Are the brakes on the “Brelief” rally? Dow futures aren’t doing much this morning, slowing down after blue chips soared 554 points in two days.
That two-day rebound was welcome in the face of gloomy predictions, but it would be foolish to assume risk assets are out of the woods just four sessions into the post-Brexit world, says Peel Hunt strategist Ian Williams.
“Everything does seem to be looking incredibly stable,” but “further volatility should be expected in due course, as the next steps to leaving the EU become clear,” Trustnet Direct analyst Tony Cross says.
“Despite the hiatus caused by the Brexit vote, the FTSE 100 is on course for its best month since October 2015,” Cross adds.
Our call of the day is cautious, with a warning on more fallout from last week’s Brexit vote.
Today’s chart keeps the focus on the U.K.’s pricey planned divorce from the EU, highlighting the country’s leadership problems.
and Dow futures
are little changed in this final trading day for 2016’s first half, and Europe
is also showing muted action. Asia mostly finished with gains.
— a good gauge these days of how frisky traders are feeling — is down 0.3%, while gold
and a key dollar index
are all declining.
Don’t be seduced by the price action in markets in the last few days, as “the worst is yet to come,” says Marc Chandler, global head of currency strategy at Brown Brothers Harriman.
The pound’s “firmer tone” isn’t based on positive developments in the U.K., and the country is facing political leadership challenges, he says. Sterling’s gains are actually due to buying by momentum traders, as well as quarter- and month-end positioning by institutional investors.
The Brexit shock still likely needs a few weeks to feed into economic reports, and policy responses largely have yet to be seen, Chandler argues.
Plus, don’t forget the quirks of the calendar, such as the upcoming Independence Day holiday (U.S. independence from Britain, not the latter’s from the EU).
“The U.S. holiday on Monday may also discourage new position-taking, and then one might as well wait until the U.S. jobs report on July 8,” he writes.
Even Italy poses new risks, in view of the battering its bank shares have taken this week. “Italy’s attempt to address its banking system was faltering before the U.K. referendum, which effectively made things worse,” Chandler says.
“Our strategy is to highlight how much trade and positive agreements among our nations are good not only for the economy of the world and the economy of our countries, but it’s also good for our citizens.” — Canadian Prime Minister Justin Trudeau pushes back against the anti-free-trade trends at a meeting of the “Three Amigos” (Trudeau, President Obama and Mexico’s president).
The man seen as a possible star in the U.K.’s exit talks with the EU is out of the picture, in a shock announcement Thursday.
Maybe we should have expected the unexpected? Boris Johnson had just been called a “maverick who hates to abide by the rules” in the London Evening Standard newspaper’s graphic, shown above.
The former London mayor had been seen as poised to replace David Cameron as leader of the Conservative Party and so become the U.K.’s next prime minister. But he was facing competition from other Tory bigwigs, such as Home Secretary Theresa May, and — as of this morning — Brexit ally and Justice Secretary Michael Gove.
“Beneath the blond mop, a famous intellect is being used for top-level plotting,” says the Standard graphic, which was inspired by the board game “Operation.” In other words, BoJo might try to act like he’s Homer Simpson, but he’s really Mr. Burns.
Certainly, minds are racing to work out why Johnson ruled himself out of the race, after being one of the favorites. What is known is that the move only heightens the political turmoil.
“British politics is in its greatest upheaval in decades. Nobody is in charge,” The Economist says.
second “Prime Day” is scheduled for July 12.
EU leaders have drawn “a stark line,” saying the U.K. can’t keep valuable business links in a seamless single market, if it doesn’t also accept European workers, the AP says.
shareholders have their annual meeting, while Starz
and Lions Gate
said they plan to merge.
have been among the companies posting earnings ahead of the open.
Weekly jobless claims rose to 268,000 while economists expected 265,000, and a report on Chicagoland’s business conditions is due at 9:45 a.m. Eastern Time.
On the Federal Reserve front, St. Louis Fed President James Bullard is expected to speak in London at 3:20 p.m. Eastern. This follows Fed Governor Jerome Powell warning late Tuesday that Brexit has shifted global risks “even further” to the downside.
In Brexit-battered Britain, the Bank of England’s Mark Carney is due to sound off at 11 a.m. Eastern.
$140 million — That’s the max value of the richest contract in NFL history. The Indianapolis Colts just inked the deal running through 2021 with their quarterback, Andrew “I’m In” Luck.
Mike Ditka says he agrees with Trump, but declines an invitation to speak.
A grizzly killed a mountain biker near Glacier National Park.
Nicholas Taleb is reportedly running a poll on whether a rival economist pumps iron.
No Rio for Lolo.
Have you heard about Finnish baby boxes?
A Muslim-American’s death at Parris Island sparks a Marine Corps probe.
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