The lack of World War 3 this weekend was the perfect catalyst for buying stocks back up towards record highs... because Putin must have folded, right? Oil prices slipped, with WTI briefly back under $96, which lifted Trannies 1.75% on the day (best performer) but the Nasdaq's break of cycle highs (to March 2000 highs) is the big news for bubble-watchers (though it's different this time remember). VIX broke back below 13 to almost a 4-week low close. Treasuries were weak all day especially after Europe closed with the long-end underperforming (30Y +6.5bps) - 3rd worst day of yeasr for 30Y - with yields rising back to Russian convoy "destroyed" headline levels. Gold dropped back under $1300 as silver rallied 0.5%. S&P futures volumes were 40% below average as AAPL flash-crashes but has almost round-tripped to 2012 highs.
There is no reason rooted in the real world for today’s frothy stock market rally. In every single region of the planet, the post-crisis, central bank fueled expansion cycle - tepid as it was in the global aggregate - is faltering badly. So with the global expansion cycle faltering, profit ratios at all-time highs and PE multiples in the nose-bleed section of history - nearly 20X reported earnings for the S&P 500 - there is only one thing left for the Wall Street robots to do. Namely, vigorously buy the latest dip because the Fed has yet another new sheriff heading for Jackson Hole purportedly bearing dovish tidings. To wit, after 6 years of pinning money market rates to the economic floorboard at zero, Janet Yellen espies an economy still encumbered by “slack”, and will therefore be inclined to keep Wall Street gamblers in free money for a while longer.
With race-relations in American at a boiling point, it is perhaps worth a glance at Asia for some context. As Media Equalizer's Brian Maloney reports, one restaurant in South Korea is refusing to serve black people due to fears over Ebola! As he concludes: imagine the uproar were this sign to appear anywhere in the US...
Now that the US is exhibiting all the tact of a neocon bull in a china world, and has resumed airborne assaults in Iraq (with US marines on the ground merely for decorative purposes) it is hardly surprising that the rest of the world - at least those who are supposedly allied ideologically with Washington (if only for the time being) - suddenly feels entitled to US assistance. Not surprisingly, the first one to knock on the door of US military handouts is none other than the Kiev, whose parliamentary speaker Oleksandr Turchynov, said in an interview with BNS, that the country needs "modern weapons, aviation, air-defense equipment from U.S., European partners."
The Missouri Governor Jay Nixon gave "no heads up" to the White House before deploying The National Guard and has now made another abrupt decision as The National Guard closes in on Ferguson:
*NIXON'S CALL TO HALT CURFEW TONIGHT MADE IN E-MAILED STATEMENT
We presume when there are military tanks rolling through the streets of a town, there is no need for the actual implementation of a curfew... This once again rubs the administration's nose in it as AG Holder's comments from last week hang in the air: "get those damned tanks out of there."
The National Guard is on its way to Ferguson, Missouri... this comes as 'official' sources have stated that Missouri Governor Nixon gave "no heads up" to the White House before deploying The National Guard...
Pope Francis, who until now has had an aura of pacifism "above all else", if now and then bashing the occasional banker for creating record wealth disparity around the globe, just shattered his reputation of a man of peace at all costs, and moments ago endorsed the use of force in Iraq to stop Islamic militants from attacking religious minorities. He added that ays the international community — and not just one country — should decide how to intervene. He did not clarify just which superpower the last statement was a direct jab against.
Having already documented America's conversation to a turnkey totalitarian banana republic (confirmed over a year later by Edward Snowden), we note the following six charts from The NY Times that show the spread of military-style equipment - including aircraft, vehicles, body armor, grenade launchers and assault rifles - since the creation of the free Defense Department program in the 1990s.
Is there something particularly notable about a 17x trailing PE multiple on the S&P 500? According to Deustche's David Bianco, there is especially during mid to late cycle expansions, i.e., after three (or much more in this case with the S&P 500 now repoting 5+ years of EPS growth) years of rising earnings. In fact, as DB calculates, the only two periods of a PE over 17 after 3 years from the last EPS decline are 1965-66 and 1996-98 (Figure 2) below. And right now. It should be self-explanatory that both of those historic periods ended with a sharp equity correction.
It was just Friday when a pithy Bob Pisani noted that investor confidence in markets is up because there have been no market malfunctions recently... he spoke too soon. As Nanex's Eric Hunsader reports, an apparent malfunction at BATS-Y has caused dozens of flash crashes... including in AAPL.
London home prices fell in August by 5.9%, the plunge the biggest since Dec 2007 (and 2nd biggest drop on record). Since western sanctions on Russian oligarchs hit 3 months ago, home prices have fallen in London (especially the highest-end regions, such as Kensington -7%) and now that weakness is accelerating and spreading across the entire UK. As Rightmove reports, the 2.9% drop in UK home prices is the worst August on record. How long before the UK pulls back on its 'support' for US sanctions? Costs, indeed?
Eager to move on from Friday's disinformation fiasco, Ukrainian military spokesmen said the bus convoy had been in an area of fierce fighting between government forces and the separatists. As Reuters reports, it had come under fire from rebel Grad and mortar launchers, they said, causing an unknown number of casualties. And in keeping with the endless flow of BS emanating from east Ukraine, where civilians are merely collateral damage to an epic information war, and just to confuse everyone if not the algos which today are stricly in "de-escalation" mode, the separatists promptly accused Ukraine of the attack, when a rebel leader denied his forces had the military capability to conduct such an attack, and accused Kiev forces of regularly attacking the area and also using Russian-made Grad missiles.
Fifteen months ago we reported China's stealth invasion of India's Ladakh region, and now, as PTI reports, Chinese troops are reported to have entered deep into Indian territory in Burtse area in Ladakh where they had pitched their tents last year. Indian troops spotted Chinese personnel 25 to 30 km from the perceived Line of Actual Control (LAC). PLA personnel carried flags reading "this is Chinese territory, go back" in their hands and they refused to move after being confronted by India's quick response team.