238 Years Of The (Dis)United Kingdom

As the World anxiously awaits the results of today's Scottish Referendum for independence from The United Kingdom, we thought a little context on just how many 'nations' have left over the last 238 years...

Lurking Beneath The Taper: More Trouble In Repo Land

Since we are now in the middle of the final month of a quarter, checking repo stats shows what we have come to expect of a fragile liquidity system. Once again, repo fails spiked sharply. The problem for “markets” is that repo is a primary liquidity conduit indicating significant and persistent degradation under, again, very benign conditions. There is no doubt that QE is the primary culprit here and that its removal is not “allowing” a healing process to begin but instead revealing the damage. With the Fed’s reverse repo program having no impact whatsoever, it just adds to the weight of evidence that policymakers don’t really know what they are doing and are just making it up as they go.

Household Net Worth Hits Record $81.5 Trillion In Q2 Driven By Stock Market Surge

When earlier today, the Fed released its latest Z.1 (Flow of Funds report) for the second quarter, there were no surprises: thanks to the relentless liquidity injections by global central banks (charted here) resulting in record stock market levels, total household net worth rose once more, increasing by $1.4 trillion in the quarter (up from a downward revised $1.2 trillion in the previous quarter) to a new record high $81.5 trillion. This was the result of a $95.4 trillion in total assets, offset by $13.9 trillion in liabilities, mostly mortgage debt of $9.4 trillion, as well as some $3.2 trillion in consumer credit, which may or may not account entirely for the student debt bubble.

El-Erian: Investors Are Overlooking 6 Major Sources Of Global Uncertainty

This has been an unusual year for the global economy, characterized by a series of unanticipated economic, geopolitical, and market shifts – and the final quarter is likely to be no different. How these shifts ultimately play out will have a major impact on the effectiveness of government policies – and much more. In the next few months, the buoyant optimism pervading financial markets may prove to be justified. Unfortunately, it is more likely that investors’ outlook is excessively rosy.

IMF Admits QE Encourages Excessive Risk-Taking; Warns "Sharp Downside Risks Are Rising"

With the Fed unleashing its bubble-watchers last week, on the heels of warnings from the Central Bankers' Central Bank (BIS), The IMF has decided it is time to chirp in. As Mises' David Howden notes, after promoting QE for years (see here and here), the IMF is finally coming to realize what has been apparent for years now to almost everyone who doesn’t work for the Fed or the IMF: that low interest rates encourage risky decisions.The IMF warns, "financial market indicators suggested investor bets funded with borrowed money looked 'excessive' and that markets could quickly deflate if there were surprises in U.S. monetary policy or the conflicts in Ukraine and the Middle East."

The Chart Alibaba's Underwriters Would Prefer You Didn't See

While the excitement is palpable on business TV, tomorrow's unleashing of Alibaba on US publicly traded markets could be less than exuberant. Judging by the performance of the last five largest US IPOs, Bloomberg notes that on average they fell 17% in the first year. Still we are sure, those who buy at the open tomorrow will be smart enough to know when to get out (hint: right before everyone else).

A "True Normal" Is Still A Distant Dream

Reflecting on the farce that was the FOMC statement and press conference yesterday, Bloomberg's Richard Breslow jabs that it appears Janet Yellen's 'splaining can be summed up, "we can’t know what considerable time means because we’re told it’s a very nuanced concept." In other words, we are just not smart enough, leave it to the PhDs in the room. Even Goldman was struggling to find the dovish side reflecting that market movements were more driven by positioning than anything new policy-wise. As Breslow sums up so eloquently, "a 'true normal' balance sheet remains a very distant dream, perhaps end of decade, and who knows if they’ll ever get back there."

Poroshenko Tells US Congress "Russia Has Invaded Ukraine, Need Lethal Aid" - Live Feed

In a passionate speech to a joint meeting of Congress, Ukraine's President Petro Poroshenko dropped some tape-bombs:


Supported by rounds of applause by US politicians, Poroshenko called for the US solidarity and to lead the offensive against Russia as they "fan the flames of war." Stocks dipped (but recovered) though PMs are higher still.

Scotland Votes As Andy Murray Provides Last Minute Boost For "Yes" Camp; Wall Street Roundup

The long awaited moment finally arrived after Scots began voting at 7am BST on whether to break away from the U.K. and end the 307-year union, even as latest opinion polls show the campaign against independence maintaining a narrow lead over those favoring independence.  And while the No's are said to have a slim lead into the vote, even if it is really the Undecideds whose vote will determine the final outcome, somewhat surprisingly, the Yes camp got an unexpected boost just hours before the polls opened when 27 year old tennis star, and Scot, Andy Murray declared his support for Scottish independence in an 11th hour intervention on Thursday morning, after years of keeping silent on the issue.

Phillly Fed Misses By Most In 7 Months, Employment Surges

Once again, there's a little something for everyone in yet another soft survey macro data point. The headline Philly Fed print missed expectations by the most since February and fell from 28 to 22.5 in September. So that's the bad news... The great news is that the employment sub-index surged to iuts highest since May 2011. That great news comes despite a plunge in the average workweek and collapse in hope as the outlook index fell to 3-month lows.

South African Rand Tumbles To 7-Month Lows As Central Bank Governor Steps Down

In a surprise for the market, South Africa's Reserve Bank chief Gill Marcus has announced she will not be available for another term when her contract is up in November. On the heels of an expected decision to leave rates unchanged, this has sent the Rand tumbling to its lowest since February. While Marcus exporessed every confidence in her successor, it appears the market is less confident (for now). Forget the economy, sell ZAR because the true leader of the nation's wealth is to step down...

Which Global Hegemon Is On Shifting Sands?

Given that all the leading candidates for Global Hegemon are hastening down paths of self-destruction, perhaps there will be no global hegemon dominating the 21st century.

Goldman's Q&A On What Yellen Really Said (Or Didn't)

Since it is the NY Fed, headed by an ex-Goldmanite, which will ultimately be tasked with exiting 6 years of "unconventional monetary policy" - at some point during this "recovery" if not now or any time soon for that matter - it is probably best to listen to Goldman for its post-mortem on what the chairwoman did or did not say. Which is why we present a "Q&A" with Goldman's head economist, Jan Hatzius, known to occasionally exchange a sandwich and the occasional policy guidelene, with NY Fed's Bill Dudley at the Pound and Pence, in which he explains how Yellen managed to be both more dovish and more hawkish than the "market" expected.

The Trolling Continues: Fed Chairwoman Expresses Her Condolences To America's Poor

As we discussed earlier in the week, Janet Yellen has released a speech this morning explaining why the poor need to get rich. In the speech below, she stresses, "how important it is to promote asset-building, including saving for a rainy day, as protection from the ups and downs of the economy," despite falling incomes, rising costs, and extending credit, we assume she means. The Fed Chairman has some words of encouragement for the tens of millions of Americans who live at or below the poverty level, including that threatened with extinction class, affectionately known as "the middle." Her message? It is important to build assets, or said otherwise...  get rich and she promises to "continue to promote asset-building."

Housing Starts, Permits Tumble Driven By Collapse In Multi-Family Units

One look at the August housing starts and permits data, and one will wonder just how is it possible that yesterday NAHB homebuilder confidence rose to a 9 year high, when according to the US Department of Commerce both Housing Start and Permits tumbled in the past month, with the housing "leading indicator" that is Permits sliding 5.6% from 1040K to 998K, and declining sequentially in every region of the US, with double digit drops in the Northeast and the Midwest, while Housing Starts tumbled by 14.4% from 1117K, to only 956K, wildly missing Wall Street expectations of "only" a 5.2% drop to 1037K.

Initial Jobless Claims Plunge From 3-Month High To 14-Year Low

Last week's "blip" higher in initial claims to over 300k - its highest in almost 3-months - has been demolished by the always-reliable, never-noisy data this week. At 280k, dramatically better than expectations of 305k, initial claims has only been lower once in the last 14 years... just don't tell Janet. The prior week was upwardly revised leaving a 36k drop this week - the biggest percentage drop since 2005. The all-important 4-week average is back under 300k and the labor department reports nothing unusual about this week's data... apart from the fact that non-seasonally-adjusted claims rose 6k to 241k.

Gold Tumbles To 2014 Lows As China Unveils Anti-Rigging Benchmark

With a Fed hinting at exit strategies, gold has tumbled to 2014 lows (and almost in the red year-to-date) as traders apparently forget Japan, China, and European central banks continue to (or are set to) print more money into the global reflation trade. It appears that as the West continues to sell 'paper' gold, the East remains enamnored as the PBOC announced this morning:


Furthermore, traders have noted physical buying interest continues in the Asian region as premiums rise in China and India.