Archive - Jul 17, 2014

With virtually every airline now avoiding to fly above east Ukraine like the airborne version of the plague (observed recently in Denver) for obvious reasons, here is a snapshot of what the sky over east Ukraine looks like courtesy of FlightRadar 24. It is, in brief, a ghost sky.

Details are starting to come together. The WSJ reports that US Intelligence detected a surface missile launch and tracked the explosion of the plane.

*U.S. INTELLIGENCE SAYS SURFACE-TO-AIR MISSILE FIRED PLANE: WSJ

However, Intelligence Community Divided Over Whether Missile From Russia or E. Ukraine.

Despite an initial attempt to rally after the terrible news out of Ukraine hit, stocks were unable to mount any serious BTFD as uncertainty spread. Despite Bullard's best efforts, bond yields crashed lower (over 7bps today) with 10Y at 2.45% near the lowest close in 13 months. Gold prices jumped over $20 (even as the USD Index flatlined - though JPY strengthened notably as risk-off set in). VIX exploded 3.7 vols (its biggest swing - 45% - since Aug 2011). Equity markets cratered into the close as Israel ground invasion news (A White House Lockdown) added to the concerns leaving all US markets red post-payrolls and red post-Yellen. The S&P 500 dropped 1.18% - its biggest drop in 3 months. The Russell 2000 is now down 2.5% year-to-date.

A day that couldn't get any more bizarre, just did.

• WHITE HOUSE PLACED ON LOCKDOWN, ABC NEWS TWEETS

Is Obama trying to run away?

NSA Spies On Americans, Then Passes Around Their Nude Pictures and Videos

How stupid do you have to be to send a commercial flight over what essentially is a warzone? How much do you think the airline actually saved by taking the most direct route?

BREAKING NEWS: A large IDF force has just launched a ground operation in the Gaza Strip. A new phase of Operation Protective Edge has begun.

— IDF (@IDFSpokesperson) July 17, 2014

Given the market's rapid surge to dismissing The Fed's stock-selling recommendations, we are stunned by the silence of "market defenders" as once again the Fed takes to the airwaves to demand investors sell their bonds...

BULLARD SAYS FED BALANCE SHEET POSES INFLATIONARY RISK; QE 'FORCED SOME INVESTORS INTO MORE RISK TAKING'
BULLARD SAYS HE WORRIES ABOUT A BOND MARKET BUBBLE BUT STOCKS RETURNED TO MORE TRADITIONAL VALUATION'

Of course we know why they are so desperate for investors to sell their bonds (aside from the economic growth reassuring meme it provides), because they are in full panic mode over the broken repo markets we discussed in detail here.

The plot thickens. Moments ago, after Ukraine emergency services complained the crash probe was being hampered by separatists, it is these same "rebels" that appear to have found a key piece of the puzzle.

• PRO-RUSSIAN SEPARATISTS IN EASTERN UKRAINE SAY THEY HAVE FOUND "BLACK BOX" FLIGHT RECORDER OF DOWNED MALAYSIAN AIRLINER - INTERFAX

The question now is simple: what happens to the black box next, and perhaps more importantly - why anyone thinks a black box will have any information on who shot the missile that allegedly took down flight MH 17.

While President Obama is supposed to be discussing the need to spend more and more taxpayer money (especially those who benefitted unequally from the Fed's money printing) on infrastructure... but can't because of the Republicans... think of the bridges and roads. However, we suspect he will be forced to take note of the ongoing accusations in Ukraine (and his conversation with Putin)...

So not only are we dealing with an investment landscape in which virtually no working fund manager has experienced a bear market in bonds… we’ve actually got an entire generation of investment professionals who have experienced only one increase in interest rates in 14 years.

Reflecting on the growing anti-dollar alliance (especially among the BRICS as we noted here), Jim Rogers exclaims "The US dollar is an extremely flawed currency... we have serious problems... and the world needs something else." His perspective is that maybe (just maybe) a combined China, Russia, Brazil joint-currency can battle the dollar's dominance. Rogers goes on to discuss the rationale for the increased cooperation between these 5 nations with multi-billion populations but notes while Russia has lots to add, "I would throw India out" of BRICS.

It is abundantly clear that nobody knows anything at this point (aside from the ridiculous "news" circulating on social networks that separatist leader Igor Strelkov admitted to shooting down the plane, which he did not as can be seen on his actual VK.com page), but that will not prevent the media from already having a clear narrative of exactly what happened, and State Department Jen Psaki will be unable to confirm or deny anything. Watch live below.

Gold, silver, oil and wheat (see table) surged today after confirmaton that a Malaysian passenger airliner was shot down over the Ukraine. The tragedy is set to be used by opposing sides as a stick to beat each other with and inflame an already very tense geopolitical situation. 

This is a video feed from Russian news outlet Life News which will obviously have an appropriate bias. We are using it as they are the first news crew to allegedly have reporters on the crash site. The images are disturbing.