While most have greeted Obama's latest military incursion into Iraq with a healthy dose of skepticism - because after all Obama is merely the fourth president in a row to bomb Iraq - Obama's ideological brother, French socialist president Hollande, had some strong words of encouragement:
*HOLLANDE SAYS FRANCE IS READY TO DO ITS PART IN IRAQ
Late yesterday, after Nobel peace prize-winning president Obama revealed his latest military incursion, years of pent up can-kicking almost caught up with futures, which dared to tumble by a whopping 0.7%, a move which hit Europe far more than the US, and shortly after Europe's open, the Euro Stoxx 50 Index dropped 10% from its 2014 high, marking an official correction in Europe where the Dax continues to be the key risk indicator, and which dropped as low as 8,903 before recovering to a drop of only 0.9% while German Bunds continues to print record highs day after day on fears what the escalating Russian trade war will do to the German economy, and other such "costs." US futures meanwhile have seen most of their losses recovered thanks to the usual relentless low volume USDJPY levitation, which pushed ES down to just -0.2% after a nearly four times greater drop. Still, while futures may be surging, the 10 Year has not gotten the memo and remains stuck just above 2.36% or its lowest print since June 2013, a clear indication that at least the bond market has given up all hope of a so-called US recovery for the conceivable future. What is most important however, is that at this pace, the Friday confidence effect, i.e., a green close, may be recovered: let's all just wait and see what the NY Fed trading desk decides to do, and escalating world wars aside, let's just pretend that HY didn't just sugger the biggest weekly HY outflow in history didn't just take place.
Nigeria Declares State Of Emergency: "Everyone In The World Is At Risk" From Ebola, CDC Issues Level 1 "All-Hands Call"Submitted by Tyler Durden on 08/07/2014 11:15 -0400
With over 932 dead, the US Centers for Disease Control and Prevention has issued its highest level alert for an all-hands on deck response to the crisis in West Africa (that is spreading across the world). While President Obama proclaimed we are prepared and itis "not easily transmitted," it appears that is not entirely true. Meanwhile, CDC Director Frieden's "deep concerns" have been confirmed as Nigeria’s health minister has declared a health emergency as the deadly Ebola virus gained a foothold in Africa’s most populous nation, according to news reports. Nigerian authorities moved quickly late Wednesday, gathering isolation tents as five more cases of the Ebola Virus were confirmed in Lagos (the world's 4th most populous city with 21 million people). Most international flights from West Africa are also now screening passengers.
Yesterday, the Wall Street Journal published an article highlighting the surge in what it calls “ultralong” bonds, defined as having a maturity of more than 30 years. The findings are simply stunning. In what may seem counterintuitive, bond yields at hundred year plus lows in many countries has led major investment firms to rush into ever riskier and longer duration fixed income securities just to earn some income. This has opened the floodgates to governments and corporations looking to lock in low yields on debt they won’t have to pay back for a generation. Just to name a few, this year we have already seen a 100-year bond sale by Mexico, two separate 50-year bond issuances by Canada, and wait for this one, Spain of all countries is set to try to sell a 50-year bond!
- So that's what Obama meant by "costs" - Italy Recession, German Orders Signal Euro-Area Struggle (BBG)
- Russia worries, weak German data weigh on Europe (Reuters)
- Hedge Funds Betting Against Banco Espírito Santo in Line for Big Gains (WSJ)
- Bankers Called Up for Ukraine War as Rolls-Royce for Sale (BBG)
- Double Punch for 'Inversion' Deals (WSJ)
- Statist Strongmen Putin-Xi See History’s Capitalism Clash (BBG)
- China bans beards, veils from Xinjiang city's buses (Reuters)
- BATS to Settle High-Speed Trading Case (WSJ)
- Second Ebola patient wheeled into Atlanta hospital for treatment (Reuters)
Russia has been quiet, too quiet, since the EU and US unleashed their latest set of sanctions. However, as military drills and troop build-ups occur on Ukraine's borders, Reuters reports that Russian Prime Minister Medvedev is considering a significant retaliation, "any unfriendly measures by the EU, including those in the area of air transportation, we’ll be studied and won’t remain without a response." Russian business daily Vedomosti quoted unnamed sources as saying the foreign and transport ministries were discussing possible action which might force EU airlines into long and costly detours and put them at a disadvantage to Asian rivals by restricting or banning European airlines from flying over Siberia on busy Asian routes. Costs? Over $1.3bn for every months for Lufthansa, BA, and Air France...
- Second Ebola patient to arrive in U.S. on Tuesday (Reuters)
- Ebola Drug Made From Tobacco Plant Saves U.S. Aid Workers (BBG)
- Egypt plans to dig new Suez Canal costing $4 billion (Reuters)
- Apple Buybacks Pay Most Ever as CEOs Spend $211 Billion (BBG)
- DeMark Says Sell China Stocks Now After World’s Best Gain (BBG)
- Investors Stung by Losses After Exiting Struggling Property Fund in China (WSJ)
- B.A. in BTFD: MIT May Consider Granting Degrees in Less Than Four Years (BBG)
- Too late, money's already been spent: GPIF Needs Overhaul Before Asset Changes, Shiozaki Says (BBG)
- Oh look, another "truce": Israel withdraws troops, 72-hour Gaza truce begins (Reuters)
It is unclear how much of this morning's momentum-busting weakness in futures is the result of China's horrendous Service PMI, which as we reported last night dropped to the lowest print on record at the contraction borderline, but whatever low volume levitation was launched by the market after Europe's close yesterday may have fizzled out if only until Europe close (there is no POMO today). Still, futures may have been helped by yet another batch of worse than expected European data, namely the final Eurozone PMI prints, which in turn sent the EURUSD to day lows and the offsetting carry favorite USDJPY to highs, helping offset futures weakness. Because in the New Normal there is nothing like a little bad macro data to goose the BTFATH algos...
"The consensus narrative on market developments is set to implode," warns Steen Jakobsen, Saxo Bank's chief economist and chief investment officer. In his latest note, he explains precisely how to position ahead of the storm, with everything from calls on gold to German government bonds and more importantly, and their underlying rationale. As Jakobsen concludes, "Yes, the truth is often ugly, but often liberating too. We need to move away from chasing paper profit to investing in people, ideas and prospects. We should not fear the coming sell-off, but embrace and use it for creating a true mandate for change. It’s about time."
Here we are now, two years later, and the ECB has failed to create the sustainable recovery that it promised. Because of this, in June of 2014, Mario Draghi implemented Negative Interest rate Policies or NIRP and hinted at launching a QE program
Unlike last week's economic report deluge, this week has virtually no A-grade updates of note, with the key events being Factory Orders (exp. 0.6%), ISM non-mfg (exp. 56.5), Trade balance (Exp. -$44.9 bn), Unit Labor Costs (1.2%) and Wholesale Inventories (0.7%).
- New War Risk on Russia Fringes Amid Armenia-Azeri Clashes (BBG)
- Palestinians accuse Israel of breaking seven-hour Gaza truce (Reuters)
- Argentine Default Sours Outlook for Peso as Talks Ordered (BBG)
- Espírito Santo Saga Entangles Swiss Company (WSJ)
- Booming African Lion Economies Gear Up to Emulate Asians (BBG)
- CME Profit Falls as Trading Volume Declines (WSJ)
- Why Recalled Cars Stay on the Road (WSJ)
- London Renters Win in Billionaire Backyard as Prices Soar (BBG)
- Junk-Debt Liquidity Concerns Bring Sales (WSJ)
- Rescuers race to find survivors after 400 die in China quake (AFP)
In recent weeks France has defied US demands not to build Mistrals for Russia, has questioned dollar imperialism and the Petrodollar, and has blasted the US banking regulator's fines as "accelerating the decline of the dollar." So it is likely not a huge surprise that ahead of the G-20 meeting of world leaders later in the year, The FT reports, France has gathered support to challenge US regulators imposing heavy penalties on foreign banks. Berlin, London and Rome have backed Paris in its push to have its concerns about so-called US extraterritoriality discussed when leaders of the world’s top 20 economies meet hoping to bring "more proportionality" to bank fines. With allies like this...
"By all measures, the U.S. stock market is currently frothy," warns Paul Singer, founder of $24.8 billion hedge fund firm Elliott Management, ominously concluding, "The apparent stability of the world financial system is superficial – financial asset prices are not real, the equilibrium is temporary, the lack of volatility is a trap, and when the whole thing goes haywire, there will truly be hell to pay."
The 100th anniversary of the beginning of World War I is upon us. Well we should mourn this cataclysmic event and continue to draw lessons from it. We see the same dangers today in the petty but growing conflict over Ukraine between the US and its European satraps and Russia. A conflict over a quasi-nation of absolutely no strategic interest to the United States. American neocons and their Congressional mouthpieces are now calling for NATO to take control of Moldova and Georgia. Conrad von Hotzendorf would have approved. No one in the west is ready to die for Luhansk or Donetsk, but few in 1914 Europe were ready to die for Verdun or Ypres – but millions did.