Even as the NATO summit began hours ago in Wales, conveniently enough (for Obama) at the venue of the 2010 Ryder Cup, so far today geopolitics has taken a backseat to the biggest event of the day - the ECB's much hyped and anticipated announcement. So anticipated in fact that even as it has been priced in for the past month, especially by BlackRock which is already calculating the Christmas bonus on its "consultancy" in implementing the ECB's ABS purchasing program and manifesting itself in record low yields across Europe's bond market, Reuters decided to milk it some more moments ago with the following blast: "Plans to launch an asset-backed securities (ABS) and covered bond purchase programme worth up to 500 billion euros are on the table at Thursday's European Central Bank policy meeting..." The notable being the size of the program, which at €500 billion, is precisely what Deutsche Bank said a week ago the size of the ABS program would be. Almost as if the bank with the world's biggest derivative exposure is helping coordinate the "Private QE"...
Sterling fell sharply yesterday as traders became nervous of a possible vote for Scottish independence. The referendum on Scottish independence from the United Kingdom takes place on Thursday 18th September.
While the referendum and the potential impact of an independent Scotland have been on the horizon for some time, the approaching vote in two weeks is causing upheaval for the British pound in currency markets, and also more general macro uncertainty in the regional economic and monetary system.
Just three months ago, everyone was a believer: bonds traded well above par, Europe's recovery was on track, and Portugal's banking system was a shining example of how Europe's bailout program worked (and Goldman was pitching SPVs full of this crap to any and all greater fools). Today - the ugly truth is exposed as Bloomberg reports, Espirito Santo International debt attracted potential buyers at just 2% of face value. Of course, the words "contained" are trotted out to explain how this is a one-off and not at all representative of the rest of the European banking system. But... Howard Marks' Oaktree Capital seems to disagree - "We continue to think Europe will provide a substantial quantum of attractive investment opportunities for all of our strategies and in particular distressed debt," as a record amount of bad loans are being offloaded by European banks ahead of the stress tests.
- Confusion as Ukraine and Russia announce progress towards peace (Reuters)... but not for stock buying algos, they know everything
- Obama Expresses Skepticism About Possible Ukraine Cease-Fire (WSJ)
- Fighters Unwind in Russia Where Beer Doesn’t Spell Death (BBG)
- Despite dangers, U.S. journalist Sotloff was determined to record Arab Spring's human toll (Reuters)
- New Beheading Video Spurs Calls for Global Response (BBG)
- Christie’s Spending on Outside Lawyers Passes $50 Million (BBG)
- IEX to Apply for Exchange Status (WSJ)
- UK says not ruling out airstrikes against Islamic State, says hostage video genuine (Reuters)
Heading into the North American open, the bulk of the morning’s price action has been provided by news that Ukrainian President Poroshenko said that he reached an agreement with Russia's Putin on a "permanent cease fire" in Eastern Ukraine's Donbass region. This saw an immediate spike higher in European equities with the DAX future rallying and breaking above its 100DMA seen at 9644.50, thus extending earlier gains that stemmed from the strong performance in Asia-Pacific equities, while the e-mini S&P once again printed a fresh record high. However, these moves staged a partial reversal amid comments from Russia’s Putin that he denied that such an agreement had been reached as Russia is not a party to the Ukraine conflict. In stock specific news, Russian exposed Raiffeisen Bank outperforms Europe (+7%) in reaction to the geopolitical developments, while Hugo Boss have underperformed throughout the session following a share placement which came in at the lower end (-5.3%).
US Equity Futures Soar To Fresh All-Time Highs On New Ukraine "Ceasefire" Which Is Promptly Refuted By All SidesSubmitted by Tyler Durden on 09/03/2014 06:56 -0400
The comedic value of developments out of Ukraine, especially when it comes to "de-escalation", truly has no equal. Case in point, events from the past three hours, when we learned that there is a new Ukraine ceasefire, there is no Ukraine ceasefire, Putin is looking for a ceasefire but can't be part to a agreement as he is not "firing", NATO is pushing again, Ukraine demands special treatment, the Ukraine rebels were never even consulted on the latest ceasefure, and so on. End result: futures just hit new all time highs.
While only 'humanitarian adviser' boots on the ground are present in Iraq (and Syria), Reuters reports that preparations are under way near Ukraine's western border for a joint military exercise this month with more than 1,000 troops from the United States and its allies. As Obama told reporters last week, "that a military solution to this problem is not going to be forthcoming," it seems a little odd 'strategically' to go ahead with the Rapid Trident exercise Sept. 16-26 as a sign of the commitment of NATO states to support non-NATO member Ukraine, entailing the first significant deployment of U.S. and other personnel to Ukraine since the crisis erupted.
The CDC's worst nightmare is coming true. Despite reassurances from the government that it was 'contained', the Ebola outbreak in Nigeria is accelerating fast. Health Minister Chukwu said that 17 had now been infected and 271 were under surveillance (including most horrifyingly, 72 in Lagos). In addition, Congo is seeing cases increase rapidly, with WHO reporting 53 cases of Ebola (31 dead) and warning, perhaps ominously, that there is no link with the West Africa strain. Liberian President Ellen Johnson Sirleaf said the situation in her country "remains grave," adding "People now don't see this as a Liberia or West Africa crisis. It could easily become a global crisis." Furthermore, Doctors-without-Borders warns, "the world is losing the battle to contain the Ebola epidemic."
- Ukraine Shifts to Defense Against Russian Incursion (WSJ)
- U.S. forces carry out operation against al-Shabaab in Somalia (Reuters)
- Bond Markets Tilt Toward Frankfurt as Draghi Negates Fed (BBG)
- Another "unexpectedly" - Swiss Economy Unexpectedly Stalls as Euro Area Takes Toll (BBG)
- Japan's 'Abenomics' feared in trouble as challenges build (Reuters)
- Germany Imposes Nationwide Ban on Uber's Cab-Hailing Service (WSJ)
- Japan's 'forward guidance', the GPIF, has "already begun a highly anticipated portfolio reshuffle" (WSJ)
- Detroit Brings Bankruptcy Plan to Court With Billionaires (BBG)
- Burger King has maneuvered to cut U.S. tax bill for years (Reuters)
With China's property developers slashing prices, piling on incentives, and still seeing sales slump; it is no surprise that demand from the top to the bottom across Asia is falling. As Reuters reports, even Singapore's Sentosa Cove (the man-made island resort billed as Asia's Monte Carlo) is eerily silent as the billionaires seem to be staying away with prices down over 20-30% in the past year. New mortgage business is down over 40% as "the rential can't even cover the mortgage anymore." As one analyst notes, "the tables have turned," adding rather ominously that, "The way prices have fallen, it's as if there is a global financial crisis."
Gold Lock Down Despite Aggressive Plan To Ban Russia From SWIFT, Terrorism & War Risk; Palladium At Multi-Year High Over $900Submitted by GoldCore on 09/01/2014 16:14 -0400
The 13 year anniversary of the 911 attacks in 2001 looms next week and given developments in recent days and weeks, one must be wary of new attacks in the UK , U.S. and other western nations. The UK has raised the country's terror threat level from substantial to severe, its second highest level. MI5 and MI6 said there was no information to suggest an attack was imminent.
More Sanctions: Europe Will Ban Purchase Of Russian Bonds; However Russian Gas Exports Remain UntouchedSubmitted by Tyler Durden on 09/01/2014 09:18 -0400
Over the weekend, insolvent, debt-dependent Europe thought long and hard how to best punish Russia and moments ago reached yet another milestone in deep projective thought: as Reuters reports, Europeans could be barred from buying new Russian government bonds "under a package of extra sanctions over Moscow's military role in Ukraine that European Union ambassadors were to start discussing on Monday, three EU sources said." This will be in addition to the ban on the debt funding of most Russian corporations. So as Europe's 7-day ultimatum for the Kremlin to "de-escalate" counts down, Putin has a choice: continue operating under a budget surplus and ignore Europe's latest and most amusing hollow threat which is merely a projection of Europe's biggest fears, or spend himself into oblivion as Europe has done over the past decade and become a vassal state of the Frankfurt central bank.. Somehow we doubt Putin will lose too much sleep over this latest "escalation"...
- Putin Suggests Statehood for Southeast Ukraine as Sanctions Loom (BBG)
- Ukraine accuses Russia of 'open aggression' as rebels advance (Reuters)
- Ruble Hits New Record Low Against Dollar (WSJ)
- Further Russia Sanctions Seen `Almost Inevitable' (BBG)
- Europe holds nerve as Russia-Ukraine warnings ratchet up (Reuters)
- China manufacturing slowdown ripples through region (Reuters)
- Brazil enters recession in election blow to Rousseff (Reuters)
- Disruptive Hong Kong protests loom after China rules out democracy (Reuters)
- Coal Miners See Signs of Recovery as Prices Stabilize (WSJ)
The entire Ukraine conflict could be resolved tomorrow morning if Kiev, and its western support, would pledge to stop waging war on the Donbass. And give it a separate status, either within Ukraine or in a separate state. After half a year+ of warfare, how else could you resolve this crisis? Only through more bloodshed, that’s how. But our western leadership is simply too trigger happy for comfort.... These clowns are dragging us into war. And yes, maybe it would be a good idea for you to tell them that you don’t want them to. Before your kids, or their friends, their neighbors, start dying in some far away ugly theater they should never have been part of. Is peace impossible in Ukraine today? No. Not at all. But it is as long as the west keeps its hopes for conquering the Donbass alive. It should have known that from the start, and perhaps it did, and started this crusade anyway, because the grand prize it’s after is Russia itself. Over our dead bodies.
Probably the 'oddest' headline of the day but in yet another show of disdain towards US military might, the Islamist militia group known as "Dawn Of Libya" has 'secured' an annex of the U.S. embassy in Tripoli. As Reuters reports, the United States evacuated its embassy in Tripoli on July 26, driving diplomats across the border into Tunisia; but a YouTube video showed the breach of the vacated diplomatic facility by an armed group, with fighters seen milling around a swimming pool. A rebel takeover of the compound would now deliver another symbolic blow to U.S. policy toward Libya, which Western governments fear is teetering toward becoming a failed state.