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Bad News For Chelsea E. Manning: US Army Won't Provide Hormones, Sex-Reassignment Surgery





Some bad news for Pvt. Bradley Chelsea Manning, who was sentenced to spend 35 years in male prison:

U.S. ARMY SAYS IT DOES NOT PROVIDE HORMONES OR SEX-REASSIGNMENT SURGERY AFTER WIKILEAKS CONVICT BRADLEY MANNING SAYS HE WANTS TO LIVE AS A WOMAN

Well, there goes that approach: it seems Chelsea's debut was short-lived.

 
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Guest Post: The Source Of Systemic Crisis: Risk And Moral Hazard





There are all sorts of candidates for the root cause of the systemic global financial crisis, but if we separate the wheat from the chaff we're left with risk and moral hazard. Pointing to human greed and cupidity as the cause doesn't identify anything useful about this era's crisis, as human greed, self-interest and opportunism are default settings. Programs that backstop banks and social insurance systems like Medicare are not like fire or life insurance because they are effectively open-ended in terms of costs and in exposure to risk. A system which pools risk without distributing it to the participants and eliminates the causal connection between risk and consequence introduces moral hazard on a grand scale.

 
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So Far 1.3x Greeces Have Been Bailed Out... And More Is Coming





Schaeuble and Merkel have very recently confirmed what was leaked a month ago - that Greece will likely get yet another 'helping hand' aid program. Some have noted that this may be financed using EU funds instead of additional loans from EU-area countries (or the IMF) yet Merkel's comments (perhaps playing to her electioneering needs) appeared to dismiss this - prompting talk of a 'bail-in' based on the new normal 'template' applied to Cyprus. Greece has so far received two bailout packages totaling EUR240 billion (with about EUR22 billion still to be released) which is 130% of Greece's GDP (which stands at EUR186.2 billion) and while the thord package appears smaller (for now) at EUR10.9 billion (based on IMF funding gap forecasts), this covers only the period through 2015 (and we know how accurate the IMF has been in the past with its hockey-sticks). Greece remains  mired in the sixth year of a recession with more than 6 out of 10 young people unemployed.

 
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Initial Claims Rise To Highest Since July 19, Biggest Miss In 6 Weeks





While largely noise in the context of the big picture, last week's multi-year low in initial claims of 320K (revised upward as usual to 323K), driven in big part by the specific furlough situation at the automakers, reversed and rose by 13K to 330K, or 6K higher than expectations. This was the highest claims number since July 19, the biggest miss to expectations and also the largest weekly jump in 6 weeks. Notably, the entire move was due to seasonal adjustments: the unadjusted claims number declined even more, dropping from 283K to 279K, although with the market at a point where bad news is desperately needed to provide even the tiniest bounce to risk, the adjustment is now meant to distort the underlying data lower not higher.

 
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Are You A "Confident Consumer"? It Depends How Rich You Are





Consumer confidence for those who earn $50,000 or more per year has recovered entirely to pre-Great Recession levels while lower income groups continue to lag. It seems, as Bloomberg's Rich Yamarone points out, money (or credit) really can buy happiness.

 
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Bradley Manning Bombshell: Announces He Is A Female Named Chelsea





"As I transition into this next phase of my life, I want everyone to know the real me. I am Chelsea Manning. I am a female. Given the way that I feel, and have felt since childhood, I want to begin hormone therapy as soon as possible. I hope that you will support me in this transition. I also request that, starting today, you refer to me by my new name and use the feminine pronoun (except in official mail to the confinement facility). I look forward to receiving letters from supporters and having the opportunity to write back." Bradley Chelsea E. Manning

 
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Frontrunning: August 22





  • SURPRISE - Goldman Sachs won a preliminary victory to limit losses from a wave of erroneous trades that roiled U.S. options markets (WSJ)
  • HP’s Whitman abandons 2014 revenue growth target (FT) - just keep doing those buybacks and ignore CapEx: revenue growth estimated in 2022
  • Republicans in Echo Before Big Burn Defy Affordable Care (BBG)
  • China's banks to take next step in rate reform push  (Reuters)
  • Berlin’s Consistency on Greece’s Rescue (FT) and lack thereof
  • Summers as Obama Voice of Authority Rides Car Rescue in Fed Race (BBG)
  • Cuomo in Manure Fight as New York Promotes Yogurt (BBG)
  • Yellen’s Ties From London to Shanghai Bypass White House (BBG)
  • Sanctions Gap Allows China to Import Iranian Oil (WSJ)
 
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Jackson Hole Begins As 10 Year Slouches Toward 3.00%





Following the market's shocking realization that the taper is coming prompting a kneejerk to the kneejerk reaction after the FOMC minutes, and yet another painful session in Asia, stocks were desperate for some good news from somewhere, which they got thanks to a Goldilocks PMI from China printing by the smallest possible expansionary quantum, or 50.1, and well above expectations, as well as a continuation of better than expected European PMI data with the August composite rising from 50.5 to 51.7 vs. Exp. 50.9, based pm a Services PMI rising into expansion to 51.0 from 49.8, (Exp. 50.2), and Manufacturing at 51.3 vs. Exp. 50.8 up from 50.3, the highest since June 2011. It is perhaps stunning just how conflicting this "improving" data is with private sector industrial and manufacturing company metrics, but with the credit creation situation in Europe (read: all that matters) at record lows, and with banks retrenching and needing to delever by trillions, it is only a matter of time before this latest propaganda wave is exposed for what it is. The net effect of the overnight data is to push the USDJPY to nearly 99.00 which thanks to the ubiquitous correlation algos has dragged US equity futures higher, if only briefly (the 10 Year is at 2.91% - under 10bps from redline territory), while slamming the offsetting EURUSD despite the "better" than expected European data.

 
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There Is No Scenario Where This Ends Well





Luckily, the average American is so bad at math they can’t read this chart and understand the implications.

 
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US Has "Strong Indications" Assad Used Chemical Weapons; Russia Says Rebel False Flag





The US is back at it again.

This morning we woke up to the horrible news that hundreds of people had died following the use of nerve gas in an area close to Damascus in an attack that the "democratic" media, and the Qatari mercenaries, scrambled to pin on the Assad regime. Just like in June the US "found" Assad had used chemcial weapons, only for the UN and Russia to accuse the US of fabricating the data, and for the chemical weapon warehouse of the rebels to be uncovered shortly thereafter, which meant the Syria narrative would have to be put on hiatus for a few months: after all the lies were getting perilously close to those used by Bush in the Iraqi WMD fiasco. Well, the administration appears certain enough time has passed by and has relaunched the old "blame Assad" plotline, with the WSJ reporting minutes ago that the US "sees strong indications" that Syria's government used chemical weapons in the attacks. What those are it is unclear as the US does not actually have presence on the ground, and neither have any UN inspectors been able to investigate. But why not go for round two of the false flag fabrication: maybe this time it will fly?

 
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Asian FX Bloodbath Continues; Stocks Slammed As Treasury Yields Push Higher





In spite of the #winning China PMI print, the bloodbath continues in Asia. EM FX are all getting slayed against the USD with IDR -3%!! INR now -1.6% today alone, breaking above 65 to the USD - a new record low. Stock markets are a sea of red with MSCI AsiaPac (Ex-Japan) down for the 4th day in a row to one-month lows (as even the Shanghai Composite has given up its gains). Philippines caught up after being closed since Friday and is down 6%. US Treasuries continue being sold (10Y hit 2.9250%) but are seeing a small bid as India opens deep in the red (time to lease that gold it would seem). The precious metal is a little lower overnight (gapping down on the China PMI news). There is no silver lining here as tonight's action is about the worst of the last week or so...

 
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The New Part-Time Normal In One Cartoon





Welcome to the new 'part-time' normal (as first defined here in 2010)...

 
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Google Trends





Presented with no comment...

 
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Wednesday Humor: CNBC's "Best Nailing It" In Ages





Based on overwhelming demand, we present today's 6 minutes of comedy gold as Cramer and Liesman basked in the glory of a call that proved to be epically incorrect mere hours later. The superlatives were exponential as kudos flew like confetti - from "believing the markets are efficient" as an indication that Dow -122 (-75 from the FOMC) was 'incorrect' to "years of experience" telling Liesman that the market's algo-only reaction was wrong and that he knew what the market expected. The only voice of reason was one Amanda Drury who noted the bond market's less than sanguine reaction (for which she was chided that "bonds have a lot more at stake than stocks.") As we write, the Dow (futures) are 125 points below the FOMC level and 190 points below the almost-perfect top-tick timing at which this TV sensation hit. Grab the popcorn and view the accompanying chart for guidance...

 
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China HSBC PMI Jumps Most In 3 Years To 'Miracle' Expansionary Print





From the lowest print in 12 months at 47.7 in July, HSBC's China Flash PMI just printed at 50.1 (massively outdoing the expected 48.2) and jumping by its most in three years month-over-month. It's a miracle, we hear you cry (especially given that CAT Asia/Pac sales collapsed 28% YoY)... In spite of new export orders dropping at a faster rate than last month and employment decreasing at a faster pace, it seems there was enough inventory decompression and 'output' to signal 'stability'. This, of course, pours cold water on those hoping for another huge stimulus plan to build more railroads (and the market's initial 3 point jump has already faded gloriously into the night).

 
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