This article was written by Tyler Durden and originally published at Zero Hedge.
Editor’s Comment: There are signs that a whole new banking crisis is following the tremors resulting from the Brexit vote – which have already been enough to initiate panicked trading and wide currency swings. What is happening in Italy is true of all the same pressure points in Europe that have come to the brink of disaster. Will this time be enough to drag the stability of the global economy along with it?
How much it impact it ultimately has remains to be seen.
“We’ve Never Had A Shock To The System Like This” – Global Selloff Accelerates On Brexit, Italy, “Unknown” Fears
by Tyler Durden
The flight to safety following last week’s quarter-end window dressing is accelerating, with constant news and flashing red headlines of record low yields across DM government bonds once the norm, and as of moments ago Denmark’s 10Y bonds joined the exclusive club of sub-zero yields; gold has soared to fresh multi-year highs above $1,370, the risk-off currency, the Yen, soaring and sending the USDJPY just above 100, while sterling crashed overnight once again below 1.27, levels not seen since 1985.
European banks continue to struggle and while Monte Paschi was halted up 10% earlier following the previously halted shorting ban, both Deutsche Bank and Credit Suisse have plunged to new all time lows, this time on concerns that the two trouble banks could be forced out of the Stoxx 50 Europe index according to an LBBW analysis while BlackRock cutting the region’s shares to underweight, with a negative view on the euro area’s banking sector, did not help. To be sure, all eyes remain on both Italian banks as well as UK property funds, where the announcement of more gating is widely perceived as imminent.
Indeed, as Bloomberg summarizes, it’s safety first for investors around the world as Brexit, no longer a risk on catalyst as it was a week ago, has instead become a reason to offload risk. Demand for haven assets sent bond yields to record lows after Federal Reserve Bank of New York President William Dudley said Brexit’s significance could escalate if it triggers turmoil in markets beyond the U.K.
Based on overnight analyst quotes, the euphoria is certainly gone by now: “Everyone is trying to react to a situation we’ve never been in before,” said Stewart Richardson, chief investment officer at RMG Wealth Management in London. “We’ve had shocks to the system before, but we haven’t had one like this. And we won’t know the answers for a long time.”
Mitsuo Shimizu, deputy general manager with Japan Asia Securities, also opined saying that there are “fears the global economy will worsen due to Europe. The U.K.’s economic outlook is blurred with uncertainty and the pound’s recent weakness is likely to encourage speculative buying in the yen.”
After rallying last week on bets central banks will work to limit the fallout from Britain’s referendum, global equities are retreating again as the knock-on effects become evident and as central bank credibility and efficiency is once again questioned. Three asset managers froze withdrawals from U.K. real-estate funds on Tuesday following a flurry of redemptions and the Bank of England relaxed capital requirements for lenders. Societe Generale SA Chairman Lorenzo Bini Smaghi said a banking crisis in Italy, stoked by the referendum, could spread to the rest of Europe and rules limiting state aid to lenders should be reconsidered.
As noted earlier, yields continue to plunge: 10-year US Treasury yields fell as much as six basis points to 1.318% and was at 1.33% at 10:44 a.m. London time. Yields on 10-year government bonds in Australia, Japan, Germany, France and the U.K. also sank to records. The strength of the gains in government bonds is leaving investors to ponder how severe the fallout from Brexit is going to be. Securities in the Bloomberg Global Developed Sovereign Bond Index, with an average life of about 10 years, yield a record-low 0.40 percent. In Germany, the 10-year bund yield fell to minus 0.205 percent, while yields on similar-maturity French and British securities reached 0.101 percent and 0.729 percent, respectively.
Expect yields to continue plunging: declining prospects of a Fed rate hike have spurred a torrent of demand for Treasuries, with almost $10 trillion of securities in the Bloomberg Global Developed Sovereign Bond Index yielding less than zero, up from about $9 trillion a week ago. In addition to experimenting with negative rates, some monetary authorities abroad are buying government debt, reducing the supply for investors who count on fixed-income assets.
“In the risk-off environment produced by international events, there is a global rush to buy super-long sovereign debt, and bonds that still offer some yield are going to be most in demand,” said Hideo Suzuki, the chief manager of foreign exchange and financial products trading at Mitsubishi UFJ Trust & Banking Corp. in Tokyo.
And while until recently bonds and stocks had disconnected, as of this moment, plunging yields finally means sliding stocks as well. The MSCI All-Country World Index dropped 0.7% and the Stoxx Europe 600 Index slid 1.4 percent, falling for a third day, with all its industry groups declining. Automakers and insurers were the biggest losers, while Tullow Oil Plc sank 14 percent after announcing a $300 million sale of convertible bonds. The Stoxx 600 trades at around 14 times estimated earnings, near its lowest valuation since 2012 relative to the global index.
Deutsche Bank AG led losses in a gauge of European lenders as BlackRock Inc. cut the region’s shares to underweight, with a negative view on the euro area’s banking sector, amid the Brexit fallout. The Italian market regulator banned short selling on Banca Monte dei Paschi di Siena for Wednesday’s session, prompting a rally of 9 percent — after it slumped 31 percent in the past two days. The MSCI Emerging Market Index dropped 1.4 percent, falling for a second day. Shares in South Korea slid 1.9 percent and Taiwan’s benchmark slid 1.6 percent. Many markets across Asia and the Middle East were closed for religious holidays.
Finally, the US:
- S&P FUTURES NEAR SESSION LOW, -14PTS, AS EU STOCKS EXTEND DROP
At this rate the Fed’s biggest flip-flopper and stock market supporter, Jim Bullard, may want to wake up: the futures will need his jawboning support soon.
Read more at Zero Hedge.com, where this report was first published.
They can sell off all they want! Here is the question. What are they going to do with their FIAT money that thy get??????
Buy gold or silver????
For me Br4ass and Lead, and food.
Sgt.
Yes People, please buy more Gold and Silver my mining stocks are going up but not very fast. Trekker Out. SLW, EGO.
sh1t, brother… GG has more than doubled since February, therefore so has my paper fiat money. I put ALL my fake paper into three mining stocks in January. Now I just have to time the exit just right so I can apply that to more food.
And before anyone gives me flack about actually investing in the crash, bear in mind I’m already very well stocked in PMs, food, and guns so thanks.
Marc it’s a never ending circle buy gold and sell for fiat and buy more gold and sell for more fiat. My only problem is, the circle keeps getting smaller, I buy high and sell low. Trekker Out. Wish I had More Fiat!
Someone here said YEARS ago, that when the crash comes it would more likely be caused by Europe or China. Who was that masked man ???
Yes, its in the archives. 🙂
You DK, and that masked man of a million other people who said the same thing over and over. You have picked about every situation out there, so you may get some of it right. What this self indulging EGO Attention boost thing you have going? Your wife not give you enough attention at home?
~WWTI…
Another PM to consider is Platinum. With an upside probability to double. Its High of $1901.00 per Ounce was 5 years ago and the lows was just 816.00 last January. And is up $100 in the last week and a half, up to $1086. So there is still a possible close to double your money option with Platinum. Time frame for double action??? Your guess as good as mine. However, You can buy Certified Platinum in 1 Oz rounds just like gold and silver.
Talked with a local PM Dealer today who is holding heavy in all the metals. Hundreds of ounces of Gold.. He said he keeps a lot of his PM’s in Bank Safety deposit Boxes. I then gave him a lecture about keeping anything in the Banks period including Safety Deposit Boxes. He said that Banks will rat on you to the Feds if you visit your safety deposit boxes too often. And the Feds are then called in to see what you got in your Box.
I said good enough reason to get the hell out of banks. I gave him a few other options to consider where to store it. He said that info about the number of visits is not public knowledge, but a requirement by the feds to banks. So you all learned something here today. Fuck the banks. Bank of PVC in the dirt.
He is a Good info source, and he said he will buy my 1 Oz Silver .999 Rounds for just $1.00 under spot when I am ready to sell, no matter how high the price is. He said yeah, he still has to collects finger prints as required by law, but he said he pays cash. He said many dealers give you a check that creates a bigger paper trail. Not sure I even want worthless fiat money in trade for my Silver coming up. He also said just sell enough Silver when you are ready, to recoup your original investment, then hold onto the rest as a profit, in case it goes to $100. He said Silver will hang in the $40 range for some time and I agreed, because most investors will see that previous high point of $48 as their target sell point to get out this up coming time. Good info Peeps. Stay tuned. More good info to come.
~WWTI…
Another PM to consider is Platinum. With an upside probability to double. Its High of $1901.00 per Ounce was 5 years ago and the lows was just 816.00 last January. And is up $100 in the last week and a half, up to $1086. So there is still a possible close to double your money option with Platinum. Time frame for double action??? Your guess as good as mine. However, You can buy Certified Platinum in 1 Oz rounds just like gold and silver.
Talked with a local PM Dealer today who is holding heavy in all the metals. Hundreds of ounces of Gold.. He said he keeps a lot of his PM’s in Bank Safety deposit Boxes. I then gave him a lecture about keeping anything in the Banks period including Safety Deposit Boxes. He said that Banks will rat on you to the Feds if you visit your safety deposit boxes too often. And the Feds are then called in to see what you got in your Box.
I said good enough reason to get the hell out of banks. I gave him a few other options to consider where to store it. He said that info about the number of visits is not public knowledge, but a requirement by the feds to banks. So you all learned something here today. Fuck the banks. Bank of PVC in the dirt.
He is a Good info source, and he said he will buy my 1 Oz Silver .999 Rounds for just $1.00 under spot when I am ready to sell, no matter how high the price is. He said yeah, he still has to collects finger prints as required by law, but he said he pays cash. He said many dealers give you a check that creates a bigger paper trail. Not sure I even want worthless fiat money in trade for my Silver coming up. He also said just sell enough Silver when you are ready, to recoup your original investment, then hold onto the rest as a profit, in case it goes to $100. He said Silver will hang in the $40 range for some time and I agreed, because most investors will see that previous high point of $48 as their target sell point to get out this up coming time. Good info Peeps. Stay tuned. More good info to come.
~WWTI…
Sarge, good points. I’m also still stacking and praying. 10 more days and I’m headed back to the BOL.
Sounds as if the whole world is suffering but the bankers always do this right before a war , haven’t they.. They sell out and then buy back in at a cheaper price.. Just making themselves richer
I think they need to get the wall street taxes on these people… Hillary also heavy into wall street. there is a lot of insiders helping each other.. And the Bankers are in the wall street also with stocks..
Any ways they just want a one world banking system..
The Housing Bubble of 2006-2008 was a perfect example of how Banks Steal and create massive wealth transfers to themselves. They give a mortgage to any person with a face, when prices are high. You default, and they take your house from you at rock bottom prices, then sell it back to you when you get back on your feet and wrap another sub-prime seedy mortgage around your property, and do it all over again. We are in another housing bubble right now 2016. Just one hiccup and people lose their Jobs and its instant replay again. Its a Game to the Bankers to own everything at your expense.
~WWTI…
The UK has just too much debt and needs a big flush to clear it out. That’s why they are talking the pound down (goal is to get it to parity with the Euro and the Dollar). They also need another big bailout from the UK tax payer to keep the financial system running. How will this be paid for? With lower wages and salaries, more cheap labor, lower pound and a massive increase in foreign money and investment coming in. London will need to be completely cleared out of its current large population of poverty stricken welfare junkies. They will be replaced with high-net worth hotties from Asia looking for a nice bolt hole where they can party and get laid.
Uk has been crippled by uncontrolled immigration draining health service, welfare & they require free houses all paid by the UK taxpayers
Which means people are waking up
Frankie – thank you for your burbling old man fantasies, always worth a laugh, as by now everyone here knows you to be a proven liar and serial fantasist (burka clad border guards, swanning around the USSR during the height of the cold war, working for a top secret government dept etc.,) You’ve shot yourself in the foot so many times you must now be crippled!
As one of the many Anglophobes on this site it’s so pleasant to realise that you view the UK with such importance and it’s reassuring to know that you have the solution to, not only the UK’s problems, but the whole wide world!
But let us be realistic. I do really think that it’s time that nursie give you your meds and strapped you in bed for the night – after all it’s the only fun you get these days!
I’m not sure what to make of it. In my corner of the world, there’s a lot of jobs, people are buying/spending/eating out all the time, etc..
I think (IMHO), nothing is going to happen until Hitlery gets in.
“I think (IMHO), nothing is going to happen.”
Fixed it for ya.
I heard there is a massive influx of people moving to Florida, because our economy is doing really good. And there is no State income Taxes. The state lives off of Vacationer’s Sales Taxes.
But living here I say “Bad idea, go away, its horrible and the Gators will eat your kids and pets when you are not looking. And our Beaches are just horrible too, women barely wear anything. Topless in Miami. Its a horrible place to live. lol
~WWTI… I’m thinking it may be the Baby Boomers Retiring, and they Got money, Lots of money, and benefits, Got pensions, Got everything as they screwed the rest out of our futures for themselves. btw/ I am on the tail end of the Boomers, but not greedy like the majority.
Herculean efforts are being expended to make things seem stable before the election, but not even Atlas can keep the rock known as the ECB from rolling down the hill. Like playing cards with a deck full of twos and threes only. It’s only a matter of who is in LESS trouble right now… because ALL those banks are royally screwed. Rapid fire defaults coming to the Mediterranean… and the “I Did It My Way” desires of nations squelched. We are about 15 dominoes away from getting hit in our own pocketbook here in the states.
Sure can’t tell it by the U.S. stock market. Trekker Out.
This is perfect timing for the US. The government will use it for cover regarding their stupidity. Ready made excuse for their incompetence.
The brexit isn’t going to crash the EU and France won’t follow. This is another opportunity to kick the can further. The Brits could very well go back on the exit and this will be a nothing deal. Just another way to steal from small time investors who blink and sell. Silver market is betting inflation but I wouldn’t count on it.
Perhaps most miss the intention. Gold, money or whatever is not worth as much as DEBT. If you have debt you cannot repay and they won’t accept you paper or you gold… what is it that they want ?
Your freedom… you must serve them because you are in debt to them.