Poland

The markets seem to sense that all of this. In the US we’re putting in what looks like a lower high. The market appears to be forming a Head and Shoulders pattern.

With Obama's initial punt to Congress backfiring terribly, as there was no way the president's Syrian attack proposal would garner the required majority in the House, the time came for damage control. And the White House, ever expedient, decided to spin the backtracking as Obama's original idea from the offset, and make it seem that a diplomatic "solution" in which the Syrian chemical weapons were contained was the whole point of the intervention. This, of course, ignores some quite blatantly obvious admissions by the White House itself, namely that the ultimate goal was always regime change in Syria. Nonetheless, stuck in a corner, that was the White House' story, and they are sticking with it. What is ironic, is that almost concurrently with the shift in narrative, others promptly came up demanding credit for the "diplomatic "solution." First, it was Poland. And now, not surprisingly, Russia jumps at the opportunity to take credit for what it deems its response to a tiny slip uttered by John Kerry on Monday.

Our bloated government needs to stop controlling and start serving. Providing its "less wealthy" citizens the very same investment freedoms that it grants its wealthier ones would be a good start.

These days, you could put ‘safety and security’ in front of just about anything and get people to readily comply. Well, OK. After all, who is against ‘safety and security’? Only criminal terrorists, apparently. This is now the easiest way for governments to exact their agendas... whether it’s invading new countries, monitoring all Internet activity worldwide, or bailing out the big banks at taxpayer expense. Apparently the citizenry has become so scared that we collectively lay down and let governments walk all over us. At this point, the Founding Fathers’ list of grievances nearly pales in comparison to the indignities and injustices to liberty that people suffer today under their government. We’ve been talking about this trend for four years now. This is no longer theory. It’s real. It’s happening. And it’s coming soon to a bankrupt, insolvent nation near you. Have you hit your breaking point yet?

In the US, retail sales on Friday will be the main data release. In addition, Congress will return from its 5-week recess on Monday and will likely keep their focus on Syria this week. Finally, San Francisco Fed President Williams (who does not vote on FOMC policy this year) will speak on Monday. Last week, Williams argued that the FOMC should maintain its focus on the unemployment rate, despite its limitations. After Friday's employment report saw the unemployment rate drop again due to falling participation, this issue is likely to resurface. The Fed's communication blackout period begins on Tuesday so Williams will be the last FOMC speaker before the September meeting ends on the 18th.

As most know by now, over the past month or so, pressure on the currencies of EM deficit countries has intensified again. Goldman's EM research group, however, remains negative on EM FX, bonds, and even stocks suggesting using any strength, like this week's exuberance to add protection or cover any remaining longs.  Central banks in most of these countries have become more active in attempting to stem pressure in the last two weeks. But with a Fed decision on ‘tapering’ looming, investors have also become more cautious and are now focused on the parallels with prior crisis periods. In what follows, Goldman provides some concise answers to the questions on the EM landscape that we encounter most often, confirming their longer-held bearish bias.

This is at least the 3rd country to take citizen and private corporation's money in order to make themselves whole after profligate spending. How many times must I warn before the message is taken seriously? Interest rates should be spike through the stratosphere, Bernanke or not!!!

To summarize:

1. Government has too much debt to issue more debt
2. Government nationalizes private pension funds making their debt holdings an "asset" and commingles with other public assets
3. New confiscated assets net out sovereign debt liability, lowering the debt/GDP ratio
4. Debt/GDP drops below threshold, government can issue more sovereign debt

Just in case one's history textbook had a few extra pages ripped out, this may be a good time to recall just how far one's government is willing to go to start a war under false pretenses.

In Part 1 of this article we documented the insane remedies prescribed by the mad banker scientists presiding over this preposterous fiat experiment since they blew up the lab in 2008. In Part 2 we tried to articulate why the country has allowed itself to be brought to the brink of catastrophe. There is no turning back time. The choices we’ve made and avoided making over the last one hundred years are going to come home to roost over the next fifteen years. We are in the midst of a great Crisis that will not be resolved until the mid-2020s. The appearance of stability is illusory, as the civic fabric of the country continues to tear asunder. Record high stock markets do not trickle down. The masters of propaganda seem baffled that their standard operating procedures are not generating the expected response from the serfs. They have failed to take into account the generational mood changes that occur; propaganda loses its effectiveness in proportion to the pain and distress being experienced by the citizenry.

"The latest numbers that we have received, in particular from Germany, are encouraging, whether it's manufacturing, whether it's service activity, whether it's exports. That is heading in the right direction, but it needs to be sustained over time. And I'm crossing fingers for the eurozone..."

The week ahead will be relatively quiet with few major data releases. The main focus will be on the Flash PMIs in the Eurozone and China as well as the FOMC minutes and Jackson Hole. In the US the relatively new Preliminary PMI has been found useful by our US team in forecasting the ISM. Existing and new home sales are additional data points of interest in the US.  The key focus this week will be on central bank action. Minutes from the FOMC and the RBA will be followed by rate decisions in Thailand and Turkey. Finally, on Thursday starts the annual Jackson Hole conference with lots of Fed speakers, including Yellen next weekend. Chairman Bernanke, whose term ends in January, will not attend.

The middle of the month brings a mixture of second-tier macro numbers punctuated by the market-moving (and Taper-cementing) retail sales report. We get IP, CPI and PPI from the US this coming week. In terms of hard activity numbers, US retail sales on Tuesday will be the highlight which as a reminder is, in addition to Jackson Hole, seen as one of two key pre-Taper catalysts to keep an eye on. Outside the US, the key data will be the quarterly publication of German, French and Eurozone GDP, as well as Japanese GDP, which has already been released (weaker real growth, higher inflation). The second week of the month also tends to show the first survey results with the Phily Fed and Empire surveys on Thursday. In Germany the ZEW will come on Tuesday. Finally, from an FX point of view, we will be focused on balance of payments related data, with the trade balance in India and TIC data in the US. After a few very weak TIC releases in recent months we would expect more evidence of weak capital inflows into the US.

Inflows into equity funds around the world have been presented as the driver of the next leg higher in this 'secular' bull market. As liquidity slooshes around the world (as David Stockman so eloquently described) there is nothing but hot money chasing what 'worked' not what will work... or, as investors have now been conditioned to do, BTFD. US asset gatherers' dissonance is high as they know the pillars of their 'just keep buying' thesis remain wobbly at best (and broken in all honesty) but flows (aside from the fact that retail appears to have just folded) are holding hope ransom for now (oh and the money-on-the-sidelines idiocy meme - buyer meet seller). So what nation saw the largest relative equity fund inflows in the world?

In what some would call a victory for free speech, Lukas Novy, a follower of the Church of the Flying Spaghetti Monster, has been granted permission to wear a sieve on his head in his official ID card. As Prague Daily reports, Novy explains that the plastic kitchenware is a crucial part of his "Pastafarianism" faith. Officials, who initially denied his request, were swayed by his commitment to "His Noodliness," agreeing that this fits in with laws that allows Czech citizens to wear headgear for religious or medical reasons. Think that is 'humorous', look at a chart of TSLA... or listen to any recent 'Abe' speech...