Nomination

Current finance minister Sapin, perhaps unsurprisingly, has admitted that France will miss EU deficit targets and needs more time to rein in public finances - proclaiming, as Reuters reports, that it may take until 2017 to bring it in line. Germany's response "nein, nein, nein" with Merkel demanding EU nations stick to commitments (rejecting any plans to 'bend rules') and Schaeuble blasting that Germany is "certain France is aware of its responsibilities." But the real stunner is that as France shows its utter ineptitude in managing an economy, EU President Juncker has placed former French finance minister Moscovici in charge of Europe's taxes and finances. German lawmakers exclaimed this is "not a wise personnel decision." The core splinters...

As reported ealier this morning, here, courtesy of Bloomberg, are the nominees for the next European Commission under the presidency of Jean-Claude "If Serioues Then lie" Juncker, with one from each of the European Union’s 28 countries. Job assignments were announced today by the incoming president, Jean-Claude Juncker of Luxembourg. What do these appointments mean for the European Union? The attached flash analysis from Open Europe should answer most initial questions.

The popular view concerning the Fed is that it is apolitical. Anyone who considers the timing of the Fed’s actions knows this is false. However, for the vast majority of Americans, including financial professionals, the Fed is thought to be an apolitical entity focusing exclusively on economic and financial matters.

In a nearly carbon-copy replica of last Friday when tensions escalated then de-escalated on rumors that Ukraine had attacked a Russian military convoy, today's Yellen speech has been completely upstaged by ongoing developments out of Ukraine, where Kiev condemned the entry of Russian humanitarian convoy trucks (subsequently adding it no longer knows where they are), following Russia's announcement it could wait no longer to provide aid to the citizens of the Donetsk People's Republic. And while NATO promptly echoed Ukraine' position once again as it did last Friday, now it is Russia's turn to explain why it rushed to enter the country, seemingly without express preapproval by the Ukraine government.

In the four months since we last wrote about the upcoming midterm election, the outlook has changed only incrementally. As Goldman notes, although there were a few surprising retirements and primary election results over the last few months, none of these seem to have significantly affected the overall prospects for control of the House or Senate. However, as the election draws near, the potential effects of a Republican Senate majority seem likely to become more of a focus for market participants.

Embattled Iraqi Prime Minister Nouri al-Maliki has agreed to step aside and support his nominated replacement in the post, according to Shiite lawmakers via AP. In an statement on state-run TV, Maliki declared support for al-Abadi, leaving his post "to not let one Iraqi blood drop be shed because of me." Of course, what really matters is what concessions were offered. In the past, Mr. Abadi has worried that American military presence was exacerbating sectarian tensions. Perhaps most notably, Maliki stated "Intelligence apparatuses behind the sectarian strife in the region." - CIA?

ISIS has attracted an entire generation of radicalized Sunni militants to the region. If one watches interviews with their enemies such as e.g. Peshmerga fighters, one topic that is occasionally mentioned is that they don't seem to fear death much. Combined with their well-known brutality, this undoubteldy makes them a formidable fighting force. However, there is evidently far more to ISIS than that. All of the above suggests that it will be exceedingly difficult to effectively destroy ISIS. It seems to us that if the goals the president has announced in recent days are to be achieved, nothing short of a full-scale invasion of Iraq (as well as of Syria for good measure) is likely to suffice – and even then, success is by no means guaranteed.

• MALIKI SAYS AL-ABADI NOMINATION IS LEGALLLY WORTHLESS
  
• MALIKI SAYS IRAQ FACES A SERIOUS CONSTITUTIONAL VIOLATION
  
• MALIKI SAYS U.S. STATE DEPT. TOOK SIDE OF THOSE VIOLATING LAW
• MALIKI SAYS NO ONE BUT HIM HAS RIGHT TO REPRESENT STATE, DAWA
• MALIKI SAY PEOPLE, SECURITY FORCES ARE IN A HOLY BATTLE

While the US is alternating between bombing the north of Iraq, and occasionally paradropping MREs and jugs of water to keep up the "noble" facade of intervention, it is very much unclear if Iraq currently has a government and in fact, who is in charge. As reported yesterday, current PM al-Maliki, seemingly unhappy with relinquishing power when a new Prime Minister, Haider al-Abadi was chosen, decided to conduct what many described as a military coup and encircled the residence of the president. Since then things have gotten quite confusing.

• Russia bans all U.S. food, EU fruit and vegetables in sanctions response (Reuters)
• Snowden receives three-year Russian residence permit (Reuters)
• Headline of the day: Europe's Recovery Menaced by Putin as Ukraine Crisis Bites (BBG)
• Americans worry that illegal migrants threaten way of life, economy (Reuters)
• Almost 90% of Uninsured Won't Pay Penalty Under the Affordable Care Act in 2016 (WSJ)
• Germany’s Bond Advance Sends 2-Year Note Yield Below Zero (BBG)
• Gaza War’s Critics in Crosshairs as Israelis Back Offensive (BBG)
• The 1% May Be Richer Than You Think, Research Shows (BBG)
• Bank of America Near $16 Billion to $17 Billion Settlement (WSJ)
• Deep Water Fracking Next Frontier for Offshore Drilling (BBG)

The Untold Story In the NSA Spying Scandal: Blackmail

• Ukraine Says Malaysian Airliner Shot Down Near Russian Border (BBG)
• Downing of airliner seen as pivotal moment in Ukraine crisis (Reuters)
• Malaysian Air Flight Took Route Avoided by Qantas, Asiana (BBG)
• Russian-Made Missile Hit Malaysia Jet, U.S. Officials Say (BBG)
• Netanyahu Orders Military to Ready Wider Gaza Incursion (BBG)
• Silvio Berlusconi Underage Sex Conviction Overturned (WSJ)
• But... but... "economic patriotism" - AbbVie to Buy Shire for $54.8 Billion as Drug Deals Surge (BBG)
• SEC targets 10 firms in high frequency trading probe - SEC document (Reuters)
• Art bubble pop: Sotheby's to Lay Off 'Modest' Number of Employees (WSJ)
• Moar Abenomics: Hermes Sales Trail Estimates as Japanese Revenue Declines (BBG)

This morning and last night saw three developments with importance for the UK’s Europe debate:

William Hague resigned as Foreign Secretary, replaced by Phillip Hammond, with the Cabinet becoming more Eurosceptic overall,
In nominating Lord Hill – the current leader of House of Lords – as the UK’s European Commissioner, Number 10 prioritised a ‘fixer’ and avoiding by-election over sending a heavy-hitter,
MEPs approved Jean-Claude Juncker as European Commission President by 422 votes to 250, marking the starting point of a more politicised European Commission.

Now that the World Cup is over, and following last week's global macro reporting slumber (aside for the Portuguese risk flaring episode of course), things pick up quite a bit in the coming week. Here are the key events.

• Secret Path Revealed for Chinese Billions Overseas (BBG)
• Traders Flood U.S. With $3.4 Trillion of Bond-Auction Demand (BBG)
• Just in time to cover bad earnings in a massive $3.8 billion "one-time charge": Citi says to pay $7 billion to settle securities investigation (Reuters)
• Troubled Epirito Santo family loosens grip on Portugal's BES (Reuters)
• BES puts in place new executives after central bank push (Reuters)
• Bank of China-CCTV drama may reveal power struggle in Beijing (SCMP)
• Portugal speeds up Banco Espírito Santo management changes (FT)
• Dark pool probe builds pressure on Barclays boss (Reuters)
• Russia Vows to Respond After Shelling From Ukraine (BBG)
• Ukraine forces end rebel airport blockade (Reuters)
• Obama Contends With Arc of Instability Unseen Since '70s (WSJ)