Month: July 2016

The signs are everywhere – if you choose to look – Europe's banking system is collapsing (no matter what Draghi has to offer). From record lows in Deutsche Bank and Credit Suisse to spiking default risk in Monte Paschi, the panic in Europe's funding markets (basis swaps collapsing) is palpable.

Tumbling to a fresh post-Brexit low, Europe's Stoxx 600 Bank Index is testing EU crisis lows…

With Credit Suisse smashing to record lows…

and Deustche Bank crashing towards the inevitable Lehman moment…

Senior and Sub CDS are widening dramatically today with Italy's short-sale ban on Monte Paschi shares sparking a 10% bounce in the stock but CDS are unchanged implying a 66% chance of default.

Which helps explain the crisis in Europe's funding markets as USD demand smashes higher (-9bps to -49bps in EUR-USD basis swaps)…

With counterparty risk concerns growing in Sterling banks…

Charts: Bloomberg

via http://ift.tt/29xiPss Tyler Durden

In his latest just released monthly letter, Bill Gross does not break any new ground, but merely once again reiterates that in a world without any new exogenous money creation (the endogenous money created by central bankers has been stuck in liquidity traps like capital markets) and thus without any pick up in the velocity of money – a key component of GDP – economic growth is limited at best, and stagnant or negative in practice.  As he puts it, “with yields at near zero and negative on $10 trillion of global government credit, the contribution of velocity to GDP growth is coming to an end and may even be creating negative growth as I’ve argued for the last several years. Our credit-based financial system is sputtering, and risk assets are reflecting that reality even if most players (including central banks) have little clue as to how the game is played.”

He lays out the global economy as an analogy to Monopoly where the narrative only works if everyone gets $200 in cash on every rotation around the board:

it’s the $200 of cash (which in the economic scheme of things represents new “credit”) that is responsible for the ongoing health of our finance-based economy. Without new credit, economic growth moves in reverse and individual player “bankruptcies” become more probable.

And without banks creating new loans and injecting money into the broader economy, economic activity grinds to a halt.

In Monopoly, the $200 of credit creation never changes. It’s always $200. If the rules or the system allowed for an increase to $400 or say $1,000, then players could keep on building and the economy keep growing without the possibility of a cash or credit squeeze. But it doesn’t. The rules which fix the passing “Go” amount at $200 ensure at some point the breakdown of a player who hasn’t purchased “well” or reserved enough cash. Bankruptcies begin. The Monopoly game, which at the start was so exciting as $1,500 and $200 a pass made for asset accumulation and economic growth, now turns sullen and competitive: Dog eat dog with the survival of many of the players on the board at risk.

What happens when the $200 in “new money” stops? “Ask Janet Yellen for instance what affects the velocity of credit or even how much credit there is in the system and her hesitant answer may not satisfy you. They don’t believe in Monopoly as the functional model for the modern day financial system. They believe in Taylor and Phillips and warn of future inflation as we approach “full employment”. They worship false idols.”

Which brings us to a familiar conclusion:

investors should not hope unrealistically for deficit spending any time soon. To me, that means at best, a ceiling on risk asset prices (stocks, high yield bonds, private equity, real estate) and at worst, minus signs at year’s end that force investors to abandon hope for future returns compared to historic examples. Worry for now about the return “of” your money, not the return “on” it.

All that may change if and when the Fed decides to inflate the S&P some more, an S&P which has gone nowhere since the end of QE3, and launch another QE program. Until then, however, make sure to have the “stay out of margin call jail” card handy…

* * *

Just A Game

If only Fed Governors and Presidents understood a little bit more about Monopoly, and a tad less about outdated historical models such as the Taylor Rule and the Phillips Curve, then our economy and its future prospects might be a little better off. That is not to say that Monopoly can illuminate all of the problems of our current economic stagnation. Brexit and a growing Populist movement clearly point out that the possibility of de-globalization (less trade, immigration and economic growth) is playing a part. And too, structural elements long ago advanced in my New Normal thesis in 2009 have a significant role as well: aging demographics, too much debt, and technological advances including job-threatening robotization are significantly responsible for 2% peak U.S. real GDP as opposed to 4-5% only a decade ago. But all of these elements are but properties on a larger economic landscape best typified by a Monopoly board. In that game, capitalists travel around the board, buying up properties, paying rent, and importantly passing “Go” and collecting $200 each and every time. And it’s the $200 of cash (which in the economic scheme of things represents new “credit”) that is responsible for the ongoing health of our finance-based economy. Without new credit, economic growth moves in reverse and individual player “bankruptcies” become more probable.

But let’s start back at the beginning when the bank hands out cash, and each player begins to roll the dice. The bank – which critically is not the central bank but the private banking system– hands out $1,500 to each player. The object is to buy good real estate at a cheap price and to develop properties with houses and hotels. But the player must have a cash reserve in case she lands on other properties and pays rent. So at some point, the process of economic development represented by the building of houses and hotels slows down. You can’t just keep buying houses if you expect to pay other players rent. You’ll need cash or “credit”, and you’ve spent much of your $1,500 buying properties.

To some extent, growth for all the players in general can continue but at a slower pace – the economy slows down due to a more levered position for each player but still grows because of the $200 that each receives as he passes Go. But here’s the rub. In Monopoly, the $200 of credit creation never changes. It’s always $200. If the rules or the system allowed for an increase to $400 or say $1,000, then players could keep on building and the economy keep growing without the possibility of a cash or credit squeeze. But it doesn’t. The rules which fix the passing “Go” amount at $200 ensure at some point the breakdown of a player who hasn’t purchased “well” or reserved enough cash. Bankruptcies begin. The Monopoly game, which at the start was so exciting as $1,500 and $200 a pass made for asset accumulation and economic growth, now turns sullen and competitive: Dog eat dog with the survival of many of the players on the board at risk.

All right. So how is this relevant to today’s finance-based economy? Hasn’t the Fed printed $4 trillion of new money and the same with the BOJ and ECB? Haven’t they effectively increased the $200 “pass go” amount by more than enough to keep the game going? Not really. Because in today’s modern day economy, central banks are really the “community chest”, not the banker. They have lots and lots of money available but only if the private system – the economy’s real bankers – decide to use it and expand “credit”. If banks don’t lend, either because of risk to them or an unwillingness of corporations and individuals to borrow money, then credit growth doesn’t increase. The system still generates $200 per player per round trip roll of the dice, but it’s not enough to keep real GDP at the same pace and to prevent some companies/households from going bankrupt.

Now many readers may be familiar with the axiomatic formula of (“M V = PT”), which in plain English means money supply X the velocity of money = PT or Gross Domestic Product (permit me the simplicity for sake of brevity). In other words, money supply or “credit” growth is not the only determinant of GDP but the velocity of that money or credit is important too. It’s like the grocery store business. Turnover of inventory is critical to profits and in this case, turnover of credit is critical to GDP and GDP growth. Without elaboration, because this may be getting a little drawn out, velocity of credit is enhanced by lower and lower interest rates. Thus, over the past 5-6 years post-Lehman, as the private system has created insufficient credit growth, the lower and lower interest rates have increased velocity and therefore increased GDP, although weakly. Now, however with yields at near zero and negative on $10 trillion of global government credit, the contribution of velocity to GDP growth is coming to an end and may even be creating negative growth as I’ve argued for the last several years. Our credit-based financial system is sputtering, and risk assets are reflecting that reality even if most players (including central banks) have little clue as to how the game is played. Ask Janet Yellen for instance what affects the velocity of credit or even how much credit there is in the system and her hesitant answer may not satisfy you. They don’t believe in Monopoly as the functional model for the modern day financial system. They believe in Taylor and Phillips and warn of future inflation as we approach “full employment”. They worship false idols.

To be fair, the fiscal side of our current system has been nonexistent. We’re not all dead, but Keynes certainly is. Until governments can spend money and replace the animal spirits lacking in the private sector, then the Monopoly board and meager credit growth shrinks as a future deflationary weapon. But investors should not hope unrealistically for deficit spending any time soon. To me, that means at best, a ceiling on risk asset prices (stocks, high yield bonds, private equity, real estate) and at worst, minus signs at year’s end that force investors to abandon hope for future returns compared to historic examples. Worry for now about the return “of” your money, not the return “on” it. Our Monopoly-based economy requires credit creation and if it stays low, the future losers will grow in number.

via http://ift.tt/29qATSi Tyler Durden

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

There is no avenue left for advocacy, grievances or redress in a system dominated by global corporations.

In the original version of feudalism, peasants armed with pitchforks knew where to go for redress or regime change: the feudal lord's castle on the hill. Though you won't find this in conventional narratives of the Middle Ages, peasant revolts were a common occurrence; serfs weren't always delighted to toil for their noble masters.

In the present era of corporate dominance, where can serfs go to demand redress and financial freedom from the neofeudal system? Nowhere. The global corporations that own the land and the productive assets have no castle that can be stormed; they exist in an abstract financial world of stock shares, buybacks, bonds, lobbyists and political influence.

When the agribusiness corporation fouls the local water supply with animal waste, where do the local peasantry go to demand restoration of their water quality? The corporation? What if the headquarters are thousands of miles away?

What impact will 100 serfs gathered outside the modern-day castle have on water quality in a distant land? Zero, because the corporation has rendered it illegal (via lobbying the local political flunkies desperate for "jobs" and campaign contributions) to even take photos of their vast animal-waste output or their inadequate disposal.

Where do oppressed serfs go to advocate for transparency in America's private Gulag prison system? If you go to the prison to protest, you'll be arrested and will soon be looking at the world from inside the privately operated gulag.

Once again–where is the castle on the hill? It's not there. The corporate operators of the private Gulag are far away, and security will disperse any troublesome serfs who travel hundreds of miles to air grievances.

Documenting abuses in the privately owned and operated Gulag is illegal. Corporate lobbying and campaign contributions have ensured that any attempt to document neofeudal exploitation by corporations is illegal.

And of course if documentation is impossible to obtain, then the exploitation doesn't exist. The mainstream media's default setting is to dismiss first-hand accounts as "he said, she said": the imprisoned serf says this, and the private prison spokesperson says that, and without any proof that can stand up in court, the grievance vanishes into thin air.

Try telling the African peasant who is unhappy with the Chinese owners of the land he tills to take his grievances to the owners of the land–a corporation in distant China that is owned by the Chinese army.

The reality is there is no avenue left for advocacy, grievances or redress in a system dominated by global corporations. The castle on the hill doesn't exist; it is diffused all over the planet, and well protected by state minions controlled by neofeudal corporate interests.

Do you really think it's mere coincidence that small business growth has imploded in the era of corporate dominance? As I explained yesterday in Governments Change, the Corporatocracy Endures, central banks dropping interest rates to near-zero for financiers and corporations sealed corporate dominance of finance and governance. There are few opportunities for small businesses when the financial and political structures serve neofeudal corporate interests.

Corporate power destroys democracy. That is the heart of neofeudalism.

via http://ift.tt/29qxlzv Tyler Durden

That Goldman’s David Kostin has been warning about the possibility of a sudden, sharp drawdown in the market, is not new: we first reported on that in early May when we presented “Six Reasons Why Goldman Is Suddenly Warning About A “Large Drop” In The Market” in which we cited the head Goldman equity strategist who said that “unbalanced distribution of upside/downside risks suggests “sell in May” or buy protection.” He adds that “we continue to expect S&P 500 will end 2016 at 2100, roughly 3% above the current level even as “a shift in investor perception of various risks could easily trigger a drawdown.”

Specifically, he warned that “a drawdown during the next few months could find the S&P 500 index falling by 5%-10% to a level between 1850 and 1950. 16 drawdowns greater than 5% have occurred since 2009, including the 13% correction that lasted 3 months and ended in February (Exhibit 1). S&P 500 trades at 2047 and has a forward P/E of 16.7x based on bottom-up adjusted EPS of $123. A 5% pullback would lower the P/E to 15.8x, implying an index level of 1950. A 10% correction would reduce the P/E to 15.0x and the index level to 1850.”

Two months, and one brief Brexit swoon later, Goldman is back with another similar warning, now expecting a 5-10% drop in the “next few month”, which Goldman expects will be met with another round of BTFDing, and pushing stocks once again higher, as they close the year at 2,100. To wit:

The S&P 500 enters 2H 2016 just 3% above where it began the year. Tactically, we continue to expect the market will experience a pullback of 5%-10% during the next few months before ending the year at 2100. Strategically, we expect a continuation of the range-bound market that has challenged investors for nearly two years. Although investors appear complacent in the wake of Brexit, a maturing economic cycle with elevated valuations, decelerating buybacks, and growing political uncertainty provide the basis for potential market weakness in the second half. At the same time, above-trend US economic growth, a return to positive but slow earnings growth, a cautious Fed, and the lack of investment alternatives around the globe will support equity prices without providing a catalyst for further upside. Our 3-, 6-, and 12-month S&P 500 price targets are 1950, 2100, and 2150.

 

Just like in May, Kostin blames the upcoming selloff on a “drawdown” in risk, one which he expects will trough when PE multiples hit 15x.

Most recent drawdowns have troughed at a forward P/E of roughly 15x. Given consensus bottom-up next-12-month EPS of $123, this same multiple would value the S&P 500 at roughly 1850, or 13% below its recent high of 2115 reached in early June. In 16 S&P  500 pullbacks of 5% or more since 2009, the S&P 500 has declined by a median of 7%, which would bring the S&P 500 to roughly 1950.

A small problem emerges if looking at earnings on a GAAP basis, where the S&P500 is currently trading in the mid-20x PE multiple, so if indeed one tragets a 15x trough, then there is a far longer way down than what Goldman estimates.

Finally, for what Goldman thinks may be the catalyst for this upcoming slump, Goldman points out that “the fallout from Brexit is just one of several headwinds to US equity returns in the next few months. Other risks include the upcoming US presidential election, unstable growth and policy in China, and a deceleration in corporate buybacks, which represent the largest source of demand for US equities.” 

Still, this being Goldman, and despite its recent call to buy gold after capitulating on its short gold reco, it has to end on a positive note which it does: “however, despite Brexit we expect decent US GDP growth of 2% in the second half of 2016. Aside from negative risk sentiment, potential UK weakness should have a minor fundamental impact on the S&P 500 because Europe in aggregate contributes less than 10% of total S&P 500 revenues.”

To be sure, what Goldman did not mention is the real reason why stocks will rebound following the next drawdown: the same reason Goldman alumni run virtually every key branch of “developed” central banks around the globe: more money printing, more easing, more debt, more central planner intervention… just “more.”

via http://ift.tt/29hItko Tyler Durden

With gold prices having risen by 24% in dollar terms already this year, UBS analyst Joni Teves declared in a note to clients yesterday that; “gold has entered a new phase”.

Key drivers include: 1) low/negative real rates, 2) the view that the dollar has peaked against DM currencies, and 3) lingering macro risks. We expect the next leg to be driven by an extension of the trend of strategic portfolio allocation into gold from a diverse set of investors. This trend should now deepen, attracting more participants and encouraging those who have been hesitating to get more involved. Relatively orderly retracements, which have typically been shallow and brief indicates strong buying interest. This suggests that gold’s floor is likely higher now given an even stronger fundamental argument for holding gold.

Teves continues:

The UK’s vote to leave the EU further underpins gold’s macro narrative, reinforcing the themes of further dovish shifts in monetary policies, consequently lower yields, and heightened uncertainty. We continue to expect US real rates to fall from here and ultimately for equilibrium real rates to settle lower and have limited upside. These factors justify strategic gold allocations across different types of investors and we expect this trend to continue.

Gold and Silver News

Read More Here

Gold Prices (LBMA AM)
06 July: USD 1,347.00, EUR 1,239.71 & GBP 1,059.01 per ounce
05 July: USD 1,344.75, EUR 1,207.05 & GBP 1,023.89 per ounce
04 July: USD 1,348.75, EUR 1,213.07 & GBP 1,016.42 per ounce
01 July: USD 1,331.75, EUR 1,199.51 & GBP 1,001.34 per ounce
30 June: USD 1,317.00, EUR 1,183.59 & GBP 976.82 per ounce
29 June: USD 1,318.00, EUR 1,191.64 & GBP 984.36 per ounce
28 June: USD 1,312.00, EUR 1,185.79 & GBP 985.84 per ounce

Silver Prices (LBMA)
06 July: USD 20.43, EUR 18.46 & GBP 15.75 per ounce
05 July: USD 19.73, EUR 17.69 & GBP 14.99 per ounce
04 July: USD 20.36, EUR 18.31 & GBP 15.36 per ounce
01 July: USD 19.24, EUR 17.29 & GBP 14.48 per ounce
30 June: USD 18.36, EUR 16.48 & GBP 13.61 per ounce
29 June: USD 18.21, EUR 16.42 & GBP 13.55 per ounce
28 June: USD 17.57, EUR 15.84 & GBP 13.17 per ounce

Recent Market Updates

– “In Gold We Trust” Annual Report – New Bull Market “Emerging”
– 3 Charts Show “How Precious Brexit Is” for Gold and Silver Bullion
– Gold, Silver Best Performing Assets In H1, 2016 – Up 26% & 38%
– BREXIT Creates EU Contagion Risk – Ramifications for Investors, Savers and Companies In Ireland
– BREXIT Day – Markets Becalmed – Gold Panic Prelude – Trading Hours
– Gold Lower Despite “Panic” Due To “Supply Issues” In Inter Bank Gold Market
– Gold Slips Despite UK Gold Demand Surging – Investors “Seek Stability”
– Gold Prices Surge to Highest in Nearly Two Years On FED and Brexit Haven Demand
– Gold Bullion Has Little Downside, Brexit Or Not, Says HSBC
– Central Bank of Ireland Warns Risks are Debt, Brexit, Geopolitical Tensions and Migration
– Gold In Euros Surges 6.5% In June and 17% YTD On BREXIT Concerns
– Soros Buying Gold On BREXIT, EU “Collapse” Risk
– UK Gold Demand Rises On BREXIT “Nerves”
– Pensions Timebomb in “Slow Motion Detonation” In UK, EU, U.S.
– Silver – Perfect Storm Brewing in the Market

via http://ift.tt/29hIRQ5 GoldCore

Things just go from bad to worse for Lionel Messi.  First he quit the Argentina football team following a loss to Chile (for the second year in a row) in the title match at Copa America.  Now frustration has turned to worry as Lionel and his father, Jorge Horacio Messi, have been sentenced to 21-months in prison for “fiscal offenses” and facing fines.

Lionel Messi, Argentinian football icon for the current generation, and his father Jorge Horacio Messi will pay a fine and likely see no jail time for dodging about €4.1 million in taxes tied to imaging rights and earnings during 2007, 2008, and 2009.  L. Messi has denied knowledge of the matter but that has not prevented Spanish courts from coming at him and his father.  As Reuters reports this morning:

UPDATE: Spanish court says sentences for Messi, father can be appealed through Supreme Court

— Reuters Sports (@ReutersSports) July 6, 2016

UPDATE: Spanish court also sentences Messi’s father to 21-month prison sentence, around 1.5 million euros for tax crimes.

— Reuters Sports (@ReutersSports) July 6, 2016

According to La Vanguardia Messi and his father were convicted for committing “three fiscal offenses” and the court “imposed a sentence of seven months in prison for each defrauding public finances committed in 2007, 2008, and 2009.”  

Messi apparently had been unaware of how his father was mishandling the footballer’s finances.  The younger Messi claimed in court that he would merely sign official documents without reading on the understandable blind trust he had in his father.  However, Lionel’s inability to trust-but-verify has now left him in a bind and possibly wishing he had one of Hillary Clinton’s contacts so he could duck any and all charges of wrong-doing.

That said, the Barcelona icon will likely not actually end up in prison: under Spanish law a prison sentence under two years can be served under probation, meaning Messi and his father will most likely remain free.

via http://ift.tt/29njqvX Tyler Durden

• For Hillary Clinton, Political Fight Over Emails Is Far From Over (WSJ)
• More “Extreme carelessness” – Iraq inquiry slams Blair over legal basis for war (Reuters)
• FBI Director Rebukes State Department Over Security Practices (WSJ)
• Gold Climbs to Two-Year High as UBS Sees Start of New Bull Run (BBG)
• Stocks and bond yields sink as growth fears set in (Reuters)
• Oil Prices Continue to Tumble on Concerns Over Global Growth Prospects (WSJ)
• Italy Could Spark European Bank Crisis, SocGen Chairman Says (BBG)
• Record-Low Yields Abound as Brexit Stresses Grow; Yen, Gold Gain (BBG)
• Global bond burn from Brexit may now force fiscal response (Reuters)
• Hillary Clinton to Criticize Donald Trump’s Casino Record in Atlantic City Speech (WSJ)
• Businesses Say Proposed Tax Rule Is Too Complicated (WSJ)
• How the FBI’s Clinton E-Mail Decision Just Changed the 2016 Race (BBG)
• Farewell ‘pantomime villain’: Farage will miss EU boos (Reuters)
• Brilliant: “Letting Central Banks Manage the Economy Might Not Be So Bad” (BBG)
• Tesla told regulators about Autopilot crash nine days after accident (Reuters)
• Elon Musk Says Autopilot Death ‘Not Material’ to Tesla Shareholders (Fortune)
• Turnbull’s Coalition Edges Ahead as Election Count Continues (BBG)
• Different targets, different countries: The challenge of stopping Islamic State (Reuters)
• Saudi king vows to fight religious extremists after bombings (Reuters)
• U.S. court to hear arguments in warrantless NSA spying case (Reuters)

Overnight Media Digest

WSJ

– FBI Director James Comey said Hillary Clinton’s handling of classified information was “extremely careless” but that the bureau would not recommend charges over her use of private email. http://on.wsj.com/29sON7V

– Two big British asset managers blocked investors from pulling money out of real-estate funds, and the pound sank to a new 31-year low Tuesday, signs that the UK’s vote to leave the EU was shaking the country anew. http://on.wsj.com/29g6Rhw

– Home Secretary Theresa May established herself as the front-runner in the race to become the next UK prime minister by convincingly winning a first round of voting for a new Conservative Party chief. http://on.wsj.com/29gewB2

– Upon taking the helm of Valeant Pharmaceuticals International Inc, Joseph Papa promised to start a “new chapter” at the struggling company. But Wall Street is questioning whether the man hired to effect change can succeed after drawing from a playbook similar to Valeant at his previous company. http://on.wsj.com/29ghllS

FT

Theresa May established a strong lead in a her bid to become prime minister.

Medivation Inc said it will hold talks with French pharmaceutical company Sanofi SA about a sale that will be open to other bidders.

Deutsche Boerse AG floated the idea of setting up a dual holding company after its merger with London Stock Exchange Group Plc to meet all regulatory requirements.

Six of Germany’s carmakers and parts suppliers, including Volkswagen AG, BMW and Daimler AG were raided by the country’s cartel authority following suspicions they had colluded when buying steel.

NYT

– The financial strains from Britain’s vote to leave the European Union are starting to show, as worries ripple through the country’s real estate market after three major real estate funds suspended payouts. http://nyti.ms/29h6jNg

– Hostess Brands LLC, the maker of Twinkies and Ding Dongs, said on Tuesday it has agreed to sell a majority stake in the company to a publicly traded affiliate of the Gores Group, an investment firm, for about $725 million. http://nyti.ms/29h61G5

– Bucking the trend of conserving cash at a time of low oil prices, the American oil giant Chevron said on Tuesday that it would go ahead with a $37 billion expansion of a gargantuan oil field on the Caspian Sea in Kazakhstan. http://nyti.ms/29h6aJz

– Twitter appointed Bret Taylor, a former senior executive at Facebook, to its board, continuing a makeover of its board of directors as it struggles to rev up its growth. http://nyti.ms/29h6iJf

Canada

THE GLOBE AND MAIL

** Centerra Gold Inc of Toronto, a miner looking for ways to lower its risk, has struck a $1.1 billion deal to buy Thompson Creek Metals Co Inc, a Colorado-based miner seeking relief from a mountain of debt. (http://bit.ly/29w1sZm)

** Meeting the demand by Unifor that Ford Motor Co’s Canadian arm, Ford Motor Co of Canada Ltd, invest in its engine plant in Windsor will be a “challenge”, company officials said on the eve of negotiations on a new contract with the union that represents 6,400 workers. (http://bit.ly/29w1Rv7)

** The federal government is taking steps to prevent First Nations children who fall ill on reserves from being denied proper treatment and medical supports because federal and provincial governments can’t agree about who should pay. (http://bit.ly/29w2bKg)

NATIONAL POST

** Loblaw Cos Ltd President Galen Weston, who observed in May that consumers were getting fed up with rising food prices, now wants his company’s largest suppliers to shoulder a bigger part of the inflationary burden. (http://bit.ly/29w2rsv)

** Two consultants who have done work for NewLeaf Travel Co Inc say the discount travel company owes them tens of thousands of dollars, raising concerns about the airline’s financial position as it gets set to offer its first flights later this month. (http://bit.ly/29w2zIC)

** Canada’s most expensive market for homes shows no signs of slowing down as June results outpaced a torrid May. The Real Estate Board of Greater Vancouver said it was the best June on record for existing home sales and price increases were escalating on a year-over-year basis. (http://bit.ly/29w2G6W)

Britain

The Times

The Bank of England has given the UK economy a £150 billion ($194.48 billion) shot in the arm by relaxing financial regulations on Britain’s lenders in its latest attempt to cushion the blow from last month’s Brexit vote. (http://bit.ly/29hxROL)

Imagination Technologies, the company behind the graphics processors used in the iPhone, has slumped to its largest annual pre-tax loss of £63 million ($81.68 million).(http://bit.ly/29oMeU4)

The Guardian

The fallout from the Brexit vote reverberated through the markets on Tuesday as two City property funds – M&G Investments and Aviva Investors – barred investors from withdrawing their cash and the Bank of England warned that risks to the financial system had begun to “crystallise”. (http://bit.ly/29ueRBb)

Tina Green, the wife of retail tycoon Philip Green, has defended their use of companies based in tax havens, praising their “strong regulatory regimes”. (http://bit.ly/29oNbeZ)

The Telegraph

ITV has set itself on a collision course with its biggest shareholder after the British government announced it will scrap laws that guarantee Virgin Media free access to its main channel. (http://bit.ly/29MvGTS)

Mike Coupe, the boss of Sainsbury’s, has warned that Britain “is in danger of talking itself into a recession” following the country’s reaction to the vote to leave the European Union. (http://bit.ly/29lYEga)

Sky News

The Virgin tycoon, Richard Branson, has held secret talks with Prime Minister hopeful Theresa May in an effort to boost his plea for a second referendum on the UK’s membership of the European Union. (http://bit.ly/29dXu1z)

Lloyds Banking Group has appointed Eduardo Stock da Cunha, a Portuguese national, as its new head of corporate development with a brief to head its mergers and acquisitions strategy. (http://bit.ly/29LGfGX)

The Independent

U.S. and European banks could end up $165 billion worse off after Britain’s historic decision to leave the EU, according to a model set up by economists at the New York University Stern Business School. (http://ind.pn/29lwnnw)

The pound has fallen below $1.31 for the first time in 31 years amid growing concerns about the financial stability of the UK after the decision to leave the EU. (http://ind.pn/29lmAhg)

via http://ift.tt/29njPhO Tyler Durden

The Chilcot Inquiry, a British public inquiry into the nation’s role in the Iraq war, was published moments ago. The massive report covers almost a decade of UK government policy decisions between 2001 and 2009 and took seven years to complete.  It covers the background to the decision to go to war, whether troops were properly prepared, how the conflict was conducted and what planning there was for its aftermath, a period in which there was intense sectarian violence.

One of the key focus areas of the report is the rationale that Tony Blair gave to the public in taking the UK to war, and whether or not the war was necessary. Upon its release, the report concluded that military action “was not a last resort”, and that Britain chose to join the invasion of Iraq in 2003 before peaceful options for disarmament had been exhausted. 

The report’s main focus is on what commitments then-Prime Minister Tony Blair gave to then-US President George W Bush ahead of the invasion, and whether or not Blair misled the British public over the threat posed by weapons of mass destruction (WMD), which ultimately turned out to be non-existent. Critically, the report determined that the threat posed by WMDs in Iraq was presented with a certainty that was not justified, and the government failed to achieve its stated objectives of the war.

As summarized by BBC, the main points of the report are:

• The UK chose to join the invasion of Iraq before the peaceful options for disarmament had been exhausted. Military action at that time was not a last resort.
• The judgements about the severity of threat posed by Iraq’s weapons of mass destruction – known as WMD – were presented with a certainty that was not justified.
• Intelligence had “not established beyond doubt” that Saddam Hussein had continued to produce chemical and biological weapons.
• Policy on Iraq was made on the basis of flawed intelligence assessments. It was not challenged, and should have been.
• The circumstances in which it was decided that there was a legal basis for UK military action were “far from satisfactory”.
• There was “little time” to properly prepare three military brigades for deployment in Iraq. The risks were neither “properly identified nor fully exposed” to ministers, resulting in “equipment shortfalls”.
• Despite explicit warnings, the consequences of the invasion were underestimated. The planning and preparations for Iraq after Saddam Hussein were “wholly inadequate”.
• The Government failed to achieve the stated objectives it had set itself in Iraq. More than 200 British citizens died as a result of the conflict. Iraqi people suffered greatly. By July 2009, at least 150,000
• Iraqis had died, probably many more. More than 1m were displaced.
• The report sets out lessons to be learned: It found former prime minister Tony Blair overestimated his ability to influence US decisions on Iraq; and the UK’s relationship with the US does not require  unconditional support.
• It said ministerial discussion which encourages frank and informed debate and challenge is important. As is ensuring civilian and military arms of government are properly equipped.
• In future, all aspects of any intervention need to be calculated, debated and challenged with rigour. Decisions need to be fully implemented.

More details from RT

The report’s main focus is on what commitments then-Prime Minister Tony Blair gave to then-US President George W Bush ahead of the invasion, and whether the former PM misled the British public over the threat posed by weapons of mass destruction (WMD), which turned out to be non-existent. Others in line for criticism include spy agency MI6 for providing inaccurate intelligence, and military commanders for failing to stand up to Blair. Speaking on the findings of the report, Sir John Chilcot says the severity of the threat posed by Iraq’s WMDs was “presented with a certainty that was not justified.” He says “despite explicit warnings, the consequences of the invasion were underestimated,” and the planning for Iraq after Saddam Hussein was “wholly inadequate.”

 

Chilcot says the government “failed to achieve its stated objectives.”

 

After the attacks in New York on September 11, 2001, Blair urged Bush not to take hasty action on Iraq, Chilcot says. But by early December, US policy had begun to shift and Blair suggested the US and the UK should work together on what he described as a “clever strategy” for regime change in Iraq, which would “build over time.” When Blair met Bush in Texas in April 2002, the formal policy was still to contain Saddam. But by then there had been a profound change in the UK’s thinking, Chilcot says.

 

“The Joint Intelligence Committee had concluded that Saddam Hussein could not be removed without an invasion. “The government was stating that Iraq was a threat that had to be dealt with. It had to disarm or be disarmed.” Britain’s formal decision to invade Iraq, if Saddam did not accept the US ultimatum to leave within 48 hours, was taken by the Cabinet on March 17, 2003. Parliament voted the following day to support the decision.

Thousands of anti-war supporters staged a demonstration in Westminster, demanding “truth and justice” and calling for Tony Blair and others to face the full charges.

“The Iraq War was a disaster, a disaster that began with a lie. If Tony Blair and other politicians responsible had told the truth it would never have happened. A country was destroyed, millions of innocent Iraqis were killed, British soldiers were killed, and terrorism has spread across the Middle East. Those responsible must now be brought to justice.” said Kate Hudson, an organizer of the protest. 

via http://ift.tt/29pUX8x Tyler Durden