A summer panic is starting to brew across markets
Published: June 10, 2016 8:32 a.m. ET

Everybody out?

Why worry later, when you can do it all right now? That sums up this market, which has catapulted itself into fretting over a couple of looming events: Brexit, still 12 days out, and the Fed meeting, just a few days away.

Here’s fresh word on the Brexit vote from Deutsche Bank’s Jim Reid, who surveyed 1,000 investors at the DB European Leverage Finance conference. A whopping 83% predicted voters will support the U.K.staying in the EU, while 17% said the result will be for an exit — which doesn’t really jibe with the polls that have been whipping the pound around.

“One would have to say that a ‘Brexit’ is probably not priced into markets, whatever that outcome might be,” says Reid. Judging by recent action, the suspense could just keep killing this market slowly.

Reid also asked where those attendees think oil will be by the end of this year, and the answer to that seemed more along the lines of “Who knows?” Here are the results:

Under $20 — no one
$20 to $30 — 1.4%
$30 to $40 — 10.7%
$40 to $50 — 36.9%
$50 to $60 — 35%
$60 to $70 — 15%
Over $70 — 0.9%

In the near term, oil is looking shaky, and is maybe gold, writes DailyFX.com’s Ilya Spivak. He sees traders moving to a neutral stance ahead of the FOMC and cashing in on some recent gains. Oil is getting knocked down this morning, but still hanging onto weekly gains of more than 2%.

Elsewhere in commodities, Bespoke Investment ranked the worst and best ETF performers over the last five days. It found commodity-related funds — such as VanEck Vectors Gold Miners ETF GDX, -1.41% , SPDR S&P Oil & Gas Equipment & Services ETF XES, -4.04% and iPath Bloomberg Coffee Subindex Total Return ETN JO, +2.33% — have seen returns upward of 12%. But biotech funds like iShares Nasdaq Biotechnology ETF IBB, -2.19% are down about 4%.

Our call of the day comes from SocGen, which says some investors may increasingly look for safety, and maybe in some dangerous places.

Don’t miss MarketWatch’s interview with Marc Faber. He ain’t scared.

Key market gauges

Futures on the Dow YMM6, -0.62% and S&P ESM6, -0.88% are getting whacked as riskier assets get the heave-ho from investors this morning. Alongside that, WTI crude oil CLN6, -3.32% and Brent LCOQ6, -2.83% are down more than 1% each, and the dollar index is pushing north. The buck is still lower against the yen USDJPY, -0.12% and euro EURUSD, -0.5656% but the index has bounced off a 4-week low.

And one bond guru thinks the Aussie dollar AUDUSD, -0.7401% will sink around 50%. (h/t iBankCoin)

Gold GCN6, +0.33% is off a bit. Europe SXXP, -2.44% is down over 1% across the board. Asia ADOW, -1.21% markets finished lower on worries about global growth, though mainland China markets are closed for a holiday.

The call

Against the backdrop of soaring Treasury prices and a global government-bond rally, SocGen says the current unease among investors could morph into a desperate situation.

“If policy rates stay low enough for long enough in all the major economies, and central banks buy up a big enough chunk of the bond market, I can’t see how investors can avoid a cycle of lurching from any high-yielding asset available, however risky, to the safety of Treasurys and bonds, and then back again,” said Kit Juckes, chief currency strategist at Société Générale.

He says some of that has been seen in foreign exchange already, as investors move from risk-on to risk-off. The question now is whether “absurdly low yields” in G3 government bonds are going to force those investors toward emerging market currencies — or is it a sign of growing fears that will push them toward safe havens?

“The answer’s somewhere halfway between, with U.S. equities (SPX) backing off highs, while Asian equities wilt a bit,” says Juckes. More of that panic in our quote of the day.

The quote

In case you missed him yesterday, here’s Janus Capital’s Bill Gross fretting about global bond yields.

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Janus Capital @JanusCapital

Gross: Global yields lowest in 500 years of recorded history. $10 trillion of neg. rate bonds. This is a supernova that will explode one day

9:05 AM - 9 Jun 2016

• 578578 Retweets
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Check out the comments on his tweet.

The chart

Just to keep you up to speed, this is what the German 10-year bundTMBMKDE-10Y, +0.00% has been doing in Europe overnight. A record, nearly scraping the 0% barrel on yields:

The economy

Consumer sentiment is coming at 10 a.m. Eastern, while the federal budget is due at 2 p.m.

The stat

Reuters

330 million people — That’s how many people can reach the Shanghai Disneyland Resort in less than three hours. The park doesn’t open until June 16, but crowds are already flocking to a surrounding tourist zone. DisneyDIS, -0.51% is currently working out security with normally muscle-flexing Chinese law enforcement.

If that’s got you curious, here’s a peek inside the park.

The buzz

Tesla TSLA, -4.61% is under review for a potential defect in the suspension of its Model S. It also got a warning from the National Highway Traffic Safety Administration for trying to get customers not to contact the agency about the issue, NHTSA confirmed in a statement to MarketWatch on Thursday.

Tesla fired back on its blog, saying there “is no safety defect” in suspensions in the Model S or X, and that the NHTSA has not opened an investigation or even a preliminary evaluation. It also denied the company had tried to get customers not to complain.

Merck MRK, -0.65% said it will purchase biotech Afferent for at least $500 million.

How much is in your Starbucks SBUX, -1.29% account? In the first quarter of 2016, the coffee maker’s customers had loaded $1.2 billion onto Starbucks cardsand mobile app.

Sophiris Bio SPHS, +69.23% is up 100%, blasting away after a promising studyfor the tiny biotech’s prostate cancer treatment.

JetBlue JBLU, -1.84% is down 1% in premarket after the air carrier said capacity growth is outpaced traffic in May.

Earnings

H&R Block HRB, +12.49% reported a lower profit, but results beat expectations and shares are u 4%.

Urban Outfitters URBN, -5.76% is down 8% it warned of weak sales for the current quarter.

Mattress Firm Holding MFRM, -12.45% is sliding 13% after earnings and its outlook disappointed.

Random reads

A “slow jamming” Obama was on “The Tonight Show” last night.

A 5.2 magnitude earthquake hit outside of San Diego early this morning

“He smelled amazing, he really smelled good.” Mind the vat. Of curry, that is:

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Sally French

✔@SAFmedia

Seagull turns orange after it falls into a vat of chicken tikka masalahttp://bit.ly/1UDGyC1

10:10 AM - 9 Jun 2016

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Scientists say El Niño is finally dead after 17 months of wreaking havoc, but hurricane generator La Niña is alive and kicking.

Texas and Florida pose the biggest risks from Zika

Fox News shows Trump trailing Clinton by a 42% to 39% spread

The government food stamp system is a mess right now

Nuns Defy Marijuana Cultivation Ban In Californian Town And Grow The Plant To Heal The Sick

By Amando Flavio

Two self-proclaimed nuns from the city of Merced in the state of California, have defied a ban on cultivation of marijuana in the city, growing the plant for medical purpose.

Generally, medical marijuana is legal in California in pursuant to Proposition 215 in 1996 andSenate Bill 420. However, in July 2015, state governor Jerry Brown signed the Medical Cannabis Organ Transplant Act into law, targeting illegal marijuana growers.

The state also gave municipalities the power to create their own medical marijuana laws. This has allowed the city of Merced to make growing and selling of medical marijuana illegal. Although city officials claim the ban is temporal, two women living in the Central Valley of the city have hit local news headlines for defying the law.

The women, Sister Kate and Sister Darcy describe themselves as nuns. Just to be clear, they are not affiliated with the Roman Catholic Church. They are self-proclaimed spiritual nuns.

The nuns say they are on a mission to grow marijuana to heal the sick. They have named themselves “Sisters of the Valley.”

According to the sisters, the marijuana they grow has low levels of tetrahydrocannabinol (THC), the primary mind-altering ingredient found in the marijuana plant. Sister Kate says the marijuana they grow doesn’t let users experience the ‘high.’

“It’s about honoring the people honoring the wisdom. Our products have less than 0.3% THC. Our medicine is medicine, and it is non-psychoactive. We’re dealing with what is actually hemp but really we advocate for whole plant legalization,” the self-proclaimed nun said.

RT English News reported that the nuns follow their own ‘holy trinity’. Their holy trinity includes honoring Mother Earth; honoring the people, through making medicine and healing; and their progressive activism. The nuns are said to have dedicated a portion of their week to “the good fight” for the poor people around them.

Kate said the low levels of THC in their marijuana allows them to mail their marijuana-infused oils and creams all over the world. They make a good living out of their products. The nuns reveal they make up to $1,000 a day through online marketing of their product. They clarify that their business is not cash only. They work legally with banks.

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Federica De Lorenzi @federicainrome

Vendono prodotti a base di Cannabis, sono le "Sisters of the Valley" ultima follia del business californiano: TOP

5:22 AM - 1 Jun 2016

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According to ABC10, California’s new regulation on marijuana had initially required the municipalities to have medical marijuana laws written by March 1. However, the state legislators who wrote the regulations later announced that the deadline was a mistake, and that more months are needed in order for the municipalities to write comprehensive medical marijuana laws.

This discrepancy allowed council members in Merced to put the ban on medical marijuana, while they await the new laws.

In April, medical marijuana users in Merced nearly clashed with council members on the delay, prompting the police chief in the city to intervene and save the situation. The nuns say the council members are making the process slow, and are not considering the need of medical marijuana users.

As it stands now, it is unclear when medical marijuana laws will be passed in Merced. The council said it is hoping to finalize an ordinance before the November elections. But that notwithstanding, the nuns are continuing with their business. They seemed very determined to take on city officials on the legality of the ban.

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(activistpost.com)

Signed Into Law: Ohio Legalizes Medical Marijuana, Sets Foundation To Nullify Federal Prohibition

Iraqis Who Escaped From ISIS Tell of Extreme Terror—and Extreme Boredom

June 10, 2016

Like hundreds of thousands of other civilians in Iraq, the engineer had been trapped by ISIS militants, unable to the leave the small town where he lived in the countryside south of the city of Mosul. Two years after ISIS seized vast sections of Iraqi territory, the military operations to dislodge ISIS from Iraq’s cities are unfolding at a slow pace, hampered by political gridlock and constrained by the Iraqi army’s thin ranks. The quagmire leaves ordinary Iraqis still living in ISIS-occupied areas at an agonizing crossroads: either stay under the suffocating rule of the extremists, or risk a potentially lethal crossing to territory held by the central government or northern Iraq’s Kurdish administration.

Read More: Exclusive: ISIS Bombed Us with Chemical Weapons, Iraqi Police Say

Those who remain in ISIS-held territory face a bleak present and a worse future. At the Debaga Camp for displaced people near the northern Iraqi town of Makhmour, single men and families who recently left ISIS-controlled villages south of Mosul described a world where most ordinary social life ceased to exist and the economy had come to a standstill. They said the jihadists banned cafes, smoking, cellphones and satellite television. Without jobs and denied ordinary sources of entertainment, residents struggled to find something to fill the empty hours—without falling afoul of the jihadists.

“We have no jobs, no work, no companies. You have to sit at home,” says Ayman, the chemical engineer. (His name has been changed, and certain details of his story have been withheld in order to protect his family from reprisal.) “If you want to go out you have to have a big beard and short trousers. Women should be totally covered in black.” The punishment for an infraction of any of these rules, he went on, could range from a fine to a beating, or worse.

Ayman hails from a small town south of Mosul, not far from the oil town of Qayyarah, which is also home to an air base that was seized and then used by the U.S. military following the 2003 invasion. The base and the town were seized by ISIS in the summer of 2014. Ayman had planned his escape for months, ultimately leaving behind his wife and young children in hopes of raising the money to smuggle his family out to join him. He had actually escaped once before, reaching Turkey in 2014, a few months after ISIS arrived. He found an apartment in Istanbul and then returned to Iraq, planning to take his family out of the country. But ISIS tightened restrictions on civilians under their control, blocking his exit from the country. Ayman was trapped, along with his family and neighbors, under the jihadists’ infant experiment in fundamentalist rule.

Read More: How a Victory Over ISIS in Fallujah Could Actually Hurt Iraq

In March, the Iraqi army launched an operation to reclaim villages south of Mosul, in preparation for an eventual attack on the city itself, one of the largest in Iraq and a key strategic goal in the broader battle against ISIS. The military succeeded in retaking some villages. But as a result of the fighting, thousands of civilians have been forced to flee. The United Nations said in April that as many as 30,000 people could soon be displaced by instability in the area. Thousands of others are fleeing amid a separate battle to reclaim the city of Fallujah, west of Baghdad. Those who successfully escape join more than 3.4 million people already displaced throughout the country.

After ISIS fighters arrived in Mosul and the surrounding area in June 2014, they set about transforming the region to fit their medieval style of governance, dismantling cell phone towers and confiscating satellite dishes. Ayman said his house was located close enough to the Kurdish regional capital that he and his family could still get a faint cell signal. They’d climb on the roof for surreptitious conversations. “If somebody hears a sound, they will come to your home and come looking for the mobile and maybe you’ll get killed, or maybe not,” he says. “That depends on the guy looking for your cell phone.” He said he also resisted the ban on satellite dishes, hiding a dish on his roof after handing another one over to the ISIS authorities, along with the wiring and the remote control.

Several types of ISIS cadres began appearing in the streets. Security men wore black, while officers policing personal behavior were garbed in white. Others wore military-style uniforms. “Just like the Iraqi army, except with a big beard and long hair,” says Ayman. The troops manning the checkpoints were usually Iraqi recruits of ISIS, he said, but there were also foreigners. “I heard people talking French. I heard people talking English—American. I know the American accent,” he says.

Under ISIS, the economic and social life of the town began to die out. Struggling under banking and other sanctions levied against ISIS, a reduction in oil revenues, inflation and the flight of the population even despite ISIS’ restrictions, the economy began to crumble in ISIS’ self-proclaimed caliphate. Ayman worked for a large company that shuttered its operations in the area after ISIS took control?. Without work, he found himself staying at home with his family. He kept his daughter out of school, refusing to send her to an institution that had been taken over by fundamentalists. To pass the time, they’d visit relatives and neighbors, sit and drink tea, or take walks. For ordinary civilians, one of the unexpected results of jihadist rule was unimaginable tedium.

“Everything is depressed there. Everything,” says Mohamed Mahmoud Ali, 54, who is also a shopkeeper from the village of Sidera. “We don’t have food. The refrigerators are empty.” After ISIS took over the town in 2014, Ali closed his corner shop, and relied on money loaned or gifted by relatives. Like Ayman, Ali had recently fled, and was waiting in a processing center in a large white tent at Debaga Camp, in the stifling late spring heat. The new arrivals have to wait, essentially detained in the tent while intelligence officials vet them, fearing that ISIS could be sending infiltrators among the displaced civilians.

Others fleeing ISIS-held areas described a depression that seemed to blanket the region. Out of fear or despair, some people simply stayed home. “You can ask my wife. We started to annoy each other,” says Abdullah Eissa, a shopkeeper in his late fifties, another new arrival at Debaga Camp. He sat in an adjacent tent on a mattress with more than a dozen members of his family around him, swatting flies in the heat. Restless children squirmed on the floor around them.

Ayman’s own family remain in ISIS-controlled territory. He had told his family he planned to leave, but refused to tell them the exact date, a measure taken to preserve the secrecy of the plan. He moved them to a different house, fearing for their safety. It was the only way, he told them. His plan is to return to work with his company, earning enough money to hire a smuggler to help them flee safely. Since he escaped, he managed to call his young daughter, who cried as they spoke. “They are worried about it,” Ayman says, “but we have no choice.”