexual assaults, and it is widespread. In the latest sexual assault case, a "dark-skinned" man assaulted a 13 year old girl at a pool in the town of Mistelbach, Austria on Wednesday. As RT reports, the man followed the girl into the women's changing room and tried to force the girl to perform oral sex. Thankfully the attacker fled after the girl began shouting.

More from RT

Authorities in the Austrian town of Mistelbach issued a temporary pool ban for refugees following a sexual assault by a “dark-skinned’ man on a 13-year-old girl.


"This news was a shock," said the town’s mayor, Alfred Pohl, as quoted by the Heute media outlet.


According to Austrian newspaper Kronen Zeitung, the attack happened on Wednesday afternoon.


The girl was first followed by a young man into the women’s changing room. Once there, he forced her to perform oral sex. The girl however fiercely resisted and started shouting, forcing the attacker to flee.


Police are now investigating the incident and are searching for the suspect.


According to eyewitnesses and the victim herself the man was a “foreigner.”


There are currently eight facilities housing refugees around Mistelbach. Police are now checking the camps, Heute news outlet reports. There is however no confirmation on whether an asylum seeker is behind the attack.


Following the incident the mayor temporarily banned all refugees from attending the swimming pool. The authorities put a poster next the pool entrance reading “Today no entry for refugees,” and two guards were hired to patrol the premises.


“This decision was not easy, and I take responsibility for it,” the mayor said. “The ban on asylum seekers from the swimming pool is temporary, until the security is in place,” he added.

* * *

These types of occurrences are what makes the immigration issue in Europe an extremely difficult one for the politicians who have to answer for these types of things. The violence and sexual assaults are what has given rise to Germany's anti-immigrant AfD party as of late, and sadly this trend does not look like it is going to cease any time soon, despite all of the flyers being printed and handed out.

via Tyler Durden

Cable Collapses To 1.33 Handle – What Happens Next?

The collapse continues as Friday’s bounce in GBPUSD is rapidly being erased. Cable is now down 2% back to a 1.33 handle..

As Bloomberg notes, GBPUSD is consolidating drop to 1985 levels with key support as follows:

  • 1st support: 1.3229, June 24 low
  • 2nd support: 1.3031, 76.4% Fibo retracement of rally from 1985 to 2007
  • 3rd support: 1.3000, psychological support


As FTSE Futures are set to open shortly, begging the question what happens next?

via Tyler Durden

Brexit Is Really a Vote Against Washington Control Over Europe

It is historically documented that the European Union was largely created by the CIA, U.S. State Department and other Americans interests.

The U.S. has used the EU to push pro-bank, pro-austerity, anti-little-guy policies throughout the European continent.

And the U.S. has used the EU to back American regime-change campaigns in Iraq, Libya, Ukraine, Syria and beyond … causing the flood of refugees into Europe in the first place.

Indeed, a global poll shows that the U.S. is considered the greatest threat to world peace by the rest of the world.  The Reuters poll revealed that many European countries – including the following nations – consider the U.S. to be the world’s top threat (Table 6):

And the UK itself considers the U.S. as essentially tied with Iran as being the biggest threat to world peace.

Michael Hudson, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, who has advised the U.S., Canadian, Mexican and Latvian governments as well as the United Nations Institute for Training and Research, notes:

Almost all the Europeans know where the immigrants are coming from. And the ones that they’re talking about are from the near East. And they’re aware of the fact that most of the immigrants are coming as a result of the NATO policies promoted by Hillary and by the Obama administration.


The problem began in Libya. Once Hillary pushed Obama to destroy Libya and wipe out the stable government there, she wiped out the arms–and Libya was a very heavily armed country. She turned over the arms to ISIS, to Al-Nusra, and Al-Qaeda. And Al-Qaeda used these arms under U.S. organization to attack Syria and Iraq. Now, the Syrian population, the Iraqi population, have no choice but to either emigrate or get killed.


So when people talk about the immigration to Europe, the Europeans, the French, the Dutch, the English, they’re all aware of the fact that this is the fact that Brussels is really NATO, and NATO is really run by Washington, and that it’s America’s new Cold War against Russia that’s been spurring all of this demographic dislocation that’s spreading into England, spreading into Europe, and is destabilizing things.


So what you’re seeing with the Brexit is the result of the Obama administration’s pro-war, new Cold War policy.




The right wing was, indeed, pushing the immigrant issue, saying wait a minute, they’re threatening our jobs. But the left wing was just as vocal, and the left wing was saying, why are these immigrants coming here? They’re coming here because of Europe’s support of NATO, and NATOs war that’s bombing the near East, that is destabilizing the whole Near East, and causing a flight of refugees not only from Syria but also from Ukraine. In England, many of the so-called Polish plumbers that came years ago have now gone back to Poland, because that country’s recovered.


But now the worry is that a whole new wave of Ukrainians–and basically the U.S. policy is one of destabilization–so even the right-wing, while they have talked about immigrants, they have also denounced the [inaud.] fact that the European policy is run by the United States, and that you have both Marine Le Pen in France saying, we want to withdraw from NATO; we don’t want confrontation with Russia. You have the left wing in England saying, we don’t want concentration in Russia. And last week when I was in Germany you had the Social Democratic Party leaders saying that Russia should be invited back into the G8, that NATO was taking a warlike position and was hurting the European economy by breaking its ties with Russia and by forcing other sanctions against Russia.


So you have a convergence between the left and the right, and the question is, who is going to determine the terms on which Europe is broken up and put back together? Will it simply be the right wing that’s anti-immigrants? Or will it simply be the left saying we want to restructure the economy in a way that essentially avoids the austerity that is coming from Brussels, on the one hand, and from the British Conservative Party on the other.


And again, you have Geert Wilders, the leader of the Dutch nationalists, saying, we want Holland to have its own central bank. We want to be in charge of our own money. And under Brussels, we cannot be in charge of our own money. That means we cannot run a budget deficit and spend money into the economy, and recover with a Keynesian-type policy.


So the whole withdrawal from Europe means withdrawing from austerity. If you look at the voting pattern in London, in England, you had London to stay in. You had the university centers, Oxford and Cambridge, voting to stay in. You had the working class, the old industrial areas of the north and the south. You had the middle class and the industrial class saying, we’re getting a really bad deal from Europe. We want to oppose austerity. And we don’t want Brussels to give us not only the anti-labor, pro-bank policies, but also the trade policy that Brussels was trying to push onto Europe, the Obama trade agreement that essentially would take national economic policy out of the hands of government and put it into the hands of corporate bureaucracy, corporation courts. And the bureaucracy in Brussels, then, is largely pro-bank, pro-corporate, and anti-labor.




So you could say that the vote to withdraw from Europe is, it’s really a vote of the British middle class, the working class, to withdraw from the U.S. neoliberalism that has been running Europe for the last ten years.

via George Washington

Capital Flight Chaos – Safe Havens Are Tiny Markets

Submitted by Adam Taggart via,

Little did I realize when creating the short video below how prescient it would quickly become in the wake of Friday's Brexit vote…

Its message is simple: there's a preponderance of data that shows the world's major asset markets are dangerously overvalued. And when these asset bubbles start to burst, the 'save haven' markets that investment capital will try to flee to are ridiculously small. Investors who do not start moving their capital in advance of crisis will be forced to pay much higher prices for safety — or may find they can't get into these haven assets at any price…

The aftermath of Friday's Brexit vote is providing us with ample validation of the video's thesis.

Stock prices immediately plunged:

The US dollar surged:

Gold put in a $100/oz reversal (which has since moderated a bit):

And Bitcoin jumped:

And look at the capital fleeing derivatives like sovereign credit default swaps. Losses of over 30% in a matter of hours. Yikes!

Response To Reader Requests

Over the years of writing about the risks in markets so distorted as the ones live with today, many Peak Prosperity readers have often asked me how my personal portfolio is positioned. Am I loaded up on save haven assets, and if so, which ones? Do I have long positions in stocks and bonds? What sort of private investments do I own? What am I focused on most going forward?

In Part 2: How My Personal Portfolio Is Positioned Right Now, I've finally decided to openly answer that question. I realize that many people are wrestling with the difficult challenge of identifying and assessing opportunities for safety as well as for prudent return in a market where price signals are bastardized and market risks obfuscated. Hopefully by sharing my own positioning, these folks may find a few constructive ideas worth discussing with their own financial advisers.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

via Tyler Durden

“Trying To Wash Away Her Bad Judgement?” – Clinton Attacks Trump Following Brexit Results

Aside from the millions of UK voters who chose to regain sovereignty last week, one of the biggest winners of the Brexit vote is potentially Donald Trump.

Trump's rise in popularity is in no small part due to the fact that people in the US are tired of the status quo, politics as usual nonsense, and Trump allows for an outlet to that sentiment. The historic vote to regain independence by the UK may very well play into Trump's favor in the US over the course of the next few months, as the UK proved that it is possible to oppose political elites and win. Trump wasted no time in putting out a statement after the final results were in to drive home that point.

Here is Trump's statement

Statement Regarding British Referendum on E.U. Membership


The people of the United Kingdom have exercised the sacred right of all free peoples. They have declared their independence from the European Union, and have voted to reassert control over their own politics, borders and economy. A Trump Administration pledges to strengthen our ties with a free and independent Britain, deepening our bonds in commerce, culture and mutual defense. The whole world is more peaceful and stable when our two countries – and our two peoples – are united together, as they will be under a Trump Administration.


Come November, the American people will have the chance to re-declare their independence. Americans will have a chance to vote for trade, immigration and foreign policies that put our citizens first. They will have the chance to reject today’s rule by the global elite, and to embrace real change that delivers a government of, by and for the people. I hope America is watching, it will soon be time to believe in America again.

Hillary Clinton on the other hand, was urging Britain to remain in the EU, thus finding herself on the losing end of a historic event that could radically shape the political and economic landscape across the globe for decades to come. Well aware of this fact, and presumably concerned that Trump would be able to capitalize on the Brexit vote, the Clinton campaign is trying desperately to get past the fact that Hillary was on the wrong side of the vote as quickly as possible.

To that end, Clinton is using funds from the $42.5 million in cash on hand at the beginning of June to quickly attack Trump for commenting on his golf course in Scotland instead of being sensitive to the global meltdown that ensued after the vote.

Here is the ad

* * *

It's humorous (and telling) to see just how quickly the Clinton campaign is scrambling to divert attention from Hillary's stance on the Brexit vote. The campaign is obviously trying to redirect public attention from Hillary's support of the global elite to Trump's comments about how business would pick up at Turnberry as the GBP falls in value (which is accurate).

This of course was not lost on Trump, who as usual took to Twitter in order to respond to the ad.

via Tyler Durden

Don’t Believe Any Headline Showing Hillary Clinton with a 12-Point Lead over Donald Trump

“A new poll shows Hillary Clinton with a 12 point lead over Donald Trump,” trumpets ABC News Radio, hyping a broadcast of This Week with George Stephanopoulos. Well, yes, but mostly no.

There is indeed a 51 percent to 39 percent advantage for Clinton over Trump in newly released Washington Post/ABC News poll, conducted from June 20-23. But that same survey also asked the same pool of voters to react to a far more representative ballot, i.e., one that includes Libertarian Party nominee Gary Johnson (who is widely expected to end up on the ballots of all 50 states), and the Green Party’s Jill Stein, who is projected to wind up on as many as 47. Leaving Johnson and Stein off polls is bad science; electing to emphasize the numbers that exclude them is journalistic malpractice.

How do the numbers differ with or without the third-party candidates included? Here’s the WashPost/ABC poll, with the first line the misleading Clinton-vs.-Trump matchup, and the second line better reflecting reality. OT = “other,” NV = “not voting.”

HC 51% DT 39% OT 2% NV 6%

HC 47% DT 37% OT 1% NV 0% GJ 7% JS 3%

So it’s a 10-point lead, not a 12-point lead, and Clinton is not supported by a majority of voters. (In fact, this marks her high-water mark in any poll this season that has included Johnson and Stein; in all others, she has been between 39 percent and 44 percent.)

The split is even more dramatic with the other poll making news today, from NBC News and the Wall Street Journal:

HC 46% DT 41%

HC 39% DT 38 GJ% 10 JS 6%

And yet here is how numbers wizard Nate Silver reacted to this poll:

That quip would read a lot differently if it were “The bad news for Trump is that a poll showing him 1 point down is considered good news for Trump,” and yet the edited version is the more accurate one. (Silver, in other venues, has argued for Johnson to be included in polling, saying “it’s not a pollster’s job, in my view, to take that choice away from the voter when they’ll have it on the ballot. They can always ask the question both ways, too — with Johnson and without.”) 

Such selective, inaccurate reading is not just the stuff of Twitter jokes. This is how the Wall Street Journal headlined its own damned poll: “Hillary Clinton Holds 5-Point Lead Over Donald Trump, Latest Poll Finds.” Right, except when you include the names of the candidates who will actually be on the ballots. ABC News did the same with its survey: “Clinton Opens 12-Point Lead on Trump.”

Well, just because some news organizations are elevating clickbait over accuracy doesn’t mean the rest of us need play along. There have been, to my count, seven national polls over the last month that asked about all four candidates, and also provided results for just Hillary Clinton and Donald Trump. Before you read or share any headline about presidential polls, make sure you check to see whether they’ve included Johnson and/or Stein, and then keep this month-long average in mind:

HC 46% DT 38% OT 7% NV 5% 

HC 42% DT 36% OT 2% NV 2% GJ 7% JS 5%

Notice the interesting symmetry in those numbers? Without the third-party candidates, “other” and “not voting” have 7 percent and 5 percent, respectively. Include them, and its Johnson and Stein who get 7 percent and 5 percent, while the number of voters feeling left out of the process plummets. And yes, the third-party challengers on net are drawing more from the Democrat.

The other thing that jumps out of the four-way polling is this: Clinton has yet to reach 50 percent when her proper competition is included, and Trump hasn’t even cracked 40. It’s early yet, and third-party support historically dwindles toward Election Day, but preliminarily the numbers illustrate what our gut already tells us: America is not enthusiastic about its major-party presidential choices.

from Hit & Run

A Tale Of Two Asset Classes: Gold Miners Soar, Banks Crash

Submitted by John Rubino via,

The following tables illustrate one of the dilemmas of mainstream money management:

The vast majority of financial advisers and portfolio managers are big fans of bank stocks because finance is, in their minds, a crucial if not the crucial form of wealth-creating activity in the modern world. So the big names in the field — Goldman Sachs, Deutsche Bank, JP Morgan, etc. — are generally seen as safe places to put client capital.


Finance stocks June 16


Gold and silver, in contrast are fringe, primitive, atavistic concepts that are, at best, “insurance” against some kind of 100-year flood that can’t be predicted and probably won’t happen.


Precious metals miners June 16


But some clients still like such things so what the hell, we’ll allocate 1% of the idiots’ money to it to shut them up. (1% is literally the proportion of global capital invested in precious metals.)

Unfortunately, that’s credit bubble thinking. Banks are dominant forces in an economy only when that economy is creating an unhealthy amount of credit. When the process exhausts itself the banks tank, and terrified capital flows back into “primitive” safe havens. Like Friday:


Gold is extending its rally in early trading – now the biggest 2-day surge since March 2009…


via Tyler Durden

Boris Johnson Emerges, Explains What “The Only Change” As A Result Of Brexit Will Be

With both David Cameron and George Osborne having vaporized and seemingly no one ready (or willing) to take charge in this transition period in which Cameron is no longer the effective PM, yet is unwilling to trigger Article 50, many have been looking to the presumptive next PM, Boris Johnson, to emerge and say a few encouraging words, which he seemingly evaded most of the weekend. However, at 10pm local time, a long overdue BoJo Op-ed graced the pages of the pro-Brexit telegraph, in which the former London mayor says that he “cannot stress too much that Britain is part of Europe – and always will be”, writes that he believes “that this climate of apprehension is understandable, given what people were told during the campaign, but based on a profound misunderstanding about what has really taken place“, but the key statement, and the one all of the understandably confused “Leave” voters will be looking for is Johnson’s explanation of what he thinks will change. To wit:

The only change – and it will not come in any great rush – is that the UK will extricate itself from the EU’s extraordinary and opaque system of legislation: the vast and growing corpus of law enacted by a European Court of Justice from which there can be no appeal. This will bring not threats, but golden opportunities for this country – to pass laws and set taxes according to the needs of the UK.

It remains to be seen if he can convince the Leave – and certainly Remain – camps (the latter, we doubt), especially since nowhere in the op-ed is the all important topic of Article 50 invoked, and more importantly, who and when will trigger it, perhaps the only issue which the markets demand clarity on at this moment. 

Among the other notable Johnson claims is that Britain will continue to have access to the European Union’s single market despite voting to leave the bloc,  adding that Britain could now forge a relationship with the EU based on free trade and partnership rather than a federal system, and that Britain would also be able to do free trade deals with growth economies outside the EU.

“There will continue to be free trade, and access to the single market,” Johnson wrote in a regular column for the Daily Telegraph newspaper, adding that there was “no great rush” for Britain to extricate itself from the EU.

He did not set out any details of how the arrangement would work, but suggested Britain would not accept free movement, saying the government would be able to implement an immigration policy which suited the needs of business and industry.

Johnson said the negative consequences of Brexit were being “wildly overdone” and that Bank of England governor Mark Carney, who came under fire from some Brexit campaigners ahead of the referendum for flagging the risks of leaving the bloc, should continue in his job.

“The economy is in good hands,” he said, praising ‘In’ campaigners Prime Minister David Cameron and finance minister George Osborne for the work they have done to reduce public spending. “Most sensible people can see that Bank of England Governor Mark Carney has done a superb job – and now that the referendum is over, he will be able to continue his work without being in the political firing-line.”

* * *

Boris Johnson’s full op-ed, originally posted in The Telegraph

I cannot stress too much that Britain is part of Europe – and always will be

This EU referendum has been the most extraordinary political event of our lifetime. Never in our history have so many people been asked to decide a big question about the nation’s future. Never have so many thought so deeply, or wrestled so hard with their consciences, in an effort to come up with the right answer.

It has been a gruelling campaign in which we have seen divisions between family and friends and colleagues – sometimes entirely amicable, sometimes, alas, less so. In the end, there was a clear result. More than 17 million people voted to leave the EU – more than have ever assented to any proposition in our democratic history. Some now cast doubt on their motives, or even on their understanding of what was at stake.

It is said that those who voted Leave were mainly driven by anxieties about immigration. I do not believe that is so. After meeting thousands of people in the course of the campaign, I can tell you that the number one issue was control – a sense that British democracy was being undermined by the EU system, and that we should restore to the people that vital power: to kick out their rulers at elections, and to choose new ones.

I believe that millions of people who voted Leave were also inspired by the belief that Britain is a great country, and that outside the job-destroying coils of EU bureaucracy we can survive and thrive as never before. I think that they are right in their analysis, and right in their choice. And yet we who agreed with this majority verdict must accept that it was not entirely overwhelming.

There were more than 16 million who wanted to remain. They are our neighbours, brothers and sisters who did what they passionately believe was right. In a democracy majorities may decide but everyone is of equal value.  We who are part of this narrow majority must do everything we can to reassure the Remainers. We must reach out, we must heal, we must build bridges – because it is clear that some have feelings of dismay, and of loss, and confusion.

I believe that this climate of apprehension is understandable, given what people were told during the campaign, but based on a profound misunderstanding about what has really taken place. At home and abroad, the negative consequences are being wildly overdone, and the upside is being ignored. The stock market is way above its level of last autumn; the pound remains higher than it was in 2013 and 2014.

The economy is in good hands. Most sensible people can see that Bank of England governor Mark Carney has done a superb job – and now that the referendum is over, he will be able to continue his work without being in the political firing-line. Thanks in large part to the reforms put in place by David Cameron and George Osborne, the fundamentals of the UK economy are outstandingly strong – a dynamic and outward-looking economy with an ever-improving skills base, and with a big lead in some of the key growth sectors of the 21st century.

We should be incredibly proud and positive about the UK, and what it can now achieve. And we will achieve those things together, with all four nations united. We had one Scotland referendum in 2014, and I do not detect any real appetite to have another one soon; and it goes without saying that we are much better together in forging a new and better relationship with the EU – based on free trade and partnership, rather than a federal system.

I cannot stress too much that Britain is part of Europe, and always will be. There will still be intense and intensifying European cooperation and partnership in a huge number of fields: the arts, the sciences, the universities, and on improving the environment. EU citizens living in this country will have their rights fully protected, and the same goes for British citizens living in the EU.

British people will still be able to go and work in the EU; to live; to travel; to study; to buy homes and to settle down. As the German equivalent of the CBI – the BDI – has very sensibly reminded us, there will continue to be free trade, and access to the single market. Britain is and always will be a great European power, offering top-table opinions and giving leadership on everything from foreign policy to defence to counter-terrorism and intelligence-sharing – all the things we need to do together to make our world safer.

The only change – and it will not come in any great rush – is that the UK will extricate itself from the EU’s extraordinary and opaque system of legislation: the vast and growing corpus of law enacted by a European Court of Justice from which there can be no appeal. This will bring not threats, but golden opportunities for this country – to pass laws and set taxes according to the needs of the UK.

Yes, the Government will be able to take back democratic control of immigration policy, with a balanced and humane points-based system to suit the needs of business and industry. Yes, there will be a substantial sum of money which we will no longer send to Brussels, but which could be used on priorities such as the NHS. Yes, we will be able to do free trade deals with the growth economies of the world in a way that is currently forbidden.

There is every cause for optimism; a Britain rebooted, reset, renewed and able to engage with the whole world. This was a seismic campaign whose lessons must be learnt by politicians at home and abroad. We heard the voices of millions of the forgotten people, who have seen no real increase in their incomes, while FTSE-100 chiefs now earn 150 times the average pay of their employees. We must pursue actively the one-nation policies that are among David Cameron’s fine legacy, such as his campaigns on the Living Wage and Life Chances. There is no doubt that many were speaking up for themselves.

But they were also speaking up for democracy, and the verdict of history will be that the British people got it right.

via Tyler Durden

Will The Market Break? Keep An Eye On This For the Answer

While markets partially bounced back from the shock lows of the London morning, Citi's Matt King is not convinced this is appropriate.

  • A rising tide of populism – The most obvious concern is that the vote fuels secessionist and protectionist tendencies outside the UK. This indeed seems quite likely – if nevertheless the sort of tail risk markets find it hard to price in advance.
  • Beware the message from rates – More troubling and imminent is the rally in rates. This looks to us the most durable of today’s moves. Now that it is inflation breakevens falling – and not just a rally in real yields – it sends a much more negative signal for risk assets.
  • Banks as the catalyst – The rates rally is wreaking havoc on bank equities in particular: SX7E is making new lows. Against this and given the negative convexity associated with potential bail-in, the relative strength in sub CDS and AT1 looks misplaced.

Is this move a temporary shock, or out for the count?

Beyond the important issue of just how messily the path to Brexit is now handled, we think the global fallout rests on two questions.

  • First, to what extent does the UK result presage or encourage the rise to power of a wave of populist and secessionist movements elsewhere?
  • And second, to what extent do today’s moves help to tip what was already a precarious balance in markets away from a reach for yield and back in the direction of risk-off?

On both counts, we think current market levels fail to fully reflect the risks; bank sub debt, in particular, seems vulnerable.

The rise and rise of populism

While the referendum result has a great many disturbing implications, perhaps the most troubling is the sheer extent of the gulf between what markets and most market participants deem to be desirable, and what it now turns out the majority of the public actually wants. The willingness to vote against the near-unanimous advice of experts must reflect either a gross underestimation of the economic consequences, or – worse – a public saying they simply don’t care.


But such polarization is far from unique to the UK. While the referendum result in itself seems unlikely to provide a significant direct boost to Donald Trump or perhaps even Marine Le Pen, and we are not unduly concerned about a strong Podemos showing in the Spanish elections on Sunday, it nevertheless is already showing signs of sparking a chain of events with negative economic consequences – and not only for the UK.


Most obvious are the calls for referenda in Scotland, France and the Netherlands. While the European political establishment will doubtless do all it can to suppress the tendencies towards secession, our political analysts argue that a further Scottish referendum is almost a given, and that others will follow. Even if the economic consequences of Brexit are seen in time to be very negative, it is not obvious that this will prove much of a deterrent. The UK campaign has demonstrated how easily economic statistics can be twisted to suit political ends.


And since many of those voting for populist movements are doing so because they feel they are not benefiting from economic prosperity, they are unlikely to feel under much obligation to maintain it. While we are obviously still a very long way away from, say, an Italy or a France leaving the euro and defaulting on its debts in the process, the open espousal of such policies by leaders making significant gains at the polls – witness the new Five-Star-Movement mayors in Turin and Rome, for example – should arguably be accompanied by a risk premium in markets.


In addition, even if the political centre is able to fend off such movements, they seem likely to be able to do so only by themselves adopting policies with negative economic consequences. EU leaders are already making stern noises about being unable to let the UK simply cherry-pick which regulations it fancies and still enjoy access to the single market. Efforts to stem immigration will surely be stepped up.


The value of global trade has already fallen by one-quarter in the past two years (Figure 1), and the rally in the $ is one of several reasons it seems likely to fall further still.



Rather than inspiring a renewed push towards trade- and market-friendly policies, the gathering gloom about global growth prospects seems to be achieving exactly the opposite.


Ideally markets would simply reflect these fears with a risk premium – and perhaps, to some extent, they will. But we have seen time and again that markets struggle to price binary events efficiently. Worry too much about Brexit, or Grexit, or a new financial crisis ahead of time and you underperform versus those who are simply unhedged. Inevitably this creates the potential for tipping points, and a hunt for catalysts which might drive us over them.

And the biggest catalyst, according to King, is the signal from rates and banks… which represents a much more immediate danger than the rise of populism and the path to Brexit…

With the vote itself behind us and Cameron having already resigned, it is hard to see an immediate negative catalyst on the latter front. Yes, there may be some shock and disappointment when the Leave campaign’s promise to be able to “take back control” and yet still maintain current trade volumes comes face-to-face with the stony face of EU self-interest, and likewise there may in time be a slow bleed of investment and jobs – not least in the financial sector – being relocated away from the UK and into the single market. But these seem unlikely to animate markets.


What seems much more troubling in the near term is the rally in rates and the associated sell-off in bank equities. These were at the heart of the markets’ disquiet in January and February, and seem dangerously close to becoming so again.


Even before Brexit concerns kicked off a couple of weeks ago, long-dated yields had begun rallying strongly. When the driver was thought to be falling real yields, and inflation expectations seemed reasonably stable, risk assets were able to turn a blind eye to this (Figure 2). Indeed, it seemed almost to fuel the reach for yield. But the more recent drop has come from a fall in inflation expectations, which are again approaching post-crisis lows.



This is something risk assets find far harder to shrug off (Figure 3). Explain the move in terms of real equilibrium neutral rates, as our rates strategists do, or in terms of secular stagnation, structurally declining business investment and credit exhaustion, as we would be inclined to, and it still points to an environment of challenged fundamentals in which risky asset valuations are worryingly dependent on a continued reach for yield.


In addition, it casts doubt on the efficacy of central banks’ past policies and, worse, raises significant question marks about what they might be able to do in the future. When the express aim of central bank easing – to boost inflation expectations – is failing so obviously, are markets really likely to be reassured by more of the same?


The driver of the yield rally seems to have been a partial capitulation by liability managers trying to cover their deficits. Today’s flight to quality and reduction in global growth expectations just exacerbates that. Even before the Brexit vote, the rally in global yields felt quite durable to us; indeed, our rates strategists are expecting yields to go lower still.


Such low rates put a strain on many financial sector business models. After a long period of resistance in recent years, presumably because yields were expected to rebound, insurance and especially bank equities seem finally to be focusing on this.


SX7E was already close to its lows prior to the UK vote, and is now making new ones – even with all the support the ECB is providing in terms of TLTROs.



If the rally in rates leads markets to worry once again about banks’ capital shortfalls, this could easily be just the sort of negative catalyst which tips global markets into a broader bout of risk aversion. Central banks can fix liquidity problems, but they can’t do much about solvency – and  a largely untested bail-in regime creates ample scope for contagion.

The case for shorts in bank credit

This makes the relative strength of financial sector credit today decidedly puzzling. Both AT1 and sub CDS seem surprisingly well supported given their potential vulnerability. Even with equities making new lows, sub CDS retraced much of the day’s initial widening and trades around 40bp inside its wides from February. You might argue that they still seem relatively “in line” or even to have underperformed equities on recent betas, but we think this ignores the negative convexity that credit, as a par instrument, is always prone to.


In a similar vein, nor are we reassured by the fact that cash spreads in the periphery have widened in line with their sovereigns. The ECB is buying the sovereigns, and can do more if necessary; it seems unlikely any time soon to start buying the banks. And even then, this would be of limited assistance to sub and AT1 in instances where the market starts to fear a capital shortfall and subsequent bail-in.


In truth, we do not know how likely such a scenario is for now: we were surprised and impressed by the strength of the market today, in banks in particular. And as we have long commented, there is an unpleasant circularity, or herding, to market moves these days which makes identifying tipping points hard (I’ll buy (only) if you will). But at a minimum we would remain underweight banks and non-ECB-eligible bonds against ECB-eligible ones.

It is clear by King's frankness that this is a situation in which few (if any) comprehend the existential crisis that The EU (and thus the world financial system that central planners have so carefully reconstructed with smoke, mirrors, and free money)…

To sum up, much of the reason for concern is that, despite all the shrinkage and capital raising by the global banking sector since the crisis, it remains a source of systemic risk.


In Europe in particular, the dangerous nexus between banks and their governments remains unresolved. Regardless of whether you think the root of the problem is yesterday’s “reckless lending” or simply an inability to weather ever flatter yield curves, pressure on bank equities could easily prove a touchpoint for a much broader bout of risk-off. And with public disaffection at prolonged stagnation growing, appetite for a renewed round of bailouts is obviously zero.


This is the terrible irony behind the populist lurch away from the political centre, and the reason markets are probably under-reacting. It is not just that those voting for Brexit, and Trump, and Le Pen actually depend upon migrants, and trade, and banks far more than they realize. It is that the negative economic fallout from each successive step towards isolationism and protectionism will perversely add fuel to the political fire, leading to calls for still more extreme policies as a result. This is just the sort of toxic cocktail of bad economics and extreme politics which the 1930s were made of. It is hard to square it with such elevated valuations in risky assets.

via Tyler Durden