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Treasury Yields Rise Most In 9 Months, Weak 7 Year Auction Does Not Help

Treasury yields are surging across the complex with the long-end steepening notably. Today's 10.5bps jump in 10Y yields is the biggest percentage shift since early November 2013... and a significant tail in the 7Y auction just made things worse.



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"US Will Feel Tangible Losses," Russia Prepares To Unleash Retaliatory Trade Wars

"It's a troubling continuation/expansion of trade as a geopolitical tool," warns one Washington-based consulting firm as Russia prepares to unleash retaliatory actions to US and European sanctions. As Bloomberg reports, Russia said yesterday it may ban imports of chicken from the U.S. and fruit from Europe and is investigating McDonald's cheese for safety. In addition, a Russian lawmaker has drafted legislation that might result in U.S. accounting firms being barred from doing business in his country. All of this is odd given Jack "trust me" Lew's reassurance that Russian sanctions would have no impact on the US economy. Russia's response, US will feel 'tangible losses' from 'destructive, myopic' sanctions.



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Complacency Is Sowing The Seeds Of The Next Euro-Zone Crisis

There are grounds for optimism about Europe’s single currency area. Yet beneath the surface of favorable sentiment towards the euro zone, the seeds of the next financial crisis are being sown. If markets connected all these dots - a weak and fragile economic recovery, the failure to break the “doom loop” between banks and sovereigns and, most importantly, scant prospect of a more secure political and economic union - the glaring disconnect between asset prices and underlying fundamentals in the euro zone would be a source of much greater concern.



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President Obama To Explain How Inventory Stuffing Is Good For All Of Us - Live Feed

A 4.0% GDP print - time to get out in front of the people and take the credit...



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GDP Deja Vu Stunner: Over Half Of US Growth In The Past Year Is From Inventory Accumulation

As we showed in December of 2013, where the scramble to accumulate inventory in hopes that it will be sold, profitably, sooner or later to buyers either domestic or foreign, is most visible, is in the data from the past 4 quarters, or the trailing year starting in Q2 2013 and ending with the just released revised Q2 2014 number. The result is that of the $675 billion rise in nominal GDP in the past year, a whopping 52%, or over half, is due to nothing else but inventory hoarding.



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Portugal Plunges To 9-Month Lows, Europe's VIX At 3-Month Highs

Portugal's PSI20 plunged over 3.4% today extending recent losses after its dead-cat-bounce, leaving the index near its lowest since October 2013. Interestingly peripheral bond spreads (and IG/HY credit spreads) compressed while equity markets all dumped across Europe amid concerns of blowback from Russia. As the sell-off accelerated into the close, credit markets also tumbled. An initial rally in financials gave way rapidly as US opened and rumors of G7 statements and Russian retaliation spread. Europe's VIX closed just shy of 18.00 - its highest close since early May. Banco Espirito Santo fell another 10% to record lows ahead of tonight's earnings.



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Six Current Economic Myths And Realities

The following are six of the most prevalent economic myths that appear time and again in the mainstream media...



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Chart(s) Of The Day: A Decade Of GDP Revisions

What is the best word to describe GDP? One suggestion: changing.



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The Fed's Failure Complicates Its Endgame

To demonstrate it hasn't failed, the Fed must taper/withdraw its monetary heroin. If the stock market tanks as a result, and the Fed rushes to the rescue with more free money for financiers, that will also prove the Fed has failed: if the economy and financial system is as robust as the Fed claims, why does it need to be rescued yet again after six long years of unprecedented injections of monetary heroin? It's a double-bind with no escape. No matter what the Fed chooses to do, the failure of its policies to help households and Main Street while enriching wall Street and the banks will be revealed to all.



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Q2 GDP Surges 4%, Beats Estimates Driven By Inventories, Fixed Investment Spike; Historical Data Revised

Moments ago the Commerce department reported Q2 GDP which blew estimates out of the water, printing at 4.0%, above the declining 3.0% consensus, as a result of a surge in Inventories and Fixed Investment, both of which added over 2.5% of the total print, while exports added another 1.23% to the GDP number. The full breakdown by component is shown below.



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Stocks Slide, Erase All GDP Gains

Well that didn't last long...



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Argentine Bonds Soar To Record Highs As Hope Rules (For Now)

While last night saw'The Holdouts' and 'The Argentina Delegation' come face-to-face for the first time in a decade for negotiations, when they went to bed late last night, there was no resolution. No news yet this morning of when the meeting will reconvene but it appears market participants are hopeful... The Argentina 2033 bonds are exploding higher. ARG 2033s are up over 10 points to a record-high price of 97.50. Let's hope they are not disappointed at the hopes for a bank bailout. Of course, we saw this kind of exuberant jump right after the initial pro-holdouts ruling drop...



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Greenspan Fears "False Dawn" In US Economy, Warns Of "Equity Correction At Some Point"

Equity bulls should be exuberant. The last time Alan Greenspan warned of exuberance and potential for a correction, stocks soared for a few more years. While Yellen's stock-picking skills have been questioned in recent days, Greenspan has once again weighed in:

*GREENSPAN SAYS 'KEY QUESTION' IS WHETHER U.S. FACES FALSE DAWN
*GREENSPAN PREDICTS AT SOME POINT EQUITIES TO HAVE CORRECTION

Although Greenspan declined to second-guess the Fed, he sees a problem moving toward "normalized" policy for his descendants.



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GDP Sparks Gold Dump, Stock Pump

Bond yields jumped over 4bps on the better than expected GDP print. Stocks popped along with the USD index. Gold was flip-flopped all over the place - an initial dump was followed by a rip back over $1300 only to be sold back down to $1295 now... Equity exuberance is fading back a little now as machines 'read' the anti-goldilocks ADP print and inventory-stuffed Fed-hawk-supporting GDP print as indicative of a punch bowl that just got dragged away a little more...



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Moscow Stock Exchange Breaks - Trading Halted



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