Morgan Stanley

• Xi Says China Conflict With U.S. Would Be Disaster (BBG)
• Short selling drops to lowest level since Lehman (FT)
• Scoping the new subprime as watchdogs cry 'bubble' (Reuters)
• Carlos Slim to break up América Móvil empire (FT)
• Jury Acquits Rengan Rajaratnam in Insider-Trading Case (WSJ)
• Hamas rockets land deep in Israel as it bombards Gaza Strip (Reuters)
• Hong Kong Buyers Queue for New Homes After Prices Plunge (BBG)
• Rebel Stronghold in Ukraine Braces for Its Showdown (WSJ)
• Tiny Houses Big With U.S. Owners Seeking Economic Freedom (BBG)
• Chinese Cash-Bearing Buyers Drive U.S. Foreign Sales Jump (BBG)

• Headline of the day: Complacency Breeds $2 Trillion of Junk as Sewage Funded (BBG)
• Israel intensifies Gaza offensive after surge in rocket fire (Reuters)
• Profits plunge at Vatican bank (FT)
• Investors Are Buying Troubled Golf Courses and Giving Them Makeovers (NYT)
• Pimco Dissidents Challenge Bill Gross in ‘Happy Kingdom (BBG)
• That's a new one: Marks and Spencer blames new website for sales drop  (Reuters)
• Iran's Supreme Leader calls for more enrichment capacity (Reuters)
• Boeing Faces Long-Term Credit Risk if Ex-Im Bank Closed, S&P Says (WSJ) not to mention the collapse risk to US durable goods orders
• U.K. Manufacturing Unexpectedly Slumps Most in 16 Months (BBG)
• Some Still Lack Coverage Under Health Law (WSJ)

Poor algos: after they got no love on Monday from the overnight USDJPY selling team which took the all important pair back to the 200 DMA, today, inexplicably (it is a Tuesday after all, and if one can't frontrun a rigged market surging higher on Turbo Tuesday may as well throw in the towel on free money and learn about fundamental analysis) the same overnight USDJPY selling team has pushed the key carry pair to below the 200 DMA, and has dragged US equity futures lower with it for the second day in a row.

• Bond Anxiety in $1.6 Trillion Repo Market as Failures Soar (BBG), as reported first by Zero Hedge
• As Food Prices Rise, Fed Keeps a Watchful Eye (WSJ)
• Yellen’s Economy Echoes Arthur Burns More Than Greenspan (BBG)
• Draghi’s $1.4 Trillion Shot: Silver Bullet or Misfire? (BBG)
• Israel's Netanyahu phones father of murdered Palestinian teen (Reuters)
• Ukraine says forces will press forward after taking rebel stronghold (Reuters)
• Goldman Sachs Brings Forward Rate Forecast as Treasuries Drop (BBG)... you mean rise?
• Super typhoon takes aim at Japan (Reuters)
• Kidnapped Nigerian girls 'escape from Boko Haram abductors' (Independent)
• Merkel says U.S. spying allegations are serious (Reuters)

Yet another in a long stream of relatively esteemed hedge fund managers has decided enough-is-enough and is shuttering his firm. The reason? Same as the rest... As WSJ reports, Steve Eisman, who emerged as one of the stars of the financial crisis with a winning bet against mortgages, has wound up his fund because he believes that "making investment decisions by looking solely at the fundamentals of individual companies is no longer a viable investment philosophy." As Baupost's Seth Klarman reminds us "Six years ago, many investors were way out over their skis. The survivors pledged to themselves that they would forever be more careful, less greedy, less short-term oriented. But here we are again, mired in a euphoric environment in which some securities have risen in price beyond all reason, where leverage is returning to rainy markets and asset classes, and where caution seems radical and risk-taking the prudent course. Not surprisingly, lessons learned in 2008 were only learned temporarily. These are the inevitable cycles of greed and fear, of peaks and troughs."

• France's Sarkozy faces corruption probe in blow to comeback hopes (Reuters)
• Ukraine Says Military Offensive Against Rebels Yielding Results (WSJ)
• JPMorgan Investors Show Support for Dimon in Cancer Fight (BBG)
• World’s ATM Moves to Frankfurt as Yellen’s Fed Slows Cash (BBG)
• Argentina Seen Backtracking on Fernandez Vows as Legacy at Risk (BBG)
• Palestinian teen killed in possible revenge attack (Reuters)
• The Bill and Hillary Clinton Money Machine Taps Corporate Cash (WSJ)
• London House Prices Surge the Most Since 1987, Nationwide Says (BBG)
• Last Jew in Afghanistan faces ruin as kebabs fail to sell (Reuters)

• Ceasefire over, Ukraine forces attack rebel positions (Reuters)
• No Good Iraq Options for Obama as Russia, Iran Jump In (BBG)
• Japan’s Cabinet Agrees to Allow Military to Help Defend Allies (BBG)
• Obama says to reform immigration on his own, bypassing Congress (Reuters)
• South Stream Pipeline Project in Bulgaria Is Delayed (NYT)
• Foreign Banks Still in the Dark About Missing Metals in China (WSJ)
• Quelle indignity: several bankers at French bank BNP Paribas will face demotions and cuts to their pay and bonuses (FT)
• Symantec Warns of Hacker Threat Against Energy Companies (BBG)
• Shrinking Office Spaces Slow Recovery (WSJ)
• Rand Paul Slams ‘Fat Cats’ With Hedge Fund in Top Donors (BBG)

This week's "Things To Ponder" is focused on things that, in my opinion, far too many individuals are ignoring. Bob Farrell once wrote that "when all experts and forecasts agree; something else is bound to happen." Today, that is the case as much as it ever was. Despite rising geopolitical risks, weak economic data, deteriorating fundamentals and softer internals - the overwhelming belief is "equities are the only game in town." Of course, we have seen this mentality many times in past history whether it was 1929, 1987, 2000 or 2007. While every market peak was different, there were all the same.

In what appears to be the first real action post-Flash Boys, NY AG Eric Schneiderman will announce at 4pm ET that Barclays will be sued over fraud allegations related to its Dark Pool's preferential treatment of high-frequency traders. As Bloomberg notes, Barclays runs one of the market's largest dark pools. This comes 2 months after the NY AG sent requests for information to various major HFT shops. It seems, just as we noted here, that a potential scapegoat is being primed 'just in case' this 'market' can't withstand the Fed's pullback.

• Obama Administration Widens Export Potential for U.S. Oil (BBG)
• WTI Pares Gains as U.S. Export Ruling Seen Limited (BBG)
• Senator Cochran defeats Tea Party rival in Mississippi Republican runoff (Reuters)
• Militants attack Iraq air base, U.S. assessment teams deploy (Reuters)
• Maliki rules out national emergency govt (AFP)
• Koch to Start EU Power Trading as It Plans LNG Expansion (BBG)
• Obama Said to Ready Sanctions on Russian Industries (BBG)
• Ghana Sends Plane With $3 Million to Calm World Cup Team (BBG)
• Ghana’s First Hedge Fund Planned by Ex-Exchange Regulator (BBG)
• SEC Is Gearing Up to Focus on Ratings Firms (WSJ)
• Abe Declares Deflation End as Growth Plan Confronts Skeptics (BBG)

• The Kerry Konfusion Kontinues: Kerry urges Kurds to save Iraq from collapse (Reuters)
• Abe Unveils Japan’s New Growth Strategy (WSJ)
• Because the recovery: Avon to Cut 600 Jobs as CEO McCoy Seeks to Trim Expenses (BBG)
• Iraqi Parties Pressure Prime Minister Nouri al-Maliki to Step Down (WSJ)
• Ukraine Rebels Call Cease-Fire to Match Government Truce (BBG)
• IRS accused of obstruction over lost emails in Tea Party affair (Reuters)
• IRS chief scorched as 'liar' (WND)
• Big Investors Missed Stock Rally (WSJ)
• U.K. Jury Finds Coulson Guilty of Conspiracy to Intercept Phone Voice-Mail Messages (WSJ)
• HSBC to halve countries served by private bank, sells assets (Reuters)
• Bond Market Has $900 Billion Mom-and-Pop Problem When Rates Rise (BBG)

• The Man Who Broke the Middle East (Politico)
• Kerry presses Maliki as Iraq loses control of Syrian, Jordanian borders (Reuters)
• Hank Paulson takes on global warming next: The Coming Climate Crash - Lessons for Climate Change in the 2008 Recession (NYT)
• In Yellen We Trust Is Bond Mantra as Inflation Threats Dismissed (BBG)
• After port fraud, China's vast warehouse sector under scrutiny (Reuters)
• Draghi Says Unlimited Cash Through 2016 Is Rate Signal (BBG)
• Tapes Said to Reveal Polish Minister Disparaging U.S. Ties (NYT)
• CDC reassigns director of lab behind anthrax blunder (Reuters)
• BNP set to receive ban to transact in USD as part of $9 billion settlement (WSJ)
• GE Clears Last French Hurdle to Clinch Alstom Deal (BBG)
• Al Jazeera journalists jailed in Egypt, supporters stunned (Reuters)
• ISDA Asked to Rule If Argentina Credit-Default Swaps Triggered (BBG)

As oil prices have risen on geopolitical concerns (that have been printed away by central banks in stocks), so gas prices at the pump in the US have risen to their highest for this time of year since 2008 (and that did not end well). We are not alone in our concern as Morgan Stanley's (and esx Fed) Vince Reinhart warns that a more extreme jump in oil prices would be enough to stall the recovery (lowering real GDP growth by 1.7 percentage points one year out; and perhaps more worryingly, raise CPI growth by about 3.6pp, lowering real consumer spending growth by a full two percentage points).

• Must be an early winter: Housing Falters as Forecasters See U.S. Sales Dropping  (BBG)
• China Property Failures Seen as $33 Billion in Trusts Due (BBG)
• Polish Prime Minister Says Recording Scandal May Trigger Early Election (WSJ)
• Iraqi forces ready push after Obama offers advisers (Reuters)
• Priorities: U.S. cuts aid to Uganda, cancels military exercise over anti-gay law (Reuters)
• Kurds' Takeover of Iraqi City of Kirkuk Strengthens Their Hand (WSJ)
• U.S. says government lab workers possibly exposed to anthrax (Reuters)
• Netflix Up 21% With Tesla: The best U.S. stocks this month are ones that just a few months ago were the biggest losers (BBG)
• Architects of Iraq Invasion Return to Blame Obama (BBG)
• Nato claims Moscow funding anti-fracking groups (FT)
• Lawmakers Skeptical GM Bosses Were Unaware of Defect (WSJ)
• Corinthian Colleges Warns of Possible Shutdown (WSJ)
• Taiwan's Quanta to start mass production of Apple's smartwatch in July (Reuters)

It feels like it was only yesterday when we wrote about the plight of what was once supposed to be the ultramodern east-coast competitor to the glitzy kitsch of Las Vegas: Atlantic City's Revel casino which back in February 2013 "filed for bankruptcy ten months after opening." Well, a short 16 months later it is time for an update because Revel, which was supposed to have a viable balance sheet upon emergence from its first Chapter 11 filing, just filed for bankruptcy for a second, and most likely final time: the dreaded "Chapter 22." And not only did the company admit its business model is not viable not due to its overlevered balance sheet, but because of the sad state of the economy and the AC gambling market, it also warned it may shut down permanently if it can't find a buyer in bankruptcy court.