headlines

While the deranged, schizophrenic market could not care less about actual facts and data, and continues to trade purely on month end liquidations, and the now traditional bailout rumors, here is what to expect in terms of scheduled releases today: Personal income and spending, Chicago NAPM and consumer sentiment indexes. Also today the Fed will announce the first Operation Twist schedule which will consists of 13 bond purchases in October, as well as 6 sales.

Now that the French banks have pretty done exactly what we anticipated due to Italy and Greece who pretty much did what we anticipated, what's next?  Look towards those banking stalwarts, but don't mention the US or shhhh!!! Gemany... Oh yeah, it's too late!

In an emailed statement from the Greek finance ministry, we are told not to expect to hear anything from anyone about anything. Sounds like they have it all under control then...*GREECE SAYS NO OFFICIAL ANNOUNCEMENT EXPECTED AFTER TROIKA CALL. The market's initial reaction is to sell-off on this no news as ES moves towards the day's lows and EUR inches lower.

UPDATE:

• GREEK CALL WITH TROIKA MAY CONTINUE TOMORROW OR LATER: MINISTRY :-Are they all on hold for Bernanke?
• GREEK FINANCE MINISTRY SAYS NO CABINET MEETING PLANNED SEPT. 20 :-  Deny, Deny, Deny, or simply Lie, because this contrasts with earlier reports that G-Pap would convene a cabinet meeting after the call.

There are no notable economic events today so just like Noda, we will be watching, watching, watching those headlines and pretending to intervene if the world does not go our way. If that fails, we will spread rumors and demand that the US assist us in weakening reality whose moves have become too one-sided.

As if the global liquidity crunch was not bad enough (as we enter a vacation sleepy week, the key report on Monday will be the ECB's bond purchase update for last week - we estimate another E30 billion in secondary market monetizations, in addition to how many banks pulled dollars from the ECB in the 7 day liquidity providing operation on Wednesday as occurred first last week), geopolitical risk is back after headlines from both Libya and Israel indicate that the Levant region is on the verge of systemic instability once again. The first two stories put Israel smack in the middle of the Middle East action. First is Egypt, which earlier "said Saturday it would withdraw its ambassador from Israel, insisting the killing of five Egyptian security personnel while Israeli forces pursued gunmen across the border was a breach of its 1979 peace treaty with the Jewish state." Complicating matters is the announcement out of Iran, via AP, that "two American men arrested more than two years ago while hiking along the Iraq-Iran border have been sentenced to eight years in prison on charges that include espionage, state TV reported Saturday, a sharp blow to hopes their release was imminent. The announcement seemed to send a hard-line message from Iran's judiciary — which answers directly to the ruling clerics — weeks after the country's foreign minister suggested that the trial of Shane Bauer and Josh Fattal could clear the way for their freedom. It also was likely to raise speculation about Iran using the Americans as political bargaining chips and could bring added tensions to Iranian President Mahmoud Ahmadinejad's expected visit to New York next month." The cherry on top is late news out of Libya that the local rebel movement may be making headway (since denied by the government) in taking over Tripoli. Net result will be even more instability in the crude market which has been expected to drop courtesy of the recent spike in deflationary expectations. Alas, when geopolitics enters the equation, the only certain thing is a surge in uncertainty. That this will likely not benefit global equity markets goes without question.

Just two economic datapoints today, jobless claims and pending home sales, which will continue confirming deteriorating macro trends, to be largely lost in the headline barrage as today is D-Day on the Boehner plan. The last of this week's bond auction trifecta comes to a close with an auction of 7 Year bonds. Unless there is an imminent debt ceiling hike this could be the last bond auction for a long, long time.

While the entire world is focused on political developments, namely the rescue of the Eurozone, and the extension of America's credit card borrowing limit, there are some economic updates to keep track of in the US, namely initial jobless claims and the July Philadelphia Fed Index. As Goldman observes below, a weaker than expected initial claims number will be lamed on the ongoing Minnesota shutdown, while it appears that as expected yesterday the surge in M2 has been completely ignored by the economists, and thus expect a massive beat in today's 10am LEI. That said, the only thing that will drive the market once again will be headlines from both sides of the Atlantic.

Housing starts and permits for June. As usual, the key driver will be Europe-based headlines. There is a tiny POMO closing at 11 am.

Homebuilder sentiment and capital inflows data. And lots and lots of European and other headlines.

Good thing the media is in agreement...

This week's truly market moving headlines, courtesy of Bloomberg (these are real)

Only this time not with its handling of luxury hotel staff, but with its assessment of "reality":

IMF's Blanchard says inflation is a non issue for US economy

And these are the people who continue to pretend they have any relevance? Just get done with your theatrical conclave already and phase out into irrelevance already. Luckily, the "real" IMF, China, is always in the background, willing to purchase, er, bailout any (read all) European states that need a bailout.

The latest in the tragic story that just gets weirder by the minute.

• TEPCO's mishandling of info on nuclear crisis 'unacceptable': Edano
• Partial meltdown of fuel rods believed to be temporary: Edano
• Radioactive water from No. 2 reactor due to partial meltdown: Edano
• Contaminated water due to condensed steam, not reactor crack: Edano

And our personal favorite:

• Locals within 20-km evacuation zone asked not to return for now

As this whole farce has gone beyond the surreal, we are now actively waiting for a cartoon Mr. Burns to show up at any ongoing press conference and announce that Springfield Nuclear Power Plant has LBOed Fukushima with Discount Window financing, at a #Ref! EV/EBITDA considering 9501.JP will not see any positive cash flow for millennia, and is appointing Mr. Sparkle (aka Homer Simpson) chief safety inspector.

I'm putting together what I see as solutions for the many pricing and valuation problems that I see coming down the pike. If you think real asset markets are a little soft now, wait until rates are controlled more by market forces than by concerted central planning cartels.

I’ve got my money on the silly cartoon being right.