http://www.zerohedge.com/fullrss2.xml en China’s Reaction: America Is A “Disgusting Thief Spying Over His Neighbor’s Fence” http://www.zerohedge.com/news/2014-08-23/china%E2%80%99s-reaction-america-%E2%80%9Cdisgusting-thief-spying-over-his-neighbor%E2%80%99s-fence%E2%80%9D <p><em>Submitted by Simon Black of <a href="http://www.sovereignman.com/highlight/wow-chinas-reaction-america-is-a-disgusting-thief-spying-over-his-neighbors-fence-14885/">Sovereign Man</a></em><a href="http://www.sovereignman.com/highlight/wow-chinas-reaction-america-is-a-disgusting-thief-spying-over-his-neighbors-fence-14885/"></a></p> <p><strong>China’s Reaction: America Is A "Disgusting Thief Spying Over His Neighbor’s Fence"</strong></p> <p>Only hours ago the US government announced that a Chinese fighter jet had intercepted an American military patrol plane over international waters east of China’s Hainan Island.</p> <p>A Pentagon spokesman called China’s actions “unsafe and unprofessional”, and blasted such unprovoked aggression.</p> <p>There was no mention as to why a US surveillance plane was just off the Chinese coast to begin with. They’re just playing the victim… and rather loudly at that.</p> <p>Needless to say, the Chinese government has a slightly different story. I asked one of our Sovereign Man team members in mainland China to translate the following article from Sina News.</p> <p>The first part of the article praises the pilot’s skill and boldness, as well as the efficiency and superiority of Chinese aviation technology.</p> <p>The Jian-11B fighter, in fact, is 100% Chinese. There is no foreign engine or major component.</p> <p>As for the rest of the article– I present it below with only one comment– it should be obvious to anyone paying attention that the US is no longer the world’s dominant superpower. It’s certainly obvious to the Chinese.</p> <p>——–<br /><em>From <a href="http://mil.news.sina.com.cn/2014-08-23/1620797098.html">Sina News</a></em><a href="http://mil.news.sina.com.cn/2014-08-23/1620797098.html"></a></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/U9298P27DT20140823160608.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/U9298P27DT20140823160608.jpg" width="550" height="376" /></a></p> <p><strong>Stop thief: China rejects the U.S. government calling our aircraft “dangerously close”</strong></p> <p>Sure enough, it is the American government who stamps its foot first after a similar event.</p> <p>First the famous anti-China military scholar Bill Gertz played his “danger close” speech for the Washington Free Beacon.</p> <p>And then the Pentagon also followed and said that it was a “dangerous intercept”. The White House called it “deeply worrying provocation”.</p> <p>Adm. John Kirby, the Defense Department spokesman, said Washington protested to the Chinese military through diplomatic channels, and called the maneuvers “unsafe and unprofessional.”</p> <p>Deputy National Security Adviser Ben Rhodes said it was “obviously a deeply concerning provocation and we have communicated directly to the Chinese government our objection to this type of action.”</p> <p>Such remarks are laughable. As we all know, the United States is the world’s largest hegemonic force and biggest rogue country.</p> <p><strong>Their various reconnaissance aircraft have been wandering around foreign airspace for decades and watching the military secrets of other countries like a disgusting thief spying over his neighbor’s fence.</strong></p> <p>However, when the neighbor comes back with a big stick, the thief will turn tail and run away, blaming the neighbor.</p> <p>When you show people weakness, they will bully you. When you show people strength, they will respect you.</p> <p>We [the newspaper] believe the Chinese Air Force and Naval aviation should maintain a high level of vigilence and morale in southeast coastal region to prevent the further US action.</p> <p><strong>America has lost face and does not want to show the world they are sick. They have been lording over other countries for so long, and they will never let it go after they eat this loss.</strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="550" height="376" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/U9298P27DT20140823160608.jpg?1408818762" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-23/china%E2%80%99s-reaction-america-%E2%80%9Cdisgusting-thief-spying-over-his-neighbor%E2%80%99s-fence%E2%80%9D#comments China national security Newspaper White House Sat, 23 Aug 2014 18:41:00 +0000 Tyler Durden 493387 at http://www.zerohedge.com Market expectations for H2 2014 http://www.zerohedge.com/news/2014-08-23/market-expectations-h2-2014 <p>The summer is almost over again. Although meteorologically and astronomically speaking the season will last for a few more days or weeks, the better part of it is behind us and ultimately you could say the same about the financial markets. Everything is quiet on the surface, but the wider market is barely able to get ahead. This is also what we have seen all year: a few steps forward and a few steps back, but it is not going anywhere. Even more, a few important indices are barely in the green year-to-date, which is quite the contrast with previous years in which yearly gains surpassed historical averages by far. </p> <p>In <a href="http://sproutmoney.com/">Sprout Money’s latest free newsletter</a> we covered the progress of some of the market heavyweights and a few other segments, of which the poor performance of the Dow Jones was definitely the most remarkable. The only real stronghold for traditional stocks is technology (NASDAQ), which is also the one thing that is keeping the broader S&amp;P 500 index from embarrassment. Digging deeper we found few positive outliers, but mostly losers among which the European stocks (DAX: -2,2%). </p> <p><a href="http://sproutmoney.com/"><img src="http://sproutmoney.com/files/2014/08/Markets-in-2014.jpg" alt="Markets in 2014" width="674" height="474" style="display: block; margin-left: auto; margin-right: auto;" class="wp-image-7894 aligncenter" /></a> </p> <p>In our opinion this is not necessarily a bad development. These last few years the market has only crept higher, which at times made us worry about the sustainability of the current bull market. A few moments of peace and quiet on the markets can only be good news for the coming years, but that also means that we are probably not going to see any fireworks over the coming months. To the contrary, we are expecting volatility to pick up and the market to become much more turbulent with surprises to the upside and the downside. As a consequence, one can only guess where the indices will end up this year, although we do not expect them to land far from where we are now, because that is what has been on the menu for the entire year of 2014. </p> <p>A few segments are performing above average this year. The laggards are definitely picking up the slack and, although commodities have left us with mixed feelings in general, a few laggards in that segment (among which is gold) have started to catch up. Other important commodities, like oil for example, are also doing well. Another market segment that is performing up to standard this year: emerging markets. This segment has been the punching bag of the financial world for years, but in 2014 this is no longer the case. The MCSI Emerging Markets ETF is listed no less than 8.7% higher, which is mostly related to the strong performance of specific countries - China and India in Asia and Brazil in South America. The emerging markets have definitely made a comeback. </p> <p>A final segment that has gotten ahead of the pack with relative ease is the <a href="http://sproutmoney.com/gold-silver/gold-silver-report-august-2014/"><strong>gold mining sector</strong></a>, which is probably the most hated segment of the financial markets in recent years. The strong correction in gold last year wreaked havoc in the gold mining sector and had a strong impact on valuations with share prices taking an 80% nosedive on average. That is, of course, already more than you need to know as an attentive investor: when a market segment loses three quarters of its value, you can expect an impressive rally to compensate for it. That is also exactly what we are seeing right now, as the average gold mining stock is listed 23% higher in 2014! </p> <p><strong>Some analysts are calling it a junk-rally, which would indicate the end of the bull market. In their view investors buy laggards in the last phase, which could be an explanation for what we have seen in 2014. We believe, however, that the market favorites of yesteryear are being picked up again, because traditional segments have become unattractive after years of unstoppable growth. It is not that we find the market too expensive in general, but it is high time for a break. </strong></p> <p></p> <p><strong>We expect this break to hold up for a little while longer, with more turbulence towards the end of the year because of higher volatility. We have already seen that large investors, among which George Soros, are hedging against that scenario to protect their portfolios as well. Laggards will remain in demand because they have quite some catching up to do. Gold mining stocks still need to double in value, for example, to end up around their historical average. Be vigilant, pay attention to your cash position, and give preference to the current winners of 2014.</strong></p> <p><strong>&gt;&gt;&gt; <a href="http://sproutmoney.com/guide-gold/">Will the gold price crash or rally from here? Find out now!</a></strong></p> <p><em>Sprout Money offers a fresh look at investing. We analyze long lasting cycles, coupled with a collection of strategic investments and concrete tips for different types of assets. The methods and strategies from Sprout Money are transformed into the <a href="http://sproutmoney.com/gold-silver">Gold &amp; Silver Report</a> and the <a href="http://sproutmoney.com/technology">Technology Report</a>.</em></p> <p><em>Follow us on Twitter <a href="https://twitter.com/Sproutmoney"><strong>@SproutMoney</strong></a></em></p> http://www.zerohedge.com/news/2014-08-23/market-expectations-h2-2014#comments Brazil China George Soros India NASDAQ Twitter Twitter Volatility Sat, 23 Aug 2014 17:37:53 +0000 Sprout Money 493386 at http://www.zerohedge.com ISIS Just Crossed "The Line" http://www.zerohedge.com/news/2014-08-23/isis-just-crossed-line <p>Unthinkable...</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140823_isis.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140823_isis.jpg" width="597" height="421" /></a></p> <p><em>Source: Cagle</em></p> <p><a href="http://www.theburningplatform.com/2014/08/23/getting-obamas-attention/"><em>h/t Jim Quinn</em></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="597" height="421" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140823_isis.jpg?1408807829" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-23/isis-just-crossed-line#comments Sat, 23 Aug 2014 17:30:21 +0000 Tyler Durden 493385 at http://www.zerohedge.com Obama's "Do Nothing Stupid" Foreign Policy Fails Again As 'New' Iraqi Government Formation Crumbles http://www.zerohedge.com/news/2014-08-23/obamas-do-nothing-stupid-foreign-policy-fails-again-new-iraqi-government-formation-c <p>President Obama's cunning plan to 'quasi-ouster' Shiite PM Maliki, in the vague hopes that a more egalitarian all-inclusive Iraqi government could be formed that will magically lead the 'people' of the Sykes-Picot-defined nation to coalesce in sovereignty against The Islamic State has, somewhat understating it and perhaps unsurprisingly, hit a roadblock. <a href="http://www.bloomberg.com/news/2014-08-22/obama-s-effort-to-combat-extremists-suffers-iraq-setback.html">As Bloomberg reports</a>, <strong>Obama's effort to have Arabs take the lead in combating Islamic State suffered a setback when Sunni lawmakers quit talks on forming a new Iraqi government after Shiite gunmen killed scores of worshipers at a Sunni mosque</strong>. The killings in Diyala province derailed attempts to form an Iraqi government with bigger roles for Sunni Arabs and Kurds that would strengthen the fight against the terrorist group. It appears the common knowledge of who is friend and who is foe remains very much in the air. </p> <p>&nbsp;</p> <p><strong>Iraq’s survival, including its ability to beat ISIL, depends on Iraqis rising above their differences, </strong>U.S. Vice President Joe Biden wrote yesterday in an op-ed in the Washington Post. He and Obama are encouraged by signs of Iraqi leaders recognizing the need to end the deadlock, he said.</p> <p><strong>Doing so would require acknowledging that, in opposing Islamic State, the U.S. and Sunni Arabs have a common interest with traditional foes </strong>such as Syrian President Bashar al-Assad, Iranian Supreme Leader Ayatollah Ali Khamenei and Hezbollah, which the U.S., the European Union and Israel consider a terrorist organization.</p> <p><a href="http://www.bloomberg.com/news/2014-08-22/obama-s-effort-to-combat-extremists-suffers-iraq-setback.html">But, as Bloomberg reports, </a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>U.S. President Barack Obama’s effort to have Arabs take the lead in combating Islamic State suffered a setback when Sunni lawmakers quit talks on forming a new Iraqi government after Shiite gunmen killed scores of worshipers at a Sunni mosque.</strong></p> <p>&nbsp;</p> <p>The killings in Diyala province derailed at least temporarily attempts to form an Iraqi government with bigger roles for Sunni Arabs and Kurds that would strengthen the fight against the terrorist group. Ben Rhodes, the deputy White House national security adviser, said yesterday that the U.S. will consider airstrikes in Syria if needed to combat Islamic State.</p> </blockquote> <p>However - this is a silver lining to The State Department...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“<strong>This senseless attack underscores the urgent need for Iraqi leaders from across the political spectrum to take the necessary steps that will help unify the country against all violent extremist groups</strong>,” deputy U.S. State Department spokeswoman Marie Harf said in a statement.</p> </blockquote> <p>So, let's get this straight - due to the senseless Sunni-Shia attack, amid efforts to bring the two sides politically closer to take on The Islamic State together, the US State Department says the Sunni and Shia shoould move quicker towards partnership?</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The breakdown in talks came as U.S. officials underscored what they called a <strong>growing threat posed by Islamic State</strong>, which also is known as ISIL, for Islamic State of Iraq and the Levant.</p> </blockquote> <p>The airstrikes are not quite going according to plan either...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Yesterday’s attacks brought the number of American airstrikes in Iraq to 93. </strong></p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>Expanded airstrikes, especially if they extend to populated areas, also would run an increased risk of causing civilian casualties and property damage.</strong></span></p> <p>&nbsp;</p> <p>That could <span style="text-decoration: underline;"><strong>drive some Iraqis and Syrians into the arms of Islamic State</strong></span>, these officials said. Like Hamas in Gaza, they said, IS would use civilians, including Christians, Yezidis, Turkmen and other minorities, as human shields.</p> <p>&nbsp;</p> <p>Instead, three of the officials said, <strong>Obama has emphasized the need for Iraq’s Shiite Prime Minister-designate Haidar al-Abadi to grant Sunnis and Kurds more power and positions in a new government.</strong></p> <p>&nbsp;</p> <p><strong>Without that, these officials said, Sunni tribes in central Iraq that in 2006 joined U.S. forces in fighting al-Qaeda in Iraq, a predecessor to IS, will remain on the sidelines or allied with the extremists.</strong></p> <p>&nbsp;</p> <p>The Kurds, who’ve done much of the fighting so far, will be reluctant to fight outside the northern areas they claim, especially if the<strong> Kurdistan Regional Government remains embroiled with the central government over the right to sell oil.</strong></p> </blockquote> <p>*&nbsp; *&nbsp; *<br />What a mess!?</p> <p>*&nbsp; *&nbsp; *</p> <p>We suspect, in some dark corner of Washington, Hillary is grinning from ear to ear.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="288" height="290" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140823_isis1.jpg?1408809097" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-23/obamas-do-nothing-stupid-foreign-policy-fails-again-new-iraqi-government-formation-c#comments European Union Iraq Israel Joe Biden national security White House Sat, 23 Aug 2014 16:46:15 +0000 Tyler Durden 493384 at http://www.zerohedge.com 3 Things Worth Thinking About http://www.zerohedge.com/news/2014-08-23/3-things-worth-thinking-about <p><em>Submitted by <a href="http://streettalklive.com/index.php/daily-x-change/2355-3-things-worth-thinking-about-vol-5.html">Lance Roberts of STA Wealth Management</a>,</em></p> <h2 style="padding: 0in;"><strong>1. Nothing To Fear From Fed Rate Increase</strong></h2> <p style="padding: 0in;">There is an overwhelming consensus of opinion that the markets, and the majority of mainstream commentators, that when the Fed begins raising rates that it is a <em>&quot;good thing.&quot;</em></p> <p>The primary premise behind that consensus is that the economy is now growing steady enough to absorb the impact of higher interest rates. This opinion was espoused yesterday by Kansas City Fed President Esther George who stated:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&quot;I don&#39;t want us to be behind the curve in beginning to normalize interest rates. When you see the economy getting as close as we are to full employment, to stable inflation, it would suggest to me that the time has come to do that.&quot;</em></p> </blockquote> <p style="padding: 0in;">There are a couple of things worth considering at this point:</p> <p style="padding: 0in;">1) As I <a href="http://streettalklive.com/index.php/why-market-bulls-should-hope-rates-don-t-rise.html">addressed previously</a>, the economy is very closely tied to the cost of capital.&nbsp; When you consider that a large chunk of corporate profitability as of late has been created through the use of cheap loans to buy back shares, rising borrowing costs make this option much less lucrative. Rising borrowing costs also directly impact the consumer spending through variable rate credit, auto sales as loan payments rise, and housing through increase mortgage payments. <em>(The referenced article has further points on this issue)</em></p> <p style="padding: 0in;">2) With regards to the statement, on full employment there is really only one type of employment that ultimately matters which is full-time.&nbsp; Part-time and temporary employment do not foster household formation, higher levels of consumer spending or increased tax revenues. The issue is that even though the unemployment rate is approaching levels of <em>&quot;full-employment,&quot;</em> it has been primarily a function of the shrinking of the labor force.&nbsp; As shown in the chart below, full-time employment is basically at the same level as it has been since the financial crisis as <em>&quot;real employment&quot;</em> has primarily been a function of population growth and little else.</p> <p style="padding: 0in;"><a class="highslide ageent-ru" href="http://streettalklive.com/images/1dailyxchange/2014/Employment-FullTime-Population-082114-2.PNG" target="_blank" title="Employment-FullTime-Population-082114-2"><img alt="Employment-FullTime-Population-082114-2" class="i_want_img5" src="http://streettalklive.com/images/1dailyxchange/2014/Employment-FullTime-Population-082114-2.PNG" style="width: 600px; height: 329px;" /></a></p> <p style="padding: 0in;">3) There is little evidence that current levels of inflation are stable. As I wrote in <a href="http://streettalklive.com/administrator/index.php?option=com_flexicontent&amp;task=items.edit&amp;cid[]=2355">&quot;Will The Fed Move To Soon&quot;</a>, the decline in economic growth globally, along with increased deflationary pressures, is likely to be reflected in the domestic economy sooner than later. Furthermore, given the fact that it is highly likely that the U.S. will have another exceptionally cold winter, the reality is that current levels of inflation have been little more than a transient surge. <a href="http://www.washingtonpost.com/blogs/wonkblog/wp/2014/08/20/worse-than-the-1930s-europes-recession-is-really-a-depression/"><em>(See: Worse Than 1930&#39;s Depression, Europe&#39;s Recession)</em></a></p> <p style="padding: 0in;"><a class="highslide ageent-ru" href="http://streettalklive.com/images/1dailyxchange/2014/High-Inflation-Index-080514.PNG" target="_blank" title="High-Inflation-Index-080514"><img alt="High-Inflation-Index-080514" class="i_want_img5" src="http://streettalklive.com/images/1dailyxchange/2014/High-Inflation-Index-080514.PNG" style="width: 600px; height: 308px;" /></a></p> <p style="padding: 0in;">There is little argument over the fact that the current economic growth rate has been <em>&quot;sluggish&quot;</em> at best and that growth has been primarily supported by the Federal Reserve&#39;s ongoing balance sheet expansion. The Federal Reserve is now going to start increasing interest rates, removing that accommodation, at a time when economic growth is at extremely low levels. The question that we must consider is whether the <em>&quot;patient&quot;</em> can survive without <em>&quot;life support.&quot;</em></p> <p style="padding: 0in;"><span style="line-height: 1.3em; text-align: left;">4) Lastly, the table below shows the history of Federal Reserve rate hikes, from the month of the first increase in the 3-month average of the effective Fed Funds rate to the onset of either a recession, market correction or both.</span></p> <p><span style="line-height: 1.3em; text-align: left;"><a class="highslide ageent-ru" href="http://streettalklive.com/images/1dailyxchange/2014/Fed-Funds-Table-071514.PNG" target="_blank" title="Fed-Funds-Table-071514"><img alt="Fed-Funds-Table-071514" class="i_want_img5" src="http://streettalklive.com/images/1dailyxchange/2014/Fed-Funds-Table-071514.PNG" style="width: 601px; height: 425px;" /></a></span></p> <p><span style="line-height: 1.3em; text-align: left;">The average number of months between the first rate hike and a recession has been 42.4 with a median of 35 months. However, if we take out the two extremely long periods of 98 months following the 1961 increase and 84 months following 1994; the average falls to just 28.6 months.&nbsp; Given the fact that the current economic cycle is extremely weak and, at more than 60 months, already the fifth longest Post-WWII recovery, it is likely that even 28 months is on the long end.</span></p> <p><span style="line-height: 1.3em; text-align: left;"><strong>The average stock market correction following the first rate has occurred 21.2 months later.</strong> If the first rate hike occurs in 2015, this would put the next market correction in 2016 which would correspond with my recent analysis on the collision of the <a href="http://streettalklive.com/index.php/why-market-bulls-should-hope-rates-don-t-rise/daily-x-change/1927-the-coming-market-meltup-and-2016-recession.html">&quot;Decennial and Presidential Cycles:&quot;</a></span></p> <p style="text-align: justify;"><strong><span style="line-height: 1.3em; text-align: left;">However, the IMPORTANT FACT is that the number of times the Federal Reserve has hiked interest rates without a negative economic or market impact has been exactly ZERO.</span></strong></p> <h2>&nbsp;</h2> <h2><u><strong>2. Stock Buybacks On The Decline</strong></u></h2> <p style="padding: 0in;">As discussed above, one to the impacts of rising interest rates is an increased cost of capital which makes two things MUCH less lucrative. The first, and most importantly, is the &quot;carry trade&quot; which has been a primary driver of asset prices over the last five years. Banks have been able to borrow capital at effectively zero, leverage it, and then buy higher yielding assets to capture the spread. This has created an immense amount of profitability for banks, in particular, in recent years.&nbsp; However, higher borrowing costs significantly reduce that profitability.</p> <p>Secondly, corporations have been using exceptionally low interest rates to borrow capital, not for the purposes of ramping up production and capital investments, but to buy back stock to artificially boost profits per share. The focus on share buy backs has been intense over the last couple of years as the benefits of cost cutting, employment reductions and wage suppression met their inevitable limits. Like other profitability gimmicks, share buybacks are also finite in nature. After more than two years of increased share repurchases, recent data suggests that this may be coming to an end.&nbsp; As <a href="http://www.marketwatch.com/story/uh-oh-stock-buybacks-are-on-the-decline-2014-08-20">Brett Arends penned</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;U.S. corporations have been spending hundreds of billions of dollars a year buying in their own stock, simultaneously increasing the demand for the stock and reducing the supply. <strong>And this matters right now because&hellip;er&hellip;they just stopped.</strong></p> <p>&nbsp;</p> <p>The <strong>amount spent on share buybacks plunged by more than 20% last quarter...</strong>As SG notes,<strong> &#39;US corporates (have) been the major net buyer of US equity in recent years, purchasing over $500 billion of stock last year alone.&#39;</strong> But, notes the bank, this happy trend may be drawing to a close.&quot;</p> </blockquote> <p>The ready supply of <em>&quot;free capital&quot;</em> has been a <em>&quot;punch bowl</em>&quot; to corporations from which they have drunk deeply. <strong>According to the Federal Reserve, corporate debt has risen 27% over the past five years to $9.6 trillion.</strong> So, much for those deleveraged balance sheets and when the Federal Reserv<em>e&nbsp;</em>does increase interest rates; a major supporter of asset prices in recent years will disappear.</p> <p>&nbsp;</p> <h2 style="padding: 0in;"><u><strong>3. The Taper Effect</strong></u></h2> <p style="padding: 0in;">The team at <a href="http://gavekal.blogspot.com/2014/08/5-charts-showing-taper-effect.html">GaveKal Capital </a>did a great piece of research confirming something that I have discussed many times in the past which is simply that everything is tied to the Federal Reserve&#39;s liquidity interventions.&nbsp;</p> <p style="padding: 0in;">As the Federal Reserve has begun to taper their ongoing bond purchases, now at $25 billion and expected to be eliminated by October, the effect has been felt on a host of asset classes and economic statistics from inflation to stocks.&nbsp; To wit:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p style="padding: 0in;">&quot;...the number of stocks trading above their 200-day moving average has dropped back in line with what the taper model would suggest. If this continues to follow suit, we could see the fewest number of stocks trading above their 200-day moving average in over 2+ years.&quot;</p> </blockquote> <p style="text-align: justify;"><a class="highslide ageent-ru" href="http://streettalklive.com/images/1dailyxchange/misc/QE-Effect-082114.png" target="_blank" title="QE-Effect-082114"><img alt="QE-Effect-082114" class="i_want_img5" src="http://streettalklive.com/images/1dailyxchange/misc/QE-Effect-082114.png" style="width: 600px; height: 341px;" /></a></p> <p><span style="line-height: 1.3em; text-align: left;">There are two important points to take away from this analysis.&nbsp; First, as <a href="http://streettalklive.com/index.php/daily-x-change/2195-it-s-only-like-this-until-it-s-like-that.html">I discussed previously</a>, there is an ongoing belief that the current financial market trends will continue to head<strong> only higher.</strong> This is a dangerous concept that is only seen near peaks of cyclical bull market cycles. While the analysis above suggests that the current bull market could certainly last some time longer, it is important to remember that it is<span style="line-height: 1.3em; text-align: left;"><span style="background-color: transparent;"><a href="http://streettalklive.com/index.php/it-s-only-like-this-until-it-s-like-that.html"> &quot;</a><em><a href="http://streettalklive.com/index.php/it-s-only-like-this-until-it-s-like-that.html">only like this, until it is like that.</a>&quot;</em></span></span></span></p> <p>The problem for most investors is that by they time they recognize the change in the underlying dynamics, it will be too late to be proactive.&nbsp; This is where the real damage occurs as emotionally driven, reactive, behaviors dominate logical investment processes.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="587" height="318" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140823_STA.jpg?1408806903" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-23/3-things-worth-thinking-about#comments Auto Sales Bond Borrowing Costs Carry Trade Federal Reserve Market Cycles Reality Recession recovery Unemployment Sat, 23 Aug 2014 16:08:24 +0000 Tyler Durden 493383 at http://www.zerohedge.com Visualizing the Vanishing Money Velocity Vortex http://www.zerohedge.com/news/2014-08-23/visualizing-vanishing-money-velocity-vortex <p style="line-height: 1.15; margin-top: 0pt; margin-bottom: 0pt;" dir="ltr"><img src="http://mynewshub.my/eng/wp-content/uploads/2014/03/Cloud-Seeding.jpg" width="700" height="321" style="line-height: 1.15; font-size: 1em;" /></p> <h3 style="line-height: 1.5; margin-top: 8pt; margin-bottom: 14pt; text-align: justify;" dir="ltr"><span style="font-size: 15px; font-family: Arial; color: #000000; background-color: #ffffff; font-weight: normal; font-style: italic; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">by Bruno de Landevoisin @ <strong><a href="http://zirpqe.wordpress.com/">StealthFlation</a></strong></span><strong><span style="font-size: 15px; font-family: Verdana; color: #0000ff; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap; background-color: #ffffff;"><a href="http://zirpqe.wordpress.com/"> </a><a href="&lt;a href=&quot;http://zirpqe.wordpress.com/&quot;&gt;&lt;font color=&quot;#009900&quot;&gt; StealthFlation &lt;/font&gt; &lt;/a&gt;"></a></span></strong></h3> <p><a href="&lt;a href=&quot;http://zirpqe.wordpress.com/&quot;&gt;&lt;font color=&quot;#009900&quot;&gt; StealthFlation &lt;/font&gt; &lt;/a&gt;"></a></p> <h3 style="line-height: 1.5; margin-top: 8pt; margin-bottom: 14pt; text-align: justify;" dir="ltr"><span style="font-size: 15px; font-family: Georgia; color: #555555; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">Left without the original formerly pristine and healthy source of naturally effervescent American spring water abundantly spouting from the ground up, the misguided monetary authorities have dangerously attempted to artificially inseminate&nbsp;the clouds above, in the hopes of drenching the parched soil below with torrential rain, so as to generate their forever heralded and promised green shoots. &nbsp;Unfortunately for us all, when these artificially seeded clouds eventually do burst, they will produce nothing but the toxic inflationary rains of StealthFlation. &nbsp;</span></h3> <h3 style="line-height: 1.5; margin-top: 8pt; margin-bottom: 14pt; text-align: justify;" dir="ltr"><span style="font-size: 16px; font-family: Georgia; color: #555555; background-color: transparent; font-weight: bold; font-style: italic; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">Under the imposition of StealthFlation, the Velocity of Money lies dormant while increasing Inflationary risks build below the surface.</span></h3> <p style="line-height: 1.8333333333333333; margin-top: 0pt; margin-bottom: 14pt;" dir="ltr"><span style="font-size: 16px; font-family: Georgia; color: #555555; background-color: transparent; font-weight: bold; font-style: italic; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><img src="https://lh4.googleusercontent.com/lPi0e0hepH23p-e3F20B7KPYp9qGiZ4srAUgeIBYxb5WZX0K3Y1bXHfB7yD2j9O_l5emtCQ8eFacn79-QEtu6zP8opCP60rVBXe5KrmDe1WKYREmfNGIm_e8f6tWfb3V5w" alt="Velocity-Of-Money-M1" width="550" height="365" style="border: none; transform: rotate(0.00rad);" /></span></p> <p><span style="color: #555555; font-family: Georgia; font-size: 15px; line-height: 24px; text-align: justify; white-space: pre-wrap; background-color: transparent;">The inflationary risks are stealth due to the synthetically suppressed rates of interest, which can not be sustained indefinitely. However, the excess supply of money has definitively been created, and it will debase the currency via inflation, it's just a matter of time.</span></p> <p><span style="color: #555555; font-family: Georgia; font-size: 15px; white-space: pre-wrap; line-height: 24px; text-align: justify; background-color: transparent;">When an economy is healthy, there is much buying and selling and money tends to move around quite swiftly. &nbsp;Unfortunately, the U.S. economy is manifesting the precise opposite of that these days. &nbsp;In fact, the velocity of M1 &amp; M2 has fallen to near all-time record lows. &nbsp;This is a very serious sign that the underlying economy has entered a period of extreme stagnation.</span></p> <h4 style="line-height: 2; margin-top: 8pt; margin-bottom: 14pt; text-align: justify;" dir="ltr"><span style="color: #555555; font-family: Georgia; font-size: 15px; font-weight: normal; white-space: pre-wrap; line-height: 24px; background-color: transparent;">In its infinite wisdom, the Federal Reserve has been attempting to counter this economic standstill by absolutely flooding the financial system with new money. &nbsp;As it always does, this has created monumental financial and fixed asset bubbles, however, it has not addressed what is fundamentally and structurally wrong with our economy. &nbsp;On a very basic level, the amount of real economic activity that we are witnessing is not anywhere near where it should be, and the anemic flow of money through our economy is proof certain of the ongoing dilemma.</span><span id="docs-internal-guid-d8000f01-037f-6c50-26e6-aff04044c82b" style="font-weight: normal;">&nbsp;</span></h4> <p style="line-height: 1.8333333333333333; margin-top: 0pt; margin-bottom: 14pt;" dir="ltr"><span style="font-size: 15px; font-family: Georgia; color: #555555; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><img src="https://lh4.googleusercontent.com/arSBCrx0oFliYnC1gQd5vhXGBOB810G9V7dZn3e9W8dDLxj3roOC20TzOIPr4gjB9G7I-GZLPPO9jC8ZMB1TadhvFaTQFRXfGQy6tr9S9EgmppgUvvQrut8ds-bvOZnwug" alt="Velocity-Of-Money-M21" width="550" height="365" style="border: none; transform: rotate(0.00rad);" /></span></p> <p style="line-height: 1.8333333333333333; margin-top: 0pt; margin-bottom: 14pt;" dir="ltr"><span style="font-size: 15px; font-family: Georgia; color: #555555; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">Clearly the transmission mechanism between the relentless synthetic origination of fresh money by the monetary miracle men and the velocity at which that new money is circulating in the real underlying economy on the ground is completely disconnected, FUBAR. </span><span style="color: #555555; font-family: Georgia; font-size: 15px; white-space: pre-wrap; line-height: 1.8333333333333333; background-color: transparent;">Why is this? &nbsp;Well, it’s really not that difficult to comprehend. &nbsp;&nbsp;</span></p> <p style="line-height: 1.8333333333333333; margin-top: 0pt; margin-bottom: 14pt;" dir="ltr"><span style="font-size: 15px; font-family: Georgia; color: #555555; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">First of all, much of the supposed economic activity generated today is not being driven from the the bottom up by the healthy deployment of excess savings naturally created from genuine self-sustaining productive economic activity on the ground, but rather in an unnatural fashion, force fed from the top down via the easy street ZIRP/QE induced debt financing incessantly being encouraged by our misguided megalomaniac monetary authorities.</span></p> <p style="line-height: 1.8333333333333333; margin-top: 0pt; margin-bottom: 14pt;" dir="ltr"><span style="font-size: 15px; font-family: Georgia; color: #555555; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">Perhaps even more malignant, the largest capital market of them all, namely the U.S. bond market has been put down by the Fed’s activist zero bound anesthesiologist. &nbsp;Thus, the utterly comatose American treasury market is no longer facilitating the natural growth of traditional savings income streams generated via secure interest bearing accounts and prudential savings products throughout the financial system’s depository structure. In short, the healthy income flows constructively generated from legitimate savings produced from genuine economic activity, namely people going to work every day, has been effectively terminated by these wizards of wanton monetary policy at the wayward central bank.</span></p> <p style="line-height: 1.8333333333333333; margin-top: 0pt; margin-bottom: 14pt;" dir="ltr"><span style="font-size: 15px; font-family: Georgia; color: #555555; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">Let's face it, if the major pension funds can't generate 5-6% per year holding conservative debt instruments in order to meet their massive obligations, they are up a creek without a paddle. The Fed understands this all to well, and so should you. </span></p> <p style="line-height: 1.8333333333333333; margin-top: 0pt; margin-bottom: 14pt;" dir="ltr"><span style="font-size: 15px; font-family: Georgia; color: #555555; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">Having thoroughly shut down the sound, well established and effectives channels of capital formation, which have consistently engendered bona fide and constructive growth over the years through the virtuous avenues of productive savings, the foolish authorities have left themselves utterly hamstrung with only one risky road to travel down. Indeed, now that they have totally cracked the transmission on our fiscally busted and broken down American bus, they have become 100% reliant on the equity market to drive their top fuel funds into the U.S. economy via the wealth effect. &nbsp;</span><span style="color: #555555; font-family: Georgia; font-size: 15px; line-height: 27.5px; white-space: pre-wrap;">Pedal to the metal at 2,000 SPX mph. &nbsp;Make no mistake my friends, we are on a crash course from hell, and will hit the wall. God help us all................</span></p> <div class="field field-type-filefield field-field-image-blog"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_blog" width="307" height="349" alt="" src="http://www.zerohedge.com/sites/default/files/images/user85367/imageroot/ZIMMER.jpg?1408809086" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-23/visualizing-vanishing-money-velocity-vortex#comments Bond Capital Formation Federal Reserve fixed Green Shoots M1 M2 Monetary Policy Money Velocity Prudential Sat, 23 Aug 2014 15:52:16 +0000 Bruno de Landevoisin 493382 at http://www.zerohedge.com Dollar is Stretched, but will it Correct? http://www.zerohedge.com/news/2014-08-23/dollar-stretched-will-it-correct <p>The US dollar had a good week, gaining against all the major currencies. &nbsp;Strong economic data underpinned it, and what we suspect is a mistaken belief that the debate about an earlier rate hike by the Fed has truly intensified.</p> <p>&nbsp;</p> <p>Ironically, the strong data failed to instill any traction in US bond yields. &nbsp;The 10-year yield was flat on the week, unable to sustain upticks above 2.40%. The 2-year yield rose about six bp, though still below 50 bp. &nbsp;It is in the middle of the August range. &nbsp;Moreover, despite the fears expressed by some hawks at the Fed about the risk to prices, few have noted the 8.5% decline in the CRB index over the past two months and the five-week slide in the price of West Texas crude oil.</p> <p>&nbsp;</p> <p>Broadly speaking, the dollar is stretched from a technical perspective. &nbsp;Yet, the fundamentals, including the upcoming ECB meeting, with new staff forecasts, &nbsp;the launching of the TLTRO, and the Scottish referendum in the first half of September, may stiffen the resolve of the dollar bulls, who are only now experiencing gratification on their long held views. &nbsp;</p> <p>&nbsp;</p> <p>Euro: &nbsp;In the second half of last week, the euro struggled to stay above the lower Bollinger Band (2 standard deviations below its 20-day moving average). &nbsp;The 20-day moving average contained euro upticks at the start of the week. &nbsp;The euro has not traded above its 20-day average since mid-July. &nbsp;It comes in near $1.3270. &nbsp;The $1.3230 level approached in the second half of last week corresponds with a retracement objective of the euro's rally that began last July near $1.2755 and peaked in early May just below $1.40. &nbsp;A break of that area would target the low from last September near $1.3100. One note of caution here is that the RSIs have failed to confirm the new lows recorded, and the MACDs are over-extended. &nbsp;The take away is to sell into bounces. &nbsp;</p> <p>&nbsp;</p> <p>Yen: &nbsp;After trading for the better part of the past four months in a JPY101-JPY103 trading range, the dollar finally broke out--and without the help of firmer US yields. &nbsp;Indeed, the US 10-year premium spent most of the past seven sessions below 190 bp and in the lower end of the where it has traded over the past year. The dollar spent most of the second half of last week above the top of its Bollinger Band. &nbsp;This has been seen four times previously this year and generally marked a near-term high. &nbsp;The JPY103.50 area held on the corrective down ticks ahead of the weekend, and JPY103 should remain intact if the breakout is for real. The highs from early April were set near JPY104.10. &nbsp;A convincing break of it would target JPY105.</p> <p>&nbsp;</p> <p>Sterling: &nbsp;The downtrend in sterling extended to its seventh consecutive week. &nbsp;In this time, it has fallen about 6.5 cents from its mid-July peak near $1.7200. &nbsp; Last week, it broke below its 200-day moving average for the first time since last August. &nbsp;The bottom Bollinger Band comes in near $1.6535, and sterling has been tracking it lower. &nbsp;The next level of chart support is pegged in the $1.6460-$1.6500 area. Resistance is seen in the $1.6625-50 area.&nbsp;</p> <p>&nbsp;</p> <p>Swiss Franc: &nbsp;Like the euro, there are last franc losses have not been confirmed by the technical indicators. The greenback was establishing a foothold above the CHF.0.9100 area, a retracement objective of the greenback's decline from July 2013. &nbsp;Additional support for the dollar is seen in the CHF0.9070-85 area. Initial resistance is seen near CHF0.9160 and then CHF0.9225. &nbsp;For its part, the euro is trading in narrow ranges against the franc, near its weakest level since last 2012. &nbsp;</p> <p>&nbsp;</p> <p>Canadian Dollar: The US dollar has tried in vain to rise through CAD1.10 more than a handful of times this month. &nbsp; However, it is not clear that the greenback bulls have given up. &nbsp;It may take a break of the 200-day moving average (~CAD1.0880) or the mid-August low (~CAD1.0860) to signal the capitulation. &nbsp;The first decline in Canadian CPI may encourage speculation that the BoC will lag behind the Fed in raising rates. Still, the strength of the retail sales (4-5x stronger than expected and &nbsp;the May series was revised higher as well) points to a robust Q2 GDP figure that will be reported next week (~2.6% after 1.2% in Q1), which will mean its pace of growth exceeded the US. &nbsp;&nbsp;</p> <p>&nbsp;</p> <p>Australian Dollar: &nbsp;The Aussie briefly slipped to a new 3-month low, just below $0.9240 on August 21, but quickly snapped back, leaving bullish divergences in its wake. &nbsp;It finished the week above its 20-day moving average for the first time in nearly a month. &nbsp;The initial target on the upside is $0.9350-75. &nbsp;</p> <p>&nbsp;</p> <p>Mexican peso: &nbsp;Technical indicators are not generating a strong signal in the peso. &nbsp;The dollar built a four-day base near MXN13.03. &nbsp;We suspect the greenback can test the MXN13.15-MXN13.1850 area without much consternation. &nbsp;</p> <p>&nbsp;</p> <p>US Treasuries: &nbsp;The US 10-year yield has not closed above its 20-day moving average here in August. It has not even trading above that average since August 5. &nbsp; It is found just below 2.45% now. &nbsp;A break could see 2.50%-2.53%. &nbsp; &nbsp;The 2-year yield is a bit perkier, and from a technical perspective, shows more potential to rise. &nbsp;The RSI and MACDs are heading higher. &nbsp;The weekly close was the best so far this month. &nbsp;The modest curve flattening is not consistent with the hawks' claim about the dangers that the Fed is slipping behind the inflation curve. &nbsp;</p> <p>&nbsp;</p> <p>S&amp;P 500: &nbsp;It took the market the better part of a month to close the gap that was created with the lower opening on July 25, which signaled the 4.5% pullback. &nbsp;New record highs have been recorded. The technical tone is constructive, and the next target is near 2003. &nbsp; It has been climbing the 5-day moving average for nearly two weeks. &nbsp;It is found near 1984 now, and its break would be the first sign the bulls are getting tired (again). &nbsp;</p> <p>&nbsp;</p> <p>CRB Index: &nbsp;New six-month lows were recorded last week. &nbsp;There is a bullish divergence in the daily RSI, and the MACDs are in deep negative territory. &nbsp;The downside momentum seemed to slow around 288, a key retracement of the advance earlier this year. &nbsp;However, the market continues to struggle to sustain even the most modest of upticks. &nbsp;New lows are likely in the coming days. &nbsp;The initial target is near 285-286. &nbsp;</p> <p>&nbsp;</p> <p>WTI: &nbsp;The front-month October futures contract posted a potential key reversal on August 21, as it made a new low for the move initially and then rallied to close above the previous day's high. &nbsp;However, there was not follow through buying ahead of the weekend, and the contract appears set to retest the low of $92.50. Risk extends to $92.00 and then $90 a barrel. &nbsp; Resistance is seen $94.00-50.</p> <p>&nbsp;</p> <p>Observations based on speculative positioning in the futures market: &nbsp;</p> <p>&nbsp;</p> <p>1. &nbsp;There were several significant position adjustments in the most recent Commitment of Traders report covering the week through August 19. &nbsp;Gross short positions in the euro, yen and sterling jumped by more than 10k contracts, The gross long Australian position rose by more than 10k contracts. &nbsp;Only five of the 14 gross positions we track rose by less than 5k contracts. &nbsp;Taken together this reflects increased activity, and may be a function of trending markets. &nbsp;</p> <p>&nbsp;</p> <p>2. &nbsp;Specifically, the gross short euro position rose by 18k contracts to 195.6k. &nbsp;The gross short yen position rose by 11.6k contracts to 105.2k. &nbsp;The gross short sterling position rose 12.4k contracts to 58.9k. &nbsp;The gross long Australian dollar position rose by 11k contracts to 65.7k. &nbsp;</p> <p>&nbsp;</p> <p>3. &nbsp;That said, there was a clear bias in adding to long currency futures positions, which seems to be largely a reflection of bottom picking. &nbsp;The lone exception was the Canadian dollar, where the longs were pared by 2.2k contracts to 41.8k. &nbsp;Gross short positions were also grown, though there were two exceptions. &nbsp;The gross short Swiss franc position was trimmed by less than 1k to 21.7k contracts, and the gross short Mexican peso position was reduced by 8.2k contracts to 43.8. &nbsp;</p> <p>&nbsp;</p> <p>4. &nbsp;At 72.2k contracts, the gross long sterling position remains the largest among the currency positions we track. &nbsp;At 195.6k contract, the gross short euro position remains the largest. &nbsp;</p> <p>&nbsp;</p> <p>5. &nbsp;The net short US 10-year Treasury speculative position slipped to 43.5k contracts from 50.2k. &nbsp;Gross long and short positions grew. &nbsp;The gross long position rose by 20.6k to 483.1k contracts. &nbsp;The gross short position rose by 14k contracts to 526.6k. &nbsp;</p> <div class="field field-type-filefield field-field-image-blog"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_blog" width="1280" height="800" alt="" src="http://www.zerohedge.com/sites/default/files/images/user113905/imageroot/sin%20city.jpg?1408808803" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-23/dollar-stretched-will-it-correct#comments 8.5% Aussie Australian Dollar Bond Canadian Dollar Commitment of Traders CPI CRB CRB Index Crude Crude Oil Futures market Swiss Franc Technical Indicators Yen Sat, 23 Aug 2014 15:46:48 +0000 Marc To Market 493381 at http://www.zerohedge.com Iceland's Bardarbunga Volcano Begins To Erupt, Ash Cloud Imminent After Aviation Warning Raised To "Red" http://www.zerohedge.com/news/2014-08-23/icelands-bardarbunga-volcano-begins-erupt-ash-cloud-imminent-aviation-warning-raised <p>In April 2010, it was Iceland's unpronouncable Eyjafjallajokull volcano which erupted and forced more than 100,000 flights to be canceled on concern glass-like particles formed from lava could melt in aircraft engines and clog turbines. </p> <p>A year later, in May 2011, ash from Iceland’s Grimsvotn volcano forced flight cancellations in Scotland, northern England and Germany leading to further lower "GDP&nbsp; adjustments" across Europe which back then was in desperate need of a scapegoat for its then double-dip recession. </p> <p>So in what may be good news for Europe once again, now teetering on the edge of a triple-dip recession (in the confines of Europe's <a href="http://www.zerohedge.com/news/2014-08-15/washington-post-europe-stuck-%E2%80%9Cgreater-depression%E2%80%9D">worst depression ever</a>), <strong>moments ago Iceland's meteorological service reported that the island's Bardarbunga volcano, having been closely observed by volcano-watchers for the past month due to heightened seismic activity, has begun to erupt </strong>which means in addition to Russia's trade war, Europe now has another volcanic eruption to blame its latest GDP contraction on. As the local Met office summarizes, a "small" eruption of lava has occurred to the northeast of the volcano leading the Icelandic National Broadcasting Service to declare that "all air traffic is now prohibited in a large radius around the volcano." </p> <blockquote class="twitter-tweet" lang="en"><p>3 earthquakes shake Iceland's volcano region <a href="http://t.co/plET6qorKK">http://t.co/plET6qorKK</a> <a href="http://t.co/mKqZMxcx8m">1pic.twitter.com/mKqZMxcx8m</a></p> <p>— BC Referrals (@BCReferrals) <a href="https://twitter.com/BCReferrals/statuses/502795438437986304">August 22, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"> <p>BREAKING NEWS </p> <p>BARDARBUNGA VOLCANO IN ICELAND HAS BEEN RAISED TO CODE RED</p> <p>For more read <a href="https://t.co/bJCsIWsF8H">https://t.co/bJCsIWsF8H</a> <a href="http://t.co/Es4RUfwjYm">pic.twitter.com/Es4RUfwjYm</a></p> <p>— Donegal weather page (@DonegalWeatherC) <a href="https://twitter.com/DonegalWeatherC/statuses/503192899673423872">August 23, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/Iceland%20volcano.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/Iceland%20volcano.jpg" width="543" height="779" /></a></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/bbbeginman.png"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/bbbeginman_0.png" width="543" height="382" /></a></p> <p>According to <a href="http://www.vedur.is/">Vedur.is</a>, the aviation warning color changed to “red,” indicating “significant emission of ash into atmosphere likely” which also means that countless trans-Atlantic flights are about to be halted once again. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/iceland%20aviation.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/iceland%20aviation_0.jpg" width="543" height="690" /></a></p> <p>Ash cloud may take several hours to appear, Iceland Civil Protection Agency says, because eruption first must melt through an ice cap of 150-400 meters.</p> <p>From <a href="http://www.ruv.is/frett/small-eruption-near-bardarbunga">Ruv.is</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>A small sub-glacial volcanic eruption has started near Bardarbunga volcano, under the icecap of Dyngjujökull glacier in the northern part of Vatnajökull Glacier, according to the Icelandic Met Office. All air traffic is now prohibited in a large radius around the volcano. </strong></p> <p>&nbsp;</p> <p><strong>The National Commissioner of the Icelandic Police has raised the alert phase to emergency phase accordingly. </strong>Furthermore, the Met Office has raised the aviation color code from orange to red resulting in the air space above the eruption site being closed. The eruption is considered a minor event at this point. Because of a pressure from the glacier cap it is uncertain whether the eruption will stay sub-glacial or not.</p> <p>&nbsp;</p> <p>Authorities say that an evacuation program has been set in motion, but there are currently not enough information to decide whether Kelduhverfi and Oxarfjordur, on the north coast, will be evacutaed. A number of tourists are in the area.</p> <p>&nbsp;</p> <p>The Coast Guards aircraft, TF-Sif, is currently monitoring the area and there are no visible signs of a plume at this moment. Nothing indicates floods because of the eruption.</p> <p>&nbsp;</p> <p>At this stage measurements taken are based on a small event. The Jökulsárgljúfur canyon has been closed and evacuation of tourists in that area and around Dettifoss waterfall has started. The situation at this stage does not call for evacuation of habitants in Kelduhverfi, Öxarfjördur and Núpasveit. People in those areas are encouraged to watch news closely and have their mobiles switched on at all times.</p> </blockquote> <p><a href="http://www.bnowire.com/2014/08/23/urgent-sub-glacial-eruption-begins-near-volcano-in-iceland-prompting-evacuations/">BNO News adds </a>that "a&nbsp; small sub-glacial eruption started Saturday near the Bárðarbunga volcano in Iceland, prompting the evacuation of tourists and causing the closure of airspace in the area, Icelandic police said, adding that it was uncertain whether the eruption would stay sub-glacial. The Icelandic Met Office said it believed a small sub-glacial lava eruption begun on Saturday afternoon under the icecap of the Dyngjujökull glacier in the northern part of the Vatnajökull glacier, near the Bárðarbunga volcano. It followed a “significant” increase in seismic activity that begun after 10 a.m. local time.</p> <p>“The eruption is considered a minor event at this point. Because of pressure from the glacier cap it is uncertain whether the eruption will stay sub-glacial or not,” Icelandic Police said in a statement. “The Coast Guard aircraft, TF-Sif, is currently monitoring the area and there are no visible signs of a plume at this moment. Nothing indicates floods because of the eruption.” </p> <p><a href="http://www.bloomberg.com/news/2014-08-23/iceland-puts-coast-guard-on-alert-as-volcano-activity-increases.html">As a reminder</a>, the Bardarbunga volcano is 25 kilometers (15.5 miles) wide and rises about 1,900 meters (6,234 feet) above sea level. It last erupted in 1996 and can spew both ash and molten lava. The volcano lies beneath Vatnajokull, Europe’s largest glacier. Roads to and from the area have been closed and the Coast Guard was today scheduled to fly over the area with scientists from the University of Iceland and people from the Civil Protection Agency.</p> <p>Or, to put it in social network-friendly terms, <em><strong>Big Bardarboom</strong></em> which will shortly lead to a flurry of press releases by international airline carriers halting transatlantic flights and leading to chaos, further GDP forecast cuts, and the ECB finally getting the geological boost it needed to justify yet another monetary intervention. </p> <p>&nbsp;-&gt; <em><strong>Update: </strong></em>Sure enough moments ago on Bloomberg: Eurocontrol Says Danger Area Declared Around Icelandic Volcano</p> <p>Those who wish to track all the latest seismic activity in 3-D can do so at the following page..</p> <p><a href="http://baering.github.io/"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/Big%20Bardarboom_0.jpg" width="543" height="293" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="460" height="259" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Bardarbunga%20blows.jpg?1408805983" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-23/icelands-bardarbunga-volcano-begins-erupt-ash-cloud-imminent-aviation-warning-raised#comments Germany Iceland Recession Trade War Twitter Twitter Sat, 23 Aug 2014 15:07:27 +0000 Tyler Durden 493380 at http://www.zerohedge.com The Chart That The US Police Force Does Not Want You To See http://www.zerohedge.com/news/2014-08-22/chart-us-police-force-does-not-want-you-see <p>USA is #1 once again... that'll teach the cynics. Oh wait...</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140822_copkillers.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140822_copkillers_0.jpg" width="600" height="318" /></a></p> <p><a href="http://www.economist.com/news/united-states/21613272-police-missouri-suburb-demonstrate-how-not-quell-riot-overkill"><em>Source: The Economist</em></a></p> <p><em>h/t @ConradHackett</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1153" height="611" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140822_copkillers.jpg?1408724373" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-22/chart-us-police-force-does-not-want-you-see#comments The Economist Sat, 23 Aug 2014 15:06:31 +0000 Tyler Durden 493371 at http://www.zerohedge.com Ukraine Humanitarian Aid Convoy Returns To Russia http://www.zerohedge.com/news/2014-08-23/ukraine-humanitarian-aid-convoy-returns-russia <p>So much ado for nothing. </p> <p>Following nearly 2 weeks of artificial tension and fake selloffs that brought the S&amp;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 "humanitarian" convoy which the <em>objective media </em>led everyone to believe was a Trojan horse just itching to launch a war in Ukraine, has left Ukraine after delivering its cargo. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/convoy%20returns.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/convoy%20returns_0.jpg" width="560" height="315" /></a></p> <p>According to Reuters,&nbsp; a total of 184 vehicles from the Russian aid convoy which approached the Ukraine border on August 14 and only crossed into Ukraine on Friday "without permission", in a move which Ukraine first derided as a Direct Invasion then once again quickly changed its tune and admitted it had given it permission to enter to "avoid confrontations" have returned to Russia, citing a Ukrainian military spokesman said.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>"According to our information as of 1 p.m. (1000 GMT), the departure from the territory of Ukraine by 184 Russian vehicles has been confirmed," the spokesman, Andriy Lysenko, told Reuters.</p> <p>&nbsp;</p> <p>He said they had left through the same crossing point by which they had entered via the Ukrainian border settlement of Izvaryne. No checks by Ukrainian border guards or customs officers had taken place.</p> <p>&nbsp;</p> <p>Asked how many Russian vehicles still remained in Ukraine, he replied: "I don't know."</p> </blockquote> <p>Nothing quite like being on top of things: perhaps the CIA is no longer sharing its data with the Kiev regime? </p> <p>Furthermore, considering Ukraine's government has been in a constant state of propaganda dissemination from the beginning, a matching and probably more credible source of <a href="http://rt.com/news/182332-humanitarian-aid-foreign-ministry/">information in this disinformation war is the Russian foreign ministry</a>, which confirmed that the humanitarian aid has been delivered to the besieged city of Lugansk in eastern Ukraine. Meanwhile <em>all trucks </em>that delivered aid had returned to Russia.</p> <p><em>“We express our satisfaction that the Russian humanitarian aid for those in need in southeastern Ukraine has been delivered as intended. We were motivated only by the goal of helping civilian citizens in need,” the statement read.</em></p> <p>All trucks have returned empty, Ukrainian and Russian border guards confirmed, Russian Deputy Emergency Minister Eduard Chizhikov said.</p> <p>“<strong>There were 227 trucks in the humanitarian operation participating in the operation, and they have all returned. All those vehicles have been searched by the representatives of the customs and border control, both on the Ukrainian and Russian side. No issues have been pointed out. All vehicles were empty upon returning, and the media representatives checked that, too, while they were filming the search</strong>,” Chizhikov stated.</p> <p>But the endless drama...</p> <p>The Foreign Ministry also said that they were “getting a lot of feedback from the residents of Lugansk, who were thankful for such a good attitude from the Russian part.” </p> <p>A clip of the eastern Ukraine locals greeting the Russian convoy:</p> <p> <iframe src="//www.youtube.com/embed/hiCMAoYA5Yc" width="560" height="315" frameborder="0"></iframe></p> <p>And perhaps in even more amusing news, Russia not only reacted to the latest "lie" out of NATO's Rasmussen, hell bent on finding the pretext to deliver even more NATO forces on the border with Russia, but said that it no longer pays attention to what he says:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p> Russia’s Defense Ministry has denied “another portion of accusations” by representatives of NATO against Russia. The latest claims include allegations that Russia directly involved its military and heavy weaponry in fighting on the Ukrainian territory.</p> <p>&nbsp;</p> <p>“<strong>We’ve stopped paying attention to Mr. Rasmussen’s empty talk and his press secretary. There is no point commenting on them. <span style="text-decoration: underline;">There is no proof there except Twitter</span></strong>,” official representative of Russia’s Defense Ministry Igor Konashenkov stated.</p> <p>&nbsp;</p> <p>“I would like to remind you that the official powers of Mr. Rasmussen ended on July 31, and today he’s acting not so much for the alliance, but as the organizer of the September 4 NATO summit in Wales. We understand that his prospects will depend on the promotion of that event,” the statement also said. </p> </blockquote> <p>This is the same <a href="http://www.zerohedge.com/news/2014-08-22/stocks-slide-nato-condemns-russian-invasion-warns-alarming-build-forces">NATO that condemned </a>the delivery of aid to a population stuck in the middle of the Ukraine civil war, which according to the red cross itself said was living in abysmal conditions, without water or power. The same population that once again just got that much closer to aligning with Russia in lieu of a Kiev government that has declared war on it.&nbsp; Lugansk residents have already expressed hope that Russia will provide more humanitarian aid in the future, first vice premier of the Lugansk People’s Republic Vasily Nikitin told RIA Novosti. <em>“We don’t have any food left, and we hope that Russia won’t leave us in this situation and these humanitarian convoys containing food will become commonplace. We hope for the help, and we need it,” </em>Nikitin stated. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/rian_02481118.hr_.en_.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/rian_02481118.hr_.en__0.jpg" width="560" height="382" /></a></p> <p>The simplest way this would happen, of course, is when the Donetsk republic follows in the steps of Crimea is annexed by Russia. However, with massive shale gas deposits located under the region, and with Hunter Biden director of a company that is quite eager to extract said shale gas, there is no way this region is going without a fight, one in which NATO is a key member. </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="690" height="471" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/rian_02481118.hr_.en_.jpg?1408803478" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-23/ukraine-humanitarian-aid-convoy-returns-russia#comments Reuters Twitter Twitter Ukraine Sat, 23 Aug 2014 14:20:29 +0000 Tyler Durden 493379 at http://www.zerohedge.com