Today's quote: "The foreign policy of the American ruling class has had the most horrifying consequences for the peoples of the countries targeted. The war fomented by the United States in Syria has reduced the population of that country from 23 million to about 17 million, killed up to half a million people, and displaced over 13 million....Nobody should believe that the criminal cabal that runs US foreign policy will proceed with any more deliberation or caution in launching a war whose body count will be in the hundreds of millions, if not billions, than it does in plotting wars in which “mere” millions of lives are squandered." Andre Damon, WSWS
1--Memo to Janet Yellen: Play with the currency markets at your own risk
"Any equivocation by Ms. Yellen will be met with a dollar rout in the FX market," Schlossberg predicted. "Stakes are higher than normal."
"The currency market is already, at best, skeptical that the Fed will raise rates this year," and if Yellen doesn't reassure traders that she will do so, the U.S. dollar/Japanese yen cross "will crash below 100 and most likely break the post-Brexit lows of 98," Schlossberg said.
Given the greenback is currently trading at 100.53 yen, that would represent a huge move for a major currency pair.
In recent days, Dallas Fed President Robert Kaplan, Kansas City Fed President Esther George and, most importantly, Fed Vice Chairman Stanley Fischer have all indicated that a rate hike could still be appropriate this year. Last week, New York Fed President William Dudley said September remains on the table.
"It seems unreasonable to expect Yellen [to] substantially deviate" from these views, Brown Brothers Harriman currency strategist Win Thin wrote Thursday
"For example, future policymakers may wish to explore the possibility of purchasing a broader range of assets, Yellen said
3---Say goodbye to retirement: Japanese Government Squanders Pension Funds On Failed Stocks As Losses Reach $130 Billion In Past Year
Japanese stocks are down about 22% in the past 12 months which represents about $60BN of losses or 4.5% of GPIF assets.... deputy director-general of investment strategy, Shinichiro Mori, points out, the GPIF will maintain the status quo as "stock markets are on a recovery trend." (Stocks will bounce back!....Not bloody likely)
While not as dire as the recent analysis by Deutsche Bank which calculated that a recession over the next 12 months is more than likely, with odds rising to 60%, overnight JPM released its latest recession probability analysis, and - somewhat unexpectedly following the last two stellar job reports and a full court political press that the recovery has rarely been stronger going into the election - now sees a 37% chance of a recession in the next 12 months. This is the highest recession probability calculated by Jamie Dimon's bank during the current economic cycle, and matches the odds first laid out in early July.
While the rising odds of a US recession are not surprising on their own, what is notable is that even JPM highlights the disconnect between the economy and the financial markets, observing that "as risk markets have rallied somewhat since our last update, the probability from the model based on macroeconomic data is now considerably above our models based on financial markets", confirming once again how distorted the relationship between the markets, supported by central banks, and the underlying economy has become...
After dropping to 30% on July 8, our preferred macroeconomic indicator of the probability that a recession begins within 12 months has risen back to 37%, equaling its high for the expansion....
As risk markets have rallied somewhat since our last update, the probability from the model based on macroeconomic data is now considerably above our models based on financial markets (in other words, stock prices are grossly inflated and doomed to plunge)...
But the most notable development in the near-term data has been the deterioration in the business sector sentiment surveys, particularly for nonmanufacturing...
This morning’s GDP report also included the first read on corporate profits in the second quarter. The report incorporates preliminary data from the Census Bureau’s Quarterly Financial Report, which includes private businesses, in addition to earnings reports from public companies. Profits fell significantly short of our forecast, and the margin measure that enters our recession model moved down, raising the model’s “background risk” of recession to 35%
5--Will wonders never cease? From Bench to Benchmark: Jose Canseco Is Twitter’s Favorite Financial Analyst-- Jose Canseco tosses out quips on Brexit, Japanese monetary policy
Jose Canseco, who slugged his way through the major leagues, has now developed a cult following after some of his contrarian predictions about financial markets came true....
When political pundits and London bookies confidently predicted that Britain would vote to remain in the European Union, the 1988 Most Valuable Player for the Oakland A’s was already warning of the damage Brexit was going to bring.
Mr. Canseco also warned in February of a housing-market bubble in Vancouver. This month, the Canadian city began to impose a new tax on foreign buyers in an effort to curb prices....
More recently, Mr. Canseco has been stressed out over the Bank of Japan 8301 0.28 % ’s ultraloose monetary policy. “Kuroda-San buddy u are drying up your short term money market - will be lehmanish crises and banks won’t be able to raise capital will fail,” he tweeted recently.
He also penned a haiku that compared Haruhiko Kuroda, head of Japan’s central bank, to the famed Austrian School economist Ludwig von Mises.
Next helicopter money
Kuroda Von Mise
Almost no one is criticizing President Bush's pledge to maintain American military hegemony. This silence is curious, considering the flap that occurred the last time such an assertion was made. In 1992, staffers working for Paul Wolfowitz (then the No. 3 Pentagon official, now No. 2) drafted a planning document that suggested the United States should "maintain the mechanisms for deterring potential competitors from even aspiring to a larger regional or global role."
This mild language - which referred to "mechanisms," not brute strength - provoked fits in official Washington. As Andrew Bacevich reminds us in his forthcoming book "American Empire," Sen. Alan Cranston of California attacked the Bush administration for proposing to make the United States "the only main honcho on the world block, the global Big Enchilada." ...
Now the Big Enchilada doctrine is back. The new Bush strategy proclaims: "Our forces will be strong enough to dissuade potential adversaries from pursuing a military buildup in hopes of surpassing, or equaling, the power of the United States." This is even stronger language than that used a decade ago....
If America is serious about remaining the Big Enchilada, it will have to spend more for defense. This is not a welcome implication for the White House, which, after throwing a pork fest in the farm bill, wants to hold the line on the defense budget.
Democrats, for their part, can't be too happy with a second implication of the predominance doctrine: Any nation with so much power always will be tempted to go it alone. Power breeds unilateralism. It's as simple as that.
Oh, sure, American presidents may pay lip service to allies, but when push comes to shove, we just don't need anyone else's help very much. It's not just George W. Bush who feels this way. Judging by his unwillingness to defer to the United Nations in Bosnia (1995), Iraq (1998) and Kosovo (1999), so did Bill Clinton.
Get used to it. If the non-reaction to the National Security Strategy is any indication, we're all hegemonists now.
7--Pretty funny: Take note, Tony Blair: why jewellery looks so bad on men--They think it makes them more youthful. In fact, it shows us they’re desperate
The only thing a medallion arouses is our suspicions....
It is extremely hard for men to look good in bling. Almost without exception, it doesn’t look like a jaunty bit of self-decoration, but like a cry for help; the external manifestation of a bleak chunk of self-doubt. Tony Blair is just another tragedy in trinketdom, a wannabe medallion man who looks as if he might be auditioning for Godspell. Men, you have been warned. You are no spring chickens. Step away from the nuggets.
US sanctions are threatening to derail Russian energy major Rosneft’s acquisition of a 49 percent stake in India's Essar Oil, reports The Times of India.
In July 2014, the Department of the Treasury included Rosneft on the list of sanctioned Russian companies after Washington accused Moscow of involvement in the military conflict in Eastern Ukraine and of annexing Crimea.
Indian banks, which invested over $5 billion into Essar Oil and currently hold 17 percent, expressed concerns over the deal due to fears of the potential consequences.
“We may have to review our exposure to Essar Oil if Rosneft comes on board,” said a top banker with a state-run lender, as quoted by The Times of India.
However, Essar Oil will reportedly try to push the deal with Rosneft through, allowing the Russian company to enter the Indian energy market.
Searching to expand cooperation with Russia beyond the traditional defense buyer-supplier relationship, New Delhi has invested over $5 billion in the Russian energy sector.
The Essar-Rosneft deal aims to open up India's retail energy business to the world's largest oil producer.
The deal was planned to be sealed by June. The Indian company had to reduce the share intended for sale by 25 percent, but the measure failed to change the situation.
--Soon after Biden told a news conference with the Turkish Prime Minister that the PYD “ would never get US support again” if it crossed the Euphrates,the PYD announced they were pulling back their units, although the SFA would remain. Within hours of the tank offensive, Erdogan had achieved one of his objectives, but it is not the US who is driving change in this battlefield but Turkey.
The tectonic plates of this conflict have shifted again, with or without NATO’s or the Pentagon’s assent. The US faces nowhere near as many challenges from its enemies in the Middle East as it does from its allies. And as Russia demonstrates, there is no more dangerous an ally than an ally scorned.