Exxon

There has been little in term of tier 1 data releases to drive the price action so far in the overnight session which means participants focused on the upcoming US related risk events including the Fed, Q2 GDP and July Payrolls. This, combined with WSJ article by Fed’s Fisher who opined that the FOMC should consider tapering the reinvestment of maturing securities and begin shrinking the Fed’s balance sheet (note that Fisher’s opinion piece is written based on a speech he gave on July 16th) meant that USTs came under pressure overnight in Asia and in Europe this morning. There has been little notable equity futures action (for now: the USDJPY algo team gave it a good ramp attempt just before Europe open, and will repeat just around the US open despite Standard Chartered major cut to its USDJPY forecast from 110 to 106 overnight), although we expect that to change since today is the day when Tuesday frontrunning takes place with full force. We expect equities to completely ignore the ongoing deterioration in Ukraine and the imminent release of EU's own sanctions against Russia, as well as what is now shaping up as an Argentina default on July 30.

• Argentine holdout NML says government "choosing" to default (Reuters)
• Crunch time for Gaza truce talks as death toll passes 800 (Reuters)
• Don’t Tell Anybody About This Story on HFT Power Jump Trading (BBG)
• U.S. Accuses Russia of Shelling Eastern Ukraine (BBG)
• France’s Wheat Exports in Question as Rain Spoils Quality (BBG)
• Tapering in action: Lower printer sales hurt Xerox's revenue (Reuters)
• No liquidity? No Problem, there's an ETF for that: Bond ETFs Swelling in Europe as Trading Debt Gets Tougher (BBG)
• Herbalife hires ex-Biden chief to fend off regulators (NYPost)
• GM recalls far from calamity for some dealers who find new customers, business (Reuters)
• Bad weather likely cause of fatal Air Algerie crash: French officials (Reuters)

"Sanctions have a boomerang effect and without any doubt they will push U.S.-Russian relations into a dead end, and cause very serious damage, and it undermines the long term security interests of the US State and its people."
"This means that U.S. companies willing to work in Russia will lose their competitiveness next to other global energy companies." Putin said the sanctions will hurt Exxon Mobil Corp which has been given the opportunity to operate in Russia. "So, do they not want it to work there? They are causing damage to their major energy companies." Putin said the sanctions will hurt Exxon Mobil Corp which has been given the opportunity to operate in Russia. "So, do they not want it to work there? They are causing damage to their major energy companies."

Economic analysts are torn as to how important Saudi Arabia will prove to the global economy in years ahead. In the first half of 2014, the US surpassed Saudi Arabia to become the world’s foremost oil producer. This sparked widespread predictions that the US would soon become an oil exporter, reducing its dependency on Riyadh and harming Saudi Arabia’s leading role in the Middle-East. However, the ISIS invasion of Iraq and Syria, the Boko Haram insurgency and continued oil theft in Nigeria, unrest in Venezuela and ongoing violence in Sudan and South Sudan have changed the deal.

• Carl Icahn says 'time to be cautious' on U.S. stocks (Reuters)
• Banco Espirito Santo Lifts Lid on Exposure to Group (BBG)
• Slowing Customer Traffic Worries U.S. Retailers (WSJ)
• Insurgents enter military base northeast of Baghdad (Reuters)
• Obama tells Israel U.S. ready to help end hostilities (Reuters)
• Japan economics minister warns of premature QE exit, sees room for more easing (Reuters)
• Greek Banks See Quadrupling of Housing Loans by Next Year (BBG) ... to fund buybacks like in the US?
• Piggy Banks Being Raided Signal Swedish Housing Dilemma (BBG)
• London Seeks New Spenders as Russians Skip $719 Champagne (BBG)

What this chart shows is that when it comes to core manufacturing and service trade, that which excludes petroleum, the US trade deficit hit some $49 billion dollars in the month of May, the highest trade deficit ever recorded! In other words, far from doubling US exports, Obama is on pace to make the export segment of the US economy the weakest it has ever been, leading to millions of export-producing jobs gone for ever (but fear not, they will be promptly replaced by part-time jobs). It also means that the collapse in Q1 GDP, much of which was driven by tumbling net exports, will continue as America appear largely unable to pull itself out of its international trade funk, much less doubling its exports.

• France's Sarkozy faces corruption probe in blow to comeback hopes (Reuters)
• Ukraine Says Military Offensive Against Rebels Yielding Results (WSJ)
• JPMorgan Investors Show Support for Dimon in Cancer Fight (BBG)
• World’s ATM Moves to Frankfurt as Yellen’s Fed Slows Cash (BBG)
• Argentina Seen Backtracking on Fernandez Vows as Legacy at Risk (BBG)
• Palestinian teen killed in possible revenge attack (Reuters)
• The Bill and Hillary Clinton Money Machine Taps Corporate Cash (WSJ)
• London House Prices Surge the Most Since 1987, Nationwide Says (BBG)
• Last Jew in Afghanistan faces ruin as kebabs fail to sell (Reuters)

What happens when huge, reckless buyers with nearly endless resources cut back after a phenomenal binge? Well, we know what happened in 2008.

Here are all the latest news and updates from the rapidly-changing situation in Iraq.

• Ukraine, Russia Fail to Reach Deal in Natural-Gas Talks (WSJ)
• Boko Haram Kidnaps More Girls in Nigeria (WSJ)
• Déjà vu: echoes of pre-crisis world mount (FT)
• Money market rates hit new low as ECB moves gain traction (Reuters)
• 'Dark Pools' Face New SEC Probe (WSJ)
• Buffett Ready to Double $15 Billion Solar, Wind Bet (BBG)
• White House-Congress rift over Bergdahl deal deepens (Reuters)
• Taxpayers Face Big Medicare Tab for Unusual Doctor Billings (WSJ)
• Lean Retirement Faces U.S. Generation X as Wealth Trails (BBG)
• Employers’ skills gap claim does not show up in US wage data (FT)
• He is holding out for the Zuckerberg overbid: Donald Sterling says LA Clippers not for sale (WSJ)

• Attorneys Known for Large Civil Settlements Line Up to Sue GM Over Company's Handling of Defective Ignition Switches (WSJ)
• Pakistani Taliban attack airport in Karachi, 27 dead (Reuters)
• U.S. Official: Sgt. Bowe Bergdahl Has Declined to Speak to His Family (WSJ)
• Ukraine Gas Talks Resume in Brussels to Avoid Cut-off This Week  (BBG)
• China's Central Bank Flexes Muscle (WSJ)
• China says Vietnam, Philippines' mingling on disputed isle a 'farce' (Reuters)
• World Needs Record Saudi Oil Supply as OPEC Convenes (BBG)
• Kraft Raises Prices on Maxwell House, Yuban U.S. Coffee Products (BBG)
• United Continental: One Sick Bird (WSJ)

US Banks enjoyed more or less steadily climbing, or rather soaring, deposits by Russian institutions and individuals, having tripled in just two years to $21.6 billion by February, according to the US Treasury... and then March hit... boomerang

"Traditionally we’ve been a financially conservative company," explains one fracking company, warning that "we’ve become more leveraged than we historically have been and we’ve become uncomfortable with that." This is the growing message from a shale boom that, as Bloomberg reports, is facing a shakeout as drillers struggle to keep pace with the relentless spending needed to get oil and gas out of the ground. As everyone chases the dream, well counts have soared and production per well has tumbled. "The list of companies that are financially stressed is considerable," warns one analyst as shale debt has almost doubled over the last four years while revenue has gained just 5.6% "not everyone is going to survive. We’ve seen it before."

Several of the largest oil companies in the world are doubling down in Russia despite moves by the West to isolate Russia and its economy. To be clear, the oil companies are not legally running afoul of international sanctions. But their collective shrug in the face of European and American pressure to boycott Russia – along with the $400 billion natural gas deal Russia signed with China last week – illustrates the difficulty with which the West will have at undermining Russia’s energy sector, if it chose to do so. Russia is too big of a prize for the likes of ExxonMobil, BP, and Shell. Or viewed another way, the moves to deepen business in Russia suggest that the world’s biggest oil companies are confident that the U.S. and Europe won’t be so bold as to truly attack Russia’s energy machine.

• McDonald’s Workers Arrested at Protest Near Headquarters (BBG)
• U.S. Sends Troops to Chad to Hunt for Abducted Nigeria Girls (BBG)
• BofA Scrapping Market-Making Unit Amid Trading Scrutiny (BBG)
• Biggest attack in years kills 31 in China's troubled Xinjiang (Reuters)
• Intense Fighting Flares in Eastern Ukraine (WSJ)
• Fed Officials Tussle Over Labor Market Slack (Hilsenrath)
• Ikea Economics Lure Central Bankers Seeking New Tools (BBG)
• When Putin ordered up new hospitals, his associates botched the operation (Reuters)
• Norway’s $33 Billion Man Steps Up Search in Asia Real Estate Bet (BBG)