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Chicago PMI Smashes Expectations, Jumps To 12-Month High

Despite plunging consumer spending, Chicago PMI surged to 66.2 (against expectations of 60.0), its highest in 12 months. This is above even the highest economist estimate and is a 4-sigma beat... having been at one-year lows just 3 months ago.



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S&P 500 Spikes To Record High - How It Got There

Nope, its fundamentals...



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Nikkei Futures Halted Limit Up (+1100) As USDJPY Tops 112

Bwuahahahaha... Nikkei futures halted limit up - over 1100 points post-BoJ (+1400 post-FOMC) as USDJPY tops 112 (up 4 handles post-FOMC) to its highest since Jan 2008.



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Ally Financial (Formerly GMAC) Admits DoJ Subpoenas On Mortgage-Related Activities

If yesterday's Citi debacle was a buying opportunity (which it is according to the pre-market), then news that Ally Financial (formerly GMAC) is under regulatory and DoJ investigation must be great news:

*ALLY CITES REQUEST FROM SEC ON SUBPRIME AUTO FINANCE PROBE & MORTGAGE-BACKED SECURITIES; REQUESTS INCLUDE SUBPOENAS FROM DOJ

Of course, do not forget that GM itself recently admitted to the DoJ probing its subprime auto loan underwriting practices. But, but, but - isn't this exactly what FHFA's Mel Watt wants?



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Despite Surprise Rate-Hike, Russian Ruble Crashes Most In 6 Years

Yesterday's record-breaking surge in the Ruble appears, as we warned, to have been front-running today's rate-hike announcement... and despite its surprise size, it is disappointing the market. The 5%-plus swing higher in the Ruble yesterday has been notably retraced as the Russian currency plunges after the central bank hiked rates 150bps (expectations were broadly of a 50bps hike) but it appears the 'whisper' number was a 200bps hike and a shift in FX policy to more active intervention. The inituial rip rally instantly faded and despite low liquidity due to Russian holidays, USDRUB is back over 43 - which would be a new record low close if it holds.



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Where Is The "Low Gas Price Spending Spree": Consumer Spending Tumbles At Fastest Rate Since October 2009

Goodbye GDP hopes: Consumer Spending tumbled 0.2% against expectations of growing 0.1%, dropping at the fastest pace since October 2009. This is the biggest miss since Jan 2014 - in the middle of the PolarVortex. Did it snow in September, and whatever happened to that spending spree that lower gas prices were supposed to lead to? The spending decline was driven by a tumble in spending on both non-durable ($8.1 billion) and mostly durable goods ($26.4 billion). Also, what happened to that surge in consumer confidence - guess broke Americans can't monetize being "confident" about their rising wages just yet.



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Bank of Japan Reaction Context: Nikkei 225 Is Up 1000 Points In 7 Hours

You know the world's financial markets have become farce when the broad Nikkei 225 stock market of Japan rises 1000 points in 7 hours... The meme that stock 'markets' move on fundamentals not central bank liquidity is officially dead. Let that sink in for a moment...



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Goldman On BOJ's Banzainomics: "We Highlight The Potential For Harsh Criticism Of Further Cost-Push Inflation"

It was about several months ago when Goldman, which initially was an enthusiastic supporter of BOJ's QE, turned sour on both Abenomics and the J-Curve (perhaps after relentless mocking on these pages), changed its tune, saying an unhappy ending for Abenomics is almost certainly in the cards. Not surprisingly then, in its post-mortem of the BOJ's overnight action, already being affectionately called Banzainomics, is hardly glowing, and is summarized as follows: "We maintain our view that unless the yen continues to depreciate significantly, as a result of the latest QQE action, the BOJ is unlikely to meet its scenario for inflation to stably reach 2% during FY2015. From a political perspective, with nationwide local elections looming in April 2015, we also highlight the potential for harsh criticism of further cost-push inflation driven by the weaker yen among nonmanufacturers, SMEs, and households. Irrespective of the latest easing moves, we believe the BOJ is treading a very narrow path."



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Frontrunning: October 31

  • Futures rally after BOJ ramps up stimulus (Reuters), Japan's central bank shocks markets with more easing as inflation slows (Reuters)
  • Kuroda Jolts Markets With Assault on Deflation Mindset (BBG)
  • Japan Mega-Pension Shifts to Stocks (WSJ)
  • Russia Raises Interest Rates (WSJ)
  • Oil-Price Drop Has Saudi Officials Divided (WSJ)
  • Not anymore, the BOJ is here: Fed Exit Could Spark Slump in All Markets, ATP CEO Says (BBG)
  • Wal-Mart Weighs Matching Online Prices from Amazon (WSJ)
  • Euro-Area Inflation Picks Up From Five-Year Low on Stimulus (BBG)
  • Big Banks Brace for Penalties in Probes  (WSJ)
  • Ex-UBS Trader Defense Could Be Threat to U.S. Forex Cases (BBG)


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Shocking Bank Of Japan Trick And QE Boosting Treat Sends Futures To Record High

Two days ago, when QE ended and knowing that the market is vastly overstimating the likelihood of a full-blown ECB public debt QE, we tweeted the following: "It's all up to the BOJ now." Little did we know how right we would be just 48 hours later. Because as previously reported, the reason why this morning futures are about to surpass record highs is because while the rest of the world was sleeping, the BOJ shocked the world with a decision to boost QE, announcing it would monetize JPY80 trillion in JGBs, up from the JPY60-70 trillion currently and expand the universe of eligible for monetization securities. A decision which will forever be known in FX folklore as the great Halloween Yen-long massacre.



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Markets Explode Higher As Bank Of Japan Goes All-In-er; Increases QE To JPY 80 Trillion

UPDATE: Nikkei 225 +1100 points,  USDJPY +3 handles to 111.00 post-FOMC,

In a surprise move given all the recent congratulatory bullshit from Abe and Kuroda on breaking the back of Japan's deflation and bring about recovery (forgetting to mention record high misery index, surging bankruptcies and a crushed consumer), the Bank of Japan (by a 5-4 vote) raised its bond-buying program from JPY 70 trillion to 80 trillion... and triple its ETF buying to JPY 3 trillion. This move, on the heels of more confirmation of broader foreign asset purchases in Japan's GPIF sent USDJPY instantly gapping 1 big figure higher to 110.30 and Nikkei futures instantly rose 400 points. S&P futures are also surging. Gold and silver are tanking and TSY bonds are selling off.



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Putin To Western Elites: Play-Time Is Over

Most people in the English-speaking parts of the world missed Putin's speech at the Valdai conference in Sochi a few days ago. Western media did their best to ignore it or to twist its meaning. Regardless of what you think or don't think of Putin, this is probably the most important political speech since Churchill's “Iron Curtain” speech of March 5, 1946. In this speech, Putin abruptly changed the rules of the game. To sum it all up: play-time is over. Children, put away your toys. Now is the time for the adults to make decisions. Russia is ready for this; is the world?



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I Pledge Allegiance...

Being surrounded by people who have been taught, just as I was, to pledge allegiance to the state, is the unfortunate reality we are all confronted with. something that is so deeply engrained that the best I can do is teach my children to think for themselves and decide on their own. Figuring out how to best teach my children the danger of such blind allegiance is without a doubt the most difficult task I face as a father.



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Goldman, Morgan Stanley Warn European QE, While Fully Priced In, Is Neither Imminent Nor Likely

On balance, Morgan Stanley feels that broad-based QE, (i.e. large-scale purchases of government bonds) is further away for the ECB than the market currently believes. Presently they only assign a subjective 40% probability to such a step being taken; whereas the euro rates market is already pricing in the ECB resorting to a broad-based purchase programme with a very high probability of 80-100%. Goldman agrees warning specifically that "Sovereign QE is not imminent... and indeed may never happen." It appears no matter what, disappointment is guaranteed for the market.



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Careful What You Wish For: Plunging Yen Leads To 140% Surge In Bankruptcies

Due to the depreciation of the JPY, leading to soaring raw material costs (crushing SME profitability), TSR reports that Japanese bankruptcies year-to-date in 2014 are up a stunning 140% having unerringly surged since Abenomics was unleashed. Despite constant reassurance and propaganda from various political leaders each and every night that Japan is on the right track... it simply is not and if there is a better indicator of the death spiral Abe has unleashed than surging bankruptcies, we are unaware of one.



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