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China’s Services Economy Growth Just Cratered

August 31, 2017 Tyler Durden 0

Amid the global growth party of hope-strewn PMIs across the world (all of which have been shown time and time again to hold zero correlation to actual economic data), China’s non-manufacturing data just puked in the punchbowl, crashing to its weakest level since May 2016 (despite amodest uptick in manufacturing).

Is China’s lagged credit impulse finally starting to leak into reality?


Manufacturing PMI rose from 51.4 to 51.7 in August but employment fell, new export orders fell, and both input and output prices soared. Notably large enterprises actually downticked with medium-size entities the most hopeful.

On the services side, non-manufacturing PMI tumbled to 53.4 (still expansionary, we hear bulls cry) – the weakest since May 2016 as new orders, business expectations, and inventories weakened.

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US Coalition Attacks ISIS Convoy, Accuses Syria And Russia Of “Terror Transfer”

August 31, 2017 Tyler Durden 0

In a surprise move that few analysts expected, the US led anti-ISIS coalition operating in Iraq and Syria has bombed parts of the ISIS convoy previously given safe passage out of Lebanon as part of a controversial deal brokered early this week with the Lebanese Army and its allies. Coalition spokesman Col. Ryan Dillan had previously warned that, “We will take action where necessary; those would be absolutely lucrative targets.” And it now appears the US coalition followed through by attacking the vehicles as they traveled across Syria to the Islamic State stronghold of Deir Ezzor.

The initial warning was issued in reaction to the controversial deal that followed ISIS’ defeat in northeast Lebanon. Since July the Lebanese Army, Hezbollah, and the Syrian Army have attempted to root out ISIS from positions in the western Qalamun area of Syria and the Jurud Arsal border region of Lebanon. The fierce campaign has had some degree of assistance from US special forces, acting in an advisory capacity for Lebanon’s military.

The territory was fully liberated Monday (August 28), but only after Lebanon struck a deal with the about 300 remaining ISIS fighters and their families which would allow them to lay down their weapons and exit through Syria in a convoy of buses (though reportedly allowed to carry light weapons such as rifles). Though ISIS was clearly defeated, the deal allowed for the turnover of the bodies of 9 deceased Lebanese soldiers previously kidnapped in 2014.

A shocking Reuters photo: ISIS fighters were given safe passage on August 28 out
of Lebanon through Syria on charter buses. Image source: Omar Sanadiki/Reuters

But the United States harshly criticized the deal soon after its announcement. Coalition spokesman Col. Dillon said further: “We are not party to this agreement between Lebanon, Hezbollah and ISIS.” He specifically targeted Syria’s role in facilitating the ISIS convoy’s exit: “Their claim of fighting terrorism rings hollow when they allow known terrorists to transit territory under their control. ISIS is a global threat, and relocating terrorists from one place to another is not a lasting solution.”

Hezbollah’s Secretary General Hassan Nasrallah first outlined the deal in a victory speech Monday night, which he indicated involved the transportation of 26 wounded and 308 ISIS fighters, along with 331 civilian family members via buses and ambulances to Syria’s eastern province. Nasrallah also declared the operation to be a complete military victory, adding that August 28th would be remembered as Lebanon’s “Second Liberation Day”.

But Lebanon’s ceasefire agreement immediately sparked controversy in the region, especially in Iraq, whose leaders see the deal as intentionally allowing more terrorists to settle at its own border. Iraqi Prime Minister Haider al-Abadi lashed out at the brokers of the deal:

The Iraqi prime minister, Haider al-Abadi, faulted Syria for relocating the Islamic State fighters to its eastern frontier, which is the border with Iraq.


“We fight the terrorists in Iraq,” he said in a speech on Tuesday. “We do not send them to Syria — we kill them in Iraq.”


Mr. Abadi called on the Syrian government to investigate the decision to relocate the Islamic State fighters.

On Wednesday the US-led coalition confirmed the strike on the group of ISIS fighters which left the Lebanese border region. Though it’s unclear where exactly the strike took place, multiple reports described the convoy being stranded in the middle of Syria after air strikes destroyed the road they traveled on, while also targeting multiple vehicles which were racing to join the convoy.

ISIS members while en route to Deir Ezzor province as part of the controversial
deal. Image source: Omar Sanadiki/Reuters

An official coalition press release aggressively called out Russia and the Syrian government. “Russian and pro-regime counter-ISIS words ring hollow when they cut deals with and allow terrorists to transit territory under their control,” the statement said. The statement also confirmed air strikes on individual ISIS vehicles and that “the Coalition cratered the road heading east between Hamaymah and Abul Kamal to prevent the further transport of ISIS fighters to the border area of our Iraqi partners…”.

And yet the US has itself routinely cut deals with ISIS and facilitated the movement of its convoys on a much larger scale, which has served to increase the terror threat. One astute observer of the Syrian war compiled a summary which proves the US coalition’s statement to be hypocritical and false:

This is ridiculous. Over and over the U.S. gave ISIS all chances to grow and to escape destruction. It itself made similar cease fire and retreat deals with the Takfiris.


The ISIS core was groomed in a U.S. prison in Buqqa, Iraq. It later came from Iraq into SyriaObama as well as then Secretary of State Kerry are on the record saying that they intentionally let ISIS grow to oust the Iraqi Prime Minister Maliki and the Syrian President Assad. The U.S. let ISIS flee from Fallujah and protested when the Iraqi government bombed the escaping ISIS convoys. In the assault on ISIS held Mosul the U.S. military held open a corridor towards Syria to let ISIS fighters escape. When the Kurdish U.S. proxy attacked Raqqa the front towards Palmyra was left open to let ISIS flee. Russia protested. Recently 1,800 out of 2,000 ISIS fighters fled from Tal Afar towards Syria before the Iraqi army assaulted the city. This is why it could take the city in just 10 days. U.S. action was designed to enable ISIS to take Deir Ezzor and only a heroic defense by Syrian troops prevented that.


Moreover in August 2016 the U.S. military itself made a deal with ISIS in Manbij, Syria, and gave free passage to retreating ISIS fighters.

Meanwhile in the northern Syrian city of Manbij US troops reportedly came under fire by Turkish-backed FSA groups. The coalition confirmed that, “Our forces did receive fire and return fire and then moved to a secure location.” The Americans returned fire and no casualties were reported. 

CNN, which first reported the exchange, included the following awkward admission in their coverage of the incident:

Many of these Turkey-supported forces originated as part of the opposition to Syrian President Bashar al-Assad and they have also clashed with the US-backed and Kurdish-led Syrian Democratic Forces in a struggle for influence in the region.

This is possibly the first known incident of FSA “moderates” which were politically backed and funded by the United States firing directly on US forces in Syria. Though many commentators have been quick to chalk this up to the “complexity” of the Syrian battlefield, it is yet more confirmation of those of us who warned early on that training and funding so-called “moderates” in Syria would in fact quickly result in expanding the ranks of terrorists who would undoubtedly soon turn their guns on their American benefactors.

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In call with Saudi king, Trump urges end to Qatar dispute

August 31, 2017 Middle East Monitor 0

US President Donald Trump spoke with Saudi King Salman on Wednesday and urged “all the parties in the Qatar dispute” to find a diplomatic resolution to end a crisis that has embroiled several Gulf countries, the White House said in a statement. Saudi Arabia, along with Bahrain, the United Arab Emirates and Egypt, have cut political and trade ties with Qatar since June because they say Doha supports regional foe Iran and Islamists.

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Documenting the Disappearance of 85,000 people since the Start of the Conflict in Syria

August 31, 2017 Middle East Monitor 0

The Syrian Human Rights Network (SHRN) said it has documented the enforced disappearance of 85,36 ​​people in Syria since the conflict started in March 2011. “The arbitrary arrests documented during the past seven years have been carried out through checkpoints or raids without arrest warrants, and detainees are denied access to their families and lawyers, while the authorities do not recognize their existence,” the network said in a report released on Wednesday. The SHRN also stated that the Syrian regime is responsible for 90% of the enforced disappearances in the country.  It also explained that enforced disappearances have expanded with the spread of non-official armed groups which are fighting alongside the regime’s army, such as Iranian militias, the Lebanese Hezbollah […]

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Mo’ Momo, Mo’ Worries – Quants Fear Hedge Funds’ “Outsized Exposure” To Market Momentum

August 31, 2017 Tyler Durden 0

Better lucky that smart? Managers of active funds are now extremely concentrated in the strongest parts of the US equity market with ‘momentum’ massively outperforming the market in August (and ramping higher off the North Korea missile launch lows).

Bloomberg’s Dani Burger notes that with more than half of their bets on high flyers like technology and online retailers, hedge funds have near-record exposure to momentum trades, a strategy that’s up 2.6 percent in August even as the S&P 500 heads for its worst month since the election. The resiliency of the bet was on display Tuesday, when Alphabet and Amazon opened nearly 1% lower before rebounding along with Apple to deliver the S&P 500’s biggest intraday reversal in 10 months.

“It’s like these things are like gold — it’s almost like a safe haven,” said Mark Connors, the global head of risk advisory at Credit Suisse Group AG.


“This resilient price action in equities is commensurate with the constructive positioning we see across hedge fund strategies and speaks to the persistent positive sentiment in 2017.”

The much-followed FANG Stocks soared over 2.1% off the opening lows…


The 50 most popular hedge fund longs…

Bloomberg’s Burger asks, how long can it last?

That’s a question that’s becoming more urgent for hedge funds that have finally caught up to a market where gains are delivered by an ever-narrowing cohort of stocks. Volatility has been rising amid renewed geopolitical tensions, signs of uneven economic growth in the U.S. and the threat of further interest-rate hikes by the Federal Reserve.


What’s more, the very nature of following momentum poses its own pitfalls. The strategy is one of the more volatile factors, and when rotations occur, pain seeps through as leaders quickly move to the back of the pack.


All that points to a hedge fund love affair that’s headed for heartbreak, according to Joseph Mezrich, head of U.S. quantitative analysis at Nomura Instinet LLC.


“We are concerned about this outsized exposure,” Mezrich, wrote in a note to clients. “The last time momentum exposure was this high was in 2013-2014, which led to a sharp decline in fund performance when momentum collapsed. Fund managers may be setting themselves up for a repeat.”

So what happens next? We leave to CS’ Mark Connors…

“You can’t manage your book for a big deleveraging… Momentum is an escalator up and an elevator shaft on the way down. But managing that is what active managers do for a living.”

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Iran: Kirkuk’s participation in Kurdistan secession referendum “exasperating”

August 30, 2017 Middle East Monitor 0

The Iranian Foreign Ministry has criticised the Kurdish government for its recent decision to hold a referendum on secession from Iraq. A ministry spokesman, Bahram Qasimi, described the decision by the Kirkuk provincial council as “a provocative, unwelcomed and wrong decision”. “The insistence on holding the referendum, despite the rejection of the Iraqi government, the United Nations and many regional and non-regional countries, does not support dialogue with Baghdad to settle the outstanding issues. It also affects the process of supporting Iraq’s victories in fighting Terrorism,” Qasimi said, according to the IRNA, a news agency. Qasimi stressed that the Islamic Republic “warns of the repercussions of this wrong decision, which is a flagrant violation of Iraq’s sovereignty and territorial integrity, […]

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Israel Statistics Bureau: 1.214 Million Arab Muslims in Israel, 35% under the age of 14.

August 30, 2017 Middle East Monitor 0

According to the data from the Israeli Central Bureau of Statistics, the number of Muslims in Israel, including occupied Jerusalem, reached 1,534, 000 in 2016 (including 320.000 Jerusalemites) constituting up to 17.7 % of the population. These data, which was published on the occasion of Eid Al-Edha, showed that the number of Muslims increased during 2016 by 36 thousand people. This indicates that the rate of population growth remained constant over the last three years at 2.4 % a year. It is also considered to be the highest rate of any group in the country. Read More: Official data: Israel uses 85% of total area of historical Palestine Jerusalem has the largest concentration of Muslim population of any city, with 320.000 […]

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