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Italy Back In Deflation With Lowest CPI Print In History; European Inflation Lowest Since 2009

Curious why European bond yields tumble to fresh new lows day after day (with the explicit backstop of the ECB of course, which makes fundamental analysis of sovereign solvency an irrelevant matter)? Then look no further than Italy, where as the chart below shows, not only has the economy "filled the gap" of its economy as tracked by its EU-Harmonized CPI, but at an August print of -0.2%, this is the lowest print in history, worse even than the brief -0.1%, flirt with deflation recorded just in the aftermath of the Lehman crash. But it wasn't only Italy: as Eurostat also reported today, Euroarea inflation also dropped once again, touching 0.3%, down from 0.4% a month ago, the lowest print October 2009.



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Frontrunning: August 29

  • Obama Cools Talk of Strikes Against Islamic State in Iraq or Syria (WSJ)
  • Separatists say will allow 'trapped' Ukrainian forces to withdraw (Reuters)
  • Ukraine Fighting Surges as Russian-Backed Forces Gain (BBG)
  • Missouri police sued for $40 million over actions in Ferguson protests (Reuters)
  • BTFDividend stocks? Tesco Slumps as Retailer Slashes Dividend 75% on Forecast (BBG)
  • In town halls, U.S. lawmakers hear voter anger over illegal migrants (Reuters)
  • Obamacare’s Latest Threat Nears Turning Point in Court (BBG)
  • Untangling the Mess of Austrian Bank Hypo (WSJ)
  • The billion-dollar fall of the house of Espirito Santo (Reuters)
  • Manhattan Condo Resale Prices Reach Record High (BBG)
  • California Drought Squeezes Wells: State Considers Regulating Groundwater Use for First Time (WSJ)


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S&P Futures Surge Over 2000, At Record High, On Collapsing Japanese, European Economic Data, Ukraine Escalations

Following Wednesday's laughable tape painting close where an algo, supposedly that of Citadel under the usual instructions of the NY Fed, ramped futures just over 2,000 to preserve faith in central planning, yesterday everyone was expecting a comparable rigged move... and got it, only this time milliseconds after the close, when futures moved from solidly in the red, to a fresh record high in seconds on no news - although some speculate that Obama not announcing Syrian air strikes yesterday was somehow the bullish catalyst - and purely on another bout of algo buying whose only purpose was to preserve the overnight momentum. Sure enough, this morning we find that even as bond yields around the world continue to probe 2014 lows, and with the Ruble sinking to fresh record lows as the Ukraine situation has deteriorated to unprecedented lows, so US equity futures have once, driven by the now generic USDJPY spike just after the European open, again soared overnight, well above 2000 and are now at all time highs, driven likely by the ongoing deflationary collapse in Europe where August inflation printed 0.3%, the lowest since 2009 while the unemployment remained close to record high, while the Japanese economic abemination is now fully featured for every Keynesian professor to see, with the latest Japanese data basically continuing the pattern of sheer horror as we reported yesterday.



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"A Man Of Many Perversions" – Federal Cybersecurity Head Convicted Of Child Porn Charges

This is why centralized power is so dangerous. It doesn’t matter whether the power is political or corporate, overly centralized power in all forms must be resisted whenever it appears. The worst of all worlds is when centralized political and corporate power unite in an unholy alliance, which is what has happened to America in recent decades. When this occurs, the combined forces of oligarchy simply begin to rapaciously feast on the citizenry with zero accountability. This is a fair description of the United States in 2014... The primary problem with centralized power is that sociopaths (for obvious reasons) gravitate toward, and greatly covet, positions of power.



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Fissure Eruption Begins In Iceland As Bardarbunga Magma Breaches The Surface

As Icenews reports, a fissure eruption has started in the Holuhraun lavafield north of Dyngjujökull. Newly formed crevasses were spotted in surveillance flyovers by scientists yesterday and at that time geophysicist Magnús Tumi Guðmundsson estimated that the magma intrusion which had been monitored for the previous week was moving only 2 kilometres under the surface.  The magma has now breached the surface and the volcanic eruption has been confirmed by scientists in the field. The low frequency tremors suggests the eruption is located outside the glacier. The blaze can be observed in Mila’s webcameras, two of which are trained on Vatnajökull glacier’s Bárðarbunga area.



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NATO Releases Satellite Imagery "Proof" That Russia Has Invaded Ukraine

NATO released new satellite images on Thursday, 28 August 2014, that show Russian combat forces engaged in military operations inside the sovereign territory of Ukraine. The images, captured in late August, depict Russian self-propelled artillery units moving in a convoy through the Ukrainian countryside and then preparing for action by establishing firing positions in the area of Krasnodon, Ukraine. Russia's response - "reports on Russian troops in Ukraine are false."



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USA Is Number 1 Again...

...In Foreign Bribery.



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Obama: "We Don't Have A Strategy Yet"

UPDATE: Damage Control Spin begins... Josh Earnest: "In his remarks today, POTUS was explicit - as he has been in the past - about the comprehensive strategy we'll use to confront ISIL threat."

President Obama 'knows' how to handle Putin's 'continuation' (not 'invasion') - more sanctions (and costs for Europe) - but when it comes to beating the most "barbaric" terrorists known as ISIS, ISIL, or The Islamic State; he had this to offer... "I don't want to put the cart before the horse. We don't have a strategy yet." Rest assured Americans - who have been told that ISIS could be crossing the borders every day and a constant threat, President Obama is 'working on it'. Perhaps most crucially, while we 'joke' that the administration has no strategy, it is noteworthy that Obama stated it was "not US policy to defeat ISIS, only reverse gains."



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This Has Never Happened Before

Presented with little comment aside to ask rhetorically just how screwed up markets and macro data are to allow 'this' to happen...



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A World Without Fractional Reserve Banks And Central Planning

"In a very real sense, it is fractional reserve banking and not money itself that is the root of so many of today’s evils. Whenever fractional reserves are permitted, the banking system – including the one that exists today throughout the world – comes to resemble a classic Ponzi scheme which can only function as long as most people don’t try to get at their money."



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Obama's National Security Council Meeting Has Concluded: Here Are The People Bringing You ISIS "Strategy"

Shortly after Obama admitted to the world he has no strategy how to deal with ISIS, about two weeks after the "humanitarian" bombing of Iraq started, he rushed into a meeting of his National Security Council. Two and a half hours later, the meeting has finished and we hope the president finally does have a strategy, one that isn't determined solely by Qatari natural gas pipeline interests.



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What Obama Meant To Wear...

Aside from his "we don't have a strategy" comment, the loudest statement President Obama made this afternoon appeared to be his choice of a "taupe" jacket. However, with everyone discussing Obama's "tan pan", we wonder isn't the President's 'green' fixation a more relevant topic?



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Abegeddon: Household Spending Re-Collapses As Japanese Unemployment Jumps To 9-Month High

Just when you thought it couldn't get any worse... In a veritable deluge of data from Japan tonight, there is - simply put - no silver lining. First, Japan's jobless rate unexpectedly jumped to 3.8% - its highest since Nov 2013 (despite the highest job-to-applicant ratio in 22 years). Then, household spending re-collapsed 5.9% for the 4th month in a row (showingh no sign of post-tax-hike-recovery). Industrial Production was up next and dramatically missed expectations with a mere 0.2% rebound after last month's plunge (-0.9% YoY - worst in 13 months), quickly followed by a 0.5% drop in Japanes retail trade MoM (missing hope for a 0.3% gain). That's good news, right? Means moar QQE, right? Wrong! Japanese CPI came hot at 3.4% YoY with energy costs and electronic goods 'hyperinflating' at 8.8% and 9.1% respectively. As Goldman's chief Japan economist warns, "the BOJ doesn’t have another bazooka," adding that "The window for reform may already have been half closed." We're gonna need another arrow, Abe!



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German Finance Minister Tells EU Leaders: Free Money Party's Over

Has Germany had enough? Hot on the heels of Mario Draghi's 'demands' that EU leaders undertake "structural reforms" to boost competitiveness and overcome the legacy of Europe's debt crisis, German Finance Minister Wolfgang Schaeuble unleashed perhaps the most worrisome statement tonight for all the free-money-party-goers - the music is about to stop. In an interview with Bloomberg TV, Schaeuble blasted "Europe needs to find ways to foster growth." In a clear shot across the bow of his 'core' cohort, Schaeuble said he "understood" Hollande's demands but shot back that "monetary policy can only buy time," adding that "the ECB has reached the limit in helping the Euro Area."



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Why Americans Are So Sensitive To Even The Smallest Increase In Prices

In the last year, even the 'smartest men in the room' PhDs with advanced degrees have seen their wages shrink, according to a new study by the Economic Policy Institute. As The WSJ notes, inflation has been low by most measures in recent years, but wage growth for the majority of workers has been even lower. That means even small amounts of inflation have been painful for vast swaths of the workforce. In recent years, one thing is clear: Neither monetary policy nor labor market policies nor fiscal policies have been able to boost earnings for most Americans. Only workers in the 80th percentile and up have seen their wage gains outpace inflation, though not by much.



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