Have you noticed that prices are going up rapidly? If so, you are certainly not alone. But Federal Reserve chair Janet Yellen, the Obama administration and the mainstream media would have us believe that inflation is completely under control and exactly where it should be. Perhaps if the highly manipulated numbers that they quote us were real, everything would be fine. But of course the way that the inflation rate is calculated has been changed more than 20 times since the 1970s, and at this point it bears so little relation to reality that it is essentially meaningless. Anyone that has to regularly pay for food, water, gas, electricity or anything else knows that inflation is too high. In fact, if inflation was calculated the same way that it was back in 1980, the inflation rate would be close to 10 percent right now.
Russia Reignites The Proxy War: Putin Offers "Complete Support" To Iraq Prime Minister Scorned By ObamaSubmitted by Tyler Durden on 06/20/2014 20:50 -0400
The Kremlin said in a statement that al-Maliki informed Putin on Friday about his government’s steps to combat the “terrorist groups in the north of the country.” It added that the insurgency threatens security of the entire region. Putin confirmed Russia’s “full support for the Iraqi government’s action to quickly free the territory of the republic from terrorists,” the Kremlin said, adding that Putin and al-Maliki also discussed bilateral cooperation. Putin’s expression of support for the embattled Iraqi prime minister comes as al-Maliki’s rivals have mounted a campaign to force him out of office, with some angling for support from Western backers and regional heavyweights.
As oil prices have risen on geopolitical concerns (that have been printed away by central banks in stocks), so gas prices at the pump in the US have risen to their highest for this time of year since 2008 (and that did not end well). We are not alone in our concern as Morgan Stanley's (and esx Fed) Vince Reinhart warns that a more extreme jump in oil prices would be enough to stall the recovery (lowering real GDP growth by 1.7 percentage points one year out; and perhaps more worryingly, raise CPI growth by about 3.6pp, lowering real consumer spending growth by a full two percentage points).
Here are all the latest news and updates from the rapidly-changing situation in Iraq.
As of this moment, US equity futures are perfectly unchanged despite what has been an almost comical reactivation of the 102.000 USDJPY tractor beam. Considering the pair has been trading within a 75 pips of the 102.000 level for the past month, one has to wonder when and what the next BOJ Yen equilibrium level will be reset to. Oddly enough, even as the USDJPY is very much unchanged, the Nikkei continues to rise suggesting that, as Nikkei reported, the GPIF is already investing Japanese pension funds in stocks. Which is great for the Nikkei catching up with the global bond bubble, what is not so great is what happens when the market realizes that the largest holder (excluding the BOJ) of JGBs is dumping, and the world's most illiquid major sovereign bond market rushes for the exits. Just recall the daily halts of Japanese bond trading from the summer of 2013 - we give it 3-6 months before it returns with a vengeance.
Gold has surged over $41 and silver over 70 cents to over $1,314 and $20.46 per ounce or 3% and 4.2% respectively as oil ticks higher on the tinder box that is Iraq ... Faber recently said how he will “never sell his gold”, he buys “more every month” and believes storing gold in Singapore is "safest”.
She came, she spoke, and she sent stocks to a new all time high. That is perhaps the simplest summary of what Janet Yellen did yesterday when, as a result of her droning monotone, she managed to put the VIX literally to sleep, which closed at the lowest since 2007 and the resulting surge in the S&P was a fresh record high, because despite the "concerns" Fed member have about record high complacency, all they are doing is adding to it. And now that apparently the Fed has a market "valuation" department, and Yellen can issue fairness opinions on whether the S&P is overvalued, the only question is whether today, as a follow through to yesterday's "buy everything, preferably on leverage, sincerely - the Fed" ramp, the VIX will drop to single digits today.
Bank of America believes the increasing geopolitical tensions in Iraq risk regional contagion, with the potential for negative spillover to global markets. If Iraq were to see further turmoil, in addition to the civil war in neighbouring Syria, we believe it could destabilize the region further, disrupt oil production and exports, and provide fertile ground for terrorist activity to extend its reach. They review the background of Iraqi turmoil, and discuss the political, economic and market implications in 10 questions; noting that the root of the problem is the central government’s non-inclusive and sectarian policies.
There has been a lot of money made by being patient waiting for the events to play out, and then coming in and shorting the Oil Markets the last five years.
In Escalating War Of Words, Saudi Arabia Fires Back At Iraq, Warns Of Civil War, Opposes Foreign InterventionSubmitted by Tyler Durden on 06/18/2014 08:44 -0400
Moments ago Saudi Arabia fired back at Iraq's "harsh words" and warned that Iraq faced the threat of full-scale civil war with grave consequences for the wider region and, in a message to arch rival Iran, warned against outside powers intervening in the conflict. "This grave situation that is storming Iraq carries with it the signs of civil war whose implications for the region we cannot fathom," Foreign Minister Prince Saud al-Faisal told a gathering of Arab and Muslim leaders in Jeddah. He urged nations racked by violence to meet the "legitimate demands of the people and to achieve national reconciliation (without) foreign interference or outside agendas". It was unclear if "foreign interference" includes the US as well, or just limited to Iran.
- Levin Hearing Ups Volume in High-Frequency Call to Action (BBG)
- Ukrainian President Fires Central Bank Chief (BBG)
- Argentina Plans Debt Swap (WSJ)
- Fed Decision Day Guide From Dot Plots To Exit Strategy (BBG)
- World Bank Economist: China May Face US-Style Financial Crisis (WSJ)
- Premier Li says no hard landing for China, expects medium to high growth (Reuters)
- Putin Talks Peace With Ukraine Leader After Gas Pipe Fire (BBG)
- Poll Shows Erosion in President's Support (WSJ)
- U.S. mortgage applications plunge in latest week (Reuters)
- Ex-Goldman director goes to prison, still owes $13.9 million fine (Reuters)
it is suddenly not fun being a Fed president (or Chairmanwoman) these days: with yesterday's 2.1% CPI print, the YoY rate has now increased for four consecutive months and is above the Fed's target. Concurrently, the unemployment rate has also dipped well below the Fed’s previous 6.5% threshold guidance, in other words the Fed has now met both its mandates as set down previously. There have also been fairly unambiguous comments from the Fed’s Bullard suggesting that this is the closest the Fed has been to fulfilling its mandates in many years. Finally, adding to the "concerns" that the Fed may surprise everyone were BOE Carney’s comments last week that a hike “could happen sooner than the market currently expect." In short: continued QE here, without a taper acceleration, merely affirms that all the Fed is after is reflating the stock market, and such trivial considerations as employment and inflation are merely secondary to the Fed. Which, of course, we know - all is secondary to the wealth effect, i.e., making the rich, richer. But it is one thing for tinfoil hat sites to expose the truth, it is something else entirely when it is revealed to the entire world.
Events in Iraq are changing by the hour, now that US combat boots are "on the ground", expect them to change even faster. For those looking to catch up on the most recent overnight news out of this latest civil war torn country, here is the full update.
- Obama to tout manufacturing gains, highlight economic progress (Reuters)
- Iraq Gunmen Attack North of Baghdad as Obama Weighs Plan (BBG)
- Chinese Regulators Block Shipping Alliance Abandoned Deal (WSJ)
- Russian $8.2 Trillion Oil Trove Locked Without U.S. Tech (BBG)
- Ukrainian forces, rebels clash near Russian border (Reuters)
- M&A talk lifts stocks, Iraq tensions ease slightly (Reuters)
- Wealthy Clintons Use Trusts to Limit Estate Tax They Back (BBG)
- Argentina vows to service debt despite new legal blow (Reuters)
- Allergan's Bitter Pill for Morgan Stanley (WSJ)
- Islamists kill 50 in Kenya, some during World Cup screening (Reuters)
- American Express Revs Up Pursuit of the Masses (WSJ)