Believe it or not, the main driver of risk overnight had nothing to do with Iraq, with the global economy or even with hopes for more liquidity, and everything to do with a largely meaningless component of Japan's future tax policy, namely whether or not Abe (who at this pace of soaring imported inflation and plunging wages won't have to worry much about 2015 as he won't be PM then) should cut the corporate tax rate in 2015. As Bloomberg reported, Abe, speaking to reporters in Tokyo today after a meeting with Finance Minister Taro Aso and Economy Minister Akira Amari, said the plan would bring the rate under 30 percent in a few years. He said alternative revenue will be secured for the move, which requires approval from the Diet.
"At the height of the Cold War I do not remember them getting this close," notes a retired Air Force Lt. Gen. as The Washington Free Beacon reports that four Russian strategic bombers triggered U.S. air defense systems while conducting practice bombing runs near Alaska this week, with two of the Tu-95 Bear H aircraft coming within 50 miles of the California coast, the North American Aerospace Defense Command (Norad) confirmed Wednesday. Two U.S. Air Force F-22 jets were scrambled and intercepted the bombers over the Aleutians but the remaining two nuclear-capable bombers then flew southeast and entered the U.S. northern air defense zone off the coast of Northern California, before 2 more F-15s were scrambled. As House Armed Services Committee member Connaway ranted, "truth of the matter is we would have squashed either one of those [bombers] like baby seals." McInerney said no American president has been treated with such disrespect in U.S. history.
Corporate “inversions” have been around since the 1980s in various forms but have come back into focus recently, but as Goldman's Alec Phillips notes have recent regained popularity as world tax rates grow ever more divergent. On the back of several high profile 'proposed' deals, a certain level of hysteria has taken hold amid potential targets but the issue has drawn enough attention that politicians are once again considering intervening. As Goldman warns, however, companies considering these transactions may now hesitate in light of the possibility that the expected tax benefits will be undone (and expect broad-based tax reform to reduce, if not eliminate, any advantages).
President Obama’s recent foreign policy speech, delivered at this year’s West Point graduation ceremony, was a disappointment to anyone who hoped the president might be changing course. The failure of each US intervention thus far in the 21st century might have inspired at least a bit of reflection. However, the president made it clear that interventionism and American exceptionalism would continue to guide his administration in its final two years. The president said, “I believe in American exceptionalism with every fiber of my being,” adding the dubious claim that “because of American diplomacy and foreign assistance, as well as the sacrifices of our military -- more people live under elected governments today than at any time in human history.” There is much to disappoint in Obama’s big foreign policy speech. It represents a continuation of the policy of “do what we say and we will subsidize you, disobey us and we will bomb you.” That approach is a failure, but the neocons who back it show no sign of falling out of favor.
In a week dominated by headlines of heroes and D-Day celebrations, we suspect President Obama was hoping for a patriotic bump in his ratings... but as The Hill reports, people in the United States say President Obama paid too high a price for the release of Army Sgt. Bowe Bergdahl, and largely disapprove of the administration’s handling of the swap, according to a pair of new polls. Only 34% of those polled (by USA Today/ Pew) backed Obama's decision as 'the right thing' but more crucially, it appears the President's ongoing push towards tyranny that is most worrisome as 72% said Obama should have informed Congress before making the deal.
just who is America's police force, and by extension the Obama administration, which is behind this quiet militarization of local police forces with weapons that would normally be seen in a warzone, preparing for war against?
"The challenges of managing student loan debt can lead some borrowers to fall behind on their loan payments and in some cases even default on their debt obligation," notes the always astute White House... and so it's time to do something about that... by bailing the bad debtors out with US taxpayers money. As we have been vociferously warning, not only has the student loan debt bubble expanded massively (as the easiest credit substitute for real-world working and unemployment) but delinquencies on the 'easily available' credit is soaring with "consequences such as a damaged credit rating, losing their tax refund, or garnished wages." Consequences, as we have been taught now, are not acceptable for this administration and so President Barack Obama will issue an executive action on Monday aimed at making it easier for young people to avoid trouble repaying student loans.
Snowden Is a Good Guy ... But There's a LOT that He Doesn't Know
With the weight of the world on his shoulders, President Obama took time out to lunge and lift at a hotel in Warsaw, Poland. The grimacing golfer was caught in action getting pumped up before meeting Ukraine's Poroshenko...
Having used words and carried a smaller and smaller stick, President Obama - alongside his good buddy David Cameron - is holding a joint press conference to explain the great vengeance and extreme rebukes they are willing to shower on Russia if Putin doesn't bow down before the G-7 in Ukraine... We suspect this week's D-Day celebrations could get a little awkward...
In today's abnormally quiet overnight session one could hear a pin, or the USDJPY, drop: with everyone focusing on the ECB announcement in one hour, not a single algo is willing to make any big moves, or even start some momentum ignition, ahead of Draghi's announcement, which absent launching full scale QE, which it won't, will be a disappointment which means the EUR will ultimatly move higher after a kneejerk lower as the market forces Super Mario to do even more next time. As Bloomberg adds, a cut in refi and deposit rates is fully priced in and latest price action suggests investors brace for disappointment if ECB stops short of signaling asset purchases or other liquidity measures to combat deflation.
Last week, when President Obama made his trip to Bagram Air Base in Afghanistan, he claimed that "America's war in Afghanistan will come to a responsible end." This turned out to be the greatest applause line of his speech. With his assertion, Obama, in effect, declared himself the hero of the Afghan war -- the one who put an end to that nightmare. But what Obama failed to mention was that it was his war, and that nothing but unattractive scenarios lie ahead for that war-torn state.
It’s commencement speech season again, when, as Bloomberg notes, lots of important people say lots of wise things to freshly minted graduates. While Michael Burry's "Brutal Hangover Is Inevitable" speech is among the best ever, this year has seen plenty of witty, inspiring speeches from the likes of President Obama, Steve Ballmer, Sean Combs, and Sarah Palin; but only Bloomberg has the one commencement speech you absolutely can’t miss: an epic supercut weaving all of 2014’s best speeches into one...
Considering that both key overnight news reports: the Chinese HSBC PMI (printing at 49.4, vs 49.7 expected) and the Eurozone CPI print from a few hours ago (print of 0.5%, down from 0.7% and below the 0.6% expected), we find it odd that futures are red: after all this is precisely that kind of negative data that has pushed the market to record highs over the past five years. And speaking of odd, considering the ongoing non-dis-deflation in Europe, the fact that Bunds and TSYs are being sold off today makes perfect sense in a New Normal bizarro world.
This week's busy calendar starts off with today’s global PMIs and ISMs. On Tuesday, President Obama begins a four day European trip ahead of the G7 meeting which starts on Wednesday. This G7 meeting is replacing the G8 meeting that was originally scheduled in Sochi but was cancelled after Russia’s annexation of Crimea. Tuesday’s data docket is important with Euroarea data releases including inflation and unemployment expected to further cement the ECB’s resolve in easing policy come Thursday. Wednesday features the global services ISMs and PMIs. Other data releases scheduled for that day includes the ADP employment report, which will provide an important preview to Friday’s NFP, and US trade. The Fed releases its Beige Book on Wednesday too and the second estimates of Euroarea GDP will be published on Wednesday as well. Apart from the ECB on Thursday, we also have the BoE policy meeting.