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Stocks Up, Dollar Up, Bond Yields Up, Commodities Down As AAPL Hits $100.00

Weaker than expected inflation and better than expected housing data sparked a dump in commodities, surge in the USDollar and US stocks. US Treasuries were unsure at first but once the US cash session opened, bonds were sold hard. The trends of the morning though have now slowed and are reversing modestly as Europe closes... and AAPL tops $100...



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Meanwhile In Pakistan

With all the other geopolitical war/conflict/droning hot spots around the world, one has so far managed to fly under the radar for the past few weeks, yet one which has the potential to generate a substantial disturbance in the central-planning farce: Pakistan.



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Buy The Drip: Thousands Of Gallons Of Oil Spill Into Ohio River Upstream Of Cincinnati

Lately it is not just trains blowing up across the country in the ongoing effort to prove just how safer rail transport is for crude oil transit compared to pipelines: as citizens of Cincinatti found out this morning, their drinking water may come with an added kick after thousands of gallons of diesel fuel spilled out onto the Ohio River after an incident at a power plant early Tuesday. According to WCPO, the Coast Guard said it estimated about 8,000 gallons of fuel spilled out from Duke Energy’s W.C. Beckjord power station outside of Cincinnati.



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When Headline Scanning Algos Get Crushed By A Wrong Bloomberg Headline

At 1033ET, Bloomberg headlines flashed: "WHOLE MILK POWDER PRICES FALL 11.5% IN GDT AUCTION" which caused an instant collapse in Kiwi (NZDUSD) as headline-reading algos reacted. However, as "humans" knew and @FXMacro reminded Bloomberg, that was last month's drop... When Bloomberg reissued: "CORRECT: WHOLE MILK POWDER PRICES RISE 3.4% IN GDT AUCTION" Kiwi surged higher. These are your efficient markets...



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UK Bakery Chain Proud To Provide "Shit To Scum For Over 70 Years"

"All publicity is good publicity," right? Perhaps not. UK bakery Greggs suffered a PR nightmare this morning, as The Drum reports, after its primary Google search image, which is linked to the Wikipedia company description, was replaced with an expletive-ridden parody logo. The message in the image, which Greggs has appealed to Google to change, claimed the bakery has been “providing shit to scum for over 70 years”.



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The Ferguson Morning After: Police "Come Under Heavy Gunfire", Arrest 31 Including Photographer, Journalist

The local authorities have tried everything: aggressive police, appeasing highway patrol, curfew, no curfew, and last night, the national guard. Nothing seems to work. Because what until 9 pm was a peaceful protest, it quickly, as documented here extensively, spiraled out of control. And as the crowd advanced, police fired stun grenades and tear gas at protesters. This escalation allegedly happened after, as Reuters reports, the police came under heavy gunfire leading to the arrest of 31 people, including a famous Getty photographer and yet another journalist.



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Russia-China Launch Biggest Central Asian Military Drill, Testing Surface-To-Air Missiles

More than 7,000 troops from China, Russia and four central Asia countries have gathered in Inner Mongolia for their biggest joint drills "to fight terrorists," but as one analyst notes, "it is kind of rare to have an anti-terrorist mission which uses battle tanks." Furthermore, as part of a drill:

*RUSSIA TESTING S-300, S-400 SYSTEMS IN ASTRAKHAN REGION: RIA

So, surface-to-air missile tests? Not very "de-escalation"-y. Perhaps this statement is a clue, "we are trying to exercise together to coordinate our troops to meet any potential eventuality."



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How Much Does It Cost America To Blow Up American Weapons?

As many have observed since Obama launched his own personal Iraq war, there is something rather farcical about the latest US intervention in the middile east, namely that US weapons are being used to destroy US weapons, captured by and in possession of ISIS jihadists. As Reuters summarizes the situation, rather poetically, "Islamic State’s  captured an enormous amount of U.S. weaponry, originally intended for the rebuilt Iraqi Army. You know — the one that collapsed in terror in front of the Islamic State, back when they were just ISIL?"  In other words US taxpayers are now paying for military missions, in which US taxpayer paid-for warplans and missiles are used to blow up other US taxpayer paid-for tanks, artillery, MRAPs, and various other weapons of death. How much? Here is the answer...



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What Do Stocks Know?

With global GDP expectations plumbing new depths (at 2.48% consensus for 2014), one could understand why it is that 30Y US Treasury yields are at 16-month lows, that Dr.Copper is tumbling, and crude oil prices slumping. But apart from the fundamentals of global macro strength, what - at almost record highs - does the US equity market know that every other asset class does not...



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Putin Considers Banning Jack Daniel's

We knew the blowback from western sanctions against Russia would get serious - and Europe is already finding that out the hard way - but Vladmimir Putin appears to have gone 'cruel-and-unusual' in his latest step. As ITAR-TASS reports, Russian consumer-protection agency Rospotrebnadzor will decide in next few days whether to seize Jack Daniel’s Tennessee Whiskey and Honey Liqueur after 'reportedly' finding "suspicious" chemicals in batch of flavored whiskey on sale in Sverdlovsk stores. Luckily Jack Lew has told us this will not impact the US economy (unless of course, you are Jack Daniels).



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Housing Permits, Starts Surge Driven By Renewed Rental Housing Scramble

After June's very disappointing housing starts and permits numbers, which plunged to 893K and 963K respectively well below consensus expectations, it was time for the Department of HUD to show how it's done, and moments ago the July housing starts and permits data literally blew away Wall Street expectations, as Starts soared from an upward revised 945K to 1093K, the highest print since November 2013, while permits surged from an also upward revised 973K to 1052K, smashing expectations of 1000K and the biggest beat since October. Why? Multi-family housing is back with a vengeance with "rental" permits and starts soaring by 24% and 33% respecitvely in the month of July.



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Cease-Fire Violated: Israeli Military Says 3 Rockets Fired From Gaza

Well that didn't last long...

*ISRAEL ARMY SAYS 3 ROCKETS WERE FIRED FROM GAZA
*ISRAEL ARMY SAYS ROCKETS LANDED IN OPEN AREAS, NO INJURIES

The Israeli military has declared the cease-fire broken. So this is the escalation that will enable a pent-up de-escalation buying opportunity?



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Core CPI Rises At Slowest Pace In 14 Months As Food Costs Jump

Consumer Price Inflation rose a mere 0.1% MoM in July, its equal lowest since November 2013 and in line with expectations as falling energy and transportation costs (both -0.3% MoM) led the stabilization (with a 5.9% plunge in airfares). The biggest drop was in personal computers (-1% MoM) which is now -6.0% year-over-year. Food prices rose 0.4% MoM. Ex-food-and-energy, prices also rose 0.1%, missing the 0.2% expectations, to the slowest pace of core inflation since April 2013. So much for all that inflation is about to break out and tear bond yields higher chatter... (no matter how real or unreal the government's hedonically-manipulated data is). The 2-month change in Core CPI swung from hottest in 7 years to coldest in 14 months...



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Frontrunning: August 19

  • Just how many rats are there? Steven Cohen's Firm Loses Another Top Executive (WSJ)
  • Iceland Sees a Potential Volcanic Eruption, and Airlines Cower (Bloomberg)
  • Iraqi forces battle to drive jihadists from Saddam's home town (Reuters)
  • Israel, Palestinians Agree to Extend Gaza Truce for 24 Hours (BBG)
  • Pimco now buying junk (BusinessWeek)
  • Pakistan arrests 147 in Punjab towns as protests in capital continue (Reuters)
  • Ex-Rabobank Employee Pleads Guilty in Libor-Rigging Probe (BBG)
  • Ebola Orphans Targeted by Aid Groups as Newest Victims (BBG)
  • Two California youths accused of plotting high school shooting spree (Reuters)
  • Only Rich Know Wage Gains With No Raises for U.S Workers (BBG)


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Futures Levitate Because Any Re-escalation Is Simply Pent Up De-escalation

A quick reminder of how geopolitics governs markets: on Friday, the market plunged 0.005% over fears Ukraine and Russia may be about to go at it all out after a fake report Ukraine shelled a Russian military convoy. On Monday, the same "market" soared just under 1% as the news that had caused the "crash" was refuted. That has been the dominant rinse, repeat theme for the past month and will continue to be well after Yellen's Friday speech at Jackson Hole (although one does wonder why she is not speaking on Wednesday when the symposium begins). Not surprisingly, with only modest re-escalation news overnight (that Russia is preparing further retaliatory sanctions against the West), which is simply "pent up de-escalation" in the eyes of Keynesian algos, futures are again up a solid 0.2% and rising, and the way the rampy USDJPY is being manipulated before its pre-market blast off, we may well see the S&P hit 1980, if not a new all time high before 9:30am, let alone during today's cash session. In any event, whatever you do, don't you dare suggest that algos should care one bit about Ferguson and its implications for US society.



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