- EU to weigh extensive sanctions on Russia (FT)
- U.S. lifts flight ban to Israel (Reuters)
- Russia says will cooperate with MH17 probe led by Netherlands (Reuters)
- Norway faces ‘concrete and credible’ terrorist threat (FT)
- Don’t Tell Anybody About This Story on HFT Power Jump Trading (BBG)
- But... but... PMI: Unilever Sales Growth Misses Estimates on Asian Slowdown (BBG)
- World’s Biggest Wealth Fund Reviews $8 Billion Russian Stake (BBG)
- Qualcomm latest US tech company to reverse in China (FT)
- Hamptons Home Sales Rise as Buyers Find More Inventory (BBG)
Despite yesterday's lackluster earnings the most recent market levitation on low volume was largely due to what some considered a moderation in geopolitical tensions after Europe once again showed it is completely incapable of stopping Putin from dominating Europe with his energy trump card, and is so conflicted it is even unable to impose sanctions (despite the US prodding first France with BNP and now Germany with the latest DB revelations to get their act together), as well as it being, well, Tuesday, today's moderate run-up in equity futures can likely be best attributed to momentum algos, which are also rushing to recalibrate and follow the overnight surge in the AUDJPY while ignoring any drifting USDJPY signals.
As the tit-for-tat public relations blitz continues to play out, Ukrainian President Petro Poroshenko has demanded that the self-proclaimed Donetsk People's Republic (DPR) and Luhansk People's Republic (LPR) be recognized as terrorist organizations, "so that any cooperation or support the terrorists receive is recognized as such under international law." Now that the US has 'proved' that the separatists shot down MH17, we suspect the calls will grow louder... even as Poroshenko says he opposes martial law.
For those just waking up and looking to catch up on all the latest news out of Ukraine and the MH17 crash response in particular, here is the latest news roundup.
- EU Works to Punish Russia as MH17 Bodies Leave Rebel Area (BBG)
- Bodies From Malaysia Airlines Flight Begin Long Trip to Netherlands (WSJ)
- Israel pounds Gaza as Kerry arrives (Reuters)
- U.S. judge dismisses Republican lawsuit over Obamacare subsidy for Congress (Reuters)
- Israel Soldier Missing Amid Assault on Hamas in Gaza (WSJ)
- Detroit Retirees Vote in Favor of Pension Cuts (WSJ)
- Russia Axes 1st Bond Sale in 3 Months as Ukraine Drives Up Yield (BBG)
- Wall Street Cut From Guest List for Jackson Hole Fed Meeting (BBG)
- Credit Suisse to Exit Commodities, Posts Big Quarter Loss (BBG)
- Draghi Cedes Euro Control to Yellen on Fed Rate Wagers (BBG)
Following the overnight ramp in various JPY crosses (dragging equity futures higher, and the Nikkei up 0.8%) it is as if the market is desperate to put all of last week's geopolitical events in the rearview mirror, and while yesterday there were no economic events of note, today's CPI and existing home prints should provide at least some distraction from the relentless barrage of one-line updates on Ukraine and Gaza. Still, that is precisely where the biggest risk remains, with an emphasis on the possibility of more Russian sanctions, this time by Europe.
Quelling some conspiracies - though we are sure more will come on 'tampering' - the Malaysian Prime Minister Najib Razak issued a statement confirming it has reached an agreement on the MH17 investigation...
MALAYSIA SAYS BLACK BOXES TO BE HANDED OVER TO MALAYSIAN TEAM
Of course, this means the "credibility" of the latest YouTube clip from Ukraine, which "supposedly" revealed that the "rebels" were instructed by Moscow to hide the black boxes will be severly questioned, or would be if there was anyone out there still questioning anything in the relentless propaganda barrage. Actually scratch that: said clip will now promptly disappear from social networks, period.
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.
With the nation teetering on the brink of default amid major inflation pressures at home and growing poverty (and Kirchner facing pressure into next year's election), today's loss in the FIFA World Cup final appears to have lit the blue touch paper. As RT reports, police used tear gas and water cannons to disperse angry fans in Buenos Aires. Following the mass gathering around the Obelisk during the game, fans clashed with riot police as the loss sunk in. There are no reports of civilian injuries but 8 police were hurt. Rio has also seen violence between Argentina fans and others (and Brazil's Rousseff has issued a calming statement).
There has been an informational overload this morning, when as we reported previously, one after another bank scrambled to issue reports, some full of typos and clearly unvetted by compliance, calming the market and desperate to see all important confidence return to the peripheral market. Most of these notes have been nothing short of outright propaganda and disinformation, or a confirmation the analysts had zero idea what they were doing (case in point Goldman which had the stock at a Buy rating until this morning, even as the stock was virtually wiped out in recent weeks). Some, actually, have done the work. Below we provide some of the less then insightful reports, as conveniently summarized by Bloomberg, and we conclude with perhaps the best piece so far - one written by Bank of America's Richard Thomas who alone among the sell-side penguin circus, was as close as he could be, to predicting this week's outcome.
This clown parade of clueless opinions (did we mention Goldman had BES at a buy until this morning?), stretched all the way to the very top with Bank of Portugal itself issuing the following pearl:
- BANK OF PORTUGAL SAYS BES DEPOSITORS CAN STAY CALM
Uhhh, what else would the Portugal central bank say? Panic and withdraw your deposits from a bank whose exposures to insolvent entities have been largely unknown until today (and even now).
The biggest problem with the epic Central Bank rig of the last five years is that propping up a bankrupt financial system by printing money only works for so long.
July 4th may be a US national holiday, which means the S&P 500 won't hit a record high on good news and a recorder high on bad, but judging by global trading volumes - already abysmal heading into today - one may as well give the entire world a day off. However, for now, global equities have come off the impressive, and curiously schizophrenic US-data inspired gains of yesterday which sent the DJIA over 17,000 yet which has resulted in an almost unchanged 10Y Treasury print since before the NFP release. Once again bonds and stocks agree to disagree.
The Great Depression did not represent the failure of capitalism or some inherent suicidal tendency of the free market to plunge into cyclical depression - absent the constant ministrations of the state through monetary, fiscal, tax and regulatory interventions. Instead, the Great Depression was a unique historical occurrence - the delayed consequence of the monumental folly of the Great War, abetted by the financial deformations spawned by modern central banking. But ironically, the “failure of capitalism” explanation of the Great Depression is exactly what enabled the Warfare State to thrive and dominate the rest of the 20th century because it gave birth to what have become its twin handmaidens - Keynesian economics and monetary central planning. Together, these two doctrines eroded and eventually destroyed the great policy barrier - that is, the old-time religion of balanced budgets - that had kept America a relatively peaceful Republic until 1914. The good Ben (Franklin that is) said,” Sir you have a Republic if you can keep it”. We apparently haven’t.
One month ago we showed that when it comes to the cost of basic (and not so basic) health insurance, the US is by far the most expensive country in the world and certainly among its "wealthy-nation"peers. It would be logical then to think that as a result of this premium - the biggest in the world - the quality of the healthcare offered in the US among the best, if not the best, in the world. Unfortunately, that would be wrong and, in fact, the reality is the complete opposite: as a recent study by the Commonweath Fund, looking at how the US healthcare system compares internationally, finds, "the U.S. fails to achieve better health outcomes than the other countries, and as shown in the earlier editions, the U.S. is last or near last on dimensions of access, efficiency, and equity." In other words: most expensive, yet worst in the developed world.