- FTW: Europe Stocks Rise as Data Signals Need for Stimulus (BBG)
- More de-escalation: Dozens die in Ukraine in street battles, Donetsk shelling (Reuters)
- Calm largely holds in Missouri after grand jury opens shooting investigation (Reuters)
- Attorney General Eric Holder Vows Thorough Probe of Ferguson Shooting (WSJ)
- World’s Biggest Wealth Fund Slows Emerging Market Investment (BBG)
- Market Chilly to Argentine Debt Proposal (WSJ)
- Israeli air strike kills three Hamas commanders in Gaza (Reuters)
- Retooled Hamas Bloodies Israel With Help From Hezbollah (BBG)
- Investors Pour Into Vanguard, Eschewing Stock Pickers (WSJ)
- Fed Debates Early Rate Increases (WSJ)
Three more banks have been permitted to import gold to China, as IBTimes notes, the country redoubles its efforts to attain pricing power of the commodity. The move, which brings the number of firms allowed to import gold into China to 15, comes ahead of the SGE launching its Yuan settled bullion exchange, in hopes of replacing the now discredited London Fix and become a price-discovery center. Shanghai Pudong Development Bank and China Merchants Bank were joined by Standard Chartered - only the 3rd foreign bank to be allowed to import gold into China as the nation continues to increase the pace of liberalisation of the gold market following the approval last year of the country's first gold-backed WTFs.
Sanctions blowback? Russian food safety watchdog Rospotrebnadzor has ordered the closure of four McDonalds restaurants in Moscow, according to Reuters, due to "numerous sanitary breaches."
*MOSCOW TEMPORARILY CLOSES SEVERAL MCDONALD'S RESTAURANTS
This was not entirely a surprise since Russia had previously raised concerns over McDonalds cheese and was angered when the fast-food restaurant ceased operations in Crimea. This also comes on the heels of McDonalds problems in China and Japan over food supply issues. It appears the "tangible losses" Putin promised, are beginning.
While the world awaits the test results from an Ebola suspect in Sacramento to learn if Ebola has now officially entered the US, the epidemic in Africa has now drifted away from the confines of its original hotspots of Guinea, Liberia and Sierra Leone, and after spreading to Africa's most populous nation Nigeria, and the third most populated city in the world, Lagos, it appears to have just entered the second largest country in Africa by area, and fourth most populous African nation: the Democratic Republic of the Congo.
- Ferguson at Turning Point After Night of Relative Calm (BBG)
- Gaza war rages on, Hamas says Israel tried to kill its military chief (Reuters)
- Surge in Putin Patriotism Masks Pain of Sanctions (BBG)
- Bank of England splits over rate hike for first time in 3 years (Reuters)
- Putin Meeting Leaves Kiev With Tough Choices (WSJ)
- European Gas Reverses Biggest Drop Since 2009 on Ukraine (BBG)
- "Isolation" Mongolia Seeks Economic Lifeline With Pivot to China, Russia (BBG)
- Uber Picks David Plouffe to Wage Regulatory Fight (NYT)
- China Levies Record Antitrust Fine on Japanese Firms (BBG)
Enter the Golden Dragon ... China is moving closer to positioning itself as the physical gold trading hub of the world and the world’s gold price discovery centre. It is a natural progression for the largest economy in the world and for the world’s largest gold buyer, importer and indeed producer. The Shanghai Gold Exchange (SGE) is launching its yuan denominated international bullion trading exchange next month.
The world’s central bankers have given companies the urge to merge. Merger and Acquisition (M&A) activity has already reached $2.2 trillion this year according to Thomson Reuters Deals Intelligence, up 70% from this time a year ago. The deals are big, with eight acquisitions, each over $5 billion, being announced in just a single week in July. However CEO buying sprees do not create new jobs and new products that make our lives better, but are instead just wasteful malinvestments that destroy capital. The cost of capital is integral to making these assumptions. The lower the assumed interest rate or cost of capital, the higher the price for the acquisition that the models will justify. Once interest rates go up, these valuation models will be blown to pieces.
The Ferguson Morning After: Police "Come Under Heavy Gunfire", Arrest 31 Including Photographer, JournalistSubmitted by Tyler Durden on 08/19/2014 10:20 -0400
The local authorities have tried everything: aggressive police, appeasing highway patrol, curfew, no curfew, and last night, the national guard. Nothing seems to work. Because what until 9 pm was a peaceful protest, it quickly, as documented here extensively, spiraled out of control. And as the crowd advanced, police fired stun grenades and tear gas at protesters. This escalation allegedly happened after, as Reuters reports, the police came under heavy gunfire leading to the arrest of 31 people, including a famous Getty photographer and yet another journalist.
More than 7,000 troops from China, Russia and four central Asia countries have gathered in Inner Mongolia for their biggest joint drills "to fight terrorists," but as one analyst notes, "it is kind of rare to have an anti-terrorist mission which uses battle tanks." Furthermore, as part of a drill:
*RUSSIA TESTING S-300, S-400 SYSTEMS IN ASTRAKHAN REGION: RIA
So, surface-to-air missile tests? Not very "de-escalation"-y. Perhaps this statement is a clue, "we are trying to exercise together to coordinate our troops to meet any potential eventuality."
As many have observed since Obama launched his own personal Iraq war, there is something rather farcical about the latest US intervention in the middile east, namely that US weapons are being used to destroy US weapons, captured by and in possession of ISIS jihadists. As Reuters summarizes the situation, rather poetically, "Islamic State’s captured an enormous amount of U.S. weaponry, originally intended for the rebuilt Iraqi Army. You know — the one that collapsed in terror in front of the Islamic State, back when they were just ISIL?" In other words US taxpayers are now paying for military missions, in which US taxpayer paid-for warplans and missiles are used to blow up other US taxpayer paid-for tanks, artillery, MRAPs, and various other weapons of death. How much? Here is the answer...
Well that didn't last long...
*ISRAEL ARMY SAYS 3 ROCKETS WERE FIRED FROM GAZA
*ISRAEL ARMY SAYS ROCKETS LANDED IN OPEN AREAS, NO INJURIES
The Israeli military has declared the cease-fire broken. So this is the escalation that will enable a pent-up de-escalation buying opportunity?
- Just how many rats are there? Steven Cohen's Firm Loses Another Top Executive (WSJ)
- Iceland Sees a Potential Volcanic Eruption, and Airlines Cower (Bloomberg)
- Iraqi forces battle to drive jihadists from Saddam's home town (Reuters)
- Israel, Palestinians Agree to Extend Gaza Truce for 24 Hours (BBG)
- Pimco now buying junk (BusinessWeek)
- Pakistan arrests 147 in Punjab towns as protests in capital continue (Reuters)
- Ex-Rabobank Employee Pleads Guilty in Libor-Rigging Probe (BBG)
- Ebola Orphans Targeted by Aid Groups as Newest Victims (BBG)
- Two California youths accused of plotting high school shooting spree (Reuters)
- Only Rich Know Wage Gains With No Raises for U.S Workers (BBG)
A quick reminder of how geopolitics governs markets: on Friday, the market plunged 0.005% over fears Ukraine and Russia may be about to go at it all out after a fake report Ukraine shelled a Russian military convoy. On Monday, the same "market" soared just under 1% as the news that had caused the "crash" was refuted. That has been the dominant rinse, repeat theme for the past month and will continue to be well after Yellen's Friday speech at Jackson Hole (although one does wonder why she is not speaking on Wednesday when the symposium begins). Not surprisingly, with only modest re-escalation news overnight (that Russia is preparing further retaliatory sanctions against the West), which is simply "pent up de-escalation" in the eyes of Keynesian algos, futures are again up a solid 0.2% and rising, and the way the rampy USDJPY is being manipulated before its pre-market blast off, we may well see the S&P hit 1980, if not a new all time high before 9:30am, let alone during today's cash session. In any event, whatever you do, don't you dare suggest that algos should care one bit about Ferguson and its implications for US society.
Over the past month ISIS has been getting angrier (""God Willing, We Will Raise The Flag Of Allah In The White House" - A Deeper Look Inside ISIS") and angrier ("ISIS Issues Threat To White House; Secret Service Taking "Appropriate Steps") until today it released a video in which it warned the United States it will attack Americans "in any place" if continuing US raids hit its militants. The video, released by Reuters, which shows a photograph of an American who was beheaded during the U.S. occupation of Iraq, featured a statement which said in English "we will drown all of you in blood".