Category: zerohedge

Health officials in Gaza said 28 Palestinians were killed since the Israeli ground offensive began late Thursday, and as WaPo reports, Prime Minister Benjamin Netanyahu said Friday that he has ordered Israel's military to prepare for "a significant expansion" of its ground offensive into the Gaza Strip, declaring that tunnels built by Hamas could not be destroyed solely through airstrikes. As The Guardian reports, according to military analyst Alex Fishman, writing in Yedioth Ahronoth: "The tanks, which serve as the heart of the assault force, received an order to open fire at anything that moved." Hamas warned Israel of the "dreadful consequences" of the conflict's escalation, while the US urged its close ally to restrict itself to a "precise" operation.

 

 

Israeli troops entered the Gaza Strip at 10.30pm local time on Thursday, under massive supporting fire from air, sea and land.

According to military analyst Alex Fishman, writing in Yedioth Ahronoth: "The tanks, which serve as the heart of the assault force, received an order to open fire at anything that moved. The area and the targets are due to be seized by the morning hours. From here on, [the army] will start to clear the ground, in what could last for several days, depending on political developments."

 

The initial aim is to destroy tunnels dug by Hamas from Gaza into Israel for the purpose of launching attacks, and to secure and expand the "buffer zone" inside Gaza's perimeter in order to prevent short-range rocket launches into Israel.

 

However, Hamas is likely to attempt to suck Israeli troops deeper into Gaza, increasing the risk of military casualties.

And the Ground Operation is expanding…

Israeli Prime Minister Benjamin Netanyahu said Friday that he has ordered Israel's military to prepare for "a significant expansion" of its ground offensive into the Gaza Strip, declaring that tunnels built by Hamas could not be destroyed solely through airstrikes.

 

The mobilisation of a further 18,000 reservists was authorised overnight, bringing the total on standby to about 60,000 in addition to those in service.

 

"In light of Hamas's incessant criminal aggression and dangerous infiltration into Israeli territory, Israel must act to protect its citizens," a statement from the prime minister's office said.
 

As The Guardian reports, the US supports Israel (for now)…

The US called on Israel to restrict itself to a "precise operation" on the ground in Gaza while stressing its right to defend itself against rocket attacks.

In a statement late on Thursday, the state department said Netanyahu had telephoned the US secretary of state, John Kerry, to explain his decision "to launch an operation to target the threat of further terrorist infiltration through tunnels into Israel".

It continued: "The secretary reaffirmed our strong support for Israel's right to defend itself against terrorist threats emanating from tunnels into Israel and expressed our view that this should be a precise operation to target tunnels, as described in a statement from the Israel Defence Forces."

It said Kerry emphasised the need to "avoid further escalation and to restore the 2012 ceasefire as soon as possible".

Hamas responded to the invasion with characteristic rhetoric.

"We warn Netanyahu of the dreadful consequences of such a foolish act," Hamas official Sami Abu Zuhri told Reuters.

A statement issued by Hamas warned Israel: "We're with you in the field, and we aren't afraid of the ground assault."

A senior Israeli military source told Yedioth Ahronoth news website

"There were altercations overnight but we are progressing as planned. As of now, some 14 terrorists have been killed in targeted attacks on rocket launching cells."

Gaza claims 28 Deaths so far… (via WaPo)

Health officials in Gaza said 28 Palestinians were killed since the ground offensive began late Thursday, bringing the total Palestinian death toll to more than 260, with the injured topping 2,000, since the conflict erupted 11 days ago. The most recent fatalities included three children who perished in an airstrike on a residential tower in Beit Lahiya in northern Gaza, according to the Gaza Health Ministry.

The Social Media blitz continues…as the operation is played on in real time:

"We have hit Hamas hard, and we will continue to hit Hamas hard," said Israel's military in a Twitter feed shortly after thousands of Israeli soldiers entered Gaza.

Read more here…

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By EconMatters  

 

 

2012-2014 Period

via Zero Hedge http://ift.tt/1mWcB3T EconMatters

The Euro is tumbling as Italy slashes economic growth expectations:

• *BANK OF ITALY SEES ITALY GDP UP 0.2% THIS YR, 1.3% IN 2015
• *BANK OF ITALY SEES DOWNSIDE RISKS FOR ITALY GROWTH EST. THIS YR

The Bank of Italy expected 0.7% growth for 2014 in January and this shift lowers the estimate below consensus. Of course, there’s no need to wqory about a triple-dip recession as Italy raised its 2015 estimate from 1.0% to 1.3% – hockey sticks are back…

 

Bank of Italy slashes 2014 growth expectations…

 

and that resulted in what Draghi could not manage…

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China’s attempts to “reign in” its credit and housing bubble (to “taper”, if you will) and to deleverage its financial sector, so widely trumpeted over a year ago just before its banking system nearly locked up overnight, are rapidly becoming the biggest joke in finance, just after anything relatedd to the Fed of course. Sure enough, confirming that the reason for the epic surge in Chinese lending over the past few months (a topic we will touch upon later) was making sure that the all important housing bubble doesn’t pop (at least not yet, recall: in China housing is a far more critical bubble than the stock market which is widely ignore by most as a “wealth effect” mechanism), was data released overnight showing how Chinese home prices reacted following the last few months of credit conservatism and destruction courtesy of the commodity funding deal rehypothecation scandal. In short: not good.

As summarized by Bloomberg, China’s new-home prices fell in a record number of cities tracked by the government as developers cut prices to boost sales volume.  Prices fell in a record 55 of the 70 cities last month from May, the National Bureau of Statistics said in a statement today, the most since January 2011 when the government changed the way it compiles the statistics.

What’s worse, and as can be seen on the chart below, prices in Shanghai and the southern city of Guangzhou fell 0.6 percent each from May, the biggest drop since January 2011, while they declined 0.4 percent in Shenzhen. Prices fell 1.7 percent in the eastern city of Hangzhou, the largest monthly decline among all the cities.

At the national level, China recorded a 0.48% sequential decline in home prices: the largest since at least 2010. And slamming the nail in the Chinese housing market, at least for now, is that the Average Sale Price dropping by 1.5% Y/Y, the biggest drop since Lehman!

Some more details from BofA:

Prices of new commodity residential properties for 70 medium-to-large-sized cities surveyed by the National Bureau of Statistics (NBS) increased by 4.3% yoy in June compared with 5.6% in May. The number of cities with higher home prices mom was 8 in June, down 7 from 15 in May, while the number of cities with lower home prices mom was 55 in June, up 20 from 35 in May.

 

In June, Soufun’s 100-city average new home price index rose by 6.5% yoy compared to 7.8% in May. Divergence in home price growth narrowed slightly among the different tiers of cities in China as all of them experienced negative mom growth. June new home price growth was 14.3%, 4.6% and 0.8% yoy, respectively for Tier-1, Tier-2 and Tier-3 cities, down from 16.6%, 6.4% and 1.9% yoy in May.

 

National average sale prices (ASP) of new homes was RMB6,033/sqm in June, down by 1.5% yoy compared to 1.2% decline recorded for May.

Back to Bloomberg which reports that some Chinese cities started to relax property curbs to stimulate the local market, while developers have cut prices since March to lure buyers. The central bank in May called on the nation’s biggest lenders to accelerate the granting of mortgages, and urged them to give priority to first-home buyers.

Housing Minister Chen Zhenggao urged cities with high housing inventories to reduce them “with all means,” 21st Century Business Herald reported today, citing an unidentified local housing official who participated in a meeting that Chen held. Local authorities could set policies to stabilize their property markets based on local conditions, according to the paper.

…

“The current biggest problem of China’s property industry is that the housing inventories are too high,” said Liu Li-Gang, chief Greater China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong in a phone interview today. “But the declines are still not very big. With more cities relaxing curbs and the economy stabilizing, the property market will gradually stabilize.”

Lowering prices to clear out excess inventory? What a novel concept. Too bad it will never be tried in the US. Or China for that matter, because should the ongoing home price collapse continue, the impacts on the bad loans held by China’s semi-nationalized financial system will be dire. Which is why we expect that the recent surge in credit injection, which in Q1 was the highest on record as tracked by financial assets in the local banking system, will accelerate and blow out all previous records. In doing so, and especially if China indeed blocks all liquidity conduits to divert local cash offshore, expect Chinese inflation to finally pick up once again as it did in 2011, when it sent the price of gold to an all time high in the process.

As for China’s “deleveraging”, may it rest in piece.

via Zero Hedge http://ift.tt/1oQQjNA Tyler Durden

Despite a full court press of PR to confirm HFT firms are friends of retail investors and do no wrong; the SEC, it appears, sees it differently. While Mary White has confidently explained the market is not rigged, her agency is now actively seeking tips, complaints, or referrals that show, as The Chicago Tribune reports, evidence of abuse of order types, as well as traditional forms of abusive trading like “layering” or “spoofing” and other issues relating to high-frequency trading that might be violations of the law. Here are the 10 firms (including poster child holy-grail trader Virtu Financial) that the SEC is probing… can you spot the oddly missing one…

 

Via The Chicago Tribune,

The U.S. Securities and Exchange Commission has been seeking information on 10 registered broker dealers as part of an ongoing investigation into high-frequency trading strategies, according to an internal SEC document reviewed by Reuters.

 

The firms listed are Allston Trading LLC; Hudson River Trading LLC; Jump Trading LLC; Latour Trading LLC, which is an affiliate of Tower Trading; Merrill Lynch, Pierce, Fenner & Smith, owned by Bank of America Group; Octeg LLC, which has been merged into a unit of KCG Holdings Inc; Tradebot Systems Inc; Two Sigma Investments LLC; Two Sigma Securities LLC; and Virtu Financial.

 

They are all some of the largest trading firms in the U.S. Allston and Jump are both based in Chicago. Hudson River, Latour, Merrill, Two Sigma, and Virtu are headquartered in New York. KCG is in Jersey City, New Jersey, and Tradebot is based in Kansas City, Missouri.

 

Jump, Latour, Bank of America, Hudson River, Tradebot and KCG declined to comment. The other firms did not immediately respond to a request for comment.

 

Their number and the open-ended quest for information shows that the SEC is casting a wide net as it looks to unearth wrongdoing in the marketplace.

 

…

 

A number of government agencies, including the SEC, New York State Attorney General Eric Schneiderman’s office, the Commodity Futures Trading Commission and the Federal Bureau of Investigation have said they had active probes into high-speed and automated trading.

 

The SEC has been seeking evidence of abuse of order types, as well as traditional forms of abusive trading like “layering” or “spoofing” and other issues relating to high-frequency trading that might be violations of the law, SEC Director of Enforcement Andrew Ceresney told Reuters in May.

 

Spoofing and layering are tactics where traders places orders that they cancel before they are executed to create the false impression of demand, aiming to trick others into buying or selling a stock at the artificial price.

*  *  *
While this list is notable (and wide) as Reuters notes, there is one name missing that surprised us… arguably the ibggest of all – Citadel… (too busy enabling the NYFed’s VIX-selling machinations we assume is not considered rigging)

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As expected following promises by virtually all carriers yesterday, today there is a literal “air pocket” above Ukraine, as seen in the most recent update of European air traffic via Flightradar24.com. Expect this pattern to remain well into the future as no airline will ever again, or certainly for the next several years, want to incur liability associated with having a plane shot down after the MH 17 tragedy.

So aside from air traffic patterns, here is a compilation of actions by Ukraine, Russia, U.S., EU, including effects on global markets, courtesy of Bloomberg

POLITICS:

• Russian President Putin says jet crash shows need to resolve crisis; sends condolences to Dutch PM Mark Rutter
• Blames Ukrainian government responsible on eastern fighting
• Expected to attend Brisbane G20 meeting in Nov.: Australia
• Ukrainian Foreign Minister Klimkin says “terrorist” calls on crash intercepted
• Rosneft says “illegitimate” sanctions won’t deter investments

WHAT TO WATCH:

• German Chancellor Merkel says destruction of MH17 won’t on its own cause additional sanctions against Russia
• U.S. says Russian-made missile struck Boeing 777 jet
• Russia Sees Evidence of Ukraine Anti-Aircraft Tracking Yday: RIA
• Ukraine needs to prepare for full halt of Russian trade: IFX
• European banks seen bowing to U.S. ban on Russia over fines
• Separatists’ deleted posts suggest jet strike mistake: AFP

MARKETS:

• Yield on 10-yr ruble bonds down 5bps to 8.87%
• Ruble appreciates 0.5% vs euro-dollar basket
• Micex -1.7% to 1,416.74, falling for fifth day in worst week since April
• Hryvnia strengthens 0.8% to 11.63 per dollar

Source: BBG

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• Ukraine Says Malaysian Airliner Shot Down Near Russian Border (BBG)
• Downing of airliner seen as pivotal moment in Ukraine crisis (Reuters)
• Malaysian Air Flight Took Route Avoided by Qantas, Asiana (BBG)
• Russian-Made Missile Hit Malaysia Jet, U.S. Officials Say (BBG)
• Netanyahu Orders Military to Ready Wider Gaza Incursion (BBG)
• Silvio Berlusconi Underage Sex Conviction Overturned (WSJ)
• But… but… “economic patriotism” – AbbVie to Buy Shire for $54.8 Billion as Drug Deals Surge (BBG)
• SEC targets 10 firms in high frequency trading probe – SEC document (Reuters)
• Art bubble pop: Sotheby’s to Lay Off ‘Modest’ Number of Employees (WSJ)
• Moar Abenomics: Hermes Sales Trail Estimates as Japanese Revenue Declines (BBG)
• Clinton Says EU Must Lead Response to Plane Downing (BBG)
• Under Pressure, Twitter Tries to Resize Itself (WSJ)
• RBS Said to Be Unwinding Distressed Unit as Head Departs (BBG)
• China Finds Debt Addiction Hard to Break in Growth Quest (BBG)
• Bitcoins Can’t Shake Bubble Image in Poll After 45% Drop (BBG)

 

Overnight Media Digest

WSJ

* A Malaysia Airlines plane carrying 283 passengers and 15 crew crashed Thursday in the battle-torn east Ukraine region of Donetsk, where U.S. intelligence agencies say it was struck by a ground-to-air missile. The U.S. agencies are divided over whether the missile was launched by the Russian military or by pro-Russia separatist rebels, who officials say lack the expertise on their own to bring down a commercial airline in midflight. (http://on.wsj.com/1mZNwEO)

* The White House late Thursday said the United States is “shocked” by the downing of a Malaysia Airlines flight near the Ukraine-Russian border and blamed Russia for fueling tensions that may have led to the disaster. (http://on.wsj.com/1tccimf)

* SoftBank Corp said Friday that Google Inc Chief Business Officer Nikesh Arora will join the company in October as vice chairman and chief executive of SoftBank Internet and Media. (http://on.wsj.com/1tYxssg)

* Microsoft said it plans to eliminate up to 18,000 jobs and take charges to earnings of up to $1.6 billion over the next year to streamline its operations following the recent acquisition of Nokia’s devices and services business. (http://on.wsj.com/1wCkRXL)

* Twitter Inc is expected to unveil as many as four new metrics later this month that it hopes will illustrate its reach beyond the 255 million users that log in at least once a month, according to people familiar with the matter. (http://on.wsj.com/Wgx0Xb)

* The Justice Department charged FedEx with transporting prescription painkillers that the United States said had been sold illegally. (http://on.wsj.com/1qMBRJ7)

* Federal energy regulators said parts of a proposal to beef up the electric grid’s security were inadequate and asked for revisions from the industry group that wrote it. In an unusual move for the Federal Energy Regulatory Commission, the agency on Thursday told the group that it should correct weaknesses in its proposed plan. The commission said to consider broadening the definition of equipment and facilities deserving protection and asked the group to allow the federal government to designate additional facilities eligible for increased security. (http://on.wsj.com/1rlC3mm)

* The U.S. Department of Justice is suing energy company Entergy Corp for failing to submit required proof of its affirmative-action programs. The complaint, filed in U.S. District Court in New Orleans Thursday, alleges Entergy has refused repeated requests from the Department of Labor’s Office of Federal Contract Compliance Programs. (http://on.wsj.com/1zOYJOf)

* Sotheby’s plans to lay off a “modest” number of its global workforce by the end of the year as it takes a harder look at its operations, according to a statement issued by the auctioneer on Thursday. (http://on.wsj.com/1zOZ5nX)

* Airbus and Boeing padded their deep order backlogs with $115.5 billion in jet deals at the Farnborough air show. Airbus beat Boeing in the annual air-show bragging-rights contest, recording deals for 496 jets compared with the 201 plane sales that Boeing made. Airlines typically get big discounts, and several of the deals still need to be finalized. (http://on.wsj.com/1p1DvH5)

* A New Zealand court stalled Danone SA’s legal action against Fonterra Co-Operative Group, saying it was best to wait for the outcome of a separate international-arbitration hearing. The French food maker is seeking compensation for costs incurred last year when it was forced to recall baby-milk products following a food-safety scare associated with dairy products supplied by Fonterra. (http://on.wsj.com/1p1DAL2)

* Investigators are examining nearly four dozen hedge funds, asset managers and other investment firms to determine whether they violated insider-trading rules after receiving a tip from a Washington research firm. (http://on.wsj.com/1latqU4)

 

FT

Google’s net revenues rose 25 percent during the second quarter, driven by new forms of product-related search advertising. However higher operating costs left its earnings below Wall Street expectations.

Sue Wagner, a co-founder of the world’s biggest money manager BlackRock, has been appointed to Apple’s board, becoming the company’s second female director as part of a push for greater diversity by Chief Executive Tim Cook.

Time Warner shares rose further above Twenty-First Century Fox’s $80 billion offer on Thursday as analysts calculated that Rupert Murdoch’s television and film empire could raise the bid that the media group behind HBO and Warner Bros rebuffed.

British Competition and Markets Authority is set to recommend a full-blown inquiry on Friday into small business lending and current accounts.

As it conducts a strategic review of its wealth management business, Royal Bank of Scotland is mulling the sale of the overseas operations of it private banking arm Coutts, which counts the Queen among its clients.

 

NYT

* Microsoft Corp said on Thursday that it was laying off up to 18,000 employees, in an attempt at reinvigoration. The cuts are the first major change made by Satya Nadella, the company’s new chief executive, who said Microsoft needed to be more nimble and focused. (http://nyti.ms/WevUv7)

* The biggest deal of the year is set to be announced on Friday morning, as the pharmaceutical giant AbbVie Inc plans to announce a $53 billion acquisition of Shire Plc , according to people briefed on the matter. (http://nyti.ms/1qjvYHl)

* China’s Alibaba Group Holding Ltd <IPO-BABA.N> has decided that it is not worth sprinting toward its long-awaited initial public offering ahead of the unofficial late-summer market slowdown. The company will instead price its offering sometime after Labor Day, people with knowledge of the matter said on Thursday. (http://nyti.ms/1rvu4ke)

* General Motors Co Chief Executive Mary Barra, who appeared before senators during the Senate Commerce subcommittee hearing on Thursday, said the company will not expand its compensation program for victims and will not waive its protection from lawsuits gained in bankruptcy reorganization. She also said that the company will not dismiss the company’s general counsel, Michael Millikin, despite several senators’ calls to do so. (http://nyti.ms/1rlHiSQ)

* FedEx Corp, the world’s second-largest package-delivery company, was indicted Thursday in connection with a Justice Department investigation into illegal pharmaceutical shipments, according to a person with knowledge of the government’s long-running investigation. (http://nyti.ms/1r7QCbj)

* Fiat SpA denied a report on Thursday that it was in merger talks with its German rival Volkswagen AG, deflating speculation that caused a brief furor on stock markets even though analysts dismissed a deal as implausible. (http://nyti.ms/1mXVfTD)

 

Canada

THE GLOBE AND MAIL

* Police Chief Bill Blair has withdrawn a request to the Toronto Police Services Board to deny reimbursing a former drug squad officer for legal fees after charges against him in a police corruption case were thrown out. (http://bit.ly/1nSkTtQ)

* Flames from a fast-moving wildfire have forced the evacuation of more than 2,500 residents from several neighbourhoods in British Columbia’s Okanagan region. (http://bit.ly/1swFoz8)

Reports in the business section:

* A sweeping management shuffle at Loblaw Companies Ltd signals that the Weston family, the grocer’s largest shareholder, is moving to further assert control at a time of massive change at the retailer. (http://bit.ly/1r6A0AI)

NATIONAL POST

* Suspended senator Mike Duffy will vigorously defend himself, his lawyer said on Thursday after a staggering 31 criminal charges were laid against him for fraud, breach of trust and even bribery. (http://bit.ly/1rw0Pxu)

* There may be only one winnable Alberta seat for the Liberals in next year’s federal election – and two prominent Liberals both appear to want it. Kent Hehr, a quadriplegic lawyer who has represented much of the area as a provincial MLA for six years, has announced he will seek the federal nomination for Calgary Centre. Also in the race is Calgary Mayor Naheed Nenshi’s chief of staff Chima Nkemdirim, who had long been tapped to run for the nomination. (http://bit.ly/1pin6wx)

FINANCIAL POST

* The Canadian Bond Investors’ Association is lashing out at Royal Bank of Canada, accusing the country’s largest bank by revenue of shirking its duty to investors in issuing the country’s first-ever non-viable contingent capital (NVCC) subordinated debenture earlier this month. (http://bit.ly/1zPZ9nx)

* Many Western Canadians are critical of the energy sector’s environmental performance and actively raise funds for or donate money to environmental causes, but still believe oil and gas development should be expanded, according to a new survey commissioned by Canada West Foundation. (http://bit.ly/1oQlust)

 

Hong Kong

SOUTH CHINA MORNING POST

— Ozone pollution in Hong Kong is at its worst in nearly a decade, indicating the deteriorating air quality, environmental group Clean Air Network found. (bit.ly/1svsb9T)

— Nearly 30 percent of Hong Kong-based manufacturers with factories in the Pearl River Delta plan to scale back their investment in the area. The Chinese Manufacturers’ Association of Hong Kong said 29.6 percent of the manufacturers it interviewed would reduce investment in the Pearl River Delta in the next three years, up from 26.9 per cent last year. (bit.ly/1nRcXJg)

THE STANDARD

— Hongkongers will soon be able to book taxis using the WeChat app on their smartphones. Mainland IT giant Tencent and Easy Taxi teamed up to launch the service in Singapore and are believed to be now eyeing Hong Kong. (bit.ly/1kB96ez)

— Cheung Kong Holdings priced units at its Mont Vert project in Tai Po as low as HK$1.65 million ($212,900) after discounts. A 194-sellable-sq-ft unit is among the first batch of 260 flats being put on the market. (bit.ly/1lagHRq)

HONG KONG ECONOMIC JOURNAL

— A total of 8,135 new homes have been registered so far in 2014, and the number of new homes accounted for 25 percent of the total home sales, the highest in percentage term in 10 years, according to data from a property agent.

Britain

The Telegraph

ABBVIE TO ANNOUNCE FIRM BID FOR SHIRE

AbbVie is expected to unveil a 31 billion pound ($52.97 billion) bid for FTSE 100 pharmaceutical group Shire on Friday morning, making it the latest U.S. company to use an overseas acquisition to lower its tax bill. (http://bit.ly/1mT0G74)

UK BANKS FACE BREAK-UP AS COMPETITION INQUIRY LOOMS

Britain’s biggest high street banks face being broken up as the result of a landmark competition inquiry which is expected to be announced on Friday. (http://bit.ly/1suYl5c)

GRANGEMOUTH TO CLINCH U.S. SHALE DEAL WITH 230 MLN STG GOVERNMENT BACKING

The British government has given a 230 million pound loan guarantee to secure the future of Grangemouth in a move that is being seen as highly political, as well as economic, just two months before the Scottish independence referendum. (http://bit.ly/1qLTUza)

HAS SPIRE’S IPO BEEN KNOCKED BY THE NHS?

Spire Healthcare, one of the country’s biggest private hospital operators, is expected to debut on the London Stock Exchange today at the bottom of its price range amid investor concerns about its exposure to the NHS and the PIP faulty breast implant scandal. (http://bit.ly/UevZhc)

The Times

BT SENDS WARNING MESSAGE TO RIVALS WITH BUSINESS SMARTPHONE LAUNCH

Telecoms company BT Group has launched the “One Phone”, a cloud-based smartphone system that acts like a desk phone when it is used in the office and a normal mobile phone when a worker is on the road. (http://thetim.es/1wBqW6G)

The Guardian

BSKYB SELLS ITV SHARES TO VIRGIN MEDIA OWNER LIBERTY GLOBAL

Virgin Media owner Liberty Global has acquired BSkyB’s 6.4 percent stake in ITV for 481 million pounds. (http://bit.ly/Wepb4p)

Sky News

GERMANS SEEK TO LAND GATWICK AIR TRAFFIC ROLE

Germany’s state-owned airspace controller Deutsche Flugsicherung is vying with its principal British rival National Air Traffic Services to land a 10-year deal to run air traffic services at the UK’s second-busiest airport. (http://bit.ly/1ngksuf)

 

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
U. of Michigan consumer confidence for July at 9:55–consensus 83.0
Leading indicators for June at 10:00–consensus up 0.5%

ANALYST RESEARCH

Upgrades

America Movil (AMX) upgraded to Equal Weight from Underweight at Barclays
American Homes 4 Rent (AMH) upgraded to Strong Buy from Outperform at Raymond James
Andersons (ANDE) upgraded to Buy from Hold at BB&T
Plexus (PLXS) upgraded to Buy from Neutral at Longbow
Sandy Spring Bancorp (SASR) upgraded to Outperform at Raymond James
Sandy Spring Bancorp (SASR) upgraded to Outperform from Neutral at RW Baird

Downgrades

AMD (AMD) downgraded to Market Perform from Outperform at FBR Capital
AMD (AMD) downgraded to Underperform from Neutral at BofA/Merrill
AU Optronics (AUO) downgraded to Underperform from Market Perform at Bernstein
Alliance Data (ADS) downgraded to Neutral from Outperform at RW Baird
Anadarko (APC) downgraded to Market Perform from Outperform at Bernstein
AutoZone (AZO) downgraded to Hold from Buy at Stifel
Dunkin’ Brands (DNKN) downgraded to Neutral from Buy at Janney Capital
EOG Resources (EOG) downgraded to Market Perform from Outperform at Bernstein
Equity Residential (EQR) downgraded to Market Perform at Raymond James
Fibria Celulose (FBR) downgraded to Sell from Neutral at Goldman
Iron Mountain (IRM) downgraded to Neutral from Outperform at RW Baird
LG Display (LPL) downgraded to Underperform from Market Perform at Bernstein
Mattel (MAT) downgraded to Hold from Buy at Needham
Nu Skin (NUS) downgraded to Underperform from Neutral at BofA/Merrill
O’Reilly Automotive (ORLY) downgraded to Hold from Buy at Stifel
Platinum Underwriters (PTP) downgraded to Market Perform at Keefe Bruyette
RealPage (RP) downgraded to Market Perform from Outperform at JMP Securities
RealPage (RP) downgraded to Underperform from Outperform at William Blair
iGATE (IGTE) downgraded to Reduce from Neutral at Nomura

Initiations

Blackhawk (HAWK) resumed with a Buy at Citigroup
Encore Capital (ECPG) initiated with a Neutral at Citigroup
FLIR Systems (FLIR) initiated with an Outperform at Oppenheimer
Jack in the Box (JACK) initiated with a Neutral at Buckingham
Kona Grill (KONA) initiated with an Outperform at Wedbush
Masonite (DOOR) initiated with an Outperform at Wedbush
Qlik Technologies (QLIK) initiated with a Market Perform at BMO Capital
Splunk (SPLK) initiated with a Market Perform at BMO Capital
Tableau (DATA) initiated with an Outperform at BMO Capital

COMPANY NEWS

AbbVie (ABBV) to acquire Shire (SHPG) for 52.48 pounds per share in cash, stock; merger worth GBP32B
FedEx (FDX) indicted for its role in distributing controlled substances. The company said it is “innocent” of the charges and said a loss from the DOJ suit “could be material” if convicted
Sony (SNE) said in a tweet that PlayStation4 is top selling next-gen console in June for U.S. (MSFT, NTDOY)
GE (GE) CEO Jeff Immelt: The environment continues to be generally positive
IBM (IBM) expects revenue growth to accelerate in 2H14
Twitter (TWTR) acquired CardSpring
Google (GOOG) said Chief Business Officer Nikesh Arora leaving to join Softbank (SFTBF)
HP (HPQ) appointed CEO Meg Whitman Chairman, Alcoa’s (AA) CEO Klaus Kleinfeld joins board 
Gentiva (GTIV) received $17.25 all-cash takeover bid, rejected Kindred’s (KND) $16 per share offer

EARNINGS

Companies that beat consensus earnings expectations last night and today include:

IBM (IBM), Shire (SHPG), Huntington Bancshares (HBAN), Cytec Industries (CYT), Baylake Corp. (BYLK), Celanese (CE), Skyworks (SWKS), Western Alliance (WAL), BancFirst (BANF), Matthews (MATW), Premiere Global (PGI), Capital One (COF), Electronics for Imaging (EFII), athenahealth (ATHN), Hub Group (HUBG)

Companies that missed consensus earnings expectations include:

Google (GOOG), Bank of Kentucky (BKYF), Taylor Capital (TAYC), Independent Bank (INDB), AMD (AMD), American National Bankshares (AMNB), B&G Foods (BGS), First Financial (FFIN)

Companies that matched consensus earnings expectations include:

General Electric (GE), Valmont (VMI), Associated Banc-Corp (ASBC), Cepheid (CPHD), Stryker (SYK), Seagate (STX), Resources Connection (RECN)

NEWSPAPERS/WEBSITES

RBS (RBS) unwinding distressted-debt unit, Bloomberg reports
Sotheby’s (BID) planning to lay off ‘modest’ number of global workforce, WSJ reports
Document reveals SEC examining firms in high-frequency trading probe, Reuters reports
Starbucks (SBUX) to test mobile phone ordering, Re/code reports
RBS (RBS) considers selling Coutts’ overseas operations, FT reports
American Apparel (APP) investor close to buying Lion’s $10M loan, Bloomberg says
Microsoft (MSFT) still looks attractive, Barron’s says

SYNDICATE

NanoViricides (NNVC) files to sell 3.07M shares of common stock for holders
Sage Therapeutics (SAGE) 5M share IPO priced at $18.00
Teekay LNG (TGP) files to sell 2.8M common units for limited partners
TerraForm Power (TERP) 20.065M share IPO priced at $25.00
Trupanion (TRUP) 7.125M share IPO priced at $10.00
TubeMogul (tube) 6.25M share IPO priced at $7.00
Uranerz Energy (URZ) raises common stock offering to 9.6M shares

via Zero Hedge http://ift.tt/1rmqTxy Tyler Durden

For a centrally-planned market that has long since lost the ability to discount the future, and certainly respond appropriately to geopolitical events, yesterday was a rough wake up call with a two punch stunner of not only the MH 17 crash pushing the Ukraine escalation into overdrive, but Israel’s just as shocking land invasion of Gaza officially marking the start of a ground war, finally dragging global stocks out of their hypnotized slumber and pushing risk broadly lower across the globe, even if the now traditional USDJPY and AUDJPY ramp algos have woken up in the past few minutes and will be eager to pretend as if nothing ever happened.

Perhaps the best paragraph summary of what happened yesterday comes from DB’s Jim Reid, as follows: “Just a few weeks after the 100th year anniversary of the accidents that led to the start of the first World War, one can’t help feel a cold shiver when observing the events of the last 24 hours. The nervousness started with the additional US/EU sanctions placed on Russia that we mentioned this time yesterday. Later the tragic news of the Malaysia Airline plane that crashed in Ukraine, near the border of Russia, seemed to quickly attract a sinister tone as claim and counter claim about the cause of the crash emerged. Russia’s President Putin has blamed Ukrainian authorities for the tragedy saying it would not have happened if Kiev had not resumed a military campaign against separatists (Reuters). Meanwhile, Ukrainian authorities say they have “unconditional evidence” that Russia was involved with the incident. The Guardian reports that flight MH17 was flying around 1000ft (or 300 metres) above restricted airspace when it was shot down. European air traffic control body, Eurocontrol, said Ukrainian authorities had barred aircraft from ground level to 32,000 feet but MH17 was cruising at 33,000 feet, still within range of sophisticated ground-to-air weaponry, when it was hit. Given the altitude, the Ukrainian authorities believe it was a missile fired from a Russian-made BUK SA-11 missile launcher which was responsible for downing the plane but there is still considerable uncertainty about the nature of anti-air technology available to pro-Russian separatists operating in south-east Ukraine. The aircraft black box was reportedly recovered by pro-Russian separatists and will be examined by Russian authorities (Interfax). The White House issued a statement overnight, urging a full unimpeded investigation and an immediate cease-fire in Ukraine, but stopped short of attributing blame for the incident.

It’s always difficult to talk about markets during periods such as this, but it’s no surprise that yesterday was one of the more difficult days year-to-date. Indeed, the S&P500 (-1.18%) had its first +/- 1% day since April 16th. All major industry sectors closed lower and given the broader skittishness, any company which reported disappointing earnings were heavily sold down including Sandisk (-13.6%), Autonation (-8.2%) and Mattel (-6.6%). Even the companies reporting better than expected earnings such as Morgan Stanley (-0.6%) and Philip Morris (-0.2%) could not avoid closing in the red. With all the geopolitical headlines, gold (+1.5%), Brent (+0.7%) and WTI (+2.0%) all closed higher. Russia’s MICEX index fell 2.3% with newly sanctioned companies such as Rosneft (-4.3%), Novatek (-.5%) underperforming. The Ruble lost 2.2% against the USD and Russian 5yr CDS gapped out around 30bp.”

So while the world awaits some clarity on who shot the plane down, which will certainly not come as the waves of propaganda will wash over any and all facts, here is what happened overnight in Asia, where equities gapped lower at today’s open but have steadily pared back the early losses. 10yr UST yields (+3bp) and gold (-0.2%) have given back some of yesterday’s gains. The risk-off tone has hit Japanese equities the hardest with the Nikkei down about 1%, exacerbated by the 0.5% fall in USDJPY yesterday. Malaysian Airline stock fell 16% on the open, though recovered somewhat and is trading around 11% lower on the day. Asian EMFX have also recovered from early weakness with the Philippine Peso and Korean Won recovering around 0.2% to 0.3% against the USD after the early gap lower. The Asian iTraxx indices is quoted about 5bp wider today. In China, the latest home price data from the government showed that real estate prices fell month-on-month in a record 55 cities of the 70 cities tracked. The largest fall was 1.7% MoM in the eastern city of Hangzhou.

In Europe stocks are seen lower across the board, however the initial selling pressure on airline and insurance related stocks at the open in response to the developments over in E. Ukraine gradually abated as market participants looked for official clarification on the situation. In terms of notable stock movers, Shire shares surged in Europe this morning after Abbvie and Shire reached a pact on a recommended combination, with an indicative value of GBP 52.48 per Shire shares. (RANsquawk)  2 out of 19 Stoxx 600 sectors rise; tech, oil & gas outperform, autos, industrials underperform. 13.5% of Stoxx 600 members gain, 85% decline.  Eurostoxx 50 -0.3%, FTSE 100 -0.5%, CAC 40 -0.1%, DAX -0.6%, IBEX -0.7%, FTSEMIB -0.1%, SMI -0.5%

Market Wrap

• S&P 500 futures up 0.1% to 1957
• Stoxx 600 down 0.4% to 338.2
• US 10Yr yield up 3bps to 2.48%
• German 10Yr yield up 1bps to 1.16%
• MSCI Asia Pacific down 0.3% to 146.8
• Gold spot down 0.5% to $1310.5/oz

Bulletin headline summary

• Stocks are seen broadly lower as the uncertainty surrounding yesterday’s plane crash over in E. Ukraine weighed on sentiment, however Bunds traded near unchanged as Western leaders steered clear of putting direct blame on Russia.
• USD/JPY recovered overnight weakness and gold traded lower by around USD 10.00 this morning, as market participants looking for further clarification of the situation from Western officials, while Ukraine contact group also appeared ready to discuss a 2-4 day cease-fire in order to facilitate the investigation.
• Focus will be on another round of corporate earnings, this time from GE and Honeywell, as well as the release of the prelim. U. Michigan survey release.
• Treasury yields higher in overnight trading after yesterday saw geopolitical headlines send 30Y yield to its lowest level since June 2013 and the 10Y yield within 3bps of its YTD low close of 2.443% on May 28.
• Israeli Prime Minister Benjamin Netanyahu said he ordered the military to prepare to widen the ground operation it opened against Palestinian militants in the Gaza Strip
• Russia and Ukraine blamed each other for the downing of a Malaysia Airlines jet that killed all 298 people on board
• European banks will likely bow to fresh bans imposed by the U.S. on financing Russian companies as the risks of dealing with the nation mount
• Six out of 10 economists in a Bloomberg News survey said Greece will need to top up the 240 billion euros ($325 billion) of loans received from Europe and the IMF since 2010
• As modern Iraq collapses, the northern region of Kurdistan is emerging as an oasis of relative calm — with plenty of oil to support its political ambitions for independence
• Financial professionals in the U.S., birthplace of the Winchester rifle and Cheech & Chong movies, are far more comfortable with marijuana and gun companies than their peers in Europe and Asia, a Bloomberg Global Poll found
• Sovereign yields mixed with Portugal, Greece 10Y yields rising ~1bp. Euro Stoxx Banks index fell 1.8% yesterday to 141.9. Asian stocks mixed with China higher, Japan lower. European equities drop, U.S. stock futures mixed. WTI crude higher, gold and copper fall

US Event Calendar

• 9:55am: UofMich Consumer Sentiment Index, July preliminary, est. 83 (prior 82.5)
• 10:00am: Leading Economic Indicators, June, est. 0.5% (prior 0.5%)
• No POMO

ASIA

The risk off sentiment following a lower close over on Wall Street in Malaysia Airlines confirming that 298 (283 passengers/15 crew) people were killed after the airliners plane was brought down in Eastern Ukraine resulted in flight to quality trade overnight in Asia. As a result, the Nikkei 225 finished the session lower as JPY strength weighed on exporters. However, Chinese equity indices bucked the trend and finished in the green, amid speculation that most cities in China will loosen property curbs after Chinese New Home Prices showed the slowest annual pace in more than a year. (RANsquawk)

FIXED INCOME

In spite of stocks in Europe trading lower amid the uncertainty surrounding yesterday’s plane crash in E. Ukraine, Bunds gradually came off the best levels of the session, as market participants welcomed reports that Ukraine contact group appeared ready to discuss a 2-4 day cease-fire in order to facilitate the investigation. At the same time, there was little finger pointing from the Western leaders directly on Russia, with German Chancellor Merkel saying that although there is much evidence that the plane was shot down, there are no alternative to diplomatic solution in Ukraine. (RANsquawk)

Of note, there is a risk that month-end related flows may be more pronounced over the next two weeks, with Barclays forecasting its Pan Euro Agg Treasury Index to extend 0.14y vs. avg. 0.07y and Pan Euro Agg Index to extend by 0.11y vs. avg. 0.07y. (RANsquawk/IFR)

EQUITIES

Heading into the North American open, stocks in Europe are seen lower across the board, however the initial selling pressure on airline and insurance related stocks at the open in response to the developments over in E. Ukraine gradually abated as market participants looked for official clarification on the situation. In terms of notable stock movers, Shire shares surged in Europe this morning after Abbvie and Shire reached a pact on a recommended combination, with an indicative value of GBP 52.48 per Shire shares. (RANsquawk)

FX

USD/JPY gradually retraced overnight weakness as market participants reacted positively to the reports that Ukraine contact group appeared ready to discuss a temporary cease-fire in order to facilitate the investigation of the plane crash. In turn this saw spot RUB recover initial upside and saw the pair move into minor negative territory. (RANsquawk)

COMMODITIES

Yesterday’s developments in E. Ukraine failed to benefit gold, with spot price trading lower by around USD 10.00 as market participants looked for further clarification of the situation from Western officials and took an opportunity to book profits on recent gains. Elsewhere, copper is on course for its second consecutive weekly loss, its biggest since early June, as investors remain wary of the state of the Chinese economy after weaker-than-expected property data for the country. Goldman Sachs say that as much as a quarter of global demand is linked to Chinese housing and property prices, for uses such as pipes, electrical wiring and home appliances. (RANsquawk/Goldman Sachs)

* * *

The conclusion to the overnight recap comes as usual from DB’s Jim Reid

Just a few weeks after the 100th year anniversary of the accidents that led to the start of the first World War, one can’t help feel a cold shiver when observing the events of the last 24 hours. The nervousness started with the additional US/EU sanctions placed on Russia that we mentioned this time yesterday. Later the tragic news of the Malaysia Airline plane that crashed in Ukraine, near the border of Russia, seemed to quickly attract a sinister tone as claim and counter claim about the cause of the crash emerged. Russia’s President Putin has blamed Ukrainian authorities for the tragedy saying it would not have happened if Kiev had not resumed a military campaign against separatists (Reuters). Meanwhile, Ukrainian authorities say they have “unconditional evidence” that Russia was involved with the incident. The Guardian reports that flight MH17 was flying around 1000ft (or 300 metres) above restricted airspace when it was shot down. European air traffic control body, Eurocontrol, said Ukrainian authorities had barred aircraft from ground level to 32,000 feet but MH17 was cruising at 33,000 feet, still within range of sophisticated ground-to-air weaponry, when it was hit. Given the altitude, the Ukrainian authorities believe it was a missile fired from a Russian-made BUK SA-11 missile launcher which was responsible for downing the plane but there is still considerable uncertainty about the nature of anti-air technology available to pro-Russian separatists operating in south-east Ukraine. The aircraft black box was reportedly recovered by pro-Russian separatists and will be examined by Russian authorities (Interfax). The White House issued a statement overnight, urging a full unimpeded investigation and an immediate cease-fire in Ukraine, but stopped short of attributing blame for the incident.

Whilst details are still emerging and the facts not fully known, the last 24 hours will likely have a big negative impact on Western-Russian relations. So it’s going to be a nervous time ahead while we await further developments but this feels like a big geopolitical blow for financial markets. If this wasn’t enough, late in the US session we saw news from Israel that their military had commenced a ground operation in Gaza “to destroy the terror tunnels dug from the Gaza Strip into Israeli territory”. Earlier Thursday, Hamas militants reportedly tried to infiltrate Israel through a tunnel under the Gaza-Israel border, but were stopped by an Israeli strike at the mouth of the tunnel. The Israeli military said the ground operation was open-ended and would be carried out on several fronts in the coastal strip (Associated Press). To add to list of worries, just before the market close there were reports about an unattended package at the White House, which was later cleared by authorities after the market close.

It’s always difficult to talk about markets during periods such as this, but it’s no surprise that yesterday was one of the more difficult days year-to-date. Indeed, the S&P500 (-1.18%) had its first +/- 1% day since April 16th. All major industry sectors closed lower and given the broader skittishness, any company which reported disappointing earnings were heavily sold down including Sandisk (-13.6%), Autonation (-8.2%) and Mattel (-6.6%). Even the companies reporting better than expected earnings such as Morgan Stanley (-0.6%) and Philip Morris (-0.2%) could not avoid closing in the red. With all the geopolitical headlines, gold (+1.5%), Brent (+0.7%) and WTI (+2.0%) all closed higher. Russia’s MICEX index fell 2.3% with newly sanctioned companies such as Rosneft (-4.3%), Novatek (-.5%) underperforming. The Ruble lost 2.2% against the USD and Russian 5yr CDS gapped out around 30bp.

The rates complex benefited from the risk-off sentiment and it was another landmark day for many European bond markets. France (3.8bp), Austria (-3.9bp), Belgium (-4.0bp) and the Netherlands (-4.0bp) recorded all-time lows in yield on their benchmark bonds. Even the perceived riskier sovereigns benefited with Spain issuing a 3yr note at an average yield of 0.692%. 10yr US treasuries (-8bp) had their best day in yield terms since March 13th (-8.5bp), also helped by disappointingly weak housing data. Both housing starts (893k vs 1020k expected) and building permits (963k vs 1035k) missed versus consensus estimates. Partly offsetting this, the Philly Fed survey (23.9 vs 16.0 expected) and jobless claims (302k vs 310k expected) were better than expected.

One corner of the fixed income market worth watching over the coming days is US high yield. Fedchair Yellen has warned repeatedly over the past month that she sees worrying signs in the lower-rated parts of the credit markets. Yesterday saw the CDX HY index drop 0.8pts in price terms, which is pretty significant given the context of low volatility that we’ve seen this year. Indeed yesterday’s drop was the worst since January 24th. There has been increasing talk that retail money is exiting high yield ETFs and this chatter intensified yesterday. According to Forbes who cite data from Lipper, retail-cash outflows from high-yield funds totalled $1.68bn in the week ended July 16, with the ETF influence responsible for roughly 63% of the total withdrawal. The outflow is the single largest one-week redemption in 11 months, since the week ending August 21st 2013. The performance of a number of high yield ETFs yesterday is worth highlighting. For example, the SPDR Barclays High Yield ETF lost 0.75% yesterday, the worst performance since February 3rd. That particular ETF is threatening to breach its 200-day MA, something which other ETFs such as the iShares iBoxx high yield ETF managed to do yesterday for the first time in more than five months.

In overnight markets, Asian equities gapped lower at today’s open but have steadily pared back the early losses. 10yr UST yields (+1.6bp) and gold (-0.15%) have given back some of yesterday’s gains. The risk-off tone has hit Japanese equities the hardest with the Nikkei down about 1%, exacerbated by the 0.5% fall in USDJPY yesterday. Malaysian Airline stock fell 16% on the open, though recovered somewhat and is trading around 11% lower on the day. Asian EMFX have also recovered from early weakness with the Philippine Peso and Korean Won recovering around 0.2% to 0.3% against the USD after the early gap lower. The Asian iTraxx indices is quoted about 5bp wider today. In China, the latest home price data from the government showed that real estate prices fell month-on-month in a record 55 cities of the 70 cities tracked. The largest fall was 1.7% MoM in the eastern city of Hangzhou.

Turning to the day ahead, the focus will be on the continuing developments around the Malaysia airline flight and in Israel/Gaza, heading into what is likely going to be a tense weekend. The data docket features the UofMichigan confidence index and the US leading indicator index. General Electric will be reporting earnings today shortly before the US market open.

via Zero Hedge http://ift.tt/1yB0InN Tyler Durden

The White House issued a full statement at 2238ET with regard the Malaysian Airlines Flight 17 crash following President Obama’s earlier brief comments: “The United States is shocked by the downing of Malaysian Airlines Flight 17, and we offer our deep condolences to all those who lost loved ones on board… It is critical that there be a full, credible, and unimpeded international investigation as quickly as possible… While we do not yet have all the facts, we do know that this incident
occurred in the context of a crisis in Ukraine that is fueled by Russian
support for the separatists, including through arms, materiel, and
training.”

 

For Immediate Release July 17, 2014

Statement by the Press Secretary on Malaysian Airlines Flight 17

 

The United States is shocked by the downing of Malaysian Airlines Flight 17, and we offer our deep condolences to all those who lost loved ones on board. We continue to seek information to determine whether there were any American citizens on board.

 

It is critical that there be a full, credible, and unimpeded international investigation as quickly as possible.

 

We urge all concerned – Russia, the pro-Russian separatists, and Ukraine – to support an immediate cease-fire in order to ensure safe and unfettered access to the crash site for international investigators and in order to facilitate the recovery of remains. The role of international organizations – such as the United Nations and the OSCE in Ukraine – may be particularly relevant for this effort, and we will be in touch with affected nations and our partners in these organizations in the coming hours and days to determine the best path forward.

 

In the meantime, it is vital that no evidence be tampered with in any way and that all potential evidence and remains at the crash site are undisturbed. The United States remains prepared to contribute immediate assistance to any international investigation, including through resources provided by the NTSB and the FBI.

 

While we do not yet have all the facts, we do know that this incident occurred in the context of a crisis in Ukraine that is fueled by Russian support for the separatists, including through arms, materiel, and training. This incident only highlights the urgency with which we continue to urge Russia to immediately take concrete steps to de-escalate the situation in Ukraine and to support a sustainable cease-fire and path toward peace that the Ukrainian government has consistently put forward.

So here we are… Ukraine blames Russian separatists, Putin blames Ukraine, USA blames Russia… and has the tapes to “prove” it

via Zero Hedge http://ift.tt/1nhoEdn Tyler Durden

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

Before you watch the video, I want to highlight an excellent article published this morning by Yves Smith over at Naked Capitalism titled, Yellen Tells Whoppers to the New Yorker. The title doesn’t do justice to the powerful and scathing critique of the fraud that is the current Federal Reserve Chairwoman. In a nutshell, the article exposes how Yellen’s acting routine is worthy of an Academy Award. In her role, she plays a caring, sweet, grandmotherly type figure all concerned about the poor and middle-class, when reality points to a career as a staunch, frontline protecter of the bankster oligarchy.

From Naked Capitalism (for background, much of the article is criticism of a propaganda piece on Yellen recently published by the New Yorker):

In other words, readers are supposed to take Yellen’s claims at face value, when the Fed’s policy of saving banks by goosing asset prices and convincing itself that ordinary people would benefit because the “wealth effect” would lead to more consumption. The result has been widening income and wealth disparity and corporate profits at record levels as a percent of GDP, meaning workers are getting less than they’ve ever gotten. Yellen as the head of one of the regional Federal Reserve Banks and member of the FOMC can’t escape from responsibility for these policies. And there’s no evidence of meaningful opposition; unlike some Federal Reserve presidents, like Charles Plosser and Dick Fisher, who have often taken issue with the Fed’s official position in their speeches, Yellen made little use of her bully pulpit at the San Francisco Fed.

 

Although these differences are significant, Lehmann overstates the dichotomy between monetarist followers of Milton Friedman and American Keynesians. In particular, Keynes himself debunked the “loanable funds” fallacy, that putting money on sale would induce businesses to take advantage of the cheap price and borrow and invest (the only ones that do are ones where the cost of money is a major product cost, and that’s financial players, who as we have found, plow it into speculation). Yet you see defenders of the Fed’s actions (usually making the argument that QE was beneficial, if less so than fiscal stimulus would have been) relying on “loanable funds” type arguments.

 

How about the most obvious answer, that Yellen is using this interview to run PR for the Fed. She leading a major institution that is under well-deserved criticism for its obvious preoccupation with banks during the crisis and post crisis period (and Lehmann takes note of that issue, pointing out that the central bank’s critics range from Rand Paul to Bernie Sanders). She’s trying to brand herself as a caring grandmother who can relate to regular folks because she came from the wrong side of the tracks, and the chump public should trust the Fed’s actions as embodying her professed world view. Lehmann promotes this effort to identify the Fed with Yellen’s supposed compassion for regular folk, starting with the article’s subhead: “How Janet Yellen is redefining the Federal Reserve.”

 

And this isn’t all she stood for. Contrary to her pious claims of empathizing with the downtrodden, if you read her testimony during the 1990s, she was regularly described by Senators during her tenure at the Council for Economic Advisers as one of the most hawkish members of the Administration. She advocated cutting veterans’ benefits. She pointedly refused to cite increased concentration in banking as an antitrust risk and approved of communications industry mergers. She supported cap and trade. She favored austerity for Mexico during its 1994-5 crisis. She also stood with Gene Ludwig complained about deadbeat borrowers declaring bankruptcy in 1997, which was tantamount to throwing her support behind the bankruptcy reform bill that eventually passed in 2005. Reversing that bill has been widely cited as one of the most powerful single steps the government could have taken to stem foreclosures, since the threat of bankruptcy would have forced more servicers to restructure mortgages.

 

At the Fed, Yellen is given more credit than she deserves for sounding some mild concern about rising housing prices. She’s also been cited as the best forecaster on the FOMC, but given how the FOMC failed to see the crisis coming, her “success” is tantamount to declaring her the winner of a height competition among peanuts.

 

Yellen’s contention that she’s really out to help little people would be far more credible if she acknowledged her past anti-middle class policy positions and claimed that she’d made a Pauline conversion. But her institutional and political loyalties preclude that.

Yellen’s acting performance is strangely reminiscent of one the most disingenuous crony billionaire operating in America today: Warren Buffet. There is no single person who has fooled more people, most of the time than hamburger eating, ice-cream cone licking, cherry coke slugging. “Uncle” Warren Buffet. As I wrote in the 2011 post, A Wolf in Sheep’s Clothing:

Anyone that has read these pieces for a while knows where I stand on Warren Buffett.  Namely I can’t stand him.  It has nothing to do with the fact that he has so much money.  I am not an envious person and moreover I think having wealth anywhere near his is more of a curse than a blessing.  The reason I can’t stand him is because he is a fraud.  While he may have been a great investor at one point, he is more of a great actor than anything else.  Here is one of the richest people in the world.  He sits there in Nebraska, chuckling, drinking his cherry coke and eating hamburgers in this pathetically obvious attempt to convince the masses he is “just like us.”  The term wolf in sheep’s was invented for guys like this.  Like most people out there I don’t like bad guys.  The trick; however, is that the most dangerous bad guys don’t come out and tell you they are bad guys and how they are going to fleece you.  What they do is pretend they are the good guys.  Pretend that they are on the side of the little guy or working for the “collective good,” which is a preposterous statement because there is no such thing.  Human desires and notions of what is a good life are as varied as the stars in the sky.  Once we start allowing officials or rich people to define “collective good” you can be sure we are finished.

Now here is Senator Elizabeth Warren torching the fraud Janet Yellen. Enjoy.

 

via Zero Hedge http://ift.tt/1zPccp9 Tyler Durden