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D.Trump likely suffered one of the worst days of his presidency on Wednesday as his personal lawyer implicated him in a crime at almost the same time as his former campaign chairman, Paul Manafort, became a convicted felon. Legal troubles of D. Trump did not stand in the way of algos shooting for new records, encouraged by the dollar correction of the past couple of days. Today clarified that November is a referendum on impeachment -- an up-or-down vote,” Steve Bannon, Trump’s former chief strategist, said. “Every Trump supporter needs to get with the program.” We can therefore expect more gesticulation, provocation, aggression and therefore volatility (away from US markets!) as D. Trump tries to substitute the legality of his actions past and present with populist action at home. Trump found some solace for his miserable day with the market action as he tweeted: “Longest bull run in the history of the stock market, congratulations America!” A little over 10 days ago, D. Trump tweeted that “Money is pouring into our cherished DOLLAR like rarely before.”. It seems he got some remorse about the recent dollar strength as he tried to twist the Fed’s hand and to discourage it from continuing what has only so far been the beginning of a normalization process. With dollar sentiment reversed somewhat, we will hear what Fed Chair J. Powell has to say on Friday at Jackson hole, looking for cues on possible policy signaling. Yesterday, the dollar weakened across the board including against EM with the exception of RUB. Sentiment more than the Russian economy seems affected by US sanctions. If recent growth data or comments from rating agencies are any guide, this is perhaps an opportunity to consider the cheapness of Russian assets which admittedly sit on the higher end of the risk spectrum. They can always be barbelled with gold and the Nasdaq as the latter now serves as a safe haven against everything else. Russian assets are “value” plays. "Sanctions haven't broken the country's macroeconomic stability," said Alexandre Abramov, a finance specialist at Moscow's Higher School of Economics. "But sanctions are cutting off the path to development. In terms of accelerating growth rates, enacting effective structural reforms — sanctions are sapping the country of these possibilities." But with unemployment low and inflation in check, the sanctions so far have done little to undermine the country's fundamental economic stability. Now that even tougher measures seem all but inevitable, the government is hoarding its budget surplus and boosting its reserves to safeguard its economic stability, Bloomberg reported. Iran, and Russia share this in common that the so-called dollar strength is currently being weaponized against them. They are in talks to schedule a trilateral summit. The ongoing weaponization of the dollar will turn itself against the dollar. It is only a question of time before more countries progressively disintermediate away from the dollar (see German Finance Minister call yesterday) and the overreaching US legal system. It will happen progressively and then... suddenly. Bonds were volatile over the past two days with US treasuries rallying a little in a market that is overwhelmingly short and as the Fed starts to be pressured to ease the pedal on tightening (COT report showed an all-time high level of shorts in 10 and 30 y year notes). 10Y bund yields rose 4bps over the same period. German Chancellor Angela Merkel was said to be prioritizing securing the European Commission presidency for Germany instead of the top job at the European Central Bank, according to Handelsblatt which compromises the chances of Bundesbank President Jens Weidmann to succeed Mario Draghi in October next year. Gold and silver traded slightly lower. As one might have expected, D. Trump will now start to harp on his populist themes again to just to create a diversion away from his legal woes and accelerate the momentum behind mid-term elections. D. Trump repeated that he was still thinking to introduce a 25% tax on European cars and Bolton was at it again, warning against Syria using chemical weapons against innocent civilians (which would of course be totally unnecessary and strategically inept and a call for the jihadists perhaps to conduct such an attack…). As ZH put it, “the other observable pattern on the seven-year long conflict in Syria is this: every time the war seems to have receded from international media attention, with the momentum clearly being with Assad and the Syrian Army, a mass attention-grabbing event or massacre happens to yank the world's (and the White House's) focus right back on Damascus.” We have been warned... Overnight, D. Trump started with tweeting that the idea of building a wall with Mexico was alive and well, causing MXN to weaken overnight. It seems the US president is the only person capable of manipulating the dollar wherever and whenever he wants... D. Trump has been frenetically tweeting overnight which is another of his pattern of trying to create a diversion whenever his personal legal and political situation is becoming more difficult which it just did yesterday. Chances are that he will now throw some more spaghettis on the wall...with all but US markets still at risk of being caught in his crosshairs... 

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