European Union

In a shocking new set of cables released by Julian Assange's Wikileaks organization, highly classified documents show that the NSA bugged meetings between UN Secretary General Ban Ki-Moon's and German Chancellor Angela Merkel (over climate change); between Israel prime minister Netanyahu and Italian prime minister Berlusconi (begging for help to deal with Obama); between key EU and Japanese trade ministers discussing their secret trade red-lines at WTO negotiations; as well as details of a private meeting

Authored by Saxobank CIO Steen Jakobsen, via TradingFloor.com,

• Cameron's EU deal is far short of what he promised
• This represents formal acceptance of a two-tier Europe
• Populists elsewhere already calling for their own referendums
• By October, Cameron and Merkel could be history and Le Pen's star shining

 No wonder David Cameron looks worried.  

With the UK's referendum on EU membership due in four months, it appears the market is gravely concerned about the possibility of Brexit. Despite the unleashing of Project Fear (both military and corporate fearmongery), cable (GBPUSD) has crashed 2.3% (the most in 7 years) to its lowest in 7 years, and both FX volatility and credit risk Brexit indicators are soaring to record highs.

Just as we warned, Friday's dubious gains have evaporated and cable is crashing to 7 years lows...

As Deutsche Bank's Jim Reid notes,

Over a dozen senior UK military leaders are to sign a letter warning voters not to support leaving the EU in the upcoming referendum. They say that doing so would compromise the UK’s national security.

The overnight news was decidedly downcast, with first London mayor Boris Johnson voicing his support for Brexit leading to a collapse in the pound, validating our Saturday warning and then some, resulting in the biggest drop in cable in over a year over fears that the EU will lose one of its most critical members...