European Stocks Enter Correction, Though Strong USDJPY Levitation Cuts Most Of US Futures Losses

Late yesterday, after Nobel peace prize-winning president Obama revealed his latest military incursion, years of pent up can-kicking almost caught up with futures, which dared to tumble by a whopping 0.7%, a move which hit Europe far more than the US, and shortly after Europe's open, the Euro Stoxx 50 Index dropped 10% from its 2014 high, marking an official correction in Europe where the Dax continues to be the key risk indicator, and which dropped as low as 8,903 before recovering to a drop of only 0.9% while German Bunds continues to print record highs day after day on fears what the escalating Russian trade war will do to the German economy, and other such "costs." US futures meanwhile have seen most of their losses recovered thanks to the usual relentless low volume USDJPY levitation, which pushed ES down to just -0.2% after a nearly four times greater drop. Still, while futures may be surging, the 10 Year has not gotten the memo and remains stuck just above 2.36% or its lowest print since June 2013, a clear indication that at least the bond market has given up all hope of a so-called US recovery for the conceivable future. What is most important however, is that at this pace, the Friday confidence effect, i.e., a green close, may be recovered: let's all just wait and see what the NY Fed trading desk decides to do, and escalating world wars aside, let's just pretend that HY didn't just sugger the biggest weekly HY outflow in history didn't just take place.

China Trade Balance Explodes To Record High As July Exports Double Expectations

Filed in the "are you kidding us" folder... Chinese exports rose an astounding 14.5% YoY in July (the biggest surge since April 2013 and double the 7.0% YoY expectations). Chinese imports plunged 1.6% to 4-month lows, dramatically missing expectations of a 2.6% YoY gain. These miracles of goalseek.xls and fake trade invoicing left the Chinese Trade Balance for July at $47.3 Billion - its highest ever (ever) and almost double the $27.4bn expectations. In the midst of collapsing European economies, plunging Russia, and stumbling 'hard' US macro data, the Chinese government would have us believe the world (net) bought the most stuff ever from them in July...

Markets Turmoil As President Obama Authorizes Air Strikes On Iraq "To Prevent Genocide"

In an effort to prevent genocide, President Obama has authorized US military action in Iraq "to protect Americans":

*OBAMA SAYS HE'S AUTHORIZED TARGETED AIR STRIKES IN IRAQ
*OBAMA SAYS HE'S AUTHORIZED HUMANITARIAN DROPS FOR REFUGEES

Global equity markets and Treasury yields are tumbling, oil and gold are up. President Obama concluded: "Today, America Is Coming To Help Iraq"... Again! Full speech below...

Ten Years Later: The Greek Olympic Wasteland In Photos

Ten years ago, when Europe was successfully pretending it is solvent for the benefit of German exports and Greece was happily masking its budget deficit disaster with Goldman Sachs currency swaps, the Olympic flame was about to light up the Athenian night sky. As BBC reports, the return of the Games to the Olympics' spiritual home was widely hailed as a success at the time. Now, not so much and most Greeks view the Athens Olympics with anger as a contributing factor to the country's economic catastrophe. The Games cost almost twice their projected budget, with organisers not opting to use any temporary, collapsible venues, as other host cities have done.

Making Sense Of The US Oil Story

We frequently see stories telling us how well the United States is doing at oil extraction. The fact that there are stories in the press about the US wanting to export crude oil adds to the hype. How much of these stories are really true? A major concern with falling per-capita energy consumption it that the financial system may soon reach limits where it is stretched beyond what it can stand. The economy needs energy growth to grow, but the economy is not getting it.

Checkers Vs Chess: The Reason Europe Is Imploding On "Russian" Sanctions

The West's leaders are full of lawyers, Putin is ex-KGB. If ever there was an example of him playing chess while the West plays checkers, the following chart is it. Despite Western protestations that its sanctions will hurt Russia more than Europe this morning, one look at Europe's huge net trade balance with Russia for food and it's clear who is really going to feel the pain. As Martin Armstrong noted previously, "Putin has responded to [Western] sanctions as any really smart chess-player would - you get the supporters of your adversary to jump-ship." What better way to crack the 'stop-Putin' alliance than to force Europe into trade deficits and squeeze their economies (especially Germany)?

Martin Armstrong Warns Italy's Recession Means "The End Of Democracy"

For the second time this year, Italy experienced a slump of its gross domestic product by 0.3% year on year. The economic data is so bad that Italy's economy is the smallest in 14 years. The advantage of Italy and its legendary corruption has been its equally inefficient government that has allowed the people to just ignore it and get along with life in the real world of the underground economy. The solution for Italy? The politician’s dream. Brussels want to take away the right of the Italian people to vote on anything meaningful. Italy is where the Republic was born. The land that had inspired the American Revolution against monarchy is now itself surrendering the last vestige of democratic process yield to the growing tyranny of Brussels under the pretense of saving the Euro.

70% Of Americans Believe Illegal Immigrants Threaten Way Of Life

In recent weeks, Bloomberg Businessweek reports, President Obama and congressional Republicans have begun to offer the same simple-sounding solution for dealing with the flood of children crossing the U.S. border alone: Send the kids home. But with tens of thousands of them churning through the system, some just toddlers, the logistics are overwhelming. Since October, more than 57,000 children have arrived by themselves, most from Central America (as we show below), and 22,000 more have been detained with their parents (mostly children under 12). The American people appears considerably more concerned than the politicians - a Reuters/Ipsos poll shows 70% of Americans - including 86% of Republicans - believe undocumented immigrants threaten traditional U.S. beliefs and customs.

First BRICS Bank, Now BRICS Food Bank

Despite President Obama's dictating that Russia is increasingly "isolated," it appears they have found a whole new set of friends to play with in the global trade sandpit. In retaliation to Western sanctions, Putin yesterday unveiled a total food import ban from all sanctioning nations, and, just as the BRICS created their own 'IMF-lite' away from Washington's prying eyes, Russia plans to substitute banned goods with not just domestic supplies but imports from Latin America, China, and several other nations. Agriculture Minister Nikolai Fedorov said "no food shortages are expected," but more isolation for the West...

US Begins Dropping Humanitarian Supplies In Iraq, It May Also be Dropping Bombs

While we await the latest nationally televized appearance of the teleprompter telling Obama just what the US is doing in Iraq at some point over the next 60 minutes, there are conflicting reports about what may or may not be happening in Iraq right now. On one hand there appears to be confirmation that the US has begun airdropping humanitarian supplies to the thousands trapped in the Iraqi mountains, as we earlier reported would likely happen. On the other hand, the NYT also blasted that the US is now also bombing ISIS targets in Iraq.

It Begins: Canada To Send Military Equipment To Ukraine

Moments ago Bloomberg reported, citing Defense minister Rob Nicholson speaking in Trenton, Ontario, that Canada, a NATO member, will send military equipment to Ukraine. Ukraine will in turn supposedly use supplies to protect eastern border Nicholson speaking to reporters, although perhaps one should ask ISIS where US military equipment that was meant for Al-Qaeda, pardon, Syrian rebels to dethrone Assad ended up...

High-Yield Bond Funds Smashed With Record $7.1 Billion Outflows

High-Yield bonds funds saw record outflows of $7.1 billion this week - the fourth week running - as the slow-motion train crash in credit starts to accelerate. As Forbes reports, the huge redemption blows out past the prior record outflow of $4.63 billion in June 2013. The full-year reading is now deeply in the red, at $5.9 billion, with 43% of the withdrawal tied to ETFs. Simply put, everyone in the bond market knew 'not' to sell because liquidity is simply not there; but game theory's first mover advantage finally broke as retail investors run and create a vicious cycle of 'liquid' ETF selling forcing 'illiquid' underlying bond selling... just as we warned here and here. Why should equity investors care? See chart below...

Retiring Early Is Un-American

Retiring early means calculating more years into the equation - how much you'll need to fund your lifestyle for as long as you (and your partner) will live. "Once you know your "number," there are only two other steps to commit to memory: Start saving and stop spending. Put another way: Live not just within your means, but well below," says Rick Miller, president of Sensible Financial Planning. Living "well below" your means really is un-American – it goes against the fundamental American cultural values of consumerism and debt.

Bonds & Bullion Bid As Dow Dumps To 4-Month Lows Amid Geopolitical Chaos

A day dominated by geopolitical headlines saw stocks hit 4-month lows, gold jump to 3-week highs, and bond yields tumble to 14-month lows. The Dow made new "sell in May" lows today, now -1.5% from end-April (joined in weakness since then by the Russell). The S&P 500 broke its 100-day moving-average (and did not bounce) as USDJPY broke the critical 102.00 level. The Dow stalled at its 200-day moving-average (16343).  10Y Treasury yields continued to plunge pressing a 2.41% handle - new 14-month closing low-yields. Gold jumped above $1315 closing near the highs of the day (and silver above $20). The USD ended up on the day but JPY carry unwinds continued. VIX broke back above 17 (and remains inverted for the 10th day in a row). Equities continues to catch down to high-yield credit's weakness. A late-day buying-panic, sparked by VIX-slamming, was triggered as S&P futures broke 1900.

If You Like Your Exemption, Keep It: 90% Of Uninsured Won't Pay Obamacare Penalties

No insurance, no penalty appears to be Obamacare's new meme as The Wall Street Journal reports almost 90% of the nation's 30 million uninsured won't pay a penalty in 2016 because of a growing batch of exemptions to the health-coverage requirement. In the interests of socialism, the Obama administration has provided 14 ways people can avoid the fine (on top of exemptions carved out under the 2010 law for groups including illegal immigrants, members of Native American tribes and certain religious sects). The exemptions are worrying insurers, as they could make it easier for younger, healthier people to forgo coverage, leaving the pools overly filled with old people or those with health problems. That, in turn, could cause premiums to rise.

Here's The Dumbest Thing You'll Hear All Week

In an unbelievable display of arrogance and self-importance, the Australian government recently announced the most sweeping changes to their national security legislation since 9/11. Basically they’re telling everyone that they should just be afraid… and that the government must spy on citizens in order to protect them. This is how it always happens... and we can watch yet another country slide rapidly into a police state.