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Mario Draghi Takes The Wind Out Of Citi's "QE In December" Sails

With Yellen's speech a bit of a letdown for the doves - she did not go full-dovish - markets anxiously await Mario Draghi to promise whetever for ever and ever... While financial markets don’t expect bombshells, his speech is an opportunity to underscore that ECB policy will stay looser for longer than that of the Fed and the Bank of England.

DRAGHI SAYS HE'S 'CONFIDENT' JUNE STIMULUS WILL BOOST DEMAND, SEES 'REAL RISK' MONETARY POLICY LOSES EFFECTIVENESS



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More Scaremongery: Inhofe Warns ISIS "Developing A Method To Blow Up A Major US City"

Last night it was SecDef Chuck Hagel who warned ISIS was a bigger threat to America than 9/11 and primed the narrative for the next round of defense-spending (and this deficit-boosting, QE-enabling money printing). Today it is Senate Armed Services Committee member Jim Inhofe who told Fox that "we're in the most dangerous position we've ever been in as a nation." While that seems a little bit of stretch (oh and hasn't the Senator seen stocks?) he adds - rather ominously, "they're crazy out there and they're rapidly developing a method of blowing up a major U.S. city and people just can't believe that's happening." But then again, when have we ever needed to 'believe' anything anyway (especially without YouTube clips to prove it).



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As South Africa Reels From Unexpected Bailout, One Bank Has A Modest Proposal: Give Us Your Gold

In a historic first, three days ago, South Africa's Rand Merchant Bank, a division of FirstRand Bank Limited, announced it would issue the FirstRand Gold Bond, or a bond denominated in South African Krugerrand gold coins. In other words, for the first time "holding" gold will pay a dividend (or in this case, interest). Sound odd? Maybe because it is.



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Why The Fed Is Being Forced To End QE

While the Federal Reserve presents itself as free to do whatever it pleases whenever it pleases, the reality is the Fed's own policies are constraining its choices. The Fed is being forced to end its bond-buying, cutting off the "free money for financiers" that has sustained a frothy stock market.



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Wall Street's Take On Jackson Hole: "Yellen Was Not Dovish Enough"

Confused by what Janet Yellen said? As it turns out, so is everyone else, where the prevailing sentiment across the sell-side analysts was that Yellen was not dovish enough. Then again, with expectations bordering on Yellen giving the "BTFATH" green light, there is no way she was not going to disappoint...



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Treasury Curve Collapses To Flattest Since Jan 2009

Bye bye NIM... The spread between 30Y and 5Y Treasury yields has collapsed to 151bps, its lowest since January 2009. It seems expectations for the exuberance of the business cycle expansion are a little underwhelming. This is half the Treasury curves peak steepness (hope) seen at the end of 2010...



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Is Portugal Next In Line For Wealth Confiscation?

The pattern should be seared in your memory by now. If you fail to recognize it, you could be struck with a huge financial blow. It’s a pattern that has played out over and over throughout history: a government gets into financial trouble, then denies there’s a problem, which is followed by a surprise wealth grab. That’s exactly what happened when bank deposits in Spain and Cyprus were raided. We’ve also seen retirement savings confiscated in some form in Poland, Portugal, and Hungary. Capital controls have been imposed in Cyprus and Iceland. Of course these aren’t the only examples of blatant government thievery. These examples are just within Europe and just within recent years. They can and will happen anywhere.



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Russia Explains Why It Rushed Entry Of Humanitarian Convoy

In a nearly carbon-copy replica of last Friday when tensions escalated then de-escalated on rumors that Ukraine had attacked a Russian military convoy, today's Yellen speech has been completely upstaged by ongoing developments out of Ukraine, where Kiev condemned the entry of Russian humanitarian convoy trucks (subsequently adding it no longer knows where they are), following Russia's announcement it could wait no longer to provide aid to the citizens of the Donetsk People's Republic. And while NATO promptly echoed Ukraine' position once again as it did last Friday, now it is Russia's turn to explain why it rushed to enter the country, seemingly without express preapproval by the Ukraine government.



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Stocks Slide As NATO 'Condemns" Russian Invasion, Warns Of "Alarming Build-Up" Of Forces

The last time NATO warned about (and threatened) Russian forces on Ukraine, stocks freefell.We will see if that happens this time:

  • *NATO CONDEMNS ENTRY OF RUSSIAN CONVOY INTO UKRAINE
  • *NATO HAS SEEN TRANSFERS OF LARGE QUANTITIES OF ADVANCED WEAPONS
  • *NATO SEES `ALARMING BUILD-UP' OF RUSSIAN FORCES NEAR UKRAINE
  • *NATO'S RASMUSSEN URGES RUSSIA TO STOP DESTABILIZING UKRAINE

As Former US Ambassador to Ukraine Bill Taylor warns "markets should be concerned, this is an actual invasion... and likely means war."



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The Market Reacts To (Then Reads) Janet Yellen's Speech

Out of the gate - based on the fact the word "slack" was present and the word "bubble" was not, stocks ramped higher as J-Yell's J-Hole speech hit. Bond yields surged (led by 5Y) and the USDollar also surged (as gold shrugged). However, once the machines were done, humans reacted to the fact that this was not the "full dovish" speech that was 'priced in' and have started to sell stocks back... but then again - we always have Draghi later to save Friday...



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Janet Yellen's J-Hole Speech: Slack Remains, QE Is Over, Rates Could Rise Sooner (Or Later)

Not  full-dovish, risk assets face tremendous downside potential. Key highlights: YELLEN SAYS FOMC SEES SIGNIFICANT UNDER-USE OF LABOR RESOURCES; YELLEN SEES ROOM FOR WAGE INCREASES THAT DON'T BOOST INFLATION; YELLEN REITERATES ASSET BUYING TO BE COMPLETED IN OCTOBER; YELLEN SAYS FASTER PROGRESS ON GOALS MAY BRING RATE RISE SOONER



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Ukraine Issues Statement On "Illegal" Entry By Russian Convoy, Warns Of "Planned Provocation"

"The fact that Russian trucks entered the territory of Ukraine without proper border and customs procedures and that the cargo was not donated to the representatives of the International Committee of the Red Cross indicates deliberate and aggressive nature of Russia’s actions. As we have previously emphasized the Russian side is fully responsible for the safety of the cargo. It is important to note that the Ukraine has already taken all necessary measures to ensure the security of the cargo. We also are not aware of the content of the agreements of the Russian side with Luhansk insurgents and we do not exclude the possibility of any planned provocation."



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JPM's Three Scenarios Of How The Ukraine Conflict Plays Out

With USDJPY algos, and thus the S&P, reacting as if stung like bees by every fabricated headline emerging out of Ukraine (only to reverse the move promptly after once the market realizes the biggest war in Ukraine continues to be one of disinformation), there appears to be far more confusion about how the Ukraine conflict will play out than what the Fed will do (recall that everyone is certain today Yellen will release even more dovishness). So to help out with the confusion here are three scenarios and trades from JPM, on how the Ukraine conflict may play out, if only in capital markets.



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Roundup Of Key Research Papers At Jackson Hole

With all eyes and ears firmly focused Janet Yellen's opening oratory this morning (due at 10ET), the contents of the rest of the conference appear to have been forgotten (and yet in the past have been among the most crucial to comprehend central banks' actions after the fact - forward guidance and QE for 2). As Bloomberg BusinessWeek reports, robots don’t steal jobs, the U.S. labor market is less flexible than it was, and workers haven’t suffered unprecedented periods out of work (and rehiring odds are the same as always), are among the conclusions of key papers being presented at the symposium, along with (unsurprisingly) findings that policymakers would benefit from a better understanding of labor market dynamics. The following is a brief review of their contents...



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Russian Humanitarian Convoy Enters Ukraine Without Authorization; Ukraine Considers Move "Direct Invasion"

Update: the farce is complete, although at least this time it didn't take Ukraine several hours to fabricate then unfabricate its plot line, because literally minutes after it accused Russia of invading, Ukraine's foreign minister said the convoy was "allowed" to avoid provocations

Here we go again. Precisely a week after the fabricated headlines last Friday that Ukraine had blown up Russian military vehicles in Ukraine territory, "news" which promptly was forgotten when Russia denied and Ukraine couldn't produce any proof of said attack, now it is time for the real "humanitarian" convoy to become the topic du jour, and so it did a few hours ago when some 90 trucks from the convoy were said to have entered Ukraine territory, a move which Ukraine promptly denounced as a direct invasion.



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