S&P Slips To 4-Week Lows, Russell Red For 2014 As Rate Hike Fears Trigger Selling

With BofAML, Goldman, and now JPMorgan all bringing forward their 'liftoff' expectations for rates, US equity and bond markets are starting to quake a little. The Russell 2000 is now back in the red for 2014 and all but Trannies are red for September. The S&P is back to Aug 20 levels as 10Y yields push 15bps higher on the week to 2-month highs over 2.60%. VIX is back over 14, catching up with rates and FX volatility.

The Game Of Thrones & The Game Of Markets

There is a connection between modern capital markets and the NFL (and between Central Bankers and Roger Goodell). The connection is solipsism – a pathological egocentrism where reality is defined by an individual’s mental perceptions and constructs. Collective solipsism is what overwhelming Common Knowledge looks like. It’s the annihilation of an individual’s perception of reality in favor of a group perception of reality. The collective solipsism of modern markets is the most crucial game to comprehend.

Harsh Austerity Sends Italian, Spanish Debt To Record Highs

Damn you debt-reducing austerity-that-is-blamed-for-everything-that-is-wrong-with-Europe's-triple-dip-recessionary-economy-when-it-is-the-corrupt-socialist-incompetent-politicians'-fault. Damn you to hell! Oh wait a minute:

Italy’s government debt rose to a record €2.169 trillion in July from €2.168 trillion in June, the Bank of Italy says in its public-finances supplement.
Spain total govt debt amounted to a record € 1.01 trillion in 2Q, up from € 995.9b in 1Q, Bank of Spain says; 2Q Total Govt Debt Rises to 98.9% of GDP From 97.4% in 1Q

With austerity like this, who needs to spend like a drunken sailor?

Where ISIS Makes Its Money

President Obama's 4-pronged strategy to 'degrade and destroy' ISIS includes a 'financial attack' (according to the Treasury) as they recognize, as The Daily Signal notes, one major hurdle in the way of the 'strategy' is the brutal organization's control of oil fields in Iraq and Syria; which ISIS uses that oil wealth to help finance its terror operations. Here's how they do it...

Congresswoman: "I'm Glad People Have This 9/11 Mentality Again"

In the wake of non-stop propaganda from politicians of both parties, as well as a mainstream media desperate for ratings, the American public is finally terrified enough to support another war in the Middle East. This is an unfortunate development... With just 6% of likely U.S. voters thinking Congress is doing a good or excellent job according to a recent Rasmussen poll, it’s no surprise to see so many of these corrupt clowns falling over one another to appear tough on ISIS, using myriad hyperbolic and Orwellian statements.

China Daily: "Western Sanctions Will Make Moscow Back The Chinese Yuan Against The Dollar"

"The apparently long-term rupture of Russia's relations with the West offers an opportunity to the Chinese leadership to enhance its already close relationship with the Kremlin and thus turn the global geopolitical balance in its favor - not unlike former US president Richard Nixon and former secretary of state Henry Kissinger who reached out to Chairman Mao Zedong in 1972. The Russians, angry with Washington, are now more amenable to giving China wider access to their energy riches and their advanced military technology. The Western sanctions pushing Russia out of the international financial system are also making Moscow more ready and willing to back the Chinese yuan against the US dollar." - China Daily

BofA Warns "Risk Of Selloff" After September's FOMC

While BofAML's Michael Hanson expects Yellen’s overall tone to remain dovish, market perception will be key. The combination of changes to the forward guidance language, upward drift of the dots, and any comments seen as potentially hawkish, could lead to a selloff...

US Unveils Latest Russian Sanctions, Putin Immediately Responds That Russia Drafting Retaliation

Moments ago, as was widely preannounced, the US Treasury unveiled its latest round of Russian sanctions. While the bigger picture was well-known, here are some of the highlights:

  • U.S. SANCTIONS FOCUS ON FINANCIAL, ENERGY, DEFENSE SECTORS
  • U.S. TREASURY ADDS SBERBANK TO SANCTIONS LIST,
  • U.S. TREASURY SANCTIONS AFFECTS GAZPROM, GAZPROM NEFT, LUKOIL, ROSNEFT, AND SURGUTNEFTGAZ
  • U.S. TIGHTENS DEBT FINANCING RESTRICTIONS TO 30 DAYS

And instantly: PUTIN: GOVT DRAFTING PROPOSALS TO RETALIATE AGAINST SANCTIONS

Stocks Slump As Hawkish Fed Fears Send 10Y Yields Back Over 2.60%

It appears the upwards revisions for retail sales and not missing expectations for the headline data is the good news that is bad news for markets. With just a few days until the FOMC, it seems market perceptions of potential fed hawkishness (no good excuses recently not to be) is weighing on bonds and stocks. Treasury yields are accelerating higher (10Y above 2.60% for first time since July) tracking oddly perfectly with USDJPY and stocks, having entirely decoupled from JPY, are tanking on the rising rates/Fed hawkishness concerns. Of course, it's Friday so anything goes before we close.

What If The Easy Money Is Now On The Bear Side?

File this under Devil's Advocate: what if the easy money in the stock market is no longer the "guaranteed" Bull melt-up but the Bearish bet on a sudden air pocket? Just as a thought experiment, put yourself in the shoes of the money managers who have the leverage to move the markets.

Retail Sales "Ex-Autos" Growth Slowest Since January

Retail Sales rose 0.6% in August - precisely as expected - with July revised from 0.0% to +0.3% but Ex-Autos the +0.3% growth, which matched the revised July number, was the slowest since January's "harsh weather" impact. The 'control group' (ex food, auto dealers, and building materials) missed expectations at +0.4% vs +0.5% exp slipping to its slowest growth in 3 months. Under the surface it appears the gains in sales are driven mostly by a 1.5% rise in auto sales - as more subprime credit is loaded onto the US consumer.

As Turkey Refuses To Join "Anti-ISIS" Coalition, John Kerry Comes Begging

It appears the 'broad coalition' that President Obama so confidently described just two days ago is crumbling faster than the Iraqi army. First UK and Germany deny support for airstrikes in Syria and now Turkey refuses to allow a U.S.-led coalition to attack jihadists in neighboring Iraq and Syria from its air bases, nor will it take part in combat operations against militants, a government official. US Secretary of State John Kerry arrived in Ankara this morning to 'build the coalition' but, as AFP reports, Turkish officials have already made their position clear, "Turkey will not be involved in any armed operation but will entirely concentrate on humanitarian operations." Their 'excuse': "our hands and arms are tied because of the hostages," but follows PM Erdogan's recent shunning of Obama.

Latest Scotland Poll Closes Gap Further: 49% Would Vote For Independence, 51% Against; Cable Wobbles

Yesterday's YouGov poll, which saw the "No" camp regain the lead with 52% of the vote, was said by some to be the end of the "Yes" momentum observed last weekend when the Yes posted its first majority since polling began, Then moments ago, the momentum in the momentum changed once again, with the Guardian releasing the latest Scottish referendum poll by ICM which took place between September 9-11 polling a "a representative sample of 1,000 people", and where the vote was said to be "too close to call", as the margin collapsed once again, this time shifting the momentum in favor of the Yes vote, which received 49% of the vote, and No getting 51%, however 17% of the voters are "yet to make up their minds."

Frontrunning: September 12

  • Russia faces new U.S., EU sanctions over Ukraine crisis (Reuters)
  • Glasgow pulls no punches in welcome to 'Save the Union Express' (Guardian)
  • Pound Seen Tumbling Up to 10% on Scottish Yes Vote (BBG)
  • Moscow stifles dissent as soldiers return in coffins (Reuters)
  • Ukraine's leader sees no military solution of crisis, eyes reforms (Reuters)
  • Venezuela Threatens Harvard Professor for Default Comment (BBG)
  • Australia Raises Terror Alert to Highest Level in a Decade (BBG)
  • Activist Investors Build Up Their War Chests (WSJ)

Futures Flat On Russia Sanctions Round 3 Day

While today's key news event will likely be the preannounced latest, third, round of anti-Russian sanctions and the Russian retaliation, the reality as DB notes, is that the market seems to be seeing "some fatigue" in this story with the ECB, Scotland and next week's Fed meeting taking center stage. As a result, and ahead of expectations of change in Fed language which should carry a more hawkish tone, the dollar has been bid up some more overnight, leading to fresh multi-year highs in the USDJPY, and the now-paired TSY trade, with 10Y yields up to 2.57%, although this may now be in short-term oversold territory. The latest Scottish poll appears to have dented some of the "Yes" momentum, with 52% of the polled saying they would vote No in the referendum, although right now neither side has a clear majority when factoring in the undecideds: which means it will come down to the wire next week, with clear implications for Europe's secessionist movements if the Yes vote still manages to prevail, not to mention massive ramifications for the UK.

Meet The Puppetmasters: Here Are The 25 Most Politically Influential Billionaires In The US

It has been said, correctly, if only by those who see beyond the false "left-right" paradigm, that those who call the shots in US politics, and thus American socio-economics, are not so much America's lobbying corporations, but the people behind the corporations - i.e., those who have the money... all of it. Obviously, nobody has more money than America's billionaires. So who are the true puppetmasters who determine America's fate? For one answer we turn to Brookings Institution Governance Studies Director Darrell West in whose upcoming book "Billionaires: Reflections on the Upper Crust" ranks the 25 most influential American billionaires.

Russia Warns Obama's "Two-Faced" Strategy In Syria Will Lead To "Huge Escalation In Middle East & Africa"

If the West bombs Islamic State militants in Syria without consulting Damascus, LiveLeak reports that the anti-ISIS alliance may use the occasion to launch airstrikes against President Bashar Assad’s forces, according to Russian Foreign Minister Sergey Lavrov. Clearly comprehending that Obama's new strategy against ISIS in Syria is all about pushing the Qatar pipeline through (as was the impetus behind the 2013 intervention push), Russia is pushing back noting that the it is using ISIS as a pretext for bombing Syrian government forces and warning that "such a development would lead to a huge escalation of conflict in the Middle East and North Africa."