• 09/21/2014 - 14:52
    Dear Janet; If I may be so forward, as a concerned citizen of the Constitutional Republic of the United States, it is with great consternation that I feel compelled to write you this distressing...

Reuters

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S&P 500 To Rise Above 2000 On Hopes Euro Collapse Accelerates, Euro Yields Hit New Records





It's been one of those days. First, the CME broke for 4 hours due to what some suggested were HFT connectivity issues, then Russia announced it would send a second humanitarian convoy into Ukraine (a big risk off move the first time it was announced, now not even an algo stirred), then Germany reported that the IFO Business Confidence/Climate dropped for the fourth consecutive month to 106.3 from 108.0, below the 107.0 expected, with the IFO chief economist stating that German GDP expectations are likely to be cut to 1.5% from 2.0% later in the year, and finally the French government collapsed due to disagreement over policy between finance minister Valls and economy minister Montebourg. All in all, a typical day in Europe's slow-motion implosion. So why are Spanish and Italian bank stocks soaring and European bond yields reaching new record highs? Simple: following Draghi's speech on Friday at Jackson Hole, which at initial read was hardly as dovish as many had expected, the FT and various other media outlets promptly changed the narrative and made it seem as if the ECB head was about to unleash QE.

 
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China Plans To Unveil Domestic "Operating System" In October





With Russia pushing to end its government's dependency on Microsoft's Operating System, it is perhaps not surprising (especially following the various raids that have been undertaken) that another BRICS member, as Reuters reports, China could have a new homegrown operating system by October to take on imported rivals such as Microsoft, Google, and Apple, Xinhua news agency said on Sunday. A spokesperson stated, China hoped domestically built software would be able to replace desktop operating systems within one to two years and mobile operating systems within three to five years.

 
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WHO Lied As Congo Admits To Ebola Outbreak While Ebola-Infected Brit Returns Home





It appears that yet another international organization has been caught lying. Three days ago, in a clear attempt to avoid spreading a panic, a WHO spokesman when asked if the latest Ebola-like disease to claims over 70 lives was the virus in question responded, "this is not Ebola." He lied:  Reuters confirms: Democratic Republic of Congo declared an Ebola outbreak in its northern Equateur province on Sunday after two out of eight cases tested came back positive for the deadly virus, Health Minister Felix Kabange Numbi said. "I declare an Ebola epidemic in the region of Djera, in the territory of Boende in the province of Equateur," Kabange Numbi told a news conference. Sadly, this simply means that the WHO is just the latest global organization willing to sacrifice its credibility in order to avoid the spread of social panic, even though the truth always emerges in the end, and when society realizes it can't even trust those mandated with telling the truth, the end panic is orders of magnitude worse.

 
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India, Pakistan Intensify Shooting Across Border; Iran Downs Israel Drone; ISIS Seizes Military Airport





Since in the New Normal no geopolitical events appear to have any adverse impact on risk and asset prices (because the central banks are always there to protect investors should the market "plunge" by say 5%) with general newsflow completely irrelevant on what has been a straight line up in the S&P since the announcement of QE4 in December 2012, one might as well see how much further geopolitical events can be pushed further before it all crashes. In other words, time for this weekend's geopolitical update which covers everything from India, Pakistan, Iran, Israel, Iraq, Syria and Qatar. 

 
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San Francisco Bay Area Hit By Strongest Earthquake In 25 Years; Wine Country Shakes - LIve Webcast





An earthquake of 6.0 magnitude, the largest in the region for 25 years, shook the San Francisco Bay Area early on Sunday, waking residents and causing some power outages and minor damage, according to initial reports.

 
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The G-20's Solution To Systemically Unstable, "Too Big To Fail" Banks: More Debt





Another day, another brilliant scheme from the think-tank that is the G-20: prevent systemic collapse from TBTF banks loaded up with record amounts of debt by forcing them to... issue more debt.

 
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Why Don't Muslims Speak Out Against ISIS?!





And Should We Just Kill Them All - as an American News Commentator Suggests - and Let God Sort 'Em Out?

 
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Ukraine Humanitarian Aid Convoy Returns To Russia





So much ado for nothing. Following nearly 2 weeks of artificial tension and fake selloffs that brought the S&P within a fraction of 2000 only for Yellen to "not be Dovish" enough and spoil the party, with the first red Jackson Hole close in 5 years, the Russian "humnatiarian" convoy which the objective media led everyone to believe was a Trojan horse just itching to launch a war in Ukraine, has left Ukraine after delivering its cargo.

 
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Ebola Epidemic Numbers Vastly Under-Reported Due To "Shadow Zones", WHO Warns





The stigma surrounding Ebola poses a serious obstacle to efforts to calibrate the outbreak in Liberia, Sierra Leone, Guinea and Nigeria. As Reuters reports, the scale of the world's worst Ebola outbreak has been concealed by families hiding infected loved ones in their homes and the existence of "shadow zones" that medics cannot enter, according to the World Health Organization (WHO). "As Ebola has no cure, some believe infected loved ones will be more comfortable dying at home," the WHO statement said, concluding rather ominously, "frankly, no one knows when this outbreak of Ebola will end."

 
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5 Things To Ponder: Interesting Stuff





As a reminder, this kind of market action is neither normal or healthy longer term and has only seen near historical major market peaks. Of course, timing is everything. With the current influx of liquidity coming to an end in October, combined with a plan to start to increasing interest rates in 2015, the Fed has clearly begun to signal the end of 5 years of ultra-accommodative policies. The question that remains to be answered is whether or not the economy is actually strong enough to be removed from "life support?" This weekend's "Things To Ponder" is just a smattering of interesting articles cover a wide range of topics that I hope you will find interesting, informative and contemplative.

 
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Russia Explains Why It Rushed Entry Of Humanitarian Convoy





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.

 
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The Market Reacts To (Then Reads) Janet Yellen's Speech





Out of the gate - based on the fact the word "slack" was present and the word "bubble" was not, stocks ramped higher as J-Yell's J-Hole speech hit. Bond yields surged (led by 5Y) and the USDollar also surged (as gold shrugged). However, once the machines were done, humans reacted to the fact that this was not the "full dovish" speech that was 'priced in' and have started to sell stocks back... but then again - we always have Draghi later to save Friday...

 
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Russian Humanitarian Convoy Enters Ukraine Without Authorization; Ukraine Considers Move "Direct Invasion"





Update: the farce is complete, although at least this time it didn't take Ukraine several hours to fabricate then unfabricate its plot line, because literally minutes after it accused Russia of invading, Ukraine's foreign minister said the convoy was "allowed" to avoid provocations

Here we go again. Precisely a week after the fabricated headlines last Friday that Ukraine had blown up Russian military vehicles in Ukraine territory, "news" which promptly was forgotten when Russia denied and Ukraine couldn't produce any proof of said attack, now it is time for the real "humanitarian" convoy to become the topic du jour, and so it did a few hours ago when some 90 trucks from the convoy were said to have entered Ukraine territory, a move which Ukraine promptly denounced as a direct invasion.

 
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Frontrunning: August 22





  • Ukraine accuses Russia of invasion after aid convoy crosses border (Reuters)
  • Hunt for Foley’s Killer Spans Old Policing and Tech Tools (BBG)
  • U.S. Probe Examines GM Lawyers (WSJ)
  • Argentina accuses U.S. Judge Griesa of "imperialist" attitude (Reuters)
  • Violence-weary Missouri town sees second night of calm (Reuters)
  • Geneva Banks Break 200-Year Silence to Unveil Earnings (BBG)
  • Richest Jailed Putin Foe Says Ukraine Fears Sparked Prosecution (BBG)
  • Disclosure of Failed Attempt to Rescue James Foley Is Criticized (WSJ)
  • Execution of U.S. journalist reveals the changing business of war coverage (Reuters)
 
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Futures Tread Water As Ukraine Tries To Steal The Jackson Hole Scene





While today's key events were supposed to be the Jackson speeches first by Janet Yellen at 10:00am Eastern and then by Mario Draghi at 2:30 pm, Ukraine quickly managed to steal the spotlight yet again when moments after the first Russian humanitarian aid convoys entered Ukraine allegedly without permission, Kiev first accused Russia of staging a direct invasion, even if moments later it changed its tune and said it had allowed the convoy in to "avoid provocations." In other words, your daily dose of Ukraine disinformation, which initially managed to push futures down some 0.3% before futs regained virtually all losses on the subsequent clarifications. Expect much more conflicting, confusing and very provocative headlines out of Kiev as the local government and the CIA try to get their story straight.

 
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