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Chicago PMI Explodes To Biggest Beat In 10 Months, Employment Drops Further

Having collapsed to 13-month lows in July - with the biggest miss on record - Chicago's PMI rebounded the way only US macro 'soft-survey' data can. After plunging from 62.6 in June to 52.6 in July, August printed a magnificent 64.3 - its highest since May - showing up this data's noisy nature as entirely useless. From worst miss on record (and 13-month lows) to best beat in 10 months and 5 month highs... brilliant. It would seem ISM has entirely given up on any credibility at all... However, given this exuberance (in production and new orders), the employment sub-index dropped yet again.



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JPMorgan Warns Military Escalation In Ukraine "May Lead To A Lehman-Style Shock"

The sudden military escalation in Ukraine in recent days has, according to JPMorgan's Alex Kantarovich, reduced the earlier hopes that the high level meeting in Minsk on 26 August would help to defuse the conflict. As Kantarovich warns, the markets are now bracing for the US/EU responses. In the worst case scenario, now appearing more likely, severe pressure on stocks may extend. As he concludes, "we believe that with the significant deterioration in the Ukrainian situation, markets may treat this as a Lehman-style shock."



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UK Raises Terror Threat Level To Severe (From Substantial)

UK Home Secretary Theresa May has announced that a terrorist attack on the UK is :highly likely," although stressed that there is no information to suggest an attack is imminent:

*UK TERROR THREAT LEVEL RAISED TO SEVERE FROM SUBSTANTIAL
*REAL AND SERIOUS THREAT IN THE UK FROM TERRORISM, MAY SAYS

Her decision is based on the latest intelligence from Syria and Iraq (and we suspect, as Brandon Smith notes, "the goal will be to terrify you and those around you into seeking out a more powerful, more centralized government authority to protect your security.")



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Personal Spending Suffers First Drop Since January As Consumer Income, Outlays Miss

Judging by the just released personal income and spending data, consumers are already forecasting a long, harsh winter. With incomes and outlays expected to rise by 0.3% and 0.2% respectively, the July data was a big dud, missing on both expectations, and while income rose by a modest 0.2%, far below the 0.5% in June, it was personal spending which in fact declined by 0.1%, a major drop from the 0.4% increase in the prior month, and the first outright decline in spending since January. As CNBC's Steve Liesman explained the disappointing data: "weather."



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Putin Says Everything U.S. Touches Turns Out Like Libya Or Iraq

Having been quiet for a few days, comfortable sitting back and watching NATO, Europe, and the US escalate each other's talking points to a frenzy of populist revolt, Russia's Vladimir Putin has come out swinging this morning:

  • *PUTIN: NO MATTER WHAT U.S. DOES, IT TURNS OUT LIKE LIBYA, IRAQ
  • *PUTIN SAYS UN CAN'T BE FOREIGN POLICY TOOL FOR U.S., ALLIES
  • *PUTIN: EUROPEAN LEADERS FAR FROM SHOWING INDEPENDENT THINKING
  • *PUTIN SAYS RUSSIA IS COUNTRY THAT DOESN'T FEAR ANYTHING

In addition to discussions of The Bolsheviks, agreeing Stalin was a tyrant, and slamming liberal economic models for creating crises, Putin notes his approval rating is high because "he is confident he's right."



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Italy Back In Deflation With Lowest CPI Print In History; European Inflation Lowest Since 2009

Curious why European bond yields tumble to fresh new lows day after day (with the explicit backstop of the ECB of course, which makes fundamental analysis of sovereign solvency an irrelevant matter)? Then look no further than Italy, where as the chart below shows, not only has the economy "filled the gap" of its economy as tracked by its EU-Harmonized CPI, but at an August print of -0.2%, this is the lowest print in history, worse even than the brief -0.1%, flirt with deflation recorded just in the aftermath of the Lehman crash. But it wasn't only Italy: as Eurostat also reported today, Euroarea inflation also dropped once again, touching 0.3%, down from 0.4% a month ago, the lowest print October 2009.



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Frontrunning: August 29

  • Obama Cools Talk of Strikes Against Islamic State in Iraq or Syria (WSJ)
  • Separatists say will allow 'trapped' Ukrainian forces to withdraw (Reuters)
  • Ukraine Fighting Surges as Russian-Backed Forces Gain (BBG)
  • Missouri police sued for $40 million over actions in Ferguson protests (Reuters)
  • BTFDividend stocks? Tesco Slumps as Retailer Slashes Dividend 75% on Forecast (BBG)
  • In town halls, U.S. lawmakers hear voter anger over illegal migrants (Reuters)
  • Obamacare’s Latest Threat Nears Turning Point in Court (BBG)
  • Untangling the Mess of Austrian Bank Hypo (WSJ)
  • The billion-dollar fall of the house of Espirito Santo (Reuters)
  • Manhattan Condo Resale Prices Reach Record High (BBG)
  • California Drought Squeezes Wells: State Considers Regulating Groundwater Use for First Time (WSJ)


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S&P Futures Surge Over 2000, At Record High, On Collapsing Japanese, European Economic Data, Ukraine Escalations

Following Wednesday's laughable tape painting close where an algo, supposedly that of Citadel under the usual instructions of the NY Fed, ramped futures just over 2,000 to preserve faith in central planning, yesterday everyone was expecting a comparable rigged move... and got it, only this time milliseconds after the close, when futures moved from solidly in the red, to a fresh record high in seconds on no news - although some speculate that Obama not announcing Syrian air strikes yesterday was somehow the bullish catalyst - and purely on another bout of algo buying whose only purpose was to preserve the overnight momentum. Sure enough, this morning we find that even as bond yields around the world continue to probe 2014 lows, and with the Ruble sinking to fresh record lows as the Ukraine situation has deteriorated to unprecedented lows, so US equity futures have once, driven by the now generic USDJPY spike just after the European open, again soared overnight, well above 2000 and are now at all time highs, driven likely by the ongoing deflationary collapse in Europe where August inflation printed 0.3%, the lowest since 2009 while the unemployment remained close to record high, while the Japanese economic abemination is now fully featured for every Keynesian professor to see, with the latest Japanese data basically continuing the pattern of sheer horror as we reported yesterday.



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"A Man Of Many Perversions" – Federal Cybersecurity Head Convicted Of Child Porn Charges

This is why centralized power is so dangerous. It doesn’t matter whether the power is political or corporate, overly centralized power in all forms must be resisted whenever it appears. The worst of all worlds is when centralized political and corporate power unite in an unholy alliance, which is what has happened to America in recent decades. When this occurs, the combined forces of oligarchy simply begin to rapaciously feast on the citizenry with zero accountability. This is a fair description of the United States in 2014... The primary problem with centralized power is that sociopaths (for obvious reasons) gravitate toward, and greatly covet, positions of power.



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Fissure Eruption Begins In Iceland As Bardarbunga Magma Breaches The Surface

As Icenews reports, a fissure eruption has started in the Holuhraun lavafield north of Dyngjujökull. Newly formed crevasses were spotted in surveillance flyovers by scientists yesterday and at that time geophysicist Magnús Tumi Guðmundsson estimated that the magma intrusion which had been monitored for the previous week was moving only 2 kilometres under the surface.  The magma has now breached the surface and the volcanic eruption has been confirmed by scientists in the field. The low frequency tremors suggests the eruption is located outside the glacier. The blaze can be observed in Mila’s webcameras, two of which are trained on Vatnajökull glacier’s Bárðarbunga area.



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NATO Releases Satellite Imagery "Proof" That Russia Has Invaded Ukraine

NATO released new satellite images on Thursday, 28 August 2014, that show Russian combat forces engaged in military operations inside the sovereign territory of Ukraine. The images, captured in late August, depict Russian self-propelled artillery units moving in a convoy through the Ukrainian countryside and then preparing for action by establishing firing positions in the area of Krasnodon, Ukraine. Russia's response - "reports on Russian troops in Ukraine are false."



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USA Is Number 1 Again...

...In Foreign Bribery.



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Obama: "We Don't Have A Strategy Yet"

UPDATE: Damage Control Spin begins... Josh Earnest: "In his remarks today, POTUS was explicit - as he has been in the past - about the comprehensive strategy we'll use to confront ISIL threat."

President Obama 'knows' how to handle Putin's 'continuation' (not 'invasion') - more sanctions (and costs for Europe) - but when it comes to beating the most "barbaric" terrorists known as ISIS, ISIL, or The Islamic State; he had this to offer... "I don't want to put the cart before the horse. We don't have a strategy yet." Rest assured Americans - who have been told that ISIS could be crossing the borders every day and a constant threat, President Obama is 'working on it'. Perhaps most crucially, while we 'joke' that the administration has no strategy, it is noteworthy that Obama stated it was "not US policy to defeat ISIS, only reverse gains."



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This Has Never Happened Before

Presented with little comment aside to ask rhetorically just how screwed up markets and macro data are to allow 'this' to happen...



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A World Without Fractional Reserve Banks And Central Planning

"In a very real sense, it is fractional reserve banking and not money itself that is the root of so many of today’s evils. Whenever fractional reserves are permitted, the banking system – including the one that exists today throughout the world – comes to resemble a classic Ponzi scheme which can only function as long as most people don’t try to get at their money."



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