Saturday 25 June 2016

Warnings from Max Keiser on Brexit

Max Keiser: Brexit fallout could result in systemic collapse bigger than 2008

All the pieces are in place for a systemic collapse greater than the financial crash of 2008 in the wake of Brexit, warns Max Keiser.

The economist told RT that we are now faced with the possibility of contagion, similar to the collapse of Lehman Brothers in 2008, which triggered a global credit crisis.

We’ve seen markets sell off and we’ve seen marking down of assets on books, we haven’t yet seen the big margin selling that will come in soon, I’m sure there will be some hedge funds that will declare bankruptcy. There are going to be some add on effects that could start to gather some momentum.”

The question is: “Can the Central Banks once again ride to the rescue and save the global economy by printing money?”

Ornery Brits just put a gun to global market's head and blew its brains out. Incredibly impressive I must say. I underestimated UK moxie.

He remarked on the possible consequences of the soaring of the Japanese yen which reached an almost two-and-a-half year high Friday after news of the Brexit decision broke.

If the Yen is rising it shows that that game which has been successful for 20 or 25 years might be over, in which case we're talking about a systemic collapse bigger than 2008 and it’s right on time.”

He says this is no surprise considering there has been no meaningful economic reform since 2008 just “more credit pumped into the system by more irresponsible corrupt central bankers”.

Keiser said it was important to note when discussing the financial fallout of the Brexit vote that the Central Banks have already committed billions to keep these markets going.

A lot of time bad news stimulates central banks to print money and then the whole charade continues on.”

Primary source of anger leading up to was BoE money printing. BoE response to - vows to print £250 bn if needed.

Bank of England Governor Mark Carney has said it is ready to inject £250 billion (US$342 billion) into the economy to keep it afloat.

Keiser told RT this ‘uncollateralized’ money comes from Carney’s “magic bag of pixie dust” and is part of a financially-engineered class war, coordinated by the Central Banks where in the UK Carney is “class warrior in chief.”

He believes all fiat currencies around the world will face more pressure as gold regains its place in a bull market while bitcoin, which is also in a bull market, will put pressure on governments to mandate economic policy as people look to the exclusive use of the cryptocurrency.

Google Searches For "Buy Gold" Soar 500% After Brexit

25 June, 2016

Three days ago, when Wall Street was virtually certain that the Brexit vote would comfortably go in favor of the Remain camp, the best tell about the true sentiment on the ground had nothing to with polls, or manipulated bookies' odds, and much more to do with our report that worried British savers are scrambling to buy gold bars and "stuffing them in safes at home, data suggests, as fears mount that a Brexit-induced financial meltdown could be just around the corner."

To all those who did convert their soon to be far less valuable pounds sterling into physical gold, and in the process avoided a record devaluation in just one day, congratulations.
However, it turns out that many more did not. And as gold soared overnight, having its best day in years while cable was tanking, suddenly everyone else also had the epiphany that the only true money that preserves its value regardless of the stupidity of politicians or idiocy of central bankers, is gold.
As the Telegraph reports, by 11am London time, BullionVault users had traded £23.5m of vaulted gold and silver since midnight - more than two weeks’ worth of average trading in 2015. And, showing the scramble by the public to buy gold, new account openings by 11am were already twice this year’s daily average.

But it was about to get much worse, or perhaps, batter.
According to Google, the number of internet searches for the phrase "buy gold" spiked by 500% after the Brexit results trickled through around 5am. Investors flocked to the safe haven asset during Asian trading while the pound plummeted to a 31-year low.
  Note: "after."
Today, as is customary after the fact, everyone was euphoric on gold: "gold could rise to $1,400 whilst other precious metals such as platinum, offer attractive fundamentals," said James Butterfill, head of research & investment strategy at ETF Securities. Virtually every other investment bank followed suit and even Goldman came out, when the traditionally goldophobic bank had no choice but to raise its gold price target following today's meteoric gold surge.

Which is great, however all of it was, as noted,  after the fact.

The truth as all those who buy gold after the devaluation learn, is that for gold to be a store of value and preserve purchasing power it has to be acquired before some catastrophic, devaluing event, which as yesterday's Brexit showed, tends to be utterly unpredictable.

The good news, of course, is that as the vast majority of the population still expresses little to no interest in the one asset that protects against loss of purchasing power and unlike stocks, is not merely a bunch of 1s and 0s in some server in some warehouse in the middle of nowhere and whose chain of ownership is constantly exposed to counterparty risk, physical gold is and always will be "right there." A fact which continues to amaze how few actually understand.

Brexit vote strips billions of dollars from UK's richest people

Richard Branson was among people calling for Britain to stay in the European Union.
Richard Branson was among people calling for Britain to stay in the European Union.

25 June, 2016

The richest people in the UK lost US$5.5 billion (NZ$7.7 billion) on Friday after the country stunned global markets by voting to leave the European Union.
The drop for the 15 wealthiest Britons tracked by the Bloomberg Billionaires Index came as European markets headed for the biggest fall since 2008 and the sterling plunged to its lowest level in more than 30 years.
Peter Hargreaves, co-founder of Hargreaves Lansdown, the UK's largest retail broker, supported the leave campaign and paid the price in the market reaction to the vote. His net worth tumbled 19 per cent to US$2.9b in mid-day trading, the largest percentage drop among the British billionaires.
James Dyson, pictured here with British Prime Minister David Cameron (right), was among the vocal Brexit backers.
James Dyson, pictured here with British Prime Minister David Cameron (right), was among the vocal Brexit backers.

Hargreaves said politicians who supported the remain cause should have nothing to do with process as the UK seeks to extricate itself from the EU.

"They may still keep their positions," he said. "But they cannot under any circumstances be involved in our relationship with the EU."
Peter Hargreaves, the co-founder of stockbroker Hargreaves Lansdown, lost the most among UK billionaires.
Peter Hargreaves, the co-founder of stockbroker Hargreaves Lansdown, lost the most among UK billionaires.

The billionaire made the largest donation - £3.2 million - to the leave campaign, according to filings with the UK's Electoral Commission. After stepping down from the Hargreaves Lansdown board in April 2015, the billionaire said that he would welcome the chance to work with the UK Government as it prepares for a future as a non-EU member.
Both sides of the heated campaign over whether to leave or remain in the 28-nation bloc drew prominent billionaire backers. Inventor James Dyson and construction-equipment magnate Anthony Bamford were vocal advocates of Brexit while Richard Branson, Li Ka-shing and George Soros were among those urging to stay.
The country's 15 richest citizens lost a collective US$5.5b as of 3.30pm in London, according to the Bloomberg index. Britain's richest person, Gerald Grosvenor, led the decline with a loss of US$1b, followed by Topshop owner Philip Green, fellow land baron Charles Cadogan and Bruno Schroder, majority shareholder of money manager Schroders Plc.
Green lost almost US$500m and Schroder lost more than US$600m. Grosvenor and Cadogan, whose fortunes are derived mostly from London property, lost a combined US$1.6b based solely on the drop in sterling.

Virgin Money Holdings, the UK-listed finance business controlled by Richard Branson's closely held Virgin Group, saw its shares fall by the most since November 2014. In a post on Virgin Group's website in response to the referendum's result, Branson said the decision to leave the EU will create volatility and cause damage to Britain's economy, but stressed acceptance of the decision and the nation coming together.
"The UK and its amazing, resilient people have weathered many storms - and with determination, resolve and sense of what is right," Branson wrote in the post, which paid tribute to Labour Party MP Jo Cox, who was killed in her West Yorkshire constituency during the referendum campaign. "Those qualities will be needed over the testing months and years to come."
South Africa's richest person Christo Wiese, who owns UK assets including fashion retailer New Look and grocer Iceland, said his "preference was unguardedly for the UK to remain" and was surprised by the result.
"I don't think it's the end of the EU, I think it's the end of EU as it's currently structured," Wiese said. "It's always had unattractive features alongside it's attractive features. This will make people sit up and say how can we make it better."
Wiese, whose bid for British discount retailer Poundland was rejected last week, said he had no plans to scale back his UK investments or change his strategy.
"We're by and large at the value end of the business scale and that's a very good place to be in Britain today."


Hargreaves was unmoved by the negative market reaction. The billionaire said he was confident the decision is the best for Britain and made a bid to help the country shape its economic future.
"I have enormous experience of business, enormous experience of negotiation, enormous experience of economics, and I'm one of Britain's most successful businessmen," he said. "If they don't involve me, they're crazy."

Brexit Vote Punishes Stocks, Dow Ends 3.4% Lower

Morgan Stanley denies moving 2,000 London jobs to Dublin and Frankfurt

The American investment bank said it has no official plans

24 June, 2016

Morgan Stanley has denied that it is moving 2,000 jobs to Dublin and Frankfurt following the vote for the UK to leave the EU.

Sources told the BBC on Friday that the process was already underway.

The American investment bank was reported to be moving jobs in euro clearing as well as other investment banking functions and senior management.

A spokesman for Morgan Stanley told the Independent that the reports were untrue and that the bank has no immediate plans to make changes.

The UK’s vote to leave the European Union is a very significant decision which will have a considerable impact, the extent of which will not be known for some time," the spokesman said.

"There will be at least a period of two years before an actual exit takes place, so there will be time to implement any changes required to adjust our business to the new environment. Morgan Stanley will continue to monitor developments very closely and will adapt accordingly while prioritising the interests of our clients, our shareholders and our employees," he added.

Initial reports suggested Morgan Stanley needed to move staff because of the passporting system, which allows it to offer financial services across all EU nations without having a permanent base in that country.

Businesses are expected to start restructuring, which may include redundancies, as they take stock of the implications of Brexit.

HSBC and Goldman Sachs have said they have no immediate plans to move operations out of the UK, despite statements made before the referendum.

Stuart Gulliver, HSBC’s chief executive, told Sky News in February that Brexit could see 20 per cent of its 5,000 London investment bankers moved out of London to Paris.

Goldman Sachs also issued several warnings it would be likely to move some staff out of the City if the UK voted to quit the 28 member bloc.

But this morning Douglas Flint, HSBC’s chair, emphasised the bank’s “commitment to British businesses, customers and staff” adding that it “remains undiminished” despite the vote.

Aneil Balgobin, partner and employment law solicitor at Simpson Millar, said he expected to see investment in foreign offices.

"Employees in the sectors that will be affected immediately might want to dig out their employment contracts this weekend and update themselves with the most relevant paragraphs such as restrictive covenants and redundancy terms," he added.

Many City institutions had warned prior to the vote that leaving the EU could mean job losses and movement of operation to the continent.

"The UK’s decision to leave the EU brings with it huge uncertainty for jobs within the financial services industry," Paul Cook, founder a cultural diagnostics firm Alderbrooke, said.

Cook doubted whether jobs would be moved immediately.

"Decisions on job cuts and banks moving their headquarters outside of London will not be effective immediately – but the last thing the sector needs is months of uncertainty as to ‘what happens next?’ weighing on the existing cost pressures," he added.

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