Update: The official and black-market Peso has collapsed further today to new record lows.
It is actually quite sad to watch the continued downfall of Argentina's economy under the inept ministrations of its government. The only good thing that can possibly come from this is that it will set yet another example for others so they may avoid making similar mistakes. Unfortunately the example is being set on the backs of the country's citizens, who are seemingly forced to live from crisis to crisis. Politicians rarely pay the price for their atrocious policies, and we are quite sure Ms. Kirchner and her cronies have feathered their nests in ways the average citizen cannot even dream of (most recently, corruption allegations have caught up with Ms. Kirchner's vice president. Rampant government corruption has long been a hot topic in Argentina under Ms. Kirchner's rule). It is not as though Argentina didn't have great potential. If only politicians would leave its economy alone and stopped inflating the currency into oblivion, the country could easily and quickly regain its former prosperity.
Just in case futures buying algos forgot what the regurgitated "catalyst" that activated the overnight ramp was, the ECB was kind enough to remind everyone that the main event over the past 12 hours was the Deutsche Bank leak that while the ECB will not announce outright QE any time soon, thus denying the rumor spread in the past weak by the likes of Citi and JPM, the formerly preannounced and thus already priced-in (by the EURUSD which was about to take out 1.40 a few months ago) ABS purchase program, or as DB called it "private QE" is about to be unleashed. The ECB confirmed this earlier this morning when it announced that it had appointed BlackRock, the world’s biggest money manager, to advise on developing a program to buy asset-backed securities. In other words, Europe's largest public-sector hedge fund has just hired the world's largest private-sector hedge fund to "fix things."
- Islamic State executes soldiers, takes hostages at Syria base (Reuters)
- Buffett Burger King Funds Flip Obama’s Inversion Calculus (BBG)
- Equities Reach Record $66 Trillion as S&P 500 Hits 2,000 (BBG)
- Central Banks Playing Own Version of Plaza-opoly With FX (BBG)
- Russia court closes McDonald's branch for 90 days (Reuters)
- Finland Says NATO an Option After Russia ‘Violates’ Border Laws (BBG)
- Netanyahu Hit With Domestic Criticism Over Gaza Truce (BBG)
- Biggest Danish Fund Readies for Rate Shock as Exit Narrows (BBG)
- Nonprofit Hospitals' Profits Fall (WSJ)
If the big hope propelling both ES and S&P cash over 2,000 was the Ukraine-Russian talks, leading to some de-escalation and a thawing of Russian-German conditions, then it was clearly a dud. As the WSJ reports, "face-to-face talks between the Russian and Ukrainian presidents failed to produce a breakthrough for ending the conflict over eastern Ukraine, as Kiev released videos of captured Russian soldiers and rebels pushed toward a government-held city. The one-on-one session, which Ukraine's President Petro Poroshenko described as "tough and complex," ended early Wednesday after a day of talks on the crisis in the Belarusian capital of Minsk. Mr. Poroshenko said afterward that he would prepare a "road map" toward a possible cease-fire with the pro-Russia separatists." In other words, absolutely no progress. There was however escalation, when overnight the September Bund future rose as much as 36 ticks to 151.18, after Poland PM Tusk said “regular” Russian troops are operating in eastern Ukraine. And so we are back to square one, with concerns over Russia pushing European bonds to new record highs, in turn leading to more US Treasury buying, while a brand new rumor of more easing from the ECB, this time by Deutsche Bank, has propped up European equities, which like US futures are trading water around the critical 2000 level.
- That will teach the UAE who's boss: U.S. Won’t Consult Syria on Militant Strikes: White House (BBG)
- Putin Set to Meet Poroshenko as Ukraine Tensions Escalate (BBG)... but the de-escalation algo?
- Tim Hortons’ Canadian Fans Squeamish of American Hookup (BBG)
- Israeli air strikes target more Gaza high-rises (Reuters)
- How Steve Ballmer Became a Rookie Basketball Mogul (WSJ)
- Buffett to Help Finance Burger King Tax-Saving Deal (BBG)
- U.S. Factories Keep Losing Ground to Global Rivals (WSJ)
- Boehner, Camp Profit From Corporate Bid to Avoid U.S. Tax (BBG)
- Experimental U.S. hypersonic weapon destroyed seconds after launch (Reuters)
- The Neo-Neocons (WSJ)
Now that we can compile the first half data using the first two quarter data for both 2013 and 2014, we can conclusively state that if it weren't for the accounting magic behind non-GAAP, which includes such addbacks as tens of billions in litigation costs for the TBTBF utilities, pardon banks, pension addbacks, and not to mention hundreds of billions in restructuring addbacks resulting from the mass termination of hundreds of thousands of workers who miraculously fail to trickle through to the BLS' own "survey" data, things would hardly be as rosy as portrayed by the sellside. In fact, EPS growth in the first half was either 6.5%... or 0.2%. Depending on whether or not one believes in accounting magic.
- Jackson Hole Theme: Labor Markets Can’t Take Higher Rates (BBG), or anything else for that matter
- Kidnappers free American missing in Syria since 2012 (Reuters)
- More unpatriots: Burger King in merger talks with Canada's Tim Hortons (Reuters)
- California Quake to Cost Insurers Up to $1 Billion, Eqecat Says (BBG)
- Congo declares Ebola outbreak in northern Equateur province (Reuters)
- Missouri Governor Defends Ferguson Prosecutor (BBG)
- Kuroda Douses Japan Stimulus Expectations (WSJ)
- London Jihadi Call Vies With Banks in Canary Wharf Shadow (BBG)
- Netanyahu Signals Expansion of Air Attacks in Gaza (WSJ)
- Libya's Islamist Militias Claim Control of Tripoli (WSJ)
Another day, another brilliant scheme from the think-tank that is the G-20: prevent systemic collapse from TBTF banks loaded up with record amounts of debt by forcing them to... issue more debt.
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...
Li & Fung’s latest results yesterday offered some interesting anecdotes. The company’s performance for the first 6 months was hampered by ongoing macroeconomic weakness, geopolitical and weather events in its key destination markets (US and Europe). Price discounting remains a theme in US retail even beyond the end of June. The company also noted a reduction of foreign tourist flow by Russian tourists into Europe which is affecting retail markets there. This fits consistently well with some of the ECB’s geopolitical concerns outlined at its previous policy meeting.
With the FOMC Minutes in the books, the only remaining major event for the week is the Jackson Hole conference, where Yellen is now expected to talk back any Hawkish aftertaste left from the Minutes, and which starts today but no speeches are due until tomorrow. And while the Minutes were generally seen as hawkish, stocks continue to levitate, blissfully oblivious what tighter monetary conditions would mean to an asset bubble, which according to many, is now the biggest in history. And speaking of equities, US futures climbed to a fresh record high overnight on just the right mix of bad news.
The algos and chart traders are making another run at 2000 on the S&P 500, attempting to convince the wary investor one more time that buying on the dips is a no brainer. And in that proposition they are, ironically, correct. To buy this utterly manipulated market at these nosebleed valuation levels is about as brainless of an undertaking as is imaginable.
- Ferguson at Turning Point After Night of Relative Calm (BBG)
- Gaza war rages on, Hamas says Israel tried to kill its military chief (Reuters)
- Surge in Putin Patriotism Masks Pain of Sanctions (BBG)
- Bank of England splits over rate hike for first time in 3 years (Reuters)
- Putin Meeting Leaves Kiev With Tough Choices (WSJ)
- European Gas Reverses Biggest Drop Since 2009 on Ukraine (BBG)
- "Isolation" Mongolia Seeks Economic Lifeline With Pivot to China, Russia (BBG)
- Uber Picks David Plouffe to Wage Regulatory Fight (NYT)
- China Levies Record Antitrust Fine on Japanese Firms (BBG)
- Just how many rats are there? Steven Cohen's Firm Loses Another Top Executive (WSJ)
- Iceland Sees a Potential Volcanic Eruption, and Airlines Cower (Bloomberg)
- Iraqi forces battle to drive jihadists from Saddam's home town (Reuters)
- Israel, Palestinians Agree to Extend Gaza Truce for 24 Hours (BBG)
- Pimco now buying junk (BusinessWeek)
- Pakistan arrests 147 in Punjab towns as protests in capital continue (Reuters)
- Ex-Rabobank Employee Pleads Guilty in Libor-Rigging Probe (BBG)
- Ebola Orphans Targeted by Aid Groups as Newest Victims (BBG)
- Two California youths accused of plotting high school shooting spree (Reuters)
- Only Rich Know Wage Gains With No Raises for U.S Workers (BBG)
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?