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28Jun2016 Pre-Market Commentary: US Futures Up Almost 1%, US Crude Rises To Almost $48, Investors Jump In To Grab Bargains, Short-Term Indicators Remain Bearish

Written by Gary

US stock futures are higher this morning (SPY +0.95%) for the first time in three days and sterling and the euro climbed too. Brent prices topped $48 a barrel today as investors took advantage of a two-day slide in crude triggered by Britain's vote to leave the European Union. It may be to early to pick up bargains, I am sitting on my hands.

Here is the current market situation from CNN Money

European markets are sharply higher today with shares in France leading the region. The CAC 40 is up 3.19% while Germany's DAX is up 3.05% and London's FTSE 100 is up 2.96%.

What Is Moving the Markets

Here are the headlines moving the markets.

Global stocks, sterling fight back after Brexit beating

LONDON (Reuters) - World stocks rose for the first time in three days and sterling and the euro climbed on Tuesday, as investors made a rush for Brexit-bashed assets hammered by some of the biggest falls since the 2008 collapse of Lehman Brothers.

Stock futures higher as bargain hunting begins after Brexit

(Reuters) - U.S. stock index futures rose sharply on Tuesday as investors rushed to pick up Brexit-hit stocks after Wall Street crumbled under fear and uncertainty to its worst two-day fall in 10 months.

U.S.-UK alliance seen outweighing Brexit trade concerns

WASHINGTON (Reuters) - The United States looks unlikely to follow through on a threat to relegate Britain to second-class trade status once its ally leaves the European Union, as it weighs the potential costs of undermining the countries' close diplomatic and military ties.

Dow Chemical to cut 2,500 jobs as part of Dow Corning deal

(Reuters) - Dow Chemical Co said it would lay off about 2,500 employees globally, or about 4 percent of its workforce, as part of a deal to assume full control of Dow Corning, which was a joint venture with Gorilla glass maker Corning Inc .

U.S. files Volkswagen settlement, details buybacks

WASHINGTON (Reuters) - Volkswagen AG has agreed to a settlement worth more than $15.3 billion, according to a court document filed on Tuesday and a source briefed on the matter.

Oil prices rebound in post-Brexit bargain hunting

LONDON (Reuters) - Oil prices topped $48 a barrel on Tuesday as investors took advantage of a two-day slide in crude triggered by Britain's vote to leave the European Union.

Lending Club names CEO, plans to cut 12 percent of its workforce

(Reuters) - Online lender Lending Club Corp said on Tuesday it would cut 12 percent of its workforce as loan originations decline and confirmed that Scott Sanborn would replace ousted chief executive Renaud Laplanche.

China's Li won't allow 'rollercoaster' markets after Brexit

BEIJING (Reuters) - Chinese Premier Li Keqiang said on Tuesday he wouldn't allow the post-Brexit panic that roiled global currencies and stocks to send the country's financial markets into a tailspin, an indication authorities would intervene if needed to prevent market chaos.

South Korea antitrust regulator says investigating Apple on 'some matters'

SEOUL (Reuters) - South Korea's Fair Trade Commission (FTC) is investigating "some matters" relating to tech giant Apple Inc , the head of the anticompetition body said during a parliamentary hearing, without disclosing further details.

Final Q1 GDP Rises 1.1% Despite Worst Personal Consumption In Two Years

And so the final, and largely irrelevant, estimate of Q1 GDP is in the history books. Moments ago the BEA reported that in the first quarter GDP rose a tepid 1.1%, higher than the first and second estimates of 0.5% and 0.8%, respecitvely, and also higher than consensus estimates of 1.0%.

So far so good. The only problem is that the all important personal consumption expenditures component of GDP rose a modest 2.0% annualized, missing expectations of a 2.1% print, a 1.5% sequential increase, and a contribution of just 1.02% to the bottom line GDP. This was the worst showing by the US consumer since Q1 of 2014 and confirms that the spending power of the US consumer which accounts for 70% of GDP, is getting increasingly worse.

So where were did the positive changes come from? Virtually all other components:

Fixed Investment was found to have subtracted only -0.06% from Q1 GDP, better than the -0.25% in the previous estimate

Private Inventories were largely unchanged at -0.23%

Exports were surprisingly revised higher from a negative 0.25% to contribution of 0.04%, which meant that net trade instead of subtracting 0.2% from the bottom line GDP print actually added 0.1%. It is curious how the US had a favorable trade balance at a time when global trade is contracting at the fastest pace since the financial crisis.

Government consumption was also largely unchanged at 0.23%.

Greenspan Warns "Early Days Of A Crisis," Inflation Coming and Urges Return To Gold Standard

Alan Greenspan, the former Chairman of the Federal Reserve has warned that Brexit was a "terrible outcome in all respects" and that we are in the "early days of a crisis." U.K. policy makers miscalculated and made a "terrible mistake" in holding a referendum on whether to quit the European Union, Greenspan said.

That decision led to a "terrible outcome in all respects," Greenspan, said in an interview with Bloomberg Surveillance yesterday in Washington.

"It didn't have to happen," Greenspan said. He warned that it is now likely that Scotland, whose majority of voters wanted to stay in the EU, will have another referendum on its own independence. He predicted such a vote would be successful, and Northern Ireland would "probably" go the same way.

He also warned about the massive entitlements and unfunded liabilities in the U.S. and western world. The U.S. national debt is heading rapidly towards $19 trillion but the U.S. also has unfunded liabilities estimated to be between $100 trillion and $200 trillion.

"The issue is essentially that entitlements are legal issues. They have nothing to do with economics. You reach a certain age or you are ill or something of that nature and you are entitled to certain expenditures out of the budget without any reference to how it's going to be funded. Where the productivity levels are now, we are lucky to get something even close to two percent annual growth rate. That annu ...

Brexit Is What Happens When The Pie Is Shrinking

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

This process of withdrawal into the relative safety of internally cohesive groups and group identities is intrinsically messy in globalized, multicultural societies.

A great many narratives are drifting around the Brexit pool: a return to sovereignty, class war, "controlled demolition," nothing-but-another-political-Kabuki- spectacle, end of the European Union, etc.

I think it boils down to something much simpler: the pie is shrinking, and the illusion that it's about to start growing has been shattered. For many communities in the developed world, the pie started shrinking in the 1970s, and has been shrinking (despite the narrative of "45 years of strong growth") since then.

Labor's share of the GDP has been declining for 45 years. Occasional blips higher during debt-fueled bubbles quickly fade when the bubble du jour pops, and the decline of labor's share of the economy resumes its trendline decline.

Since 2008, the only group who feels the pie is growing is the class that has benefited from the unparalleled expansion of debt and leverage, financialization, globalization and central planning--roughly 20% of the work force, with the top 5% gathering most of the gains in income and wealth, and the top .1% gathering most of the increase in wealth. (See chart below)

For seven long years, the citizenry has been told the economy is expanding and therefore they're "doing better." But this narrative is not supported by their actual lived experience. Inflation is woefully under-reported by official statistics, and the r ...

How They Hedged Brexit: Soros Was Short Deutsche Bank, Druckenmiller Was Long Gold

As we reported yesterday, one of the bigger losers from the Brexit referendum was none other than Soros, who as it turned out had put his money where his "doom and gloomy" Guardian Op-Ed was and as a spokesman said, Soros was long the pound before Britain's vote to leave the European Union on Friday, and didn't "speculate against sterling while he was arguing for Britain to remain."

Soros wasn't the only one long sterling. According to internal UBS flow data, the pound saw the strongest normalized net inflows in G-10 in the lead up to the U.K. referendum on EU membership, recording the second-strongest week of net buying in over a year and a half suggesting hedge funds bought the pound aggressively before the vote. Curiously, as UBS also notes, despite buying GBP at the highest level since 2008, outflows from the pound recorded on the Friday after the referendum outcome were only marginal despite a 17-big- figure sell off in morning trading.

But back to recently bearish Soros, who many were surprised to see have an unhedged position going into such a major event. Well, as it turns out Soros was hedged after all.

As Bloomberg reports, Soros Fund Management took a short position in Deutsche Bank AG of about 7 million shares, or a total notional of about $100 million, as turmoil from the U.K.'s decision to leave the European Union sent bank stocks lower. The position taken on Friday was equivalent to 0.51 percent of Deutsche Bank's share capital, according to a German filing published on Monday. The document doesn't show at which price the fund took the position.

Deutsche Bank shares fell 16% at the open on Friday and closed down 14 percent at 13.37 euros. Their highest price that day was 13.95 euros. At that level, a 0.51 percent stake would be worth about 98 million euros ($108 ...

U.K. Downgraded: Why Reasons Matter More Than Impact

Post-Brexit, the U.K. has lost its triple-A rating from Standard & Poor's. That matters more politically than financially.

Shareholder Fight Puts China's Market Resolve on the Line

The struggle to control developer China Vanke is shaping up as a test of the country's resolve to make markets friendlier to investors.

Why China's Bad Debts Won't Wash Away Easily

A plan to raise a fresh $1 billion in equity for China Huarong, one of China's giant "bad banks," is yet one more acknowledgment that the country's debt situation can't be easily resolved.

The Wall Street Journal: Airbnb sues San Francisco to block rental registration law

Airbnb has sued the city of San Francisco over regulation that would compel users to register listins and have Airbnb pay a fine for each unregistered listing.

Economic Report: First-quarter U.S. GDP raised to 1.1%

The U.S. economy's annual growth rate in the first quarter was raised again to 1.1%, revised figures show, but it was still one of the weakest performances in the past several years.

Exclusive: Apttus plans IPO for first half of 2017

Apttus, a quote-to-cash company with a $1 billion valuation, has hired a new chief financial officer with the goal of going public in the first half of 2017.

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