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Thread: Financial Crisis - 2013 - ????

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    Creepy Ass Cracka & Site Owner Ryan Ruck's Avatar
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    Default Re: Financial Crisis - 2013 - ????


    A Recession Worse Than 2008 Is Coming

    January 15, 2015

    The S&P 500 has begun 2016 with its worst performance ever. This has prompted Wall Street apologists to come out in full force and try to explain why the chaos in global currencies and equities will not be a repeat of 2008. Nor do they want investors to believe this environment is commensurate with the dot-com bubble bursting. They claim the current turmoil in China is not even comparable to the 1997 Asian debt crisis.

    Indeed, the unscrupulous individuals that dominate financial institutions and governments seldom predict a down-tick on Wall Street, so don't expect them to warn of the impending global recession and market mayhem.

    But a recession has occurred in the U.S. about every five years, on average, since the end of WWII; and it has been seven years since the last one — we are overdue.

    Most importantly, the average market drop during the peak to trough of the last 6 recessions has been 37 percent. That would take the S&P 500 down to 1,300; if this next recession were to be just of the average variety.

    But this one will be worse.

    A major contributor for this imminent recession is the fallout from a faltering Chinese economy. The megalomaniac communist government has increased debt 28 times since the year 2000. Taking that total north of 300 percent of GDP in a very short period of time for the primary purpose of building a massive unproductive fixed asset bubble that adds little to GDP.

    Now that this debt bubble is unwinding, growth in China is going offline. The renminbi's falling value, cascading Shanghai equity prices (down 40 percent since June 2014) and plummeting rail freight volumes (down 10.5 percent year over year), all clearly illustrate that China is not growing at the promulgated 7 percent, but rather isn't growing at all. The problem is that China accounted for 34 percent of global growth, and the nation's multiplier effect on emerging markets takes that number to over 50 percent.

    Therefore, expect more stress on multinational corporate earnings as global growth continues to slow. But the debt debacle in China is not the primary catalyst for the next recession in the United States. It is the fact that equity prices and real estate values can no longer be supported by incomes and GDP. And now that the Federal Reserve's quantitative easing and zero interest-rate policy have ended, these asset prices are succumbing to the gravitational forces of deflation. The median home price to income ratio is currently 4.1; whereas the average ratio is just 2.6.

    Therefore, despite record low mortgage rates, first-time homebuyers can no longer afford to make the down payment. And without first-time home buyers, existing home owners can't move up.

    Likewise, the total value of stocks has now become dangerously detached from the anemic state of the underlying economy. The long-term average of the market cap-to-GDP ratio is around 75, but it is currently 110. The rebound in GDP coming out of the Great Recession was artificially engendered by the Fed's wealth effect. Now, the re-engineered bubble in stocks and real estate is reversing and should cause a severe contraction in consumer spending.

    Nevertheless, the solace offered by Wall Street is that another 2008-style deflation and depression is impossible because banks are now better capitalized. However, banks may find they are less capitalized than regulators now believe because much of their assets are in Treasury debt and consumer loans that should be significantly underwater after the next recession brings unprecedented fiscal strain to both the public and private sectors.

    But most importantly, even if one were to concede financial institutions are less leveraged; the startling truth is that businesses, the federal government and the Federal Reserve have taken on a humongous amount of additional debt since 2007. Even household debt has increased back to its 2007 record of $14.1 trillion. Specifically, business debt during that time frame has grown from $10.1 trillion, to $12.6 trillion; the total national debt boomed from $9.2 trillion, to $18.9 trillion; and the Fed's balance sheet has exploded from $880 billion to $4.5 trillion.

    Banks may be better off today than they were leading up to the Great Recession but the government and Fed's balance sheets have becomTherefore, this inevitable, and by all accounts brutal upcoming recession, will coincide with two unprecedented and extremely dangerous conditions that should make the next downturn worse than 2008.

    First, the Fed will not be able to lower interest rates and provide any debt-service relief for the economy. In the wake of the Great Recession, former Fed Chair Ben Bernanke took the overnight interbank lending rate down to zero percent from 5.25 percent and printed $3.7 trillion. The Fed bought longer-term debt in order to push mortgages and nearly every other form of debt to record lows.

    The best the Fed can do now is to take away its 0.25 percent rate hike made in December.

    Second, the federal government increased the amount of publicly-traded debt by $8.5 trillion (an increase of 170 percent), and ran $1.5 trillion deficits to try to boost consumption through transfer payments. Another such ramp up in deficits and debt, which are a normal function of recessions after revenue collapses, would cause an interest-rate spike that would turn this next recession into a devastating depression.

    It is my belief that, in order to avoid the surging cost of debt-service payments on both the public and private-sector level, the Fed will feel compelled to launch a massive and unlimited round of bond purchases. However, not only are interest rates already at historic lows, but faith in the ability of central banks to provide sustainable GDP growth will have already been destroyed, given their failed eight-year experiment in QE.

    Therefore, the ability of government to save the markets and the economy this time around will be extremely difficult, if not impossible. Look for chaos in currency, bond and equity markets on an international scale throughout 2016. Indeed, it already has begun.e insolvent in the wake of their inane effort to borrow and print the economy back to health. As a result, the federal government's debt has now soared to nearly 600 percent of total revenue. And the Fed has spent the last eight years leveraging up its balance sheet 77-to-1 in its goal to peg short-term interest rates at zero percent.


    Not giving any investment advice but I'm glad I cashed out my old 401k and am using it for hard goods and paying off debt.

    I've still got 30+ years to work and am starting a new 401k at my new employer so, compounded with the current economic outlook, it seemed like a good idea (the IRS is going to be bumping me up to a higher tax bracket because of it but, I'm going to be adjusting withholding so I don't get a deep anal probing end of year). Another co-worker that moved with me did the same but he's got a couple years on me. Our old company's stock price is down $13/share right now. That's in the last 4 months and it is considered a rock solid investment because of it's history of paying dividends. My old 401k was at -5.5% YTD at the time I cashed it out.

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    Creepy Ass Cracka & Site Owner Ryan Ruck's Avatar
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    Default Re: Financial Crisis - 2013 - ????

    Missed this when it came out.

    So RBS and JP Morgan are both urging people to get out of the market. That cannot be a good sign. I'm starting to feel really good about having cashed in my old 401k to pay off debt and put into something I can put in my hand... well, driveway.


    Bearish J.P Morgan Says Sell Stocks On Any Rally

    For first time in seven years, advice moves away from buy the dips

    January 11, 2016

    J.P. Morgan Chase has turned its back on the stock market: For the first time in seven years, the investment bank is urging investors to sell stocks on any bounce.

    “Our view is that the risk-reward for equities has worsened materially. In contrast to the past seven years, when we advocated using the dips as buying opportunities, we believe the regime has transitioned to one of selling any rally,” Mislav Matejka, an equity strategist at J.P. Morgan, said in a report.

    Aside from technical indicators, expectations of anemic corporate earnings combined with the downward trajectory in U.S. manufacturing activity and a continued weakness in commodities are raising red flags.

    “We fear that the incoming fourth-quarter reporting season won’t be able to provide much reassurance for stocks,” he said.

    Expectations for earnings are so bearish that the hurdle rate—the minimum rate of return on an investment that makes it worth the risk—for fourth-quarter results is now minus 4%, compared with plus 5% several months earlier.

    “If this were to materialize, it would be the weakest quarter for EPS delivery so far in the upcycle,” said Matejka.

    Further adding to the grim outlook is the slowdown in the manufacturing sector, which pushed J.P. Morgan’s profit-margin proxy — the gap between pricing power and the wage costs — into negative territory in the fourth quarter for the first time since 2008.

    The Institute for Supply Management’s manufacturing index, released last week, dipped to 48.2% in December from 48.6% in November, the lowest since the Great Recession.

    The positive correlation between oil prices and earnings on top of the sustained gains in the U.S. dollar — which has an inverse correlation to results — will also weigh on the market, he added.

    U.S. oil futures slid under $32 a barrel on Monday for the first time since December 2003 with February West Texas Intermediate crude US:CLG6 dropping 5.9% to $31.19 a barrel. February Brent crude, the global crude benchmark UK:LCOG6 was off 6% to $31.45 a barrel.

    Meanwhile, the ICE U.S. Dollar index a gauge for the greenback’s strength against a basket of six currencies, has risen more than 7% over the past 12 months, a trend it is expected to maintain until the middle of 2016.

    Among other analysts, Katie Stockton, chief technical strategist at BTIG, is likewise pessimistic.

    “The SPX is set up for an oversold bounce this week, with seven of our market internal measures at contrarian extremes,” she said. “But we are unconvinced that a shakeout is underway.”

    Stockton added that she is more cautious on the market’s intermediate outlook in the wake of last week’s 6% rout, as the sharp loss in momentum suggests that the next support level of 1,872 touched in September may be in jeopardy in the next couple of months.

    “Fortunately, we expect an oversold bounce to afford a better selling opportunity in the days ahead,” she said.

    Goldman Sachs on Monday reiterated its S&P 500 target of 2,100 for 2016 despite the wobbly start.

    “The prospective price gain from the current level equals 9% but rises to 11% when dividends are included,” said David Kostin, Goldman’s chief U.S. equity strategist.

    Dividends have accounted for 78% of the market’s total return since 1965, he noted.

    The S&P 500 is down 0.6% to 1,909, failing to hold early Monday gains. The Dow Jones Industrial Average is down 0.4% to 16,280 and the Nasdaq Composite has dropped 1.1% to 4,594.

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    Creepy Ass Cracka & Site Owner Ryan Ruck's Avatar
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    Default Re: Financial Crisis - 2013 - ????

    Well now, this is quite the interesting trial balloon...


    The Fed Wants to Test How Banks Would Handle Negative Rates

    February 2, 2016

    As interest rates turn negative around the world, the Federal Reserve is asking banks to consider the possibility of the same happening in the U.S.

    In its annual stress test for 2016, the Fed said it will assess the resilience of big banks to a number of possible situations, including one where the rate on the three-month U.S. Treasury bill stays below zero for a prolonged period.

    "The severely adverse scenario is characterized by a severe global recession, accompanied by a period of heightened corporate financial stress and negative yields for short-term U.S. Treasury securities," the central bank said in announcing the stress tests last week.

    In that particular simulation, the unemployment rate doubles to 10 percent, the same level it reached in the aftermath of the last financial crisis.

    Three-month bill rates have slipped slightly below zero several times in recent years, including in September after the Fed delayed rate liftoff amid global financial market turmoil, touching a low of minus 0.05 percent on Oct. 2.

    But in the stress test, banks would have to handle three-month bill rates entering negative territory in the second quarter of 2016, and then falling to negative 0.5 percent and holding there through the first quarter of 2019.

    Not a Forecast

    "This scenario does not represent a forecast of the Federal Reserve," the central bank said. It also assumes "that the adjustment to negative short-term rates proceeds with no additional financial market disruptions."

    Fed officials have made clear that they are a long way from contemplating a reduction in rates below zero in their benchmark overnight policy rate. Some, though, have suggested they’d be more open to such a move than in the past should the economy deteriorate significantly.

    The central bank left its target range for the federal funds rate unchanged at 0.25 percent to 0.5 percent last week after raising it in December for the first time since 2006.

    U.S. policy makers decided against pushing rates below zero during the financial crisis partly because of concern it could lead to dangerous dislocations in the money markets.

    European Experience

    Since then, the European Central Bank and the central banks of Switzerland, Sweden and Denmark have nudged some official lending rates negative without such repercussions, and Fed officials have publicly taken note.

    The Bank of Japan became the latest monetary authority push rates into negative territory last week in an effort to spur lagging growth and increase too-low inflation.

    Former Fed official Roberto Perli cautioned against drawing conclusions about future Fed actions from the inclusion of negative U.S. rates in the stress test scenario.

    "It doesn’t signal anything" about future monetary policy, said Perli, a partner at Cornerstone Macro LLC in Washington.

    Nevertheless, it is "another sign that the Fed would not be entirely adverse" to reducing its target rate below zero should economic conditions warrant, he said.

    Bill Dudley

    New York Fed President William Dudley said last month that policy makers were "not thinking at all seriously of moving to negative interest rates.

    "But I suppose if the economy were to unexpectedly weaken dramatically, and we decided that we needed to use a full array of monetary policy tools to provide stimulus, it’s something that we would contemplate as a potential action," he said on Jan. 15.

    Fed Vice Chairman Stanley Fischer said Monday that foreign central banks that had resorted to negative interest rates to stimulate their economies had been more successful than he anticipated.

    “It’s working more than I can say I expected in 2012,” he told the Council on Foreign Relations in New York. "Everybody is looking at how this works," he added.



  4. #484
    Senior Member samizdat's Avatar
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    Default Re: Financial Crisis - 2013 - ????

    Hey Ryan, you may wish to switch your Cruz signature gif or jpg. It appears to have been hacked.

    canto XXV Dante

    from purgatory, the lustful... "open your breast to the truth which follows and know that as soon as the articulations in the brain are perfected in the embryo, the first Mover turns to it, happy...."
    Shema Israel

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    Creepy Ass Cracka & Site Owner Ryan Ruck's Avatar
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    Default Re: Financial Crisis - 2013 - ????

    Responded to your PM sami.

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    Default Re: Financial Crisis - 2013 - ????

    So... like, negative rates... that means that instead of getting interest, they will be paying that back to the people with loans?

    LOL
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    Default Re: Financial Crisis - 2013 - ????

    Carrier Air Conditioner (part of United Technologies) Moving 1,400 Jobs to Mexico

    Published on Feb 11, 2016
    Carrier Air Conditioner is moving production to Monterrey, Mexico putting 1,400 Indianapolis Jobs south of the border in 2017.






    Fully Story: http://www.theindychannel.com/news/lo...

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    Nikita Khrushchev: "We will bury you"
    "Your grandchildren will live under communism."
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    damn those evil corporations stealing jobs...
    Libertatem Prius!


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    Default Re: Financial Crisis - 2013 - ????

    Ab Urbe Condita 2761

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    Default Re: Financial Crisis - 2013 - ????

    Well, this isn't a good sign for the economy...


    Perfect Storm To Keep Shipping Under Water

    February 23, 2016

    Dry bulk ship owners will need to idle or demolish their ships to tide over excess capacity that has sent freight rate plunging, a maritime research analyst said Tuesday.

    The dry bulk sector's woes have been simmering for the last seven years although demand had held up relatively well until 2013-2014. The recent slowdown in China has exacerbated overcapacity currently estimated at 30 percent, said Rahul Kapoor, director of equity research at Drewry Financial Research Services.

    "It's a toxic combination of negative demand growth and excess supply," Kapoor told CNBC.

    Freight rates have collapsed as growth in China slows, reducing the country's appetite for commodities just as a backlog of large vessels come into service.

    Key shipping indicator Baltic Dry Index has been breaching fresh record lows and is down almost 100 percent at 316 since reaching a peak of 11,793 in May 2008. The BDI is a measure of freight rates for shipping dry bulk cargoes such as iron ore, coal and grains.

    To get supply and demand in order, dry bulk vessel owners will need to park over 20 percent of their capacity, Kapoor told CNBC's "The Rundown" on Tuesday.

    Dry bulk freight rates are so low that they are not even covering operating costs, he said.

    Other than dry bulk, Drewry is also bearish on the container shipping sector in the medium-term.

    The sector has become so competitive that carriers are forced to pass on savings from the collapse in oil prices, which have tanked 70 percent since the summer of 2014.

    "Fuel surcharges have vanished from container shipping carriers," he said.

    The prolonged slump in the maritime industry has spurred consolidation.

    Just last week, China shipping giants Cosco Group and China Shipping Group merged to form China Cosco Shipping Corporation.

    French shipping company CMA CGM SA is buying Singapore's Temasek Holding's shares in Neptune Orient Lines for S$2.26 billion ($1.61 billion).

    However, the M&A wave may be tapering off, said Kapoor.

    Not all shippers are doing badly. Oil tankers are riding the wave from the oil slump with freight rates at "respectable levels".

    China's crude oil import volume rose to its record high in December due to stockpiling on a prolonged slump in prices.

    Tankers carrying liquefied natural gas however are facing the same fate as bulk shippers with many parked and idled in and around Singapore, one of the world's biggest trading hubs for the fuel, reported Reuters earlier this month.

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    Default Re: Financial Crisis - 2013 - ????

    At least the won't be dumping containers overboard for me to run into....

    lol
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    Default Re: Financial Crisis - 2013 - ????

    There Is More To Come: “We’re In The Early Chapters… Red Flags Are Screaming… The Economy Is Imploding… Nuclear War”

    Mac Slavo
    February 28th, 2016




    The beginning of 2016 revealed what some have known for quite some time – financial markets are an epic disaster just waiting to be realized. With stock indexes having rebounded somewhat since the initial meltdown, financial pundits and mainstream analysts would have us believe that the worst of it has passed. But don’t be fooled, warns Economic Collapse Blog publisher Michael Snyder in his latest interview with Future Money Trends, because we’re still in the early chapters of what may be the most devastating financial, economic and monetary collapse in history:
    A total of $16.5 trillion dollars had been wiped out from stock markets around the world… that doesn’t even count bonds and other things. So we have seen this massive amount of wealth wiped out globally… almost as much as the U.S. national debt.
    Of course, the past few days we’ve seen a bounce back… markets never go down in a straight line… If you go back to 2008, the two best days in terms of a point increase in U.S. stock market history were right in the middle of the Crash of 2008… just because stocks go up for a day or two does not mean the crisis is over.
    In my perspective we’re still in the early chapters… all of the red flags are still screaming that a lot more is to come… the entire global economy is imploding.
    As the collapse takes hold we can expect unprecedented maneuvers from our monetary masters. With central banks preparing to introduce negative interest rates, for example, savers and bank account holders will actually be paying for the privilege of keeping their money in the bank. The likely response, as we witnessed with a run on personal safes in Japan, is that people will simply take their money out of the bank and hold it in cash.

    But such a work-around will be short lived, explains Snyder, because they’ll simply outlaw certain cash transactions or ban them altogether, which is, incidentally, the very recommendation we’ve heard in recent weeks from large financial institutions and ‘renowned’ economists. Of course, they argue that banning cash will stop drug dealers and tax dodgers, but as Snyder explains, such a ban is being specifically designed so that they can take total control of not just our currency, but every aspect of our lives:
    This sets up the kind of scenario where all of a sudden the government becomes the gatekeeper… they can say ‘alright, if you want to use the system, then we can put some conditions on you for using the system. You’ve got to comply what we’re demanding of you or else you can’t have a bank account, you can’t get a job, you can’t buy, you can’t sell, you can’t participate in this electronic digital system.
    We can only speculate that control of such a digital currency system will necessitate the implementation of ‘beast technology’ that may include forced embedding of tracking chips into the general populace. That may sounds conspiratorially crazy, but so too did the notion that physical cash will be banned around the globe… until a few weeks ago.

    But never mind that global trade has collapsed or the widespread job losses, because the average person on the street really won’t believe it until the stock market tells them something’s wrong.

    That day is certainly coming. The only question is, who will be blamed when it does?

    We all know it could not possibly have been the machinations of central banks, Western governments and entrenched financial firms that are responsible for global economic malaise.

    As Michael Snyder notes, there is a huge wild card in the middle east right now and the very scapegoat the elite need to set this whole thing in motion is just waiting for the green light:
    The Russians have already warned Turkey that they are willing to use tactical nukes to keep forces away from Damascus… so the Russians have nukes… Saudi Arabia has nukes… And many people believe Iran already has nuclear weapons.
    So we’re talking about a situation where we can potentially see nuclear war in the middle east, at least to a limited degree.
    What would that do to the global economy and financial system?

    This is a huge wildcard.

    It’s something to keep an eye on…
    Make no mistake, those who have orchestrated the fleecing of America, Europe and the rest of the world have absolutely no intention of admitting they are responsible for the disaster to come. As Future Money Trends suggests, a tactical nuclear war would be the perfect out for central banks and Keynesian economists.

    One way or the other, regardless of the catalyst, the system as we know it today and how we operate within it is about to change drastically.

    http://www.shtfplan.com/headline-new...r-war_02282016

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    Default Re: Financial Crisis - 2013 - ????

    We're mere months from a nuclear war.
    Libertatem Prius!


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    CNBC Analysis: Don't Trust Those GDP Numbers

    March 24, 2016

    An in-depth analysis by CNBC of the government's reports on gross domestic product suggests large and persistent errors that should give investors, business executives and policymakers pause in relying on the data for key decisions.

    CNBC looked at each quarterly report going back to 1990 and found an average error rate of 1.3 percentage points. So an initial report of 2 percent growth on average later would be revised to 3.3 percent or 0.7 percent.

    The research does not show any systematic overstatement or understatement of growth, just persistently large revisions.

    CNBC also found:


    • The error rates in the second and third estimates of GDP are the same as the first. So despite more time and data, the error rates will be just as large three months after the end of the quarter as they are one month afterward.
    • About 30 percent of the time, the government gets the direction of growth wrong. That is, GDP initially shown to be higher than the previous quarter could in fact be lower, and vice versa.
    • The error rates haven't improved over the decades despite vast improvements in computing power and communications speeds. The size of the revisions from 2008 to 2013 is the same as those from 1990 to 1995.


    The errors have potentially important policy implications. On April 30, 2008, with the Great Recession just gathering steam, the Federal Reserve cut interest rates by one-quarter point to 2 percent. That same day, the Bureau of Economic Analysis, the agency that produces the GDP report, announced that the economy was growing an anemic 0.6 percent but still growing.

    But in subsequent years, that GDP growth would be revised to show a contraction of 2.7 percent, the biggest decline in 17 years. While the Fed was acting aggressively in bringing down rates, the question is whether it might have done more had it known the severity of the decline earlier. (By the end of the year, an initial report of a contraction of 3.4 percent would be revised to show a massive decline of 8.2 percent.)

    It can go the other way and have political ramifications.

    In the second quarter of 1992, as President George H.W. Bush was running for re-election, growth was reported at a pedestrian 1.4 percent. It would be revised up in subsequent years, after the election of Bill Clinton, to a strong 4.5 percent.

    "If the errors are really what you say, then we really have no idea what's going on,'' said Joel Naroff of Naroff Economic Advisors, one of about a dozen economists surprised to learn of CNBC's findings.

    The findings raise warning signs for investors, policymakers and business executives about reacting too strongly to the initial government reports on economic growth.

    Those warnings are especially important now that the trend growth rate has slowed to just around 2 percent. They raise questions about whether signals from the stock and bond markets provide better clues to the direction of the economy and whether the government could improve its reporting by incorporating the growing mass of private sector data.

    They also make some wonder if government data agencies should be better funded.

    "If you're betting your business on it, it's terrible because you're being told growth is strong or weak, and you're planning off it," Naroff said.

    The majority of economists contacted did not know the error rate and most guessed an amount half of that calculated by CNBC. Some were off by two-thirds.

    The government publishes three initial versions of GDP: the "advanced" report, about a month after the end of the quarter, the second estimate, published two months after the end of the quarter, and the third estimate, published about three months after a quarter's end. CNBC's research shows the error rate of all three releases is about the same 1.3 percentage points.

    "That is something I've been concerned about, too," said Brent Moulton, associate director for national economic accounts at the Bureau of Economic Analysis.

    "We're working to try to get more accurate data in time to improve the advance GDP estimate,'' including faster data on wages from the Bureau of Labor Statistics, he said. "Revisions are not errors They represent improvements to the GDP estimate as more information becomes available."

    Moulton's agency publishes an average error rate for only the advanced report, compared with where the number will be revised to years later. That error rate, which appears as an end note to each "advanced" report, is virtually the same one as the one calculated by CNBC.

    The agency, however, does not routinely publish an error rate for the second and third releases relative to the revisions in later years. It did publish a report on the overall accuracy of the GDP and all its versions in 2014.

    Mark Zandi, chief economist at Moody's Analytics who was among the economists contacted by CNBC, was surprised that the error rate did not improve from the advance to the third release. He figured, as did others, the third estimate would be better than the first.

    Moulton said the large revisions result from new information that his agency receives over time. For example, it takes a year before the agency gets more complete wage data and another year before it receives data from the Internal Revenue Service; after five years, the bureau has data from the broad economic census, which it uses to go back and revise GDP.

    The bureau changes its methodology from time to time, for example, altering how it adjusts different parts of the data for seasonality.

    Moulton says the bureau has been working to speed up the data it receives. Trade data that once took 45 days is now received in 30 days. It's also working on a way to speed up collecting inventory data, which is often a big swing factor in revisions.

    Moulton noted that revisions are often largest around turning points in the economy, like when it's entering or exiting recession, as it was in 1992 and in 2008. And some variables are outside its control.

    For example, individuals and companies are always going to file tax data late, receive extensions and amend returns. Corporate returns are often complicated.

    Outside economists do not envy the bureau's task of measuring production in the $18 trillion U.S. economy. Over time, as the economy has become more service-oriented, it's become harder to measure actual output, especially when the measures include complex ideas like intellectual property.

    "It's a more complex and esoteric economy," Zandi said.

    For example, the economy used to be far more reliant on manufacturing, and measuring the value of automobiles produced is far easier than measuring the value of the fast-growing health care and education service sectors of the economy.

    But with trend growth only 2 percent, an error rate of 1.3 percentage points presents a danger for policy errors.

    Officials contacted by CNBC said they tend to rely more heavily on the jobs data than the GDP data, especially when they contradict each other, as is now the case. Fed officials tend to use running quarterly averages rather than a single quarter to gauge the direction of the economy.

    Indeed work by CNBC shows that a more accurate picture emerges when four quarters are averaged together.

    A study by the Organization for Economic Cooperation and Development found the U.S. about middle of the pack compared with other advanced countries on its error rates. The 2014 study by the Bureau of Economic Analysis itself suggests that over long periods of time, like five to 10 years, the BEA fairly accurately portrays growth.

    Interestingly, it has a pretty good handle on the biggest part of the economy, the consumer. The revisions to consumptions over time are relatively small, including revisions to services. The biggest error rates are in business investment including equipment and intellectual property.

    One irony is that the government data collectors have to go back and continuously revise the impact of government spending on GDP, which is to say, the government is not fully accurate in counting the government.

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    Default Re: Financial Crisis - 2013 - ????

    Puerto Rico Says Will Default Tomorrow, Begs Congress For Help "Or Else Crisis Will Get Worse"

    Submitted by Tyler Durden on 05/01/2016 17:10 -0400

    Update: PR Governor Padilla has spoken...


    • *PUERTO RICO GOVERNOR SAYS WON'T PAY DEBT TOMORROW
    • *PUERTO RICO GOVERNOR SAYS ISLAND WON'T PAY DEBT MONDAY
    • *PUERTO RICO GOVERNOR: GOVERNMENT SIGNED MORATORIUM BILL YESTERD
    • *PUERTO RICO NEEDS DEAL W/ CREDITORS AND/OR CONGRESS: GARCIA


    And of course, demands a bailout...

    • *PUERTO RICO GOVERNOR CALLS ON U.S. CONGRESS, PAUL RYAN FOR HELP


    And then threatens...
    • *CRISIS WILL GET WORSE IF U.S. CONGRESS DOESN'T HELP: GARCIA
    • *PUERTO RICO GOVERNOR CONCLUDES REMARKS TO COMMONWEALTH


    As we detailed earlier, It's D-Day in Puerto Rico. As Bloomberg reports, investors are finding little comfort in the Puerto Rico Government Development Bank’s efforts to strike a last-ditch agreement with creditors to soften the blow of a default this weekend. The bonds that mature today (May 1st) have crashed to just 20c (disastrously below the 36-cent recovery rate the commonwealth proposed in March).

    It appears investors are not buying what Puerto Rico is selling and prefer to dump the bonds than hold out in hope of a 'deal'...



    A default on the $422 million due today is "virtually certain,"
    S&P Global Ratings said April 11.

    No matter which route Puerto Rico takes, credit-rating companies see a default as inevitable. Moody’s Investors Service analysts said last week that any non-payment, even if it’s agreed to by creditors, constitutes a default in their eyes. S&P Global Ratings said a distressed-debt exchange or temporarily withholding interest is synonymous to default.
    But as Bloomberg reports, Puerto Rico said its Government Development Bank, which is operating in a state of emergency to preserve its dwindling cash, reached an agreement with some credit unions to delay $33 million of bond payments as the commonwealth rushes toward a potential historic default.

    The pact only affects a portion of the $422 million that the bank owes on May 1. The GDB will exchange the $33 million in bonds for new debt that will mature May 1, 2017, Governor Alejandro Garcia Padilla’s administration said in a statement Friday. The terms of the agreement are available to other credit unions, called cooperativas, and investors, according to the statement.

    “Apart from this private exchange, GDB continues to negotiate a potential transaction related to an exchange of all of GDB’s bond indebtedness, which would require the participation of all creditors of GDB (including the cooperativas),” the administration said in the statement. “The private exchange does not affect, or take the place of, those ongoing negotiations.”
    The bank is still negotiating a possible debt exchange on all of its bonds, which would require the participation of all its creditors, according a the statement. The GDB, which structured the island’s debt sales, has $5.1 billion of debt. The governor’s office said Garcia Padilla will speak to the commonwealth in a televised address Sunday at 5 p.m. New York time.

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    Nikita Khrushchev: "We will bury you"
    "Your grandchildren will live under communism."
    “You Americans are so gullible.
    No, you won’t accept
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    outright, but we’ll keep feeding you small doses of
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    until you’ll finally wake up and find you already have communism.

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    ."
    We’ll so weaken your
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    until you’ll
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    like overripe fruit into our hands."



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    Default Re: Financial Crisis - 2013 - ????

    It's tomorrow. Have they defaulted? What does "default" mean for a country anyway?
    Libertatem Prius!


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    Default Re: Financial Crisis - 2013 - ????


    The Federal Reserve's $4.3 Trillion Ticking Time Bomb

    May 27, 2016

    The Federal Reserve has a big problem if it wants to raise rates again. It will have to pay U.S. and foreign banks enormous sums of money instead of U.S. taxpayers.

    Not only would the Fed likely draw the ire of Congress, but it could also become a target of the next U.S. president—be it Clinton or Trump. That’s because the gangbuster profits of $90 billion (plus) per year that the Fed remits to the Treasury could easily dwindle to zero. According to several leading economists, it’s also possible that the Fed will become technically insolvent (though it always has the power to print its way out of such a disastrous state).

    Quantitative easing was a Faustian bargain

    The putative savior of the financial crisis, quantitative easing, was a Faustian bargain. The Fed got to inject trillions of dollars into the financial sector while simultaneously “sterilizing” the very same money. It did this by incentivizing banks to deposit their digital cash at the Fed, paying above-market interest rates.

    Currently, the Fed pays 0.50% annually to banks to keep that money out of the economy. It might not seem like much, but the comparable rate paid by the U.S. Treasury for T-bills is 0.28%. In other words, the Fed pays banks nearly twice as much as the Treasury does.

    But the Fed refuses to acknowledge this. Each year, the Fed Chair is required by law to testify twice in front of Congress. Both Ben Bernanke and Janet Yellen have used the word, “comparable,” to assert disingenuously that the Fed is paying an amount of interest similar to what banks could earn in the marketplace. It’s possible to “compare” apples to oranges, but it doesn’t mean they’re similar.

    Currently, the Fed is paying banks about $12 billion per year in interest. If the Fed raises rates two times (by 0.25% each time) and the level of reserves stays the same, that number doubles to $24 billion. If we are to believe San Francisco Fed President John Williams, who targets an eventual 3.0% for short-term rates, then that's $72 billion per year to the banks. This is a huge expenses for the Fed. Subtract from that the $90 billion (plus) per year in operating profits, and the amount of money the Fed pays to the Treasury gets pretty small.

    The Fed is poised to take huge capital losses


    But it gets worse. The Fed is taking capital losses on its $4.3 trillion bond portfolio, and those losses will eventually accelerate. When the bonds that the Fed holds mature, it realizes losses because it paid above-market prices for most of them to begin with.

    The Fed is currently keeping its balance sheet the same size, purchasing new bonds when old ones mature. Should it decide to sell bonds, it would realize huge losses over a short space of time and would likely go into debt with the U.S. Treasury. According to Hall and Reis, it would take the Fed 6 to 10 years to work off the debt and get back in the green.

    Bottom line: No matter how you slice it, the Fed payments to Uncle Sam will not only drop off a cliff someday, they could also go negative. That means, the taxpayers would be indirectly on the hook for Federal Reserve operating losses.

    The crisis comes when Congress realizes the Fed is paying the government nothing (or next to nothing) while shelling out billions to the banks. Several members of Congress have already been critical of Fed payments to banks, but they’ve largely missed the mark. When the next budget crisis arises without the Fed paying it’s perceived “fair share,” all it would take is a few impassioned speeches to stir the masses and make monetary policy a de facto political animal.

    The worst possible outcome would be for a fickle and indecisive Congress to assert its authority over monetary policy. Unfortunately, by waiting seven years to raise rates—and into an economy growing at best modestly—the Fed has backed itself into a corner. The Fed has clearly chosen the banks over the best interests of the taxpayers, and this will eventually come back to bite Chair Yellen.

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    Default Re: Financial Crisis - 2013 - ????

    Yay! The unemployment rate has fallen to lows unseen in years!

    Oh, wait... The labor force participation rate dropped to 62.6%?


    Sharp Fall in U.S. Hiring Saps Chance of Fed Rate Increase in June

    June 3, 2016

    In a troubling sign that the economic recovery may have stalled, at least temporarily, the government reported on Friday that employers added just 38,000 workers in May. The significant plunge in hiring is likely to push back a decision by the Federal Reserve to raise interest rates.

    The official unemployment rate dropped to 4.7 percent from 5 percent, but that was primarily a result of Americans dropping out of the labor force.

    “Boy, this is ugly,” said Diane Swonk, an independent economist in Chicago. “The losses were deeper and more broad-based than we expected, and with the downward revision to previous months, it puts the Fed back on pause.”


    May’s job totals were affected by the more than 35,000 Verizon workers who were on strike and classified as unemployed by the Labor Department. With those Verizon workers now back on the job, Ms. Swonk and other analysts do expect next month will show an additional gain of 35,000 to 40,000 jobs.

    “The only good news is that wages held,” Ms. Swonk said. Average hourly earnings were up again, 0.2 percent for the month, for a gain of 2.5 percent for the year.

    Even apart from the distortion created by the Verizon strike, the average monthly job gains so far in 2016 have fallen far shy of the nearly 240,000 average of the last two years, a pace that has helped buoy the economy and cut the jobless figure in half since the depths of the recession.

    The jobs picture showed further weakening as revisions released on Friday to March and April’s figures cut 59,000 from the previous employment totals. Over the last three months, job creation has averaged only 116,000 a month. May’s gains marked the lowest figure since September 2010.

    In recent weeks, Fed officials have been consistently signaling their intent to lift rates from the ground level once it is clear that the economy is healthy enough to absorb an increase. Speaking at a forum in Cambridge, Mass., last week, Janet L. Yellen, the Fed chairwoman, said it would be appropriate to increase borrowing costs “in the coming months” if growth continued to pick up and “if the labor market continues to improve.”

    The Fed’s policy-making committee has its next three meetings scheduled for mid-June, late July and September.

    “I would say June is off the table,” said Carl Tannenbaum, chief economist at Northern Trust, noting that Fed officials have repeatedly said their approach was “data dependent.” He pointed out that job creation was sluggish, labor force participation declined for the second month in a row and the number of people working part time for economic reasons rose sharply. “It’s disappointing.”

    Investors wrote off the chances of a June rate increase after the latest release. The probability of a June increase, as implied by asset prices, fell from 21 percent to 6 percent in early trading, according to CME Group. The probability of a rate increase by September fell from about two-thirds to roughly 50 percent.

    The sentiment could be summed up by the Tempos’ 1959 hit, “See You in September.”

    Hiring across the board was soft, with particularly heavy declines in construction, manufacturing and mining, in addition to the drop in information services as a result of the Verizon strike.

    The Obama administration acknowledged that the slower pace of job gains was disappointing.

    “This month’s report is a reminder of the important work that remains to sustain faster growth in jobs and wages, including investing in infrastructure and job training, implementing high-standards trade agreements like the Trans-Pacific Partnership, and raising the minimum wage,” Jason Furman, the chairman of the council of economic advisers, said in a statement posted on the White House’s website.

    Donald J. Trump, the presumptive Republican presidential nominee, was quick to react on Twitter, writing “Terrible jobs report just reported. Only 38,000 jobs added. Bombshell!”

    Worries about the economy are a common refrain among supporters of Mr. Trump, as well as among those who are still behind Senator Bernie Sanders’s bid to lead the Democratic presidential ticket.

    Patrick O’Keefe, director of economic research at CohnReznick, an accounting, tax and advisory firm, argued that “a 5 percent unemployment rate today is a distinctly different indication of labor market slack than a 5 percent unemployment rate would have been before the recession, in 2007.”

    If the labor force participation rate had remained constant, nine million more people would be looking for a job.

    “Just because people left the work force out of discouragement doesn’t mean they’re not available for work,” he said. “It just means the economy is not generating sufficient jobs at sufficient pay levels to get them back in.”

    A broader measure of unemployment that includes people too discouraged to search for work or who are making do with a part-time job because they cannot find a full-time one, stayed steady at 9.7 percent. It has hovered just below 10 percent for more than six months.

    While retiring baby boomers would be expected to bring down the proportion of the population in the labor market, Mr. O’Keefe said he was particularly disturbed by the significant decline among those in their prime working ages.

    “In policy making, the Fed continues to focus on a measure that is maladjusted, that does not reflect the reality of today’s economy,” said Mr. O’Keefe, a former deputy assistant secretary in the Labor Department.

    Across generations, many people are still not attached to the work force in the way they had envisioned. “Many may be working in the gray economy, able to pick up work here and there, but not a sustainable job,” he said.

    Public sector employees — postal workers and bus drivers, teachers and police officers — have also not made up ground lost during the recession. Add in the normal growth that would be needed to keep pace with an expanding population, and there is about a 1.8 million job shortfall in public sector employment, said Elise Gould, an economist at the Economic Policy Institute, a labor-oriented research organization in Washington.

    Dan Finnigan, chief executive of Jobvite, a recruiting service used by start-ups, said that “anxiety about the job market among seekers is going up,” with a majority surveyed expressing concern that advancing technology will eliminate their jobs.

    Although job creation has remained steady on average across Jobvite’s platform, Mr. Finnigan said he had observed a noticeable drop in openings at technology companies in California and New York.

    “I think there’s going to be a flight to safety,” he said, with technologically adept workers being lured to larger companies that can offer more cash, more training and more security instead of opting for the prospect of a bigger payout with more risk.

    Not everyone has seen the weakness in hiring yet. Tom Gimbel, chief executive of LaSalle Network, a Chicago recruiter, said: “In a weak economy, what usually gets cut first and usually gets put on hold first are jobs at the manager to director level — those earning between $75,000 and $125,000 — and I haven’t seen that yet. The market is strong right now. I’ve still got clients hiring.”

    At the lower end of the pay scale, however, Mr. Gimbel said employers have been thinking about how they will be affected by the Obama administration’s recent decision to raise the salary cutoff for overtime pay. “They’re worried about bringing people in at a certain level,” he said. Starting Dec. 1, employers will have to give time-and-a-half overtime pay to most salaried workers earning up to $47,476, compared with the previous threshold of $23,660.

    Minimum-wage increases that have already taken effect in some places may be partly responsible for the uptick in average hourly earnings.

    A survey of 220 executives during the first quarter by PricewaterhouseCoopers, or PwC, the accounting and consulting firm, found that a majority planned to increase their head count this year, but the proportion was down from 2015.

    “The first-quarter decline in business confidence is notable,” said Shawn Panson, a partner at PwC.

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    Default Re: Financial Crisis - 2013 - ????


    Jamie Dimon Just Sounded The Alarm On Auto Loans

    The JPMorgan Chase CEO says "someone is going to get hurt" as financing for autos has flourished in the U.S.

    June 2, 2016

    Jamie Dimon is sounding the alarm on auto loans.

    "Auto is clearly a little stretched, in my opinion," the JPMorgan Chase CEO said Thursday morning, speaking at the AllianceBernstein Strategic Decisions Conference in New York. "Someone is going to get hurt. ... We don't do much of that."

    But other lenders have.

    The average size of new auto loans is rising, as is the average payment size, according to research from Experian released Thursday morning.

    In May, the total amount of auto loans cracked the $1 trillion mark for the first time, marking a 10 percent increase. It comes as auto sales have hovered around record highs.

    At more than $30,000, the average auto loan for a new car is also at an all-time high, according to Experian. Also, at more than $500, the average monthly auto loan payment is at a record.

    The Experian research also noted that more subprime borrowers are borrowing for new auto purchases.

    "The continued rise in new vehicle costs have kept many consumers exploring options to keep their monthly payments affordable," said Melinda Zabritski, Experian's senior director of automotive finance, in a statement that accompanied Thursday's research. "As long as vehicle prices continue to rise, we can expect leasing rates to grow along with them. However, consumers need to understand the nuances of their lease agreements and make sure that leasing fits their lifestyle."





    Also not mentioned in the article is that the average auto loan term is up to 68 months.

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    Default Re: Financial Crisis - 2013 - ????

    Dow futures down ​730
    Markets live: Pound falls to three decade low as Britain votes Leave in EU referendum

    The pound is on track for its worst ever one-day fall as the UK heads for Brexit











































    $ per £



    The pound tumbled as traders bet on BrexitSource: Bloomberg24 Jun 16 04: 0324 Jun 16 01: 5723 Jun 16 23: 5123 Jun 16 21: 4524 Jun 16 03: 4224 Jun 16 03: 2124 Jun 16 03: 0024 Jun 16 02: 3924 Jun 16 02: 1824 Jun 16 01: 3624 Jun 16 01: 1524 Jun 16 00: 5424 Jun 16 00: 3324 Jun 16 00: 1223 Jun 16 23: 3023 Jun 16 23: 0923 Jun 16 22: 4823 Jun 16 22: 2723 Jun 16 22: 0623 Jun 16 21: 2423 Jun 16 21: 0323 Jun 16 20: 4223 Jun 16 20: 2123 Jun 16 20: 001.31.351.41.451.51.55



    23 Jun 16 23: 04 $ per £: 1.4967
    Highcharts.com




    Auto update






    Japan's Kuroda pledges to provide liquidity to distressed markets

    Haruhiko Kuroda, the Bank of Japan governor, has pledged that the central bank will provide sufficient liquidity in the aftermath of the Brexit vote.
    He has said that the Bank of Japan will use swap arrangements between six central banks to provide the markets with ample liquidity.
    Taro Aso, the Japanese finance minister, said that he was concerned about the global economic impact of the UK referendum.







    Japanese finance minister prepares to talk to press after yen surge

    Epic press scrum setting up for Japanese finmin Aso. Get ready for a day of this. pic.twitter.com/QAgZZO1cA7
    — Robin Harding (@RobinBHarding) June 24, 2016










    Gold surges to $1,360 on Brexit result

    The precious metal, seen as a safe haven for investors in times of panic, has rallied on news that the UK will leave the EU.
    Gold rallied as much as 8.1pc to nearly $1,360 as money managers looked for somewhere to shelter.



    +500% spike in searches for "buy gold" in the past four hourshttps://t.co/pmMsRUcAwK
    — GoogleTrends (@GoogleTrends) June 24, 2016










    Sterling's slide worsens as pound approaches $1.33

    The UK's currency has now fallen by 10.6pc against the US dollar, taking it as low as $1.3304.







    Asian stock markets tumble

    Japanese equities have started trading, and it's looking ugly. The Nikkei is down 1,100 points, or 7pc, as shares start changing hands.







    Japan to hold press conference within the hour

    As investors have piled into the perceived safe haven of the Japanese yen, it has surely caused headaches for policymakers.
    The currency has risen by more than 10pc against sterling, a spanner in the works for officials who had kept the yen low, as part of an economic strategy designed to spur growth and boost inflation.







    Pound crashes to 1985 low as sterling falls below $1.35

    It just keeps falling. The currency is now at its weakest levels in more than three decades.
    Here's how that looks.
































    $ per £




    Sterling is at its lowest levels in over 30 yearsSource: BloombergQ2 2016Q4 2008Q2 2001Q4 1993Q2 1986Q4 2014Q2 2013Q4 2011Q2 2010Q2 2007Q4 2005Q2 2004Q4 2002Q4 1999Q2 1998Q4 1996Q2 1995Q2 1992Q4 1990Q2 1989Q4 1987Q4 198411.251.51.7522.25



    Q2 2001 $ per £: 1.4153
    Highcharts.com












    'Lehman-like' currency markets as pound tumbles below $1.37

    The pound has kept sliding, now below $1.37 and on course to double its worst ever one-day slide if losses extend.



    FX feels Lehman like
    — The Thalesians (@thalesians) June 24, 2016


    Simon Derrick, of BNY Mellon, says: "Self evidently a number of investors will have found themselves on the wrong side of the price action in the past few hours.
    "It therefore look very likely that today will see a record fall for the pound, easily beating Black Wednesday's move. Indeed, it seems fair to say that today will soon start to be referred to as a Black Friday for markets."







    Bank of England expected to slash interest rates

    As the currency slides, investors are expecting imminent action from the Bank of England.
    Policymakers could unleash monetary stimulus in an effort to support growth - if it is confirmed that Britons have voted for Brexit.
    Danny Blanchflower, himself a former Bank policymaker, suggests that interest rate cuts are now on the table.



    GBP down to $1.37 presume MPC members been contacted only question what time they will meet and will they cut by 25bp or 50bp
    — Danny Blanchflower (@D_Blanchflower) June 24, 2016






    UK stocks to plunge by nearly 8pc as markets open

    While currency traders may already have their heads in their hands - while others are no doubt cheering the outcome - there are still more than four hours until UK stocks starting trading.
    Out of hours betting and futures activity suggest that when the London Stock Exchange starts at 8am, we'll be in for a bumpy ride. The FTSE 100 is expected to fall by more than 7.7pc, or nearly 500 points on the open.



    FTSE forecast to open down 489 points 7.7% lower pic.twitter.com/WvkaUJtg2D
    — Richard Fletcher (@fletcherr) June 24, 2016






    Pound drops below $1.38

    The currency keeps dropping. We'll keep you updated.







    Sterling drops below $1.40 as investors reckon with Brexit

    The pound has dropped below the crucial $1.40 mark as traders accept that a Leave outcome is all but a certainty.
    The drop - at its greatest a 5.7pc slide against the US dollar - puts the currency on track for the worst one-day fall in history.
    Last night sterling had surged above $1.50 as money managers bet that Britons had voted to remain in the EU.



    Amazingly, cable could (theoretically) hit a 6-month high and a 6-month low on the same day. pic.twitter.com/7yZ31SwT1e
    — Joe Weisenthal (@TheStalwart) June 24, 2016


    The euro is also dropping against the US dollar, reflecting worries about spillover effects from the Brexit vote. The single currency is down by close to 2pc.







    What next for financial markets?

    With many pollsters now calling the outcome for Leave, or suggesting it is the most likely outcome, what next for financial markets trying to process the surprise outcome?
    Simon Derrick, chief markets strategist at BNY Mellon, says that "we need to ask whether any official action might be taken to support UK markets".
    George Osborne, the Chancellor, has said: "The Bank of England and the Treasury - Governor [Mark] Carney and myself - we have of course discussed contingency plans."
    Mr Derrick said that beyond the UK impact, attention would turn to the possibility of a domino effect, impacting investor confidence in other EU member states.
    "We also need to start thinking about how nations such as Switzerland and Japan will react should save haven flows begin to head their way.
    "More generally, there seems a good chance that other G7 members will be prepared to take action.
    "Finally, and possibly most importantly, it is worth asking what this means for the possibility of a rate hike by the [US] Fed in the near future. While a July move already seemed unlikely, it is entirely possible (given the recent comments about international concerns) that a September shift starts to look a little more remote as well."










    Long nights for a world watching London

    As traders burn both ends of the candle, officials in Brussels are also closing watching the outcome of the UK's referendum.
    The lights have been staying on at the Berlaymont, the heart of the European Commission.



    It's 1.30am and lights still burning at EU's Berlaymont HQ. Tusk, Juncker meet at 1030am pic.twitter.com/Y3MCvoQilU
    — Matthew Holehouse (@mattholehouse) June 23, 2016


    EU-Commission, Brussels, 3:45 a.m. pic.twitter.com/mmvorxcTjP
    — Stefan Leifert (@StefanLeifert) June 24, 2016






    Brexit now odds-on favourite

    With 71 out of 382 counting areas declared, Leave is now expected to be the most likely outcome, at least by those betting money on the outcome.
    Oddschecker compiled betting odds now suggest that there is a 55pc chance of a Brexit result. For the first time, withdrawing from the EU is considered more likely than staying.














    Leave probability (%)



    Brexit is considered the most likely outcome for thefirst timeSource: OddscheckerJul '15Jan '16Oct '15Apr '16102030405060



    Sunday, Jan 17, 2016 Leave probability (%): 35.78
    Highcharts.com








    Sterling slide on track for largest fall in history

    The pound's tumble is now worse than that of any day during the global financial crisis, or that of the 1992 ERM exit.
    With a drop of over 5pc on the day, if continued, sterling's decline would be the worst in the currency's history against the US dollar.
    Joe Rundle, of ETX Capital, said: "We can expect to see these gyrations continue throughout the night as traders react to the referendum results as they come in. We’re not seeing a panic just yet but the complacency has definitely gone."































    One-day slide against the US dollar (%)The post-EU vote slide is the worst in sterling historySource: Bloomberg24 Jun 201616 Sep 19924 Jun 198120 Jan 200918 Dec 20089 Jan 19921 Dec 20086 Sep 198523 Feb 198112 Nov 20088 Sep 198122 May 198922 Oct 200821 Oct 20084 Jun 199311 Sep 199216 Oct 199218 Sep 19925 Jan 198810 May 1993-5-4-3-2-10



    Highcharts.com








    Pound dives as City reckons with Leave probability

    Sterling is heading ever lower against the dollar - on track for its worst losses against the US currency in at least the last three decades.
    It is currently trading down more than 5.3pc as traders contemplate the likelihood of a Brexit victory.
    That puts the pound on track for a greater fall than that of "Black Wednesday", when the UK left the ERM in 1992. On that day, the pound dropped by just 4.1pc.
    Sterling has now traded as low as $1.4055.
    Meanwhile, Asian markets are waking up and reckoning with the consequences. Expect to see some fall out in bourses there once they open up for trading.














    Chances of Brexit more than triple as results trickle in

    Odds of a Leave outcome have risen by almost 240pc since Thursday morning, according to Oddschecker, which gathers odds from all of the major bookmakers.
    The chances of a vote to withdraw from the EU now stand just shy of 40pc, according to punters' bets.

































    Leave probability (%)

    Brexit chances have spiked on betting marketsSource: Oddschecker24 Jun 16 01: 4821 Jun 16 13: 5124 Jun 16 00: 3923 Jun 16 23: 2123 Jun 16 22: 0023 Jun 16 04: 4223 Jun 16 00: 4222 Jun 16 22: 5722 Jun 16 21: 3622 Jun 16 19: 5722 Jun 16 18: 3322 Jun 16 17: 0922 Jun 16 14: 0922 Jun 16 11: 3022 Jun 16 09: 0022 Jun 16 01: 3021 Jun 16 21: 4821 Jun 16 19: 4521 Jun 16 17: 5421 Jun 16 15: 4821 Jun 16 11: 5421 Jun 16 09: 3921 Jun 16 06: 5121 Jun 16 01: 30102030400



    Highcharts.com




    The huge rise reflects much bigger than anticipated Brexit support in the North of the country, as well as in Northern Ireland. Polling expert John Curtice and others have now suggested that a Leave vote could be the most likely result.
    However, clarity isn't anticipated until much later in the morning. Chris Hanretty, of UEA, suggests that we won't be able to make forecasts with much precision until 3.30am, when the result should become apparent.







    Plunge in sterling a 'once in a year move'

    Drop in pound 'once in a year move', trading expert says Play! 00:35











    FTSE poised to fall 2pc when markets open

    Out of hours trading suggests London's leading index will shed 111 points as it opens, at 8am this morning.
    That'd represent a fall of around 1.8pc from where the FTSE ended on Thursday, at 6,338.10.



    Futures markets open - current betting is that FTSE 100 (top of list) will open down 111 points. pic.twitter.com/v6xfRHNyin
    — Joel Hills (@ITVJoel) June 24, 2016










    Chances of Brexit have doubled

    As early outcomes have shown big gains for the Leave camp, gamblers have been splashing their cash on Brexit bets.
    On some of the largest exchanges, the probabilities of leaving the EU have surged. Betfair, which suggested just a 18pc chance of Brexit just over an hour ago, now has the chances at 35pc.
    PredictIt, another large prediction market, has also seen huge shifts in the past couple of hours, according to former Bank of England policymaker Danny Blanchflower.



    https://t.co/ZRxSJPxPbz now jumps brexit probability to 35% from 14% a couple of hours agohttps://t.co/HC22rw5LKf
    — Danny Blanchflower (@D_Blanchflower) June 23, 2016






    First bit of good news for the Remain camp

    Swindon has come out for Leave - but much more narrowly than anticipated.
    Chris Hanretty, of UEA, had estimated that about 59pc of voters would want Brexit. In the end, just 55pc opted to withdraw from the EU.
    Other pundits are weighing in with the same opinion.



    Leave won Swindon but their vote a little down perhaps on what they'd expect given NE results #euref https://t.co/dWg703KRut
    — Matthew Goodwin (@GoodwinMJ) June 23, 2016










    Early results lead to swift City reassessment

    Big Brexit wins have resulted in the choppy trading session many were predicting.
    Sterling has bounced back and forth on strong Brexit support in the North, falling as low as $1.4344. The drop is one of the largest witnessed since the financial crisis, in 2009.
    Analysis of currency bets placed ahead of the EU vote suggested that the currency could drop to as low as $1.10 if Britons vote for Brexit, in a move that would dwarf the plunge of "Black Wednesday", when the UK pulled out of the ERM in 1992.
    Jeremy Cook, of World First, said: "Newcastle was a squeaky win for Remain but Sunderland was a huge kick in the ribs and the bottom has fallen out of the pound.
    "These markets are thin, liquidity is poor and a recovery is obviously possible but those traders who were looking to book a quick profit before a restful night’s sleep have had their ideas shattered."










    Pound slumps on Brexit advance

    The City has come alive to the possibility of Brexit.
    A larger than expected turnout for Leave in Newcastle, and a much heavier Brexit win than anticipated in Sunderland have knocked the pound heavily against the dollar. So far it has lost about 2.6pc of its gains.
    Joe Rundle, of ETX Capital, says: "The pound is plummeting as Sunderland votes heavily for Leave. Markets are very nervy at the moment as the polls – and the markets - could be wrong. The Sunderland result has definitely altered the tone of the evening and markets are getting very choppy."
    The FTSE, London's leading stock market, has also headed lower during out of hours trading. It is now around 70 points below Thursday's official close.










    Newcastle declares for Remain - but by a tiny margin

    The Newcastle result is the first shock of the night. This counting area - one of the referendum's largest - was expected to come out much more strongly for Remain.
    JP Morgan, one of the largest and most influential investment banks, expected 66.8pc of the vote for Remain if the national vote was to be neck and neck. The actual margin of victory was much smaller, with only 51pc voting to stay in.
    Simon Derrick, chief markets strategist at BNY Mellon, says that the Newcastle result proves that it is "still very early on to make definitive calls" on the national outcome.
    The pound is losing a lot of its gains on the news, retracing its progress with a slide to the low $1.48s. It had reached over $1.50 earlier in the night.



    Spot the Newcastle result #EUref pic.twitter.com/nXjFlzE9lc
    — World First (@World_First) June 23, 2016










    Money flowing into Brexit bets

    Closely-watched EU referendum betting markets have come alive in the last few minutes, as punters splash cash on the chance of a Brexit outcome.
    A flood of money has pushed up the odds of a Leave outcome to 18pc on Betfair, one of the largest bookmakers. The perception of a higher chance of a UK exit has come in tandem with a fall in the pound, now at around $1.4925.







    First result not exactly a shock to the markets

    Gibraltar - one of the smaller counting areas - has come out massively for Remain, with 96pc voting to keep the UK in the EU.
    Not a huge surprise that - given that Gibraltar borders Spain and would be one of the most affected regions if the UK were to withdraw from the EU.
    In the end, 19,322 votes were cast to remain, while just 823 Gibraltarians opted to exit the EU. That's only around 20,000 votes of the 30 million or so total we are expecting.



    823 people in Gibraltar apparently confused about the location of Gibraltar.
    — LadINy FOHF (@LadyFOHF) June 23, 2016






    Traders rely on turnout for early guidance

    While we await the first solid results - probably around half midnight - many of the 382 counting areas have already been reporting turnout figures.
    A higher turnout is likely to be positive for the Remain side, while lower figures could boost the Leave camp, which is believed to contain more passionate Britons, who are more likely to be among those certain to vote.
    David Owen, a Jefferies economist, says that counting on a Remain victory "depends on there being a high turnout". Some 66pc of voters headed to the ballot boxes for the general election last year, and a huge 85pc of Scots voted in their independence referendum in the year before.
    A turnout figure more like that of the 2014 EU Parliamentary elections, when just 35pc of registered voters actually did cast a ballot, would be a big boost to would be Leavers.



    Turnout in number of mainland UK authorities declared so far ranging from 68% to 75%.
    — Britain Elects (@britainelects) June 23, 2016






    US stock market futures rally as Brexit fears recede

    Traders are betting on a surge in US stock markets as the EU referendum looks to be headed towards a Remain result.
    While polling experts are still saying that it would be too early to dismiss a win for the Leave camp, that has not stopped US equity futures climbing.
    Janet Yellen, the Fed chairman, warned earlier this week that a Brexit vote "could have significant economic repercussions", although she did not believe a US recession would be the most likely outcome.



    US equity futures continue their rally as trading resumes pic.twitter.com/l0wOD2tCNp
    — Joe Weisenthal (@TheStalwart) June 23, 2016






    Has the Bremain bounce run its course?

    Michael Hewson of CMC Markets said: "Just prior to polls closing late money bets on the betting markets saw stock market futures and sterling surge higher with GBP/USD hitting 1.4990 before slipping back to 1.4900.
    "As the final poll from YouGov hit the wires sterling pushed back higher again towards the 1.5000 level. With Nigel Farage also admitting that “Remain” may have edged it, it would appear that the fat lady is in the act of clearing her throat and readying herself to sing.
    "The big question now is not only whether the final poll is right but also whether this is a case of buy the rumour, sell the fact.
    "Has the Bremain bounce run its course?"
    These last few weeks have been historic ones for sterling:



    At current rates – 1.4985 – GBPUSD is enjoying its 4th best week since 1985.
    — World First (@World_First) June 23, 2016


    This is the last post from Isabelle Fraser, as she hands over to Peter Spence for markets coverage through the night.







    ...And sterling breaks through the $1.50 mark

    It looks like the YouGov polling has pushed it over the edge.



    Credit: Bloomberg



    Meanwhile the Yen is falling as its status as a safe haven is less in demand. After-hours trading in the US is up too, withe S&P up 0.4pc after it jumped 1.3pc earlier in the day.







    Sterling jumps after YouGov poll show lead for Remain

    Sterling is heading towards $1.50, the highest it has been since 17 December 2015.
    It's all over the place and seems to be having quite the party. It's lurking around $1.498 at the moment.



    GBPUSD having a fun time pic.twitter.com/b9MpvRfnGt
    — Joe Weisenthal (@TheStalwart) June 23, 2016


    Meanwhile, the FT's Peter Speigel says that YouGov's poll chimed with exit polls carried out by hedge funders.



    Sources briefed on hedge fund exit polls told me they had similar 52-48 result for Remain as of late afternoon https://t.co/fWk5qpoqSz
    — Peter Spiegel (@SpiegelPeter) June 23, 2016






    S&P 500 rallies to close less than 1pc below all-time record

    The S&P 500 closed up 1.3pc and the Dow Jones hit 1,800 points, ending 1.29pc higher - both climbing in the last 30 minutes of trading.
    This comes as Betfair announced that the odds of a Remain vote were 88pc, a record high.



    Markets are slavishly tracking #Bexit odds. Dow tops 18K ahead of Brexit vote results as higher Pound seen as pos pic.twitter.com/biNtF3xDrT
    — Holger Zschaepitz (@Schuldensuehner) June 23, 2016


    Which leads me to ponder...



    There's good research to be done on the two week period where global markets followed a British betting market with less than £100m waged.
    — Mike Bird (@Birdyword) June 23, 2016






    What to look out for tonight

    No doubt currently in the midst of a disco nap, traders and analysts will be up soon to find opportunities as the results come in.
    Oil, gold, gold futures and currency markets will all be open, as will the Asian markets. Some hedge funds and investment banks have commissioned exit polling so as to lay big bets and attempt to make profits on foreign exchange and sterling derivative markets.
    We could even see this before the polls close - and well into the night. But recent trading suggests that most expect a Remain vote.
    Meanwhile, the FT reports that Citigroup has curated its own Brexit playlist, including 'Should I stay or should I go?' by The Clash.
    At Barclays, sleeping bags have been brought in to avoid Brexhaustion (sorry) among late-night and early-morning traders.
    They should really read this article which asks is lack of shut-eye good for business? Hint: probably not.










    Markets update: FTSE 100 rises 6.4% in five days on Bremain optimism

    Trading volumes were thin as investors awaited the result of the Brexit referendum. Although early trade suggested increased expectations Britain would vote to stay in the EU, a small bout of jitters appeared to creep into markets in afternoon trade.



    Hmmm. Markets having earlier indicated remain certainty now seem to be as clueless as everyone else on the outcome pic.twitter.com/yWw4dtLZky
    — jeremy warner (@JeremyWarnerUK) June 23, 2016



    • FTSE 100 surged to a two-month high by close, up 76.91 points, or 1.23pc, to 6,338.10
    • Since last Thusday the FTSE 100 has risen 6.38pc
    • £100bn wiped back on to the value of blue chip stocks in one week
    • GBPUSD trading at 1.4813 against the dollar
    • Dow Jones up 0.83%

    Chris Beauchamp, of IG, said: " Buccaneering risk takers that stepped in at the end of last week can't really be blamed for booking their profits now, to either sit back and watch the results come in, or take the saner option and sleep through the night."






    On that note, I'm passing the baton over to my colleague Isabelle Fraser. Thanks for following my markets coverage today.







    Market report: CRH jumps on 'buy' rating, as FTSE 100 closes at two-month ahead of Brexit result

    A bullish broker note lifted shares in Irish building materials supplier CRH today. Canaccord Genuity began covering the FTSE 100 stock with a “buy” rating as it believes the business is now “well positioned” to deliver strong earnings growth following its recent acquisitions and a positive trading backdrop.
    Aynsley Lammin, of Canaccord Genuity, said: “Having suffered from a asynchronised downturn in its key markets post the financial crisis, it should now be enjoying a more favourable macro backdrop.” Following a year of substantial acquisitions, including the €6.5bn purchase of assets from Lafarge Holcim, the broker said CRH has adopted “a sensible focus on deleveraging”.






    As leverage returns to “more comfortable levels” Canaccord expects the group will continue to “drive growth” through small-to-mid size acquisitions. Trading in the US construction markets have also improved and infrastructure work is on the rise. However, the backdrop in Europe remains challenging.
    Nevertheless, Mr Lammin said: “We are past the worst [in Europe] with a return to growth now expected, albeit slow.” The broker now expects operating margins will rise from 5.4pc last year to 9pc in 2018. Buoyed by the upbeat note, shares in CRH closed jumped 59p, or 2.9pc, to £20.94.
    More than £100bn wiped back on FTSE 100 in five days

    On the wider market, trading volumes were thin as investors awaited the result of the Brexit referendum. The FTSE 100 surged to a two-month high by close, up 76.91 points, or 1.23pc, to 6,338.10.
    In the past week, London’s benchmark index has risen 6.38pc, adding more than £100bn back on to the value of blue chip stocks.






    Mining stocks were among the biggest risers as copper prices rallied to a seven-week high of $4,780 a tonne on the back of two opinion polls yesterday which showed the Remain camp was in the lead.
    In its wake, shares in Anglo American climbed 3.6pc to 694.7p, Antofagasta advanced 3.6pc to 440.3p, Glencore made gains of 2.8pc to 153p and BHP Billiton edged up 2pc to 870.5p.
    Elsewhere, Britain’s biggest supermarket chain Tesco edged up 0.8pc to 167.8p after it recorded its second straight quarter of UK sales growth, buoyed by a boost in international markets.
    Staying with the retail sector, shares in online grocer Ocado bounced 1.6pc to 253p after Morgan Stanley reiterated its 'overweight’ recommendation. Despite the concerns about increased competition following the arrival of AmazonFresh to London, analysts at the investment bank thinks Ocado could be “a net beneficiary” of Amazon’s foray into grocery. Francois Halconruy, of Morgan Stanley, said: “While a successful AmazonFresh in the UK could shave 90 to 110p from our Ocado valuation, this impact would most likely be offset if the Amazon threat prompted just three additional partners to sign with Ocado’s Smart Platform over the next few years.”






    On the mid-cap index, packaging group DS Smith enjoyed its best day in four months following a results beat. Full-year operating profit came in at £379m compared with analysts expectations of £285m. In its wake, JP Morgan hiked its operating profit estimates by 3pc for next year as it expects the mid-cap company to “continue to deliver organic and acquisition-led growth” this year.
    Meanwhile, Trevor Green, of Aviva Investors, which holds a 6.8pc stake in the FTSE 250 company, said: “The results today highlight strong progress in recent acquisition integration in conjunction with underlying growth in the business and this positive momentum looks set to continue.” Shares leapt 25.6p, or 6.6pc, to 412.5p.
    Shares in London Stock Exchange also jumped 3.1pc to £27.35 after fund group Lindsell Train, the LSE’s fourth largest shareholder, said the market is still not pricing in synergies in the LSE-Deutsche Boerse merger. In an update to its clients, Michael Lindsell, of Lindsell Train, said the offer document, which promises €450m cost savings per year materially underplays the value of the tie-up between the pair.
    On the other side, RSA Insurance tumbled on the back of a bearish broker note. Canaccord Genuity cautioned that the decline in the yield curve and long bond yields has contributed to the weakness in the insurance sector. The broker downgraded RSA to hold as it believes it outperformed the wider sector, with shares up 14pc compared with a 13pc slide industry wide. Ben Cohen, of Canaccord Genuity, said: “With bond yields at least as great a headwind for RSA as for its UK peers, we see limited scope for near-term upgrades until we have greater visibility on 2018 and beyond.” The FTSE 100 stumbled 0.5p to 483.6p.






    Meanwhile, betting companies dropped into the red after it was announced a new 'place of consumption’ tax of 15pc would be launched in South Australia. Although it is a small state, where less than 7pc of the country reside, analysts in the City said there’s a real risk that other states may look to copy a place of consumption tax regime. In its wake, shares in Paddy Power Betfair lost 4.6pc to £87. Its peer William Hill rose 2.4pc to 300.2p.
    Finally, on Aim, Totally closed flat at 62.5p despite another vote of confidence from chairman Bob Holt in the business. Mr Holt snapped up almost 27,000 shares at a price of 63.6p a piece just three days after indulging in a 20,000 share purchase.







    Betfair: £12m traded today; 84% chance remain

    As voting enters its final hours, we have the latest update from Betfair.
    Remain is trading at around 1.19, implying an 84% Britain will vote to stay in the EU. Brexit is now trading at a 16% chance.
    Top stats:

    • £63m traded on market in the biggest political betting market in Betfair's history
    • £12 traded today alone
    • Largest bet on remain: £315,000
    • Largest bet on leave: £194,000

    Betfair Spokesperson, Naomi Totten said:“The sheer volume of money being traded on this market is phenomenal with over £63m now matched and £12m of that being traded today alone. The largest betting market in Betfair Exchange history is £102m on a World Cup cricket match in 2015. It is unlikely that the Brexit market will surpass that, but we are predicting that it will sit comfortably in the top 10 markets of all time.”



    REMAIN still very solid on Betfair. Currently 84% chance pic.twitter.com/PeGTZh0z6O
    — Mike Smithson (@MSmithsonPB) June 23, 2016






    Little scope for a relief rally if Britain votes Remain

    Pantheon Macro: Markets have priced-in a remain vote. Little scope remains for a relief rally after a #Bremain vote. pic.twitter.com/twuOlWGQPn
    — Holger Zschaepitz (@Schuldensuehner) June 23, 2016






    Copper soars to seven-week high on Bremain optimism

    Copper prices surged to their highest levels in seven weeks as two opinion polls released today put Remain ahead.
    The boosted sentiment was reinforced by the weak dollar, which makes metals cheaper for other currency holders.
    As cautious optimism swept trading floors across the globe, three-month copper on the London Metal Exchange rose 1.7% to $4,780 a-tonne.
    The rally in copper boosted mining stocks, sending them to the top of the FTSE 100. Anglo American and Antofagasta made gains of more than 3%.
    Here's a look at the FTSE 100's top risers today:



    Credit: Bloomberg







    What would Brexit mean for your money?






    Calm before (another) storm?

    London's benchmark index shutters for the evening. Decision on Brexit referendum due at 7am, markets open at 8am.



    There is - quite literally - a dark cloud sitting over the City of London right now... #EUreferendum pic.twitter.com/sbVvPI80rT
    — James Andrews (@FinanceJames) June 23, 2016


    Meanwhile, the pound remains up 0.63% at 1.4798 against the dollar.



    #Brexit CHART: British pound vs the dollar. Crazy morning, easy nap, cold afternoon tea. Getting ready for tonight. pic.twitter.com/e1Y5DKdWrY
    — Maxime Sbaihi (@MxSba) June 23, 2016


    Be sure to check out our live referendum blog: EU Referendum: Polling stations forced to close by floods, as final polls show race 'too close to call'







    FTSE 100 closes at two-month high

    The FTSE 100 has closed at its highest level since April 22, when it touched 6,381.44.
    Today, the blue chip index suffered a rollercoaster ride surging through 6,300 before retreating in afternoon trade. However, it managed to regain momentum in afternoon trade amid increased expectations Britain will vote to stay in the EU.
    European bourses also made robust gains as voting heads into the final stretch.
    At close of play:

    • FTSE 100: +1.23%
    • DAX: +1.67%
    • CAC 40: +1.83%
    • IBEX: +2.12%











    Markets enter home stretch ahead of Brexit result

    As European markets enter their final stretch before tomorrow's referendum results, here's what analysts in the City have to say:
    Chris Beauchamp, of IG: "The overall mood across markets remains firmly positive, perhaps a little on the ebullient side as well. Indices in the UK, Europe and the US have posted good gains, although the UK's top 100 index has shed most of the day's advances. Given that it has advanced so strongly in recent days, that is hardly surprising. Buccaneering risk takers that stepped in at the end of last week can't really be blamed for booking their profits now, to either sit back and watch the results come in, or take the saner option and sleep through the night."






    Jasper Lawler, of CMC Markets: "Investors who wanted to protect their portfolio against adverse moves in Sterling or other UK assets will have done so already. With polls now showing a bias towards a Remain vote, there is no need for any more hedging."








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    Nikita Khrushchev: "We will bury you"
    "Your grandchildren will live under communism."
    “You Americans are so gullible.
    No, you won’t accept
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    like overripe fruit into our hands."



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