Archive - Jul 17, 2014 - Story

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?

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)...

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.

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.

While the world was riveted by the latest Malaysian Airlines tragedy, Obama and Putin spoke. According to Reuters, Obama warned Russian President Vladimir Putin on Thursday that the United States and its allies are prepared to impose additional sanctions on Moscow if it does not change course in Ukraine.

The first eyewitness photo of debris of MH17 Malaysian Airlines plane has been released. Considering the amount of propaganda involved in this tragic development, take everything with a mine of salt.

The Ruble was already losing ground on the back of US Sanctions but those losses accelerated markedly after the Malaysia Airliness jet crash news. This is the biggest drop in the Ruble since August 2011...

#BREAKING: Reuters correspondent on the scene in Eastern Ukraine sees burning wreckage of air plane, bodies on ground

— Reuters World (@ReutersWorld) July 17, 2014

Despite CNBC's best afforts to play down this "may have been shot down" news of 295 dead on a Malaysian Airlines jet in Ukraine, markets are turmoiling. New lows for the day in stocks and bond yields have been accompnied by a surge in Gold (up over $25) and VIX (up almost 2 vols) with its biggest jump in 6 months.