“If you can keep your wits about you while all others are losing theirs, and blaming you. . . . The world will be yours and everything in it, what’s more, you’ll be a man, my son.” — Rudyard Kipling

1. IEX Wins Approval to Launch Stock Exchange — the SEC has finally given approval to IEX Group to challenge the NYSE (NYSE:ICE), Nasdaq (NASDAQ:NDAQ), and Bats Global (BATS:BATS) as the nation’s 13th national stock exchange. IEX’s “speed bump” delays orders by 350 millionths-of-a-second, but it’s enough to protect investors from high-frequency trading which can front-run slower orders on other exchanges.
2. Facebook (FB) Shareholders OK Stock Shift That Keeps Zuckerberg In Charge — Facebook (NASDAQ:FB) shareholders approved a proposal to create a new class of non-voting shares, a move aimed at allowing CEO Mark Zuckerberg to give away his wealth without relinquishing control of the company he founded. FB will now move ahead with its plan to issue two Class C shares for each Class A and Class B share held by shareholders, in what effectively is a 3-for-1 stock split; Creation of the Class C shares will allow Zuckerberg to sell the non-voting stock, but keep the voting Class A and Class B shares that would let him retain control of the company.
3. ECB Restores Greece’s Access to Cheap Funding — the ECB will start accepting junk-rated Greek government debt as collateral for its regular bank lending operations. According to economists, the decision to open a funding facility that had been shut for 16 months could lead to the partial lifting of capital controls in the coming days.
4. Britain Voted To Leave The EU — With all 382 U.K. areas reporting, the ‘Leave’ camp won 51.9% of vote vs. ‘Remain’s 48.1%. Voter turnout was 72.2%. David Cameron has resigned as U.K. Prime Minister in an emotional speech outside 10 Downing Street stating “I do not think it would be right for me to be the captain that steers our country to its next destination,”. As a next step, Article 50 of the Lisbon Treaty will be invoked to begin the formal process for leaving the EU. That would start a series of negotiations for how to disentangle the U.K. from its many union structures, and could take up to 2 years (or more if both Britain and the European Council agree to extend the discussion period).

The week ahead — Economic data from Econoday.com:

“Buy Fear, Sell Greed” — unknown

1. German 10-year Sovereign Bond Yields Turn Negative For First Time — the yield on the 10-year benchmark German bund fell into negative territory for the first time ever last week, amid global growth concerns and jitters over the U.K.’s upcoming referendum on its European Union membership. The move comes as the European Central Bank has ramped up its bond buying program in recent months as well as investor uncertainty over whether the U.K. will stay in the European Union.
2. MSCI Rebuffs Chinese Equities for Third Time — China’s domestic equities were denied entry into MSCI Inc.’s benchmark indexes for a third time, a setback for President Xi Jinping’s efforts to raise the profile of mainland markets and turn the yuan into an international currency. China was rejected despite a flurry of measures this year to address MSCI’s concerns, including curbs on arbitrary trading halts and looser restrictions on cross-border capital flows. The decision suggests international investors are still uncomfortable putting their money in the $6 trillion market after a botched government campaign to prop up share prices roiled global equities last year.
3. World Health Organization (WHO) Panel Elevated the Zika Virus To A Public Health Emergency — A WHO panel has elevated the Zika virus to a public health emergency, but spurned calls to postpone or move the 2016 Olympic Games, which are scheduled to begin in Rio de Janeiro in six weeks. Brazil is hosting the Games during its winter, when the concentration of mosquitoes that spread Zika and other viruses is low, the committee noted.
4. FOMC Meeting — the FOMC left its target for the Fed Funds rate unchanged at 0.25-0.5%, while the “dots” took a sizable shift. U.S. Federal Reserve scaled back its outlook for interest-rate increases and Janet Yellen signaled rates may stay lower for longer. Also, the Bank of England is also expected to maintain interest rates – at the 0.5% level it’s been for over seven years.
5. Lumber Liquidators Settles With Regulator — the U.S. Consumer Product Safety Commission has ended its probe of Lumber Liquidators (NYSE:LL) for selling formaldehyde-laden flooring without issuing a product recall, while calling for corrective measures it has already largely undertaken. The stock is still down more than 70% since the devastating 60 Minutes report in March last year that plunged the retailer into losses and led to the exit of top executives.

The week ahead — Economic data from Econoday.com:

“I have learned through the years that after a good run of profits in the markets, it`s very important to take a few days off as a reward. The natural tendency is to keep pushing until the streak ends. But experience has taught me that a rest in the middle of the streak can often extend it.”– Martin Schwartz

1. International Tankers Help Ship Iranian Fuel — more than 25 European and Asian-owned supertankers are now shipping Iranian crude, allowing the Islamic Republic to ramp up exports much faster than expected following the lifting of sanctions in January. Tehran was struggling as recently as April to find partners to ship its oil, but after an agreement on a temporary insurance fix, more than a third of Iran’s crude shipments are now being handled by foreign vessels.
2. Eurozone GDP Growth Revised Back Up — the first estimate was 0.6%, which was revised down to 0.5% in the second round, and now in the third report – which includes details on GDP components – the figure has been revised back to its original estimate. Annual growth was 1.7%, unchanged from the fourth quarter, driven by a jump in consumer spending and investment.
3. Hillary Clinton Wins California, Bolstering Claim to Nomination — Hillary Clinton claimed the Democratic presidential nomination last Tuesday night after decisive victories in the California, New Jersey and New Mexico primaries. However, Senator Bernie Sanders refused to yield, insisting that he would continue his campaign.
4. ECB Kicks Off Corporate Bond Buying — the European Central Bank has formally started its corporate sector purchase program, with the official buying list to be released on July 18. The criteria for the plan are as follows: Bonds have to be active, euro denominated, have an investment grade rating and be issued within the eurozone. Along with other measures such as ultra-cheap long term loans and government bond-buying, the program aims to kickstart the region’s economy and lift inflation back to the bank’s 2% target.
5. Soros Is Back to Trading & He’s Bearish — George Soros has returned to trading, lured by opportunities to profit from what he sees as coming economic troubles. Soros Fund Management, which manages $30B for the billionaire and his family, sold stocks and bought gold and shares of gold miners, anticipating weakness in various markets. The last time George Soros got closely involved in his firm’s trading was just prior to the financial crisis in 2008. Per WSJ, Soros noted particular concerns over China, Greek challenges and a potential Brexit that could lead to the EU’s collapse.\
6. Crude Oil Broke Above $50 Per Barrell — crude oil has taken the price of WTI above $50 per barrel to $51.10. At this level, crude oil has now taken out its highs from last October and is trading at its best levels since 7/15/15. It has certainly been an amazing rally for oil prices over the last four months, with prices rising 96% off their lows in February.

The week ahead — Economic data from Econoday.com:

“The easiest thing to do is prepare. If you don’t, on behalf of the other market participants, we thank you.” – unknown

1. Bank Shares See More Brexit Fallout — global banks across the globe are taking another serious beating post-Brexit. The sector is getting battered on fears that fragile recoveries at many financial institutions will be delayed and that volatile markets could claim scalps. Sources have also revealed that Italy is considering a €40B capital infusion into its banks.
2. Panama Set For Opening of Canal Expansion — Panama officially opened an addition to its legendary sea canal last week, capping a nine-year, $5.4B expansion project that will double shipping capacity and affect global trade routes. A third lane has been added to the waterway that can accommodate a new generation of super cargo ships large enough to carry up to 14K containers, compared with around 5K currently.
3. S&P Strips U.K.’s AAA Credit Rating On Brexit Vote — the U.K. was stripped of its AAA credit rating by S&P Global Ratings last Monday after British voters last week voted to pull the country out of the European Union. S&P lowered the rating to AA. The downgrade also reflects worries about the risks of a “marked deterioration” in the U.K.’s external financing conditions given the country’s already elevated gross external financing requirements, S&P said. Competing ratings firms Moody’s and Fitch had lowered the U.K. credit rating ahead of last week’s referendum.
4. Oil Set For Best Quarter Since 2009 — oil is headed for its biggest quarterly advance since 2009, rising 29% in the last three months as falling American supply adds to speculation that the global surplus is easing. The latest data from the EIA showed U.S. crude stockpiles dropping to the lowest since March and output falling for a third week. Furthermore, supply disruptions in Nigeria and Canada, as well as fears over strike outages in Norway, have also given the commodity a big lift.
5. Driverless Car Collaboration Between BMW, Intel & Mobileye (MBLY) — BMW AG, Intel Corp.(INTC) and Mobileye NV (MBLY) are working to develop autonomous-car technology. BMW has been a client of Mobileye, along with General Motors Co. and Tesla Motors Inc. As automakers and their suppliers race to create systems to replace human drivers, most companies are betting on some form of artificial intelligence, which requires powerful processing. Senior executives from each company will hold an event on Friday to discuss the driverless-vehicle initiative.
6. Puerto Rico Set For Its Largest Default to Date as Obama Signs Rescue Bill — Puerto Rico is set for its largest default to date as $1.9B in debt payments come last friday, including more than $1B in general obligation bonds, the island’s highest tiered credit that carries a constitutional lien on revenues. Governor Alejandro Garcia Padilla declared the moratorium on GO debt payments just minutes after President Obama signed a law giving the territory access to a restructuring process that will put its finances under a federal oversight board.

The week ahead — Economic data from Econoday.com: