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The Rot Within, Part I: Our Ponzi Economy

Depending on blowing the next bubble to temporarily prop up the economy is the height of foolhardy shortsightedness.



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Europe Agrees To Disagree Over New Russian Sanctions

As usual, Europe is talking out of both sides of its mouth (or other orifices). On the one hand, we are told:

  • EU foreign ministers failed to agree new sanctions against Russia at a Brussels meeting

And on the other hand:

  • Dutch minister says EU imposing new sanctions on officials over Russia

So - which is it Europe?



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In Potentially "Lethal Blow" For Obamacare, US Appeals Court Finds Insurance Subsidies Invalid In Most States

Moments ago, in what NBC classified as a "potentially lethal blow to Obamacare" a federal appeals court has ruled that the federal government may not subsidize health insurance plans bought by people in states that decided not to set up their own marketplaces under Obamacare. The law clearly says that states are to set up the exchanges. But 34 states opted not to, and the federal government took over in those states. The court ruled that federal government may not pay subsidies for insurance plans in those states. As the Hill reports further, the D.C. Circuit Court of Appeals said the Affordable Care Act does not permit the IRS to distribute premium subsidies in the federal ObamaCare exchange, meaning those consumers must bear the  full cost of their insurance.



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Rising Wages Where? Real Wages Post First Annual Decline Since 2012

For all the talk about "noisy inflation" this and "rising prices are good for the economy" that, what the Fed's cheerleading squad continues to ignore is the one most important inflation the US economy needs in order to actually have a sustainable recovery instead of centrally-planned stagflation: wage inflation. And while bullish pundits keep reffering to some mythical CEO survey promising wage will increase any day now, just not today, the BLS released its most recent real wage (adjusted for inflation) report today showing that not only did the average real hourly wage remain flat for the second month in a row at $10.29, the lowest level since September 2013, but posted the first annual decline since October 2012.



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Bill Ackman's "Most Important Death-Blow-For-Herbalife Presentation Ever" - Live Feed

The question on everyone's lips... how many slides? And where's Carl Icahn?



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Congressional Hearing On Hedge Fund Tax Evasion Through "Fictional Derivatives" - Live Webcast

As reported yesterday, at 9:30 am this morning the permanent subcommittee on investigations will hold a hearing in which it will expose the latest tax-evasion loophole used by select high-frequency trading hedge funds which has the technical name "basket options", but which, thanks to Carl Levin's mnemonic of fictional derivatives" will be better known as such (read the full story How RenTec Made More Than $34 Billion In Profits Since 1998: "Fictional Derivatives"). It will be interesting to learn, although we doubt it will be discussed, how in light of collapsing trading volumes for underlying securities, how much of the record derivative and future trading volume in recent years is directly related to this kind of tax-evading trading, and perhaps just as important, whether Congress and the IRS will crack down on such practices in the future.



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The Latest Updates About Ukraine And Flight MH17: News Roundup

For those just waking up and looking to catch up on all the latest news out of Ukraine and the MH17 crash response in particular, here is the latest news roundup.



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Gold Dumped (Pre-CPI) And Pumped (Post-CPI)

9 minutes before CPI data hit, gold futures were slammed lower on notable volume ($390 million). Then as CPI hit and "noise" was evidently not going away, gold prices surged over $12 to $1316 obn very heavy volume... Gold is moving inversely with the USD (which is flying around) as stock rally (?) and longer-term bonds rally/flatten.



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CPI Remains Stubbornly High as Yellen's "Noise" Won't Go Away

Consumer Price Inflation was 2.1% in June (as expected) remaining above the Fed's mandate levels and worryingly for all those who see the Fed as omniscient... refusing to go "noisily" down. Core CPI fell very modestly to 1.9% year-over-year but the jump in gasoline prices accounted for two-thirds of the overall rise in June CPI (seems like the Fed needs to print some more world peace to brings prices down). How many months of 'high' inflation does it take before Yellen admits it is not 'noise'?



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Chinese Premier Li Admits Central Planning May Not Be Optimal

In an odd admission of the possible fallibility of a centrally-planned economy, none other than Chinese Premier Li recently noted, "we should never assume that we few at the top have more insight or power but should try to mobilize the intelligence and creativity of the many thousands of our people so as to create unrivaled value." Perhaps the Federal Reserve would do well to listen. However, Li did not excuse himself from the need to spin how well things were going. On the heels of our 11 awkward Chinese fact charts, Li explains "the Chinese market is booming, the economy strong [sic]. Enterprises are the mainstay of the market." However, as Diapason Commodities' Sean Corrigan, when trying to confirm this 'fact', "discrepancies abound."



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Putin Speaks: Will Respond "Adequately" To Ongoing NATO Buildup; "Wont Tighten Screws" In Response To Threats

Perhaps there were some concerns that Putin, following the Russian Security Council Meeting today, may lash out at the west with escalating retaliatory sanctions against the west of his own. He did not which may explain why futures just saw an algo-driven buying wave moments ago. Still, what he did say is hardly justification to declare an "all clear" for risk as Putin being Putin, he merely reiterated for the nth time the Russian party line: Ukraine should facilitate a cease fire, Russia won't "blink" no matter how intense western sanctions are, and Russia will retaliate in kind to any ongoing NATO build up on its borders. Oh, and Crimea is now Russia's to do as it sees fit.



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Frontrunning: July 22

  • EU Works to Punish Russia as MH17 Bodies Leave Rebel Area (BBG)
  • Bodies From Malaysia Airlines Flight Begin Long Trip to Netherlands (WSJ)
  • Israel pounds Gaza as Kerry arrives (Reuters)
  • U.S. judge dismisses Republican lawsuit over Obamacare subsidy for Congress (Reuters)
  • Israel Soldier Missing Amid Assault on Hamas in Gaza (WSJ)
  • Detroit Retirees Vote in Favor of Pension Cuts (WSJ)
  • Russia Axes 1st Bond Sale in 3 Months as Ukraine Drives Up Yield  (BBG)
  • Wall Street Cut From Guest List for Jackson Hole Fed Meeting (BBG)
  • Credit Suisse to Exit Commodities, Posts Big Quarter Loss (BBG)
  • Draghi Cedes Euro Control to Yellen on Fed Rate Wagers (BBG)


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Stocks Desperate To Put Ukraine In Rearview Mirror But More Russian Sanctions Loom

Following the overnight ramp in various JPY crosses (dragging equity futures higher, and the Nikkei up 0.8%) it is as if the market is desperate to put all of last week's geopolitical events in the rearview mirror, and while yesterday there were no economic events of note, today's CPI and existing home prints should provide at least some distraction from the relentless barrage of one-line updates on Ukraine and Gaza. Still, that is precisely where the biggest risk remains, with an emphasis on the possibility of more Russian sanctions, this time by Europe.



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Russia Says Has Photos Of Ukraine Deploying BUK Missiles In East, Radar Proof Of Warplanes In MH17 Vicinity

Ukraine hasn’t said how it immediately knew rebels downed Malaysian plane, notes the Russian Foreign Ministry, as it unveils 10 awkward questions for Ukraine (and perhaps the US 'snap judgment') to answer about the MH17 disaster. However, what is perhaps more concerning for the hordes of finger-pointers is that: RUSSIA HAS IMAGES OF UKRAINE DEPLOYING BUK ROCKETS IN EAST: IFX; RUSSIA DETECTED UKRAINIAN FIGHTER JET PICK UP SPEED TOWARD MH17. Obviously, if there is proof that this is so, aside from CIA-created YouTube clips, these would deal another unpleasant blow to US foreign policy.



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