The espionage scandal that keeps on giving has released its latest installment, once more courtesy of the Guardian, which on the eve of tomorrow's starting G-8 meeting reveals that foreign politicians and officials who took part in two G-20 summit meetings in London in 2009 had their computers monitored, their phone calls intercepted, and fake internet cafes were set up on the instructions of the British Government Communications Headquarters (GCHQ), the sister organization to the US NSA. Naturally, it wasn't just the GCHQ - according to the Guardian, during the 2009 G-20 meeting there was an NSA attempt to eavesdrop on then-Russian leader, Dmitry Medvedev, as his phone calls passed through satellite links to Moscow. And while broad espionage allegations can be deflected by pretending by the rhetoric-endowed and teleprompter-aided that only terrorist threats were targeted, it will be very difficult to explain why the national information super spooks used every trick of the trade to spy on the so-called leaders of the developed world.
While the world awaits Russia's formal response to last week's US escalation in Syria (as Putin demonstratively arrived an hour late for talks on Syria with UK PM David Cameron) another country: Iran - fresh from an election in which moderate candidate Hassan Rohani became the new president - is taking matters into its own hands. The Independent Reports that "a military decision has been taken in Iran – even before last week’s presidential election – to send a first contingent of 4,000 Iranian Revolutionary Guards to Syria to support President Bashar al-Assad’s forces against the largely Sunni rebellion that has cost almost 100,000 lives in just over two years. Iran is now fully committed to preserving Assad’s regime, according to pro-Iranian sources which have been deeply involved in the Islamic Republic’s security, even to the extent of proposing to open up a new ‘Syrian’ front on the Golan Heights against Israel."
- As Goldman's money-printing tentacle Carney arrives, everyone else leaves: Tucker to Leave BOE (WSJ)
- So much for pent up demand: Refinancings Plunge as Bond Yields Rise (WSJ)
- Singapore Censures 20 Banks for Attempts to Rig Benchmark Rates (BBG)
- Behind the Big Profits: A Research Tax Break (WSJ)
- While working for spies, Snowden was secretly prolific online (Reuters)
- Turkey to Await Ruling on Park as Erdogan Meets Protesters (BBG)
- Iran votes for new president, Khamenei slams U.S. doubts (Reuters)
- NSA revelations, modified wheat cast a pall on U.S. trade talks with Europe (WaPo)
- Euro zone inflation subdued as employment keeps falling (Reuters)
It would appear the cleanest dirty shirt is losing its appeal as both bonds and stocks are being sold this morning and the JPY and EUR are rallying as the liquidity washes back home. The USD Index is back at its 10DMA again but it seems the building tension in Europe (Turkey and now the potential for a collapse in the Greek coalition over the ERT closure - which we warned about yesterday) and Abenomics hangover is leading to an unwind of these levered carry trades everywhere around the world.
Wednesday may be the new Tuesday (which halted its relentless and statistically impossible streak of 20 out of 20 up DJIA days last week), if only in terms of the overnight no news stock futures ramp, which today is back with a vengeance. In a session that was devoid of any news, the e-Mini is up enough to practically erase all of yesterday's losses. Whether this is due to a relatively calm Nikkei trading session, to no further surge (or collapse) in the USDJPY, or to the 10 Year trading flat inside 2.20% is unclear. What is clear is that the bipolar market swings from extreme to extreme on speculation about the largely irrelevant topic of whether the Fed will taper (because if it does, it will be very promptly followed by an untapering once risk assets around the world implode.)
After a couple of days of exuberant dead-cat-bouncing in Japan (and therefore implicitly US equities), the reality that credit markets had been hinting at is starting to be realized once again. A nasty gap-down open in US equities saw BTFDers come piling back in, aided by pressure on bonds and a final liftathon into the EU close in AUDJPY. That was the best of the day and JPY's biggest surge in over 3 years (~3%!) dissolved any equity-dip-buying power as stocks jerked up and down around VWAP for the rest of the day. Credit markets opened even more gap wider than stocks weaker as chatter was that bondholders were hedging exposures (as opposed to reducing exposure - hoping that redemptions don't come). That gap was very rapidly filled and aided the parabolic ramp into the EU close. Then, credit was offered, stocks followed as VIX and Treasuries were bid the rest of the day. A very chaotic day in almost every asset class (with PMs actually relatively stable) as US markets begin to mimic Japanese volatility. The Nikkei is now 800 points off the dead-cat-bounce highs from 2 days ago.
It appears to be rapidly shifting from bad to worse in Turkey...
Turkish Riot Police Storm Taksim Square, Central Banks Warns Of Intervention Due To Extreme Market VolatilitySubmitted by Tyler Durden on 06/11/2013 06:28 -0500
Over a week into "Occupy Taksim", the Turkish situation is nowhere near resolution. In fact, judging by the capital markets response to news that hundreds of police stormed Taksim Square this morning using tear gas to disperse protesters, where the lira declined overnight to the weakest level since December 2011, bond yields dropped 29 bps, Turkish CDS rose wider than Russia, and where even the central bank has warned it may start engaging in tightening operations, things are going to get much worse. Finally, a big demonstration is due in a few hours: will Taksim Square June 2013 be the "Waddel and Reed/May 2010" Syntagma Square flash crash equivalent? Find out shortly.
Emerging markets have tanked but some of the reasons for their underperformance will prove overblown, providing opportunities for long-term investors.
The United States is estimated to have anything from 700 military bases around the world to more than 1000. Hans-Hermann Hoppe asks "how can democracy be a stable equilibrium if it is possible that it be transformed democratically into a dictatorship, i.e., a system which is considered not stable?" Empirically, democracies are anything but stable. Concluding it may be better to heed the advice of Erik von Kuehnelt-Leddihn and, instead of aiming to make the world safe for democracy, we try making it safe from democracy - everywhere, but most importantly in the United States.
Today, there is almost zero truth in mainstream media. The fascist corporate-banking-government machine has ensured that mainstream media has now become the official department of propaganda, not only in political news, but also regarding nearly all financial news as well.
Here is what is shaping the global capital markets.
Back in 2010 we started an annual series looking at the (re)distribution in the wealth of nations and social classes. What we found then (and what the media keeps rediscovering year after year to its great surprise) is that as a result of global central bank policy, the rich got richer, and the poor kept on getting poorer, even though as we predicted the global political powers would, at least superficially, seek to enforce policies that aimed to reverse this wealth redistribution from the poor to the rich (a doomed policy as the world's legislative powers are largely in the lobby pocket of the world's wealthiest who needless to say are less then willing to enact laws that reduce their wealth and leverage). Now that the topic of wealth distribution (or rather concentration) is once again in vogue, below we present the latest such update looking at a global portrait of household wealth. The bottom line: 29 million, or 0.6% of those with any actual assets under their name, own $87.4 trillion, or 39.3% of all global assets.
Here are four things that seem to be dominating the weekend discussions.
As violent protests persist across Turkey, and spread from Istanbul to the capital Ankara, and Izmir, here is a visual summary of what is going on courtesy of Reuters.