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What San Francisco Housing Reveals About The Fourth Global Liquidity Bubble

Fourth time was sadly not the charm...



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Case-Shiller Home Prices Tumble Most Since Dec 2011, Miss 2nd Month In A Row

But it was supposed to be the weather? S&P/Case-Shiller home prices dropped in May and missed expectations for the 2nd month in a row. Against a forecast rise on 0.3%, prices dropped in May by 0.3% - the biggest drop since December 2011. It appears we are going to need more Chinese hot money flow buyers. Of note, while in April Case-Shiller reported only 5 cities out of the tracked 20 posting sequential price declines, in May this number has soared to 14. And so the fourth dead cat bounce in housing appears to be over.



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USDJPY Surge Sends Stocks Higher As Bond Yields Tumble

This morning makes as much sense as most mornings. US equity markets, after some weakness in the European session have been lifted wholesale towards Friday's highs on the heels of a USDJPY 102 stop-running algo. At the same time bonds are being bnought aggressively with 10Y and 30Y yields now lower on the week. The USD index is surging higher on EUR and GBP weakness and commodities are sliding.



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The Panic Containment Team Speaks: Ebola Poses "Little Risk" To The US, CDC Claims: Is It Wrong?

In the aftermath of the news from the past week that at least two US citizens have been infected with the Ebola virus, a very unpleasant if nagging question has appeared: can the virus spread to the US? According to NBC, "the Ebola virus, which has infected two U.S. humanitarian workers in Liberia, is only a short plane ride from any city on Earth. But federal health officials say it’s not a big worry for most Americans." Are they wrong?



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Frontrunning: July 29

  • EU finalises Russian sanctions as BP warns of impact on business (FT)
  • Geopolitical Risk Rises for Global Investors (BBG)
  • Jaded Argentines brace for looming debt default (Reuters)
  • In Argentina, Mix of Money and Politics Stirs Intrigue Around Kirchner (WSJ)
  • Mom ‘Trusting God’ for Ebola-Infected U.S. Doctor’s Life (BBG)
  • Thanks NSA: Tech Companies Reel as NSA's Spying Tarnishes Reputations (BBG)
  • Goldman unit eyes foray into China amid metals financing scandal (Reuters)
  • Cash out time: London’s Gherkin Tower Offered for Sale by Its Lenders (BBG)
  • Apenomics strikes again: McDonald’s Japan axes profit guidance amid food safety scandal (FT)
  • Do you see what happens Larry when you are the only USDJPY bid? Nomura Profit Falls More Than Estimated on Broking Slump (BBG)


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Futures Levitate As FOMC Begins Two-Day Meeting

Overnight markets have been a continuation of the relative peace observed yesterday before the onslaught of key data later in the week, with the biggest mover standing out as the USDJPY, which briefly touched 102 before sliding lower then recouping losses. This sent the Nikkei 225 up 0.57% despite absolutely atrocious Japanese household spending data, coupled with a major deterioration in employment: at this rate if Abenomics doesn't fix the economy it just may destroy it. Aside from that the last 24 hours could be summed as having a lot of noise but not a lot of excitement. This was best illustrated by the S&P500’s (+0.03%) performance which was the second smallest gain YTD. And while the SHCOMP is starting to fade its recent euphoria and China was up only 0.24%, Europe continues to cower in the shade of Russian sanctions as both German Bund yields rose to record highs, and Portugal's BES tumbled by 10% once again to 1 week lows. Today Europe is expected to formally reveal its latest Russian sanctions, which should in turn push Europe's already teetering economy back over the edge.



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The Shocking Reason Putin Isn't Worried About The $50 Billion Yukos Ruling

"There is a war coming in Europe... Do you really think this matters?"



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Photos Emerge Of 10 "Active Militia Teams" Securing The US-Mexico Border

With 1000s of illegal immigrants crossing the US-Mexico border every day (perhaps even more now some of the border has been washed away), the government quietly dumping them in Tennessee (among other places), and current (recently constructed border protection infrastructure already breaking down), it appears the American people are taking matters into their own hands. Photos showing dozens of members of militia groups on the U.S.-Mexico border carrying semi-automatic rifles and wearing masks, camouflage and tactical gear provide one of the first glimpses into the group's activities on the border. The groups, including Oathkeepers, Three Percenters and Patriots, began recruiting and organizing more than a month ago and recent Facebook entries provide more color on their perspective: "You see an illegal. You point your gun dead at him, right between his eyes, and you say, 'Get back across the border or you will be shot.' ...We are not worried about an 'International' incident."



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Asset Forfeiture – How To Steal Americans' Hard Earned Cash With Zero Repercussions

While the epidemic of law enforcement theft is problematic throughout the country (see these egregious examples from Tennessee and Michigan), it appears Texas has a particularly keen love affair with the practice. Not only did last year’s story take place in Texas, today’s highlighted episode also takes place in the Lone Star State. This time in a town of 150 people called Estelline, which earns more than 89% of its gross revenues from traffic fines and forfeitures. In other words, from theft.



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Is This China's QE?

Shortly after we exposed the real liquidity crisis facing Chinese banks recently (when no repo occurred and money market rates surged), China (very quietly) announced CNY 1 trillion of 'Pledged Supplementary Lending' (PSL) by the PBOC to China Development Bank. This first use of the facility "smacks of quantitative easing" according to StanChart's Stephen Green, noting it is "deliberate and significant expansion of the PBOC's balance sheet via creating bank reserves/cash" and likens the exercise to the UK's Funding For Lending scheme. BofA is less convinced of the PBOC's quantitative loosening, suggesting it is more like a targeted line of credit (focused on lowering the costs of funding) and arguing with a record "asset" creation by Chinese banks in Q1 does China really need standalone QE?



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Israel Destroys Hamas Media Broadcast Outlets In Massive Explosion - Live Feed

Operation Protective Edge entered its 22nd day on Tuesday, as Israeli ground forces continued their incursion into Gaza following the government rejection of a cease-fire draft proposed by U.S. Secretary of State John Kerry over the weekend. Earlier in the evening, Haaretz reports the Israeli Air Force struck Hamas chief Ismail Haniyeh's home in Gaza and then Reuters notes that Hamas said that its broadcast outlets, Al-Aqsa TV and Al-Aqsa Radio were also targeted. The television station continued to broadcast, but the radio station went silent.



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On Washington's Ukrainian Fiasco: "Who Is The Real Problem Here?"

In just 800 words Pat Buchanan exposes the sheer juvenile delinquency embodied in Washington’s current Ukrainian fiasco.
What motivates Putin seems simple and understandable. He wants the respect due a world power. He sees himself as protector of the Russians left behind in his “near abroad.” He relishes playing Big Power politics. History is full of such men. But what motivates those on our side who seek every opportunity to restart the Cold War? Is it not a desperate desire to appear once again Churchillian, once again heroic, once again relevant, as they saw themselves in the Cold War that ended so long ago? Who is the real problem here?

 



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China Raids Multiple Microsoft Offices, Media Demands "Severe Punishment"

With Chinese state media calling for "severe punishment" against American tech firms for helping the U.S government to steal secrets and monitor China, Reuters reports that Microsoft offices in Beijing, Shanghai, Guangzhou and Chengdu were raided this weekend. Chinese officials declined to give any reasons for the inspections. Whether this is ongoing blow-back from NSA revelations or a back-door Russia retaliation is unclear, but it is an escalation from the ongoing Windows 8 ban. Microsoft's only response, "we're happy to answer the government's questions."



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Today's Other Anniversary

As most are aware by now, today is the 100th anniversary of the start of World War I - the war which was supposed to end all wars, when in reality, in conjunction with the Federal Reserve - which was created just few shorts months prior - it merely unleashed the most deadly series of wars the world has ever seen. What may be less known is that today's "other" anniversary is perhaps just as momentous, if not (yet) as destructive or GDP boosting: on July 28, 2004 is when America got its first glimpse of a political newcomer few if any had heard of previously. Barack Obama.



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Is This How China Will Deal With Its Massive Mal-Investment?

There is no doubt that China's massive credit-fueled expansion has created the largest mal-investment boom the world has ever known (no matter how much anticipated urbanization or consumerization one really believes in)... so we wondered, how will they deal with this problem? Perhaps the following creative destruction is necessary...



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