Wall Street sinks; dairy prices slip; US factory orders fell in May; BofE sees risks crystallising; India bets on infrastructure growth; UST 10yr yield at 1.36%; oil down, gold up; NZ$1 = 71.4 US¢, TWI-5 = 75.1

Lets start with a laugh
Malcolm,

You assassinated a Liberal Prime Minister, Tony Abbott, who'd won an election by a huge margin.

You promised to do even better than him.

You then treated the Liberal base like dirt, smashing it with a huge super tax, refusing to speak to conservative journalists, repeatedly humiliating Abbott.

You referred to the colonial settlement of Australia as an "invasion" and even held an end-of-Ramadan meal with known Muslim bigots...

And Bolt's just warming up. Unfortunately, his call for Turnbull to quit is trickier than it sounds:

Malcolm can't fall on his sword, it's still stuck in Tony Abbott's back.
http://www.steynonline.com/7549/the-blunder-down-under

I don’t want to diminish the importance of repo haircuts or correlation implications, but those pertain more so (so far) to the “last one.” In the years since the crisis, it seems that volatility has assumed a more central mathematical role. Frustratingly, it has done so in almost exactly the same fashion as correlation had leading up to 2007. The conventional perception about central bank policy including QE is that it has all been a combined effort of “money printing”, and thus for asset markets there is plentiful liquidity which can be extrapolated into expectations of very low volatility. In some circles, this has been called the banishment of “tail risk.”
Volatility has a role to play in math upon balance sheets, especially in measures like VaR. Even indirectly, volatility is a central premise of not just asset pricing but funding conditions and basic balance sheet construction (and then fortification). Thus, if it were suddenly found that volatility estimates, like correlation in the mid-2000’s, had been too optimistic and systemically so, the adjustment in aggregate terms to even a slightly more realistic volatility organization might be excessively harsh.
http://www.alhambrapartners.com/2016/07/05/how-markets-are-supposed-to-…

Will pensioners take it on the chin?

As Bloomberg reports, because shares held by Japan’s $1.4 trillion Government Pension Investment Fund have suffered such large losses, it will need to add to those holdings to meet targets for their weighting, while selling sovereign bonds whose value has soared. Assuming no re-weighting was done since Jan. 1, GPIF will need to buy 4.2 trillion yen ($41 billion) of local stocks and sell 9.8 trillion yen of Japanese government bonds to reach its goals. The brokerage didn’t give a time frame for this buying. Read more

Almost everything we are now witnessing is symptomatic of the complete failure of governments in the western world to deal with any of the fundamental matters that needed to be dealt with decades ago. Continuous economic growth fueled by conversion of oil into waste products has always been a path to catastrophe, both because sources of high-quality easy-to-extract oil are finite and because burning too much oil (and coal) wrecks the global environment; continuous expansion of population leads to ever-lower levels of sustainability and greater dependence on rapidly depleting energy reserves; continuous 'printing' of money and charging of interest on it leads to unsupportable debt levels.

Since all the fundamental factors are more-or-less universally ignored, it follows that general conditions will continue to be made worse by governments......until the system 'implodes' as a consequence of depletion of resources, pollution, overpopulation and inability to service debt.

The fact that there are still impoverished people in a few countries who are prepared to work for what would be regarded as slave wages in the developed world and the fact that there are still some pockets of unexploited mineral resources does not alter the overall picture or the inevitable conclusion.

I would assume that a large number of Brits, a least those with assets , who may have contemplated 6-9 months ago to uproot and head to New Zealand, may be looking at their shiny new visa and the current exchange rate and unpack their bags and stay put.

Utilising the QV values , Auckland housing stock has just gone thru the half trillion mark, about 510000000000, accounts for 57 percent of New Zealands total value . Put another way , and remembering fewer people per home outside Auckland( bar Poverty Bay), the rest of this tiny nations housing stock is valued at only 43 percent of the total yet accounts for two thirds of the population and close to two thirds of the nations GDP..At least we can blame it on a surge in international students.

Here comes the next global recession!