The festering wound involving Italian banks in general and Italy’s third largest bank Monte Paschi, just got worse yet again, as the bank which suddenly everyone is focused on extends yesterday’s 14% drop, and is halted in Milan trading after falling 7%, once again dragging down European bank stocks with it, and this time US equity futures are starting to notice. 

As a reminder, Matteo Renzi’s helplessness at Italy’s financial situation, appears to have started to boil over, when as we reported overnight, some testy words were exchanged, in which the Italian PM accused the ECB’s head and former Bank of Italy governor, Mario Draghi, of not doing everything in his power to “help Italian banks.” Instead it was up to the Italian government to flaunt bail-in rules once again, after La Stampa reported that the government is once again studying a capital plan for Monte Paschi that includes new convertible bonds and support from Atlante fund, the latter worth at least €3 billion even as Brussels says intervention would need to respect principle of “burden sharing” by shareholders and bondholders. As La Stampa also adds, the results of 2016 stress test, due to be published on July 29, could trigger the start of the process to inject new capital in the bank

In short, Italy is desperate to bail out a bank whose failure (or even bail in) may spark a bank run, yet neither the ECB is rushing to help it, nor Europe has given any indication it will budge.

It wasn’t just Italian banks, which have become a near-daily fixture of Europe’s failing system, that dragged risk lower, but also the latest surge in the Yen and another fresh all time low in DM bond yields. Indeed, the Yen headed for biggest advance in more than a week, with the USDJPY tumbling overnight, down -0.8% to 101.65, a move which started earlier in Asian session amid thin liquidity, around the time Japan’s 10-year bond auction draws record-low average yield.

And then there was sterling, which after flirting with a rebound over the past week following the Brexit vote, fell to its weakest level in 31 years against the dollar, exceeding lows reached in the aftermath of Britain’s vote to leave the European Union. Sterling sank before Bank of England Governor Mark Carney gives a press conference in London, in which he outlined more tools to contain the fallout from the U.K.’s decision to quit the bloc, among which the first indications of how he would ease stress on UK banks:

• Bank of England’s Financial Policy Committee cuts countercyclical capital buffer for U.K. banks to zero from 0.5%, according to Financial Stability Report published Tuesday.
• Expects buffer to stay at zero until at least June 2017
• Says there is evidence that risks surrounding Brexit have begun to materialize
• Says current financial stability outlook is challenging; sees period of uncertainty, adjustment

That said, Carney’s “easing” remarks have pushed UK stocks to session highs and helped cut the S&P drop to only 9 points, while pushing the pound off its multi-decade lows. Yes, we have reached a singularity in which central bank easing is currency positive.

So why the latest intervention by the BOE? As Bloomberg adds, there are increasing signs that the U.K. vote is weighing on investor confidence. As reported last night, Scotland-based Standard Life Investments suspended trading in its 2.9 billion-pound ($3.8 billion) fund this week, after seeing an increase in redemption requests “as a result of uncertainty for the U.K. commercial real estate market.” Data published by YouGov Plc and the Centre for Economics and Business Research on Tuesday indicated that pessimism about the economic outlook almost doubled following the June 23 referendum. “There’s a lot of nervousness in the sterling market,” said Thu Lan Nguyen, a currency strategist at Commerzbank AG in Frankfurt.

Pierre Mouton, of Notz, Stucki & Cie. in Geneva told Bloomberg that  “part of the weaknesses or sell-off today can be explained by some profit taking after a surprising week,” said “We have seen this morning that the PMI wasn’t that good for the euro area, and markets can react to economic figures. It might be a good opportunity at the beginning of the third quarter to lighten the positions and wait.”

A measure of U.K. business confidence dropped sharply following the referendum, a report showed on Tuesday. Across Europe, Purchasing Managers Indexes for manufacturing and service showed lackluster growth. “We have an amalgamation of small reasons to fall piling up,” said Takuya Takahashi, a Tokyo-based senior strategist at Daiwa Securities Group Inc.

Putting this all together, and we get a major drop across European markets in which all industry groups on the Stoxx Europe 600 Index declined, with insurers and banks among the biggest losers, as the market takes a second look at the Brexit aftermath and suddenly is not so sure that everything is “contained.”

Brent crude dropped below $50 a barrel as nickel slid from an eight-week high, while gold and silver retreated for the first time in at least a week. The pound fell to its weakest level since 2013 against the euro and South Africa’s rand led losses among the currencies of commodity-exporting nations. Bond yields plumbed new lows from Australia to the U.S. The MSCI All-Country World Index dropped 0.4% in early trading, its first slide in more than a week. The Stoxx 600 lost 1.3%, extending its decline into a second day, while S&P 500 Index futures slid 0.6%, The U.S. market is reopening after being closed for the Independence Day holiday.

The MSCI All-Country World Index dropped 0.4 percent at 10:58 a.m. in London, its first slide in more than a week. The Stoxx 600 lost 1.3 percent, extending its decline into a second day, while S&P 500 Index futures slid 0.6 percent. The U.S. market is reopening after being closed for the Independence Day holiday. In Europe, all industry groups fell, and more than 550 companies in the Stoxx 600 declined, with commodity producers among the biggest losers. Anglo American Plc and BHP Billiton Ltd. dropped more than 2.5 percent, while precious metals miner Fresnillo Plc dropped 2.9 percent after reaching its highest price since 2013. Standard Life Plc lost 4.2 percent after its money manager unit suspended trading in its 2.9 billion-pound ($3.9 billion) U.K. Real Estate fund. Legal & General Group Plc fell 6.4 percent after Jefferies Group lowered its rating on the insurer on concern over its dividend. The MSCI Emerging Markets Index fell 1.1 percent, after climbing 6.2 percent in the past five days in the biggest rally since the period ended March 7.

Meanwhile, global bond yields continued setting new record lows: the yield on Treasury 10-year notes slid seven basis points to an unprecedented 1.3750 percent. The securities are rallying as futures indicate that the chance of the Federal Reserve raising interest rates this year has dwindled to 12 percent, down from 50 percent prior to the U.K.’s vote on EU membership. Thirty-year bond yields dropped to as low as 2.1395 percent, also a record. “This is the most obvious manifestation of the global search for yield forcing investors further out the curve,” said Damien McColough, head of fixed-income research at Westpac Banking Corp. in Sydney. “The size of the drop in the 30-year yield reflects a bit of a capitulation trade, but I am not particularly surprised.”

Germany’s 10-year bond yield was at minus 0.16 percent, approaching the minus 0.17 percent all-time low reached on June 24. The yield on the U.K.’s 10-year gilt yield slid four basis points to 0.79 percent. Australia’s 10-year yield dropped as much as nine basis points to a record 1.92 percent following the RBA meeting. Taiwan’s declined four basis points to an unprecedented 0.70 percent after the island’s central bank was said to have reduced an overnight interest rate. Japan sold 10-year debt at a yield of minus 0.24 percent, the lowest-ever rate, and the yield on its 20-year notes touched a record low of 0.03 percent.

Market Snapshot

• S&P 500 futures down 0.6% to 2083
• Stoxx 600 down 1.3% to 326
• FTSE 100 up 0.1% to 6530
• DAX down 1.5% to 9567
• S&P GSCI Index down 1.6% to 370.5
• MSCI Asia Pacific down 0.5% to 130
• Nikkei 225 down 0.7% to 15669
• Hang Seng down 1.5% to 20751
• Shanghai Composite up 0.6% to 3006
• S&P/ASX 200 down 1% to 5228
• US 10-yr yield down 6bps to 1.39%
• German 10Yr yield down 2bps to -0.16%
• Italian 10Yr yield up 2bps to 1.27%
• Spanish 10Yr yield up 4bps to 1.19%
• Dollar Index down 0.07% to 95.58
• WTI Crude futures down 2.6% to $47.71
• Brent Futures down 2.2% to $49.01
• Gold spot down 0.5% to $1,344
• Silver spot down 3.4% to $19.62

Top Global Headlines

• Carney Sees Tougher Times With Brexit as BOE Eases Bank Rules
• Italy Said to Consider Capital Injection in Banca Monte Paschi
• Tesla Misses Delivery Forecast Amid ‘Extreme’ Production Ramp-up
• Billionaire Bros. Seek Repeat of Danaher’s M&A-Fueled Ascent
• Debt Boom That Put JPMorgan on Top After Decade Gathers Pace
• Third Ex-Citigroup Trader Wins Unfair Dismissal Lawsuit
• Blackstone Names Ex-M&S CEO Bolland Europe Private Equity Head
• For RBA’s Next Move on Interest Rates, Set Alarm for July 27
• Buffett Applies to Fed to Expand Wells Fargo Holding Beyond 10%
• Aurobindo Said to Enter Fray for $1.5 Billion Teva Portfolio
• Wall Street Takes a Hit in Draft of Democratic Party’s Platform
• ‘Dory’ Swims Past ‘Tarzan’ for Third Straight Box-Office Win
• Petrobras CEO Said to See $15b 5-Year Payment in U.S. Case: Estado
• Google, Facebook Said to Have Looked at Buying LinkedIn: Recode
• London Banker Bonuses Set to Shrivel as Brexit Hits Dealmaking
• Goldman Sachs Tells Asset-Management Staff to Curb Spending: FT
• U.K. Business Expectations Fall ‘Off a Cliff’ on Brexit Vote
• Staples Hires KPMG to Weigh Possible U.K. Unit Sale: Telegraph

Looking at regional markets, dampened demand was observed for riskier assets in Asia following the US holiday and losses seen in European stock markets. Nikkei 225 (-0.7 %) was pressured from the open by a firmer JPY, while ASX 200 (-1.0%) was dragged lower amid a decline across the commodities complex, with participants initially tentative ahead of the RBA rate decision. Chinese markets were mixed with the Hang Seng (-1.5%) conforming to the mostly downbeat tone, while Shanghai Comp (+0.6%) was resilient amid somewhat encouraging data in which Caixin Services PMI printed an 11-month high and although the Composite figure printed slightly lower than prior, it remained above the 50 benchmark level. 10yr JGBs traded lower but are off their worst levels following a 10yr auction which showed the lowest accepted price, beat estimates and better than prior.

Top Asian News

• China Rising Yield Premium Spurs Global Funds to Boost Holdings: Gap with 10-year U.S yield widest since August
• Real Yield at 2014 Low as India Sells Debt Quotas to Foreigners: Consumer prices rose in May at fastest pace in 21 months
• Japan Top-Performing Fund Fell 25% as Volatility Rose on Brexit: Stratton’s Japan Synthetic Warrant Fund fell 50% YTD
• As 2-and-20 Fees Under Fire, Asia Hedge Funds Seek Cost Cuts: Bigger funds are joining “platforms” as costs rise, fees fall
• Aussie Election Hangs in Balance as Slow Vote Count Proceeds: Prime Minister Turnbull’s coalition still short of majority

In Europe, equities have been equally volatile today, with all major European indices trading in negative territory (Euro Stoxx: -1.5%), and attention given to the yoyo-ing Italian financial sector as well as yet another German automaker scandal. Italian financials saw downside initially, before moving higher shortly after the open, however with Banca Monte dei Paschi (-9%) still one of the worst performers despite source reports suggesting that Italy could be considering capital injections in the Co. German Automakers also unperformed today after the likes of Daimler, Volkswagen and BMW have all been implicated in alleged collusion with regards to steel prices. Given the price action across other asset classes, fixed income has been comparatively quiet, with Bunds higher by around 30 ticks by mid¬morning, however failing to break 167.50, while the US 10-year reached fresh record lows.

Top European News

• Pound Tumbles to 31-Yr Low as Selloff Resumes Before Carney: Sterling sank to lowest since 2013 vs euro ahead of BOE Governor Mark Carney’s press conference, where he may outline more tools to contain Brexit fallout.
• U.K. Economy May Face Contraction as Brexit Bites: Former deputy BOE governor John Gieve said on Bloomberg TV: “I am expecting quite a sharp reduction in investment spending, a sharp hit to the commercial property market, probably a check to consumer spending, all of which could push us toward zero or below growth this year and the beginning of next”
• Italy Said to Consider Capital Injection in Monte Paschi: Italy would seek to use Article 32 of EU’s bank failure rules that allows temporary state aid.
• Hutchison, VimpelCom Said in Exclusive Sale Talks With Iliad: Iliad emerged as favored buyer of wireless assets in Italy that would be used to create fourth carrier in that country.
• Mediaset Mulling New Channels, Extra Payout After Unit Sale: Co. considering starting free-to-air television channels in France, Germany, U.K. as it reviews investment options.

In FX, the pound fell to its lowest in more than three decades against the dollar, surpassing levels immediately after the referendum. An index published by YouGov Plc and the Centre for Economics and Business Research indicated pessimism about the economic outlook almost doubled in the week following the June 23 vote. Sterling slid 1.1 percent to $1.3148 and was 1 percent weaker at 84.73 pence per euro. The yen climbed 0.9 percent to 101.66 per dollar. The currency has gained more than 4 percent since the U.K. referendum amid persistent demand for haven assets. The Bloomberg Dollar Spot Index rose 0.2 percent. Australia’s dollar fell 0.5 percent, after climbing 1.2 percent over the last two sessions. A national election over the weekend failed to produce a clear winner with officials continuing to tally votes on Tuesday. The MSCI Emerging Markets Currency Index retreated 0.5 percent. It was little changed on Monday after jumping 2 percent in the four days through Friday.

“Markets are concerned about what’s going on in the U.K. and there’s more uncertainty about Italian banks,” said Vishnu Varathan, a senior economist at Mizuho Bank Ltd.

In commodities, precious metals declined as the dollar snapped five days of losses. Silver tumbled 2.9 percent to $19.73 an ounce, ending its biggest two-day advance since 2011. Gold fell 0.4 percent to $1,345.63 an ounce. Industrial metals also declined, led by a 1.2 percent loss in Copper to $4,836 a metric ton. Oil extended losses, with West Texas Intermediate crude dropping to $47.71 a barrel, a decline of 2.6 percent relative to Friday’s close following the July 4 public holiday. Brent fell 2.1 percent to $49.03.

Bulletin Headline Summary from RanSquawk and Bloomberg

• European equities trade lower across the board as risk aversion persists with Italian banking names and German auto names further souring sentiment
• GBP/USD hit a fresh 31-year low as the post-Brexit fallout continues to grip FX markets and UK Services PMI falls short of expectations (albeit from a partly out-of-date report)
• Looking ahead, highlights include US IBD/TIPP Economic Optimism, Factory Orders & Durable Goods, GDT Auction and a host of central bank speakers
• Treasuries rally with 10Y and 30Y hitting record lows as risk-off sentiment sends global equities and commodities lower; this week will feature nonfarm payrolls on Friday and FOMC minutes Wednesday.
• Italy is considering injecting fresh capital into Banca Monte dei Paschi di Siena SpA to boost the finances of Italy’s third-biggest bank ahead of stress test results
• It’s now a familiar refrain: A European prime minister calls a referendum, his job could be on the line and markets are getting worried. This time it’s not Britain’s David Cameron but Italy’s Matteo Renzi has called a vote, expected in October
• The Bank of England cut its capital requirements for U.K. banks and pledged to implement any other measures needed to shore up financial stability after Britain’s shock decision to leave the European Union
• BOE’s Carney said bank will take whatever action is necessary to support U.K. but its actions cannot fully offset Brexit volatility
• Confidence of British executives plunged and pessimism doubled as the Brexit turmoil stoked concerns that business investment and the property market are poised to slump
• Commercial-property companies slumped after Standard Life Investments suspended trading in its 2.9 billion-pound ($3.9 billion) U.K. Real Estate fund on Monday as redemptions surged in the wake of Britain’s vote to leave the European Union
• The pound fell to its weakest level in three decades against the dollar, exceeding lows reached in the aftermath of Britain’s vote to leave the European Union
• The euro-area economy continued growing at a lackluster pace in June, ahead of the U.K.’s referendum on its European Union membership. Purchasing Managers Index for manufacturing and service activity was unchanged at 53.1
• The Australian dollar erased losses after the central bank left its benchmark cash rate unchanged at a policy meeting on Tuesday. The Aussie rose by as much as 0.1% after the decision
• Four banks including ING Groep NV and ABN Amro Group NV agreed to pay hundreds of millions of euros to settle a long-running dispute with Dutch businesses over interest- rate swaps that backfired after the 2008 financial crisis
• Oil prices won’t rise much further over the next year and a half as demand growth slows and refiners comfortably meet gasoline consumption, according to the world’s largest independent oil-trading house

* * *

DB’s Jim Reid concludes the overnight wrap

One theme which could instead dictate near term direction for markets however and which arguably Brexit has reignited and brought back to the forefront is the ailing and fragile state of the Italian banking sector. Indeed following on from the weekend headlines concerning Italy PM Renzi and the suggestion that he is prepared to go against EU bail-in principles by using public funds to bail out domestic banks, yesterday the sector was put under further stress after Banca Monte dei Paschi revealed that it had received a notice from the ECB requiring it to meet certain non-performing loan requirements. Indeed the draft statement laid out NPL targets for the next three years which would require Monte to shed bad loans by just over €14bn by 2018.

That sent Monte shares down 14% yesterday with the rest of the Italian bank complex also sent tumbling (Banco Popolare SC -4.50%, Mediobanca -4.21%, Unicredit -3.63%, UBI -3.05%). Monte shares – which are at an all time low – are now down over 70% year-to-date already while yesterday’s move took the bank’s market cap below €1bn. With the sector sitting on a €360bn behemoth of bad loans the results of the EU bank stress tests on the 29th July loom large and it’s hard not to picture this Italian job as an important event for markets. Don’t forget that we’ve also got the not-so-small matter of the senate reform referendum in October. On a similar topic, interestingly a poll run by Ipsos for Corriere della Sera yesterday showed 46% of Italian voters are in favour of remaining in the EU versus 28% in favour of leaving. That leaves a relatively sizeable 26% undecided or unwilling to vote.

Meanwhile the daily soap opera that is UK politics rolls on with the news yesterday that UKIP leader Nigel Farage has become the latest political leader to stand down after arguing that he had achieved his political ambition following the referendum result. Today the first rounds of voting for the Conservative leadership position commence with MP’s voting to take the five candidate race down to four. Further voting is set to come on Thursday and then again on Tuesday when we will be down to the final two candidates. However we’ll still have to wait until September until we know the result of the final vote and therefore the subsequent position on renegotiation and Article 50.

In terms of markets yesterday, with the US on holiday and so volumes much lower than usual that weakness for Italian banks was enough to see risk assets finally succumb to losses in Europe following the strong run since last Monday. The Stoxx 600 ended -0.74% by the closing bell and the FTSE 100 was -0.84%. Sterling was up a fairly modest +0.15% to $1.329. Unsurprisingly the FTSE MIB (-1.74%) and Euro Stoxx Banks (-1.52%) indices underperformed. BTP’s were also underperformers in sovereign bond markets with yields a couple of basis points higher. Moves for credit markets were highlighted by weakness in financials. The iTraxx Main and Crossover indices were little changed however senior and sub financials materially underperformed after closing 6bps and 16bps wider respectively.

Some of the more notable price action yesterday came in the commodity complex and specifically precious metals. Silver in particular extended its post Brexit rally after rising another +2.86% yesterday and at one stage rising above $21/oz for the first time since July 2014. Gold closed up +0.70% meaning it is now up nearly 8% since pre-Brexit. Silver is up a fairly remarkable +19% in the same time frame.
Refreshing our screens now, with the exception of China most major bourses are lower in early trading in Asia this morning. The Nikkei (-0.78%), Hang Seng (-0.81%), Kospi (-0.35%) and ASX (-0.89%) are all in the red as we type, however the Shanghai Comp is +0.40%. That perhaps reflects the latest Caixin services reading for June in China which rose 1.5pts to 52.7 and to the highest level since July last year. Combined with the soft manufacturing reading from last week however the composite reading nudged down 0.2pts to 50.3. Meanwhile the Aussie Dollar (-0.27%) is a touch weaker this morning following the latest trade data which revealed a widening in the deficit. The RBA cash target rate decision is due shortly after we go to print (no change expected). US equity index futures are modestly in the red.

In terms of the rest of the newsflow, yesterday saw the ECB release their latest CSPP holdings data which showed the Bank as continuing its strong run rate of purchases and so far surprising on the upside. Total purchases settled by July 1st were €6.798bn. This implies that the latest weekly purchases amount to €1.9bn and an average daily run rate in that week of €380m. The average daily run rate since the program started is €425m. Interestingly we also got a breakdown of purchases by primary and secondary markets and it showed that 96% of purchases were made in the secondary and only 4% in the former, so perhaps making the quantum of buying even more impressive given the low amount of new issue buying.

There wasn’t much in the way of economic data for us to highlight yesterday. Of the data that was released, Euro area PPI printed at +0.6% mom for May which was higher than expected (+0.3% mom) and has had the effect of slowing the rate of deflation to -3.9% yoy from -4.4%. The other release was the July Sentix investor confidence reading which printed at a below market +1.7 for the headline (vs. +5.0 expected) and down 8.2pts from June. That was the lowest print since January last year and a first bit of evidence of the impact of the Brexit vote. The expectations component reading actually tumbled to -2.0 from +10.0.

One month ago, in a move which US military officials admitted was aimed squarely at “sending a clear message to Russia”, the US deployed not one but two aircraft carriers to the Mediterranean: the USS Truman and USS Eisenhower.  As we reported at the time, a military official in Washington said the Truman’s shift was a signal to Moscow and a demonstration of the Navy’s operational flexibility and reach. “It provides some needed presence in the Med to check…the Russians,” the official said. “The unpredictability of what we did with Truman kind of makes them think twice.”

The Truman would not be alone: the USS Dwight D. Eisenhower aircraft carrier strike group will allegedly support “US national security interests in Europe.” “The USS Dwight D. Eisenhower Carrier Strike Group (IKE CSG) entered the US 6th Fleet area of operations […] in support of US national security interests in Europe,” the US European Command (EUCOM) has announced.

US Carriers Truman and Eisenhower.

Naturally, in addition to sending Russia a message, the official reason was to further punish the perpetual scapegoat for all military activity in the region, the Islamic State: “Washington claims that the increased military presence is aimed at fighting Islamic State and balancing Russian extensive military efforts. “The presence of two carrier strike groups in the Mediterranean Sea demonstrates our commitment to safety and security in the region,” the statement read. “These forces further serve to support European allies and partners, deter potential threats and are capable of conducting operations in support of the counter-ISIL [Daesh] mission.”

As the WSJ notes, Rear Adm. Bret Batchelder, the highest-ranking officer on the carrier, told visiting reporters this week that moving the “capital ship” of the U.S. Navy from the Gulf through the Suez Canal is a flexing of muscle meant to reassure North Atlantic Treaty Organization allies of the American commitment to maintaining the balance of naval power in the Mediterranean.  “It is a demonstration of capability. That’s for sure,” he said. “There are undoubtedly folks who are watching that and this is just a graphic representation of what we’re capable of.”

The implication from this escalation was clear, and this is how we concluded less than a month ago:

“while the US may be hoping to “check” the Russians, all this action which will be seen as the latest provocation by the Kremlin will do is further strain already chilly relations between Russia and the US.… We expect Russia to respond by promptly deploying warships of its own to the Mediterranean in a repeat of the summer of 2013 when the beach off the Syrian coast was a parking lot of Russian, US, European and even Chinese warships.”

Once again this assessment proved correct, and as Tass reports, citing a military-diplomatic source in Moscow, Russia will respond to the US double aircraft carrier escalation, by deploying its own aircraft carrier, the Admiral Kuznetsov, to Syria where its unofficial role will be as a counterpoint to US naval presence in the eastern Mediterranean. The official justification for the deployment is the same as that of the US: to crush the Islamic State of course, to wit: “the Admiral Kuznetsov carrier will participate in delivering strikes against militants in Syria from an eastern part of the Mediterranean Sea in October 2016 – January 2017, a military-diplomatic source in Moscow told TASS on Saturday.”

A military and diplomatic source told TASS earlier that the aircraft carrier Admiral Kuznetsov would arrive in the eastern part of the Mediterranean Sea in autumn. The ship is currently undergoing shipbuilders’ trials in the Barents Sea after repairs.

Russian carrier Admiral Kuznetsov

“The General Staff has prepared a plan for involvement of the deck aircraft in delivering strikes on terrorist groups in the Syrian Arab Republic, where the crews will practice taking off the carrier to deliver strikes on ground targets.”

Not only that, but according to the Russian source, the Kuzentsov will henceforth lead the the Russian navy’s “permanent grouping” in the Mediterranean, meaning that at any one moment there will be at least on Russian and, correspondingly, at least one (or more) US carriers.

Thus, the source said, in autumn-winter, the strikes will be delivered both by the crews located at the Hmeymim Base, and the aircraft carrier’s crews “in most close coordination.” “The Admiral Kuznetsov,” which will lead the Russian Navy’s permanent grouping in the Mediterranean Sea, will be close to the Syrian shore “so that the deck aircraft have enough fuel to complete the military tasks and return back,” the source said.

During the voyage, the source continued, the Admiral Kuznetsov “will have about 15 fighters Su-33 and MiG-29K/KUB and more than ten helicopters Ka-52K, Ka-27 and Ka-31.”

“The aircraft carrier will come to the Mediterranean Sea roughly before end of January – early February, after that it will return home and in February-March it will undergo maintenance and modernization in Severodvinsk, supposedly at Sevmash,” the source added.

TASS added that it does not have official confirmation of this information, although we expect the Kremlin will shortly confirm this Russian response to the build up of US naval forces in the region, in keeping with Putin’s warning that he will promptly respond to the growing build up of NATO forces on Russia’s borders.

As a result of Brexit, we pointed out that companies now will have a convenient scapegoat for any future earnings misses, or at the very least use Brexit as a reason to lower guidance for the remainder of the year without any pushback from analysts.

We also noted that with the referendum behind us, everyone would conveniently forget that earnings expectations had already been continuously revised down for quite some time now, long before Brexit.

But if you don’t want to take our word for it, here is CLSA reminding everyone as well.

In a recent note, CLSA wrote that world trade growth had hit a new post-global financial crisis low long before Brexit ever came about.

From CLSA

World trade growth hits new low
The UK’s surprise Brexit vote has caused a spike in risk perceptions but even before the vote the global economy was struggling. With the March data world trade growth hit a new post-GFC low. Emerging Market demand has contracted on a YoY basis for six back-to-back months. And developed economy demand has weakened, from +3.7% YoY in the three months to November 2015 to 1.2% YoY in the three months to March

* * *

Of course this won’t stop companies from using Brexit as a hall pass in order to explain away any and all misses and forward guidance revisions, and it also won’t stop analysts from using the infamous “one-time adjustment” line in order to paper over the weaker earnings, but it is good to keep this in mind that the new narrative isn’t the whole truth.