With Petroshenko agreeing to extend today's cease-fire deadline for 3 days, the Russians, unfortunately, are not optimistic after the 'expert-level' talks in Europe. Given this, it appears Russia is preparing its retaliation for possible further sanctions that are being waved by Europe and the US. As AP reports, Russia's state-controlled gas company, Gazprom, says it could limit supplies to European customers that intend to re-sell the natural gas on to Ukraine. Whil enot naming specific countries, the Gazprom CEO explained he needed to clamp down on the so-called reverse-flow supplies the the cut-off Ukraine as they were "half-fraudulent schemes."
Pentagon Admits Armed Drones Flying Over Baghdad; Top Shiite Cleric Joins US Calling For Maliki OusterSubmitted by Tyler Durden on 06/27/2014 12:50 -0400
With Iraq closing a last minute deal with Russia to reinforce its depleted airforce by purchasing second-hand Su fighter jets, suddenly the US found itself scrambling: the last thing it wants is to hand over control of Iraq's skies to foreign-made warplanes. Which is perhaps why as CBS just reported, a Pentagon official has officially confirmed that the US is now flying armed drones over Baghdad. "The flights, which are not round the clock, are for the protection of the embassy and are not the precursor to air strikes" according to the same source.
While Poroshenko extends today's ceasefire (under threat of military action if nothing is solved by then); the phrase "hearts and minds" comes to mind as Russia unleashes its latest softly-softly headline in providing 'humanitarian aid' to the eastern regions of Ukraine. While 'asking' Ukraine to help determine the route for the aid, the press release explains this is 'aid' for the eastern regions of Donetsk and Luhansk following "numerous appeals" by the people. It appears that the "aid" does not include US-Iraq-style "special advisers."
The domestic energy boom is behind the expansion of Industrial Production. The remarkable untold story: Ex mining and oil and gas extraction, US Industrial Production has been in contraction for most of the period since Peak Oil in 2005-08.
The economy must be doing great, right? The market's at all-time highs... We suspect President Obama will 'brush off' the Q1 GDP collapse and focus his 'remarks on the US economy' on how well America is doing; how exceptional it's growth is'; and how any minute now it's going to the moon alice (and not just the Fed balance sheet). And just a reminder, the last time Obama spoke aggressively on 'fixing' inequality, stocks were not happy. Remember, the greatest irony of it all...
Pundits enjoy pointing to NYSE margin debt as an indication of overall system leverage, and how prone to margin calls and liquidations the investor class may be at any given moment. However, in the new normal, in which sophsiticated investors fund themselves via completely different mechanism - mostly involving repo and other shadow banking conduits - margin debt has become a very much irrelevant indicator of overall leverage.
In Hillary Clinton's attempt to seem "one of the people", she made the public relations debacle of portraying herself as "dead broke" at the time she and Bill Clinton left the White House. Of course, the reason this attempt at populist pandering backfired is because as is well-known, even the least educated American, the bulk of wealth American president families accrue is not while in office but after, when they hit the speaking/book publishing circuit. This is just what WaPo found when it conducted a review of the Clintons’ federal financial disclosure: it found that Bill was paid $104.9 million for delivering 542 speeches around the world between January 2001 and January 2013, when Hillary left her job as secretary of state.
With US equity markets hovering near record-er highs, we thought a quick summary of the state of the world's growing geopolitical risks would 'help' rationalize the BTFATH mentality. Here is Deutsche Bank's map of the most potentially destabilizing risks around the world...
The proof is clear. According to SWIFT, China’s renminbi is now the second most used currency in the world for global trade settlement, putting it ahead of even the euro. It’s happening. And based on the data, it’s completely obvious (as we continued to chronicle) to just about everyone but the US government. However, we were still surprised to see an article in the Financial Times’ banking intelligence subsidiary (‘The Banker’) entitled "The US’s dollar domination is coming to an end." This reality has become obvious to just about everyone... Reserve currencies come and go. So will the dollar. This is nothing new.
Following June's initial largest miss in 18 months, UMich consumer confidence 'final' print inched higher to 82.5, modestly beating expectations - but well below April's peak. In case you were confused at whether you should be exuberant (conference board confidence at highest since 2008) or dysphoric (Gallup survey at lowest in 2014), we don't blame you. What is most worrisome about the UMich data, aside from the non-confirmation of exuberance offered by the government survey, is the tumble in the "outlook' index to 3 month lows.
Most market pundits have predicted higher bond yields (for months), yet unloved global fixed income securities have traded well all year. Even after the dovish FOMC reiterated its intent to maintain a highly-accommodative stance, bonds have stayed resilient. The main cause of market jitteriness might be that investors are beginning to sense the ‘time-inconsistency’ aspects of Fed policy.
The CEOs of U.S. companies are compensated exceedingly well with the heads of the S&P 500 paid 331 times as much, on average, as production and nonsupervisory employees. As we wrote a month ago while explaining the 'mystery and completely indiscriminate' buyer of US stocks: "since a vast majority of executive compensation agreements are tied to company stock "performance"; C-suites are perversely happy if their own corporate cash is used to buy the stock near or at all time highs: after all management year end bonus will simply benefit that much more, while keeping activist investors delighted (and away from the embarrassing public spotlight)." Sure enough, as HBR explains, executive comp in recent decades comes down to four words: stock options and restricted stock (and more and more in the last few years).
Ukraine's President Petro Poroshenko (C) poses with European Commission President Jose Manuel Barroso (L) and European Council President Herman Van Rompuy (R) at the EU Council in Brussels June 27, 2014 following the singing of Ukraine's trade agreement with EU. Euphoria ensues.
- Yellen Spending Recipe Lacking Key Ingredient: Bigger Wage Gains (BBG)
- Ukraine signs trade agreement with EU, draws Russian threat (Reuters)
- GM Documents Show Senior Executive Had Role in Switch (WSJ)
- Australian Report Postulates Malaysia Airlines Flight 370 Lost Oxygen (WSJ)
- World’s Biggest Debt Load Lures Distressed Funds to China (BBG)
- GPIF Rushing Into Riskier Assets Before Ready, Okina Says (BBG)
- Japan Prices Rise Most Since ’82 on Tax, Utility Fees (BBG)
- Italian Debt Swells to Rival Germany as Bond Yields Slide (BBG)
- China’s Manhattan Project Marred by Ghost Buildings (BBG)
- BOE's Carney Says Rates Won't Rise to Levels Previously Considered Normal (WSJ)