US GDP beat expectations 'proving' that government data shows the recovery meme is on track (as long as it doesn't snow ever again). The market's reaction... intriguing - stocks shrugged even as a USDJPY pump tried to get things going; gold and silver moved modestly higher; and Treasury yields... fell notably at the long end. 30Y is now trading with a 3.06% handle and 5s30s is back below 145bps...!
Following the unexpected surge in Q2 GDP, which beat most analyst estimates, there was widespread expectation that based on real-time data, the revised Q2 print would be worse. So perhaps it is appropriate that the Bureau of Economic Analysis punked everyone once again, when moments ago it released the first revision to the Q2 GDP print, which instead of dropping to the consensus expected 3.9%, it instead rose to 4.2%, up from the 4.0% initial report.
"Slack" or "no slack" - initial claims tumbling along the bottom of the lowest levels in a decade suggest the US economy's job creation is as good as it gets. Initial claims was stable at 298k (vs expectations of 300k) down very small from the 299k adjusted data for last week. Continuing claims rose 25k on the week and missed expectations but also continues to tread water at the lowest levels since 2007.
Hot on the heels of Ukraine's claims of 'invasion' and retraction of said claim, NATO is once again stepping in with strong claims about Russian 'incursions':
- *NATO OFFICER: ESTIMATED 20,000 RUSSIAN TROOPS NEAR UKRAINE (not 17 or 45?)
- *NATO OFFICER: OVER 1,000 RUSSIAN TROOPS OPERATING IN UKRAINE
- *NATO OFFICER: 2ND FRONT RISKS CUTTING UKRAINE ARMY SUPPLY LINES
- *NATO OFFICER: NEW 2ND FRONT 'EXTREMELY WORRYING' FOR UKRAINE
While NATO statements in the past have caused dramatic weakness in stocks (or been entirely shurgged off), it appears this time markets are taking their concerns more seriously as the officer states Ukraine's forces are in a "dire situation."
- Clearly it's time to bomb Assad (on Qatar instructions): Islamic State executes dozens of Syrian army soldiers (Reuters)
- Ukraine Declares Russian Invasion as Sanctions Threat Raised (BBG)
- Ukraine Reports Russian Invasion on a New Front (NYT)
- German Unemployment Rises as Risks to Economy Build (BBG)
- Ebola spreads to Nigeria oil hub Port Harcourt (BBC)
- FBI Probes Possible Hacking Incident at J.P. Morgan (WSJ)
- FBI, Secret Service investigate reports of cyber attacks on U.S. banks (Reuters)
- If you like your Venezuela, you can stay in Venezuela: Airlines Abandon Fliers Amid Currency Dispute (WSJ)
- Boomer Wealth Dented by Mortgages Poses U.S. Risk (BBG)
- People Aren't Buying Guns (BusinessWeek)
Ukraine accused Russia on Thursday of mounting an invasion in the southeast of the country in support of pro-Moscow separatist rebels. Ukraine's security and defense council said the border town of Novoazovsk and other parts of Ukraine's south-east had fallen under the control of Russian forces who together with rebels were staging a counter-offensive. "A counter-offensive by Russian troops and separatist units is continuing in south-east Ukraine," the council said in a post on Twitter. ... and then everything was promptly denied: CORRECTED-UKRAINIAN PRESIDENT POROSHENKO SAYS RUSSIAN TROOPS HAVE BEEN BROUGHT INTO UKRAINE (NOT 'RUSSIAN MILITARY INVASION HAS TAKEN PLACE')
If you like your de-escalation, you can keep your de-escalation. To think that heading into, and following the Russia-Ukraine "summit" earlier this week there was so much hope that the tense Ukraine civil war "situation" would somehow fix itself. Oh how wrong that thinking was considering overnight, following rebel separatists gains in the southeast of Ukraine which included the strategic port of Novoazvosk and which is "threatening to open up a new front in the war" including setting up a land corridor to Russia controlled-Crimea, Ukraine's president Poroshenko for the first time came out and directly accused Russia of an "Invasion", or at least a first time in recent weeks, saying he has convened the security council on the recent Russian actions.
First Russia and China, then UAE, Egypt, and Turkey... and now it appears Germany (following a phone call with Putin) is pulling the rug out from under US hegemony - just as Obama's warmongery ramps up...
*MERKEL SAYS U.S. CAN'T SOLVE ALL THE WORLD'S PROBLEMS ANYMORE
Which is odd because just yesterday, President Obama (who never lies) stated "The United States is and will remain the one indispensable nation in the world..." adding that "no other nation can do what we do." Perhaps he is wrong?
According to Russia's RIA Novosti, citing business daily Kommersant, Gazprom Neft has agreed to export 80,000 tons of oil from Novoportovskoye field in the Arctic; it will accept payment in rubles, and will also deliver oil via the Eastern Siberia-Pacific Ocean pipeline (ESPO), accepting payment in Chinese yuan for the transfers. Meaning Russia will export energy to either Europe or China, and receive payment in either Rubles or Yuan, in effect making the two currencies equivalent as far as the Eurasian axis is conerned, but most importantly, transact completely away from the US dollar thus, finally putin'(sic) in action the move for a Petrodollar-free world.
"The relationship between those who are constantly watched and tracked, and those who watch and track them, is the relationship between masters and slaves." - Chris Hedges
Yesterday, as the S&P closed above 2,000 for the first time, mainstream media pundits were trotted out to proclaim that either "stocks are 'fairly' valued" or "stocks are cheap" and the "money on the sidelines" must come in now. Aside from the 'idiocy' of the last comment, we thought BMO's Jack Ablin's comments were of note. "Valuation is the market’s biggest headwind,” he wrote, adding that sales “have to catch up” for stocks to sustain the rally. One glimpse at the following chart and it is clear that not only are stocks "not cheap" or "not fair" they are extremely rich with the only fall-back now being that "they're not as expensive as they were at the top of the biggest bubble in stocks ever." Seems like BTFATH makes perfect sense in that light...
Exactly one year ago Obama proposed to take Bashir al-Assad to the woodshed because he had allegedly unleashed a vicious chemical attack on his own citizens. That was all pretext, of course, because even the CIA refused to sign-off on the flimsy case for Assad’s culpability at the time - a reluctance corroborated since then by the considerable evidence that hundreds of Syrian civilians were murdered during a false flag operation staged by the rebels with help from Turkey. Now the White House is threatening to bomb Syria again. Washington should call off the bombers and get out of harm’s way. The American Imperium has failed and the prospect of bombing both sides of an irrelevant non-country’s ancient tribal wars ought, at last, to make that much clear.
Yesterday we noted the fact that Biotech stock investors has 'fought the Fed' and won (for now) in the last few months after Janet Yellen's "stretched valuations" warning. With bond yields continuing to collapse, despite Bullard's ongoing demand that the market 'sell sell sell', we thought a glimpse at just how dovish the market is compared to the 'hawkish' Fed would be useful...
You may be familiar with the story of how the US government confiscated gold bullion and then made owning it illegal back in 1933. Actually this event is more accurately termed a nationalization. Americans were forced under harsh penalties to sell their gold at an artificially low “official price.” Many have speculated that the US government could once again turn to gold confiscation/nationalization if it became desperate enough. But would the US government really turn to a 1933-style grab again? We would argue that they wouldn’t, but that doesn’t mean the threat to your gold has diminished. Quite the opposite.