The enemy of your enemy is your... frenemy; and so it is across the Middle East as the WSJ notes the spread of The Islamic State has united many parties once at odds with each other to become 'strange bedfellows'.
Words matter, the way they are said can matter even more, yet what is just as important is the posture, and yes – that can include even your choice of attire. Agree or not with the policies, but the decision for that suit in our opinion was anything but a faux pas, it was intentional... It was sending a visual cue to all that we are not fiercely red, white, and blue. We are taupe.
"Government engineered false-flag terrorism is a historically established fact. With all this hype circling ISIS, I have to suggest that maybe, just maybe, we are being given the ultimate scapegoat for the ultimate false flag attack. I believe the time is in fact ripe for a large scale false-flag on American soil."
The goal will be to terrify you and those around you into seeking out a more powerful, more centralized government authority to protect your security, to provide cover for the continued planned collapse of American society into third world status, and out of these ashes, the centralization of the political and financial foundations of our world into the hands of an elite few.
The “faster rotating sanctions spiral with Russia” causes worst plunge in the history of the German consumer index.
- 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.
The 'Sunni Turn' Against The 'Shiite Crescent': How The Strategic Stupidity Of Washington (And Its Allies) Created ISISSubmitted by Tyler Durden on 08/25/2014 21:50 -0500
The Islamic State in Syria (ISIS) is being touted as the newest “threat” to the American homeland. We are told by everyone from the President on down that if we don’t attack them – i.e. go back into Iraq (and even venture into Syria) to root them out – they’ll soon show up on American shores. ISIS didn’t blast Sykes-Picot to pieces: we did, and now we must live with the consequences. Nemesis has taken her pound of flesh. The best course now is to learn the lesson every child has to absorb before he can attain adulthood in more than merely a physical sense: actions have consequences. Applied to the Middle East, this lesson can only have one meaning: stay out and keep out.
As Iran continues to negotiate with world powers over its controversial (but purely for peaceful purposes, of course) nuclear program - with hard-liners demanding more concessions from the West - The Telegraph reports that a brief video, which aired on the Arabic-language Al-Alam TV, shows what the channel says are parts of an Israeli drone, scattered in an unidentified desert area. Text accompanying the footage says the drone was downed on Saturday and identifies it as a Hermes 450, a known Israeli model. The Iranian TV station also says the model is dubbed "Spy Goddess." However, as The Telegraph adds, there were no visible Israeli markings in the footage and Israel's military has declined comment on the matter... and Iran will sue Israel legally over its alleged violation of Iran's air space.
Key highlights in the coming week: US Durable Goods, Michigan Conf., Services PMI, PCE, and CPI in Euro area and Japan. Broken down by day: Monday - US Services PMI, New Home Sales (Consensus 4.7%); Singapore CPI; Tuesday - US Durable Goods (consensus 7.5%) and Consumer Confidence; Wednesday - Germany GfK Consumer Confidence; Thursday - US GDP 2Q (2nd est., expect 3.70%, below consensus) and Personal Consumption; Euro area Confidence; CPI in Germany and Spain; Friday - US Michigan Conf. (consensus 80.1), PCE (consensus 0.10%), Chicago PMI; Core CPI in Euro area and Japan (consensus 2.30%). Additionally, with a long weekend in the US coming up, expect volumes into the close of the week to slump below even recent near-record lows observed recently as the CYNKing of the S&P 500 goes into overdrive.
Late on Saturday afternoon, supposedly in retaliation for yet another round of shelling by Hamas now that the X+1 "ceasefire" has failed to lead to anything tangible, Israel bombed an apartment tower in Gaza City, collapsing the 12-story building with 44 apartments. The dramatic strike is shown in the blip below. Amazingly, while dozens were wounded in the strike, no one was killed, Palestinian officials said.
India, Pakistan Intensify Shooting Across Border; Iran Downs Israel Drone; ISIS Seizes Military AirportSubmitted by Tyler Durden on 08/24/2014 11:07 -0500
Since in the New Normal no geopolitical events appear to have any adverse impact on risk and asset prices (because the central banks are always there to protect investors should the market "plunge" by say 5%) with general newsflow completely irrelevant on what has been a straight line up in the S&P since the announcement of QE4 in December 2012, one might as well see how much further geopolitical events can be pushed further before it all crashes. In other words, time for this weekend's geopolitical update which covers everything from India, Pakistan, Iran, Israel, Iraq, Syria and Qatar.
President Obama's cunning plan to 'quasi-ouster' Shiite PM Maliki, in the vague hopes that a more egalitarian all-inclusive Iraqi government could be formed that will magically lead the 'people' of the Sykes-Picot-defined nation to coalesce in sovereignty against The Islamic State has, somewhat understating it and perhaps unsurprisingly, hit a roadblock. As Bloomberg reports, Obama's effort to have Arabs take the lead in combating Islamic State suffered a setback when Sunni lawmakers quit talks on forming a new Iraqi government after Shiite gunmen killed scores of worshipers at a Sunni mosque. The killings in Diyala province derailed attempts to form an Iraqi government with bigger roles for Sunni Arabs and Kurds that would strengthen the fight against the terrorist group. It appears the common knowledge of who is friend and who is foe remains very much in the air. We suspect, in some dark corner of Washington, Hillary is grinning from ear to ear.
US equity markets were led by the stodgy old low-beta Dow this week - not the high-flying muppetry of the Russell or Nasdaq - as stocks enjoyed the best week in 4 months amidst escalation of geopolitical time-bombs in Israel, Iraq, and Ukraine. Dow and Trannies gained 2% by the close as today's disappointment in Yellen and Draghi took the exuberant shine off an otherwise bottom-left-to-top-right Birinyi ruler-based market. The USDollar gained 1.1% on the week - its best week since November - closing at one-year highs. Gold was slapped almost 2% lower (worst week in almost 3 months) as did WTI (back at $1280 and $93.50 respectively). Copper surged 3.2% on the week (2nd best week in a year) on China restocking chatter. Treasuries were a mixed bag with dramatic flattening on the week (30Y +2bps, 5Y +12bps) to 2009 flat. Credit markets cratered on the day - ignoring equity's relative shrug.
What’s Confusing You Is the Nature of Their Game
- FTW: Europe Stocks Rise as Data Signals Need for Stimulus (BBG)
- More de-escalation: Dozens die in Ukraine in street battles, Donetsk shelling (Reuters)
- Calm largely holds in Missouri after grand jury opens shooting investigation (Reuters)
- Attorney General Eric Holder Vows Thorough Probe of Ferguson Shooting (WSJ)
- World’s Biggest Wealth Fund Slows Emerging Market Investment (BBG)
- Market Chilly to Argentine Debt Proposal (WSJ)
- Israeli air strike kills three Hamas commanders in Gaza (Reuters)
- Retooled Hamas Bloodies Israel With Help From Hezbollah (BBG)
- Investors Pour Into Vanguard, Eschewing Stock Pickers (WSJ)
- Fed Debates Early Rate Increases (WSJ)