“The market does not know if you are long or short and could not care less. You are the only one emotionally involved with your position. The market is just reacting to supply and demand and if you are cheering it one way, there is always somebody else cheering it just as hard that it will go the other way” – Marty Schwartz

1. Pilot Program Tests Nickel Trading Increments 15 years After Decimalization — fifteen years after the decimalization of stock trading, a pilot program will widen “tick sizes” to five-cent increments rather than pennies for some stocks. The move is a bid to increase trading in those stocks, and could benefit small investors but raise trading costs, as market makers tend to profit from wider spreads.
2. UK’s Pound Hits 31-year Low on Brexit Anxiety — the pound is down to a 31-year low as concerns over Brexit continue to weigh on investors. The sterling fell to a post-Brexit vote low of $1.2749 earlier in the day. Economists expect more volatility as the complexity of an exit from the European Union plays out.
3. Fitch Sets Stage for Wells Fargo Credit Rating Cut — Fitch has cut the outlook on Wells Fargo’s (NYSE:WFC) credit ratings to Negative, but affirmed the bank’s existing rating of AA-, which is investment-grade. In an announcement, Fitch cited “potential reputational damage from the recent regulatory actions and fines,” as well as a belief that the lender could face “earnings pressure.”
4. U.K. Delivers Landmark Ruling on Fracking — the U.K. government has approved a horizontal fracking permit at a Cuadrilla site in Lancashire, northern England, in a ruling that could have far-reaching consequences for the shale gas industry. It means, for the first time, British shale rock will be fracked horizontally, which is expected to yield more gas. A ban on fracking in the U.K. was lifted in 2012.
5. Annual Fall Meetings for the IMF and World Bank — finance officials and central bankers from around the world are gathering in Washington for the annual fall meetings of the IMF and World Bank. The talks will take up issues including weak global growth trends, the increase of anti-trade measures and concerns that many have expressed about the financial health of European banks.

The week ahead — Economic data from Econoday.com:

“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:

“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: