FRIDAY 8/8/14; Geopolitics Rattle Global Markets; Productivity and Costs; US Fighter Jets Strike Northern Iraq; Russia Requesting De-Escalation in Ukraine; Wholesale Trade

The US authorization of air strikes against the ISIS militants in Iraq rattles world markets. Global contagion continues as international stocks are a sea of red. WTIC crude oil climbs to 98.13 and Brent crude oil is up to 106.41. Natty gas gains +0.5% to 3.89. S&P futures are down -14. Dow -105. Gold moves higher to 1317. Copper is weak.

The WHO declares the ebola outbreak as an international emergency as the death count approaches 1K. Italy’s young leader PM Matteo Renzi is trying to pass reforms to help the flailing economy. Italy is in a multi-year recession that never ends and the contagion is dragging down Europe. Israel says the Gaza cease-fire was violated by Hamas rocket fire as the violence rises in day 32 of the Israel-Hamas war and day 22 of the Israeli incursion into Gaza. The Ukraine-Russia turmoil continues with the UN calling on Russia “to step back from the brink.” The Russian Ruble currency pair climbs to 36.4669 showing a continuing weakening of the ruble and money leaving Russia. Geopolitical angst punches global markets in the gut overnight.

The dollar/yen 101.78 losing the 102 level. The BOJ leaves rates unchanged and maintains monetary policy steady for 20 consecutive meetings. Japan’s central bank reports weakness in expor









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g +1%. The BOJ remains very active buying assets with the JGB’s printing at multi-year lows at 0.50%. Global bond yields move lower with Europe printing multi-century low yields. Perhaps global deflation, that no one expects, is on the horizon?

The relative Ukraine calmness creates the Friday rally. The pro-Russian separatist leader in the Donetsk and eastern Ukraine area stepped down earlier in the week a sign that the Ukranian troops are making headway in restoring calm to the country. Today Russia warms up to the idea of a peaceful resolution. The takeaway from the trading session is that Russia is the main geopolitical event. The global market turnaround started with the S&P futures bottoming at 1890 in the early hours on Friday morning.

Another Obamacare official loses emails and cannot produce the documents to investigators. Over 20 people have claimed to have lost their emails concerning ongoing Whitehouse scandal investigations. People realize there are two sets of rules; one set for the elite politicians and wealthy and the other for everyone else. Folks lose confidence in government and along with the ongoing separation of the classes; these events will lead to future social unrest.