Israel

Despite already being engaged in drone wars in Pakistan, Somalia, Yemen, and still occupying Afghanistan, the U.S. is being duped into yet another war based on shaky evidence and at the behest of deep-pocketed special interests.  This is coming even while a secretive cyber war already being waged to damage Iran’s nuclear capability.  According to the Pentagon, “computer sabotage coming from another country can constitute an act of war.”  Not only that, but the draconian sanctions thus far placed on Iran are doing enormous harm to the citizens who hardly have a say in what their government does.  The Belgium-based SWIFT payment system that facilitates most international payments has already denied service to many Iranian banks.  With the imposing of an oil embargo from the European Union just around the corner (July 1^st) that will all but make it impossible for oil tankers to be insured by Lloyd’s of London, an actual naval blockade is being floated by U.S. lawmakers.  Much like the Antebellum South and Japan, Iran too is being pushed into a corner.... Then and now, wealthy special interests are a driving force behind American imperialism.  Lies will be spun till they are seen as facts.  When the truth comes out, the irreparable damage will already be done.  Like anything the state lays its filthy hands on, war is a racket.  The beneficiaries of the ruling class’s gleeful foray into mass murder are few in number.  The masses, still brainwashed into feverish nationalism, end up paying the costs with their pilfered income, eroded liberty, and, ultimately, their own lives.

Swiss Minister of Defense speaks up while Merkel joins the Axis of Evil

• German court may delay ESM bailout fund ratification (Reuters)
• New dangers lurk for rudderless Spain (Reuters)
• SEC Said to Depose SAC’s Cohen in Insider-Trading Probe (Bloomberg)
• With Europe broke, Asia is Wall Street's new dumb money: Riskier Bets Pitched To Asia's Rising Rich (WSJ)
• Spain expected to request bank aid after debt test (Reuters)
• Lawmakers Push for Overhaul of IPO Process (WSJ)
• Israel: "all options" open after Iran talks fail (Reuters)
• Canadian housing boom to grind to a halt (Financial Post)
• Italians Dodge Property Tax in Test for Monti’s Austerity (Bloomberg)
• ORCL earnings must have been good: Oracle CEO Ellison to Buy Most of Hawaiian Island Lanai (Bloomberg)

• Prepare for Lehmans (sic) re-run, Bank official warns (Telegraph)
• Fed Seen Extending Operation Twist While Avoiding Bond Buying (Bloomberg)
• US Watchdog Hits at ‘Risky’ London (FT)
• G20 Bid to Cut Cost of Euro Borrowing (FT)
• Romney Says Rubio Being Examined as Possible Running Mate (Bloomberg)
• Hollande Says Worth Exploring ESM Bond Buys (Reuters)
• US Upbeat After Eurozone Debt Crisis Talks (FT)
• BOJ Members Say Japan Could Be ‘Adversely Affected’ by Europe (Bloomberg)
• China Steps Said to Grow Bond Market, Add Issuer Scrutiny (Bloomberg)
• How Asia Will Fare if Europe Cracks (WSJ)

The full results of the Egyptian election will not be 'released' until the 21st but as Stratfor's Reva Bhalla notes, the Muslim Brotherhood is already claiming a narrow victory over the military's preferred candidate. Rather sadly, she opines, "the Presidency itself may not even matter much as the military has taken a series of moves in recent days to overtly reassert its authority over the Egyptian political system", further reinforcing Stratfor's historical position that Egypt's political future will be dictated (ironic choice of words) by the military and not by protesters in Tahrir Square. In a succinct 4 minutes, Reva explains why the possibility of a Brotherhood victory remains somewhat impotent given the implicit understandings with the military (via the constitution) but worries that the changes in the clamp-down efforts (more aggressive) of political protests will affect political affiliates in the Palestinian border-lands with Israel - where this weekend's 'suspiciously timed' renewed spate of attacks into Israel raises questions of who was responsible (and for what end?). The bottom-line is that tensions remain and the Brotherhood's links to Hamas are a political foil for the military (or even Israel's Netanyahu) to declare them unfit to rule.

"The most important election this weekend may have nothing to do with the Eurozone - at least directly. The election in Egypt may change the face of the Middle East. The implications to Israel, Iran and Saudi Arabia are enormous. Will the most populous Arab nation become a theocracy? This will be some weekend."

You can’t watch the mainstream media propaganda channels for more than ten minutes without a talking head breathlessly announcing that gas prices have dropped for the 24th day in a row and are now back to $3.55 a gallon. Wall Street oil analysts, who are paid hundreds of thousands of dollars per year to tell us why prices rose or fell after the fact, are paraded on CNBC to proclaim the huge consumer windfall from the drop in price. This is just another episode of a never ending reality show, designed to keep the average American sedated so they’ll continue to spend money they don’t have buying crap they don’t need. The brainless twits that pass for journalists in the corporate mainstream media never give the viewer or reader any historical context to judge the true impact of the price increase or decrease. The government agencies promoting the storyline of those in power extrapolate the current trend and ignore the basic facts of supply, demand, price and peak oil. The EIA is now predicting further drops in prices. Two months ago they predicted steadily rising prices through the summer. What would we do without these government drones guiding us?

The state purports to represent the people when all it does is leech off their labor in order to commit crimes at home and abroad.  Under the auspices of keeping democracy safe around the world, the foreign policy of the U.S. government has been one of bombing, killing, and overall domination.  Meanwhile, anti-American sentiment continues to spread by instances such as the C.I.A. targeting civilian responders to drone strikes who attempt to aid those who were attacked.  In some cases, the C.I.A. even launches drone attacks at the mourners in funerals held for those in earlier strikes. These are the measures under which the American people are told they are being kept safe.  What would be constituted as war by any other nation is not so when carried out by the U.S. government.  But it’s all just another facade through which Washington pretends to serve the people when in reality it puts them in even more danger.

While the Mutually Assured Destruction game is playing out economically in Europe as Spain (et. al.) square off with Germany, it seems we just ticked a minute closer to midnight on the doomsday clock globally. In a somewhat stunning report from Der Spiegel, Israel is arming up to six new German-made submarines with nuclear weapons. These subs are being built in Germany and it turns out the helpful German government has known of this Israeli nuclearization for decades - despite official denial (more lying when it matters we presume). In one of the more ironic comments, according to extensive research carried out by the magazine, Israel is equipping submarines that were built in the northern German city of Kiel and largely paid for by the German government (Not only is Berlin financing one-third of the cost of the submarine, around €135 million ($168 million), but it is also allowing Israel to defer its payment until 2015) with nuclear-tipped cruise missiles. The missiles can be launched using a previously secret hydraulic ejection system. Israeli Defence Minister Ehud Barak told Spiegel that Germans should be "proud" that they have secured the existence of the state of Israel "for many years." Vendor-financing for WWIII FTMFW.

The absence of the UK from today’s trade is particularly evident, with volumes remaining particularly light across all asset classes. Nonetheless, European equities are largely seen drifting higher with the exception of the DAX index, which is yet to move over into positive territory. News flow remains light with the highlight of the day so far being comments from the Troika, confirming that Portugal remains on track with its bailout program, and have confirmed that the country will receive the next EUR 4.1bln tranche in July. FX moves remain in a tight range, with EUR/USD looking relatively unchanged, with the USD index slightly weaker as the US comes to market. Looking ahead in the session, participants can look forward to US ISM New York and Factory Orders data as the next risk events of the session.

When Iran's nuclear facilities were publicly crippled in 2011 by what then was considered a revolutionary computer virus which destroys physical equipment, many immediately assumed the virus originated in Israel for obvious reasons. They were wrong. In what can be described as the first presidentially-mandated and condoned act of cyberwarfare, one circumventing the War Powers Act of course, the NYT informs us that the order to physically impair Iranian sovereignty came from none other than the Nobel Peace prize winning president: Barack Obama.

All you need to read

There was a time, late in the winter, that not a day passed without some headline announcing Israel's preparedness to attack Iran, culminating with the grotesque - a show on Israel TV detailing the actual invasion plans. All these daily updates did was guarantee one thing - that absolutely no war could possibly break out for two simple reasons:

i) you never declare war when the opponent is expecting you, instead you habituate them to news about imminent invasions which never happens, and,

ii) Brent was over $120, which would guarantee no re-election for Obama as outright war would send the energy complex soaring, gas prices surging, and the world economy, but most importantly the Russell 2000, tumbling.

Over the past 2 months two things have happened: chatter of "imminent" war with Iran has died down to barely a whisper, and WTI is now trading 20% lower than 2012 highs. Which means there is far more capacity for a run higher. So putting all that together, does it mean that the prospect of war with Iran is now gone? Below we present the latest naval update map courtesy of Stratfor, and leave readers to make their own conclusions...

Following the morning in Europe, a generally risk-off tone is observed, with stock futures sitting just above session lows and the German Schatz auction resulting in record low yields. Some of the risk-averse moves were noted following unconfirmed market talk that a troubled Dutch housing association may be pressed towards bankruptcy, however this seems to be linked towards an article concerning the Dutch central bank probing into the sale of derivatives to the housing group Vestia. Nonetheless, the long end of the Dutch curve remains well-bid and European 10-yr government bond yield spreads are seen generally wider across the board. Releases from the UK have come under particular focus; the BoE minutes showed an alongside-expectations vote of 8-1 to keep QE on hold. With some analysts estimating more of a lean towards further asset purchases, the initial reaction was strength in the GBP currency, but countering this effect was the parallel release of UK retail sales, with the monthly reading showing the sharpest decline since January 2010. Additionally, it was noted that several members of the board saw further QE as a finely balanced decision, placing GBP/USD back on a downward trajectory and briefly below 1.5700. Elsewhere in foreign exchange, current sentiment is reflected in EUR/USD, printing multi-month lows earlier in the session of 1.2615, with the USD index at 20-month highs which in turn has weighed on commodities.

All you need to read.