Although trading started out positive Friday, the major indexes quickly reversed course when news broke of Ukrainian forces attacking an armored Russian convey upon entering Ukrainian territory. Via Reuters:
“Ukraine said its artillery partly destroyed a Russian armored column that entered its territory overnight and said its forces came under shellfire from Russia on Friday in what appeared to be a major military escalation between the ex-Soviet states.Russia's government denied its forces had crossed into Ukraine and accused Kiev of trying to sabotage deliveries of aid. NATO said there had been a Russian incursion into Ukraine, while avoiding the term invasion, and European capitals accused the Kremlin of escalating the fighting.”
Gold took a hit earlier in the morning, falling under ,300, before quickly reversing course on the Ukraine news.
Meanwhile, although still net long on stocks, it appears Soros significantly ramped up his hedge position in recent months, with Business Insider speculating that he’s “getting worried about the market and where the S&P is going to head in the months ahead when the Fed ends QE.” (story)
Zero Hedge provides the following chart, showing his put position (as of June) is now the highest in recent years:
The big question on many investors’ minds is on the timing of initial rate hikes. Not surprisingly, one of the Fed’s most dovish members, Narayana Kocherlakota, pushed back on concerns in a Friday speech saying, “You hear a lot of concerns that it is time for us to exit, time for us to start thinking about leaving the zero bound and raising rates…but boy, it’s a mistake to go too early.” (story)
In economic news, MarketWatch reports that consumer sentiment fell to a nine-month low this month.
“Consumers’ views on the upcoming economy grew decidedly grimmer this month, with the gauge tumbling to 66.2 from 71.8 in July. A volatile stock market as well as international tensions could be weighing down sentiment, economists said.” (story)
Meanwhile, manufacturing data continues to improve:
(Reuters) - U.S. manufacturing output rose broadly in July and automobile production recorded its largest increase in five years, boosting the economy at the start of the third quarter. While other data on Friday showed some cooling in factory activity in New York state this month, economists said it did not change the view of an economy with strong momentum, noting that the pullback followed a robust increase in July.
Unfortunately, things in Europe seem to get worse. Via Washington Post, Europe’s Greater Depression is worse than the 1930s:
“[T]he eurozone as a whole didn't grow at all in the second quarter. Neither did France, whose economy has actually been flat for a year now. Germany's economy fell 0.2 percent from the previous quarter—and that after revisions revealed it had quietly gone through a double-dip recession in early 2013. Though that's still much better than Italy: Its GDP also fell 0.2 percent, but its triple-dip recession has now wiped out all growth since 2000. The closest thing approximating good news was that Spain's dead-cat bounce recovery continued with 0.6 percent growth. But it still has 24.5 percent unemployment.”
