President Obama and Israeli Prime Minister Netanyahu spoke on the phone today; The White House just released the clarifying statement of next steps...
While the world's attention is focused on the tragic events in Ukraine, the fighting in Gaza has entered its 13th, and most deadly day, with at least 50 Palestinians killed on Sunday by Israeli shelling in a Gaza neighborhood, where "bodies were strewn in the street and thousands fled for shelter to a hospital packed with wounded, witnesses and health officials said." Reuters reports that the mass casualties in Shejaia, in northeast Gaza, were the heaviest since Israel launched its offensive, since expanded to a land offensive including tanks and troops. This has brought the total dead count on the Gaza side to over 400. According to elderly locals, today's Israeli shelling was the fiercest they had seen since the 1967 Middle East war, when Israel captured Gaza. Shifa hospital's director, Naser Tattar, said 17 children, 14 women and four elderly were among the 50 dead, and about 400 people were wounded in the Israeli assault.
With a straight face, Barack Obama has been repeatedly telling us that the world is "more stable" and "less violent" than ever. In fact, he believes that this is the best time in history to be alive because of how peaceful and stable everything is. Just this week, his press secretary told the media that this administration has "substantially improved" the "tranquility of the global community". Apparently these guys don't think that we will notice all of the violence, war and terrorism constantly raging all around us.
While everyone in the world (apart from the BRICS and Germany) know that Putin/Russia is the enemy; the relationships among the various 'states' in The Middle East are a mystery to most... As Slate reports, with overlapping civil wars in Syria and Iraq, a new flare-up of violence between Israel and the Palestinians, and tense nuclear talks with Iran; Middle Eastern politics are more volatile than ever and longtime alliances are shifting. Here's Slate's guide to who's on whose side in the escalating chaos...
U.S. Government Lied to Pretend that Accidental Russian Shootdown of Commercial Plane Was Intentional … Three Decades AgoSubmitted by George Washington on 07/19/2014 14:05 -0400
The U.S. Has Previously Carried Out a Major Disinformation Campaign to Malign Russia
With large anti-Israel protests in London, Paris, Brussels, and Madrid, the social media PR blitzkrieg continues between the IDF and Hamas. Palestinian officials claim over 100 civilian deaths in the last 48 hours (and over 330 since Operation Protective Edge began). Israel continues to reference the ongoing bombardment of rockets from Gaza (militants in Gaza have launched 1,663 rockets...The IDF has struck "2,300 terror targets" in Gaza). As LA Times reports, fighting continued above and below ground Saturday as Israeli soldiers have located dozens of shafts dug under homes and green houses leading to 13 tunnels. CNN reports local witnesses saying very 30 seconds to a minute a shell comes down in or around Beit Lahya. Perhaps most fascinating is The IDF claims that their forces have been attacked by explosive-laden "suicide donkeys."
Just imagine how high stocks would be if more jets were shot down in Ukraine, more ground operations were unleashed in Gaza, more sanctions were placed on global growth, more European and US macro data disappointed, more job cuts at major firms, and more European banks declared bankruptcy. Today's farcical Friday surge (with the Nasdaq up 2% from its overnight lows and 30 point rip in the S&P) appears 100% based on the squeezing of "most shorted" stocks (best day in over a month) and the ramping of AUDJPY. Credit markets ignored the idiocy; Treasury markets ignored it; The USD went nowhere (after EUR dumped on Italy downgrade then recovered). Gold, Silver, and Copper all closed down 2-3% on the week (given back yesterday's gains) as Oil surged 2.2%. VIX dropped over 2 vols to close with a 12-handle (but disconnected notably from stocks at the close). It's not all ponies and unicorns though - Biotechs are down 5% from Yellen's comments and the Russell 2000 closed red for the 2nd week in a row (and still -1% year-to-date). Best Dow Friday in 5 months (up 11 in a row).
"Fixed" - well almost. US equity markets have retraced all the losses suffered post-Israel-escalation (why worry?) but remain (for now) below the levels reached before the MH17 crash headlines hit... Of course, AUDJPY is in in charge along with VIX (as it is Friday after all)...
Health officials in Gaza said 28 Palestinians were killed since the Israeli ground offensive began late Thursday, and as WaPo reports, Prime Minister Benjamin Netanyahu said Friday that he has ordered Israel's military to prepare for "a significant expansion" of its ground offensive into the Gaza Strip, declaring that tunnels built by Hamas could not be destroyed solely through airstrikes. As The Guardian reports, according to military analyst Alex Fishman, writing in Yedioth Ahronoth: "The tanks, which serve as the heart of the assault force, received an order to open fire at anything that moved." Hamas warned Israel of the "dreadful consequences" of the conflict's escalation, while the US urged its close ally to restrict itself to a "precise" operation.
For a centrally-planned market that has long since lost the ability to discount the future, and certainly respond appropriately to geopolitical events, yesterday was a rough wake up call with a two punch stunner of not only the MH 17 crash pushing the Ukraine escalation into overdrive, but Israel's just as shocking land invasion of Gaza officially marking the start of a ground war, finally dragging global stocks out of their hypnotized slumber and pushing risk broadly lower across the globe, even if the now traditional USDJPY and AUDJPY ramp algos have woken up in the past few minutes and will be eager to pretend as if nothing ever happened.
Residents in the northern Gaza Strip said they could hear the sound of tanks entering from Beit Lahiya as we noted earlier and now the Army has confirmed:
*ISRAEL SENDING TANKS INTO GAZA: ARMY
As NY Times reports, the military released a statement saying the goal of the operation was to "establish a reality in which Israeli residents can live in safety and security without continuous indiscriminate terror." Judging by the images and clips below, they are deadly serious. Hamas warns, “The occupation will pay its price expensively, and Hamas is ready for confrontation.”
Despite an initial attempt to rally after the terrible news out of Ukraine hit, stocks were unable to mount any serious BTFD as uncertainty spread. Despite Bullard's best efforts, bond yields crashed lower (over 7bps today) with 10Y at 2.45% near the lowest close in 13 months. Gold prices jumped over $20 (even as the USD Index flatlined - though JPY strengthened notably as risk-off set in). VIX exploded 3.7 vols (its biggest swing - 45% - since Aug 2011). Equity markets cratered into the close as Israel ground invasion news (A White House Lockdown) added to the concerns leaving all US markets red post-payrolls and red post-Yellen. The S&P 500 dropped 1.18% - its biggest drop in 3 months. The Russell 2000 is now down 2.5% year-to-date.
BREAKING NEWS: A large IDF force has just launched a ground operation in the Gaza Strip. A new phase of Operation Protective Edge has begun.
— IDF (@IDFSpokesperson) July 17, 2014
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