Tag: news

Via The Daily Bell

Clearly, the only sane thing to do after a terrorist attack is to take rights away. Maybe if we build a prison around society, we will all be safe. Maybe it is just a matter of the government having more power over the citizens, and they will finally rid the world of terrorism.

Or maybe the UK’s priorities are all wrong. For instance, did you know that in the United Kingdom, you are required to pay a tax to acquire a TV License in order to watch broadcast and online media? And they are not messing around. Look at these posters and billboards.

The BBC is watching.

Yet Prime Minister Theresa May seems to think the UK is simply not invasive enough of their citizen’s personal lives. They are going full-on “Big Brother” over TV licenses; they know who you are.

But they don’t know who the terrorists are. The government identifies in a database every last home without a TV license, but they cannot track and stop terrorists.

Theresa May is now calling for stricter regulations regarding the internet, in the wake of the most recent terrorist attack. She wants to force internet providers and websites to remove any loosely defined “extremist” or “radicalizing” content, and she wants to internationally outlaw end to end encryption.

“We cannot allow this ideology the safe space it needs to breed – yet that is precisely what the internet, and the big companies that provide internet-based services provide,” Ms May said.

“We need to work with allies democratic governments to reach international agreements to regulate cyberspace to prevent the spread of extremist and terrorism planning.”

Already the Prime Minister has expanded internet surveillance to Orwellian levels, allowing police to snoop around in anyone’s search history, fishing for a crime.

The [Investigatory Power] Act, championed by Ms May, requires internet service providers to maintain a list of visited websites for all internet users for a year and gives intelligence agencies more powers to intercept online communications. Police can access the stored browsing history without any warrant or court order.

They want to stop the spread of “extremism”. But as we see with the Scottish police arresting a YouTuber over a joke video, and governments investigating comedians, what the government considers extreme on the internet has nothing to do with terrorists.

They can regulate the internet until the cows come home, and the only thing that will happen is innocent people will lose their rights, and get caught up in government punishment for perfectly normal free speech.

And anyway, they will probably just use their snooping powers to make sure people paid their TV license fee, and forget all about the terrorists.

So yet again, governments are selling more control as a way to keep people safe, when in reality, it threatens privacy and therefore liberty. Clearly, the British government cares more about collecting taxes than keeping the public safe.

The government is less concerned about stopping real terrorism than they are about making sure the masses won’t rebel against their failure to address real issues, and their unwillingness to stop preventing the people from protecting themselves.

But hey, who can blame May, she’s already out of ideas! After all, guns are already banned in Great Britain. And it totally worked, all these people were killed with vans, knives, and bombs, not guns.

Protect Yourself. The Government Cannot and Will Not.

Even the police are defenseless in jolly old England. They ran away from the terrorists, forcing the citizens they help keep disarmed to throw chairs and pint glasses in defense. The first officer on the scene was armed only with a baton.

Witnesses said they saw two men stabbing people outside the well-known Roast restaurant in Borough market. A chef from the nearby Fish restaurant said: “I saw two guys with big knives downstairs outside Roast. They were stabbing people. The police were running away, they were community police. They were normal officers, they were running away.

“The guy with the knife was killing two people. We were shouting ‘stop, stop’ and people threw chairs at them.”

We would rather see citizens spray some hot lead towards a terrorist, but maybe we are the strange ones. And actually, some governments are responding by empowering their citizens instead of tightening the chain.

A couple of months ago, Czech President Milos Zeman made an unusual request: He urged citizens to arm themselves against a possible “super-Holocaust” carried out by Muslim terrorists.

Never mind that there are fewer than 4,000 Muslims in this country of 10 million people — gun purchases spiked. One shop owner in East Bohemia, a region in the northern center of the Czech Republic, told a local paper that people were scared of a “wave of Islamists.”

Now the country’s interior ministry is pushing a constitutional change that would let citizens use guns against terrorists. Proponents say this could save lives if an attack occurs and police are delayed or unable to make their way to the scene. To become law, Parliament must approve the proposal; they’ll vote in the coming months.

Okay, great job, but really, they need to pass a law allowing people to shoot terrorists? Natural rights dictate that when you are unjustly attacked, you should fight back.

But still, we will give the Czech Republic credit. When it comes to relatively small countries, a high rate of gun ownership is the most effective homeland defense.

It’s still not right to be paranoid about a terrorist attack or to stop going out in public because of them. The chances of being caught up in this type of thing are still very low.

But that is no reason to leave yourself defenseless. As they say, hope for the best, prepare for the worst.

Get yourself a gun or two if you haven’t already. Then buy lots of ammo, or better yet, ammo making/ reloading equipment. Then practice, and hope you never need the skill. But if history repeats itself, you will have an option other than being a helpless pleading victim.

To be even safer, get the whole community involved. Start a club. Maybe once a week you can all muster for some training and group physical training.

Get cell411, an app that allows you to connect with your friends and neighbors in case anyone needs help. Build the network of people you trust to come to your aid if you set off an alert on the app, and be ready to respond when they send out an alert. Alerts can be for general danger, medical issues, or even police brutality and illegal searches. Press a button, and your team will be alerted to respond to whatever threat.

At the end of the day, we can trust that the military will keep us safe, and we can hope that the cops show up when we need them (and hope they don’t shoot us instead of the attacker), but the only way to truly be safe is to take responsibility into your own hands.

That way, you will also have the ability to protect yourself against the truly biggest threat to life, liberty, and property, instead of relying on them to protect you.

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Virtually nobody saw it coming.

Late on Sunday night, the Saudi-led alliance of Gulf Arab states including Egypt, shocked the world when they announced they had severed ties and closed borders with one of the Gulf’s wealthiest, if smallest, neighbors Qatar, a (now former) member of the Gulf Cooperation Council in what we called a “geopolitical earthquake” and what Bloomberg dubbed “an unprecedented move designed to punish one of the region’s financial superpowers for its ties with Iran and Islamist groups in the region.”

As we noted first last night, just days after president Trump left the region, a “geopolitical earthquake” took place in the Middle East as the rift between Qatar and other members of the Gulf Cooperation Council exploded with Bahrain, UAE, Saudi Arabia, and Egypt cutting all diplomatic ties with Qatar accusing it of “spreading chaos,” by funding terrorism and supporting Iran. Saudi Arabia, Bahrain, the United Arab Emirates and Egypt all said they will suspend air and sea travel to and from the Gulf emirate. Saudi Arabia will also shut land crossings with its neighbor, potentially depriving the emirate of imports through its only land border.

Saudi Arabia cited Qatar’s support of “terrorist groups aiming to destabilize the region,” including the Muslim Brotherhood, Islamic State and al-Qaeda. It accused Qatar of supporting “Iranian-backed terrorist groups” operating in the kingdom’s eastern province as well as Bahrain.  Saudi Arabia, along with Bahrain and the U.A.E., gave Qatari diplomats 48 hours to leave.

Donald Trump meets Qatar’s ruler Sheikh Tamim bin Hamad al-Thani in Riyadh in May

Qatar responded by saying it regrets the “unjustified” decision of the gulf nations to sever ties and called the accusations “baseless”, saying they were part of a plan to “impose guardianship on the state, which in itself is a violation of sovereignty.”

The first hints that not all is well emerged just three days after Trump left Riyadh as part of his first international trip in May – during which the US president and Saudi King Salman singled out Iran as the world’s main sponsor of terrorism – when the state-run Qatar News Agency carried comments by Qatari ruler Sheikh Tamim bin Hamad Al Thani criticizing mounting anti-Iran sentiment. Officials quickly deleted the comments, blamed them on hackers and appealed for calm, however it was too late and Saudi and U.A.E. media outlets then launched verbal assaults against Qatar, which intensified after Sheikh Tamim’s phone call with Iranian President Hassan Rouhani over the weekend in apparent defiance of Saudi criticism.

“Qatar is right in the middle of the GCC countries and it has tried to pursue an independent foreign policy,” said Peter Sluglett, director of the Middle East Institute of the National University of Singapore quoted by Bloomberg. “The idea is to bring Qatar to heel.”

Qatar’s geopolitical importance can not be underscored, not only for its vast wealth, but because Qatar is one of the biggest producer of liquefied natural gas (and arguably the source of the 6 year long Syrian proxy war, due to Qatar’s documented desires to pass a natgas pipeline into Europe through Syria), and also hosts the forward headquarters of CENTCOM, the U.S. military’s central command in the Middle East. Speaking of Qatar’s wealth, while the country has a population smaller than Houston, it has one of the world’s largest sovereign wealth funds with over $335 billion investments in companies from Barclays Plc and Credit Suisse Group.

What prompted the surprising move by the Gulf-states? According to some, emboldened by “warmer” ties with the US under President Trump, the Saudi-led alliance is seeking to stamp out any opposition to forming a united front against Shiite-ruled Iran. And while Monday’s escalation is unlikely to hurt energy exports from the Gulf, it threatens to have far-reaching effects on Qatar according to Bloomberg.

“There are going to be implications for people, for travelers, for business people. More than that, it brings the geopolitical risks into perspective,” Tarek Fadlallah, the chief executive officer of Nomura Asset Management Middle East, said in an interview to Bloomberg Television.

“Since this is an unprecedented move, it is very difficult to see how it plays out.”

The stunned confusion explains the sudden, adverse reaction in Qatar assets, which saw the Qatar QE Index of stocks plunge tumble 8%, the most since 2009 to the lowest since January 2016…

… while Dubai’s index fell 1.2%. Separately, Qatar bond yields surged in the worst day in 7 months as Qatar CDS spiked to 2 month highs.

There were also fireworks in the FX arena, where forward contracts for the Qatari riyal soared by over 200bps  to 4.05%, suggesting a currency devaluation may be imminent as a result of the economic blockade.

While Brent initially rose as much as 1.6% to $50.74 a barrel, it has since pared all gains as concerns that the tenuous OPEC alliance may be about to collapse, resulting in a fresh flood of crude in the market. That said, keep an eye on the Straits of Hormuz: heightened tensions between Saudi Arabia, the world’s biggest crude exporter, and Iran typically draw market attention to the tight waterway through which about 30% of the seaborne oil trade passes.

Politicians, largely behind the curve, chimed in and U.S. Secretary of State Rex Tillerson said it’s important that the Gulf states remain unified and encouraged the various parties to address their differences. Speaking at a news conference in Sydney, he said the crisis won’t undermine the fight on terrorism. “What we’re seeing is a growing list of some irritants in the region that have been there for some time,” Tillerson said. “Obviously they’ve now bubbled up to a level that countries decided they needed to take action in an effort to have those differences addressed.”

Making the matter a particular headache for the US State Department is that all five countries involved in the dispute are U.S. allies, and Qatar has committed $35 billion to invest in American assets. The Qatar Investment Authority, the country’s sovereign wealth fund, plans to open an office in the Silicon Valley.

Not the First Time

As Bloomberg reminds us, this is not the first time Qatar has been singled out and disagreements among the six GCC members have flared in the past; tensions with Qatar could be traced to the mid-1990s when Al Jazeera television was launched from Doha, providing a platform for Arab dissidents to criticize autocratic governments in the region except Qatar’s.

The Gulf nation also played a key role in supporting anti-regime movements during the Arab Spring, acting against Saudi and U.A.E. interests by bankrolling the Muslim Brotherhood’s government in Egypt. Qatar also hosts members of Hamas’s exiled leadership and maintains ties with Iran.

 

In 2014, Saudi Arabia, the U.A.E. and Bahrain temporarily withdrew their ambassadors from Qatar. That dispute centered on Egypt following the army-led ouster of Islamist President Mohamed Mursi, a Muslim Brotherhood leader.

The crisis comes just weeks after Moody’s cut Qatar’s credit rating by one level to Aa3, the fourth-highest investment grade, citing uncertainty over its economic growth model.

“Qatar is economically and socially most vulnerable from food and other non-energy imports,” said Paul Sullivan, a Middle East expert at Georgetown University. “If there is a true blockade, this could be a big problem for them. Rules stopping citizens of the U.A.E., Saudi Arabia and Bahrain from even transiting via Qatar could cause significant disruptions.”

Iran also chimed in, with an official saying the Gulf crisis is a fallout from Trump Saudi visit: “Rift and crumbling of unity” among Gulf nations “first result of the sword dance in Riyadh,” Hamid Aboutalebi, a deputy chief of staff for political affairs, said on Twitter.  The comments were a reference to Donald Trump’s Saudi visit last month, when he took part in a ceremonial sword dance with Saudi officials

“Time for sanctions has ended, cutting diplomatic ties, closing borders, blockading nations” is not the way to end crisis, the Iranian added and said that Saudi, UAE, Egypt, Bahrain need to choose “democracy at home and talks in the region.”

A Russian envoy in Vienna, Vladimir Voronkov, was cited by RIA saying that that tensions between Qatar, Middle Eastern nations are a sign of political destabilization in region.

Finally, with confusion still rampant over last night’s events, here courtesy of Bloomberg is a recap of key reactions by various analysts and investors who believe the damaged diplomatic ties will lead to increased volatility and pessimism toward Middle Eastern assets. Here are some views on the move by market participants:

Tarek Fadlallah, chief executive officer of Nomura Asset Management Middle East:

• “Clearly this is going to rattle investors, mostly foreign investors, that have to play a key role in regulation reform and investment program.”
• “Political uncertainty, particularly given recent headlines on Trump’s visit, make investors wary of investing not just in Qatar specifically, but in region more broadly”
• Expect spike in volatility, followed by downward move in markets in general

Marwan Shurrab, head of high net worth and retail equities brokerage at Al Ramz in Dubai

• Sees volatility increasing in the very short-term
• Investors will watch for any kind of announcement, or further clarification coming from governments or companies
• Investors will assess which companies have the biggest exposure to the region and therefore, have potential revenues at risk
• Some long-term investors could find opportunities if any signal of potential recovery

Majd Dola, senior research analyst at Al Ramz Capital in Dubai

• Many U.A.E. companies have operational exposure to Qatar ranging from mid- to-large size projects, sees some “negative economic impact on already struggling companies”
• Notes Drake & Scull has 500m dirhams worth of projects in Qatar; Arabtec has two joint ventures, pending legal cases, and receivables; DAMAC announced a 500m-dirham tower in Doha recently
• While hard to quantify the direct impact on those companies, it won’t be positive in short- term
• “If we take this one step further, Qatar is set to host World Cup 2020, which created a massive potential pipeline for U.A.E. developers and contractors”
• Qatar investment funds might also be under pressure to liquidate U.A.E. holdings
• Companies like DXBE (11% owned by Qatar investment) might face further pressure if things moved further in negative direction

Abdul Kadir Hussain, head of fixed income asset management at Arqaam Capital Ltd.

• Expects some initial impact on Qatari bonds.
• “A lot of them are held in hold-to-maturity books so I don’t expect a major pullback.”
• Still, expects a small narrowing of bond spreads
• Doesn’t expect move to affect bonds across the GCC at this point since they are “relatively cheap” for their ratings
• Given the lull in market due to summer and Ramadan, technicals are probably supportive in terms of new issuance

Peter Sluglett, director of the Middle East Institute of the National University of Singapore

• “Desire of the Trump administration is that nobody in that region should have any sort of relations with Iran. Qatar is right in the middle of the GCC countries and it has tried to pursue an independent foreign policy. So the idea is to bring Qatar to heel”

As for the biggest question of all: is Qatar’s ambition for a trans-Syrian nat gas pipeline now officially over, the jury is still out…

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• Saudis, U.A.E., Bahrain and Egypt Cut Ties With Qatar (WSJ)
• Saudi-Led Alliance Cuts Ties With Qatar (BBG)
• Saudi, Egypt lead Arab states cutting Qatar ties, Iran blames Trump (Reuters); Qatar asks citizens to leave UAE within 14 days: embassy (Reuters)
• London Fortifies Bridges to Protect Pedestrians From Attack (BBG)
• Bank at Center of U.S. Inquiry Projects Russian ‘Soft Power’ (NYT)
• Democrat Questions Russia Link as Comey Heads to Hill (WSJ)
• Chats by Metals Trader Reveal Spoofing ‘Tricks from the Master’ (BBG)
• Draghi Seen Taking Slowest Possible Path Out of ECB Stimulus (BBG)
• Kushners Hunt for a Loan to Pay Back Chinese Investors (BBG)
• ‘Pink Slime’ case against ABC a challenge to press in era of ‘fake news’ (Reuters)
• Dems to Clinton: Stay out of the spotlight (The Hill)
• Iraqi Forces Disrupt ISIS Supply Route (WSJ)
• California Localities Primed for Legal Recreational Cannabis Use (BBG)
• What can $75,560 get you in California? A prison cell (AP)
• Deutsche Bank asks for more time for U.S. query on Trump, Russia (Reuters)
• Why Aren’t American Teenagers Working Anymore? (BBG)
• John Paulson Goes From Hot to Not as Most Client Money Vanishes (BBG)
• Trump’s London Tweets Shock U.K. But Can’t Distract From Comey (BBG)
• Mexican Peso Rebounds as Ruling Party Win Eases Political Risk (BBG)

 

Overnight Media Digest

WSJ

– General Motors Co Chief Executive Mary Barra faces shareholders this week, under pressure from a hedge-fund investor and fresh scrutiny following the ouster of her counterpart at a crosstown rival. on.wsj.com/2qWyNzA

– Three Persian Gulf countries – Saudi Arabia, Bahrain and UAE – cut off diplomatic ties with Qatar, accusing their neighbor of meddling in their internal affairs and backing terrorism. on.wsj.com/2qWsVGV

– Toyota Motor Corp sold its stake in Tesla Inc some time last year, the company said, formally ending a partnership between the car makers. on.wsj.com/2qWxVuV

– Germany’s third-largest shipping firm filed for insolvency after it was cut loose by one of the country’s biggest shipping lenders, a sign Germany’s long-simmering shipping crisis has reached a boiling point. on.wsj.com/2qWccmQ

– Three influential House Republicans have proposed shaking up federal oversight of burgeoning commercial space activities by putting the Commerce Department squarely in charge of regulating such endeavors. on.wsj.com/2qWtpwz

 

FT

– U.S. grain trader Bunge that is fending off takeover interest from Switzerland’s Glencore is working with JPMorgan Chase and law firm Shearman & Sterling as it seeks to remain independent.

– Rosneft, Russia’s largest oil company, served notice that it will ramp up production if there is a sudden end to the agreement among major crude producers to curb output to prop up prices.

– World Bank said that long-term growth prospects of the world’s developing economies are being undermined by weak investment. Economists at the bank predicted the global economy would grow by 2.7 percent in 2017, the best growth in global trade seen in years.

– According to a new survey by fund manager Invesco, Sovereign wealth funds see the UK as a less attractive location for investment following its vote to leave the EU whereas Germany’s desirability has increased.

 

NYT

– Steve Mosko, the former chairman of Sony Pictures Television, is in discussions with Sinclair Broadcast Group Inc about a senior management position, according to two people briefed on the conversations. nyti.ms/2rrorv8

– Declaring “enough is enough,” Prime Minister Theresa May vowed on Sunday to conduct a sweeping review of Britain’s counterterrorism strategy after three knife-wielding assailants unleashed an assault late Saturday night, the third major terrorist attack in the country in three months. nyti.ms/2rrBGfe

– Investigators of possible collusion between Russia and the Trump campaign are looking at Jared Kushner’s meeting with the head of VEB, a bank owned by the Russian state. nyti.ms/2rrm2AS

 

Canada

THE GLOBE AND MAIL

** As the federal government seeks advice from Canadians on the country’s approach to renegotiating the North American free-trade agreement, players in the auto sector disagree on how a key feature of automotive trade should be treated. (tgam.ca/2sHVfhj)

** Executives at Tim Hortons’s parent company face shareholders at its annual meeting on Monday amid secret talks with disgruntled franchisees and mounting criticism of the chain’s cost-cutting efforts. (tgam.ca/2s939Ub)

** Enbridge Inc is mulling expansion of a major export pipeline, in the first sign of how the company plans to use its scale after a C$37 billion ($28 billion) merger with Spectra Energy Corp. (tgam.ca/2svdirC)

NATIONAL POST

** Christine “Chrissy” Archibald, a British Columbia native who went to university in Calgary before moving to Europe to be with her fiance was identified Sunday as the lone Canadian victim in a terrorist attack in London. (bit.ly/2sF5PWy)

** Sales of existing homes across the Greater Toronto Area dropped a 20.3 percent in May from a year ago, while the average home price in the region fell about 6 percent from April, results based on the first full month of data following a major initiative by the Ontario government to cool Canada’s biggest housing market. (bit.ly/2rsExEX)

 

Britain

The Times

– The City’s top fund managers are attempting to torpedo Saudi Arabia’s attempts to list its $2 trillion state oil company Saudi Aramco IPO-ARMO.SE on the London Stock Exchange . In a letter to the Financial Conduct Authority, Chris Cummings, chief executive of the Investment Association (IA), said they would not tolerate any listing that did not adhere to the market’s rules and standards. bit.ly/2qVOzep

– Philip Green has called in management consultants as he tries to turn around his struggling Arcadia Group. McKinsey & Co is said to be helping Green grapple with the shift to online shopping, which has particularly hit sales at Topshop, the most successful part of his empire. bit.ly/2qVqsfy

The Guardian

– Philip Green’s fashion empire suffered a 16 percent fall in profits last year as the billionaire’s Topshop-to-Miss Selfridge group struggled with difficult trading on the high street. bit.ly/2qVEiPj

– HSBC is offering its employees cash bonuses of up to 2,500 pounds ($3,216.75) if they can convince a colleague to move from London to the bank’s new British headquarters in Birmingham. The bank has created a special bonus scheme to encourage staff to “help us find the right people for Birmingham”. bit.ly/2qVXcp8

The Telegraph

– The airline BMI Regional is looking to replace up to a quarter of its fleet with larger aircraft as it seeks to double down on its most popular routes. bit.ly/2qW68uI

– The World Bank has upgraded its forecasts for UK growth over the next three years against a stronger global backdrop that will boost the British economy despite its weak start to the year. Economists at the Bank expect the UK economy to grow by 1.7pc this year. bit.ly/2qVW2tA

Sky News

– A meeting between Ross McEwan, RBS’s chief executive, and directors of the RBoS Shareholder Action Group took place on Friday. The talks concluded without an agreement after McEwan declined to increase a financial offer to the remaining claimants. bit.ly/2qVr4So

– Stensrud family, which owns the Norwegian asset manager Skagen, has agreed to invest millions of pounds in British provider of auto-enrolment pensions, Smart Pension. bit.ly/2qVFySn

The Independent

– Uber has been criticised for being too slow to turn off its “surge pricing” feature after Saturday night’s deadly terror attacks in London. App users took to social media to complain saying that Uber should have reduced prices immediately as people tried to make their way home in the aftermath of the attack. ind.pn/2qVGshy

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Gold Stays Strong Following London Attacks

A summer evening on London Bridge and in Borough Market ended in terror on Saturday as attackers killed seven people and injured 48.

This is the second terrorist attack on British soil in less than two weeks and the the third this year. The attack was immediately labelled as a terrorist attack. In the hours that followed police arrested a further 12 people who were suspected of having links to the horrendous incident.

As was seen following the Manchester attack there has been a slight uptick in risk aversion over night. This morning the British pound slipped in Asian trading, both the Yen and gold have retained earlier gains. After dropping 0.7 percent last week the dollar index did edge higher earlier but remains close to 96.654, its lowest since the US election results.

On Friday gold hit its highest in over 6 weeks due to disappointing US jobs data. The Non-Farm Payrolls report showed the labour market was losing momentum. Unemployment is at a 16 year low of 4.3% but data showed below-forecast hiring and wage growth.

This morning gold has not improved on the 1.1% climb achieved on Friday. All eyes now look to the UK elections. Each of the European elections have seen some uptick in safe haven demand for gold but not at panic buying levels.

The London attack comes less than four days before the UK general election. As per the Manchester attack election campaigning was suspended by the majority of parties. It is expected to resume today, with party leaders stating that if we lose democracy then ‘they’ win.  Since the attack a fortnight ago, Theresa May’s lead in the polls has reduced significantly.

Unsurprisingly both parties are now focusing on terrorism and counter-extremism polices. Theresa May is considered to be tougher on terrorism than the Labour Party but she has still felt the need to up the ante in her language. Following the London attacks she stepped away from her usual tolerance based rhetoric and stated that ‘enough was enough.’

“There is, to be frank, far too much tolerance of extremism in our country,” she said. “So we need to become far more robust in identifying it and stamping it out — across the public sector and across society. That will require some difficult and often embarrassing conversations.”

Labour are keen to remind voters that no matter what May says the sad fact remains that she has the worst record on countering terrorism. Despite officially suspending campaigning Jeremy Corbyn (previously considered to be weaker on policy regarding terror) used Saturday night’s events as ammunition to attack the Conservatives, who he accused of trying to “protect the public on the cheap”.

Barbs continued to be exchanged across parties, no doubt leading to more confusion and anger from the electorate. Just in time for Thursday’s vote which is looking increasingly close.

Tensions run high after terrorist attacks

Concerns over terrorism are clearly worldwide. We have been reminded of this not only in London where tourists were among the victims but also because of events in the Phillipines and Kabul.

Trump’s visit to the Middle East has also brought the conversation on terror back to the fore. This has already made an impact in the region, one which is likely to lead to upset and instability.  This morning Saudi Arabia, Egypt, Bahrain, the United Arab Emirates and Yemen have announced they  each cut diplomatic ties with Qatar.

Qatar is accused of destabilising the region due to its relationship with Iran. Qatar called the move “unjustified” with “no basis in fact”. This morning the United Arab Emirates gave Qatari diplomats 48 hours to leave the country. Abu Dhabi accuses Qatar of ‘supporting, funding and embracing terrorism, extremism and sectarian organisations.’

Trump also had something to say about London’s attacks when he tweeted, ‘”At least 7 dead and 48 wounded in terror attack and Mayor of London says there is ‘no reason to be alarmed!’”

Mayor Khan’s team said he had “more important things to do than respond to Mr Trump.” Whilst a few tweets might not mean very much they are a good example of the increasingly frayed relations and opinions between global leaders when it comes to approaching terrorism.

Markets look beyond London

Markets do not feel a significant impact following terrorism events. This is a sad fact as it suggests they are something that are just becoming a part of life. However markets should not be so laissez-faire.Consumer sentiment is very vulnerable, this combined with an already fragile economy and increasingly noisy financial markets could mean a spate of terrorist attacks will negatively impact markets to an extent not seen for many years.

Expect some turbulence in the gold price in the coming days as we approach not only the UK election but also the Federal Reserve meeting. Whichever way the decision goes we might see an uptick in the gold price, traditionally it responds to a dovish tone from the central bank but following recent rate hikes it has reacted positively.

Markets remain uncertain and often fragile. The uncertain political climate both in the UK and the United States its negatively impacting currencies. Concerns over the fragility of both the economy but also the security of countries’ citizens will lead to continuing demand for safe haven gold.

News and Commentary

London attackers kill seven, PM May says ‘enough is enough’ (Reuters)

Gold hits highest in over six weeks as U.S. jobs data disappoints (Reuters)

Bonds Rise With Gold, Asia Stocks Slip on Economy (Bloomberg)

Major decline in gold smuggling cases after demonetisation: Customs (Business Standard)

India says to levy 3 pct tax on gold under new regime, industry relieved (Reuters)

Gold Seen Rising to Four-Year High as Fed ‘Gentle’ on Rates (Bloomberg)

Sell Economic Ignorance, Buy Gold (ZeroHedge)

Deutsche Bank Trader Admits To Rigging Precious Metals Markets

Pound Slips After London Attack, Gold Holds Gains (Bloomberg)

Summer Storm Keeps Building as Second Dip of Great Recession Approaches (GoldSeek)

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Submitted by ZeroPointNow

Update: CNN Responds Below

Update 2: Same protesters, multiple locations?

Being one of the more inept tentacles of the deep state, CNN was apparently caught staging Fake News in the aftermath of the ISIS claimed London attacks which claimed 7 lives and injured 48.

While ISIS supporters are celebrating the attacks, MSM propagandists have been hard at work pushing the “religion of peace” narrative – trotting out hijabbed women and a child to hold signs expressing Muslim outrage at the terrorist attacks.

WATCH. @CNN scripting a narrative. Right before your eyes. http://pic.twitter.com/rdRbQzbqgy

— Katie Hopkins (@KTHopkins) June 4, 2017

This doesn’t appear to have been an ‘organic’ protest against terrorism, instead, it looks very much like CNN staged their outrage.

Caught on Video

 

AP used the same pictures:

— The Associated Press (@AP) June 4, 2017

UPDATE: CNN RESPONDS

 

UPDATE 2: Multiple Locations?

Same group. Multiple locations. Any more screen shots? Spot the pink trousers. Were this group for hire? #FakeNews http://pic.twitter.com/8O57YOeQAK

— Katie Hopkins (@KTHopkins) June 4, 2017

 

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Donald Trump has started the week with another angry tweetstorm, when shortly after 6am the President pressed his controversial travel ban plans following Saturday’s latest terror attack in London, calling for an expedited judicial review and urging his administration to seek a tougher version of the proposal, while making it clear that the intention of his blocked executive now being appealed to the Supreme Court, is “a TRAVEL BAN!”

“People, the lawyers and the courts can call it whatever they want, but I am calling it what we need and what it is, a TRAVEL BAN!” he tweeted.

People, the lawyers and the courts can call it whatever they want, but I am calling it what we need and what it is, a TRAVEL BAN!

— Donald J. Trump (@realDonaldTrump) June 5, 2017

“The Justice Dept. should have stayed with the original Travel Ban, not the watered down, politically correct version they submitted to S.C.,” Trump, referring to the U.S. Supreme Court, wrote in a series of tweets on the issue.

The Justice Dept. should have stayed with the original Travel Ban, not the watered down, politically correct version they submitted to S.C.

— Donald J. Trump (@realDonaldTrump) June 5, 2017

He also said the DOJ should ask for an expedited Supreme Court hearing for the “watered down Travel Ban” and then seek a “much tougher version.”

The Justice Dept. should ask for an expedited hearing of the watered down Travel Ban before the Supreme Court – & seek much tougher version!

— Donald J. Trump (@realDonaldTrump) June 5, 2017

Trump also said his administration is “EXTREME VETTING” people now coming into the U.S. “The courts are slow and political!” he tweeted.

In any event we are EXTREME VETTING people coming into the U.S. in order to help keep our country safe. The courts are slow and political!

— Donald J. Trump (@realDonaldTrump) June 5, 2017

In a series of prior tweets over the weekend which saw the third terrorist attack in London in three months, Trump reignited the debate over the issue of his controversial travel ban, prompting furious reactions from liberals, including a CNN anchor, Reza Aslan, who called Trump a “piece of shit”, a comment for which he later apologized.

In a tweet on Saturday, Trump renewed his call for the courts to approve his executive order, which temporarily bars nationals from six predominately Muslim countries from entering the U.S.

“We need to be smart, vigilant and tough,” Trump said. “We need the courts to give us back our rights. We need the Travel Ban as an extra level of safety!”

The Trump administration last week appealed lower court decisions to block the ban to the Supreme Court. In a statement last week, Justice Department spokeswoman Sarah Isgur Flores said the department had “asked the Supreme Court to hear this important case and [is] confident that President Trump’s executive order is well within his lawful authority to keep the nation safe and protect our communities from terrorism.”

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S&P futures point to a slightly lower open ahead of today’s US non-mfg ISM and Service PMI data. European shares fall, while Asian shares are little changed. Several European countries, including Germany, are closed for Whit Monday leading to subdued trading. Crude futures have reversed overnight gains following the latest unexpected Gulf Crisis overnight, in which Gulf nations cut all diplomatic relations with Qatar amid striking allegations of funding terrorism, as reported overnight.

Looking at other asset classes, the AUD/USD continues grinding higher after a stronger than expected Chinese services PMI and inventories data reduces chances of negative GDP print, iron ore futures +2.0%; GBP/USD fills gap to Friday close, after opening lower in Asia following Saturday’s attacks Bloomberg observes. European equity markets lower from the open, oil-related stocks underperform given heightened political uncertainty. Banco Popular in Spain trades -11% after reports of liquidity pressure due to deposit withdrawals. Core fixed income markets edge lower, German long-end steepens, some focus on wage pressures within PMI data. MXN leads EMFX higher as ruling party is projected to win state election.

European stocks are down, with the Stoxx Europe 600 lower by 0.2% with miners the biggest losers following a downgrade, while zinc and tin led base metals lower. Europe was dragged lower by the Basic Resources index which drops as much as 1.3% to one-month low, making biggest decline of 19 industry groups, after HSBC cuts valuations for London-traded mining companies, downgrades Antofagasta, Kaz Minerals. Antofagasta is biggest decliner in sector, falls 2.8%, Centamin -2%, ArcelorMittal -1.6%, Anglo American -1%. HSBC cuts LSE equities valuations by 4%-9% on assumption of stronger GBP/USD conversion rate, used to convert USD-denominated cash flows to GBP, bank’s analysts write in note Monday.

The big event of the session was the sharp shift in Gulf balance of power with geopolitics surging to the top of the agenda as investors digest the move by Saudi Arabia, Bahrain, the United Arab Emirates and Egypt to suspended air and sea travel to and from Qatar. Saudi Arabia cited Qatar’s support of “terrorist groups aiming to destabilize the region.” Which is ironic considering that a leaked memo by Hillary Clinton last year exposed both Saudi Arabia and Qatar as the two big state sponsors of regional terrorism.

Following the report, Qatar stocks have plunged over 7%, the biggest one day drop since December 2014 to the lowest since January 2016…

… while Qatar bond yield have surged in the worst day in 7 months…

… and Qatar CDS spiked to 2 month highs.

Terror was also in focus in Europe following an attack at a popular London nightlife spot days before a national election.

Crude initially recovered some of Friday’s slump, although it has since filled the gap, while stocks in Qatar plunged as the market digested the fallout from the unexpected diplomatic twist.

Treasury yields remained near the lowest in seven months after U.S. jobs data missed forecasts last week. The peso rallied on signs the ruling PRI was ahead in the governor’s election for the key state of Mexico.

While the Fed has entered a blackout period ahead of next week’s rate decision, there is plenty of data in the coming days, with the headline being former FBI Director James Comey’s testimony before Congress following his dismissal by Donald Trump. U.K. voters go to the polls Thursday. Surveys of voters over the past few weeks have indicated a tightening race, increasing the chance that Prime Minister Theresa May might not get an increased majority.

Policy decisions from central banks in India and Australia are due during the week, as well as data on Chinese trade and inflation, U.S. factory orders, European industrial output figures and GDP reports for Australia, Japan and the euro area.

In Fx, the Bloomberg Dollar Spot Index dropped 0.2 percent, adding to a 0.4 percent decline on Friday. The yen fell 0.1 percent to 110.53 per dollar. Japan’s currency climbed 0.9 percent Friday after the U.S. data. The Mexican peso soared 1.6 percent, reversing an earlier drop. President Enrique Pena Nieto’s party is narrowly ahead in the election for governor of Mexico’s largest state in an official quick count, throwing it a lifeline ahead of next year’s general vote. Follow more on the vote here. The pound traded 0.1 percent weaker, paring its earlier loss. The euro also fell 0.1 percent to $1.1268.

In commodities, WTI crude was 0.5% lower to $47.46, after dropping 1.5 percent on Friday. Gold rose as much as 0.2 percent to $1,282.1 an ounce, hitting the highest since April. Tin fell 1 percent to $20,090 a ton and zinc traded 1.4 percent lower at $2,494.5 a ton on the London Metal Exchange.

In rates, the yield on 10-year Treasury notes rose one basis point to 2.17 percent after dropping five basis points on Friday. U.K. benchmark yields climbed two basis points.

Bulletin Headline Summary from RanSquawk

• Middle east tensions see crude prices jump as several nations cut ties with Qatar
• European equities trading in subdued fashion with many participants away for Whit Monday
• Looking ahead, highlights include: US ISM Non-Manufacturing PMI and Factory Orders.

Market Snapshot

• STOXX Europe 600 down 0.2% to 391.75
• STOXX Europe 600 down 0.2% to 391.75
• German 10Y yield rose 1.2 bps to 0.286%
• Euro down 0.1% to 1.1266 per US$
• Brent Futures up 0.8% to $50.33/bbl
• Italian 10Y yield rose 0.4 bps to 1.966%
• Spanish 10Y yield fell 0.5 bps to 1.567%
• MXAP up 0.03% to 155.39
• MXAPJ up 0.2% to 503.72
• Nikkei down 0.03% to 20,170.82
• Topix down 0.1% to 1,609.97
• Hang Seng Index down 0.2% to 25,862.99
• Shanghai Composite down 0.5% to 3,091.66
• Sensex up 0.2% to 31,338.30
• Australia S&P/ASX 200 down 0.6% to 5,754.87
• Kospi down 0.1% to 2,368.62
• German 10Y yield rose 1.2 bps to 0.286%
• Euro down 0.1% to 1.1266 per US$
• Italian 10Y yield rose 0.4 bps to 1.966%
• Spanish 10Y yield fell 0.5 bps to 1.567%

Top Overnight Headlines via BBG

• Saudi Arabia, UAE, Egypt and Bahrain cut diplomatic ties with Qatar; shut down sea, airspace and land crossings to the country
  • European May Service PMIs:
  • Spain 57.3 vs 57.5 est;
  • Italy 55.1 vs 55.3 est;
  • France 57.2 vs 58.0 est;
  • Germany 55.4 vs 55.2 est;
  • Euro zone 56.3 vs 56.2 est;
• Markit note services firms faced another strong rise in costs, linked in many cases to salary pressures
• Italy: President Gentiloni says parliament should decide between general election as early as September, or wait until the beginning of next year to hold fresh elections
• U.K. May Services PMI: 53.8 vs 55.0 est.
• Russia does not see not see any impact on oil output cut deal from Qatar tensions
• China May Caixin services PMI 52.8 vs 51.5 prev; composite PMI 51.5 vs 51.2

Looking at regional markets, we start in Asia which dismissed the positive Wall St. close on Friday, to trade with a cautious tone after Saturday’s terrorist attack in London and as the region reacted to the miss on US NFP data. ASX 200 (-0.7%) underperformed with financials heavily weighing on the index amid weakness across banks, while Nikkei 225 (+0.1%) recovered from opening losses after USD/JPY rebounded from its lows. Elsewhere, Shanghai Comp. (-0.5%) and Hang Seng (-0.3%) failed to benefit from an improvement in Caixin Services and Composite PMI figures, as the PBoC remained steadfast in its prudent and neutral policy stance. Specifically, PBoC Deputy Governor Chen stated the PBoC will neither be tight or loose in terms of monetary policy and will remain neutral and prudent. Also in China, the Caixin Services PMI for May printed at 52.8 (Prey. 51.5); a 4-month high; Chinese Caixin Composite PMI (May) 51.5 (Prey. 51.2) PBoC injected CNY 40bIn in 7-day reverse repos and CNY 30bIn in 28-day reverse repos. PBoC set CNY mid-point at 6.7935 (Prey. 6.8070) Finally, 10yr JGBs were mildly higher alongside the cautious tone in markets, although upside was capped following a lack of Rinban announcement from the BoJ, while the curve slightly flattened amid outperformance in the super long-end.

Top Asian News

• Korean Air 2Q Traffic Is ‘Higher’ Than Expected, President Says
• Shenhua, China Guodian Said to Mull $267 Billion Power Giant
• Noble Group Said to Ask Lenders to Extend Key Credit Facility
• Thailand Central Bank Eases Some Currency Rules as Baht Climbs
• YLG Bullion Sees Thailand’s Gold Imports Rising 15% This Year
• Baht Rises After Central Bank Relaxes FX Rules: Kasikornbank
• Qatar Bonds Drop as GCC Governments Cut Diplomatic Ties on Iran
• Nomura Adds to India 7.68% 2023 Bond Position Ahead of RBI Meet
• The Hard-to-Believe Steel Shortage That’s Unfolding in China

In Europe it has been a relatively quiet affair amid market closures due to Whit Monday. Additionally, investors are hovering on the sidelines as they await key releases later in the week (UK election and ECB decision). As such, EU bourses have been directionless, with focus on tensions rising in the middle east as several nations including Saudi Arabia cut diplomatic ties with Qatar, after they are alleged to support terrorists. Subsequently, crude prices jumped over 1% in Asian trade with speculation that this might lead to an impact on oil and LNG supplies. Similarly, fixed income markets are also subdued with Bunds off by around 20 ticks, taking the lead from USTs, while the German curve is showing some modest steepening. Levels of support to the downside reside around 162.45 with the former high situated at 162.15

Top European News

• Germany and France Keep Euro-Area Growth Pace at Six-Year High
• The London Attack Didn’t Stop the Social Media Election
• Inflation Squeeze, Election Jitters Take Toll on U.K. Services
• Popular Said to Meet ECB as It Weighs Options for Liquidity
• Putin Says He’s Not Aware of Kushner’s Russia Channel Proposal
• Sasa Reappraises Lands at Higher Values, Shares Advance
• Juventus Slumps After Champions League Final Loss
• London Cops Adjust to New Terror Reality With Guns, Choppers
• EDP Falls as Prosecutor Investigates CMEC Compensation Regime

In currencies, it has been relatively subdued this morning in FX, with some of the expectant market drivers not playing out as one would expect. Given the terror attack in London and some of the latest election polls showing gap narrowing (to a significant degree in some cases), GBP held up well this morning, perhaps in anticipation of a strong UK services PMI number. However, this came in softer than expected, though remains comfortably in the expansionary zone, printing 53.8 vs 55.8 previously. Cable has since pushed above 1.2900 again, tentatively so as yet, but EUR/GBP is also lower to test initial support ahead of 0.8700. The data alone was cause near term GBP weakness, so we can only put these moves down to an expected Tory victory on Thursday. Elsewhere, Oil prices have risen due to the severing of diplomatic ties with Qatar from some of the leading Arab countries. Allegations over links to terrorism have prompted this, and the push up in WTI and Brent have assisted CAD and NOK to a moderate degree. As for the USD majors, near term trade is extremely tight, with EUR/USD refusing to give up ground in the mid 1.1200’s, while USD/JPY continues to find buyers ahead of 110.00. Treasury yields stagnant, albeit at lower levels.

In commodities, the focus is on Oil this morning as the allegations of terrorism links made on Qatar have led to six Arab countries including Saudi and Egypt to sever diplomatic ties. Qatar has denied this, but uncertainty has lifted Oil price levels to a modest degree, with supply side concerns still weighing on WTI to keep trade below the mid USD48.00 mark. Brent is above USD50.00, but is struggling to maintain a foothold, so the inventory data this week could be significant after the notable draw downs reported last week. These latest developments have also put a fresh bid under precious metals, as Gold is now eyeing a move into the upper USD1280’s. Silver has tipped over USD17.50. Base metals remain heavy though, with Zinc the underperformer today. Nickel still pressured since its loss of the 9000 handle, but off the lows. Copper is still hemmed inside USD2.50-2.60, with a test on the lower end of the limits rebuffed for now.

On today’s calendar, we will get the remaining PMIs as well as final revisions to Q1 unit labour costs and nonfarm productivity, ISM non-manufacturing for May, factory orders for April and final durable and capital goods orders revisions for April

US Event Calendar

• 8:30am: Nonfarm Productivity, est. -0.2%, prior -0.6%; Unit Labor Costs, est. 2.4%, prior 3.0%
• 9:45am: Markit US Services PMI, prior 54; US Composite PMI, prior 53.9
• 10am: ISM Non-Manf. Composite, est. 57.1, prior 57.5
• 10am: Labor Market Conditions Index Change, est. 3, prior 3.5
• 10am: Factory Orders, est. -0.2%, prior 0.2%; Factory Orders Ex Trans, prior -0.3%
• 10am: Durable Goods Orders, est. -0.5%, prior -0.7%; Durables Ex Transportation, prior -0.4%
• 10am: Cap Goods Orders Nondef Ex Air, est. 0.1%, prior 0.0%; Cap Goods Ship Nondef Ex Air, prior -0.1%

DB’s Jim Reid concludes the overnight wrap

A sobering weekend for Londoners. Was very shocked at the attack on London Bridge on Saturday especially as I walked across it on Friday. As I was walking I was remembering the shocking Westminster Bridge attack in March and thought that the pedestrian walkway was so wide and so easy to access from the road that this could sadly be an easy target for a copycat attack. I even moved well away from the side of the road and closer to the river to be what I thought at the time was excessively cautious and paranoid. So I was quite shocked that just over 24 hours later the attackers chose that area to terrorise the capital. I heard the news seconds after watching the most heart-warming film I’d seen for a while called Lion. If you need cheering up then watch it and I challenge anyone not to have at least one tear in the eye at some point during the film.

Anyway life goes on and although this tragic event will get headlines markets will move on to what is a busy week. As we dubbed it last week we have super Thursday to look forward to with the UK election, the ECB meeting where hints of a policy shift may take place and also the testimony from Comey before the Senate that could be embarrassing as a minimum for Mr Trump. We’ll preview the ECB in more detail on Thursday but in brief our economists have changed their ECB call. They now think the balance of probabilities have shifted away from a change to forward guidance so soon with the soft May flash inflation print last week perhaps helping to offset confidence in the growth outlook. They still expect some soft exit expectations management, for example, talking up economic growth and tasking the internal committees to consider the options for forward guidance, deposit rate and QE.

Before this today we’ll see the final services PMIs from around the globe and the equivalent ISM in the US. This morning we’ve already had the Caixin release out of China where, in contrast to the disappointing manufacturing reading, the services print rose by an impressive 1.3pts to 52.8 in May and the highest since January. That reading has helped support a rise in the composite to 51.5 from 51.2. This, combined with the rest of the data today will be another good real time gauge of activity after a confusing payroll report on Friday which led to a strong end to the week for fixed income.

Before we recap that though, it’s worth noting that the other breaking news to report this morning is that Saudi Arabia, UAE, Bahrain and Egypt have all cut diplomatic ties with Qatarwith air and sea travel to the Gulf state also suspended. According to Bloomberg the move is related to Qatar’s backing of Iranian-backed terrorism activity in the region. It’s a developing story so the details are fairly light as we go to print though. There’s been some reaction in markets. WTI (+1.28%) and Brent Oil (+1.22%) had already moved higher prior to the headlines hitting but are now even firmer while Gold is +0.10%. Equity markets in  Asia are however flat to slightly weaker with financials lagging under the pressure of falling bond yields. Middle Eastern bourses are not yet open. In FX Sterling is down -0.20% following the weekend events.

Back to payrolls. The data revealed headline growth of just 138k for May which compared to the consensus estimate of 182k, while there was a further net 66k of downward revisions to the prior two months also made. That means that over the last three months the average increase in nonfarm payrolls is just 121k, down from as high as 201k in February. The current three-month moving average is also at the lowest reading since July 2012. The difference now however is that the unemployment rate is much lower with the rate down to just 4.3% in May (from 4.4% in April) and the lowest since May 2001. The move lower last month was partly helped by a two-tenths decline in the participation rate to 62.7% however it’s worth noting that this rate has largely stayed in a 62.5-63.0% range for 20 months now despite some month to month volatility. So while a disappointing headline payrolls figure, it does possibly reflect the struggle to hire as we get closer to full employment. As our US economists also note, there simply is not enough excess slack left in the labour market to produce the sort of job gains that we have experienced in the past so employment growth is poised to slow further going forward.

To that point, the Dallas Fed’s Kaplan said following the employment report that “there are dramatically more skilled job openings in the US than there are workers” and that “while there is slack, it is dwindling”. It’s worth also noting that the other important element of the employment report – wages growth – was a bit soft in May. While average hourly earnings rose +0.2% mom and matching expectations, April was revised down a tenth and the annual rate held steady at +2.5% yoy versus expectations for a one-tenth rise to +2.6%.

As mentioned earlier fixed income markets seemingly picked up on some of the softer elements of the data with 5y, 10y and 30y Treasury yields falling 4.3bps, 5.2bps and 5.3bps respectively, while the USD index also hit the lowest since October last year. The short end of the Treasury curve did however pare back an initial move lower with 2y yields eventually closing unchanged. With Bloomberg’s calculator also showing that a June rate hike is around 90% priced in this morning, the data hasn’t yet influenced the market’s expectations of next week’s FOMC too much as yet. Meanwhile core yields were also lower in Europe on Friday. Benchmark yields in Germany, France, UK and Netherlands were between 2bps and 4bps lower although the periphery was a little weaker with yields 1bp to 3bps higher.

As we noted last week most bond markets are either at or very close to the bottom end of the three-month range for yields. In fact despite US equities hitting new highs on Friday (S&P 500 +0.37% and +0.96%  for the week, Dow +0.29% and +0.60%) and European markets also enjoying a solid end to the week (Stoxx 600 +0.23% and +0.31%), last week was actually a pretty strong one for most bond markets too which more than likely reflects some of the benign inflation data we got. Benchmark 10y Treasury yields were 8.7bps lower over the week and at the lowest yield this year (2.159%) while 10y Bund yields were down 5.6bps over the week and have now fallen for 4 weeks in a row. At 0.272% they still have a bit of work to do to get down to the 2017 lows of 0.156% but they are down from as high as 0.452% just last month. Last week was a similar story too for the likes of France (-4.7bps), Switzerland (-5.9bps) and the Netherlands (-5.1bps). Two markets which stand out for bucking that trend though are BTPs (+16.4bps) and Gilts (+2.5bps) where domestic political situations continue to dominate those markets.

With regards to the latter, the last couple of opinion polls continue to point towards a tighter race ahead of Thursday. The latest YouGov/Times poll conducted over 1-2 June shows the Tories as holding a 4%  lead over Labour at 42-38% which is unchanged from the last poll. Meanwhile the Survation/Mail on Sunday poll (conducted on 3 June) showed a lead of just 1% for the Tories at 40-39%. That is the smallest lead for the Conservatives of any opinion poll we’ve seen so far. Other polls continue to have a bigger lead for the Tories but the gap has seemingly narrowed over the course of the campaign.

The only other news to report from the weekend is the latest World Bank economic forecasts. Released yesterday, the World Bank expects the global economy to grow 2.7% in 2017 driven by a recovery in US, Europe and advanced economies, followed by 2.9% in 2018. Those forecasts are unchanged versus the January estimates.

In terms of the other news from Friday, Philadelphia Fed President Harker (a voter this year) reiterated his call for a further two rate hikes this year. He said that concern about recent lower than expected inflation outcomes was unwarranted and also that payrolls gains in the range of roughly 100k a month is all that is required to achieve full-employment. Meanwhile there was a bit of focus on a NY Times article which suggested that President Trump is likely to nominate monetary economist Marvin Goodfriend and former Treasury Department official Randal Quarles to fill two of the three vacant Governor positions on the Fed’s board. The article suggested that Quarles would likely become a leading figure in the administration’s efforts to roll back financial regulation and also be nominated to serve as the Fed’s vice-chair for  supervision. Meanwhile Goodfriend, who is also a former Fed official, is said to support a more rules based policy approach.

To the week ahead now. This morning we’re kicking off in Europe with the remaining services and composite May PMIs which will also include a first look at the data for the UK and periphery. Over in the US this afternoon we also receive the remaining PMIs as well as final revisions to Q1 unit labour costs and nonfarm productivity, ISM non-manufacturing for May, factory orders for April and final durable and capital goods orders revisions for April. With little of significance in Asia on Tuesday we are straight to Europe with the June Sentix investor confidence reading and April retail sales for the Euro area. In the US tomorrow we are due to get JOLTS job openings for April. Wednesday kicks off in Germany with April factory orders, while in the UK we get the May house prices data. The only data due in the US on Wednesday is April consumer credit. China will also release May foreign reserves data at some stage. The early focus in Asia on Thursday is in Japan with the final Q1 GDP revisions, while the latest trade data will also be released. Over in Europe on Thursday we also receive the final Q1 GDP revisions for the Euro area, while industrial production in Germany for April and trade data in France is also due. The big event in Europe on Thursday comes just after midday with the ECB meeting which will be closely followed by Draghi’s press conference. The only release due in the US on Thursday is initial jobless claims. China will also release May trade data at some stage on Thursday.

We end the week in Asia on Friday with the May CPI and PPI prints in China. Over in Europe we’ll get April trade data in Germany, industrial production in France, and industrial production and trade data in the UK. We finish the week in the US with the final April wholesale inventories print.

With the Fed into the blackout period now there’s no Fedspeak this week while over at the ECB, along with Draghi’s press conference we’ll also hear from Nowotny on Friday. The big event this week is likely to be the UK election this Thursday which will include exit polls just after polling stations close at 10pm BST. Results will then be released through the night. Also worth keeping an eye on is former FBI director James Comey’s testimony before the Senate on Thursday. Other things to note are the RBA meeting on Tuesday, RBI meeting on Wednesday and OECD 2017 outlook on Wednesday.

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In a rare negative move on Apple, Pacific Crest downgraded the tech giant from Overweight to Sector Weight. As StreetInsider notes, analyst Andy Hargreaves says the upside from the iPhone 8 appears to be priced in to the stock. He tells clients in a Monday research note that the risks to Apple might not be priced in, referring to the risk that iPhone sales could potentially decline in FY 2019.

We are downgrading AAPL to Sector Weight and recommend investors reduce position sizes. We believe AAPL anticipates strong performance in the iPhone 8 cycle, while providing relatively little weight to risks through the cycle or the potential for iPhone sales to decline in FY19.

Commenting the iPhone 8 upside first, Hargreaves says rewards from the phone are balanced against the risks: “we believe investors are anticipating an extremely strong iPhone 8 cycle, while giving relatively little weight to risks around gross margins, elasticity, supply issues, or the likelihood for declines beyond the iPhone 8 cycle. This reduces the risk/reward ratio and prompts us to downgrade our rating to Sector Weight.” He also believes that unit sale estimates required to achieve nearly $12.00 in EPS “appear extremely unlikely.”

According to Hargreaves, the 12-month fair value of Apple at $145 is based on 7.0x FY18 EV/EBITDA.

Addressing a possible sales decline in FY 2019, Hargreaves comments that the multiple may decline as sales declines impact EPS and revenues. Without a dividend raise, Apple may likely see a decline in its multiple (emphasis Street Insider): “We expect resumed declines in sales to new users and lower replacement rates to drive iPhone sales down in FY19, which is likely to drive FY19 revenue and EPS down. Absent a material increase in the dividend, we would expect this to prompt multiple contraction through FY18, offsetting potential earnings upside from the iPhone 8.”

Further, he cuts his FY 2017 EPS estimates citing iPhone 8 delays. He says recent checks show delays to the OLED iPhone out to October which causes him to shift iPhone unit sales for FY 2017 out into FY 2018: “…we now expect the OLED iPhone 8 to ship in October with tight initial volume that ramps rapidly through F1Q (Dec.). This is likely to cause a bigger pause in F4Q (Sept.) than we previously estimated, with more units shifting out of FY17 and into F1Q18 and F2Q18. In addition to pushing units out of F4Q17 into F1Q18 and F2Q18, we are adjusting our estimates to anticipate a slightly faster falloff in sales in 2H:FY18 in a pattern that is similar to the one seen during the iPhone 6 cycle.”

FY 2017 EPS estimate falls from $8.95 to $8.86 and FY 2018 EPS estimate rises from $10.22 to $10.53.

Hargreaves suggest clients who chose to sell Apple at these levels should go and purchase Google, citing retention of excellent risk/reward profile and more sustained upside potential compared with Apple.  Shares of Apple closed at $155.45 Friday.

h/t StreetInsider

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The Obama administration played an important role to make sure Greece remains in the eurozone, former Vice President Joe Biden said. As KeepTalkingGreece.com reports, in an interview to newspaper Kathimerini, Biden said that he was personally involved in the issue and described the efforts and difficulties he faced to avoid the financial collapse of Greece.

The Obama administration and you personally also played an important role in making sure that Greece remained a part of the eurozone. Could you describe for us these efforts and the difficulties you faced? Was there a close call when you got very concerned about a Grexit and a destabilized Greece? Do you believe that the risk of a Grexit is gone?

 

President Obama and I were engaged with all parties in the Greek financial crisis, because we wanted to prevent Greece from experiencing financial collapse. Grexit would have had very serious long-term consequences for Greece and Europe – and could potentially have triggered a wider crisis of confidence in the global economy.

 

We were concerned that in the high-stakes negotiation between Greece and its creditors, failure to reach a sensible agreement would have made all parties much worse off in the end. But because of each side’s desire to secure the best possible terms, this worst-case scenario was a real possibility.

 

While the ultimate decision was up to the leaders of Greece, the IMF, and the eurozone countries, I think we helped steer the conversation in a more pragmatic direction because of the credibility we had in Athens, Brussels and Berlin.

 

We argued with the creditor countries that Greece had been saddled with an unsustainably high debt burden and that reform would only go so far with such a large debt overhang. At the same time, we encouraged the Greek leadership to think about how to demonstrate to its creditors that it had a credible roadmap for systemic economic reform, which was necessary.

 

While a deal was reached and the worst of the crisis is behind us, we are not yet completely out of the woods. I believe the United States continues to have a role to play in supporting the parties as they move forward with discussions on Greece’s economic future.

So that's who the Greeks have to blame thank for record unemployment, record suicide rates, record poverty, and record taxes.

Biden spoke also of the importance of “energy diplomacy” after the discovery of natural gas in Cyprus, Israel and Egypt – and the potential for discoveries in Greece and Lebanon.

"This is an exciting development that could bring about not only economic prosperity, but also enhance regional security through cooperation, collaboration and integration,” Biden stressing the necessity for a solution of the Cyprus issue.

Full interview here.

We look forward to Jucker's response to Biden's claims of saving the world…

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