Japan

George Soros Warns Washington To "Mend Relations With China" Or Face World War 3

"Both the US and China have a vital interest in reaching an understanding because the alternative is so unpalatable," Soros wrote in an article for the New York Review of Books, with the danger imminent if Chinese economic reforms fail forcing President Xi Jinping to "foster some external conflicts to keep the country united and maintain himself in power." These "conflicts" would present themselves in the form of a Sino-Russo alliance which could draw the entire world into war.

Frontrunning: June 18

  • WSJ urges Fed to blow uberest of all bubbles: Memo to Fed: Let the Economy Overheat (WSJ)
  • Gunman at large after killing nine at black South Carolina church (Reuters)
  • Nine Dead in Charleston Shooting Labeled a 'Hate Crime' (BBG)
  • Hong Kong Votes Down Beijing-Backed Election Plan (WSJ)
  • Greece Has Already Cost Investors $897 Billion This Year (BBG)
  • Merkel Maintains Tough Stance on Greece as Deadline Looms (WSJ)
  • Small U.S. frackers face extinction amid drilling drought (Reuters)
  • Brian Williams to Stay at NBC, but Lester Holt Will Be Anchor (WSJ)

Dollar Tumbles After Fed Whiffs Again; More Cracks Appear In Chinese Stock Bubble

All those saying the Fed will never be able to raise rate are looking particularly smug this morning, because if the market needed a green light that despite all the constant posturing, pomp and rhetoric, the US economy is simply (never) ready for a rate hike, it got it late last night when Goldman is pushing back its forecast for the first Fed rate hike from  September to December 2015 saying that "in large part this reflects the fact that seven FOMC participants are now projecting zero or one rate hike this year, a group that we believe includes Fed Chair Janet Yellen. We had viewed a clear signal for a September hike at the June meeting as close to a necessary condition for the FOMC to actually hike in September, but the committee did not lay that groundwork today."

Futures Rebound As Yellen's Market-Lifting Track Record Offsets Greek Gloom

With the Fed's June FOMC statement in just over 7 hours and a Yellen press conference to follow shortly, one in which nobody expects the Fed will announces its first rate-hiking cycle in nine years despite repeated clues by Yellen that not only is there froth in the market but that the Fed has no dry powder to contain the next crisis when it emerges (even though a rate hike will catalyze the next crisis), traders have chosen to ignore the chatter from Greece which is getting worse by the hour, and unlike recent days, have bought risk overnight based on one simple technical: of the five press conferences in ten Fed meetings held by Yellen as Chairman, the S&P finished higher 80% of the time.

The Two Contending Visions Of World Government

U.S. President Barack Obama’s proposed ‘Trade’ deals are actually about whether the world is heading toward a dictatorial world government - a dictatorship by the hundred or so global super-rich who hold the controlling blocks of stock in the world’s largest international corporations - or else toward a democratic world government - which will be a global federation of free and independent states, much like the United States was at its founding, but global in extent. These are two opposite visions of world government; and Obama is clearly on the side of fascism, an international mega-corporate dictatorship... What’s at stake here is nothing less than whether the future of the United States, and perhaps even of the world, will be democracy, or else fascism.

Peak Oil: Myth Or Coming Reality?

In short, we have yet to see evidence that we are nearing a peak in oil production. On the contrary, agencies like EIA and IEA have predicted a stable increase in crude oil production for the next few years at least. But supplies may not be the only, or even the most important factor when analyzing the end of the oil era. The world is making progress at moving beyond oil. So instead of discussing Peak Oil in terms of supply, perhaps it is now more useful to analyze ‘Peak Demand’.

According To Bank of America, This Is "The Biggest Risk To Global Equities"

"While most are focused on the risks around a withdrawal of liquidity, we believe the biggest hit to confidence could be the opposite: if another round of US QE is necessary to prop up the economy," BofAML says, suggesting the Fed is now cornered as raising rates risks destabilizing markets and QE4 risks betraying the futility of successive central bank interventions.

China Mocks G7 As "Gathering Of Debtors", Warns "Confrontation Will Be A Disaster For Europe"

"Since the very beginning of the establishment of the G7, it has been a rich-man's club that consists of Western major powers and aims to maintain the collective hegemony of the US-led West. Whether the G7 will become a geopolitical tool or a Cold War relic largely depends on European countries. Unlike the US, Europe shares a closer geopolitical and economic links with Russia. If the G7 becomes a platform for the confrontation between the West and Russia, it will undoubtedly be a disaster for Europe."

Saxobank CIO: Credit Cycle Has Peaked, Gold Will Be Best-Performing Commodity

"Forget the 1930s; inflation is different this time," says Saxobank's Steen Jakobsen, warning that while there may be a summer of growth in Europe, hell will come afterwards, "European 'cost advantage' is disappearing fast and furiously – enjoy the summer of growth – afterwards, you can expect: zero growth, zero reform and higher inflation 'expectations'... The credit cycle has peaked... and Gold will be the best performer in commodity-led rally - we see 1425/35 by year-end."

European Stocks Slide, Greece Tumbles But US BTFDers Emerge After Collapse In Greek Bailout Talks

European shares remain lower, close to intraday lows, with the banks and autos sectors underperforming and food & beverage, retail outperforming. Tsipras hardens Greek stance after collapse of bailout talks. The Italian and Swedish markets are the worst-performing larger bourses, the U.K. the best. The euro is weaker against the dollar. Greek 10yr bond yields rise; Spanish yields increase. Commodities decline, with copper, nickel underperforming and natural gas outperforming. U.S. Empire manufacturing, net TIC flows, NAHB housing market index, industrial production, capacity  utilization due later.

The Futility Of Our Global Monetary Experiment

The Fed’s balance sheet grew eight times more rapidly than the economy during the last fourteen years. That’s just the inverse of the relationship that occurred back in the Golden Era. if you need any proof at all of this massive intrusion into the financial system isn’t working; the huge amount of money printing and balance sheet expansion; the unremitting financial repression and pegging of interest rates; look at that fundamental comparison. The only thing it’s really doing is simply inflating the serial bubble that ultimately reach unsustainable peaks and collapse. Hopefully on the third strike, the people who gave us these bubbles will be out.