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Mapping The Militarization Of America's Police Force Since 2006

A few months ago we warned about the SWATification of America, mapping the surplus military gear by state.

Having  already documented America's conversation to a turnkey totalitarian banana republic (confirmed over a year later by Edward Snowden), we note the following six charts from The NY Times that show the spread of military-style equipment - including aircraft, vehicles, body armor, grenade launchers and assault rifles - since the creation of the free Defense Department program in the 1990s.



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Bloomberg "Surrealistic" Headline Of The Day



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What's So Special About A 17x PE Multiple?

Is there something particularly notable about a 17x trailing PE multiple on the S&P 500? According to Deustche's David Bianco, there is especially during mid to late cycle expansions, i.e., after three (or much more in this case with the S&P 500 now repoting 5+ years of EPS growth) years of rising earnings. In fact, as DB calculates, the only two periods of a PE over 17 after 3 years from the last EPS decline are 1965-66 and 1996-98 (Figure 2) below. And right now. It should be self-explanatory that both of those historic periods ended with a sharp equity correction.



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Dozens Of Flash-Crashes - Including AAPL - As BATS Breaks

It was just Friday when a pithy Bob Pisani noted that investor confidence in markets is up because there have been no market malfunctions recently... he spoke too soon. As Nanex's Eric Hunsader reports, an apparent malfunction at BATS-Y has caused dozens of flash crashes... including in AAPL.



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UK Home Prices Have Biggest August Plunge On Record As Russian Sanctions Sink In

London home prices fell in August by 5.9%, the plunge the biggest since Dec 2007 (and 2nd biggest drop on record). Since western sanctions on Russian oligarchs hit 3 months ago, home prices have fallen in London (especially the highest-end regions, such as Kensington -7%) and now that weakness is accelerating and spreading across the entire UK. As Rightmove reports, the 2.9% drop in UK home prices is the worst August on record. How long before the UK pulls back on its 'support' for US sanctions? Costs, indeed?



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Disinformation War Escalates: Ukraine, Rebels Accuse Each Other Of Attacking Refugee Convoy

Eager to move on from Friday's disinformation fiasco, Ukrainian military spokesmen said the bus convoy had been in an area of fierce fighting between government forces and the separatists. As Reuters reports, it had come under fire from rebel Grad and mortar launchers, they said, causing an unknown number of casualties.  And in keeping with the endless flow of BS emanating from east Ukraine, where civilians are merely collateral damage to an epic information war, and just to confuse everyone if not the algos which today are stricly in "de-escalation" mode, the separatists promptly accused Ukraine of the attack, when a rebel leader denied his forces had the military capability to conduct such an attack, and accused Kiev forces of regularly attacking the area and also using Russian-made Grad missiles.



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Chinese Troops 'Invade' 25Km Into India, "This Is Chinese Territory, Go Back"

Fifteen months ago we reported China's stealth invasion of India's Ladakh region, and now, as PTI reports, Chinese troops are reported to have entered deep into Indian territory in Burtse area in Ladakh where they had pitched their tents last year. Indian troops spotted Chinese personnel 25 to 30 km from the perceived Line of Actual Control (LAC). PLA personnel carried flags reading "this is Chinese territory, go back" in their hands and they refused to move after being confronted by India's quick response team.



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Is The SEC Asking These Hedge Funds Why They All Rushed Into Allergan Last Quarter?

It remains to be seen if frontrunning the general public on collusive, material, non-public information that a strategic would be about to announce a bid for Allergan is indeed "completely lawful", however we do have a question: now that the SEC is formally investigating Ackman for what may be a massive frontrunning scam, is it also looking at all the other hedge funds which reported brand new stakes (some of which also entirely in the form of calls) in Allergan in the second quarter?



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Homebuilder Sentiment Jumps to Highest Since January As Midwest Hits Record High

Despite almost record-low mortgage apps and plunging sales, homebuilders remain as optimistic as ever that no matter what is ahead - stagnant wages, rising rates, or FNMA's outlook deteriorating - everything will be fine in housing.NAHB sentiment printed 55, beating 53 expectations on the back of an explosion of hope in the Midwest to record highs (as South and West tumbled). The 'outlook' - the real hope - surged to its highest in a year - just short of this cycle's highs in hope.



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NATO Admits Putin Holds "Short-Term Cards", But "Won't Be Around Forever"

Following a summit in Brussels, a senior NATO diplomat proudly proclaimed that 'allies' have pledged more spending and will beef up its presence in Eastern Europe. However, likely to the chagrin of President Obama (and the West's narrative), he let slip some uncomfortable truths:

  • *NATO DIPLOMAT SAYS PUTIN HOLDS TACTIAL SHORT-TERM CARDS (hhmm, ok)
  • *NATO DIPLOMAT SAYS LONG-TERM GEOPOLITICAL TRENDS FAVOR THE WEST (phew...)
  • *NATO DIPLOMAT SAYS PUTIN WON'T BE AROUND FOREVER (threat or warning?)

So, all the west has to do is be patient? Wait out Putin? We suspect that 'strategy' may get accelerated at some point.



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The Bottom Line To Investors From Tax Inversions: No Above Average Returns

While it remains to be seen if Obama can put an end to what has been the hottest M&A trend in 2014, namely engaging in tax redomiciling "inversion" deals, it is clear that the C-suite is delighted to continue pursuing deals which minimize the cash outflows to the US Treasury, with some 52 redomiciling deals done since 1983, 22 taking place since 2009 and another 10 being finalized and many more in the works. But what is the track record of tax inversions when it comes to the bottom line, namely investor returns.  According to a Reuters calculation, "companies that have done such "inversion" deals have failed to produce above-average returns for investors."



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Don't Think It Won't Happen Just Because It Hasn't Happened Yet: Loss Of Faith In The Fed

Much of the supposedly godlike power of central banks is participants' faith in their powers to control not just finance but the real world that can be leveraged by finance. Implicit in this narrative is the notion that there are no hard limits on credit or central bank money creation. Equally implicit is the assumption that the central banks repressing interest rates and creating trillions of dollars out of thin air can control any blowback or unintended consequences triggered by the free money for financiers tsunami.



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Gunmen Attack Saudi Prince In Paris, Steal "Sensitive Documents"

Amid all the global geopolitical tensions - which the stock market apparently believes are all fixed now - news that the motorcade of a Saudi prince was attacked in Paris by Kalashnikov-wielding gunmen takes on more relevance than it normally would. The attackers stole 250,000 Euros in cash and more crucially - "sensitive documents." No suspects have been apprehended and to make matters more complex, local police noted "It's quite an unusual attack. They were obviously well-informed. It's true that it's quite a rare way of operating."



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All Eyes On Jackson Hole: Key Events In The Coming Week

The main event of the week will be Yellen's long awaited speech at the Jackson Hole 3-day symposium taking place August 21-23. The theme of this year's symposium is entitled "Re-Evaluating Labour Market Dynamics" and Yellen is expected to deliver her keynote address on Friday morning US time. Consensus is that she will likely highlight that the alternative measures of labour market slack in evaluating the ongoing significant under-utilisation of labour resources (eg, duration of employment, quit rate in JOLTS data) have yet to normalise relative to 2002-2007 levels. Any sound bite that touches on the debate of cyclical versus structural drivers of labour force participation will also be closely followed. Unlike some of the previous Jackson Hole symposiums, this is probably not one that will serve as a precursor of any monetary policy changes but the tone of Yellen's speech may still have a market impact and set the mood for busier times ahead in September.



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National Guard Sent To Ferguson After Night Of "Molotov Cocktails, Shootings, Looting And Vandalism "

After three consecutive days of rioting and looting in Ferguson, MO, despite a second night of curfews which was honored by few if any, Missouri's governor said on Monday he would send the National Guard into the violent suburb to "restore calm" after authorities forcibly dispersed yet another crowd overnight.  Gov. Jay Nixon signed an executive order deploying the U.S. state militia, saying demonstrators had thrown Molotov cocktails and shot at police as well as a civilian, a description of the night's events diverging widely from some eyewitness accounts. State Highway Patrol Captain Ron Johnson told a late night news briefing: "Molotov cocktails were thrown, there were shootings, looting, vandalism and other acts of violence that clearly appear not to have been spontaneous."



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