SUMMER SELLOFF CONTINUES: Italy “Unexpectedly” Enters Triple-Dip Recession, Russia Prepares Large-Scale Invasion

U.S. stocks: Futures fall; Time Warner, Sprint plunge

NEW YORK (MarketWatch) — U.S. stock futures continued on a downward path as failed merger news, geopolitical tensions and downbeat European economic news weighed on sentiment ahead of the market open on Wall Street.

U.K. stocks hurt by euro-zone, Russia-Ukraine worries

U.K. stocks had started the session lower after Wall Street, then overnight in Asia, slumped following reports Russia has dramatically increased the number of troops and vehicles at its eastern border with Ukraine, and after the Polish foreign minister warned of the potential for an invasion. On Tuesday, Russian President Vladimir Putin ordered his government to prepare retaliatory measures against U.S. and European economic sanctions imposed on Russia.

Russia Prepares Large-Scale Invasion: “Battle-ready Force of Infantry, Armor, Artillery, and Air Defense”

A massive buildup on the Ukrainian border in the last 48 hours has seen Russia double its troop levels with 17 additional battalions and has left Western leaders trying to figure out what President Vladimir Putin is planning to do next.

On Tuesday the Russian President called for an emergency meeting of the United Nations Security Council to resolve the “humanitarian crisis” in Ukraine that has reportedly left tens of thousands of people displaced because of fighting over the last several months, a move that some in the West see as prelude to a Russian invasion of Ukraine.

“We are convening an emergency meeting of the United Nations Security Council on the humanitarian situation in Ukraine,” Russian Ambassador to the U.N. Vitaly Churkin was quoted as saying.

Earlier on Tuesday, the Russian Foreign Ministry said the U.N. and the International Committee of the Red Cross expressed “readiness” to discuss its plan to deploy a “humanitarian mission” to Ukraine, which some consider to be a pretext for an invasion by Russian forces.  

Russia has significantly built up its troop presence along the Ukrainian border in recent weeks, according to U.S. officials, making it ready for a potential large-scale invasion of southeastern Ukraine if Russian President Vladimir Putin so chooses.

According to a report in The New York Times, Russia has nearly doubled its troop presence along the border, adding 17 battalions and 19,000 to 21,000 troops who now compose a “battle-ready force of infantry, armor, artillery, and air defense within a few miles of the border.”

The White House has openly worried about what would be, for all intents and purposes, an invasion under the guise of a “peacekeeping” operation.

“We’ve seen a significant re-buildup of Russian forces along the border, potentially positioning Russia for a so-called humanitarian or peacekeeping intervention in Ukraine,” deputy national security adviser Tony Blinken said last week.

“That’s a very real option,” a senior Defense Department official told The Times. “And should Putin decide, he could do that with little or no notice. We just don’t know what he’s thinking.”

Source: Business Insider

The European “Recovery” Is Over: Italy “Unexpectedly” Enters Triple-Dip Recession

Goodbye European recovery, we hardly knew you.

It must have come as a huge shock to all hypnotized lemmings aka “sophisticated investors” who have been following the manipulated, artificial yields in the Italian 10Y relentlessly declining and thus suggesting at least some economic stability, when an hour ago instead of reporting a 0.1% increase for its Q2 GDP as widely expected, Italy “unexpectedly” reported a sequential contraction of -0.2% down from a -0.1% drop in Q1, and officially the start of yet another, its third since Lehman, recession. Then again, considering Italy’s youth unemployment of over 40% just hit a record high, we use the term “unexpectedly” rather loosely.

This is how Italy’s real GDP just dropped to the lowest level since 2000.

German two-year bond yield goes to zero for first time since eurozone crisis depths

Pressures Are Piling Up On the Market

With breadth deteriorating and new highs falling, the market’s character has changed, and numerous negative market tells abound (and have been heretofore dismissed until the past week).

  • Throughout the 2013-2014 rally shallow market declines responded positively to favorable news, but the Thursday waterfall drop followed better-than-expected economic news — namely, a 4% second-quarter 2014 real GDP reading.
  • I have often opined that some of the worst market declines occur when investors can’t identify a catalyst for the drop or when good news is ignored — such as it might be at the current time.
  • Just as rising markets tend to result in investors and traders focusing on good news (e.g., the specter of low interest rates and central bankers’ more cowbell), the focus in a more significant drop might move toward the bad news — and there is a lot to worry about (including a subpar global economic recovery, geopolitical risk, Washington dysfunction, the schism between the haves and have-nots, etc.).
  • The notion of buying the dip has remained ingrained — equity inflows into domestic equity funds and ETFs continue strong. This is unhealthy and when in the extreme, historically points to more substantial declines.
  • Importantly, the quality of the recent advance and the internals hasdeteriorated with numerous classical technical divergences. The August-to-October period, as previously mentioned, is among the most seasonally weak periods in history.
  • Large-cap, multi-industry stocks with above-average dividend yields have led the market advance, but these stocks are now starting to lose strength. If the drop gathers momentum, these are vulnerable and heavily weighted in the indices, making them likely liquid candidates used to raise cash.
  • Generally speaking, the global equity rally is also beginning to get more selective — another signpost of late bull market behavior.


  1. Puerto Rico economic activity index dips in June
  2. Argentina economy will likely contract this year: U.N.
  3. ECLAC forecasts 0.5% shrinkage in Venezuela’s economy
  4. Japan Pensions With About $500 Billion Set to Copy GPIF
  5. Chinese services sector fails to grow for first time on record
  6. Moody’s says France will likely miss deficit target
  7. U.S. debt balloons to $7 TRILLION more than it was when Obama took office
  8. Life insurers hit by triple whammy (Korea)
  9. Russia Scraps Ruble Bond Sale as Yields Jump to 5-Month High
  10. U.S. airfares on the rise, outpacing inflation
  11. Why New Yorkers should be worried about their water supply
  12. Ontario utility pension funds unstable, government report says
  13. Bond Liquidity Falls 70% in Europe as Sales Soar
  14. GM’s Subprime Lending Draws Justice Department Scrutiny
  15. Thousands of Russians stranded abroad after tour operator fails
  16. Weak Japan Exports, Output Said to Raise Concerns at BOJ

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