Israel

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.

• 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)

While everyone's (algorithmic) attention will be focused on today's minutes from the July 29-30 FOMC meeting for views on remaining slack in U.S. economy following recent changes in the labor market (especially a particularly solid JOLTS report which indicates that at least on the openings front, there is no more) and any signal of policy change by the Fed ahead of Fed Chair Janet Yellen’s speech in Jackson Hole on Aug. 22, a curious thing happened overnight when a few hours ago the BoE's own minutes show the first vote split since 2011, as Weale and McCafferty argue for a 0.75% bank rate. Then again, if the Russians are finally bailing on London real estate, the inflationary pressures at the top of UK housing may finally be easing. In any event, every FOMC "minute" will be overanalyzed for hints of what Yellen's speech on Friday morning will say, even if stocks just shy of all time highs know quite well she won't dare say anything to tip the boat despite her warnings of a biotech and social network bubble.

With all the other geopolitical war/conflict/droning hot spots around the world, one has so far managed to fly under the radar for the past few weeks, yet one which has the potential to generate a substantial disturbance in the central-planning farce: Pakistan.

Well that didn't last long...

*ISRAEL ARMY SAYS 3 ROCKETS WERE FIRED FROM GAZA
*ISRAEL ARMY SAYS ROCKETS LANDED IN OPEN AREAS, NO INJURIES

The Israeli military has declared the cease-fire broken. So this is the escalation that will enable a pent-up de-escalation buying opportunity?

• 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)

A quick reminder of how geopolitics governs markets: on Friday, the market plunged 0.005% over fears Ukraine and Russia may be about to go at it all out after a fake report Ukraine shelled a Russian military convoy. On Monday, the same "market" soared just under 1% as the news that had caused the "crash" was refuted. That has been the dominant rinse, repeat theme for the past month and will continue to be well after Yellen's Friday speech at Jackson Hole (although one does wonder why she is not speaking on Wednesday when the symposium begins). Not surprisingly, with only modest re-escalation news overnight (that Russia is preparing further retaliatory sanctions against the West), which is simply "pent up de-escalation" in the eyes of Keynesian algos, futures are again up a solid 0.2% and rising, and the way the rampy USDJPY is being manipulated before its pre-market blast off, we may well see the S&P hit 1980, if not a new all time high before 9:30am, let alone during today's cash session. In any event, whatever you do, don't you dare suggest that algos should care one bit about Ferguson and its implications for US society.

Now that the US is exhibiting all the tact of a neocon bull in a china world, and has resumed airborne assaults in Iraq (with US marines on the ground merely for decorative purposes) it is hardly surprising that the rest of the world - at least those who are supposedly allied ideologically with Washington (if only for the time being) - suddenly feels entitled to US assistance. Not surprisingly, the first one to knock on the door of US military handouts is none other than the Kiev, whose parliamentary speaker Oleksandr Turchynov, said in an interview with BNS, that the country needs "modern weapons, aviation, air-defense equipment from U.S., European partners."

The main event of the week will be Yellen's long awaited speech at the Jackson Hole 3-day symposium taking place August 21-23. The theme of this year's symposium is entitled "Re-Evaluating Labour Market Dynamics" and Yellen is expected to deliver her keynote address on Friday morning US time. Consensus is that she will likely highlight that the alternative measures of labour market slack in evaluating the ongoing significant under-utilisation of labour resources (eg, duration of employment, quit rate in JOLTS data) have yet to normalise relative to 2002-2007 levels. Any sound bite that touches on the debate of cyclical versus structural drivers of labour force participation will also be closely followed. Unlike some of the previous Jackson Hole symposiums, this is probably not one that will serve as a precursor of any monetary policy changes but the tone of Yellen's speech may still have a market impact and set the mood for busier times ahead in September.

Friday's main event, Ukraine's alleged attack of a Russian military convoy, has come and gone, and as we mused on Friday has promptly faded into the memory of all other fabricated headlines released by the country engaged in a major civil war and an even more major disinformation war. To be sure, Germany's DAX has recovered virtually all losses, US futures are up about 9 points, and the 10 Year is back to 2.37%. One wonders what algo-slamming headline amusement Ukraine has in stock for us today, although anyone hoping for a quick "de-escalation" (there's that word again) will have to wait following yesterday's meeting of Russian, Ukraine, German and French ministers in Berlin where Russia's Lavrov said he saw no progress on Ukraine cease-fire, Foreign Minister Sergei Lavrov says in Berlin, adding that a cease-fire should be unconditional.

Earlier we joked that "it is rumored, although unlikely, that a city devolving into a state of emergency and actual curfew, will be enough for the president to take a break from his golf game and make a teleprompted statement later today." Just a few short hours later, in a stunning development and in what may well be a first for the president, Obama announced he planned to take a break in the middle of his Martha's Vineyard vacation and return to Washington on Sunday night for "unspecified meetings with Vice President Joe Biden and other advisers."

Non-ideologically laden overview of the key issues shaping the investment climate in the week ahead.  

There were headlines for everyone this morning, but especially for fans of what is increasingly known as Russia's "Schrodinger Invasion" of East Ukraine: one which may or may not be happening depending on i) one's point of view and ii) how one is observing it.